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Credit risk management
Key developments in 2024
There were no material changes to the policies and practices for\u00a0the
management of credit risk in 2024. We continued to apply the
requirements of IFRS 9 \u2018Financial Instruments\u2019 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.
For further details, see \u2018Top and emerging risks\u2019 on page 131.
\"Arrows_WD.jpg\"
Governance and structure
We have established 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 Group
CEO together with the authority to sub-delegate them. The Credit
Risk sub-function in Group Risk and Compliance is responsible for the
key policies and processes for managing credit risk, which include
formulating Group credit policies and risk rating frameworks, guiding
the Group\u2019s 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:
\u2013 to maintain across HSBC a strong culture of responsible lending,
and robust risk policies and control frameworks;
\u2013 to both partner and challenge our businesses in defining,
implementing and continually re-evaluating our risk appetite under
actual and scenario conditions; and
\u2013 to ensure there is independent, expert scrutiny of credit risks, their
costs and their mitigation.
Key risk management processes
IFRS 9 \u2018Financial Instruments\u2019 process
The IFRS 9 process comprises three main areas: modelling, data and
forward economic guidance; implementation; and governance.
Modelling, data and forward economic guidance
We have 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.
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 committee.
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
Regional management review forums are established in key sites and
regions in order to review and approve the impairment results.
Regional management review forums have representatives from
Credit Risk and Finance. The key site and regional approvals are
reported up to the relevant global business impairment committee for
final approval of the Group\u2019s ECL for the period. Required members of
the committee are the Wholesale Global Chief Corporate Credit
Officer and Chief Risk and Compliance Officer for Wealth and
Personal Banking Risk, as well as the relevant global business\u2019s Chief
Financial Officer and the Global Financial Controller.
Concentration of exposure
(Audited)
Concentrations of credit risk arise when a number of counterparties or
exposures have comparable economic characteristics, or such
counterparties are engaged in similar activities or operate in the same
geographical areas or industry sectors so that their collective ability to
meet contractual obligations is similarly affected by changes in
economic, political or other conditions. We use a number of controls
and\u00a0measures to minimise undue concentration of exposure in\u00a0our
portfolios across industries, countries and global businesses. These
include portfolio and counterparty limits, approval and review controls,
and stress testing.
Credit quality of financial instruments
(Audited)
Our risk rating system facilitates the internal ratings-based approach
under the Basel framework adopted by the Group to support the
calculation of our minimum credit regulatory capital requirement. The
five credit quality classifications encompass a range of granular
internal credit rating grades assigned to wholesale and retail
customers, and the external ratings 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 (\u2018CRR\u2019) to external credit
rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying
23-grade scale of obligor probability of default (\u2018PD\u2019). 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
12-month Basel
probability of
default %
Internal
credit rating
12 month
probability-
weighted PD %
Quality classification1,2
Strong
BBB and above
A- and above
CRR 1 to CRR 2
0\u20130.169
Band 1 and 2
0.000\u20130.500
Good
BBB- to BB
BBB+ to BBB-
CRR 3
0.170\u20130.740
Band 3
0.501\u20131.500
Satisfactory
BB- to B and unrated
BB+ to B and unrated
CRR 4 to CRR 5
0.741\u20134.914
Band 4 and 5
1.501\u201320.000
Sub-standard
B- to C
B- to C
CRR 6 to CRR 8
4.915\u201399.999
Band 6
20.001\u201399.999
Credit impaired
Default
Default
CRR 9 to CRR 10
100
Band 7
100
1Customer risk rating (\u2018CRR\u2019).
212-month point-in-time probability-weighted probability of default (\u2018PD\u2019).
Quality classification definitions
\u2013 \u2018Strong\u2019 exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of
expected loss.
\u2013 \u2018Good\u2019 exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk.
\u2013 \u2018Satisfactory\u2019 exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk.
\u2013 \u2018Sub-standard\u2019 exposures require varying degrees of special attention and default risk is of greater concern.
\u2013 \u2018Credit-impaired\u2019 exposures have been assessed as described in Note 1.2(i) to the financial statements.
Forborne loans and advances
(Audited)
Forbearance measures consist of concessions towards an obligor that
is experiencing or about to experience difficulties in meeting its
financial commitments.
We continue to class loans as forborne when we modify the
contractual payment terms due to having concerns about the
borrowers\u2019 ability to meet contractual payments when they were due.
Our definition of forborne captures non-payment-related concessions,
such as covenant waivers.
For details of our policy on forbearance, see Note 1.2(i) in the financial
\"Arrows_WD.jpg\"
statements.
Credit quality of forborne loans
For wholesale lending, where payment-related forbearance measures
result in a diminished financial obligation, or if there are other
indicators of impairment, the loan will be classified as credit impaired
if it is not already so classified. All facilities with a customer, including
loans that have not been modified, are considered credit impaired
following the identification of a payment-related forborne loan. For
retail lending, where a material payment-related concession has been
granted, the loan will be classified as credit impaired. In isolation, non-
payment related forbearance measures may not result in the loan
being classified as credit impaired unless combined with other
indicators of credit impairment. These are classed as performing
forborne loans for both wholesale and retail lending.
Wholesale and retail lending forborne loans are classified as credit
impaired until there is sufficient evidence to demonstrate a significant
reduction in the risk of non-payment of future cash flows, observed
over a minimum one-year period, and there are no other indicators of
impairment. Any forborne loans not considered credit impaired will
remain forborne for a minimum of two years from the date that credit
impairment no longer applies. For wholesale and retail lending, any
forbearance measures granted on a loan already classed as forborne
results in the customer being classed as credit impaired.
Forborne loans and recognition of expected
credit losses
(Audited)
Forborne loans expected credit loss assessments reflect the higher
rates of losses typically experienced with these types of loans such
that they are in stage 2 and stage 3. The higher rates are more
pronounced in unsecured retail lending requiring further
segmentation. For wholesale lending, forborne loans are typically
assessed individually. Credit risk ratings are intrinsic to the
impairment assessments. The individual impairment assessment
takes into account the higher risk of the future non-payment inherent
in forborne loans.
Impairment assessment
(Audited)
For details of our impairment policies on loans and advances and
financial investments, see Note 1.2(i) on the financial statements.
Write-off of loans and advances
(Audited)
Under IFRS 9, write-off should occur when there is no reasonable
expectation of recovering further cash flows from the financial asset.
This principle does not prohibit early write-off, which is defined in
local policies to ensure effectiveness in the management of
customers in the collections process.
Unsecured personal facilities, including credit cards, are generally
written off at between 150 and 210 days past due. The standard
period runs until the end of the month in which the account becomes
180 days contractually delinquent. However, in exceptional
circumstances, to avoid unfair customer outcomes, deliver customer
duty or meet regulatory expectations, the period may be extended
further.
For secured facilities, write-off should occur upon repossession of
collateral, receipt of proceeds via settlement, or determination that
recovery of the collateral will not be pursued. Where these assets are
maintained on the balance sheet beyond 60 months of consecutive
delinquency-driven default, the prospect of recovery is reassessed.
Recovery activity, on both secured and unsecured assets, may
continue after write-off.
Any unsecured exposures that are not written off at 180 days past
due, and any secured exposures that are in \u2018default\u2019 status for 60
months or greater but are not written off, are subject to additional
monitoring via the appropriate governance forums.
Summary of credit risk
The following disclosure 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.
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
(Audited)
31 Dec 2024
At 31 Dec 2023
Gross carrying/
nominal amount
Allowance for
ECL1
Gross carrying/
nominal amount
Allowance for
ECL1
$m
$m
$m
$m
Loans and advances to customers at amortised cost
940,373
(9,715)
949,609
(11,074)
Loans and advances to banks at amortised cost
102,052
(13)
112,917
(15)
Other financial assets measured at amortised cost
828,580
(92)
960,271
(422)
\u2013\u00a0 cash and balances at central banks
267,674
\u2014
285,868
\u2014
\u2013\u00a0 Hong Kong Government certificates of indebtedness
42,293
\u2014
42,024
\u2014
\u2013\u00a0 reverse repurchase agreements \u2013 non-trading
252,549
\u2014
252,217
\u2014
\u2013\u00a0 financial investments
153,982
(9)
148,346
(20)
\u2013\u00a0 assets held for sale2
3,273
(4)
103,186
(324)
\u2013\u00a0 prepayments, accrued income and other assets3
108,809
(79)
128,630
(78)
Total gross carrying amount on-balance sheet
1,871,005
(9,820)
2,022,797
(11,511)
Loans and other credit-related commitments
619,367
(348)
661,015
(367)
Financial guarantees
16,998
(29)
17,009
(39)
Total nominal amount off-balance sheet4
636,365
(377)
678,024
(406)
2,507,370
(10,197)
2,700,821
(11,917)
Fair value
Memorandum
allowance for
ECL5
Fair value
Memorandum
allowance for
ECL5
$m
$m
$m
$m
Debt instruments measured at fair value through other comprehensive income
(\u2018FVOCI\u2019)
346,124
(54)
302,348
(97)
1The 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.
2For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see \u2018Assets held for sale\u2019 on page 146. At 31\u00a0December
2024, the gross carrying amount comprised $1,113m of loans and advances to customers and banks (2023: $84,075m) and $2,160m of other financial assets at
amortised cost (2023: $19,111m). The corresponding allowance for ECL comprised $4m of loans and advances to customers and banks (2023: $303m) and
$0.3m of other financial assets at amortised cost (2023: $21m).
3Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. \u2018Prepayments, accrued income and other assets\u2019 as
presented within the consolidated balance sheet on page 343 comprises both financial and non-financial assets, including cash collateral and settlement
accounts. It also includes \u2018Items in the course of collection from other banks\u2019 which was presented separately in 2023.
4Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
5Debt 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
\u2018Change in expected credit losses and other credit impairment charges\u2019 in the income statement.
The following table provides an overview of the Group\u2019s credit risk by stage and industry, and the associated ECL coverage. The financial assets
recorded in each stage have the following characteristics:
\u2013 Stage 1: These financial assets are unimpaired and without significant increase in credit risk on which a 12-month allowance for ECL is
recognised.
\u2013 Stage 2: A significant increase in credit risk has been experienced on these financial assets since initial recognition for which a lifetime ECL is
recognised.
\u2013 Stage 3: There is objective evidence of impairment and the financial assets are therefore considered to be in default or otherwise credit
impaired on which a lifetime ECL is recognised.
\u2013 POCI: Financial assets that are purchased or originated at a deep discount are seen to reflect the incurred credit losses on which a lifetime
ECL is recognised.
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at
31\u00a0December\u00a02024
(Audited)
Gross carrying/nominal amount1
Allowance for ECL
ECL coverage %
Stage
1
Stage
2
Stage
3
POCI2
Total
Stage
1
Stage
2
Stage
3
POCI2
Total
Stage
1
Stage
2
Stage
3
POCI2
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
%
%
%
%
%
Loans and
advances to
customers at
amortised cost
824,420
93,248
22,615
90
940,373
(1,078)
(2,546)
(6,040)
(51)
(9,715)
0.1
2.7
26.7
56.7
1.0
\u2013\u00a0 personal
403,746
39,919
3,560
\u2014
447,225
(570)
(1,158)
(796)
\u2014
(2,524)
0.1
2.9
22.4
\u2014
0.6
\u2013\u00a0 corporate and
commercial
340,987
51,231
18,376
90
410,684
(463)
(1,358)
(4,883)
(51)
(6,755)
0.1
2.7
26.6
56.7
1.6
\u2013\u00a0 non-bank
financial
institutions
79,687
2,098
679
\u2014
82,464
(45)
(30)
(361)
\u2014
(436)
0.1
1.4
53.2
\u2014
0.5
Loans and
advances to
banks at
amortised cost
101,852
198
2
\u2014
102,052
(9)
(2)
(2)
\u2014
(13)
\u2014
1.0
100.0
\u2014
\u2014
Other financial
assets
measured at
amortised cost
826,621
1,806
153
\u2014
828,580
(64)
(5)
(23)
\u2014
(92)
\u2014
0.3
15.0
\u2014
\u2014
Loan and other
credit-related
commitments
597,231
21,175
958
3
619,367
(137)
(121)
(90)
\u2014
(348)
\u2014
0.6
9.4
\u2014
0.1
\u2013\u00a0 personal
251,489
1,680
86
\u2014
253,255
(17)
\u2014
(5)
\u2014
(22)
\u2014
\u2014
5.8
\u2014
\u2014
\u2013\u00a0 corporate and
commercial
231,201
17,453
838
3
249,495
(111)
(116)
(83)
\u2014
(310)
\u2014
0.7
9.9
\u2014
0.1
\u2013\u00a0 financial
114,541
2,042
34
\u2014
116,617
(9)
(5)
(2)
\u2014
(16)
\u2014
0.2
5.9
\u2014
\u2014
Financial
guarantees
15,353
1,397
248
\u2014
16,998
(8)
(5)
(16)
\u2014
(29)
0.1
0.4
6.5
\u2014
0.2
\u2013\u00a0 personal
1,416
11
\u2014
\u2014
1,427
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 corporate and
commercial
10,048
1,232
195
\u2014
11,475
(7)
(5)
(15)
\u2014
(27)
0.1
0.4
7.7
\u2014
0.2
\u2013\u00a0 financial
3,889
154
53
\u2014
4,096
(1)
\u2014
(1)
\u2014
(2)
\u2014
\u2014
1.9
\u2014
\u2014
At 31 Dec
2024
2,365,477
117,824
23,976
93
2,507,370
(1,296)
(2,679)
(6,171)
(51)
(10,197)
0.1
2.3
25.7
54.8
0.4
1Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
2Purchased or originated credit-impaired (\u2018POCI\u2019).
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 (\u2018DPD\u2019) and are transferred from stage 1 to stage 2.
The following disclosure presents the ageing of stage 2 financial
assets by those less than 30 DPD and greater than 30 DPD and
therefore presents those financial assets classified as stage 2 due to
ageing (30 DPD) and those identified at an earlier stage (less than 30
DPD).
Stage 2 days past due analysis at 31 December 2024
(Audited)
Gross carrying amount
Allowance for ECL
ECL coverage %
Stage 2
Up-to-
date
1 to 29
DPD1
30 and
> DPD1
Stage 2
Up-to-
date
1 to 29
DPD1
30 and
> DPD1
Stage 2
Up-to-
date
1 to 29
DPD1
30 and
> DPD1
$m
$m
$m
$m
$m
$m
$m
$m
%
%
%
%
Loans and advances to
customers at amortised
cost
93,248
90,157
1,888
1,203
(2,546)
(2,147)
(192)
(207)
2.7
2.4
10.2
17.2
\u2013\u00a0 personal
39,919
37,676
1,361
882
(1,158)
(799)
(169)
(190)
2.9
2.1
12.4
21.5
\u2013\u00a0 corporate and
commercial
51,231
50,486
506
239
(1,358)
(1,326)
(21)
(11)
2.7
2.6
4.2
4.6
\u2013\u00a0 non-bank financial
institutions
2,098
1,995
21
82
(30)
(22)
(2)
(6)
1.4
1.1
9.5
7.3
Loans and advances to
banks at amortised cost
198
198
\u2014
\u2014
(2)
(2)
\u2014
\u2014
1.0
1.0
\u2014
\u2014
Other financial assets
measured at amortised
cost
1,806
1,794
3
9
(5)
(5)
\u2014
\u2014
0.3
0.3
\u2014
\u2014
1The days past due amounts presented above are on a contractual basis.
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at
31 December 2023
(Audited)
Gross carrying/nominal amount1
Allowance for ECL
ECL coverage %
Stage 1
Stage 2
Stage 3
POCI2
Total
Stage 1
Stage 2
Stage 3
POCI2
Total
Stage 1
Stage 2
Stage 3
POCI2
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
%
%
%
%
%
Loans and
advances to
customers at
amortised
cost
809,384
120,871
19,273
81
949,609
(1,130)
(2,964)
(6,950)
(30)
(11,074)
0.1
2.5
36.1
37.0
1.2
\u2013\u00a0 personal
396,534
47,483
3,505
\u2014
447,522
(579)
(1,434)
(854)
\u2014
(2,867)
0.1
3.0
24.4
\u2014
0.6
\u2013 corporate
and
commercial
342,878
69,738
14,958
81
427,655
(499)
(1,500)
(5,774)
(30)
(7,803)
0.1
2.2
38.6
37.0
1.8
\u2013\u00a0 non-bank
financial
institutions
69,972
3,650
810
\u2014
74,432
(52)
(30)
(322)
\u2014
(404)
0.1
0.8
39.8
\u2014
0.5
Loans and
advances to
banks at
amortised
cost
111,479
1,436
2
\u2014
112,917
(10)
(3)
(2)
\u2014
(15)
\u2014
0.2
100.0
\u2014
\u2014
Other
financial
assets
measured at
amortised
cost
946,873
12,734
664
\u2014
960,271
(109)
(132)
(181)
\u2014
(422)
\u2014
1.0
27.3
\u2014
\u2014
Loan and
other credit-
related
commitments
630,949
28,922
1,140
4
661,015
(153)
(128)
(86)
\u2014
(367)
\u2014
0.4
7.5
\u2014
0.1
\u2013\u00a0 personal
253,183
3,459
355
\u2014
256,997
(23)
\u2014
(2)
\u2014
(25)
\u2014
\u2014
0.6
\u2014
\u2014
\u2013\u00a0 corporate
and
commercial
246,210
20,928
736
4
267,878
(120)
(119)
(83)
\u2014
(322)
\u2014
0.6
11.3
\u2014
0.1
\u2013\u00a0 financial
131,556
4,535
49
\u2014
136,140
(10)
(9)
(1)
\u2014
(20)
\u2014
0.2
2.0
\u2014
\u2014
Financial
guarantees
14,746
1,879
384
\u2014
17,009
(7)
(7)
(25)
\u2014
(39)
\u2014
0.4
6.5
\u2014
0.2
\u2013\u00a0 personal
1,106
13
\u2014
\u2014
1,119
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 corporate
and
commercial
10,157
1,290
330
\u2014
11,777
(6)
(6)
(24)
\u2014
(36)
0.1
0.5
7.3
\u2014
0.3
\u2013\u00a0 financial
3,483
576
54
\u2014
4,113
(1)
(1)
(1)
\u2014
(3)
\u2014
0.2
1.9
\u2014
0.1
At 31 Dec
2023
2,513,431
165,842
21,463
85
2,700,821
(1,409)
(3,234)
(7,244)
(30)
(11,917)
0.1
2.0
33.8
35.3
0.4
1Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
2Purchased or originated credit-impaired (\u2018POCI\u2019).
Stage 2 days past due analysis at 31 December 2023
(Audited)
Gross carrying amount
Allowance for ECL
ECL coverage %
Stage 2
Up-to-
date
1 to 29
DPD1
30 and >
DPD1
Stage
2
Up-to-
date
1 to 29
DPD1
30 and >
DPD1
Stage
2
Up-to-
date
1 to 29
DPD1
30 and >
DPD1
$m
$m
$m
$m
$m
$m
$m
$m
%
%
%
%
Loans and advances to
customers at amortised cost
120,871
116,320
2,571
1,980
(2,964)
(2,458)
(245)
(261)
2.5
2.1
9.5
13.2
\u2013\u00a0 personal
47,483
44,634
1,785
1,064
(1,434)
(974)
(214)
(246)
3.0
2.2
12.0
23.1
\u2013\u00a0 corporate and commercial
69,738
68,446
697
595
(1,500)
(1,454)
(31)
(15)
2.2
2.1
4.4
2.5
\u2013\u00a0 non-bank financial
institutions
3,650
3,240
89
321
(30)
(30)
\u2014
\u2014
0.8
0.9
\u2014
\u2014
Loans and advances to banks
at amortised cost
1,436
1,424
\u2014
12
(3)
(3)
\u2014
\u2014
0.2
0.2
\u2014
\u2014
Other financial assets
measured at amortised cost
12,734
12,417
171
146
(132)
(113)
(9)
(10)
1.0
0.9
5.3
6.8
1The days past due amounts presented above are on a contractual basis.
Assets held for sale
(Audited)
At 31 December 2024, the most material balances held for sale arose
from our business in South Africa and our private banking business in
Germany.
Disclosures relating to assets held for sale are provided in the
following credit risk tables, primarily where the disclosure is relevant
to the measurement of these financial assets:
\u2013 \u2018Maximum exposure to credit risk\u2019 (page 148); and
\u2013 \u2018Distribution of financial instruments by credit quality at
31\u00a0December\u2019 (page 166);
Although there was a reclassification on the balance sheet, there was
no separate income statement reclassification. As a result, charges
for changes in expected credit losses and other credit impairment
charges shown in the credit risk disclosures include charges relating
to financial assets classified as \u2018assets held for sale\u2019.
\u2018Loans and other credit-related commitments\u2019, \u2018financial guarantees\u2019
and \u2018Debt instruments measured at fair value through other
comprehensive income\u2019 as reported in credit disclosures, also include
exposures and allowances relating to financial assets classified as
\u2018assets held for sale\u2019.
Loans and advances to customers and banks measured at amortised cost
(Audited)
2024
2023
Total gross loans
and advances
Allowance
for ECL
Total gross loans
and advances
Allowance
for ECL
$m
$m
$m
$m
As reported
1,042,425
(9,728)
1,062,526
(11,089)
Reported in \u2018Assets held for sale\u2019
1,113
(4)
84,075
(303)
At 31 December
1,043,538
(9,732)
1,146,601
(11,392)
At 31 December 2024, gross loans and advances of our business in
South Africa were $660m and the related allowance for ECL was
$4m. Gross loans and advances of our private banking business in
Germany were $309m and of our French life insurance business were
$144m, both with negligible allowance for ECL.
Lending balances held for sale continue to be measured at amortised
cost less allowances for impairment and, therefore, such carrying
amounts may differ from fair value.
These lending balances are part of associated disposal groups that are
measured in their entirety at the lower of carrying amount and fair
value less costs to sell. Any difference between the carrying amount
of these assets and their sales price is part of the overall gain or loss
on the associated disposal group as a whole.
For further details of the carrying amount and the fair value at 31\u00a0December
\"Arrows_WD.jpg\"
2024 of loans and advances to banks and customers classified as held for
sale, see Note 23 on the financial statements.
Gross loans and allowance for ECL on loans and advances to customers and banks reported in \u2018Assets held for sale\u2019
(Audited)
South Africa
German Private Banking
Business
Other
Total
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
Loans and advances to customers
at amortised cost
660
(4)
309
\u2014
\u2014
\u2014
969
(4)
\u2013\u00a0 personal
\u2014
\u2014
130
\u2014
\u2014
\u2014
130
\u2014
\u2013\u00a0 corporate and commercial
586
(4)
19
\u2014
\u2014
\u2014
605
(4)
\u2013\u00a0 non-bank financial institutions
74
\u2014
160
\u2014
\u2014
\u2014
234
\u2014
Loans and advances to banks at
amortised cost
\u2014
\u2014
\u2014
\u2014
144
\u2014
144
\u2014
At 31 Dec 20241
660
(4)
309
\u2014
144
\u2014
1,113
(4)
Banking business in
Canada
Retail banking operations in
France
Other
Total
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
Gross
carrying
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
Loans and advances to customers
at amortised cost
56,349
(220)
16,984
(82)
255
(1)
73,588
(303)
\u2013\u00a0 personal
27,071
(95)
13,920
(79)
140
(1)
41,131
(175)
\u2013\u00a0 corporate and commercial
27,789
(120)
3,012
(3)
\u2014
\u2014
30,801
(123)
\u2013\u00a0 non-bank financial institutions
1,489
(5)
52
\u2014
115
\u2014
1,656
(5)
Loans and advances to banks at
amortised cost
154
\u2014
10,333
\u2014
\u2014
\u2014
10,487
\u2014
At 31 Dec 2023
56,503
(220)
27,317
(82)
255
(1)
84,075
(303)
1The table above does not include disposals completed during 2024 including the sale of our retail banking operations in France completed on 1 January 2024 and
our banking business in Canada completed on 28 March 2024. The sale of our business in Argentina was announced in the first quarter of 2024 and completed
on 6\u00a0December 2024. The gross loans and advances to customers and banks in Argentina were $1,760m and the associated allowance for ECL was $34m at
31\u00a0March 2024. For more details, please refer to business disposals as disclosed in Note 23 on page 411.
The table below analyses the amount of ECL (charges)/releases arising from assets held for sale. The charges during the period relate to our
businesses in Canada ($41m) and in Argentina ($40m).
Changes in expected credit losses and other credit impairment
(Audited)
2024
2023
$m
$m
ECL (charges)/releases arising from:
\u2013\u00a0 assets held for sale
(81)
(49)
\u2013\u00a0 assets not held for sale
(3,333)
(3,398)
Year ended 31 Dec
(3,414)
(3,447)
Credit exposure
Maximum exposure to credit risk
(Audited)
This section provides information on balance sheet items and their offsets as well as loan and other credit-related commitments. Commentary
on consolidated balance sheet movements in 2024 is\u00a0provided on page\u00a095.
Maximum exposure to credit risk
(Audited)
2024
2023
Maximum exposure
Offset
Net
Maximum exposure
Offset
Net
$m
$m
$m
$m
$m
$m
Loans and advances to customers held at amortised cost
930,658
(22,822)
907,836
938,535
(22,607)
915,928
\u2013\u00a0 personal
444,701
(2,256)
442,445
444,655
(2,470)
442,185
\u2013\u00a0 corporate and commercial
403,929
(18,897)
385,032
419,852
(18,771)
401,081
\u2013\u00a0 non-bank financial institutions
82,028
(1,669)
80,359
74,028
(1,366)
72,662
Loans and advances to banks at amortised cost
102,039
\u2014
102,039
112,902
\u2014
112,902
Other financial assets held at amortised cost
854,427
(4,383)
850,044
973,316
(13,919)
959,397
\u2013\u00a0 cash and balances at central banks
267,674
\u2014
267,674
285,868
\u2014
285,868
\u2013\u00a0 Hong Kong Government certificates of indebtedness
42,293
\u2014
42,293
42,024
\u2014
42,024
\u2013\u00a0 reverse repurchase agreements \u2013 non-trading
252,549
(4,383)
248,166
252,217
(13,919)
238,298
\u2013\u00a0 financial investments
153,973
\u2014
153,973
148,326
\u2014
148,326
\u2013\u00a0 assets held for sale
27,234
\u2014
27,234
114,134
\u2014
114,134
\u2013\u00a0 prepayments, accrued income and other assets
110,704
\u2014
110,704
130,747
\u2014
130,747
Derivatives
268,637
(254,257)
14,380
229,714
(222,059)
7,655
Total on-balance sheet exposure to credit risk
2,155,761
(281,462)
1,874,299
2,254,467
(258,585)
1,995,882
Total off-balance sheet
970,610
\u2014
970,610
1,007,885
\u2014
1,007,885
\u2013\u00a0 financial and other guarantees
109,380
\u2014
109,380
111,102
\u2014
111,102
\u2013\u00a0 loan and other credit-related commitments
861,230
\u2014
861,230
896,783
\u2014
896,783
At 31 Dec
3,126,371
(281,462)
2,844,909
3,262,352
(258,585)
3,003,767
Credit deterioration of financial
instruments
(Audited)
A summary of our current policies and practices regarding the identification,
\"Arrows_WD.jpg\"
treatment and measurement of stage 1, stage 2, stage\u00a03 (credit impaired)
and POCI financial instruments can be found in Note 1.2 on the financial
statements.
(Audited)
The recognition and measurement of ECL involves the use of
judgement and estimation. We form 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.\u00a0
The Central scenario is constructed to reflect the latest
macroeconomic expectations. Outer scenarios incorporate the
crystallisation of economic and geopolitical risks.
In the fourth quarter of 2024, the four economic scenarios were
modified to reflect heightened policy uncertainty following the US
election and to overcome any lags in consensus forecasts. An
adjustment factor based on more recent views of expected tariffs and
other policy changes was modelled and then applied to each of the
economic scenarios. 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.
At 31 December 2024, there was an overall reduction in management
judgemental adjustments compared with 31 December 2023, as
modelled outcomes better reflected the key risks at 31 December 2024.
Methodology
At 31 December 2024, four scenarios were used to capture the latest
economic expectations and to articulate management\u2019s view of the
range of risks and potential outcomes. Each scenario is updated with
the latest economic forecasts and distributional estimates every
quarter.
Three scenarios, the Upside, Central and Downside, are drawn from\u00a0
consensus forecasts, market data and distributional estimates of the
entire range of economic outcomes. The fourth scenario, the
Downside 2, represents management\u2019s view of severe downside
risks. Consensus estimates are deployed as conditioning variables in a
proprietary expansion of the scenario variables.\u00a0
The Central scenario is deemed the \u2018most likely\u2019 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\u2019 views of the entire range of
economic outcomes. In the later years of these scenarios, projections
revert to long-term consensus trend expectations. Reversion to trend
expectations is done with reference to historically observed quarterly
changes in the values of macroeconomic variables.
The fourth scenario, the Downside 2, represents management\u2019s view of
severe downside risks. It is a globally consistent, narrative-driven
scenario that explores a more extreme economic outcome 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
constructed to be consistent with a 10% probability. The Downside 2 is
calibrated to a 5% probability. The Central scenario is assigned the
remaining 75%. 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 that consensus forecasts
and distributional estimates did not adequately reflect the
consequences of the US election on the global economic outlook.
Due to the lag in forecasts there was increased uncertainty as to how
tariffs would be implemented and economic policy would change. As
such, scenarios have been constructed using the described standard
methodology and an adjustment \u2013 to account for policy changes \u2013
applied. The adjustment was 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 impact, the adjustment
reduces GDP growth in our key markets by an average of 30bps and
50bps respectively, in the first two years of the Central scenario
forecast. Outer scenarios were adjusted in parallel.
The scenario adjustment entailed no change in scenario probability
weights, which remained in line with our Forward Economic Guidance
(\u2019FEG\u2019) 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\u2019s 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 and estimates,
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. The exception is mainland China, where the headwinds to
growth ensure that forecast interest rates are lower.
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 were
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\u2019s Central scenario reflects expectations for slower growth and
higher inflation and unemployment across many of our key markets.
Expectations of lower GDP growth during 2025 are driven by the
assumed effects of higher tariffs, which impede trade flows, weaken
consumption and deter investment. In the scenario, the US applies tariffs
on key trading partners, focusing on mainland China and Mexico at the
outset of the new administration\u2019s term, before moving attention to
other trading partners. Countries are expected to respond in kind. As a
direct consequence of tariffs, trade growth is expected to be lower,
which in turn weighs on GDP growth.
Mainland China, Hong Kong and Mexico experience the greatest
negative consequences given their deeper trade and financial
interlinkages, with the US economy. 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 wage
growth. At the same time, higher tariff rates drive US inflation. Higher
inflation is assumed to erode purchasing power and reduces GDP
growth. In other markets, including in Mexico, higher inflation is also
expected due to currency depreciation. The higher projected rates of
inflation ensure that central banks are expected to slow the pace of
interest rate reductions. The exception is in mainland China, where
the PBoC cuts interest rates as the excess of domestic supply is
expected to become more acute and drives prices lower.
Global GDP is expected to grow by 2.5% in 2025 in the Central
scenario, and the average rate of global GDP growth is forecast to be
2.6% 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%.
The key features of our Central scenario are:
\u2013 GDP growth rates across the majority of our main markets are
expected to slow 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.\u00a0 Elevated interest rates and higher price levels are also expected
to continue to weigh on some consumer and corporate segments.
\u2013 In most markets, unemployment is forecast to rise moderately in
2025 as economic activity slows, although it will remain low by
historical standards.\u00a0
\u2013 Inflation 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\u2019 target ranges from 2025. The main exceptions are
Hong Kong and mainland China, where inflation is expected to remain
subdued, despite higher tariffs, due to weak domestic demand.
\u2013 Housing market conditions remain mixed, with price weakness
expected to persist in Hong Kong and mainland China, stronger
growth in the UAE and Mexico, and more muted price growth in the
UK, US and France. High inventory levels remain the biggest drag on
Hong Kong and mainland China residential property and this is
expected to lead to another year of price declines in 2025, before a
gradual recovery from 2026.
\u2013 Challenging conditions are also forecast 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 have driven lower valuations.
\u2013 Policy interest rates in key markets are forecast to gradually decline
further in 2025. In the longer term, they are expected to remain at a
higher level than in recent years.
\u2013 The Brent crude oil price is forecast to average around $69 per barrel
over the projection period.
The Central scenario was created with forecasts available in late November, and reviewed continually until the end of December 2024. In accordance
with HSBC\u2019s scenario framework, a probability weight of 75% has been assigned to the Central scenario across all major markets.
The following tables describe key macroeconomic variables in the consensus Central scenario.
Consensus Central scenario 2025\u20132029 (as at 4Q24)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP (annual average growth rate,\u00a0%)
2025
1.2
2.0
1.7
4.0
0.9
4.4
0.9
2026
1.3
1.6
1.8
3.7
0.9
4.2
1.2
2027
1.8
1.6
3.5
4.3
1.4
3.9
1.7
2028
1.6
1.8
3.1
3.9
1.5
3.6
1.9
2029
1.6
2.0
2.7
3.7
1.4
3.6
2.0
5-year average1
1.5
1.8
2.6
3.9
1.2
3.9
1.5
Unemployment rate (%)
2025
4.9
4.4
3.3
5.2
7.5
2.7
3.5
2026
4.7
4.3
3.7
5.4
7.3
2.6
3.5
2027
4.5
4.3
3.3
5.2
7.2
2.6
3.5
2028
4.3
4.2
3.0
5.0
7.0
2.5
3.5
2029
4.3
4.1
2.9
5.0
7.0
2.5
3.5
5-year average1
4.5
4.2
3.2
5.2
7.2
2.6
3.5
House prices (annual average growth rate, %)
2025
1.4
4.4
(0.5)
(5.9)
2.1
9.3
7.6
2026
3.8
3.2
2.4
(0.7)
4.4
5.1
4.5
2027
4.6
2.4
3.0
3.2
4.4
3.6
4.2
2028
3.5
2.5
2.7
4.1
3.8
1.8
4.0
2029
2.7
2.6
2.7
2.9
3.1
1.3
4.0
5-year average1
3.2
3.0
2.1
0.7
3.6
4.2
4.9
Inflation (annual average growth rate, %)
2025
2.4
2.4
1.4
0.3
1.2
2.1
5.0
2026
2.1
2.8
1.9
1.0
1.6
1.9
3.9
2027
2.1
2.5
2.2
1.5
2.0
1.8
3.4
2028
2.0
2.2
2.2
1.7
2.3
1.9
3.4
2029
2.0
2.1
2.3
1.6
2.2
1.8
3.4
5-year average
2.1
2.4
2.0
1.2
1.9
1.9
3.8
Central bank policy rate (annual average, %)
2025
4.2
4.1
4.5
2.9
2.1
4.1
9.4
2026
3.9
3.7
4.1
2.9
1.8
3.8
8.8
2027
3.8
3.7
4.0
3.0
2.0
3.7
8.8
2028
3.7
3.6
4.0
3.2
2.0
3.6
8.9
2029
3.7
3.6
4.0
3.3
2.1
3.6
8.9
5-year average1
3.9
3.7
4.1
3.1
2.0
3.8
8.9
1The five-year average is calculated over a projected period of 20 quarters from 1Q25 to 4Q29.
2For mainland China, the rate shown is the Loan Prime Rate.
Consensus Central scenario 2024\u20132028 (as at 4Q23)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP (annual average growth rate,\u00a0%)
2024
0.3
1.0
2.6
4.5
0.8
3.7
1.9
2025
1.2
1.8
2.7
4.4
1.5
4.0
2.2
2026
1.7
2.1
2.6
4.3
1.6
3.8
2.3
2027
1.6
2.0
2.6
3.8
1.5
3.4
2.4
2028
1.6
2.0
2.6
3.9
1.5
3.4
2.4
5-year average1
1.3
1.8
2.6
4.2
1.4
3.6
2.2
Unemployment rate (%)
2024
4.7
4.3
3.0
5.2
7.5
2.6
2.9
2025
4.6
4.2
3.0
5.1
7.3
2.6
2.9
2026
4.3
4.0
3.2
5.1
7.0
2.6
2.9
2027
4.2
4.0
3.2
5.1
6.8
2.6
2.9
2028
4.2
4.0
3.2
5.1
6.8
2.6
2.9
5-year average1
4.4
4.1
3.1
5.1
7.1
2.6
2.9
House prices (annual average growth rate, %)
2024
(5.5)
2.9
(6.6)
(0.6)
(1.0)
12.6
6.5
2025
0.1
2.7
(0.7)
1.1
2.4
7.7
4.2
2026
3.5
3.1
2.6
2.6
4.0
4.4
4.2
2027
3.0
2.7
2.8
4.0
4.4
2.6
4.0
2028
3.0
2.1
3.0
4.5
4.0
2.3
4.0
5-year average1
0.8
2.7
0.2
2.3
2.8
5.9
4.6
Inflation (annual average growth\u00a0 rate,%)
2024
3.2
2.7
2.1
1.8
2.7
2.3
4.2
2025
2.2
2.2
2.1
2.0
1.8
2.2
3.6
2026
2.2
2.3
2.2
2.1
1.7
2.1
3.5
2027
2.3
2.2
2.4
2.0
1.9
2.1
3.5
2028
2.3
2.2
2.4
2.0
2.1
2.1
3.5
5-year average1
2.4
2.3
2.2
2.0
2.0
2.1
3.7
Central bank policy rate (annual average, %)
2024
5.0
5.0
5.4
3.2
3.6
5.1
10.4
2025
4.3
4.0
4.4
3.3
2.8
4.1
8.6
2026
3.9
3.7
4.1
3.5
2.6
3.7
7.9
2027
3.8
3.7
4.1
3.7
2.6
3.7
7.9
2028
3.7
3.8
4.1
3.9
2.7
3.8
8.1
5-year average1
4.1
4.1
4.4
3.5
2.9
4.1
8.6
1The five-year average is calculated over a projected period of 20 quarters from 1Q24 to 4Q28.
2For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including the 4Q23 disclosure, the reference rate shown for mainland China was the
Lending Rate.
The graphs compare the Central scenario at the year end 2023 with economic expectations at the end of 2024.
GDP growth: Comparison of Central scenarios
Hong Kong
\"119846767492320\"
Note: Real GDP shown as year-on-year percentage change.
Mainland China
\"119846767492325\"
Note: Real GDP shown as year-on-year percentage change.
UK
\"119846767492329\"
Note: Real GDP shown as year-on-year percentage change.
US
\"119846767492334\"
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 in the Central scenario.
The scenario is consistent with a number of key upside risk themes.
These include only limited increases in tariffs and a faster fall in the
rate of inflation that allows central banks to reduce interest rates
more quickly. The Upside scenario would also be consistent with a
de-escalation in geopolitical tensions, where the Russia-Ukraine war
moves quickly towards a conclusion, tensions in the Middle East
subside and US-China relations become more cordial.
The following tables describe key macroeconomic variables in the
consensus Upside scenario.
Consensus Upside scenario 2025\u20132029 (as at 4Q24)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-peak)1
11.3
(4Q29)
13.6
(4Q29)
21.4
(4Q29)
27.5
(4Q29)
8.9
(4Q29)
28.9
(4Q29)
13.6
(4Q29)
Unemployment rate (%, min)2
3.5
(3Q26)
3.6
(1Q26)
2.9
(4Q29)
4.9
(4Q26)
6.4
(4Q26)
2.2
(4Q26)
3.0
(1Q25)
House price index (%, start-to-peak)1
24.2
(4Q29)
23.6
(4Q29)
25.3
(4Q29)
9.8
(4Q29)
22.8
(4Q29)
26.1
(4Q29)
31.7
(4Q29)
Inflation rate (YoY % change, min)3
1.4
(1Q26)
1.6
(2Q26)
(0.1)
(4Q25)
(1.0)
(4Q25)
0.1
(4Q25)
0.6
(4Q25)
3.1
(2Q26)
Central bank policy rate (%, min)2
3.6
(4Q25)
3.6
(1Q29)
4.0
(1Q29)
2.7
(1Q26)
1.4
(3Q25)
3.6
(1Q29)
7.6
(1Q26)
1Cumulative change to the highest level of the series during the 20-quarter projection.
2Lowest projected unemployment or policy interest rate in the scenario. For mainland China, rate shown is the Loan Prime Rate.
3Lowest projected year-on-year percentage change in inflation in the scenario.
Consensus Upside scenario 2024\u20132028 (as at 4Q23)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-peak)1
10.8
(4Q28)
14.3
(4Q28)
21.8
(4Q28)
30.4
(4Q28)
10.4
(4Q28)
30.7
(4Q28)
17.8
(4Q28)
Unemployment rate (%, min)2
3.1
(4Q24)
3.1
(2Q25)
2.4
(3Q24)
4.8
(4Q25)
6.2
(4Q25)
2.0
(4Q25)
2.4
(3Q24)
House price index (%, start-to-peak)1
13.0
(4Q28)
21.9
(4Q28)
17.9
(4Q28)
19.7
(4Q28)
19.6
(4Q28)
34.2
(4Q28)
30.6
(4Q28)
Inflation rate (YoY % change, min)3
1.3
(2Q25)
1.4
(1Q25)
0.3
(4Q24)
0.6
(3Q24)
1.5
(3Q24)
1.4
(1Q25)
2.7
(1Q25)
Central bank policy rate (%, min)2
3.7
(3Q28)
3.7
(2Q27)
4.1
(1Q27)
3.1
(3Q24)
2.6
(2Q26)
3.7
(1Q27)
7.8
(2Q25)
1Cumulative change to the highest level of the series during the 20-quarter projection.
2Lowest projected unemployment or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including the
4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.
3Lowest 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 a global recession.
As the geopolitical environment remains volatile and complex, risks
include:
\u2013 an increase in protectionist policies, as countries that impose
tariffs are met with retaliatory actions. This lowers investment,
complicates international supply chains, and impedes trade flows;
\u2013 broader and more prolonged conflicts in the Middle East and
between Russia and Ukraine, which further disrupt energy and
food supplies; and
\u2013 continued differences between the US and 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\u2019 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 by raising interest rates, leading to higher
defaults and an 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 tables describe key macroeconomic variables in the
consensus Downside scenario.
Consensus Downside scenario 2025\u20132029 (as at 4Q24)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-trough)1
(1.0)
(4Q26)
(0.6)
(3Q25)
(4.5)
(4Q25)
(2.5)
(3Q25)
(0.6)
(1Q26)
0.3
(1Q25)
(2.1)
(4Q26)
Unemployment rate (%, max)2
6.1
(4Q25)
5.3
(3Q25)
5.1
(2Q26)
6.9
(4Q26)
8.3
(3Q25)
3.4
(1Q26)
4.1
(4Q25)
House price index (%, start-to-
trough) 1
(4.5)
(1Q26)
(0.2)
(1Q25)
(1.9)
(2Q26)
(12.8)
(3Q26)
(0.3)
(1Q25)
(0.4)
(1Q25)
2.1
(1Q25)
Inflation rate (YoY % change, max)3
3.4
(4Q25)
4.5
(1Q26)
3.1
(1Q26)
2.0
(1Q26)
2.6
(3Q25)
2.8
(1Q26)
7.4
(4Q25)
Central bank policy rate (%, max)2
5.0
(1Q25)
4.8
(1Q25)
5.2
(1Q25)
3.0
(1Q25)
3.2
(1Q25)
4.8
(1Q25)
11.5
(3Q25)
1Cumulative change to the lowest level of the series during the 20-quarter projection.
2The highest projected unemployment or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate.
3The highest projected year-on-year percentage change in inflation in the scenario.
Consensus Downside scenario 2024\u20132028 (as at 4Q23)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-trough)1
(1.0)
(2Q25)
(1.4)
(3Q24)
(1.6)
(3Q25)
(1.5)
(1Q24)
(0.3)
(2Q24)
1.4
(1Q24)
(0.3)
(4Q24)
Unemployment rate (%, max)2
6.4
(1Q25)
5.6
(4Q24)
4.7
(4Q25)
6.9
(4Q25)
8.5
(4Q24)
3.7
(4Q25)
3.5
(4Q25)
House price index (%, start-to-
trough) 1
(12.0)
(2Q25)
(1.3)
(3Q24)
(9.6)
(4Q24)
(7.1)
(3Q25)
(1.2)
(3Q24)
0.3
(1Q24)
1.2
(1Q24)
Inflation rate (YoY % change, max)3
4.1
(1Q24)
3.5
(4Q24)
3.8
(3Q24)
3.5
(4Q24)
3.8
(2Q24)
3.0
(1Q24)
6.5
(4Q24)
Central bank policy rate (%, max)2
5.7
(1Q24)
5.6
(1Q24)
6.0
(1Q24)
3.2
(3Q24)
4.2
(1Q24)
5.7
(1Q24)
12.0
(3Q24)
1Cumulative change to the lowest level of the series during the 20-quarter projection.
2The highest projected unemployment or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including
the 4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.
3The 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\u2019s view of the tail of the economic distribution. It
incorporates the crystallisation of a number of risks simultaneously,
including significant increases in tariffs globally, where the US
imposes particularly high and punitive tariffs on imports from
mainland China and Mexico. A further escalation of geopolitical crises
is also assumed, which creates severe supply disruptions to goods
and energy markets.
In the scenario, as inflation surges and central banks tighten monetary
policy further, consumer and business confidence falls. However, this
impulse is assumed to be short-lived, as recession takes hold, causing
a fall in demand, leading commodity prices to correct sharply and
global price inflation to fall.
The following tables describe key macroeconomic variables in the
Downside 2 scenario.
Downside 2 scenario 2025\u20132029 (as at 4Q24)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-trough)1
(9.1)
(2Q26)
(4.1)
(2Q26)
(10.1)
(4Q25)
(8.7)
(4Q25)
(7.9)
(2Q26)
(6.8)
(2Q26)
(10.5)
(3Q26)
Unemployment rate (%, max)2
8.4
(2Q26)
9.3
(2Q26)
7.1
(1Q26)
7.1
(4Q26)
10.4
(1Q27)
5.0
(3Q25)
5.6
(1Q26)
House price index (%, start-to-
trough) 1
(27.2)
(4Q26)
(15.8)
(4Q25)
(34.4)
(3Q27)
(30.5)
(4Q26)
(14.0)
(2Q27)
(13.2)
(2Q27)
2.0
(1Q25)
Inflation rate (YoY % change, max)3
10.1
(2Q25)
4.9
(4Q25)
3.6
(1Q26)
3.8
(4Q25)
7.6
(2Q25)
3.7
(2Q25)
7.9
(4Q25)
Central bank policy rate (%, max)2
5.5
(1Q25)
5.5
(1Q25)
5.9
(1Q25)
3.5
(3Q25)
4.2
(1Q25)
5.6
(1Q25)
12.1
(3Q25)
1Cumulative 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. For mainland China, the rate shown is the Loan Prime Rate.
3 The highest projected year-on-year percentage change in inflation in the scenario.
Downside 2 scenario 2024\u20132028 (as at 4Q23)
UK
US
Hong Kong
Mainland China
France
UAE
Mexico
GDP level (%, start-to-trough)1
(8.8)
(2Q25)
(4.6)
(1Q25)
(8.2)
(1Q25)
(6.4)
(1Q25)
(6.6)
(1Q25)
(4.9)
(2Q25)
(8.1)
(2Q25)
Unemployment rate (%, max)2
8.4
(2Q25)
9.3
(2Q25)
6.4
(4Q24)
7.0
(4Q25)
10.2
(4Q25)
4.3
(3Q24)
4.9
(2Q25)
House price index (%, start-to-
trough) 1
(30.2)
(4Q25)
(14.7)
(4Q24)
(32.8)
(3Q26)
(25.5)
(4Q25)
(14.5)
(2Q26)
(2.9)
(4Q25)
1.2
(1Q24)
Inflation rate (YoY % change, max)3
10.1
(2Q24)
4.8
(2Q24)
4.1
(3Q24)
4.1
(4Q24)
8.6
(2Q24)
3.5
(2Q24)
7.0
(4Q24)
Central bank policy rate (%, max)2
6.0
(1Q24)
6.1
(1Q24)
6.4
(1Q24)
4.1
(3Q24)
5.2
(1Q24)
6.1
(1Q24)
12.7
(3Q24)
1Cumulative 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. For mainland China, rate shown is the Loan Prime Rate. In prior periods, including the
4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.
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 our four largest markets.
Hong Kong
\"119846767543989\"
Mainland China
\"119846767543996\"
UK
\"119846767544001\"
US
\"119846767544006\"
Scenario weighting
Scenario weightings are calibrated to probabilities that are determined
with reference to consensus forecast probability distributions.
Management may then choose to vary weights if they assess that the
calibration lags more recent events, or does not reflect their view of
the distribution of economic and geopolitical risk. Management\u2019s view
of the scenarios and the probability distribution takes into
consideration the relationship of the consensus scenario to both
internal and external assessments of risk.
In assessing the economic environment and the level of risk and
uncertainty, management has considered both global and country-
specific factors.
In the fourth quarter of 2024, key considerations around uncertainty
focused on:
\u2013 US import tariffs and bilateral tariff escalations globally, and the
impact on trade and manufacturing supply chains;
\u2013 the extent and success of mainland China in deploying fiscal and
monetary support to secure economic growth and underpin a
recovery in the real estate market;
\u2013 prospects for recovery in the Hong Kong residential property
market;
\u2013 the implications of changes to monetary policy expectations on
growth and employment;
\u2013 estimation and forecast uncertainty for UK unemployment given
ongoing methodology updates at the Office for National Statistics;
and
\u2013 risks of an asset price correction given elevated valuations across
different asset classes.
Although these factors are significant, management assessed that
following the tariff-based adjustment, the Central scenario reflected
the most likely future economic outcome and that 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 in all major
markets. The Central scenario was assigned a 75% probability
weighting in our major markets. The consensus Upside scenario was
assigned a 10% weighting, and the consensus Downside scenario
was given 10%. The Downside 2 was assigned a 5% weighting.
In support of the decision, it was noted that the effect of higher tariffs
would be most negative in mainland China and Hong Kong, as it
would limit trade growth (a significant growth driver in 2024)
substantially and lead to weaker domestic demand. The adjustment to
the Central scenario reflected this assumption.
In the UK, tariffs have a small direct impact on GDP growth forecasts
in the Central scenario, but indirect effects would be larger through
weaker trade and lower global growth. The outlook also remains weak
given the only partially offsetting impacts from measures announced
in the 2024-25 Budget and higher US interest rates.
For the US, the Central scenario reflects expectations that economic
growth will slow in 2025 as households and businesses adjust to
higher inflation, lower labour supply and elevated interest rates.
The impact from tariffs is minimal for the UAE, as trade with the US is
small, but it is assumed to be affected through secondary channels,
including a stronger US dollar and higher interest rates. It was also
observed that geopolitical risks have remained high since the
outbreak of conflict in the Middle East, but economic and market
impacts have been limited and oil production remains unaffected.
Escalation risks were assessed to be consistent with the probabilities
assigned to the Downside scenario.
Management concluded that Mexico is likely to be one of the most
heavily affected countries from US tariff policies and that the impacts
are reflected in the scenarios. GDP growth forecasts in the Central
scenario are lower than in previous periods, and inflation and interest
rates are higher, in part due to an expected deprecation of the
Mexican peso.
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.
Scenario weightings, %
Standard
weights
UK
US
Hong
Kong
Mainland
China
Canada
France
UAE
Mexico
4Q24
Upside scenario
10
10
10
10
10
10
10
10
10
Central scenario
75
75
75
75
75
75
75
75
75
Downside scenario
10
10
10
10
10
10
10
10
10
Downside 2 scenario
5
5
5
5
5
5
5
5
5
4Q23
Upside scenario
10
10
10
10
10
10
10
10
10
Central scenario
75
75
75
75
75
75
75
75
75
Downside scenario
10
10
10
10
10
10
10
10
10
Downside 2 scenario
5
5
5
5
5
5
5
5
5
At 31 December 2024, the consensus Upside and Central scenarios for all markets had a combined weighting of 85%, unchanged as at
31\u00a0December 2023.
Critical estimates and judgements
The calculation of ECL under IFRS 9 involved significant judgements,
assumptions and estimates at 31 December 2024. These included:
\u2013 the selection and configuration of economic scenarios, given the
constant change in economic conditions and distribution of
economic risks; and
\u2013 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 in 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.\u00a0
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 our wholesale portfolios, a global methodology is used for the
estimation of the term structure of probability of default (\u2018PD\u2019) and
loss given default (\u2018LGD\u2019). 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, allowance for ECL estimates are derived based on
discounted cash flow (\u2018DCF\u2019) calculations for internal forward-looking
scenarios specific to individual borrower circumstances (see page
359). Probability-weighted outcomes are applied, and depending on
materiality and status of the 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 our 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
macroeconomic variables. These are included within IFRS 9 ECL
estimates using either economic response models or models that
contain internal, external and macroeconomic variables. The
macroeconomic impact on PD is modelled over the period equal to
the remaining maturity of the 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 Downside 2 scenario.
Management judgemental
adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled allowance
for ECL at either a customer, segment or portfolio level where
management believes allowances do not sufficiently reflect the credit
risk/expected credit losses at the reporting date. These can relate to
risks or uncertainties that are not reflected in the models and/or to
any late-breaking events with significant uncertainty, subject to
management review and challenge.
This includes refining model inputs and outputs and using
adjustments to ECL based on management judgement and
quantitative analysis for impacts that are difficult to model.
The effects of management judgemental adjustments are considered for both
balances and allowance for ECL when determining whether or not a significant
increase in credit risk has occurred and is allocated to a stage where
appropriate. This is in accordance with the internal adjustments framework.
Management judgemental adjustments are reviewed under the
governance process for IFRS 9 (as detailed in the section \u2018Credit risk
management\u2019 on page 139). Review and challenge focuses on the
rationale and quantum of the adjustments with a further review
carried out by the second line of defence where significant. For some
management judgemental adjustments, internal frameworks establish
the conditions under which these adjustments should no longer be
required and as such are considered as part of the governance
process. This internal governance process allows management
judgemental adjustments to be reviewed regularly and, where
possible, to reduce the reliance on these through model recalibration
or redevelopment, as appropriate.
The drivers of management judgemental adjustments continue to
evolve with the economic environment and as new risks emerge.
In addition to management judgemental adjustments there are also
\u2018Other adjustments\u2019, which are made to address process limitations
and data/model deficiencies and can also include, where appropriate,
the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be
incorporated into the total reported ECL.
\u2018Management judgemental adjustments\u2019 and \u2018Other adjustments\u2019
constitute the total value of adjustments to modelled allowance for
ECL. For the wholesale portfolio, defaulted exposures are assessed
individually and management judgemental adjustments are made only
to the performing portfolio.
At 31 December 2024, there was a $0.6bn reduction in management
judgemental adjustments compared with 31 December 2023. This
was driven by retail due to reductions in economic uncertainty,
primarily in the UK and Asia, and model redevelopments which
captured macro-economic risks more effectively.
Management judgemental adjustments made in estimating the
scenario-weighted reported allowance for ECL at 31 December 2024
are set out in the following table.
Management judgemental adjustments to ECL at 31 December 20241
Retail
Wholesale2
Total
$bn
$bn
$bn
Modelled ECL (A)3
2.6
2.0
4.6
Banks, sovereigns, government entities and low-risk counterparties
0.0
0.0
Corporate lending adjustments
0.1
0.1
Inflation related adjustments
0.0
0.0
Other credit judgements
0.0
0.0
Total management judgemental adjustments (B)4
0.0
0.1
0.1
Other adjustments (C)5
(0.0)
0.1
0.1
Final ECL (A + B + C)6
2.6
2.2
4.8
Management judgemental adjustments to ECL at 31 December 20231,7
Retail
Wholesale2
Total
$bn
$bn
$bn
Modelled ECL (A)3
2.6
2.4
5.0
Banks, sovereigns, government entities and low-risk counterparties
0.0
0.0
Corporate lending adjustments
0.1
0.1
Inflation-related adjustments
0.1
0.1
Other credit judgements
0.5
0.5
Total management judgemental adjustments (B)4
0.6
0.1
0.7
Other adjustments (C)5
(0.0)
0.0
0.0
Final ECL (A + B + C)6
3.2
2.5
5.7
1Management judgemental adjustments presented in the table reflect increases or (decreases) to allowance for ECL, respectively.
2The wholesale portfolio corresponds to adjustments to the performing portfolio (stage 1 and stage 2).
3(A) refers to probability-weighted allowance for ECL before any adjustments are applied.
4(B) refers to adjustments that are applied where management believes allowance for ECL does not sufficiently reflect the credit risk/expected credit losses of
any given portfolio at the reporting date. These can relate to risks or uncertainties that are not reflected in the model and/or to any late-breaking events.
5(C) refers to adjustments to allowance for ECL made to address process limitations and data/model deficiencies and can also include where appropriate, the
impact of new models where governance has sufficiently progressed to allow an accurate estimate of ECL allowance to be incorporated into the total reported
ECL.
6As presented within our internal credit risk governance (see page 139).
731 December 2023 includes the Canada, Argentina, Armenia and Oman businesses and retail banking operations in France.
Management judgemental adjustments at 31\u00a0December 2024 were
an increase to allowance for ECL of $0.1bn for the wholesale portfolio
and $0.0bn for the retail portfolio.
At 31 December 2024, wholesale management judgemental
adjustments were an increase to allowance for ECL of $0.1bn
(31\u00a0December 2023: $0.1bn increase). These were mainly to
corporate exposures to reflect heightened uncertainty in specific
sectors and geographies, including offsetting adjustments to the real
estate sector in mainland China, Hong Kong and the US, and
adjustments to exposures to the automotive and industrial sectors in
Germany.
At 31 December 2024, retail management judgemental adjustments
to allowance for ECL were $0.0bn (31 December 2023 $0.6bn). The
reduction in adjustments compared with 31 December 2023 for
inflation-related adjustments was primarily due to the reduction of
inflation related risk in the UK and the sale of the Canadian banking
business. Other credit judgements decreased due to reductions in
economic uncertainty, primarily in the UK and Asia, and model
redevelopments which captured macro-economic risks more
effectively.
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 allowance for ECL under each scenario described
above for selected portfolios, applying a 100% weighting to each
scenario in turn. The weighting is reflected in both the determination
of a significant increase in credit risk and the measurement of the
resulting allowances.
The allowance for ECL calculated for the Upside and Downside
scenarios should not be taken to represent the upper and lower limits
of possible ECL outcomes. The impact of defaults that might occur in
the future under different economic scenarios is captured by
recalculating allowances 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%
weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
allowance for 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 the effects of macroeconomic factors are not
necessarily the key consideration when performing individual
assessments of allowances 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
allowance for ECL for defaulted obligors of loans and advances. This\u00a0
is because the retail ECL for secured mortgage portfolios, including
loans in all stages, is sensitive to macroeconomic variables.
Wholesale and retail sensitivity
The wholesale and retail sensitivity tables present the 100%
weighted results. 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 judgemental 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
IFRS 9 ECL sensitivity to future economic conditions1,2,3
Reported
Gross carrying
amount4
Reported
allowance for
ECL
Consensus
Central
scenario
allowance for
ECL
Consensus
Upside
scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2024
$m
$m
$m
$m
$m
$m
UK
432,160
717
667
526
850
2,389
US
202,888
216
201
205
247
461
Hong Kong
450,966
659
616
465
906
1,496
Mainland China
137,960
178
141
84
329
886
Mexico
34,713
69
61
46
86
302
UAE
58,909
51
49
40
58
120
France
184,591
82
80
69
97
125
Other geographies5
455,823
234
216
176
304
774
Total
1,958,010
2,205
2,031
1,612
2,877
6,555
of which:
Stage 1
1,830,264
689
632
494
797
803
Stage 2
127,746
1,516
1,399
1,118
2,080
5,751
By geography at 31 Dec 2023
UK
426,427
820
754
599
1,041
2,487
US
191,104
215
199
189
268
441
Hong Kong
447,480
609
566
433
807
1,393
Mainland China
129,945
258
217
142
414
945
Canada5
84,092
89
75
56
107
487
Mexico
30,159
60
56
46
73
226
UAE
52,074
32
32
30
34
40
France
178,827
98
102
90
124
141
Other geographies5,7
450,271
325
298
245
410
882
Total
1,990,378
2,507
2,301
1,829
3,278
7,043
of which:
Stage 1
1,820,843
754
702
553
860
854
Stage 2
169,535
1,753
1,599
1,276
2,418
6,189
1Allowance for ECL sensitivity includes off-balance sheet financial instruments. These are subject to significant measurement uncertainty.
2Includes low credit-risk financial instruments such as debt instruments at FVOCI, which have high carrying amounts but low ECL under all the above scenarios.
3Excludes defaulted obligors. For a detailed breakdown of performing and non-performing wholesale portfolio exposures, see page 170.
4Staging refers only to probability-weighted/reported gross carrying amount. Stage allocation of gross exposures varies by scenario, with higher allocation to stage
2 under the Downside 2 scenario.
5Includes small portfolios that use less complex modelling approaches and are not sensitive to macroeconomic changes.
6Classified as held for sale at 31 December 2023.
7Includes the Argentina and Armenia businesses, which were sold in 2024.
At 31 December 2024, the highest level of 100% scenario-weighted
allowance for ECL was observed in the UK and Hong Kong under the
Downside 2 scenario, driven primarily by a larger exposure to those
geographies, namely in the real estate sector. In relation to the
underlying exposure, mainland China and Mexico have the higher
Downside 2 ECL coverage, mostly due to the relatively larger
proportion of higher risk exposures in those geographies.
Compared with 31 December 2023, the Downside 2 ECL impact
reduced by $0.5bn mostly due to the sale of the Canada business
while observing offsetting impacts driven by updates to our forward
economic scenarios.
In the wholesale portfolio, off-balance sheet financial instruments
have a lower likelihood to be fully converted to a funded exposure at
the point of default, and consequently the sensitivity of the allowance
for ECL is lower in relation to its nominal amount, when compared
with an on-balance sheet exposure with a similar risk profile.
Retail analysis
IFRS 9 ECL sensitivity to future economic conditions1
Reported gross
carrying
amount
Reported
allowance for
ECL
Consensus
Central
scenario
allowance for
ECL
Consensus
Upside
scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2024
$m
$m
$m
$m
$m
$m
UK
Mortgages
163,541
126
117
107
132
288
Credit cards
7,415
280
275
265
276
447
Other
8,249
241
233
217
243
351
Mexico
Mortgages
7,482
165
162
155
168
215
Credit cards
2,227
337
333
330
338
423
Other
3,722
419
416
413
422
593
Hong Kong
Mortgages
106,866
5
5
4
5
10
Credit cards
9,419
293
275
268
300
770
Other
6,210
106
102
101
105
249
UAE
Mortgages
1,993
8
8
8
8
8
Credit cards
536
31
31
31
31
35
Other
688
17
17
17
17
19
US
Mortgages
16,965
6
6
6
6
8
Credit cards
193
15
14
14
15
17
Other geographies
Mortgages
51,064
131
127
124
136
180
Credit cards
3,500
162
159
156
164
223
Other
2,292
72
72
69
73
93
Total
392,361
2,413
2,351
2,285
2,440
3,928
of which: mortgages
347,910
440
425
405
456
708
Stage 1
311,875
51
47
43
58
129
Stage 2
33,761
126
117
107
129
275
Stage 3
2,274
263
261
255
269
304
of which: credit cards
23,290
1,116
1,086
1,064
1,124
1,915
Stage 1
19,915
276
267
258
284
701
Stage 2
3,107
655
634
621
656
1,027
Stage 3
267
185
185
185
185
188
of which: others
21,161
856
839
816
860
1,305
Stage 1
18,574
216
204
193
217
532
Stage 2
2,005
360
355
343
363
483
Stage 3
583
279
279
279
279
290
IFRS 9 ECL sensitivity to future economic conditions1,2
Reported gross
carrying amount
Reported
allowance for
ECL
Consensus
Central scenario
allowance for
ECL
Consensus
Upside scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2023
$m
$m
$m
$m
$m
$m
UK
Mortgages
161,127
189
180
172
201
334
Credit cards
7,582
344
340
302
353
486
Other
8,183
341
333
273
383
515
Mexico
Mortgages
8,666
188
180
150
235
363
Credit cards
2,445
295
286
206
376
489
Other
4,529
513
503
426
600
731
Hong Kong
Mortgages
106,136
2
2
1
3
5
Credit cards
9,128
287
239
214
395
887
Other
6,269
109
100
88
124
256
UAE
Mortgages
2,001
25
25
25
25
25
Credit cards
471
24
24
22
25
32
Other
721
20
20
19
21
28
France
Mortgages
20,589
50
50
50
51
51
Other
1,328
44
44
43
45
48
US
Mortgages
14,385
8
4
3
4
10
Credit cards
204
15
15
10
15
16
Canada
Mortgages
25,464
67
65
64
70
99
Credit cards
338
13
13
12
16
15
Other
1,368
13
13
12
14
33
Other geographies
Mortgages
55,368
152
149
144
158
198
Credit cards
3,655
173
166
151
202
291
Other
2,416
91
86
83
95
137
Total
442,373
2,962
2,835
2,471
3,411
5,049
of which: mortgages
393,736
681
655
609
747
1,085
Stage 1
347,874
101
92
77
145
303
Stage 2
43,451
264
249
225
280
429
Stage 3
2,412
316
314
307
322
352
of which: credit cards
23,822
1,150
1,082
918
1,381
2,217
Stage 1
18,557
249
232
180
329
604
Stage 2
4,953
707
657
546
859
1,415
Stage 3
312
193
193
192
194
197
of which: others
24,815
1,131
1,098
944
1,283
1,748
Stage 1
19,551
218
205
151
272
501
Stage 2
4,542
540
519
423
636
868
Stage 3
722
373
373
370
375
379
1Allowance for ECL sensitivities exclude portfolios utilising less complex modelling approaches.
2Included balances and allowance for ECL which had been reclassified from \u2018loans and advances to customers\u2019 to \u2018assets held for sale\u2019 in the balance sheet at
31\u00a0December 2023. This also included any balances and allowance for ECL which continued to be reported as personal lending in \u2018loans and advances to
customers\u2019 that are in accordance with the basis of inclusion for retail sensitivity analysis. This includes the Canada, Argentina businesses and retail banking
operations in France.
At 31 December 2024, the most significant level of allowance for ECL
sensitivity was observed in the UK, Mexico and Hong Kong. Mortgages
reflected the lowest level of allowance for ECL sensitivity across most
markets given the significant levels of collateral relative to the exposure
values. Credit cards and other unsecured lending across stages 1 and 2
are more sensitive to economic forecasts and therefore reflected the
highest level of allowance for ECL sensitivity during 2024.
There was a reduction in the total sensitivity for ECL allowance in all
scenarios compared with 31 December 2023, due to banking portfolio\u00a0
sales, reduction of management judgemental adjustments, model
redevelopments and scenario evolution.
There is limited sensitivity in credit cards and other unsecured lending
in stage 3 as levels of loss on defaulted exposures remain consistent
through various economic conditions. The Downside 2 scenario is
from the tail of the economic distribution where allowance for ECL is
more sensitive based on historical experience and includes a
macroeconomic-dependent stressed LGD for a limited number of
portfolios.
The reported gross carrying amount by stage is representative of the
weighted scenario allowance for ECL. The allowance for ECL
sensitivity to the other scenarios includes changes in allowance for
ECL due to the levels of loss and the migration of additional lending
balances in or out of stage 2.
Group ECL sensitivity results
The allowance for ECL of the scenarios and management judgemental
adjustments is highly sensitive to movements in economic forecasts.
Based upon the sensitivity tables presented above, if the Group allowance
for ECL balance was estimated solely on the basis of the Central scenario,
Downside scenario or the Downside 2 scenario at 31\u00a0December 2024, it
would increase/(decrease) as presented in the below table.
Total Group ECL at 31 December 2024
Retail1
Wholesale1
$bn
$bn
Reported allowance for ECL
2.4
2.2
Scenarios
100% Consensus Central scenario
(0.1)
(0.2)
100% Consensus Upside scenario
(0.1)
(0.6)
100% Consensus Downside scenario
0.0
0.7
100% Downside 2 scenario
1.5
4.3
Total Group ECL at 31 December 2023
Reported allowance for ECL
3.0
2.5
Scenarios
100% Consensus Central scenario
(0.1)
(0.2)
100% Consensus Upside scenario
(0.5)
(0.7)
100% Consensus Downside scenario
0.4
0.8
100% Downside 2 scenario
2.1
4.5
1On the same basis as retail and wholesale sensitivity analysis.
At 31 December 2024, the Group allowance for ECL decreased in the
retail portfolio by $0.6bn and decreased by $0.3bn in the wholesale
portfolio, compared with 31 December 2023.
There was also a reduction in allowance for ECL sensitivity across all
scenarios within the retail and wholesale portfolios since
31\u00a0December 2023, primarily as a result of the sale of our Canada
banking business, the sale of our retail banking operations in France,
and various other business sales during the first half of 2024.
For the wholesale portfolio this was the main driver of the decrease in
Downside 2 ECL sensitivity.
For the retail portfolios the ECL sensitivity decrease across all
scenarios including the Downside 2 was also primarily due to the
reduction of management judgemental adjustments, model
redevelopments and scenario evolution.
Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL
Wholesale
Retail
Total
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
Included in sensitivity analysis
1,958,010
(2,205)
392,361
(2,413)
2,350,371
(4,618)
\u2013\u00a0 Exclusions from sensitivity as described in the
section above1
20,409
(5,419)
309,178
(124)
329,587
(5,543)
\u2013\u00a0 Debt instruments measured at fair value through
other comprehensive income2
(346,124)
54
\u2014
\u2014
(346,124)
54
\u2013\u00a0 Performance guarantees2
(92,722)
311
\u2014
\u2014
(92,722)
311
\u2013\u00a0 Other financial assets at amortised cost not
presented as wholesale or personal lending, including
held for sale2
(568,668)
141
(130)
\u2014
(568,798)
141
\u2013\u00a0 Other3
5,978
(441)
498
(9)
6,476
(450)
As reported in the Summary of credit risk
(excluding debt instruments measured at FVOCI) by
stage distribution and ECL coverage by industry
sector at 31 Dec 2024
976,883
(7,559)
701,907
(2,546)
1,678,790
(10,105)
Other financial assets at amortised cost
828,580
(92)
Total reported in the Summary of credit risk
(excluding debt instruments measured at FVOCI) by
stage distribution and ECL coverage by industry
sector at 31 Dec 2024
2,507,370
(10,197)
Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL (continued)
Wholesale
Retail
Total
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
Included in sensitivity analysis
1,990,378
(2,507)
442,373
(2,962)
2,432,751
(5,469)
\u2013\u00a0 Exclusions from sensitivity as described in the
section above1
17,024
(6,237)
308,569
(93)
325,593
(6,330)
\u2013\u00a0 Debt instruments measured at fair value through
other comprehensive income2
(302,348)
97
\u2014
\u2014
(302,348)
97
\u2013\u00a0 Performance guarantees2
(93,312)
35
\u2014
\u2014
(93,312)
35
\u2013\u00a0 Other financial assets at amortised cost not
presented as wholesale or personal lending, including
held for sale2
(579,534)
93
(41,129)
174
(620,663)
267
\u2013\u00a0 Other3
2,704
(84)
(4,175)
(11)
(1,471)
(95)
As reported in the Summary of credit risk (excluding
debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at 31
Dec 2023
1,034,912
(8,603)
705,638
(2,892)
1,740,550
(11,495)
Other financial assets at amortised cost
960,271
(422)
Total reported in the Summary of credit risk (excluding
debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at 31
Dec 2023
2,700,821
(11,917)
1Comprises wholesale defaulted obligors, retail portfolios utilising less complex modelling approaches, private banking and insurance.
2The sensitivity analysis includes certain items reported in Other assets at amortised cost, which are not allocated to an industry in the credit tables. It also
includes FVOCI and performance guarantees, which are presented separately in the credit tables.
3Includes FX and other operational variances.
Reconciliations 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 by stage of the
Group\u2019s gross carrying/nominal amount and allowances for loans and
advances to banks and customers, including loan commitments and
financial guarantees.
In addition, a reconciliation by stage of the Group\u2019s gross carrying
amount and allowances for loans and advances to banks and
customers and a reconciliation by stage of the Group\u2019s nominal
amount and allowances for loan commitments and financial
guarantees, were included in this section following adoption of the
recommendations of the third report from The Taskforce on
Disclosures about Expected Credit Losses (\u2018DECL\u2019).
Movements are calculated on a quarterly basis and therefore fully
capture stage movements between quarters. If movements were
calculated on a year-to-date basis they would only reflect the opening
and closing position of the financial instrument.
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 transfer of stage
represents the increase or decrease due to these transfers, for
example, moving from a 12-month (stage 1) to a lifetime (stage 2)
ECL measurement basis. Net remeasurement excludes the
underlying customer risk rating (\u2018CRR\u2019)/probability of default (\u2018PD\u2019)
movements of the financial instruments transferring stage. This is
captured, along with other credit quality movements in the \u2018changes
to risk parameters \u2013 credit quality\u2019 line item.
Changes in \u2018Net new and further lending/repayments\u2019 represents the
impact from volume movements within the Group\u2019s lending portfolio
and includes \u2018New financial assets originated or purchased\u2019, \u2018assets
derecognised (including final repayments)\u2019 and \u2018changes to risk
parameters \u2013 further lending/repayment\u2019.
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including
loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
1,496,805
(1,300)
153,084
(3,102)
20,799
(7,063)
85
(30)
1,670,773
(11,495)
Transfers of financial
instruments:
(19,629)
(1,259)
6,652
2,302
12,977
(1,043)
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 1 to
stage 2
(116,211)
419
116,211
(419)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 2 to
stage 1
98,731
(1,627)
(98,731)
1,627
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(2,799)
16
(12,230)
1,321
15,029
(1,337)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
650
(67)
1,402
(227)
(2,052)
294
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of
stage
\u2014
959
\u2014
(831)
\u2014
(144)
\u2014
\u2014
\u2014
(16)
Changes due to
modifications not
derecognised
\u2014
\u2014
\u2014
\u2014
(25)
\u2014
\u2014
\u2014
(25)
\u2014
Net new and further
lending/repayments
87,833
(168)
(37,731)
589
(5,246)
1,689
7
(7)
44,863
2,103
Changes to risk parameters
\u2013 credit quality
\u2014
363
\u2014
(1,773)
\u2014
(3,945)
\u2014
(11)
\u2014
(5,366)
Changes to models used
for ECL calculation
\u2014
68
\u2014
(4)
\u2014
(20)
\u2014
\u2014
\u2014
44
Assets written off
\u2014
\u2014
\u2014
\u2014
(4,459)
4,459
\u2014
\u2014
(4,459)
4,459
Credit-related modifications
that resulted in
derecognition
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and
others1, 2, 3
(75,322)
105
(6,107)
145
(223)
(81)
1
(3)
(81,651)
166
At 31 Dec 2024
1,489,687
(1,232)
115,898
(2,674)
23,823
(6,148)
93
(51)
1,629,501
(10,105)
ECL income statement
change for the period
1,222
(2,019)
(2,420)
(18)
(3,235)
Recoveries
260
Others
(158)
Total ECL income
statement change for the
period
(3,133)
1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance
for ECL of $46m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
2Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
At 31 Dec 2024
12 months ended
31 Dec 2024
Gross carrying/
nominal amount
Allowance for ECL
ECL charge
\u00a0
$m
$m
$m
As above
1,629,501
(10,105)
(3,133)
Other financial assets measured at amortised cost
828,580
(92)
(114)
Non-trading reverse purchase agreement commitments
49,289
\u2014
\u2014
Performance and other guarantees not considered for IFRS 9
\u2014
\u2014
(173)
Summary of financial instruments to which the impairment requirements in IFRS 9 are
applied/Summary consolidated income statement
2,507,370
(10,197)
(3,420)
Debt instruments measured at FVOCI
346,124
(54)
6
Total allowance for ECL/total income statement ECL change for the period
n/a
(10,251)
(3,414)
As shown in the previous table, the allowance for ECL for loans and
advances to customers and banks and relevant loan commitments
and financial guarantees decreased $1,390m during the period from
$11,495m at 31 December 2023 to $10,105m at 31\u00a0December 2024.
This decrease was driven by:
\u2013 $4,459m of assets written off;
\u2013 $2,103m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayment;
\u2013 foreign exchange and other movements of $166m; and
\u2013 $44m of changes to models used for ECL calculation.
These were partly offset by:
\u2013 $5,366m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages; and
\u2013 $16m relating to the net remeasurement impact of stage
transfers.
The ECL charge for the period of $3,235m presented in the previous
table consisted of $5,366m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages and $16m relating to the net remeasurement impact
of stage transfers.
This was partly offset by $2,103m relating to underlying net book
volume movement and $44m in changes to models used for ECL
calculation.
Summary views of the movement in wholesale and personal lending
are presented on pages 173 and 185.
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including
loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
1,433,643
(1,257)
177,223
(3,710)
21,207
(6,949)
129
(38)
1,632,202
(11,954)
Transfers of financial instruments:
(18,948)
(1,048)
10,286
2,228
8,662
(1,180)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to
stage 2
(150,728)
442
150,728
(442)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to
stage 1
133,079
(1,467)
(133,079)
1,467
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(1,986)
23
(8,600)
1,379
10,586
(1,402)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
687
(46)
1,237
(176)
(1,924)
222
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
917
\u2014
(973)
\u2014
(124)
\u2014
\u2014
\u2014
(180)
Net new and further lending/
repayments
77,693
(185)
(36,795)
661
(4,956)
1,117
(36)
3
35,906
1,596
Changes to risk parameters \u2013
credit quality
\u2014
307
\u2014
(1,262)
\u2014
(3,896)
\u2014
21
\u2014
(4,830)
Changes to models used for ECL
calculation
\u2014
(22)
\u2014
46
\u2014
7
\u2014
\u2014
\u2014
31
Assets written off
\u2014
\u2014
\u2014
\u2014
(3,922)
3,922
\u2014
\u2014
(3,922)
3,922
Credit-related modifications that
resulted in derecognition
\u2014
\u2014
\u2014
\u2014
(119)
95
\u2014
\u2014
(119)
95
Foreign exchange and others1
4,417
(12)
2,370
(92)
(73)
(55)
(8)
(16)
6,706
(175)
At 31 Dec 2023
1,496,805
(1,300)
153,084
(3,102)
20,799
(7,063)
85
(30)
1,670,773
(11,495)
ECL income statement change for
the period
1,017
(1,528)
(2,896)
24
(3,383)
Recoveries
268
Others
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(195)
Total ECL income statement
change for the period
(3,310)
1Total includes $7.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance
for ECL of $70m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
(Audited)
At 31 Dec 2023
12 months ended
31 Dec 2023
Gross carrying/
nominal amount
Allowance for
ECL
ECL charge
\u00a0
$m
$m
$m
As above
1,670,773
(11,495)
(3,310)
Other financial assets measured at amortised cost
960,271
(422)
(35)
Non-trading reverse purchase agreement commitments
69,777
\u2014
\u2014
Performance and other guarantees not considered for IFRS 9
\u2014
\u2014
(44)
Summary of financial instruments to which the impairment requirements in IFRS 9 are
applied/Summary consolidated income statement
2,700,821
(11,917)
(3,389)
Debt instruments measured at FVOCI
302,348
(97)
(58)
Total allowance for ECL/total income statement ECL change for the period
n/a
(12,014)
(3,447)
Credit quality
Credit quality of financial instruments
(Audited)
We assess the credit quality of all financial instruments that are
subject to credit risk. The credit quality of financial instruments is a
point-in-time assessment of PD, whereas stages 1 and 2 are
determined based on relative deterioration of credit quality since initial
recognition for the majority of portfolios. Accordingly, for non-credit-
impaired financial instruments, there is no direct relationship between
the credit quality assessment and stages 1 and 2, although typically
the lower credit quality bands exhibit a higher proportion in stage 2.
The five credit quality classifications provided below each encompass
a range of granular internal credit rating grades assigned to wholesale
and personal lending businesses and the external ratings attributed by
external agencies to debt securities, as shown in the table on
page\u00a0139.
Distribution of financial instruments by credit quality at 31 December 2024
(Audited)
Gross carrying/notional amount
Allowance
for ECL/
other credit
provisions
Net
Strong
Good
Satisfactory
Sub-
standard
Credit
impaired
Total
$m
$m
$m
$m
$m
$m
$m
$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at
amortised cost
515,266
193,080
186,416
22,906
22,705
940,373
(9,715)
930,658
\u2013\u00a0 personal
360,317
53,595
27,774
1,979
3,560
447,225
(2,524)
444,701
\u2013\u00a0 corporate and commercial
114,504
118,785
138,705
20,224
18,466
410,684
(6,755)
403,929
\u2013\u00a0 non-bank financial institutions
40,445
20,700
19,937
703
679
82,464
(436)
82,028
Loans and advances to banks held at amortised
cost
92,621
4,255
5,040
134
2
102,052
(13)
102,039
Cash and balances at central banks
266,713
949
12
\u2014
\u2014
267,674
\u2014
267,674
Hong Kong Government certificates of
indebtedness
42,293
\u2014
\u2014
\u2014
\u2014
42,293
\u2014
42,293
Reverse repurchase agreements \u2013 non-trading
155,831
70,877
25,799
42
\u2014
252,549
\u2014
252,549
Financial investments
146,970
3,681
3,331
\u2014
\u2014
153,982
(9)
153,973
Assets held for sale
2,425
458
367
1
22
3,273
(4)
3,269
Other assets
88,338
9,735
10,151
454
131
108,809
(79)
108,730
\u2013\u00a0 endorsements and acceptances
2,101
2,663
3,090
243
10
8,107
(14)
8,093
\u2013\u00a0 accrued income and other
86,237
7,072
7,061
211
121
100,702
(65)
100,637
Debt instruments measured at fair value
through\u00a0other comprehensive income1
336,313
9,448
7,768
380
\u2014
353,909
(54)
353,855
Out-of-scope for IFRS 9 ECL
Trading assets
119,546
21,951
15,804
2,300
47
159,648
\u2014
159,648
Other financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
53,282
11,862
4,390
231
11
69,776
\u2014
69,776
Derivatives
224,870
34,124
9,373
258
12
268,637
\u2014
268,637
Assets held for sale
3,019
\u2014
\u2014
\u2014
\u2014
3,019
\u2014
3,019
Total gross carrying amount on balance sheet
2,047,487
360,420
268,451
26,706
22,930
2,725,994
(9,874)
2,716,120
Percentage of total credit quality (%)
75.1
13.2
9.9
1.0
0.8
100
Loan and other credit-related commitments
400,120
131,396
77,220
9,670
961
619,367
(348)
619,019
Financial guarantees
7,365
4,263
4,399
723
248
16,998
(29)
16,969
In-scope: Irrevocable loan commitments and
financial guarantees
407,485
135,659
81,619
10,393
1,209
636,365
(377)
635,988
Loan and other credit-related commitments
96,952
76,340
65,619
2,847
453
242,211
\u2014
242,211
Performance and other guarantees
39,940
32,956
17,339
1,671
817
92,723
(312)
92,411
Out-of-scope: Revocable loan commitments
and non-financial guarantees
136,892
109,296
82,958
4,518
1,270
334,934
(312)
334,622
1For 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.
Distribution of financial instruments by credit quality at 31 December 2023
(Audited)
Gross carrying/notional amount
Allowance
for ECL/
other credit
provisions
Net
Strong
Good
Satisfactory
Sub-
standard
Credit
impaired
Total
$m
$m
$m
$m
$m
$m
$m
$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at
amortised cost
497,665
206,476
197,582
28,532
19,354
949,609
(11,074)
938,535
\u2013\u00a0 personal
346,562
62,656
32,314
2,485
3,505
447,522
(2,867)
444,655
\u2013\u00a0 corporate and commercial
118,123
123,713
145,249
25,531
15,039
427,655
(7,803)
419,852
\u2013\u00a0 non-bank financial institutions
32,980
20,107
20,019
516
810
74,432
(404)
74,028
Loans and advances to banks held at amortised
cost
101,057
4,640
6,363
855
2
112,917
(15)
112,902
Cash and balances at central banks
284,723
1,068
77
\u2014
\u2014
285,868
\u2014
285,868
Hong Kong Government certificates of
indebtedness
42,024
\u2014
\u2014
\u2014
\u2014
42,024
\u2014
42,024
Reverse repurchase agreements \u2013\u00a0 non-trading
170,494
46,884
34,206
633
\u2014
252,217
\u2014
252,217
Financial investments
143,333
3,814
1,137
62
\u2014
148,346
(20)
148,326
Assets held for sale
68,501
16,403
14,812
2,939
531
103,186
(324)
102,862
Other assets
106,184
11,982
9,965
366
133
128,630
(78)
128,552
\u2013\u00a0 endorsements and acceptances
2,405
2,666
2,707
161
18
7,957
(18)
7,939
\u2013\u00a0 accrued income and other
103,779
9,316
7,258
205
115
120,673
(60)
120,613
Debt instruments measured at fair value through
other comprehensive income 1
288,959
12,037
7,897
805
5
309,703
(97)
309,606
Out-of-scope for IFRS 9 ECL
Trading assets
122,695
20,595
20,746
1,326
135
165,497
\u2014
165,497
Other financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
52,649
11,517
4,733
84
6
68,989
\u2014
68,989
Derivatives
196,098
27,377
6,041
187
11
229,714
\u2014
229,714
Assets held for sale
12,495
\u2014
\u2014
\u2014
\u2014
12,495
\u2014
12,495
Total gross carrying amount on balance sheet
2,086,877
362,793
303,559
35,789
20,177
2,809,195
(11,608)
2,797,587
Percentage of total credit quality (%)
74.3
12.9
10.8
1.3
0.7
100
Loan and other credit-related commitments
436,359
142,500
73,230
7,782
1,144
661,015
(367)
660,648
Financial guarantees
7,700
4,146
4,080
699
384
17,009
(39)
16,970
In-scope: Irrevocable loan commitments and
financial guarantees
444,059
146,646
77,310
8,481
1,528
678,024
(406)
677,618
Loan and other credit-related commitments
92,509
77,891
61,462
3,896
377
236,135
\u2014
236,135
Performance and other guarantees
39,784
32,231
19,445
1,853
964
94,277
(145)
94,132
Out-of-scope: Revocable loan commitments and
non-financial guarantees
132,293
110,122
80,907
5,749
1,341
330,412
(145)
330,267
1For 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.
Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
(Audited)
Gross carrying/notional amount
Allowance\u00a0
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
515,266
193,080
186,416
22,906
22,705
940,373
(9,715)
930,658
\u2013\u00a0 stage 1
498,415
170,420
150,818
4,767
\u2014
824,420
(1,078)
823,342
\u2013\u00a0 stage 2
16,851
22,660
35,598
18,139
\u2014
93,248
(2,546)
90,702
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
22,615
22,615
(6,040)
16,575
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
90
90
(51)
39
Loans and advances to banks at amortised cost
92,621
4,255
5,040
134
2
102,052
(13)
102,039
\u2013\u00a0 stage 1
92,528
4,226
4,981
117
\u2014
101,852
(9)
101,843
\u2013\u00a0 stage 2
93
29
59
17
\u2014
198
(2)
196
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
2
2
(2)
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Other financial assets measured at amortised cost
702,570
85,700
39,660
497
153
828,580
(92)
828,488
\u2013\u00a0 stage 1
702,373
85,032
38,977
239
\u2014
826,621
(64)
826,557
\u2013\u00a0 stage 2
197
668
683
258
\u2014
1,806
(5)
1,801
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
153
153
(23)
130
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loan and other credit-related commitments
400,120
131,396
77,220
9,670
961
619,367
(348)
619,019
\u2013\u00a0 stage 1
398,779
125,956
67,949
4,547
\u2014
597,231
(137)
597,094
\u2013\u00a0 stage 2
1,341
5,440
9,271
5,123
\u2014
21,175
(121)
21,054
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
958
958
(90)
868
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
3
3
\u2014
3
Financial guarantees
7,365
4,263
4,399
723
248
16,998
(29)
16,969
\u2013\u00a0 stage 1
7,352
4,192
3,625
184
\u2014
15,353
(8)
15,345
\u2013\u00a0 stage 2
13
71
774
539
\u2014
1,397
(5)
1,392
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
248
248
(16)
232
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2024
1,717,942
418,694
312,735
33,930
24,069
2,507,370
(10,197)
2,497,173
Debt instruments at FVOCI1
\u2013\u00a0 stage 1
336,264
9,448
7,290
\u2014
\u2014
353,002
(31)
352,971
\u2013\u00a0 stage 2
49
\u2014
478
380
\u2014
907
(23)
884
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2024
336,313
9,448
7,768
380
\u2014
353,909
(54)
353,855
Loans and advances to customers at amortised cost
497,665
206,476
197,582
28,532
19,354
949,609
(11,074)
938,535
\u2013\u00a0 stage 1
478,422
177,410
147,940
5,612
\u2014
809,384
(1,130)
808,254
\u2013\u00a0 stage 2
19,243
29,066
49,642
22,920
\u2014
120,871
(2,964)
117,907
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
19,273
19,273
(6,950)
12,323
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
81
81
(30)
51
Loans and advances to banks at amortised cost
101,057
4,640
6,363
855
2
112,917
(15)
112,902
\u2013\u00a0 stage 1
101,011
4,631
5,550
287
\u2014
111,479
(10)
111,469
\u2013\u00a0 stage 2
46
9
813
568
\u2014
1,436
(3)
1,433
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
2
2
(2)
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Other financial assets measured at amortised cost
815,259
80,151
60,197
4,000
664
960,271
(422)
959,849
\u2013\u00a0 stage 1
814,776
78,486
53,095
516
\u2014
946,873
(109)
946,764
\u2013\u00a0 stage 2
483
1,665
7,102
3,484
\u2014
12,734
(132)
12,602
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
664
664
(181)
483
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loan and other credit-related commitments
436,359
142,500
73,230
7,782
1,144
661,015
(367)
660,648
\u2013\u00a0 stage 1
432,017
135,192
61,213
2,527
\u2014
630,949
(153)
630,796
\u2013\u00a0 stage 2
4,342
7,308
12,017
5,255
\u2014
28,922
(128)
28,794
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
1,140
1,140
(86)
1,054
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
4
4
\u2014
4
Financial guarantees
7,700
4,146
4,080
699
384
17,009
(39)
16,970
\u2013\u00a0 stage 1
7,497
3,943
3,204
102
\u2014
14,746
(7)
14,739
\u2013\u00a0 stage 2
203
203
876
597
\u2014
1,879
(7)
1,872
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
384
384
(25)
359
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
1,858,040
437,913
341,452
41,868
21,548
2,700,821
(11,917)
2,688,904
Debt instruments at FVOCI1
\u2013\u00a0 stage 1
288,909
12,037
7,579
\u2014
\u2014
308,525
(37)
308,488
\u2013\u00a0 stage 2
50
\u2014
318
805
\u2014
1,173
(59)
1,114
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
5
5
(1)
4
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
288,959
12,037
7,897
805
5
309,703
(97)
309,606
1For 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.
Credit-impaired loans
(Audited)
We determine that a financial instrument is credit impaired and in
stage 3 by considering relevant objective evidence, primarily whether:
\u2013 contractual payments of either principal or interest are past due for
more than 90 days;
\u2013 there are other indications that the borrower is unlikely to pay,
such as when a concession has been granted to the borrower for
economic or legal reasons relating to the borrower\u2019s financial
condition; and
\u2013 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
\u00a0 \u00a0 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.
Wholesale lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and
customers including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
845,982
(698)
102,129
(1,668)
16,939
(6,207)
85
(30)
965,135
(8,603)
Transfers of financial
instruments:
(17,606)
(214)
6,997
825
10,609
(611)
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 1 to
stage 2
(70,991)
173
70,991
(173)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 2 to
stage 1
55,182
(380)
(55,182)
380
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(2,056)
7
(9,515)
636
11,571
(643)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
259
(14)
703
(18)
(962)
32
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
214
\u2014
(226)
\u2014
(12)
\u2014
\u2014
\u2014
(24)
Net new and further lending/
repayments
58,044
(151)
(29,842)
311
(4,450)
1,219
7
(7)
23,759
1,372
Change to risk parameters \u2013
credit quality
\u2014
112
\u2014
(899)
\u2014
(2,508)
\u2014
(11)
\u2014
(3,306)
Changes to models used for
ECL calculation
\u2014
39
\u2014
105
\u2014
\u2014
\u2014
\u2014
\u2014
144
Assets written off
\u2014
\u2014
\u2014
\u2014
(2,925)
2,925
\u2014
\u2014
(2,925)
2,925
Credit-related modifications
that resulted in derecognition
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and
others1 2 3
(53,384)
53
(4,996)
36
4
(153)
1
(3)
(58,375)
(67)
At 31 Dec 2024
833,036
(645)
74,288
(1,516)
20,177
(5,347)
93
(51)
927,594
(7,559)
ECL income statement
change for the period
214
(709)
(1,301)
(18)
(1,814)
Recoveries
40
Others
(126)
Total ECL income statement
change for the period
(1,900)
1Total includes $2.9bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $23m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for
sale\u2019 on page 411.
