Annual Financial Report - Part 3

HSBC Holdings PLC
21 February 2024
 





100


111


130






 


 

 


Financial summary

 


Contents

100

Changes to presentation from 1 January 2023

100

Use of alternative performance measures

101

Critical estimates and judgements

101

Impact of hyperinflationary accounting

103

Consolidated income statement

104

Income statement commentary

107

Supplementary table for planned disposals

109

Consolidated balance sheet

 

Changes to presentation from 1 January 2023

Changes to our reporting framework

On 1 January 2023, we updated our financial reporting framework. We no longer report 'adjusted' results, which excluded the impact of both foreign currency translation differences and significant items. Instead, we compute constant currency performance by adjusting comparative reported results only for the effects of foreign currency translation differences between the relevant periods. This will enable users to understand the impact of foreign currency translation differences on the Group's performance. We separately disclose 'notable items', which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. While our primary segmental reporting by global business remains unchanged, effective from 1 January 2023, the Group changed the supplementary presentation of results from geographical regions to main legal entities to better reflect the Group's structure.

IFRS 17 'Insurance Contracts'

On 1 January 2023, HSBC adopted IFRS 17 'Insurance Contracts'. As required by the standard, the Group applied the requirements retrospectively with comparative data previously published under IFRS 4 'Insurance Contracts' restated from the 1 January 2022 transition date. As required by IAS 1 'Presentation of Financial Statements' a third statement of financial position as at the transition date of 1 January 2022 has been disclosed (for further details, see page 331). Under IFRS 17 there is no present value of in-force business ('PVIF') asset recognised up front. Instead the measurement of the insurance contract liability takes into account fulfilment cash flows and a contractual service margin ('CSM') representing the unearned profit. In contrast to the Group's previous IFRS 4 accounting where profits are recognised up front, under IFRS 17 they are deferred and systematically recognised in revenue as services are provided over the expected coverage period. The CSM also includes directly attributable costs, which had previously been expensed as incurred and which are now incorporated within the insurance liability measurement and recognised over the expected coverage period.

In conjunction with the implementation of IFRS 17, the Group has made use of the option to re-designate to fair value through profit or loss assets that were previously held at amortised cost totalling $55.1bn, and eligible assets previously held at fair value through other comprehensive income totalling $1.1bn. The re-designation of amortised cost assets generated a net increase to assets of $4.9bn because the fair value measurement on transition was higher than the previous amortised cost carrying amount.

The impact of the transition was a reduction of $1.1bn on the Group's full-year 2022 reported revenue and a reduction of $0.5bn on full-year 2022 reported profit before tax. The Group's total equity at 1 January 2022 reduced by $10.5bn to $196.3bn on the transition, and tangible equity reduced by $2.4bn to $146.9bn. For further details of our adoption of IFRS 17, see Note 38 'Effects of adoption of IFRS 17' on page 422.


Cost target

At our full-year 2022 results, we set a target for our 'adjusted' operating expenses of growth for 2023 compared with 2022. Under our new reporting framework we no longer present 'adjusted' results. The exception to this is for operating expenses, where our 'target basis' will adjust reported results for notable items and the period-on-period effects of foreign currency translation differences. We also exclude the impact of retranslating comparative period financial information at the latest rates of foreign exchange in hyperinflationary economies, which is not within our control. We consider that this measure provides useful information to investors by quantifying and excluding the items that management considered when setting and assessing cost-related targets. In our target basis, we also exclude the costs related to the acquisition of SVB UK and related investments internationally, which are expected to add approximately 1% to our cost growth compared with 2022.

Our 2022 baseline for operating expenses on this basis is $29.8bn, which has been retranslated at the average rates of foreign exchange for 2023.

Resegmentation

In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs, a portfolio of our Global Banking customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly. Similar smaller transfers from GBM to CMB were also undertaken within our entities in Australia and Indonesia, where comparative data have not been re-presented.

Banking NII

At our interim 2023 results, we introduced banking net interest income. This alternative performance measure is reconciled on page 104, and deducts from Group reported net interest income: the impact of the cost of funding reported in net interest income used to fund trading and fair value net assets; the impact of foreign exchange swaps in Markets Treasury, where an offsetting income or loss is recorded in trading and fair value income, and third-party net interest income from our insurance business.

This resulting measure is intended to approximate the Group's banking revenue that is directly impacted by changes in interest rates.

Use of alternative performance measures

Our reported results are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IFRS Accounting Standards'), as detailed in the financial statements starting on page 329.

To measure our performance, we supplement our IFRS Accounting Standards figures with non-IFRS Accounting Standards measures, which constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with US Securities and Exchange Commission rules and regulations. These measures include those derived from our reported results that eliminate factors that distort year-on-year comparisons. The 'constant currency performance' measure used throughout this report is described below. Definitions and calculations of other alternative performance measures are included in our 'Reconciliation of alternative performance measures' on page 130. In addition, insurance-specific non-GAAP measures including 'Insurance manufacturing value of new business', 'Insurance manufacturing proxy embedded value', and 'Insurance equity plus CSM net of tax' are provided on pages 116 to 117, together with their definitions and reconciliation to GAAP measures. All alternative performance measures are reconciled to the closest reported performance measure.



 

The global business segmental results are presented on a constant currency basis in accordance with IFRS 8 'Operating Segments' as detailed in Note 10 'Segmental analysis' on page 372.

Constant currency performance

Constant currency performance is computed by adjusting reported results for the effects of foreign currency translation differences, which distort year-on-year comparisons.

We consider constant currency performance to provide useful information for investors by aligning internal and external reporting, and reflecting how management assesses year-on-year performance.

Notable items

We separately disclose 'notable items', which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature.

The tables on pages 112 to 113 and pages 123 to 128 detail the effects of notable items on each of our global business segments, legal entities and selected countries/territories in 2023, 2022 and 2021.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies during 2023.

We exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a like-for-like basis and to better understand the underlying trends in the business.

Foreign currency translation differences for 2023 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

-   the income statements for 2022 and 2021 at the average rates of exchange for 2023; and

-   the balance sheets at 31 December 2022 and 31 December 2021 at the prevailing rates of exchange on 31 December 2023.

No adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. The constant currency data of HSBC's Argentina subsidiaries have not been adjusted further for the impacts of hyperinflation. Since 1 June 2022, Türkiye has been deemed a hyperinflationary economy for accounting purposes. HSBC has an operating entity in Türkiye and the constant currency data have not been adjusted further for the impacts of hyperinflation.

When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC's operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.

Critical estimates and judgements

The results of HSBC reflect the choice of accounting policies, assumptions and estimates that underlie the preparation of HSBC's consolidated financial statements. The material accounting policies, including the policies which include critical estimates and judgements, are described in Note 1.2 on the financial statements. The accounting policies listed below are highlighted as they involve a high degree of uncertainty and have a material impact on the financial statements:

-   Impairment of amortised cost financial assets and financial assets measured at fair value through other comprehensive income ('FVOCI'): The most significant judgements relate to defining what is considered to be a significant increase in credit risk, determining the lifetime and point of initial recognition of revolving facilities, selecting and calibrating the probability of default ('PD'), the loss given default ('LGD') and the exposure at default ('EAD') models, as well as selecting model inputs and economic forecasts, making assumptions and estimates to incorporate relevant information about late-breaking and past events, current conditions and forecasts of economic conditions, and selecting applicable recovery strategies for certain wholesale credit-impaired loans. A high degree of uncertainty is involved in making estimations using assumptions that are highly subjective and very sensitive to the risk factors. See Note 1.2(i) on page 348.

-   Deferred tax assets: The most significant judgements relate to those made in respect of recoverability, which are based on expected future profitability. See Note 1.2(l) on page 353.

-   Valuation of financial instruments: In determining the fair value of financial instruments a variety of valuation techniques are used, some of which feature significant unobservable inputs and are subject to substantial uncertainty. See Note 1.2(c) on page 345.

-   Impairment of investment in subsidiaries: Impairment testing, including testing for reversal of impairment, involves significant judgement in determining the value in use, and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment, based on a number of management assumptions. See Note 1.2(a) on page 343.

-   Impairment of interests in associates: Impairment testing, including testing for reversal of impairment, involves significant judgement in determining the value in use, and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment, based on a number of management assumptions. The most significant judgements relate to the impairment testing of our investment in Bank of Communications Co., Limited ('BoCom'). See Note 1.2(a) on page 343.

-   Impairment of goodwill and non-financial assets: A high degree of uncertainty is involved in estimating the future cash flows of the cash-generating units ('CGUs') and the rates used to discount these cash flows. See Note 1.2(a) on page 343 and Note 1.2(n) on page 353.

-   Provisions: Significant judgement may be required due to 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. See Note 1.2(m) on page 353.

-   Post-employment benefit plans: The calculation of the defined benefit pension obligation involves the determination of key assumptions including discount rate, inflation rate, pension payments and deferred pensions, pay and mortality. See Note 1.2(k) on page 352.

-   Non-current assets and disposal groups held for sale: Management judgement is required in determining the likelihood of the sale to occur, and the anticipated timing in assessing whether the held for sale criteria have been met. See Note 1.2(o) on page 354.

Given the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of the items above, it is possible that the outcomes in the next financial year could differ from the expectations on which management's estimates are based, resulting in the recognition and measurement of materially different amounts from those estimated by management in these financial statements.

Impact of hyperinflationary accounting

We continue to treat Argentina and Türkiye as hyperinflationary economies for accounting purposes. The impact of applying IAS 29 'Financial Reporting in Hyperinflationary Economies' and the hyperinflation provisions of IAS 21 'The Effects of Changes in Foreign Exchange Rates' in the current period for our operations in both Argentina and Türkiye was a decrease in the Group's profit before tax of $1,297m (2022: $548m), comprising a decrease in revenue, including loss on net monetary position, of $1,586m (2022: $541m) and a decrease in ECL and operating expenses of $289m (2022: increase of $7m). The CPI at 31 December for Argentina was 3,576, with an increase in the year of 2,429.13 (2022: 563.92 increase). The CPI for Türkiye was 1,859 with an increase in the year of 730.89 (2022: 359.94 increase).


Consolidated income statement


Summary consolidated income statement


2023

20221

2021

2020

2019


$m

$m

$m

$m

$m

Net interest income

          35,796 

          30,377 

          26,489 

          27,578 

          30,462 

Net fee income

          11,845 

          11,770 

          13,097 

          11,874 

          12,023 

Net income from financial instruments held for trading or managed on a fair value basis

          16,661 

          10,278 

             7,744 

             9,582 

          10,231 

Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss

             7,887 

        (13,831)

             4,053 

             2,081 

             3,478 

Net insurance premium income

                    - 

                    - 

          10,870 

          10,093 

          10,636 

Insurance finance (expense)/income

           (7,809)

          13,799 

                    - 

                    - 

                    - 

Insurance service result

             1,078 

                809 

                    - 

                    - 

                    - 

Gain on acquisition2

             1,591 

                    - 

                    - 

                    - 

                    - 

(Impairment)/reversal of impairment relating to the sale of our retail banking operations in France3

                 150 

           (2,316)

                    - 

                    - 

                    - 

Other operating (expense)/income4

           (1,141)

               (266)

             1,687 

             1,866 

             4,194 

Total operating income

          66,058 

          50,620 

          63,940 

          63,074 

          71,024 

Net insurance claims and benefits paid and movement in liabilities to policyholders

                    - 

                    - 

         (14,388)

         (12,645)

        (14,926)

Net operating income before change in expected credit losses and other

credit impairment charges5

          66,058 

          50,620 

          49,552 

          50,429 

          56,098 

Change in expected credit losses and other credit impairment charges

           (3,447)

           (3,584)

                 928 

           (8,817)

           (2,756)

Net operating income

          62,611 

          47,036 

          50,480 

          41,612 

          53,342 

Total operating expenses excluding impairment of goodwill and other intangible assets

        (32,355)

        (32,554)

         (33,887)

         (33,044)

        (34,955)

Impairment of goodwill and other intangible assets

                 285 

               (147)

               (733)

           (1,388)

           (7,394)

Operating profit

          30,541 

          14,335 

          15,860 

             7,180 

          10,993 

Share of profit in associates and joint ventures

             2,807 

             2,723 

             3,046 

             1,597 

             2,354 

Impairment of interest in associate

           (3,000)

                    - 

                    - 

                    - 

                    - 

Profit before tax

          30,348 

          17,058 

          18,906 

             8,777 

          13,347 

Tax expense

           (5,789)

               (809)

           (4,213)

           (2,678)

           (4,639)

Profit for the year

          24,559 

          16,249 

          14,693 

             6,099 

             8,708 

Attributable to:






-  ordinary shareholders of the parent company

          22,432 

          14,346 

          12,607 

             3,898 

             5,969 

-  preference shareholders of the parent company

                    - 

                    - 

                      7

                    90

                   90

-  other equity holders

             1,101 

             1,213 

             1,303 

             1,241 

             1,324 

-  non-controlling interests

             1,026 

                690 

                 776 

                 870 

             1,325 

Profit for the year

          24,559 

          16,249 

          14,693 

             6,099 

             8,708 

 


Five-year financial information


2023

20221

2021

2020

2019


$

$

$

$

$

Basic earnings per share

               1.15 

               0.72 

                0.62 

                0.19 

                  0.3 

Diluted earnings per share

               1.14 

               0.72 

                0.62 

                0.19 

                  0.3 

Dividends per ordinary share (paid in the period)6

               0.53 

               0.27 

                0.22 

                    - 

               0.51 


%

%

%

%

%

Dividend payout ratio7

       50            

       44            

       40            

       79            

         100       

Post-tax return on average total assets

        0.8         

                  0.5 

                  0.5 

                  0.2 

                  0.3 

Return on average ordinary shareholders' equity

           13.6    

        9.0         

        7.1         

        2.3         

        3.6         

Return on average tangible equity

           14.6    

           10.0    

        8.3         

        3.1         

        8.4         

Effective tax rate

           19.1    

                  4.7 

                22.3 

                30.5 

               34.8 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021, 2020 and 2019 are prepared on an IFRS 4 basis.

2   Provisional gain recognised in respect of the acquisition of SVB UK.

 In the fourth quarter of 2023, an impairment loss of $2.0bn was recognised relating to the sale of our retail banking operations in France. This largely offset the $2.1bn recognised in the first quarter of 2023 on the reversal of the held for sale classification at that time. In 2023, a total net $0.1bn of credit was recognised in other operating income, reflecting the net asset value disposed under the final terms of sale. The $0.4bn impairment of goodwill recognised in the third quarter in 2022 has not been reversed.

4     Other operating (expense)/income includes a loss on net monetary positions of $1,667m (2022: $678m; 2021: $576m) as a result of applying IAS 29 'Financial Reporting in Hyperinflationary Economies' and disposal losses on capitalised markets treasury repositioning of $977m in 2023.

5     Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.

6     Includes dividend paid during the period, which consisted of a second interim dividend of $0.23 per ordinary share in respect of the financial year ended 31 December 2022 paid in April 2023 and the first, second and third interim dividends of $0.30 per ordinary share in respect of the financial year ending 31 December 2023.

7     In 2023, our dividend payout ratio was adjusted for material notable items and related impacts. In 2022, our dividend payout ratio was adjusted for the loss on classification to held for sale of our retail banking business in France, items relating to the planned sale of our banking business in Canada, and the recognition of certain deferred tax assets. No items were adjusted for in 2021, 2020 or 2019.

Unless stated otherwise, all tables in the Annual Report and Accounts 2023 are presented on a reported basis.

For a summary of our financial performance in 2023, see page 27.

For further financial performance data for each global business and legal entity, see pages 111 to 114 and 120 to 130 respectively. The global business segmental results are presented on a constant currency basis in accordance with IFRS 8 'Operating Segments' as set out in Note 10: Segmental analysis on page 372.


Income statement commentary

The following commentary compares Group financial performance for the year ended 2023 with 2022, unless otherwise stated.


Net interest income


Year ended

Quarter ended


31 Dec

31 Dec

31 Dec

31 Dec

30 Sep

31 Dec


2023

20221

2021

2023

2023

20221


$m

$m

$m

$m

$m

$m

Interest income

             100,868 

                52,826 

                36,188 

                26,714 

                27,198 

                18,957 

Interest expense

              (65,072)

              (22,449)

                 (9,699)

              (18,430)

              (17,950)

                 (9,971)

Net interest income

                35,796 

                30,377 

                26,489 

                  8,284 

                   9,248 

                   8,986 

Average interest-earning assets

         2,161,746  

          2,143,758 

          2,209,513 

         2,164,324  

          2,157,370 

          2,116,018 


%

%

%

%

%

%

Gross interest yield2

           4.67    

           2.46    

           1.64    

           4.90    

           5.00    

           3.55    

Less: gross interest payable2

                        (3.47)

                        (1.24)

                        (0.53)

                        (3.83)

                        (3.80)

                        (2.21)

Net interest spread3

           1.20    

           1.22    

           1.11    

           1.07    

           1.20    

           1.34    

Net interest margin4

           1.66    

           1.42    

           1.20    

           1.52    

           1.70    

           1.68    

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2     Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA'). Gross interest payable is the average annualised interest cost as a percentage of average interest-bearing liabilities.

3     Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds.

4     Net interest margin is net interest income expressed as an annualised percentage of AIEA.                                                                                                                                                                                                                                                                               


Summary of interest income by type of asset


2023

20221

2021


Average

balance

Interest

income

Yield

Average

balance

Interest

income

Yield

Average

balance

Interest

income

Yield


$m

$m

%

$m

$m

%

$m

$m

%

Short-term funds and loans and advances to banks

        403,674 

        14,770 

           3.66          

           445,659 

        5,577 

           1.25          

           450,678 

         1,105 

           0.25          

Loans and advances to customers

        957,717 

        47,673 

           4.98          

        1,022,320 

     32,543 

           3.18          

        1,060,658 

      26,071 

           2.46          

Reverse repurchase agreements - non-trading2

        240,263 

        14,391 

           5.99          

           231,058 

        4,886 

           2.11          

           206,246 

         1,019 

           0.49          

Financial investments

        407,363 

        16,858 

           4.14          

           372,702 

        7,704 

           2.07          

           438,840 

         6,729 

           1.53          

Other interest-earning assets

        152,729 

          7,176 

           4.70          

              72,019 

        2,116 

           2.94          

              53,091 

         1,264 

           2.38          

Total interest-earning assets

    2,161,746  

     100,868 

           4.67          

        2,143,758 

     52,826 

           2.46          

        2,209,513 

      36,188 

           1.64          

 


Summary of interest expense by type of liability


2023

20221

2021


Average

balance

Interest

expense

Cost

Average
balance

Interest
expense

Cost

Average
balance

Interest
expense

Cost


$m

$m

%

$m

$m

%

$m

$m

%

Deposits by banks3

            60,392 

          2,401 

           3.98          

              75,739 

           770 

           1.02          

              75,671 

            198 

           0.26          

Customer accounts4

     1,334,803  

        34,162 

           2.56          

        1,342,342 

     10,903 

           0.81          

        1,362,580 

         4,099 

           0.30          

Repurchase agreements - non-trading2

         146,605 

        10,858 

           7.41          

           118,308 

        3,085 

           2.61          

           114,201 

            363 

           0.32          

Debt securities in issue - non-trading

         184,867 

        11,223 

           6.07          

           179,775 

        5,607 

           3.12          

           193,137 

         3,603 

           1.87          

Other interest-bearing liabilities

         146,216 

          6,428 

           4.40          

              87,965 

        2,084 

           2.37          

              70,929 

         1,436 

           2.02          

Total interest-bearing liabilities

     1,872,883  

        65,072 

           3.47          

        1,804,129 

     22,449 

           1.24          

        1,816,518 

         9,699 

           0.53          

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2     The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net balance reported for repurchase agreements and thus higher cost.