2Total includes $28.9bn of nominal amount and $20m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $0.3bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
As shown in the above table, the allowance for ECL for loans and
advances to customers and banks and relevant loan commitments
and financial guarantees decreased by $1,044m during the period
from $8,603m at 31 December 2023 to $7,559m at 31 December
2024.
This decrease was driven by:
\u2013 $2,925m of assets written off;
\u2013 $1,372m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayments; and
\u2013 $144m relating to changes to models used for ECL calculation.
These were partly offset by:
\u2013 $3,306m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages;
\u2013 foreign exchange and other movements of $67m; and
\u2013 $24m relating to the net remeasurement impact of stage
transfers.
The ECL charge for the period of $1,814m presented in the previous
table consisted of $3,306m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages and $24m relating to the net remeasurement impact
of stage transfers. This was partly offset by $1,372m relating to
underlying net book volume movement and $144m in changes to
models used for ECL calculation.
During the period, there was a net transfer between stage 1 and
stage 2 of $15,809m gross carrying/nominal amounts. It was primarily
driven by our entities in Asia ($12,878m), mainly due to deterioration
in the real estate and construction sectors, and in our main entity in
the US ($1,986m) and Mexico ($1,805m), partly offset by
improvements in the economic outlook that led to upgrades to stage
1 exposures, primarily in our legal entities in the UK($3,077m).
A summary of basis of preparation is available on page 161.
Wholesale lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and
customers including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
830,322
(670)
124,660
(2,205)
17,068
(6,144)
129
(38)
972,179
(9,057)
Transfers of financial instruments:
(16,804)
(429)
10,247
1,141
6,557
(712)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to
stage 2
(93,511)
172
93,511
(172)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to
stage 1
77,772
(605)
(77,772)
605
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(1,444)
20
(6,255)
765
7,699
(785)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
379
(16)
763
(57)
(1,142)
73
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
354
\u2014
(294)
\u2014
(45)
\u2014
\u2014
\u2014
15
Net new and further lending/
repayments
43,282
(138)
(32,082)
311
(3,787)
973
(36)
3
7,377
1,149
Changes to risk parameters \u2013
credit quality
\u2014
203
\u2014
(621)
\u2014
(2,941)
\u2014
21
\u2014
(3,338)
Changes to models used for ECL
calculation
\u2014
(9)
\u2014
25
\u2014
\u2014
\u2014
\u2014
\u2014
16
Assets written off
\u2014
\u2014
\u2014
\u2014
(2,596)
2,596
(2,596)
2,596
Credit-related modifications that
resulted in derecognition
\u2014
\u2014
\u2014
\u2014
(119)
95
\u2014
\u2014
(119)
95
Foreign exchange and others1
(10,818)
(9)
(696)
(25)
(184)
(29)
(8)
(16)
(11,706)
(79)
At 31 Dec 2023
845,982
(698)
102,129
(1,668)
16,939
(6,207)
85
(30)
965,135
(8,603)
ECL income statement change
for the period
410
(579)
(2,013)
24
(2,158)
Recoveries
42
Others
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(203)
Total ECL income statement
change for the period
(2,319)
1Total includes $13.5bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $61m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for
sale\u2019 on page 411.
Mainland China commercial real estate
(Audited)
Hong Kong
Mainland China
Rest of the Group
Total
$m
$m
$m
$m
Loans and advances to customers1
3,161
3,694
303
7,158
Guarantees issued and others2
80
16
5
101
Total mainland China commercial real estate exposure at 31 Dec 2024
3,241
3,710
308
7,259
Distribution of mainland China commercial real estate exposure by
credit quality
Strong
118
1,817
109
2,044
Good
578
595
1
1,174
Satisfactory
196
899
49
1,144
Sub-standard
777
136
149
1,062
Credit impaired
1,572
263
\u2014
1,835
At 31 Dec 2024
3,241
3,710
308
7,259
Allowance for ECL by credit quality
Strong
\u2014
(4)
\u2014
(4)
Good
\u2014
(3)
\u2014
(3)
Satisfactory
\u2014
(13)
\u2014
(13)
Sub-standard
(261)
(30)
(17)
(308)
Credit impaired
(749)
(81)
\u2014
(830)
At 31 Dec 2024
(1,010)
(131)
(17)
(1,158)
Allowance for ECL by stage distribution
Stage 1
\u2014
(9)
\u2014
(9)
Stage 2
(261)
(41)
(17)
(319)
Stage 3
(743)
(81)
\u2014
(824)
POCI
(6)
\u2014
\u2014
(6)
At 31 Dec 2024
(1,010)
(131)
(17)
(1,158)
ECL coverage %
31.2
3.5
5.5
16.0
Loans and advances to customers1
6,033
4,917
839
11,789
Guarantees issued and others2
255
66
37
358
Total mainland China commercial real estate exposure at 31 Dec 2023
6,288
4,983
876
12,147
Distribution of mainland China commercial real estate exposure by
credit quality
Strong
781
1,723
6
2,510
Good
604
953
421
1,978
Satisfactory
679
1,704
261
2,644
Sub-standard
1,298
327
188
1,813
Credit impaired
2,926
276
\u2014
3,202
At 31 Dec 2023
6,288
4,983
876
12,147
Allowance for ECL by credit quality
Strong
\u2014
(3)
\u2014
(3)
Good
\u2014
(5)
(1)
(6)
Satisfactory
(3)
(27)
\u2014
(30)
Sub-standard
(66)
(87)
(16)
(169)
Credit impaired
(1,726)
(125)
\u2014
(1,851)
At 31 Dec 2023
(1,795)
(247)
(17)
(2,059)
Allowance for ECL by stage distribution
Stage 1
\u2014
(10)
\u2014
(10)
Stage 2
(69)
(112)
(17)
(198)
Stage 3
(1,726)
(125)
\u2014
(1,851)
At 31 Dec 2023
(1,795)
(247)
(17)
(2,059)
ECL coverage %
28.5
5.0
1.9
17.0
1Amounts represent gross carrying amount.
2Amounts represent nominal amount for guarantees and other contingent liabilities.
Collateral and other credit enhancements
(Audited)
Although collateral can be an important mitigant of credit risk, it is the
Group\u2019s practice to lend on the basis of the customer\u2019s ability to meet
their obligations out of cash flow resources rather than placing
primary reliance on collateral and other credit risk enhancements.
Depending on the customer\u2019s standing and the type of product,
facilities may be provided without any collateral or other credit
enhancements. For other lending, a charge over collateral is obtained
and considered in determining the credit decision and pricing. In the
event of default, the Group may utilise the collateral as a source of
repayment.
Depending on its form, collateral can have a significant financial effect
in mitigating our exposure to credit risk. Where there is sufficient
collateral, an expected credit loss is not recognised. This is the case
for reverse repurchase agreements and for certain loans and
advances to customers where the loan to value (\u2018LTV\u2019) is very low.
Mitigants may include a charge on borrowers\u2019 specific assets, such as
real estate or financial instruments. Other credit risk mitigants include
short positions in securities and financial assets held as part of linked
insurance/investment contracts where the risk is predominantly borne
by the policyholder. Additionally, risk may be managed by employing
other types of collateral and credit risk enhancements, such as
second charges, other liens and unsupported guarantees. Guarantees
are normally taken from corporates and export credit agencies.
Corporates would normally provide guarantees as part of a parent/
subsidiary relationship and span a number of credit grades. The export
credit agencies will normally be investment grade.
Certain credit mitigants are used strategically in portfolio management
activities. While single name concentrations arise in portfolios
managed by Global Banking and Corporate Banking, it is only in Global
Banking that their size requires the use of portfolio level credit
mitigants. Across Global Banking, risk limits and utilisations, maturity
profiles and risk quality are monitored and managed proactively. This
process is key to the setting of risk appetite for these larger, more
complex, geographically distributed customer groups. While the
principal form of risk management continues to be at the point of
exposure origination, through the lending decision-making process,
Global Banking also utilises loan sales and credit default swap (\u2018CDS\u2019)
hedges to manage concentrations and reduce risk.
These transactions are the responsibility of a dedicated Global
Banking portfolio management team. Hedging activity is carried out
within agreed credit parameters, and is subject to market risk limits
and a robust governance structure. Where applicable, CDSs are
entered into directly with a central clearing house counterparty.
Otherwise, the Group\u2019s exposure to CDS protection providers is
diversified among mainly banking counterparties with strong credit
ratings.
CDS mitigants are held at portfolio level and are not included in the
expected credit loss calculations. CDS mitigants are not reported in
the following tables.
Collateral on loans and advances
Collateral held is analysed separately for commercial real estate and
for other corporate, commercial and financial (non-bank) lending. The
following tables include off-balance sheet loan commitments,
primarily undrawn credit lines.
The collateral measured in the following tables consists of fixed\u00a0first
charges on real estate, and charges over cash and marketable
financial instruments. The values in the tables represent the expected
market value on an open market basis, actual values realised are a
function of market conditions. No adjustment has been made to the
collateral for any expected costs of recovery. Marketable securities
are measured at their fair value.
Other types of collateral, such as unsupported guarantees and floating
charges over the assets of a customer\u2019s business, are not measured
in the following tables. While such mitigants have value, often
providing rights in insolvency, their assignable value is not sufficiently
certain and they are therefore assigned no value for disclosure
purposes.
The LTV ratios presented are calculated by directly associating loans
and advances with the collateral that individually and uniquely
supports each facility. When collateral assets are shared by multiple
loans and advances, whether specifically or, more generally, by way
of an all monies charge, the collateral value is pro-rated across the
loans and advances protected by the collateral.
For credit-impaired loans, the collateral values cannot be directly
compared with impairment allowances recognised. The LTV figures
use open market values with no adjustments, actual values realised
are a function of market conditions. Impairment allowances are
calculated on a different basis, by considering other cash flows and
adjusting collateral values for costs of realising collateral as explained
further on page 359.
Commercial real estate loans and advances
The value of commercial real estate collateral is determined by\u00a0using
a combination of external and internal valuations and\u00a0physical
inspections. For commercial real estate, where the facility exceeds
regulatory threshold requirements, Group policy requires an
independent review of the valuation at least every three years, or
more frequently as the need arises.
In Hong Kong, market practice is typically for lending to major
property companies to be either secured by guarantees or unsecured.
In Europe, facilities of a working capital nature are generally not
secured by a first fixed charge, and are therefore disclosed as not
collateralised.
Wholesale lending \u2013 commercial real estate loans and advances to customers including loan commitments by level of collateral for key
countries/territories (by stage)
(Audited)
Gross carrying/nominal amount
ECL coverage
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
$m
$m
$m
$m
$m
%
%
%
%
%
Not collateralised
36,168
4,709
1,704
\u2014
42,581
0.1
9.0
47.5
\u2014
3.0
Fully collateralised by LTV ratio
37,090
11,909
5,254
\u2014
54,253
0.1
1.7
7.8
\u2014
1.2
\u2013\u00a0 less than 50%
20,522
5,154
2,413
\u2014
28,089
0.1
1.7
5.7
\u2014
0.9
\u2013\u00a0 51% to 75%
11,392
3,840
1,691
\u2014
16,923
0.1
2.2
7.6
\u2014
1.3
\u2013\u00a0 76% to 90%
2,554
2,277
767
\u2014
5,598
0.1
0.9
12.5
\u2014
2.1
\u2013\u00a0 91% to 100%
2,622
638
383
\u2014
3,643
0.2
2.3
12.3
\u2014
1.8
Partially collateralised (A):\u00a0 LTV > 100%
2,119
698
815
64
3,696
0.2
2.8
19.7
45.8
5.8
\u2013\u00a0 collateral value on A
1,255
457
570
29
2,311
Total at 31 Dec 2024
75,377
17,316
7,773
64
100,530
0.1
3.8
17.7
45.8
2.1
of which: UK
Not collateralised
4,487
1,890
127
\u2014
6,504
0.4
3.8
27.8
\u2014
1.9
Fully collateralised by LTV ratio
9,139
3,194
305
\u2014
12,638
0.2
1.1
8.2
\u2014
0.6
\u2013\u00a0 less than 50%
2,903
761
160
\u2014
3,824
0.2
1.5
8.0
\u2014
0.8
\u2013\u00a0 51% to 75%
4,202
1,693
69
\u2014
5,964
0.2
1.2
12.0
\u2014
0.6
\u2013\u00a0 76% to 90%
1,173
732
24
\u2014
1,929
0.1
0.4
10.2
\u2014
0.3
\u2013\u00a0 91% to 100%
861
8
52
\u2014
921
0.1
7.7
2.7
\u2014
0.3
Partially collateralised (B):\u00a0 LTV > 100%
503
565
119
46
1,233
0.2
2.9
21.1
48.6
5.3
\u2013\u00a0 collateral value on B
296
350
69
26
741
Total UK at 31 Dec 2024
14,129
5,649
551
46
20,375
0.2
2.2
15.5
48.6
1.3
of which: Hong Kong
Not collateralised
16,380
2,312
1,404
\u2014
20,096
\u2014
14.3
47.9
\u2014
5.0
Fully collateralised by LTV ratio
17,115
6,045
4,127
\u2014
27,287
0.1
1.4
5.8
\u2014
1.2
\u2013\u00a0 less than 50%
12,935
3,589
2,102
\u2014
18,626
0.1
1.3
3.8
\u2014
0.7
\u2013\u00a0 51% to 75%
3,534
1,059
1,243
\u2014
5,836
0.1
2.2
6.2
\u2014
1.8
\u2013\u00a0 76% to 90%
336
1,050
654
\u2014
2,040
0.1
1.1
11.8
\u2014
4.4
\u2013\u00a0 91% to 100%
310
347
128
\u2014
785
\u2014
0.5
2.4
\u2014
0.6
Partially collateralised (C):\u00a0 LTV > 100%
185
62
562
18
827
\u2014
1.9
17.6
38.1
12.9
\u2013\u00a0 collateral value on C
119
41
397
3
560
Total Hong Kong at 31 Dec 2024
33,680
8,419
6,093
18
48,210
\u2014
4.9
16.6
38.1
3.0
Not collateralised
36,754
5,128
2,543
\u2014
44,425
0.1
3.9
72.4
\u2014
4.7
Fully collateralised by LTV ratio
46,212
15,177
1,963
\u2014
63,352
0.1
2.5
12.0
\u2014
1.0
\u2013\u00a0 less than 50%
24,391
7,413
574
\u2014
32,378
0.1
1.9
13.1
\u2014
0.7
\u2013\u00a0 51% to 75%
16,086
5,240
657
\u2014
21,983
0.1
3.1
9.3
\u2014
1.1
\u2013\u00a0 76% to 90%
3,140
1,437
454
\u2014
5,031
0.1
3.5
11.8
\u2014
2.1
\u2013\u00a0 91% to 100%
2,595
1,087
278
\u2014
3,960
0.2
2.3
16.6
\u2014
1.9
Partially collateralised (A):\u00a0 LTV > 100%
7,075
1,487
156
50
8,768
0.1
1.8
30.2
14.5
1.0
\u2013\u00a0 collateral value on A
4,004
1,061
115
26
5,206
Total at 31 Dec 2023
90,041
21,792
4,662
50
116,545
0.1
2.8
45.6
14.5
2.4
of which: UK
Not collateralised
4,644
1,288
97
\u2014
6,029
0.4
2.0
12.4
\u2014
0.9
Fully collateralised by LTV ratio
9,762
2,512
295
\u2014
12,569
0.1
1.3
13.9
\u2014
0.7
\u2013\u00a0 less than 50%
3,514
507
51
\u2014
4,072
0.1
1.9
21.6
\u2014
0.6
\u2013\u00a0 51% to 75%
4,826
1,418
103
\u2014
6,347
0.1
1.1
16.4
\u2014
0.6
\u2013\u00a0 76% to 90%
749
292
80
\u2014
1,121
0.1
1.3
14.9
\u2014
1.5
\u2013\u00a0 91% to 100%
673
295
61
\u2014
1,029
0.1
1.6
1.9
\u2014
0.6
Partially collateralised (B):\u00a0 LTV > 100%
1,580
239
82
35
1,936
0.1
1.1
34.2
20.7
2.0
\u2013\u00a0 collateral value on B
524
171
62
17
774
Total UK at 31 Dec 2023
15,986
4,039
474
35
20,534
0.2
1.5
17.1
20.7
0.9
of which: Hong Kong
Not collateralised
16,889
2,323
2,215
\u2014
21,427
\u2014
6.5
78.7
\u2014
8.8
Fully collateralised by LTV ratio
20,783
8,447
989
\u2014
30,219
\u2014
2.1
5.0
\u2014
0.8
\u2013\u00a0 less than 50%
15,425
5,604
294
\u2014
21,323
\u2014
1.5
1.4
\u2014
0.5
\u2013\u00a0 51% to 75%
4,102
2,140
312
\u2014
6,554
0.1
3.8
2.1
\u2014
1.4
\u2013\u00a0 76% to 90%
657
619
315
\u2014
1,591
0.1
1.8
8.0
\u2014
2.3
\u2013\u00a0 91% to 100%
599
84
68
\u2014
751
\u2014
0.1
20.5
\u2014
1.9
Partially collateralised (C):\u00a0 LTV > 100%
1,770
616
52
15
2,453
\u2014
0.8
24.5
\u2014
0.7
\u2013\u00a0 collateral value on C
1,569
535
39
8
2,151
Total Hong Kong at 31 Dec 2023
39,442
11,386
3,256
15
54,099
\u2014
2.9
55.5
\u2014
4.0
Wholesale lending \u2013 other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level
of collateral for key countries/territories (by stage)
(Audited)
Gross carrying/nominal amount
ECL coverage
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
$m
$m
$m
$m
$m
%
%
%
%
%
Not collateralised
713,028
62,844
6,870
5
782,747
0.1
0.9
41.5
14.2
0.5
Fully collateralised by LTV ratio
87,488
11,992
3,394
21
102,895
0.1
2.0
8.0
98.1
0.6
\u2013\u00a0 less than 50%
39,432
4,360
1,703
\u2014
45,495
0.1
1.6
6.9
\u2014
0.5
\u2013\u00a0 51% to 75%
20,169
4,643
778
21
25,611
0.1
2.8
12.0
98.1
1.0
\u2013\u00a0 76% to 90%
9,016
1,515
512
\u2014
11,043
0.1
1.6
7.1
\u2014
0.6
\u2013\u00a0 91% to 100%
18,871
1,474
401
\u2014
20,746
\u2014
0.8
6.3
\u2014
0.2
Partially collateralised (A):\u00a0 LTV > 100%
51,536
5,772
2,411
3
59,722
0.1
0.8
34.3
7.0
1.5
\u2013\u00a0 collateral value on A
22,800
2,519
1,162
1
26,482
Total at 31 Dec 2024
852,052
80,608
12,675
29
945,364
0.1
1.1
31.2
72.8
0.6
of which: UK
Not collateralised
134,075
10,822
2,661
4
147,562
0.1
2.5
32.4
\u2014
0.9
Fully collateralised by LTV ratio
24,552
3,046
968
\u2014
28,566
0.1
2.4
5.8
\u2014
0.6
\u2013\u00a0 less than 50%
9,183
1,288
473
\u2014
10,944
0.1
2.2
2.8
\u2014
0.5
\u2013\u00a0 51% to 75%
7,544
1,216
244
\u2014
9,004
0.1
2.7
7.0
\u2014
0.7
\u2013\u00a0 76% to 90%
2,942
367
129
\u2014
3,438
0.1
2.3
15.3
\u2014
0.9
\u2013\u00a0 91% to 100%
4,883
175
122
\u2014
5,180
0.1
2.1
5.3
\u2014
0.3
Partially collateralised (B):\u00a0 LTV > 100%
7,016
1,055
395
\u2014
8,466
0.2
1.3
10.8
\u2014
0.8
\u2013\u00a0 collateral value on B
3,832
581
252
\u2014
4,665
Total UK at 31 Dec 2024
165,643
14,923
4,024
4
184,594
0.1
2.4
23.9
\u2014
0.8
of which: Hong Kong
Not collateralised
117,849
6,389
1,313
\u2014
125,551
\u2014
0.6
58.1
\u2014
0.7
Fully collateralised by LTV ratio
28,291
5,866
1,877
21
36,055
0.1
2.1
5.3
98.1
0.7
\u2013\u00a0 less than 50%
14,500
1,774
903
\u2014
17,177
0.1
1.4
5.1
\u2014
0.5
\u2013\u00a0 51% to 75%
7,331
2,766
449
21
10,567
0.1
3.0
8.3
98.1
1.4
\u2013\u00a0 76% to 90%
2,896
752
372
\u2014
4,020
0.1
1.9
3.6
\u2014
0.7
\u2013\u00a0 91% to 100%
3,564
574
153
\u2014
4,291
\u2014
0.3
1.7
\u2014
0.1
Partially collateralised (C):\u00a0 LTV > 100%
17,125
1,535
1,048
\u2014
19,708
\u2014
0.4
46.8
\u2014
2.6
\u2013\u00a0 collateral value on C
6,741
627
639
\u2014
8,007
Total Hong Kong at 31 Dec 2024
163,265
13,790
4,238
21
181,314
\u2014
1.2
31.9
98.1
0.9
Not collateralised
672,142
76,261
7,702
8
756,113
0.1
0.9
40.0
6.8
0.6
Fully collateralised by LTV ratio
113,339
19,747
2,629
23
135,738
0.1
1.4
10.7
89.8
0.5
\u2013\u00a0 less than 50%
42,953
7,069
1,168
\u2014
51,190
0.1
1.5
11.8
\u2014
0.5
\u2013\u00a0 51% to 75%
24,011
8,222
887
\u2014
33,120
0.1
1.3
6.4
\u2014
0.6
\u2013\u00a0 76% to 90%
10,194
2,531
421
23
13,169
0.1
1.6
10.3
90.6
0.9
\u2013\u00a0 91% to 100%
36,181
1,925
153
\u2014
38,259
\u2014
1.1
27.6
\u2014
0.2
Partially collateralised (A):\u00a0 LTV > 100%
53,686
9,019
2,233
3
64,941
0.1
0.7
32.2
38.4
1.3
\u2013\u00a0 collateral value on A
24,505
4,266
993
1
29,765
Total at 31 Dec 2023
839,167
105,027
12,564
34
956,792
0.1
1.0
32.5
67.1
0.6
of which: UK
Not collateralised
117,824
20,401
3,423
\u2014
141,648
0.2
1.9
23.2
\u2014
1.0
Fully collateralised by LTV ratio
22,217
5,912
1,162
\u2014
29,291
0.1
1.7
3.7
\u2014
0.6
\u2013\u00a0 less than 50%
7,385
2,340
601
\u2014
10,326
0.1
1.2
1.3
\u2014
0.5
\u2013\u00a0 51% to 75%
6,966
2,292
434
\u2014
9,692
0.1
1.7
3.6
\u2014
0.7
\u2013\u00a0 76% to 90%
2,256
809
106
\u2014
3,171
0.2
2.5
15.8
\u2014
1.3
\u2013\u00a0 91% to 100%
5,610
471
21
\u2014
6,102
0.1
2.1
14.5
\u2014
0.3
Partially collateralised (B):\u00a0 LTV > 100%
6,335
1,732
299
\u2014
8,366
0.2
1.8
18.4
\u2014
1.2
\u2013\u00a0 collateral value on B
3,508
1,080
175
\u2014
4,763
Total UK at 31 Dec 2023
146,376
28,045
4,884
\u2014
179,305
0.2
1.8
18.3
\u2014
0.9
of which: Hong Kong
Not collateralised
114,025
7,523
906
\u2014
122,454
\u2014
0.4
57.5
\u2014
0.5
Fully collateralised by LTV ratio
32,857
8,918
877
22
42,674
0.1
1.3
6.6
94.7
0.5
\u2013\u00a0 less than 50%
16,175
2,898
230
\u2014
19,303
0.1
1.4
11.8
\u2014
0.4
\u2013\u00a0 51% to 75%
9,461
4,515
336
\u2014
14,312
0.1
1.2
3.1
\u2014
0.5
\u2013\u00a0 76% to 90%
4,245
863
253
22
5,383
0.1
1.8
2.0
94.7
0.9
\u2013\u00a0 91% to 100%
2,976
642
58
\u2014
3,676
\u2014
0.4
27.0
\u2014
0.5
Partially collateralised (C):\u00a0 LTV > 100%
16,152
2,887
704
\u2014
19,743
\u2014
0.6
30.2
\u2014
1.2
\u2013\u00a0 collateral value on C
6,619
1,306
318
\u2014
8,243
Total Hong Kong at 31 Dec 2023
163,034
19,328
2,487
22
184,871
0.1
0.8
31.8
94.7
0.6
Personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
650,823
(602)
50,955
(1,434)
3,860
(856)
705,638
(2,892)
Transfers of financial instruments:
(2,023)
(1,045)
(345)
1,477
2,368
(432)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(45,220)
246
45,220
(246)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
43,549
(1,247)
(43,549)
1,247
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(743)
9
(2,715)
685
3,458
(694)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
391
(53)
699
(209)
(1,090)
262
\u2014
\u2014
Net remeasurement of ECL arising from transfer
of stage
\u2014
745
\u2014
(605)
\u2014
(132)
\u2014
8
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(25)
\u2014
(25)
\u2014
Net new and further lending/repayments
29,789
(17)
(7,889)
278
(796)
470
21,104
731
Change to risk parameters \u2013 credit quality
\u2014
251
\u2014
(874)
\u2014
(1,437)
\u2014
(2,060)
Changes to models used for ECL calculation
\u2014
29
\u2014
(109)
\u2014
(20)
\u2014
(100)
Assets written off
\u2014
\u2014
\u2014
\u2014
(1,534)
1,534
(1,534)
1,534
Foreign exchange and others1,2,3
(21,938)
52
(1,111)
109
(227)
72
(23,276)
233
At 31 Dec 2024
656,651
(587)
41,610
(1,158)
3,646
(801)
701,907
(2,546)
ECL income statement change for the period
1,008
(1,310)
(1,119)
(1,421)
Recoveries
220
Others
(32)
Total ECL income statement change for the
period
(1,233)
1Total includes $0.8bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of
$23m, reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page\u00a0411.
2Total includes $6.4bn of nominal amount and $1m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $2.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
As shown in the above table, the allowance for ECL for loans and advances to customers and relevant loan commitments and financial
guarantees decreased by $346m during the period from $2,892m at 31\u00a0December 2023 to $2,546m at 31\u00a0December\u00a02024.
This decrease was driven by:
\u2013 $1,534m of assets written off;
\u2013 $731m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayment;
\u2013 foreign exchange and other movements of $233m; and
\u2013 $8m relating to the net remeasurement impact of stage transfers.
These were partly offset by:
\u2013 $2,060m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages; and
\u2013 $100m of changes to models used for ECL calculation.
The ECL charge for the period of $1,421m presented in the above
table consisted of $2,060m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages, and $100m relating to changes to models used for
the calculation of ECL. This was partly offset by $731m relating to
underlying net book volume movements and $8m relating to the net
remeasurement impact of stage transfer.
During the period, there was a net transfer between stage 1 and
stage 2 of $1,671m gross carrying/nominal amounts. This increase
was mainly driven by HSBC UK ( $3,410m) due to mortgages portfolio
and Mexico ($860m) due to a slight deterioration in unsecured lending
portfolio, partly offset by Hong Kong ($2,983m) due to improvement
in credit cards and other unsecured lending portfolio.
A summary of basis of preparation is available on page 161.
\"Arrows_WD.jpg\"
Personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
603,321
(587)
52,563
(1,505)
4,139
(805)
660,023
(2,897)
Transfers of financial instruments:
(2,144)
(619)
39
1,087
2,105
(468)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(57,217)
270
57,217
(270)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
55,307
(862)
(55,307)
862
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(542)
3
(2,345)
614
2,887
(617)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
308
(30)
474
(119)
(782)
149
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
563
\u2014
(679)
\u2014
(79)
\u2014
(195)
Net new and further lending/repayments
34,411
(47)
(4,713)
350
(1,169)
144
28,529
447
Change to risk parameters \u2013 credit quality
\u2014
104
\u2014
(641)
\u2014
(955)
\u2014
(1,492)
Changes to models used for ECL calculation
\u2014
(13)
\u2014
21
\u2014
7
\u2014
15
Assets written off
\u2014
\u2014
\u2014
\u2014
(1,326)
1,326
(1,326)
1,326
Foreign exchange and others1,2
15,235
(3)
3,066
(67)
111
(26)
18,412
(96)
At 31 Dec 2023
650,823
(602)
50,955
(1,434)
3,860
(856)
705,638
(2,892)
ECL income statement change for the period
607
(949)
(883)
(1,225)
Recoveries
226
Others
8
Total ECL income statement change for the period
(991)
1Total includes $7.8bn of gross carrying loans and advances and a corresponding allowance for ECL of $11m, due to the retention of certain balances previously
classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 \u2018Assets held for sale and liabilities of disposal groups
held for sale\u2019 on page 411.
2Total includes $2.0bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of
$20m, reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page\u00a0411.
First lien residential mortgages \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to
customers including loan commitments and financial guarantees
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
340,764
(109)
38,513
(202)
2,258
(264)
381,535
(575)
Transfers of financial instruments:
(3,561)
(232)
2,694
232
867
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(33,524)
23
33,524
(23)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
30,113
(244)
(30,113)
244
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(290)
6
(1,127)
90
1,417
(96)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
140
(17)
410
(79)
(550)
96
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
163
\u2014
(152)
\u2014
(30)
\u2014
(19)
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Net new and further lending/repayments
14,008
20
(6,336)
26
(523)
33
7,149
79
Change to risk parameters \u2013 credit quality
\u2014
115
\u2014
(73)
\u2014
(103)
\u2014
(61)
Changes to models used for ECL calculation
\u2014
(8)
\u2014
29
\u2014
1
\u2014
22
Assets written off
\u2014
\u2014
\u2014
\u2014
(63)
63
(63)
63
Foreign exchange and others
(6,535)
(7)
(530)
10
(65)
15
(7,130)
18
At 31 Dec 2024
344,676
(58)
34,341
(130)
2,474
(285)
381,491
(473)
ECL income statement change for the period
290
(170)
(99)
21
Recoveries
7
Others
(1)
Total ECL income statement change for the
period
27
At 1 Jan 2023
317,666
(74)
40,048
(231)
2,230
(270)
359,944
(575)
Transfers of financial instruments:
(1,182)
(109)
421
138
761
(29)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(41,207)
28
41,207
(28)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
40,164
(117)
(40,164)
117
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(354)
1
(958)
100
1,312
(101)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
215
(21)
336
(51)
(551)
72
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
72
\u2014
(79)
\u2014
(67)
\u2014
(74)
Net new and further lending/repayments
15,447
(3)
(3,939)
22
(751)
322
10,757
341
Change to risk parameters \u2013 credit quality
\u2014
16
\u2014
(67)
\u2014
(269)
\u2014
(320)
Changes to models used for ECL calculation
\u2014
(2)
\u2014
28
\u2014
\u2014
\u2014
26
Assets written off
\u2014
\u2014
\u2014
\u2014
(53)
53
(53)
53
Foreign exchange and others
8,833
(9)
1,983
(13)
71
(4)
10,887
(26)
At 31 Dec 2023
340,764
(109)
38,513
(202)
2,258
(264)
381,535
(575)
ECL income statement change for the period
83
(96)
(14)
(27)
Recoveries
10
Others
13
Total ECL income statement change for the period
(4)
Credit cards \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan
commitments
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
153,292
(253)
6,547
(698)
450
(144)
160,289
(1,095)
Transfers of financial instruments:
796
(453)
(1,469)
717
673
(264)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(6,427)
129
6,427
(129)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
7,255
(569)
(7,255)
569
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(179)
2
(765)
327
944
(329)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
147
(15)
124
(50)
(271)
65
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
280
\u2014
(256)
\u2014
(45)
\u2014
(21)
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(2)
\u2014
(2)
\u2014
Net new and further lending/repayments
9,604
18
(1,122)
127
(1)
194
8,481
339
Change to risk parameters \u2013 credit quality
\u2014
79
\u2014
(476)
\u2014
(694)
\u2014
(1,091)
Changes to models used for ECL calculation
\u2014
22
\u2014
(122)
\u2014
1
\u2014
(99)
Assets written off
\u2014
\u2014
\u2014
\u2014
(736)
736
(736)
736
Foreign exchange and others1
(7,380)
27
(196)
50
(41)
17
(7,617)
94
At 31 Dec 2024
156,312
(280)
3,760
(658)
343
(199)
160,415
(1,137)
ECL income statement change for the period
399
(727)
(544)
(872)
Recoveries
106
Others
(10)
Total ECL income statement change for the
period
(776)
1Total includes $4.5bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada and our business in Argentina during 2024.
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
140,519
(244)
6,747
(777)
353
(160)
147,619
(1,181)
Transfers of financial instruments:
199
(292)
(848)
496
649
(204)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(7,855)
102
7,855
(102)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
8,124
(391)
(8,124)
391
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(82)
1
(621)
227
703
(228)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
12
(4)
42
(20)
(54)
24
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
185
\u2014
(301)
\u2014
(5)
\u2014
(121)
Net new and further lending/repayments
13,206
27
621
169
12
(41)
13,839
155
Change to risk parameters \u2013 credit quality
\u2014
82
\u2014
(281)
\u2014
(301)
\u2014
(500)
Changes to models used for ECL calculation
\u2014
(9)
\u2014
15
\u2014
1
\u2014
7
Assets written off
\u2014
\u2014
\u2014
\u2014
(571)
571
(571)
571
Foreign exchange and others
(632)
(2)
27
(19)
7
(5)
(598)
(26)
At 31 Dec 2023
153,292
(253)
6,547
(698)
450
(144)
160,289
(1,095)
ECL income statement change for the period
285
(398)
(346)
(459)
Recoveries
108
Others
(200)
Total ECL income statement change for the period
(551)
Other personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
156,767
(240)
5,895
(534)
1,152
(448)
163,814
(1,222)
Transfers of financial instruments:
742
(360)
(1,570)
528
828
(168)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(5,269)
94
5,269
(94)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
6,181
(434)
(6,181)
434
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(274)
1
(823)
268
1,097
(269)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
104
(21)
165
(80)
(269)
101
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
302
\u2014
(197)
\u2014
(57)
\u2014
48
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(23)
\u2014
(23)
\u2014
Net new and further lending/repayments
6,177
(55)
(431)
125
(272)
243
5,474
313
Change to risk parameters \u2013 credit quality
\u2014
57
\u2014
(325)
\u2014
(640)
\u2014
(908)
Changes to models used for ECL calculation
\u2014
15
\u2014
(16)
\u2014
(22)
\u2014
(23)
Assets written off
\u2014
\u2014
\u2014
\u2014
(735)
735
(735)
735
Foreign exchange and others1,2
(8,023)
32
(385)
49
(121)
40
(8,529)
121
At 31 Dec 2024
155,663
(249)
3,509
(370)
829
(317)
160,001
(936)
ECL income statement change for the period
319
(413)
(476)
(570)
Recoveries
107
Others
(21)
Total ECL income statement change for the
period
(484)
1Total includes $0.3bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $10m,
reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
2Total includes $4.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada during 2024.
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
145,136
(269)
5,768
(497)
1,556
(375)
152,460
(1,141)
Transfers of financial instruments:
(1,161)
(218)
466
453
695
(235)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(8,155)
140
8,155
(140)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
7,019
(354)
(7,019)
354
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(106)
1
(766)
287
872
(288)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
81
(5)
96
(48)
(177)
53
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
306
\u2014
(299)
\u2014
(7)
\u2014
\u2014
Net new and further lending/repayments
5,758
(71)
(1,395)
159
(430)
(137)
3,933
(49)
Change to risk parameters \u2013 credit quality
\u2014
6
\u2014
(293)
\u2014
(385)
\u2014
(672)
Changes to models used for ECL calculation
\u2014
(2)
\u2014
(22)
\u2014
6
\u2014
(18)
Assets written off
\u2014
\u2014
\u2014
\u2014
(702)
702
(702)
702
Foreign exchange and others1
7,034
8
1,056
(35)
33
(17)
8,123
(44)
At 31 Dec 2023
156,767
(240)
5,895
(534)
1,152
(448)
163,814
(1,222)
ECL income statement change for the period
239
(455)
(523)
(739)
Recoveries
108
Others
195
Total ECL income statement change for the period
(436)
1Total includes $7.2bn of gross carrying loans and advances and a corresponding allowance for ECL of $10m, due to the retention of certain balances previously
classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 \u2018Assets held for sale and liabilities of disposal groups
held for sale\u2019 on page 411.
Collateral on loans and advances
(Audited)
The following table provides a quantification of the value of fixed
charges we hold over specific assets where we have a history
of\u00a0enforcing, and are able to enforce, collateral in satisfying a debt in
the event of the borrower failing to meet its contractual obligations,
and where the collateral is cash or can be realised by sale in an
established market. The collateral valuation excludes any adjustments
for obtaining and selling the collateral and, in particular, loans shown
as not collateralised or partially collateralised may also benefit from
other forms of credit mitigants.
Personal lending \u2013 residential mortgage loans including loan commitments by level of collateral for key countries/territories by stage
(Audited)
Gross carrying/nominal amount
ECL coverage
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
$m
$m
$m
$m
%
%
%
%
Fully collateralised by LTV ratio
332,641
34,203
2,371
369,215
\u2014
0.4
10.0
0.1
\u2013\u00a0 less than 50%
141,331
18,076
1,238
160,645
\u2014
0.2
7.6
0.1
\u2013\u00a0 51% to 70%
111,963
11,507
698
124,168
\u2014
0.4
11.2
0.1
\u2013\u00a0 71% to 80%
39,374
3,040
242
42,656
\u2014
0.7
13.1
0.1
\u2013\u00a0 81% to 90%
25,514
1,264
131
26,909
\u2014
0.9
15.0
0.1
\u2013\u00a0 91% to 100%
14,459
316
62
14,837
\u2014
1.8
22.4
0.1
Partially collateralised (A): LTV > 100%
12,031
139
103
12,273
\u2014
3.2
46.2
0.4
\u2013\u00a0 collateral value on A
11,274
126
70
11,470
Total at 31 Dec 2024
344,672
34,342
2,474
381,488
\u2014
0.4
11.5
0.1
of which: UK
Fully collateralised by LTV ratio
151,264
30,574
747
182,585
\u2014
0.2
8.5
0.1
\u2013\u00a0 less than 50%
62,753
16,689
445
79,887
\u2014
0.1
6.9
0.1
\u2013\u00a0 51% to 70%
50,374
10,456
206
61,036
\u2014
0.2
9.7
0.1
\u2013\u00a0 71% to 80%
20,552
2,423
64
23,039
\u2014
0.4
12.1
0.1
\u2013\u00a0 81% to 90%
15,965
939
23
16,927
\u2014
0.6
13.0
0.1
\u2013\u00a0 91% to 100%
1,620
67
9
1,696
\u2014
0.7
16.7
0.1
Partially collateralised (B): LTV > 100%
146
15
5
166
\u2014
1.0
27.7
0.9
\u2013\u00a0 collateral value on B
109
12
4
125
Total UK at 31 Dec 2024
151,410
30,589
752
182,751
\u2014
0.2
8.6
0.1
of which: Hong Kong
Fully collateralised
95,751
756
138
96,645
\u2014
\u2014
1.3
\u2014
\u2013\u00a0 less than 50%
38,894
372
79
39,345
\u2014
\u2014
0.4
\u2014
\u2013\u00a0 51% to 70%
30,088
227
31
30,346
\u2014
\u2014
0.4
\u2014
\u2013\u00a0 71% to 80%
6,783
47
11
6,841
\u2014
\u2014
5.1
\u2014
\u2013\u00a0 81% to 90%
7,602
42
9
7,653
\u2014
0.2
1.1
\u2014
\u2013\u00a0 91% to 100%
12,384
68
8
12,460
\u2014
0.1
8.8
\u2014
Partially collateralised (C): LTV > 100%
11,744
103
14
11,861
\u2014
0.2
19.1
\u2014
\u2013\u00a0 collateral value on C
11,034
96
12
11,142
Total Hong Kong at 31 Dec 2024
107,495
859
152
108,506
\u2014
0.1
2.9
\u2014
Fully collateralised by LTV ratio
331,279
38,378
2,129
371,786
\u2014
0.5
10.1
0.1
\u2013\u00a0 less than 50%
140,992
19,715
1,165
161,872
\u2014
0.3
7.1
0.1
\u2013\u00a0 51% to 70%
113,043
12,636
568
126,247
\u2014
0.6
10.9
0.1
\u2013\u00a0 71% to 80%
37,866
4,111
229
42,206
\u2014
0.9
15.2
0.2
\u2013\u00a0 81% to 90%
23,278
1,499
109
24,886
\u2014
1.2
17.3
0.2
\u2013\u00a0 91% to 100%
16,100
417
58
16,575
\u2014
1.6
28.9
0.2
Partially collateralised (A): LTV > 100%
9,529
136
129
9,794
\u2014
3.4
42.0
0.6
\u2013\u00a0 collateral value on A
8,968
123
104
9,195
Total at 31 Dec 2023
340,808
38,514
2,258
381,580
\u2014
0.5
11.9
0.1
of which: UK
Fully collateralised by LTV ratio
146,739
33,597
759
181,095
\u2014
0.3
9.7
0.1
\u2013\u00a0 less than 50%
60,403
17,629
458
78,490
\u2014
0.2
7.9
0.1
\u2013\u00a0 51% to 70%
49,945
11,248
207
61,400
\u2014
0.4
9.4
0.1
\u2013\u00a0 71% to 80%
20,293
3,275
61
23,629
\u2014
0.6
13.4
0.1
\u2013\u00a0 81% to 90%
12,946
1,161
18
14,125
\u2014
0.8
17.5
0.1
\u2013\u00a0 91% to 100%
3,152
284
15
3,451
\u2014
1.0
41.6
0.3
Partially collateralised (B): LTV > 100%
317
19
27
363
0.1
1.7
17.5
1.4
\u2013\u00a0 collateral value on B
244
15
22
281
Total UK at 31 Dec 2023
147,056
33,616
786
181,458
\u2014
0.3
9.9
0.1
of which: Hong Kong
Fully collateralised by LTV ratio
97,414
1,354
93
98,861
\u2014
\u2014
0.3
\u2014
\u2013\u00a0 less than 50%
41,903
831
66
42,800
\u2014
\u2014
0.1
\u2014
\u2013\u00a0 51% to 70%
29,762
330
15
30,107
\u2014
\u2014
0.5
\u2014
\u2013\u00a0 71% to 80%
5,260
48
2
5,310
\u2014
0.1
0.4
\u2014
\u2013\u00a0 81% to 90%
8,161
61
4
8,226
\u2014
0.1
1.9
\u2014
\u2013\u00a0 91% to 100%
12,328
84
6
12,418
\u2014
0.3
1.8
\u2014
Partially collateralised (C): LTV > 100%
8,973
86
4
9,063
\u2014
0.9
7.8
\u2014
\u2013\u00a0 collateral value on C
8,535
81
4
8,620
Total Hong Kong at 31 Dec 2023
106,387
1,440
97
107,924
\u2014
0.1
0.7
\u2014
HSBC Holdings
(Audited)
Credit risk in HSBC Holdings primarily arises from transactions with
Group subsidiaries.
In HSBC Holdings, the maximum exposure to credit risk arises from
two components:
\u2013 financial assets on the balance sheet, where maximum exposure
equals the carrying amount (see page 350); and
\u2013 financial guarantees and other guarantees, where the maximum
exposure is the maximum that we would have to pay if the
guarantees were called upon (see Note 33).
In the case of our derivative asset balances (see page 350), 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. These offsets also include
collateral received in cash and other financial assets.
The total offset relating to our derivative asset balances was $3.0bn at
31\u00a0December 2024 (2023:\u00a0$3.0bn).
The credit quality of loans and advances and financial investments,
both of which consist of intra-Group lending and US Treasury bills and
bonds, is\u00a0assessed as \u2018strong\u2019, with 100% of the exposure being
neither past due nor impaired (2023: 100%). For further details of
credit quality classification, see page 140.
Own funds disclosure
(Audited)
At
31 Dec 2024
31 Dec 2023
Ref*
$m
$m
Common equity tier 1 capital: instruments and reserves
1
Capital instruments and the related share premium accounts
22,378
22,964
\u2013\u00a0 ordinary shares
22,378
22,964
2
Retained earnings1
138,959
135,614
3
Accumulated other comprehensive income (and other reserves)1
(8,410)
(7,195)
5
Minority interests (amount allowed in consolidated CET1)
3,960
3,917
5a
Independently reviewed net profits net of any foreseeable charge or dividend
7,184
10,568
6
Common equity tier 1 capital before regulatory adjustments
164,071
165,868
28
Total regulatory adjustments to common equity tier 1
(39,160)
(39,367)
29
Common equity tier 1 capital
124,911
126,501
36
Additional tier 1 capital before regulatory adjustments
19,286
17,732
43
Total regulatory adjustments to additional tier 1 capital
(70)
(70)
44
Additional tier 1 capital
19,216
17,662
45
Tier 1 capital
144,127
144,163
51
Tier 2 capital before regulatory adjustments
29,334
28,148
57
Total regulatory adjustments to tier 2 capital
(1,075)
(1,107)
58
Tier 2 capital
28,259
27,041
59
Total capital
172,386
171,204
*The references identify lines prescribed in the PRA template, which are applicable and where there is a value.
1We have updated the classification between components of shareholders\u2019 equity to present \u2018Retained Earnings\u2019 in Row 2 and \u2018Accumulated other
comprehensive income (and other reserves)\u2019 in Row 3. The comparatives have been aligned.
The Group non-trading VaR for 2024 is shown in the table below.
Non-trading VaR, 99% 10 day
(Audited)
Interest rate
Credit spread
Portfolio diversification1
Total2
$m
$m
$m
$m
Balance at 31 Dec 2024
528.4
246.1
(220.7)
553.8
Average
603.7
315.1
(222.9)
695.8
Maximum
1,000.6
369.1
1,097.6
Minimum
292.1
242.4
408.7
Balance at 31 Dec 2023
549.6
356.7
(329.5)
576.7
Average
494.0
266.1
(201.6)
558.6
Maximum
638.6
368.0
\u2014
709.4
Minimum
344.0
174.5
\u2014
401.5
1Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic
market risk that occurs when combining a number of different risk types \u2013 such as interest rate and credit spreads \u2013 together in\u00a0one portfolio. It is measured as
the difference between the sum of the VaR\u00a0by individual risk type and the combined total VaR. A negative number represents the benefit of portfolio
diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit
for these measures.
2The total VaR is non-additive across risk types due to diversification effects.
Credit risk
(Audited)
Our insurance manufacturing subsidiaries also have credit risk
mandates and limits within which they are permitted to operate,
which consider the credit risk exposure, quality and performance of
their investment portfolios. Our assessment of the creditworthiness
of issuers and counterparties is based primarily upon internationally
recognised credit ratings and other publicly available information.
Stress testing is performed on investment credit exposures using
credit spread sensitivities and default probabilities.
We use a number of tools to manage and monitor credit risk. These
include a credit report containing a watch-list of investments with
current credit concerns, 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.
Credit risk
(Audited)
Description and exposure
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
risks for our insurance manufacturers:
\u2013 the risk associated with credit spread volatility and default by debt
security counterparties after investing premiums to generate a
return for policyholders and shareholders; and
\u2013 the risk of default by reinsurance counterparties and non-
reimbursement for claims made after ceding insurance risk.
The amounts outstanding at the balance sheet date in respect
of\u00a0these items are shown in the table on page 232.
The credit quality of the reinsurers\u2019 share of liabilities under insurance
contracts is assessed as \u2018satisfactory\u2019 or higher (as defined on
page\u00a0139), with none of the exposure being either past due or
impaired (2023: none).
Credit risk on assets supporting unit-linked liabilities is predominantly
borne by the policyholders. Therefore, our exposure is primarily
related to liabilities under non-linked insurance and investment
contracts and shareholders\u2019 funds. The credit quality of insurance
financial assets is included in the\u00a0table on page 166.
The risk associated with credit spread volatility is to a large extent
mitigated by holding debt securities to maturity, and sharing a degree
of credit spread experience with policyholders.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-2": { "value": "
Credit risk management
Key developments in 2024
There were no material changes to the policies and practices for\u00a0the
management of credit risk in 2024. We continued to apply the
requirements of IFRS 9 \u2018Financial Instruments\u2019 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.
For further details, see \u2018Top and emerging risks\u2019 on page 131.
\"Arrows_WD.jpg\"
Governance and structure
We have established 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 Group
CEO together with the authority to sub-delegate them. The Credit
Risk sub-function in Group Risk and Compliance is responsible for the
key policies and processes for managing credit risk, which include
formulating Group credit policies and risk rating frameworks, guiding
the Group\u2019s 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:
\u2013 to maintain across HSBC a strong culture of responsible lending,
and robust risk policies and control frameworks;
\u2013 to both partner and challenge our businesses in defining,
implementing and continually re-evaluating our risk appetite under
actual and scenario conditions; and
\u2013 to ensure there is independent, expert scrutiny of credit risks, their
costs and their mitigation.
Key risk management processes
IFRS 9 \u2018Financial Instruments\u2019 process
The IFRS 9 process comprises three main areas: modelling, data and
forward economic guidance; implementation; and governance.
Modelling, data and forward economic guidance
We have 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.
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 committee.
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
Regional management review forums are established in key sites and
regions in order to review and approve the impairment results.
Regional management review forums have representatives from
Credit Risk and Finance. The key site and regional approvals are
reported up to the relevant global business impairment committee for
final approval of the Group\u2019s ECL for the period. Required members of
the committee are the Wholesale Global Chief Corporate Credit
Officer and Chief Risk and Compliance Officer for Wealth and
Personal Banking Risk, as well as the relevant global business\u2019s Chief
Financial Officer and the Global Financial Controller.
Concentration of exposure
(Audited)
Concentrations of credit risk arise when a number of counterparties or
exposures have comparable economic characteristics, or such
counterparties are engaged in similar activities or operate in the same
geographical areas or industry sectors so that their collective ability to
meet contractual obligations is similarly affected by changes in
economic, political or other conditions. We use a number of controls
and\u00a0measures to minimise undue concentration of exposure in\u00a0our
portfolios across industries, countries and global businesses. These
include portfolio and counterparty limits, approval and review controls,
and stress testing.
Credit quality of financial instruments
(Audited)
Our risk rating system facilitates the internal ratings-based approach
under the Basel framework adopted by the Group to support the
calculation of our minimum credit regulatory capital requirement. The
five credit quality classifications encompass a range of granular
internal credit rating grades assigned to wholesale and retail
customers, and the external ratings 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 (\u2018CRR\u2019) to external credit
rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying
23-grade scale of obligor probability of default (\u2018PD\u2019). 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
12-month Basel
probability of
default %
Internal
credit rating
12 month
probability-
weighted PD %
Quality classification1,2
Strong
BBB and above
A- and above
CRR 1 to CRR 2
0\u20130.169
Band 1 and 2
0.000\u20130.500
Good
BBB- to BB
BBB+ to BBB-
CRR 3
0.170\u20130.740
Band 3
0.501\u20131.500
Satisfactory
BB- to B and unrated
BB+ to B and unrated
CRR 4 to CRR 5
0.741\u20134.914
Band 4 and 5
1.501\u201320.000
Sub-standard
B- to C
B- to C
CRR 6 to CRR 8
4.915\u201399.999
Band 6
20.001\u201399.999
Credit impaired
Default
Default
CRR 9 to CRR 10
100
Band 7
100
1Customer risk rating (\u2018CRR\u2019).
212-month point-in-time probability-weighted probability of default (\u2018PD\u2019).
Quality classification definitions
\u2013 \u2018Strong\u2019 exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of
expected loss.
\u2013 \u2018Good\u2019 exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk.
\u2013 \u2018Satisfactory\u2019 exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk.
\u2013 \u2018Sub-standard\u2019 exposures require varying degrees of special attention and default risk is of greater concern.
\u2013 \u2018Credit-impaired\u2019 exposures have been assessed as described in Note 1.2(i) to the financial statements.
Forborne loans and advances
(Audited)
Forbearance measures consist of concessions towards an obligor that
is experiencing or about to experience difficulties in meeting its
financial commitments.
We continue to class loans as forborne when we modify the
contractual payment terms due to having concerns about the
borrowers\u2019 ability to meet contractual payments when they were due.
Our definition of forborne captures non-payment-related concessions,
such as covenant waivers.
For details of our policy on forbearance, see Note 1.2(i) in the financial
\"Arrows_WD.jpg\"
statements.
Credit quality of forborne loans
For wholesale lending, where payment-related forbearance measures
result in a diminished financial obligation, or if there are other
indicators of impairment, the loan will be classified as credit impaired
if it is not already so classified. All facilities with a customer, including
loans that have not been modified, are considered credit impaired
following the identification of a payment-related forborne loan. For
retail lending, where a material payment-related concession has been
granted, the loan will be classified as credit impaired. In isolation, non-
payment related forbearance measures may not result in the loan
being classified as credit impaired unless combined with other
indicators of credit impairment. These are classed as performing
forborne loans for both wholesale and retail lending.
Wholesale and retail lending forborne loans are classified as credit
impaired until there is sufficient evidence to demonstrate a significant
reduction in the risk of non-payment of future cash flows, observed
over a minimum one-year period, and there are no other indicators of
impairment. Any forborne loans not considered credit impaired will
remain forborne for a minimum of two years from the date that credit
impairment no longer applies. For wholesale and retail lending, any
forbearance measures granted on a loan already classed as forborne
results in the customer being classed as credit impaired.
Forborne loans and recognition of expected
credit losses
(Audited)
Forborne loans expected credit loss assessments reflect the higher
rates of losses typically experienced with these types of loans such
that they are in stage 2 and stage 3. The higher rates are more
pronounced in unsecured retail lending requiring further
segmentation. For wholesale lending, forborne loans are typically
assessed individually. Credit risk ratings are intrinsic to the
impairment assessments. The individual impairment assessment
takes into account the higher risk of the future non-payment inherent
in forborne loans.
Impairment assessment
(Audited)
For details of our impairment policies on loans and advances and
financial investments, see Note 1.2(i) on the financial statements.
Write-off of loans and advances
(Audited)
Under IFRS 9, write-off should occur when there is no reasonable
expectation of recovering further cash flows from the financial asset.
This principle does not prohibit early write-off, which is defined in
local policies to ensure effectiveness in the management of
customers in the collections process.
Unsecured personal facilities, including credit cards, are generally
written off at between 150 and 210 days past due. The standard
period runs until the end of the month in which the account becomes
180 days contractually delinquent. However, in exceptional
circumstances, to avoid unfair customer outcomes, deliver customer
duty or meet regulatory expectations, the period may be extended
further.
For secured facilities, write-off should occur upon repossession of
collateral, receipt of proceeds via settlement, or determination that
recovery of the collateral will not be pursued. Where these assets are
maintained on the balance sheet beyond 60 months of consecutive
delinquency-driven default, the prospect of recovery is reassessed.
Recovery activity, on both secured and unsecured assets, may
continue after write-off.
Any unsecured exposures that are not written off at 180 days past
due, and any secured exposures that are in \u2018default\u2019 status for 60
months or greater but are not written off, are subject to additional
monitoring via the appropriate governance forums.
Approach and policy
(Audited)
Our objective in the management of treasury risk is to maintain
appropriate levels of capital, liquidity, funding, foreign exchange and
market risk to support our business strategy, and meet our regulatory
and stress testing-related requirements.
Our approach to treasury management is driven by our strategic and
organisational requirements, and considers the regulatory, economic
and commercial environment. We aim to maintain a strong capital and
liquidity base to support the risks inherent in our business and invest
in accordance with our strategy, meeting both consolidated and local
regulatory requirements at all times.
Our policy is underpinned by our risk management framework. The
risk management 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 and transactional foreign exchange risk, and interest rate
risk in the banking book.
For further details, refer to our Pillar 3 Disclosures at 31 December 2024.
\"Arrows_WD.jpg\"
Insurance manufacturing operations
risk management
Key developments in 2024
The insurance manufacturing subsidiaries follow the Group\u2019s risk
management framework. In addition, there are specific policies and
practices relating to the risk management of insurance contracts,
which did not change materially over 2024. During the year, there
was continued market volatility observed across interest rates, equity
and credit markets and foreign exchange rates. This was
predominantly driven by geopolitical factors and wider inflationary
concerns. Other areas of focus were the ongoing integration of the
insurance business that was acquired through AXA Singapore in 2022
into the Group\u2019s risk management framework, development of
processes and systems within the reinsurance entity established in
Bermuda, and controls supporting IFRS 17.
As mentioned, the insurance business in Argentina was sold during
2024, with the sale completing on 6 December 2024. Following
HSBC\u2019s announcement on 20 December 2024 of the signing of a
memorandum of understanding for the planned sale of its French
insurance business, the balance sheet of the French business has
been reported as held for sale at 31 December 2024. Further details
are provided on page 411.
Governance and structure
(Audited)
Insurance manufacturing risks are managed to a defined risk appetite,
which is\u00a0aligned to the Group\u2019s risk appetite and risk management
framework, including its three lines of defence model. For details of
the Group\u2019s governance framework, see page\u00a0128. The Global
Insurance Risk Management Meeting oversees the control
framework globally and is accountable to the WPB Risk Management
Meeting on risk matters relating to the insurance business.
The monitoring of the risks within our insurance operations is carried
out by Insurance Risk teams. The Group\u2019s risk stewardship functions
support the Insurance Risk teams in their respective areas of
expertise.
Stress and scenario testing
(Audited)
Stress testing forms a key part of the risk management framework
for the insurance business. We participate in local and Group-wide
regulatory stress tests, as well as internally developed stress and
scenario tests, including Group internal stress test exercises.
The results of these stress tests and the adequacy of management
action plans to mitigate these risks are considered in the Group\u2019s
ICAAP and the entities\u2019 regulatory Own Risk and Solvency
Assessments, which are produced by all material entities.
Key risk management processes
Market risk
(Audited)
All our insurance manufacturing subsidiaries have market risk
mandates and limits that specify the investment instruments in which
they are permitted to invest and the maximum quantum of market
risk that they may retain. They manage market risk by using some or
all of the techniques listed below, among others, depending on the
nature of the contracts written.
\u2013 We are able to adjust bonus rates to manage the liabilities to
policyholders for products with participating features. The effect is
that a significant proportion of the market risk is borne by the
policyholder.
\u2013 We use asset and liability matching where asset portfolios are
structured to support projected liability cash flows. The Group
manages its assets using an approach that considers asset quality,
diversification, cash flow matching, liquidity, volatility and target
investment return. We use models to assess the effect of a range
of future scenarios on the values of financial assets and
associated liabilities, and ALCOs employ the outcomes in
determining how best to structure asset holdings to support
liabilities.
\u2013 We use derivatives and other financial instruments to protect
against adverse market movements.
\u2013 We design new products to mitigate market risk, such as
changing the investment return sharing proportion between
policyholders and the shareholder.
Credit risk
(Audited)
Our insurance manufacturing subsidiaries also have credit risk
mandates and limits within which they are permitted to operate,
which consider the credit risk exposure, quality and performance of
their investment portfolios. Our assessment of the creditworthiness
of issuers and counterparties is based primarily upon internationally
recognised credit ratings and other publicly available information.
Stress testing is performed on investment credit exposures using
credit spread sensitivities and default probabilities.
We use a number of tools to manage and monitor credit risk. These
include a credit report containing a watch-list of investments with
current credit concerns, 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.
Capital and liquidity risk
(Audited)
Capital risk for our insurance manufacturing subsidiaries is assessed
in the Group\u2019s ICAAP, based on their financial capacity to support the
risks to which they are exposed. Capital adequacy is assessed on
both the Group\u2019s economic capital basis, and the relevant local
insurance regulatory basis.
Risk appetite buffers are set to ensure that the operations are able to
remain solvent, allowing for business-as-usual volatility and extreme
but plausible stress events.
Liquidity risk is less material for the insurance business. It 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 manufacturing subsidiaries complete quarterly liquidity risk
reports and an annual review of the liquidity risks to which they are
exposed.
Insurance underwriting risk
(Audited)
Our insurance manufacturing subsidiaries primarily use the following
frameworks and processes to manage and mitigate insurance
underwriting risks:
\u2013 a formal approval process for launching new products or making
changes to products;
\u2013 a product pricing and profitability framework, which requires initial
and ongoing assessment of the adequacy of premiums charged
on new insurance contracts to meet the risks associated with
them;
\u2013 a framework for customer underwriting;
\u2013 reinsurance, which cedes risks to third-party reinsurers to keep
risks within risk appetite, reduce volatility and improve capital
efficiency; and
\u2013 oversight by financial reporting committees and actuarial review
committees in each of our entities of the methodology and
assumptions that underpin IFRS 17 reporting.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-4": { "value": "
Critical estimates and judgements
The calculation of ECL under IFRS 9 involved significant judgements,
assumptions and estimates at 31 December 2024. These included:
\u2013 the selection and configuration of economic scenarios, given the
constant change in economic conditions and distribution of
economic risks; and
\u2013 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 in 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.\u00a0
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 our wholesale portfolios, a global methodology is used for the
estimation of the term structure of probability of default (\u2018PD\u2019) and
loss given default (\u2018LGD\u2019). 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, allowance for ECL estimates are derived based on
discounted cash flow (\u2018DCF\u2019) calculations for internal forward-looking
scenarios specific to individual borrower circumstances (see page
359). Probability-weighted outcomes are applied, and depending on
materiality and status of the 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.
Management judgemental
adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled allowance
for ECL at either a customer, segment or portfolio level where
management believes allowances do not sufficiently reflect the credit
risk/expected credit losses at the reporting date. These can relate to
risks or uncertainties that are not reflected in the models and/or to
any late-breaking events with significant uncertainty, subject to
management review and challenge.
This includes refining model inputs and outputs and using
adjustments to ECL based on management judgement and
quantitative analysis for impacts that are difficult to model.
The effects of management judgemental adjustments are considered for both
balances and allowance for ECL when determining whether or not a significant
increase in credit risk has occurred and is allocated to a stage where
appropriate. This is in accordance with the internal adjustments framework.
Management judgemental adjustments are reviewed under the
governance process for IFRS 9 (as detailed in the section \u2018Credit risk
management\u2019 on page 139). Review and challenge focuses on the
rationale and quantum of the adjustments with a further review
carried out by the second line of defence where significant. For some
management judgemental adjustments, internal frameworks establish
the conditions under which these adjustments should no longer be
required and as such are considered as part of the governance
process. This internal governance process allows management
judgemental adjustments to be reviewed regularly and, where
possible, to reduce the reliance on these through model recalibration
or redevelopment, as appropriate.
The drivers of management judgemental adjustments continue to
evolve with the economic environment and as new risks emerge.
In addition to management judgemental adjustments there are also
\u2018Other adjustments\u2019, which are made to address process limitations
and data/model deficiencies and can also include, where appropriate,
the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be
incorporated into the total reported ECL.
\u2018Management judgemental adjustments\u2019 and \u2018Other adjustments\u2019
constitute the total value of adjustments to modelled allowance for
ECL. For the wholesale portfolio, defaulted exposures are assessed
individually and management judgemental adjustments are made only
to the performing portfolio.
At 31 December 2024, there was a $0.6bn reduction in management
judgemental adjustments compared with 31 December 2023. This
was driven by retail due to reductions in economic uncertainty,
primarily in the UK and Asia, and model redevelopments which
captured macro-economic risks more effectively.
Management judgemental adjustments made in estimating the
scenario-weighted reported allowance for ECL at 31 December 2024
are set out in the following table.
Management judgemental adjustments to ECL at 31 December 20241
Retail
Wholesale2
Total
$bn
$bn
$bn
Modelled ECL (A)3
2.6
2.0
4.6
Banks, sovereigns, government entities and low-risk counterparties
0.0
0.0
Corporate lending adjustments
0.1
0.1
Inflation related adjustments
0.0
0.0
Other credit judgements
0.0
0.0
Total management judgemental adjustments (B)4
0.0
0.1
0.1
Other adjustments (C)5
(0.0)
0.1
0.1
Final ECL (A + B + C)6
2.6
2.2
4.8
Management judgemental adjustments to ECL at 31 December 20231,7
Retail
Wholesale2
Total
$bn
$bn
$bn
Modelled ECL (A)3
2.6
2.4
5.0
Banks, sovereigns, government entities and low-risk counterparties
0.0
0.0
Corporate lending adjustments
0.1
0.1
Inflation-related adjustments
0.1
0.1
Other credit judgements
0.5
0.5
Total management judgemental adjustments (B)4
0.6
0.1
0.7
Other adjustments (C)5
(0.0)
0.0
0.0
Final ECL (A + B + C)6
3.2
2.5
5.7
1Management judgemental adjustments presented in the table reflect increases or (decreases) to allowance for ECL, respectively.
2The wholesale portfolio corresponds to adjustments to the performing portfolio (stage 1 and stage 2).
3(A) refers to probability-weighted allowance for ECL before any adjustments are applied.
4(B) refers to adjustments that are applied where management believes allowance for ECL does not sufficiently reflect the credit risk/expected credit losses of
any given portfolio at the reporting date. These can relate to risks or uncertainties that are not reflected in the model and/or to any late-breaking events.
5(C) refers to adjustments to allowance for ECL made to address process limitations and data/model deficiencies and can also include where appropriate, the
impact of new models where governance has sufficiently progressed to allow an accurate estimate of ECL allowance to be incorporated into the total reported
ECL.
6As presented within our internal credit risk governance (see page 139).
731 December 2023 includes the Canada, Argentina, Armenia and Oman businesses and retail banking operations in France.
Management judgemental adjustments at 31\u00a0December 2024 were
an increase to allowance for ECL of $0.1bn for the wholesale portfolio
and $0.0bn for the retail portfolio.
At 31 December 2024, wholesale management judgemental
adjustments were an increase to allowance for ECL of $0.1bn
(31\u00a0December 2023: $0.1bn increase). These were mainly to
corporate exposures to reflect heightened uncertainty in specific
sectors and geographies, including offsetting adjustments to the real
estate sector in mainland China, Hong Kong and the US, and
adjustments to exposures to the automotive and industrial sectors in
Germany.
At 31 December 2024, retail management judgemental adjustments
to allowance for ECL were $0.0bn (31 December 2023 $0.6bn). The
reduction in adjustments compared with 31 December 2023 for
inflation-related adjustments was primarily due to the reduction of
inflation related risk in the UK and the sale of the Canadian banking
business. Other credit judgements decreased due to reductions in
economic uncertainty, primarily in the UK and Asia, and model
redevelopments which captured macro-economic risks more
effectively.
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 allowance for ECL under each scenario described
above for selected portfolios, applying a 100% weighting to each
scenario in turn. The weighting is reflected in both the determination
of a significant increase in credit risk and the measurement of the
resulting allowances.
The allowance for ECL calculated for the Upside and Downside
scenarios should not be taken to represent the upper and lower limits
of possible ECL outcomes. The impact of defaults that might occur in
the future under different economic scenarios is captured by
recalculating allowances 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%
weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
allowance for 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 the effects of macroeconomic factors are not
necessarily the key consideration when performing individual
assessments of allowances 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
allowance for ECL for defaulted obligors of loans and advances. This\u00a0
is because the retail ECL for secured mortgage portfolios, including
loans in all stages, is sensitive to macroeconomic variables.
Wholesale and retail sensitivity
The wholesale and retail sensitivity tables present the 100%
weighted results. 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 judgemental 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
IFRS 9 ECL sensitivity to future economic conditions1,2,3
Reported
Gross carrying
amount4
Reported
allowance for
ECL
Consensus
Central
scenario
allowance for
ECL
Consensus
Upside
scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2024
$m
$m
$m
$m
$m
$m
UK
432,160
717
667
526
850
2,389
US
202,888
216
201
205
247
461
Hong Kong
450,966
659
616
465
906
1,496
Mainland China
137,960
178
141
84
329
886
Mexico
34,713
69
61
46
86
302
UAE
58,909
51
49
40
58
120
France
184,591
82
80
69
97
125
Other geographies5
455,823
234
216
176
304
774
Total
1,958,010
2,205
2,031
1,612
2,877
6,555
of which:
Stage 1
1,830,264
689
632
494
797
803
Stage 2
127,746
1,516
1,399
1,118
2,080
5,751
By geography at 31 Dec 2023
UK
426,427
820
754
599
1,041
2,487
US
191,104
215
199
189
268
441
Hong Kong
447,480
609
566
433
807
1,393
Mainland China
129,945
258
217
142
414
945
Canada5
84,092
89
75
56
107
487
Mexico
30,159
60
56
46
73
226
UAE
52,074
32
32
30
34
40
France
178,827
98
102
90
124
141
Other geographies5,7
450,271
325
298
245
410
882
Total
1,990,378
2,507
2,301
1,829
3,278
7,043
of which:
Stage 1
1,820,843
754
702
553
860
854
Stage 2
169,535
1,753
1,599
1,276
2,418
6,189
1Allowance for ECL sensitivity includes off-balance sheet financial instruments. These are subject to significant measurement uncertainty.
2Includes low credit-risk financial instruments such as debt instruments at FVOCI, which have high carrying amounts but low ECL under all the above scenarios.
3Excludes defaulted obligors. For a detailed breakdown of performing and non-performing wholesale portfolio exposures, see page 170.
4Staging refers only to probability-weighted/reported gross carrying amount. Stage allocation of gross exposures varies by scenario, with higher allocation to stage
2 under the Downside 2 scenario.
5Includes small portfolios that use less complex modelling approaches and are not sensitive to macroeconomic changes.
6Classified as held for sale at 31 December 2023.
7Includes the Argentina and Armenia businesses, which were sold in 2024.
At 31 December 2024, the highest level of 100% scenario-weighted
allowance for ECL was observed in the UK and Hong Kong under the
Downside 2 scenario, driven primarily by a larger exposure to those
geographies, namely in the real estate sector. In relation to the
underlying exposure, mainland China and Mexico have the higher
Downside 2 ECL coverage, mostly due to the relatively larger
proportion of higher risk exposures in those geographies.
Compared with 31 December 2023, the Downside 2 ECL impact
reduced by $0.5bn mostly due to the sale of the Canada business
while observing offsetting impacts driven by updates to our forward
economic scenarios.
In the wholesale portfolio, off-balance sheet financial instruments
have a lower likelihood to be fully converted to a funded exposure at
the point of default, and consequently the sensitivity of the allowance
for ECL is lower in relation to its nominal amount, when compared
with an on-balance sheet exposure with a similar risk profile.
Retail analysis
IFRS 9 ECL sensitivity to future economic conditions1
Reported gross
carrying
amount
Reported
allowance for
ECL
Consensus
Central
scenario
allowance for
ECL
Consensus
Upside
scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2024
$m
$m
$m
$m
$m
$m
UK
Mortgages
163,541
126
117
107
132
288
Credit cards
7,415
280
275
265
276
447
Other
8,249
241
233
217
243
351
Mexico
Mortgages
7,482
165
162
155
168
215
Credit cards
2,227
337
333
330
338
423
Other
3,722
419
416
413
422
593
Hong Kong
Mortgages
106,866
5
5
4
5
10
Credit cards
9,419
293
275
268
300
770
Other
6,210
106
102
101
105
249
UAE
Mortgages
1,993
8
8
8
8
8
Credit cards
536
31
31
31
31
35
Other
688
17
17
17
17
19
US
Mortgages
16,965
6
6
6
6
8
Credit cards
193
15
14
14
15
17
Other geographies
Mortgages
51,064
131
127
124
136
180
Credit cards
3,500
162
159
156
164
223
Other
2,292
72
72
69
73
93
Total
392,361
2,413
2,351
2,285
2,440
3,928
of which: mortgages
347,910
440
425
405
456
708
Stage 1
311,875
51
47
43
58
129
Stage 2
33,761
126
117
107
129
275
Stage 3
2,274
263
261
255
269
304
of which: credit cards
23,290
1,116
1,086
1,064
1,124
1,915
Stage 1
19,915
276
267
258
284
701
Stage 2
3,107
655
634
621
656
1,027
Stage 3
267
185
185
185
185
188
of which: others
21,161
856
839
816
860
1,305
Stage 1
18,574
216
204
193
217
532
Stage 2
2,005
360
355
343
363
483
Stage 3
583
279
279
279
279
290
IFRS 9 ECL sensitivity to future economic conditions1,2
Reported gross
carrying amount
Reported
allowance for
ECL
Consensus
Central scenario
allowance for
ECL
Consensus
Upside scenario
allowance for
ECL
Consensus
Downside
scenario
allowance for
ECL
Downside 2
scenario
allowance for
ECL
By geography at 31 Dec 2023
$m
$m
$m
$m
$m
$m
UK
Mortgages
161,127
189
180
172
201
334
Credit cards
7,582
344
340
302
353
486
Other
8,183
341
333
273
383
515
Mexico
Mortgages
8,666
188
180
150
235
363
Credit cards
2,445
295
286
206
376
489
Other
4,529
513
503
426
600
731
Hong Kong
Mortgages
106,136
2
2
1
3
5
Credit cards
9,128
287
239
214
395
887
Other
6,269
109
100
88
124
256
UAE
Mortgages
2,001
25
25
25
25
25
Credit cards
471
24
24
22
25
32
Other
721
20
20
19
21
28
France
Mortgages
20,589
50
50
50
51
51
Other
1,328
44
44
43
45
48
US
Mortgages
14,385
8
4
3
4
10
Credit cards
204
15
15
10
15
16
Canada
Mortgages
25,464
67
65
64
70
99
Credit cards
338
13
13
12
16
15
Other
1,368
13
13
12
14
33
Other geographies
Mortgages
55,368
152
149
144
158
198
Credit cards
3,655
173
166
151
202
291
Other
2,416
91
86
83
95
137
Total
442,373
2,962
2,835
2,471
3,411
5,049
of which: mortgages
393,736
681
655
609
747
1,085
Stage 1
347,874
101
92
77
145
303
Stage 2
43,451
264
249
225
280
429
Stage 3
2,412
316
314
307
322
352
of which: credit cards
23,822
1,150
1,082
918
1,381
2,217
Stage 1
18,557
249
232
180
329
604
Stage 2
4,953
707
657
546
859
1,415
Stage 3
312
193
193
192
194
197
of which: others
24,815
1,131
1,098
944
1,283
1,748
Stage 1
19,551
218
205
151
272
501
Stage 2
4,542
540
519
423
636
868
Stage 3
722
373
373
370
375
379
1Allowance for ECL sensitivities exclude portfolios utilising less complex modelling approaches.
2Included balances and allowance for ECL which had been reclassified from \u2018loans and advances to customers\u2019 to \u2018assets held for sale\u2019 in the balance sheet at
31\u00a0December 2023. This also included any balances and allowance for ECL which continued to be reported as personal lending in \u2018loans and advances to
customers\u2019 that are in accordance with the basis of inclusion for retail sensitivity analysis. This includes the Canada, Argentina businesses and retail banking
operations in France.
At 31 December 2024, the most significant level of allowance for ECL
sensitivity was observed in the UK, Mexico and Hong Kong. Mortgages
reflected the lowest level of allowance for ECL sensitivity across most
markets given the significant levels of collateral relative to the exposure
values. Credit cards and other unsecured lending across stages 1 and 2
are more sensitive to economic forecasts and therefore reflected the
highest level of allowance for ECL sensitivity during 2024.
There was a reduction in the total sensitivity for ECL allowance in all
scenarios compared with 31 December 2023, due to banking portfolio\u00a0
sales, reduction of management judgemental adjustments, model
redevelopments and scenario evolution.
There is limited sensitivity in credit cards and other unsecured lending
in stage 3 as levels of loss on defaulted exposures remain consistent
through various economic conditions. The Downside 2 scenario is
from the tail of the economic distribution where allowance for ECL is
more sensitive based on historical experience and includes a
macroeconomic-dependent stressed LGD for a limited number of
portfolios.
The reported gross carrying amount by stage is representative of the
weighted scenario allowance for ECL. The allowance for ECL
sensitivity to the other scenarios includes changes in allowance for
ECL due to the levels of loss and the migration of additional lending
balances in or out of stage 2.
Group ECL sensitivity results
The allowance for ECL of the scenarios and management judgemental
adjustments is highly sensitive to movements in economic forecasts.
Based upon the sensitivity tables presented above, if the Group allowance
for ECL balance was estimated solely on the basis of the Central scenario,
Downside scenario or the Downside 2 scenario at 31\u00a0December 2024, it
would increase/(decrease) as presented in the below table.
Total Group ECL at 31 December 2024
Retail1
Wholesale1
$bn
$bn
Reported allowance for ECL
2.4
2.2
Scenarios
100% Consensus Central scenario
(0.1)
(0.2)
100% Consensus Upside scenario
(0.1)
(0.6)
100% Consensus Downside scenario
0.0
0.7
100% Downside 2 scenario
1.5
4.3
Total Group ECL at 31 December 2023
Reported allowance for ECL
3.0
2.5
Scenarios
100% Consensus Central scenario
(0.1)
(0.2)
100% Consensus Upside scenario
(0.5)
(0.7)
100% Consensus Downside scenario
0.4
0.8
100% Downside 2 scenario
2.1
4.5
1On the same basis as retail and wholesale sensitivity analysis.
At 31 December 2024, the Group allowance for ECL decreased in the
retail portfolio by $0.6bn and decreased by $0.3bn in the wholesale
portfolio, compared with 31 December 2023.
There was also a reduction in allowance for ECL sensitivity across all
scenarios within the retail and wholesale portfolios since
31\u00a0December 2023, primarily as a result of the sale of our Canada
banking business, the sale of our retail banking operations in France,
and various other business sales during the first half of 2024.
For the wholesale portfolio this was the main driver of the decrease in
Downside 2 ECL sensitivity.
For the retail portfolios the ECL sensitivity decrease across all
scenarios including the Downside 2 was also primarily due to the
reduction of management judgemental adjustments, model
redevelopments and scenario evolution.
Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL
Wholesale
Retail
Total
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
Included in sensitivity analysis
1,958,010
(2,205)
392,361
(2,413)
2,350,371
(4,618)
\u2013\u00a0 Exclusions from sensitivity as described in the
section above1
20,409
(5,419)
309,178
(124)
329,587
(5,543)
\u2013\u00a0 Debt instruments measured at fair value through
other comprehensive income2
(346,124)
54
\u2014
\u2014
(346,124)
54
\u2013\u00a0 Performance guarantees2
(92,722)
311
\u2014
\u2014
(92,722)
311
\u2013\u00a0 Other financial assets at amortised cost not
presented as wholesale or personal lending, including
held for sale2
(568,668)
141
(130)
\u2014
(568,798)
141
\u2013\u00a0 Other3
5,978
(441)
498
(9)
6,476
(450)
As reported in the Summary of credit risk
(excluding debt instruments measured at FVOCI) by
stage distribution and ECL coverage by industry
sector at 31 Dec 2024
976,883
(7,559)
701,907
(2,546)
1,678,790
(10,105)
Other financial assets at amortised cost
828,580
(92)
Total reported in the Summary of credit risk
(excluding debt instruments measured at FVOCI) by
stage distribution and ECL coverage by industry
sector at 31 Dec 2024
2,507,370
(10,197)
Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL (continued)
Wholesale
Retail
Total
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
Gross carrying/
nominal amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
Included in sensitivity analysis
1,990,378
(2,507)
442,373
(2,962)
2,432,751
(5,469)
\u2013\u00a0 Exclusions from sensitivity as described in the
section above1
17,024
(6,237)
308,569
(93)
325,593
(6,330)
\u2013\u00a0 Debt instruments measured at fair value through
other comprehensive income2
(302,348)
97
\u2014
\u2014
(302,348)
97
\u2013\u00a0 Performance guarantees2
(93,312)
35
\u2014
\u2014
(93,312)
35
\u2013\u00a0 Other financial assets at amortised cost not
presented as wholesale or personal lending, including
held for sale2
(579,534)
93
(41,129)
174
(620,663)
267
\u2013\u00a0 Other3
2,704
(84)
(4,175)
(11)
(1,471)
(95)
As reported in the Summary of credit risk (excluding
debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at 31
Dec 2023
1,034,912
(8,603)
705,638
(2,892)
1,740,550
(11,495)
Other financial assets at amortised cost
960,271
(422)
Total reported in the Summary of credit risk (excluding
debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at 31
Dec 2023
2,700,821
(11,917)
1Comprises wholesale defaulted obligors, retail portfolios utilising less complex modelling approaches, private banking and insurance.
2The sensitivity analysis includes certain items reported in Other assets at amortised cost, which are not allocated to an industry in the credit tables. It also
includes FVOCI and performance guarantees, which are presented separately in the credit tables.
3Includes FX and other operational variances.
Reconciliations 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 by stage of the
Group\u2019s gross carrying/nominal amount and allowances for loans and
advances to banks and customers, including loan commitments and
financial guarantees.
In addition, a reconciliation by stage of the Group\u2019s gross carrying
amount and allowances for loans and advances to banks and
customers and a reconciliation by stage of the Group\u2019s nominal
amount and allowances for loan commitments and financial
guarantees, were included in this section following adoption of the
recommendations of the third report from The Taskforce on
Disclosures about Expected Credit Losses (\u2018DECL\u2019).
Movements are calculated on a quarterly basis and therefore fully
capture stage movements between quarters. If movements were
calculated on a year-to-date basis they would only reflect the opening
and closing position of the financial instrument.
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 transfer of stage
represents the increase or decrease due to these transfers, for
example, moving from a 12-month (stage 1) to a lifetime (stage 2)
ECL measurement basis. Net remeasurement excludes the
underlying customer risk rating (\u2018CRR\u2019)/probability of default (\u2018PD\u2019)
movements of the financial instruments transferring stage. This is
captured, along with other credit quality movements in the \u2018changes
to risk parameters \u2013 credit quality\u2019 line item.
Changes in \u2018Net new and further lending/repayments\u2019 represents the
impact from volume movements within the Group\u2019s lending portfolio
and includes \u2018New financial assets originated or purchased\u2019, \u2018assets
derecognised (including final repayments)\u2019 and \u2018changes to risk
parameters \u2013 further lending/repayment\u2019.
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including
loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
1,496,805
(1,300)
153,084
(3,102)
20,799
(7,063)
85
(30)
1,670,773
(11,495)
Transfers of financial
instruments:
(19,629)
(1,259)
6,652
2,302
12,977
(1,043)
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 1 to
stage 2
(116,211)
419
116,211
(419)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 2 to
stage 1
98,731
(1,627)
(98,731)
1,627
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(2,799)
16
(12,230)
1,321
15,029
(1,337)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
650
(67)
1,402
(227)
(2,052)
294
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of
stage
\u2014
959
\u2014
(831)
\u2014
(144)
\u2014
\u2014
\u2014
(16)
Changes due to
modifications not
derecognised
\u2014
\u2014
\u2014
\u2014
(25)
\u2014
\u2014
\u2014
(25)
\u2014
Net new and further
lending/repayments
87,833
(168)
(37,731)
589
(5,246)
1,689
7
(7)
44,863
2,103
Changes to risk parameters
\u2013 credit quality
\u2014
363
\u2014
(1,773)
\u2014
(3,945)
\u2014
(11)
\u2014
(5,366)
Changes to models used
for ECL calculation
\u2014
68
\u2014
(4)
\u2014
(20)
\u2014
\u2014
\u2014
44
Assets written off
\u2014
\u2014
\u2014
\u2014
(4,459)
4,459
\u2014
\u2014
(4,459)
4,459
Credit-related modifications
that resulted in
derecognition
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and
others1, 2, 3
(75,322)
105
(6,107)
145
(223)
(81)
1
(3)
(81,651)
166
At 31 Dec 2024
1,489,687
(1,232)
115,898
(2,674)
23,823
(6,148)
93
(51)
1,629,501
(10,105)
ECL income statement
change for the period
1,222
(2,019)
(2,420)
(18)
(3,235)
Recoveries
260
Others
(158)
Total ECL income
statement change for the
period
(3,133)
1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance
for ECL of $46m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
2Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
At 31 Dec 2024
12 months ended
31 Dec 2024
Gross carrying/
nominal amount
Allowance for ECL
ECL charge
\u00a0
$m
$m
$m
As above
1,629,501
(10,105)
(3,133)
Other financial assets measured at amortised cost
828,580
(92)
(114)
Non-trading reverse purchase agreement commitments
49,289
\u2014
\u2014
Performance and other guarantees not considered for IFRS 9
\u2014
\u2014
(173)
Summary of financial instruments to which the impairment requirements in IFRS 9 are
applied/Summary consolidated income statement
2,507,370
(10,197)
(3,420)
Debt instruments measured at FVOCI
346,124
(54)
6
Total allowance for ECL/total income statement ECL change for the period
n/a
(10,251)
(3,414)
As shown in the previous table, the allowance for ECL for loans and
advances to customers and banks and relevant loan commitments
and financial guarantees decreased $1,390m during the period from
$11,495m at 31 December 2023 to $10,105m at 31\u00a0December 2024.
This decrease was driven by:
\u2013 $4,459m of assets written off;
\u2013 $2,103m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayment;
\u2013 foreign exchange and other movements of $166m; and
\u2013 $44m of changes to models used for ECL calculation.
These were partly offset by:
\u2013 $5,366m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages; and
\u2013 $16m relating to the net remeasurement impact of stage
transfers.
The ECL charge for the period of $3,235m presented in the previous
table consisted of $5,366m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages and $16m relating to the net remeasurement impact
of stage transfers.
This was partly offset by $2,103m relating to underlying net book
volume movement and $44m in changes to models used for ECL
calculation.
Summary views of the movement in wholesale and personal lending
are presented on pages 173 and 185.
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including
loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
Gross
exposure
Allowance/
provision
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
1,433,643
(1,257)
177,223
(3,710)
21,207
(6,949)
129
(38)
1,632,202
(11,954)
Transfers of financial instruments:
(18,948)
(1,048)
10,286
2,228
8,662
(1,180)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to
stage 2
(150,728)
442
150,728
(442)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to
stage 1
133,079
(1,467)
(133,079)
1,467
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(1,986)
23
(8,600)
1,379
10,586
(1,402)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
687
(46)
1,237
(176)
(1,924)
222
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
917
\u2014
(973)
\u2014
(124)
\u2014
\u2014
\u2014
(180)
Net new and further lending/
repayments
77,693
(185)
(36,795)
661
(4,956)
1,117
(36)
3
35,906
1,596
Changes to risk parameters \u2013
credit quality
\u2014
307
\u2014
(1,262)
\u2014
(3,896)
\u2014
21
\u2014
(4,830)
Changes to models used for ECL
calculation
\u2014
(22)
\u2014
46
\u2014
7
\u2014
\u2014
\u2014
31
Assets written off
\u2014
\u2014
\u2014
\u2014
(3,922)
3,922
\u2014
\u2014
(3,922)
3,922
Credit-related modifications that
resulted in derecognition
\u2014
\u2014
\u2014
\u2014
(119)
95
\u2014
\u2014
(119)
95
Foreign exchange and others1
4,417
(12)
2,370
(92)
(73)
(55)
(8)
(16)
6,706
(175)
At 31 Dec 2023
1,496,805
(1,300)
153,084
(3,102)
20,799
(7,063)
85
(30)
1,670,773
(11,495)
ECL income statement change for
the period
1,017
(1,528)
(2,896)
24
(3,383)
Recoveries
268
Others
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(195)
Total ECL income statement
change for the period
(3,310)
1Total includes $7.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance
for ECL of $70m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
(Audited)
At 31 Dec 2023
12 months ended
31 Dec 2023
Gross carrying/
nominal amount
Allowance for
ECL
ECL charge
\u00a0
$m
$m
$m
As above
1,670,773
(11,495)
(3,310)
Other financial assets measured at amortised cost
960,271
(422)
(35)
Non-trading reverse purchase agreement commitments
69,777
\u2014
\u2014
Performance and other guarantees not considered for IFRS 9
\u2014
\u2014
(44)
Summary of financial instruments to which the impairment requirements in IFRS 9 are
applied/Summary consolidated income statement
2,700,821
(11,917)
(3,389)
Debt instruments measured at FVOCI
302,348
(97)
(58)
Total allowance for ECL/total income statement ECL change for the period
n/a
(12,014)
(3,447)
Wholesale lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and
customers including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
Gross
carrying/
nominal
amount
Allowanc
e for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
845,982
(698)
102,129
(1,668)
16,939
(6,207)
85
(30)
965,135
(8,603)
Transfers of financial
instruments:
(17,606)
(214)
6,997
825
10,609
(611)
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 1 to
stage 2
(70,991)
173
70,991
(173)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013 transfers from stage 2 to
stage 1
55,182
(380)
(55,182)
380
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(2,056)
7
(9,515)
636
11,571
(643)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
259
(14)
703
(18)
(962)
32
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
214
\u2014
(226)
\u2014
(12)
\u2014
\u2014
\u2014
(24)
Net new and further lending/
repayments
58,044
(151)
(29,842)
311
(4,450)
1,219
7
(7)
23,759
1,372
Change to risk parameters \u2013
credit quality
\u2014
112
\u2014
(899)
\u2014
(2,508)
\u2014
(11)
\u2014
(3,306)
Changes to models used for
ECL calculation
\u2014
39
\u2014
105
\u2014
\u2014
\u2014
\u2014
\u2014
144
Assets written off
\u2014
\u2014
\u2014
\u2014
(2,925)
2,925
\u2014
\u2014
(2,925)
2,925
Credit-related modifications
that resulted in derecognition
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and
others1 2 3
(53,384)
53
(4,996)
36
4
(153)
1
(3)
(58,375)
(67)
At 31 Dec 2024
833,036
(645)
74,288
(1,516)
20,177
(5,347)
93
(51)
927,594
(7,559)
ECL income statement
change for the period
214
(709)
(1,301)
(18)
(1,814)
Recoveries
40
Others
(126)
Total ECL income statement
change for the period
(1,900)
1Total includes $2.9bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $23m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for
sale\u2019 on page 411.
2Total includes $28.9bn of nominal amount and $20m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $0.3bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
As shown in the above table, the allowance for ECL for loans and
advances to customers and banks and relevant loan commitments
and financial guarantees decreased by $1,044m during the period
from $8,603m at 31 December 2023 to $7,559m at 31 December
2024.
This decrease was driven by:
\u2013 $2,925m of assets written off;
\u2013 $1,372m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayments; and
\u2013 $144m relating to changes to models used for ECL calculation.
These were partly offset by:
\u2013 $3,306m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages;
\u2013 foreign exchange and other movements of $67m; and
\u2013 $24m relating to the net remeasurement impact of stage
transfers.
The ECL charge for the period of $1,814m presented in the previous
table consisted of $3,306m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages and $24m relating to the net remeasurement impact
of stage transfers. This was partly offset by $1,372m relating to
underlying net book volume movement and $144m in changes to
models used for ECL calculation.
During the period, there was a net transfer between stage 1 and
stage 2 of $15,809m gross carrying/nominal amounts. It was primarily
driven by our entities in Asia ($12,878m), mainly due to deterioration
in the real estate and construction sectors, and in our main entity in
the US ($1,986m) and Mexico ($1,805m), partly offset by
improvements in the economic outlook that led to upgrades to stage
1 exposures, primarily in our legal entities in the UK($3,077m).
A summary of basis of preparation is available on page 161.
Wholesale lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and
customers including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
POCI
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
830,322
(670)
124,660
(2,205)
17,068
(6,144)
129
(38)
972,179
(9,057)
Transfers of financial instruments:
(16,804)
(429)
10,247
1,141
6,557
(712)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to
stage 2
(93,511)
172
93,511
(172)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to
stage 1
77,772
(605)
(77,772)
605
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(1,444)
20
(6,255)
765
7,699
(785)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
379
(16)
763
(57)
(1,142)
73
\u2014
\u2014
\u2014
\u2014
Net remeasurement of ECL
arising from transfer of stage
\u2014
354
\u2014
(294)
\u2014
(45)
\u2014
\u2014
\u2014
15
Net new and further lending/
repayments
43,282
(138)
(32,082)
311
(3,787)
973
(36)
3
7,377
1,149
Changes to risk parameters \u2013
credit quality
\u2014
203
\u2014
(621)
\u2014
(2,941)
\u2014
21
\u2014
(3,338)
Changes to models used for ECL
calculation
\u2014
(9)
\u2014
25
\u2014
\u2014
\u2014
\u2014
\u2014
16
Assets written off
\u2014
\u2014
\u2014
\u2014
(2,596)
2,596
(2,596)
2,596
Credit-related modifications that
resulted in derecognition
\u2014
\u2014
\u2014
\u2014
(119)
95
\u2014
\u2014
(119)
95
Foreign exchange and others1
(10,818)
(9)
(696)
(25)
(184)
(29)
(8)
(16)
(11,706)
(79)
At 31 Dec 2023
845,982
(698)
102,129
(1,668)
16,939
(6,207)
85
(30)
965,135
(8,603)
ECL income statement change
for the period
410
(579)
(2,013)
24
(2,158)
Recoveries
42
Others
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(203)
Total ECL income statement
change for the period
(2,319)
1Total includes $13.5bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $61m, reflecting business disposals as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for
sale\u2019 on page 411.
Personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
650,823
(602)
50,955
(1,434)
3,860
(856)
705,638
(2,892)
Transfers of financial instruments:
(2,023)
(1,045)
(345)
1,477
2,368
(432)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(45,220)
246
45,220
(246)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
43,549
(1,247)
(43,549)
1,247
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(743)
9
(2,715)
685
3,458
(694)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
391
(53)
699
(209)
(1,090)
262
\u2014
\u2014
Net remeasurement of ECL arising from transfer
of stage
\u2014
745
\u2014
(605)
\u2014
(132)
\u2014
8
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(25)
\u2014
(25)
\u2014
Net new and further lending/repayments
29,789
(17)
(7,889)
278
(796)
470
21,104
731
Change to risk parameters \u2013 credit quality
\u2014
251
\u2014
(874)
\u2014
(1,437)
\u2014
(2,060)
Changes to models used for ECL calculation
\u2014
29
\u2014
(109)
\u2014
(20)
\u2014
(100)
Assets written off
\u2014
\u2014
\u2014
\u2014
(1,534)
1,534
(1,534)
1,534
Foreign exchange and others1,2,3
(21,938)
52
(1,111)
109
(227)
72
(23,276)
233
At 31 Dec 2024
656,651
(587)
41,610
(1,158)
3,646
(801)
701,907
(2,546)
ECL income statement change for the period
1,008
(1,310)
(1,119)
(1,421)
Recoveries
220
Others
(32)
Total ECL income statement change for the
period
(1,233)
1Total includes $0.8bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of
$23m, reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page\u00a0411.
2Total includes $6.4bn of nominal amount and $1m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $2.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Argentina during 2024.
As shown in the above table, the allowance for ECL for loans and advances to customers and relevant loan commitments and financial
guarantees decreased by $346m during the period from $2,892m at 31\u00a0December 2023 to $2,546m at 31\u00a0December\u00a02024.
This decrease was driven by:
\u2013 $1,534m of assets written off;
\u2013 $731m relating to volume movements, which included the
allowance for ECL associated with new originations, assets
derecognised and further lending/repayment;
\u2013 foreign exchange and other movements of $233m; and
\u2013 $8m relating to the net remeasurement impact of stage transfers.
These were partly offset by:
\u2013 $2,060m relating to credit quality changes, including the credit
quality impact of financial instruments transferring between
stages; and
\u2013 $100m of changes to models used for ECL calculation.
The ECL charge for the period of $1,421m presented in the above
table consisted of $2,060m relating to credit quality changes,
including the credit quality impact of financial instruments transferring
between stages, and $100m relating to changes to models used for
the calculation of ECL. This was partly offset by $731m relating to
underlying net book volume movements and $8m relating to the net
remeasurement impact of stage transfer.
During the period, there was a net transfer between stage 1 and
stage 2 of $1,671m gross carrying/nominal amounts. This increase
was mainly driven by HSBC UK ( $3,410m) due to mortgages portfolio
and Mexico ($860m) due to a slight deterioration in unsecured lending
portfolio, partly offset by Hong Kong ($2,983m) due to improvement
in credit cards and other unsecured lending portfolio.
A summary of basis of preparation is available on page 161.
\"Arrows_WD.jpg\"
Personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
(Audited)
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
603,321
(587)
52,563
(1,505)
4,139
(805)
660,023
(2,897)
Transfers of financial instruments:
(2,144)
(619)
39
1,087
2,105
(468)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(57,217)
270
57,217
(270)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
55,307
(862)
(55,307)
862
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(542)
3
(2,345)
614
2,887
(617)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
308
(30)
474
(119)
(782)
149
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
563
\u2014
(679)
\u2014
(79)
\u2014
(195)
Net new and further lending/repayments
34,411
(47)
(4,713)
350
(1,169)
144
28,529
447
Change to risk parameters \u2013 credit quality
\u2014
104
\u2014
(641)
\u2014
(955)
\u2014
(1,492)
Changes to models used for ECL calculation
\u2014
(13)
\u2014
21
\u2014
7
\u2014
15
Assets written off
\u2014
\u2014
\u2014
\u2014
(1,326)
1,326
(1,326)
1,326
Foreign exchange and others1,2
15,235
(3)
3,066
(67)
111
(26)
18,412
(96)
At 31 Dec 2023
650,823
(602)
50,955
(1,434)
3,860
(856)
705,638
(2,892)
ECL income statement change for the period
607
(949)
(883)
(1,225)
Recoveries
226
Others
8
Total ECL income statement change for the period
(991)
1Total includes $7.8bn of gross carrying loans and advances and a corresponding allowance for ECL of $11m, due to the retention of certain balances previously
classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 \u2018Assets held for sale and liabilities of disposal groups
held for sale\u2019 on page 411.
2Total includes $2.0bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of
$20m, reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page\u00a0411.
First lien residential mortgages \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to
customers including loan commitments and financial guarantees
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
340,764
(109)
38,513
(202)
2,258
(264)
381,535
(575)
Transfers of financial instruments:
(3,561)
(232)
2,694
232
867
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(33,524)
23
33,524
(23)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
30,113
(244)
(30,113)
244
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(290)
6
(1,127)
90
1,417
(96)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
140
(17)
410
(79)
(550)
96
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
163
\u2014
(152)
\u2014
(30)
\u2014
(19)
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Net new and further lending/repayments
14,008
20
(6,336)
26
(523)
33
7,149
79
Change to risk parameters \u2013 credit quality
\u2014
115
\u2014
(73)
\u2014
(103)
\u2014
(61)
Changes to models used for ECL calculation
\u2014
(8)
\u2014
29
\u2014
1
\u2014
22
Assets written off
\u2014
\u2014
\u2014
\u2014
(63)
63
(63)
63
Foreign exchange and others
(6,535)
(7)
(530)
10
(65)
15
(7,130)
18
At 31 Dec 2024
344,676
(58)
34,341
(130)
2,474
(285)
381,491
(473)
ECL income statement change for the period
290
(170)
(99)
21
Recoveries
7
Others
(1)
Total ECL income statement change for the
period
27
At 1 Jan 2023
317,666
(74)
40,048
(231)
2,230
(270)
359,944
(575)
Transfers of financial instruments:
(1,182)
(109)
421
138
761
(29)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(41,207)
28
41,207
(28)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
40,164
(117)
(40,164)
117
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(354)
1
(958)
100
1,312
(101)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
215
(21)
336
(51)
(551)
72
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
72
\u2014
(79)
\u2014
(67)
\u2014
(74)
Net new and further lending/repayments
15,447
(3)
(3,939)
22
(751)
322
10,757
341
Change to risk parameters \u2013 credit quality
\u2014
16
\u2014
(67)
\u2014
(269)
\u2014
(320)
Changes to models used for ECL calculation
\u2014
(2)
\u2014
28
\u2014
\u2014
\u2014
26
Assets written off
\u2014
\u2014
\u2014
\u2014
(53)
53
(53)
53
Foreign exchange and others
8,833
(9)
1,983
(13)
71
(4)
10,887
(26)
At 31 Dec 2023
340,764
(109)
38,513
(202)
2,258
(264)
381,535
(575)
ECL income statement change for the period
83
(96)
(14)
(27)
Recoveries
10
Others
13
Total ECL income statement change for the period
(4)
Credit cards \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan
commitments
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
153,292
(253)
6,547
(698)
450
(144)
160,289
(1,095)
Transfers of financial instruments:
796
(453)
(1,469)
717
673
(264)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(6,427)
129
6,427
(129)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
7,255
(569)
(7,255)
569
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(179)
2
(765)
327
944
(329)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
147
(15)
124
(50)
(271)
65
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
280
\u2014
(256)
\u2014
(45)
\u2014
(21)
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(2)
\u2014
(2)
\u2014
Net new and further lending/repayments
9,604
18
(1,122)
127
(1)
194
8,481
339
Change to risk parameters \u2013 credit quality
\u2014
79
\u2014
(476)
\u2014
(694)
\u2014
(1,091)
Changes to models used for ECL calculation
\u2014
22
\u2014
(122)
\u2014
1
\u2014
(99)
Assets written off
\u2014
\u2014
\u2014
\u2014
(736)
736
(736)
736
Foreign exchange and others1
(7,380)
27
(196)
50
(41)
17
(7,617)
94
At 31 Dec 2024
156,312
(280)
3,760
(658)
343
(199)
160,415
(1,137)
ECL income statement change for the period
399
(727)
(544)
(872)
Recoveries
106
Others
(10)
Total ECL income statement change for the
period
(776)
1Total includes $4.5bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada and our business in Argentina during 2024.
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
140,519
(244)
6,747
(777)
353
(160)
147,619
(1,181)
Transfers of financial instruments:
199
(292)
(848)
496
649
(204)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(7,855)
102
7,855
(102)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
8,124
(391)
(8,124)
391
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(82)
1
(621)
227
703
(228)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
12
(4)
42
(20)
(54)
24
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
185
\u2014
(301)
\u2014
(5)
\u2014
(121)
Net new and further lending/repayments
13,206
27
621
169
12
(41)
13,839
155
Change to risk parameters \u2013 credit quality
\u2014
82
\u2014
(281)
\u2014
(301)
\u2014
(500)
Changes to models used for ECL calculation
\u2014
(9)
\u2014
15
\u2014
1
\u2014
7
Assets written off
\u2014
\u2014
\u2014
\u2014
(571)
571
(571)
571
Foreign exchange and others
(632)
(2)
27
(19)
7
(5)
(598)
(26)
At 31 Dec 2023
153,292
(253)
6,547
(698)
450
(144)
160,289
(1,095)
ECL income statement change for the period
285
(398)
(346)
(459)
Recoveries
108
Others
(200)
Total ECL income statement change for the period
(551)
Other personal lending \u2013 reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers
including loan commitments and financial guarantees
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
156,767
(240)
5,895
(534)
1,152
(448)
163,814
(1,222)
Transfers of financial instruments:
742
(360)
(1,570)
528
828
(168)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(5,269)
94
5,269
(94)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
6,181
(434)
(6,181)
434
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(274)
1
(823)
268
1,097
(269)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
104
(21)
165
(80)
(269)
101
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
302
\u2014
(197)
\u2014
(57)
\u2014
48
Changes due to modifications not derecognised
\u2014
\u2014
\u2014
\u2014
(23)
\u2014
(23)
\u2014
Net new and further lending/repayments
6,177
(55)
(431)
125
(272)
243
5,474
313
Change to risk parameters \u2013 credit quality
\u2014
57
\u2014
(325)
\u2014
(640)
\u2014
(908)
Changes to models used for ECL calculation
\u2014
15
\u2014
(16)
\u2014
(22)
\u2014
(23)
Assets written off
\u2014
\u2014
\u2014
\u2014
(735)
735
(735)
735
Foreign exchange and others1,2
(8,023)
32
(385)
49
(121)
40
(8,529)
121
At 31 Dec 2024
155,663
(249)
3,509
(370)
829
(317)
160,001
(936)
ECL income statement change for the period
319
(413)
(476)
(570)
Recoveries
107
Others
(21)
Total ECL income statement change for the
period
(484)
1Total includes $0.3bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $10m,
reflecting business disposals, as disclosed in Note 23 \u2018Assets held for sale and liabilities of disposal groups held for sale\u2019 on page 411.
2Total includes $4.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada during 2024.
Non-credit impaired
Credit impaired
Stage 1
Stage 2
Stage 3
Total
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
Gross
carrying/
nominal
amount
Allowance
for ECL
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2023
145,136
(269)
5,768
(497)
1,556
(375)
152,460
(1,141)
Transfers of financial instruments:
(1,161)
(218)
466
453
695
(235)
\u2014
\u2014
\u2013\u00a0 transfers from stage 1 to stage 2
(8,155)
140
8,155
(140)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers from stage 2 to stage 1
7,019
(354)
(7,019)
354
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 transfers to stage 3
(106)
1
(766)
287
872
(288)
\u2014
\u2014
\u2013\u00a0 transfers from stage 3
81
(5)
96
(48)
(177)
53
\u2014
\u2014
Net remeasurement of ECL arising from transfer of
stage
\u2014
306
\u2014
(299)
\u2014
(7)
\u2014
\u2014
Net new and further lending/repayments
5,758
(71)
(1,395)
159
(430)
(137)
3,933
(49)
Change to risk parameters \u2013 credit quality
\u2014
6
\u2014
(293)
\u2014
(385)
\u2014
(672)
Changes to models used for ECL calculation
\u2014
(2)
\u2014
(22)
\u2014
6
\u2014
(18)
Assets written off
\u2014
\u2014
\u2014
\u2014
(702)
702
(702)
702
Foreign exchange and others1
7,034
8
1,056
(35)
33
(17)
8,123
(44)
At 31 Dec 2023
156,767
(240)
5,895
(534)
1,152
(448)
163,814
(1,222)
ECL income statement change for the period
239
(455)
(523)
(739)
Recoveries
108
Others
195
Total ECL income statement change for the period
(436)
1Total includes $7.2bn of gross carrying loans and advances and a corresponding allowance for ECL of $10m, due to the retention of certain balances previously
classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 \u2018Assets held for sale and liabilities of disposal groups
held for sale\u2019 on page 411.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-5": { "value": "
Credit quality
Credit quality of financial instruments
(Audited)
We assess the credit quality of all financial instruments that are
subject to credit risk. The credit quality of financial instruments is a
point-in-time assessment of PD, whereas stages 1 and 2 are
determined based on relative deterioration of credit quality since initial
recognition for the majority of portfolios. Accordingly, for non-credit-
impaired financial instruments, there is no direct relationship between
the credit quality assessment and stages 1 and 2, although typically
the lower credit quality bands exhibit a higher proportion in stage 2.
The five credit quality classifications provided below each encompass
a range of granular internal credit rating grades assigned to wholesale
and personal lending businesses and the external ratings attributed by
external agencies to debt securities, as shown in the table on
page\u00a0139.
Distribution of financial instruments by credit quality at 31 December 2024
(Audited)
Gross carrying/notional amount
Allowance
for ECL/
other credit
provisions
Net
Strong
Good
Satisfactory
Sub-
standard
Credit
impaired
Total
$m
$m
$m
$m
$m
$m
$m
$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at
amortised cost
515,266
193,080
186,416
22,906
22,705
940,373
(9,715)
930,658
\u2013\u00a0 personal
360,317
53,595
27,774
1,979
3,560
447,225
(2,524)
444,701
\u2013\u00a0 corporate and commercial
114,504
118,785
138,705
20,224
18,466
410,684
(6,755)
403,929
\u2013\u00a0 non-bank financial institutions
40,445
20,700
19,937
703
679
82,464
(436)
82,028
Loans and advances to banks held at amortised
cost
92,621
4,255
5,040
134
2
102,052
(13)
102,039
Cash and balances at central banks
266,713
949
12
\u2014
\u2014
267,674
\u2014
267,674
Hong Kong Government certificates of
indebtedness
42,293
\u2014
\u2014
\u2014
\u2014
42,293
\u2014
42,293
Reverse repurchase agreements \u2013 non-trading
155,831
70,877
25,799
42
\u2014
252,549
\u2014
252,549
Financial investments
146,970
3,681
3,331
\u2014
\u2014
153,982
(9)
153,973
Assets held for sale
2,425
458
367
1
22
3,273
(4)
3,269
Other assets
88,338
9,735
10,151
454
131
108,809
(79)
108,730
\u2013\u00a0 endorsements and acceptances
2,101
2,663
3,090
243
10
8,107
(14)
8,093
\u2013\u00a0 accrued income and other
86,237
7,072
7,061
211
121
100,702
(65)
100,637
Debt instruments measured at fair value
through\u00a0other comprehensive income1
336,313
9,448
7,768
380
\u2014
353,909
(54)
353,855
Out-of-scope for IFRS 9 ECL
Trading assets
119,546
21,951
15,804
2,300
47
159,648
\u2014
159,648
Other financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
53,282
11,862
4,390
231
11
69,776
\u2014
69,776
Derivatives
224,870
34,124
9,373
258
12
268,637
\u2014
268,637
Assets held for sale
3,019
\u2014
\u2014
\u2014
\u2014
3,019
\u2014
3,019
Total gross carrying amount on balance sheet
2,047,487
360,420
268,451
26,706
22,930
2,725,994
(9,874)
2,716,120
Percentage of total credit quality (%)
75.1
13.2
9.9
1.0
0.8
100
Loan and other credit-related commitments
400,120
131,396
77,220
9,670
961
619,367
(348)
619,019
Financial guarantees
7,365
4,263
4,399
723
248
16,998
(29)
16,969
In-scope: Irrevocable loan commitments and
financial guarantees
407,485
135,659
81,619
10,393
1,209
636,365
(377)
635,988
Loan and other credit-related commitments
96,952
76,340
65,619
2,847
453
242,211
\u2014
242,211
Performance and other guarantees
39,940
32,956
17,339
1,671
817
92,723
(312)
92,411
Out-of-scope: Revocable loan commitments
and non-financial guarantees
136,892
109,296
82,958
4,518
1,270
334,934
(312)
334,622
1For 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.
Distribution of financial instruments by credit quality at 31 December 2023
(Audited)
Gross carrying/notional amount
Allowance
for ECL/
other credit
provisions
Net
Strong
Good
Satisfactory
Sub-
standard
Credit
impaired
Total
$m
$m
$m
$m
$m
$m
$m
$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at
amortised cost
497,665
206,476
197,582
28,532
19,354
949,609
(11,074)
938,535
\u2013\u00a0 personal
346,562
62,656
32,314
2,485
3,505
447,522
(2,867)
444,655
\u2013\u00a0 corporate and commercial
118,123
123,713
145,249
25,531
15,039
427,655
(7,803)
419,852
\u2013\u00a0 non-bank financial institutions
32,980
20,107
20,019
516
810
74,432
(404)
74,028
Loans and advances to banks held at amortised
cost
101,057
4,640
6,363
855
2
112,917
(15)
112,902
Cash and balances at central banks
284,723
1,068
77
\u2014
\u2014
285,868
\u2014
285,868
Hong Kong Government certificates of
indebtedness
42,024
\u2014
\u2014
\u2014
\u2014
42,024
\u2014
42,024
Reverse repurchase agreements \u2013\u00a0 non-trading
170,494
46,884
34,206
633
\u2014
252,217
\u2014
252,217
Financial investments
143,333
3,814
1,137
62
\u2014
148,346
(20)
148,326
Assets held for sale
68,501
16,403
14,812
2,939
531
103,186
(324)
102,862
Other assets
106,184
11,982
9,965
366
133
128,630
(78)
128,552
\u2013\u00a0 endorsements and acceptances
2,405
2,666
2,707
161
18
7,957
(18)
7,939
\u2013\u00a0 accrued income and other
103,779
9,316
7,258
205
115
120,673
(60)
120,613
Debt instruments measured at fair value through
other comprehensive income 1
288,959
12,037
7,897
805
5
309,703
(97)
309,606
Out-of-scope for IFRS 9 ECL
Trading assets
122,695
20,595
20,746
1,326
135
165,497
\u2014
165,497
Other financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
52,649
11,517
4,733
84
6
68,989
\u2014
68,989
Derivatives
196,098
27,377
6,041
187
11
229,714
\u2014
229,714
Assets held for sale
12,495
\u2014
\u2014
\u2014
\u2014
12,495
\u2014
12,495
Total gross carrying amount on balance sheet
2,086,877
362,793
303,559
35,789
20,177
2,809,195
(11,608)
2,797,587
Percentage of total credit quality (%)
74.3
12.9
10.8
1.3
0.7
100
Loan and other credit-related commitments
436,359
142,500
73,230
7,782
1,144
661,015
(367)
660,648
Financial guarantees
7,700
4,146
4,080
699
384
17,009
(39)
16,970
In-scope: Irrevocable loan commitments and
financial guarantees
444,059
146,646
77,310
8,481
1,528
678,024
(406)
677,618
Loan and other credit-related commitments
92,509
77,891
61,462
3,896
377
236,135
\u2014
236,135
Performance and other guarantees
39,784
32,231
19,445
1,853
964
94,277
(145)
94,132
Out-of-scope: Revocable loan commitments and
non-financial guarantees
132,293
110,122
80,907
5,749
1,341
330,412
(145)
330,267
1For 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.
Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
(Audited)
Gross carrying/notional amount
Allowance\u00a0
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
515,266
193,080
186,416
22,906
22,705
940,373
(9,715)
930,658
\u2013\u00a0 stage 1
498,415
170,420
150,818
4,767
\u2014
824,420
(1,078)
823,342
\u2013\u00a0 stage 2
16,851
22,660
35,598
18,139
\u2014
93,248
(2,546)
90,702
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
22,615
22,615
(6,040)
16,575
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
90
90
(51)
39
Loans and advances to banks at amortised cost
92,621
4,255
5,040
134
2
102,052
(13)
102,039
\u2013\u00a0 stage 1
92,528
4,226
4,981
117
\u2014
101,852
(9)
101,843
\u2013\u00a0 stage 2
93
29
59
17
\u2014
198
(2)
196
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
2
2
(2)
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Other financial assets measured at amortised cost
702,570
85,700
39,660
497
153
828,580
(92)
828,488
\u2013\u00a0 stage 1
702,373
85,032
38,977
239
\u2014
826,621
(64)
826,557
\u2013\u00a0 stage 2
197
668
683
258
\u2014
1,806
(5)
1,801
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
153
153
(23)
130
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loan and other credit-related commitments
400,120
131,396
77,220
9,670
961
619,367
(348)
619,019
\u2013\u00a0 stage 1
398,779
125,956
67,949
4,547
\u2014
597,231
(137)
597,094
\u2013\u00a0 stage 2
1,341
5,440
9,271
5,123
\u2014
21,175
(121)
21,054
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
958
958
(90)
868
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
3
3
\u2014
3
Financial guarantees
7,365
4,263
4,399
723
248
16,998
(29)
16,969
\u2013\u00a0 stage 1
7,352
4,192
3,625
184
\u2014
15,353
(8)
15,345
\u2013\u00a0 stage 2
13
71
774
539
\u2014
1,397
(5)
1,392
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
248
248
(16)
232
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2024
1,717,942
418,694
312,735
33,930
24,069
2,507,370
(10,197)
2,497,173
Debt instruments at FVOCI1
\u2013\u00a0 stage 1
336,264
9,448
7,290
\u2014
\u2014
353,002
(31)
352,971
\u2013\u00a0 stage 2
49
\u2014
478
380
\u2014
907
(23)
884
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2024
336,313
9,448
7,768
380
\u2014
353,909
(54)
353,855
Loans and advances to customers at amortised cost
497,665
206,476
197,582
28,532
19,354
949,609
(11,074)
938,535
\u2013\u00a0 stage 1
478,422
177,410
147,940
5,612
\u2014
809,384
(1,130)
808,254
\u2013\u00a0 stage 2
19,243
29,066
49,642
22,920
\u2014
120,871
(2,964)
117,907
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
19,273
19,273
(6,950)
12,323
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
81
81
(30)
51
Loans and advances to banks at amortised cost
101,057
4,640
6,363
855
2
112,917
(15)
112,902
\u2013\u00a0 stage 1
101,011
4,631
5,550
287
\u2014
111,479
(10)
111,469
\u2013\u00a0 stage 2
46
9
813
568
\u2014
1,436
(3)
1,433
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
2
2
(2)
\u2014
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Other financial assets measured at amortised cost
815,259
80,151
60,197
4,000
664
960,271
(422)
959,849
\u2013\u00a0 stage 1
814,776
78,486
53,095
516
\u2014
946,873
(109)
946,764
\u2013\u00a0 stage 2
483
1,665
7,102
3,484
\u2014
12,734
(132)
12,602
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
664
664
(181)
483
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loan and other credit-related commitments
436,359
142,500
73,230
7,782
1,144
661,015
(367)
660,648
\u2013\u00a0 stage 1
432,017
135,192
61,213
2,527
\u2014
630,949
(153)
630,796
\u2013\u00a0 stage 2
4,342
7,308
12,017
5,255
\u2014
28,922
(128)
28,794
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
1,140
1,140
(86)
1,054
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
4
4
\u2014
4
Financial guarantees
7,700
4,146
4,080
699
384
17,009
(39)
16,970
\u2013\u00a0 stage 1
7,497
3,943
3,204
102
\u2014
14,746
(7)
14,739
\u2013\u00a0 stage 2
203
203
876
597
\u2014
1,879
(7)
1,872
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
384
384
(25)
359
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
1,858,040
437,913
341,452
41,868
21,548
2,700,821
(11,917)
2,688,904
Debt instruments at FVOCI1
\u2013\u00a0 stage 1
288,909
12,037
7,579
\u2014
\u2014
308,525
(37)
308,488
\u2013\u00a0 stage 2
50
\u2014
318
805
\u2014
1,173
(59)
1,114
\u2013\u00a0 stage 3
\u2014
\u2014
\u2014
\u2014
5
5
(1)
4
\u2013\u00a0 POCI
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
288,959
12,037
7,897
805
5
309,703
(97)
309,606
1For 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.
Insurance manufacturing operations risk in 2024
Measurement
The following tables show the composition of the fair value of underlying items of the Group\u2019s participating contracts at the reporting date.
Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
Life direct
participating
and investment
DPF contracts1
Life
other
contracts2
Other
contracts3
Shareholder
assets
and liabilities
Total
At 31 Dec 2024
$m
$m
$m
$m
$m
Financial assets
98,676
4,452
6,227
5,967
115,322
\u2013\u00a0 trading assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013 financial assets designated and otherwise mandatorily measured
at fair value through profit or loss
94,327
4,233
4,839
690
104,089
\u2013\u00a0 derivatives
207
7
1
\u2014
215
\u2013\u00a0 financial investments \u2013 at amortised cost
545
90
1,060
4,335
6,030
\u2013\u00a0 financial assets at fair value through other comprehensive income
\u2014
\u2014
6
73
79
\u2013\u00a0 other financial assets
3,597
122
321
869
4,909
Insurance contract assets
14
104
\u2014
\u2014
118
Reinsurance contract assets
\u2014
5,013
\u2014
\u2014
5,013
Other assets and investment properties4
24,647
64
36
3,337
28,084
Total assets at 31 Dec 2024
123,337
9,633
6,263
9,304
148,537
Liabilities under investment contracts designated at fair\u00a0value
\u2014
\u2014
5,931
\u2014
5,931
Insurance contract liabilities
102,605
4,427
\u2014
\u2014
107,032
Reinsurance contract liabilities
\u2014
701
\u2014
\u2014
701
Deferred tax
\u2014
\u2014
\u2014
12
12
Other liabilities4
21,772
39
\u2014
6,035
27,846
Total liabilities
124,377
5,167
5,931
6,047
141,522
Total equity
\u2014
\u2014
\u2014
7,015
7,015
Total liabilities and equity at 31 Dec 2024
124,377
5,167
5,931
13,062
148,537
Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
Life direct
participating and
investment DPF
contracts1
Life
other
contracts2
Other
contracts3
Shareholder
assets
and liabilities
Total
At 31 Dec 2023
$m
$m
$m
$m
$m
Financial assets
113,605
3,753
5,812
7,696
130,866
\u2013\u00a0 trading assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 financial assets designated and otherwise mandatorily measured
at fair value through profit or loss
100,427
3,593
4,177
1,166
109,363
\u2013\u00a0 derivatives
258
10
\u2014
6
274
\u2013\u00a0 financial investments \u2013 at amortised cost
1,351
67
1,157
4,772
7,347
\u2013\u00a0 financial assets at fair value through other comprehensive income
8,859
\u2014
5
693
9,557
\u2013\u00a0 other financial assets
2,710
83
473
1,059
4,325
Insurance contract assets
13
213
\u2014
\u2014
226
Reinsurance contract assets
\u2014
4,871
\u2014
\u2014
4,871
Other assets and investment properties
2,782
164
35
1,636
4,617
Total assets at 31 Dec 2023
116,400
9,001
5,847
9,332
140,580
Liabilities under investment contracts designated at fair\u00a0value
\u2014
\u2014
5,103
\u2014
5,103
Insurance contract liabilities
116,389
3,961
\u2014
\u2014
120,350
Reinsurance contract liabilities
\u2014
819
\u2014
\u2014
819
Deferred tax
\u2014
1
\u2014
3
4
Other liabilities
\u2014
\u2014
\u2014
6,573
6,573
Total liabilities
116,389
4,781
5,103
6,576
132,849
Total equity
\u2014
\u2014
\u2014
7,731
7,731
Total liabilities and equity at 31 Dec 2023
116,389
4,781
5,103
14,307
140,580
1\u2018Life direct participating and investment DPF contracts\u2019 are life direct participating contracts and investment contracts with discretionary participating features.
These are substantially measured under the variable fee approach measurement model.
2\u2018Life other contracts\u2019 are measured under the general measurement model and mainly include protection insurance contracts as well as reinsurance contracts.
The reinsurance contracts primarily provide diversification benefits over the life direct participating and investment DPF contracts.
3\u2018Other contracts\u2019 includes investment contracts for which HSBC does not bear significant insurance risk.
4\u2019Other assets and investment properties\u2019 includes $24,222m and \u2019Other liabilities\u2019 includes $23,420m in respect of the classification of the French insurance
business assets and liabilities as held for sale at 31 December 2024. Further details are provided on page 411.
11Trading assets
2024
2023
$m
$m
Treasury and other eligible bills
32,022
24,433
Debt securities
97,275
106,108
Equity securities
155,194
123,663
Trading securities
284,491
254,204
Loans and advances to banks1
6,123
9,761
Loans and advances to customers1
24,228
25,194
Year ended 31 Dec
314,842
289,159
1Loans and advances to banks and customers include reverse repos, stock borrowing and other accounts.
12Fair 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.
Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price
determination or validation is used. For inactive markets, HSBC sources alternative market information, with greater weight given to
information that is considered to be more relevant and reliable. Examples of the factors considered are price observability, instrument
comparability, consistency of data sources, underlying data accuracy and timing of prices.
For fair values determined using valuation models, the control framework includes development or validation by independent support functions
of the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming
operational and are calibrated against external market data on an ongoing basis.
Changes in fair value are generally subject to a profit and loss analysis process and are disaggregated into high-level categories including
portfolio changes, market movements and other fair value adjustments.
The majority of financial instruments measured at fair value are in GBM. GBM\u2019s fair value governance structure comprises its Finance function,
Valuation Committees and a Valuation Committee Review Group. Finance is responsible for establishing procedures governing valuation and
ensuring fair values are in compliance with accounting standards. The fair values are reviewed by the Valuation Committees, which consist of
independent support functions. These committees are overseen by the Valuation Committee Review Group, which considers all material
subjective valuations.
Financial liabilities measured at fair value
In certain circumstances, HSBC 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
either based 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 HSBC\u2019s liabilities. The
change in fair value of issued debt securities attributable to the Group\u2019s own credit spread is computed as follows: for each security at each
reporting date, an externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer. Then,
using discounted cash flow, each security is valued using an appropriate market discount curve. The difference in the valuations is attributable
to the Group\u2019s own credit spread. This methodology is applied consistently across all securities.
Structured notes issued and certain other hybrid instruments are reported as financial liabilities designated at fair value. The\u00a0credit spread
applied to these instruments is derived from the spreads at which HSBC issues structured notes.
Gains and losses arising from changes in the credit spread of liabilities issued by HSBC, recorded in other comprehensive income, reverse over
the contractual life of the debt, provided that the debt is not repaid at a premium or a discount.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
\u2013 Level 1 \u2013 valuation technique using quoted market price. These are financial instruments with quoted prices for identical instruments in
active markets that HSBC can access at the measurement date.
\u2013 Level 2 \u2013 valuation technique using observable inputs. These are 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.
\u2013 Level 3 \u2013 valuation technique with significant unobservable inputs. These are financial instruments valued using valuation techniques where
one or more significant inputs are unobservable.
Financial instruments carried at fair value and bases of valuation
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
$m
$m
$m
$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets
236,593
71,574
6,675
314,842
202,020
82,833
4,306
289,159
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
39,331
56,694
19,744
115,769
27,030
63,825
19,788
110,643
Derivatives
1,859
264,629
2,149
268,637
931
226,714
2,069
229,714
Financial investments
258,371
78,088
2,734
339,193
215,228
76,591
2,618
294,437
Liabilities
Trading liabilities
42,038
23,160
784
65,982
53,354
19,318
478
73,150
Financial liabilities designated at fair value
2,152
127,458
9,117
138,727
1,266
129,232
10,928
141,426
Derivatives
1,088
260,518
2,842
264,448
1,918
230,285
2,569
234,772
The table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale
in accordance with IFRS 5. For further details, see Note 23.
Financial instruments carried at fair value and bases of valuation \u2013 assets and liabilities held for sale
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
$m
$m
$m
$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets
\u2014
\u2014
\u2014
\u2014
2,403
61
\u2014
2,465
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
2,967
9,018
2,575
14,560
\u2014
15
49
64
Derivatives
\u2014
36
\u2014
36
\u2014
528
\u2014
528
Financial investments
2,651
5,345
504
8,500
9,357
\u2014
28
9,385
Liabilities
Trading liabilities
\u2014
\u2014
\u2014
\u2014
1,352
64
\u2014
1,417
Financial liabilities designated at fair value
\u2014
130
\u2014
130
\u2014
2,370
\u2014
2,370
Derivatives
\u2014
19
\u2014
19
\u2014
615
\u2014
615
Transfers between Level 1 and Level 2 fair values
Assets
Liabilities
Financial
investments
Trading
assets
Designated and otherwise
mandatorily measured
at fair value
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
13,511
9,246
1,540
\u2014
191
\u2014
\u2014
Transfers from Level 2 to Level 1
10,752
6,060
3,042
\u2014
159
\u2014
\u2014
At 31 Dec 2023
Transfers from Level 1 to Level 2
13,200
8,066
1,709
\u2014
54
\u2014
\u2014
Transfers from Level 2 to Level 1
9,975
5,758
2,477
\u2014
309
\u2014
\u2014
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.
Fair value adjustments
Fair value adjustments take into consideration additional factors not incorporated within the primary product valuation model that would
otherwise be considered by a market participant. Adjustments are calculated using model infrastructure including those within primary valuation
systems. We classify fair value adjustments as either \u2018risk-related\u2019 or \u2018model-related\u2019. The majority of these adjustments relate to MSS.
Movements in the amount of fair value adjustments do not necessarily translate in equivalent movements of profits or losses within the
income statement, as these movements can be compensated by other related profits or loss effects. For example, as models are enhanced,
fair value adjustments may no longer be required. Similarly, fair value adjustments will decrease when the related positions are unwound, but
this may not result in profit or loss.
Fair value adjustments
2024
2023
GBM
Corporate
Centre
GBM
Corporate
Centre
$m
$m
$m
$m
Type of adjustment
Risk-related
634
35
692
41
\u2013\u00a0 bid-offer
366
2
414
\u2014
\u2013\u00a0 uncertainty
98
3
75
3
\u2013\u00a0 credit valuation adjustment
126
27
164
35
\u2013\u00a0 debit valuation adjustment
(24)
\u2014
(54)
\u2014
\u2013\u00a0 funding fair value adjustment
68
3
93
3
Model-related
50
\u2014
63
\u2014
\u2013\u00a0 model limitation
50
\u2014
63
\u2014
Inception profit (Day 1 P&L reserves)
92
\u2014
86
\u2014
At 31 Dec
776
35
841
41
The net reduction in fair value adjustments was predominantly driven by changes to exposure, and tightening of credit and liquidity market
spreads.
Bid-offer
IFRS 13 \u2018Fair Value Measurement\u2019 requires the 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.
Uncertainty
Certain model inputs may be less readily determinable from market data and/or the choice of model itself may be more subjective. In\u00a0these
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 HSBC\u2019s valuation model.
Credit and debit valuation adjustments
The credit valuation adjustment (\u2018CVA\u2019) is an adjustment to the valuation of over-the-counter (\u2018OTC\u2019) derivative contracts to reflect the possibility
that the counterparty may default and that HSBC may not receive the full market value of the transactions.
The debit valuation adjustment (\u2018DVA\u2019) is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC may
default, and that it may not pay the full market value of the transactions. The DVA considers the overlap with the funding fair value adjustment.
HSBC calculates a separate CVA and DVA for each legal entity, and for each counterparty to which the entity has exposure. With the exception
of central clearing parties, all third-party counterparties are included in the CVA and DVA calculations, and these adjustments are not netted
across Group entities.
HSBC calculates the CVA by applying the probability of default (\u2018PD\u2019) of the counterparty, conditional on the non-default of HSBC, to\u00a0HSBC\u2019s
expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default. Conversely, HSBC calculates
the DVA by applying the PD of HSBC, conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to
HSBC and multiplying the result by the loss expected in the event of default. Both\u00a0calculations are performed over the life of the potential exposure.
For most products HSBC uses a simulation methodology, which incorporates a range of potential exposures over the life of the portfolio, to
calculate the expected positive exposure to a counterparty. The simulation methodology includes credit mitigants, such as counterparty netting
agreements and collateral agreements with the counterparty.
The methodologies do not, in general, account for \u2018wrong-way risk\u2019. Wrong-way risk is an adverse correlation between the counterparty\u2019s probability of
default and the mark-to-market value of the underlying transaction. The risk can either be general, perhaps related to the currency of the issuer country,
or specific to the transaction concerned. When there is significant wrong-way risk, a trade-specific approach is applied to reflect this risk in the valuation.
Funding fair value adjustment
The funding fair value adjustment (\u2018FFVA\u2019) 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 or the counterparty.
Model limitation
Models used for portfolio valuation purposes may be based upon a simplified 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 when the fair value estimated by a valuation model is based on one or more significant unobservable
inputs. The accounting for inception profit adjustments is discussed in Note 1.
Fair value valuation bases
Financial instruments measured at fair value using a valuation technique with significant unobservable inputs \u2013 Level 3
Assets
Liabilities
Financial
investments
Trading
assets
Designated and
otherwise mandatorily
measured at fair value
through profit or loss
Derivatives
Total
Trading
liabilities
Designated
at fair
value
Derivatives
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Private equity including
strategic investments
552
1
17,705
\u2014
18,258
\u2014
1
\u2014
1
Asset-backed securities
182
198
\u2014
\u2014
380
\u2014
\u2014
\u2014
\u2014
Structured notes
\u2014
\u2014
3
\u2014
3
\u2014
9,113
\u2014
9,113
Other derivatives
\u2014
\u2014
\u2014
2,149
2,149
\u2014
\u2014
2,842
2,842
Other portfolios
2,000
6,476
2,036
\u2014
10,512
784
3
\u2014
787
At 31 Dec 2024
2,734
6,675
19,744
2,149
31,302
784
9,117
2,842
12,743
Private equity including
strategic investments
507
7
17,640
\u2014
18,154
\u2014
1
\u2014
1
Asset-backed securities
309
128
8
\u2014
445
\u2014
\u2014
\u2014
\u2014
Structured notes
\u2014
\u2014
3
\u2014
3
\u2014
10,331
\u2014
10,331
Other derivatives
\u2014
\u2014
\u2014
2,069
2,069
\u2014
\u2014
2,569
2,569
Other portfolios
1,802
4,171
2,137
\u2014
8,110
478
596
\u2014
1,074
At 31 Dec 2023
2,618
4,306
19,788
2,069
28,781
478
10,928
2,569
13,975
Level 3 instruments are present in both ongoing and legacy businesses. Loans held for securitisation, derivatives with monolines, certain \u2018other
derivatives\u2019 and predominantly all Level 3 asset-backed securities are legacy positions. HSBC has the capability to hold these positions.
Private equity including strategic investments
The fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee\u2019s 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 (\u2018NAV\u2019) received. If necessary, adjustments
are made to the NAV of funds to obtain the best estimate of fair value.
Asset-backed securities
While quoted market prices are generally used to determine the fair value of the asset-backed securities (\u2018ABSs\u2019), valuation models are used to
substantiate the reliability of the limited market data available and to identify whether any adjustments to quoted market prices are required.
For certain ABSs, such as residential mortgage-backed securities, the valuation uses an industry standard model with assumptions relating to
prepayment speeds, default rates and loss severity based on collateral type, and performance, as appropriate. The valuations output is
benchmarked for consistency against observable data for securities of a similar nature.
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 paragraph below on derivatives. These structured notes comprise principally equity-linked notes issued by HSBC,
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.
Derivatives
OTC derivative valuation models calculate the present value of expected future cash flows, based upon \u2018no arbitrage\u2019 principles. For many
vanilla derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may
be some differences 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 or estimated from historical 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
Designated
at fair
value
Derivatives
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
2,618
4,306
19,788
2,069
478
10,928
2,569
Total gains/(losses) recognised in profit or\u00a0loss
(9)
280
896
1,037
18
496
1,268
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
280
\u2014
1,037
18
496
1,268
\u2013\u00a0 net income from assets and liabilities of insurance
businesses, including related derivatives,
measured at fair value through profit or loss
\u2014
\u2014
684
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
212
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 gains less losses from financial investments at fair
value through other comprehensive income
(9)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total gains/(losses) recognised in other
comprehensive income (\u2018OCI\u2019) 1
(78)
(115)
(39)
(36)
(18)
(45)
(53)
\u2013\u00a0 financial investments: fair value gains/(losses)
18
\u2014
\u2014
\u2014
\u2014
33
\u2014
\u2013\u00a0 exchange differences
(96)
(115)
(39)
(36)
(18)
(78)
(53)
Purchases
1,670
4,170
6,261
\u2014
924
\u2014
\u2014
New issuances
\u2014
\u2014
\u2014
\u2014
\u2014
6,521
\u2014
Sales
(97)
(1,477)
(649)
\u2014
(295)
\u2014
\u2014
Settlements2
(1,011)
(967)
(6,476)
(897)
(307)
(4,750)
(568)
Transfers out3
(438)
(429)
(278)
(777)
(29)
(6,048)
(1,346)
Transfers in3
79
907
241
753
13
2,015
972
At 31 Dec 2024
2,734
6,675
19,744
2,149
784
9,117
2,842
Unrealised gains/(losses) recognised in profit or loss
relating to assets and liabilities held at 31\u00a0Dec 2024
\u2014
(150)
11
(1,377)
(6)
(94)
(1,343)
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
(150)
\u2014
(1,377)
(6)
\u2014
(1,343)
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
11
\u2014
\u2014
(94)
\u2014
At 1 Jan 2023
2,961
4,817
17,407
1,964
474
10,432
2,920
Total gains/(losses) recognised in profit or\u00a0loss
(44)
266
921
692
75
97
910
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
266
\u2014
692
75
97
910
\u2013\u00a0 net income from assets and liabilities of insurance
businesses, including related derivatives,
measured at fair value through profit or loss
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
921
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 gains less losses from financial investments at fair
value through other comprehensive income
(44)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total gains/(losses) recognised in other
comprehensive income (\u2018OCI\u2019)1
28
108
87
81
24
523
111
\u2013\u00a0 financial investments: fair value gains/(losses)
(44)
\u2014
\u2014
\u2014
\u2014
335
\u2014
\u2013\u00a0 exchange differences
72
108
87
81
24
188
111
Purchases
353
2,276
3,555
\u2014
291
\u2014
\u2014
New issuances
\u2014
2
\u2014
\u2014
2
5,389
\u2014
Sales
(290)
(2,478)
(658)
\u2014
(320)
(2)
\u2014
Settlements
(352)
(872)
(1,886)
(1,018)
(74)
(3,258)
(1,565)
Transfers out
(662)
(922)
(156)
(240)
(45)
(2,881)
(358)
Transfers in
624
1,109
518
590
51
628
551
At 31 Dec 2023
2,618
4,306
19,788
2,069
478
10,928
2,569
Unrealised gains/(losses) recognised in profit or loss
relating to assets and liabilities held at 31\u00a0Dec 2023
\u2014
(152)
82
737
\u2014
(433)
(903)
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
(152)
\u2014
737
\u2014
\u2014
(903)
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
82
\u2014
\u2014
(433)
\u2014
1Included in \u2018financial investments: fair value gains/(losses)\u2019 in the current year and \u2018exchange differences\u2019 in the consolidated statement of comprehensive income.
2Includes $3.1bn decrease from classification of the assets of our French Life Insurance business as assets held for sale.
3Includes $4.4bn of transfers out and $1.5bn of transfers in relating to enhancement of observability assessments on equity structured notes.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.
Effect of changes in significant unobservable assumptions to reasonably
possible alternatives
Sensitivity of fair values to reasonably possible alternative assumptions
2024
2023
Reflected in profit or loss
Reflected in OCI
Reflected in profit or loss
Reflected in OCI
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
$m
$m
$m
$m
$m
$m
$m
$m
Derivatives, trading assets and trading
liabilities1
481
(313)
\u2014
\u2014
492
(531)
\u2014
\u2014
Financial assets and liabilities designated
and otherwise mandatorily measured at
fair value through profit or loss
1,434
(1,141)
\u2014
\u2014
1,092
(1,100)
\u2014
\u2014
Financial investments
21
(21)
47
(50)
13
(12)
61
(66)
At 31 Dec
1,936
(1,475)
47
(50)
1,597
(1,643)
61
(66)
1\u2018Derivatives, trading assets and trading liabilities\u2019 are presented as one category to reflect the manner in which these instruments are risk-managed.
The sensitivity analysis for certain private equity positions has been enhanced in order to reduce dependency on historical observations and
focus on current valuation uncertainty, resulting in some increases in favourable sensitivities.
The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95% 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 the most unfavourable change from varying the assumptions individually.
Key unobservable inputs to Level 3 financial instruments
The following table lists key unobservable inputs to Level 3 financial instruments and provides the range of those inputs at 31\u00a0December 2024.
Quantitative information about significant unobservable inputs in Level 3 valuations
Fair value
2024
2023
Assets
Liabilities
Key valuation
techniques
Key unobservable
inputs
Full range
of inputs
Full range
of inputs
$m
$m
Lower
Higher
Lower
Higher
Private equity including strategic
investments2
18,258
1
Price \u2013 Net asset value
Current Value/Cost
0
291
See footnote 2
Asset-backed securities
380
\u2014
\u2013\u00a0 collateralised loan/debt obligation
100
\u2014
Market proxy
Price
0
97
0
94
\u2013\u00a0 other ABSs
280
\u2014
Market proxy
Price
0
248
0
220
Structured notes
3
9,113
\u2013\u00a0 equity-linked notes
3
5,739
Model \u2013 Option model
Equity volatility
6%
70%
6%
154%
Model \u2013 Option model
Equity correlation
15%
100%
34%
100%
\u2013\u00a0 Foreign exchange-linked notes
\u2014
1,833
Model \u2013 Option model
Foreign exchange
volatility
3%
35%
1%
34%
\u2013\u00a0 other structured notes
\u2014
1,541
Derivatives
2,149
2,842
\u00a0
\u00a0
\u2013\u00a0 interest rate derivatives
1,102
1,066
\u00a0
\u00a0
\u00a0 \u00a0 securitisation swaps
196
186
Model \u2013 Discounted cash flow
Prepayment rate
5%
10%
5%
10%
\u00a0 \u00a0 long-dated swaptions
71
76
Model \u2013 Option model
Interest rate
volatility
9%
30%
11%
37%
\u00a0 \u00a0 other interest rate derivatives
835
804
\u2013\u00a0 Foreign exchange derivatives
202
212
\u00a0 \u00a0 Foreign exchange options
154
174
Model \u2013 Option model
Foreign exchange
volatility
1%
26%
1%
31%
\u00a0 \u00a0 other foreign exchange derivatives
48
38
\u2013\u00a0 equity derivatives
460
638
\u00a0 \u00a0 long-dated single stock options
145
166
Model \u2013 Option model
Equity volatility
6%
118%
6%
110%
\u00a0 \u00a0 other equity derivatives
315
472
\u2013\u00a0 credit derivatives
376
922
\u00a0 \u00a0 total return swaps
349
847
Market proxy
Price
0
104
0
104
\u00a0 \u00a0 other credit derivatives
27
75
\u2013\u00a0 other derivatives
9
4
Other portfolios
10,512
787
\u2013\u00a0 repurchase agreements
1,739
742
Model \u2013 Discounted cash flow
Interest rate curve
0%
26%
3%
8%
\u2013\u00a0 bonds
4,300
27
Market proxy
Price
0
140
0
101
\u2013\u00a0 other1
4,473
18
At 31 Dec 2024
31,302
12,743
1\u2018Other\u2019 includes a range of asset holdings including loans and deposits, syndicated loans and infrastructure debt.
2\u2018Private equity including strategic investments\u2019 includes private equity, private credit and private equity fund, primarily held as part of our Insurance business and
for strategic investments. The analysis for private equity positions has been enhanced with the range of key unobservable inputs now quoted.
The range of values above shows the highest and lowest unobservable inputs that have been used to value significant Level 3 exposures and
reflects the diversity of the underlying financial instruments in scope and subsequent differentiation in pricing.
Private equity including strategic investments
The \u2018private equity\u2019 holdings include private equity investments and private equity funds held as limited partners. The key unobservable input is
the current value of the underlying positions, determined using valuation techniques in line with the International Capital Valuation Guidelines.
The inputs represented are an appropriate range of inputs normalised across different exposure types.
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 when specific market pricing is not available but there is evidence from instruments with
common characteristics. 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 are estimated from observable data.
The range of unobservable volatilities reflects the wide variation in volatility inputs by reference market price.
Correlation
Correlation is a measure of the inter-relationship between two market variables 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 variable. 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 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 variable 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\u00a0more 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 portfolio will depend on HSBC\u2019s net risk position in respect of each variable.
HSBC Holdings
Basis of valuing HSBC Holdings\u2019 financial assets and liabilities measured at fair value
2024
2023
Level 1
Level 2
Total
Level 1
Level 2
Total
$m
$m
$m
$m
$m
$m
Recurring fair value measurement
Assets at 31 Dec
Trading assets
709
\u2014
709
\u2014
\u2014
\u2014
Financial assets with HSBC undertakings designated and
otherwise mandatorily measured at fair value
\u2014
61,286
61,286
\u2014
59,879
59,879
Derivatives
\u2014
3,054
3,054
\u2014
3,344
3,344
Liabilities at 31 Dec
Financial liabilities designated at fair value
\u2014
41,582
41,582
\u2014
43,638
43,638
Derivatives
\u2014
5,340
5,340
\u2014
6,090
6,090
13
Fair values of financial instruments not carried at fair value
Fair values of financial instruments not carried at fair value and bases of valuation
Fair value
Carrying
amount
Quoted market
price Level 1
Observable
inputs Level 2
Significant
unobservable
inputs Level 3
Total
$m
$m
$m
$m
$m
At 31 Dec 2024
Assets
Loans and advances to banks
102,039
\u2014
101,007
1,048
102,055
Loans and advances to customers1
930,658
\u2014
11,435
906,208
917,643
Reverse repurchase agreements \u2013 non-trading
252,549
\u2014
252,598
\u2014
252,598
Financial investments \u2013 at amortised cost
153,973
120,843
29,493
724
151,060
Liabilities
Deposits by banks
73,997
\u2014
74,025
\u2014
74,025
Customer accounts
1,654,955
\u2014
1,655,151
\u2014
1,655,151
Repurchase agreements \u2013 non-trading
180,880
\u2014
180,873
\u2014
180,873
Debt securities in issue
105,785
\u2014
105,689
954
106,643
Subordinated liabilities
25,958
\u2014
28,262
\u2014
28,262
At 31 Dec 2023
Assets
Loans and advances to banks
112,902
2
111,263
1,479
112,744
Loans and advances to customers
938,535
\u2014
13,258
911,124
924,382
Reverse repurchase agreements \u2013 non-trading
252,217
\u2014
252,243
\u2014
252,243
Financial investments \u2013 at amortised cost
148,326
115,383
30,765
440
146,588
Liabilities
Deposits by banks
73,163
\u2014
73,176
\u2014
73,176
Customer accounts
1,611,647
\u2014
1,611,795
\u2014
1,611,795
Repurchase agreements \u2013 non-trading
172,100
\u2014
172,081
\u2014
172,081
Debt securities in issue
93,917
\u2014
93,196
706
93,902
Subordinated liabilities
24,954
\u2014
27,151
\u2014
27,151
1Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of $6.9bn (2023:
$7.9bn). 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 $1bn 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 (refer Note 23 for details).
Fair values of financial instruments not carried at fair value and bases of valuation \u2013 assets and disposal groups held for sale
Fair value
Carrying
amount
Quoted market
price Level 1
Observable
inputs Level 2
Significant
unobservable
inputs Level 3
Total
$m
$m
$m
$m
$m
At 31 Dec 2024
Assets
Loans and advances to banks
144
\u2014
144
\u2014
144
Loans and advances to customers
977
\u2014
11
966
977
Reverse repurchase agreements \u2013 non-trading
\u2014
\u2014
\u2014
\u2014
\u2014
Financial investments \u2013 at amortised cost
\u2014
\u2014
\u2014
\u2014
\u2014
Liabilities
Deposits by banks
\u2014
\u2014
\u2014
\u2014
\u2014
Customer accounts
5,399
\u2014
5,399
\u2014
5,399
Repurchase agreements \u2013 non-trading
\u2014
\u2014
\u2014
\u2014
\u2014
Debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
Subordinated liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
Assets
Loans and advances to banks
10,487
\u2014
10,487
\u2014
10,487
Loans and advances to customers
73,376
\u2014
90
72,200
72,290
Reverse repurchase agreements \u2013 non-trading
2,723
\u2014
2,723
\u2014
2,723
Financial investments \u2013 at amortised cost
7,624
7,530
\u2014
5
7,535
Liabilities
Deposits by banks
78
\u2014
78
\u2014
78
Customer accounts
85,950
\u2014
86,475
\u2014
86,475
Repurchase agreements \u2013 non-trading
2,768
\u2014
2,768
\u2014
2,768
Debt securities in issue
9,084
\u2014
8,820
\u2014
8,820
Subordinated liabilities
8
\u2014
7
\u2014
7
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. They include cash and balances at central banks, Hong Kong Government
certificates of indebtedness and Hong Kong currency notes in circulation, all of which are measured at amortised cost.
Valuation
Fair value is an 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. This may be different from the theoretical economic value attributed from an instrument\u2019s cash
flows over its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market
prices are available may differ from those of other companies.
Loans and advances to banks and customers
To determine the fair value of loans and advances to banks and customers, loans are segregated into portfolios of similar characteristics. Fair
values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation
models incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting over-
the-counter trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using
assumptions that HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination
pricing for similar loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time,
we may engage a third-party valuation specialist to measure the fair value of a pool of loans.
The fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants\u2019 expectations of credit
losses over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit-impaired loans,
fair value is estimated by discounting the future cash flows over the time period they are expected to be recovered.
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
The fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are
estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.
Debt securities in issue and subordinated liabilities
Fair values in debt securities in issue and subordinated liabilities 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 \u2013 non-trading
Carrying amounts of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate fair values. This
is due to the fact that balances are generally short dated.
HSBC Holdings
The methods used by HSBC Holdings to determine fair values of financial instruments for the purposes of measurement and disclosure are
described above.
Fair values of HSBC Holdings\u2019 financial instruments not carried at fair value on the balance sheet
2024
2023
Carrying amount
Fair value1
Carrying amount
Fair value1
$m
$m
$m
$m
Assets at 31 Dec
Loans and advances to HSBC undertakings
37,677
38,359
27,354
27,878
Financial investments \u2013 at amortised cost
10,328
10,335
19,558
19,531
Liabilities at 31 Dec
Debt securities in issue
64,320
65,123
65,239
65,172
Subordinated liabilities
23,548
25,911
24,439
26,651
1Fair values (other than Financial investments which are Level 1) were determined using valuation techniques with observable inputs (Level 2).
14Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss
2024
2023
Designated at
fair value
Mandatorily
measured at
fair value
Total
Designated
at fair value
Mandatorily
measured at
fair value
Total
$m
$m
$m
$m
$m
$m
Securities
2,406
104,093
106,499
2,353
101,152
103,505
\u2013\u00a0 treasury and other eligible bills
732
393
1,125
695
724
1,419
\u2013\u00a0 debt securities
1,674
59,904
61,578
1,658
60,045
61,703
\u2013\u00a0 equity securities
\u2014
43,796
43,796
\u2014
40,383
40,383
Loans and advances to banks and customers
951
6,120
7,071
371
5,495
5,866
Other
\u2014
2,199
2,199
\u2014
1,272
1,272
At 31 Dec
3,357
112,412
115,769
2,724
107,919
110,643
15
Derivatives
Notional contract amounts and fair values of derivatives by product contract type held by HSBC
Notional contract amount
Fair value \u2013 Assets
Fair value \u2013 Liabilities
Trading
Hedging
Trading
Hedging
Total
Trading
Hedging
Total
$m
$m
$m
$m
$m
$m
$m
$m
Foreign exchange
11,706,591
82,161
142,055
2,738
144,793
133,910
75
133,985
Interest rate
17,316,173
406,109
209,794
4,790
214,584
212,980
4,930
217,910
Equities
768,732
\u2014
17,116
\u2014
17,116
20,643
\u2014
20,643
Credit
143,136
\u2014
1,756
\u2014
1,756
1,769
\u2014
1,769
Commodity and other
118,180
\u2014
3,134
\u2014
3,134
2,887
\u2014
2,887
Gross total fair values
30,052,812
488,270
373,855
7,528
381,383
372,189
5,005
377,194
Offset (Note 31)
(112,746)
(112,746)
At 31 Dec 2024
30,052,812
488,270
373,855
7,528
268,637
372,189
5,005
264,448
Foreign exchange
9,463,768
63,547
99,014
935
99,949
99,949
780
100,729
Interest rate
14,853,397
361,312
223,534
5,119
228,653
225,443
4,080
229,523
Equities
677,149
\u2014
14,427
\u2014
14,427
17,603
\u2014
17,603
Credit
153,606
\u2014
1,351
\u2014
1,351
1,861
\u2014
1,861
Commodity and other
90,007
\u2014
1,820
\u2014
1,820
1,542
\u2014
1,542
Gross total fair values
25,237,927
424,859
340,146
6,054
346,200
346,398
4,860
351,258
Offset (Note 31)
(116,486)
(116,486)
At 31 Dec 2023
25,237,927
424,859
340,146
6,054
229,714
346,398
4,860
234,772
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.
Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries
Notional contract amount
Assets
Liabilities
Trading
Hedging
Trading
Hedging
Total
Trading
Hedging
Total
$m
$m
$m
$m
$m
$m
$m
$m
Foreign exchange
51,437
\u2014
796
\u2014
796
1,015
\u2014
1,015
Interest rate
30,535
90,074
1,544
714
2,258
487
3,838
4,325
At 31 Dec 2024
81,972
90,074
2,340
714
3,054
1,502
3,838
5,340
Foreign exchange
66,711
\u2014
486
\u2014
486
1,705
\u2014
1,705
Interest rate
33,480
92,268
1,730
1,128
2,858
747
3,638
4,385
At 31 Dec 2023
100,191
92,268
2,216
1,128
3,344
2,452
3,638
6,090
Use of derivatives
For details regarding the use of derivatives, see page 218 under \u2018Market risk\u2019.
Trading derivatives
Most of HSBC\u2019s 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 revenue
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. Other derivatives classified as held for trading include non-qualifying hedging derivatives.
Substantially all of HSBC Holdings\u2019 derivatives entered into with subsidiaries are managed in conjunction with financial liabilities.
Hedge accounting derivatives
HSBC applies hedge accounting to manage the following risks: interest rate and foreign exchange risks. Further details of how these risks arise
and how they are managed by the Group can be found in the \u2018Risk review\u2019.
Hedged risk components
HSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign
currency risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise
separately identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are
regarded as being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition
where HSBC designates alternative benchmark rates as the hedged risk which may not have been separately identifiable upon initial
designation, provided HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated
risk components account for a significant portion of the overall changes in fair value or cash flows of the hedged items.
HSBC uses net investment hedges to hedge the structural foreign exchange risk related to net investments in foreign operations including
subsidiaries and branches whose functional currencies are different from that of the parent. When hedging with foreign exchange forward
contracts, the spot rate component of the foreign exchange risk is designated for an amount of net assets as the hedged risk.
Sources of hedge ineffectiveness may arise from basis risk, including but not limited to the discount rates used for calculating the fair value of
derivatives, hedges using instruments with a non-zero fair value, and notional and timing differences between the hedged items and hedging
instruments.
Fair value hedges
HSBC enters into fixed-for-floating interest rate swaps to manage the exposure to changes in fair value caused by movements in market
interest rates on certain fixed-rate financial instruments that are not measured at fair value through profit or loss, including debt securities held
and issued.
HSBC hedging instrument by hedged risk
Hedging instrument
Carrying amount
Notional amount1,2
Assets
Liabilities
Balance sheet
presentation
Change in fair value3
Hedged risk
$m
$m
$m
$m
Interest rate4
190,332
4,180
4,411
Derivatives
(449)
At 31 Dec 2024
190,332
4,180
4,411
(449)
Interest rate4
172,985
3,729
2,965
Derivatives
(1,043)
At 31 Dec 2023
172,985
3,729
2,965
(1,043)
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 notional amount of non-dynamic fair value hedges is equal to $71,916m (2023: $62,480m), of which the weighted-average maturity date is March\u00a02031 and
the weighted-average swap rate is 3.24% (2023: 3.04%).
3 Used in effectiveness testing, which uses the full fair value change of the hedging instrument not excluding any component.
4 The hedged risk \u2018interest rate\u2019 includes inflation risk.
HSBC hedged item by hedged risk
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in
fair value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet
presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
93,055
(2,701)
Financial investments -
measured at fair value
through other
comprehensive income
(728)
(8)
Net income from
financial instruments
held for trading or
managed on a fair
value basis
492
11
Financial investments -
measured at amortised
cost
(14)
13,915
(104)
\u2014
Loans and advances to
customers
16
\u2014
\u2014
Reverse repurchase
agreements \u2013 non-
trading
\u2014
72,576
(1,800)
Debt securities in issue
1,110
207
\u2014
Customer accounts
\u2014
1,205
(266)
Subordinated liabilities
57
At 31 Dec 2024
107,462
73,988
(2,794)
(2,066)
441
(8)
HSBC hedged item by hedged risk (continued)
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in fair
value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
82,321
(2,282)
Financial investments -
measured at fair value through
other comprehensive income
2,053
5
Net income from
financial instruments
held for trading or
managed on a fair
value basis
514
32
Financial investments -
measured at amortised cost
32
4,701
(18)
Loans and advances to
customers
122
\u2014
\u2014
Reverse repurchase
agreements \u2013 non-trading
15
64,269
(2,147)
Debt securities in issue
(1,179)
\u2014
\u2014
Deposits by banks
\u2014
\u2014
\u2014
Subordinated liabilities
5
At 31 Dec 2023
87,536
64,269
(2,268)
(2,147)
1,048
5
1 The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were liabilities of $311m (2023: $136m) for FVOCI assets and liabilities of $745m (2023: $1,256m) for debt issued.
2 Used in effectiveness testing, which comprise an amount attributable to the designated hedged risk that can be a risk component.
3 The hedged risk \u2018interest rate\u2019 includes inflation risk.
HSBC Holdings hedging instrument by hedged risk
Hedging instrument
Carrying amount
Notional amount1,2
Assets
Liabilities
Balance sheet
presentation
Change in fair value3
Hedged risk
$m
$m
$m
$m
Interest rate4
90,074
714
3,838
Derivatives
(1,103)
At 31 Dec 2024
90,074
714
3,838
(1,103)
Interest rate4
92,268
1,128
3,638
Derivatives
1,426
At 31 Dec 2023
92,268
1,128
3,638
1,426
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 notional amount of non-dynamic fair value hedges is equal to $90,074m (2023: $92,268m), of which the weighted-average maturity date is May\u00a02030 and
the weighted-average swap rate is 2.78% (2023: 2.46%). The majority of these hedges are internal to the Group.
3 Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.
4 The hedged risk \u2018interest rate\u2019 includes foreign exchange risk.
HSBC Holdings hedged item by hedged risk
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in
fair value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet
presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
78,402
(2,423)
Debt securities
in issue
861
(9)
Net income from
financial instruments
held for trading or
managed on a fair value
basis
7,769
(244)
Loans and
advances to banks
233
At 31 Dec 2024
7,769
78,402
(244)
(2,423)
1,094
(9)
Interest rate3
80,889
(2,971)
Debt securities
in issue
(1,716)
29
Net income from financial
instruments held for
trading or managed on a
fair value basis
7,772
(490)
Loans and
advances to banks
319
At 31 Dec 2023
7,772
80,889
(490)
(2,971)
(1,397)
29
1 The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were liabilities of $1,216m (2023: $1,299m) for debt issued.
2 Used in effectiveness testing, comprising amount attributable to the designated hedged risk that can be a risk component.
3 The hedged risk \u2018interest rate\u2019 includes foreign exchange risk.
For some debt securities held, HSBC manages interest rate risk in a dynamic risk management strategy. The assets in scope of this strategy
are high-quality fixed-rate debt securities, which may be sold to meet liquidity and funding requirements.
The interest rate risk of the HSBC fixed-rate debt securities issued is managed in a non-dynamic risk management strategy.
Cash flow hedges
HSBC\u2019s 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 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.
HSBC also hedges the variability in future cash flows on foreign-denominated financial assets and liabilities arising due to changes in foreign
exchange market rates with cross-currency swaps, which are considered dynamic hedges.
Hedging instrument by hedged risk
Hedging instrument
Hedged item
Ineffectiveness
Carrying amount
Change in
fair value2
Change in fair
value3
Recognised
in profit
and loss
Profit and loss
presentation
Notional
amount1
Assets
Liabilities
Balance
sheet
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Foreign currency
47,194
2,088
68
Derivatives
2,451
2,451
\u2014
Net income from
financial instruments
held for trading or
managed on a fair
value basis
Interest rate
215,777
619
519
Derivatives
(2,954)
(2,964)
10
At 31 Dec 2024
262,971
2,707
587
(503)
(513)
10
Foreign currency
29,772
935
257
Derivatives
977
977
\u2014
Net income from
financial instruments
held for trading or
managed on a fair
value basis
Interest rate
188,327
1,390
1,116
Derivatives
1,542
1,512
30
At 31 Dec 2023
218,099
2,325
1,373
2,519
2,489
30
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.
Reconciliation of equity and analysis of other comprehensive income by risk type
Interest rate
Foreign currency
$m
$m
Cash flow hedging reserve at 1 Jan 2024
(901)
(132)
Fair value gains/(losses)
(2,964)
2,451
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of:
Hedged items that have affected profit or loss1
2,529
(2,430)
Income taxes
81
1
Others
199
87
Cash flow hedging reserve at 31 Dec 2024
(1,056)
(23)
Cash flow hedging reserve at 1 Jan 2023
(3,387)
(421)
Fair value gains/(losses)
1,512
977
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of:
Hedged items that have affected profit or loss1
2,196
(718)
Income taxes
(937)
(29)
Others
(285)
59
Cash flow hedging reserve at 31 Dec 2023
(901)
(132)
1Hedged items that have affected profit or loss are primarily recorded within interest income.
Net investment hedges
The Group applies hedge accounting in respect of certain net investments in non-US dollar functional currency foreign operations for changes in
spot exchange rates only. Hedging could be undertaken for Group structural exposure to changes in the US dollar to foreign currency exchange
rates using forward foreign exchange contracts or by financing with foreign currency borrowings. An economic relationship exists between the
hedged net investment and hedging instrument due to the shared foreign currency risk exposure. For further details of our structural foreign
exchange exposures, see page 212.
The aggregate positions at the reporting date and the performance indicators of both live and de-designated hedges are summarised below.
Hedges of net investment in foreign operations
Carrying amount
Nominal
amount
Amounts
recognised
in OCI1
Change in
fair value2
Hedge ineffectiveness
recognised in income
statement
Derivative
assets
Derivative
liabilities
Description of hedged risk
$m
$m
$m
$m
$m
$m
2024
Pound sterling-denominated structural foreign exchange
397
(1)
15,407
833
229
\u2014
Swiss franc-denominated structural foreign exchange
10
\u2014
556
89
40
\u2014
Hong Kong dollar-denominated structural foreign exchange
1
(3)
5,844
(27)
(26)
\u2014
Other structural foreign exchange3
242
(3)
13,160
907
499
\u2014
Total
650
(7)
34,967
1,803
742
\u2014
2023
Pound sterling-denominated structural foreign exchange
(404)
16,415
604
(843)
\u2014
Swiss franc-denominated structural foreign exchange
(23)
526
49
(62)
\u2014
Hong Kong dollar-denominated structural foreign exchange
\u2014
5,792
\u2014
2
\u2014
Other structural foreign exchange3
(96)
11,042
477
102
\u2014
Total
\u2014
(523)
33,775
1,130
(801)
\u2014
1Amount recognised in OCI for Swiss franc includes $110m (2023: $110m) related to de-designated hedge.
2Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.
3Other currencies include Euro, New Taiwan dollar, Singapore dollar, Canadian dollar, Omani rial, South Korean won, UAE dirham, Indian rupee, Chinese
renminbi, Kuwaiti dinar, Qatari riyal, Saudi riyal, Indonesian rupiah, Thai baht and Philippine peso.
16Financial investments
Carrying amount of financial investments
2024
2023
$m
$m
Financial investments measured at fair value through other comprehensive income
339,193
294,437
\u2013\u00a0 treasury and other eligible bills
112,705
102,438
\u2013\u00a0 debt securities
224,496
190,119
\u2013\u00a0 equity securities
1,569
1,447
\u2013\u00a0 other instruments
423
433
Debt instruments measured at amortised cost
153,973
148,326
\u2013\u00a0 treasury and other eligible bills
22,148
30,733
\u2013\u00a0 debt securities
131,825
117,593
At 31 Dec
493,166
442,763
Equity instruments measured at fair value through other comprehensive income
Fair value
Dividends
recognised
Type of equity instruments
$m
$m
Investments required by central institutions
620
29
Business facilitation
886
29
Others
63
2
At 31 Dec 2024
1,569
60
Investments required by central institutions
609
27
Business facilitation
793
35
Others
45
2
At 31 Dec 2023
1,447
64
Weighted average yields of investment debt securities
Up to 1
year
1 to 5
years
5 to 10
years
Over 10
years
Yield
Yield
Yield
Yield
%
%
%
%
Debt securities measured at fair value through other comprehensive income
US Treasury
2.9
3.4
2.5
2.3
US Government agencies
0.8
\u2014
3.1
3.1
US Government-sponsored agencies
1.7
3.5
1.6
1.8
UK Government
3.8
3.8
2.3
2.4
Hong Kong Government
\u2014
1.9
2.0
\u2014
Other governments
2.7
4.1
3.7
2.3
Asset-backed securities
3.4
3.0
5.4
4.3
Corporate debt and other securities
2.7
3.5
3.2
1.9
Debt securities measured at amortised cost
US Treasury
3.5
3.8
3.8
2.1
US Government agencies
0.7
0.7
1.1
4.6
US Government-sponsored agencies
\u2014
2.8
3.7
2.9
UK Government
3.5
2.9
2.8
\u2014
Hong Kong Government
\u2014
2.7
\u2014
\u2014
Other governments
2.8
4.1
5.2
\u2014
Asset-backed securities
\u2014
\u2014
7.7
\u2014
Corporate debt and other securities
2.7
2.9
3.2
4.8
The maturity distributions of ABSs are presented in the above table on the basis of contractual maturity dates. The weighted average yield for
each range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2024 by the book amount of
debt securities at that date. The yields do not include the effect of related derivatives.
HSBC Holdings
HSBC Holdings carrying amount of financial investments
2024
2023
$m
$m
Debt instruments measured at amortised cost
\u2013\u00a0 treasury and other eligible bills
9,556
15,629
\u2013\u00a0 debt securities
772
3,929
At 31 Dec
10,328
19,558
Weighted average yields of investment debt securities
Up to 1
year
1 to 5
years
5 to 10
years
Over 10
years
Yield
Yield
Yield
Yield
%
%
%
%
Debt securities measured at amortised cost
US Treasury
4.3
\u2014
\u2014
\u2014
The weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year ended
31\u00a0December 2024 by the book amount of debt securities at that\u00a0date. The yields do not include the effect of\u00a0related derivatives.
24Trading liabilities\u00a0 \u00a0 \u00a0 \u00a0
2024
2023
$m
$m
Deposits by banks1
7,671
6,779
Customer accounts1
10,709
8,955
Other debt securities in issue (Note 26)
73
27
Other liabilities \u2013 net short positions in securities
47,529
57,389
At 31 Dec
65,982
73,150
1 \u2018Deposits by banks\u2019 and \u2018Customer accounts\u2019 include repos, stock lending and other amounts.
25
Financial liabilities designated at fair value\u00a0 \u00a0 \u00a0 \u00a0
HSBC
2024
2023
$m
$m
Deposits by banks and customer accounts1
23,773
21,043
Liabilities to customers under investment contracts
5,931
5,103
Debt securities in issue (Note 26)
99,706
103,803
Subordinated liabilities (Note 29)
9,317
11,477
At 31 Dec
138,727
141,426
1Structured deposits placed at HSBC Bank USA are insured by the Federal Deposit Insurance Corporation, a US government agency, up to $250,000 per
depositor.
The carrying amount of financial liabilities designated at fair value was $4,365m less than the contractual amount at maturity (2023: $4,421m
less). The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $1,655m (2023: loss of $1,286m).
HSBC Holdings\u00a0
2024
2023
$m
$m
Debt securities in issue (Note 26)
33,268
35,189
Subordinated liabilities (Note 29)
8,314
8,449
At 31 Dec
41,582
43,638
The carrying amount of financial liabilities designated at fair value was $17m less than the contractual amount at maturity (2023:\u00a0$246m\u00a0less).
The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $540m (2023:\u00a0$682m).
30Maturity analysis of assets, liabilities and off-balance sheet commitments
The table on page 418 provides an analysis of consolidated total assets, liabilities and off-balance sheet commitments by residual contractual
maturity at the balance sheet date. These balances are included in the maturity analysis as follows:
\u2013 Trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the
\u2018Due not more than 1 month\u2019 time bucket because trading balances are typically held for short periods of time.
\u2013 Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the \u2018Due over 5\u00a0years\u2019 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 \u2018Due\u00a0over 5 years\u2019 time bucket.
\u2013 Non-financial assets and liabilities with no contractual maturity are included in the \u2018Due over 5 years\u2019 time bucket.
\u2013 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.
\u2013 Liabilities under insurance contracts included in \u2018non-financial liabilities\u2019 are irrespective of contractual maturity included in the \u2018Due over 5
years\u2019 time bucket in the maturity table provided below. An analysis of the present value of expected future cash flows of insurance contract
liabilities and contractual service margin is provided on page 373. Liabilities under investment contracts are\u00a0classified in accordance with
their contractual maturity. Undated investment contracts are included in the \u2018Due over 5 years\u2019 time bucket, although such contracts are
subject to surrender and transfer options by the policyholders.
\u2013 Loan and other credit-related commitments are classified on the basis of the earliest date they can be drawn down.
HSBC
Maturity analysis of assets, liabilities and off-balance sheet commitments
Due not
more
than
1 month
Due over
1 month
but not
more
than
3 months
Due over
3 months
but not
more
than
6 months
Due over
6 months
but not
more
than
9 months
Due over
9 months
but not
more
than
1 year
Due over
1 year
but not
more
than
2 years
Due over
2 years
but not
more
than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash and balances at central banks
267,674
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
267,674
Hong Kong Government certificates of
indebtedness
42,293
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,293
Trading assets
311,277
1,374
679
337
774
401
\u2014
\u2014
314,842
Financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
6,329
1,497
1,218
810
1,570
4,010
11,503
88,832
115,769
Derivatives
264,689
401
709
377
164
364
524
1,409
268,637
Loans and advances to banks
69,778
16,300
3,871
4,264
2,922
2,276
2,236
392
102,039
Loans and advances to customers
135,250
69,955
53,557
36,945
38,985
89,061
176,645
330,260
930,658
\u2013\u00a0 personal
45,221
10,236
7,634
6,705
6,197
19,683
53,434
295,588
444,698
\u2013\u00a0 corporate and commercial
78,170
52,618
38,440
22,858
25,292
54,832
102,637
29,102
403,949
\u2013\u00a0 financial
11,859
7,101
7,483
7,382
7,496
14,546
20,574
5,570
82,011
Reverse repurchase agreements \u2013 non-trading
179,590
36,552
15,054
3,715
6,659
7,400
3,579
\u2014
252,549
Financial investments
35,780
74,850
50,650
15,907
20,465
54,125
143,870
97,519
493,166
Assets held for sale1
2,711
170
215
401
711
513
2,465
19,170
26,356
Accrued income and other financial assets
94,803
6,831
4,127
648
579
498
346
1,504
109,336
Financial assets at 31 Dec 2024
1,410,174
207,930
130,080
63,404
72,829
158,648
341,168
539,086
2,923,319
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
93,729
93,729
Total assets at 31 Dec 2024
1,410,174
207,930
130,080
63,404
72,829
158,648
341,168
632,815
3,017,048
Off-balance sheet commitments received
Loan and other credit-related commitments
41,875
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
41,875
Financial liabilities
Hong Kong currency notes in circulation
42,293
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,293
Deposits by banks
54,714
1,595
2,227
653
3,924
507
9,919
458
73,997
Customer accounts
1,382,204
168,423
58,928
19,062
17,389
6,482
2,353
114
1,654,955
\u2013\u00a0 personal
640,031
111,341
41,429
13,429
11,109
3,983
1,981
\u2014
823,303
\u2013\u00a0 corporate and commercial
564,693
45,047
14,708
3,991
4,748
1,968
332
106
635,593
\u2013\u00a0 financial
177,480
12,035
2,791
1,642
1,532
531
40
8
196,059
Repurchase agreements \u2013 non-trading
168,075
10,340
1,176
450
473
171
\u2014
195
180,880
Trading liabilities
58,069
4,933
2,873
7
100
\u2014
\u2014
\u2014
65,982
Financial liabilities designated at
fair value
19,037
8,732
5,890
4,765
5,600
17,013
43,274
34,416
138,727
\u2013\u00a0 debt securities in issue: covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 debt securities in issue: unsecured
8,431
4,148
3,557
2,885
4,362
14,660
38,259
22,866
99,168
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
1,011
\u2014
886
1,871
5,548
9,316
\u2013\u00a0 other
10,606
4,584
2,333
869
1,238
1,467
3,144
6,002
30,243
Derivatives
262,928
2
6
3
1
43
192
1,273
264,448
Debt securities in issue
5,761
10,915
10,330
7,332
7,239
14,724
22,311
27,173
105,785
\u2013\u00a0 covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
1,253
\u2014
1,253
\u2013\u00a0 otherwise secured
511
47
67
64
61
664
520
2,236
4,170
\u2013\u00a0 unsecured
5,250
10,868
10,263
7,268
7,178
14,060
20,538
24,937
100,362
Liabilities of disposal groups held for sale2
5,356
223
42
2
107
\u2014
\u2014
1,448
7,178
Accruals and other financial liabilities
99,424
11,827
5,415
1,013
1,241
902
1,489
738
122,049
Subordinated liabilities
\u2014
\u2014
1,719
16
\u2014
\u2014
861
23,362
25,958
Total financial liabilities at 31 Dec 2024
2,097,861
216,990
88,606
33,303
36,074
39,842
80,399
89,177
2,682,252
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
142,523
142,523
Total liabilities at 31 Dec 2024
2,097,861
216,990
88,606
33,303
36,074
39,842
80,399
231,700
2,824,775
Off-balance sheet commitments given
Loan and other credit-related commitments
861,181
74
12
85
49
6
57
114
861,578
\u2013\u00a0 personal
253,522
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
253,522
\u2013\u00a0 corporate and commercial
460,762
74
12
85
49
6
57
114
461,159
\u2013\u00a0 financial
146,897
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
146,897
Maturity analysis of assets, liabilities and off-balance sheet commitments (continued)
Due not
more
than
1 month
Due over
1 month
but not
more
than
3 months
Due over
3 months
but not
more
than
6 months
Due over
6 months
but not
more than
9 months
Due over
9 months
but not
more than
1 year
Due over
1 year
but not
more than
2 years
Due over
2 years
but not
more than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash and balances at central banks
285,868
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
285,868
Hong Kong Government certificates of
indebtedness
42,024
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,024
Trading assets
284,865
2,010
637
363
555
165
564
\u2014
289,159
Financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
5,530
697
821
753
581
4,839
11,917
85,505
110,643
Derivatives
227,343
138
134
71
35
383
570
1,040
229,714
Loans and advances to banks
76,524
18,662
6,487
2,689
3,281
2,756
2,328
175
112,902
Loans and advances to customers
142,803
66,425
52,218
40,135
36,323
94,206
175,381
331,044
938,535
\u2013\u00a0 personal
44,105
9,558
6,960
6,422
6,127
19,606
54,365
297,512
444,655
\u2013\u00a0 corporate and commercial
83,281
50,268
38,250
24,685
24,566
61,612
106,598
30,592
419,852
\u2013\u00a0 financial
15,417
6,599
7,008
9,028
5,630
12,988
14,418
2,940
74,028
Reverse repurchase agreements \u2013 non-trading
164,826
43,893
23,840
6,708
5,126
6,113
1,711
\u2014
252,217
Financial investments
48,969
69,816
44,493
16,348
18,603
46,124
106,117
92,293
442,763
Assets held for sale1
39,882
2,929
7,041
4,176
3,261
17,085
33,015
7,943
115,332
Accrued income and other financial assets
114,480
6,574
4,404
550
698
220
764
1,513
129,203
Financial assets at 31 Dec 2023
1,433,114
211,144
140,075
71,793
68,463
171,891
332,367
519,513
2,948,360
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
90,317
90,317
Total assets at 31 Dec 2023
1,433,114
211,144
140,075
71,793
68,463
171,891
332,367
609,830
3,038,677
Off-balance sheet commitments received
Loan and other credit-related commitments
39,836
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
39,836
Financial liabilities
Hong Kong currency notes in circulation
42,024
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,024
Deposits by banks
52,747
2,758
2,324
381
94
1,458
13,064
337
73,163
Customer accounts
1,343,858
138,117
78,611
20,832
17,724
7,785
4,616
104
1,611,647
\u2013\u00a0 personal
621,112
84,909
61,286
14,794
12,465
5,507
2,742
2
802,817
\u2013\u00a0 corporate and commercial
545,207
43,562
14,525
4,605
3,393
2,165
1,527
92
615,076
\u2013\u00a0 financial
177,539
9,646
2,800
1,433
1,866
113
347
10
193,754
Repurchase agreements \u2013 non-trading
158,882
10,311
1,759
300
847
1
\u2014
\u2014
172,100
Trading liabilities
66,548
6,302
300
\u2014
\u2014
\u2014
\u2014
\u2014
73,150
Financial liabilities designated at fair value
22,080
8,366
7,823
7,197
6,239
16,679
39,497
33,545
141,426
\u2013\u00a0 debt securities in issue: covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 debt securities in issue: unsecured
10,383
2,760
5,748
6,225
5,390
14,090
34,757
23,898
103,251
\u2013\u00a0 subordinated liabilities and preferred\u00a0
securities
\u2014
1,995
\u2014
\u2014
\u2014
1,471
3,429
4,581
11,476
\u2013\u00a0 other
11,697
3,611
2,075
972
849
1,118
1,311
5,066
26,699
Derivatives
233,134
113
25
9
47
73
1,223
148
234,772
Debt securities in issue
6,891
6,664
10,816
6,896
6,427
6,317
27,452
22,454
93,917
\u2013\u00a0 covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
1,273
\u2014
1,273
\u2013\u00a0 otherwise secured
447
44
62
58
55
188
861
1,679
3,394
\u2013\u00a0 unsecured
6,444
6,620
10,754
6,838
6,372
6,129
25,318
20,775
89,250
Liabilities of disposal groups held for sale2
69,868
5,231
5,479
6,728
6,541
4,730
7,918
1,511
108,006
Accruals and other financial liabilities
111,559
11,827
6,007
1,205
1,414
1,053
1,491
2,137
136,693
Subordinated liabilities
\u2014
13
\u2014
\u2014
\u2014
1,790
897
22,254
24,954
Total financial liabilities at 31 Dec 2023
2,107,591
189,702
113,144
43,548
39,333
39,886
96,158
82,490
2,711,852
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
134,215
134,215
Total liabilities at 31 Dec 2023
2,107,591
189,702
113,144
43,548
39,333
39,886
96,158
216,705
2,846,067
Off-balance sheet commitments given
Loan and other credit-related commitments
895,140
95
126
72
171
439
807
300
897,150
\u2013\u00a0 personal
256,272
21
30
46
107
279
745
192
257,692
\u2013\u00a0 corporate and commercial
472,507
74
26
26
64
160
62
108
473,027
\u2013\u00a0 financial
166,361
\u2014
70
\u2014
\u2014
\u2014
\u2014
\u2014
166,431
1Unallocated impairment losses in relation to disposal groups of $0.03bn (2023: $2.0bn) and non-financial assets of $0.9bn (2023: $0.9bn) that are presented
within assets held for sale on the balance sheet have been included within non-financial assets in the table above.
2A total of $21.8bn (2023: $0.4bn) of non-financial liabilities that are presented within liabilities of disposal groups held for sale on the balance sheet have been
included within non-financial liabilities in the table above.
HSBC Holdings
Maturity analysis of assets, liabilities and off-balance sheet commitments
Due not
more
than
1 month
Due over
1 month
but not
more than
3 months
Due over
3 months
but not
more than
6 months
Due over
6 months
but not
more than
9 months
Due over
9 months
but not
more than
1 year
Due over
1 year
but not
more than
2 years
Due over
2 years
but not
more than
5 years
Due
over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash at bank and in hand:
\u2013\u00a0 balances with HSBC undertakings
2,548
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
2,548
Financial assets with HSBC undertakings
designated and otherwise mandatorily
measured at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
5,835
31,547
23,904
61,286
Derivatives
2,339
\u2014
24
\u2014
\u2014
243
162
286
3,054
Loans and advances to HSBC undertakings
8,500
\u2014
120
\u2014
13
1,640
6,739
20,665
37,677
Trading assets
709
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
709
Financial investments
6,141
4,187
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
10,328
Accrued income and other financial assets
2,719
856
292
203
11
\u2014
\u2014
\u2014
4,081
Total financial assets at 31 Dec 2024
22,956
5,043
436
203
24
7,718
38,448
44,855
119,683
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
154,574
154,574
Total assets at 31 Dec 2024
22,956
5,043
436
203
24
7,718
38,448
199,429
274,257
Financial liabilities
Amounts owed to HSBC undertakings
\u2014
231
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
231
Financial liabilities designated at fair\u00a0value
\u2014
\u2014
\u2014
1,012
\u2014
3,641
16,907
20,022
41,582
\u2013\u00a0 debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
2,755
15,036
15,476
33,267
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
1,012
\u2014
886
1,871
4,546
8,315
Derivatives
1,502
89
144
44
45
209
794
2,513
5,340
Debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
14,897
24,395
25,028
64,320
Accruals and other financial liabilities
351
1,713
831
129
31
\u2014
\u2014
20
3,075
Subordinated liabilities
\u2014
\u2014
1,541
\u2014
\u2014
\u2014
836
21,171
23,548
Total financial liabilities 31 Dec 2024
1,853
2,033
2,516
1,185
76
18,747
42,932
68,754
138,096
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
22
22
Total liabilities at 31 Dec 2024
1,853
2,033
2,516
1,185
76
18,747
42,932
68,776
138,118
Financial assets
Cash at bank and in hand:
\u2013\u00a0 balances with HSBC undertakings
7,029
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
7,029
Financial assets with HSBC undertakings
designated and otherwise mandatorily
measured at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
3,815
26,284
29,780
59,879
Derivatives
2,217
\u2014
\u2014
\u2014
\u2014
18
675
434
3,344
Loans and advances to HSBC undertakings
\u2014
\u2014
120
\u2014
\u2014
1,016
6,783
19,435
27,354
Financial investments
10,365
6,017
898
750
757
771
\u2014
\u2014
19,558
Accrued income and other financial assets
3,511
860
254
229
5
\u2014
\u2014
\u2014
4,859
Total financial assets at 31\u00a0Dec\u00a02023
23,122
6,877
1,272
979
762
5,620
33,742
49,649
122,023
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
163,146
163,146
Total assets at 31 Dec 2023
23,122
6,877
1,272
979
762
5,620
33,742
212,795
285,169
Financial liabilities
Amounts owed to HSBC undertakings
\u2014
168
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
168
Financial liabilities designated at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
5,287
19,604
18,747
43,638
\u2013\u00a0 debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
3,816
16,175
15,198
35,189
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
\u2014
\u2014
1,471
3,429
3,549
8,449
Derivatives
2,452
209
7
59
75
558
1,318
1,412
6,090
Debt securities in issue
\u2014
\u2014
816
2,158
\u2014
4,920
33,735
23,610
65,239
Accruals and other financial liabilities
1,437
1,599
1,049
127
34
\u2014
\u2014
23
4,269
Subordinated liabilities
\u2014
1,987
\u2014
\u2014
\u2014
1,600
880
19,972
24,439
Total financial liabilities at 31\u00a0Dec 2023
3,889
3,963
1,872
2,344
109
12,365
55,537
63,764
143,843
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
20
20
Total liabilities at 31 Dec 2023
3,889
3,963
1,872
2,344
109
12,365
55,537
63,784
143,863
Contractual maturity of financial liabilities
The following table shows, 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). For this reason, balances in the following table do not agree directly with those in
our consolidated balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are\u00a0classified according to their
contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the \u2018Due not more than 1 month\u2019 time
bucket and not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the
basis of the earliest date they can be called.
Cash flows payable by HSBC under financial liabilities by remaining contractual maturities
Due not
more
than 1
month
Due over
1 month but
not more
than
3 months
Due over
3 months but
not more than
1 year
Due over
1 year but
not
more than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
Deposits by banks
54,819
1,759
7,381
11,242
511
75,712
Customer accounts
1,382,666
171,917
97,667
10,089
113
1,662,452
Repurchase agreements \u2013 non-trading
168,633
10,425
2,195
188
196
181,637
Trading liabilities
65,982
\u2014
\u2014
\u2014
\u2014
65,982
Financial liabilities designated at fair value
19,139
9,042
18,462
70,587
45,767
162,997
Derivatives
262,014
531
1,008
2,034
2,765
268,352
Debt securities in issue
5,780
11,309
27,103
45,725
32,129
122,046
Subordinated liabilities
39
120
2,959
7,373
35,512
46,003
Other financial liabilities1
138,319
9,754
5,421
2,206
608
156,308
2,097,391
214,857
162,196
149,444
117,601
2,741,489
Loan and other credit-related commitments
861,193
78
146
63
98
861,578
Financial guarantees2
16,998
\u2014
\u2014
\u2014
\u2014
16,998
At 31 Dec 2024
2,975,582
214,935
162,342
149,507
117,699
3,620,065
Proportion of cash flows payable in period
83%
6%
4%
4%
3%
Deposits by banks
52,938
2,898
3,304
17,123
362
76,625
Customer accounts
1,345,006
141,348
119,660
13,423
109
1,619,546
Repurchase agreements \u2013 non-trading
159,264
10,457
2,996
1
\u2014
172,718
Trading liabilities
73,150
\u2014
\u2014
\u2014
\u2014
73,150
Financial liabilities designated at fair value
22,262
9,156
26,033
63,960
44,886
166,297
Derivatives
232,598
609
1,295
2,445
2,910
239,857
Debt securities in issue
6,837
7,407
24,117
43,513
27,119
108,993
Subordinated liabilities
39
135
1,465
9,020
34,920
45,579
Other financial liabilities1
149,904
9,752
5,943
2,555
2,109
170,263
2,041,998
181,762
184,813
152,040
112,415
2,673,028
Loan and other credit-related commitments
895,156
95
371
1,437
91
897,150
Financial guarantees2
16,966
4
39
\u2014
\u2014
17,009
At 31 Dec 2023
2,954,120
181,861
185,223
153,477
112,506
3,587,187
Proportion of cash flows payable in period
83%
5%
5%
4%
3%
1Excludes financial liabilities of disposal groups.
2Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
HSBC Holdings
HSBC Holdings\u2019 primary sources of liquidity are dividends received from subsidiaries, interest on and repayment of intra-Group loans and
securities, and interest earned on its own liquid funds. HSBC Holdings also raises funds in the debt capital markets to meet the Group\u2019s
minimum requirement for own funds and eligible liabilities and maintain an appropriate liquidity buffer. HSBC Holdings uses this liquidity to
meet its obligations, including interest and principal repayments on external debt liabilities, operating expenses and collateral on derivative
transactions.
HSBC Holdings is also subject to contingent liquidity risk by virtue of credit-related commitments and guarantees and similar contracts issued
relating to its subsidiaries. Such commitments and guarantees are only issued after due consideration of HSBC Holdings\u2019 ability to finance the
commitments and guarantees and the likelihood of the need arising.
HSBC Holdings actively manages the cash flows from its subsidiaries to optimise the amount of cash held at the holding company level. During
2024, consistent with the Group\u2019s capital plan, the Group\u2019s material subsidiaries did not experience any significant restrictions on paying
dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments
from material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other
things, their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating
performance.
HSBC Holdings currently has sufficient liquidity to meet its present and forecast requirements.
The following table shows, 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). For this reason, balances in the following table do not agree directly with those in
HSBC Holdings balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are\u00a0classified according to their
contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the \u2018Due not more than 1 month\u2019 time
bucket and not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the
basis of the earliest date they can be called.
Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities
Due not
more
than 1
month
Due over 1
month but
not
more than 3
months
Due over 3
months but
not more
than
1 year
Due over 1
year but not
more than 5
years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
Amounts owed to HSBC undertakings
\u2014
231
\u2014
\u2014
\u2014
231
Financial liabilities designated at fair value
2
133
2,254
26,335
26,788
55,512
Derivatives
669
202
1,344
2,591
1,658
6,464
Debt securities in issue
\u2014
254
1,697
47,771
29,706
79,428
Subordinated liabilities
\u2014
105
2,627
6,794
31,773
41,299
Other financial liabilities
351
1,735
991
\u2014
20
3,097
At 31 Dec 2024
1,022
2,660
8,913
83,491
89,945
186,031
Amounts owed to HSBC undertakings
\u2014
168
\u2014
\u2014
\u2014
168
Financial liabilities designated at fair value
23
405
1,437
31,050
25,610
58,525
Derivatives
1,244
556
1,651
2,227
726
6,404
Debt securities in issue
\u2014
680
4,787
46,909
27,745
80,121
Subordinated liabilities
46
2,163
1,360
8,239
30,862
42,670
Other financial liabilities
1,436
1,620
1,210
\u2014
23
4,289
At 31 Dec 2023
2,749
5,592
10,445
88,425
84,966
192,177
31Offsetting of financial assets and financial liabilities
In the offsetting of financial assets and financial liabilities, the net amount is reported in the balance sheet when the offset criteria are met. This
is achieved when there is a legally enforceable right to offset the recognised amounts and there is either an intention to settle on a net basis, or
realise the asset and settle the liability simultaneously.
In the following table, the \u2018Amounts not set off in the balance sheet\u2019 include transactions where:
\u2013 the counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right to set off only in
the event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and
\u2013 cash and non-cash collateral (debt securities and equities) has been received/pledged for derivatives and reverse repurchase/repurchase,
stock borrowing/lending and similar agreements to cover net exposure in the event of a default or other predetermined events.
The effect of over-collateralisation is excluded.
\u2018Amounts not subject to enforceable netting agreements\u2019 include contracts executed in jurisdictions where the rights of offset 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.
For risk management purposes, the net amounts of loans and advances to customers are subject to limits, which are monitored and the
relevant customer agreements are subject to review and updated, as necessary, to ensure the legal right to set off remains appropriate.
Offsetting of financial assets and financial liabilities
Amounts subject to enforceable netting arrangements
Amounts not
subject to
enforceable
netting
arrangements1
Total
Amounts not set off in the
balance sheet
Gross
amounts
Amounts
offset
Net
amounts
in the
balance
sheet
Financial
instruments,
including
non-cash
collateral
Cash
collateral
Net
amount
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Derivatives (Note 15)2
372,699
(112,746)
259,953
(230,133)
(22,730)
7,090
8,684
268,637
Reverse repos, stock borrowing and
similar agreements classified as:3
\u2013\u00a0 trading assets
25,077
(637)
24,440
(24,428)
(10)
2
757
25,197
\u2013\u00a0 non-trading assets
386,124
(154,133)
231,991
(230,584)
(332)
1,075
20,602
252,593
Loans and advances to customers4
34,582
(16,540)
18,042
(15,313)
(75)
2,654
4
18,046
At 31 Dec 2024
818,482
(284,056)
534,426
(500,458)
(23,147)
10,821
30,047
564,473
Derivatives (Note 15)2
341,473
(116,486)
224,987
(198,743)
(22,926)
3,318
4,727
229,714
Reverse repos, stock borrowing and
similar agreements classified as:3
\u2013\u00a0 trading assets
29,152
(602)
28,550
(28,513)
(34)
3
2,633
31,183
\u2013\u00a0 non-trading assets
365,922
(135,210)
230,712
(230,240)
(80)
392
21,653
252,365
Loans and advances to customers4
34,173
(15,792)
18,381
(15,613)
(93)
2,675
2
18,383
At 31 Dec 2023
770,720
(268,090)
502,630
(473,109)
(23,133)
6,388
29,015
531,645
Financial liabilities
Derivatives (Note 15)2
369,287
(112,746)
256,541
(221,232)
(30,334)
4,975
7,907
264,448
Repos, stock lending and similar
agreements classified as:3
\u2013\u00a0 trading liabilities
18,482
(157)
18,325
(18,326)
\u2014
(1)
6
18,331
\u2013\u00a0 non-trading liabilities
287,648
(154,613)
133,035
(131,719)
(164)
1,152
47,845
180,880
Customer accounts5
41,409
(16,540)
24,869
(15,313)
(75)
9,481
17
24,886
At 31 Dec 2024
716,826
(284,056)
432,770
(386,590)
(30,573)
15,607
55,775
488,545
Derivatives (Note 15)2
344,799
(116,486)
228,313
(198,640)
(23,748)
5,925
6,459
234,772
Repos, stock lending and similar
agreements classified as:3
\u2013\u00a0 trading liabilities
15,686
(172)
15,514
(15,453)
\u2014
61
6
15,520
\u2013\u00a0 non-trading liabilities
270,493
(135,640)
134,853
(134,095)
(669)
89
37,247
172,100
Customer accounts5
42,522
(15,792)
26,730
(15,613)
(93)
11,024
13
26,743
At 31 Dec 2023
673,500
(268,090)
405,410
(363,801)
(24,510)
17,099
43,725
449,135
1These exposures continue to be secured by financial collateral, but we may not have sought or been able to obtain a legal opinion evidencing enforceability of
the right of offset.\u00a0
2\u00a0 At 31 December 2024, the amount of cash margin received that had been offset against the gross derivatives assets was $5,303m (2023:\u00a0$5,105m). The
amount of cash margin paid that had been offset against the gross derivatives liabilities was $5,614m (2023: $7,142m).
3For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within \u2018Trading assets\u2019 of
$25,197m (2023: $31,183m) and \u2018Trading liabilities\u2019 of $18,331m (2023: $ 15,520m), see the \u2018Funding sources and uses\u2019 table on page 209.
4At 31 December 2024, the total amount of \u2018Loans and advances to customers\u2019 was $930,658m (2023: $938,535m), of which $ 18,042m (2023: $18,381m) was
subject to offsetting.
5At 31 December 2024, the total amount of \u2018Customer accounts\u2019 was $1,654,955m (2023: $1,611,647m), of which $24,869m (2023:\u00a0$26,730m) was subject to
offsetting.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-6": { "value": "
Collateral on loans and advances
(Audited)
The following table provides a quantification of the value of fixed
charges we hold over specific assets where we have a history
of\u00a0enforcing, and are able to enforce, collateral in satisfying a debt in
the event of the borrower failing to meet its contractual obligations,
and where the collateral is cash or can be realised by sale in an
established market. The collateral valuation excludes any adjustments
for obtaining and selling the collateral and, in particular, loans shown
as not collateralised or partially collateralised may also benefit from
other forms of credit mitigants.
Personal lending \u2013 residential mortgage loans including loan commitments by level of collateral for key countries/territories by stage
(Audited)
Gross carrying/nominal amount
ECL coverage
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
$m
$m
$m
$m
%
%
%
%
Fully collateralised by LTV ratio
332,641
34,203
2,371
369,215
\u2014
0.4
10.0
0.1
\u2013\u00a0 less than 50%
141,331
18,076
1,238
160,645
\u2014
0.2
7.6
0.1
\u2013\u00a0 51% to 70%
111,963
11,507
698
124,168
\u2014
0.4
11.2
0.1
\u2013\u00a0 71% to 80%
39,374
3,040
242
42,656
\u2014
0.7
13.1
0.1
\u2013\u00a0 81% to 90%
25,514
1,264
131
26,909
\u2014
0.9
15.0
0.1
\u2013\u00a0 91% to 100%
14,459
316
62
14,837
\u2014
1.8
22.4
0.1
Partially collateralised (A): LTV > 100%
12,031
139
103
12,273
\u2014
3.2
46.2
0.4
\u2013\u00a0 collateral value on A
11,274
126
70
11,470
Total at 31 Dec 2024
344,672
34,342
2,474
381,488
\u2014
0.4
11.5
0.1
of which: UK
Fully collateralised by LTV ratio
151,264
30,574
747
182,585
\u2014
0.2
8.5
0.1
\u2013\u00a0 less than 50%
62,753
16,689
445
79,887
\u2014
0.1
6.9
0.1
\u2013\u00a0 51% to 70%
50,374
10,456
206
61,036
\u2014
0.2
9.7
0.1
\u2013\u00a0 71% to 80%
20,552
2,423
64
23,039
\u2014
0.4
12.1
0.1
\u2013\u00a0 81% to 90%
15,965
939
23
16,927
\u2014
0.6
13.0
0.1
\u2013\u00a0 91% to 100%
1,620
67
9
1,696
\u2014
0.7
16.7
0.1
Partially collateralised (B): LTV > 100%
146
15
5
166
\u2014
1.0
27.7
0.9
\u2013\u00a0 collateral value on B
109
12
4
125
Total UK at 31 Dec 2024
151,410
30,589
752
182,751
\u2014
0.2
8.6
0.1
of which: Hong Kong
Fully collateralised
95,751
756
138
96,645
\u2014
\u2014
1.3
\u2014
\u2013\u00a0 less than 50%
38,894
372
79
39,345
\u2014
\u2014
0.4
\u2014
\u2013\u00a0 51% to 70%
30,088
227
31
30,346
\u2014
\u2014
0.4
\u2014
\u2013\u00a0 71% to 80%
6,783
47
11
6,841
\u2014
\u2014
5.1
\u2014
\u2013\u00a0 81% to 90%
7,602
42
9
7,653
\u2014
0.2
1.1
\u2014
\u2013\u00a0 91% to 100%
12,384
68
8
12,460
\u2014
0.1
8.8
\u2014
Partially collateralised (C): LTV > 100%
11,744
103
14
11,861
\u2014
0.2
19.1
\u2014
\u2013\u00a0 collateral value on C
11,034
96
12
11,142
Total Hong Kong at 31 Dec 2024
107,495
859
152
108,506
\u2014
0.1
2.9
\u2014
Fully collateralised by LTV ratio
331,279
38,378
2,129
371,786
\u2014
0.5
10.1
0.1
\u2013\u00a0 less than 50%
140,992
19,715
1,165
161,872
\u2014
0.3
7.1
0.1
\u2013\u00a0 51% to 70%
113,043
12,636
568
126,247
\u2014
0.6
10.9
0.1
\u2013\u00a0 71% to 80%
37,866
4,111
229
42,206
\u2014
0.9
15.2
0.2
\u2013\u00a0 81% to 90%
23,278
1,499
109
24,886
\u2014
1.2
17.3
0.2
\u2013\u00a0 91% to 100%
16,100
417
58
16,575
\u2014
1.6
28.9
0.2
Partially collateralised (A): LTV > 100%
9,529
136
129
9,794
\u2014
3.4
42.0
0.6
\u2013\u00a0 collateral value on A
8,968
123
104
9,195
Total at 31 Dec 2023
340,808
38,514
2,258
381,580
\u2014
0.5
11.9
0.1
of which: UK
Fully collateralised by LTV ratio
146,739
33,597
759
181,095
\u2014
0.3
9.7
0.1
\u2013\u00a0 less than 50%
60,403
17,629
458
78,490
\u2014
0.2
7.9
0.1
\u2013\u00a0 51% to 70%
49,945
11,248
207
61,400
\u2014
0.4
9.4
0.1
\u2013\u00a0 71% to 80%
20,293
3,275
61
23,629
\u2014
0.6
13.4
0.1
\u2013\u00a0 81% to 90%
12,946
1,161
18
14,125
\u2014
0.8
17.5
0.1
\u2013\u00a0 91% to 100%
3,152
284
15
3,451
\u2014
1.0
41.6
0.3
Partially collateralised (B): LTV > 100%
317
19
27
363
0.1
1.7
17.5
1.4
\u2013\u00a0 collateral value on B
244
15
22
281
Total UK at 31 Dec 2023
147,056
33,616
786
181,458
\u2014
0.3
9.9
0.1
of which: Hong Kong
Fully collateralised by LTV ratio
97,414
1,354
93
98,861
\u2014
\u2014
0.3
\u2014
\u2013\u00a0 less than 50%
41,903
831
66
42,800
\u2014
\u2014
0.1
\u2014
\u2013\u00a0 51% to 70%
29,762
330
15
30,107
\u2014
\u2014
0.5
\u2014
\u2013\u00a0 71% to 80%
5,260
48
2
5,310
\u2014
0.1
0.4
\u2014
\u2013\u00a0 81% to 90%
8,161
61
4
8,226
\u2014
0.1
1.9
\u2014
\u2013\u00a0 91% to 100%
12,328
84
6
12,418
\u2014
0.3
1.8
\u2014
Partially collateralised (C): LTV > 100%
8,973
86
4
9,063
\u2014
0.9
7.8
\u2014
\u2013\u00a0 collateral value on C
8,535
81
4
8,620
Total Hong Kong at 31 Dec 2023
106,387
1,440
97
107,924
\u2014
0.1
0.7
\u2014
17
Assets pledged, collateral received and assets transferred
Assets pledged1
Financial assets pledged as collateral
2024
2023
$m
$m
Treasury bills and other eligible securities
17,713
20,504
Loans and advances to banks
14,880
13,636
Loans and advances to customers
24,524
27,490
Debt securities
91,975
88,367
Equity securities
51,642
40,280
Other
63,386
61,223
Assets pledged at 31 Dec
264,120
251,500
The value 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 for collateralised transactions including, where relevant, standard
securities lending and borrowing, repurchase agreements and derivative margining. HSBC places both cash and non-cash collateral in relation to
derivative transactions.
Hong Kong currency notes in circulation are secured by the deposit of funds in respect of which the Hong Kong Government certificates of
indebtedness are held.
Financial assets pledged as collateral which the counterparty has the right to sell or repledge
2024
2023
$m
$m
Trading assets
84,863
77,847
Financial investments
47,248
39,324
At 31 Dec
132,111
117,171
Collateral received1
The fair value of assets accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements, swaps of
securities and derivative margining that HSBC is permitted to sell or repledge in the absence of default was $515,267m (2023:\u00a0$495,653m).
The fair value of any such collateral sold or repledged was $293,460m (2023: $284,108m).
HSBC 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 transferred1
The assets pledged include transfers to third parties that do not qualify for derecognition, including 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 while a related
liability, reflecting the Group\u2019s 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. The Group is unable to use, sell or pledge the transferred assets for the duration of the
transaction, and remains exposed to interest rate risk and credit risk on these pledged assets.
Transferred financial assets not qualifying for full derecognition and associated financial liabilities
Carrying amount of:
Transferred
assets
Associated
liabilities
$m
$m
At 31 Dec 2024
Repurchase agreements
83,585
75,625
Securities lending agreements
58,232
4,361
At 31 Dec 2023
Repurchase agreements
81,486
74,517
Securities lending agreements
46,663
3,826
1Excludes assets classified as held for sale.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-7": { "value": "
Funding sources
(Audited)
2024
2023
$m
$m
Customer accounts
1,654,955
1,611,647
Deposits by banks
73,997
73,163
Repurchase agreements \u2013 non-trading
180,880
172,100
Debt securities in issue
105,785
93,917
Cash collateral, margin, settlement accounts and
items in course of transmission to other banks
82,732
92,550
Liabilities of disposal groups held for sale
29,011
108,406
Subordinated liabilities
25,958
24,954
Financial liabilities designated at fair value
138,727
141,426
Insurance contract liabilities
107,629
120,851
Trading liabilities
65,982
73,150
\u2013\u00a0 repos
14,806
12,198
\u2013\u00a0 stock lending
3,525
3,322
\u2013\u00a0 other trading liabilities
47,651
57,630
Total equity
192,273
192,610
Other balance sheet liabilities
359,119
333,903
At 31 Dec
3,017,048
3,038,677
Funding uses
(Audited)
2024
2023
$m
$m
Loans and advances to customers
930,658
938,535
Loans and advances to banks
102,039
112,902
Reverse repurchase agreements \u2013 non-trading
252,549
252,217
Cash collateral, margin, settlement accounts and
items in course of collection from other banks
78,538
96,253
Assets held for sale
27,234
114,134
Trading assets
314,842
289,159
\u2013\u00a0 reverse repos
16,823
16,575
\u2013\u00a0 stock borrowing
8,374
14,609
\u2013\u00a0 other trading assets
289,645
257,975
Financial investments
493,166
442,763
Cash and balances with central banks
267,674
285,868
Other balance sheet assets
550,348
506,846
At 31 Dec
3,017,048
3,038,677
.
Capital and liquidity risk
(Audited)
Capital risk for our insurance manufacturing subsidiaries is assessed
in the Group\u2019s ICAAP, based on their financial capacity to support the
risks to which they are exposed. Capital adequacy is assessed on
both the Group\u2019s economic capital basis, and the relevant local
insurance regulatory basis.
Risk appetite buffers are set to ensure that the operations are able to
remain solvent, allowing for business-as-usual volatility and extreme
but plausible stress events.
Liquidity risk is less material for the insurance business. It 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 manufacturing subsidiaries complete quarterly liquidity risk
reports and an annual review of the liquidity risks to which they are
exposed.
Liquidity risk
(Audited)
Description and exposure
Liquidity risk is the risk that an insurance operation, 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 able to be shared with
policyholders for products with participating features.
The remaining maturity of insurance contract liabilities is included in
Note 4 on page 373.
The amounts of insurance contract liabilities that are payable on demand are set out by the product grouping below; 2024 balances exclude the
French insurance business that was classified as held for sale at 31 December 2024 (further details are provided on page 411).
Amounts payable on demand
(Audited)
2024
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
98,275
102,605
107,287
116,389
Life other contracts
2,960
4,427
2,765
3,961
At 31 Dec
101,235
107,032
110,052
120,350
Sensitivities
(Audited)
The following table shows the sensitivity of the CSM, profit and total
equity to reasonably foreseeable changes in non-economic
assumptions across all our insurance manufacturing subsidiaries.
These sensitivities are prepared in accordance with current IFRS.
Sensitivity to lapse rates depends on the type of contracts
being\u00a0written. An increase in lapse rates typically has a negative
effect on CSM (and therefore expected future profits) due to the loss
of\u00a0future income on the lapsed policies. However, some contract
lapses have a positive effect on profit due to the existence of policy
surrender charges.
Mortality and morbidity risk is typically associated with life insurance
contracts. During the year we have revised the sensitivity to mortality
and morbidity rates from 10% to 5% to align with reasonably
foreseeable changes, and the comparatives have been restated
accordingly. The effect on profit of an increase in mortality or
morbidity depends on the type of business being written.
Expense rate risk is the exposure to a change in the allocated cost
of\u00a0administering insurance contracts. To the extent that increased
expenses cannot be passed on to policyholders, an\u00a0increase in
expense rates will have a negative effect on our\u00a0profits. This risk is
generally greatest for our smaller entities.
The impact of changing insurance underwriting risk factors is primarily
absorbed within the CSM, unless contracts are onerous in which case
the impact is directly to profit. The impact of changes to the CSM is
released to profits over the expected coverage periods of the related
insurance contracts.
The sensitivities provided below include the French insurance
business, which was classified as held for sale at 31 December 2024.
Further details are provided on page 411.
Sensitivity of HSBC\u2019s insurance manufacturing subsidiaries to insurance underwriting risk factors1
(Audited)
Effect on
CSM
Effect on
profit after tax2
Effect on
total equity
At 31 Dec 2024
$m
$m
$m
10% increase in lapse rates
(282)
(21)
(30)
10% decrease in lapse rates
297
23
36
5% increase in mortality and/or morbidity rates
(92)
(16)
(20)
5% decrease in mortality and/or morbidity rates
102
14
23
10% increase in expense rates
(66)
(11)
(15)
10% decrease in expense rates
68
12
15
At 31 Dec 2023
10% increase in lapse rates
(277)
(24)
(24)
10% decrease in lapse rates
290
29
29
5% increase in mortality and/or morbidity rates3
(87)
(11)
(11)
5% decrease in mortality and/or morbidity rates3
87
16
16
10% increase in expense rates
(68)
(6)
(6)
10% decrease in expense rates
67
11
11
1The sensitivities impacts are provided after considering the impacts of reinsurance contracts held as risk mitigation.
2\u2018Effect on profit after tax\u2018 in respect for the year.
3During the year the sensitivity to mortality and morbidity rates have been changed from 10% to 5% and the comparatives have been restated accordingly.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-8": { "value": "
Value at risk
(Audited)
VaR is a technique for estimating potential losses on risk positions as
a result of movements in market rates\u00a0and prices over a specified
time horizon and to a given level of confidence. The use of VaR is
integrated into market risk management and calculated for all trading
positions regardless of how we capitalise them. Where we do not
calculate VaR explicitly, we use alternative tools as summarised in
the \u2018Stress testing\u2019 section below.
Our models are predominantly based on historical simulation that
incorporates the following features:
\u2013 historical market rates and prices, which are calculated with
reference to foreign exchange rates, commodity prices, interest
rates, equity prices and the associated volatilities;
\u2013 potential market movements that are calculated with reference to
data from the past two years; and
\u2013 calculations to a 99% confidence level and using a one-day holding
period.
The models also incorporate the effect of option features on the
underlying exposures. The nature of the VaR models means that an
increase in observed market volatility will lead to an\u00a0increase in VaR
without any changes in the underlying positions.
The Group trading VaR for the year is shown in the table below.
Trading VaR, 99% 1 day1
(Audited)
Foreign
exchange and
commodity
Interest
rate
Equity
Credit
spread
Portfolio
diversification2
Total3
$m
$m
$m
$m
$m
$m
Balance at 31 Dec 2024
14.6
34.9
16.3
8.2
(35.7)
38.3
Average
15.2
48.3
14.8
9.9
(35.1)
53.1
Maximum
29.8
78.1
20.5
13.1
83.3
Minimum
6.9
24.8
12.7
6.6
37.0
Balance at 31 Dec 2023
13.4
55.9
15.2
7.2
(38.9)
52.8
Average
16.2
53.9
19.0
11.6
(40.8)
59.8
Maximum
24.6
86.0
27.8
16.5
98.2
Minimum
9.3
25.5
13.4
6.6
34.4
1Trading portfolios comprise positions arising from the market-making and warehousing of customer-derived positions.
2Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic
market risk that occurs when combining a number of different risk types \u2013 such as interest rate, equity and foreign exchange \u2013 together in\u00a0one portfolio. It is
measured as the difference between the sum of the VaR\u00a0by individual risk type and the combined total VaR. A negative number represents the benefit of
portfolio diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification
benefit for these measures.
3The total VaR is non-additive across risk types due to diversification effects.
Market risk
(Audited)
All our insurance manufacturing subsidiaries have market risk
mandates and limits that specify the investment instruments in which
they are permitted to invest and the maximum quantum of market
risk that they may retain. They manage market risk by using some or
all of the techniques listed below, among others, depending on the
nature of the contracts written.
\u2013 We are able to adjust bonus rates to manage the liabilities to
policyholders for products with participating features. The effect is
that a significant proportion of the market risk is borne by the
policyholder.
\u2013 We use asset and liability matching where asset portfolios are
structured to support projected liability cash flows. The Group
manages its assets using an approach that considers asset quality,
diversification, cash flow matching, liquidity, volatility and target
investment return. We use models to assess the effect of a range
of future scenarios on the values of financial assets and
associated liabilities, and ALCOs employ the outcomes in
determining how best to structure asset holdings to support
liabilities.
\u2013 We use derivatives and other financial instruments to protect
against adverse market movements.
\u2013 We design new products to mitigate market risk, such as
changing the investment return sharing proportion between
policyholders and the shareholder.
Market risk
(Audited)
Description and exposure
Market risk is the risk of changes in market factors affecting HSBC\u2019s
capital or profit. Market factors include interest rates, equity and growth
assets, credit spreads and foreign exchange rates.
Our exposure varies depending on the type of contract issued. Our most
significant life insurance products are contracts with participating
features. These products typically include some form of capital guarantee
or guaranteed return on the sums invested by the policyholders, to which
bonuses are added if allowed by the overall performance of the funds. For
contracts without participating features, some form of guarantee may still
exist but HSBC\u2019s ability to share risks with policyholders will be reduced.\u00a0
Funds supporting these savings products are primarily invested in fixed
income, with a proportion in some cases allocated to other asset classes
to provide customers with the potential for enhanced returns.
These products expose HSBC to the risk of variation in asset returns,
which will impact our participation in the investment performance.
In addition, in some scenarios the asset returns can become insufficient
to cover the policyholders\u2019 financial guarantees, and some contracts are
non-participating, in which case the shortfall has to be met by HSBC.
Amounts are held against the cost of such positions, calculated by
stochastic modelling in the larger entities.
The cost of such guarantees are generally not material and are absorbed
by the insurance fulfilment cash flows.
For unit-linked contracts, market risk is substantially borne by\u00a0the
policyholder, but some market risk exposure typically remains, as fees
earned are related to the market value of the linked assets.
Sensitivity of HSBC\u2019s insurance manufacturing subsidiaries to market risk factors
(Audited)
2024
2023
Effect on
CSM
Effect on profit
after tax1
Effect on
total equity
Effect on
CSM
Effect on
profit after tax1
Effect on
total equity
$m
$m
$m
$m
$m
$m
+100 basis point parallel shift in yield curves
(155)
83
52
(92)
66
32
-100 basis point parallel shift in yield curves
(249)
(217)
(186)
(390)
(137)
(103)
+100 basis point shift in credit spreads
(907)
(84)
(115)
(884)
(11)
(45)
-100 basis point shift in credit spreads
876
60
91
806
104
138
10% increase in growth assets2
467
73
73
436
78
78
10% decrease in growth assets2
(514)
(79)
(79)
(507)
(85)
(85)
10% appreciation in US dollar exchange rate against local
functional currency3
71
17
17
24
(1)
(1)
10% depreciation in US dollar exchange rate against local
functional currency3
(26)
(3)
(3)
(35)
(3)
(3)
1\u2018Effect on profit after tax\u2018 in respect for the year.
2\u2018Growth assets\u2019 primarily comprise equity securities and investment properties. Variability in growth asset fair value constitutes a market risk to insurance
manufacturing subsidiaries.
3During the year 10% US dollar exchange rate methodology changed and the 10% sensitivity range applies to all currencies except for the Hong Kong dollar,
where the extent of change is limited by the impact of the HKD to USD peg. The comparatives have been restated accordingly.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-9": { "value": "
Single total figure of remuneration
(Audited)
The following table shows the single total figure of remuneration of each executive Director for 2024, together with comparative figures. Sir
Noel Quinn retired as Group CEO and as an executive Director of the Board on 2 September 2024 and was succeeded by Georges Elhedery.
The figures below reflect the remuneration paid in respect of time spent as executive Director during 2024.
Single total figure of remuneration
Sir Noel Quinn
Georges Elhedery
(\u00a3000)
2024
2023
2024
2023
Base salary
914
1,336
989
780
Fixed pay allowance (\u2019FPA\u2019)
1,138
1,700
1,288
1,085
Cash in lieu of pension
91
134
99
78
Taxable benefits1
66
127
39
4
Non-taxable benefits
60
89
58
52
Total fixed
2,270
3,386
2,473
1,999
Annual incentive2,3
1,540
2,018
1,677
1,287
Notional returns4
56
43
8
6
Replacement award
\u2014
\u2014
\u2014
\u2014
Long-term incentive5,6
5,298
4,949
1,207
\u2014
Total variable
6,894
7,010
2,891
1,293
Total fixed and variable
9,164
10,396
5,364
3,292
1Taxable benefits include the provision of medical insurance, car benefit, accommodation and tax return assistance (including any associated tax due, where applicable).
Non-taxable benefits include the provision of life assurance and other insurance cover.
2Sir Noel Quinn was not eligible to be considered for a 2025-2027 LTI award. To satisfy regulatory requirements, 40% of the annual incentive award for Sir Noel Quinn
is delivered immediately and 60% is deferred. Both immediate and deferred portions of the award are split evenly between cash and shares. The shares portion of the
award is subject to a retention period of one year and both the shares and the deferred cash portions of the award are subject to clawback provisions.
3The annual incentive award for Georges Elhedery is awarded 50% in cash and 50% in shares. The shares portion of the award vests immediately at grant and is
subject to a retention period of one year and clawback provisions.
4Deferred cash awards granted in prior years include a right to receive notional returns for the period between the grant and vesting date. This is determined by
reference to a rate of return specified at the time of grant and paid annually, with the amount disclosed on a paid basis.
5LTI awards were made in February 2022 (in respect of 2021) at a share price of \u00a35.380 for which the performance period ended on 31\u00a0December 2024. The value of
the awards has been computed based on a share price of \u00a37.184, the average share price during the three-month period to 31 December 2024. The value attributable
to share price appreciation for Sir Noel Quinn is \u00a31,330,238 and for Georges Elhedery is \u00a3303,006. The vesting LTI granted to Georges Elhedery was in respect of
2021 performance in his role as Co-CEO, GBM. See the following section for details of the performance assessment, which resulted in 75.00% vesting.
6The value of the 2021-2023 LTI for Sir Noel Quinn has been restated based on a share price of \u00a35.899 to reflect the value of the award on 12 March 2024, when the
first tranche of the award vested. In 2023, the value was based on the average share price during the three-month period to 31 December 2023 of \u00a36.192.
Benefits
The values of the significant benefits in the single total figure table are set out in the following table. The accommodation benefits in Hong Kong
and the car benefits for Georges Elhedery are not included in the table below as they were not deemed significant.
Sir Noel Quinn
Georges Elhedery
(\u00a3000)
2024
2023
2024
2023
Group income protection (non-taxable)
57
84
49
49
Accommodation in Hong Kong (taxable)
18
67
\u2014
\u2014
Car and driver in UK and Hong Kong (taxable)
15
47
\u2014
\u2014
Determining executive Directors\u2019 incentive outcomes
(Audited)\u00a0
Both executive Directors met the minimum standard of conduct and
behaviour for an annual incentive award to be made.
The award is determined by applying the outcome of their annual
scorecard to the maximum opportunity, set at 215% of base salary.
Sir Noel Quinn has been assessed on full-year performance against
the Group CEO annual scorecard with his pay outcome pro-rated for
time in role up to and including 1 September 2024. Georges Elhedery
has been assessed on full-year performance against both the Group
CEO and Group CFO scorecards with his pay outcome pro-rated
based on the time spent and salary received in each role.
The financial measures, weightings and targets were set at the start
of the year to align with our reported financial performance, excluding
notable items, to ensure that out-turns were not impacted by one-
offs. In setting the targets, the Committee considered the 2024
financial plan, 2023 performance, external commitments, scenario
testing of upside and downside risks in the plan, and analyst
consensus where available.
Diversity representation target ranges were set based on a trajectory
to meet our external commitments. Other strategic measures were
set based on maintaining or improving when compared with 2023
performance and/or market benchmarks.
In assessing performance, the Committee considered, and made no
adjustment for, the impact of interest rates, re-confirming that
variations in the macroeconomic environment and their impact on
business outcomes remain for our executives to manage.
The Committee considered carefully the wider context in which
performance was delivered in 2024 and judged that the overall
scorecard outcome for both Sir Noel Quinn and Georges Elhedery
was appropriate against the targets set at the start of the year for
financial, strategic and personal measures.
Taking into account inputs from the Group Risk Committee, the
Committee concluded that the risk and compliance modifier should not
be applied for 2024 based on the Group\u2019s performance against key risk
metrics for either Sir Noel Quinn or Georges Elhedery.
Annual incentive scorecard assessment
(Audited)
Summary assessment
Minimum
(25% payout)
Maximum
(100% payout)
Performance
Weighting
(%)
Assessment
(%)
Sir Noel Quinn
Outcome (%)
Georges Elhedery
Outcome (%)
Profit before tax ($bn)1
27.1
33.5
34.1
15.0
100.00
15.00
15.00
Target basis operating expenses ($bn)1
32.9
32.3
32.6
15.0
60.09
9.01
9.01
Group RoTE1,2
13.5%
16.5%
16.0%
25.0
87.50
21.88
21.88
Asia RoTE1,2
15.1%
18.1%
18.2%
5.0
100.00
5.00
5.00
Customer satisfaction
See following tables for commentary
15.0
75.00
11.25
11.25
Employee experience
10.0
70.00
7.00
7.00
Wider society
5.0
50.00
2.50
2.50
Personal measures
10.0
6.17
7.15
Total
100.0
77.81
78.79
Scorecard outcome (000)
\u00a31,540
\u00a31,677
Risk adjustment (000)
\u00a3\u2014
\u00a3\u2014
Annual incentive (000)
\u00a31,540
\u00a31,677
1Excluding notable items.
2The CET1 capital ratio of 14.9% exceeded the tolerance level in the risk appetite statement as required by the underpin.
Strategic measures for both executive Directors
Measures
Weighting
Performance achievement
Assessment
Outcome
Customer
satisfaction
Maintain and improve
NPS in the UK and
Hong Kong, and in
key growth markets
15.0%
\u2013 The Committee assessed performance against a scorecard of quantitative
targets set at the start of the year, and using NPS data from external providers.
\u2013 In Hong Kong we met our NPS targets, and are ranked in first place in both CMB
and WPB.
\u2013 In HSBC UK, WPB saw a modest improvement in rank by two positions to joint
11th. In CMB, as measured by the Savanta MarketVue Business Banking
Survey, our Mid-Market Enterprise (\u2019MME\u2019) segment has improved its rank to
2nd position at FY24 (FY23: 3rd). Our Large Corporate sector was ranked 3rd for
NPS in the 2024 Coalition Greenwich UK Commercial Study.
\u2013 For other key growth markets, in WPB we improved rank in Singapore, but saw
a decline in India and rank remained stable in Mexico and China. In CMB,
Singapore and India rankings are in the Top 3.
\u2013 GBM has seen an improvement globally rising from 3rd to 2nd place.
\u2013 Overall, the Committee assessed that the NPS targets were met.
75.00%
11.25%
Employee
experience
Improve diversity and
inclusion
10.0%
\u2013 Senior leadership representation for women increased by 0.5\u00a0percentage points
year-on-year to 34.6% , exceeding the target set.
\u2013 Senior leadership colleagues with Asian heritage increased by 1.5 percentage
points year-on-year to 39.3%, exceeding target.
\u2013 The percentage of Black heritage colleagues in senior leadership roles remained
flat at 3.0%, which was above the minimum set, but behind target.
\u2013 The Inclusion index in our employee Snapshot survey remained flat at 78%,
above minimum, but behind target.
70.00%
7.00%
Wider
society
Execution of
sustainability
commitments
5.0%
\u2013 Whilst the Sustainability Execution Programme (\u2019SEP\u2019) is on track with mitigating
actions in place for known risks, the Committee assessment considered that the
pace of progress could have been accelerated with greater management focus.
\u2013 The absolute financed emissions for oil & gas and thermal coal mining exceeded
the 2024 goal on the trajectory towards our 2030 reduction target.
50.00%
2.50%
Personal measures for the Group CEO and the Group CFO
Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators.
Group CEO
Weighting
Assessment
Performance achievement
Technology
transformation
4.67%
75.00%
\u2013 Progress was made on our technology strategy through mobilisation of 83% value streams with clear
accountability across technology and business leads.
\u2013 Future State Architecture (\u2019FSA\u2019), which defines the technology roadmap, was agreed for four areas
(Wholesale Credit & Lending, GPB & Wealth, Global FX and Wholesale Client Services Onboarding and Know
Your Customer) with 97% of FSAs approved providing a better end-state view of our strategic application
estate.
Driving data quality
remediation
2.33%
50.00%
\u2013 The Committee\u2019s assessment balanced strong progress against the targets set at the start of the year, while
noting that data risk is one of the three principal risk areas to have a material impact on the Group in 2024,
and taking into consideration regulatory feedback.
Simplification of
processes and
organisation
3.0%
50.00%
\u2013 In 2024, we completed the sales of our retail banking operations in France, and businesses in Canada,
Argentina, Russia and Armenia. We announced divestments in our private banking business in Germany and
our business in South Africa, and announced the planned sale of our France life insurance business. We
acquired SilkRoad Property Partners Group in Singapore and Citi\u2019s retail wealth management portfolio in
mainland China. In October 2024, we announced a simplified organisational structure.
Total
6.17% out of 10.00%
Personal measures for the Group CEO and the Group CFO (continued)
Group CFO
Weighting
Assessment
Performance achievement
Deliver activities
relating to
regulatory priorities
5.0%
75.00%
\u2013 The Committee\u2019s assessment considered improved regulatory feedback on recovery and resolution planning
activity, and measurement and management of IRRBB risk.
\u2013 The Integrity of Regulatory Reporting programme continues to remediate against known gaps to deliver
improvements in the quality of regulatory returns, partially meeting the targets set at the start of the year.
\u2013 The regulatory excellence programme achieved efficiencies and outcomes broadly in line with the targets and
milestones set, and the Finance on The Cloud programme successfully closed in April 2024.
Enhanced
disclosures and
controls
2.5%
67.86%
\u2013 Implemented enhanced disclosures covering banking NII, structural hedge and multi-jurisdictional revenue.
\u2013 Progress against external disclosure commitments for scope 3 emissions of Pillar 3 sections and coal
exposures and delivery of other ESG regulatory deliverables including climate risk stress testing and
regulatory reporting.
Drive liquidity and
capital management
across the Group
2.5%
87.50%
\u2013 Strong capital and liquidity positions with no breaches in risk appetite, meeting the targets set.
Total
7.63% out of 10.00%
Long-term incentive (\u2019LTI\u2019) awards
LTI awards over 2022 to 2024 performance period
(Audited)
Sir Noel Quinn, Georges Elhedery and Ewen Stevenson were each
granted a 2022\u20132024 LTI award in February 2022. In line with the
terms of his departure, Ewen Stevenson is a good leaver and his
award has been pro-rated for time in employment.
The scorecard delivered an outcome of 75.00%, reflecting strong
shareholder returns across the performance period.
Based on the performance outcome, 737,504 shares will vest for Sir
Noel Quinn, 167,991 shares will vest for Georges Elhedery and
191,224 shares will vest for Ewen Stevenson. The awards will vest in
five equal annual instalments commencing in March 2025.
The Committee determined that there were no windfall gains to
consider for this award given the share price at grant (\u00a35.38) was
above the share price at the previous LTI grant (\u00a34.26).
The 2022\u20132024 LTI award is subject to a risk and compliance
modifier. The Committee received input from the GRC who assessed
that the performance targets were delivered with appropriate risk
management. On this basis, the Committee considered that no
adjustment for risk should be made.
Assessment of the 2022\u20132024 LTI awards
Measures (weighting)1
Minimum\u00a0 \u00a0
(25% payout)
Target\u00a0 \u00a0 \u00a0 \u00a0
(50% payout)
Maximum\u00a0
(100% payout)
Actual
Assessment
Outcome
RoTE with CET1 capital ratio underpin2 (25%)
8.0%
9.5%
11.0%
14.6%
100.0%
25.00%
Capital reallocation to Asia with CET1 capital ratio
underpin3 (25%)
46.0%
48.0%
50.0%
43.7%
0.0%
0.00%
Transition to net
zero 4 (25%)
Carbon reduction (own
emissions)
52.0%
56.0%
60.0%
66.1%
100.0%
12.50%
Sustainable finance and
investment
$285bn
$340bn
$370bn
$394bn
100.0%
12.50%
Relative TSR5 (25%)
At median of the
peer group
Straight-line vesting
between minimum
and maximum
At upper quartile of
the peer group
Above upper
quartile
100.0%
25.00%
Total
75.00%
1Awards vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set out in this table.
2Assessed based on RoTE in the 2024 financial year. The CET1 capital ratio of 14.9% exceeded the level required by the underpin.
3Assessed based on share of Group tangible equity (on a constant currency basis and excluding associates) allocated to Asia by 31 December 2024.
4Carbon reduction assessed on percentage reduction in total energy and travel emissions achieved by 31 December 2024 using 2019 as the baseline. Sustainable
finance and investment assessed on cumulative financing provided over the performance period.
5The peer group was: Bank of America, Barclays, BNP Paribas, Citigroup, DBS Group Holdings, Deutsche Bank, J.P. Morgan Chase & Co., Lloyds Banking Group,
Morgan Stanley, Standard Chartered and UBS Group. Credit Suisse Group was removed following its acquisition by UBS Group in June 2023.
LTI awards over 2025 to 2027 performance period
After taking into account performance for 2024, and subject to
shareholder approval of the new policy, the Committee intends to
grant Georges Elhedery an LTI award of \u00a39,000,000 and Pam Kaur an
LTI award of \u00a35,250,000 (both 600% of base salary). The awards will
have a three-year performance period starting on 1\u00a0January 2025.
Alongside reviewing the policy, the Committee has undertaken a
comprehensive review of the performance measures used for our
incentive arrangements to ensure alignment to the Group's priorities
and balance delivery of financial and strategic performance.
For the 2025-2027 LTI, we will retain Group RoTE, relative TSR and
environment measures, reflecting our strategic commitments, and to
assess relative performance compared with peers.
We will increase the weighting of RoTE to 40%, reflecting that the
delivery of a strong stable return on tangible equity is a core measure
of the sustainable returns expected by our investors. Group RoTE will
be assessed excluding notable items in the last year of assessment to
mirror our outlook on RoTE which targets a mid-teens return in each
of the three years from 2025 to 2027 excluding notable items.
The RoTE measure is subject to a CET1 capital ratio underpin. If the
CET1 capital ratio at the end of the performance period is below the
CET1 risk tolerance level set in the risk appetite statement, then the
assessment for this measure will be reduced to nil.
We will increase the weighting of relative TSR to 40% as it is a key
measure of shareholder returns, a material relative measure used by
our peers and in line with investor expectations. No changes have
been made to our relative TSR peer group, which continues to include
more Asian peers to better reflect our growth and investment focus
following a review in 2023.
Following feedback from our shareholders on the metrics used and
recognising the increase in LTI opportunity, we have reduced the
overall weighting of the environment measure from 25% to 20% to
ensure a greater proportion of the LTI is aligned to value creation
while supporting our ESG ambitions.
The Committee completed a comprehensive review of the
environment metrics in the LTI and discussed with major
shareholders. At this stage, financed emission targets remain difficult
to include given challenges in the methodology, timeliness and
frequency of reporting. This was recognised by the investors we
spoke to as part of our policy engagement. We therefore decided to
retain metrics on carbon reduction in our own emissions and
sustainable finance and investment, given we cannot currently use
financed emissions, which is a material metric in supporting our ESG
ambitions.
The Committee will continue to keep the environment measures and
weighting under review for future performance cycles.
Performance targets have been set to balance stretch and
achievability so that awards act as an effective incentive for
management, and incentivise outperformance against our external
strategic commitments. The proposed change in remuneration
structure will be supported by target ranges calibrated to reflect the
increase to the remuneration opportunity.
It was recognised by investors in our engagement that our recent LTI
targets have been set to deliver maximum payouts only for
outperformance compared to consensus and our external strategic
commitments.
For 2025-2027 awards:
\u2013 The maximum target for RoTE reflects stretch above plan and
performance forecasts, taking into account the macroeconomic
environment. The minimum target for RoTE is aligned to our
external commitment of mid-teens RoTE over the medium term.
\u2013 The minimum target for relative TSR is set \u2018at the median of our
peer group\u2019, which ensures no payout for below median
performance aligned to investor expectations. The maximum is set
\u2018at the upper quartile of our peer group\u2019.
\u2013 Our emissions reduction targets have been set based on meeting
our forecasts relating to emissions reduction and purchase of
renewable energy.
\u2013 For the sustainable finance and investment measure, we have set
performance targets to support our ambition announced in 2020 to
provide $750bn to $1tn of financing and investment by 2030. We
reflected on sustainable financing forecasts, market demand, and
regulation, as well as higher LTI opportunity in setting the stretch
in the target range.
The LTI is subject to a risk and compliance modifier, which gives the
Committee the discretion to ensure performance targets are delivered
with appropriate risk management.
Consistent with our approach since 2017, the number of shares to be
awarded will be adjusted to reflect the expected dividend yield of the
shares over the vesting period, as awards are not entitled to dividend
equivalents in accordance with regulatory requirements.
To the extent performance conditions are satisfied at the end of the
three-year performance period, the awards will vest in five equal
annual instalments commencing from around the third anniversary of
the grant date. On vesting, shares equivalent to the net number of
shares that have vested (after those sold to cover any income tax and
social security payable) will be held for a retention period of up to one
year, or such period as required by regulators.
Performance conditions for the 2025\u20132027 LTI awards
Measures (weighting)1
Minimum\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
(25% payout)
Target\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
(50% payout)
Maximum\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
(100% payout)
RoTE (excluding notable items) with CET1 capital ratio
underpin2 (40%)
14.0%
16.0%
18.0%
Relative TSR3 (40%)
At the median of the
peer group
Straight-line vesting between
minimum and maximum
At the upper quartile of the
peer group
Environment4 (20%)
Carbon reduction (own
emissions)
71.0%
73.0%
78.0%
Sustainable finance and
investment
$648.0bn
$720.0bn
$792.0bn
Subject to risk and compliance modifier
The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance
factors during the performance period.
1 Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.
2 To be assessed based on RoTE excluding notable items at the end of the performance period, subject to the CET1 capital ratio underpin.
3 The peer group for the 2024 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P.\u00a0Morgan
Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.\u00a0
4 Carbon reduction will be measured based on percentage reduction in total energy and travel emissions achieved by 31 December 2027 using 2019 as the
baseline. The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the performance period starting from
1 January 2020 and ending 31\u00a0December 2027.
Scheme interests awarded during 2024
(Audited)
The table below sets out the scheme interests granted to executive Directors during 2024 in respect of the 2023 performance year, as
disclosed in the\u00a02023 Directors\u2019 remuneration report. No non-executive Directors received scheme interests during the financial year. The below
table includes details of immediate shares and fixed pay allowances in compliance with Chapter 17 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited.
Scheme awards in 2024
(Audited)
Type of interest
awarded
Basis on which
award made
Date of award
Face
value
awarded
\u00a3000
Percentage
receivable for
minimum
performance
Number of
shares
awarded
End of
performance
period
Sir Noel Quinn
LTI deferred shares1
% of base salary
26 February 2024
5,822
25
974,853
31 December 2026
Immediate shares2
% of base salary
26 February 2024
1,009
N/A
168,955
31 December 2023
Fixed pay allowance3
N/A
8 May 2024
300
N/A
42,146
N/A
15 August 2024
300
N/A
46,219
N/A
5 November 2024
300
N/A
41,846
N/A
Georges Elhedery
LTI deferred shares1
% of base salary
26 February 2024
3,399
25
569,177
31 December 2026
Immediate shares2
% of base salary
26 February 2024
643
N/A
107,752
31 December 2023
Fixed pay allowance3
N/A
8 May 2024
192
N/A
26,899
N/A
15 August 2024
192
N/A
29,498
N/A
5 November 2024
299
N/A
41,720
N/A
1 In accordance with the remuneration policy approved by shareholders at the 2022 AGM, the LTI award was determined at 320% of base salary for Sir Noel
Quinn and 320% of base salary for Georges Elhedery. The number of shares to be granted was determined by taking HSBC\u2019s closing share price of \u00a35.972 taken
on 23\u00a0February 2024, and applying a discount based on HSBC\u2019s expected dividend yield of 6.25% per annum for the vesting period (\u00a34.385). The fair value of the
awards was \u00a32.028 based on IFRS 2 accounting standards. LTI awards are conditional share awards subject to a three-year forward-looking performance period
and vest in five equal annual instalments, between the third and seventh anniversary of the award date, subject to performance achieved. Awards are subject to
clawback for a maximum period of 10 years from the date of the award and are not eligible for dividend equivalents.
2 Immediate share awards are granted based on the previous years\u2019 performance as part of the annual incentive and are not subject to forward-looking
performance conditions. On vesting, awards will be subject to a one-year retention period. The face values of the immediate share awards have been computed
using HSBC\u2019s closing share price of \u00a35.972 taken on 23 February 2024. The fair value of the awards was \u00a35.957 based on IFRS 2 accounting standards. Awards
are subject to clawback for a maximum period of 10 years from the date of the award.
3 Fixed pay allowance awards are granted in instalments in accordance with the remuneration policy approved by shareholders at the 2022 AGM, and are not
subject to forward-looking performance conditions. Individual tax liabilities were satisfied in cash, therefore the face value awarded represents the net of tax
value of the shares and the number of shares awarded reflects the net of tax number of shares. The fixed pay allowance awards have been computed using
HSBC\u2019s closing share price of \u00a37.126 taken on 7 May 2024, \u00a36.498 taken on 14 August 2024 and \u00a37.177 taken on 4\u00a0November 2024. The fair values of these
awards are based on IFRS 2 accounting standards and are \u00a37.208, \u00a36.558 and \u00a37.224 respectively. These awards vest immediately and are subject to a retention
period and released annually on pro-rata basis over five years, starting in March 2025.
Performance conditions for the 2024\u20132026 LTI awards
(Audited)
Measures (weighting)1
Minimum
(25% payout)
Target
(50% payout)
Maximum
(100% payout)
RoTE with CET1 capital ratio underpin2 (37.5%)
14.0%
16.0%
17.0%
Environment and sustainability3
(25%)
Carbon reduction
(own emissions)
66.0%
70.0%
74.0%
Sustainable finance and
investment
$539.0bn
$641.0bn
$693.0bn
Relative TSR4 (37.5%)
At median of the
peer group
Straight-line vesting between
minimum and maximum
At upper quartile of
peer group
Subject to risk and compliance modifier
The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance
factors during the performance period.
1 Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.
2 To be assessed based on RoTE at the end of the performance period, subject to the CET1 capital ratio underpin.
3 Carbon reduction will be measured based on percentage reduction in total energy and travel emissions achieved by 31 December 2026 using 2019 as the
baseline. The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the period ending 31\u00a0December 2026.
4 The peer group for the 2024\u20132026 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings,
J.P.\u00a0Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.
Executive Directors\u2019 interests in shares
(Audited)
The shareholdings of executive Directors in 2024, including the
shareholdings of their connected persons, at 31 December 2024 (or
the date they stepped down from the Board, if earlier) are set out
below. The following table shows the comparison of shareholdings
with the company shareholding guidelines. There have been no
changes in the shareholdings of the executive Directors from
31\u00a0December 2024 to the date of this report.
Individuals have five years from their appointment date to build up the
recommended levels of shareholding. In line with investor guidance,
for executive Directors, unvested shares that are not subject to
forward-looking performance conditions (on a net of tax basis) can
count towards their shareholding requirement under the shareholder-
approved policy.
The Committee reviews compliance with the shareholding
requirement, taking into account shareholder expectations and
guidelines. The Committee also has full discretion in determining any
penalties for non-compliance.
With regard to post-employment shareholding arrangements, we
believe that our remuneration structure achieves the objective of
ensuring there is ongoing alignment of executive Directors\u2019 interests
with shareholder experience post-cessation of their employment due
to the following features of the policy:
\u2013 Shares delivered to executive Directors as part of the fixed pay
allowance have a five-year retention period, which continues to
apply following a departure of an executive Director.
\u2013 Shares delivered as part of an annual incentive award are subject
to a one-year retention period, which continues to apply following
a departure of an executive Director.
\u2013 LTI awards have a seven-year vesting period with a one-year post-
vesting retention period, which is not accelerated on departure.
The weighted average holding period of an LTI award within HSBC is
therefore six years, in excess of the five-year holding period typically
implemented by FTSE-listed companies.
HSBC operates a policy under which individuals are not permitted to
enter into any personal hedging strategies in relation to HSBC shares
subject to a vesting and/or retention period.
Shares
(Audited)
Shareholding
guidelines
(% of salary)
Shareholding at
31 Dec 2024 2 or
date stepped
down
(% of salary)
At 31 Dec 2024, or date stepped down from the Board if earlier
Scheme interests
Share
interests
(number
of shares)
Share
options3
Shares awarded subject to deferral1
without
performance
conditions
with
performance
conditions4
Executive Directors
Sir Noel Quinn5 (stepped down from 2
September 2024)
400%
1,068%
2,046,949
\u2014
869,896
2,819,614
Georges Elhedery5 (appointed as Group
CEO from 2 September 2024)
400%
504%
966,017
\u2014
606,179
1,044,640
1 The gross number of shares is disclosed. A portion will be sold at vesting to cover any income tax and social security that falls due at the time of vesting.
2 The value of the shareholding is calculated using an average of the daily closing share prices in the three months to 31 December 2024 (\u00a37.184), and does not
include any unvested interests.
3 At 31 December 2024, Sir Noel Quinn and Georges Elhedery did not hold any options under the HSBC Holdings Savings-Related Share Option Plan (UK).
4 LTI awards granted in February 2022, 2023 and 2024 are subject to the performance conditions as set out in the preceding sections.
5 Executive Directors are expected to meet their shareholding guidelines within five years of the date of their appointment.
Total pension entitlements
(Audited)
No employees who served as executive Directors during the year
have a right to amounts under any HSBC final salary pension scheme
for their services as executive Directors or are entitled to additional
benefits in the event of early retirement. There is no retirement age
set for Directors, but the normal retirement age for colleagues is 65.
Payments to past Directors
(Audited)
In line with the terms of his departure disclosed in our Annual Report
and Accounts 2022, Ewen Stevenson was granted good leaver status.
Ewen Stevenson is eligible to receive vesting of the 2022\u20132024 LTI
award, pro-rated for time in employment subject to satisfaction of
non-compete provisions under which he cannot undertake a role with
a defined list of competitor financial services firms for 12 months
after his employment ceases with HSBC. Details of the 2022\u20132024
LTI outcome are outlined on page 298.
No other payments were made to, or in respect of, former Directors
in\u00a0the year in excess of the minimum threshold of \u00a350,000 set for this
purpose.
Payments for loss of office
(Audited)
Departure terms for Sir Noel Quinn
Sir Noel Quinn is leaving the Group on 30 April 2025. He will continue
to receive his salary, Fixed Pay Allowance (\u2019FPA\u2019), cash in lieu of
pension allowance and other benefits up to (and including) his
retirement date in the normal way. The aggregate value of these
payments from 2\u00a0September 2024 to 31 December 2024 was
\u00a31,147,055 and comprised a salary of \u00a3454,844, a FPA of \u00a3562,019,
cash in lieu of pension allowance of \u00a345,484 and benefits totalling
\u00a384,707, which includes Group Income Protection, a contribution
towards Sir Noel Quinn's legal fees incurred in connection with his
departure arrangements and other benefits in connection with his
retirement. Sir Noel Quinn will also receive cash in lieu of unused
holiday on expiry of his notice period. The fixed pay allowance will be
awarded in immediately vested shares, be subject to a retention
period and released on a pro-rata basis over five years.\u00a0
Sir Noel Quinn will not be eligible for an LTI award in respect of the
2024 performance year, or any annual incentive award in respect of
the 2025 performance year. In accordance with the contractual terms
agreed and our approved Directors\u2019 remuneration policy, Sir Noel
Quinn was granted good leaver status in respect of his outstanding
unvested share awards. Good leaver status is conditional upon him
not taking up a role with a defined list of competitor financial services
firms for a year from his departure date. As a good leaver, his
deferred share awards will continue to vest and be released on their
scheduled vesting dates, subject to the relevant terms (including post-
vesting retention periods, malus and, where applicable, clawback).
Any vesting of his LTI awards will be pro-rated for the period up to the
departure date and will be subject to the relevant terms (including
post-vesting retention periods, malus and clawback) and the
achievement of the required performance conditions. For this
purpose, his 2022 and 2023 LTI awards have been pro-rated for time
with the maximum number of shares, being 669,995 and 433,268
respectively, still subject to performance.
Sir Noel Quinn will be eligible to receive certain post-departure
benefits for a period of up to seven years after the departure date. Sir
Noel Quinn will receive no other compensation or payment for the
termination of his service agreement or his ceasing to be a Director of
the Group.
Directors\u2019 emoluments
The details of compensation paid to executive and non-executive Directors for the year ended 31 December 2024 are set out below:
Emoluments
Sir Noel Quinn
Georges Elhedery
Non-executive Directors1
2024
2023
2024
2023
2024
2023
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Directors' base salary, allowances and benefits in kind
2,270
3,386
2,473
1,999
Non-executive Directors' fees and benefits in kind
5,583
4,769
Pension contributions
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Performance-related pay paid or receivable2,3
1,540
6,293
10,677
3,783
\u2014
\u2014
Inducements to join paid or receivable
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Compensation for loss of office
1,147
\u2014
\u2014
\u2014
\u2014
\u2014
Notional return on deferred cash
56
43
8
6
\u2014
\u2014
Total
5,013
9,722
13,157
5,788
5,583
4,769
Total ($000)
6,406
12,424
16,814
7,397
7,135
6,095
1 Fees and benefits in kind for 2024 reflects the population as per the single total figure table for non-executive Directors, which excludes individuals who have
stepped down from the Board during 2024.
2 Includes the value of the deferred and LTI awards at grant.
3 The 2024 value of performance-related pay paid or receivable for Georges Elhedery includes the proposed 2025-2027 LTI award under the new executive
Director remuneration policy, which is subject to shareholder approval at the 2025 AGM.
The aggregate amount of Directors\u2019 emoluments (including both executive Directors and non-executive Directors) for the year ended
31\u00a0December 2024 was $ 30,355,377. The aggregate value of Director retirement benefits for current Directors is nil.
As per our policy, benefits in kind may\u00a0include, but are not limited to, the provision of medical insurance, income protection insurance, health
assessment, life\u00a0assurance, club membership, tax assistance, car benefit, travel assistance, provision of company owned-accommodation and
relocation costs (including any tax due, where applicable).
The details of compensation paid to former executive Directors for the year ended 31 December 2024 are set out below:\u00a0
Emoluments to former executive Directors
Douglas Flint
Stuart Gulliver
John Flint
Marc Moses
\u00a3
$
\u00a3
$
\u00a3
$
\u00a3
$
Post-employment medical insurance benefits
8,018
10,246
8,018
10,246
12,161
15,541
18,950
24,217
Tax return support
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
2,500
3,195
1 Amounts are converted into US dollars based on the average exchange rates for the year.
The total aggregate value of benefits provided to former executive Directors in 2024 was \u00a349,646 ($63,444). There were payments under
retirement benefit arrangements to four former Directors of \u00a33,225,964.
We note an additional retirement benefit payment made in 2023 to a former Director of \u00a31,038,863. This means payments under retirement
benefit arrangements for 2023 were made to four former Directors, totalling \u00a32,420,537.
The provision at 31 December 2024 in respect of unfunded pension obligations to two former Directors amounted to \u00a3352,441. This relates to
unfunded unapproved retirement benefits schemes.
Non-executive Directors
(Audited)
The following table shows the total fees and benefits of non-executive Directors for 2024, together with comparative figures for 2023.
Fees and benefits
(Audited)
Fees1
Benefits2
Total
(\u00a3000)
2024
2023
2024
2023
2024
2023
Geraldine Buckingham3
270
244
3
5
273
249
Rachel Duan
255
244
3
\u2014
258
244
Dame Carolyn Fairbairn
292
279
5
\u2014
297
279
James Forese4
801
759
4
1
805
760
Ann Godbehere5
389
68
\u2014
\u2014
389
68
Steven Guggenheimer6
259
264
4
1
263
265
Jos\u00e9 Antonio Meade Kuribre\u00f1a
253
244
7
4
260
248
Kalpana Morparia7
248
170
1
\u2014
249
170
Eileen Murray8
331
290
\u2014
3
331
293
Brendan Nelson9
329
81
38
12
367
93
David Nish10
159
479
30
19
189
498
Swee Lian Teo11
256
51
\u2014
\u2014
256
51
Sir Mark Tucker
1,500
1,500
145
51
1,645
1,551
Total (\u00a3000)
5,343
4,673
240
96
5,583
4,769
Total ($000)
6,828
5,972
307
123
7,135
6,095
1 Fees are in line with the Directors\u2019 remuneration policy. There was a 5% increase in fees for Director fees, Group Risk Committee Member, Group Audit
Committee Chair and Member, Remuneration Committee Chair and Member, Nomination & Corporate Governance Committee Member and Group Technology
Committee Chair and Member).
2 Benefits include taxable expenses such as accommodation, travel and subsistence relating to attendance at Board and other meetings at HSBC Holdings\u2019
registered offices. Amounts disclosed have been grossed up using a tax rate of 45%, where relevant.
3 Stepped down as a member of the Group Risk Committee and joined the Group Audit Committee as member on 1 October 2024. Appointed as Chair of the
Sustainability Working Group on 1 October 2024.
4 Appointed as a member of the Sustainability Working Group on 1 October 2024. Includes fee of \u00a3430,000 (2023: \u00a3443,000) in relation to his role as Chair of
HSBC North America Holdings, Inc.
5 Appointed as a member of the Group Audit Committee on 21 February 2024 and the Sustainability Working Group on 1 October 2024. Appointed as Senior
Independent Director on 3 May 2024.
6 Stepped down as a member of the Technology Governance Working Group on 1 March 2024. Appointed as a member of the Group Technology Committee on
1\u00a0March 2024.
7 Appointed as a member of the Group Technology Committee on 1 March 2024. Stepped down as a member of Group Risk Committee on 1 October 2024 and
joined the Group Remuneration Committee on 1 October 2024.\u00a0
8 Stepped down as the Co-Chair of the Technology Governance Working Group Committee on 1 March 2024 and as the member of the Group Audit Committee
on 1 October 2024. Appointed as the Chair of the Group Technology Committee on 1 March 2024 and as a member of the Group Risk Committee on 1 October
2024.
9 Appointed as Chair of the Group Audit Committee on 21 February 2024. Appointed as member of the Group Technology Committee on 1 March 2024 and
Sustainability Working Group on 1 October 2024.
10 Retired from the Board at the conclusion of the 2024 AGM on 3 May 2024.
11 Appointed as member of the Group Technology Committee on 1 March 2024 and the Sustainability Working Group on 1 October 2024.
Non-executive Directors\u2019 interests in shares
(Audited)
The shareholdings of persons who were non-executive Directors in
2024, including the shareholdings of their connected persons, at
31\u00a0December\u00a02024, or date of cessation as a Director if earlier, are
set out below. There have been no changes in the shareholdings of
the non-executive Directors from 31\u00a0December 2024 to the date of
this report.
N on-executive Directors are expected to meet the shareholding
guidelines of 15,000 shares within five years of the date of their
appointment. All non-executive Directors who had been appointed for
five years or more at 31 December 2024 met the guidelines.
Shares
Shareholding
guidelines (number
of shares)
Share interests
(number of shares)
Geraldine Buckingham
15,000
15,000
Rachel Duan
15,000
15,000
Dame Carolyn Fairbairn
15,000
15,000
James Forese
15,000
115,000
Ann Godbehere
15,000
15,000
Steven Guggenheimer
15,000
15,000
Jos\u00e9 Antonio Meade Kuribre\u00f1a
15,000
15,000
Kalpana Morparia
15,000
15,000
Eileen Murray
15,000
75,000
Brendan Nelson
15,000
15,000
David Nish (retired on 3 May 2024)
15,000
50,000
Swee Lian Teo
15,000
15,200
Sir Mark Tucker
15,000
307,352
Key Management Personnel
Details of Directors\u2019 remuneration and interests in shares are disclosed in the \u2018Directors\u2019 remuneration report\u2019 on pages 279 to 317.
IAS\u00a024\u00a0\u2018Related Party Disclosures\u2019 requires the following additional information for key management compensation.
Compensation of Key Management Personnel
2024
2023
2022
$m
$m
$m
Short-term employee benefits
53
51
52
Post-employment benefits
1
1
1
Other long-term employee benefits
12
10
8
Share-based payments
29
29
26
Year ended 31 Dec
95
91
87
Shareholdings, options and other securities of Key Management Personnel
2024
2023
(000s)
(000s)
Number of options held over HSBC Holdings ordinary shares under employee share plans
20
32
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially
17,455
20,409
Number of other HSBC securities held
228
228
At 31 Dec
17,703
20,669
Advances and credits, guarantees and deposit balances during the year with Key Management Personnel
2024
2023
Balance at
31\u00a0Dec
Highest amounts
outstanding
during year
Balance at
31 Dec
Highest amounts
outstanding
during year
$m
$m
$m
$m
Key Management Personnel
Advances and credits1
9
12
11
16
Deposits
78
191
60
130
1Advances and credits entered into by subsidiaries of HSBC Holdings plc during 2024 with Directors and former Directors, disclosed pursuant to section 413 of
the Companies Act 2006, totalled $1.3m (2023: $2.6m)
Unless previously disclosed, there were no connected transactions during the reporting period that fell outside the exemptions provided by the
Companies Act 2006, the UK Financial Conduct Authority\u2019s Listing Rules and the Rules Governing The Listing of Securities on The Stock
Exchange of Hong Kong Limited. The transactions conducted were in the ordinary course of business and on substantially the same terms,
including interest rates and security, as for comparable transactions with parties of a similar standing or, where applicable, with other
employees. These transactions did not involve more than the normal risk of repayment or present other unfavourable features.
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}, "f-917": { "value": "0.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2025-01-01T00:00:00", "group:BalanceSheetLocation1Axis": "group:ReverseRepurchaseAgreementsWithBanks", "ifrs-full:MaturityAxis": "ifrs-full:NotLaterThanOneMonthMember", "unit": "iso4217:USD" } }, "f-918": { "value": "200000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00", "group:BalanceSheetLocation1Axis": "group:ReverseRepurchaseAgreementsWithBanks", "ifrs-full:MaturityAxis": "ifrs-full:NotLaterThanOneMonthMember", "unit": "iso4217:USD" } }, "f-919": { "value": "1300000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2023-01-01T00:00:00", "group:BalanceSheetLocation1Axis": "group:ReverseRepurchaseAgreementsWithBanks", "ifrs-full:MaturityAxis": "ifrs-full:NotLaterThanOneMonthMember", "unit": "iso4217:USD" } }, "f-920": { "value": "400000000.0", "decimals": -8, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00", "group:BalanceSheetLocation1Axis": "group:ItemsInCourseOfTransmissionToOtherBanksMember", "unit": "iso4217:USD" } }, "f-921": { "value": "200000000.0", "decimals": -8, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsClassifiedAsPartOfDisposalGroupHeldForSale", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2023-01-01T00:00:00", "group:BalanceSheetLocation1Axis": "group:ItemsInCourseOfTransmissionToOtherBanksMember", "unit": "iso4217:USD" } }, "f-922": { "value": "
1.1Basis of preparation
(a)Compliance with International Financial Reporting Standards
The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings comply with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006, and have also applied international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are also prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (\u2018IFRS Accounting
Standards\u2019), including interpretations issued by the IFRS Interpretations Committee, as there are no applicable differences from IFRS
Accounting Standards for the periods presented. There were no unendorsed standards effective for the year ended 31\u00a0December\u00a02024
affecting these consolidated and separate financial statements.
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting
policies have been applied consistently.
(b)Differences between IFRS Accounting Standards and Hong Kong Financial Reporting
Standards
There are no significant differences between IFRS Accounting Standards and Hong Kong Financial Reporting Standards in terms of their
application to HSBC, and consequently there would be no significant differences had the financial statements been prepared in accordance
with Hong Kong Financial Reporting Standards. The \u2018Notes on the financial statements\u2019, taken together with the \u2018Report of the Directors\u2019,
include the aggregate of all disclosures necessary to satisfy IFRS Accounting Standards and Hong Kong Financial Reporting Standards.
(c)Future accounting developments
Minor amendments to IFRS Accounting Standards
The International Accounting Standards Board (\u2018IASB\u2019) has published a number of minor amendments to IFRS Accounting Standards that are
effective from 1 January 2025. HSBC expects they will have an insignificant effect, when adopted, on the consolidated financial statements of
HSBC and the separate financial statements of HSBC Holdings.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 \u2018Financial Instruments\u2019 and IFRS 7 \u2018Financial Instruments: Disclosures\u2019
In May 2024, the IASB issued amendments to IFRS 9 \u2018Financial Instruments\u2019 and IFRS 7 \u2018Financial Instruments: Disclosures\u2019, effective for
annual reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed
settled when using an electronic payment system, the amendments also provide further clarification regarding the classification of financial
assets that contain contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related
contingencies, and financial assets with certain non-recourse features. The Group is undertaking an assessment of the potential impact.
IFRS 18 \u2018Presentation and Disclosure in Financial Statements\u2019
In April 2024, the IASB issued IFRS 18 \u2018Presentation and Disclosure in Financial Statements\u2019, 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\u2019s financial performance. It will replace IAS 1 \u2018Presentation of Financial Statements\u2019 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. HSBC are currently assessing impacts and data
readiness before developing a more detailed implementation plan.
(d)Foreign currencies
HSBC\u2019s consolidated financial statements are presented in US dollars because the US dollar and currencies linked to it form the major currency
bloc in which HSBC transacts and funds its business. The US dollar is also HSBC Holdings\u2019 functional currency because the US dollar and
currencies linked to it are the most significant currencies relevant to the underlying transactions, events and conditions of its subsidiaries, as
well as representing a significant proportion of its funds generated from financing activities.
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\u00a0liabilities 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. Except for
subsidiaries operating in hyperinflationary economies, in the consolidated financial statements, the assets and liabilities of branches,
subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group\u2019s presentation currency at
the rate of exchange at the balance sheet date, while their results are translated into US dollars 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.
(e)Presentation of information
Certain disclosures required by IFRS Accounting Standards have been included in the sections marked as (\u2018Audited\u2019) in the Annual Report and
Accounts 2024 as follows:
\u2013 Disclosures concerning the nature and extent of risks relating to insurance contracts and financial instruments are included in the \u2018Risk
review\u2019 on pages 126 to 235.
\u2013 The \u2018Own funds disclosure\u2019 is included in the \u2018Risk review\u2019 on page 205.
HSBC follows the UK Finance Disclosure Code. The UK Finance Disclosure Code aims to increase the quality and comparability of UK banks\u2019
disclosures and sets out five disclosure principles together with supporting guidance agreed in 2010. In line with the principles of the UK
Finance Disclosure Code, HSBC assesses good practice recommendations issued from time to time by relevant regulators and standard
setters, and will assess the applicability and relevance of such guidance, enhancing disclosures where appropriate.
(f)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 \u2018critical estimates and
judgements\u2019 in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management\u2019s
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\u2019s selection of HSBC\u2019s 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\u2019s 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.
(g)Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the
resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of
information relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and capital
resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following uncertain inflation,
rapidly changing interest rates, slower Chinese economic activity, and disrupted supply chains as a result of the Russia-Ukraine war, conflict in
the Middle East and US-China tensions. They also included other top and emerging risks, including climate change, as well as the related
impacts on profitability, capital and liquidity.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-923": { "value": "
(a)Compliance with International Financial Reporting Standards
The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings comply with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006, and have also applied international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are also prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (\u2018IFRS Accounting
Standards\u2019), including interpretations issued by the IFRS Interpretations Committee, as there are no applicable differences from IFRS
Accounting Standards for the periods presented. There were no unendorsed standards effective for the year ended 31\u00a0December\u00a02024
affecting these consolidated and separate financial statements.
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting
policies have been applied consistently.
(b)Differences between IFRS Accounting Standards and Hong Kong Financial Reporting
Standards
There are no significant differences between IFRS Accounting Standards and Hong Kong Financial Reporting Standards in terms of their
application to HSBC, and consequently there would be no significant differences had the financial statements been prepared in accordance
with Hong Kong Financial Reporting Standards. The \u2018Notes on the financial statements\u2019, taken together with the \u2018Report of the Directors\u2019,
include the aggregate of all disclosures necessary to satisfy IFRS Accounting Standards and Hong Kong Financial Reporting Standards.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-925": { "value": "
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting
policies have been applied consistently.", "dimensions": { "concept": "ifrs-full:DisclosureOfFirstTimeAdoptionExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-924": { "value": "
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting
policies have been applied consistently.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-926": { "value": "Future accounting developments
Minor amendments to IFRS Accounting Standards
The International Accounting Standards Board (\u2018IASB\u2019) has published a number of minor amendments to IFRS Accounting Standards that are
effective from 1 January 2025. HSBC expects they will have an insignificant effect, when adopted, on the consolidated financial statements of
HSBC and the separate financial statements of HSBC Holdings.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 \u2018Financial Instruments\u2019 and IFRS 7 \u2018Financial Instruments: Disclosures\u2019
In May 2024, the IASB issued amendments to IFRS 9 \u2018Financial Instruments\u2019 and IFRS 7 \u2018Financial Instruments: Disclosures\u2019, effective for
annual reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed
settled when using an electronic payment system, the amendments also provide further clarification regarding the classification of financial
assets that contain contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related
contingencies, and financial assets with certain non-recourse features. The Group is undertaking an assessment of the potential impact.
IFRS 18 \u2018Presentation and Disclosure in Financial Statements\u2019
In April 2024, the IASB issued IFRS 18 \u2018Presentation and Disclosure in Financial Statements\u2019, 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\u2019s financial performance. It will replace IAS 1 \u2018Presentation of Financial Statements\u2019 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. HSBC are currently assessing impacts and data
readiness before developing a more detailed implementation plan.
", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-927": { "value": "
(d)Foreign currencies
HSBC\u2019s consolidated financial statements are presented in US dollars because the US dollar and currencies linked to it form the major currency
bloc in which HSBC transacts and funds its business. The US dollar is also HSBC Holdings\u2019 functional currency because the US dollar and
currencies linked to it are the most significant currencies relevant to the underlying transactions, events and conditions of its subsidiaries, as
well as representing a significant proportion of its funds generated from financing activities.
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\u00a0liabilities 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. Except for
subsidiaries operating in hyperinflationary economies, in the consolidated financial statements, the assets and liabilities of branches,
subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group\u2019s presentation currency at
the rate of exchange at the balance sheet date, while their results are translated into US dollars 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-928": { "value": "
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\u00a0liabilities 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. Except for
subsidiaries operating in hyperinflationary economies, in the consolidated financial statements, the assets and liabilities of branches,
subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group\u2019s presentation currency at
the rate of exchange at the balance sheet date, while their results are translated into US dollars 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-929": { "value": "
(f)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 \u2018critical estimates and
judgements\u2019 in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management\u2019s
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\u2019s selection of HSBC\u2019s 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\u2019s 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.
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\u2019s 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
\u2013 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 or reversal more
frequently than once a year when indicators exist. This
ensures that the assumptions on which the cash flow
forecasts are based continue to reflect current market
conditions and management\u2019s best estimate of future
business prospects.
\u2013 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\u2019s view of future business prospects at the time of the
assessment.
\u2013 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\u2019s control.
\u2013 Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are
described in Note 19.\u00a0
Critical estimates and judgements
The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management\u2019s 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
\u2013 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\u2019s best estimate
of future business prospects.
\u2013 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\u2019s view of future business prospects at the time of the assessment.
\u2013 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 individual CGUs. The cost of equity percentage is
generally derived from a capital asset pricing model and 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\u2019s control.
\u2013 Key assumptions used in estimating goodwill and non-financial asset impairment are described in Note
21.
Critical estimates and judgements
The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited (\u2018BoCom\u2019),
which involves estimations of value in use:
Judgements
Estimates
\u2013 The value in use calculation uses discounted cash flow projections based on
management\u2019s best estimate of future earnings available to ordinary shareholders
prepared in accordance with IAS 36 \u2018Impairment of Assets\u2019. Those cash flows use
estimates based on BoCom\u2019s current condition and so do not include estimated cash
flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise.
\u2013 Key assumptions used in estimating BoCom\u2019s value in use and the sensitivity of the
value in use calculations to different assumptions are described in Note 18.
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
\u2013 An instrument in its entirety is classified as valued using significant unobservable
inputs if, in the opinion of management, greater than 5% of the instrument\u2019s valuation
is driven by unobservable inputs.
\u2013 \u2018Unobservable\u2019 in this context means that there is little or no current market data
available from which to determine the price at which an arm\u2019s 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).
\u2013 Details on the Group\u2019s 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.
Critical estimates and judgements
The calculation of the Group\u2019s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set
out below:
Judgements
Estimates
\u2013 Defining what is considered to be a significant increase in credit risk
\u2013 Determining the lifetime and point of initial recognition of overdrafts and credit cards
\u2013 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
\u2013 Selecting model inputs and economic forecasts, including determining whether sufficient and
appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss
\u2013 Making management adjustments to account for late-breaking events, model and data limitations and
deficiencies, and expert credit judgements
\u2013 Selecting applicable recovery strategies for certain wholesale credit-impaired loans
\u2013 The section \u2018Measurement uncertainty and
sensitivity analysis of ECL estimates\u2019, marked as
audited from page 147, 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
Critical estimates and judgements
The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal
plan.
Judgements
Estimates
\u2013 A range of assumptions could be applied, and different assumptions could
significantly alter the defined benefit obligation and the amounts
recognised in profit or loss or OCI.
\u2013 The calculation of the defined benefit pension obligation includes
assumptions with regard to the discount rate, inflation rate, pension
payments and deferred pensions, pay and mortality. Management
determines these assumptions in consultation with the plan\u2019s actuaries.
\u2013 Key assumptions used in calculating the defined benefit pension
obligation for the principal plan and the sensitivity of the calculation to
different assumptions are described in Note 5.
Critical estimates and judgements
The recognition of deferred tax assets depends on judgements and estimates.
Judgements
Estimates
\u2013 Specific judgements supporting deferred tax assets are described in Note\u00a07.
\u2013 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. See Note 7 for further detail.
Critical estimates and judgements
The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out
below:
Judgements
Estimates
\u2013 Determining whether a present obligation exists. Professional advice is taken on
the assessment of litigation and similar obligations.
\u2013 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.
\u2013 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.
Critical estimates and judgements
The review of goodwill and other non-financial assets for impairment reflects management\u2019s 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 described in the \u2018Critical estimates and judgements\u2019 in Note 1.2(a).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-930": { "value": "
(g)Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the
resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of
information relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and capital
resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following uncertain inflation,
rapidly changing interest rates, slower Chinese economic activity, and disrupted supply chains as a result of the Russia-Ukraine war, conflict in
the Middle East and US-China tensions. They also included other top and emerging risks, including climate change, as well as the related
impacts on profitability, capital and liquidity.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-931": { "value": "
1.2Summary of material ac counting policies
(a)Consolidation and related policies
Investments in subsidiaries
Where an entity is governed by voting rights, HSBC consolidates when it holds \u2013 directly or indirectly \u2013 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\u00a0fair value
or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets. This election is made for\u00a0each business
combination. HSBC Holdings\u2019 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 the relevant investment
to its carrying amount. Indicators of impairment include both external and internal sources of information. Similarly, assessments are made as
to whether an impairment loss recognised in prior periods may no longer exist or may have decreased. Where this is the case, such an
impairment loss is reversed if there has been a change in the estimate used to determine the relevant recoverable amount since the last
impairment loss was recognised, and to the extent that it does not increase the carrying amount above that had no impairment loss been
previously recognised.
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\u2019s 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
\u2013 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 or reversal more
frequently than once a year when indicators exist. This
ensures that the assumptions on which the cash flow
forecasts are based continue to reflect current market
conditions and management\u2019s best estimate of future
business prospects.
\u2013 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\u2019s view of future business prospects at the time of the
assessment.
\u2013 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\u2019s control.
\u2013 Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are
described in Note 19.\u00a0
Goodwill
Goodwill is allocated to cash-generating units (\u2019CGUs\u2019) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes. HSBC\u2019s CGUs are based on its main legal entities subdivided by global business,
except for Global Banking and Markets, for which goodwill is monitored on a global basis.
Impairment testing is performed at least 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. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the
portion of the CGU retained.
Critical estimates and judgements
The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management\u2019s 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
\u2013 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\u2019s best estimate
of future business prospects.
\u2013 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\u2019s view of future business prospects at the time of the assessment.
\u2013 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 individual CGUs. The cost of equity percentage is
generally derived from a capital asset pricing model and 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\u2019s control.
\u2013 Key assumptions used in estimating goodwill and non-financial asset impairment are described in Note
21.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The Group\u2019s consideration of this risk includes taking account of the
potential implications for CGUs arising from the revised organisational structure effective from 1 January 2025.
HSBC sponsored structured entities
HSBC 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 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, together with one or more parties, has joint control. Depending on HSBC\u2019s rights and
obligations, the joint arrangement is classified as either a joint operation or a joint venture.
HSBC classifies investments in\u00a0entities over which it has significant influence, and those that are neither subsidiaries nor joint arrangements, as
associates.
HSBC 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 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. Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have
decreased. Any reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the
extent that it does not increase the carrying amount above that had no impairment loss been previously recognised.
Critical estimates and judgements
The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited (\u2018BoCom\u2019),
which involves estimations of value in use:
Judgements
Estimates
\u2013 The value in use calculation uses discounted cash flow projections based on
management\u2019s best estimate of future earnings available to ordinary shareholders
prepared in accordance with IAS 36 \u2018Impairment of Assets\u2019. Those cash flows use
estimates based on BoCom\u2019s current condition and so do not include estimated cash
flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise.
\u2013 Key assumptions used in estimating BoCom\u2019s value in use and the sensitivity of the
value in use calculations to different assumptions are described in Note 18.
(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, is recognised
in \u2018Interest income\u2019 and \u2018Interest expense\u2019 in the income statement using the effective interest method. However, as an exception to this,
interest on debt instruments issued by HSBC for funding purposes that are designated under the fair value option to reduce an accounting
mismatch and on derivatives managed in conjunction with those debt instruments 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 expected credit losses).
Non-interest income and expense
HSBC generates fee income from services provided over time, such as account service and card fees, or when HSBC 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\u2019s 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.
HSBC acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, HSBC
acts as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.
HSBC 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 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:
\u2013 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019: 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.
\u2013 \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit
or loss\u2019: 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.
\u2013 \u2018Changes in fair value of designated debt instruments and related derivatives\u2019: Interest paid on debt instruments and interest cash flows on
related derivatives is presented in interest expense where doing so reduces an accounting mismatch.
\u2013 \u2018Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss\u2019: This includes interest on
instruments that fail the solely payments of principal and interest (\u2018SPPI\u2019) 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\u00a0transfer 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\u00a0a quoted price in an active market or a valuation technique that uses
only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception (a \u2018day 1 gain or loss\u2019). 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 enters into an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC 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, \u2018Fair values of financial instruments
carried at fair value\u2018.
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
\u2013 An instrument in its entirety is classified as valued using significant unobservable
inputs if, in the opinion of management, greater than 5% of the instrument\u2019s valuation
is driven by unobservable inputs.
\u2013 \u2018Unobservable\u2019 in this context means that there is little or no current market data
available from which to determine the price at which an arm\u2019s 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).
\u2013 Details on the Group\u2019s 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 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.
HSBC 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 intends to\u00a0hold
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 (\u2018repos\u2019), they remain on the balance
sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (\u2018reverse repos\u2019) 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 repo or repo 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 repo or repo
agreements.
(e)Financial assets measured at fair value through other comprehensive income
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 fair value
through other comprehensive income (\u2018FVOCI\u2019). These comprise primarily debt securities. They are recognised on 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) 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 \u2018Gains less losses from financial instruments\u2019. 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
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:
\u2013 The use of the designation removes or significantly reduces an accounting mismatch.
\u2013 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.
\u2013 The financial liability contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC 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
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 \u2018Net income from financial instruments held for trading or
managed on a fair value basis\u2019 or \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss\u2019 or \u2018Changes in fair value of designated debt and related derivatives\u2019 except for the effect of
changes in the liabilities\u2019 credit risk, which is presented in \u2018Other comprehensive income\u2019, 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 are:
\u2013 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.
\u2013 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 (\u2018DPF\u2019), 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. 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.
\u2013 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 that are designated at fair value where doing so reduces an
accounting mismatch, the contractual interest is shown in \u2018Interest expense\u2019 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 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 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019. 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.
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and
losses on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the
income statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the
disposal, or part-disposal, of the foreign operation.
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 (\u2018ECL\u2019) 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 FVOCI, 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 (\u201912-month
ECL\u2019). 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 (\u2018lifetime ECL\u2019). Financial assets where 12-month ECL is recognised are considered to
be \u2018stage 1\u2019; financial assets which are considered to have experienced a significant increase in credit risk are in \u2018stage 2\u2019; 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 \u2018stage 3\u2019.
Purchased or originated credit-impaired financial assets (\u2018POCI\u2019) are treated differently as set out below.
Credit impaired (stage 3)
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, 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\u2019s 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.
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 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.
The Group 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
\u2018Forborne loans and advances\u2019 on page 140.
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\u2019s
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 (\u2018PD\u2019), which encompasses a
wide range of information including the obligor\u2019s customer risk rating (\u2018CRR\u2019), macroeconomic 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 the reporting date. The quantitative measure of significance varies depending on the
credit quality at origination as follows:
Origination CRR
Significance trigger \u2013 PD to increase by
0.1\u20131.2
15bps
2.1\u20133.3
30bps
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\u2019s 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 \u2013 number of CRR grade notches
deterioration required to identify as significant credit
deterioration\u00a0(stage 2) (> or equal to)
0.1
5 notches
1.1\u20134.2
4 notches
4.3\u20135.1
3 notches
5.2\u20137.1
2 notches
7.2\u20138.2
1 notch
8.3
0 notch
Further information about the 23-grade scale used for CRR can be found on page 139.
\"Arrows_WD.jpg\"
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\u00a0months 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.
We continue 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 (\u201812-month ECL\u2019) 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 calculates ECL using three main components: a probability of default (\u2018PD\u2019), a loss given default (\u2019LGD\u2019) and the exposure at
default (\u2018EAD\u2019).
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.
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 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
\u2013 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)
\u2013 Default backstop of\u00a090+ days past due for all portfolios (includes
unlikely to pay (\u2018UTP\u2019) criteria in line with internal policy)
\u2013 May be subject to a sovereign cap
\u2013 Represents current portfolio quality and performance, adjusted for
the impact of multiple forward-looking macroeconomic scenarios
\u2013 Default backstop of 90+ days past due for all portfolios (includes
UTP criteria in line with internal policy)
EAD
\u2013 Cannot be lower than current balance
\u2013 Amortisation captured for term products
\u2013 Future drawdown captured for revolving products
LGD
\u2013 Downturn LGD (consistent with losses we would expect to suffer
during a severe but plausible economic downturn)
\u2013 Regulatory floors may apply to mitigate risk of underestimating
downturn LGD due to lack of historical data
\u2013 Discounted using appropriate index (minimum 9%)
\u2013 All collection costs included
\u2013 LGD based on recent portfolio performance data and includes the
expected impact of future economic conditions such as change in
the value of collateral
\u2013 No floors applied, discounted using the original effective interest rate
\u2013 Only costs associated with selling collateral and certain third-party
costs are included
Other
\u2013 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 (\u2018DCF\u2019) 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 the
Group and judgement in relation to the likelihood of the work-out 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 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\u2019s 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 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 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 losses 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 \u2018Measurement
uncertainty and sensitivity analysis of ECL estimates\u2019 on page 147.
Critical estimates and judgements
The calculation of the Group\u2019s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set
out below:
Judgements
Estimates
\u2013 Defining what is considered to be a significant increase in credit risk
\u2013 Determining the lifetime and point of initial recognition of overdrafts and credit cards
\u2013 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
\u2013 Selecting model inputs and economic forecasts, including determining whether sufficient and
appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss
\u2013 Making management adjustments to account for late-breaking events, model and data limitations and
deficiencies, and expert credit judgements
\u2013 Selecting applicable recovery strategies for certain wholesale credit-impaired loans
\u2013 The section \u2018Measurement uncertainty and
sensitivity analysis of ECL estimates\u2019, marked as
audited from page 147, 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 Group 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, the Group issues investment contracts with
discretionary participation features ('DPF\u2019), which are also accounted under IFRS 17 \u2019Insurance Contracts\u2019.
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\u2019s 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 Group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of
contracts, the Group considers its groups of contracts as being denominated in a single currency.
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 Group\u2019s accounting policy is to update the estimates
used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the 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
Group\u2019s demographic and operating experience along with external mortality data where the Group\u2019s own experience data is not sufficiently
large in size to be credible.
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 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.
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.
For the main insurance manufacturing entity in these locations, the one-year 75th percentile level of stress corresponds to the following
percentiles based on an ultimate view of risk over all future years:
\u2013 Asia-Pacific (Hong Kong): 60th percentile (2023: 60th percentile).
\u2013 Europe (France): 60th percentile (2023: 60th percentile).
\u2013 Latin America (Mexico): 64th percentile (2023: 65th percentile).
The 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.
Measurement models
The variable fee approach (\u2018VFA\u2019) measurement model is used for most of the contracts issued by the Group, which is mandatory upon
meeting the following eligibility criteria at inception:\u00a0
\u2013 the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
\u2013 the Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The Group considers that a
substantial share is a majority of returns; and
\u2013 the 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 Group considers that a substantial proportion is a majority proportion of change on a present value probability-
weighted average of all scenarios.
For some contracts measured under VFA, the other comprehensive income (\u2018OCI\u2019) option is used. The OCI option is applied where the
underlying items held by the 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 (\u2018GMM\u2019).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the group 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 Group\u2019s 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
Group\u2019s 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 group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The Group identifies the quantity of the benefits provided as follows:
\u2013 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.
\u2013 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.
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 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 group 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.
(k)Employee compensation and benefits
Share-based payments
HSBC enters into both equity-settled and cash-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.
Post-employment benefit plans
HSBC 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 (see Note
1.2(c)), 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.
Critical estimates and judgements
The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal
plan.
Judgements
Estimates
\u2013 A range of assumptions could be applied, and different assumptions could
significantly alter the defined benefit obligation and the amounts
recognised in profit or loss or OCI.
\u2013 The calculation of the defined benefit pension obligation includes
assumptions with regard to the discount rate, inflation rate, pension
payments and deferred pensions, pay and mortality. Management
determines these assumptions in consultation with the plan\u2019s actuaries.
\u2013 Key assumptions used in calculating the defined benefit pension
obligation for the principal plan and the sensitivity of the calculation to
different assumptions are described in Note 5.
(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 as 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. HSBC 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
in which the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, management considers 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. Management also considers 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
Estimates
\u2013 Specific judgements supporting deferred tax assets are described in Note\u00a07.
\u2013 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. See Note 7 for further detail.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next
financial year, but does consider this to be an area that is inherently judgemental.
(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.
Critical estimates and judgements
The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out
below:
Judgements
Estimates
\u2013 Determining whether a present obligation exists. Professional advice is taken on
the assessment of litigation and similar obligations.
\u2013 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.
\u2013 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.
Critical estimates and judgements
The review of goodwill and other non-financial assets for impairment reflects management\u2019s 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 described in the \u2018Critical estimates and judgements\u2019 in Note 1.2(a).
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill and non-financial assets
in the next financial year, but does consider this to be an area that is inherently judgemental.
(o)Non-current assets and disposal groups held for sale
HSBC 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.\u00a0
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.", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-932": { "value": "
(a)Consolidation and related policies
Investments in subsidiaries
Where an entity is governed by voting rights, HSBC consolidates when it holds \u2013 directly or indirectly \u2013 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\u00a0fair value
or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets. This election is made for\u00a0each business
combination. HSBC Holdings\u2019 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 the relevant investment
to its carrying amount. Indicators of impairment include both external and internal sources of information. Similarly, assessments are made as
to whether an impairment loss recognised in prior periods may no longer exist or may have decreased. Where this is the case, such an
impairment loss is reversed if there has been a change in the estimate used to determine the relevant recoverable amount since the last
impairment loss was recognised, and to the extent that it does not increase the carrying amount above that had no impairment loss been
previously recognised.