3     Including interest-bearing bank deposits only.

4     Including interest-bearing customer accounts only.


Net interest income ('NII') for 2023 was $35.8bn, an increase of $5.4bn or 18% compared with 2022. This reflected higher average interest rates across major currencies compared with 2022.

Excluding the unfavourable impact of foreign currency translation differences, net interest income increased by $6.0bn or 20%.

NII for the fourth quarter of 2023 was $8.3bn, down 10% compared with the previous quarter, and down 8% compared with the fourth quarter of 2022. The decrease was predominantly driven by the impact of higher funding costs across our liabilities, which included the impact of deposit migration in our main legal entities in Asia and Europe. In addition, the fourth quarter of 2023 included an adverse impact of $0.2bn, relating to the first nine months of 2023, due to reclassifications to NII from 'net income from financial instruments held for trading or managed on a fair value basis' related to hedges in Canada that will not recur given the expected sale of the business.

The impact of hyperinflation in Argentina on NII in 2023 was an adverse movement of $0.5bn, with an associated impact on NIM of 2bps. The impact in the fourth quarter of 2023 was an adverse movement of $0.5bn, with an associated impact on NIM of 9bps. This compared with minimal movements in the equivalent periods in 2022. The increase in hyperinflationary accounting impacts in 2023 was notably due to the impact of the devaluation of the Argentinian peso.

Net interest margin ('NIM') for 2023 of 1.66% was 24bps higher compared with 2022, as the rise in the yield on average interest-earning assets ('AIEA') of 220bps was partly offset by the rise in the funding costs of average interest-bearing liabilities of 196bps.

The increase in NIM in 2023 included the unfavourable impact of foreign currency translation differences. Excluding this, NIM increased by 27bps.

NIM for the fourth quarter of 2023 was 1.52%, down 18bps compared with the previous quarter, and down 16bps compared with  the fourth quarter of 2022. The decreases were predominantly driven by a rise in funding costs of average interest-bearing liabilities, which included the impact of customer deposit migration in our main legal entities in Asia and Europe, as well as the Argentina hyperinflation impact as noted above, partly offset by an increase in the yield on AIEA.

 


Interest income for 2023 of $100.9bn increased by $48.0bn compared with 2022. Interest income of $26.7bn in the fourth quarter of 2023 was down $0.5bn compared with the previous quarter, and up $7.8bn compared with the fourth quarter of 2022. The respective increases of $48.0bn and $7.8bn were predominantly driven by the impact of higher market interest rates. The decrease of $0.5bn compared with the previous quarter was predominantly due to hyperinflation in Argentina.

The change in interest income in 2023 compared with 2022 included an adverse impact of foreign currency translation differences of $1.2bn. After excluding foreign currency translation differences, interest income increased by $49.2bn.

 

Interest expense for 2023 of $65.1bn increased by $42.6bn compared with 2022. This reflected an increase in funding costs of 223bps, mainly due to the impact of higher interest rates on our liabilities including customer deposit migration, notably in Asia and Europe. Within interest expense was the effect of higher funding costs associated with supporting our trading and fair value activities, as explained below in banking net interest income.

The rise in interest expense included the favourable effects of foreign currency translation differences of $0.6bn. Excluding this, interest expense increased by $43.2bn.

Interest expense of $18.4bn in the fourth quarter of 2023 was up $0.5bn compared with the third quarter of 2023, and up $8.5bn compared with the fourth quarter of 2022. The increase was predominantly driven by the impact of higher market interest rates, and the impact of deposit migration.


 

Banking net interest income







Year ended

Quarter ended


31 Dec

31 Dec

31 Dec

30 Sep

31 Dec


2023

2022

2023

2023

2022


$bn

$bn

$bn

$bn

$bn

Net interest income

                   35.8 

                    30.4 

                      8.3 

                      9.2 

                      9.0 

Banking book funding costs used to generate 'net income from financial instruments held for trading or managed on a fair value basis'

                      8.7 

                      2.5 

                      2.5 

                      2.4 

                      1.3 

Third-party net interest income from insurance

                    (0.4)

                    (0.4)

                    (0.1)

                    (0.1)

                    (0.1)

Banking net interest income

                   44.1 

                    32.5 

                   10.7 

                    11.5 

                    10.2 

 


Banking net interest income is an alternative performance measure, and is defined as Group reported net interest income after deducting:

-   the internal cost to fund trading and fair value net assets for which associated revenue is reported in 'Net income from financial instruments held for trading or managed on a fair value basis', also referred to as 'trading and fair value income'. These funding costs reflect proxy overnight or term interest rates as applied by internal funds transfer pricing;

-   the funding costs of foreign exchange swaps in Markets Treasury, where an offsetting income or loss is recorded in trading and fair value income. These instruments are used to manage foreign currency deployment and funding in our entities; and

-   third-party net interest income in our insurance business.

In our segmental disclosures, the funding costs of trading and fair value net assets are predominantly recorded in GBM in 'net income from financial instruments held for trading or managed on a fair value basis'. On consolidation, this funding is eliminated in Corporate Centre, resulting in an increase in the funding costs reported in net interest income with an equivalent offsetting increase in 'net income from financial instruments held for trading or managed on a fair value basis' in this segment. In the second quarter of 2023 we implemented a consistent reporting approach across our most material entities that contribute to our trading and fair value net assets, which resulted in an increase to the first half of 2023 associated funding costs reported through the intersegment elimination in Corporate Centre of approximately $0.4bn, recognised in the second quarter of 2023. In the consolidated Group results, the cost to fund these trading and fair value net assets is reported in net interest income.

The internally allocated funding cost of $8.7bn, which was incurred in 2023 to generate trading and fair value income, related to trading, fair value and associated net asset balances predominantly in GBM. At 31 December 2023, these stood at approximately $164bn.

Net fee income of $11.8bn was $0.1bn higher than in 2022, and included an adverse impact from foreign currency translation differences of $0.1bn. The rise in net fee income in CMB and WPB was partly offset by a reduction in GBM.

In CMB, net fee income increased by $0.2bn driven by higher fees from credit facilities, notably in Europe and the UK due to an increase in trade products. Fee income also grew in account services, reflecting greater client activity in transaction banking, mainly in Global Payments Solutions ('GPS'), and in cards, as spending increased compared with 2022. These increases were partly offset by a reduction in fees from funds under management and broking activities.

In WPB, net fee income increased by $0.1bn. The rise was mainly due to higher cards income, mainly in our legal entities in Hong Kong and in Mexico, as customer spending increased. However, income from broking fell, notably in Hong Kong, due to weaker equity markets and muted customer sentiment. The rise in cards activity resulted in higher fee expenses.

In GBM, net fee income decreased by $0.2bn. This was driven by higher fee expense, notably in our main entities in Hong Kong, mainly relating to GBM products sold to customers in other global businesses. In Europe, fee expense grew in our private credit business, and we incurred higher interbank and clearing fee expense. There was a decrease in corporate finance fee income, reflecting lower client activity in Europe, and a fall in broking income due to lower equity turnover. Global custody income also fell. This was partly offset by an increase in underwriting income, from an increase in syndicated fees in Europe and a rise in fees in the US following historical lows in 2022.

Net income from financial instruments held for trading or managed on a fair value basis of $16.7bn was $6.4bn higher compared with 2022. This reflected a rise in income, primarily relating to trading activities in GBM, for which the associated funding costs are reported in net interest income, notably in our main legal entities in Hong Kong and Europe. The rise also included a favourable movement on non-qualifying hedges of $0.5bn due to the non-recurrence of fair value losses in 2022. These increases were partly offset by an adverse fair value movement on foreign exchange hedges related to the planned sale of our banking business in Canada.

Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss of $7.9bn compared with a net expense of $13.8bn in 2022. This increase reflected favourable movements on debt securities, due to movements in interest rates, and equities. The increases were notably in our portfolios in Hong Kong and France.

This favourable movement resulted in a corresponding movement in insurance finance expense, which has an offsetting impact for the related liabilities to policyholders.



 

Insurance finance expense of $7.8bn compared with an income of $13.8bn in 2022, reflecting the impact of investment returns on underlying assets on the value of liabilities to policyholders, which moves inversely with 'net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss'.

Insurance service result of $1.1bn increased by $0.3bn compared with 2022, primarily due to an increase in the release of the contractual service margin ('CSM'). This primarily reflected a higher CSM balance from higher new business written and favourable assumption updates, primarily from updates to lapse rate assumptions. The increase also reflected a reduction in losses from onerous contracts. Under IFRS 17, the measurement of the insurance contract liability takes into account fulfilment cash flows and a CSM representing the unearned profit. In contrast to the Group's previous IFRS 4 accounting where profits are recognised up front, under IFRS 17 they are deferred and systematically recognised in revenue as services are provided over the life of the contract. The CSM also includes attributable cost, which had previously been expensed as incurred and which is now incorporated within the insurance liability measurement and recognised over the life of the contract.

Gain on acquisition of $1.6bn related to the provisional gain recognised in respect of the acquisition of Silicon Valley Bank UK Limited.

Impairment loss relating to the sale of the retail banking operations in France was a net impairment reversal of $0.2bn in 2023, compared with an impairment of $2.3bn in 2022.

In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', the disposal group was classified as held for sale on 30 September 2022, at which point the Group recognised the estimated impairment of $2.3bn, which included impairment of goodwill of $0.4bn and related transaction costs. In the first quarter of 2023, $2.1bn of this impairment loss was reversed as the sale became less certain. It was reinstated in the fourth quarter of 2023 as we reclassified these operations as held for sale and remeasured the disposal group at the lower of carrying value and fair value less costs to sell, resulting in a $2.0bn impairment loss, reflecting the final terms of the sale. The sale completed on 1 January 2024.

Other operating expense of $1.1bn was $0.9bn higher than in 2022. The increase primarily related to losses in 2023 in Markets Treasury on asset disposals of $1.0bn relating to repositioning and risk management activities in our hold-to-collect-and-sell portfolio in certain key legal entities. These actions are accretive to net interest income and reduce the consumption of the Group's financial resources.

The increased expense also included a loss of $0.3bn in 2023 relating to corrections to historical valuation estimates in our life insurance business, and losses related to the disposal of our New Zealand retail mortgage loan portfolio and the merger of HSBC Bank Oman in 2023 with Sohar International. These were partly offset by losses in 2022 relating to the disposal of our branch operations in Greece and the planned disposal of our business in Russia.

Change in expected credit losses and other credit impairment charges ('ECL') were a charge of $3.4bn, a decrease of $0.1bn or 4% compared with 2022.  

The charge in 2023 primarily comprised stage 3 net charges, notably related to mainland China commercial real estate sector exposures. ECL charges in this sector were $1.0bn in 2023. The charge in 2023 also reflected the impact of continued economic uncertainty, rising interest rates and inflationary pressures. The charge in 2022 of $3.6bn included charges related to mainland China commercial real estate exposures of $1.3bn.

For further details on the calculation of ECL, including the measurement uncertainties and significant judgements applied to such calculations, the impact of the economic scenarios and management judgemental adjustments, see pages 156 to 168.  


 


Operating expenses



Year ended


2023

2022¹

2021


$m

$m

$m

Gross employee compensation and benefits

                19,623 

19,288

19,612

Capitalised wages and salaries

                (1,403)

                 (1,285)

                   (870)

Goodwill impairment

                         - 

                          - 

587

Property and equipment

                  4,285 

4,949

5,145

Amortisation and impairment of intangibles

                  1,827 

1,701

1,438

UK bank levy

                      339 

13

116

Legal proceedings and regulatory matters

                      188 

246

106

Other operating expenses2

                  7,211 

7,789

8,486

Reported operating expenses

                32,070 

32,701

34,620

Currency translation

                         - 

                     (399)

               (2,376)

Constant currency operating expenses

                32,070 

                32,302 

              32,244 

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2   Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel. The decrease was driven by favourable currency translation differences and lower restructuring and other related costs following the completion of our cost-saving programme at the end of 2022.


Staff numbers (full-time equivalents)1


2023

2022

2021

Global businesses




Wealth and Personal Banking

             128,399 

             128,764 

             130,185 

Commercial Banking

                45,884 

               43,640 

                42,969 

Global Banking and Markets

                46,241 

               46,435 

                46,166 

Corporate Centre

                      337 

                      360 

                      377 

At 31 Dec

             220,861 

             219,199 

             219,697 

1   Represents the number of full-time equivalent people with contracts of service with the Group who are being paid at the reporting date.


Operating expenses of $32.1bn were $0.6bn or 2% lower than in 2022, including a favourable impact of $0.4bn from foreign currency translation differences.

This was driven by lower restructuring and other related costs following the completion of our cost to achieve programme, which concluded at the end of 2022, as well as a $0.2bn reduction due to a reversal of historical asset impairments, and the effects of our continued cost discipline. There was also a favourable impact of $0.2bn due to the impact of hyperinflationary accounting in Argentina in 2023.

These reductions were partly offset by an increase in technology costs, the impacts of inflation, a higher performance-related pay accrual and severance payments. In addition, the UK bank levy increased by $0.3bn, which included adjustments related to prior years, and we incurred a $0.2bn charge in the US relating to the FDIC special assessment.

The number of employees expressed in full-time equivalent staff ('FTE') at 31 December 2023 was 220,861, an increase of 1,662 compared with 31 December 2022. The number of contractors at 31 December 2023 was 4,676, a decrease of 1,371.

Share of profit in associates and joint ventures of $2.8bn was $0.1bn or 3% higher than in 2022, reflecting an increase in the share of profit from Saudi Awwal Bank ('SAB').

Impairment of interest in associate of $3.0bn related to our investment in BoCom.

We maintain a 19.03% interest in BoCom. Since our investment in 2004, BoCom has grown its business significantly to the extent that it has recently been designated as a global systemically important bank ('GSIB'). 

For accounting purposes, the balance sheet carrying value attributed to BoCom represents our share of its net assets. We perform quarterly impairment tests incorporating a value-in-use calculation, recognising the gap between this carrying value and the fair value (based on the list share price). We have previously disclosed that the excess of the value-in-use calculation over its carrying value has been marginal in recent years, and that reasonably possible changes in assumptions could generate an impairment.

Recent macroeconomic, policy and industry factors resulted in a wider range of reasonably possible value-in-use outcomes for our BoCom valuation. At 31 December 2023, the Group performed an impairment test on the carrying value which resulted in an impairment of $3.0bn, as the recoverable amount as determined by a value-in-use calculation was lower than the carrying value. Our value-in-use calculation uses both historical experience and market participant views to estimate future cash flows, relevant discount rates and associated capital assumptions.  

This impairment will have no material impact on HSBC's capital, capital ratios or distribution capacity, and therefore no impact on dividends or share buy-backs. The insignificant impact on HSBC's capital and CET1 ratio is due to the compensating release of regulatory capital deductions to offset the impairment charge.

We remain strategically committed to mainland China as demonstrated by our recent announcements to acquire Citi's retail wealth management portfolio and the investments made into mainland China in recent years. BoCom remains a strong partner in China, and we remain focused on maximising the mutual value of our partnership. Our positive views on the medium- and long-term structural growth opportunities in mainland China are unchanged.  

For further details, see Note 18: Interests in associates and joint ventures on page 391.

Tax expense


Year ended


2023

2022


$m

$m

Tax (charge)/credit



Reported

                (5,789)

                     (809)

Currency translation

                         - 

                      160 

Constant currency tax (charge)/credit

                (5,789)

                     (649)


 

Notable items


Year ended


2023

2022


$m

$m

Tax



Tax (charge)/credit on notable items

                      207 

                   1,026 

Recognition of losses

                         - 

                   2,333 

Uncertain tax positions

                      427 

                     (142)




Tax expense

The effective tax rate for 2023 of 19.1% was higher than the 4.7% in 2022. The effective tax rate for 2023 was increased by 2.3 percentage points by the non-deductible impairment of investments in associates, and reduced by 1.6 percentage points by the release of provisions for uncertain tax positions and reduced by 1.5 percentage points by the non-taxable accounting gain on the acquisition of SVB UK. The effective tax rate for 2022 was reduced by 12.8 percentage points by the recognition of a deferred tax asset on historical tax losses of HSBC Holdings as a result of improved profit forecasts for the UK tax group. Excluding these items, the effective tax rates were 19.9% for 2023 and 17.5% for 2022.

Return on average tangible equity

In 2023, RoTE was 14.6%, compared with 10.0% in 2022. Excluding the impact of strategic transactions and the impairment of BoCom, RoTE was 15.6%.

Supplementary table for planned disposals

The income statements and selected balance sheet metrics for the year ended 31 December 2023 of our banking business in Canada and our retail banking operations in France are shown below.

The asset and liability balances relating to these planned disposals are reported on the Group balance sheet within 'Assets held for sale' and 'Liabilities of disposal groups held for sale', respectively, as at 31 December 2023.

Income statement and selected balance sheet metrics of disposal groups held for sale


Year ended 2023


Canada1

France retail2


$bn

$bn

Revenue

                        2.0 

                        0.3 

ECL

                         -  

                         - 

Operating expenses

                     (1.0)

                     (0.6)

of which: costs expected to be exited

                     (0.7)

                     (0.4)

Profit before tax

                        0.9 

                     (0.2)




Loans and advances to customers

                     56.1 

                     16.9 

Customer accounts

                     63.0 

                     22.3 

RWA3

                     31.9 

                        4.1 

1   Under the terms of the sale agreement, the pre-tax profit on sale will be recognised through a combination of the consolidation of HSBC Canada's results into the Group's financial statements from 30 June 2022 until completion, and the remaining gain on sale recognised at completion.

2   France retail includes the transferring of the retail banking business, HSBC SFH and associated supporting services. For further details, see Note 23: Assets held for sale and liabilities of disposal groups held for sale on page 401.

3   Includes $3.5bn in Canada in respect of operational risk RWAs, and $0.6bn associated with our retail banking business in France.


Consolidated balance sheet


Five-year summary consolidated balance sheet


2023

20221

2021

2020

2019


$m

$m

$m

$m

$m

Assets






Cash and balances at central banks

             285,868 

             327,002 

             403,018 

             304,481 

             154,099 

Trading assets

             289,159 

             218,093 

             248,842 

             231,990 

             254,271 

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

             110,643 

             100,101 

                49,804 

                45,553 

                43,627 

Derivatives

             229,714 

             284,159 

             196,882 

             307,726 

             242,995 

Loans and advances to banks

             112,902 

             104,475 

                83,136 

                81,616 

                69,203 

Loans and advances to customers

             938,535 

             923,561 

          1,045,814 

          1,037,987 

          1,036,743 

Reverse repurchase agreements - non-trading

             252,217 

             253,754 

             241,648 

             230,628 

             240,862 

Financial investments

             442,763 

             364,726 

             446,274 

             490,693 

             443,312 

Assets held for sale

             114,134 

             115,919 

                   3,411 

                      299 

                      123 

Other assets

             262,742 

             257,496 

             239,110 

             253,191 

             229,917 

Total assets at 31 Dec

         3,038,677  

          2,949,286 

          2,957,939 

          2,984,164 

          2,715,152 

Liabilities






Deposits by banks

                73,163 

                66,722 

             101,152 

                82,080 

                59,022 

Customer accounts

         1,611,647  

          1,570,303 

          1,710,574 

          1,642,780 

          1,439,115 

Repurchase agreements - non-trading

             172,100 

             127,747 

             126,670 

             111,901 

             140,344 

Trading liabilities

                73,150 

                72,353 

                84,904 

                75,266 

                83,170 

Financial liabilities designated at fair value

             141,426 

             127,321 

             145,502 

             157,439 

             164,466 

Derivatives

             234,772 

             285,762 

             191,064 

             303,001 

             239,497 

Debt securities in issue

                93,917 

                78,149 

                78,557 

                95,492 

             104,555 

Insurance contract liabilities

             120,851 

             108,816 

             112,745 

             107,191 

                97,439 

Liabilities of disposal groups held for sale

             108,406 

             114,597 

                   9,005 

                          - 

                          - 

Other liabilities

             216,635 

             212,319 

             190,989 

             204,019 

             194,876 

Total liabilities at 31 Dec

         2,846,067  

          2,764,089 

          2,751,162 

          2,779,169 

          2,522,484 

Equity






Total shareholders' equity

             185,329 

             177,833 

             198,250 

             196,443 

             183,955 

Non-controlling interests

                  7,281 

                   7,364 

                   8,527 

                   8,552 

                   8,713 

Total equity at 31 Dec

             192,610 

             185,197 

             206,777 

             204,995 

             192,668 

Total liabilities and equity at 31 Dec

         3,038,677  

          2,949,286 

          2,957,939 

          2,984,164 

          2,715,152 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. We have restated 2022 comparative data.

A more detailed consolidated balance sheet is contained in the financial statements on page 331.


Five-year selected financial information


2023

20221

2021

2020

2019


$m

$m

$m

$m

$m

Called up share capital

                  9,631 

                10,147 

                10,316 

                10,347 

                10,319 

Capital resources2

             171,204 

             162,423 

             177,786 

             184,423 

             172,150 

Undated subordinated loan capital

                         18 

                   1,967 

                   1,968 

                   1,970 

                   1,968 

Preferred securities and dated subordinated loan capital3

                36,413 

                29,921 

                28,568 

                30,721 

                33,063 

Risk-weighted assets

             854,114 

             839,720 

             838,263 

             857,520 

             843,395 

Total shareholders' equity

             185,329 

             177,833 

             198,250 

             196,443 

             183,955 

Less: preference shares and other equity instruments

              (17,719)

              (19,746)

              (22,414)

              (22,414)

              (22,276)

Total ordinary shareholders' equity

             167,610 

             158,087 

             175,836 

             174,029 

             161,679 

Less: goodwill and intangible assets (net of tax)

              (11,900)

              (11,160)

              (17,643)

              (17,606)

              (17,535)

Tangible ordinary shareholders' equity

             155,710 

             146,927 

             158,193 

             156,423 

             144,144 

Financial statistics






Loans and advances to customers as a percentage of customer accounts

58.2%

58.8%

61.1%

63.2%

72.0%

Average total shareholders' equity to average total assets

6.01%

5.97%

6.62%

6.46%

6.97%

Net asset value per ordinary share at year-end ($)4

                     8.82 

                     8.01 

                     8.76 

                     8.62 

                     8.00 

Tangible net asset value per ordinary share at year-end ($)5

                     8.19 

                     7.44 

                     7.88 

                     7.75 

                     7.13 

Tangible net asset value per fully diluted share at year-end ($)

                     8.14 

                     7.39 

                     7.84 

                     7.72 

                     7.11 

Number of $0.50 ordinary shares in issue (millions)

                19,263 

                20,294 

                20,632 

                20,694 

                20,639 

Basic number of $0.50 ordinary shares outstanding (millions)

                19,006 

                19,739 

                20,073 

                20,184 

                20,206 

Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)

                19,135 

                19,876 

                20,189 

                20,272 

                20,280 

Closing foreign exchange translation rates to $:






$1: £

                  0.784 

                   0.830 

                   0.739 

                   0.732 

                   0.756 

$1: €

                  0.903 

                   0.937 

                   0.880 

                   0.816 

                   0.890 

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. We have restated 2022 comparative data.

2     Capital resources are regulatory total capital, the calculation of which is set out on page 206.

3     Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 406.

4     The definition of net asset value per ordinary share is total shareholders' equity, less non-cumulative preference shares and capital securities, divided by the number of ordinary shares in issue, excluding own shares held by the company, including those purchased and held in treasury.

5     The definition of tangible net asset value per ordinary share is total ordinary shareholders' equity excluding goodwill, PVIF (for 2021, 2020 and 2019) and other intangible assets (net of deferred tax), divided by the number of basic ordinary shares in issue, excluding own shares held by the company, including those purchased and held in treasury.



Combined view of customer lending and customer deposits


2023

2022


$m

$m

Loans and advances to customers

               938,535 

               923,561 

-  of which: HSBC Innovation Bank Limited (formerly SVB UK)

                    7,955 

                            - 

Loans and advances to customers of disposal groups reported in 'Assets held for sale'

                  73,285 

                  80,576 

banking business in Canada

                  56,129 

                  55,197 

retail banking operations in France

                  16,902 

                  25,029 

other

                        254 

                        350 

Non-current assets held for sale

                           92 

                        112 

Combined customer lending

           1,011,912  

            1,004,249 

Currency translation

                           - 

                  20,454 

Combined customer lending at constant currency

           1,011,912  

            1,024,703 

Customer accounts

           1,611,647  

            1,570,303 

-  of which: HSBC Innovation Bank Limited (formerly SVB UK)

                    6,019 

                            - 

Customer accounts reported in 'Liabilities of disposal groups held for sale'

                  85,950 

                  85,274 

banking business in Canada

                  63,001 

                  60,606 

retail banking operations in France

                  22,307 

                  22,348 

other

                        642 

                     2,320 

Combined customer deposits

           1,697,597  

            1,655,577 

Currency translation

                           - 

                  30,773 

Combined customer deposits at constant currency

           1,697,597  

            1,686,350 

 

 


Balance sheet commentary compared with 31 December 2022

At 31 December 2023, total assets of $3.0tn were $89bn or 3% higher on a reported basis and increased by $31bn or 1% on a constant currency basis.

Reported loans and advances to customers as a percentage of customer accounts was 58.2% compared with 58.8% at 31 December 2022. The movement in this ratio reflected a higher growth in customer accounts than in lending.

Assets

Cash and balances at central banks decreased by $41bn or 13%, which included a $13bn favourable impact of foreign currency translation differences. The decrease was mainly in HSBC UK, reflecting a reduction in customer accounts and repurchase agreements, as well as an increase in the deployment of our cash surplus into financial investments. Cash fell in HSBC Bank plc as our European branches managed liquidity requirements and due to the completion of the sale of our retail banking operations in France. Cash also decreased in the UK as we deployed our commercial surplus into reverse repurchase agreements and financial investments.

Trading assets increased by $71bn or 33%, mainly as we captured increased client activity in equity and debt securities, particularly in Hong Kong and HSBC Bank plc. The increase in trading assets also reflected the use of surplus liquidity to fund trading activities given the subdued demand for customer lending.

Derivative assets decreased by $54bn or 19%, mainly in Europe, reflecting adverse revaluation movements on interest rate contracts due to a stabilisation and downward shift in long-term yield curve rates in most major markets. Foreign exchange contracts also fell, primarily in HSBC Bank plc, as a result of reduced volatility in foreign exchange rate movements in 2023. The decrease in derivative assets was consistent with the decrease in derivative liabilities, as the underlying risk is broadly matched.



 

Loans and advances to customers of $939bn increased by $15bn or 2% on a reported basis. This included a favourable impact of foreign currency translation differences of $18bn.

On a constant currency basis, loans and advances to customers fell by $3bn, reflecting the following movements.

In WPB, customer lending increased by $21bn, reflecting growth in mortgage balances, notably in our main legal entities in Hong Kong (up $6bn), the UK (up $5bn), Mexico (up $1bn) and Australia (up $1bn). There was an increase of $7.8bn in secured lending in our main entity in Europe following the reclassification of a portfolio of home loans previously classified as assets held for sale, relating to the sale of our retail banking operations in France. The increase also included growth of $3bn in credit card balances, mainly in our entities in Hong Kong, the UK and Mexico. These increases were partly offset by reductions due to business divestments in Oman and New Zealand.

In GBM, lending fell by $16bn due to a reduction in term lending, primarily in our main legal entities in Hong Kong, including a reduction in the commercial real estate sector, and in Europe, reflecting muted client demand. Lending also fell by $1bn due to the merger of our operations in Oman with Sohar International. In addition there was a transfer of GBM customers to CMB in Australia and Indonesia, resulting in a $3bn reduction.

In CMB, customer lending was $7bn lower, mainly in our main legal entities in Hong Kong, including in the commercial real estate sector, and in the US, as well as in HSBC Bank plc, reflecting weaker client demand in a higher interest rate environment. Lending also fell by $1bn due to the sale of our business in Oman. In HSBC UK, lending grew by $4bn, as an increase from the acquisition of SVB UK of $8bn partly mitigated reductions from clients repaying their facilities. The transfer of customers to CMB from GBM in Australia and Indonesia, referred to above, led to an increase of $3bn.

Financial investments increased by $78bn or 21%, mainly in Asia and Europe from the purchase of debt securities, treasury and other eligible bills, as we redeployed our commercial surplus to benefit from higher yield curves and enhance our hedging activities on net interest income. The increase was across both debt instruments held at fair value through other comprehensive income and instruments held at amortised cost.

Assets held for sale of $114bn primarily comprised the assets relating to the sale of our retail banking operations in France and the planned sale of our banking business in Canada. This balance was broadly stable compared with 2022, as a decrease of $8bn relating to the transfer to loans and advances to customers of a portfolio of secured home loans in France was largely offset by a transfer of cash into assets held for sale, related to the completion of the sale of our retail banking operations there.

 

Liabilities

Customer accounts of $1.6tn increased by $41bn or 3% on a reported basis. This included a favourable impact of foreign currency translation differences of $28bn.

On a constant currency basis, customer accounts increased by $13bn, reflecting the following movements.

In WPB, customer accounts grew by $12bn, reflecting higher interest-bearing term and money market deposit balances, as interest rates rose, primarily in our main legal entity in Asia, notably Hong Kong (up $10bn, or 3%), Singapore (up $5bn, or 15%), Australia (up $3bn, or 19%), mainland China (up $3bn, or 19%) and Taiwan up ($2bn, or 34%). However, customer accounts fell by $14bn in HSBC UK, reflecting cost of living and competitive pressures. There was also a reduction due to the sale of our business in Oman.

In CMB, customer accounts increased by $3bn. The growth included an increase of $6bn related to our acquisition of SVB UK, as well as increases in our entities in Asia, excluding Hong Kong, and in continental Europe, mainly in term and money market deposits. In addition, a transfer of customers from GBM to CMB in Australia and Indonesia resulted in a rise of $4bn. These increases mitigated


reductions in our main entities in Hong Kong and the UK and a reduction of $2bn due to the sale of our business in Oman.

In GBM, customer accounts were marginally lower, falling $2bn. Balances fell in Hong Kong and the UK, although there was growth in continental Europe and Singapore. Balances fell by $1bn following the sale of our business in Oman, and by $4bn due to the transfer of customers from GBM to CMB in Australia and Indonesia.

Repurchase agreements - non-trading increased by $44bn or 35%, notably in HSBC Bank plc, reflecting higher client demand, and in our main entity in Asia due to a higher requirement for short-term funding.

Derivative liabilities decreased by $51bn or 18%, which is consistent with the reduction in derivative assets, since the underlying risk is broadly matched.

Debt securities in issue increased by $16bn or 20%, due to a net increase in debt issuances.

Liabilities of disposal groups held for sale of $108bn primarily comprised the liabilities relating to the sale of our retail banking operations in France and the planned sale of our banking business in Canada.

Equity

Total shareholders' equity, including non-controlling interests, increased by $7bn or 4% compared with 31 December 2022.

Shareholders' equity was increased by profits generated of $25bn and net gains through other comprehensive income ('OCI') of $5bn. These increases were partly offset by the impact of dividends paid of $12bn, the redemption of perpetual subordinated contingent convertible capital securities of $4bn and the impact of our $7bn share buy-back activities in 2023.

The net gains through OCI of $5bn included favourable movements of $3bn on financial instruments designated as hold-to-collect-and-sell, which are held as hedges to our exposure to interest rate movements. The favourable movement was a result of the fall in long-term market yield curves in 2023. The net gain also included a favourable movement on cash flow hedges of $3bn and from the effects of hyperinflation of $2bn. These gains were partly offset by fair value losses on liabilities related to changes in own credit risk of $1bn, as well as other smaller losses.

 

Financial investments

As part of our interest rate hedging strategy, we hold a portfolio of debt instruments, reported within financial investments, which are classified as hold-to-collect-and-sell. As a result, the change in value of these instruments is recognised through 'debt instruments at fair value through other comprehensive income' in equity.

At 31 December 2023, we recognised a pre-tax cumulative unrealised loss reserve through other comprehensive income of $3.9bn related to these hold-to-collect-and-sell positions. This reflected a $2.6bn pre-tax gain in 2023, inclusive of movements on related fair value hedges. The gain in 2023 included a reduction in unrealised losses due to the disposal of securities as part of repositioning actions taken in this portfolio of $1.0bn. Overall, the Group is positively exposed to rising interest rates through net interest income, although there is an adverse impact on our capital base in the early stages of a rising interest rate environment due to the fair value of hold-to collect-and-sell instruments.

Over time, these adverse movements will unwind as the instruments reach maturity, although not all will necessarily be held to maturity.

We also hold a portfolio of financial investments measured at amortised cost, which are classified as hold-to-collect. At 31 December 2023, there was a cumulative unrealised loss of $1.7bn, although the unrealised loss is not reflected on our balance sheet. This included $1.0bn that related to debt instruments held to manage our interest rate exposure, representing a $0.8bn improvement during 2023.

 


Risk-weighted assets


Risk-weighted assets ('RWAs') totalled $854.1bn at 31 December 2023, a $14.4bn increase since 2022, including foreign currency translation differences of $2.0bn. This was mainly due to:

-   a $26.2bn increase in asset size, which was mostly attributed to WPB lending growth and a rise in operational risk RWAs, offset by reduced lending in CMB and GBM;

-   a $6.2bn increase from acquisitions, mainly from SVB UK, partly offset by a disposal of our Oman business; and

-   a $19.9bn decrease in RWAs due to changes in methodology and policy.

-  





Customer accounts by country/territory


2023

20221


$m

$m

Hong Kong

             543,504 

             542,543 

UK

             508,181 

             493,028 

US

                99,607 

             100,404 

Singapore

                73,547 

                61,475 

Mainland China

                56,006 

                56,948 

France1

                42,666 

                33,726 

Australia

                32,071 

                28,506 

Germany

                30,641 

                28,949 

Mexico

                29,423 

                25,531 

UAE

                24,882 

                23,331 

India

                24,377 

                22,636 

Taiwan

                16,949 

                15,316 

Malaysia

                15,983 

                16,008 

Switzerland

                  8,047 

                   5,167 

Egypt

                  5,858 

                   6,045 

Indonesia

                  5,599 

                   5,840 

Türkiye

                  3,510 

                   3,497 

Other2

                90,796 

             101,353 

At 31 Dec

         1,611,647  

          1,570,303 

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. We have restated 2022 comparative data.

2     At 31 December 2023, customer accounts of $86bn (2022: $85bn) met the criteria to be classified as held for sale and are reported within 'Liabilities of disposal groups held for sale' on the balance sheet, of which $63bn (2022: $61bn) and $22bn (2022: $22bn) belongs to the planned sale of the banking business in Canada and sale of our retail banking operations in France, respectively. Refer to Note 23 on page 401 for further details.