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\u2019s 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
\u2013 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 or reversal more
frequently than once a year when indicators exist. This
ensures that the assumptions on which the cash flow
forecasts are based continue to reflect current market
conditions and management\u2019s best estimate of future
business prospects.
\u2013 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\u2019s view of future business prospects at the time of the
assessment.
\u2013 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\u2019s control.
\u2013 Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are
described in Note 19.\u00a0
Goodwill
Goodwill is allocated to cash-generating units (\u2019CGUs\u2019) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes. HSBC\u2019s CGUs are based on its main legal entities subdivided by global business,
except for Global Banking and Markets, for which goodwill is monitored on a global basis.
Impairment testing is performed at least 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. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the
portion of the CGU retained.
Critical estimates and judgements
The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management\u2019s 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
\u2013 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\u2019s best estimate
of future business prospects.
\u2013 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\u2019s view of future business prospects at the time of the assessment.
\u2013 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 individual CGUs. The cost of equity percentage is
generally derived from a capital asset pricing model and 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\u2019s control.
\u2013 Key assumptions used in estimating goodwill and non-financial asset impairment are described in Note
21.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The Group\u2019s consideration of this risk includes taking account of the
potential implications for CGUs arising from the revised organisational structure effective from 1 January 2025.
HSBC sponsored structured entities
HSBC 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 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, together with one or more parties, has joint control. Depending on HSBC\u2019s rights and
obligations, the joint arrangement is classified as either a joint operation or a joint venture.
HSBC classifies investments in\u00a0entities over which it has significant influence, and those that are neither subsidiaries nor joint arrangements, as
associates.
HSBC 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 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. Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have
decreased. Any reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the
extent that it does not increase the carrying amount above that had no impairment loss been previously recognised.
Critical estimates and judgements
The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited (\u2018BoCom\u2019),
which involves estimations of value in use:
Judgements
Estimates
\u2013 The value in use calculation uses discounted cash flow projections based on
management\u2019s best estimate of future earnings available to ordinary shareholders
prepared in accordance with IAS 36 \u2018Impairment of Assets\u2019. Those cash flows use
estimates based on BoCom\u2019s current condition and so do not include estimated cash
flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise.
\u2013 Key assumptions used in estimating BoCom\u2019s value in use and the sensitivity of the
value in use calculations to different assumptions are described in Note 18.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-933": { "value": "
Investments in subsidiaries
Where an entity is governed by voting rights, HSBC consolidates when it holds \u2013 directly or indirectly \u2013 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\u00a0fair value
or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s identifiable net assets. This election is made for\u00a0each business
combination. HSBC Holdings\u2019 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 the relevant investment
to its carrying amount. Indicators of impairment include both external and internal sources of information. Similarly, assessments are made as
to whether an impairment loss recognised in prior periods may no longer exist or may have decreased. Where this is the case, such an
impairment loss is reversed if there has been a change in the estimate used to determine the relevant recoverable amount since the last
impairment loss was recognised, and to the extent that it does not increase the carrying amount above that had no impairment loss been
previously recognised.
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\u2019s 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
\u2013 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 or reversal more
frequently than once a year when indicators exist. This
ensures that the assumptions on which the cash flow
forecasts are based continue to reflect current market
conditions and management\u2019s best estimate of future
business prospects.
\u2013 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\u2019s view of future business prospects at the time of the
assessment.
\u2013 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\u2019s control.
\u2013 Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are
described in Note 19.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-934": { "value": "
Goodwill
Goodwill is allocated to cash-generating units (\u2019CGUs\u2019) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes. HSBC\u2019s CGUs are based on its main legal entities subdivided by global business,
except for Global Banking and Markets, for which goodwill is monitored on a global basis.
Impairment testing is performed at least 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. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the
portion of the CGU retained.
Critical estimates and judgements
The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management\u2019s 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
\u2013 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\u2019s best estimate
of future business prospects.
\u2013 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\u2019s view of future business prospects at the time of the assessment.
\u2013 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 individual CGUs. The cost of equity percentage is
generally derived from a capital asset pricing model and 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\u2019s control.
\u2013 Key assumptions used in estimating goodwill and non-financial asset impairment are described in Note
21.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The Group\u2019s consideration of this risk includes taking account of the
potential implications for CGUs arising from the revised organisational structure effective from 1 January 2025.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-935": { "value": "
Interests in associates and joint arrangements
Joint arrangements are investments in which HSBC, together with one or more parties, has joint control. Depending on HSBC\u2019s rights and
obligations, the joint arrangement is classified as either a joint operation or a joint venture.
HSBC classifies investments in\u00a0entities over which it has significant influence, and those that are neither subsidiaries nor joint arrangements, as
associates.
HSBC 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 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. Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have
decreased. Any reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the
extent that it does not increase the carrying amount above that had no impairment loss been previously recognised.
Critical estimates and judgements
The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited (\u2018BoCom\u2019),
which involves estimations of value in use:
Judgements
Estimates
\u2013 The value in use calculation uses discounted cash flow projections based on
management\u2019s best estimate of future earnings available to ordinary shareholders
prepared in accordance with IAS 36 \u2018Impairment of Assets\u2019. Those cash flows use
estimates based on BoCom\u2019s current condition and so do not include estimated cash
flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise.
\u2013 Key assumptions used in estimating BoCom\u2019s value in use and the sensitivity of the
value in use calculations to different assumptions are described in Note 18.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-936": { "value": "
Interest income and expense
Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value, is recognised
in \u2018Interest income\u2019 and \u2018Interest expense\u2019 in the income statement using the effective interest method. However, as an exception to this,
interest on debt instruments issued by HSBC for funding purposes that are designated under the fair value option to reduce an accounting
mismatch and on derivatives managed in conjunction with those debt instruments 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 expected credit losses).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-937": { "value": "
Non-interest income and expense
HSBC generates fee income from services provided over time, such as account service and card fees, or when HSBC 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\u2019s 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.
HSBC acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, HSBC
acts as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.
HSBC 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 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:
\u2013 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019: 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.
\u2013 \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit
or loss\u2019: 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.
\u2013 \u2018Changes in fair value of designated debt instruments and related derivatives\u2019: Interest paid on debt instruments and interest cash flows on
related derivatives is presented in interest expense where doing so reduces an accounting mismatch.
\u2013 \u2018Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss\u2019: This includes interest on
instruments that fail the solely payments of principal and interest (\u2018SPPI\u2019) test, see (d) below.
The accounting policies for insurance service result and insurance finance income/(expense) are disclosed in Note 1.2(j).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradingIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-939": { "value": "
(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\u00a0transfer 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\u00a0a quoted price in an active market or a valuation technique that uses
only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception (a \u2018day 1 gain or loss\u2019). 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 enters into an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC 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, \u2018Fair values of financial instruments
carried at fair value\u2018.
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
\u2013 An instrument in its entirety is classified as valued using significant unobservable
inputs if, in the opinion of management, greater than 5% of the instrument\u2019s valuation
is driven by unobservable inputs.
\u2013 \u2018Unobservable\u2019 in this context means that there is little or no current market data
available from which to determine the price at which an arm\u2019s 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).
\u2013 Details on the Group\u2019s 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 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.
HSBC 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 intends to\u00a0hold
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 (\u2018repos\u2019), they remain on the balance
sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (\u2018reverse repos\u2019) 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 repo or repo 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 repo or repo
agreements.
(e)Financial assets measured at fair value through other comprehensive income
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 fair value
through other comprehensive income (\u2018FVOCI\u2019). These comprise primarily debt securities. They are recognised on 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) 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 \u2018Gains less losses from financial instruments\u2019. 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
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:
\u2013 The use of the designation removes or significantly reduces an accounting mismatch.
\u2013 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.
\u2013 The financial liability contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC 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
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 \u2018Net income from financial instruments held for trading or
managed on a fair value basis\u2019 or \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss\u2019 or \u2018Changes in fair value of designated debt and related derivatives\u2019 except for the effect of
changes in the liabilities\u2019 credit risk, which is presented in \u2018Other comprehensive income\u2019, 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 are:
\u2013 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.
\u2013 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 (\u2018DPF\u2019), 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. 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.
\u2013 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 that are designated at fair value where doing so reduces an
accounting mismatch, the contractual interest is shown in \u2018Interest expense\u2019 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 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 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019. 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.
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and
losses on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the
income statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the
disposal, or part-disposal, of the foreign operation.
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 (\u2018ECL\u2019) 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 FVOCI, 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 (\u201912-month
ECL\u2019). 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 (\u2018lifetime ECL\u2019). Financial assets where 12-month ECL is recognised are considered to
be \u2018stage 1\u2019; financial assets which are considered to have experienced a significant increase in credit risk are in \u2018stage 2\u2019; 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 \u2018stage 3\u2019.
Purchased or originated credit-impaired financial assets (\u2018POCI\u2019) are treated differently as set out below.
Credit impaired (stage 3)
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, 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\u2019s 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.
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 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.
The Group 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
\u2018Forborne loans and advances\u2019 on page 140.
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\u2019s
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 (\u2018PD\u2019), which encompasses a
wide range of information including the obligor\u2019s customer risk rating (\u2018CRR\u2019), macroeconomic 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 the reporting date. The quantitative measure of significance varies depending on the
credit quality at origination as follows:
Origination CRR
Significance trigger \u2013 PD to increase by
0.1\u20131.2
15bps
2.1\u20133.3
30bps
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\u2019s 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 \u2013 number of CRR grade notches
deterioration required to identify as significant credit
deterioration\u00a0(stage 2) (> or equal to)
0.1
5 notches
1.1\u20134.2
4 notches
4.3\u20135.1
3 notches
5.2\u20137.1
2 notches
7.2\u20138.2
1 notch
8.3
0 notch
Further information about the 23-grade scale used for CRR can be found on page 139.
\"Arrows_WD.jpg\"
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\u00a0months 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.
We continue 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 (\u201812-month ECL\u2019) 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 calculates ECL using three main components: a probability of default (\u2018PD\u2019), a loss given default (\u2019LGD\u2019) and the exposure at
default (\u2018EAD\u2019).
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.
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 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
\u2013 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)
\u2013 Default backstop of\u00a090+ days past due for all portfolios (includes
unlikely to pay (\u2018UTP\u2019) criteria in line with internal policy)
\u2013 May be subject to a sovereign cap
\u2013 Represents current portfolio quality and performance, adjusted for
the impact of multiple forward-looking macroeconomic scenarios
\u2013 Default backstop of 90+ days past due for all portfolios (includes
UTP criteria in line with internal policy)
EAD
\u2013 Cannot be lower than current balance
\u2013 Amortisation captured for term products
\u2013 Future drawdown captured for revolving products
LGD
\u2013 Downturn LGD (consistent with losses we would expect to suffer
during a severe but plausible economic downturn)
\u2013 Regulatory floors may apply to mitigate risk of underestimating
downturn LGD due to lack of historical data
\u2013 Discounted using appropriate index (minimum 9%)
\u2013 All collection costs included
\u2013 LGD based on recent portfolio performance data and includes the
expected impact of future economic conditions such as change in
the value of collateral
\u2013 No floors applied, discounted using the original effective interest rate
\u2013 Only costs associated with selling collateral and certain third-party
costs are included
Other
\u2013 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 (\u2018DCF\u2019) 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 the
Group and judgement in relation to the likelihood of the work-out 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 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\u2019s 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 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 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 losses 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 \u2018Measurement
uncertainty and sensitivity analysis of ECL estimates\u2019 on page 147.
Critical estimates and judgements
The calculation of the Group\u2019s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set
out below:
Judgements
Estimates
\u2013 Defining what is considered to be a significant increase in credit risk
\u2013 Determining the lifetime and point of initial recognition of overdrafts and credit cards
\u2013 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
\u2013 Selecting model inputs and economic forecasts, including determining whether sufficient and
appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss
\u2013 Making management adjustments to account for late-breaking events, model and data limitations and
deficiencies, and expert credit judgements
\u2013 Selecting applicable recovery strategies for certain wholesale credit-impaired loans
\u2013 The section \u2018Measurement uncertainty and
sensitivity analysis of ECL estimates\u2019, marked as
audited from page 147, 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
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-938": { "value": "
(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\u00a0transfer 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\u00a0a quoted price in an active market or a valuation technique that uses
only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception (a \u2018day 1 gain or loss\u2019). 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 enters into an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC 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, \u2018Fair values of financial instruments
carried at fair value\u2018.
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
\u2013 An instrument in its entirety is classified as valued using significant unobservable
inputs if, in the opinion of management, greater than 5% of the instrument\u2019s valuation
is driven by unobservable inputs.
\u2013 \u2018Unobservable\u2019 in this context means that there is little or no current market data
available from which to determine the price at which an arm\u2019s 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).
\u2013 Details on the Group\u2019s 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.
(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:
\u2013 The use of the designation removes or significantly reduces an accounting mismatch.
\u2013 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.
\u2013 The financial liability contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC 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
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 \u2018Net income from financial instruments held for trading or
managed on a fair value basis\u2019 or \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss\u2019 or \u2018Changes in fair value of designated debt and related derivatives\u2019 except for the effect of
changes in the liabilities\u2019 credit risk, which is presented in \u2018Other comprehensive income\u2019, 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 are:
\u2013 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.
\u2013 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 (\u2018DPF\u2019), 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. 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.
\u2013 Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance
evaluated on a fair value basis.
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Non-trading reverse repurchase, repurchase and similar agreements
When debt securities are sold subject to a commitment to repurchase them at a predetermined price (\u2018repos\u2019), they remain on the balance
sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (\u2018reverse repos\u2019) 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 repo or repo 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 repo or repo
agreements.
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(e)Financial assets measured at fair value through other comprehensive income
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 fair value
through other comprehensive income (\u2018FVOCI\u2019). These comprise primarily debt securities. They are recognised on 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) 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 \u2018Gains less losses from financial instruments\u2019. 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
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-942": { "value": "
(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 that are designated at fair value where doing so reduces an
accounting mismatch, the contractual interest is shown in \u2018Interest expense\u2019 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 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 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019. 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.
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and
losses on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the
income statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the
disposal, or part-disposal, of the foreign operation.
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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-943": { "value": "
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 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 \u2018Net income from financial instruments held for trading or managed on a fair value basis\u2019. 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.
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and
losses on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the
income statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the
disposal, or part-disposal, of the foreign operation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-944": { "value": "
(i)Impairment of amortised cost and FVOCI financial assets
Expected credit losses (\u2018ECL\u2019) 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 FVOCI, 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 (\u201912-month
ECL\u2019). 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 (\u2018lifetime ECL\u2019). Financial assets where 12-month ECL is recognised are considered to
be \u2018stage 1\u2019; financial assets which are considered to have experienced a significant increase in credit risk are in \u2018stage 2\u2019; 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 \u2018stage 3\u2019.
Purchased or originated credit-impaired financial assets (\u2018POCI\u2019) are treated differently as set out below.
Credit impaired (stage 3)
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, 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\u2019s 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.
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 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.
The Group 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
\u2018Forborne loans and advances\u2019 on page 140.
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\u2019s
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 (\u2018PD\u2019), which encompasses a
wide range of information including the obligor\u2019s customer risk rating (\u2018CRR\u2019), macroeconomic 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 the reporting date. The quantitative measure of significance varies depending on the
credit quality at origination as follows:
Origination CRR
Significance trigger \u2013 PD to increase by
0.1\u20131.2
15bps
2.1\u20133.3
30bps
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\u2019s 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 \u2013 number of CRR grade notches
deterioration required to identify as significant credit
deterioration\u00a0(stage 2) (> or equal to)
0.1
5 notches
1.1\u20134.2
4 notches
4.3\u20135.1
3 notches
5.2\u20137.1
2 notches
7.2\u20138.2
1 notch
8.3
0 notch
Further information about the 23-grade scale used for CRR can be found on page 139.
\"Arrows_WD.jpg\"
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\u00a0months 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.
We continue 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 (\u201812-month ECL\u2019) 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 calculates ECL using three main components: a probability of default (\u2018PD\u2019), a loss given default (\u2019LGD\u2019) and the exposure at
default (\u2018EAD\u2019).
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.
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 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
\u2013 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)
\u2013 Default backstop of\u00a090+ days past due for all portfolios (includes
unlikely to pay (\u2018UTP\u2019) criteria in line with internal policy)
\u2013 May be subject to a sovereign cap
\u2013 Represents current portfolio quality and performance, adjusted for
the impact of multiple forward-looking macroeconomic scenarios
\u2013 Default backstop of 90+ days past due for all portfolios (includes
UTP criteria in line with internal policy)
EAD
\u2013 Cannot be lower than current balance
\u2013 Amortisation captured for term products
\u2013 Future drawdown captured for revolving products
LGD
\u2013 Downturn LGD (consistent with losses we would expect to suffer
during a severe but plausible economic downturn)
\u2013 Regulatory floors may apply to mitigate risk of underestimating
downturn LGD due to lack of historical data
\u2013 Discounted using appropriate index (minimum 9%)
\u2013 All collection costs included
\u2013 LGD based on recent portfolio performance data and includes the
expected impact of future economic conditions such as change in
the value of collateral
\u2013 No floors applied, discounted using the original effective interest rate
\u2013 Only costs associated with selling collateral and certain third-party
costs are included
Other
\u2013 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 (\u2018DCF\u2019) 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 the
Group and judgement in relation to the likelihood of the work-out 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 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\u2019s 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 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 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 losses 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 \u2018Measurement
uncertainty and sensitivity analysis of ECL estimates\u2019 on page 147.
Critical estimates and judgements
The calculation of the Group\u2019s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set
out below:
Judgements
Estimates
\u2013 Defining what is considered to be a significant increase in credit risk
\u2013 Determining the lifetime and point of initial recognition of overdrafts and credit cards
\u2013 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
\u2013 Selecting model inputs and economic forecasts, including determining whether sufficient and
appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss
\u2013 Making management adjustments to account for late-breaking events, model and data limitations and
deficiencies, and expert credit judgements
\u2013 Selecting applicable recovery strategies for certain wholesale credit-impaired loans
\u2013 The section \u2018Measurement uncertainty and
sensitivity analysis of ECL estimates\u2019, marked as
audited from page 147, 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
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(j)Insurance contracts
A contract is classified as an insurance contract where the Group 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, the Group issues investment contracts with
discretionary participation features ('DPF\u2019), which are also accounted under IFRS 17 \u2019Insurance Contracts\u2019.
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\u2019s 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 Group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of
contracts, the Group considers its groups of contracts as being denominated in a single currency.
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 Group\u2019s accounting policy is to update the estimates
used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the 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
Group\u2019s demographic and operating experience along with external mortality data where the Group\u2019s own experience data is not sufficiently
large in size to be credible.
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 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.
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.
For the main insurance manufacturing entity in these locations, the one-year 75th percentile level of stress corresponds to the following
percentiles based on an ultimate view of risk over all future years:
\u2013 Asia-Pacific (Hong Kong): 60th percentile (2023: 60th percentile).
\u2013 Europe (France): 60th percentile (2023: 60th percentile).
\u2013 Latin America (Mexico): 64th percentile (2023: 65th percentile).
The 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.
Measurement models
The variable fee approach (\u2018VFA\u2019) measurement model is used for most of the contracts issued by the Group, which is mandatory upon
meeting the following eligibility criteria at inception:\u00a0
\u2013 the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
\u2013 the Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The Group considers that a
substantial share is a majority of returns; and
\u2013 the 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 Group considers that a substantial proportion is a majority proportion of change on a present value probability-
weighted average of all scenarios.
For some contracts measured under VFA, the other comprehensive income (\u2018OCI\u2019) option is used. The OCI option is applied where the
underlying items held by the 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 (\u2018GMM\u2019).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the group 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 Group\u2019s 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
Group\u2019s 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 group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The Group identifies the quantity of the benefits provided as follows:
\u2013 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.
\u2013 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.
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 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 group 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.
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(k)Employee compensation and benefits
Share-based payments
HSBC enters into both equity-settled and cash-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.
Post-employment benefit plans
HSBC 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 (see Note
1.2(c)), 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.
Critical estimates and judgements
The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal
plan.
Judgements
Estimates
\u2013 A range of assumptions could be applied, and different assumptions could
significantly alter the defined benefit obligation and the amounts
recognised in profit or loss or OCI.
\u2013 The calculation of the defined benefit pension obligation includes
assumptions with regard to the discount rate, inflation rate, pension
payments and deferred pensions, pay and mortality. Management
determines these assumptions in consultation with the plan\u2019s actuaries.
\u2013 Key assumptions used in calculating the defined benefit pension
obligation for the principal plan and the sensitivity of the calculation to
different assumptions are described in Note 5.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-947": { "value": "
Share-based payments
HSBC enters into both equity-settled and cash-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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-949": { "value": "
(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 as 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. HSBC 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
in which the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, management considers 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. Management also considers 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
Estimates
\u2013 Specific judgements supporting deferred tax assets are described in Note\u00a07.
\u2013 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. See Note 7 for further detail.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next
financial year, but does consider this to be an area that is inherently judgemental.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-948": { "value": "
(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 as 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. HSBC 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
in which the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, management considers 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. Management also considers 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
Estimates
\u2013 Specific judgements supporting deferred tax assets are described in Note\u00a07.
\u2013 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. See Note 7 for further detail.
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next
financial year, but does consider this to be an area that is inherently judgemental.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-950": { "value": "
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.
Critical estimates and judgements
The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out
below:
Judgements
Estimates
\u2013 Determining whether a present obligation exists. Professional advice is taken on
the assessment of litigation and similar obligations.
\u2013 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.
\u2013 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-951": { "value": "
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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-952": { "value": "
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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-953": { "value": "
(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.
Critical estimates and judgements
The review of goodwill and other non-financial assets for impairment reflects management\u2019s 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 described in the \u2018Critical estimates and judgements\u2019 in Note 1.2(a).
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill and non-financial assets
in the next financial year, but does consider this to be an area that is inherently judgemental.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-954": { "value": "
(o)Non-current assets and disposal groups held for sale
HSBC 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.\u00a0
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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-955": { "value": "
2Net fee income
Net fee income by global business
2024
Wealth and
Personal
Banking
Commercial
Banking
Global
Banking and
Markets
Corporate
Centre
Total
$m
$m
$m
$m
$m
Funds under management
1,864
78
497
\u2014
2,439
Cards
2,448
351
44
\u2014
2,843
Credit facilities
85
722
621
\u2014
1,428
Broking income
561
13
716
\u2014
1,290
Account services
348
791
360
\u2014
1,499
Unit trusts
1,060
10
1
\u2014
1,071
Underwriting
\u2014
8
683
\u2014
691
Global custody
120
7
704
\u2014
831
Remittances
77
387
361
\u2014
825
Imports/exports
\u2014
463
182
\u2014
645
Insurance agency commission
329
18
\u2014
\u2014
347
Other
1,551
1,249
2,725
(3,168)
2,357
Fee income
8,443
4,097
6,894
(3,168)
16,266
Less: fee expense
(2,513)
(245)
(4,348)
3,141
(3,965)
Net fee income
5,930
3,852
2,546
(27)
12,301
2023
Wealth and
Personal
Banking
Commercial
Banking
Global
Banking and
Markets
Corporate
Centre
Total
$m
$m
$m
$m
$m
Funds under management
1,763
71
539
\u2014
2,373
Cards
2,385
353
38
\u2014
2,776
Credit facilities
103
856
615
\u2014
1,574
Broking income
463
22
592
\u2014
1,077
Account services
402
788
347
\u2014
1,537
Unit trusts
727
10
1
\u2014
738
Underwriting
\u2014
3
583
\u2014
586
Global custody
128
6
730
\u2014
864
Remittances
86
389
347
1
823
Imports/exports
\u2014
470
154
\u2014
624
Insurance agency commission
280
18
\u2014
\u2014
298
Other
1,433
1,161
2,458
(2,706)
2,346
Fee income
7,770
4,147
6,404
(2,705)
15,616
Less: fee expense
(2,416)
(210)
(3,858)
2,713
(3,771)
Net fee income
5,354
3,937
2,546
8
11,845
2022
Wealth and
Personal
Banking
Commercial
Banking
Global
Banking and
Markets
Corporate
Centre
Total
$m
$m
$m
$m
$m
Funds under management
1,765
107
500
(12)
2,360
Cards
2,146
313
32
\u2014
2,491
Credit facilities
100
783
591
\u2014
1,474
Broking income
576
40
635
\u2014
1,251
Account services
337
730
344
1
1,412
Unit trusts
682
14
\u2014
\u2014
696
Underwriting
1
2
443
(5)
441
Global custody
140
19
762
\u2014
921
Remittances
72
380
346
1
799
Imports/exports
\u2014
493
141
\u2014
634
Insurance agency commission
283
16
1
\u2014
300
Other
1,330
1,102
2,376
(2,463)
2,345
Fee income
7,432
3,999
6,171
(2,478)
15,124
Less: fee expense
(2,128)
(212)
(3,459)
2,445
(3,354)
Net fee income
5,304
3,787
2,712
(33)
11,770
Net fee income included $6,816m of fees earned on financial assets that were not at fair value through profit or loss, other than amounts
included in determining the effective interest rate (2023: $6,971m; 2022: $6,410m), $1,951m of fees payable on financial liabilities that were
not at fair value through profit or loss, other than amounts included in determining the effective interest rate (2023: $1,872m; 2022:\u00a0$1,613m ),
$3,480m of fees earned on trust and other fiduciary activities (2023: $3,452m; 2022: $3,492m) and $401m of fees payable relating to trust and
other fiduciary activities (2023: $333m; 2022: $370m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-956": { "value": "16266000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:FeeAndCommissionIncome", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-957": { "value": "3965000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:FeeAndCommissionExpense", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-958": { "value": "12301000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:FeeAndCommissionIncomeExpense", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-959": { "value": "
3Net income/(expense) from financial instruments measured at fair value
through profit or loss
2024
2023
2022
$m
$m
$m
Net income/(expense) arising on:
Net trading activities
23,186
20,391
2,372
Other instruments managed on a fair value basis
(2,070)
(3,730)
7,906
Net income from financial instruments held for trading or managed on a fair value basis
21,116
16,661
10,278
Financial assets held to meet liabilities under insurance and investment contracts
6,210
8,086
(14,392)
Liabilities to customers under investment contracts
(309)
(199)
561
Net income/(expense) from assets and liabilities of insurance businesses, including related
derivatives, measured at fair value through profit or loss
5,901
7,887
(13,831)
HSBC Holdings
2024
2023
2022
$m
$m
$m
Net income/(expense) arising on:
Net trading activities
984
(546)
2,094
Other instruments managed on a fair value basis
1,915
1,609
35
Net income from financial instruments held for trading or managed on a fair value basis
2,899
1,063
2,129
Derivatives managed in conjunction with HSBC Holdings-issued debt securities
93
426
(1,529)
Other changes in fair value
(218)
(1,894)
3,673
Changes in fair value of designated debt and related derivatives
(125)
(1,468)
2,144
Changes in fair value of other financial instruments mandatorily measured at fair value through profit
or loss
2,086
3,692
(2,409)
Year ended 31 Dec
4,860
3,287
1,864
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-960": { "value": "
4
Insurance business
Insurance service result
Year ended 31 Dec 2024
Year ended 31 Dec 2023
Life direct
participating
and investment
DPF contracts1
Life other
contracts2
Total
Life direct
participating and
investment DPF
contracts1
Life other
contracts2
Total
$m
$m
$m
$m
$m
$m
Insurance revenue
Amounts relating to changes in liabilities for remaining coverage
1,890
566
2,456
1,626
470
2,096
\u2013\u00a0 Contractual service margin recognised for services provided
1,143
188
1,331
975
151
1,126
\u2013\u00a0 Change in risk adjustment for non-financial risk for risk expired
46
20
66
21
15
36
\u2013\u00a0 Expected incurred claims and other insurance service expenses
698
358
1,056
594
304
898
\u2013\u00a0 Other
3
\u2014
3
36
\u2014
36
Recovery of insurance acquisition cash flows
195
101
296
109
54
163
Total insurance revenue
2,085
667
2,752
1,735
524
2,259
Insurance service expenses
Incurred claims and other insurance service expenses
(616)
(428)
(1,044)
(615)
(292)
(907)
Losses and reversal of losses on onerous contracts
(50)
(73)
(123)
(32)
(77)
(109)
Amortisation of insurance acquisition cash flows
(195)
(101)
(296)
(109)
(54)
(163)
Adjustments to liabilities for incurred claims
(6)
27
21
(1)
(1)
(2)
Total insurance service expenses
(867)
(575)
(1,442)
(757)
(424)
(1,181)
Total insurance service result
1,218
92
1,310
978
100
1,078
1\u2018Life direct participating and investment DPF contracts\u2019 are substantially measured under the variable fee approach measurement model.
2\u2018Life other contracts\u2019 are measured under the general measurement model.
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 loss1
5,644
273
5,917
7,663
214
7,877
Amounts recognised in OCI2
185
\u2014
185
493
\u2014
493
Total investment return (memorandum)
5,829
273
6,102
8,156
214
8,370
Net finance expense
Changes in fair value of underlying items of direct participating contracts
(5,805)
\u2014
(5,805)
(7,995)
\u2014
(7,995)
Effect of risk mitigation option
44
\u2014
44
(35)
\u2014
(35)
Interest accreted
\u2014
(110)
(110)
\u2014
(127)
(127)
Effect of changes in interest rates and other financial assumptions
\u2014
(298)
(298)
(12)
(121)
(133)
Effect of measuring changes in estimates at current rates and adjusting
the CSM at rates on initial recognition
\u2014
\u2014
\u2014
\u2014
(10)
(10)
Total net finance expense from insurance contracts
(5,761)
(408)
(6,169)
(8,042)
(258)
(8,300)
Represented by:
Amounts recognised in profit or loss
(5,570)
(408)
(5,978)
(7,551)
(258)
(7,809)
Amounts recognised in OCI
(191)
\u2014
(191)
(491)
\u2014
(491)
Total net investment return
68
(135)
(67)
114
(44)
70
Represented by:
Amounts recognised in profit or loss
74
(135)
(61)
112
(44)
68
Amounts recognised in OCI
(6)
\u2014
(6)
2
\u2014
2
1Total Group \u2018Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss\u2019 of
$5,901m gain (2023: $7,886m gain) includes returns on assets and liabilities supporting insurance policies of $5,685m (2023: $7,627m loss) and on shareholder
assets of $216m (2023: $259m gain). Investment returns of $5,917m (2023: $7,877m gain) include gains of $5,685m (2023: $7,627m gain) on underlying assets
supporting insurance liabilities reported in \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at
fair value through profit or loss\u2019, $235m gains (2023: $257m gain) reported in \u2018Net interest income\u2019 and $3m loss (2023: $7m loss) reported in \u2018Other operating
income\u2019.\u00a0
2\u2018Amounts recognised in OCI\u2019 insurance investment income comprises of fair value gains of $185m (2023: $497m gain) and expected credit (recoveries)/losses
of nil (2023: $4m loss). The Group statement of comprehensive income statement \u2018Debt instruments at fair value through other comprehensive income \u2013 fair
value gains/(losses)\u2019 gain of $41m (2023: $2,381m gain) includes insurance investment income recognised in OCI of $185m gain (2023: $497m gain) and \u2018Debt
instruments at fair value through other comprehensive income - expected credit (recoveries)/losses recognised in the income statement\u2019 recovery of $6m (2023:
$59m loss) includes insurance expected credit (recoveries)/losses recognised in OCI of nil (2023: $4m loss).
Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive
income \u2013 assets supporting contracts measured under the modified retrospective approach
2024
2023
$m
$m
Balance at 1 Jan
(670)
(973)
Net change in fair value
(153)
451
Net amount reclassified to profit or loss
3
(6)
Related income tax
39
(115)
Foreign exchange and other
45
(27)
Balance at 31 Dec
(736)
(670)
Movements in carrying amounts of insurance contracts \u2013 analysis by remaining coverage and incurred claims
Year ended 31 Dec 2024
Life direct participating and investment DPF
contracts
Life other 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
(15)
1
1
(13)
(279)
(16)
56
(239)
(252)
Opening liabilities
116,546
121
370
117,037
3,400
191
223
3,814
120,851
Net opening balance at 1 Jan 2024
116,531
122
371
117,024
3,121
175
279
3,575
120,599
Changes in the consolidated income
statement and statement of
comprehensive income
Insurance revenue
Contracts under the fair value approach1
(715)
\u2014
\u2014
(715)
(217)
\u2014
\u2014
(217)
(932)
Contracts under the modified
retrospective approach
(141)
\u2014
\u2014
(141)
(18)
\u2014
\u2014
(18)
(159)
Other contracts2
(1,229)
\u2014
\u2014
(1,229)
(432)
\u2014
\u2014
(432)
(1,661)
Total insurance revenue
(2,085)
\u2014
\u2014
(2,085)
(667)
\u2014
\u2014
(667)
(2,752)
Insurance service expenses
Incurred claims and other insurance
service expenses
\u2014
(7)
623
616
\u2014
(49)
477
428
1,044
Amortisation of insurance acquisition
cash flows
195
\u2014
\u2014
195
101
\u2014
\u2014
101
296
Losses and reversal of losses on
onerous contracts
\u2014
50
\u2014
50
\u2014
73
\u2014
73
123
Adjustments to liabilities for incurred
claims
\u2014
\u2014
6
6
\u2014
\u2014
(27)
(27)
(21)
Total insurance service expenses
195
43
629
867
101
24
450
575
1,442
Investment components
(8,284)
\u2014
8,284
\u2014
(1,058)
\u2014
1,058
\u2014
\u2014
Insurance service result
(10,174)
43
8,913
(1,218)
(1,624)
24
1,508
(92)
(1,310)
Net finance expense from insurance
contracts3
5,720
41
\u2014
5,761
405
3
\u2014
408
6,169
Other movements recognised in the
statement of profit or loss
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Effect of movements in exchange rates
(1,162)
(5)
(9)
(1,176)
(76)
1
(24)
(99)
(1,275)
Total changes in the consolidated
income statement and statement of
comprehensive income
(5,616)
79
8,904
3,367
(1,295)
28
1,484
217
3,584
Cash flows
Premiums received
16,442
\u2014
\u2014
16,442
1,950
\u2014
\u2014
1,950
18,392
Claims, other insurance service
expenses paid and other cash flows
2
\u2014
(9,020)
(9,018)
2
\u2014
(1,508)
(1,506)
(10,524)
Insurance acquisition cash flows
(835)
\u2014
\u2014
(835)
(260)
\u2014
\u2014
(260)
(1,095)
Total cash flows
15,609
\u2014
(9,020)
6,589
1,692
\u2014
(1,508)
184
6,773
Other movements4
(23,495)
(54)
(31)
(23,580)
53
8
60
121
(23,459)
Net closing balance at 31 Dec 2024
103,029
147
224
103,400
3,571
211
315
4,097
107,497
Closing assets
(16)
1
1
(14)
(177)
(13)
72
(118)
(132)
Closing liabilities
103,045
146
223
103,414
3,748
224
243
4,215
107,629
Net closing balance at 31 Dec 2024
103,029
147
224
103,400
3,571
211
315
4,097
107,497
Movements in carrying amounts of insurance contracts \u2013 analysis by remaining coverage and incurred claims (continued)
Year ended 31 Dec 2023
Life direct participating and investment DPF
contracts
Life other 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
(5)
\u2014
\u2014
(5)
(187)
21
35
(131)
(136)
Opening liabilities
104,676
114
355
105,145
3,359
109
203
3,671
108,816
Net opening balance at 1 Jan 2023
104,671
114
355
105,140
3,172
130
238
3,540
108,680
Changes in the consolidated income
statement and statement of comprehensive
income
Insurance revenue
Contracts under the fair value approach1
(508)
\u2014
\u2014
(508)
(196)
\u2014
\u2014
(196)
(704)
Contracts under the modified retrospective
approach
(148)
\u2014
\u2014
(148)
(22)
\u2014
\u2014
(22)
(170)
Other contracts2
(1,079)
\u2014
\u2014
(1,079)
(306)
\u2014
\u2014
(306)
(1,385)
Total insurance revenue
(1,735)
\u2014
\u2014
(1,735)
(524)
\u2014
\u2014
(524)
(2,259)
Insurance service expenses
Incurred claims and other insurance service
expenses
\u2014
(6)
621
615
\u2014
(24)
316
292
907
Amortisation of insurance acquisition cash
flows
109
\u2014
\u2014
109
54
\u2014
\u2014
54
163
Losses and reversal of losses on onerous
contracts
\u2014
32
\u2014
32
\u2014
77
\u2014
77
109
Adjustments to liabilities for incurred claims
\u2014
\u2014
1
1
\u2014
\u2014
1
1
2
Total insurance service expenses
109
26
622
757
54
53
317
424
1,181
Investment components
(8,104)
\u2014
8,104
\u2014
(818)
\u2014
818
\u2014
\u2014
Insurance service result
(9,730)
26
8,726
(978)
(1,288)
53
1,135
(100)
(1,078)
Net finance expense from insurance
contracts3
8,042
\u2014
\u2014
8,042
254
3
1
258
8,300
Other movements recognised in the
statement of profit or loss
513
(5)
(214)
294
(8)
4
(13)
(17)
277
Effect of movements in exchange rates
942
1
6
949
25
(2)
8
31
980
Total changes in the consolidated income
statement and statement of comprehensive
income
(233)
22
8,518
8,307
(1,017)
58
1,131
172
8,479
Cash flows
Premiums received
12,616
\u2014
\u2014
12,616
1,256
\u2014
\u2014
1,256
13,872
Claims, other insurance service expenses
paid and other cash flows
(15)
\u2014
(8,502)
(8,517)
1
\u2014
(1,112)
(1,111)
(9,628)
Insurance acquisition cash flows
(522)
\u2014
\u2014
(522)
(282)
\u2014
\u2014
(282)
(804)
Total cash flows
12,079
\u2014
(8,502)
3,577
975
\u2014
(1,112)
(137)
3,440
Acquisition of subsidiaries and other
movements
14
(14)
\u2014
\u2014
(9)
(13)
22
\u2014
\u2014
Net closing balance at 31 Dec 2023
116,531
122
371
117,024
3,121
175
279
3,575
120,599
Closing assets
(15)
1
1
(13)
(279)
(16)
56
(239)
(252)
Closing liabilities
116,546
121
370
117,037
3,400
191
223
3,814
120,851
Net closing balance at 31 Dec 2023
116,531
122
371
117,024
3,121
175
279
3,575
120,599
1On transition to IFRS 17 the Group applied the full retrospective approach to new business written from 2018 at the earliest. Where applying the full
retrospective approach was impracticable, the Group primarily applied the fair value approach.
2\u2018Other contracts\u2019 are those contracts measured by applying IFRS 17 from inception of the contracts. These include contracts measured under the full
retrospective approach at transition and contracts incepted after transition.
3\u2018Net finance expense from insurance contracts\u2019 expense of $6,169m (2023: $8,300m expense) comprises expense of $5,978m (2023: $7,809m expense)
recognised in the income statement and expense of $191m (2023: $491m expense) recognised in other comprehensive income.
4The \u2018Other movements\u2018 reduction of $23,459m in insurance contracts includes $21,811m in respect of our French insurance business, classified as held for sale
at 31 December 2024. Further details are provided on page 412.
Movements in carrying amounts of insurance contracts \u2013 analysis by measurement component
Year ended 31 Dec 2024
Life direct participating and investment DPF contracts
Life other contracts
Estimates
of present
value of
future cash
flows and
risk
adjustment
Contractual service margin
Estimates
of present
value of
future cash
flows and
risk
adjustment
Contractual service margin
Contracts
under the
fair value
approach
1
Contracts
under the
modified
retros-
pective
approach
Other
contracts
2
Total
Contracts
under the
fair value
approach1
Contracts
under the
modified
retros-
pective
approach
Other
contracts
2
Total
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Opening assets
(30)
3
\u2014
14
(13)
(339)
36
\u2014
64
(239)
(252)
Opening liabilities
106,440
4,679
715
5,203
117,037
3,113
361
19
321
3,814
120,851
Net opening balance at
1 Jan 2024
106,410
4,682
715
5,217
117,024
2,774
397
19
385
3,575
120,599
Changes in the
consolidated income
statement and
statement of
comprehensive income
Changes that relate to
current services
Contractual service
margin recognised for
services provided
\u2014
(488)
(59)
(596)
(1,143)
\u2014
(77)
(6)
(105)
(188)
(1,331)
Change in risk adjustment
for non-financial risk
expired
(46)
\u2014
\u2014
\u2014
(46)
(20)
\u2014
\u2014
\u2014
(20)
(66)
Experience adjustments
(82)
\u2014
\u2014
\u2014
(82)
70
\u2014
\u2014
\u2014
70
(12)
Other movements
recognised in insurance
service result
\u2014
52
\u2014
(55)
(3)
\u2014
\u2014
\u2014
\u2014
\u2014
(3)
Changes that relate to
future services
Contracts initially
recognised in the year
(2,384)
\u2014
\u2014
2,400
16
(201)
\u2014
\u2014
220
19
35
Changes in estimates that
adjust the contractual
service margin3
(914)
229
(6)
691
\u2014
(7)
30
7
(30)
\u2014
\u2014
Changes in estimates that
result in losses and
reversal of losses on
onerous contracts
34
\u2014
\u2014
\u2014
34
54
\u2014
\u2014
\u2014
54
88
Changes that relate to
past services
Adjustments to liabilities
for incurred claims
6
\u2014
\u2014
\u2014
6
(27)
\u2014
\u2014
\u2014
(27)
(21)
Insurance service result
(3,386)
(207)
(65)
2,440
(1,218)
(131)
(47)
1
85
(92)
(1,310)
Net finance expense from
insurance contracts4
5,761
\u2014
\u2014
\u2014
5,761
380
12
\u2014
16
408
6,169
Other movements
recognised in the
statement of profit or loss
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Effect of movements in
exchange rates
(1,167)
51
(24)
(36)
(1,176)
(50)
(11)
\u2014
(38)
(99)
(1,275)
Total changes in the
consolidated income
statement and
statement of
comprehensive income
1,208
(156)
(89)
2,404
3,367
199
(46)
1
63
217
3,584
Cash flows
Premiums received
16,442
\u2014
\u2014
\u2014
16,442
1,950
\u2014
\u2014
\u2014
1,950
18,392
Claims, other insurance
service expenses paid and
other cash flows
(9,018)
\u2014
\u2014
\u2014
(9,018)
(1,506)
\u2014
\u2014
\u2014
(1,506)
(10,524)
Insurance acquisition cash
flows
(835)
\u2014
\u2014
\u2014
(835)
(260)
\u2014
\u2014
\u2014
(260)
(1,095)
Total cash flows
6,589
\u2014
\u2014
\u2014
6,589
184
\u2014
\u2014
\u2014
184
6,773
Other movements5
(22,736)
(23)
(626)
(195)
(23,580)
153
2
(20)
(14)
121
(23,459)
Net closing balance at
31 Dec 2024
91,471
4,503
\u2014
7,426
103,400
3,310
353
\u2014
434
4,097
107,497
Closing assets
(27)
3
\u2014
10
(14)
(359)
73
\u2014
168
(118)
(132)
Closing liabilities
91,498
4,500
\u2014
7,416
103,414
3,669
280
\u2014
266
4,215
107,629
Net closing balance at
31 Dec 2024
91,471
4,503
\u2014
7,426
103,400
3,310
353
\u2014
434
4,097
107,497
Movements in carrying amounts of insurance contracts \u2013 analysis by measurement component (continued)
Year ended 31 Dec 2023
Life direct participating and investment DPF contracts
Life other contracts
Estimates
of present
value of
future cash
flows and
risk
adjustment
Contractual service margin
Estimates
of present
value of
future cash
flows and
risk
adjustment
Contractual service margin
Contracts
under the
fair value
approach1
Contracts
under the
modified
retros-
pective
approach
Other
contracts
2
Total
Contracts
under the
fair value
approach
1
Contracts
under the
modified
retros-
pective
approach
Other
contracts
2
Total
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Opening assets
(18)
3
\u2014
10
(5)
(308)
86
\u2014
91
(131)
(136)
Opening liabilities
96,174
4,364
792
3,815
105,145
3,162
325
18
166
3,671
108,816
Net opening balance at 1 Jan
2023
96,156
4,367
792
3,825
105,140
2,854
411
18
257
3,540
108,680
Changes in the consolidated
income statement and
statement of comprehensive
income
Changes that relate to current
services
Contractual service margin
recognised for services provided
\u2014
(188)
(70)
(717)
(975)
\u2014
(69)
(6)
(76)
(151)
(1,126)
Change in risk adjustment for
non-financial risk expired
(21)
\u2014
\u2014
\u2014
(21)
(15)
\u2014
\u2014
\u2014
(15)
(36)
Experience adjustments
21
\u2014
\u2014
\u2014
21
(12)
\u2014
\u2014
\u2014
(12)
9
Other movements recognised in
insurance service result
(36)
\u2014
\u2014
\u2014
(36)
\u2014
\u2014
\u2014
\u2014
\u2014
(36)
Changes that relate to future
services
Contracts initially recognised in
the year
(1,606)
\u2014
\u2014
1,619
13
(176)
\u2014
\u2014
207
31
44
Changes in estimates that adjust
contractual service margin3
(771)
368
(33)
436
\u2014
21
26
6
(53)
\u2014
\u2014
Changes in estimates that result
in losses and reversal of losses
on onerous contracts
19
\u2014
\u2014
\u2014
19
46
\u2014
\u2014
\u2014
46
65
Changes that relate to past
services
Adjustments to liabilities for
incurred claims
1
\u2014
\u2014
\u2014
1
1
\u2014
\u2014
\u2014
1
2
Insurance service result
(2,393)
180
(103)
1,338
(978)
(135)
(43)
\u2014
78
(100)
(1,078)
Net finance expense from
insurance contracts4
8,042
\u2014
\u2014
\u2014
8,042
235
11
\u2014
12
258
8,300
Other movements recognised in
the statement of profit or loss
145
133
(1)
17
294
(43)
6
\u2014
20
(17)
277
Effect of movements in
exchange rates
883
2
27
37
949
\u2014
12
1
18
31
980
Total changes in the
consolidated income statement
and statement of
comprehensive income
6,677
315
(77)
1,392
8,307
57
(14)
1
128
172
8,479
Cash flows
Premiums received
12,616
\u2014
\u2014
\u2014
12,616
1,256
\u2014
\u2014
\u2014
1,256
13,872
Claims, other insurance service
expenses paid and other cash
flows
(8,517)
\u2014
\u2014
\u2014
(8,517)
(1,111)
\u2014
\u2014
\u2014
(1,111)
(9,628)
Insurance acquisition cash flows
(522)
\u2014
\u2014
\u2014
(522)
(282)
\u2014
\u2014
\u2014
(282)
(804)
Total cash flows
3,577
\u2014
\u2014
\u2014
3,577
(137)
\u2014
\u2014
\u2014
(137)
3,440
Other movements
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Net closing balance at\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31 Dec 2023
106,410
4,682
715
5,217
117,024
2,774
397
19
385
3,575
120,599
Closing assets
(30)
3
\u2014
14
(13)
(339)
36
\u2014
64
(239)
(252)
Closing liabilities
106,440
4,679
715
5,203
117,037
3,113
361
19
321
3,814
120,851
Net closing balance at\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31 Dec 2023
106,410
4,682
715
5,217
117,024
2,774
397
19
385
3,575
120,599
1On transition to IFRS 17 the Group applied the full retrospective approach to new business written from 2018 at the earliest. Where applying the full
retrospective approach was impracticable, the Group primarily applied the fair value approach.
2\u2018Other contracts' are those contracts measured by applying IFRS 17 from inception of the contracts. These include contracts measured under the full
retrospective approach at transition and contracts incepted after transition.
3\u2018Changes in estimates that adjust contractual service margin\u2019 increase of $921m (2023: $750m increase) includes an increase of $651m (2023: $233m increase)
from economic factors and an increase of $270m (2023: $517m increase) from non-economic factors.
4\u2018Net finance expense from insurance contracts\u2019 expense of $6,169m (2023: $8,300m expense) comprises expense of $5,978m (2023: $7,809m expense)
recognised in the income statement and expense of $191m (2023: $491m expense) recognised in other comprehensive income.
5\u2018Other movements\u2018 $23,459m reduction in insurance contracts includes $21,811m in respect of the classification of the France insurance business to held for
sale at 31 December 2024. Further details are provided on page 412.
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
16,878
495
17,373
12,418
215
12,633
\u2013\u00a0 insurance acquisition cash flows
805
38
843
602
21
623
\u2013\u00a0 claims and other insurance service expenses payable
16,073
457
16,530
11,816
194
12,010
Estimates of present value of cash inflows
(19,326)
(481)
(19,807)
(14,074)
(204)
(14,278)
Risk adjustment for non-financial risk
48
2
50
37
2
39
Contractual service margin
2,400
\u2014
2,400
1,619
\u2014
1,619
(Losses) recognised on initial recognition
\u2014
(16)
(16)
\u2014
(13)
(13)
Life other contracts
Estimates of present value of cash outflows
1,484
476
1,960
1,116
464
1,580
\u2013\u00a0 insurance acquisition cash flows
125
65
190
106
50
156
\u2013\u00a0 claims and other insurance service expenses payable
1,359
411
1,770
1,010
414
1,424
Estimates of present value of cash inflows
(1,731)
(460)
(2,191)
(1,350)
(438)
(1,788)
Risk adjustment for non-financial risk
27
3
30
27
5
32
Contractual service margin
220
\u2014
220
207
\u2014
207
(Losses) recognised on initial recognition
\u2014
(19)
(19)
\u2014
(31)
(31)
Present value of expected future cash flows of insurance contract liabilities and contractual service margin
Less
than 1
year
1\u20132
years
2\u20133
years
3\u20134
years
4\u20135
years
5\u201310
years
10\u201320
years
Over 20
years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
2024
Insurance liability future cash flows1
Life direct participating and investment DPF contracts
(3,526)
(455)
2,464
2,968
3,219
11,332
22,005
53,120
91,127
Life other contracts
971
(96)
(101)
(53)
7
63
279
2,529
3,599
Insurance liability future cash flows at 31 Dec
(2,555)
(551)
2,363
2,915
3,226
11,395
22,284
55,649
94,726
Remaining contractual service margin1
Life direct participating and investment DPF contracts
1,052
961
880
810
746
2,892
2,954
1,634
11,929
Life other contracts
128
104
85
69
53
159
127
62
787
Remaining contractual service margin at 31 Dec
1,180
1,065
965
879
799
3,051
3,081
1,696
12,716
2023
Insurance liability future cash flows
Life direct participating and investment DPF contracts
(2,620)
(545)
2,321
2,419
3,344
11,695
23,351
65,897
105,862
Life other contracts
1,276
362
(347)
4
(45)
36
102
1,628
3,016
Insurance liability future cash flows at 31 Dec
(1,344)
(183)
1,974
2,423
3,299
11,731
23,453
67,525
108,878
Remaining contractual service margin
Life direct participating and investment DPF contracts
917
848
783
722
666
2,597
2,653
1,428
10,614
Life other contracts
172
113
84
74
61
141
115
41
801
Remaining contractual service margin at 31 Dec
1,089
961
867
796
727
2,738
2,768
1,469
11,415
1\u00a0 \u2018Insurance liability future cash flows\u2019 and \u2018Remaining contractual service margin\u2019 at 31 December 2024 exclude the French insurance business that was
classified as held for sale at 31 December 2024. Further details are provided on page 412.
Discount rates
The discount rates applied to expected future cash flows are determined through a bottom-up approach as set out in Note 1.2(j) \u2018Summary of
material accounting policies \u2013 Insurance contracts\u2019 on page 354. The blended average of discount rates used within our most material
manufacturing entities are as follows:
HSBC Life (International) Ltd
Hang Seng Insurance Co Ltd
HSBC Assurances
Vie (France)
HK$
US$
HK$
US$
\u20ac
At 31 Dec 2024
10-year discount rate (%)
4.32
5.16
4.43
5.25
2.97
20-year discount rate (%)
4.42
5.51
4.53
5.60
2.95
At 31 Dec 2023
10-year discount rate (%)
4.02
4.47
4.16
4.62
2.96
20-year discount rate (%)
4.21
4.91
4.34
5.06
2.97
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-961": { "value": "
Insurance service result
Year ended 31 Dec 2024
Year ended 31 Dec 2023
Life direct
participating
and investment
DPF contracts1
Life other
contracts2
Total
Life direct
participating and
investment DPF
contracts1
Life other
contracts2
Total
$m
$m
$m
$m
$m
$m
Insurance revenue
Amounts relating to changes in liabilities for remaining coverage
1,890
566
2,456
1,626
470
2,096
\u2013\u00a0 Contractual service margin recognised for services provided
1,143
188
1,331
975
151
1,126
\u2013\u00a0 Change in risk adjustment for non-financial risk for risk expired
46
20
66
21
15
36
\u2013\u00a0 Expected incurred claims and other insurance service expenses
698
358
1,056
594
304
898
\u2013\u00a0 Other
3
\u2014
3
36
\u2014
36
Recovery of insurance acquisition cash flows
195
101
296
109
54
163
Total insurance revenue
2,085
667
2,752
1,735
524
2,259
Insurance service expenses
Incurred claims and other insurance service expenses
(616)
(428)
(1,044)
(615)
(292)
(907)
Losses and reversal of losses on onerous contracts
(50)
(73)
(123)
(32)
(77)
(109)
Amortisation of insurance acquisition cash flows
(195)
(101)
(296)
(109)
(54)
(163)
Adjustments to liabilities for incurred claims
(6)
27
21
(1)
(1)
(2)
Total insurance service expenses
(867)
(575)
(1,442)
(757)
(424)
(1,181)
Total insurance service result
1,218
92
1,310
978
100
1,078
1\u2018Life direct participating and investment DPF contracts\u2019 are substantially measured under the variable fee approach measurement model.
2\u2018Life other contracts\u2019 are measured under the general measurement model.
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 loss1
5,644
273
5,917
7,663
214
7,877
Amounts recognised in OCI2
185
\u2014
185
493
\u2014
493
Total investment return (memorandum)
5,829
273
6,102
8,156
214
8,370
Net finance expense
Changes in fair value of underlying items of direct participating contracts
(5,805)
\u2014
(5,805)
(7,995)
\u2014
(7,995)
Effect of risk mitigation option
44
\u2014
44
(35)
\u2014
(35)
Interest accreted
\u2014
(110)
(110)
\u2014
(127)
(127)
Effect of changes in interest rates and other financial assumptions
\u2014
(298)
(298)
(12)
(121)
(133)
Effect of measuring changes in estimates at current rates and adjusting
the CSM at rates on initial recognition
\u2014
\u2014
\u2014
\u2014
(10)
(10)
Total net finance expense from insurance contracts
(5,761)
(408)
(6,169)
(8,042)
(258)
(8,300)
Represented by:
Amounts recognised in profit or loss
(5,570)
(408)
(5,978)
(7,551)
(258)
(7,809)
Amounts recognised in OCI
(191)
\u2014
(191)
(491)
\u2014
(491)
Total net investment return
68
(135)
(67)
114
(44)
70
Represented by:
Amounts recognised in profit or loss
74
(135)
(61)
112
(44)
68
Amounts recognised in OCI
(6)
\u2014
(6)
2
\u2014
2
1Total Group \u2018Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss\u2019 of
$5,901m gain (2023: $7,886m gain) includes returns on assets and liabilities supporting insurance policies of $5,685m (2023: $7,627m loss) and on shareholder
assets of $216m (2023: $259m gain). Investment returns of $5,917m (2023: $7,877m gain) include gains of $5,685m (2023: $7,627m gain) on underlying assets
supporting insurance liabilities reported in \u2018Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at
fair value through profit or loss\u2019, $235m gains (2023: $257m gain) reported in \u2018Net interest income\u2019 and $3m loss (2023: $7m loss) reported in \u2018Other operating
income\u2019.\u00a0
2\u2018Amounts recognised in OCI\u2019 insurance investment income comprises of fair value gains of $185m (2023: $497m gain) and expected credit (recoveries)/losses
of nil (2023: $4m loss). The Group statement of comprehensive income statement \u2018Debt instruments at fair value through other comprehensive income \u2013 fair
value gains/(losses)\u2019 gain of $41m (2023: $2,381m gain) includes insurance investment income recognised in OCI of $185m gain (2023: $497m gain) and \u2018Debt
instruments at fair value through other comprehensive income - expected credit (recoveries)/losses recognised in the income statement\u2019 recovery of $6m (2023:
$59m loss) includes insurance expected credit (recoveries)/losses recognised in OCI of nil (2023: $4m loss).", "dimensions": { "concept": "ifrs-full:DisclosureOfInsurancePremiumRevenueExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-962": { "value": "
5Employee compensation and benefits
2024
2023
2022
$m
$m
$m
Employee compensation and benefits1
18,465
18,220
18,003
Capitalised wages and salaries2
1,688
1,403
1,285
Gross employee compensation and benefits for the year ended 31 Dec
20,153
19,623
19,288
Consists of:
Wages and salaries
17,815
17,359
16,970
Social security costs
1,487
1,507
1,403
Post-employment benefits
851
757
915
Year ended 31 Dec
20,153
19,623
19,288
1Employee compensation and benefits are presented in the income statement net of software capitalisation costs and costs included in the insurance contract
fulfilment cash flow liabilities under IFRS 17.
2Comprises $1,118m (2023: $1,043m; 2022: $922m) software capitalisation costs and $570m (2023: $360m; 2022: $363m) costs included in the insurance
contract fulfilment cash flow liabilities under IFRS 17.
Average number of persons employed by HSBC during the year by global business1
2024
2023
2022
Wealth and Personal Banking
125,068
132,336
135,676
Commercial Banking
47,135
46,826
48,004
Global Banking and Markets
48,351
48,043
48,597
Corporate Centre
374
347
365
Year ended 31 Dec
220,928
227,552
232,642
1Average number of persons employed represents the number of persons with contracts of service with the Group.
Average number of persons employed by HSBC during the year by legal entity1
2024
2023
2022
HSBC UK Bank plc
20,034
20,415
20,501
HSBC Bank plc
11,456
14,809
15,405
The Hongkong and Shanghai Banking Corporation Limited
54,478
54,321
54,792
HSBC Bank Middle East Limited
3,344
3,316
3,338
HSBC North America Holdings Inc.
5,928
6,046
6,749
HSBC Bank Canada
758
4,354
4,241
Grupo Financiero HSBC, S.A. de C.V.
13,928
14,412
14,484
Other trading entities2
8,393
9,247
10,026
Holding companies, shared service centres and intra-Group eliminations
102,609
100,632
103,106
Year ended 31 Dec
220,928
227,552
232,642
1Average number of persons employed represents the number of persons with contracts of service with the Group.
2Other trading entities includes entities located in T\u00fcrkiye, Egypt and Saudi Arabia.
Reconciliation of total incentive awards granted to income statement charge
2024
2023
2022
$m
$m
$m
Total incentive awards approved for the current year
3,800
3,774
3,359
Less: deferred bonuses awarded, expected to be recognised in future periods
(381)
(353)
(343)
Total incentives awarded and recognised in the current year
3,419
3,421
3,016
Add: current year charges for deferred bonuses from previous years
439
375
239
Other
(97)
(56)
(22)
Income statement charge for incentive awards
3,761
3,740
3,233
Share-based payments
\u2018Wages and salaries\u2019 includes the effect of share-based payments arrangements, of which $529m (2023: $482m; 2022:\u00a0$400m) was equity
settled, as follows:
2024
2023
2022
$m
$m
$m
Conditional share awards
551
499
402
Savings-related and other share award option plans
27
23
22
Year ended 31 Dec
578
522
424
HSBC share awards
Award
Policy
Deferred share awards
(including annual incentive
awards, long-term incentive
(\u2018LTI\u2019) awards delivered in
shares)
An assessment of performance over the relevant period ending on 31 December is used to determine the amount of\u00a0the award
to be granted.
\u2013 Deferred awards generally require employees to remain in employment over the vesting period and are generally not subject
to performance conditions after the grant date. An exception to these are LTI awards, which are subject to performance
conditions.
\u2013 Deferred share awards generally vest over a period of three, four, five or seven years.
\u2013 Vested shares may be subject to a retention requirement post-vesting.
\u2013 Awards are generally subject to malus and clawback provisions.
International Employee Share
Purchase Plan (\u2018ShareMatch\u2019)
The plan was first introduced in Hong Kong in 2013 and now includes employees based in 30 jurisdictions.
\u2013 Shares are purchased in the market each quarter up to a maximum value of \u00a3750, or the equivalent in local currency.
\u2013 Matching awards are added at a ratio of one free share for every three purchased. In mainland China, matching awards are
settled in cash.
\u2013 Matching awards vest subject to continued employment and the retention of the purchased shares for a maximum period of
two years and nine months.
Movement on HSBC share awards
2024
2023
Number
Number
(000s)
(000s)
Conditional share awards outstanding at 1 Jan
125,023
126,246
Additions during the year
84,930
72,289
Released in the year
(71,849)
(70,054)
Forfeited in the year
(4,461)
(3,458)
Conditional share awards outstanding at 31 Dec
133,643
125,023
Weighted average fair value of awards granted ($)
6.08
5.84
HSBC share option plans
Main plans
Policy
Savings-related share option
plans (\u2018Sharesave\u2019)
\u2013 From 2014, employees eligible for the UK plan could save up to \u00a3 500 per month with the option to use the savings to acquire
shares.
\u2013 These are generally exercisable within six months following either the third or fifth anniversary of the commencement of a
three-year or five-year contract, respectively.
\u2013 The exercise price is set at a 20% (2023: 20%) discount to the market value immediately preceding the date of invitation.
Calculation of fair values
The fair values of share options are calculated using a Black-Scholes model. The fair value of a share award is based on the share price at the
date of the grant.
Movement on HSBC share option plans
Savings-related
share option plans
Number
WAEP1
(000s)
\u00a3
Outstanding at 1 Jan 2024
83,994
3.42
Granted during the year2
11,845
5.30
Exercised during the year3
(16,776)
2.94
Expired during the year
(2,454)
4.20
Forfeited during the year
(1,274)
3.48
Outstanding at 31 Dec 2024
75,335
3.81
\u2013\u00a0 of which exercisable
1,446
3.34
Weighted average remaining contractual life (years)
2.10
Outstanding at 1 Jan 2023
115,651
2.89
Granted during the year2
23,382
4.70
Exercised during the year3
(49,007)
2.73
Expired during the year
(3,832)
3.78
Forfeited during the year
(2,200)
2.88
Outstanding at 31 Dec 2023
83,994
3.42
\u2013\u00a0 of which exercisable
7,165
2.70
Weighted average remaining contractual life (years)
2.41
1Weighted average exercise price.
2The weighted average fair value of options granted during the year was $1.66 (2023: $1.92).
3The weighted average share price at the date the options were exercised was $8.54 (2023: $7.39 ).
Post-employment benefit plans
The Group operates pension plans throughout the world for its employees. \u2018Pension risk management processes\u2019 on page 203 contains details
of the policies and practices associated with these pension plans, some of which are defined benefit plans. The largest defined benefit plan is
the HSBC UK section of the HSBC Bank (UK) Pension Scheme (\u2018the principal plan\u2019), created as a result of the HSBC Bank (UK) Pension Scheme
being fully sectionalised in 2018 to meet the requirements of the Banking Reform Act. For further details of how the trustee of the HSBC Bank
(UK) Pension Scheme manages climate risk, see \u2019Managing climate risk\u2019 on page 60.
HSBC holds on its balance sheet the net surplus or deficit, which is the difference between the fair value of plan assets and the discounted
value of scheme liabilities at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable
through reduced contributions in the future or through potential future refunds from the schemes. In assessing whether a surplus is
recoverable, HSBC has considered its current right to obtain a future refund or a reduction in future contributions together with the rights of
third parties such as trustees.
The principal plan
The principal plan has a defined benefit section and a defined contribution section. The defined benefit section was closed to future benefit
accrual in 2015, with defined benefits earned by employees at that date continuing to be linked to their salary while they remain employed by
HSBC. 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 Group.
The investment strategy of the plan is to hold the majority of assets in bonds, with the remainder in a diverse range of investments. It also
includes some interest rate swaps to reduce interest rate risk, inflation swaps to reduce inflation risk and longevity swaps to reduce the impact
of longer life expectancy.
The principal plan is subject to the statutory funding objective requirements of the UK Pensions Act 2004, which requires that it be funded to at
least the level of technical provisions (an actuarial estimate of the assets needed to provide for the benefits already built up under the plan).
Where a funding valuation is carried out and identifies a deficit, the employer and trustee are required to agree to a deficit recovery plan.
The latest funding valuation of the plan at 31 December 2022 was carried out by Towers Watson Limited, using the projected unit credit
method. At that date, the market value of the plan\u2019s assets was \u00a323.9bn ($28.8bn) and this exceeded the value placed on its liabilities on an
ongoing basis by \u00a33.7bn ($4.4bn), giving a funding level of 118%. These figures include defined contribution assets amounting to \u00a33.0bn
($3.6bn). The main differences between the assumptions used for assessing the defined benefit liabilities for this funding valuation and those
used for IAS 19 are that an element of prudence is contained in the funding valuation assumptions for discount rate, inflation rate and life
expectancy. The funding valuation is used to judge the amount of cash contributions the Group needs to put into the pension scheme. It will
always be different to the IAS 19 accounting surplus, which is an accounting rule concerning employee benefits and shown on the balance
sheet of our financial statements. The next funding valuation will be performed in 2026, with an effective date of 31 December 2025.
The actuary also assessed the value of the liabilities if the plan were to have been stopped and an insurance company asked to secure all future
pension payments. This is generally larger than the amount needed on the ongoing basis described above because an insurance company
would use more prudent assumptions, which would allow for reserves and include an explicit allowance for the future administrative expenses
of\u00a0the plan. Under this approach, the amount of assets needed was estimated to be \u00a321.3bn ($25.7bn) at 31 December 2022.
The trust deed gives the ability for HSBC UK to take a refund of surplus assets after the plan has been run down such that no further
beneficiaries remain. In assessing whether a surplus is recoverable, HSBC UK has considered its right to obtain a future refund together with
the rights of third parties such as trustees. On this basis, any net surplus in the HSBC UK section of the plan is recognised in HSBC UK\u2019s
financial statements and the Group\u2019s financial statements.
Income statement charge/(credit)
2024
2023
2022
$m
$m
$m
Defined benefit pension plans
(116)
(151)
42
Defined contribution pension plans
933
874
845
Pension plans
817
723
887
Defined benefit and contribution healthcare plans
34
34
28
Year ended 31 Dec
851
757
915
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
30,758
(23,959)
\u2014
6,799
Defined benefit healthcare plans
80
(348)
\u2014
(268)
At 31 Dec 2024
30,838
(24,307)
\u2014
6,531
Total employee benefit liabilities (within Note 27 \u2018Accruals, deferred
income and other liabilities\u2019)
(1,017)
Total employee benefit assets (within Note 22 \u2018Prepayments,
accrued income and other assets\u2019)
7,548
Defined benefit pension plans
33,897
(27,011)
\u2014
6,886
Defined benefit healthcare plans
107
(403)
\u2014
(296)
At 31 Dec 2023
34,004
(27,414)
\u2014
6,590
Total employee benefit liabilities (within Note 27 \u2018Accruals, deferred
income and other liabilities\u2019)
(1,160)
Total employee benefit assets (within Note 22 \u2018Prepayments,
accrued income and other assets\u2019)
7,750
HSBC Holdings
Employee compensation and benefit expense in respect of HSBC Holdings\u2019 employees in 2024 amounted to $29m (2023: $15m ). The average number
of persons employed during 2024 was 28 (2023: 29). A small number of employees are members of defined benefit pension plans. These employees
are members of the HSBC Bank (UK) Pension Scheme. HSBC Holdings pays contributions to such plan for its own employees in accordance with the
schedules of contributions determined by the trustees of the plan and recognises these contributions as an expense as they fall due.
Defined benefit pension plans
Net asset/(liability) under defined benefit pension plans
Fair value of plan
assets
Present value of
defined benefit
obligations
Effect of the asset
ceiling
Net defined benefit
asset/(liability)
Principal1
plan
Other
plans
Principal1
plan
Other
plans
Principal1
plan
Other
plans
Principal1
plan
Other
plans
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
26,590
7,307
(19,782)
(7,229)
\u2014
\u2014
6,808
78
Service cost
\u2014
(1)
(35)
(144)
\u2014
\u2014
(35)
(145)
\u2013\u00a0 current service cost
\u2014
\u2014
(9)
(140)
\u2014
\u2014
(9)
(140)
\u2013\u00a0 past service cost and gains/(losses) from\u00a0settlements
\u2014
(1)
(26)
(4)
\u2014
\u2014
(26)
(5)
Net interest income/(cost) on the net defined benefit asset/
(liability)
1,213
277
(896)
(265)
\u2014
\u2014
317
12
Remeasurement effects recognised in other
comprehensive income
(2,665)
(6)
2,156
186
\u2014
\u2014
(509)
180
\u2013\u00a0 return on plan assets (excluding interest income)
(2,665)
(6)
\u2014
\u2014
\u2014
\u2014
(2,665)
(6)
\u2013\u00a0 actuarial gains/(losses) financial assumptions
\u2014
\u2014
1,771
204
\u2014
\u2014
1,771
204
\u2013\u00a0 actuarial gains/(losses) demographic assumptions
\u2014
\u2014
161
(5)
\u2014
\u2014
161
(5)
\u2013\u00a0 actuarial gains/(losses) experience adjustments
\u2014
\u2014
224
(13)
\u2014
\u2014
224
(13)
\u2013\u00a0 other changes
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
(387)
(145)
281
191
\u2014
\u2014
(106)
46
Benefits paid
(1,082)
(496)
1,082
561
\u2014
\u2014
\u2014
65
Other movements2
(17)
170
(29)
(36)
\u2014
\u2014
(46)
134
At 31 Dec 2024
23,652
7,106
(17,223)
(6,736)
\u2014
\u2014
6,429
370
At 1 Jan 2023
25,121
7,050
(18,787)
(6,906)
\u2014
\u2014
6,334
144
Service cost
\u2014
\u2014
(10)
(150)
\u2014
\u2014
(10)
(150)
\u2013\u00a0 current service cost
\u2014
\u2014
(14)
(135)
\u2014
\u2014
(14)
(135)
\u2013\u00a0 past service cost and losses from\u00a0settlements
\u2014
\u2014
4
(15)
\u2014
\u2014
4
(15)
Net interest income/(cost) on the net defined benefit asset/
(liability)
1,247
298
(925)
(286)
\u2014
\u2014
322
12
Remeasurement effects recognised in other
comprehensive income
(225)
110
7
(300)
\u2014
\u2014
(218)
(190)
\u2013\u00a0 return on plan assets (excluding interest income)
(225)
110
\u2014
\u2014
\u2014
\u2014
(225)
110
\u2013\u00a0 actuarial gains/(losses) financial assumptions
\u2014
\u2014
(123)
(327)
\u2014
\u2014
(123)
(327)
\u2013\u00a0 actuarial gains/(losses) demographic assumptions
\u2014
\u2014
357
17
\u2014
\u2014
357
17
\u2013\u00a0 actuarial gains/(losses) experience adjustments
\u2014
\u2014
(227)
10
\u2014
\u2014
(227)
10
\u2013\u00a0 other changes
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
1,472
228
(1,098)
(190)
\u2014
\u2014
374
38
Benefits paid
(1,063)
(548)
1,063
629
\u2014
\u2014
\u2014
81
Other movements2
38
169
(32)
(26)
\u2014
\u2014
6
143
At 31 Dec 2023
26,590
7,307
(19,782)
(7,229)
\u2014
\u2014
6,808
78
1For further details of the principal plan, see page 376.
2Other movements include contributions by HSBC, contributions by employees, administrative costs and taxes paid by plan.
HSBC expects to make $97m of contributions to defined benefit pension plans during 2025, consisting of $nil for the principal plan and $97m
for other plans. 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
The principal plan1,2
1,094
1,129
1,165
1,203
1,242
6,837
Other plans1
437
423
438
432
428
2,223
1The duration of the defined benefit obligation is 11.8 years for the principal plan under the disclosure assumptions adopted (2023: 12.9 years) and 9.8 years for
all other plans combined (2023: 10.3 years).
2For further details of the principal plan, see page 376.
Fair value of plan assets by asset classes
31 Dec 2024
31 Dec 2023
Value
Quoted
market price
in active
market
No quoted
market price
in active
market
Thereof
HSBC1
Value
Quoted
market price
in active
market
No quoted
market price
in active
market
Thereof
HSBC1
$m
$m
$m
$m
$m
$m
$m
$m
The principal plan2
Fair value of plan assets
23,652
13,903
9,749
421
26,590
15,006
11,584
547
\u2013\u00a0 equities3
65
\u2014
65
\u2014
83
\u2014
83
\u2014
\u2013\u00a0 bonds fixed income
5,864
5,372
492
\u2014
5,262
4,739
523
\u2014
\u2013\u00a0 bonds index-linked
8,253
8,253
\u2014
\u2014
10,300
10,300
\u2014
\u2014
\u2013\u00a0 derivatives
295
\u2014
295
421
1,061
\u2014
1,061
547
\u2013\u00a0 property
833
\u2014
833
\u2014
830
\u2014
830
\u2014
\u2013\u00a0 pooled investment vehicles
8,064
\u2014
8,064
\u2014
9,087
\u2014
9,087
\u2014
\u2013\u00a0 other
278
278
\u2014
\u2014
(33)
(33)
\u2014
\u2014
Other plans
Fair value of plan assets
7,106
6,407
699
19
7,307
5,361
1,946
39
\u2013\u00a0 equities
587
587
\u2014
4
556
556
\u2014
3
\u2013\u00a0 bonds fixed income
3,671
3,671
\u2014
4
3,624
3,623
1
5
\u2013\u00a0 bonds index-linked
33
33
\u2014
\u2014
90
90
\u2014
\u2014
\u2013\u00a0 bonds other
473
473
\u2014
\u2014
447
415
32
\u2014
\u2013\u00a0 derivatives
2
(3)
5
\u2014
2
(1)
3
\u2014
\u2013\u00a0 property
103
98
5
\u2014
112
108
4
\u2014
\u2013\u00a0 other
2,237
1,548
689
11
2,476
570
1,906
31
1The fair value of plan assets includes derivatives entered into with HSBC Bank plc as detailed in Note 36.
2For further details of the principal plan, see page 376.
3Includes $65m (2023: $83m) in relation to private equities.
Post-employment defined benefit plans\u2019 principal actuarial financial assumptions
HSBC determines the discount rates to be applied to its obligations in consultation with the plans\u2019 local actuaries, on the basis of current
average yields of high-quality (AA-rated or equivalent) debt instruments with maturities consistent with those of the defined benefit obligations.
Key actuarial assumptions for the principal plan1
Discount rate
Inflation rate (RPI)
Inflation rate (CPI)
Rate of increase for pensions
Rate of pay increase
%
%
%
%
%
UK
At 31 Dec 2024
5.54
3.33
2.88
3.22
3.63
At 31 Dec 2023
4.65
3.23
2.67
3.14
3.42
1For further details of the principal plan, see page 376.
Mortality tables and average life expectancy at age 60 for the principal plan1
Mortality
table
Life expectancy at age 60 for
a male member currently:
Life expectancy at age 60 for
a female member currently:
Aged 60
Aged 40
Aged 60
Aged 40
UK
At 31 Dec 2024
SAPS S32
26.1
27.7
28.3
29.9
At 31 Dec 2023
SAPS S33
26.2
27.7
28.3
29.8
1For further details of the principal plan, see page 376.
2\u00a0 \u00a0 Self-administered pension scheme (\u2018SAPS\u2019) S3 table, with different tables and multipliers adopted based on gender, pension amount and member status,
reflecting the Scheme\u2019s actual mortality experience. Improvements are projected in accordance with the Continuous Mortality Investigation's CMI 2023 core
projection model with an initial addition to improvement of 0.25% per annum, and a long-term rate of improvement of 1.25% per annum and with a 0%
weighting to 2020 and 2021 mortality experience and a 15% weighting to 2022 and 2023, reflecting long-term view on mortality improvements post-pandemic.
3\u00a0 \u00a0 Self-administered pension scheme (\u2018SAPS\u2019) S3 table, with different tables and multipliers adopted based on gender, pension amount and member status,
reflecting the Scheme\u2019s actual mortality experience. Improvements are projected in accordance with the Continuous Mortality Investigation\u2019s CMI 2022 core
projection model with an initial addition to improvement of 0.25% per annum, a long-term rate of improvement of 1.25% per annum, with a 0% weighting to
2020 and 2021, mortality experience and a 25% weighting to 2022, reflecting updated long-term view on mortality improvements post-pandemic.
The effect of changes in key assumptions on the principal plan1
Impact on HSBC UK section of the
HSBC Bank (UK) Pension Scheme obligation
Financial impact of increase
Financial impact of decrease
2024
2023
2024
2023
$m
$m
$m
$m
Discount rate \u2013 increase/decrease of 0.25%
(473)
(599)
496
631
Inflation rate (RPI and CPI) \u2013 increase/decrease of 0.25%
389
500
(391)
(497)
Pension payments and deferred pensions \u2013 increase/decrease of 0.25%
487
622
(478)
(590)
Pay \u2013 increase/decrease of 0.25%
6
8
(6)
(6)
Change in mortality \u2013 increase/decrease of 1 year
483
613
(464)
(613)
1For further details of the principal plan, see page 376.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely
to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to
significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the defined benefit asset recognised in the balance sheet. The
methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the prior period.
Directors\u2019 emoluments
Details of Directors\u2019 emoluments, pensions and their interests are disclosed in the Directors\u2019 remuneration report on page 279.
Post-employment benefit plans
At 31 December 2024, $3.4bn (2023: $3.1bn) of HSBC post-employment benefit plan assets were under management by HSBC companies,
earning management fees of $14m in 2024 (2023: $13m). At 31 December 2024, HSBC\u2019s post-employment benefit plans had placed deposits
of $395m (2023:\u00a0$402m) with its banking subsidiaries, earning interest payable to the schemes of $2m (2023: $2m). The above outstanding
balances arose from the ordinary course of business and on substantially the same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
The combined HSBC Bank (UK) Pension Scheme enters into swap transactions with HSBC to manage inflation and interest rate sensitivity of
its liabilities and selected assets. At 31 December 2024, the gross notional value of the swaps was $6.4bn (2023: $7.1bn). These swaps had a
positive fair value to the scheme of $0.4bn (2023: $0.5bn); and HSBC had delivered collateral of $0.4bn (2023: $0.6bn) to the scheme in respect
of these arrangements. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-963": { "value": "
Average number of persons employed by HSBC during the year by global business1
2024
2023
2022
Wealth and Personal Banking
125,068
132,336
135,676
Commercial Banking
47,135
46,826
48,004
Global Banking and Markets
48,351
48,043
48,597
Corporate Centre
374
347
365
Year ended 31 Dec
220,928
227,552
232,642
1Average number of persons employed represents the number of persons with contracts of service with the Group.
Average number of persons employed by HSBC during the year by legal entity1
2024
2023
2022
HSBC UK Bank plc
20,034
20,415
20,501
HSBC Bank plc
11,456
14,809
15,405
The Hongkong and Shanghai Banking Corporation Limited
54,478
54,321
54,792
HSBC Bank Middle East Limited
3,344
3,316
3,338
HSBC North America Holdings Inc.
5,928
6,046
6,749
HSBC Bank Canada
758
4,354
4,241
Grupo Financiero HSBC, S.A. de C.V.
13,928
14,412
14,484
Other trading entities2
8,393
9,247
10,026
Holding companies, shared service centres and intra-Group eliminations
102,609
100,632
103,106
Year ended 31 Dec
220,928
227,552
232,642
1Average number of persons employed represents the number of persons with contracts of service with the Group.
2Other trading entities includes entities located in T\u00fcrkiye, Egypt and Saudi Arabia.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-964": { "value": "
Share-based payments
\u2018Wages and salaries\u2019 includes the effect of share-based payments arrangements, of which $529m (2023: $482m; 2022:\u00a0$400m) was equity
settled, as follows:
2024
2023
2022
$m
$m
$m
Conditional share awards
551
499
402
Savings-related and other share award option plans
27
23
22
Year ended 31 Dec
578
522
424
HSBC share awards
Award
Policy
Deferred share awards
(including annual incentive
awards, long-term incentive
(\u2018LTI\u2019) awards delivered in
shares)
An assessment of performance over the relevant period ending on 31 December is used to determine the amount of\u00a0the award
to be granted.
\u2013 Deferred awards generally require employees to remain in employment over the vesting period and are generally not subject
to performance conditions after the grant date. An exception to these are LTI awards, which are subject to performance
conditions.
\u2013 Deferred share awards generally vest over a period of three, four, five or seven years.
\u2013 Vested shares may be subject to a retention requirement post-vesting.
\u2013 Awards are generally subject to malus and clawback provisions.
International Employee Share
Purchase Plan (\u2018ShareMatch\u2019)
The plan was first introduced in Hong Kong in 2013 and now includes employees based in 30 jurisdictions.
\u2013 Shares are purchased in the market each quarter up to a maximum value of \u00a3750, or the equivalent in local currency.
\u2013 Matching awards are added at a ratio of one free share for every three purchased. In mainland China, matching awards are
settled in cash.
\u2013 Matching awards vest subject to continued employment and the retention of the purchased shares for a maximum period of
two years and nine months.
Movement on HSBC share awards
2024
2023
Number
Number
(000s)
(000s)
Conditional share awards outstanding at 1 Jan
125,023
126,246
Additions during the year
84,930
72,289
Released in the year
(71,849)
(70,054)
Forfeited in the year
(4,461)
(3,458)
Conditional share awards outstanding at 31 Dec
133,643
125,023
Weighted average fair value of awards granted ($)
6.08
5.84
HSBC share option plans
Main plans
Policy
Savings-related share option
plans (\u2018Sharesave\u2019)
\u2013 From 2014, employees eligible for the UK plan could save up to \u00a3 500 per month with the option to use the savings to acquire
shares.
\u2013 These are generally exercisable within six months following either the third or fifth anniversary of the commencement of a
three-year or five-year contract, respectively.
\u2013 The exercise price is set at a 20% (2023: 20%) discount to the market value immediately preceding the date of invitation.
Calculation of fair values
The fair values of share options are calculated using a Black-Scholes model. The fair value of a share award is based on the share price at the
date of the grant.
Movement on HSBC share option plans
Savings-related
share option plans
Number
WAEP1
(000s)
\u00a3
Outstanding at 1 Jan 2024
83,994
3.42
Granted during the year2
11,845
5.30
Exercised during the year3
(16,776)
2.94
Expired during the year
(2,454)
4.20
Forfeited during the year
(1,274)
3.48
Outstanding at 31 Dec 2024
75,335
3.81
\u2013\u00a0 of which exercisable
1,446
3.34
Weighted average remaining contractual life (years)
2.10
Outstanding at 1 Jan 2023
115,651
2.89
Granted during the year2
23,382
4.70
Exercised during the year3
(49,007)
2.73
Expired during the year
(3,832)
3.78
Forfeited during the year
(2,200)
2.88
Outstanding at 31 Dec 2023
83,994
3.42
\u2013\u00a0 of which exercisable
7,165
2.70
Weighted average remaining contractual life (years)
2.41
1Weighted average exercise price.
2The weighted average fair value of options granted during the year was $1.66 (2023: $1.92).
3The weighted average share price at the date the options were exercised was $8.54 (2023: $7.39 ).
Net asset/(liability) under defined benefit pension plans
Fair value of plan
assets
Present value of
defined benefit
obligations
Effect of the asset
ceiling
Net defined benefit
asset/(liability)
Principal1
plan
Other
plans
Principal1
plan
Other
plans
Principal1
plan
Other
plans
Principal1
plan
Other
plans
$m
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
26,590
7,307
(19,782)
(7,229)
\u2014
\u2014
6,808
78
Service cost
\u2014
(1)
(35)
(144)
\u2014
\u2014
(35)
(145)
\u2013\u00a0 current service cost
\u2014
\u2014
(9)
(140)
\u2014
\u2014
(9)
(140)
\u2013\u00a0 past service cost and gains/(losses) from\u00a0settlements
\u2014
(1)
(26)
(4)
\u2014
\u2014
(26)
(5)
Net interest income/(cost) on the net defined benefit asset/
(liability)
1,213
277
(896)
(265)
\u2014
\u2014
317
12
Remeasurement effects recognised in other
comprehensive income
(2,665)
(6)
2,156
186
\u2014
\u2014
(509)
180
\u2013\u00a0 return on plan assets (excluding interest income)
(2,665)
(6)
\u2014
\u2014
\u2014
\u2014
(2,665)
(6)
\u2013\u00a0 actuarial gains/(losses) financial assumptions
\u2014
\u2014
1,771
204
\u2014
\u2014
1,771
204
\u2013\u00a0 actuarial gains/(losses) demographic assumptions
\u2014
\u2014
161
(5)
\u2014
\u2014
161
(5)
\u2013\u00a0 actuarial gains/(losses) experience adjustments
\u2014
\u2014
224
(13)
\u2014
\u2014
224
(13)
\u2013\u00a0 other changes
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
(387)
(145)
281
191
\u2014
\u2014
(106)
46
Benefits paid
(1,082)
(496)
1,082
561
\u2014
\u2014
\u2014
65
Other movements2
(17)
170
(29)
(36)
\u2014
\u2014
(46)
134
At 31 Dec 2024
23,652
7,106
(17,223)
(6,736)
\u2014
\u2014
6,429
370
At 1 Jan 2023
25,121
7,050
(18,787)
(6,906)
\u2014
\u2014
6,334
144
Service cost
\u2014
\u2014
(10)
(150)
\u2014
\u2014
(10)
(150)
\u2013\u00a0 current service cost
\u2014
\u2014
(14)
(135)
\u2014
\u2014
(14)
(135)
\u2013\u00a0 past service cost and losses from\u00a0settlements
\u2014
\u2014
4
(15)
\u2014
\u2014
4
(15)
Net interest income/(cost) on the net defined benefit asset/
(liability)
1,247
298
(925)
(286)
\u2014
\u2014
322
12
Remeasurement effects recognised in other
comprehensive income
(225)
110
7
(300)
\u2014
\u2014
(218)
(190)
\u2013\u00a0 return on plan assets (excluding interest income)
(225)
110
\u2014
\u2014
\u2014
\u2014
(225)
110
\u2013\u00a0 actuarial gains/(losses) financial assumptions
\u2014
\u2014
(123)
(327)
\u2014
\u2014
(123)
(327)
\u2013\u00a0 actuarial gains/(losses) demographic assumptions
\u2014
\u2014
357
17
\u2014
\u2014
357
17
\u2013\u00a0 actuarial gains/(losses) experience adjustments
\u2014
\u2014
(227)
10
\u2014
\u2014
(227)
10
\u2013\u00a0 other changes
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Exchange differences
1,472
228
(1,098)
(190)
\u2014
\u2014
374
38
Benefits paid
(1,063)
(548)
1,063
629
\u2014
\u2014
\u2014
81
Other movements2
38
169
(32)
(26)
\u2014
\u2014
6
143
At 31 Dec 2023
26,590
7,307
(19,782)
(7,229)
\u2014
\u2014
6,808
78
1For further details of the principal plan, see page 376.
2Other movements include contributions by HSBC, contributions by employees, administrative costs and taxes paid by plan.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-965": { "value": "
6
Auditor\u2019s remuneration
2024
2023
2022
$m
$m
$m
Audit fees payable to PwC1
102.8
109.8
97.6
Other audit fees payable
1.6
2.2
1.6
Year ended 31 Dec
104.4
112.0
99.2
Fees payable by HSBC to PwC
2024
2023
2022
$m
$m
$m
Fees for HSBC Holdings\u2019 statutory audit2
22.0
24.1
21.9
Fees for other services provided to HSBC
124.6
131.8
126.2
\u2013\u00a0 audit of HSBC\u2019s subsidiaries
80.8
85.7
75.7
\u2013\u00a0 audit-related assurance services3
25.0
26.0
26.4
\u2013\u00a0 other assurance services4,5
18.8
20.1
24.1
Year ended 31 Dec
146.6
155.9
148.1
1Audit fees payable to PwC in 2024 included adjustments made to the prior year audit fee after finalisation of the 2023 financial statements.
2Fees payable to PwC for the statutory audit of the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings. They
include amounts payable for services relating to the consolidation returns of HSBC Holdings\u2019 subsidiaries, which are clearly identifiable as being in support of the
Group audit opinion.
3Including services for assurance and other services that relate to statutory and regulatory filings, including interim reviews.
4Including permitted services relating to attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users,
including comfort letters.
5Includes reviews of PRA regulatory reporting returns.
No fees were payable by HSBC to PwC as principal auditor for the following types of services: internal audit services and services related to
litigation, recruitment and remuneration.
Fees payable by HSBC\u2019s associated pension schemes to PwC
2024
2023
2022
$000
$000
$000
Audit of HSBC\u2019s associated pension schemes
320
297
480
Year ended 31 Dec
320
297
480
No fees were payable by HSBC\u2019s associated pension schemes to PwC as principal auditor for the following types of services: internal audit
services, other assurance services, services related to corporate finance transactions, valuation and actuarial services, litigation, recruitment
and remuneration, and information technology.
In addition to the above, the estimated fees paid to PwC by third parties associated with HSBC amounted to $9.9m (2023: $12.3m;
2022:\u00a0$13.1m). In these cases, HSBC was connected with the contracting party and may therefore have been involved in appointing PwC.
These fees arose from services such as auditing mutual funds managed by HSBC and reviewing the financial position of corporate concerns
that borrow from HSBC.
Fees payable for non-audit services for HSBC Holdings are not disclosed separately because such fees are disclosed on a consolidated basis for
the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-966": { "value": "
7
Tax
Tax expense
2024
2023
2022
$m
$m
$m
Current tax1
6,115
5,718
2,984
\u2013\u00a0 for this year
5,863
5,737
3,264
\u2013\u00a0 adjustments in respect of prior years
31
(19)
(280)
\u2013\u00a0 Pillar 2 and qualifying domestic top-up taxes
221
\u2014
\u2014
Deferred tax
1,195
71
(2,175)
\u2013\u00a0 origination and reversal of temporary differences
1,288
19
(2,278)
\u2013\u00a0 effect of changes in tax rates
(2)
17
(293)
\u2013\u00a0 adjustments in respect of prior years
(91)
35
396
Year ended 31 Dec2
7,310
5,789
809
1Current tax included Hong Kong profits tax of $1,615m (2023: $1,328m; 2022: $604m). The Hong Kong tax rate applying to the profits of subsidiaries assessable
in Hong Kong was 16.5% (2023: 16.5% ; 2022: 16.5%).
2In addition to amounts recorded in the income statement, a tax credit of $12m (2023: credit of $41m) was recorded directly to equity.
Tax reconciliation
The tax charged to the income statement differs from the tax charge that would apply if all profits had been taxed at the UK corporation tax rate
as follows:
2024
2023
2022
$m
%
$m
%
$m
%
Profit before tax
32,309
30,348
17,058
Tax expense
Taxation at UK corporation tax rate of 25.0% (2023: 23.5%, 2022: 19.0%)
8,077
25.0
7,132
23.5
3,241
19.0
Impact of differently taxed overseas profits in overseas locations
(1,351)
(4.2)
(612)
(2.0)
459
2.7
UK banking surcharge
215
0.7
350
1.2
283
1.7
Items increasing tax charge in 2024:
\u2013\u00a0 tax impact of sale of HSBC Argentina
1,536
4.8
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 local taxes and overseas withholding taxes
584
1.8
419
1.4
346
2.0
\u2013\u00a0 other permanent disallowables
344
1.0
227
0.7
363
2.1
\u2013\u00a0 impacts of hyperinflation
327
1.0
348
1.1
171
1.0
\u2013\u00a0 movements in unrecognised deferred tax
259
0.7
(22)
(0.1)
(2,503)
(14.7)
\u2013\u00a0 Global Minimum Tax top-up charge
221
0.7
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 bank levy
73
0.2
112
0.4
59
0.3
\u2013\u00a0 movements in provisions for uncertain tax positions
38
0.1
(472)
(1.6)
27
0.2
\u2013\u00a0 impact of changes in tax rates
6
\u2014
17
0.1
(293)
(1.7)
\u2013\u00a0 impairment of interest in associate
\u2014
\u2014
705
2.3
\u2014
\u2014
Items reducing tax charge in 2024:
\u2013\u00a0 non-taxable gain on disposal of HSBC Canada
(1,174)
(3.6)
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 non-taxable income and gains
(1,079)
(3.3)
(1,189)
(3.9)
(825)
(4.8)
\u2013\u00a0 effect of profits in associates and joint ventures
(456)
(1.4)
(571)
(1.9)
(504)
(3.1)
\u2013\u00a0 deductions for AT1 coupon payments
(249)
(0.8)
(229)
(0.7)
(246)
(1.4)
\u2013\u00a0 adjustments in respect of prior period
(46)
(0.1)
16
0.1
116
0.7
\u2013\u00a0 tax impact of sale of French retail banking business
(15)
\u2014
\u2014
\u2014
115
0.7
\u2013\u00a0 accounting gain on acquisition of SVB UK
\u2014
\u2014
(442)
(1.5)
\u2014
\u2014
Year ended 31 Dec
7,310
22.6
5,789
19.1
809
4.7
The Group\u2019s profits are taxed at different rates depending on the country or territory in which the profits arise. The key applicable tax rates for
2024 include Hong Kong (16.5%), the US (21%) and the UK (25%). If the Group\u2019s profits were taxed at the statutory rates of the countries in
which the profits arose, then the tax rate for the year would have been 21.4% (2023: 22.6%).
The effective tax rate for the year of 22.6% was higher than in the previous year (2023: 19.1%). The effective tax rate for the year was reduced
by 3.6% by the non-taxable gain arising on the disposal of HSBC Canada, increased by 4.8% by the non-deductible loss arising on the disposal
of HSBC Argentina, increased by 70.0% by movements in unrecognised deferred tax, primarily relating to French tax losses, and increased by
70.0% by the Group\u2019s Pillar 2 Global Minimum Tax charge. The effective tax rate for 2023 was increased by 2.3% by the non-taxable
impairment of the Group\u2019s investment in BoCom, reduced by 1.6% by the release of provisions for uncertain tax positions and reduced by
1.5% by the non-taxable accounting gain on the acquisition of SVB UK.
In July 2023, the UK enacted legislation to introduce the \u2018Pillar Two\u2019 global minimum tax model rules of the OECD\u2019s Inclusive Framework on
Base Erosion and Profit Shifting (\u2019BEPS\u2019) and a UK qualified domestic minimum top-up tax, with effect from 1 January 2024. Under the Pillar
Two rules, a top-up tax liability arises where the Group\u2019s effective tax rate in a jurisdiction is below 15%. The Group has recorded a Pillar Two
global minimum tax charge of $221m for the period, primarily related to the non-taxation of dividends and income on government bonds in
Hong Kong (which have the effect of reducing the effective tax rate from the statutory rate of 16.5% to below 15%) and low or nil statutory tax
rates in jurisdictions such as Bermuda and the Channel Islands. For the current period, this tax expense will be substantially payable in the UK
by HSBC Holdings.
Many jurisdictions have introduced or announced the introduction of domestic minimum tax rules that are closely aligned to the OECD\u2019s Pillar
Two model rules, as well as new or amended corporate income tax rules, with effect from 2024 or 2025. As and when such taxes are
introduced, they will have the effect of increasing local tax liabilities, eliminating or reducing the top-up tax liability payable in the UK by HSBC
Holdings in respect of those jurisdictions. Hong Kong, Bermuda and the Channel Islands have introduced such new tax rules with effect from
1\u00a0January 2025.
Accounting for taxes involves some estimation because tax law is uncertain and its application requires a degree of judgement, which
authorities may dispute. Liabilities are recognised based on best estimates of the probable outcome, taking into account external advice where
appropriate. Exposures relating to legacy tax cases were reassessed during 2024, resulting in a charge of $38m to the income statement. We
do not expect significant liabilities to arise in excess of the amounts provided. HSBC only recognises current and deferred tax assets where
recovery is probable.
Movement of deferred tax assets and liabilities
Loan
impairment
provisions
Unused tax
losses and
tax credits
Financial
assets at
FVOCI
Cash flow
hedges
Retirement
obligations
Other
Total
$m
$m
$m
$m
$m
$m
$m
Assets
1,158
4,544
876
419
\u2014
2,933
9,930
Liabilities
\u2014
\u2014
\u2014
\u2014
(1,814)
(1,600)
(3,414)
At 1 Jan 2024
1,158
4,544
876
419
(1,814)
1,333
6,516
Income statement
(74)
(640)
100
\u2014
(85)
(431)
(1,130)
Other comprehensive income
\u2014
\u2014
(49)
84
114
189
338
Foreign exchange and other adjustments
(14)
(40)
(311)
(61)
18
208
(200)
At 31 Dec 2024
1,070
3,864
616
442
(1,767)
1,299
5,524
Assets1
1,070
3,864
616
442
\u2014
2,906
8,898
Liabilities1
\u2014
\u2014
\u2014
\u2014
(1,767)
(1,607)
(3,374)
Assets
1,062
4,397
850
1,271
\u2014
3,048
10,628
Liabilities
\u2014
\u2014
\u2014
\u2014
(1,673)
(1,567)
(3,240)
At 1 Jan 2023
1,062
4,397
850
1,271
(1,673)
1,481
7,388
Income statement
(39)
102
541
1
(114)
(562)
(71)
Other comprehensive income
\u2014
\u2014
(598)
(974)
99
399
(1,074)
Foreign exchange and other adjustments
135
45
83
121
(126)
15
273
At 31 Dec 2023
1,158
4,544
876
419
(1,814)
1,333
6,516
Assets1
1,158
4,544
876
419
\u2014
2,933
9,930
Liabilities1
\u2014
\u2014
\u2014
\u2014
(1,814)
(1,600)
(3,414)
1After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets of $6,841m (2023: $7,754m) and
deferred tax liabilities of $1,317m (2023: $1,238m).
In applying judgement in recognising deferred tax assets, management has assessed all relevant information, including future business profit
projections and the track record of meeting forecasts. Management\u2019s assessment of the likely availability of future taxable profits against which
to recover deferred tax assets is based on the most recent financial forecasts approved by management, which cover a five-year period and are
extrapolated where necessary, and takes into consideration the reversal of existing taxable temporary differences and past business
performance. When forecasts are extrapolated beyond five years, a number of different scenarios are considered, reflecting different
downward risk adjustments, in order to assess the sensitivity of our recognition and measurement conclusions in the context of such longer-
term forecasts.
The Group\u2019s net deferred tax asset of $5.5bn (2023: $6.5bn) included $2.6bn (2023: $3.3bn) of deferred tax assets relating to the UK, $3.0bn
(2023: $3.1bn) of deferred tax assets relating to the US and a net deferred asset of $0.5bn (2023: $0.9bn) in France.
The UK deferred tax asset of $2.6bn excluded a $1.8bn deferred tax liability arising on the UK pension scheme surplus, the reversal of which is
not taken into account when estimating future taxable profit due to the level of uncertainty as to the timing and manner of its reversal. The UK
deferred tax assets are supported by forecasts of taxable profit, also taking into consideration the history of profitability in the relevant
businesses. The majority of the deferred tax asset relates to tax attributes which do not expire and are forecast to be recovered within 3 years
and as such are less sensitive to changes in long-term profit forecasts.
The net US deferred tax asset of $3.0bn included $1.2bn related to US tax losses, of which $0.9bn expire in 10 to 15 years. Management
expects the US deferred tax asset to be substantially recovered within 13 years, with the majority recovered in the first 5 years.
The net deferred tax asset in France of $0.5bn included $0.5bn related to tax losses, which are expected to be substantially recovered within
12 years. Unused tax losses with a tax value of $0.2bn have not been recognised due to the absence of convincing evidence regarding the
availability of sufficient future taxable profits against which to recover them.
Unrecognised deferred tax
The amount of gross temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance
sheet was $11.0bn (2023: $10.4bn). This amount included unused US state tax losses of $3.8bn (2023: $4.0bn) which are forecast to expire
before they are recovered, unused French tax losses of $0.7bn (2023: nil) for which there is insufficient evidence of future taxable profits to
support recognition, and unused UK tax losses of $3.5bn (2023: $4.5bn), which arose prior to 1 April 2017 and can only be recovered against
future taxable profits of HSBC Holdings. No deferred tax was recognised on these losses due to the absence of convincing evidence regarding
the availability of sufficient future taxable profits against which to recover them. Deferred tax asset recognition is reassessed at each balance
sheet date based on the available evidence. Of the total amounts on which deferred tax was not recognised, $6.0bn (2023: $5.1bn) had no
expiry date, $1.0bn (2023: $0.5bn) was scheduled to expire within 10 years and the remaining balance is expected to expire after 10 years.
Deferred tax is not recognised in respect of the Group\u2019s investments in subsidiaries and branches where HSBC is able to control the timing of
remittance or other realisation and where remittance or realisation is not probable in the foreseeable future. The aggregate temporary
differences relating to unrecognised deferred tax liabilities arising on investments in subsidiaries and branches was $15.2bn (2023: $14.4bn)
and the corresponding unrecognised deferred tax liability was $0.7bn (2023: $0.7bn).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-967": { "value": "
Movement of deferred tax assets and liabilities
Loan
impairment
provisions
Unused tax
losses and
tax credits
Financial
assets at
FVOCI
Cash flow
hedges
Retirement
obligations
Other
Total
$m
$m
$m
$m
$m
$m
$m
Assets
1,158
4,544
876
419
\u2014
2,933
9,930
Liabilities
\u2014
\u2014
\u2014
\u2014
(1,814)
(1,600)
(3,414)
At 1 Jan 2024
1,158
4,544
876
419
(1,814)
1,333
6,516
Income statement
(74)
(640)
100
\u2014
(85)
(431)
(1,130)
Other comprehensive income
\u2014
\u2014
(49)
84
114
189
338
Foreign exchange and other adjustments
(14)
(40)
(311)
(61)
18
208
(200)
At 31 Dec 2024
1,070
3,864
616
442
(1,767)
1,299
5,524
Assets1
1,070
3,864
616
442
\u2014
2,906
8,898
Liabilities1
\u2014
\u2014
\u2014
\u2014
(1,767)
(1,607)
(3,374)
Assets
1,062
4,397
850
1,271
\u2014
3,048
10,628
Liabilities
\u2014
\u2014
\u2014
\u2014
(1,673)
(1,567)
(3,240)
At 1 Jan 2023
1,062
4,397
850
1,271
(1,673)
1,481
7,388
Income statement
(39)
102
541
1
(114)
(562)
(71)
Other comprehensive income
\u2014
\u2014
(598)
(974)
99
399
(1,074)
Foreign exchange and other adjustments
135
45
83
121
(126)
15
273
At 31 Dec 2023
1,158
4,544
876
419
(1,814)
1,333
6,516
Assets1
1,158
4,544
876
419
\u2014
2,933
9,930
Liabilities1
\u2014
\u2014
\u2014
\u2014
(1,814)
(1,600)
(3,414)
1After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets of $6,841m (2023: $7,754m) and
deferred tax liabilities of $1,317m (2023: $1,238m).
In applying judgement in recognising deferred tax assets, management has assessed all relevant information, including future business profit
projections and the track record of meeting forecasts. Management\u2019s assessment of the likely availability of future taxable profits against which
to recover deferred tax assets is based on the most recent financial forecasts approved by management, which cover a five-year period and are
extrapolated where necessary, and takes into consideration the reversal of existing taxable temporary differences and past business
performance. When forecasts are extrapolated beyond five years, a number of different scenarios are considered, reflecting different
downward risk adjustments, in order to assess the sensitivity of our recognition and measurement conclusions in the context of such longer-
term forecasts.
The Group\u2019s net deferred tax asset of $5.5bn (2023: $6.5bn) included $2.6bn (2023: $3.3bn) of deferred tax assets relating to the UK, $3.0bn
(2023: $3.1bn) of deferred tax assets relating to the US and a net deferred asset of $0.5bn (2023: $0.9bn) in France.
The UK deferred tax asset of $2.6bn excluded a $1.8bn deferred tax liability arising on the UK pension scheme surplus, the reversal of which is
not taken into account when estimating future taxable profit due to the level of uncertainty as to the timing and manner of its reversal. The UK
deferred tax assets are supported by forecasts of taxable profit, also taking into consideration the history of profitability in the relevant
businesses. The majority of the deferred tax asset relates to tax attributes which do not expire and are forecast to be recovered within 3 years
and as such are less sensitive to changes in long-term profit forecasts.
The net US deferred tax asset of $3.0bn included $1.2bn related to US tax losses, of which $0.9bn expire in 10 to 15 years. Management
expects the US deferred tax asset to be substantially recovered within 13 years, with the majority recovered in the first 5 years.
The net deferred tax asset in France of $0.5bn included $0.5bn related to tax losses, which are expected to be substantially recovered within
12 years. Unused tax losses with a tax value of $0.2bn have not been recognised due to the absence of convincing evidence regarding the
availability of sufficient future taxable profits against which to recover them.
Unrecognised deferred tax
The amount of gross temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance
sheet was $11.0bn (2023: $10.4bn). This amount included unused US state tax losses of $3.8bn (2023: $4.0bn) which are forecast to expire
before they are recovered, unused French tax losses of $0.7bn (2023: nil) for which there is insufficient evidence of future taxable profits to
support recognition, and unused UK tax losses of $3.5bn (2023: $4.5bn), which arose prior to 1 April 2017 and can only be recovered against
future taxable profits of HSBC Holdings. No deferred tax was recognised on these losses due to the absence of convincing evidence regarding
the availability of sufficient future taxable profits against which to recover them. Deferred tax asset recognition is reassessed at each balance
sheet date based on the available evidence. Of the total amounts on which deferred tax was not recognised, $6.0bn (2023: $5.1bn) had no
expiry date, $1.0bn (2023: $0.5bn) was scheduled to expire within 10 years and the remaining balance is expected to expire after 10 years.
Deferred tax is not recognised in respect of the Group\u2019s investments in subsidiaries and branches where HSBC is able to control the timing of
remittance or other realisation and where remittance or realisation is not probable in the foreseeable future. The aggregate temporary
differences relating to unrecognised deferred tax liabilities arising on investments in subsidiaries and branches was $15.2bn (2023: $14.4bn)
and the corresponding unrecognised deferred tax liability was $0.7bn (2023: $0.7bn).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-968": { "value": "
8
Dividends
Dividends to shareholders of the parent company
2024
2023
2022
Per
share
Total
Per
share
Total
Per
share
Total
$
$m
$
$m
$
$m
Dividends paid on ordinary shares
In respect of previous year:
\u2013\u00a0 second interim dividend
\u2014
\u2014
0.23
4,589
0.18
3,576
\u2013\u00a0 fourth interim dividend
0.31
5,872
\u2014
\u2014
\u2014
\u2014
In respect of current year:
\u2013\u00a0 first interim dividend
0.10
1,877
0.10
2,001
0.09
1,754
\u2013\u00a0 special dividend
0.21
3,942
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 second interim dividend
0.10
1,852
0.10
1,956
\u2014
\u2014
\u2013\u00a0 third interim dividend
0.10
1,805
0.10
1,946
\u2014
\u2014
Total
0.82
15,348
0.53
10,492
0.27
5,330
Total coupons on capital securities classified as equity
1,062
1,101
1,214
Dividends to shareholders
16,410
11,593
6,544
Total coupons on capital securities classified as equity
2024
2023
2022
Total
Total
Total
First call date
Per security
$m
$m
$m
Perpetual subordinated contingent convertible securities1
$2,250m issued at 6.375%2
Sep 2024
$63.750
122
143
143
$2,450m issued at 6.375%
Mar 2025
$63.750
156
156
156
$3,000m issued at 6.000%
May 2027
$60.000
180
180
180
$2,350m issued at 6.250%3
Mar 2023
$62.500
\u2014
52
147
$1,800m issued at 6.500%
Mar 2028
$65.000
117
117
117
$1,500m issued at 4.600%
Dec 2030
$46.000
69
69
69
$1,000m issued at 4.000%
Mar 2026
$40.000
40
40
40
$1,000m issued at 4.700%
Mar 2031
$47.000
47
47
47
$2,000m issued at 8.000%4
Mar 2028
$80.000
160
80
\u2014
$1,350m issued at 6.875%5
Sep 2029
$68.750
\u2014
\u2014
\u2014
$1,150m issued at 6.950%6
Mar 2034
$69.500
\u2014
\u2014
\u2014
\u20ac1,500m issued at 5.250%7
Sep 2022
\u20ac52.500
\u2014
\u2014
76
\u20ac1,000m issued at 6.000%8
Sep 2023
\u20ac60.000
\u2014
56
63
\u20ac1,250m issued at 4.750%
Jul 2029
\u20ac47.500
65
64
65
\u00a31,000m issued at 5.875%
Sep 2026
\u00a358.750
77
72
70
SGD1,000m issued at 4.700%9
Jun 2022
SGD47.000
\u2014
\u2014
14
SGD750m issued at 5.000%10
Sep 2023
SGD50.000
\u2014
25
27
SGD1,500m issued at 5.250%11
Jun 2029
SGD52.500
29
\u2014
\u2014
Total
1,062
1,101
1,214
1 Discretionary coupons are paid semi-annually, based on the denominations of each security.
2 This security was called by HSBC Holdings on 23 July 2024 and was redeemed and cancelled on 17 September 2024.
3 This security was called by HSBC Holdings on 30 January 2023 and was redeemed and cancelled on 23 March 2023.
4 This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six calendar months prior to the reset date of 7\u00a0September 2028.
5 This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of 11 March
2030.
6 This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of
11\u00a0September 2034.
7 This security was called by HSBC Holdings on 9 August 2022 and was redeemed and cancelled on 16 September 2022.
8 This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 29 September 2023.
9 This security was called by HSBC Holdings on 4 May 2022 and was redeemed and cancelled on 8 June 2022.
10 This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 25 September 2023.
11 This security was issued by HSBC Holdings on 14 June 2024. The first call period commences six calendar months prior to the reset date of 14 December 2029.
On 19 February 2025, the Directors approved a fourth interim dividend in respect of the financial year ended 31 December 2024 of $0.36 per
ordinary share (the \u2018dividend\u2019), an expected distribution of approximately $6.4bn. The dividend will be payable on 25 April 2025 to holders of
record on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on
7\u00a0March\u00a02025. No liability was recorded in the financial statements in respect of the fourth interim dividend for 2024.
On 6 January 2025, HSBC paid a coupon on its \u20ac1,250m subordinated capital securities, representing a total distribution of \u20ac30m ($31m).\u00a0No
liability was recorded in the balance sheet at 31 December 2024 in respect of this coupon payment.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-969": { "value": "0.36", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD/xbrli:shares" } }, "f-970": { "value": "6400000000.0", "decimals": -8, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-971": { "value": "
9Earnings per share
Basic earnings per ordinary share is calculated by dividing the profit attributable to ordinary shareholders of the parent company by the
weighted average number of ordinary shares outstanding, after deducting own shares held. Diluted earnings per ordinary share is calculated by
dividing the basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average number
of ordinary shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be issued on
conversion of dilutive potential ordinary shares.
Basic and diluted earnings per share
2024
2023
2022
Profit
Number
of shares
Per
share
Profit
Number
of shares
Per
share
Profit
Number
of shares
Per
share
$m
(millions)
$
$m
(millions)
$
$m
(millions)
$
Basic1
22,917
18,357
1.25
22,432
19,478
1.15
14,346
19,849
0.72
Effect of dilutive potential
ordinary shares
128
122
137
Diluted1
22,917
18,485
1.24
22,432
19,600
1.14
14,346
19,986
0.72
1 Weighted average number of ordinary shares outstanding (basic) or assuming dilution (diluted) after deducting own shares held.
The number of anti-dilutive employee share options excluded from the weighted average number of dilutive potential ordinary shares was Nil
(2023: 23\u00a0million; 2022: 9.4 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-972": { "value": "
10
Segmental analysis
The Group CEO, supported by the rest of the Group Executive Committee (\u2018GEC\u2019), was considered the Chief Operating Decision Maker
(\u2018CODM\u2019) during the reporting period for the purposes of identifying the Group\u2019s reportable segments. As the reorganisation only took effect
from 1 January 2025, it has no effect on the 2024 segmental reporting. Global business results were assessed by the CODM on the basis of
constant currency performance that removes the effects of currency translation from reported results. Therefore, we disclose these results on
a constant currency basis as required by IFRS Accounting Standards. The 2023 and 2022 income statements are converted at the average rates
of exchange for 2024, and the balance sheets at 31 December 2023 and 31 December 2022 at the prevailing rates of exchange on
31\u00a0December 2024.
Our operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and
expense. These allocations include the costs of certain support services and global functions to the extent that they can be meaningfully
attributed to global businesses. While such allocations have been made on a systematic and consistent basis, they involve a certain degree of
subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.
Where relevant, income and expense amounts presented include the results of inter-segment funding along with inter-company and inter-
business line transactions. All such transactions are undertaken on arm\u2019s length terms. Measurement of segmental assets, liabilities, income
and expenses is in accordance with the Group\u2019s accounting policies. Shared costs are included in segments on the basis of actual recharges.
The intra-group elimination items for the global businesses are presented in Corporate Centre.
Our global businesses
We provide a comprehensive range of banking and related financial services to our customers in our three global businesses. The products and
services offered to customers are organised by these global businesses.
\u2013 Wealth and Personal Banking (\u2018WPB\u2019) provides a full range of retail banking and wealth products to our customers from personal banking to
ultra high net worth individuals. Typically, customer offerings include retail banking products, such as current and savings accounts,
mortgages and personal loans, credit cards, debit cards and local and international payment services. We also provide wealth management
services, including insurance and investment products, global asset management services, investment management and private wealth
solutions for customers with more sophisticated and international requirements.
\u2013 Commercial Banking (\u2018CMB\u2019) offers a broad range of products and services to serve the needs of our commercial customers, including small
and medium-sized enterprises, mid-market enterprises and corporates. These include credit and lending, international trade and receivables
finance, treasury management and liquidity solutions (payments and cash management and commercial cards), commercial insurance and
investments. CMB also offers customers access to products and services offered by other global businesses, such as Global Banking and
Markets, which include foreign exchange products, raising capital on debt and equity markets and advisory services.
\u2013 Global Banking and Markets (\u2018GBM\u2019) provides tailored financial solutions to major government, corporate and institutional clients and private
investors worldwide. The client-focused business lines deliver a full range of banking capabilities, including financing, advisory and
transaction services, a markets business that provides services in credit, rates, foreign exchange, equities, money markets and securities
services, and principal investment activities.
HSBC constant currency profit before tax and balance sheet data
2024
Wealth and
Personal
Banking
Commercial
Banking
Global
Banking and
Markets
Corporate
Centre
Total
$m
$m
$m
$m
$m
Net operating income/(expense) before change in expected credit losses
and other credit impairment charges1
28,674
21,580
17,529
(1,929)
65,854
\u2013\u00a0 external
20,460
21,565
30,698
(6,869)
65,854
\u2013\u00a0 inter-segment
8,214
15
(13,169)
4,940
\u2014
\u2013\u00a0 of which: net interest income/(expense)2
20,352
17,261
7,488
(12,368)
32,733
Change in expected credit losses and other credit impairment charges
(1,335)
(1,815)
(235)
(29)
(3,414)
Net operating income/(expense)
27,339
19,765
17,294
(1,958)
62,440
Total operating expenses
(15,204)
(7,906)
(10,231)
298
(33,043)
Operating profit/(loss)
12,135
11,859
7,063
(1,660)
29,397
Share of profit in associates and joint ventures less impairment
47
1
\u2014
2,864
2,912
Constant currency profit before tax
12,182
11,860
7,063
1,204
32,309
%
%
%
%
%
Share of HSBC\u2019s constant currency profit before tax
37.7
36.7
21.9
3.7
100.0
Constant currency cost efficiency ratio
53.0
36.6
58.4
15.4
50.2
Constant currency balance sheet data
$m
$m
$m
$m
$m
Loans and advances to customers (net)
447,085
306,926
169,516
7,131
930,658
Interests in associates and joint ventures
558
25
108
28,218
28,909
Total external assets
890,080
603,841
1,388,845
134,282
3,017,048
Customer accounts
823,267
490,475
340,898
315
1,654,955
2023
Net operating income/(expense) before change in expected credit losses and
other credit impairment charges1
26,848
22,396
15,771
(103)
64,912
\u2013\u00a0 external
18,669
23,686
27,618
(5,061)
64,912
\u2013\u00a0 inter-segment
8,179
(1,290)
(11,847)
4,958
\u2014
\u2013\u00a0 of which: net interest income/(expense)2
19,902
16,289
6,860
(8,899)
34,152
Change in expected credit losses and other credit impairment charges
(935)
(2,006)
(317)
(1)
(3,259)
Net operating income/(expense)
25,913
20,390
15,454
(104)
61,653
Total operating expenses
(14,352)
(7,234)
(9,872)
(36)
(31,494)
Operating profit/(loss)
11,561
13,156
5,582
(140)
30,159
Share of profit/(loss) in associates and joint ventures3
64
(1)
\u2014
(319)
(256)
Constant currency profit/(loss) before tax
11,625
13,155
5,582
(459)
29,903
%
%
%
%
%
Share of HSBC\u2019s constant currency profit before tax
38.9
44.0
18.7
(1.6)
100.0
Constant currency cost efficiency ratio
53.5
32.3
62.6
(35.0)
48.5
Constant currency balance sheet data
$m
$m
$m
$m
$m
Loans and advances to customers (net)
444,856
301,103
170,868
262
917,089
Interests in associates and joint ventures
539
23
107
26,226
26,895
Total external assets
915,062
613,124
1,298,065
146,296
2,972,547
Customer accounts
792,710
465,095
321,226
582
1,579,613
HSBC constant currency profit before tax and balance sheet data (continued)
2022
Wealth and
Personal
Banking
Commercial
Banking
Global
Banking and
Markets
Corporate
Centre
Total
$m
$m
$m
$m
$m
Net operating income/(expense) before change in expected credit losses and
other credit impairment charges1
20,772
16,207
14,542
(1,934)
49,587
\u2013\u00a0 external
18,176
16,834
18,704
(4,127)
49,587
\u2013\u00a0 inter-segment
2,596
(627)
(4,162)
2,193
\u2014
\u2013\u00a0 of which: net interest income/(expense)2
15,887
11,584
4,602
(2,633)
29,440
Change in expected credit losses and other credit impairment charges
(1,160)
(1,868)
(578)
(9)
(3,615)
Net operating income/(expense)
19,612
14,339
13,964
(1,943)
45,972
Total operating expenses
(14,141)
(6,810)
(9,403)
(1,875)
(32,229)
Operating profit/(loss)
5,471
7,529
4,561
(3,818)
13,743
Share of profit/(loss) in associates and joint ventures
29
1
(2)
2,531
2,559
Constant currency profit/(loss) before tax
5,500
7,530
4,559
(1,287)
16,302
%
%
%
%
%
Share of HSBC\u2019s constant currency profit before tax
33.7
46.2
28.0
(7.9)
100.0
Constant currency cost efficiency ratio
68.1
42.0
64.7
(96.9)
65.0
Constant currency balance sheet data
$m
$m
$m
$m
$m
Loans and advances to customers (net)
425,072
309,224
186,653
350
921,299
Interests in associates and joint ventures
503
27
90
27,676
28,296
Total external assets
873,688
602,624
1,305,319
161,872
2,943,503
Customer accounts
781,881
462,806
323,420
443
1,568,550
1Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2Net interest expense recognised in Corporate Centre includes $11.4bn (2023: $8.7bn; 2022: $2.5bn) of interest expense in relation to the internal cost to fund
trading and fair value net assets; and the funding cost of foreign exchange swaps in our Markets Treasury function.
3Includes an impairment loss of $3.0bn recognised in respect of the Group\u2019s investment in BoCom in 2023.
Reported external net operating income is attributed to countries and territories on the basis of the location of the branch responsible for
reporting the results or advancing the funds:
2024
2023
2022
$m
$m
$m
Reported external net operating income/(expense) by country/territory1
65,854
66,058
50,620
\u2013\u00a0 UK2
12,307
11,027
11,710
\u2013\u00a0 Hong Kong
20,811
20,185
15,454
\u2013\u00a0 US
4,233
3,816
3,893
\u2013\u00a0 France
3,804
4,208
(177)
\u2013\u00a0 other countries/territories
24,699
26,822
19,740
1Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately
incorporated group of service companies (\u2018ServCo Group\u2019).
Constant currency results reconciliation
2024
2023
2022
Reported and
constant
currency
Constant
currency
Currency
translation
Reported
Constant
currency
Currency
translation
Reported
$m
$m
$m
$m
$m
$m
$m
Revenue1
65,854
64,912
(1,146)
66,058
49,587
(1,033)
50,620
ECL
(3,414)
(3,259)
188
(3,447)
(3,615)
(31)
(3,584)
Operating expenses
(33,043)
(31,494)
576
(32,070)
(32,229)
472
(32,701)
Share of profit/(loss) in associates and
joint ventures less impairment2
2,912
(256)
(63)
(193)
2,559
(164)
2,723
Profit before tax
32,309
29,903
(445)
30,348
16,302
(756)
17,058
1Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2Includes an impairment loss of $3.0bn recognised in respect of the Group\u2019s investment in BoCom in 2023.
Constant currency balance sheet reconciliation
2024
2023
2022
Reported and
constant
currency
Constant
currency
Currency
translation
Reported
Constant
currency
Currency
translation
Reported
$m
$m
$m
$m
$m
$m
$m
Loans and advances to customers (net)
930,658
917,089
21,446
938,535
921,299
2,262
923,561
Interests in associates and joint ventures
28,909
26,895
449
27,344
28,296
958
29,254
Total external assets
3,017,048
2,972,547
66,130
3,038,677
2,943,503
5,783
2,949,286
Customer accounts
1,654,955
1,579,613
32,034
1,611,647
1,568,550
1,753
1,570,303
Notable items
2024
2023
2022
$m
$m
$m
Year ended 31 Dec
Notable items
Revenue
Disposals, acquisitions and related costs1,2
(1,343)
1,298
(2,737)
Fair value movements on financial instruments3
\u2014
14
(618)
Restructuring and other related costs
\u2014
\u2014
(247)
Disposal losses on Markets Treasury repositioning
\u2014
(977)
\u2014
Early redemption of legacy securities
(237)
\u2014
\u2014
Operating expenses
Disposals, acquisitions and related costs
(199)
(321)
(18)
Restructuring and other related costs4
(34)
136
(2,882)
Impairment of interests in associates5
\u2014
(3,000)
\u2014
1Amounts in 2024 include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on
sale of our business in Argentina. This is partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign
exchange hedging of the sales proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.
2Amounts in 2023 include the gain of $1.6bn recognised in respect of the acquisition of SVB UK, as well as the impact of the sale of our retail banking operations
in France.
3Fair value movements on non-qualifying hedges in HSBC Holdings.
4Amounts in 2024 relate to restructuring provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022. Amounts in 2023 relate
to reversals of restructuring provisions recognised during 2022.
5Relates to an impairment loss of $3.0bn recognised in respect of the Group\u2019s investment in BoCom in 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-973": { "value": "
11Trading assets
2024
2023
$m
$m
Treasury and other eligible bills
32,022
24,433
Debt securities
97,275
106,108
Equity securities
155,194
123,663
Trading securities
284,491
254,204
Loans and advances to banks1
6,123
9,761
Loans and advances to customers1
24,228
25,194
Year ended 31 Dec
314,842
289,159
1Loans and advances to banks and customers include reverse repos, stock borrowing and other accounts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-974": { "value": "
12Fair 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.
Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price
determination or validation is used. For inactive markets, HSBC sources alternative market information, with greater weight given to
information that is considered to be more relevant and reliable. Examples of the factors considered are price observability, instrument
comparability, consistency of data sources, underlying data accuracy and timing of prices.
For fair values determined using valuation models, the control framework includes development or validation by independent support functions
of the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming
operational and are calibrated against external market data on an ongoing basis.
Changes in fair value are generally subject to a profit and loss analysis process and are disaggregated into high-level categories including
portfolio changes, market movements and other fair value adjustments.
The majority of financial instruments measured at fair value are in GBM. GBM\u2019s fair value governance structure comprises its Finance function,
Valuation Committees and a Valuation Committee Review Group. Finance is responsible for establishing procedures governing valuation and
ensuring fair values are in compliance with accounting standards. The fair values are reviewed by the Valuation Committees, which consist of
independent support functions. These committees are overseen by the Valuation Committee Review Group, which considers all material
subjective valuations.
Financial liabilities measured at fair value
In certain circumstances, HSBC 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
either based 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 HSBC\u2019s liabilities. The
change in fair value of issued debt securities attributable to the Group\u2019s own credit spread is computed as follows: for each security at each
reporting date, an externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer. Then,
using discounted cash flow, each security is valued using an appropriate market discount curve. The difference in the valuations is attributable
to the Group\u2019s own credit spread. This methodology is applied consistently across all securities.
Structured notes issued and certain other hybrid instruments are reported as financial liabilities designated at fair value. The\u00a0credit spread
applied to these instruments is derived from the spreads at which HSBC issues structured notes.
Gains and losses arising from changes in the credit spread of liabilities issued by HSBC, recorded in other comprehensive income, reverse over
the contractual life of the debt, provided that the debt is not repaid at a premium or a discount.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
\u2013 Level 1 \u2013 valuation technique using quoted market price. These are financial instruments with quoted prices for identical instruments in
active markets that HSBC can access at the measurement date.
\u2013 Level 2 \u2013 valuation technique using observable inputs. These are 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.
\u2013 Level 3 \u2013 valuation technique with significant unobservable inputs. These are financial instruments valued using valuation techniques where
one or more significant inputs are unobservable.
Financial instruments carried at fair value and bases of valuation
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
$m
$m
$m
$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets
236,593
71,574
6,675
314,842
202,020
82,833
4,306
289,159
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
39,331
56,694
19,744
115,769
27,030
63,825
19,788
110,643
Derivatives
1,859
264,629
2,149
268,637
931
226,714
2,069
229,714
Financial investments
258,371
78,088
2,734
339,193
215,228
76,591
2,618
294,437
Liabilities
Trading liabilities
42,038
23,160
784
65,982
53,354
19,318
478
73,150
Financial liabilities designated at fair value
2,152
127,458
9,117
138,727
1,266
129,232
10,928
141,426
Derivatives
1,088
260,518
2,842
264,448
1,918
230,285
2,569
234,772
The table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale
in accordance with IFRS 5. For further details, see Note 23.
Financial instruments carried at fair value and bases of valuation \u2013 assets and liabilities held for sale
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
$m
$m
$m
$m
Recurring fair value measurements at 31 Dec
Assets
Trading assets
\u2014
\u2014
\u2014
\u2014
2,403
61
\u2014
2,465
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
2,967
9,018
2,575
14,560
\u2014
15
49
64
Derivatives
\u2014
36
\u2014
36
\u2014
528
\u2014
528
Financial investments
2,651
5,345
504
8,500
9,357
\u2014
28
9,385
Liabilities
Trading liabilities
\u2014
\u2014
\u2014
\u2014
1,352
64
\u2014
1,417
Financial liabilities designated at fair value
\u2014
130
\u2014
130
\u2014
2,370
\u2014
2,370
Derivatives
\u2014
19
\u2014
19
\u2014
615
\u2014
615
Transfers between Level 1 and Level 2 fair values
Assets
Liabilities
Financial
investments
Trading
assets
Designated and otherwise
mandatorily measured
at fair value
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
13,511
9,246
1,540
\u2014
191
\u2014
\u2014
Transfers from Level 2 to Level 1
10,752
6,060
3,042
\u2014
159
\u2014
\u2014
At 31 Dec 2023
Transfers from Level 1 to Level 2
13,200
8,066
1,709
\u2014
54
\u2014
\u2014
Transfers from Level 2 to Level 1
9,975
5,758
2,477
\u2014
309
\u2014
\u2014
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.
Fair value adjustments
Fair value adjustments take into consideration additional factors not incorporated within the primary product valuation model that would
otherwise be considered by a market participant. Adjustments are calculated using model infrastructure including those within primary valuation
systems. We classify fair value adjustments as either \u2018risk-related\u2019 or \u2018model-related\u2019. The majority of these adjustments relate to MSS.
Movements in the amount of fair value adjustments do not necessarily translate in equivalent movements of profits or losses within the
income statement, as these movements can be compensated by other related profits or loss effects. For example, as models are enhanced,
fair value adjustments may no longer be required. Similarly, fair value adjustments will decrease when the related positions are unwound, but
this may not result in profit or loss.
Fair value adjustments
2024
2023
GBM
Corporate
Centre
GBM
Corporate
Centre
$m
$m
$m
$m
Type of adjustment
Risk-related
634
35
692
41
\u2013\u00a0 bid-offer
366
2
414
\u2014
\u2013\u00a0 uncertainty
98
3
75
3
\u2013\u00a0 credit valuation adjustment
126
27
164
35
\u2013\u00a0 debit valuation adjustment
(24)
\u2014
(54)
\u2014
\u2013\u00a0 funding fair value adjustment
68
3
93
3
Model-related
50
\u2014
63
\u2014
\u2013\u00a0 model limitation
50
\u2014
63
\u2014
Inception profit (Day 1 P&L reserves)
92
\u2014
86
\u2014
At 31 Dec
776
35
841
41
The net reduction in fair value adjustments was predominantly driven by changes to exposure, and tightening of credit and liquidity market
spreads.
Bid-offer
IFRS 13 \u2018Fair Value Measurement\u2019 requires the 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.
Uncertainty
Certain model inputs may be less readily determinable from market data and/or the choice of model itself may be more subjective. In\u00a0these
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 HSBC\u2019s valuation model.
Credit and debit valuation adjustments
The credit valuation adjustment (\u2018CVA\u2019) is an adjustment to the valuation of over-the-counter (\u2018OTC\u2019) derivative contracts to reflect the possibility
that the counterparty may default and that HSBC may not receive the full market value of the transactions.
The debit valuation adjustment (\u2018DVA\u2019) is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC may
default, and that it may not pay the full market value of the transactions. The DVA considers the overlap with the funding fair value adjustment.
HSBC calculates a separate CVA and DVA for each legal entity, and for each counterparty to which the entity has exposure. With the exception
of central clearing parties, all third-party counterparties are included in the CVA and DVA calculations, and these adjustments are not netted
across Group entities.
HSBC calculates the CVA by applying the probability of default (\u2018PD\u2019) of the counterparty, conditional on the non-default of HSBC, to\u00a0HSBC\u2019s
expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default. Conversely, HSBC calculates
the DVA by applying the PD of HSBC, conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to
HSBC and multiplying the result by the loss expected in the event of default. Both\u00a0calculations are performed over the life of the potential exposure.
For most products HSBC uses a simulation methodology, which incorporates a range of potential exposures over the life of the portfolio, to
calculate the expected positive exposure to a counterparty. The simulation methodology includes credit mitigants, such as counterparty netting
agreements and collateral agreements with the counterparty.
The methodologies do not, in general, account for \u2018wrong-way risk\u2019. Wrong-way risk is an adverse correlation between the counterparty\u2019s probability of
default and the mark-to-market value of the underlying transaction. The risk can either be general, perhaps related to the currency of the issuer country,
or specific to the transaction concerned. When there is significant wrong-way risk, a trade-specific approach is applied to reflect this risk in the valuation.
Funding fair value adjustment
The funding fair value adjustment (\u2018FFVA\u2019) 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 or the counterparty.
Model limitation
Models used for portfolio valuation purposes may be based upon a simplified 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 when the fair value estimated by a valuation model is based on one or more significant unobservable
inputs. The accounting for inception profit adjustments is discussed in Note 1.
Fair value valuation bases
Financial instruments measured at fair value using a valuation technique with significant unobservable inputs \u2013 Level 3
Assets
Liabilities
Financial
investments
Trading
assets
Designated and
otherwise mandatorily
measured at fair value
through profit or loss
Derivatives
Total
Trading
liabilities
Designated
at fair
value
Derivatives
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Private equity including
strategic investments
552
1
17,705
\u2014
18,258
\u2014
1
\u2014
1
Asset-backed securities
182
198
\u2014
\u2014
380
\u2014
\u2014
\u2014
\u2014
Structured notes
\u2014
\u2014
3
\u2014
3
\u2014
9,113
\u2014
9,113
Other derivatives
\u2014
\u2014
\u2014
2,149
2,149
\u2014
\u2014
2,842
2,842
Other portfolios
2,000
6,476
2,036
\u2014
10,512
784
3
\u2014
787
At 31 Dec 2024
2,734
6,675
19,744
2,149
31,302
784
9,117
2,842
12,743
Private equity including
strategic investments
507
7
17,640
\u2014
18,154
\u2014
1
\u2014
1
Asset-backed securities
309
128
8
\u2014
445
\u2014
\u2014
\u2014
\u2014
Structured notes
\u2014
\u2014
3
\u2014
3
\u2014
10,331
\u2014
10,331
Other derivatives
\u2014
\u2014
\u2014
2,069
2,069
\u2014
\u2014
2,569
2,569
Other portfolios
1,802
4,171
2,137
\u2014
8,110
478
596
\u2014
1,074
At 31 Dec 2023
2,618
4,306
19,788
2,069
28,781
478
10,928
2,569
13,975
Level 3 instruments are present in both ongoing and legacy businesses. Loans held for securitisation, derivatives with monolines, certain \u2018other
derivatives\u2019 and predominantly all Level 3 asset-backed securities are legacy positions. HSBC has the capability to hold these positions.
Private equity including strategic investments
The fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee\u2019s 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 (\u2018NAV\u2019) received. If necessary, adjustments
are made to the NAV of funds to obtain the best estimate of fair value.
Asset-backed securities
While quoted market prices are generally used to determine the fair value of the asset-backed securities (\u2018ABSs\u2019), valuation models are used to
substantiate the reliability of the limited market data available and to identify whether any adjustments to quoted market prices are required.
For certain ABSs, such as residential mortgage-backed securities, the valuation uses an industry standard model with assumptions relating to
prepayment speeds, default rates and loss severity based on collateral type, and performance, as appropriate. The valuations output is
benchmarked for consistency against observable data for securities of a similar nature.
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 paragraph below on derivatives. These structured notes comprise principally equity-linked notes issued by HSBC,
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.
Derivatives
OTC derivative valuation models calculate the present value of expected future cash flows, based upon \u2018no arbitrage\u2019 principles. For many
vanilla derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may
be some differences 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 or estimated from historical 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
Designated
at fair
value
Derivatives
$m
$m
$m
$m
$m
$m
$m
At 1 Jan 2024
2,618
4,306
19,788
2,069
478
10,928
2,569
Total gains/(losses) recognised in profit or\u00a0loss
(9)
280
896
1,037
18
496
1,268
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
280
\u2014
1,037
18
496
1,268
\u2013\u00a0 net income from assets and liabilities of insurance
businesses, including related derivatives,
measured at fair value through profit or loss
\u2014
\u2014
684
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
212
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 gains less losses from financial investments at fair
value through other comprehensive income
(9)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total gains/(losses) recognised in other
comprehensive income (\u2018OCI\u2019) 1
(78)
(115)
(39)
(36)
(18)
(45)
(53)
\u2013\u00a0 financial investments: fair value gains/(losses)
18
\u2014
\u2014
\u2014
\u2014
33
\u2014
\u2013\u00a0 exchange differences
(96)
(115)
(39)
(36)
(18)
(78)
(53)
Purchases
1,670
4,170
6,261
\u2014
924
\u2014
\u2014
New issuances
\u2014
\u2014
\u2014
\u2014
\u2014
6,521
\u2014
Sales
(97)
(1,477)
(649)
\u2014
(295)
\u2014
\u2014
Settlements2
(1,011)
(967)
(6,476)
(897)
(307)
(4,750)
(568)
Transfers out3
(438)
(429)
(278)
(777)
(29)
(6,048)
(1,346)
Transfers in3
79
907
241
753
13
2,015
972
At 31 Dec 2024
2,734
6,675
19,744
2,149
784
9,117
2,842
Unrealised gains/(losses) recognised in profit or loss
relating to assets and liabilities held at 31\u00a0Dec 2024
\u2014
(150)
11
(1,377)
(6)
(94)
(1,343)
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
(150)
\u2014
(1,377)
(6)
\u2014
(1,343)
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
11
\u2014
\u2014
(94)
\u2014
At 1 Jan 2023
2,961
4,817
17,407
1,964
474
10,432
2,920
Total gains/(losses) recognised in profit or\u00a0loss
(44)
266
921
692
75
97
910
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
266
\u2014
692
75
97
910
\u2013\u00a0 net income from assets and liabilities of insurance
businesses, including related derivatives,
measured at fair value through profit or loss
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
921
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 gains less losses from financial investments at fair
value through other comprehensive income
(44)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total gains/(losses) recognised in other
comprehensive income (\u2018OCI\u2019)1
28
108
87
81
24
523
111
\u2013\u00a0 financial investments: fair value gains/(losses)
(44)
\u2014
\u2014
\u2014
\u2014
335
\u2014
\u2013\u00a0 exchange differences
72
108
87
81
24
188
111
Purchases
353
2,276
3,555
\u2014
291
\u2014
\u2014
New issuances
\u2014
2
\u2014
\u2014
2
5,389
\u2014
Sales
(290)
(2,478)
(658)
\u2014
(320)
(2)
\u2014
Settlements
(352)
(872)
(1,886)
(1,018)
(74)
(3,258)
(1,565)
Transfers out
(662)
(922)
(156)
(240)
(45)
(2,881)
(358)
Transfers in
624
1,109
518
590
51
628
551
At 31 Dec 2023
2,618
4,306
19,788
2,069
478
10,928
2,569
Unrealised gains/(losses) recognised in profit or loss
relating to assets and liabilities held at 31\u00a0Dec 2023
\u2014
(152)
82
737
\u2014
(433)
(903)
\u2013\u00a0 net income/(losses) from financial instruments
held for trading or managed on a fair value basis
\u2014
(152)
\u2014
737
\u2014
\u2014
(903)
\u2013\u00a0 changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss
\u2014
\u2014
82
\u2014
\u2014
(433)
\u2014
1Included in \u2018financial investments: fair value gains/(losses)\u2019 in the current year and \u2018exchange differences\u2019 in the consolidated statement of comprehensive income.
2Includes $3.1bn decrease from classification of the assets of our French Life Insurance business as assets held for sale.
3Includes $4.4bn of transfers out and $1.5bn of transfers in relating to enhancement of observability assessments on equity structured notes.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.
Effect of changes in significant unobservable assumptions to reasonably
possible alternatives
Sensitivity of fair values to reasonably possible alternative assumptions
2024
2023
Reflected in profit or loss
Reflected in OCI
Reflected in profit or loss
Reflected in OCI
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
Favourable
changes
Un-
favourable
changes
$m
$m
$m
$m
$m
$m
$m
$m
Derivatives, trading assets and trading
liabilities1
481
(313)
\u2014
\u2014
492
(531)
\u2014
\u2014
Financial assets and liabilities designated
and otherwise mandatorily measured at
fair value through profit or loss
1,434
(1,141)
\u2014
\u2014
1,092
(1,100)
\u2014
\u2014
Financial investments
21
(21)
47
(50)
13
(12)
61
(66)
At 31 Dec
1,936
(1,475)
47
(50)
1,597
(1,643)
61
(66)
1\u2018Derivatives, trading assets and trading liabilities\u2019 are presented as one category to reflect the manner in which these instruments are risk-managed.
The sensitivity analysis for certain private equity positions has been enhanced in order to reduce dependency on historical observations and
focus on current valuation uncertainty, resulting in some increases in favourable sensitivities.
The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95% 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 the most unfavourable change from varying the assumptions individually.
Key unobservable inputs to Level 3 financial instruments
The following table lists key unobservable inputs to Level 3 financial instruments and provides the range of those inputs at 31\u00a0December 2024.
Quantitative information about significant unobservable inputs in Level 3 valuations
Fair value
2024
2023
Assets
Liabilities
Key valuation
techniques
Key unobservable
inputs
Full range
of inputs
Full range
of inputs
$m
$m
Lower
Higher
Lower
Higher
Private equity including strategic
investments2
18,258
1
Price \u2013 Net asset value
Current Value/Cost
0
291
See footnote 2
Asset-backed securities
380
\u2014
\u2013\u00a0 collateralised loan/debt obligation
100
\u2014
Market proxy
Price
0
97
0
94
\u2013\u00a0 other ABSs
280
\u2014
Market proxy
Price
0
248
0
220
Structured notes
3
9,113
\u2013\u00a0 equity-linked notes
3
5,739
Model \u2013 Option model
Equity volatility
6%
70%
6%
154%
Model \u2013 Option model
Equity correlation
15%
100%
34%
100%
\u2013\u00a0 Foreign exchange-linked notes
\u2014
1,833
Model \u2013 Option model
Foreign exchange
volatility
3%
35%
1%
34%
\u2013\u00a0 other structured notes
\u2014
1,541
Derivatives
2,149
2,842
\u00a0
\u00a0
\u2013\u00a0 interest rate derivatives
1,102
1,066
\u00a0
\u00a0
\u00a0 \u00a0 securitisation swaps
196
186
Model \u2013 Discounted cash flow
Prepayment rate
5%
10%
5%
10%
\u00a0 \u00a0 long-dated swaptions
71
76
Model \u2013 Option model
Interest rate
volatility
9%
30%
11%
37%
\u00a0 \u00a0 other interest rate derivatives
835
804
\u2013\u00a0 Foreign exchange derivatives
202
212
\u00a0 \u00a0 Foreign exchange options
154
174
Model \u2013 Option model
Foreign exchange
volatility
1%
26%
1%
31%
\u00a0 \u00a0 other foreign exchange derivatives
48
38
\u2013\u00a0 equity derivatives
460
638
\u00a0 \u00a0 long-dated single stock options
145
166
Model \u2013 Option model
Equity volatility
6%
118%
6%
110%
\u00a0 \u00a0 other equity derivatives
315
472
\u2013\u00a0 credit derivatives
376
922
\u00a0 \u00a0 total return swaps
349
847
Market proxy
Price
0
104
0
104
\u00a0 \u00a0 other credit derivatives
27
75
\u2013\u00a0 other derivatives
9
4
Other portfolios
10,512
787
\u2013\u00a0 repurchase agreements
1,739
742
Model \u2013 Discounted cash flow
Interest rate curve
0%
26%
3%
8%
\u2013\u00a0 bonds
4,300
27
Market proxy
Price
0
140
0
101
\u2013\u00a0 other1
4,473
18
At 31 Dec 2024
31,302
12,743
1\u2018Other\u2019 includes a range of asset holdings including loans and deposits, syndicated loans and infrastructure debt.
2\u2018Private equity including strategic investments\u2019 includes private equity, private credit and private equity fund, primarily held as part of our Insurance business and
for strategic investments. The analysis for private equity positions has been enhanced with the range of key unobservable inputs now quoted.
The range of values above shows the highest and lowest unobservable inputs that have been used to value significant Level 3 exposures and
reflects the diversity of the underlying financial instruments in scope and subsequent differentiation in pricing.
Private equity including strategic investments
The \u2018private equity\u2019 holdings include private equity investments and private equity funds held as limited partners. The key unobservable input is
the current value of the underlying positions, determined using valuation techniques in line with the International Capital Valuation Guidelines.
The inputs represented are an appropriate range of inputs normalised across different exposure types.
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 when specific market pricing is not available but there is evidence from instruments with
common characteristics. 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 are estimated from observable data.
The range of unobservable volatilities reflects the wide variation in volatility inputs by reference market price.
Correlation
Correlation is a measure of the inter-relationship between two market variables 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 variable. 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 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 variable 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\u00a0more 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 portfolio will depend on HSBC\u2019s net risk position in respect of each variable.
HSBC Holdings
Basis of valuing HSBC Holdings\u2019 financial assets and liabilities measured at fair value
2024
2023
Level 1
Level 2
Total
Level 1
Level 2
Total
$m
$m
$m
$m
$m
$m
Recurring fair value measurement
Assets at 31 Dec
Trading assets
709
\u2014
709
\u2014
\u2014
\u2014
Financial assets with HSBC undertakings designated and
otherwise mandatorily measured at fair value
\u2014
61,286
61,286
\u2014
59,879
59,879
Derivatives
\u2014
3,054
3,054
\u2014
3,344
3,344
Liabilities at 31 Dec
Financial liabilities designated at fair value
\u2014
41,582
41,582
\u2014
43,638
43,638
Derivatives
\u2014
5,340
5,340
\u2014
6,090
6,090
13
Fair values of financial instruments not carried at fair value
Fair values of financial instruments not carried at fair value and bases of valuation
Fair value
Carrying
amount
Quoted market
price Level 1
Observable
inputs Level 2
Significant
unobservable
inputs Level 3
Total
$m
$m
$m
$m
$m
At 31 Dec 2024
Assets
Loans and advances to banks
102,039
\u2014
101,007
1,048
102,055
Loans and advances to customers1
930,658
\u2014
11,435
906,208
917,643
Reverse repurchase agreements \u2013 non-trading
252,549
\u2014
252,598
\u2014
252,598
Financial investments \u2013 at amortised cost
153,973
120,843
29,493
724
151,060
Liabilities
Deposits by banks
73,997
\u2014
74,025
\u2014
74,025
Customer accounts
1,654,955
\u2014
1,655,151
\u2014
1,655,151
Repurchase agreements \u2013 non-trading
180,880
\u2014
180,873
\u2014
180,873
Debt securities in issue
105,785
\u2014
105,689
954
106,643
Subordinated liabilities
25,958
\u2014
28,262
\u2014
28,262
At 31 Dec 2023
Assets
Loans and advances to banks
112,902
2
111,263
1,479
112,744
Loans and advances to customers
938,535
\u2014
13,258
911,124
924,382
Reverse repurchase agreements \u2013 non-trading
252,217
\u2014
252,243
\u2014
252,243
Financial investments \u2013 at amortised cost
148,326
115,383
30,765
440
146,588
Liabilities
Deposits by banks
73,163
\u2014
73,176
\u2014
73,176
Customer accounts
1,611,647
\u2014
1,611,795
\u2014
1,611,795
Repurchase agreements \u2013 non-trading
172,100
\u2014
172,081
\u2014
172,081
Debt securities in issue
93,917
\u2014
93,196
706
93,902
Subordinated liabilities
24,954
\u2014
27,151
\u2014
27,151
1Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of $6.9bn (2023:
$7.9bn). 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 $1bn 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 (refer Note 23 for details).
Fair values of financial instruments not carried at fair value and bases of valuation \u2013 assets and disposal groups held for sale
Fair value
Carrying
amount
Quoted market
price Level 1
Observable
inputs Level 2
Significant
unobservable
inputs Level 3
Total
$m
$m
$m
$m
$m
At 31 Dec 2024
Assets
Loans and advances to banks
144
\u2014
144
\u2014
144
Loans and advances to customers
977
\u2014
11
966
977
Reverse repurchase agreements \u2013 non-trading
\u2014
\u2014
\u2014
\u2014
\u2014
Financial investments \u2013 at amortised cost
\u2014
\u2014
\u2014
\u2014
\u2014
Liabilities
Deposits by banks
\u2014
\u2014
\u2014
\u2014
\u2014
Customer accounts
5,399
\u2014
5,399
\u2014
5,399
Repurchase agreements \u2013 non-trading
\u2014
\u2014
\u2014
\u2014
\u2014
Debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
Subordinated liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
At 31 Dec 2023
Assets
Loans and advances to banks
10,487
\u2014
10,487
\u2014
10,487
Loans and advances to customers
73,376
\u2014
90
72,200
72,290
Reverse repurchase agreements \u2013 non-trading
2,723
\u2014
2,723
\u2014
2,723
Financial investments \u2013 at amortised cost
7,624
7,530
\u2014
5
7,535
Liabilities
Deposits by banks
78
\u2014
78
\u2014
78
Customer accounts
85,950
\u2014
86,475
\u2014
86,475
Repurchase agreements \u2013 non-trading
2,768
\u2014
2,768
\u2014
2,768
Debt securities in issue
9,084
\u2014
8,820
\u2014
8,820
Subordinated liabilities
8
\u2014
7
\u2014
7
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. They include cash and balances at central banks, Hong Kong Government
certificates of indebtedness and Hong Kong currency notes in circulation, all of which are measured at amortised cost.
Valuation
Fair value is an 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. This may be different from the theoretical economic value attributed from an instrument\u2019s cash
flows over its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market
prices are available may differ from those of other companies.
Loans and advances to banks and customers
To determine the fair value of loans and advances to banks and customers, loans are segregated into portfolios of similar characteristics. Fair
values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation
models incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting over-
the-counter trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using
assumptions that HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination
pricing for similar loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time,
we may engage a third-party valuation specialist to measure the fair value of a pool of loans.
The fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants\u2019 expectations of credit
losses over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit-impaired loans,
fair value is estimated by discounting the future cash flows over the time period they are expected to be recovered.
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
The fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are
estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.
Debt securities in issue and subordinated liabilities
Fair values in debt securities in issue and subordinated liabilities 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 \u2013 non-trading
Carrying amounts of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate fair values. This
is due to the fact that balances are generally short dated.
HSBC Holdings
The methods used by HSBC Holdings to determine fair values of financial instruments for the purposes of measurement and disclosure are
described above.
Fair values of HSBC Holdings\u2019 financial instruments not carried at fair value on the balance sheet
2024
2023
Carrying amount
Fair value1
Carrying amount
Fair value1
$m
$m
$m
$m
Assets at 31 Dec
Loans and advances to HSBC undertakings
37,677
38,359
27,354
27,878
Financial investments \u2013 at amortised cost
10,328
10,335
19,558
19,531
Liabilities at 31 Dec
Debt securities in issue
64,320
65,123
65,239
65,172
Subordinated liabilities
23,548
25,911
24,439
26,651
1Fair values (other than Financial investments which are Level 1) were determined using valuation techniques with observable inputs (Level 2).
14Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss
2024
2023
Designated at
fair value
Mandatorily
measured at
fair value
Total
Designated
at fair value
Mandatorily
measured at
fair value
Total
$m
$m
$m
$m
$m
$m
Securities
2,406
104,093
106,499
2,353
101,152
103,505
\u2013\u00a0 treasury and other eligible bills
732
393
1,125
695
724
1,419
\u2013\u00a0 debt securities
1,674
59,904
61,578
1,658
60,045
61,703
\u2013\u00a0 equity securities
\u2014
43,796
43,796
\u2014
40,383
40,383
Loans and advances to banks and customers
951
6,120
7,071
371
5,495
5,866
Other
\u2014
2,199
2,199
\u2014
1,272
1,272
At 31 Dec
3,357
112,412
115,769
2,724
107,919
110,643
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-976": { "value": "
14Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss
2024
2023
Designated at
fair value
Mandatorily
measured at
fair value
Total
Designated
at fair value
Mandatorily
measured at
fair value
Total
$m
$m
$m
$m
$m
$m
Securities
2,406
104,093
106,499
2,353
101,152
103,505
\u2013\u00a0 treasury and other eligible bills
732
393
1,125
695
724
1,419
\u2013\u00a0 debt securities
1,674
59,904
61,578
1,658
60,045
61,703
\u2013\u00a0 equity securities
\u2014
43,796
43,796
\u2014
40,383
40,383
Loans and advances to banks and customers
951
6,120
7,071
371
5,495
5,866
Other
\u2014
2,199
2,199
\u2014
1,272
1,272
At 31 Dec
3,357
112,412
115,769
2,724
107,919
110,643
16Financial investments
Carrying amount of financial investments
2024
2023
$m
$m
Financial investments measured at fair value through other comprehensive income
339,193
294,437
\u2013\u00a0 treasury and other eligible bills
112,705
102,438
\u2013\u00a0 debt securities
224,496
190,119
\u2013\u00a0 equity securities
1,569
1,447
\u2013\u00a0 other instruments
423
433
Debt instruments measured at amortised cost
153,973
148,326
\u2013\u00a0 treasury and other eligible bills
22,148
30,733
\u2013\u00a0 debt securities
131,825
117,593
At 31 Dec
493,166
442,763
Equity instruments measured at fair value through other comprehensive income
Fair value
Dividends
recognised
Type of equity instruments
$m
$m
Investments required by central institutions
620
29
Business facilitation
886
29
Others
63
2
At 31 Dec 2024
1,569
60
Investments required by central institutions
609
27
Business facilitation
793
35
Others
45
2
At 31 Dec 2023
1,447
64
Weighted average yields of investment debt securities
Up to 1
year
1 to 5
years
5 to 10
years
Over 10
years
Yield
Yield
Yield
Yield
%
%
%
%
Debt securities measured at fair value through other comprehensive income
US Treasury
2.9
3.4
2.5
2.3
US Government agencies
0.8
\u2014
3.1
3.1
US Government-sponsored agencies
1.7
3.5
1.6
1.8
UK Government
3.8
3.8
2.3
2.4
Hong Kong Government
\u2014
1.9
2.0
\u2014
Other governments
2.7
4.1
3.7
2.3
Asset-backed securities
3.4
3.0
5.4
4.3
Corporate debt and other securities
2.7
3.5
3.2
1.9
Debt securities measured at amortised cost
US Treasury
3.5
3.8
3.8
2.1
US Government agencies
0.7
0.7
1.1
4.6
US Government-sponsored agencies
\u2014
2.8
3.7
2.9
UK Government
3.5
2.9
2.8
\u2014
Hong Kong Government
\u2014
2.7
\u2014
\u2014
Other governments
2.8
4.1
5.2
\u2014
Asset-backed securities
\u2014
\u2014
7.7
\u2014
Corporate debt and other securities
2.7
2.9
3.2
4.8
The maturity distributions of ABSs are presented in the above table on the basis of contractual maturity dates. The weighted average yield for
each range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2024 by the book amount of
debt securities at that date. The yields do not include the effect of related derivatives.
HSBC Holdings
HSBC Holdings carrying amount of financial investments
2024
2023
$m
$m
Debt instruments measured at amortised cost
\u2013\u00a0 treasury and other eligible bills
9,556
15,629
\u2013\u00a0 debt securities
772
3,929
At 31 Dec
10,328
19,558
Weighted average yields of investment debt securities
Up to 1
year
1 to 5
years
5 to 10
years
Over 10
years
Yield
Yield
Yield
Yield
%
%
%
%
Debt securities measured at amortised cost
US Treasury
4.3
\u2014
\u2014
\u2014
The weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year ended
31\u00a0December 2024 by the book amount of debt securities at that\u00a0date. The yields do not include the effect of\u00a0related derivatives.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-975": { "value": "
14Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss
2024
2023
Designated at
fair value
Mandatorily
measured at
fair value
Total
Designated
at fair value
Mandatorily
measured at
fair value
Total
$m
$m
$m
$m
$m
$m
Securities
2,406
104,093
106,499
2,353
101,152
103,505
\u2013\u00a0 treasury and other eligible bills
732
393
1,125
695
724
1,419
\u2013\u00a0 debt securities
1,674
59,904
61,578
1,658
60,045
61,703
\u2013\u00a0 equity securities
\u2014
43,796
43,796
\u2014
40,383
40,383
Loans and advances to banks and customers
951
6,120
7,071
371
5,495
5,866
Other
\u2014
2,199
2,199
\u2014
1,272
1,272
At 31 Dec
3,357
112,412
115,769
2,724
107,919
110,643
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-977": { "value": "
15
Derivatives
Notional contract amounts and fair values of derivatives by product contract type held by HSBC
Notional contract amount
Fair value \u2013 Assets
Fair value \u2013 Liabilities
Trading
Hedging
Trading
Hedging
Total
Trading
Hedging
Total
$m
$m
$m
$m
$m
$m
$m
$m
Foreign exchange
11,706,591
82,161
142,055
2,738
144,793
133,910
75
133,985
Interest rate
17,316,173
406,109
209,794
4,790
214,584
212,980
4,930
217,910
Equities
768,732
\u2014
17,116
\u2014
17,116
20,643
\u2014
20,643
Credit
143,136
\u2014
1,756
\u2014
1,756
1,769
\u2014
1,769
Commodity and other
118,180
\u2014
3,134
\u2014
3,134
2,887
\u2014
2,887
Gross total fair values
30,052,812
488,270
373,855
7,528
381,383
372,189
5,005
377,194
Offset (Note 31)
(112,746)
(112,746)
At 31 Dec 2024
30,052,812
488,270
373,855
7,528
268,637
372,189
5,005
264,448
Foreign exchange
9,463,768
63,547
99,014
935
99,949
99,949
780
100,729
Interest rate
14,853,397
361,312
223,534
5,119
228,653
225,443
4,080
229,523
Equities
677,149
\u2014
14,427
\u2014
14,427
17,603
\u2014
17,603
Credit
153,606
\u2014
1,351
\u2014
1,351
1,861
\u2014
1,861
Commodity and other
90,007
\u2014
1,820
\u2014
1,820
1,542
\u2014
1,542
Gross total fair values
25,237,927
424,859
340,146
6,054
346,200
346,398
4,860
351,258
Offset (Note 31)
(116,486)
(116,486)
At 31 Dec 2023
25,237,927
424,859
340,146
6,054
229,714
346,398
4,860
234,772
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.
Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries
Notional contract amount
Assets
Liabilities
Trading
Hedging
Trading
Hedging
Total
Trading
Hedging
Total
$m
$m
$m
$m
$m
$m
$m
$m
Foreign exchange
51,437
\u2014
796
\u2014
796
1,015
\u2014
1,015
Interest rate
30,535
90,074
1,544
714
2,258
487
3,838
4,325
At 31 Dec 2024
81,972
90,074
2,340
714
3,054
1,502
3,838
5,340
Foreign exchange
66,711
\u2014
486
\u2014
486
1,705
\u2014
1,705
Interest rate
33,480
92,268
1,730
1,128
2,858
747
3,638
4,385
At 31 Dec 2023
100,191
92,268
2,216
1,128
3,344
2,452
3,638
6,090
Use of derivatives
For details regarding the use of derivatives, see page 218 under \u2018Market risk\u2019.
Trading derivatives
Most of HSBC\u2019s 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 revenue
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. Other derivatives classified as held for trading include non-qualifying hedging derivatives.
Substantially all of HSBC Holdings\u2019 derivatives entered into with subsidiaries are managed in conjunction with financial liabilities.
Hedge accounting derivatives
HSBC applies hedge accounting to manage the following risks: interest rate and foreign exchange risks. Further details of how these risks arise
and how they are managed by the Group can be found in the \u2018Risk review\u2019.
Hedged risk components
HSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign
currency risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise
separately identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are
regarded as being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition
where HSBC designates alternative benchmark rates as the hedged risk which may not have been separately identifiable upon initial
designation, provided HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated
risk components account for a significant portion of the overall changes in fair value or cash flows of the hedged items.
HSBC uses net investment hedges to hedge the structural foreign exchange risk related to net investments in foreign operations including
subsidiaries and branches whose functional currencies are different from that of the parent. When hedging with foreign exchange forward
contracts, the spot rate component of the foreign exchange risk is designated for an amount of net assets as the hedged risk.
Sources of hedge ineffectiveness may arise from basis risk, including but not limited to the discount rates used for calculating the fair value of
derivatives, hedges using instruments with a non-zero fair value, and notional and timing differences between the hedged items and hedging
instruments.
Fair value hedges
HSBC enters into fixed-for-floating interest rate swaps to manage the exposure to changes in fair value caused by movements in market
interest rates on certain fixed-rate financial instruments that are not measured at fair value through profit or loss, including debt securities held
and issued.
HSBC hedging instrument by hedged risk
Hedging instrument
Carrying amount
Notional amount1,2
Assets
Liabilities
Balance sheet
presentation
Change in fair value3
Hedged risk
$m
$m
$m
$m
Interest rate4
190,332
4,180
4,411
Derivatives
(449)
At 31 Dec 2024
190,332
4,180
4,411
(449)
Interest rate4
172,985
3,729
2,965
Derivatives
(1,043)
At 31 Dec 2023
172,985
3,729
2,965
(1,043)
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 notional amount of non-dynamic fair value hedges is equal to $71,916m (2023: $62,480m), of which the weighted-average maturity date is March\u00a02031 and
the weighted-average swap rate is 3.24% (2023: 3.04%).
3 Used in effectiveness testing, which uses the full fair value change of the hedging instrument not excluding any component.
4 The hedged risk \u2018interest rate\u2019 includes inflation risk.
HSBC hedged item by hedged risk
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in
fair value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet
presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
93,055
(2,701)
Financial investments -
measured at fair value
through other
comprehensive income
(728)
(8)
Net income from
financial instruments
held for trading or
managed on a fair
value basis
492
11
Financial investments -
measured at amortised
cost
(14)
13,915
(104)
\u2014
Loans and advances to
customers
16
\u2014
\u2014
Reverse repurchase
agreements \u2013 non-
trading
\u2014
72,576
(1,800)
Debt securities in issue
1,110
207
\u2014
Customer accounts
\u2014
1,205
(266)
Subordinated liabilities
57
At 31 Dec 2024
107,462
73,988
(2,794)
(2,066)
441
(8)
HSBC hedged item by hedged risk (continued)
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in fair
value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
82,321
(2,282)
Financial investments -
measured at fair value through
other comprehensive income
2,053
5
Net income from
financial instruments
held for trading or
managed on a fair
value basis
514
32
Financial investments -
measured at amortised cost
32
4,701
(18)
Loans and advances to
customers
122
\u2014
\u2014
Reverse repurchase
agreements \u2013 non-trading
15
64,269
(2,147)
Debt securities in issue
(1,179)
\u2014
\u2014
Deposits by banks
\u2014
\u2014
\u2014
Subordinated liabilities
5
At 31 Dec 2023
87,536
64,269
(2,268)
(2,147)
1,048
5
1 The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were liabilities of $311m (2023: $136m) for FVOCI assets and liabilities of $745m (2023: $1,256m) for debt issued.
2 Used in effectiveness testing, which comprise an amount attributable to the designated hedged risk that can be a risk component.
3 The hedged risk \u2018interest rate\u2019 includes inflation risk.
HSBC Holdings hedging instrument by hedged risk
Hedging instrument
Carrying amount
Notional amount1,2
Assets
Liabilities
Balance sheet
presentation
Change in fair value3
Hedged risk
$m
$m
$m
$m
Interest rate4
90,074
714
3,838
Derivatives
(1,103)
At 31 Dec 2024
90,074
714
3,838
(1,103)
Interest rate4
92,268
1,128
3,638
Derivatives
1,426
At 31 Dec 2023
92,268
1,128
3,638
1,426
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 notional amount of non-dynamic fair value hedges is equal to $90,074m (2023: $92,268m), of which the weighted-average maturity date is May\u00a02030 and
the weighted-average swap rate is 2.78% (2023: 2.46%). The majority of these hedges are internal to the Group.
3 Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.
4 The hedged risk \u2018interest rate\u2019 includes foreign exchange risk.
HSBC Holdings hedged item by hedged risk
Hedged item
Ineffectiveness
Carrying amount
Accumulated fair value
hedge adjustments
included in carrying
amount1
Change in
fair value2
Recognised
in profit
and loss
Assets
Liabilities
Assets
Liabilities
Balance sheet
presentation
Profit and loss
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Interest rate3
78,402
(2,423)
Debt securities
in issue
861
(9)
Net income from
financial instruments
held for trading or
managed on a fair value
basis
7,769
(244)
Loans and
advances to banks
233
At 31 Dec 2024
7,769
78,402
(244)
(2,423)
1,094
(9)
Interest rate3
80,889
(2,971)
Debt securities
in issue
(1,716)
29
Net income from financial
instruments held for
trading or managed on a
fair value basis
7,772
(490)
Loans and
advances to banks
319
At 31 Dec 2023
7,772
80,889
(490)
(2,971)
(1,397)
29
1 The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were liabilities of $1,216m (2023: $1,299m) for debt issued.
2 Used in effectiveness testing, comprising amount attributable to the designated hedged risk that can be a risk component.
3 The hedged risk \u2018interest rate\u2019 includes foreign exchange risk.
For some debt securities held, HSBC manages interest rate risk in a dynamic risk management strategy. The assets in scope of this strategy
are high-quality fixed-rate debt securities, which may be sold to meet liquidity and funding requirements.
The interest rate risk of the HSBC fixed-rate debt securities issued is managed in a non-dynamic risk management strategy.
Cash flow hedges
HSBC\u2019s 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 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.
HSBC also hedges the variability in future cash flows on foreign-denominated financial assets and liabilities arising due to changes in foreign
exchange market rates with cross-currency swaps, which are considered dynamic hedges.
Hedging instrument by hedged risk
Hedging instrument
Hedged item
Ineffectiveness
Carrying amount
Change in
fair value2
Change in fair
value3
Recognised
in profit
and loss
Profit and loss
presentation
Notional
amount1
Assets
Liabilities
Balance
sheet
presentation
Hedged risk
$m
$m
$m
$m
$m
$m
Foreign currency
47,194
2,088
68
Derivatives
2,451
2,451
\u2014
Net income from
financial instruments
held for trading or
managed on a fair
value basis
Interest rate
215,777
619
519
Derivatives
(2,954)
(2,964)
10
At 31 Dec 2024
262,971
2,707
587
(503)
(513)
10
Foreign currency
29,772
935
257
Derivatives
977
977
\u2014
Net income from
financial instruments
held for trading or
managed on a fair
value basis
Interest rate
188,327
1,390
1,116
Derivatives
1,542
1,512
30
At 31 Dec 2023
218,099
2,325
1,373
2,519
2,489
30
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.
Reconciliation of equity and analysis of other comprehensive income by risk type
Interest rate
Foreign currency
$m
$m
Cash flow hedging reserve at 1 Jan 2024
(901)
(132)
Fair value gains/(losses)
(2,964)
2,451
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of:
Hedged items that have affected profit or loss1
2,529
(2,430)
Income taxes
81
1
Others
199
87
Cash flow hedging reserve at 31 Dec 2024
(1,056)
(23)
Cash flow hedging reserve at 1 Jan 2023
(3,387)
(421)
Fair value gains/(losses)
1,512
977
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of:
Hedged items that have affected profit or loss1
2,196
(718)
Income taxes
(937)
(29)
Others
(285)
59
Cash flow hedging reserve at 31 Dec 2023
(901)
(132)
1Hedged items that have affected profit or loss are primarily recorded within interest income.
Net investment hedges
The Group applies hedge accounting in respect of certain net investments in non-US dollar functional currency foreign operations for changes in
spot exchange rates only. Hedging could be undertaken for Group structural exposure to changes in the US dollar to foreign currency exchange
rates using forward foreign exchange contracts or by financing with foreign currency borrowings. An economic relationship exists between the
hedged net investment and hedging instrument due to the shared foreign currency risk exposure. For further details of our structural foreign
exchange exposures, see page 212.
The aggregate positions at the reporting date and the performance indicators of both live and de-designated hedges are summarised below.
Hedges of net investment in foreign operations
Carrying amount
Nominal
amount
Amounts
recognised
in OCI1
Change in
fair value2
Hedge ineffectiveness
recognised in income
statement
Derivative
assets
Derivative
liabilities
Description of hedged risk
$m
$m
$m
$m
$m
$m
2024
Pound sterling-denominated structural foreign exchange
397
(1)
15,407
833
229
\u2014
Swiss franc-denominated structural foreign exchange
10
\u2014
556
89
40
\u2014
Hong Kong dollar-denominated structural foreign exchange
1
(3)
5,844
(27)
(26)
\u2014
Other structural foreign exchange3
242
(3)
13,160
907
499
\u2014
Total
650
(7)
34,967
1,803
742
\u2014
2023
Pound sterling-denominated structural foreign exchange
(404)
16,415
604
(843)
\u2014
Swiss franc-denominated structural foreign exchange
(23)
526
49
(62)
\u2014
Hong Kong dollar-denominated structural foreign exchange
\u2014
5,792
\u2014
2
\u2014
Other structural foreign exchange3
(96)
11,042
477
102
\u2014
Total
\u2014
(523)
33,775
1,130
(801)
\u2014
1Amount recognised in OCI for Swiss franc includes $110m (2023: $110m) related to de-designated hedge.
2Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.
3Other currencies include Euro, New Taiwan dollar, Singapore dollar, Canadian dollar, Omani rial, South Korean won, UAE dirham, Indian rupee, Chinese
renminbi, Kuwaiti dinar, Qatari riyal, Saudi riyal, Indonesian rupiah, Thai baht and Philippine peso.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-979": { "value": "
18
Interests in associates and joint ventures
Carrying amount of HSBC\u2019s interests in associates and joint ventures
2024
2023
$m
$m
Interests in associates
28,777
27,200
Interests in joint ventures
132
144
Interests in associates and joint ventures
28,909
27,344
Principal associates of HSBC
2024
2023
Carrying amount
Fair value1
Carrying amount
Fair value1
$m
$m
$m
$m
Bank of Communications Co., Limited
22,367
11,631
21,210
8,812
Saudi Awwal Bank
5,027
5,705
4,659
6,438
1 Principal associates are listed on recognised stock exchanges. The fair values are based on the quoted market prices of the shares held (Level 1 in the fair value
hierarchy).
Principal associates of HSBC (continued)
At 31 Dec 2024
Jurisdiction of incorporation
and principal place of
business
Principal activity
HSBC\u2019s interest1
%
Bank of Communications Co., Limited
Mainland China
Banking services
19.03
Saudi Awwal Bank
Saudi Arabia
Banking services
31.00
1There has been no percentage change in HSBC\u2019s shareholding interest in the principal associates when compared with 2023.
Share of profit in associates and joint ventures
2024
2023
$m
$m
Bank of Communications Co., Limited
2,241
2,250
Saudi Awwal Bank
596
538
Other associates and joint ventures
75
19
Share of profit in associates and joint ventures
2,912
2,807
Less: Impairment of interest in BoCom
\u2014
(3,000)
A list of all associates and joint ventures is set out in Note 38.
Bank of Communications Co., Limited
The Group maintains a 19.03% interest in Bank of Communications Co., Limited (\u2018BoCom\u2019). The Group\u2019s investment in BoCom is classified as
an associate. Significant influence in BoCom was established with consideration of all relevant factors, including representation on BoCom\u2019s
Board of Directors and participation in a resource and experience sharing agreement (\u2018RES\u2019). Under the RES, HSBC staff have been seconded
to assist in the maintenance of BoCom\u2019s financial and operating policies. Investments in associates are recognised using the equity method of
accounting in accordance with IAS 28 \u2018Investments in Associates and Joint Ventures\u2019, whereby the investment is initially recognised at cost
and adjusted thereafter for the post-acquisition change in the Group\u2019s share of associate\u2019s net assets. An impairment test is required if there is
any indication of impairment or reversal.
At 31 December 2023, the Group performed an impairment test on the carrying amount, which resulted in an impairment of $3.0bn, as the
recoverable amount as determined by a value in use (\u2018VIU\u2019) calculation was lower than the carrying amount. No further impairment was
required for the year ended 31 December 2024.
If the Group did not have significant influence in BoCom, the investment would be carried at fair value rather than the current carrying amount.
On 24 September 2024, the People\u2019s Bank of China, National Financial Regulatory Administration and China Securities Regulatory Commission
announced several policies aimed at promoting growth and economic development. These included monetary stimulus, property market
support and capital market strengthening measures, as well as measures to recapitalise the largest commercial banks. In the absence of
further details on how the recapitalisation of the largest commercial banks may be enacted, there is no change to the impairment test result at
31 December 2024. As further details become available, the impairment test will be updated to reflect their impact and may result in a change
to the carrying value of our investment in BoCom. These developments have the potential to impact on the Group\u2018s reported earnings, but are
unlikely to have an impact on HSBC's capital or capital ratios.
We remain supportive of our relationship with BoCom and will consider any broader implications on the carrying value of our investment as
further details become available.
Basis of recoverable amount
The VIU calculation uses discounted cash flow projections based on management\u2019s best estimates of future earnings available to ordinary
shareholders prepared in accordance with IAS 36 \u2019Impairment of Assets\u2019. Those cash flows used estimates based on BoCom\u2019s current
condition and so do not include estimated cash flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise. Significant management judgement is required in arriving at the
best estimate.
The VIU may increase or decrease depending on the effect of changes to model inputs. The main model inputs are described below and are
based on factors observed at period-end. The factors that could result in increases or reductions in the VIU include changes in BoCom\u2019s short-
term performance, a change in regulatory capital requirements or revisions to the forecast of BoCom\u2019s future profitability.
There are two main components to the VIU calculation. The first component is management\u2019s best estimate of BoCom\u2019s earnings. Forecast
earnings growth over the short to medium term continues to be lower than recent (within the last five years) actual growth, and reflects the
impact of recent macroeconomic, policy and industry factors in mainland China. As a result of management\u2018s intent to continue to retain its
investment for the long term, earnings beyond the short to medium term are extrapolated into perpetuity using a long-term growth rate to
derive a terminal value, which comprises the majority of the VIU. The second component is the capital maintenance charge (\u2018CMC\u2019), which is
management\u2019s forecast of the earnings that need to be withheld in order for BoCom to meet capital requirements over the forecast period,
meaning that CMC is deducted when arriving at management\u2019s estimate of future earnings available to ordinary shareholders. The CMC
reflects the revised capital requirements arising from revisions of the ratio of risk-weighted assets to total assets assumption. The principal
inputs to the CMC calculation include estimates of asset growth, the ratio of risk-weighted assets to total assets and the expected capital
requirements. An increase in the CMC as a result of a change to these principal inputs would reduce VIU. Additionally, management considers
other qualitative factors, to ensure that the inputs to the VIU calculation remain appropriate.
Key assumptions in value in use calculation
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
\u2013 Long-term profit growth rate: 3.00% (2023: 3.00%) for periods after 2028, which does not exceed forecast GDP growth in mainland China
and is similar to forecasts by external analysts.
\u2013 Long-term asset growth rate: 3.25% (2023: 3.00%) for periods after 2028, which is the rate that assets are expected to grow to achieve long-term
profit growth of 3.00%. The increase of long-term asset growth rate was supported by historical data, which is expected to continue.
\u2013 Discount rate: 8.53% (2023: 9.00%), which is based on a capital asset pricing model (\u2018CAPM\u2019), using market data. The discount rate used is
within the range of 7.1% to 8.8% (2023: 7.9% to 9.7%) indicated by the CAPM, and decreased as a consequence of a market-driven
reduction in the risk-free rate.
\u2013 Expected credit losses (\u2018ECL\u2019) as a percentage of loans and advances to customers: ranges from 0.74% to 0.93% (2023: 0.80% to 0.97%)
in the short to medium term, reflecting reported credit experience in mainland China. For periods after 2028, the ratio is 0.97% (2023:
0.97%), which is higher than BoCom\u2019s average ECL as a percentage of loans and advances to customers in recent years prior to the
Covid-19 pandemic.
\u2013 Risk-weighted assets as a percentage of total assets: ranges from 62.0% to 62.5% (2023: 62.0% to 63.7%) in the short to medium term,
reflecting higher risk-weights in the short term followed by an expected reversion to recent historical levels. For periods after 2028, the ratio
is 62.0% (2023: 62.0%), which continues to be similar to BoCom\u2019s actual results in recent years.
\u2013 Loans and advances to customers growth rate: ranges from 7.5% to 9.5% (2023: 9.0% to 10.0%) in the short to medium term, which is
similar to BoCom\u2019s actual results in recent years. Changes in the forecast growth rate of loans and advances to customers are likewise
reflected in the forecast ECL.
\u2013 Operating income growth rate: ranges from 0.1% to 9.9% (2023: -0.4% to 9.7%) in the short to medium term, which is similar to BoCom\u2019s
actual results in recent years, and is impacted by projections of net interest income in the short term as a consequence of recent
macroeconomic, policy and industry factors in mainland China.
\u2013 Cost-income ratio: ranges from 34.6% to 39.8% (2023: 35.5% to 39.8%) in the short to medium term. These ratios are similar to BoCom\u2019s
actual results in recent years.
\u2013 Long-term effective tax rate: 15.0% (2023:\u00a015.0%) for periods after 2028, which is higher than the recent historical average, and aligned to
the minimum tax rate as proposed by the OECD/Group of 20 (\u2018G20\u2019) Inclusive Framework on Base Erosion and Profit Shifting.
\u2013 Capital requirements: capital adequacy ratio of 12.5% (2023: 12.5%) and tier 1 capital adequacy ratio of 9.5% (2023: 9.5%), based on
BoCom\u2019s capital risk appetite and capital requirements respectively.
The changes in VIU would impact the carrying amount if there is an indication of further impairment (or indication that an impairment may no
longer exist or may have decreased, to the extent of impairment loss previously recognised). The following table illustrates the impact on the
carrying amount of reasonably possible changes to key assumptions used in the VIU calculation. This reflects the sensitivity of each key
assumption on its own and it is possible that more than one favourable and/or unfavourable change may occur at the same time. The selected
rates of reasonably possible changes to key assumptions are based on external analysts\u2019 forecasts, statutory requirements and other relevant
external data sources, which can change period to period. Unless specified, favourable and unfavourable changes are consistently applied
throughout short-to-medium and long-term forecast years, based on a straight-line average of the base case assumption.
Sensitivity of the carrying amount to the key VIU assumptions
Favourable change
Unfavourable change
Reversal of impairment /
VIU headroom
Impairment
bps
$bn
bps
$bn
At 31 Dec 2024
Long-term profit growth rate
55
4.0
(96)
(5.4)
Long-term asset growth rate
(121)
8.6
30
(2.8)
Discount rate
(143)
5.4
287
(6.4)
Expected credit losses as a percentage of loans and advances to
customers
2024 to 2028: 66
2029 onwards: 91
4.0
2024 to 2028: 108
2029 onwards: 104
(4.3)
Risk-weighted assets as a percentage of total assets
(132)
0.8
234
(1.7)
Loans and advances to customers growth rate
(217)
3.4
340
(6.1)
Operating income growth rate
76
2.7
(81)
(3.3)
Cost-income ratio
(190)
0.2
380
(7.1)
Long-term effective tax rate
(426)
1.6
1,000
(4.0)
Capital requirements \u2013 capital adequacy ratio
\u2014
\u2014
372
(14.3)
Capital requirements \u2013 tier 1 capital adequacy ratio
\u2014
\u2014
270
(6.7)
At 31 Dec 2023
Long-term profit growth rate
58
3.3
(79)
(3.4)
Long-term asset growth rate
(79)
4.5
58
(4.0)
Discount rate
(110)
4.5
280
(6.1)
Expected credit losses as a percentage of loans and advances to
customers
2023 to 2027: 78
2028 onwards: 91
2.9
2023 to 2027: 120
2028 onwards: 104
(4.4)
Risk-weighted assets as a percentage of total assets
(150)
0.9
216
(1.6)
Loans and advances to customers growth rate
(213)
3.2
207
(2.9)
Operating income growth rate
57
2.6
(81)
(2.6)
Cost-income ratio
(212)
0.8
99
(2.9)
Long-term effective tax rate
(426)
1.6
1,000
(3.5)
Capital requirements \u2013 capital adequacy ratio
\u2014
\u2014
215
(7.5)
Capital requirements \u2013 tier 1 capital adequacy ratio
\u2014
\u2014
248
(3.7)
Considering the interrelationship of the changes set out in the table above, management estimates that the reasonably possible range of VIU is
$13.5bn to $30.8bn (2023: $13.1bn to $28.8bn), acknowledging that the fair value of the Group\u2019s investment has ranged from $6.8bn to
$11.6bn over the last five years as at the date of the impairment tests. The possible range of VIU is based on impacts set out in the table above
arising from the favourable/unfavourable change in the earnings in the short to medium term, the expected credit losses as a percentage of
loans and advances to customers, and a 50bps increase/decrease in the discount rate. All other long-term assumptions, and the basis of the
CMC have been kept unchanged when determining the reasonably possible range of the VIU.
Selected financial information of BoCom
The statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2024, HSBC included the associate\u2019s
results on the basis of the financial statements for the 12 months ended 30 September 2024, taking into account any known changes in the
subsequent period from 1 October 2024 to 31 December 2024 that would have materially affected the results.
Selected balance sheet information of BoCom
At 30 Sep
At 30 Sep
2024
2023
$m
$m
Cash and balances at central banks
99,663
112,800
Due from and placements with banks and other financial institutions
122,607
100,464
Loans and advances to customers
1,128,603
1,087,613
Other financial assets
587,721
587,949
Other assets
61,086
59,215
Total assets
1,999,680
1,948,041
Due to and placements from banks and other financial institutions
326,742
292,065
Deposits from customers
1,195,590
1,216,611
Other financial liabilities
282,894
251,246
Other liabilities
38,082
36,766
Total liabilities
1,843,308
1,796,698
Total equity
156,372
151,343
Reconciliation of BoCom\u2019s total shareholders\u2019 equity to the carrying amount in HSBC\u2019s consolidated financial statements
At 30 Sep
2024
2023
$m
$m
Equity attributable to shareholders
154,748
149,713
Other equity instruments
(23,946)
(24,616)
Equity attributable to shareholders less other equity instruments
130,802
125,097
The Group's share of equity1
25,284
24,210
Impairment2
(2,917)
(3,000)
Carrying amount\u00a0
22,367
21,210
1This balance includes goodwill originally arising on acquisition.
2This balance includes the impact of foreign exchange movements on the $3bn impairment booked in the financial year ended 31 December 2023.
Selected income statement information of BoCom
For the 12 months ended 30 Sep
2024
2023
$m
$m
Net interest income
23,180
23,432
Net fee and commission income
5,315
6,221
Credit and impairment losses
(7,410)
(8,099)
Depreciation and amortisation
(2,589)
(2,560)
Tax expense
(835)
(1,007)
Profit for the year
12,922
13,211
Other comprehensive income
1,361
686
Total comprehensive income
14,283
13,897
Dividends received from BoCom
745
736
Saudi Awwal Bank
The Group\u2019s investment in Saudi Awwal Bank (\u2018SAB\u2019) is classified as an associate. HSBC is the largest shareholder in SAB with a shareholding
of 31%. Significant influence in SAB is established via representation on the Board of Directors. Investments in associates are recognised using
the equity method of accounting in accordance with IAS 28, as described previously for BoCom.
Impairment testing
There were no indicators of impairment at 31 December 2024. The fair value of the Group\u2019s investment in SAB of $5.7bn was above the
carrying amount of $5.0bn.
Associates and joint ventures
The Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest
bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.
Transactions and balances during the year with associates and joint ventures
2024
2023
Highest balance
during the year
Balance at
31 Dec
Highest balance
during the year
Balance at
31 Dec
$m
$m
$m
$m
Unsubordinated amounts due from joint ventures
104
72
98
94
Unsubordinated amounts due from associates
8,097
5,011
7,907
5,910
Amounts due to associates
2,992
1,844
3,002
1,668
Amounts due to joint ventures
101
85
95
61
Fair value of derivative assets with associates
919
763
1,514
795
Fair value of derivative liabilities with associates
3,718
2,641
4,388
2,962
Guarantees and commitments
569
577
503
331
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.
Associates
The undertakings below are associates and equity accounted.
Associates
% of share class
held by
immediate parent
company (or by
the Group where
this varies)
Footnotes
Bank of Communications Co., Ltd.
19.03
2, 159
Barrowgate Limited
24.64
(15.53)
160
BGF Group plc
24.62
161
Bud Financial Limited
4.50
4, 162
CANARA HSBC LIFE INSURANCE
COMPANY LIMITED
26.00
163
Divido Financial Services Limited (In
Administration)
7.85
164
Electronic Payment Services Company (Hong
Kong) Limited
38.69
2, 19
Episode Six Inc.
5.69
4, 165
EPS Company (Hong Kong) Limited
38.69
19
HQLAX S.\u00e0 r.l.
6.10
4, 90
HSBC Jintrust Fund Management Company
Limited
49.00
2, 11, 166
HSBC UK Covered Bonds (LM) Limited
N/A
1,2, 167
Lightico Ltd
2.80
4, 85
LiquidityMatch LLC
N/A
1, 168
London Precious Metals Clearing Limited
30.00
2, 169
Marketnode PTE. Ltd.
12.60
4, 46
MENA Infrastructure Fund (GP) Ltd
33.33
170
Quantexa Limited
9.36
4, 99
Radiant Global Investors LLC
N/A
1, 2, 172
Saudi Awwal Bank
31.00
173
The London Gold Market Fixing Limited
N/A
1, 157
Threadneedle Software Holdings Limited
7.10
4, 174
Trade Information Network Limited
12.76
152
Trinkaus Europa Immobilien-Fonds Nr. 7
Frankfurt Mertonviertel KG
N/A
182
We Trade Innovation Designated Activity
Company (In Liquidation)
9.88
2, 130
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-978": { "value": "
18
Interests in associates and joint ventures
Carrying amount of HSBC\u2019s interests in associates and joint ventures
2024
2023
$m
$m
Interests in associates
28,777
27,200
Interests in joint ventures
132
144
Interests in associates and joint ventures
28,909
27,344
Associates and joint ventures
The Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest
bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.