Loans and advances, deposits by currency


At


31 Dec 2023

$m

USD

GBP

HKD

EUR

CNY

Others1

Total

Loans and advances to banks

                33,231 

                15,632 

                  7,106 

                  4,688 

                  8,772 

                43,473 

             112,902 

Loans and advances to customers

             170,274 

             284,261 

             213,079 

                68,655 

                49,594 

             152,672 

             938,535 

Total loans and advances

             203,505 

             299,893 

             220,185 

                73,343 

                58,366 

             196,145 

         1,051,437  

Deposits by banks

                28,744 

                18,231 

                  2,597 

                  6,997 

                  4,517 

                12,077 

                73,163 

Customer accounts

             441,967 

             423,725 

             305,520 

             128,444 

                63,535 

             248,456 

         1,611,647  

Total deposits

             470,711 

             441,956 

             308,117 

             135,441 

                68,052 

             260,533 

         1,684,810  










31 Dec 20222

Loans and advances to banks

                34,495 

                12,292 

                  5,188 

                  6,328 

                  7,833 

                38,339 

             104,475 

Loans and advances to customers

             182,719 

             265,988 

             221,150 

                57,077 

                49,036 

             147,591 

             923,561 

Total loans and advances

             217,214 

             278,280 

             226,338 

                63,405 

                56,869 

             185,930 

         1,028,036  

Deposits by banks

                23,133 

                16,963 

                  4,002 

                  8,830 

                  4,707 

                  9,087 

                66,722 

Customer accounts

             430,866 

             422,087 

             312,052 

             112,399 

                63,032 

             229,867 

         1,570,303  

Total deposits

             453,999 

             439,050 

             316,054 

             121,229 

                67,739 

             238,954 

         1,637,025  

1     'Others' includes items with no currency information available of $1,592m for loans to banks (2022: $1,112m), $1,904m for loans to customers (2022: $2,112m), $11m for deposits by banks (2022: $13m) and $8m for customer accounts (2022: $6m).

2     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data have been restated accordingly.


RWAs by currency


At


31 Dec 2023

$m

USD

GBP

HKD

EUR

CNY

Others

Total

RWAs1

             202,697 

             155,231 

             135,701 

                69,996 

                57,907 

             232,582 

             854,114 










31 Dec 2022

RWAs1

             223,657 

             143,474 

             152,804 

                60,843 

                49,867 

             209,075 

             839,720 

1     RWAs includes credit risk, market risk and operational risk RWAs.


Global businesses and legal entities

 


Contents

114

Summary

114

Supplementary analysis of constant currency results and notable items by global business

117

Reconciliation of reported and constant currency risk-weighted assets

118

Supplementary tables for WPB and GBM

124

Analysis of reported results by legal entities

127

Summary information - legal entities and selected countries/territories

132

Analysis by country/territory



 

Summary

The Group Chief Executive, supported by the rest of the Group Executive Committee ('GEC'), reviews operating activity on a number of bases, including by global business and legal entities. Our global businesses - Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets - along with Corporate Centre are our reportable segments under IFRS 8 'Operating Segments' and are presented below and in Note 10: Segmental analysis on page 372.

On 1 January 2023, we updated our financial reporting framework and changed the supplementary presentation of results from geographical regions to main legal entities to better reflect the Group's structure.

The results of main legal entities are presented on a reported and constant currency basis, including HSBC UK Bank plc, HSBC Bank plc, The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank Middle East Limited, HSBC North America Holdings Inc., HSBC Bank Canada and Grupo Financiero HSBC, S.A. de C.V.

The results of legal entities are presented on a reported basis on page 120 and a constant currency basis on page 123.

 

 

Basis of preparation

The Group Chief Executive, supported by the rest of the GEC, is considered the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's reportable segments. Global business results are assessed by the CODM on the basis of constant currency performance. We separately disclose 'notable items', which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. Constant currency performance information for 2022 and 2021 are presented as described on page 101. As required by IFRS 8, reconciliations of the total constant currency global business results to the Group's reported results are presented on page 373.

Supplementary reconciliations from reported to constant currency results by global business are presented on pages 111 to 113 for information purposes.

Global business performance is also assessed using return on tangible equity ('RoTE'). A reconciliation of global business RoTE to the Group's RoTE is provided on page 132.

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 and legal entities. While such allocations have been made on a systematic and consistent basis, they necessarily involve a 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's length terms. The intra-Group elimination items for the global businesses are presented in Corporate Centre.

HSBC Holdings incurs the liability of the UK bank levy, with the cost being recharged to its UK operating subsidiaries. The current year expense will be reflected in the fourth quarter as it is assessed on our balance sheet position as at 31 December.

In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs, a portfolio of our customers within our entities in Latin America was transferred from Global Banking and Markets to Commercial Banking for reporting purposes. Comparative data have been re-presented accordingly. Similar smaller transfers from Global Banking and Markets to Commercial Banking were also undertaken within our entities in Australia and Indonesia, where comparative data have not been re-presented.

 

 


 

Supplementary analysis of constant currency results and notable items by global business

Constant currency results1


2023


Wealth and

Personal

Banking

Commercial

Banking2

Global

Banking and

Markets2

Corporate

Centre

Total


$m

$m

$m

$m

$m

Revenue3

                27,275 

                22,867 

                16,115 

                    (199)

                66,058 

ECL

                (1,058)

                (2,062)

                    (326)

                         (1)

                (3,447)

Operating expenses

              (14,738)

                (7,524)

                (9,865)

                         57 

              (32,070)

Share of profit in associates and joint ventures

                         65 

                         (1)

                         - 

                    (257)

                    (193)

Profit/(loss) before tax

                11,544 

                13,280 

                  5,924 

                    (400)

                30,348 

Loans and advances to customers (net)

             454,878 

             309,422 

             173,966 

                      269 

             938,535 

Customer accounts

             804,863 

             475,666 

             330,522 

                      596 

         1,611,647  

1     In the current period constant currency results are equal to reported as there is no currency translation.

2     In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs, a portfolio of our customers within our markets in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.

3   Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

 

Notable items


2023


Wealth and Personal Banking

Commercial Banking

Global

Banking and Markets

Corporate Centre

Total


$m

$m

$m

$m

$m

Notable items






Revenue






Disposals, acquisitions and related costs1,2,3

                           4 

                  1,591 

                         - 

                    (297)

                  1,298 

Fair value movements on financial instruments4

                         - 

                         - 

                         - 

                         14 

                         14 

Disposal losses on Markets Treasury repositioning

                    (391)

                    (316)

                    (270)

                         - 

                    (977)

Operating expenses






Disposals, acquisitions and related costs

                       (53)

                       (55)

                           3 

                    (216)

                    (321)

Restructuring and other related costs5

                         20 

                         32 

                         21 

                         63 

                      136 

Impairment of interest in associate6

                         - 

                         - 

                         - 

                (3,000)

                (3,000)

1   Includes the impact of the sale of our retail banking operations in France.

2   Includes the provisional gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3   Includes fair value movements on the foreign exchange hedging of the expected proceeds from the planned sale of our banking operations in Canada.

4   Fair value movements on non-qualifying hedges in HSBC Holdings.

5   Amounts relate to reversals of restructuring provisions recognised during 2022.

6   Relates to an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom. See Note 18 on page 391.

Reconciliation of reported results to constant currency results - global businesses (continued)


20221


Wealth and Personal Banking

Commercial

Banking1

Global Banking and Markets2

Corporate

Centre

Total


$m

$m

$m

$m

$m

Revenue3






Reported

                21,103 

                16,494 

                14,899 

                 (1,876)

                50,620 

Currency translation

                     (219)

                     (211)

                     (297)

                       (22)

                     (749)

Constant currency

                20,884 

                16,283 

                14,602 

                 (1,898)

                49,871 

ECL






Reported

                 (1,130)

                 (1,849)

                     (595)

                       (10)

                 (3,584)

Currency translation

                       (56)

                       (13)

                         22

                            1

                       (46)

Constant currency

                 (1,186)

                 (1,862)

                     (573)

                          (9)

                 (3,630)

Operating expenses






Reported

              (14,415)

                 (7,052)

                 (9,383)

                 (1,851)

              (32,701)

Currency translation

                      167 

                      158 

                         45

                         29

                      399 

Constant currency

              (14,248)

                 (6,894)

                 (9,338)

                 (1,822)

              (32,302)

Share of profit/(loss) in associates and joint ventures






Reported

                         30

                          - 

                          (2)

                   2,695 

                   2,723 

Currency translation

                          - 

                          - 

                          - 

                     (121)

                     (121)

Constant currency

                         30

                          - 

                          (2)

                   2,574 

                   2,602 

Profit/(loss) before tax






Reported

                   5,588 

                   7,593 

                   4,919 

                 (1,042)

                17,058 

Currency translation

                     (108)

                       (66)

                     (230)

                     (113)

                     (517)

Constant currency

                   5,480 

                   7,527 

                   4,689 

                 (1,155)

                16,541 

Loans and advances to customers (net)






Reported

             422,309 

             311,957 

             188,940 

                      355 

             923,561 

Currency translation

                11,813 

                   4,906 

                   1,262 

                            6

                17,987 

Constant currency

             434,122 

             316,863 

             190,202 

                      361 

             941,548 

Customer accounts






Reported

             779,310 

             463,928 

             326,630 

                      435 

          1,570,303 

Currency translation

                14,000 

                   8,496 

                   5,673 

                         23

                28,192 

Constant currency

             793,310 

             472,424 

             332,303 

                      458 

          1,598,495 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.

2    In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs, a portfolio of our customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

 

Notable items (continued)


20221


Wealth and Personal Banking

Commercial Banking

Global

Banking and Markets

Corporate Centre

Total


$m

$m

$m

$m

$m

Notable items






Revenue






Disposals, acquisitions and related costs2

                 (2,212)

                          - 

                          - 

                     (525)

                 (2,737)

Fair value movements on financial instruments3

                          - 

                          - 

                          - 

                     (618)

                     (618)

Restructuring and other related costs4

                         98

                       (16)

                     (184)

                     (145)

                     (247)

Operating expenses






Disposals, acquisitions and related costs

                          (7)

                          - 

                          - 

                       (11)

                       (18)

Restructuring and other related costs

                     (357)

                     (266)

                     (252)

                 (2,007)

                 (2,882)

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.

2   Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.3bn (inclusive of $0.4bn in goodwill impairments) related to the planned sale of the retail banking operations in France.

3   Fair value movements on non-qualifying hedges in HSBC Holdings.

4   Comprises gains and losses relating to the business update in February 2020, including losses associated with the RWA reduction programme.

Reconciliation of reported results to constant currency results - global businesses (continued)


20211


Wealth and Personal Banking

Commercial

Banking

Global Banking and Markets

Corporate

Centre

Total


$m

$m

$m

$m

$m

Revenue2






Reported

                22,117 

                13,743 

                14,276 

                     (584)

                49,552 

Currency translation

                 (1,145)

                 (1,044)

                 (1,190)

                       (94)

                 (3,473)

Constant currency

                20,972 

                12,699 

                13,086 

                     (678)

                46,079 

ECL






Reported

                      288 

                      397 

                      240 

                            3

                      928 

Currency translation

                       (93)

                       (58)

                       (19)

                          - 

                     (170)

Constant currency

                      195 

                      339 

                      221 

                            3

                      758 

Operating expenses






Reported

              (16,306)

                 (7,213)

              (10,045)

                 (1,056)

              (34,620)

Currency translation

                      968 

                      522 

                      790 

                         96

                   2,376 

Constant currency

              (15,338)

                 (6,691)

                 (9,255)

                     (960)

              (32,244)

Share of profit/(loss) in associates and joint ventures






Reported

                         34

                            1

                          - 

                   3,011 

                   3,046 

Currency translation

                            2

                          - 

                          - 

                     (241)

                     (239)

Constant currency

                         36

                            1

                          - 

                   2,770 

                   2,807 

Profit/(loss) before tax






Reported

                   6,133 

                   6,928 

                   4,471 

                   1,374 

                18,906 

Currency translation

                     (268)

                     (580)

                     (419)

                     (239)

                 (1,506)

Constant currency

                   5,865 

                   6,348 

                   4,052 

                   1,135 

                17,400 

Loans and advances to customers (net)






Reported

             488,786 

             353,182 

             203,106 

                      740 

          1,045,814 

Currency translation

              (15,482)

              (12,579)

                 (6,913)

                       (28)

              (35,002)

Constant currency

             473,304 

             340,603 

             196,193 

                      712 

          1,010,812 

Customer accounts






Reported

             859,029 

             511,195 

             339,698 

                      652 

          1,710,574 

Currency translation

              (24,262)

              (15,703)

              (17,392)

                       (30)

              (57,387)

Constant currency

             834,767 

             495,492 

             322,306 

                      622 

          1,653,187 

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2    Net operating income/(expense) before change in expected credit losses and other credit impairment charges, also referred to as revenue.

Notable items (continued)


20211


Wealth and Personal Banking

Commercial Banking

Global

Banking and Markets

Corporate Centre

Total


$m

$m

$m

$m

$m

Notable items






Revenue






Fair value movements on financial instruments2

                          - 

                          - 

                          - 

                     (221)

                     (221)

Restructuring and other related costs3

                         14

                          (3)

                     (395)

                         77

                     (307)

Operating expenses






Impairment of non-financial items

                     (587)

                          - 

                          - 

                          - 

                     (587)

Restructuring and other related costs

                     (296)

                       (83)

                     (195)

                 (1,262)

                 (1,836)

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2   Fair value movements on non-qualifying hedges in HSBC Holdings.

3   Comprises gains and losses relating to the business update in February 2020, including losses associated with the RWA reduction programme.


Reconciliation of reported and constant currency risk-weighted assets


At 31 Dec 2023


Wealth and Personal Banking

Commercial

Banking1

Global

Banking and

Markets1

Corporate Centre

Total


$bn

$bn

$bn

$bn

$bn

Risk-weighted assets






Reported

                  192.9 

                  354.5 

                  218.5 

                     88.2 

                  854.1 

Constant currency

                  192.9 

                  354.5 

                  218.5 

                     88.2 

                  854.1 








At 31 Dec 2022

Risk-weighted assets






Reported

                  182.9 

                  342.4 

                  225.9 

                     88.5 

                  839.7 

Currency translation

                        1.7 

                        1.8 

                      (0.1)                     

                         - 

                        3.4 

Constant currency

                  184.6 

                  344.2 

                  225.8 

                     88.5 

                  843.1 

 


At 31 Dec 2021

Risk-weighted assets






Reported

                   178.3 

                   340.0 

                   229.1 

                     90.9 

                   838.3 

Currency translation

                      (6.1)

                   (15.9)

                      (8.4)

                      (1.4)

                   (31.8)

Constant currency

                   172.2 

                   324.1 

                   220.7 

                     89.5 

                   806.5 

1    In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs, a portfolio of our customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.


Supplementary tables for WPB and GBM


WPB constant currency performance by business unit

A breakdown of WPB by business unit is presented below to reflect the basis of how the revenue performance of the business units is assessed and managed.

WPB - summary (constant currency basis)



Consists of1


Total

WPB

Banking

operations

Life

insurance

Global Private Banking

Asset

management


$m

$m

$m

$m

$m

2023






Net operating income before change in expected credit losses and other credit impairment charges2

                27,275 

                22,279 

                  1,462 

                  2,252 

                    1,282 

-  net interest income

                20,491 

                19,055 

                      282 

                  1,155 

                           (1)

-  net fee income/(expense)

                  5,355 

                  3,213 

                      151 

                      794 

                    1,197 

-  other income

                  1,429 

                         11 

                  1,029 

                      303 

                           86 

ECL

                (1,058)

                (1,056)

                           4 

                         (6)

                           - 

Net operating income

                26,217 

                21,223 

                  1,466 

                  2,246 

                    1,282 

Total operating expenses

              (14,738)

              (11,474)

                    (682)

                (1,627)

                      (955)

Operating profit

                11,479 

                  9,749 

                      784 

                      619 

                        327 

Share of profit in associates and joint ventures

                         65 

                         15 

                         50 

                         - 

                           - 

Profit before tax

                11,544 

                  9,764 

                      834 

                      619 

                        327 







2022






Net operating income before change in expected credit losses and other credit impairment charges2

                20,884 

                16,383 

                  1,354 

                  2,016 

                    1,131 

-  net interest income

                15,971 

                14,673 

                      339 

                      965 

                           (6)                          

-  net fee income/(expense)

                  5,307 

                  3,260 

                      154 

                      788 

                    1,105 

-  other income

                    (394)                   

                (1,550)

                      861 

                      263 

                           32 

ECL

                (1,186)

                (1,173)

                         (8)                        

                         (4)                        

                           (1)                          

Net operating income

                19,698 

                15,210 

                  1,346 

                  2,012 

                    1,130 

Total operating expenses

              (14,248)

              (11,132)

                    (785)                   

                (1,477)

                      (854)                     

Operating profit

                  5,450 

                  4,078 

                      561 

                      535 

                        276 

Share of profit in associates and joint ventures

                         30 

                         13 

                         17 

                         - 

                           - 

Profit before tax

                  5,480 

                  4,091 

                      578 

                      535 

                        276 



 

 

WPB - summary (constant currency basis) (continued)


Total

WPB

Consists of1


Banking

operations

Life

insurance manufacturing3

Global Private Banking

Asset

management


$m

$m

$m

$m

$m

2021






Net operating income before change in expected credit losses and other credit impairment charges2

                 20,972 

                 15,527 

                       2,512 

                    1,777 

                    1,156 

-  net interest income

                 13,447 

                 10,563 

                       2,256 

                       630 

                           (2)

-  net fee income/(expense)

                    5,677 

                    4,249 

                         (603)

                       916 

                    1,115 

-  other income

                    1,848 

                       715 

                           859 

                       231 

                          43

ECL

                       195 

                       204 

                            (21)

                          13

                           (1)

Net operating income

                 21,167 

                 15,731 

                       2,491 

                    1,790 

                    1,155 

Total operating expenses

               (15,338)

               (12,379)

                         (629)

                  (1,538)

                      (792)

Operating profit

                    5,829 

                    3,352 

                       1,862 

                       252 

                       363 

Share of profit in associates and joint ventures

                          36

                          19

                              17

                           - 

                           - 

Profit before tax

                    5,865 

                    3,371 

                       1,879 

                       252 

                       363 

1   Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

2     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 is prepared on an IFRS 4 basis.

3   We adopted IFRS 17 from 1 January 2023 and have restated 2022 financial data. Data for 2021 has not restated, and 'Life insurance manufacturing' is disclosed on the basis of preparation prevailing in 2021, which includes results from our manufacturing business only, with insurance distribution presented in 'banking operations'.


Life insurance business performance

The following table provides an analysis of the performance of our life insurance business for the period. It comprises income earned by our insurance manufacturing operations within our WPB business, as well as income earned and costs incurred within our Wealth insurance distribution channels, consolidation and inter-company elimination entries.

Results of WPB's life insurance business unit (constant currency basis)


Year ended 31 Dec 2023


Insurance manufac-turing operations

Wealth insurance and other1

Life insurance


$m

$m

$m

Net interest income

                       283 

                          (1)

                        282 

Net fee income/(expense)

                       (27)

                       178 

                        151 

Other income

                       990 

                         39 

                    1,029 

-  insurance service results

                   1,127 

                       (34)

                    1,093 

-  net investment returns (excluding net interest income)

                    (119)

                         30 

                         (89)

-  other operating income

                       (18)

                         43 

                           25 

Net operating income before change in expected credit losses and other credit impairment charges2

                   1,246 

                       216 

                    1,462 

ECL

                            4 

                          - 

                             4 

Net operating income

                   1,250 

                       216 

                    1,466 

Total operating expenses

                    (571)

                    (111)

                      (682)

Operating profit

                       679 

                       105 

                        784 

Share of profit/(loss) in associates and joint ventures

                         50 

                          - 

                           50 

Profit before tax

                       729 

                       105 

                        834 






Year ended 31 Dec 20223

Net interest income

                       345 

                          (6)                         

                        339 

Net fee income/(expense)

                       (31)                      

                       185 

                        154 

Other income

                       847 

                         14 

                        861 

-  insurance service results

                       861 

                       (18)                      

                        843 

-  net investment returns (excluding net interest income)

                     (176)                    

                       (28)                      

                      (204)                     

-  other operating income

                       162 

                         60 

                        222 

Net operating income before change in expected credit losses and other credit impairment charges2

                   1,161 

                       193 

                    1,354 

ECL

                          (8)                         

                          - 

                           (8)                          

Net operating income

                   1,153 

                       193 

                    1,346 

Total operating expenses

                     (594)                    

                     (191)                    

                      (785)                     

Operating profit

                       559 

                            2 

                        561 

Share of profit/(loss) in associates and joint ventures

                         17 

                          - 

                           17 

Profit before tax

                       576 

                            2 

                        578 

1   'Wealth insurance and other' includes fee income earned and operating expenses incurred within our Wealth distribution channels. It also includes the IFRS 17 consolidation entries arising from transactions between our insurance manufacturing operations and Wealth distribution channels and with the wider Group, as well as allocations of central costs benefiting life insurance.

2     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

3     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data have been restated accordingly. This table presents an IFRS 17-specific analysis of results and therefore does not include 2021 comparatives.



 

WPB insurance manufacturing (constant currency basis)

The following table shows the results of our insurance manufacturing operations for our WPB business and for all global business segments in aggregate.

Results of insurance manufacturing operations1,2,3

2023

2022

2021


WPB

All global

businesses

WPB

All global

businesses

WPB

All global

businesses


$m

$m

$m

$m

$m

$m

Net interest income 

                  283 

                   320 

                  345 

                  370 

               2,255 

               2,430 

Net fee expense

                   (27)

                   (14)

                   (31)

                   (16)

                 (599)

                 (629)

Other income

                  990 

                   981 

                  847 

                  847 

            14,257 

            14,745 

Insurance service result

              1,127 

               1,125 

                  861 

                  866 

                      - 

                      - 

release of contractual service margin

              1,094 

               1,094 

                  902 

                  902 

                      - 

                      - 

risk adjustment release

                     44 

                     44 

                     45

                     45

                      - 

                      - 

experience variance and other

                     30 

                     28 

                     42

                     47

                      - 

                      - 

loss from onerous contracts

                   (41)

                   (41)

                 (128)

                 (128)

                      - 

                      - 

Net investment returns (excluding net interest income)4

                (119)

                (125)

                 (176)

                 (187)

               3,948 

               3,980 

insurance finance income/(expense)

            (7,809)

             (7,809)

            13,850 

            13,853 

                      - 

                      - 

other investment income

              7,690 

               7,684 

          (14,026)

          (14,040)

               3,948 

               3,980 

Net insurance premium income

                     - 

                      - 

                      - 

                      - 

            10,145 

            10,617 

Other operating income

                   (18)

                   (19)

                  162 

                  168 

                  164 

                  148 

Total operating income

              1,246 

               1,287 

               1,161 

               1,201 

            15,913 

            16,546 

Net insurance claims and benefits paid and movement in liabilities to

policyholders

                     - 

                      - 

                      - 

                      - 

          (13,366)

          (13,863)

Net operating income before change in expected credit losses and other credit impairment charges5

              1,246 

               1,287 

               1,161 

               1,201 

               2,547 

               2,683 

Change in expected credit losses and other credit impairment charges

                       4 

                        4 

                      (8)

                      (9)

                   (18)

                   (22)

Net operating income

              1,250 

               1,291 

               1,153 

               1,192 

               2,529 

               2,661 

Total operating expenses

                (571)

                (581)

                 (594)

                 (589)

                 (564)

                 (590)

Operating profit

                  679 

                   710 

                  559 

                  603 

               1,965 

               2,071 

Share of profit in associates and joint ventures

                     50 

                     50 

                     17

                     17

                     17

                     17

Profit before tax of insurance business operations6

                  729 

                   760 

                  576 

                  620 

               1,982 

               2,088 

Additional information







Insurance manufacturing new business contractual service margin (reported basis)

              1,686 

               1,686 

               1,111 

               1,111 

                      - 

                      - 

Consolidated Group new business contractual service margin (reported basis)

              1,812 

               1,812 

               1,229 

               1,229 

                      - 

                      - 

Annualised new business premiums of insurance manufacturing operations

              3,797 

               3,797 

               2,354 

               2,354 

               2,777 

               2,830 

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for 2022 have been restated accordingly; comparative data for 2021 are reported under IFRS 4 'Insurance Contracts'.

2     Constant currency results are derived by adjusting for period-on-period effects of foreign currency translation differences. The impact of foreign currency translation differences on 'All global businesses' profit before tax was a $13m increase for 2022 and a $53m decrease in 2021.

3     The results presented for insurance manufacturing operations are shown before elimination of inter-company transactions with HSBC non-insurance operations. The 'All global businesses' result consists primarily of WPB business, as well as a small proportion of CMB business.

4     Net investment return under IFRS 17 for all global businesses for 2023 was $195m (2022: $183m), which consisted of net interest income, net income/(expenses) on assets held at fair value through profit or loss, and insurance finance income/(expense).

5     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

6     The effect of applying hyperinflation accounting in Argentina on insurance manufacturing operations in all global business resulted in a decrease of $41m in revenue in 2023 (2022: decrease of $7m, 2021: increase of $1m) and a decrease of $41m in profit before tax in 2023 (2022: decrease of $6m, 2021: increase of $1m).

Insurance manufacturing


The following commentary, unless otherwise specified, relates to the 'All global businesses' results.

Profit before tax of $0.8bn increased by $0.1bn compared with 2022. This primarily reflected the following:

-   Insurance service result of $1.1bn increased by $0.3bn compared with 2022. This was driven by an increase in the release of CSM of $0.2bn as a result of a higher closing CSM balance from the effect of new business written and favourable assumption updates primarily from updates to lapse rate assumptions. The improved insurance service result also reflected a reduction to losses from onerous contracts of $0.1bn, mainly in Hong Kong and Singapore, in part due to improved market conditions in 2023.

-   Net investment return (excluding net interest income) increased by $0.1bn, with positive asset returns in 2023 compared with losses in the prior period.

-   Other operating income reduced by $0.2bn compared with 2022, and included a $0.3bn loss from corrections to historical valuation estimates, partly offset by gains of $0.2bn from reinsurance contracts in Hong Kong.

Profit before tax of $0.6bn in 2022 reduced by $1.5bn compared with 2021, primarily reflecting the change in reporting basis from IFRS 4 'Insurance Contracts' in 2021 to IFRS 17 'Insurance Contracts' in 2022. Further information regarding the impact of transition is provided in Note 38 'Effects of adoption of IFRS 17' on page 422.

Annualised new business premiums ('ANP') is used to assess new insurance premiums generated by the business. It is calculated as 100% of annualised first year regular premiums and 10% of single premiums, before reinsurance ceded. ANP in 2023 increased by 61% compared with 2022, primarily from strong new business sales in Hong Kong and a shift in product mix from single to multi-premium products.

Insurance manufacturing value of new business

Insurance manufacturing value of new business is a non-GAAP alternative performance measure that provides information about value generation from new business sold during the period. Since transitioning to IFRS 17, insurance manufacturing value of new business is a metric used internally to measure the long-term profitability of new business sold, and its disclosure supports the consistent communication of this performance measure, albeit on a new calculation basis. Insurance manufacturing value of new business is calculated as the sum of the IFRS 17 new business CSM and loss component adjusted for:

-   a full attribution of expenses incurred within our insurance manufacturing operations. IFRS 17 considers only directly attributable expenses within the new business CSM measurement; and

-   long-term asset spreads expected to be generated over the contract term. Under IFRS 17, new business CSM is in contrast calculated on a market consistent risk neutral basis. This also necessitates changes to the underlying economic scenario models used in the valuation of policyholder guarantees to reflect this basis.

There were no other adjustments made, with demographic and expense assumptions remaining unchanged, except for inclusion of future non-attributable expenses as described above. The IFRS 17 risk adjustment remained unchanged, with no additional allowances made for market risks. Insurance manufacturing value of new business was measured before tax and after inclusion of the impact of reinsurance.


Insurance manufacturing value of new business


2023

2022




$m

$m

Insurance manufacturing operations new business CSM and loss component1

                            1,678 

                             1,095 

Inclusion of incremental expenses not attributable to the contractual service margin

                              (342)

                               (285)

Long-term asset spreads


                                238 

                                362 

Insurance manufacturing value of new business

                            1,574 

                             1,172 

1 Insurance manufacturing new business contractual service margin was $1,686m (2022: $1,111m) and the loss component was $8m (2022: $16m).


Insurance equity plus CSM net of tax

Insurance equity plus CSM net of tax is a non-GAAP alternative performance measure that provides information about our insurance manufacturing operations' net asset value plus the future earnings from in-force business. At 31 December 2023, insurance equity plus CSM net of tax was $16,583m (31 December 2022: $14,646m).

At 31 December 2023, insurance equity plus CSM net of tax was calculated as insurance manufacturing operations equity of $7,731m plus CSM of $10,786m less tax of $1,934m. At 31 December 2022, it was calculated as insurance manufacturing operations equity of $7,236m plus CSM of $9,058m less tax of $1,648m.

Insurance manufacturing proxy embedded value

Insurance manufacturing proxy embedded value is a non-GAAP alternative performance measure that provides information about the value of the insurance manufacturing operations and is defined as total shareholders' equity plus the present value of projected future profits. It is not comparable with peer embedded value disclosure as there is no single industry standard basis of calculation.

The present value of projected future profits is calculated as the CSM net of tax adjusted for:

-   a full attribution of expenses incurred within our insurance manufacturing operations, net of tax. IFRS 17 considers only directly attributable expenses within the CSM measurement; and

-   long-term asset spreads expected to be generated over the contract term, net of tax. Under IFRS 17, CSM is in contrast calculated on a market consistent risk neutral basis. This also necessitates changes to the underlying economic scenario models used in the valuation of policyholder guarantees to reflect this basis.

There are no other adjustments made, with demographic and expense assumptions remaining unchanged, except for inclusion of future non-attributable expenses as described above. The IFRS 17 risk adjustment remained unchanged, with no additional allowances made for market risks. Insurance manufacturing proxy embedded value was measured after tax and after inclusion of the impact of reinsurance.


 

Insurance manufacturing proxy embedded value


At 31 Dec 2023

At 31 Dec 2022


$m

$m

Total shareholders' equity and contractual service margin net of tax

                          16,583 

                          14,646 

Inclusion of incremental expenses not attributable to the contractual service margin, net of tax

                              (582)

                               (559)

Long-term asset spreads, net of tax

                            2,368 

                             2,369 

Insurance manufacturing proxy embedded value

                          18,369 

                          16,456 




 


WPB: Wealth balances


The following table shows the wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our customers.

WPB - reported wealth balances1


2023

2022


$bn

$bn

Global Private Banking invested assets

                      363 

                      312 

-  managed by Global Asset Management

                         61 

                         57

-  external managers, direct securities and other

                      302 

                      255 

Retail invested assets

                      383 

                      363 

-  managed by Global Asset Management

                      178 

                      198 

-  external managers, direct securities and other

                      205 

                      165 

Asset Management third-party distribution

                      445 

                      340 

Reported invested assets1

                  1,191 

                   1,015 

Wealth deposits (Premier, Jade and Global Private Banking)2

                      536 

                      503 

Total reported wealth balances

                  1,727 

                   1,518 

1     Invested assets are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. At 31 December 2023, $32bn of invested assets were classified as held for sale and are not included in the table above.

2     Premier, Jade and Global Private Banking deposits, which include Prestige deposits in Hang Seng Bank, form part of the total WPB customer accounts balance of $805bn (2022: $779bn) on page 111. At 31 December 2023, $42bn of wealth deposits were classified as held for sale and are not included in the table above.


Asset Management: funds under management

The following table shows the funds under management of our Asset Management business. Funds under management represents assets managed, either actively or passively, on behalf of our customers. Funds under management are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.

Asset Management - reported funds under management1


2023

2022


$bn

$bn

Opening balance

                      595 

                      630 

Net new invested assets

                         54 

                         45

Net market movements

                         23 

                       (36)

Foreign exchange and others

                         12 

                       (44)

Closing balance

                      684 

                      595 







Asset Management - reported funds under management by legal entities


2023

2022


$bn

$bn

HSBC Bank plc

                      162 

                      134 

The Hongkong and Shanghai Banking Corporation Limited

                      198 

                      184 

HSBC North America Holdings Inc.

                         71 

                         60

Grupo Financiero HSBC, S.A. de C.V.

                         15 

                            8

Other trading entities2

                      238 

                      209 

Closing balance

                      684 

                      595 

1    Funds under management are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.

2     Funds under management of $177bn in 2023 and $143bn in 2022 relating to our Asset Management entity in the UK are reported under 'other trading entities' in the table above.


At 31 December 2023, Asset Management funds under management amounted to $684bn, an increase of $89bn or 15%. The increase reflected net new invested assets of $54bn and a positive impact from market performances and foreign exchange translation. Net new invested assets were notably from additions in money market and exchange traded funds, as well as passive and private equity products.

 


 

Global Private Banking: client balances

Global Private Banking client balances comprises invested assets and deposits, which are translated at the rates of exchange applicable for their respective year-ends, with the effects of currency translation reported separately.

Global Private Banking - reported client balances1


2023

2022


$bn

$bn

Opening balance

                      383 

                      423 

Net new invested assets

                         17 

                         18

Increase/(decrease) in deposits

                           9 

                          (1)

Net market movements

                         19 

                       (53)

Foreign exchange and others

                         19 

                          (4)

Closing balance

                      447 

                      383 

 

Global Private Banking - reported client balances by legal entities


2023

2022


$bn

$bn

HSBC UK Bank plc

                         32 

                         28

HSBC Bank plc

                         54 

                         58

The Hongkong and Shanghai Banking Corporation Limited

                      209 

                      174 

HSBC North America Holdings Inc.

                         64 

                         56

Grupo Financiero HSBC, S.A. de C.V.

                          

                          - 

Other trading entities

                         85 

                         67

Closing balance

                      447 

                      383 

1     Client balances are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. Customer deposits included in these client balances are on balance sheet.


Retail invested assets


The following table shows the invested assets of our retail customers. These comprise customer assets either managed by our Asset Management business or by external third-party investment managers as well as self-directed investments by our customers.

Retail invested assets are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.


Retail invested assets


2023

2022


$bn

$bn

Opening balance

                      363 

                      434 

Net new invested assets1

                         26 

                         26

Net market movements

                           7 

                       (47)

Foreign exchange and others

                       (13)

                       (50)

Closing balance

                      383 

                      363 




Retail invested assets by legal entities


2023

2022


$bn

$bn

HSBC UK Bank plc

                         29 

                         27

HSBC Bank plc

                         31 

                         27

The Hongkong and Shanghai Banking Corporation Limited

                      292 

                      284 

HSBC Bank Middle East Limited

                           3 

                            2

HSBC North America Holdings Inc.

                         14 

                         12

Grupo Financiero HSBC, S.A. de C.V.

                          

                            7

Other trading entities

                           5 

                            4

Closing balance

                      383 

                      363 

1     'Retail net new invested assets' covers nine markets, comprising Hong Kong including Hang Seng Bank (Hong Kong), mainland China, Malaysia, Singapore, HSBC UK, UAE, US, Canada and Mexico. The net new invested assets relating to all other geographies is reported in 'foreign exchange and others'.


WPB invested assets


Net new invested assets represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Global Private Banking invested assets. It excludes all customer deposits. The net new invested assets in the table below is non-

additive from the tables above, as net new invested assets managed by Asset Management that are generated by retail clients or Global Private Banking will be recorded in both businesses.


WPB: Invested assets


2023

2022


$bn

$bn

Opening balance

                  1,015 

                   1,119 

Net new invested assets

                         84 

                         80

Net market movements

                         43 

                     (118)

Foreign exchange and others

                         49 

                       (66)

Closing balance

                  1,191 

                   1,015 




WPB: Net new invested assets by legal entities


2023

2022


$bn

$bn

HSBC UK Bank plc

                           1 

                            2

HSBC Bank plc

                           3 

                            6

The Hongkong and Shanghai Banking Corporation Limited

                         47 

                         59

HSBC Bank Middle East Limited

                           1 

                          - 

HSBC North America Holdings Inc.

                           7 

                            8

HSBC Bank Canada

                         - 

                          (1)

Grupo Financiero HSBC, S.A. de C.V.

                          

                            1

Other trading entities

                         20 

                            5

Total

                         84 

                         80

 


GBM: Securities Services and Issuer Services


Assets held in custody

Custody is the safekeeping and servicing of securities and other financial assets on behalf of clients. Assets held in custody are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. At 31 December 2023, we held $9.7tn of assets as custodian, an increase of 6% compared with 31 December 2022. The balance comprised $8.8tn of assets in Securities Services, which were recorded at market value, and $0.9tn of assets in Issuer Services, recorded at book value.

The increase was mainly in Securities Services balances. This was driven by net asset inflows in Europe and Asia, favourable market movements in Asia, North America and Latin America, and a positive impact of currency translation differences in Europe.


Assets under administration

Our assets under administration business includes the provision of bond and loan administration services, transfer agency services and the valuation of portfolios of securities and other financial assets on behalf of clients and complements the custody business. At 31 December 2023, the value of assets held under administration by the Group amounted to $4.9tn, which was 9% higher than at 31 December 2022. The balance comprised $2.9tn of assets in Securities Services, which were recorded at market value, and $2.0tn of assets in Issuer Services, recorded at book value.

The increase was mainly driven by Securities Services balances due to net asset inflows in Europe and Asia together with a favourable impact of currency translation differences, market movements and onboarding of new clients in Europe. Issuer Services balances also rose driven by new issuances, notably in the US and the UK, as well as a favourable impact of currency translation differences in the UK.