Transactions and balances during the year with associates and joint ventures
2024
2023
Highest balance
during the year
Balance at
31 Dec
Highest balance
during the year
Balance at
31 Dec
$m
$m
$m
$m
Unsubordinated amounts due from joint ventures
104
72
98
94
Unsubordinated amounts due from associates
8,097
5,011
7,907
5,910
Amounts due to associates
2,992
1,844
3,002
1,668
Amounts due to joint ventures
101
85
95
61
Fair value of derivative assets with associates
919
763
1,514
795
Fair value of derivative liabilities with associates
3,718
2,641
4,388
2,962
Guarantees and commitments
569
577
503
331
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
Joint ventures
The undertakings below are joint ventures and equity accounted.
Joint ventures
% of share class
held by immediate
parent company (or
by the Group
where this varies)
Footnotes
Climate Asset Management Limited
N/A
1,2, 152
Global Payments Technology M\u00e9xico, S.A. de
C.V.
50.00
(49.99)
2, 153
MK HoldCo Limited
50.32
2, 154
Pentagreen Capital Pte. Ltd
50.00
155
ProServe Bermuda Limited
50.00
156
The London Silver Market Fixing Limited
N/A
1,2, 157
Vaultex UK Limited
50.00
158
", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-980": { "value": "27344000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InvestmentsInSubsidiariesJointVenturesAndAssociates", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-981": { "value": "2912000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ShareOfProfitLossOfAssociatesAndJointVenturesAccountedForUsingEquityMethod", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-982": { "value": "2807000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ShareOfProfitLossOfAssociatesAndJointVenturesAccountedForUsingEquityMethod", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-983": { "value": "
Impairment testing
At 31 December 2024, the carrying amount of the investment was $22.4bn (2023: $21.2bn) with fair value of $11.6bn (2023: $8.8bn). The
Group has concluded there is no indication of further impairment (or indication that an impairment may no longer exist or may have decreased)
since 31 December 2023. As part of this assessment, the Group updated the VIU calculation which supported that there was no significant
change to the 31 December 2023 impairment position. As a result, no additional impairment to the carrying amount (or reversal of impairment)
was made at 31 December 2024.
Basis of recoverable amount
The VIU calculation uses discounted cash flow projections based on management\u2019s best estimates of future earnings available to ordinary
shareholders prepared in accordance with IAS 36 \u2019Impairment of Assets\u2019. Those cash flows used estimates based on BoCom\u2019s current
condition and so do not include estimated cash flows arising from uncommitted future actions that may affect the performance of the
investment which will be considered at the relevant time should they arise. Significant management judgement is required in arriving at the
best estimate.
The VIU may increase or decrease depending on the effect of changes to model inputs. The main model inputs are described below and are
based on factors observed at period-end. The factors that could result in increases or reductions in the VIU include changes in BoCom\u2019s short-
term performance, a change in regulatory capital requirements or revisions to the forecast of BoCom\u2019s future profitability.
There are two main components to the VIU calculation. The first component is management\u2019s best estimate of BoCom\u2019s earnings. Forecast
earnings growth over the short to medium term continues to be lower than recent (within the last five years) actual growth, and reflects the
impact of recent macroeconomic, policy and industry factors in mainland China. As a result of management\u2018s intent to continue to retain its
investment for the long term, earnings beyond the short to medium term are extrapolated into perpetuity using a long-term growth rate to
derive a terminal value, which comprises the majority of the VIU. The second component is the capital maintenance charge (\u2018CMC\u2019), which is
management\u2019s forecast of the earnings that need to be withheld in order for BoCom to meet capital requirements over the forecast period,
meaning that CMC is deducted when arriving at management\u2019s estimate of future earnings available to ordinary shareholders. The CMC
reflects the revised capital requirements arising from revisions of the ratio of risk-weighted assets to total assets assumption. The principal
inputs to the CMC calculation include estimates of asset growth, the ratio of risk-weighted assets to total assets and the expected capital
requirements. An increase in the CMC as a result of a change to these principal inputs would reduce VIU. Additionally, management considers
other qualitative factors, to ensure that the inputs to the VIU calculation remain appropriate.
Key assumptions in value in use calculation
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
\u2013 Long-term profit growth rate: 3.00% (2023: 3.00%) for periods after 2028, which does not exceed forecast GDP growth in mainland China
and is similar to forecasts by external analysts.
\u2013 Long-term asset growth rate: 3.25% (2023: 3.00%) for periods after 2028, which is the rate that assets are expected to grow to achieve long-term
profit growth of 3.00%. The increase of long-term asset growth rate was supported by historical data, which is expected to continue.
\u2013 Discount rate: 8.53% (2023: 9.00%), which is based on a capital asset pricing model (\u2018CAPM\u2019), using market data. The discount rate used is
within the range of 7.1% to 8.8% (2023: 7.9% to 9.7%) indicated by the CAPM, and decreased as a consequence of a market-driven
reduction in the risk-free rate.
\u2013 Expected credit losses (\u2018ECL\u2019) as a percentage of loans and advances to customers: ranges from 0.74% to 0.93% (2023: 0.80% to 0.97%)
in the short to medium term, reflecting reported credit experience in mainland China. For periods after 2028, the ratio is 0.97% (2023:
0.97%), which is higher than BoCom\u2019s average ECL as a percentage of loans and advances to customers in recent years prior to the
Covid-19 pandemic.
\u2013 Risk-weighted assets as a percentage of total assets: ranges from 62.0% to 62.5% (2023: 62.0% to 63.7%) in the short to medium term,
reflecting higher risk-weights in the short term followed by an expected reversion to recent historical levels. For periods after 2028, the ratio
is 62.0% (2023: 62.0%), which continues to be similar to BoCom\u2019s actual results in recent years.
\u2013 Loans and advances to customers growth rate: ranges from 7.5% to 9.5% (2023: 9.0% to 10.0%) in the short to medium term, which is
similar to BoCom\u2019s actual results in recent years. Changes in the forecast growth rate of loans and advances to customers are likewise
reflected in the forecast ECL.
\u2013 Operating income growth rate: ranges from 0.1% to 9.9% (2023: -0.4% to 9.7%) in the short to medium term, which is similar to BoCom\u2019s
actual results in recent years, and is impacted by projections of net interest income in the short term as a consequence of recent
macroeconomic, policy and industry factors in mainland China.
\u2013 Cost-income ratio: ranges from 34.6% to 39.8% (2023: 35.5% to 39.8%) in the short to medium term. These ratios are similar to BoCom\u2019s
actual results in recent years.
\u2013 Long-term effective tax rate: 15.0% (2023:\u00a015.0%) for periods after 2028, which is higher than the recent historical average, and aligned to
the minimum tax rate as proposed by the OECD/Group of 20 (\u2018G20\u2019) Inclusive Framework on Base Erosion and Profit Shifting.
\u2013 Capital requirements: capital adequacy ratio of 12.5% (2023: 12.5%) and tier 1 capital adequacy ratio of 9.5% (2023: 9.5%), based on
BoCom\u2019s capital risk appetite and capital requirements respectively.
The changes in VIU would impact the carrying amount if there is an indication of further impairment (or indication that an impairment may no
longer exist or may have decreased, to the extent of impairment loss previously recognised). The following table illustrates the impact on the
carrying amount of reasonably possible changes to key assumptions used in the VIU calculation. This reflects the sensitivity of each key
assumption on its own and it is possible that more than one favourable and/or unfavourable change may occur at the same time. The selected
rates of reasonably possible changes to key assumptions are based on external analysts\u2019 forecasts, statutory requirements and other relevant
external data sources, which can change period to period. Unless specified, favourable and unfavourable changes are consistently applied
throughout short-to-medium and long-term forecast years, based on a straight-line average of the base case assumption.
Sensitivity of the carrying amount to the key VIU assumptions
Favourable change
Unfavourable change
Reversal of impairment /
VIU headroom
Impairment
bps
$bn
bps
$bn
At 31 Dec 2024
Long-term profit growth rate
55
4.0
(96)
(5.4)
Long-term asset growth rate
(121)
8.6
30
(2.8)
Discount rate
(143)
5.4
287
(6.4)
Expected credit losses as a percentage of loans and advances to
customers
2024 to 2028: 66
2029 onwards: 91
4.0
2024 to 2028: 108
2029 onwards: 104
(4.3)
Risk-weighted assets as a percentage of total assets
(132)
0.8
234
(1.7)
Loans and advances to customers growth rate
(217)
3.4
340
(6.1)
Operating income growth rate
76
2.7
(81)
(3.3)
Cost-income ratio
(190)
0.2
380
(7.1)
Long-term effective tax rate
(426)
1.6
1,000
(4.0)
Capital requirements \u2013 capital adequacy ratio
\u2014
\u2014
372
(14.3)
Capital requirements \u2013 tier 1 capital adequacy ratio
\u2014
\u2014
270
(6.7)
At 31 Dec 2023
Long-term profit growth rate
58
3.3
(79)
(3.4)
Long-term asset growth rate
(79)
4.5
58
(4.0)
Discount rate
(110)
4.5
280
(6.1)
Expected credit losses as a percentage of loans and advances to
customers
2023 to 2027: 78
2028 onwards: 91
2.9
2023 to 2027: 120
2028 onwards: 104
(4.4)
Risk-weighted assets as a percentage of total assets
(150)
0.9
216
(1.6)
Loans and advances to customers growth rate
(213)
3.2
207
(2.9)
Operating income growth rate
57
2.6
(81)
(2.6)
Cost-income ratio
(212)
0.8
99
(2.9)
Long-term effective tax rate
(426)
1.6
1,000
(3.5)
Capital requirements \u2013 capital adequacy ratio
\u2014
\u2014
215
(7.5)
Capital requirements \u2013 tier 1 capital adequacy ratio
\u2014
\u2014
248
(3.7)
Considering the interrelationship of the changes set out in the table above, management estimates that the reasonably possible range of VIU is
$13.5bn to $30.8bn (2023: $13.1bn to $28.8bn), acknowledging that the fair value of the Group\u2019s investment has ranged from $6.8bn to
$11.6bn over the last five years as at the date of the impairment tests. The possible range of VIU is based on impacts set out in the table above
arising from the favourable/unfavourable change in the earnings in the short to medium term, the expected credit losses as a percentage of
loans and advances to customers, and a 50bps increase/decrease in the discount rate. All other long-term assumptions, and the basis of the
CMC have been kept unchanged when determining the reasonably possible range of the VIU.
Selected financial information of BoCom
The statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2024, HSBC included the associate\u2019s
results on the basis of the financial statements for the 12 months ended 30 September 2024, taking into account any known changes in the
subsequent period from 1 October 2024 to 31 December 2024 that would have materially affected the results.
Impairment testing
There were no indicators of impairment at 31 December 2024. The fair value of the Group\u2019s investment in SAB of $5.7bn was above the
carrying amount of $5.0bn.
Goodwill
Impairment testing
The Group\u2019s impairment test in respect of goodwill allocated to each cash-generating unit (\u2018CGU\u2019) is performed at 1 October each year. A
review for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2024. No indicators of impairment were
identified as part of these reviews.
Basis of the recoverable amount
The recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use (\u2018VIU\u2019) at each respective testing date.
The VIU is calculated by discounting management\u2019s cash flow projections for the CGU. The key assumptions used in the VIU calculation for
each individually significant CGU that is not impaired are discussed below.
Key assumptions in VIU calculation \u2013 significant CGUs at 1 October 20241
Carrying
amount at
1\u00a0Oct 2024
of which
goodwill
Value in
use at
1\u00a0Oct 2024
Discount
rate
Growth
rate
beyond
initial
cash flow
Carrying
amount at
1\u00a0Oct\u00a02023
of which
goodwill
Value in
use at
1\u00a0Oct 2023
Discount
rate
Growth
rate
beyond initial
cash flow
projections
$m
$m
$m
%
%
$m
$m
$m
%
%
HSBC UK
Bank plc \u2013
WPB
12,785
2,843
27,118
10.6
2.0
11,167
2,597
27,933
10.4
2.0
1For impacts arising from the revised organisational structure effective from 1 January 2025, see Note 1.2(a)
At 1 October 2024, aggregate goodwill of $1,493m (1 October 2023: $1,599m) had been allocated to CGUs that were not considered
individually significant. The Group\u2019s CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other
than goodwill.
Management\u2019s judgement in estimating the cash flows of a CGU
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability
plans approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and
endorses planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and
macroeconomic outlook. For the 1 October 2024 impairment test, cash flow projections until the end of 2029 were considered, in line with our
internal planning horizon. Key assumptions underlying cash flow projections reflect management\u2019s outlook on interest rates and inflation, as
well as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and
observable climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS
Accounting Standards, estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring
initiatives before an entity has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring
costs.
Discount rate
The rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing
model (\u2018CAPM\u2019) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including
the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market\u2019s
assessment of the economic variables and management\u2019s judgement. The discount rates for each CGU are refined to reflect the rates of
inflation for the countries within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management
supplements this process by comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced
by external sources for businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable
in discount rates and asset prices.
Long-term growth rate
The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of
business units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it
derives revenue.
Sensitivities of key assumptions in calculating VIU
At 1 October 2024, given the extent by which VIU exceeds carrying amount, the HSBC UK WPB CGU was not sensitive to reasonably possible
adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to
assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of
discount rates observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections.
None of the remaining CGUs are individually significant.
Other intangible assets
Impairment testing
Impairment of other intangible assets is assessed in accordance with our policy explained in Note 1.2(n) by comparing the net carrying amount
of CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or
fair value, as appropriate, for each CGU. No significant impairment was recognised during the year.
Key assumptions in VIU calculation
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next
financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in
accordance with the requirements of IAS 36:
\u2013 Management\u2019s judgement in estimating future cash flows: We considered past business performance, current market conditions and our
macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude
estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to
carry out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the
benefit of certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections
include known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
\u2013 Long-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective
of the businesses within the Group.
\u2013 Discount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and
geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates
and asset prices.
Sensitivity of estimates relating to non-financial assets
As explained in Note 1.2(a), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for
impairment. Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use
assets (see Note\u00a022). The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are
no non-financial asset balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in
a material adjustment to the results and financial position of the Group within the next financial year.
Non-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be
allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned
property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant.
At 31 December 2024 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the
recoverable amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in
respect of each input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast
and risks attaching to the key assumptions underlying cash flow projections.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-984": { "value": "
19
Investments in subsidiaries\u00a0
Main subsidiaries of HSBC Holdings1
At 31 Dec 2024
Place of
incorporation or
registration
HSBC\u2019s
interest
%
Share class
Europe
HSBC Bank plc
England and Wales
100
\u00a31 Ordinary, $0.01 Non-Cumulative Third Dollar
Preference
HSBC UK Bank plc
England and Wales
100
\u00a31 Ordinary
HSBC Continental Europe
France
99.99
\u20ac5 Actions
Asia
Hang Seng Bank Limited2,3
Hong Kong
63.12
HK$5 Ordinary
HSBC Bank (China) Company Limited
People\u2019s Republic of
China
100
CNY1 Ordinary
HSBC Bank Malaysia Berhad
Malaysia
100
Ordinary no par value
HSBC Life (International) Limited
Bermuda
100
HK$1 Ordinary
The Hongkong and Shanghai Banking Corporation Limited
Hong Kong
100
Ordinary no par value
Middle East, North Africa and T\u00fcrkiye
HSBC Bank Middle East Limited
United Arab Emirates
100
$1 Ordinary and $1 Preference shares
North America
HSBC Bank USA, N.A.
US
100
$100 Common and $0.01 Preference
Latin America
HSBC Mexico, S.A., Instituci\u00f3n de Banca M\u00faltiple,
Grupo Financiero HSBC
Mexico
99.99
MXN2 Ordinary
1Main subsidiaries are either held directly or indirectly via intermediate holding companies. During 2024, we completed the sale of HSBC Bank Canada to the
Royal Bank of Canada, therefore it is no longer an indirect subsidiary of HSBC Holdings. There has been no material percentage change in HSBC\u2019s shareholding
for its existing main subsidiaries since 2023.
2In addition to the strategic holding disclosed above, the Group held 0.06% (2023: 0.09%) shareholding as part of its trading books.
3Based on the latest corporate substantial shareholding notice filed with Hong Kong Exchange and Clearing Limited on 21 June 2024, the Group\u2019s shareholding in
Hang Seng Bank Limited on 18 June 2024 was 63.04%. Movements in our shareholding since 18 June 2024 are reflected in the above table.
Details of the debt, subordinated debt and preference shares issued by the main subsidiaries to parties external to the Group are included in
Note 26 \u2018Debt securities in issue\u2019 and Note 29 \u2018Subordinated liabilities\u2019, respectively.
A list of all related undertakings is set out in Note 38. The principal countries and territories of operation are the same as the countries and
territories of incorporation except for HSBC Life (International) Limited, which operates mainly in Hong Kong.
HSBC is structured as a network of regional banks and locally incorporated regulated banking entities. Each bank is separately capitalised in
accordance with applicable prudential requirements and maintains a capital buffer consistent with the Group\u2019s risk appetite for the relevant
country or region. HSBC\u2019s capital management process is incorporated in the financial resource plan, which is approved by the Board.
HSBC Holdings is the primary provider of equity capital to its subsidiaries and also provides them with non-equity capital where necessary.
These investments are substantially funded by HSBC Holdings\u2019 issuance of equity and non-equity capital, and by profit retention.
As part of its capital management process, HSBC Holdings seeks to maintain a balance between the composition of its capital and its
investment in subsidiaries. Subject to this, there is no current or foreseen impediment to HSBC Holdings\u2019 ability to provide funding for such
investments. During 2024, consistent with the Group\u2019s capital plan, the Group\u2019s material subsidiaries did not experience any significant
restrictions on paying dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned
dividends or payments from material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings
depends on, among other things, their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and
financial and operating performance.
The amount of guarantees by HSBC Holdings in favour of other Group entities is set out in Note 33.
Information on structured entities consolidated by HSBC where HSBC owns less than 50% of the voting rights is included in Note 20
\u2018Structured entities\u2019. In each of these cases, HSBC controls and consolidates an entity when it is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Impairment testing of investments in subsidiaries
At each reporting period end, HSBC Holdings reviews investments in subsidiaries for indicators of impairment. An impairment is recognised
when the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment\u2019s fair
value less costs of disposal and its VIU, in accordance with the requirements of IAS 36. The VIU is calculated by discounting management\u2019s
cash flow projections for the investment. The cash flows represent the free cash flows based on the subsidiary\u2019s binding capital requirements.
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
\u2013 Management\u2019s judgement in estimating future cash flows: The cash flow projections for each investment are based on the latest approved
plans, which include forecast capital available for distribution based on the capital requirements of the subsidiary, taking into account
minimum and core capital requirements and factoring in reasonably possible uncertainties. For the impairment test as at 31 December 2024,
cash flow projections until the end of 2029 were considered in line with our internal planning horizon. Our cash flow projections include
known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
\u2013 Long-term growth rates: The long-term growth rate is used to extrapolate the free cash flows in perpetuity because of the long-term
perspective of the legal entity. The growth rate reflects long-term inflation for the country or territory within which the investment operates.
\u2013 Discount rates: The rate used to discount the cash flows is based on the cost of capital assigned to each investment, which is derived using
a CAPM and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the
risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market\u2019s
assessment of the economic variables and management\u2019s judgement. The discount rates for each investment are refined to reflect the
rates of inflation for the countries or territories within which the investment operates. In addition, for the purposes of testing investments
for impairment, management supplements this process by comparing the discount rates derived using the internally generated CAPM, with
cost of capital rates produced by external sources for businesses operating in similar markets. The impacts from climate risk are included to
the extent that they are observable in discount rates and asset prices.
As at 31 December 2024, the carrying amount of HSBC Holdings\u2019 investments in subsidiaries was $152.3bn (2023: $159.5bn). The year-on-year
reduction was predominantly due to the recognition of an $11.4bn impairment of HSBC Holdings\u2019 investment in HSBC Overseas Holdings (UK)
Limited.
The recoverable amount of HSBC Overseas Holdings (UK) Limited is assessed as the aggregate of the recoverable amounts of its subsidiaries.
During the year HSBC Overseas Holdings (UK) Limited sold its stake in its direct subsidiary HSBC Bank Canada to Royal Bank of Canada, and
transferred HSBC Private Bank (Suisse) SA, its indirect subsidiary (via HSBC Private Banking Holdings (Suisse) SA), to HSBC Bank plc.
Following these disposals HSBC Overseas Holdings (UK) Limited paid $12.1bn in dividend income to HSBC Holdings, which mainly drove the
recognition of an $11.4bn impairment in its investment in HSBC Overseas Holdings (UK) Limited, offset by a higher recoverable amount of
HSBC Overseas Holdings (UK) Limited\u2019s principal remaining subsidiary as at 31 December 2024, HSBC North America Holdings Inc, driven by
higher projected profits and lower projected capital requirements. As at 31 December 2024, HSBC Holdings had recognised for HSBC
Overseas Holdings (UK) Limited a cumulative impairment of $21.6bn (2023: $10.2bn), and a carrying amount of $14.0bn (2023: $25.8bn).
Impairment test results
Investments
Recoverable
amount
Discount
rate
Long-term
growth rate
$m
%
%
HSBC North America Holdings Inc.
At 31 Dec 2024
13,264
11.00
2.25
At 31 Dec 2023
12,756
10.50
2.17
Sensitivities of key assumptions in calculating VIU
At 31 December 2024, the recoverable amount of HSBC Overseas Holdings (UK) Limited remained sensitive to reasonably possible changes in
key assumptions impacting its principal subsidiary, HSBC North America Holdings Inc.
In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input
to the model. These include the external range of observable discount rates, historical performance against forecast, and risks attached to the
key assumptions underlying cash flow.
The following table presents a summary of the key assumptions underlying the most sensitive inputs to the model for HSBC North America
Holdings Inc., the key risks attached to each, and details of a reasonably possible change to assumptions where, in the opinion of management,
these could result in a change in VIU.
Reasonably possible changes in key assumptions
Input
Key assumptions
Associated risks
Reasonably possible
change
Investment
HSBC North America Holdings Inc.
(subsidiary of HSBC Overseas
Holdings (UK) Limited)
Free cash flows projections
\u2013 Level of interest rates and
yield curves.
\u2013 Competitors\u2019 positions
within the market.
\u2013 Strategic actions
relating to revenue and
costs are not achieved.
\u2013 Free cash flow
projections decrease
by 10%.
Discount rate
\u2013 Discount rate used is a
reasonable estimate of a
suitable market rate for
the profile of the
business.
\u2013 External evidence arises
to suggest that the rate
used is not appropriate
to the business.
\u2013 Discount rate
decreases by 1%.
\u2013 Discount rate increases
by 1%.
Sensitivity of VIU to reasonably possible changes in key assumptions
In $bn (unless otherwise stated)
At 31 Dec 2024
At 31 Dec 2023
HSBC North America Holdings Inc.
VIU
13.3
12.8
Impact on VIU
100bps decrease in the discount rate \u2013 single variable1
1.5
1.6
100bps increase in the discount rate \u2013 single variable1
(1.2)
(1.2)
10% decrease in forecast profitability \u2013 single variable1
(1.3)
(1.3)
1The recoverable amount of HSBC Overseas Holdings (UK) Limited represents the aggregate of recoverable amounts of the underlying subsidiaries. Single
variable sensitivity analysis on a single subsidiary may therefore not be representative of the aggregate impact of the change in the variable.
Subsidiaries with significant non-controlling interests
2024
2023
Hang Seng Bank Limited
Proportion of ownership interests and voting rights held by non-controlling interests (%)1
36.88
37.86
Place of business
Hong Kong
Hong Kong
$m
$m
Profit attributable to non-controlling interests
905
889
Accumulated non-controlling interests of the subsidiary
6,879
6,877
Dividends paid to non-controlling interests
620
490
Summarised financial information:
\u2013\u00a0 total assets
229,069
214,321
\u2013\u00a0 total liabilities
208,908
194,621
\u2013\u00a0 net operating income before changes in expected credit losses and other credit impairment charges
5,249
5,210
\u2013\u00a0 profit for the year
2,434
2,356
\u2013\u00a0 total comprehensive income for the year
2,482
2,723
1This includes the Group\u2019s shareholding held under trading books 0.06% (2023: 0.09%).
HSBC Holdings
Details of HSBC Holdings\u2019 subsidiaries are shown in Note 38.
Transactions and balances during the year with subsidiaries
2024
2023
Highest balance
during the year
Balance at
31 Dec
Highest balance
during the year
Balance at
31 Dec
$m
$m
$m
$m
Assets
Cash and balances with HSBC undertakings
9,342
2,548
8,396
7,029
Financial assets with HSBC undertakings designated and otherwise mandatorily
measured at fair value
66,030
61,286
60,309
59,879
Derivatives
3,391
3,054
4,010
3,344
Loans and advances to HSBC undertakings
37,677
37,677
28,213
27,354
Prepayments, accrued income and other assets
7,108
4,216
7,417
5,145
Investments in subsidiaries
160,805
152,337
167,542
159,478
Total related party assets at 31 Dec
284,353
261,118
275,887
262,229
Liabilities
Amounts owed to HSBC undertakings
231
231
179
168
Derivatives
7,944
5,340
9,309
6,090
Accruals, deferred income and other liabilities
399
194
505
341
Subordinated liabilities
1,202
\u2014
927
913
Total related party liabilities at 31 Dec
9,776
5,765
10,920
7,512
Guarantees and commitments
7,440
7,327
7,723
7,723
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.
Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company.
HSBC Holdings incurs a charge for these employees equal to the contributions paid into the scheme on their behalf. Disclosure in relation to
the scheme is made in Note 5.
Subsidiaries
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
AI Nominees (UK) One Limited
100.00
12
AI Nominees (UK) Two Limited
100.00
12
Almacenadora Banpacifico S.A. (In
Liquidation)
N/A
1, 13
Assetfinance December (F) Limited
100.00
14
Assetfinance December (H) Limited
100.00
12
Assetfinance December (P) Limited
100.00
12
Assetfinance December (R) Limited
100.00
12
Assetfinance June (A) Limited
100.00
12
Assetfinance June (D) Limited
100.00
14
Assetfinance March (B) Limited
100.00
15
Assetfinance March (D) Limited
100.00
14
Assetfinance March (F) Limited
100.00
12
Assetfinance September (F) Limited
100.00
12
Assetfinance September (G) Limited
100.00
14
B&Q Financial Services Limited
100.00
12
Banco HSBC S.A.
100.00
16
Banco Nominees (Guernsey) Limited
100.00
17
Banco Nominees 2 (Guernsey) Limited
100.00
17
Banco Nominees Limited
100.00
18
Beau Soleil Limited Partnership
N/A
1, 19
Beijing HSBC Real Estate Leasing Company
Limited
N/A
1, 20
Beijing Miyun HSBC Rural Bank Company
Limited
100.00
11, 21
BentallGreenOak China Real Estate
Investments, L.P.
N/A
1, 22
Canada Crescent Nominees (UK) Limited (In
Liquidation)
100.00
23
Canada Square Nominees (UK) Limited
100.00
12
Capco/Cove, Inc.
100.00
24
Card-Flo #3, Inc.
100.00
25
CC&H Holdings LLC
N/A
1, 26
CCF & Partners Asset Management Limited
100.00
(99.99)
12
Charterhouse Administrators (D.T.) Limited
100.00
(99.99)
12
Charterhouse Management Services Limited
100.00
(99.99)
12
Charterhouse Pensions Limited
100.00
12
Chongqing Dazu HSBC Rural Bank Company
Limited
100.00
11, 28
Chongqing Fengdu HSBC Rural Bank
Company Limited
100.00
11, 29
Chongqing Rongchang HSBC Rural Bank
Company Limited
100.00
11, 30
CI 10 LP Inc
N/A
107
COIF Nominees Limited
N/A
1, 12
Corsair IV Financial Services Capital Partners -
B L.P
N/A
1, 31
D9 LP Inc
N/A
107
Dalian Pulandian HSBC Rural Bank Company
Limited
100.00
11, 32
Decision One Mortgage Company, LLC
N/A
1, 33
Dempar 1
100.00
(99.99)
5, 34
Desarrollo Turistico, S.A. de C.V. (In
Liquidation)
100.00
(99.99)
13
Electronic Data Process M\u00e9xico, S.A. de C.V.
100.00
35
ERISA Actions Europe N\u00b02
N/A
1, 175
ERISA Actions Grandes Valeurs
N/A
1, 175
ERISA Opportunities
N/A
1, 175
Eton Corporate Services Limited
100.00
17
Flandres Contentieux S.A.
100.00
(99.99)
5, 34
Fonci\u00e8re Elys\u00e9es
100.00
(99.99)
5, 34
Fujian Yongan HSBC Rural Bank Company
Limited
100.00
11, 36
Fulcher Enterprises Company Limited
100.00
(63.12)
37
Fundacion HSBC, A.C.
100.00
(99.99)
2, 9, 13
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
Giller Ltd.
100.00
24
GPIF Co-Investment, LLC
N/A
1, 25
Griffin International Limited
100.00
12
Grupo Financiero HSBC, S. A. de C. V.
99.99
13
Guangdong Enping HSBC Rural Bank
Company Limited
100.00
11, 38
Guangzhou HSBC Real Estate Company Ltd
100.00
11, 39
H5 LP Inc
N/A
107
H8 LP Inc
N/A
107
H9 LP Inc
N/A
107
Hang Seng (Nominee) Limited
100.00
(63.12)
37
Hang Seng Bank (China) Limited
100.00
(63.12)
11, 40
Hang Seng Bank (Trustee) Limited
100.00
(63.12)
37
Hang Seng Bank Limited
63.12
37
Hang Seng Bullion Company Limited
100.00
(63.12)
37
Hang Seng Credit Limited
100.00
(63.12)
37
Hang Seng Data Services Limited
100.00
(63.12)
37
Hang Seng Finance Limited
100.00
(63.12)
37
Hang Seng Financial Information Limited
100.00
(63.12)
37
Hang Seng Indexes (Netherlands) B.V.
N/A
1, 41
Hang Seng Indexes Company Limited
100.00
(63.12)
37
Hang Seng Insurance Company Limited
100.00
(63.12)
37
Hang Seng Investment Management Limited
100.00
(63.12)
37
Hang Seng Investment Services Limited
100.00
(63.12)
37
Hang Seng Japan Topix 100 Index ETF
66.43
19
Hang Seng Qianhai Fund Management
Company Limited
70.00
(43.86)
11, 42
Hang Seng Real Estate Management Limited
100.00
(63.12)
37
Hang Seng Securities Limited
100.00
(63.12)
37
Hang Seng Security Management Limited
100.00
(63.12)
37
HASE Wealth Limited
N/A
137
Haseba Investment Company Limited
100.00
(63.12)
37
HBPH Corporation (In Dissolution)
99.99
43
HFC Bank Limited (In Liquidation)
100.00
44
High Time Investments Limited
100.00
(63.12)
37
HLF
100.00
(99.99)
5, 34
Honey Blue Enterprises Limited (\u4ea8\u4eac\u4f01\u696d\u6709
\u9650\u516c\u53f8)
100.00
19
Honey Green Enterprises Ltd.
100.00
45
Honey Grey Enterprises Limited (\u4ea8\u7a57\u4f01\u696d\u6709
\u9650\u516c\u53f8)
100.00
19
Honey Silver Enterprises Limited
100.00
19
Household International Europe Limited (In
Liquidation)
100.00
44
Household Pooling Corporation
100.00
47
Housing (USA) LLP
N/A
1, 25
HSBC (BGF) Investments Limited
100.00
12
HSBC (General Partner) Limited
100.00
3, 48
HSBC (Guernsey) GP PCC Limited
100.00
17
HSBC (Kuala Lumpur) Nominees Sdn Bhd
100.00
49
HSBC (Malaysia) Trustee Berhad
100.00
50
HSBC (Singapore) Nominees Pte Ltd
100.00
51
HSBC Actions Europe
50.66
175
HSBC Agency (India) Private Limited
100.00
52
HSBC Alternative Investments Limited
100.00
12
HSBC Amanah Malaysia Berhad
100.00
49
HSBC Americas Corporation (Delaware)
100.00
25
HSBC Asia Holdings B.V.
100.00
12
HSBC Asia Holdings Limited
100.00
3, 19
HSBC Asia Pacific Holdings (UK) Limited
100.00
6, 12
HSBC Asset Finance (UK) Limited
100.00
12
HSBC Asset Finance M.O.G. Holdings (UK)
Limited
100.00
12
HSBC Asset Management (Fund Services UK)
Limited
100.00
12
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Asset Management (India) Private
Limited
99.99
53
HSBC Asset Management (Japan) Limited
100.00
54
HSBC Assurances Vie (France)
100.00
(99.99)
5, 55
HSBC Australia Holdings Pty Limited
100.00
6, 56
HSBC BANK (CHILE)
100.00
57
HSBC Bank (China) Company Limited
100.00
11, 58
HSBC Bank (General Partner) Limited
100.00
48
HSBC Bank (Mauritius) Limited
100.00
59
HSBC Bank (Singapore) Limited
100.00
51
HSBC Bank (Taiwan) Limited
100.00
60
HSBC Bank (Uruguay) S.A.
100.00
61
HSBC Bank (Vietnam) Ltd.
100.00
62
HSBC Bank A.S.
100.00
63
HSBC Bank Australia Limited
100.00
56
HSBC Bank Bermuda Limited
100.00
18
HSBC Bank Capital Funding (Sterling 1) LP
N/A
1, 48
HSBC Bank Egypt S.A.E
94.54
64
HSBC Bank Malaysia Berhad
100.00
4, 49
HSBC Bank Malta p.l.c.
70.03
65
HSBC Bank Middle East Limited
100.00
4, 66
HSBC Bank Middle East Limited
Representative Office Morocco SARL (In
Liquidation)
100.00
67
HSBC Bank Pension Trust (UK) Limited
100.00
12
HSBC Bank plc
100.00
3, 4, 12
HSBC Bank USA, National Association
100.00
4, 68
HSBC Branch Nominee (UK) Limited
100.00
14
HSBC Brasil Holding S.A.
100.00
16
HSBC Broking Forex (Asia) Limited
100.00
19
HSBC Broking Futures (Asia) Limited
100.00
19
HSBC Broking Futures (Hong Kong) Limited
100.00
19
HSBC Broking Securities (Asia) Limited
100.00
19
HSBC Broking Securities (Hong Kong) Limited
100.00
19
HSBC Broking Services (Asia) Limited
100.00
19
HSBC Capital (USA), Inc.
100.00
25
HSBC Capital Funding (Dollar 1) L.P.
N/A
1, 48
HSBC Card Services Inc.
100.00
25
HSBC Casa de Bolsa, S.A. de C.V., Grupo
Financiero HSBC
100.00
(99.99)
13
HSBC Cayman Limited
100.00
69
HSBC Cayman Services Limited
100.00
69
HSBC Client Holdings Nominee (UK) Limited
100.00
12
HSBC Client Nominee (Jersey) Limited
100.00
2, 70
HSBC Climate Tech Venture Capital Fund
SCSp
87.15
177
HSBC Columbia Funding, LLC
N/A
125
HSBC Continental Europe
99.99
5, 34
HSBC Corporate Advisory (Malaysia) Sdn Bhd
100.00
49
HSBC Corporate Finance (Hong Kong) Limited
100.00
19
HSBC Corporate Secretary (UK) Limited
100.00
3, 12
HSBC Corporate Services (Shanghai) Co., Ltd.
N/A
1, 71
HSBC Corporate Trustee Company (UK)
Limited
100.00
12
HSBC Custody Nominees (Australia) Limited
100.00
56
HSBC Custody Services (Guernsey) Limited
100.00
17
HSBC Daisy Investments (Mauritius) Limited
100.00
72
HSBC Diversified Loan Fund General Partner
Sarl
N/A
1, 73
HSBC Diversified Loan SCSp-RAIF
N/A
73
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Electronic Data Processing
(Guangdong) Limited
100.00
11, 74
HSBC Electronic Data Processing (Malaysia)
Sdn Bhd
100.00
75
HSBC Electronic Data Processing
(Philippines), Inc.
99.99
76
HSBC Electronic Data Processing India
Private Limited
100.00
77
HSBC Electronic Data Processing Lanka
(Private) Limited
100.00
78
HSBC Electronic Data Service Delivery
(Egypt) S.A.E
100.00
79
HSBC Equipment Finance (UK) Limited
100.00
14
HSBC Equity (UK) Limited
100.00
12
HSBC EURO Protect 80+
78.06
55
HSBC Europe B.V.
100.00
12
HSBC European Senior Direct Lending Fund
2023 RAIF SICAV-S.A.
43.00
91
HSBC Executor & Trustee Company (UK)
Limited
100.00
14
HSBC Factoring (France)
100.00
(99.99)
5, 34
HSBC Finance (Netherlands)
100.00
3, 12
HSBC Finance Corporation
100.00
25
HSBC Finance Limited
100.00
12
HSBC Finance Transformation (UK) Limited
100.00
12
HSBC Financial Advisors Singapore Pte. Ltd.
100.00
2, 51
HSBC Financial Services (Lebanon) S.A.L
99.83
80
HSBC Financial Technology Venture Capital
Fund SCSp
100.00
177
HSBC FinTech Services (Shanghai) Company
Limited
N/A
1, 2, 81
HSBC Global Asset Management (Bermuda)
Limited
100.00
4, 18
HSBC Global Asset Management
(Deutschland) GmbH
100.00
(99.99)
7, 82
HSBC Global Asset Management (France)
100.00
(99.99)
5, 55
HSBC Global Asset Management (Hong
Kong) Limited
100.00
83
HSBC Global Asset Management (Malta)
Limited
100.00
(70.03)
84
HSBC Global Asset Management (M\u00e9xico),
S.A. de C.V., Sociedad Operadora de Fondos
de Inversi\u00f3n, Grupo Financiero HSBC
100.00
(99.99)
13
HSBC Global Asset Management (Singapore)
Limited
100.00
51
HSBC Global Asset Management
(Switzerland) AG
100.00
5, 171
HSBC Global Asset Management (Taiwan)
Limited
100.00
86
HSBC Global Asset Management (UK)
Limited
100.00
12
HSBC Global Asset Management (USA) Inc.
100.00
87
HSBC Global Asset Management Holdings
(Bahamas) Limited
100.00
88
HSBC Global Asset Management Limited
100.00
3, 12
HSBC Global Custody Nominee (UK) Limited
100.00
12
HSBC Global Custody Proprietary Nominee
(UK) Limited
100.00
12
HSBC Global Funds ICAV - Digital Leaders
Equity Fund
100.00
27
HSBC Global Funds ICAV - Euro Lower
Carbon Government 10+ Year Bond UCITS
ETF
100.00
27
HSBC Global Funds ICAV - Euro Lower
Carbon Government 1-3 Year Bond UCITS
ETF
100.00
27
HSBC Global Funds ICAV - Global Aggregate
Bond ESG UCITS ETF
100.00
27
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Global Funds ICAV - Global Equity
Index Fund -ACEUR
N/A
1, 176
HSBC Global Funds ICAV - Japan Equity Index
Fund
99.77
105
HSBC Global Infrastructure Debt Fund Feeder
SCA SICAV-RAIF- Global Infrastructure Debt
EUR
N/A
1, 91
HSBC GLOBAL INVESTMENT FUNDS - ASIA
ESG BOND
93.03
129
HSBC Global Investment Funds \u2013 ESG Short
Duration Credit Bond
74.22
129
HSBC GLOBAL INVESTMENT FUNDS -
GLOBAL EMERGING MARKETS EQUITY
56.47
129
HSBC Global Investment Funds - Strategic
Duration and Income Bond
100.00
129
HSBC Global Multi-asset Seeding course
(Stable Type)
67.39
54
HSBC Global Services (Canada) Limited
100.00
89
HSBC Global Services (China) Holdings
Limited
100.00
12
HSBC Global Services (Hong Kong) Limited
100.00
19
HSBC Global Services (UK) Limited
100.00
12
HSBC Global Services Limited
100.00
3, 12
HSBC Global Transition Infrastructure Debt
Fund RAIF SICAV-S.A.
31.00
91
HSBC Group Management Services Limited
100.00
12
HSBC Group Nominees UK Limited
100.00
3, 12
HSBC Holdings B.V.
100.00
12
HSBC Horizon 2034 2036 A 3D
76.72
175
HSBC India Small Cap Equity Fund (QII\uff09
40.38
54
HSBC Infrastructure Debt GP 1 S.\u00e0 r.l.
N/A
1, 91
HSBC Infrastructure Debt GP 2 S.\u00e0 r.l.
N/A
1, 91
HSBC Innovation Bank Limited
100.00
92
HSBC INSN (Non Operating) Pte. Ltd. (In
Liquidation)
100.00
51
HSBC Institutional Trust Services (Asia)
Limited
100.00
19
HSBC Institutional Trust Services (Bermuda)
Limited
100.00
18
HSBC Institutional Trust Services (Mauritius)
Limited
100.00
93
HSBC Institutional Trust Services (Singapore)
Limited
100.00
51
HSBC Insurance (Asia) Limited
100.00
95
HSBC Insurance (Asia-Pacific) Holdings
Limited
100.00
83
HSBC Insurance (Bermuda) Limited
100.00
96
HSBC Insurance Agency (USA) Inc.
100.00
97
HSBC Insurance Brokerage Company Limited
N/A
1,2, 98
HSBC Insurance Brokers Greater China
Limited
100.00
83
HSBC Insurance SAC 1 (Bermuda) Limited
100.00
18
HSBC Insurance SAC 2 (Bermuda) Limited
100.00
18
HSBC Insurance Services Holdings Limited
(In Liquidation)
100.00
23
HSBC International Finance Corporation
(Delaware)
100.00
100
HSBC International Trustee (BVI) Limited
100.00
10, 101
HSBC International Trustee (Holdings) Pte.
Limited
100.00
51
HSBC International Trustee Limited
100.00
102
HSBC Inversiones S.A.
100.00
57
HSBC InvestDirect (India) Private Limited
99.99
53
HSBC InvestDirect Financial Services (India)
Limited
99.99
53
HSBC InvestDirect Sales & Marketing (India)
Private Limited
98.99
(98.98)
103
HSBC InvestDirect Securities (India) Private
Limited
99.99
53
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Investment and Insurance Brokerage,
Philippines Inc.
99.99
104
HSBC Investment Bank Holdings B.V.
100.00
12
HSBC Investment Bank Holdings Limited
100.00
12
HSBC Investment Company Limited
100.00
3, 12
HSBC Investment Funds (Hong Kong) Limited
100.00
83
HSBC Investment Funds (Luxembourg) SA
100.00
105
HSBC Invoice Finance (UK) Limited
100.00
14
HSBC Issuer Services Common Depositary
Nominee (UK) Limited
100.00
12
HSBC Latin America B.V.
100.00
12
HSBC Latin America Holdings (UK) Limited
100.00
3, 12
HSBC Leasing (Asia) Limited
100.00
19
HSBC Legacy Partnership Limited
100.00
12
HSBC Life (Bermuda) Limited
100.00
18
HSBC Life (Cornell Centre) Limited
100.00
95
HSBC Life (Edwick Centre) Limited
100.00
95
HSBC Life (International) Limited
100.00
18
HSBC Life (Property) Limited
100.00
95
HSBC Life (Singapore) Pte. Ltd.
100.00
51
HSBC Life (Tsing Yi Industrial) Limited
100.00
95
HSBC Life (UK) Limited
100.00
12
HSBC Life (Workshop) Limited
100.00
95
HSBC Life Assurance (Malta) Ltd.
100.00
(70.03)
84
HSBC Life Insurance Company Limited
100.00
11, 106
HSBC LU Nominees Limited
100.00
12
HSBC Management (Guernsey) Limited
100.00
107
HSBC Markets (USA) Inc.
100.00
25
HSBC Marking Name Nominee (UK) Limited
100.00
12
HSBC Master Trust Trustee Limited (In
Liquidation)
100.00
23
HSBC Mexico, S.A., Institucion de Banca
Multiple, Grupo Financiero HSBC
99.99
13
HSBC Middle East Asset CO. LLC
100.00
108
HSBC Middle East Holdings B.V.
100.00
3, 4, 66
HSBC Middle East Leasing Partnership
N/A
1, 109
HSBC Middle East Securities L.L.C
100.00
110
HSBC Mix Dynamique
58.13
55
HSBC Mortgage Corporation (USA)
100.00
25
HSBC Multi-Asset Style Factors S
N/A
1, 175
HSBC Nominees (Asing) Sdn Bhd
100.00
49
HSBC Nominees (Hong Kong) Limited
100.00
19
HSBC Nominees (New Zealand) Limited
100.00
111
HSBC Nominees (Tempatan) Sdn Bhd
100.00
49
HSBC North America Holdings Inc.
100.00
4, 25
HSBC Operational Services GmbH
100.00
(99.99)
7, 82
HSBC Overseas Holdings (UK) Limited
100.00
3, 12
HSBC Overseas Investments Corporation
(New York)
100.00
112
HSBC Overseas Nominee (UK) Limited
100.00
12
HSBC PB Corporate Services 1 Limited
100.00
113
HSBC PB Services (Suisse) SA
100.00
114
HSBC Pension Trust (Ireland) DAC
100.00
115
HSBC Pensiones, S.A. (In Liquidation)
100.00
(99.99)
13
HSBC PI Holdings (Mauritius) Limited
100.00
116
HSBC Portfolios \u2013 World Selection 5 (Part
ACHEUR)
N/A
1, 105
HSBC Portfoy Yonetimi A.S.
100.00
117
HSBC Preferential LP (UK)
100.00
12
HSBC Private Bank (Luxembourg) S.A.
100.00
(99.99)
105
HSBC Private Bank (Suisse) SA
100.00
114
HSBC Private Bank (UK) Limited
100.00
12
HSBC Private Banking Holdings (Suisse) SA
100.00
114
HSBC Private Banking Nominee 3 (Jersey)
Limited
100.00
113
HSBC Private Equity Investments (UK)
Limited
100.00
12
HSBC Private Markets Management SARL
N/A
1, 2, 118
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Private Trustee (Hong Kong) Limited
100.00
19
HSBC Professional Services (India) Private
Limited
100.00
119
HSBC Property (UK) Limited
100.00
12
HSBC Property Funds (Holding) Limited
100.00
12
HSBC Provident Fund Trustee (Hong Kong)
Limited
100.00
19
HSBC Qianhai Securities Limited
90.00
11, 120
HSBC RCF Partnership Fund RAIF SICAV-S.A.
11.00
175
HSBC Real Estate Leasing (France)
100.00
(99.99)
5, 34
HSBC REGIO Fund General Partner S.\u00e0 r.l.
100.00
91
HSBC REIM (France)
100.00
(99.99)
5, 55
HSBC Responsible Investment Funds - SRI
Balanced
64.14
55
HSBC Responsible Investment Funds - SRI
Dynamic
72.79
55
HSBC Resposible Investment Funds - SRI
Global Equity A
N/A
1, 175
HSBC Retirement Benefits Trustee (UK)
Limited
100.00
3, 12
HSBC Retirement Services Limited (In
Liquidation)
100.00
23
HSBC Saudi Arabia, Closed Joint Stock
Company
100.00
(66.19)
121
HSBC Securities (Egypt) S.A.E. (In
Liquidation)
100.00
(94.65)
122
HSBC Securities (Japan) Co., Ltd.
100.00
54
HSBC Securities (Singapore) Pte Limited
100.00
51
HSBC Securities (South Africa) (Pty) Limited
100.00
123
HSBC Securities (Taiwan) Corporation Limited
100.00
60
HSBC Securities (USA) Inc.
100.00
25
HSBC Securities and Capital Markets (India)
Private Limited
99.99
6, 103
HSBC Securities Brokers (Asia) Limited
100.00
19
HSBC Securities Investments (Asia) Limited
100.00
19
HSBC Securities Services (Bermuda) Limited
100.00
18
HSBC Securities Services (Guernsey) Limited
100.00
17
HSBC Securities Services (Ireland) DAC
100.00
115
HSBC Securities Services (Luxembourg) S.A.
100.00
105
HSBC Securities Services Holdings (Ireland)
DAC
100.00
115
HSBC Securities Services Nominees Limited
100.00
19
HSBC Seguros, S.A de C.V., Grupo Financiero
HSBC
100.00
(99.99)
13
HSBC Select Dynamic
80.59
55
HSBC Select Equity
86.38
55
HSBC Select Flexible
63.93
55
HSBC Semfi Limited
75.00
12
HSBC Senior UK Direct Lending 2020 RAIF
SICAV-S.A
N/A
91
HSBC Senior UK Direct Lending Fund II RAIF
SICAV-S.A.
72.46
91
HSBC Service Company Germany GmbH
100.00
(99.99)
7, 82
HSBC Service Delivery (Polska) Sp. z o.o.
100.00
124
HSBC Services (France)
100.00
(99.99)
5, 34
HSBC Services Japan Limited
100.00
88
HSBC Services USA Inc.
100.00
125
HSBC Servicios Financieros, S.A. de C.V
100.00
(99.99)
13
HSBC Servicios, S.A. DE C.V., Grupo
Financiero HSBC
100.00
(99.99)
13
HSBC SFT (C.I.) Limited
100.00
17
HSBC Singapore Dollar Liquidity Fund
76.37
51
HSBC Small Cap France
52.70
55
HSBC Software Development (Guangdong)
Limited
100.00
11, 126
HSBC Software Development (India) Private
Limited
100.00
127
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Software Development (Malaysia) Sdn
Bhd
100.00
75
HSBC Specialist Investments Limited
100.00
6, 12
HSBC Technology & Services (China) Limited
(In Liquidation)
N/A
1, 128
HSBC Technology & Services (USA) Inc.
100.00
25
HSBC Transaction Services GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus & Burkhardt (International)
S.A.
100.00
(99.99)
129
HSBC Trinkaus & Burkhardt Gesellschaft fur
Bankbeteiligungen mbH
100.00
(99.99)
82
HSBC Trinkaus & Burkhardt GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus Family Office GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus Real Estate GmbH
100.00
(99.99)
7, 82
HSBC Trust Company (Delaware), National
Association
100.00
100
HSBC Trust Company (UK) Limited
100.00
12
HSBC Trustee (C.I.) Limited
100.00
113
HSBC Trustee (Cayman) Limited
100.00
69
HSBC Trustee (Guernsey) Limited
100.00
17
HSBC Trustee (Hong Kong) Limited
100.00
19
HSBC Trustee (Singapore) Limited
100.00
51
HSBC Trustees (India) Private Limited
99.99
103
HSBC UK Bank plc
100.00
3, 14
HSBC UK Client Nominee Limited
100.00
14
HSBC UK Covered Bonds LLP
N/A
1, 14
HSBC UK Societal Projects Limited
N/A
1, 14
HSBC USA Inc.
100.00
4, 112
HSBC Ventures USA Inc.
100.00
25
HSBC Violet Investments (Mauritius) Limited
100.00
72
HSBC Wealth Client Nominee Limited
100.00
14
HSBC World Equity Protect 80
98.87
55
HSBC Yatirim Menkul Degerler A.S.
100.00
63
HSI Asset Securitization Corporation
100.00
25
HSI International Limited
100.00
(63.12)
37
HSIL Investments Limited
100.00
12
Hubei Macheng HSBC Rural Bank Company
Limited
100.00
11, 131
Hubei Suizhou Cengdu HSBC Rural Bank
Company Limited
100.00
11, 132
Hubei Tianmen HSBC Rural Bank Company
Limited
100.00
11, 133
Hunan Pingjiang HSBC Rural Bank Company
Limited
100.00
11, 134
I3 LP Inc.
N/A
107
Imenson Limited
100.00
(63.12)
37
INHK PC LP Inc
100.00
17
INHK PE LP Inc
100.00
17
Inmobiliaria Bisa, S.A. de C.V.
99.99
13
Inmobiliaria Grufin, S.A. de C.V.
100.00
(99.99)
13
Inmobiliaria Guatusi, S.A. de C.V.
100.00
(99.99)
13
Internationale Kapitalanlagegesellschaft mit
beschr\u00e4nkter Haftung
100.00
(99.99)
82
J6 LP Inc
N/A
107
James Capel (Nominees) Limited
100.00
12
James Capel (Taiwan) Nominees Limited
100.00
12
Keyser Ullmann Limited
100.00
(99.99)
12
L1 LP Inc
N/A
107
Lion Corporate Services Limited
100.00
19
Lion International Corporate Services Limited
100.00
135
Lion International Management Limited
100.00
135
Lion Management (Hong Kong) Limited
100.00
19
Lyndholme Limited
100.00
19
Marks and Spencer Financial Services plc
100.00
136
Marks and Spencer Unit Trust Management
Limited
100.00
136
Midcorp Limited
100.00
12
Midland Bank (Branch Nominees) Limited
100.00
14
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
Midland Nominees Limited
100.00
14
MP Payments Group Limited
100.00
12
MP Payments Middle East AE L.L.C.
100.00
137
MP Payments Netherlands B.V.
100.00
138
MP Payments Operations Limited
100.00
12
MP Payments Singapore Pte. Ltd.
100.00
51
MP Payments UK Limited
100.00
12
P2 LP Inc
N/A
107
Prudential Client HSBC GIS Nominee (UK)
Limited
100.00
12
PT Bank HSBC Indonesia
98.94
139
PT HSBC Sekuritas Indonesia
85.00
140
R/CLIP Corp.
100.00
25
Real Estate Collateral Management Company
100.00
25
Red Hexagon Energy Transition Asia GP S.\u00e0
r.l.
100.00
2, 91
Republic Nominees Limited
100.00
17
RLUKREF Nominees (UK) One Limited
100.00
12
RLUKREF Nominees (UK) Two Limited
100.00
12
S.A.P.C. - Ufipro Recouvrement
99.99
9, 34
Saf Baiyun
100.00
(99.99)
5, 34
Saf Guangzhou
100.00
(99.99)
5, 34
SCI HSBC Assurances Immo
100.00
(99.99)
9, 55
SCPI Elysees Grand Large
98.50
175
Select INKA
N/A
1, 82
Serai Limited
100.00
19
SFM
100.00
(99.99)
5, 34
SFSS Nominees (Pty) Limited
100.00
123
Shandong Rongcheng HSBC Rural Bank
Company Limited
100.00
11, 141
Shenzhen HSBC Development Company Ltd
100.00
11, 142
Sico Limited
100.00
143
SilkRoad Fund Management S.\u00e0.r.l
100.00
2, 144
Silkroad GP II Limited
100.00
2, 145
Silkroad GP II S.a.r.l.
100.00
2, 144
Silkroad GP Limited
100.00
2, 69
Silkroad GP SC S.a r.l
100.00
2, 146
Silkroad Property Partners K.K. (In Liquidation)
100.00
147
Silkroad Property Partners Limited
100.00
148
Silkroad Property Partners Management
Consultancy Limited
N/A
1, 149
Silkroad Property Partners PTE. LTD.
100.00
150
SNC Les Oliviers D'Antibes
60.00
(59.99)
9, 55
SNCB/M6-2007 A
100.00
(99.99)
2, 5, 34
SNCB/M6-2007 B
100.00
(99.99)
2, 5, 34
SNCB/M6-2008 A
100.00
(99.99)
2, 5, 34
Soci\u00e9t\u00e9 Fran\u00e7aise et Suisse
100.00
(99.99)
5, 34
Somers Dublin DAC
100.00
(99.99)
115
Somers Nominees (Far East) Limited
100.00
18
Sopingest
100.00
(99.99)
5, 34
South Yorkshire Light Rail Limited
100.00
12
St Cross Trustees Limited
100.00
14
Sun Hung Kai Development (Lujiazui III)
Limited
100.00
11, 151
The Hongkong and Shanghai Banking
Corporation Limited
100.00
19
Tooley Street View Limited
100.00
3, 12
Trinkaus Europa Immobilien-Fonds Nr.3
Objekt Utrecht Verwaltungs-GmbH
100.00
(99.99)
7, 82
Trinkaus Immobilien-Fonds
Geschaeftsfuehrungs-GmbH
100.00
(99.99)
7, 82
Trinkaus Immobilien-Fonds Verwaltungs-
GmbH
100.00
(99.99)
7, 82
Trinkaus Private Equity Management GmbH
100.00
(99.99)
7, 82
Trinkaus Private Equity Verwaltungs GmbH
100.00
(99.99)
7, 82
Turnsonic (Nominees) Limited
100.00
14
Valeurs Mobili\u00e8res Elys\u00e9es
100.00
(99.99)
5, 34
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
W4 LP Inc
N/A
107
WARDLEY LIMITED
100.00
19
Wayfoong Nominees Limited
100.00
19
Westminster House, LLC
N/A
1, 25
Woodex Limited
100.00
18
Yan Nin Development Company Limited
100.00
(63.12)
37
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-985": { "value": "
20Structured entities
HSBC is mainly involved with both consolidated and unconsolidated structured entities through the securitisation of financial assets, conduits
and investment funds, established either by HSBC or a third party.
Consolidated structured entities
Total assets of HSBC\u2019s consolidated structured entities, split by entity type
Conduits
Securitisations
HSBC managed funds
Other
Total
$bn
$bn
$bn
$bn
$bn
At 31 Dec 2024
2.4
7.0
7.2
1.8
18.4
At 31 Dec 2023
3.6
7.8
5.5
8.2
25.1
Conduits
HSBC has established and manages two types of conduits: securities investment conduits (\u2018SICs\u2019) and multi-seller conduits.
Securities investment conduits
The SICs purchase highly rated ABSs to facilitate tailored investment opportunities.
\u2013 At 31 December 2024, Solitaire, HSBC\u2019s principal SIC, held $0.7bn of ABSs (2023: $1.0bn). It is currently funded entirely by commercial
paper (\u2018CP\u2019) issued to HSBC. At 31 December 2024, HSBC held $1.0bn of CP (2023: $1.3bn).
Multi-seller conduit
HSBC\u2019s multi-seller conduit was established to provide access to flexible market-based sources of finance for its clients. Currently, HSBC bears
risk equal to the transaction-specific facility offered to the multi-seller conduit, amounting to $5.2bn at 31\u00a0December 2024 (2023:\u00a0$6.1bn). First
loss protection is provided by the originator of the assets, and not by HSBC, through transaction-specific credit enhancements. A layer of loss
protection is provided by HSBC in the form of a programme-wide enhancement facility.
Securitisations
HSBC uses structured entities to securitise customer loans and advances it originates in order to diversify its sources of funding for asset
origination and capital efficiency purposes. The loans and advances are transferred by HSBC to the structured entities for cash or synthetically,
and the structured entities issue debt securities to investors. Where synthetic securitisations are used, the credit risk associated with the loan
portfolio of assets is transferred to the structured entities through loan portfolio financial guarantees.
HSBC managed funds
HSBC has established a number of money market and non-money market funds. Where it is deemed to be acting as principal rather than agent
in its role as investment manager, HSBC controls these funds.
Other
HSBC has entered into a number of transactions in the normal course of business, which include asset and structured finance transactions
where it has control of the structured entity. In addition, HSBC is deemed to control a\u00a0number of third-party managed funds through its
involvement as a principal in the funds.
Unconsolidated structured entities
The term \u2018unconsolidated structured entities\u2019 refers to all structured entities not controlled by HSBC. The Group enters\u00a0into transactions with
unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment
opportunities.
Nature and risks associated with HSBC interests in unconsolidated structured entities
Securitisations
HSBC managed
funds
Non-HSBC
managed funds
Other
Total
Total asset values of the entities ($m)
0\u2013500
167
344
1,215
46
1,772
500\u20132,000
2
75
911
2
990
2,000\u20135,000
\u2014
30
348
1
379
5,000\u201325,000
\u2014
21
212
\u2014
233
25,000+
\u2014
2
33
\u2014
35
Number of entities at 31 Dec 2024
169
472
2,719
49
3,409
$bn
$bn
$bn
$bn
$bn
Total assets in relation to HSBC\u2019s interests in the unconsolidated
structured entities
5.4
12.1
25.4
2.4
45.3
\u2013\u00a0 trading assets
\u2014
0.1
\u2014
\u2014
0.1
\u2013\u00a0 financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
\u2014
7.8
22.2
\u2014
30.0
\u2013\u00a0 loans and advances to customers
5.4
\u2014
0.7
1.5
7.6
\u2013\u00a0 financial investments
\u2014
0.2
0.4
\u2014
0.6
\u2013\u00a0 assets held for sale
\u2014
4.0
2.1
\u2014
6.1
\u2013\u00a0 other assets
\u2014
\u2014
\u2014
0.9
0.9
Total liabilities in relation to HSBC\u2019s interests in the
unconsolidated structured entities
\u2014
\u2014
\u2014
0.4
0.4
\u2013\u00a0 other liabilities
\u2014
\u2014
\u2014
0.4
0.4
Other off-balance sheet commitments
\u2014
1.0
8.1
1.3
10.4
HSBC\u2019s maximum exposure at 31 Dec 2024
5.4
13.1
33.5
3.3
55.3
Total asset values of the entities ($m)
0\u2013500
120
337
1,271
42
1,770
500\u20132,000
4
96
1,069
3
1,172
2,000\u20135,000
\u2014
39
418
\u2014
457
5,000\u201325,000
\u2014
24
217
\u2014
241
25,000+
\u2014
3
11
\u2014
14
Number of entities at 31 Dec 2023
124
499
2,986
45
3,654
$bn
$bn
$bn
$bn
$bn
Total assets in relation to HSBC\u2019s interests in the unconsolidated
structured entities
3.2
13.9
20.7
3.3
41.1
\u2013\u00a0 trading assets
\u2014
0.6
\u2014
\u2014
0.6
\u2013\u00a0 financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
\u2014
12.6
19.7
\u2014
32.3
\u2013\u00a0 loans and advances to customers
3.2
\u2014
0.6
2.5
6.3
\u2013\u00a0 financial investments
\u2014
0.7
0.4
\u2014
1.1
\u2013\u00a0 other assets
\u2014
\u2014
\u2014
0.8
0.8
Total liabilities in relation to HSBC\u2019s interests in the
unconsolidated structured entities
\u2014
\u2014
\u2014
0.3
0.3
\u2013\u00a0 other liabilities
\u2014
\u2014
\u2014
0.3
0.3
Other off-balance sheet commitments
0.1
1.9
5.0
1.2
8.2
HSBC\u2019s maximum exposure at 31 Dec 2023
3.3
15.8
25.7
4.2
49.0
The maximum exposure to loss from HSBC\u2019s interests in unconsolidated structured entities represents the maximum loss it could incur as a
result of its involvement with these entities regardless of the probability of the loss being incurred.
\u2013 For commitments, guarantees and written credit default swaps, the maximum exposure to loss is the notional amount of potential future
losses.
\u2013 For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying
amount 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 that HSBC has entered into in order to
mitigate the Group\u2019s exposure to loss.
Securitisations
HSBC has interests in unconsolidated securitisation vehicles through holding notes issued by these entities. In addition, HSBC has investments
in ABSs issued by third-party structured entities.
HSBC managed funds
HSBC establishes and manages money market funds and non-money market investment funds to provide customers with investment
opportunities. Further information on funds under management is provided on page 107.
HSBC, as fund manager, may be entitled to receive management and performance fees based on the assets under management. HSBC may
also retain units in these funds.
Non-HSBC managed funds
HSBC purchases and holds units of third-party managed funds in order to facilitate business and meet customer needs.
Other
HSBC has established structured entities in the normal course of business, such as structured credit transactions for customers, to provide
finance to public and private sector infrastructure projects, and for asset and structured finance transactions.
In addition to the interests disclosed above, HSBC enters into derivative contracts, reverse repos and stock borrowing transactions with
structured entities. These interests arise in the normal course of business for the facilitation of third-party transactions and risk management
solutions.
HSBC sponsored structured entities
The amount of assets transferred to and income received from such sponsored structured entities during 2024 and 2023 was not significant.
38HSBC Holdings\u2019 subsidiaries, joint ventures and associates
In accordance with section 409 of the Companies Act 2006 a list of HSBC Holdings plc subsidiaries, joint ventures and associates, the
registered office addresses and the effective percentages of equity owned at 31 December 2024 are disclosed below.
Unless otherwise stated, the share capital comprises ordinary or common shares that are held by Group subsidiaries. The ownership
percentage is provided for each undertaking. The undertakings below are consolidated by HSBC unless otherwise indicated.
Subsidiaries
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
AI Nominees (UK) One Limited
100.00
12
AI Nominees (UK) Two Limited
100.00
12
Almacenadora Banpacifico S.A. (In
Liquidation)
N/A
1, 13
Assetfinance December (F) Limited
100.00
14
Assetfinance December (H) Limited
100.00
12
Assetfinance December (P) Limited
100.00
12
Assetfinance December (R) Limited
100.00
12
Assetfinance June (A) Limited
100.00
12
Assetfinance June (D) Limited
100.00
14
Assetfinance March (B) Limited
100.00
15
Assetfinance March (D) Limited
100.00
14
Assetfinance March (F) Limited
100.00
12
Assetfinance September (F) Limited
100.00
12
Assetfinance September (G) Limited
100.00
14
B&Q Financial Services Limited
100.00
12
Banco HSBC S.A.
100.00
16
Banco Nominees (Guernsey) Limited
100.00
17
Banco Nominees 2 (Guernsey) Limited
100.00
17
Banco Nominees Limited
100.00
18
Beau Soleil Limited Partnership
N/A
1, 19
Beijing HSBC Real Estate Leasing Company
Limited
N/A
1, 20
Beijing Miyun HSBC Rural Bank Company
Limited
100.00
11, 21
BentallGreenOak China Real Estate
Investments, L.P.
N/A
1, 22
Canada Crescent Nominees (UK) Limited (In
Liquidation)
100.00
23
Canada Square Nominees (UK) Limited
100.00
12
Capco/Cove, Inc.
100.00
24
Card-Flo #3, Inc.
100.00
25
CC&H Holdings LLC
N/A
1, 26
CCF & Partners Asset Management Limited
100.00
(99.99)
12
Charterhouse Administrators (D.T.) Limited
100.00
(99.99)
12
Charterhouse Management Services Limited
100.00
(99.99)
12
Charterhouse Pensions Limited
100.00
12
Chongqing Dazu HSBC Rural Bank Company
Limited
100.00
11, 28
Chongqing Fengdu HSBC Rural Bank
Company Limited
100.00
11, 29
Chongqing Rongchang HSBC Rural Bank
Company Limited
100.00
11, 30
CI 10 LP Inc
N/A
107
COIF Nominees Limited
N/A
1, 12
Corsair IV Financial Services Capital Partners -
B L.P
N/A
1, 31
D9 LP Inc
N/A
107
Dalian Pulandian HSBC Rural Bank Company
Limited
100.00
11, 32
Decision One Mortgage Company, LLC
N/A
1, 33
Dempar 1
100.00
(99.99)
5, 34
Desarrollo Turistico, S.A. de C.V. (In
Liquidation)
100.00
(99.99)
13
Electronic Data Process M\u00e9xico, S.A. de C.V.
100.00
35
ERISA Actions Europe N\u00b02
N/A
1, 175
ERISA Actions Grandes Valeurs
N/A
1, 175
ERISA Opportunities
N/A
1, 175
Eton Corporate Services Limited
100.00
17
Flandres Contentieux S.A.
100.00
(99.99)
5, 34
Fonci\u00e8re Elys\u00e9es
100.00
(99.99)
5, 34
Fujian Yongan HSBC Rural Bank Company
Limited
100.00
11, 36
Fulcher Enterprises Company Limited
100.00
(63.12)
37
Fundacion HSBC, A.C.
100.00
(99.99)
2, 9, 13
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
Giller Ltd.
100.00
24
GPIF Co-Investment, LLC
N/A
1, 25
Griffin International Limited
100.00
12
Grupo Financiero HSBC, S. A. de C. V.
99.99
13
Guangdong Enping HSBC Rural Bank
Company Limited
100.00
11, 38
Guangzhou HSBC Real Estate Company Ltd
100.00
11, 39
H5 LP Inc
N/A
107
H8 LP Inc
N/A
107
H9 LP Inc
N/A
107
Hang Seng (Nominee) Limited
100.00
(63.12)
37
Hang Seng Bank (China) Limited
100.00
(63.12)
11, 40
Hang Seng Bank (Trustee) Limited
100.00
(63.12)
37
Hang Seng Bank Limited
63.12
37
Hang Seng Bullion Company Limited
100.00
(63.12)
37
Hang Seng Credit Limited
100.00
(63.12)
37
Hang Seng Data Services Limited
100.00
(63.12)
37
Hang Seng Finance Limited
100.00
(63.12)
37
Hang Seng Financial Information Limited
100.00
(63.12)
37
Hang Seng Indexes (Netherlands) B.V.
N/A
1, 41
Hang Seng Indexes Company Limited
100.00
(63.12)
37
Hang Seng Insurance Company Limited
100.00
(63.12)
37
Hang Seng Investment Management Limited
100.00
(63.12)
37
Hang Seng Investment Services Limited
100.00
(63.12)
37
Hang Seng Japan Topix 100 Index ETF
66.43
19
Hang Seng Qianhai Fund Management
Company Limited
70.00
(43.86)
11, 42
Hang Seng Real Estate Management Limited
100.00
(63.12)
37
Hang Seng Securities Limited
100.00
(63.12)
37
Hang Seng Security Management Limited
100.00
(63.12)
37
HASE Wealth Limited
N/A
137
Haseba Investment Company Limited
100.00
(63.12)
37
HBPH Corporation (In Dissolution)
99.99
43
HFC Bank Limited (In Liquidation)
100.00
44
High Time Investments Limited
100.00
(63.12)
37
HLF
100.00
(99.99)
5, 34
Honey Blue Enterprises Limited (\u4ea8\u4eac\u4f01\u696d\u6709
\u9650\u516c\u53f8)
100.00
19
Honey Green Enterprises Ltd.
100.00
45
Honey Grey Enterprises Limited (\u4ea8\u7a57\u4f01\u696d\u6709
\u9650\u516c\u53f8)
100.00
19
Honey Silver Enterprises Limited
100.00
19
Household International Europe Limited (In
Liquidation)
100.00
44
Household Pooling Corporation
100.00
47
Housing (USA) LLP
N/A
1, 25
HSBC (BGF) Investments Limited
100.00
12
HSBC (General Partner) Limited
100.00
3, 48
HSBC (Guernsey) GP PCC Limited
100.00
17
HSBC (Kuala Lumpur) Nominees Sdn Bhd
100.00
49
HSBC (Malaysia) Trustee Berhad
100.00
50
HSBC (Singapore) Nominees Pte Ltd
100.00
51
HSBC Actions Europe
50.66
175
HSBC Agency (India) Private Limited
100.00
52
HSBC Alternative Investments Limited
100.00
12
HSBC Amanah Malaysia Berhad
100.00
49
HSBC Americas Corporation (Delaware)
100.00
25
HSBC Asia Holdings B.V.
100.00
12
HSBC Asia Holdings Limited
100.00
3, 19
HSBC Asia Pacific Holdings (UK) Limited
100.00
6, 12
HSBC Asset Finance (UK) Limited
100.00
12
HSBC Asset Finance M.O.G. Holdings (UK)
Limited
100.00
12
HSBC Asset Management (Fund Services UK)
Limited
100.00
12
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Asset Management (India) Private
Limited
99.99
53
HSBC Asset Management (Japan) Limited
100.00
54
HSBC Assurances Vie (France)
100.00
(99.99)
5, 55
HSBC Australia Holdings Pty Limited
100.00
6, 56
HSBC BANK (CHILE)
100.00
57
HSBC Bank (China) Company Limited
100.00
11, 58
HSBC Bank (General Partner) Limited
100.00
48
HSBC Bank (Mauritius) Limited
100.00
59
HSBC Bank (Singapore) Limited
100.00
51
HSBC Bank (Taiwan) Limited
100.00
60
HSBC Bank (Uruguay) S.A.
100.00
61
HSBC Bank (Vietnam) Ltd.
100.00
62
HSBC Bank A.S.
100.00
63
HSBC Bank Australia Limited
100.00
56
HSBC Bank Bermuda Limited
100.00
18
HSBC Bank Capital Funding (Sterling 1) LP
N/A
1, 48
HSBC Bank Egypt S.A.E
94.54
64
HSBC Bank Malaysia Berhad
100.00
4, 49
HSBC Bank Malta p.l.c.
70.03
65
HSBC Bank Middle East Limited
100.00
4, 66
HSBC Bank Middle East Limited
Representative Office Morocco SARL (In
Liquidation)
100.00
67
HSBC Bank Pension Trust (UK) Limited
100.00
12
HSBC Bank plc
100.00
3, 4, 12
HSBC Bank USA, National Association
100.00
4, 68
HSBC Branch Nominee (UK) Limited
100.00
14
HSBC Brasil Holding S.A.
100.00
16
HSBC Broking Forex (Asia) Limited
100.00
19
HSBC Broking Futures (Asia) Limited
100.00
19
HSBC Broking Futures (Hong Kong) Limited
100.00
19
HSBC Broking Securities (Asia) Limited
100.00
19
HSBC Broking Securities (Hong Kong) Limited
100.00
19
HSBC Broking Services (Asia) Limited
100.00
19
HSBC Capital (USA), Inc.
100.00
25
HSBC Capital Funding (Dollar 1) L.P.
N/A
1, 48
HSBC Card Services Inc.
100.00
25
HSBC Casa de Bolsa, S.A. de C.V., Grupo
Financiero HSBC
100.00
(99.99)
13
HSBC Cayman Limited
100.00
69
HSBC Cayman Services Limited
100.00
69
HSBC Client Holdings Nominee (UK) Limited
100.00
12
HSBC Client Nominee (Jersey) Limited
100.00
2, 70
HSBC Climate Tech Venture Capital Fund
SCSp
87.15
177
HSBC Columbia Funding, LLC
N/A
125
HSBC Continental Europe
99.99
5, 34
HSBC Corporate Advisory (Malaysia) Sdn Bhd
100.00
49
HSBC Corporate Finance (Hong Kong) Limited
100.00
19
HSBC Corporate Secretary (UK) Limited
100.00
3, 12
HSBC Corporate Services (Shanghai) Co., Ltd.
N/A
1, 71
HSBC Corporate Trustee Company (UK)
Limited
100.00
12
HSBC Custody Nominees (Australia) Limited
100.00
56
HSBC Custody Services (Guernsey) Limited
100.00
17
HSBC Daisy Investments (Mauritius) Limited
100.00
72
HSBC Diversified Loan Fund General Partner
Sarl
N/A
1, 73
HSBC Diversified Loan SCSp-RAIF
N/A
73
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Electronic Data Processing
(Guangdong) Limited
100.00
11, 74
HSBC Electronic Data Processing (Malaysia)
Sdn Bhd
100.00
75
HSBC Electronic Data Processing
(Philippines), Inc.
99.99
76
HSBC Electronic Data Processing India
Private Limited
100.00
77
HSBC Electronic Data Processing Lanka
(Private) Limited
100.00
78
HSBC Electronic Data Service Delivery
(Egypt) S.A.E
100.00
79
HSBC Equipment Finance (UK) Limited
100.00
14
HSBC Equity (UK) Limited
100.00
12
HSBC EURO Protect 80+
78.06
55
HSBC Europe B.V.
100.00
12
HSBC European Senior Direct Lending Fund
2023 RAIF SICAV-S.A.
43.00
91
HSBC Executor & Trustee Company (UK)
Limited
100.00
14
HSBC Factoring (France)
100.00
(99.99)
5, 34
HSBC Finance (Netherlands)
100.00
3, 12
HSBC Finance Corporation
100.00
25
HSBC Finance Limited
100.00
12
HSBC Finance Transformation (UK) Limited
100.00
12
HSBC Financial Advisors Singapore Pte. Ltd.
100.00
2, 51
HSBC Financial Services (Lebanon) S.A.L
99.83
80
HSBC Financial Technology Venture Capital
Fund SCSp
100.00
177
HSBC FinTech Services (Shanghai) Company
Limited
N/A
1, 2, 81
HSBC Global Asset Management (Bermuda)
Limited
100.00
4, 18
HSBC Global Asset Management
(Deutschland) GmbH
100.00
(99.99)
7, 82
HSBC Global Asset Management (France)
100.00
(99.99)
5, 55
HSBC Global Asset Management (Hong
Kong) Limited
100.00
83
HSBC Global Asset Management (Malta)
Limited
100.00
(70.03)
84
HSBC Global Asset Management (M\u00e9xico),
S.A. de C.V., Sociedad Operadora de Fondos
de Inversi\u00f3n, Grupo Financiero HSBC
100.00
(99.99)
13
HSBC Global Asset Management (Singapore)
Limited
100.00
51
HSBC Global Asset Management
(Switzerland) AG
100.00
5, 171
HSBC Global Asset Management (Taiwan)
Limited
100.00
86
HSBC Global Asset Management (UK)
Limited
100.00
12
HSBC Global Asset Management (USA) Inc.
100.00
87
HSBC Global Asset Management Holdings
(Bahamas) Limited
100.00
88
HSBC Global Asset Management Limited
100.00
3, 12
HSBC Global Custody Nominee (UK) Limited
100.00
12
HSBC Global Custody Proprietary Nominee
(UK) Limited
100.00
12
HSBC Global Funds ICAV - Digital Leaders
Equity Fund
100.00
27
HSBC Global Funds ICAV - Euro Lower
Carbon Government 10+ Year Bond UCITS
ETF
100.00
27
HSBC Global Funds ICAV - Euro Lower
Carbon Government 1-3 Year Bond UCITS
ETF
100.00
27
HSBC Global Funds ICAV - Global Aggregate
Bond ESG UCITS ETF
100.00
27
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Global Funds ICAV - Global Equity
Index Fund -ACEUR
N/A
1, 176
HSBC Global Funds ICAV - Japan Equity Index
Fund
99.77
105
HSBC Global Infrastructure Debt Fund Feeder
SCA SICAV-RAIF- Global Infrastructure Debt
EUR
N/A
1, 91
HSBC GLOBAL INVESTMENT FUNDS - ASIA
ESG BOND
93.03
129
HSBC Global Investment Funds \u2013 ESG Short
Duration Credit Bond
74.22
129
HSBC GLOBAL INVESTMENT FUNDS -
GLOBAL EMERGING MARKETS EQUITY
56.47
129
HSBC Global Investment Funds - Strategic
Duration and Income Bond
100.00
129
HSBC Global Multi-asset Seeding course
(Stable Type)
67.39
54
HSBC Global Services (Canada) Limited
100.00
89
HSBC Global Services (China) Holdings
Limited
100.00
12
HSBC Global Services (Hong Kong) Limited
100.00
19
HSBC Global Services (UK) Limited
100.00
12
HSBC Global Services Limited
100.00
3, 12
HSBC Global Transition Infrastructure Debt
Fund RAIF SICAV-S.A.
31.00
91
HSBC Group Management Services Limited
100.00
12
HSBC Group Nominees UK Limited
100.00
3, 12
HSBC Holdings B.V.
100.00
12
HSBC Horizon 2034 2036 A 3D
76.72
175
HSBC India Small Cap Equity Fund (QII\uff09
40.38
54
HSBC Infrastructure Debt GP 1 S.\u00e0 r.l.
N/A
1, 91
HSBC Infrastructure Debt GP 2 S.\u00e0 r.l.
N/A
1, 91
HSBC Innovation Bank Limited
100.00
92
HSBC INSN (Non Operating) Pte. Ltd. (In
Liquidation)
100.00
51
HSBC Institutional Trust Services (Asia)
Limited
100.00
19
HSBC Institutional Trust Services (Bermuda)
Limited
100.00
18
HSBC Institutional Trust Services (Mauritius)
Limited
100.00
93
HSBC Institutional Trust Services (Singapore)
Limited
100.00
51
HSBC Insurance (Asia) Limited
100.00
95
HSBC Insurance (Asia-Pacific) Holdings
Limited
100.00
83
HSBC Insurance (Bermuda) Limited
100.00
96
HSBC Insurance Agency (USA) Inc.
100.00
97
HSBC Insurance Brokerage Company Limited
N/A
1,2, 98
HSBC Insurance Brokers Greater China
Limited
100.00
83
HSBC Insurance SAC 1 (Bermuda) Limited
100.00
18
HSBC Insurance SAC 2 (Bermuda) Limited
100.00
18
HSBC Insurance Services Holdings Limited
(In Liquidation)
100.00
23
HSBC International Finance Corporation
(Delaware)
100.00
100
HSBC International Trustee (BVI) Limited
100.00
10, 101
HSBC International Trustee (Holdings) Pte.
Limited
100.00
51
HSBC International Trustee Limited
100.00
102
HSBC Inversiones S.A.
100.00
57
HSBC InvestDirect (India) Private Limited
99.99
53
HSBC InvestDirect Financial Services (India)
Limited
99.99
53
HSBC InvestDirect Sales & Marketing (India)
Private Limited
98.99
(98.98)
103
HSBC InvestDirect Securities (India) Private
Limited
99.99
53
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Investment and Insurance Brokerage,
Philippines Inc.
99.99
104
HSBC Investment Bank Holdings B.V.
100.00
12
HSBC Investment Bank Holdings Limited
100.00
12
HSBC Investment Company Limited
100.00
3, 12
HSBC Investment Funds (Hong Kong) Limited
100.00
83
HSBC Investment Funds (Luxembourg) SA
100.00
105
HSBC Invoice Finance (UK) Limited
100.00
14
HSBC Issuer Services Common Depositary
Nominee (UK) Limited
100.00
12
HSBC Latin America B.V.
100.00
12
HSBC Latin America Holdings (UK) Limited
100.00
3, 12
HSBC Leasing (Asia) Limited
100.00
19
HSBC Legacy Partnership Limited
100.00
12
HSBC Life (Bermuda) Limited
100.00
18
HSBC Life (Cornell Centre) Limited
100.00
95
HSBC Life (Edwick Centre) Limited
100.00
95
HSBC Life (International) Limited
100.00
18
HSBC Life (Property) Limited
100.00
95
HSBC Life (Singapore) Pte. Ltd.
100.00
51
HSBC Life (Tsing Yi Industrial) Limited
100.00
95
HSBC Life (UK) Limited
100.00
12
HSBC Life (Workshop) Limited
100.00
95
HSBC Life Assurance (Malta) Ltd.
100.00
(70.03)
84
HSBC Life Insurance Company Limited
100.00
11, 106
HSBC LU Nominees Limited
100.00
12
HSBC Management (Guernsey) Limited
100.00
107
HSBC Markets (USA) Inc.
100.00
25
HSBC Marking Name Nominee (UK) Limited
100.00
12
HSBC Master Trust Trustee Limited (In
Liquidation)
100.00
23
HSBC Mexico, S.A., Institucion de Banca
Multiple, Grupo Financiero HSBC
99.99
13
HSBC Middle East Asset CO. LLC
100.00
108
HSBC Middle East Holdings B.V.
100.00
3, 4, 66
HSBC Middle East Leasing Partnership
N/A
1, 109
HSBC Middle East Securities L.L.C
100.00
110
HSBC Mix Dynamique
58.13
55
HSBC Mortgage Corporation (USA)
100.00
25
HSBC Multi-Asset Style Factors S
N/A
1, 175
HSBC Nominees (Asing) Sdn Bhd
100.00
49
HSBC Nominees (Hong Kong) Limited
100.00
19
HSBC Nominees (New Zealand) Limited
100.00
111
HSBC Nominees (Tempatan) Sdn Bhd
100.00
49
HSBC North America Holdings Inc.
100.00
4, 25
HSBC Operational Services GmbH
100.00
(99.99)
7, 82
HSBC Overseas Holdings (UK) Limited
100.00
3, 12
HSBC Overseas Investments Corporation
(New York)
100.00
112
HSBC Overseas Nominee (UK) Limited
100.00
12
HSBC PB Corporate Services 1 Limited
100.00
113
HSBC PB Services (Suisse) SA
100.00
114
HSBC Pension Trust (Ireland) DAC
100.00
115
HSBC Pensiones, S.A. (In Liquidation)
100.00
(99.99)
13
HSBC PI Holdings (Mauritius) Limited
100.00
116
HSBC Portfolios \u2013 World Selection 5 (Part
ACHEUR)
N/A
1, 105
HSBC Portfoy Yonetimi A.S.
100.00
117
HSBC Preferential LP (UK)
100.00
12
HSBC Private Bank (Luxembourg) S.A.
100.00
(99.99)
105
HSBC Private Bank (Suisse) SA
100.00
114
HSBC Private Bank (UK) Limited
100.00
12
HSBC Private Banking Holdings (Suisse) SA
100.00
114
HSBC Private Banking Nominee 3 (Jersey)
Limited
100.00
113
HSBC Private Equity Investments (UK)
Limited
100.00
12
HSBC Private Markets Management SARL
N/A
1, 2, 118
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Private Trustee (Hong Kong) Limited
100.00
19
HSBC Professional Services (India) Private
Limited
100.00
119
HSBC Property (UK) Limited
100.00
12
HSBC Property Funds (Holding) Limited
100.00
12
HSBC Provident Fund Trustee (Hong Kong)
Limited
100.00
19
HSBC Qianhai Securities Limited
90.00
11, 120
HSBC RCF Partnership Fund RAIF SICAV-S.A.
11.00
175
HSBC Real Estate Leasing (France)
100.00
(99.99)
5, 34
HSBC REGIO Fund General Partner S.\u00e0 r.l.
100.00
91
HSBC REIM (France)
100.00
(99.99)
5, 55
HSBC Responsible Investment Funds - SRI
Balanced
64.14
55
HSBC Responsible Investment Funds - SRI
Dynamic
72.79
55
HSBC Resposible Investment Funds - SRI
Global Equity A
N/A
1, 175
HSBC Retirement Benefits Trustee (UK)
Limited
100.00
3, 12
HSBC Retirement Services Limited (In
Liquidation)
100.00
23
HSBC Saudi Arabia, Closed Joint Stock
Company
100.00
(66.19)
121
HSBC Securities (Egypt) S.A.E. (In
Liquidation)
100.00
(94.65)
122
HSBC Securities (Japan) Co., Ltd.
100.00
54
HSBC Securities (Singapore) Pte Limited
100.00
51
HSBC Securities (South Africa) (Pty) Limited
100.00
123
HSBC Securities (Taiwan) Corporation Limited
100.00
60
HSBC Securities (USA) Inc.
100.00
25
HSBC Securities and Capital Markets (India)
Private Limited
99.99
6, 103
HSBC Securities Brokers (Asia) Limited
100.00
19
HSBC Securities Investments (Asia) Limited
100.00
19
HSBC Securities Services (Bermuda) Limited
100.00
18
HSBC Securities Services (Guernsey) Limited
100.00
17
HSBC Securities Services (Ireland) DAC
100.00
115
HSBC Securities Services (Luxembourg) S.A.
100.00
105
HSBC Securities Services Holdings (Ireland)
DAC
100.00
115
HSBC Securities Services Nominees Limited
100.00
19
HSBC Seguros, S.A de C.V., Grupo Financiero
HSBC
100.00
(99.99)
13
HSBC Select Dynamic
80.59
55
HSBC Select Equity
86.38
55
HSBC Select Flexible
63.93
55
HSBC Semfi Limited
75.00
12
HSBC Senior UK Direct Lending 2020 RAIF
SICAV-S.A
N/A
91
HSBC Senior UK Direct Lending Fund II RAIF
SICAV-S.A.
72.46
91
HSBC Service Company Germany GmbH
100.00
(99.99)
7, 82
HSBC Service Delivery (Polska) Sp. z o.o.
100.00
124
HSBC Services (France)
100.00
(99.99)
5, 34
HSBC Services Japan Limited
100.00
88
HSBC Services USA Inc.
100.00
125
HSBC Servicios Financieros, S.A. de C.V
100.00
(99.99)
13
HSBC Servicios, S.A. DE C.V., Grupo
Financiero HSBC
100.00
(99.99)
13
HSBC SFT (C.I.) Limited
100.00
17
HSBC Singapore Dollar Liquidity Fund
76.37
51
HSBC Small Cap France
52.70
55
HSBC Software Development (Guangdong)
Limited
100.00
11, 126
HSBC Software Development (India) Private
Limited
100.00
127
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
HSBC Software Development (Malaysia) Sdn
Bhd
100.00
75
HSBC Specialist Investments Limited
100.00
6, 12
HSBC Technology & Services (China) Limited
(In Liquidation)
N/A
1, 128
HSBC Technology & Services (USA) Inc.
100.00
25
HSBC Transaction Services GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus & Burkhardt (International)
S.A.
100.00
(99.99)
129
HSBC Trinkaus & Burkhardt Gesellschaft fur
Bankbeteiligungen mbH
100.00
(99.99)
82
HSBC Trinkaus & Burkhardt GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus Family Office GmbH
100.00
(99.99)
7, 82
HSBC Trinkaus Real Estate GmbH
100.00
(99.99)
7, 82
HSBC Trust Company (Delaware), National
Association
100.00
100
HSBC Trust Company (UK) Limited
100.00
12
HSBC Trustee (C.I.) Limited
100.00
113
HSBC Trustee (Cayman) Limited
100.00
69
HSBC Trustee (Guernsey) Limited
100.00
17
HSBC Trustee (Hong Kong) Limited
100.00
19
HSBC Trustee (Singapore) Limited
100.00
51
HSBC Trustees (India) Private Limited
99.99
103
HSBC UK Bank plc
100.00
3, 14
HSBC UK Client Nominee Limited
100.00
14
HSBC UK Covered Bonds LLP
N/A
1, 14
HSBC UK Societal Projects Limited
N/A
1, 14
HSBC USA Inc.
100.00
4, 112
HSBC Ventures USA Inc.
100.00
25
HSBC Violet Investments (Mauritius) Limited
100.00
72
HSBC Wealth Client Nominee Limited
100.00
14
HSBC World Equity Protect 80
98.87
55
HSBC Yatirim Menkul Degerler A.S.
100.00
63
HSI Asset Securitization Corporation
100.00
25
HSI International Limited
100.00
(63.12)
37
HSIL Investments Limited
100.00
12
Hubei Macheng HSBC Rural Bank Company
Limited
100.00
11, 131
Hubei Suizhou Cengdu HSBC Rural Bank
Company Limited
100.00
11, 132
Hubei Tianmen HSBC Rural Bank Company
Limited
100.00
11, 133
Hunan Pingjiang HSBC Rural Bank Company
Limited
100.00
11, 134
I3 LP Inc.
N/A
107
Imenson Limited
100.00
(63.12)
37
INHK PC LP Inc
100.00
17
INHK PE LP Inc
100.00
17
Inmobiliaria Bisa, S.A. de C.V.
99.99
13
Inmobiliaria Grufin, S.A. de C.V.
100.00
(99.99)
13
Inmobiliaria Guatusi, S.A. de C.V.
100.00
(99.99)
13
Internationale Kapitalanlagegesellschaft mit
beschr\u00e4nkter Haftung
100.00
(99.99)
82
J6 LP Inc
N/A
107
James Capel (Nominees) Limited
100.00
12
James Capel (Taiwan) Nominees Limited
100.00
12
Keyser Ullmann Limited
100.00
(99.99)
12
L1 LP Inc
N/A
107
Lion Corporate Services Limited
100.00
19
Lion International Corporate Services Limited
100.00
135
Lion International Management Limited
100.00
135
Lion Management (Hong Kong) Limited
100.00
19
Lyndholme Limited
100.00
19
Marks and Spencer Financial Services plc
100.00
136
Marks and Spencer Unit Trust Management
Limited
100.00
136
Midcorp Limited
100.00
12
Midland Bank (Branch Nominees) Limited
100.00
14
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
Midland Nominees Limited
100.00
14
MP Payments Group Limited
100.00
12
MP Payments Middle East AE L.L.C.
100.00
137
MP Payments Netherlands B.V.
100.00
138
MP Payments Operations Limited
100.00
12
MP Payments Singapore Pte. Ltd.
100.00
51
MP Payments UK Limited
100.00
12
P2 LP Inc
N/A
107
Prudential Client HSBC GIS Nominee (UK)
Limited
100.00
12
PT Bank HSBC Indonesia
98.94
139
PT HSBC Sekuritas Indonesia
85.00
140
R/CLIP Corp.
100.00
25
Real Estate Collateral Management Company
100.00
25
Red Hexagon Energy Transition Asia GP S.\u00e0
r.l.
100.00
2, 91
Republic Nominees Limited
100.00
17
RLUKREF Nominees (UK) One Limited
100.00
12
RLUKREF Nominees (UK) Two Limited
100.00
12
S.A.P.C. - Ufipro Recouvrement
99.99
9, 34
Saf Baiyun
100.00
(99.99)
5, 34
Saf Guangzhou
100.00
(99.99)
5, 34
SCI HSBC Assurances Immo
100.00
(99.99)
9, 55
SCPI Elysees Grand Large
98.50
175
Select INKA
N/A
1, 82
Serai Limited
100.00
19
SFM
100.00
(99.99)
5, 34
SFSS Nominees (Pty) Limited
100.00
123
Shandong Rongcheng HSBC Rural Bank
Company Limited
100.00
11, 141
Shenzhen HSBC Development Company Ltd
100.00
11, 142
Sico Limited
100.00
143
SilkRoad Fund Management S.\u00e0.r.l
100.00
2, 144
Silkroad GP II Limited
100.00
2, 145
Silkroad GP II S.a.r.l.
100.00
2, 144
Silkroad GP Limited
100.00
2, 69
Silkroad GP SC S.a r.l
100.00
2, 146
Silkroad Property Partners K.K. (In Liquidation)
100.00
147
Silkroad Property Partners Limited
100.00
148
Silkroad Property Partners Management
Consultancy Limited
N/A
1, 149
Silkroad Property Partners PTE. LTD.
100.00
150
SNC Les Oliviers D'Antibes
60.00
(59.99)
9, 55
SNCB/M6-2007 A
100.00
(99.99)
2, 5, 34
SNCB/M6-2007 B
100.00
(99.99)
2, 5, 34
SNCB/M6-2008 A
100.00
(99.99)
2, 5, 34
Soci\u00e9t\u00e9 Fran\u00e7aise et Suisse
100.00
(99.99)
5, 34
Somers Dublin DAC
100.00
(99.99)
115
Somers Nominees (Far East) Limited
100.00
18
Sopingest
100.00
(99.99)
5, 34
South Yorkshire Light Rail Limited
100.00
12
St Cross Trustees Limited
100.00
14
Sun Hung Kai Development (Lujiazui III)
Limited
100.00
11, 151
The Hongkong and Shanghai Banking
Corporation Limited
100.00
19
Tooley Street View Limited
100.00
3, 12
Trinkaus Europa Immobilien-Fonds Nr.3
Objekt Utrecht Verwaltungs-GmbH
100.00
(99.99)
7, 82
Trinkaus Immobilien-Fonds
Geschaeftsfuehrungs-GmbH
100.00
(99.99)
7, 82
Trinkaus Immobilien-Fonds Verwaltungs-
GmbH
100.00
(99.99)
7, 82
Trinkaus Private Equity Management GmbH
100.00
(99.99)
7, 82
Trinkaus Private Equity Verwaltungs GmbH
100.00
(99.99)
7, 82
Turnsonic (Nominees) Limited
100.00
14
Valeurs Mobili\u00e8res Elys\u00e9es
100.00
(99.99)
5, 34
Subsidiaries
% of share class
held by immediate
parent company
(or by the Group
where this varies)
Footnotes
W4 LP Inc
N/A
107
WARDLEY LIMITED
100.00
19
Wayfoong Nominees Limited
100.00
19
Westminster House, LLC
N/A
1, 25
Woodex Limited
100.00
18
Yan Nin Development Company Limited
100.00
(63.12)
37
Joint ventures
The undertakings below are joint ventures and equity accounted.
Joint ventures
% of share class
held by immediate
parent company (or
by the Group
where this varies)
Footnotes
Climate Asset Management Limited
N/A
1,2, 152
Global Payments Technology M\u00e9xico, S.A. de
C.V.
50.00
(49.99)
2, 153
MK HoldCo Limited
50.32
2, 154
Pentagreen Capital Pte. Ltd
50.00
155
ProServe Bermuda Limited
50.00
156
The London Silver Market Fixing Limited
N/A
1,2, 157
Vaultex UK Limited
50.00
158
Non-Profit Foundation
The undertakings below are Non-Profit Foundation.
Non-Profit Foundation
% of share class
held by
immediate parent
company (or by
the Group where
this varies)
Footnotes
HSBC Philanthropy Foundation Beijing\u00a0
N/A
1, 175
Associates
The undertakings below are associates and equity accounted.
Associates
% of share class
held by
immediate parent
company (or by
the Group where
this varies)
Footnotes
Bank of Communications Co., Ltd.
19.03
2, 159
Barrowgate Limited
24.64
(15.53)
160
BGF Group plc
24.62
161
Bud Financial Limited
4.50
4, 162
CANARA HSBC LIFE INSURANCE
COMPANY LIMITED
26.00
163
Divido Financial Services Limited (In
Administration)
7.85
164
Electronic Payment Services Company (Hong
Kong) Limited
38.69
2, 19
Episode Six Inc.
5.69
4, 165
EPS Company (Hong Kong) Limited
38.69
19
HQLAX S.\u00e0 r.l.
6.10
4, 90
HSBC Jintrust Fund Management Company
Limited
49.00
2, 11, 166
HSBC UK Covered Bonds (LM) Limited
N/A
1,2, 167
Lightico Ltd
2.80
4, 85
LiquidityMatch LLC
N/A
1, 168
London Precious Metals Clearing Limited
30.00
2, 169
Marketnode PTE. Ltd.
12.60
4, 46
MENA Infrastructure Fund (GP) Ltd
33.33
170
Quantexa Limited
9.36
4, 99
Radiant Global Investors LLC
N/A
1, 2, 172
Saudi Awwal Bank
31.00
173
The London Gold Market Fixing Limited
N/A
1, 157
Threadneedle Software Holdings Limited
7.10
4, 174
Trade Information Network Limited
12.76
152
Trinkaus Europa Immobilien-Fonds Nr. 7
Frankfurt Mertonviertel KG
N/A
182
We Trade Innovation Designated Activity
Company (In Liquidation)
9.88
2, 130
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-986": { "value": "
21Goodwill and intangible assets
2024
2023
$m
$m
Goodwill
4,118
4,323
Other intangible assets1
8,266
8,164
At 31 Dec
12,384
12,487
1Included within other intangible assets is internally generated software with a net carrying amount of $7,100m (2023: $6,895m). During the year, capitalisation
of internally generated software was $2,476m (2023: $2,306m), impairment was $67m (2023: reversal impairment of $285m) and amortisation was $1,995m
(2023: $1,877m).
Movement analysis of goodwill
2024
2023
$m
$m
Gross amount
At 1 Jan
19,560
18,965
Exchange differences
(962)
523
Reclassified to held for sale and additions1
28
73
Other
\u2014
(1)
At 31 Dec
18,626
19,560
Accumulated impairment losses
At 1 Jan
(15,237)
(14,809)
Exchange differences
716
(428)
Reclassified to held for sale1
13
\u2014
At 31 Dec
(14,508)
(15,237)
Net carrying amount at 31 Dec
4,118
4,323
1 Includes goodwill arising from acquisition of Silkroad, offset by goodwill reclassified to held for sale associated with sales of HSBC Bank Armenia, private
banking business in Germany, and planned sale of HSBC Assurances Vie (France). For further details, see Note\u00a023.
Goodwill
Impairment testing
The Group\u2019s impairment test in respect of goodwill allocated to each cash-generating unit (\u2018CGU\u2019) is performed at 1 October each year. A
review for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2024. No indicators of impairment were
identified as part of these reviews.
Basis of the recoverable amount
The recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use (\u2018VIU\u2019) at each respective testing date.
The VIU is calculated by discounting management\u2019s cash flow projections for the CGU. The key assumptions used in the VIU calculation for
each individually significant CGU that is not impaired are discussed below.
Key assumptions in VIU calculation \u2013 significant CGUs at 1 October 20241
Carrying
amount at
1\u00a0Oct 2024
of which
goodwill
Value in
use at
1\u00a0Oct 2024
Discount
rate
Growth
rate
beyond
initial
cash flow
Carrying
amount at
1\u00a0Oct\u00a02023
of which
goodwill
Value in
use at
1\u00a0Oct 2023
Discount
rate
Growth
rate
beyond initial
cash flow
projections
$m
$m
$m
%
%
$m
$m
$m
%
%
HSBC UK
Bank plc \u2013
WPB
12,785
2,843
27,118
10.6
2.0
11,167
2,597
27,933
10.4
2.0
1For impacts arising from the revised organisational structure effective from 1 January 2025, see Note 1.2(a)
At 1 October 2024, aggregate goodwill of $1,493m (1 October 2023: $1,599m) had been allocated to CGUs that were not considered
individually significant. The Group\u2019s CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other
than goodwill.
Management\u2019s judgement in estimating the cash flows of a CGU
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability
plans approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and
endorses planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and
macroeconomic outlook. For the 1 October 2024 impairment test, cash flow projections until the end of 2029 were considered, in line with our
internal planning horizon. Key assumptions underlying cash flow projections reflect management\u2019s outlook on interest rates and inflation, as
well as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and
observable climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS
Accounting Standards, estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring
initiatives before an entity has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring
costs.
Discount rate
The rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing
model (\u2018CAPM\u2019) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including
the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market\u2019s
assessment of the economic variables and management\u2019s judgement. The discount rates for each CGU are refined to reflect the rates of
inflation for the countries within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management
supplements this process by comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced
by external sources for businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable
in discount rates and asset prices.
Long-term growth rate
The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of
business units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it
derives revenue.
Sensitivities of key assumptions in calculating VIU
At 1 October 2024, given the extent by which VIU exceeds carrying amount, the HSBC UK WPB CGU was not sensitive to reasonably possible
adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to
assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of
discount rates observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections.
None of the remaining CGUs are individually significant.
Other intangible assets
Impairment testing
Impairment of other intangible assets is assessed in accordance with our policy explained in Note 1.2(n) by comparing the net carrying amount
of CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or
fair value, as appropriate, for each CGU. No significant impairment was recognised during the year.
Key assumptions in VIU calculation
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next
financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in
accordance with the requirements of IAS 36:
\u2013 Management\u2019s judgement in estimating future cash flows: We considered past business performance, current market conditions and our
macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude
estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to
carry out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the
benefit of certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections
include known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
\u2013 Long-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective
of the businesses within the Group.
\u2013 Discount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and
geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates
and asset prices.
Sensitivity of estimates relating to non-financial assets
As explained in Note 1.2(a), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for
impairment. Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use
assets (see Note\u00a022). The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are
no non-financial asset balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in
a material adjustment to the results and financial position of the Group within the next financial year.
Non-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be
allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned
property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant.
At 31 December 2024 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the
recoverable amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in
respect of each input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast
and risks attaching to the key assumptions underlying cash flow projections.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-987": { "value": "12384000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:IntangibleAssetsAndGoodwill", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-988": { "value": "
Movement analysis of goodwill
2024
2023
$m
$m
Gross amount
At 1 Jan
19,560
18,965
Exchange differences
(962)
523
Reclassified to held for sale and additions1
28
73
Other
\u2014
(1)
At 31 Dec
18,626
19,560
Accumulated impairment losses
At 1 Jan
(15,237)
(14,809)
Exchange differences
716
(428)
Reclassified to held for sale1
13
\u2014
At 31 Dec
(14,508)
(15,237)
Net carrying amount at 31 Dec
4,118
4,323
1 Includes goodwill arising from acquisition of Silkroad, offset by goodwill reclassified to held for sale associated with sales of HSBC Bank Armenia, private
banking business in Germany, and planned sale of HSBC Assurances Vie (France). For further details, see Note\u00a023.
Goodwill
Impairment testing
The Group\u2019s impairment test in respect of goodwill allocated to each cash-generating unit (\u2018CGU\u2019) is performed at 1 October each year. A
review for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2024. No indicators of impairment were
identified as part of these reviews.
Basis of the recoverable amount
The recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use (\u2018VIU\u2019) at each respective testing date.
The VIU is calculated by discounting management\u2019s cash flow projections for the CGU. The key assumptions used in the VIU calculation for
each individually significant CGU that is not impaired are discussed below.
Key assumptions in VIU calculation \u2013 significant CGUs at 1 October 20241
Carrying
amount at
1\u00a0Oct 2024
of which
goodwill
Value in
use at
1\u00a0Oct 2024
Discount
rate
Growth
rate
beyond
initial
cash flow
Carrying
amount at
1\u00a0Oct\u00a02023
of which
goodwill
Value in
use at
1\u00a0Oct 2023
Discount
rate
Growth
rate
beyond initial
cash flow
projections
$m
$m
$m
%
%
$m
$m
$m
%
%
HSBC UK
Bank plc \u2013
WPB
12,785
2,843
27,118
10.6
2.0
11,167
2,597
27,933
10.4
2.0
1For impacts arising from the revised organisational structure effective from 1 January 2025, see Note 1.2(a)
At 1 October 2024, aggregate goodwill of $1,493m (1 October 2023: $1,599m) had been allocated to CGUs that were not considered
individually significant. The Group\u2019s CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other
than goodwill.
Management\u2019s judgement in estimating the cash flows of a CGU
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year,
but does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability
plans approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and
endorses planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and
macroeconomic outlook. For the 1 October 2024 impairment test, cash flow projections until the end of 2029 were considered, in line with our
internal planning horizon. Key assumptions underlying cash flow projections reflect management\u2019s outlook on interest rates and inflation, as
well as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and
observable climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS
Accounting Standards, estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring
initiatives before an entity has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring
costs.
Discount rate
The rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing
model (\u2018CAPM\u2019) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including
the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market\u2019s
assessment of the economic variables and management\u2019s judgement. The discount rates for each CGU are refined to reflect the rates of
inflation for the countries within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management
supplements this process by comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced
by external sources for businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable
in discount rates and asset prices.
Long-term growth rate
The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of
business units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it
derives revenue.
Sensitivities of key assumptions in calculating VIU
At 1 October 2024, given the extent by which VIU exceeds carrying amount, the HSBC UK WPB CGU was not sensitive to reasonably possible
adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to
assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of
discount rates observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections.
None of the remaining CGUs are individually significant.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-989": { "value": "
Other intangible assets
Impairment testing
Impairment of other intangible assets is assessed in accordance with our policy explained in Note 1.2(n) by comparing the net carrying amount
of CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or
fair value, as appropriate, for each CGU. No significant impairment was recognised during the year.
Key assumptions in VIU calculation
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next
financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in
accordance with the requirements of IAS 36:
\u2013 Management\u2019s judgement in estimating future cash flows: We considered past business performance, current market conditions and our
macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude
estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to
carry out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the
benefit of certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections
include known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
\u2013 Long-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective
of the businesses within the Group.
\u2013 Discount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and
geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates
and asset prices.
Sensitivity of estimates relating to non-financial assets
As explained in Note 1.2(a), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for
impairment. Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use
assets (see Note\u00a022). The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are
no non-financial asset balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in
a material adjustment to the results and financial position of the Group within the next financial year.
Non-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be
allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned
property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant.
At 31 December 2024 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the
recoverable amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in
respect of each input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast
and risks attaching to the key assumptions underlying cash flow projections.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-990": { "value": "
22Prepayments, accrued income and other assets
2024
2023
$m
$m
Prepayments and accrued income
13,781
13,854
Settlement accounts and items in course of collection from other banks
19,050
39,195
Cash collateral and margin receivables
59,488
57,058
Bullion
16,841
13,701
Endorsements and acceptances
8,093
7,939
Insurance contract assets (Note 4)
132
252
Reinsurance contract assets
4,798
4,728
Employee benefit assets (Note 5)
7,548
7,750
Right-of-use assets
2,205
2,456
Owned property, plant and equipment
9,407
10,478
Other accounts
11,397
14,186
At 31 Dec1
152,740
171,597
Prepayments, accrued income and other assets include $109,336m (2023: $129,203m) of financial assets, the majority of which are measured at amortised
cost.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-991": { "value": "
23Assets held for sale, liabilities of disposal groups held for sale and
business acquisitions
2024
2023
$m
$m
Held for sale at 31 Dec
Disposal groups
27,126
115,836
Unallocated impairment losses1
(31)
(1,975)
Non-current assets held for sale
139
273
Assets held for sale
27,234
114,134
Liabilities of disposal groups held for sale
29,011
108,406
1This represents impairment losses in excess of the carrying value of the non-current assets, excluded from the measurement scope of IFRS 5.
Disposal groups
France retail banking operations
On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking business in France to CCF, a subsidiary of Promontoria
MMB SAS (\u2018My Money Group\u2019). The sale also included HSBC Continental Europe\u2019s 100% ownership interest in HSBC SFH (France) and its 3%
ownership interest in Cr\u00e9dit Logement.
Upon completion and in accordance with the terms of the sale, HSBC Continental Europe received a \u20ac0.1bn ($0.1bn) profit participation interest
in the ultimate holding company of My Money Group. The associated impacts on initial recognition of this stake at fair value were recognised as
part of the pre-tax loss on disposal in 2023, upon the reclassification of the disposal group as held for sale. In accordance with the terms of the
sale, HSBC Continental Europe retained a portfolio of \u20ac7.1bn ($7.4bn) at the time of the sale, consisting of home and certain other loans, and
the CCF brand, which it licensed to the buyer under a long-term licence agreement. Additionally, HSBC Continental Europe\u2019s subsidiaries,
HSBC Assurances Vie (France) and HSBC Global Asset Management (France), entered into distribution agreements with the buyer.
The customer lending balances and associated income statement impacts of the portfolio of retained loans, together with the profit
participation interest and the licence agreement of the CCF brand, were reclassified from WPB to Corporate Centre, with effect from 1 January
2024.
During the fourth quarter of 2024, we began the process of marketing the retained home and other loan portfolio for sale, which had a carrying
value of \u20ac6.7bn ($6.9bn) at 31 December 2024. As a result, we reclassified the portfolio to a hold-to-collect-and-sell business model from
1\u00a0January 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 $1bn 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,
we entered into non-qualifying economic hedges, hedging interest rate risk on the portfolio and recognised a $0.1bn mark-to-market gain year-
to-date.
Canada banking business
On 28 March 2024, HSBC Overseas Holdings (UK) Limited, a direct subsidiary of HSBC Holdings plc, completed the sale of HSBC Bank Canada
to the Royal Bank of Canada.
The completion of the transaction resulted in a gain on sale of $4.8bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn in other reserves losses. The gain on sale also included $0.3bn in fair value gains recognised on the related foreign exchange
hedges in the first quarter of 2024. There was no tax on the gain recognised at completion due to the substantial shareholding exemption rule
in the UK.
Following the completion of this transaction, the Board approved a special dividend of $0.21 per share, which was paid in June 2024 alongside
the first interim dividend.
Argentina business
On 6 December 2024, HSBC Latin America B.V. completed the sale of its business in Argentina to Grupo Financiero Galicia (\u2018Galicia\u2018).
Galicia acquired all of HSBC Argentina\u2019s business covering banking, asset management and insurance, together with $100m of subordinated
debt issued by HSBC Argentina and held by HSBC Latin America Holdings (UK) Limited for a base consideration of $550m. The consideration
was adjusted for the results of the business and fair value gains or losses on HSBC Argentina\u2019s securities portfolios during the period between
31 December 2023 and 30 November 2024. HSBC received the purchase consideration in a combination of cash and Galicia\u2019s American
Depositary Receipts (\u2018ADRs\u2018), with ADRs representing less than a 10% economic interest in Galicia. At 31 December 2024, the fair value of the
ADRs received and held as fair value through profit and loss was $0.7bn.
For the year ended 31 December 2024, we recognised a $1.0bn pre-tax loss and we recycled $5.2bn foreign currency reserve and other
reserve losses to the income statement on completion. There was no tax deduction on the loss recognised.
Other disposals
On 30 May 2024, HSBC Europe BV, a wholly-owned subsidiary of HSBC Bank plc, completed the sale of HSBC Bank (RR) (Limited Liability
Company) to Expobank. Foreign currency translation reserve losses of $0.1bn were recognised in the income statement upon completion.
On 6 July 2024, The Hongkong and Shanghai Banking Corporation Limited (acting through its Mauritius branch) completed the sale of its
Wealth and Personal Banking business in Mauritius to Absa Bank (Mauritius) Limited, a wholly-owned subsidiary of Absa Group Limited. The
financial impact of the sale was not significant for the Group.
On 23 September 2024, HSBC Continental Europe, a wholly owned subsidiary of HSBC Bank plc, reached an agreement to sell its private
banking business in Germany to BNP Paribas 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 $0.2bn, which will be recognised on completion.
On 25 September 2024, HSBC reached an agreement to transfer its business in South Africa to local lender FirstRand Bank Ltd and the
disposal group met the held for sale criteria at 31 December 2024. The transaction, which is subject to regulatory and governmental approvals,
is expected to complete in the second half of 2025. At closing, cumulative foreign currency translation reserves and other reserves will recycle
to the income statement. At 31 December 2024, foreign currency translation reserve and other reserve losses stood at $0.2bn.
On 29 November 2024, HSBC Europe BV completed the sale of HSBC Bank Armenia to Ardshinbank with a year-to-date loss of $0.1bn
recognised.
On 20 December 2024, HSBC Continental Europe signed a Memorandum of Understanding (\u2018MoU\u2019) for the planned sale of its French life
insurance business, HSBC Assurances Vie (France), to Matmut Soci\u00e9t\u00e9 d\u2019Assurance 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\u00a0December 2024, resulting in the reclassification of $24.2bn in assets and $23.4bn 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 $0.2bn 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 $0.1bn as at
31\u00a0December 2024.
At 31 December 2024, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment
losses, were as follows:
French Life
Insurance Business
German Private
Banking Business
South Africa1
Other
Total
$m
$m
$m
$m
$m
Assets of disposal groups held for sale
Cash and balances at central banks
\u2014
1,896
\u2014
\u2014
1,896
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss
14,560
\u2014
\u2014
\u2014
14,560
Derivatives
26
\u2014
10
\u2014
36
Loans and advances to banks
144
\u2014
\u2014
\u2014
144
Loans and advances to customers\u00a0
\u2014
309
656
\u2014
965
Financial investments2
8,500
\u2014
\u2014
\u2014
8,500
Goodwill
\u2014
5
\u2014
\u2014
5
Prepayments, accrued income and other assets
992
21
7
\u2014
1,020
Total assets at 31 Dec 2024
24,222
2,231
673
\u2014
27,126
Liabilities of disposal groups held for sale
Customer accounts\u00a0
\u2014
2,085
3,294
20
5,399
Financial liabilities designated at fair value
11
119
\u2014
\u2014
130
Derivatives
\u2014
\u2014
19
\u2014
19
Insurance contract liabilities
21,811
\u2014
\u2014
\u2014
21,811
Accruals, deferred income and other liabilities
1,598
22
32
\u2014
1,652
Total liabilities at 31 Dec 2024
23,420
2,226
3,345
20
29,011
Expected date of completion
Second half of 2025
Second half of 2025
Second half of 2025
Operating segment
WPB
WPB
GBM and
Corporate Centre
1\u00a0 \u00a0 Under the financial terms of the sale of our South Africa business, HSBC Bank plc will transfer the business with a net asset value of $0.7bn for a book value
less any provisions. The purchase price will be satisfied by the transfer of agreed liabilities of $3.3bn. Any required increase to the net asset value of the
business to achieve this will be satisfied by the inclusion of additional cash. Based upon the net liabilities of the disposal group at 31 December 2024, HSBC
would be expected to include a cash contribution of $2.6bn.
2Represents financial investments measured at fair value through other comprehensive income.
At 31 December 2023, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment
losses, were as follows:
Canada
Retail banking
operations in France
Other
Total
$m
$m
$m
$m
Assets of disposal groups held for sale
Cash and balances at central banks
5,370
226
\u2014
5,596
Trading assets
2,465
\u2014
\u2014
2,465
Financial assets designated and otherwise mandatorily measured at fair value through
profit or loss
15
49
\u2014
64
Derivatives
528
\u2014
\u2014
528
Loans and advances to banks
154
10,333
\u2014
10,487
Loans and advances to customers\u00a0
56,129
16,902
254
73,285
Reverse repurchase agreements \u2013 non-trading
2,723
\u2014
\u2014
2,723
Financial investments1
16,978
33
\u2014
17,011
Goodwill
225
\u2014
\u2014
225
Prepayments, accrued income and other assets
3,318
132
2
3,452
Total assets at 31 Dec 2023
87,905
27,675
256
115,836
Liabilities of disposal groups held for sale
Trading liabilities
1,417
\u2014
\u2014
1,417
Deposits by banks
78
\u2014
\u2014
78
Customer accounts\u00a0
63,001
22,307
642
85,950
Repurchase agreements \u2013 non-trading
2,768
\u2014
\u2014
2,768
Financial liabilities designated at fair value
\u2014
2,370
\u2014
2,370
Derivatives
608
7
\u2014
615
Debt securities in issue\u00a0
7,707
1,377
\u2014
9,084
Subordinated liabilities
8
\u2014
\u2014
8
Accruals, deferred income and other liabilities
5,916
196
4
6,116
Total liabilities at 31 Dec 2023
81,503
26,257
646
108,406
Date of completion
28 March 2024
1 January 2024
Operating segment
All global
businesses
WPB
1Includes financial investments measured at fair value through other comprehensive income of $9.4bn and debt instruments measured at amortised cost of
$7.6bn.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-992": { "value": "
Business acquisitions
In October 2023, HSBC Global Asset Management Singapore Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking
Corporation Limited, entered into an agreement to acquire 100% of the shares of Silkroad Property Partners Pte Ltd (\u2018Silkroad\u2019) and for HSBC
Global Asset Management Limited to acquire Silkroad\u2019s affiliated General Partner entities. Silkroad is a Singapore headquartered Asia-Pacific-
focused, real estate investment manager. The acquisition was completed on 31 January 2024.
In October 2023, HSBC Bank (China) Company Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation
Limited, entered into an agreement to acquire Citibank China\u2019s retail wealth management portfolio in mainland China. The portfolio comprises
assets under management and deposits and the associated wealth customers. The acquisition was completed on 7 June 2024.
The financial impact of these business acquisitions was not significant for the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-993": { "value": "
24Trading liabilities\u00a0 \u00a0 \u00a0 \u00a0
2024
2023
$m
$m
Deposits by banks1
7,671
6,779
Customer accounts1
10,709
8,955
Other debt securities in issue (Note 26)
73
27
Other liabilities \u2013 net short positions in securities
47,529
57,389
At 31 Dec
65,982
73,150
1 \u2018Deposits by banks\u2019 and \u2018Customer accounts\u2019 include repos, stock lending and other amounts.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-994": { "value": "
25
Financial liabilities designated at fair value\u00a0 \u00a0 \u00a0 \u00a0
HSBC
2024
2023
$m
$m
Deposits by banks and customer accounts1
23,773
21,043
Liabilities to customers under investment contracts
5,931
5,103
Debt securities in issue (Note 26)
99,706
103,803
Subordinated liabilities (Note 29)
9,317
11,477
At 31 Dec
138,727
141,426
1Structured deposits placed at HSBC Bank USA are insured by the Federal Deposit Insurance Corporation, a US government agency, up to $250,000 per
depositor.
The carrying amount of financial liabilities designated at fair value was $4,365m less than the contractual amount at maturity (2023: $4,421m
less). The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $1,655m (2023: loss of $1,286m).
HSBC Holdings\u00a0
2024
2023
$m
$m
Debt securities in issue (Note 26)
33,268
35,189
Subordinated liabilities (Note 29)
8,314
8,449
At 31 Dec
41,582
43,638
The carrying amount of financial liabilities designated at fair value was $17m less than the contractual amount at maturity (2023:\u00a0$246m\u00a0less).
The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $540m (2023:\u00a0$682m).
29
Subordinated liabilities
HSBC\u2019s subordinated liabilities
2024
2023
$m
$m
At amortised cost
25,958
24,954
\u2013\u00a0 subordinated liabilities
25,080
23,149
\u2013\u00a0 preferred securities
878
1,805
Designated at fair value (Note 25)
9,317
11,477
\u2013\u00a0 subordinated liabilities
9,317
11,477
\u2013\u00a0 preferred securities
\u2014
\u2014
At 31 Dec
35,275
36,431
Issued by HSBC subsidiaries
3,144
4,154
Issued by HSBC Holdings
32,131
32,277
Subordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called
and redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed
at the first call date, coupons payable may reset or become floating rate based on relevant market rates. On\u00a0subordinated liabilities other than
floating rate notes, interest is payable at fixed rates of up to 8.201%.
The balance sheet amounts disclosed in the following table are presented on an IFRS basis and do not reflect the amount that the instruments
contribute to regulatory capital, principally due to regulatory amortisation and regulatory eligibility limits.
HSBC\u2019s subordinated liabilities: subsidiaries
2024
2023
$m
$m
Additional tier 1 capital securities issued by HSBC subsidiaries1
732
1,672
Tier 2 securities issued by HSBC subsidiaries
\u2013\u00a0 Tier 2 securities issued by HSBC Bank plc
715
764
\u2013\u00a0 Tier 2 securities issued by The Hongkong and Shanghai Banking Corporation Limited
\u2014
\u2013\u00a0 Tier 2 securities issued by HSBC Bank USA Inc
223
223
\u2013\u00a0 Tier 2 securities issued by HSBC Bank USA N.A.
1,431
1,449
Securities issued by other HSBC subsidiaries
43
46
Subordinated liabilities issued by HSBC subsidiaries at 31 Dec
3,144
4,154
1\u00a0 The $900m 10.176% security issued by HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.
HSBC Holdings\u2019 subordinated liabilities
2024
2023
$m
$m
At amortised cost
23,548
24,439
Designated at fair value (Note 25)
8,314
8,449
At 31 Dec
31,862
32,888
HSBC Holdings\u2019 subordinated liabilities in issue
2024
2023
$m
$m
Tier 2 securities issued by HSBC Holdings
Amounts owed to third parties
31,862
31,975
Amounts owed to HSBC undertakings1
\u2014
913
Subordinated liabilities issued by HSBC Holdings at 31 Dec
31,862
32,888
1The $900m 10.176% security issued by HSBC Holdings to HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.
Guaranteed by HSBC Holdings or HSBC Bank plc
Capital securities guaranteed by HSBC Holdings or HSBC Bank plc were issued by the Jersey limited partnerships. The proceeds of these were
lent to the respective guarantors by the limited partnerships in the form of subordinated notes. They qualified as additional tier 1 capital for
HSBC under CRR II until 31 December 2021 by virtue of the application of grandfathering provisions. The capital securities guaranteed by HSBC
Bank plc also qualified as additional tier 1 capital for HSBC Bank plc (on a solo and a consolidated basis) under CRR II until 31 December 2021
by virtue of the same grandfathering process. Since 31 December 2021, these securities have no longer qualified as regulatory capital for HSBC
Holdings or HSBC Bank plc. On 31 October 2024, the capital securities guaranteed by HSBC Holdings were redeemed.
As at 31 December 2024 the preferred securities guaranteed by HSBC Bank plc are intended to provide investors with rights to income and
capital distributions, as well as distributions upon liquidation of the issuer that are equivalent to the rights that they would have had if they had
purchased non-cumulative perpetual preference shares of the issuer. There are limitations on the payment of distributions if such payments are
prohibited under UK banking regulations or other requirements, if a payment would cause a breach of HSBC Bank plc\u2019s capital adequacy
requirements, or if HSBC Bank plc has insufficient distributable reserves (as defined).
HSBC Bank plc have covenanted that, if prevented under certain circumstances from paying distributions on the preferred securities in full, they
will not pay dividends or other distributions in respect of their ordinary shares, or repurchase or redeem their ordinary shares, until the
distribution on the preferred securities has been paid in full.
If the preferred securities guaranteed by HSBC Bank plc are outstanding in November 2048, or if the total capital ratio of HSBC Bank plc (on a
solo or consolidated basis) falls below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that
proceedings have not been commenced for the liquidation, dissolution or winding up of HSBC Bank plc, the holders\u2019 interests in the preferred
security guaranteed by HSBC Bank plc will be exchanged for interests in preference shares issued by HSBC Bank plc that have economic
terms which are in all material respects equivalent to the preferred security and its guarantee.
Tier 2 securities
Tier 2 capital securities are either perpetual or dated subordinated securities on which there is an obligation to pay coupons. These capital
securities are included within HSBC\u2019s regulatory capital base as tier 2 capital under CRR II, either as fully eligible capital or by virtue of the
application of grandfathering provisions. In accordance with CRR II, the capital contribution of all tier 2 securities is amortised for regulatory
purposes in their final five years before maturity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-995": { "value": "
26
Debt securities in issue
HSBC
2024
2023
$m
$m
Bonds and medium-term notes
163,903
160,632
Other debt securities in issue
41,661
37,115
Total debt securities in issue
205,564
197,747
Included within:
\u2013\u00a0 trading liabilities (Note 24)
(73)
(27)
\u2013\u00a0 financial liabilities designated at fair value (Note 25)
(99,706)
(103,803)
At 31 Dec
105,785
93,917
HSBC Holdings
2024
2023
$m
$m
Debt securities
97,588
100,428
Included within:
\u2013\u00a0 financial liabilities designated at fair value (Note 25)
(33,268)
(35,189)
At 31 Dec
64,320
65,239
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-997": { "value": "
27Accruals, deferred income and other liabilities
2024
2023
$m
$m
Accruals and deferred income
16,277
16,814
Settlement accounts and items in course of transmission to other banks
24,692
35,718
Cash collateral and margin payables
58,040
56,832
Endorsements and acceptances
8,102
7,911
Employee benefit liabilities (Note 5)
1,017
1,160
Reinsurance contract liabilities
701
819
Lease liabilities
2,459
2,813
Other liabilities
19,052
21,834
At 31 Dec1
130,340
143,901
Accruals, deferred income and other liabilities include $122,051m (2023: $136,696m) of financial liabilities, the majority of which are measured at amortised
cost.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-996": { "value": "
27Accruals, deferred income and other liabilities
2024
2023
$m
$m
Accruals and deferred income
16,277
16,814
Settlement accounts and items in course of transmission to other banks
24,692
35,718
Cash collateral and margin payables
58,040
56,832
Endorsements and acceptances
8,102
7,911
Employee benefit liabilities (Note 5)
1,017
1,160
Reinsurance contract liabilities
701
819
Lease liabilities
2,459
2,813
Other liabilities
19,052
21,834
At 31 Dec1
130,340
143,901
Accruals, deferred income and other liabilities include $122,051m (2023: $136,696m) of financial liabilities, the majority of which are measured at amortised
cost.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-998": { "value": "
28 Provisions
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
284
380
130
420
1,214
Additions
181
205
36
203
625
Amounts utilised
(193)
(228)
(48)
(105)
(574)
Unused amounts reversed
(63)
(63)
(35)
(82)
(243)
Exchange and other movements
(10)
1
2
21
14
At 31 Dec 2024
199
295
85
457
1,036
Contractual commitments1
At 1 Jan 2024
527
Net change in expected credit loss provision and other movements
161
At 31 Dec 2024
688
Total provisions
At 31 Dec 2023
1,741
At 31 Dec 2024
1,724
Provisions (excluding contractual commitments)
At 1 Jan 2023
445
409
195
397
1,446
Additions
255
236
37
170
698
Amounts utilised
(288)
(231)
(69)
(68)
(656)
Unused amounts reversed
(149)
(30)
(41)
(95)
(315)
Exchange and other movements
21
(4)
8
16
41
At 31 Dec 2023
284
380
130
420
1,214
Contractual commitments1
At 1 Jan 2023
512
Net change in expected credit loss provision and other movements
15
At 31 Dec 2023
527
Total provisions
At 31 Dec 2022
1,958
At 31 Dec 2023
1,741
1Contractual commitments include the expected credit loss provision in relation to off-balance sheet financial guarantee contracts and commitments where
HSBC has become party to an irrevocable commitment, as defined under IFRS 9 \u2018Financial Instruments\u2019; and provisions for performance and other guarantee
contracts.
Further details of \u2018Legal proceedings and regulatory matters\u2019 are set out in Note 35. Legal proceedings include civil court, arbitration or tribunal
proceedings brought against HSBC companies (whether by way of claim or counterclaim); or civil disputes that may, if not settled, result in
court, arbitration or tribunal proceedings. \u2018Regulatory matters\u2019 refers to investigations, reviews and other actions carried out by, or in response
to, the actions of regulators or law enforcement agencies in connection with alleged wrongdoing by HSBC.
Customer remediation refers to HSBC\u2019s activities to compensate customers for losses or damages associated with a failure to comply with
regulations or to treat customers fairly. Customer remediation is often initiated by HSBC in response to customer complaints and/or industry
developments in sales practices, and is not necessarily initiated by regulatory action.
For further details of the impact of IFRS 9 on undrawn loan commitments and financial guarantees, presented in \u2018Contractual commitments\u2019,
see Note 33. Further analysis of the movement in the expected credit loss provision is disclosed within the \u2018Reconciliation of changes in gross
carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees\u2018
table on page 161.
Brazil PIS and COFINS tax matters
Beginning in the late 1990s, HSBC Bank Brasil S.A. \u2013 Banco M\u00faltiplo (\u2018HSBC Brazil\u2019) and other financial services firms brought legal proceedings
in Brazil challenging the assessment of PIS and COFINS taxes, which are federal taxes imposed on gross revenues earned by legal entities in
Brazil. The Supreme Court of Brazil selected three cases \u2013 one involving an insurer, in 2007, and two involving other banks, in 2011 \u2013 to set
standards that would apply to all of these proceedings. In June 2023, the court ruled against the financial services firms in all three cases. The
standards set by the court in this ruling have not yet been applied to HSBC Brazil\u2019s legacy cases, liability for which remained with HSBC after
the sale of HSBC\u2019s operations in Brazil to Bradesco in 2016. There are many factors that may affect the range of outcomes and any resulting
financial impact for HSBC. Based upon the information currently available, a provision was recognised in respect of one legacy case. The
remaining additional tax liability subject to challenge on all legacy PIS and COFINS cases is up to $0.4bn. As at 31 December 2024, no provision
has been booked for this amount.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-999": { "value": "1724000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:OtherProvisions", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2025-01-01T00:00:00", "unit": "iso4217:USD" } }, "f-1000": { "value": "
29
Subordinated liabilities
HSBC\u2019s subordinated liabilities
2024
2023
$m
$m
At amortised cost
25,958
24,954
\u2013\u00a0 subordinated liabilities
25,080
23,149
\u2013\u00a0 preferred securities
878
1,805
Designated at fair value (Note 25)
9,317
11,477
\u2013\u00a0 subordinated liabilities
9,317
11,477
\u2013\u00a0 preferred securities
\u2014
\u2014
At 31 Dec
35,275
36,431
Issued by HSBC subsidiaries
3,144
4,154
Issued by HSBC Holdings
32,131
32,277
Subordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called
and redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed
at the first call date, coupons payable may reset or become floating rate based on relevant market rates. On\u00a0subordinated liabilities other than
floating rate notes, interest is payable at fixed rates of up to 8.201%.
The balance sheet amounts disclosed in the following table are presented on an IFRS basis and do not reflect the amount that the instruments
contribute to regulatory capital, principally due to regulatory amortisation and regulatory eligibility limits.
HSBC\u2019s subordinated liabilities: subsidiaries
2024
2023
$m
$m
Additional tier 1 capital securities issued by HSBC subsidiaries1
732
1,672
Tier 2 securities issued by HSBC subsidiaries
\u2013\u00a0 Tier 2 securities issued by HSBC Bank plc
715
764
\u2013\u00a0 Tier 2 securities issued by The Hongkong and Shanghai Banking Corporation Limited
\u2014
\u2013\u00a0 Tier 2 securities issued by HSBC Bank USA Inc
223
223
\u2013\u00a0 Tier 2 securities issued by HSBC Bank USA N.A.
1,431
1,449
Securities issued by other HSBC subsidiaries
43
46
Subordinated liabilities issued by HSBC subsidiaries at 31 Dec
3,144
4,154
1\u00a0 The $900m 10.176% security issued by HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.
HSBC Holdings\u2019 subordinated liabilities
2024
2023
$m
$m
At amortised cost
23,548
24,439
Designated at fair value (Note 25)
8,314
8,449
At 31 Dec
31,862
32,888
HSBC Holdings\u2019 subordinated liabilities in issue
2024
2023
$m
$m
Tier 2 securities issued by HSBC Holdings
Amounts owed to third parties
31,862
31,975
Amounts owed to HSBC undertakings1
\u2014
913
Subordinated liabilities issued by HSBC Holdings at 31 Dec
31,862
32,888
1The $900m 10.176% security issued by HSBC Holdings to HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.
Guaranteed by HSBC Holdings or HSBC Bank plc
Capital securities guaranteed by HSBC Holdings or HSBC Bank plc were issued by the Jersey limited partnerships. The proceeds of these were
lent to the respective guarantors by the limited partnerships in the form of subordinated notes. They qualified as additional tier 1 capital for
HSBC under CRR II until 31 December 2021 by virtue of the application of grandfathering provisions. The capital securities guaranteed by HSBC
Bank plc also qualified as additional tier 1 capital for HSBC Bank plc (on a solo and a consolidated basis) under CRR II until 31 December 2021
by virtue of the same grandfathering process. Since 31 December 2021, these securities have no longer qualified as regulatory capital for HSBC
Holdings or HSBC Bank plc. On 31 October 2024, the capital securities guaranteed by HSBC Holdings were redeemed.
As at 31 December 2024 the preferred securities guaranteed by HSBC Bank plc are intended to provide investors with rights to income and
capital distributions, as well as distributions upon liquidation of the issuer that are equivalent to the rights that they would have had if they had
purchased non-cumulative perpetual preference shares of the issuer. There are limitations on the payment of distributions if such payments are
prohibited under UK banking regulations or other requirements, if a payment would cause a breach of HSBC Bank plc\u2019s capital adequacy
requirements, or if HSBC Bank plc has insufficient distributable reserves (as defined).
HSBC Bank plc have covenanted that, if prevented under certain circumstances from paying distributions on the preferred securities in full, they
will not pay dividends or other distributions in respect of their ordinary shares, or repurchase or redeem their ordinary shares, until the
distribution on the preferred securities has been paid in full.
If the preferred securities guaranteed by HSBC Bank plc are outstanding in November 2048, or if the total capital ratio of HSBC Bank plc (on a
solo or consolidated basis) falls below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that
proceedings have not been commenced for the liquidation, dissolution or winding up of HSBC Bank plc, the holders\u2019 interests in the preferred
security guaranteed by HSBC Bank plc will be exchanged for interests in preference shares issued by HSBC Bank plc that have economic
terms which are in all material respects equivalent to the preferred security and its guarantee.
Tier 2 securities
Tier 2 capital securities are either perpetual or dated subordinated securities on which there is an obligation to pay coupons. These capital
securities are included within HSBC\u2019s regulatory capital base as tier 2 capital under CRR II, either as fully eligible capital or by virtue of the
application of grandfathering provisions. In accordance with CRR II, the capital contribution of all tier 2 securities is amortised for regulatory
purposes in their final five years before maturity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-1001": { "value": "
30Maturity analysis of assets, liabilities and off-balance sheet commitments
The table on page 418 provides an analysis of consolidated total assets, liabilities and off-balance sheet commitments by residual contractual
maturity at the balance sheet date. These balances are included in the maturity analysis as follows:
\u2013 Trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the
\u2018Due not more than 1 month\u2019 time bucket because trading balances are typically held for short periods of time.
\u2013 Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the \u2018Due over 5\u00a0years\u2019 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 \u2018Due\u00a0over 5 years\u2019 time bucket.
\u2013 Non-financial assets and liabilities with no contractual maturity are included in the \u2018Due over 5 years\u2019 time bucket.
\u2013 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.
\u2013 Liabilities under insurance contracts included in \u2018non-financial liabilities\u2019 are irrespective of contractual maturity included in the \u2018Due over 5
years\u2019 time bucket in the maturity table provided below. An analysis of the present value of expected future cash flows of insurance contract
liabilities and contractual service margin is provided on page 373. Liabilities under investment contracts are\u00a0classified in accordance with
their contractual maturity. Undated investment contracts are included in the \u2018Due over 5 years\u2019 time bucket, although such contracts are
subject to surrender and transfer options by the policyholders.
\u2013 Loan and other credit-related commitments are classified on the basis of the earliest date they can be drawn down.
HSBC
Maturity analysis of assets, liabilities and off-balance sheet commitments
Due not
more
than
1 month
Due over
1 month
but not
more
than
3 months
Due over
3 months
but not
more
than
6 months
Due over
6 months
but not
more
than
9 months
Due over
9 months
but not
more
than
1 year
Due over
1 year
but not
more
than
2 years
Due over
2 years
but not
more
than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash and balances at central banks
267,674
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
267,674
Hong Kong Government certificates of
indebtedness
42,293
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,293
Trading assets
311,277
1,374
679
337
774
401
\u2014
\u2014
314,842
Financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
6,329
1,497
1,218
810
1,570
4,010
11,503
88,832
115,769
Derivatives
264,689
401
709
377
164
364
524
1,409
268,637
Loans and advances to banks
69,778
16,300
3,871
4,264
2,922
2,276
2,236
392
102,039
Loans and advances to customers
135,250
69,955
53,557
36,945
38,985
89,061
176,645
330,260
930,658
\u2013\u00a0 personal
45,221
10,236
7,634
6,705
6,197
19,683
53,434
295,588
444,698
\u2013\u00a0 corporate and commercial
78,170
52,618
38,440
22,858
25,292
54,832
102,637
29,102
403,949
\u2013\u00a0 financial
11,859
7,101
7,483
7,382
7,496
14,546
20,574
5,570
82,011
Reverse repurchase agreements \u2013 non-trading
179,590
36,552
15,054
3,715
6,659
7,400
3,579
\u2014
252,549
Financial investments
35,780
74,850
50,650
15,907
20,465
54,125
143,870
97,519
493,166
Assets held for sale1
2,711
170
215
401
711
513
2,465
19,170
26,356
Accrued income and other financial assets
94,803
6,831
4,127
648
579
498
346
1,504
109,336
Financial assets at 31 Dec 2024
1,410,174
207,930
130,080
63,404
72,829
158,648
341,168
539,086
2,923,319
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
93,729
93,729
Total assets at 31 Dec 2024
1,410,174
207,930
130,080
63,404
72,829
158,648
341,168
632,815
3,017,048
Off-balance sheet commitments received
Loan and other credit-related commitments
41,875
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
41,875
Financial liabilities
Hong Kong currency notes in circulation
42,293
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,293
Deposits by banks
54,714
1,595
2,227
653
3,924
507
9,919
458
73,997
Customer accounts
1,382,204
168,423
58,928
19,062
17,389
6,482
2,353
114
1,654,955
\u2013\u00a0 personal
640,031
111,341
41,429
13,429
11,109
3,983
1,981
\u2014
823,303
\u2013\u00a0 corporate and commercial
564,693
45,047
14,708
3,991
4,748
1,968
332
106
635,593
\u2013\u00a0 financial
177,480
12,035
2,791
1,642
1,532
531
40
8
196,059
Repurchase agreements \u2013 non-trading
168,075
10,340
1,176
450
473
171
\u2014
195
180,880
Trading liabilities
58,069
4,933
2,873
7
100
\u2014
\u2014
\u2014
65,982
Financial liabilities designated at
fair value
19,037
8,732
5,890
4,765
5,600
17,013
43,274
34,416
138,727
\u2013\u00a0 debt securities in issue: covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 debt securities in issue: unsecured
8,431
4,148
3,557
2,885
4,362
14,660
38,259
22,866
99,168
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
1,011
\u2014
886
1,871
5,548
9,316
\u2013\u00a0 other
10,606
4,584
2,333
869
1,238
1,467
3,144
6,002
30,243
Derivatives
262,928
2
6
3
1
43
192
1,273
264,448
Debt securities in issue
5,761
10,915
10,330
7,332
7,239
14,724
22,311
27,173
105,785
\u2013\u00a0 covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
1,253
\u2014
1,253
\u2013\u00a0 otherwise secured
511
47
67
64
61
664
520
2,236
4,170
\u2013\u00a0 unsecured
5,250
10,868
10,263
7,268
7,178
14,060
20,538
24,937
100,362
Liabilities of disposal groups held for sale2
5,356
223
42
2
107
\u2014
\u2014
1,448
7,178
Accruals and other financial liabilities
99,424
11,827
5,415
1,013
1,241
902
1,489
738
122,049
Subordinated liabilities
\u2014
\u2014
1,719
16
\u2014
\u2014
861
23,362
25,958
Total financial liabilities at 31 Dec 2024
2,097,861
216,990
88,606
33,303
36,074
39,842
80,399
89,177
2,682,252
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
142,523
142,523
Total liabilities at 31 Dec 2024
2,097,861
216,990
88,606
33,303
36,074
39,842
80,399
231,700
2,824,775
Off-balance sheet commitments given
Loan and other credit-related commitments
861,181
74
12
85
49
6
57
114
861,578
\u2013\u00a0 personal
253,522
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
253,522
\u2013\u00a0 corporate and commercial
460,762
74
12
85
49
6
57
114
461,159
\u2013\u00a0 financial
146,897
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
146,897
Maturity analysis of assets, liabilities and off-balance sheet commitments (continued)
Due not
more
than
1 month
Due over
1 month
but not
more
than
3 months
Due over
3 months
but not
more
than
6 months
Due over
6 months
but not
more than
9 months
Due over
9 months
but not
more than
1 year
Due over
1 year
but not
more than
2 years
Due over
2 years
but not
more than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash and balances at central banks
285,868
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
285,868
Hong Kong Government certificates of
indebtedness
42,024
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,024
Trading assets
284,865
2,010
637
363
555
165
564
\u2014
289,159
Financial assets designated and otherwise
mandatorily measured at fair value through profit
or loss
5,530
697
821
753
581
4,839
11,917
85,505
110,643
Derivatives
227,343
138
134
71
35
383
570
1,040
229,714
Loans and advances to banks
76,524
18,662
6,487
2,689
3,281
2,756
2,328
175
112,902
Loans and advances to customers
142,803
66,425
52,218
40,135
36,323
94,206
175,381
331,044
938,535
\u2013\u00a0 personal
44,105
9,558
6,960
6,422
6,127
19,606
54,365
297,512
444,655
\u2013\u00a0 corporate and commercial
83,281
50,268
38,250
24,685
24,566
61,612
106,598
30,592
419,852
\u2013\u00a0 financial
15,417
6,599
7,008
9,028
5,630
12,988
14,418
2,940
74,028
Reverse repurchase agreements \u2013 non-trading
164,826
43,893
23,840
6,708
5,126
6,113
1,711
\u2014
252,217
Financial investments
48,969
69,816
44,493
16,348
18,603
46,124
106,117
92,293
442,763
Assets held for sale1
39,882
2,929
7,041
4,176
3,261
17,085
33,015
7,943
115,332
Accrued income and other financial assets
114,480
6,574
4,404
550
698
220
764
1,513
129,203
Financial assets at 31 Dec 2023
1,433,114
211,144
140,075
71,793
68,463
171,891
332,367
519,513
2,948,360
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
90,317
90,317
Total assets at 31 Dec 2023
1,433,114
211,144
140,075
71,793
68,463
171,891
332,367
609,830
3,038,677
Off-balance sheet commitments received
Loan and other credit-related commitments
39,836
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
39,836
Financial liabilities
Hong Kong currency notes in circulation
42,024
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
42,024
Deposits by banks
52,747
2,758
2,324
381
94
1,458
13,064
337
73,163
Customer accounts
1,343,858
138,117
78,611
20,832
17,724
7,785
4,616
104
1,611,647
\u2013\u00a0 personal
621,112
84,909
61,286
14,794
12,465
5,507
2,742
2
802,817
\u2013\u00a0 corporate and commercial
545,207
43,562
14,525
4,605
3,393
2,165
1,527
92
615,076
\u2013\u00a0 financial
177,539
9,646
2,800
1,433
1,866
113
347
10
193,754
Repurchase agreements \u2013 non-trading
158,882
10,311
1,759
300
847
1
\u2014
\u2014
172,100
Trading liabilities
66,548
6,302
300
\u2014
\u2014
\u2014
\u2014
\u2014
73,150
Financial liabilities designated at fair value
22,080
8,366
7,823
7,197
6,239
16,679
39,497
33,545
141,426
\u2013\u00a0 debt securities in issue: covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2013\u00a0 debt securities in issue: unsecured
10,383
2,760
5,748
6,225
5,390
14,090
34,757
23,898
103,251
\u2013\u00a0 subordinated liabilities and preferred\u00a0
securities
\u2014
1,995
\u2014
\u2014
\u2014
1,471
3,429
4,581
11,476
\u2013\u00a0 other
11,697
3,611
2,075
972
849
1,118
1,311
5,066
26,699
Derivatives
233,134
113
25
9
47
73
1,223
148
234,772
Debt securities in issue
6,891
6,664
10,816
6,896
6,427
6,317
27,452
22,454
93,917
\u2013\u00a0 covered bonds
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
1,273
\u2014
1,273
\u2013\u00a0 otherwise secured
447
44
62
58
55
188
861
1,679
3,394
\u2013\u00a0 unsecured
6,444
6,620
10,754
6,838
6,372
6,129
25,318
20,775
89,250
Liabilities of disposal groups held for sale2
69,868
5,231
5,479
6,728
6,541
4,730
7,918
1,511
108,006
Accruals and other financial liabilities
111,559
11,827
6,007
1,205
1,414
1,053
1,491
2,137
136,693
Subordinated liabilities
\u2014
13
\u2014
\u2014
\u2014
1,790
897
22,254
24,954
Total financial liabilities at 31 Dec 2023
2,107,591
189,702
113,144
43,548
39,333
39,886
96,158
82,490
2,711,852
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
134,215
134,215
Total liabilities at 31 Dec 2023
2,107,591
189,702
113,144
43,548
39,333
39,886
96,158
216,705
2,846,067
Off-balance sheet commitments given
Loan and other credit-related commitments
895,140
95
126
72
171
439
807
300
897,150
\u2013\u00a0 personal
256,272
21
30
46
107
279
745
192
257,692
\u2013\u00a0 corporate and commercial
472,507
74
26
26
64
160
62
108
473,027
\u2013\u00a0 financial
166,361
\u2014
70
\u2014
\u2014
\u2014
\u2014
\u2014
166,431
1Unallocated impairment losses in relation to disposal groups of $0.03bn (2023: $2.0bn) and non-financial assets of $0.9bn (2023: $0.9bn) that are presented
within assets held for sale on the balance sheet have been included within non-financial assets in the table above.
2A total of $21.8bn (2023: $0.4bn) of non-financial liabilities that are presented within liabilities of disposal groups held for sale on the balance sheet have been
included within non-financial liabilities in the table above.
HSBC Holdings
Maturity analysis of assets, liabilities and off-balance sheet commitments
Due not
more
than
1 month
Due over
1 month
but not
more than
3 months
Due over
3 months
but not
more than
6 months
Due over
6 months
but not
more than
9 months
Due over
9 months
but not
more than
1 year
Due over
1 year
but not
more than
2 years
Due over
2 years
but not
more than
5 years
Due
over
5 years
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial assets
Cash at bank and in hand:
\u2013\u00a0 balances with HSBC undertakings
2,548
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
2,548
Financial assets with HSBC undertakings
designated and otherwise mandatorily
measured at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
5,835
31,547
23,904
61,286
Derivatives
2,339
\u2014
24
\u2014
\u2014
243
162
286
3,054
Loans and advances to HSBC undertakings
8,500
\u2014
120
\u2014
13
1,640
6,739
20,665
37,677
Trading assets
709
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
709
Financial investments
6,141
4,187
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
10,328
Accrued income and other financial assets
2,719
856
292
203
11
\u2014
\u2014
\u2014
4,081
Total financial assets at 31 Dec 2024
22,956
5,043
436
203
24
7,718
38,448
44,855
119,683
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
154,574
154,574
Total assets at 31 Dec 2024
22,956
5,043
436
203
24
7,718
38,448
199,429
274,257
Financial liabilities
Amounts owed to HSBC undertakings
\u2014
231
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
231
Financial liabilities designated at fair\u00a0value
\u2014
\u2014
\u2014
1,012
\u2014
3,641
16,907
20,022
41,582
\u2013\u00a0 debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
2,755
15,036
15,476
33,267
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
1,012
\u2014
886
1,871
4,546
8,315
Derivatives
1,502
89
144
44
45
209
794
2,513
5,340
Debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
14,897
24,395
25,028
64,320
Accruals and other financial liabilities
351
1,713
831
129
31
\u2014
\u2014
20
3,075
Subordinated liabilities
\u2014
\u2014
1,541
\u2014
\u2014
\u2014
836
21,171
23,548
Total financial liabilities 31 Dec 2024
1,853
2,033
2,516
1,185
76
18,747
42,932
68,754
138,096
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
22
22
Total liabilities at 31 Dec 2024
1,853
2,033
2,516
1,185
76
18,747
42,932
68,776
138,118
Financial assets
Cash at bank and in hand:
\u2013\u00a0 balances with HSBC undertakings
7,029
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
7,029
Financial assets with HSBC undertakings
designated and otherwise mandatorily
measured at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
3,815
26,284
29,780
59,879
Derivatives
2,217
\u2014
\u2014
\u2014
\u2014
18
675
434
3,344
Loans and advances to HSBC undertakings
\u2014
\u2014
120
\u2014
\u2014
1,016
6,783
19,435
27,354
Financial investments
10,365
6,017
898
750
757
771
\u2014
\u2014
19,558
Accrued income and other financial assets
3,511
860
254
229
5
\u2014
\u2014
\u2014
4,859
Total financial assets at 31\u00a0Dec\u00a02023
23,122
6,877
1,272
979
762
5,620
33,742
49,649
122,023
Non-financial assets
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
163,146
163,146
Total assets at 31 Dec 2023
23,122
6,877
1,272
979
762
5,620
33,742
212,795
285,169
Financial liabilities
Amounts owed to HSBC undertakings
\u2014
168
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
168
Financial liabilities designated at fair value
\u2014
\u2014
\u2014
\u2014
\u2014
5,287
19,604
18,747
43,638
\u2013\u00a0 debt securities in issue
\u2014
\u2014
\u2014
\u2014
\u2014
3,816
16,175
15,198
35,189
\u2013\u00a0 subordinated liabilities and preferred
securities
\u2014
\u2014
\u2014
\u2014
\u2014
1,471
3,429
3,549
8,449
Derivatives
2,452
209
7
59
75
558
1,318
1,412
6,090
Debt securities in issue
\u2014
\u2014
816
2,158
\u2014
4,920
33,735
23,610
65,239
Accruals and other financial liabilities
1,437
1,599
1,049
127
34
\u2014
\u2014
23
4,269
Subordinated liabilities
\u2014
1,987
\u2014
\u2014
\u2014
1,600
880
19,972
24,439
Total financial liabilities at 31\u00a0Dec 2023
3,889
3,963
1,872
2,344
109
12,365
55,537
63,764
143,843
Non-financial liabilities
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
20
20
Total liabilities at 31 Dec 2023
3,889
3,963
1,872
2,344
109
12,365
55,537
63,784
143,863
Contractual maturity of financial liabilities
The following table shows, 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). For this reason, balances in the following table do not agree directly with those in
our consolidated balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are\u00a0classified according to their
contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the \u2018Due not more than 1 month\u2019 time
bucket and not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the
basis of the earliest date they can be called.
Cash flows payable by HSBC under financial liabilities by remaining contractual maturities
Due not
more
than 1
month
Due over
1 month but
not more
than
3 months
Due over
3 months but
not more than
1 year
Due over
1 year but
not
more than
5 years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
Deposits by banks
54,819
1,759
7,381
11,242
511
75,712
Customer accounts
1,382,666
171,917
97,667
10,089
113
1,662,452
Repurchase agreements \u2013 non-trading
168,633
10,425
2,195
188
196
181,637
Trading liabilities
65,982
\u2014
\u2014
\u2014
\u2014
65,982
Financial liabilities designated at fair value
19,139
9,042
18,462
70,587
45,767
162,997
Derivatives
262,014
531
1,008
2,034
2,765
268,352
Debt securities in issue
5,780
11,309
27,103
45,725
32,129
122,046
Subordinated liabilities
39
120
2,959
7,373
35,512
46,003
Other financial liabilities1
138,319
9,754
5,421
2,206
608
156,308
2,097,391
214,857
162,196
149,444
117,601
2,741,489
Loan and other credit-related commitments
861,193
78
146
63
98
861,578
Financial guarantees2
16,998
\u2014
\u2014
\u2014
\u2014
16,998
At 31 Dec 2024
2,975,582
214,935
162,342
149,507
117,699
3,620,065
Proportion of cash flows payable in period
83%
6%
4%
4%
3%
Deposits by banks
52,938
2,898
3,304
17,123
362
76,625
Customer accounts
1,345,006
141,348
119,660
13,423
109
1,619,546
Repurchase agreements \u2013 non-trading
159,264
10,457
2,996
1
\u2014
172,718
Trading liabilities
73,150
\u2014
\u2014
\u2014
\u2014
73,150
Financial liabilities designated at fair value
22,262
9,156
26,033
63,960
44,886
166,297
Derivatives
232,598
609
1,295
2,445
2,910
239,857
Debt securities in issue
6,837
7,407
24,117
43,513
27,119
108,993
Subordinated liabilities
39
135
1,465
9,020
34,920
45,579
Other financial liabilities1
149,904
9,752
5,943
2,555
2,109
170,263
2,041,998
181,762
184,813
152,040
112,415
2,673,028
Loan and other credit-related commitments
895,156
95
371
1,437
91
897,150
Financial guarantees2
16,966
4
39
\u2014
\u2014
17,009
At 31 Dec 2023
2,954,120
181,861
185,223
153,477
112,506
3,587,187
Proportion of cash flows payable in period
83%
5%
5%
4%
3%
1Excludes financial liabilities of disposal groups.
2Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
HSBC Holdings
HSBC Holdings\u2019 primary sources of liquidity are dividends received from subsidiaries, interest on and repayment of intra-Group loans and
securities, and interest earned on its own liquid funds. HSBC Holdings also raises funds in the debt capital markets to meet the Group\u2019s
minimum requirement for own funds and eligible liabilities and maintain an appropriate liquidity buffer. HSBC Holdings uses this liquidity to
meet its obligations, including interest and principal repayments on external debt liabilities, operating expenses and collateral on derivative
transactions.
HSBC Holdings is also subject to contingent liquidity risk by virtue of credit-related commitments and guarantees and similar contracts issued
relating to its subsidiaries. Such commitments and guarantees are only issued after due consideration of HSBC Holdings\u2019 ability to finance the
commitments and guarantees and the likelihood of the need arising.
HSBC Holdings actively manages the cash flows from its subsidiaries to optimise the amount of cash held at the holding company level. During
2024, consistent with the Group\u2019s capital plan, the Group\u2019s material subsidiaries did not experience any significant restrictions on paying
dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments
from material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other
things, their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating
performance.
HSBC Holdings currently has sufficient liquidity to meet its present and forecast requirements.
The following table shows, 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). For this reason, balances in the following table do not agree directly with those in
HSBC Holdings balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are\u00a0classified according to their
contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the \u2018Due not more than 1 month\u2019 time
bucket and not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the
basis of the earliest date they can be called.
Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities
Due not
more
than 1
month
Due over 1
month but
not
more than 3
months
Due over 3
months but
not more
than
1 year
Due over 1
year but not
more than 5
years
Due over
5 years
Total
$m
$m
$m
$m
$m
$m
Amounts owed to HSBC undertakings
\u2014
231
\u2014
\u2014
\u2014
231
Financial liabilities designated at fair value
2
133
2,254
26,335
26,788
55,512
Derivatives
669
202
1,344
2,591
1,658
6,464
Debt securities in issue
\u2014
254
1,697
47,771
29,706
79,428
Subordinated liabilities
\u2014
105
2,627
6,794
31,773
41,299
Other financial liabilities
351
1,735
991
\u2014
20
3,097
At 31 Dec 2024
1,022
2,660
8,913
83,491
89,945
186,031
Amounts owed to HSBC undertakings
\u2014
168
\u2014
\u2014
\u2014
168
Financial liabilities designated at fair value
23
405
1,437
31,050
25,610
58,525
Derivatives
1,244
556
1,651
2,227
726
6,404
Debt securities in issue
\u2014
680
4,787
46,909
27,745
80,121
Subordinated liabilities
46
2,163
1,360
8,239
30,862
42,670
Other financial liabilities
1,436
1,620
1,210
\u2014
23
4,289
At 31 Dec 2023
2,749
5,592
10,445
88,425
84,966
192,177
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32
Called up share capital and other equity instruments
Called up share capital and share premium
HSBC Holdings ordinary shares of $0.50 each, issued and fully paid
2024
2023
Number
$m
Number
$m
At 1 Jan
19,262,728,193
9,631
20,293,607,410
10,147
Shares issued under HSBC employee share plans
10,283,430
5
10,778,479
5
Shares issued in lieu of dividends
\u2014
\u2014
\u2014
\u2014
Less: shares repurchased and cancelled
1,326,061,041
663
716,384,289
358
Less: treasury shares cancelled
\u2014
\u2014
325,273,407
163
At 31 Dec1
17,946,950,582
8,973
19,262,728,193
9,631
1All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.
HSBC Holdings share premium
2024
2023
$m
$m
At 31 Dec
14,810
14,738
Total called up share capital and share premium
2024
2023
$m
$m
At 31 Dec
23,783
24,369
HSBC Holdings non-cumulative preference share of \u00a30.01
The one non-cumulative sterling preference share of \u00a30.01 (\u2018sterling preference share\u2019) has been in issue since 29 December 2010 and is held
by a subsidiary of HSBC Holdings. Dividends are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share
carries no rights of conversion into ordinary shares of HSBC Holdings and no right to attend or vote at shareholder meetings of HSBC Holdings.
These securities can be redeemed by HSBC Holdings at any time, subject to prior approval by the PRA.
Other equity instruments
HSBC Holdings has included two types of additional tier 1 capital securities in its tier 1 capital, including the contingent convertible securities
described below. These are accounted for as equity because HSBC does not have an obligation to transfer cash or a variable number of its own
ordinary shares to holders under any circumstances outside its control. See Note 29 for additional tier 1 securities accounted for as liabilities.
Additional tier 1 capital \u2013 contingent convertible securities
HSBC Holdings continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1
capital securities on an end point basis. These securities are marketed principally and subsequently allotted to corporate investors and fund
managers. The net proceeds of the issuances are typically used for HSBC Holdings\u2019 general corporate purposes and to further strengthen its
capital base to meet requirements under CRR II. These securities bear a fixed rate of interest until their initial call dates. After the initial call
dates, if they are not redeemed, the securities will bear interest at rates fixed periodically in advance for five-year periods based on credit
spreads, fixed at issuance, above prevailing market rates. Interest on the contingent convertible securities will be due and payable only at the
sole discretion of HSBC Holdings, and HSBC Holdings has sole and absolute discretion at all times to cancel for any reason (in whole or part)
any interest payment that would otherwise be payable on any payment date. Distributions will not be paid if they are prohibited under UK
banking regulations or if the Group has insufficient reserves or fails to meet the solvency conditions defined in the securities\u2019 terms.
The contingent convertible securities are undated and are repayable at the option of HSBC Holdings in whole typically at the initial call date or
on any fifth anniversary after this date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax
reasons. Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC Holdings\u2019 sterling preference
shares and therefore rank ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of
HSBC Holdings at a predetermined price, should HSBC\u2019s consolidated non-transitional CET1 ratio fall below 7.0%. Therefore, in accordance
with the terms of the securities, if the non-transitional CET1 ratio breaches the 7.0% trigger, the securities will convert into ordinary shares at
fixed contractual conversion prices in the issuance currencies of the relevant securities, subject to anti-dilution adjustments.
HSBC\u2019s additional tier 1 capital \u2013 contingent convertible securities in issue which are accounted for in equity
Original nominal
amount (LCY)
First call
date
2024
2023
$m
$m
$2,250m
6.375% Perpetual Subordinated Contingent Convertible Securities1
Sept 2024
\u2014
2,250
$2,450m
6.375% Perpetual Subordinated Contingent Convertible Securities
Mar 2025
2,450
2,450
$3,000m
6.000% Perpetual Subordinated Contingent Convertible Securities
May 2027
3,000
3,000
$1,800m
6.500% Perpetual Subordinated Contingent Convertible Securities
Mar 2028
1,800
1,800
$1,500m
4.600% Perpetual Subordinated Contingent Convertible Securities2
Dec 2030
1,500
1,500
$1,000m
4.000% Perpetual Subordinated Contingent Convertible Securities3
Mar 2026
1,000
1,000
$1,000m
4.700% Perpetual Subordinated Contingent Convertible Securities4
Mar 2031
1,000
1,000
$2,000m
8.000% Perpetual Subordinated Contingent Convertible Securities5
Mar 2028
1,980
1,980
\u20ac1,250m
4.750% Perpetual Subordinated Contingent Convertible Securities
Jul 2029
1,422
1,422
\u00a31,000m
5.875% Perpetual Subordinated Contingent Convertible Securities
Sept 2026
1,301
1,301
$1,350m
6.875% Perpetual Subordinated Contingent Convertible Securities6
Sept 2029
1,337
\u2014
$1,150m
6.950% Perpetual Subordinated Contingent Convertible Securities7
Mar 2034
1,138
\u2014
SGD1,500m
5.250% Perpetual Subordinated Contingent Convertible Securities8
Jun 2029
1,096
\u2014
At 31 Dec
19,024
17,703
1This security was called by HSBC Holdings on 23 July 2024 and redeemed and cancelled on 17 September 2024.
2This security was issued by HSBC Holdings on 17 December 2020. The first call period commences six months prior to reset date of 17 June 2031.
3This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2026.
4This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2031.
5This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six months prior to reset date of 7 September 2028. This security
has been accounted for net of directly attributable transaction costs.
6This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six months prior to reset date of 11 March 2030. This
security has been accounted for net of directly attributable transaction costs.
7This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six months prior to reset date of 11 September 2034. This
security has been accounted for net of directly attributable transaction costs.
8This security was issued by HSBC Holdings on 14 June 2024. The first call period commences six months prior to reset date of 14 December 2039.
Shares under option
For details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Savings-Related Share Option
Plan (UK), see Note 5.
Aggregate options outstanding under these plans
31 Dec 2024
31 Dec 2023
Number of
HSBC Holdings
ordinary shares
Usual period of
exercise
Exercise price
Number of
HSBC Holdings
ordinary shares
Usual period of
exercise
Exercise price
75,335,399
2023 to 2030
\u00a32.6270\u2013\u00a35.4490
83,993,678
2022 to 2029
\u00a32.6270\u20135.4490
Maximum obligation to deliver HSBC Holdings ordinary shares
At 31 December 2024, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements and the
HSBC International Employee Share Purchase Plan, together with long-term incentive awards and deferred share awards granted under the
HSBC Share Plan 2011, was 209,683,768 (2023: 208,539,316). The total number of shares at 31\u00a0December 2024 held by employee benefit
trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 9,305,925 (2023: 20,902,218).
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Called up share capital and share premium
HSBC Holdings ordinary shares of $0.50 each, issued and fully paid
2024
2023
Number
$m
Number
$m
At 1 Jan
19,262,728,193
9,631
20,293,607,410
10,147
Shares issued under HSBC employee share plans
10,283,430
5
10,778,479
5
Shares issued in lieu of dividends
\u2014
\u2014
\u2014
\u2014
Less: shares repurchased and cancelled
1,326,061,041
663
716,384,289
358
Less: treasury shares cancelled
\u2014
\u2014
325,273,407
163
At 31 Dec1
17,946,950,582
8,973
19,262,728,193
9,631
1All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.
Total called up share capital and share premium
2024
2023
$m
$m
At 31 Dec
23,783
24,369
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-1004": { "value": "
33
Contingent liabilities, contractual commitments and guarantees
HSBC
HSBC Holdings1
2024
2023
2024
2023
$m
$m
$m
$m
Guarantees and other contingent liabilities:
\u2013\u00a0 financial guarantees
16,998
17,009
\u2014
\u2014
\u2013\u00a0 performance and other guarantees
92,723
94,277
7,327
7,723
\u2013\u00a0 other contingent liabilities
298
636
\u2014
\u2014
At 31 Dec
110,019
111,922
7,327
7,723
Commitments:2
\u2013\u00a0 documentary credits and short-term trade-related transactions
7,096
7,818
\u2014
\u2014
\u2013\u00a0 forward asset purchases and forward deposits placed
61,017
78,535
\u2014
\u2014
\u2013\u00a0 standby facilities, credit lines and other commitments to lend
793,465
810,797
\u2014
\u2014
At 31 Dec
861,578
897,150
\u2014
\u2014
1Guarantees by HSBC Holdings are in favour of other Group entities. These include contracts that provide protection against credit risk on a specified exposure
but do not meet the definition of financial guarantees.
2Includes $619,367m of commitments at 31 December 2024 (31 December 2023: $661,015m), to which the impairment requirements in IFRS 9 are applied
where HSBC has become party to an irrevocable commitment.
The preceding table discloses the nominal principal amounts of off-balance sheet liabilities and commitments for the Group, which represent
the maximum amounts at risk should the contracts be fully drawn upon and the clients default. As a significant portion of guarantees and
commitments are expected to expire without being drawn upon, the total of the nominal principal amounts is not indicative of future liquidity
requirements. The expected credit loss provision relating to guarantees and commitments under IFRS 9 is disclosed in Note 28.
The majority of the guarantees have a term of less than one year, while guarantees with terms of more than one year are subject to HSBC\u2019s
annual credit review process.
Contingent liabilities arising from legal proceedings, regulatory and other matters against Group companies are excluded from this note but are
disclosed in Notes 28 and 35.
Financial Services Compensation Scheme
The Financial Services Compensation Scheme (\u2018FSCS\u2019) provides compensation, up to certain limits, to eligible customers of financial services
firms that are unable, or likely to be unable, to pay claims against them. The FSCS may impose a further levy on the Group to the extent the
industry levies imposed to date are not sufficient to cover the compensation due to customers in any future possible collapse. The ultimate
FSCS levy to the industry as a result of a collapse cannot be estimated reliably. It is dependent on various uncertain factors including the
potential recovery of assets by the FSCS, changes in the level of protected products (including deposits and investments) and the population of
FSCS members at the time.
Associates
HSBC\u2019s share of associates\u2019 contingent liabilities, contractual commitments and guarantees amounted to $74.5bn at 31 December 2024 (2023:
$69.9bn). No matters arose where HSBC was severally liable.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-1005": { "value": "
34Finance lease receivables
HSBC 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.
The table below excludes finance lease receivables reclassified on the balance sheet to \u2018Assets held for sale\u2019 in accordance with IFRS 5. Net
investment in finance leases of $1,595m was reclassified to \u2018Assets held for sale\u2019 in 2023 as a result of the sale of our banking business in
Canada. There was no net investment in finance leases classified as held-for-sale at 31 December 2024.
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
2,331
(295)
2,036
2,355
(308)
2,047
One to two years
1,787
(226)
1,561
1,954
(249)
1,705
Two to three years
1,290
(171)
1,119
1,380
(189)
1,191
Three to four years
839
(134)
705
930
(153)
777
Four to five years
766
(147)
619
593
(132)
461
Later than one year and no later than five\u00a0years
4,682
(678)
4,004
4,857
(723)
4,134
Later than five years
3,518
(639)
2,879
4,116
(838)
3,278
At 31 Dec
10,531
(1,612)
8,919
11,328
(1,869)
9,459
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:MLU0ZO3ML4LN2LL2TL39", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "f-1006": { "value": "
35Legal proceedings and regulatory matters
HSBC is party to legal proceedings and regulatory matters in a number of jurisdictions arising out of its normal business operations. Apart from
the matters described below, HSBC considers that none of these matters are material. The recognition of provisions is determined in
accordance with the accounting policies set out in Note 1. While the outcomes of legal proceedings and regulatory matters are inherently
uncertain, management believes that, based on the information available to it, appropriate provisions have been made in respect of these
matters as at 31 December 2024 (see Note 28). Where an individual provision is material, the fact that a provision has been made is stated and
quantified, except to the extent that doing so would be seriously prejudicial. Any provision recognised does not constitute an admission of
wrongdoing or legal liability. It is not practicable to provide an aggregate estimate of\u00a0potential liability for our legal proceedings and regulatory
matters as a class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US
whose assets were invested with Bernard L. Madoff Investment Securities LLC (\u2018Madoff Securities\u2019). Based on information provided by Madoff
Securities as at 30 November 2008, the purported aggregate value of these funds was $8.4bn, including fictitious profits reported by Madoff.
Based on information available to HSBC, the funds\u2019 actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities
during the time HSBC serviced the funds are estimated to have totalled approximately $4bn. Various HSBC companies have been named as
defendants in lawsuits arising out of Madoff Securities\u2019 fraud.
Trustee litigation: The Madoff Securities trustee (the \u2018Trustee\u2019) has brought lawsuits in the US against various HSBC companies and others
seeking recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $543m (plus interest), and these
lawsuits remain pending in the US Bankruptcy Court for the Southern District of New York.
The Trustee has filed a claim against various HSBC companies in the High Court of England and Wales seeking recovery of alleged transfers
from Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been specified.
Fairfield Funds litigation: Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (together, the \u2018Fairfield Funds\u2019) (in
liquidation) have brought lawsuits in the US against various HSBC companies and others seeking recovery of alleged transfers from the Fairfield
Funds to the HSBC companies (that acted as nominees for clients) in the amount of $382m (plus interest). Fairfield Funds\u2019 claims against most
of the HSBC companies have been dismissed, but remain pending on appeal before the US Court of Appeals for the Second Circuit. Fairfield
Funds\u2019 claims against HSBC Private Bank (Suisse) SA (\u2018PBRS\u2019) and HSBC Securities Services Luxembourg (\u2018HSSL\u2019) have not been dismissed
and are ongoing before the US Bankruptcy Court for the Southern District of New York. PBRS and HSSL have appealed the decision not to
dismiss them and these appeals are pending before the US Court of Appeals for the Second Circuit.
Herald Fund SPC (\u2018Herald\u2019) litigation: HSSL and HSBC Bank plc are defending an action brought by Herald (in liquidation) before the
Luxembourg District Court seeking restitution of securities and cash in the amount of $2.5bn (plus interest), or damages in the amount of
$5.6bn (plus interest). In 2013, the Luxembourg District Court dismissed Herald\u2019s securities restitution claim and stayed the cash restitution
and damages claims. In December 2024, the Luxembourg Court of Appeal reversed the Luxembourg District Court\u2019s dismissal and determined
that Herald\u2019s claims for restitution of securities and cash were founded in principle. HSSL has appealed this decision. Herald\u2019s claim against
HSBC Bank plc is pending.
Alpha Prime Fund Limited (\u2018Alpha Prime\u2019) litigation: Various HSBC companies are defending a number of actions brought by Alpha Prime in
the Luxembourg District Court seeking damages for alleged breach of contract and negligence in the amount of $1.16bn (plus interest). These
matters are currently pending before the Luxembourg District Court.
In November 2024, Alpha Prime served various HSBC companies with a lawsuit filed in the Bermuda Supreme Court seeking damages for
unspecified amounts for alleged breach of contract and negligence. This claim is currently stayed.
Senator Fund SPC (\u2018Senator\u2019) litigation: HSSL and the Luxembourg branch of HSBC Bank plc are defending a number of actions brought by
Senator before the Luxembourg District Court seeking restitution of securities in the amount of $625m (plus interest), or damages in the
amount of $188m (plus interest). These matters are currently pending before the Luxembourg District Court.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
US Anti-Terrorism Act litigation
Since November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others on behalf
of plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants aided
and abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism Act, or provided banking services to
customers alleged to have connections to terrorism financing. Seven actions, which seek damages for unspecified amounts, remain pending
and HSBC\u2019s motions to dismiss have been granted in three of these cases. These dismissals are subject to appeals and/or the plaintiffs re-
pleading their claims. The four other actions are at an early stage.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
Interbank offered rates investigation and litigation
Euro interest rate derivatives: In December 2016, the European Commission (\u2018EC\u2019) 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\u2019s findings on HSBC\u2019s liability. In November 2024, the
General Court of the European Union rejected a separate appeal by HSBC concerning the amount of the fine. This matter is now closed.
US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named as defendants in a number of individual and putative class
action lawsuits filed in federal and state courts in the US with respect to the setting of US dollar Libor. The complaints assert claims under
various US federal and state laws, including antitrust and racketeering laws and the Commodity Exchange Act (\u2018US CEA\u2019). HSBC has concluded
class settlements with five groups of plaintiffs, and several class action lawsuits brought by other groups of plaintiffs have been voluntarily
dismissed. Two individual US dollar Libor-related actions seeking damages from HSBC for unspecified amounts remain pending.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the
timing or any possible impact on HSBC, which could be significant.
Foreign exchange-related investigations and litigation
In December 2016, Brazil\u2019s Administrative Council of Economic Defense initiated an investigation into the onshore foreign exchange market
and identified a number of banks, including HSBC, as subjects of its investigation, which remains ongoing. Lawsuits alleging foreign exchange-
related misconduct remain pending against HSBC and other banks in courts in Brazil.
Since 2017, HSBC Bank plc, among other financial institutions, has been defending a complaint filed by the Competition Commission of South
Africa before the South African Competition Tribunal for alleged anti-competitive behaviour in the South African foreign exchange market. In
2020, a revised complaint was filed which also named HSBC Bank USA N.A. (\u2018HSBC Bank USA\u2019) as a defendant. In January 2024, the South
African Competition Appeal Court dismissed HSBC Bank USA from the revised complaint but denied HSBC Bank plc\u2019s application to dismiss.
Both the Competition Commission and HSBC Bank plc have appealed to the Constitutional Court of South Africa.
HSBC Bank plc and HSBC Holdings have reached a settlement with plaintiffs in Israel to resolve a class action filed in the local courts alleging
foreign exchange-related misconduct. The settlement remains subject to court approval.
In February 2024, HSBC Bank plc and HSBC Holdings were joined to an existing claim brought in the UK Competition Appeals Tribunal against
various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking approximately \u00a33bn in damages
from all the defendants. This matter is at an early stage.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
Precious metals fix-related litigation
US litigation: HSBC and other members of The London Silver Market Fixing Limited are defending a class action pending in the US District
Court for the Southern District of New York alleging that, from January 2007 to December 2013, the defendants conspired to manipulate the
price of silver and silver derivatives for their collective benefit in violation of US antitrust laws, the US CEA and New York state law. In May
2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.
HSBC and other members of The London Platinum and Palladium Fixing Company Limited have been defending a class action in the US District
Court for the Southern District of New York alleging that, from January 2008 to November 2014, the defendants conspired to manipulate the
price of platinum group metals and related financial products for their collective benefit in violation of US antitrust laws and the US CEA. In
January 2025, the court approved a settlement reached with the plaintiffs to resolve this action. This matter is now closed.
Canada litigation: HSBC and other financial institutions are defending putative class actions filed in the Ontario and Quebec Superior Courts of
Justice alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation of the Canadian
Competition Act and common law. These actions each seek CA$1bn in damages plus CA$250m in punitive damages. Two of the actions are
proceeding and the others have been stayed.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the
timing or any possible impact on HSBC, which could be significant.
Tax-related investigations
Since 2023, the French National Financial Prosecutor has been investigating a number of banks, including HSBC Continental Europe and the
Paris branch of HSBC Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading
activities. HSBC Bank plc and the German branch of HSBC Continental Europe also continue to cooperate with investigations by the German
public prosecutor into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain
trading activities.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
Gilts trading investigation and litigation
Since 2018, the UK Competition and Markets Authority has been investigating HSBC and four other banks for suspected anti-competitive
conduct in relation to the historical trading of gilts and related derivatives. This matter is nearing conclusion. The impact on HSBC is not
expected to be significant.
In June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among other banks, were named as defendants in a putative class action filed in
the US District Court for the Southern District of New York by plaintiffs alleging anti-competitive conduct in the gilts market and seeking
damages for unspecified amounts. Certain of the defendants, including HSBC Bank plc and HSBC Securities (USA) Inc., have reached a
settlement with the plaintiffs to resolve this matter. The settlement remains subject to court approval. Based on the facts currently known, it is
not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could
be significant.
Korean short selling indictment
In March 2024, the Korean Prosecutors\u2019 Office issued a criminal indictment against The Hongkong and Shanghai Banking Corporation Limited
(\u2018HBAP\u2019) and three current and former employees for breaching short selling rules under the Financial Investment Services and Capital Markets
Act in connection with trades carried out between August 2021 and December 2021. In February 2025, the Korean court acquitted HBAP of all
charges. The Korean Prosecutors\u2019 Office has the right to appeal this decision. Proceedings against the individual defendants have been
suspended.
First Citizens litigation
In May 2023, First-Citizens Bank & Trust Company (\u2018First Citizens\u2019) brought a lawsuit in the US District Court for the Northern District of
California against various HSBC companies and seven US-based HSBC employees who had previously worked for Silicon Valley Bank (\u2018SVB\u2019).
The lawsuit seeks $1bn in damages and alleges, among other things, that the various HSBC companies conspired with the individual
defendants to solicit employees from First Citizens and that the individual defendants took confidential information belonging to SVB and/or
First Citizens. In July 2024, the court dismissed several of First Citizens\u2019 claims and also dismissed certain defendants for lack of jurisdiction,
but allowed limited discovery into whether some of these defendants may be subject to jurisdiction. The remaining claims are proceeding
against certain defendants.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or
any possible impact on HSBC, which could be significant.
US mortgage securitisation litigation
Beginning in 2014, a number of lawsuits were filed in various state and federal courts in the US against HSBC Bank USA, as a trustee of more
than 280 mortgage securitisation trusts, seeking unspecified damages for losses in collateral value allegedly sustained by the trusts. Nearly all
of these lawsuits have either been settled or dismissed; one action remains pending in a New York state court.
HSBC Bank USA and certain of its affiliates continue to defend a mortgage loan repurchase action seeking unspecified damages and specific
performance brought by the trustee of a mortgage securitisation trust in New York state court.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
Mexican government bond litigation
HSBC Mexico S.A. and other banks are named as defendants in a consolidated putative class action pending in the US District Court for the
Southern District of New York alleging anti-competitive conduct in the Mexican government bond market between 2010 and 2014 and seeking
unspecified damages. In January 2025, the court denied the defendants\u2019 motion to dismiss the plaintiffs\u2019 third amended complaint, and this
action is proceeding.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or
any possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Holdings and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for information,
investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal proceedings
including litigation, arbitration and other contentious proceedings, in connection with various matters arising out of their businesses and
operations.
At the present time, HSBC does not expect the ultimate resolution of any of these matters to be material to the Group\u2019s 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.
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36Related party transactions
Related parties of the Group and HSBC Holdings include subsidiaries, associates, joint ventures, post-employment benefit plans for HSBC
employees, Key Management Personnel (\u2018KMP\u2019) as defined by IAS 24, close family members of KMP and entities that are controlled or jointly
controlled by KMP or their close family members. KMP are defined as those persons having authority and responsibility for planning, directing
and controlling the activities of HSBC Holdings. These individuals also constitute \u2018senior management\u2019 for the purposes of the Hong Kong
Listing Rules. In applying IAS 24, it was determined that for this financial reporting period KMP included Directors, former Directors and senior
management listed on pages 237 to 243 except for the roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief Human
Resources Officer, Group Chief Sustainability Officer, Group Chief Communications and Brand Officer, and Group Chief People & Governance
Officer who do not meet the criteria for KMP as provided for in the standard.
Particulars of transactions with related parties are tabulated below. The disclosure of the year-end balance and the highest amounts outstanding during
the year is considered to be the most meaningful information to represent the amount of the transactions and outstanding balances during the year.
Key Management Personnel
Details of Directors\u2019 remuneration and interests in shares are disclosed in the \u2018Directors\u2019 remuneration report\u2019 on pages 279 to 317.
IAS\u00a024\u00a0\u2018Related Party Disclosures\u2019 requires the following additional information for key management compensation.
Compensation of Key Management Personnel
2024
2023
2022
$m
$m
$m
Short-term employee benefits
53
51
52
Post-employment benefits
1
1
1
Other long-term employee benefits
12
10
8
Share-based payments
29
29
26
Year ended 31 Dec
95
91
87
Shareholdings, options and other securities of Key Management Personnel
2024
2023
(000s)
(000s)
Number of options held over HSBC Holdings ordinary shares under employee share plans
20
32
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially
17,455
20,409
Number of other HSBC securities held
228
228
At 31 Dec
17,703
20,669
Advances and credits, guarantees and deposit balances during the year with Key Management Personnel
2024
2023
Balance at
31\u00a0Dec
Highest amounts
outstanding
during year
Balance at
31 Dec
Highest amounts
outstanding
during year
$m
$m
$m
$m
Key Management Personnel
Advances and credits1
9
12
11
16
Deposits
78
191
60
130
1Advances and credits entered into by subsidiaries of HSBC Holdings plc during 2024 with Directors and former Directors, disclosed pursuant to section 413 of
the Companies Act 2006, totalled $1.3m (2023: $2.6m) .
Unless previously disclosed, there were no connected transactions during the reporting period that fell outside the exemptions provided by the
Companies Act 2006, the UK Financial Conduct Authority\u2019s Listing Rules and the Rules Governing The Listing of Securities on The Stock
Exchange of Hong Kong Limited. The transactions conducted were in the ordinary course of business and on substantially the same terms,
including interest rates and security, as for comparable transactions with parties of a similar standing or, where applicable, with other
employees. These transactions did not involve more than the normal risk of repayment or present other unfavourable features.
Associates and joint ventures
The Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest
bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.
Transactions and balances during the year with associates and joint ventures
2024
2023
Highest balance
during the year
Balance at
31 Dec
Highest balance
during the year
Balance at
31 Dec
$m
$m
$m
$m
Unsubordinated amounts due from joint ventures
104
72
98
94
Unsubordinated amounts due from associates
8,097
5,011
7,907
5,910
Amounts due to associates
2,992
1,844
3,002
1,668
Amounts due to joint ventures
101
85
95
61
Fair value of derivative assets with associates
919
763
1,514
795
Fair value of derivative liabilities with associates
3,718
2,641
4,388
2,962
Guarantees and commitments
569
577
503
331
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.
Post-employment benefit plans
At 31 December 2024, $3.4bn (2023: $3.1bn) of HSBC post-employment benefit plan assets were under management by HSBC companies,
earning management fees of $14m in 2024 (2023: $13m). At 31 December 2024, HSBC\u2019s post-employment benefit plans had placed deposits
of $395m (2023:\u00a0$402m) with its banking subsidiaries, earning interest payable to the schemes of $2m (2023: $2m). The above outstanding
balances arose from the ordinary course of business and on substantially the same terms, including interest rates and security, as for
comparable transactions with third-party counterparties.
The combined HSBC Bank (UK) Pension Scheme enters into swap transactions with HSBC to manage inflation and interest rate sensitivity of
its liabilities and selected assets. At 31 December 2024, the gross notional value of the swaps was $6.4bn (2023: $7.1bn). These swaps had a
positive fair value to the scheme of $0.4bn (2023: $0.5bn); and HSBC had delivered collateral of $0.4bn (2023: $0.6bn) to the scheme in respect
of these arrangements. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.
HSBC Holdings
Details of HSBC Holdings\u2019 subsidiaries are shown in Note 38.
Transactions and balances during the year with subsidiaries
2024
2023
Highest balance
during the year
Balance at
31 Dec
Highest balance
during the year
Balance at
31 Dec
$m
$m
$m
$m
Assets
Cash and balances with HSBC undertakings
9,342
2,548
8,396
7,029
Financial assets with HSBC undertakings designated and otherwise mandatorily
measured at fair value
66,030
61,286
60,309
59,879
Derivatives
3,391
3,054
4,010
3,344
Loans and advances to HSBC undertakings
37,677
37,677
28,213
27,354
Prepayments, accrued income and other assets
7,108
4,216
7,417
5,145
Investments in subsidiaries
160,805
152,337
167,542
159,478
Total related party assets at 31 Dec
284,353
261,118
275,887
262,229
Liabilities
Amounts owed to HSBC undertakings
231
231
179
168
Derivatives
7,944
5,340
9,309
6,090
Accruals, deferred income and other liabilities
399
194
505
341
Subordinated liabilities
1,202
\u2014
927
913
Total related party liabilities at 31 Dec
9,776
5,765
10,920
7,512
Guarantees and commitments
7,440
7,327
7,723
7,723
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.
Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company.
HSBC Holdings incurs a charge for these employees equal to the contributions paid into the scheme on their behalf. Disclosure in relation to
the scheme is made in Note 5.
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37
Events after the balance sheet date\u00a0
A fourth interim dividend for 2024 of $0.36 per ordinary share (a distribution of approximately $6.4bn was approved by the Directors after
31\u00a0December 2024. On 19 February 2025, HSBC Holdings announced a share buy-back to purchase its ordinary shares up to a maximum
consideration of $2.0bn, which is expected to commence shortly and complete by our first quarter 2025 results announcement. On 30 January
2025, HSBC Holdings called $1,750m 2.999% fixed rate/floating rate senior unsecured and $500m floating rate senior unsecured securities.
These securities are expected to be redeemed and cancelled on 10 March 2025. On 7 February 2025, HSBC Holdings called $2,450m 6.375%
perpetual subordinated contingent convertible securities which are expected to be redeemed and cancelled on 30 March 2025. The accounts
were approved by the Board of Directors on 19 February 2025 and authorised for issue.
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