 


Analysis of reported results by legal entities

HSBC reported profit/(loss) before tax and balance sheet data


2023


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corporation Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo Financiero HSBC, S.A. de C.V.

Other trading entities

Holding companies, shared service centres and intra-Group eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Net interest income

          9,684 

         2,674 

                16,705 

       1,551 

          1,712 

      1,275 

             2,148 

      3,765 

                (3,718)

         35,796 

Net fee income

          1,597 

         1,527 

                  4,859 

           475 

          1,237 

          559 

                 581 

      1,225 

                    (215)

         11,845 

Net income from financial instruments held for trading or managed on a fair value basis

              516 

         4,220 

                  9,507 

           397 

              729 

          110 

                 437 

      1,054 

                    (309)

         16,661 

Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss

                 - 

         1,438 

                  6,258 

              - 

                 - 

             - 

                    39 

          323 

                    (171)

           7,887 

Insurance finance income/(expense)

                 - 

       (1,460)

                (6,237)

              - 

                 - 

             - 

                  (44)

        (166)

                         98 

         (7,809)

Insurance service result

                 - 

             154 

                      838 

              - 

                 - 

             - 

                    87 

               9 

                       (10)

           1,078 

Other income/(expense)1

          1,608 

             736 

                       (31)

                2 

              185 

             22 

                    65 

    (1,481)

                    (506)

               600 

Net operating income before change in expected credit losses and other credit impairment charges2

        13,405 

         9,289 

                31,899 

       2,425 

          3,863 

      1,966 

             3,313 

      4,729 

                (4,831)

         66,058 

Change in expected credit losses and other credit impairment charges

            (523)

          (212)

                (1,641)

           (90)

               (94)

           (46)

               (696)

        (279)

                      134 

         (3,447)

Net operating income

        12,882 

         9,077 

                30,258 

       2,335 

          3,769 

      1,920 

             2,617 

      4,450 

                (4,697)

         62,611 

Total operating expenses excluding impairment of goodwill and other intangible assets

        (4,602)

       (6,483)

              (13,379)

     (1,095)

        (3,473)

    (1,049)

           (1,823)

    (2,631)

                  2,180 

       (32,355)

Impairment of goodwill and other intangible assets

               (10)

               97 

                       (16)

              (1)

              222 

             - 

                    (3)

             (4)

                         - 

               285 

Operating profit/(loss)

          8,270 

         2,691 

                16,863 

       1,239 

              518 

          871 

                 791 

      1,815 

                (2,517)

         30,541 

Share of profit in associates and joint ventures less impairment3

                 - 

             (52)

                    (696)

              - 

                 - 

             - 

                    14 

          544 

                         (3)

             (193)

Profit/(loss) before tax

          8,270 

         2,639 

                16,167 

       1,239 

              518 

          871 

                 805 

      2,359 

                (2,520)

         30,348 


%

%

%

%

%

%

%

%

%

%

Share of HSBC's profit before tax

27.2

8.7

53.3

4.1

1.7

2.9

2.6

7.8

(8.3)

100.0

Cost efficiency ratio

34.4

68.7

42.0

45.2

84.2

53.4

55.1

55.7

45.1

48.5

Balance sheet data

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Loans and advances to customers (net)

     270,208 

      95,750 

             455,315 

    20,072 

        54,829 

             - 

           26,410 

    15,951 

                         - 

      938,535 

Total assets

     423,029 

    896,682 

         1,333,911  

    50,612 

     252,339 

    90,731 

           47,309 

    59,051 

           (114,987)

  3,038,677  

Customer accounts

     339,611 

    274,733 

             801,430 

    31,341 

        99,607 

             - 

           29,423 

    35,326 

                      176 

  1,611,647  

Risk-weighted assets4,5

     129,211 

    131,468 

             396,677 

    24,294 

        72,248 

    31,890 

           32,639 

    59,574 

                  6,704 

      854,114 



 


HSBC reported profit/(loss) before tax and balance sheet data (continued)


20226


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corporation Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo Financiero HSBC, S.A. de C.V.

Other trading entities

Holding companies, shared service centres and intra-Group eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Net interest income

          7,615 

         2,357 

                14,031 

           903 

          1,922 

      1,251 

             1,796 

      2,244 

                (1,742)

         30,377 

Net fee income

          1,536 

         1,601 

                  4,924 

           458 

          1,223 

          598 

                 455 

      1,127 

                    (152)                   

         11,770 

Net income from financial instruments held for trading or managed on a fair value basis

              472 

         3,564 

                  5,270 

           360 

              485 

             76 

                 351 

          639 

                    (939)                   

         10,278 

Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss

                 - 

       (1,761)

              (12,117)

              - 

                 - 

             - 

                    (9)                   

             66 

                       (10)                      

       (13,831)

Insurance finance income/(expense)

                 - 

         1,431 

                12,407 

              - 

                 - 

             - 

                      3 

           (32)          

                       (10)                      

         13,799 

Insurance service result

                 - 

             149 

                      636 

              - 

                 - 

             - 

                    50 

           (20)          

                         (6)                        

               809 

Other income/(expense)1

              148 

       (1,920)

                      491 

             22 

              533 

             29 

                    67 

        (521)       

                (1,431)

         (2,582)

Net operating income before change in expected credit losses and other credit impairment charges2

          9,771 

         5,421 

                25,642 

       1,743 

          4,163 

      1,954 

             2,713 

      3,503 

                (4,290)

         50,620 

Change in expected credit losses and other credit

impairment charges

            (563) 

           (292)          

                (2,090)

             21 

               (20) 

           (84)          

               (507)              

           (61)          

                         12 

         (3,584)

Net operating income

          9,208 

         5,129 

                23,552 

       1,764 

          4,143 

      1,870 

             2,206 

      3,442 

                (4,278)

         47,036 

Total operating expenses excluding impairment of goodwill and other intangible assets

        (4,667)

       (6,497)

              (13,011)

     (1,033)

        (3,429)

    (1,017)

           (1,631)

    (2,359)

                  1,090 

       (32,554)

Impairment of goodwill and other intangible assets

               (54) 

               11 

                       (42)                      

              (3)             

                 (9) 

           (21)          

                    (5)                   

             (2)            

                       (22)                      

             (147)            

Operating profit/(loss)

          4,487 

       (1,357)

                10,499 

           728 

              705 

          832 

                 570 

      1,081 

                (3,210)

         14,335 

Share of profit in associates and joint ventures less impairment

                 - 

             (38)            

                  2,400 

              - 

                 - 

             - 

                    13 

          351 

                         (3)                        

           2,723 

Profit/(loss) before tax

          4,487 

       (1,395)

                12,899 

           728 

              705 

          832 

                 583 

      1,432 

                (3,213)

         17,058 


%

%

%

%

%

%

%

%

%

%

Share of HSBC's profit before tax

26.3

(8.2)

75.6

4.3

4.1

4.9

3.4

8.4

(18.8)

100.0

Cost efficiency ratio

48.3

119.6

50.9

59.4

82.6

53.1

60.3

67.4

24.9

64.6

Balance sheet data

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Loans and advances to customers (net)

     245,921 

      86,964 

             473,985 

    19,762 

        54,159 

             - 

           20,446 

    22,325 

                         (1)                        

      923,561 

Total assets

     412,522 

    863,308 

         1,297,806  

    48,086 

     239,117 

    94,604 

           39,939 

    67,345 

           (113,441)

  2,949,286  

Customer accounts

     336,086 

    253,075 

             784,236 

    29,893 

     100,404 

             - 

           25,531 

    41,078 

                         - 

  1,570,303  

Risk-weighted assets4,5

     110,919 

    127,017 

             406,985 

    22,490 

        72,446 

    31,876 

           26,744 

    60,289 

                  8,144 

      839,720 



 

 

HSBC reported profit/(loss) before tax and balance sheet data (continued)


2021


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corporation Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo Financiero HSBC, S.A. de C.V.

Other trading entities

Holding companies, shared service centres and intra-Group eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Net interest income

          6,397 

         2,411 

                12,623 

           633 

          1,809 

          978 

             1,542 

      1,586 

                (1,490)

         26,489 

Net fee income

          1,484 

         1,945 

                  5,828 

           445 

          1,426 

          634 

                 406 

      1,044 

                    (115)                   

         13,097 

Net income from financial instruments held for trading or managed on a fair value basis

              437 

         2,382 

                  3,649 

           275 

              226 

             89 

                 272 

          474 

                       (60)                      

           7,744 

Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss

                 - 

         1,670 

                  2,340 

              - 

                 - 

             - 

                      4 

             44 

                         (5)                        

           4,053 

Insurance finance income/(expense)

                 - 

                - 

                         - 

              - 

                 - 

             - 

                    - 

             - 

                         - 

                  - 

Insurance service result

                 - 

                - 

                         - 

              - 

                 - 

             - 

                    - 

             - 

                         - 

                  - 

Other income/(expense)

              278 

               16 

                (1,446)

             55 

              595 

             67 

                 136 

        (152)       

                (1,380)

         (1,831)

Net operating income before loan impairment (charges)/recoveries and other credit risk provisions2

          8,596 

         8,424 

                22,994 

       1,408 

          4,056 

      1,768 

             2,360 

      2,996 

                (3,050)

         49,552 

Change in expected credit losses and other credit impairment (charges)/recoveries

          1,362 

             239 

                    (840)                   

           142 

              205 

             37 

               (224)              

               2 

                           5 

               928 

Net operating income

          9,958 

         8,663 

                22,154 

       1,550 

          4,261 

      1,805 

             2,136 

      2,998 

                (3,045)

         50,480 

Total operating expenses excluding impairment of goodwill and other intangible assets

        (5,147)

       (7,448)

              (12,975)

         (955)        

        (3,678)

    (1,036)

           (1,558)

    (2,060)

                      970 

       (33,887)

Impairment of goodwill and other intangible assets

               (25) 

             (63)            

                       (24)                      

              (3)             

                 (5) 

             (8)            

                    (7)                   

             (6)            

                    (592)                   

             (733)            

Operating profit/(loss)

          4,786 

         1,152 

                  9,155 

           592 

              578 

          761 

                 571 

          932 

                (2,667)

         15,860 

Share of profit in associates and joint ventures less impairment

                 - 

             263 

                  2,486 

              - 

                 - 

             - 

                    17 

          280 

                         - 

           3,046 

Profit/(loss) before tax

          4,786 

         1,415 

                11,641 

           592 

              578 

          761 

                 588 

      1,212 

                (2,667)

         18,906 


%

%

%

%

%

%

%

%

%

%

Share of HSBC's profit before tax

           25.3    

        7.5       

           61.6    

        3.1       

        3.1         

        4.0       

        3.1         

        6.4       

            (14.1)           

             100.0            

Cost efficiency ratio

           60.2    

           89.2          

           56.5    

           68.0          

           90.8    

           59.0          

           66.3    

           69.0          

           12.4    

           69.9    

Balance sheet data

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Loans and advances to customers (net)

     264,624 

    122,954 

             492,523 

    18,623 

        52,678 

    54,226 

           18,043 

    22,142 

                           1 

  1,045,814  

Total assets

     468,362 

    807,541 

         1,259,270  

    46,773 

     261,335 

    94,570 

           35,525 

    66,425 

              (81,862)

  2,957,939  

Customer accounts

     381,482 

    270,975 

             792,099 

    26,802 

     111,921 

    58,071 

           23,583 

    45,643 

                         (2)                        

  1,710,574  

Risk-weighted assets4,5

     113,501 

    136,038 

             393,742 

    22,855 

        77,775 

    30,198 

           24,578 

    56,112 

                  9,072 

      838,263 

1     Other income/(expense) in this context comprises gain on acquisitions, impairment gain/(loss) relating to the sale of our retail banking operations in France, and other operating income/(expense).

2   Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

3   Includes an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

4     Risk-weighted assets are non-additive across the principal entities due to market risk diversification effects within the Group.

5     Balances are on a third-party Group consolidated basis.

6   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

 

 


Summary information - legal entities and selected countries/territories

Legal entity reported and constant currency results¹


2023


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corpo-

ration Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities2

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue3

      13,405 

         9,289 

           31,899 

       2,425 

          3,863 

      1,966 

              3,313 

        4,729 

                (4,831)

       66,058 

ECL

          (523)

          (212)

           (1,641)

           (90)

               (94)

           (46)

               (696)

          (279)

                      134 

        (3,447)

Operating expenses

       (4,612)

       (6,386)

         (13,395)

     (1,096)

        (3,251)

    (1,049)

            (1,826)

      (2,635)

                  2,180 

     (32,070)

Share of profit in associates and joint ventures

                - 

             (52)

               (696)

              - 

                 - 

             - 

                    14 

            544 

                         (3)

           (193)

Profit/(loss) before tax

         8,270 

         2,639 

           16,167 

       1,239 

              518 

          871 

                  805 

        2,359 

                (2,520)

       30,348 

Loans and advances to customers (net)

    270,208 

      95,750 

        455,315 

    20,072 

        54,829 

             - 

           26,410 

      15,951 

                         - 

     938,535 

Customer accounts

    339,611 

    274,733 

        801,430 

    31,341 

        99,607 

             - 

           29,423 

      35,326 

                      176 

                       1,611,647                      

1     In the current period, constant currency results are equal to reported, as there is no currency translation.

2     Other trading entities includes the results of entities located in Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group's reported profit before tax of $1,286m. Supplementary analysis is provided on page 130 to provide a fuller picture of the MENAT regional performance.

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

Legal entity results: notable items


2023


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corpo-

ration Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue











Disposals, acquisitions and related costs1,2,3

         1,591  

            (14)

                       - 

             - 

                 - 

             - 

                    - 

             - 

                   (279)

      1,298  

Fair value movements on financial instruments4

                 - 

               - 

                       - 

             - 

                 - 

             - 

                    - 

             - 

                        14 

             14 

Restructuring and other related costs

                 - 

            361 

                       - 

             - 

                 - 

             - 

                    - 

             - 

                   (361)

             - 

Disposal losses on Markets Treasury repositioning

           (145)

            (94)

                 (473)

          (20)

           (246)

             - 

                    - 

             - 

                           1 

        (977)

Operating expenses











Disposals, acquisitions and related costs

              (45)

          (111)

                       - 

             - 

              (11)

       (115)

                    - 

             - 

                      (39)

        (321)

Restructuring and other related costs5

                20 

               30 

                      10 

                2 

                10 

             - 

                      6 

               2 

                        56 

          136 

Impairment of interest in associate6

                 - 

               - 

             (3,000)

             - 

                 - 

             - 

                    - 

             - 

                         - 

    (3,000)

1   Includes the impacts of the sale of our retail banking operations in France.

2   Includes the provisional gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3   Includes fair value movements on the foreign exchange hedging of the expected proceeds from the planned sale of our banking operations in Canada.

4   Fair value movements on non-qualifying hedges in HSBC Holdings.

5   Balances relate to reversals of restructuring provisions recognised during 2022.

6   Includes an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

Selected countries/territories results1


2023


UK2

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue3

               19,092 

               20,611 

                  3,923 

                  3,796 

                  3,313 

ECL

                   (594)

                (1,529)

                      (93)

                      (94)

                   (696)

Operating expenses

             (12,485)

                (8,244)

                (2,713)

                (3,251)

                (1,826)

Share of profit/(loss) in associates and joint ventures

                      (53)

                        30 

                   (746)

                         - 

                        14 

Profit before tax

                  5,960 

               10,868 

                      371 

                      451 

                      805 

Loans and advances to customers (net)

             309,262 

             279,551 

               44,275 

               54,829 

               26,410 

Customer accounts

             508,181 

             543,504 

               56,006 

               99,607 

               29,423 

1     In the current period, constant currency results are equal to reported, as there is no currency translation.

2   UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

 

Selected countries/territories results: notable items


2023


UK1

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue






Disposals, acquisitions and related costs1,2,3,4

                  1,272 

                         - 

                         - 

                         - 

                         - 

Fair value movements on financial instruments5

                         14 

                         - 

                         - 

                         - 

                         - 

Disposal losses on Markets Treasury repositioning

                    (239)

                    (473)

                         - 

                    (246)

                         - 

Operating expenses






Disposals, acquisitions and related costs

                       (71)

                         (1)

                         (5)

                       (11)

                         - 

Restructuring and other related costs6

                         75 

                           9 

                           4 

                         10 

                           6 

Impairment of interest in associate7

                         - 

                         - 

                (3,000)

                         - 

                         - 

1     UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

2   Includes the provisional gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3   Includes the impairment gain relating to the sale of our retail banking operations in France.

4   Includes fair value movements on the foreign exchange hedging of the expected proceeds from the planned sale of our banking operations in Canada.

5   Fair value movements on non-qualifying hedges in HSBC Holdings.

6   Balances relates to reversals of restructuring provisions recognised during 2022.

7   Includes an impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

 Legal entity reported and constant currency results (continued)


20221


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corpo-

ration Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities2

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue3











Reported

            9,771 

            5,421 

         25,642 

            1,743 

            4,163 

            1,954 

            2,713 

            3,503 

               (4,290)

         50,620 

Currency translation

               125 

                (11)

              (278)

                     3

                   - 

                (67)

               370 

              (789)

                   (102)

              (749)

Constant currency

            9,896 

            5,410 

         25,364 

            1,746 

            4,163 

            1,887 

            3,083 

            2,714 

               (4,392)

         49,871 

ECL











Reported

              (563)

              (292)

          (2,090)

                  21

                (20)

                (84)

              (507)

                (61)

                       12

          (3,584)

Currency translation

                (43)

                  14

                     6

                   - 

                   - 

                     2

                (67)

                  41

                          1

                (46)

Constant currency

              (606)

              (278)

          (2,084)

                  21

                (20)

                (82)

              (574)

                (20)

                       13

          (3,630)

Operating expenses











Reported

          (4,721)

          (6,486)

       (13,053)

          (1,036)

          (3,438)

          (1,038)

          (1,636)

          (2,361)

                 1,068 

       (32,701)

Currency translation

                (45)

                (81)

               134 

                   (1)

                   - 

                  37

              (221)

               500 

                       76

               399 

Constant currency

          (4,766)

          (6,567)

       (12,919)

          (1,037)

          (3,438)

          (1,001)

          (1,857)

          (1,861)

                 1,144 

       (32,302)

Share of profit/(loss) in associates and joint ventures











Reported

                   - 

                (38)

            2,400 

                   - 

                   - 

                   - 

                  13

               351 

                        (3)

            2,723 

Currency translation

                   - 

                     1

              (123)

                   - 

                   - 

                   - 

                     1

                   - 

                        - 

              (121)

Constant currency

                   - 

                (37)

            2,277 

                   - 

                   - 

                   - 

                  14

               351 

                        (3)

            2,602 

Profit/(loss) before tax











Reported

            4,487 

          (1,395)

         12,899 

               728 

               705 

               832 

               583 

            1,432 

               (3,213)

         17,058 

Currency translation

                  37

                (77)

              (261)

                     2

                   - 

                (28)

                  83

              (248)

                     (25)

              (517)

Constant currency

            4,524 

          (1,472)

         12,638 

               730 

               705 

               804 

               666 

            1,184 

               (3,238)

         16,541 

Loans and advances to customers (net)











Reported

      245,921 

         86,964 

      473,985 

         19,762 

         54,159 

                   - 

         20,446 

         22,325 

                        (1)

      923,561 

Currency translation

         14,412 

            4,009 

          (2,105)

                  22

                   - 

                   - 

            3,044 

          (1,396)

                          1

         17,987 

Constant currency

      260,333 

         90,973 

      471,880 

         19,784 

         54,159 

                   - 

         23,490 

         20,929 

                        - 

      941,548 

Customer accounts











Reported

      336,086 

      253,075 

      784,236 

         29,893 

      100,404 

                   - 

         25,531 

         41,078 

                        - 

   1,570,303 

Currency translation

         19,697 

         12,400 

          (2,671)

                  35

                   - 

                   - 

            3,802 

          (5,072)

                          1

         28,192 

Constant currency

      355,783 

      265,475 

      781,565 

         29,928 

      100,404 

                   - 

         29,333 

         36,006 

                          1

   1,598,495 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.      

2   Other trading entities includes the results of entities located in Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group's reported profit before tax of $997m and constant currency profit before tax of $840m. Supplementary analysis is provided on page 130 to provide a fuller picture of the MENAT regional performance.

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

Legal entity results: notable items (continued)


20221


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and

Shanghai

Banking

Corporation

Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue











Disposals, acquisitions and related costs2

                   - 

          (2,242)

                      - 

                   - 

                   - 

                   - 

                     - 

                  - 

                     (495)

          (2,737)

Fair value movements on financial instruments3

                   - 

                   - 

                      - 

                   - 

                   - 

                   - 

                     - 

                  - 

                     (618)

              (618)

Restructuring and other related costs4

                     1

              (278)

                      46

                 (13)

                   98

                     1

                   (17)

                  - 

                       (85)

              (247)

Operating expenses











Disposals, acquisitions and related costs

                   - 

                 (18)

                      - 

                   - 

                   - 

                   - 

                     - 

                  - 

                          - 

                (18)

Restructuring and other related costs

              (521)

              (656)

                 (741)

                 (64)

              (421)

                 (87)

                (115)

             (150)

                     (127)

          (2,882)

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.

2     Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.3bn (inclusive of $0.4bn in goodwill impairments) relates to the planned sale of the retail banking operations in France.

3     Fair value movements on non-qualifying hedges in HSBC Holdings.

4     Comprises gains and losses relating to the business update in February 2020, including losses associated with the RWA reduction programme.

Selected countries/territories results (continued)


20221


UK2

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue3






Reported

                17,268 

                15,712 

                   4,104 

                   4,107 

                   2,713 

Currency translation

                      223 

                            8

                     (212)

                          - 

                      370 

Constant currency

                17,491 

                15,720 

                   3,892 

                   4,107 

                   3,083 

ECL






Reported

                     (712)

                 (1,683)

                     (326)

                       (20)

                     (507)

Currency translation

                       (36)

                          (2)

                         16

                          - 

                       (67)

Constant currency

                     (748)

                 (1,685)

                     (310)

                       (20)

                     (574)

Operating expenses






Reported

              (13,232)

                 (7,935)

                 (2,757)

                 (3,438)

                 (1,636)

Currency translation

                     (140)

                          (1)

                      139 

                          - 

                     (221)

Constant currency

              (13,372)

                 (7,936)

                 (2,618)

                 (3,438)

                 (1,857)

Share of profit/(loss) in associates and joint ventures






Reported

                       (41)

                            5

                   2,386 

                          - 

                         12

Currency translation

                            1

                          - 

                     (122)

                          - 

                            2

Constant currency

                       (40)

                            5

                   2,264 

                          - 

                         14

Profit before tax






Reported

                   3,283 

                   6,099 

                   3,407 

                      649 

                      582 

Currency translation

                         48

                            5

                     (179)

                          - 

                         84

Constant currency

                   3,331 

                   6,104 

                   3,228 

                      649 

                      666 

Loans and advances to customers (net)






Reported

             286,032 

             294,580 

                50,481 

                54,159 

                20,446 

Currency translation

                16,763 

                     (626)

                 (1,476)

                          - 

                   3,044 

Constant currency

             302,795 

             293,954 

                49,005 

                54,159 

                23,490 

Customer accounts






Reported

             493,028 

             542,543 

                56,948 

             100,404 

                25,531 

Currency translation

                28,895 

                 (1,153)

                 (1,664)

                          - 

                   3,802 

Constant currency

             521,923 

             541,390 

                55,284 

             100,404 

                29,333 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.

2     UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.



 

Selected countries/territories results: notable items (continued)


20221


UK2

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue






Disposals, acquisitions and related costs

                       (60)

                          - 

                          - 

                          - 

                          - 

Fair value movements on financial instruments3

                     (617)

                          - 

                          - 

                          - 

                          - 

Restructuring and other related costs4

                      407 

                     (124)

                         71

                         99

                       (17)

Operating expenses






Restructuring and other related costs

                 (1,741)

                     (393)

                       (70)

                     (424)

                     (115)

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly.

2     UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

3     Fair value movements on non-qualifying hedges in HSBC Holdings.

4     Comprises gains and losses relating to the business update in February 2020, including losses associated with RWA reduction commitments.

 Legal entity reported and constant currency results (continued)


20211


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and Shanghai Banking Corpo-

ration Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities1

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total


$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue2











Reported

            8,596 

            8,424 

         22,994 

            1,408 

            4,056 

            1,768 

            2,360 

            2,996 

               (3,050)

         49,552 

Currency translation

              (824)

              (737)

              (841)

                     1

                   - 

              (127)

               344 

              (871)

                   (418)

          (3,473)

Constant currency

            7,772 

            7,687 

         22,153 

            1,409 

            4,056 

            1,641 

            2,704 

            2,125 

               (3,468)

         46,079 

ECL











Reported

            1,362 

               239 

              (840)

               142 

               205 

                  37

              (224)

                     2

                          5

               928 

Currency translation

              (128)

                (25)

                  24

                   - 

                   - 

                   (3)

                (36)

                   (3)

                          1

              (170)

Constant currency

            1,234 

               214 

              (816)

               142 

               205 

                  34

              (260)

                   (1)

                          6

               758 

Operating expenses











Reported

          (5,172)

          (7,511)

       (12,999)

              (958)

          (3,683)

          (1,044)

          (1,565)

          (2,066)

                    378 

       (34,620)

Currency translation

               499 

               677 

               471 

                   (1)

                     1

                  75

              (250)

               582 

                    322 

            2,376 

Constant currency

          (4,673)

          (6,834)

       (12,528)

              (959)

          (3,682)

              (969)

          (1,815)

          (1,484)

                    700 

       (32,244)

Share of profit/(loss) in associates and joint ventures











Reported

                   - 

               263 

            2,486 

                   - 

                   - 

                   - 

                  17

               280 

                        - 

            3,046 

Currency translation

                   - 

                (27)

              (214)

                   - 

                   - 

                   - 

                     3

                   - 

                        (1)

              (239)

Constant currency

                   - 

               236 

            2,272 

                   - 

                   - 

                   - 

                  20

               280 

                        (1)

            2,807 

Profit/(loss) before tax











Reported

            4,786 

            1,415 

         11,641 

               592 

               578 

               761 

               588 

            1,212 

               (2,667)

         18,906 

Currency translation

              (453)

              (112)

              (560)

                   - 

                     1

                (55)

                  61

              (292)

                     (96)

          (1,506)

Constant currency

            4,333 

            1,303 

         11,081 

               592 

               579 

               706 

               649 

               920 

               (2,763)

         17,400 

Loans and advances to customers (net)











Reported

      264,624 

      122,954 

      492,523 

         18,623 

         52,678 

         54,226 

         18,043 

         22,142 

                          1

   1,045,814 

Currency translation

       (15,280)

          (4,501)

       (13,319)

                  22

                   - 

          (2,183)

            3,749 

          (3,491)

                          1

       (35,002)

Constant currency

      249,344 

      118,453 

      479,204 

         18,645 

         52,678 

         52,043 

         21,792 

         18,651 

                          2

   1,010,812 

Customer accounts











Reported

      381,482 

      270,975 

      792,099 

         26,802 

      111,921 

         58,071 

         23,583 

         45,643 

                        (2)

   1,710,574 

Currency translation

       (22,028)

       (12,400)

       (16,539)

                  19

                   - 

          (2,338)

            4,900 

          (9,003)

                          2

       (57,387)

Constant currency

      359,454 

      258,575 

      775,560 

         26,821 

      111,921 

         55,733 

         28,483 

         36,640 

                        - 

   1,653,187 

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2   Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.



 

Legal entity results: notable items (continued)


20211


HSBC UK Bank plc

HSBC Bank plc

The Hongkong and

Shanghai

Banking

Corporation

Limited

HSBC Bank Middle East Limited

HSBC North America Holdings Inc.

HSBC Bank Canada

Grupo

Financiero

HSBC, S.A.

de C.V.

Other trading entities

Holding

companies,

shared

service

centres and

intra-Group

eliminations

Total

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Revenue











Fair value movements on financial instruments2

                   - 

                   - 

                      - 

                   - 

                   - 

                   - 

                     - 

                  - 

                     (221)

              (221)

Restructuring and other related costs3

                     4

              (280)

                        1

                     1

                   (6)

                     2

                   (15)

                    2

                       (16)

              (307)

Operating expenses











Impairment of non-financial items

                   - 

                   - 

                      - 

                   - 

                   - 

                   - 

                     - 

                  (1)

                     (586)

              (587)

Restructuring and other related costs

              (356)

              (473)

                 (406)

                 (31)

              (355)

                 (68)

                   (59)

                (78)

                       (10)

          (1,836)

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2     Fair value movements on non-qualifying hedges in HSBC Holdings.

3     Comprises gains and losses relating to the business update in February 2020, including losses associated with the RWA reduction programme.

Selected countries/territories results (continued)


20211


UK2

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue3






Reported

                16,415 

                14,463 

                   3,734 

                   4,006 

                   2,341 

Currency translation

                 (1,571)

                     (101)

                     (340)

                          (1)

                      343 

Constant currency

                14,844 

                14,362 

                   3,394 

                   4,005 

                   2,684 

ECL






Reported

                   1,645 

                     (608)

                       (89)

                      205 

                     (224)

Currency translation

                     (154)

                            3

                         11

                          - 

                       (36)

Constant currency

                   1,491 

                     (605)

                       (78)

                      205 

                     (260)

Operating expenses






Reported

              (14,808)

                 (7,955)

                 (2,773)

                 (3,683)

                 (1,565)

Currency translation

                   1,212 

                         51

                      255 

                            1

                     (250)

Constant currency

              (13,596)

                 (7,904)

                 (2,518)

                 (3,682)

                 (1,815)

Share of profit/(loss) in associates and joint ventures






Reported

                      267 

                         16

                   2,461 

                          - 

                         17

Currency translation

                       (27)

                          - 

                     (213)

                          - 

                            3

Constant currency

                      240 

                         16

                   2,248 

                          - 

                         20

Profit before tax






Reported

                   3,519 

                   5,916 

                   3,333 

                      528 

                      569 

Currency translation

                     (540)

                       (47)

                     (287)

                          - 

                         60

Constant currency

                   2,979 

                   5,869 

                   3,046 

                      528 

                      629 

Loans and advances to customers (net)






Reported

             306,464 

             311,947 

                54,239 

                52,678 

                18,043 

Currency translation

              (17,696)

                     (553)

                 (5,689)

                          - 

                   3,749 

Constant currency

             288,768 

             311,394 

                48,550 

                52,678 

                21,792 

Customer accounts






Reported

             535,797 

             549,429 

                59,266 

             111,921 

                23,583 

Currency translation

              (30,939)

                     (974)

                 (6,217)

                          - 

                   4,900 

Constant currency

             504,858 

             548,455 

                53,049 

             111,921 

                28,483 

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2     UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

3     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

Selected countries/territories results: notable items (continued)


20211


UK2

Hong

Kong

Mainland

China

US

Mexico


$m

$m

$m

$m

$m

Revenue






Fair value movements on financial instruments3

                     (221)

                          - 

                          - 

                          - 

                          - 

Restructuring and other related costs4

                      227 

                       (54)

                         41

                          (9)

                       (15)

Operating expenses






Restructuring and other related costs

                 (1,121)

                     (225)

                       (32)

                     (355)

                       (59)

1     Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2     UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).

3     Fair value movements on non-qualifying hedges in HSBC Holdings.

4     Comprises gains and losses relating to the business update in February 2020, including losses associated with RWA reduction commitments.


Analysis by country/territory

Profit/(loss) before tax by country/territory within global businesses


2023


Wealth and

Personal

Banking

Commercial Banking

Global Banking and Markets

Corporate

Centre

Total


$m

$m

$m

$m

$m

UK1

                     2,415 

                     4,437 

                       (692)

                       (200)

                     5,960 

-  of which: HSBC UK Bank plc (ring-fenced bank)

                     2,754 

                     5,282 

                         144 

                            90 

                     8,270 

-  of which: HSBC Bank plc (non-ring-fenced bank)

                         396 

                         295 

                         121 

                         177 

                         989 

-  of which: Holdings and other

                       (735)

                   (1,140)

                       (957)

                       (467)

                   (3,299)

France

                          (35)

                         235 

                         128 

                            10 

                         338 

Germany

                            44 

                         144 

                         128 

                              4 

                         320 

Switzerland

                            25 

                            29 

                            - 

                              5 

                            59 

Hong Kong

                     6,808 

                     2,970 

                     1,394 

                       (304)

                   10,868 

Australia

                         177 

                         319 

                            85 

                          (15)

                         566 

India

                            56 

                         398 

                         774 

                         289 

                     1,517 

Indonesia

                            23 

                         124 

                            68 

                            (7)

                         208 

Mainland China

                          (90)

                         339 

                         662 

                       (540)

                         371 

Malaysia

                         111 

                         158 

                         219 

                          (21)

                         467 

Singapore

                         233 

                         436 

                         444 

                          (31)

                     1,082 

Taiwan

                            99 

                            72 

                         198 

                            (7)

                         362 

Egypt

                         141 

                            98 

                         303 

                          (11)

                         531 

UAE

                         387 

                         212 

                         377 

                          (83)

                         893 

Saudi Arabia2

                            - 

                            - 

                         118 

                         539 

                         657 

US

                         225 

                         513 

                         111 

                       (398)

                         451 

Canada

                         293 

                         561 

                         120 

                          (96)

                         878 

Mexico

                         317 

                         504 

                            15 

                          (31)

                         805 

Other3

                         315 

                     1,731 

                     1,472 

                         497 

                     4,015 

Year ended 31 Dec 2023

                   11,544 

                   13,280 

                     5,924 

                       (400)

                   30,348 

1     UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies ('ServCo Group').

2   Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

3   Corporate Centre includes the profit and loss impact of inter-company debt eliminations of $571m.



 

Profit/(loss) before tax by country/territory within global businesses (continued)


20221


Wealth and

Personal

Banking

Commercial

 Banking

Global

Banking

and Markets

Corporate

Centre

Total


$m

$m

$m

$m

$m

UK2

                      1,764 

                      2,094 

                        (534)

                          (41)

                      3,283 

-  of which: HSBC UK Bank plc (ring-fenced bank)

                      2,112 

                      2,662 

                         143 

                        (430)

                      4,487 

-  of which: HSBC Bank plc (non-ring-fenced bank)

                         294 

                         315 

                         141 

                        (473)

                         277 

-  of which: Holdings and other

                        (642)

                        (883)

                        (818)

                         862 

                    (1,481)

France3

                    (2,248)

                         210 

                            81

                        (231)

                    (2,188)

Germany

                            17

                               8

                         133 

                        (147)

                            11

Switzerland

                            25

                            17

                            13

                          (30)

                            25

Hong Kong

                      4,435 

                      1,278 

                         955 

                        (568)

                      6,100 

Australia

                         147 

                         180 

                         157 

                          (36)

                         448 

India

                            45

                         304 

                         622 

                         306 

                      1,277 

Indonesia

                               4

                            71

                         100 

                             (8)

                         167 

Mainland China

                        (100)

                         303 

                         526 

                      2,678 

                      3,407 

Malaysia

                         110 

                            89

                         219 

                          (36)

                         382 

Singapore

                         218 

                         255 

                         351 

                          (77)

                         747 

Taiwan

                            36

                            43

                         137 

                          (17)

                         199 

Egypt

                         101 

                            76

                         194 

                             (4)

                         367 

UAE

                         128 

                         107 

                         320 

                          (86)

                         469 

Saudi Arabia4

                            30

                             - 

                            94

                         345 

                         469 

US

                         209 

                         557 

                         270 

                        (387)

                         649 

Canada

                         243 

                         548 

                         140 

                          (89)

                         842 

Mexico

                         241 

                         414 

                            39

                        (112)

                         582 

Other5

                         183 

                      1,039 

                      1,102 

                    (2,502)

                        (178)

Year ended 31 Dec 2022

                      5,588 

                      7,593 

                      4,919 

                    (1,042)

                   17,058 

1   From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for financial year ended 31 December 2022 have been restated accordingly.

2    UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies ('ServCo Group').

3   Includes the impact of goodwill impairment of $425m as a result of the reclassification of our retail banking operations in France to held for sale. At 31 December 2022, HSBC's cash-generating units were based on geographical regions, sub-divided by global businesses.

4   Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

5  Corporate Centre includes the profit and loss impact of inter-company debt eliminations of $1,850m.

Profit/(loss) before tax by country/territory within global businesses (continued)


2021


Wealth and Personal Banking

Commercial

 Banking

Global

Banking

and Markets

Corporate

Centre

Total


$m

$m

$m

$m

$m

UK1

                      1,511 

                      2,475 

                        (487)

                            20

                      3,519 

-  of which: HSBC UK Bank plc (ring-fenced bank)

                      2,047 

                      2,929 

                         127 

                        (318)

                      4,785 

-  of which: HSBC Bank plc (non-ring fenced bank)

                         176 

                         259 

                         220 

                          (17)

                         638 

-  of which: Holdings and other

                        (712)

                        (713)

                        (834)

                         355 

                    (1,904)

France

                         236 

                         163 

                          (97)

                        (133)

                         169 

Germany

                            17

                            82

                         155 

                            67

                         321 

Switzerland

                            46

                            10

                             - 

                          (12)

                            44

Hong Kong

                      4,076 

                      1,303 

                         920 

                        (383)

                      5,916 

Australia

                         146 

                         132 

                         131 

                          (26)

                         383 

India

                            20

                         265 

                         593 

                         232 

                      1,110 

Indonesia

                            14

                            12

                         111 

                             (8)

                         129 

Mainland China

                          (95)

                         288 

                         586 

                      2,554 

                      3,333 

Malaysia

                            37

                          (23)

                         145 

                          (20)

                         139 

Singapore

                         145 

                         107 

                         231 

                          (13)

                         470 

Taiwan

                            14

                            16

                         106 

                             (5)

                         131 

Egypt

                            79

                            42

                         163 

                             (2)

                         282 

UAE

                            91

                               3

                         342 

                          (61)

                         375 

Saudi Arabia2

                            17

                             - 

                            65

                         274 

                         356 

US

                        (131)

                         472 

                         524 

                        (337)

                         528 

Canada

                         141 

                         544 

                         145 

                          (62)

                         768 

Mexico

                         305 

                            88

                         222 

                          (46)

                         569 

Other3

                        (536)

                         698 

                         867 

                        (665)

                         364 

Year ended 31 Dec 2021

                      6,133 

                      6,677 

                      4,722 

                      1,374 

                   18,906 

1     UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies ('ServCo Group').

2   Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

3   Includes the impact of goodwill impairment of $587m. At 31 December 2021, HSBC's cash-generating units were based on geographical regions, sub-divided by global businesses.


Middle East, North Africa and Türkiye supplementary information

The following tables show the results of our Middle East, North Africa and Türkiye business operations on a regional basis (including results of all the legal entities operating in the region and our share of the results of Saudi Awwal Bank). They also show the profit before tax of each of the global businesses.

Middle East, North Africa and Türkiye regional performance




2023

2022


$m

$m

Revenue1

                  3,688 

                   2,936 

Change in expected credit losses and other credit impairment charges

                    (133)

                            8

Operating expenses

                (1,592)

                 (1,586)

Share of profit in associates and joint ventures

                      538 

                      342 

Profit before tax

                  2,501 

                   1,700 

Loans and advances to customers (net)2

                22,766 

                26,475 

Customer accounts2

                40,708 

                43,933 

1     Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

2     In the second quarter of 2023, loans and advances to customers of $2,975m were classified as 'Assets held for sale', and customer accounts of $4,878m were classified as 'Liabilities of disposal groups held for sale' in respect of the planned merger of our business in Oman. The merger was subsequently completed in August 2023.

Profit before tax by global business


2023

2022


$m

$m

Wealth and Personal Banking

                      612 

                      313 

Commercial Banking

                      400 

                      290 

Global Banking and Markets

                  1,104 

                      861 

Corporate Centre

                      385 

                      236 

Total

                  2,501 

                   1,700 


 


Reconciliation of alternative performance measures

 


Contents

130

Use of alternative performance measures

131

Alternative performance measure definitions

133

Return on average ordinary shareholders' equity and return on average tangible equity

133

Net asset value and tangible net asset value per ordinary share

133

Post-tax return and average total shareholders' equity on average total assets

133

Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers

133

Target basis operating expenses

134

Basic earnings per share excluding material notable items and related impacts

134

Multi-jurisdictional client revenue

 

 


Use of alternative performance measures

Our reported results are prepared in accordance with IFRS Accounting Standards as detailed in our financial statements starting on page 329.

As described on page 100, we use a combination of reported and alternative performance measures, including those derived from our reported results that eliminate factors that distort year-on-year comparisons. These are considered alternative performance measures (non-GAAP financial measures).

The following information details the adjustments made to the reported results and the calculation of other alternative performance measures. All alternative performance measures are reconciled to the closest reported performance measure.

On 1 January 2023, HSBC adopted IFRS 17 'Insurance Contracts'. As required by the standard, the Group applied the requirements retrospectively with comparative data previously published under IFRS 4 'Insurance Contracts' restated from the 1 January 2022 transition date.

In addition to the alternative performance measures set out in this section, further alternative performance measures in relation to the Group's insurance manufacturing operations are set out on pages 116 to 117.

 


Alternative performance measure definitions



Return on average ordinary shareholders' equity ('RoE')


Profit attributable to the ordinary shareholders



Average ordinary shareholders' equity






Return on average tangible equity ('RoTE')

Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other intangible assets


Average ordinary shareholders' equity adjusted for goodwill and intangibles






Return on average tangible equity ('RoTE') excluding strategic transactions and impairment of BoCom

Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other intangible assets, the impact of strategic transactions and impairment of BoCom1


Average ordinary shareholders' equity adjusted for goodwill and intangibles, the impact of strategic transactions and impairment of BoCom1






Net asset value per ordinary share


Total ordinary shareholders' equity2



Basic number of ordinary shares in issue excluding treasury shares






Tangible net asset value per ordinary share


Tangible ordinary shareholders' equity3



Basic number of ordinary shares in issue excluding treasury shares






Post-tax return on average total assets


Profit after tax



Average total assets






Average total shareholders' equity on average total assets


Average total shareholders' equity



Average total assets






Expected credit losses and other credit impairment charges ('ECL') as % of average gross loans and advances to customers


Annualised constant currency ECL4


Constant currency average gross loans and advances to customers4





Expected credit losses and other credit impairment charges ('ECL') as % of average gross loans and advances to customers, including held for sale


Annualised constant currency ECL4



Constant currency average gross loans and advances to customers, including held for sale4






Target basis operating expenses


Reported operating expenses excluding notable items, foreign exchange translation and other excluded items5






Basic earnings per share excluding material notable items and related impacts


Profit attributable to ordinary shareholders excluding material notable items and related impacts6


Weighted average number of ordinary shares outstanding, excluding own shares held





Multi-jurisdictional client revenue


Total client revenue we generate from clients that hold a relationship with us that generates revenue in more than one market


1     Excluding the impacts of the sale of our retail banking operations in France, the provisional gain of $1.6bn recognised in respect of the acquisition of SVB UK and the impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom.

2    Total ordinary shareholders' equity is total shareholders' equity less non-cumulative preference shares and capital securities.

3     Tangible ordinary shareholders' equity is total ordinary shareholders' equity excluding goodwill and other intangible assets (net of deferred tax).

4     The constant currency numbers are derived by adjusting reported ECL and average loans and advances to customers for the effects of foreign currency translation differences.

5     Includes impact of re-translating comparative period financial information at the latest rates of foreign exchange in hyperinflationary economies, which we consider to be outside of our control, and the incremental costs associated with our acquisition of SVB UK and related international investments.

6     Excluding the impacts of material M&A transactions, the 2022 deferred tax adjustment in HSBC Holdings and the impairment loss of $3.0bn recognised in 2023 in respect of the Group's investment in BoCom.




 

 


Return on average ordinary shareholders' equity, return on average tangible equity and return on average tangible equity excluding strategic transactions and impairment of BoCom


2023

2022¹

2021


$m

$m

$m

Profit




Profit attributable to the ordinary shareholders of the parent company

             22,432 

            14,346 

             12,607 

Impairment of goodwill and other intangible assets (net of tax)

                      43 

                   535 

                   608 

Decrease/(increase) in PVIF (net of tax)1

                      - 

                      - 

                    (58)

Profit attributable to the ordinary shareholders, excluding goodwill, other

intangible assets impairment and PVIF

             22,475 

            14,881 

             13,157 

Impact of strategic transactions and impairment of BoCom2,3,4

               1,275 

               1,886 

N/A

Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment, strategic transactions and impairment of BoCom

             23,750 

            16,767 

N/A

Equity




Average total shareholders' equity

          184,029 

          180,263 

          199,295 

Effect of average preference shares and other equity instruments

           (18,794)

           (21,202)

           (22,814)

Average ordinary shareholders' equity

          165,235 

          159,061 

          176,481 

Effect of goodwill, other intangibles and PVIF (net of deferred tax)

           (11,480)

           (10,786)

           (17,705)

Average tangible equity

          153,755 

          148,275 

          158,776 

Average impact of strategic transactions and impairment of BoCom

             (1,277)

                   748 

N/A

Average tangible equity excluding strategic transactions and impairment of BoCom

          152,478 

          149,023 

N/A


%

%

%

Ratio




Return on average ordinary shareholders' equity

           13.6    

        9.0         

        7.1         

Return on average tangible equity

           14.6    

           10.0    

        8.3         

Return on average tangible equity excluding strategic transactions and impairment of BoCom

15.6

11.3

N/A

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.

2   Includes the impacts of the sale of our retail banking operations in France.

3   Includes the provisional gain of $1.6bn recognised in respect of the acquisition of SVB UK.

4   Includes the impairment loss of $3.0bn recognised in respect of the Group's investment in BoCom. See Note 18 on page 394.

From 2024, we intend to revise the adjustments made to return on average tangible equity ('RoTE') to exclude all notable items, improving alignment with the treatment of notable items in our other income statement disclosures. On this basis, we continue to target a RoTE in the mid-teens for 2024. If this basis had been adopted for 2023, our RoTE excluding notable items would have been 16.2%.


The following table details the adjustments made to reported results by global business:

Return on average tangible equity by global business


Year ended 31 Dec 2023


Wealth and

Personal

Banking

Commercial

Banking

Global

Banking and

Markets

Corporate

Centre

Total


$m

$m

$m

$m

$m

Profit before tax

                11,544 

                13,280 

                  5,924 

                    (400)

                30,348 

Tax expense

                (2,141)

                (2,945)

                (1,165)

                      462 

                (5,789)

Profit after tax

                  9,403 

                10,335 

                  4,759 

                         62 

                24,559 

Less attributable to: preference shareholders, other equity holders, non-controlling interests

                    (828)

                    (485)

                    (588)

                    (226)

                (2,127)

Profit attributable to ordinary shareholders of the parent company

                  8,575 

                  9,850 

                  4,171 

                    (164)

                22,432 

Other adjustments

                    (221)

                      364 

                      168 

                    (268)

                         43 

Profit attributable to ordinary shareholders

                  8,354 

                10,214 

                  4,339 

                    (432)

                22,475 

Average tangible shareholders' equity

                29,352 

                43,687 

                38,036 

                42,680 

             153,755 

Return on average tangible equity (%)

           28.5    

           23.4    

           11.4    

                        (1.0)

           14.6    



Year ended 31 Dec 2022

Profit before tax

                  5,588 

                  7,593 

                  4,919 

                (1,042)

                17,058 

Tax expense

                (1,150)

                (1,796)

                    (761)                   

                  2,898 

                    (809)                   

Profit after tax

                  4,438 

                  5,797 

                  4,158 

                  1,856 

                16,249 

Less attributable to: preference shareholders, other equity holders, non-controlling interests

                    (688)                   

                    (344)                   

                    (510)                   

                    (362)                   

                (1,903)

Profit attributable to ordinary shareholders of the parent company

                  3,750 

                  5,453 

                  3,648 

                  1,494 

                14,346 

Other adjustments

                      432 

                      328 

                      255 

                    (499)                   

                      515 

Profit attributable to ordinary shareholders

                  4,182 

                  5,781 

                  3,903 

                      995 

                14,861 

Average tangible shareholders' equity

                30,290 

                42,271 

                39,935 

                35,780 

             148,276 

Return on average tangible equity (%)

           13.8    

           13.7    

        9.8         

        2.8         

           10.0    

 


Net asset value and tangible net asset value per ordinary share


2023

2022¹

2021


$m

$m

$m

Total shareholders' equity

          185,329 

          177,833 

          198,250 

Preference shares and other equity instruments

           (17,719)

           (19,746)

           (22,414)

Total ordinary shareholders' equity

          167,610 

          158,087 

          175,836 

Goodwill, PVIF and intangible assets (net of deferred tax)

           (11,900)

           (11,160)

           (17,643)

Tangible ordinary shareholders' equity

          155,710 

          146,927 

          158,193 

Basic number of $0.50 ordinary shares outstanding

             19,006 

            19,739 

             20,073 


$

$

$

Value per share




Net asset value per ordinary share

                  8.82 

                  8.01 

                  8.76 

Tangible net asset value per ordinary share

                  8.19 

                  7.44 

                  7.88 

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. We have restated 2022 comparative data.


Post-tax return and average total shareholders' equity on average total assets


2023

2022¹

2021


$m

$m

$m

Profit after tax

             24,559 

            16,249 

             14,693 

Average total shareholders' equity

          184,029 

          180,263 

          199,295 

Average total assets

      3,059,887  

      3,017,495 

       3,012,437 





Ratio

%

%

%

Post-tax return on average total assets

        0.8         

        0.5         

        0.5         

Average total shareholders' equity to average total assets

           6.01    

           5.97    

           6.62    

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.


Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit

losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale


2023

2022¹

2021


$m

$m

$m

Expected credit losses and other credit impairment charges ('ECL')

                (3,447)

                 (3,584)

                      928 

Currency translation

                         - 

                       (46)

                     (170)

Constant currency

                (3,447)

                 (3,630)

                      758 

Average gross loans and advances to customers

             955,585 

          1,014,148 

          1,057,412 

Currency translation

                11,629 

                   6,701 

              (43,098)

Constant currency

             967,214 

          1,020,849 

          1,014,314 

Average gross loans and advances to customers, including held for sale

         1,020,992  

          1,035,678 

          1,058,947 

Currency translation

                12,688 

                   7,837 

              (43,098)

Constant currency

         1,033,680  

          1,043,515 

          1,015,849 





Ratio

%

%

%

Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers

           0.36    

           0.36    

                        (0.07)

Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale

           0.33    

           0.35    

                        (0.07)

1     From 1 January 2023, we adopted IFRS 17 'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.


Target basis operating expenses


Target basis operating expenses is computed by excluding the impact of notable items and foreign exchange translation impacts from reported results. We also exclude the impact of retranslating comparative period financial information at the latest rates of foreign exchange in hyperinflationary economies, which we consider to be outside of our control. Our target basis also excludes the impact of

the acquisition of SVB UK and related investments internationally, which added approximately 1% to our cost growth in 2023 compared with 2022. We consider this measure to provide useful information to investors by quantifying and excluding the notable items that management considered when setting and assessing cost-related targets.


Target basis operating expenses


2023

2022


$m

$m

Reported operating expenses

               32,070 

               32,701 

Notable items

                   (185)

                (2,900)

Disposals, acquisitions and related costs

                   (321)

                       (18)

Impairment of non-financial items

                         - 

                         - 

Restructuring and other related costs1

                      136 

                (2,882)

Excluding the impact of SVB UK and related international investments

                   (271)

                          - 

Currency translation2


                    (430)

Excluding the impact of retranslating prior year costs of hyperinflationary economies at a constant currency foreign exchange rate


                      440 

Target basis operating expenses

               31,614 

               29,811 

1     Amounts in 2023 relate to reversals of restructuring provisions recognised during 2022.

2   Currency translation on reported operating expenses, excluding currency translation on notable items.


Basic earnings per share excluding material notable items and related impacts


Material notable items are a subset of notable items. Material notable items are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature, which are excluded from our dividend payout ratio calculation and our earnings per share measure, along with related impacts. Categorisation as a material notable item is dependent on the nature of each item in conjunction with the financial impact on the Group's income statement.

Related impacts include those items that do not qualify for designation as notable items but whose adjustment is considered by management to be appropriate for the purposes of determining the basis for our dividend payout ratio calculation.

In 2023, material notable items comprised the impacts of the sale of our retail banking operations in France, the planned sale of our

banking business in Canada, the acquisition of SVB UK and the impairment of BoCom. The impairment of BoCom is included within material notables given that the impairment relates to the accounting assessment of the future value-in-use. The impairment has no material impact on our distribution capacity, dividends or share buy-backs. Related items comprised HSBC Bank Canada's financial results from the 30 June 2022 net asset reference date onwards, as a component of the gain on sale will be recognised through the consolidation of HSBC Bank Canada's results in the Group's results, with the remainder recognised at completion.

Commencing in 2024, we will establish a dividend payout ratio on a 'target basis'. We will disclose at each quarter the adjustments that we will designate as material notable items and related impacts.


Basic earnings per share excluding material notable items and related impacts


20231


$m

Profit attributable to shareholders of company

                 23,533 

Coupon payable on capital securities classified as equity

                      (1.1)

Profit attributable to ordinary shareholders of company

                      22.4

Impairment of interest in associate2

                         3.0

Provisional gain on acquisition of SVB UK

                      (1.5)

Impairment loss relating to the sale of our retail banking operations in France (net of tax)

                         0.1

Impact of the planned sale of our banking business in Canada3

                      (0.3)

Profit attributable to ordinary shareholders of company excluding material notable items and related impacts

                      23.7



Number of shares


Weighted average basic number of ordinary shares (millions)

                 19,478

Basic earnings per share excluding material notable items and related impacts

                      1.22

Basic earnings per share 

                      1.15

Dividend per ordinary share (in respect of the period) ($)

                      0.61

Dividend payout ratio (%) (dividend per ordinary share divided by basic earnings per share excluding material notable items and related impacts)

                                                  50%                       

1     In 2023, earnings per share ('EPS') was adjusted for material notable items and related impacts. 2022 comparatives have not been provided due to the change our reporting framework and restatement due to the adoption of the IFRS 17. See our Annual Report and Accounts 2022 for details of the impacts of adjustments to our EPS in 2022.

2     Represents an impairment loss of $3bn recognised in respect of the Group's investment in BoCom. See Note 18 on page 392.

3   Represents the earnings recognised by the banking business in Canada, net of gains and losses on foreign exchange hedges held at Group level, that will reduce the gain on sale recognised by the Group on completion.


Multi-jurisdictional revenue

Multi-jurisdictional revenue is a financial metric we use to assess our ability to drive value from our international network.

In our wholesale businesses, we identify a client as multi-jurisdictional if they hold a relationship with us that generates revenue in any market outside of where the primary relationship is managed. A client is defined as a mastergroup (HSBC's own client groupings) that includes both the parent and, where relevant, any subsidiaries.

Multi-jurisdictional client revenue is a component of wholesale client revenue and represents the total client revenue we generate from multi-jurisdictional clients. Wholesale client revenue is derived by excluding from CMB and GBM reported revenue the revenue we generate from client facilitation in fixed income and equities, the 2023 provisional gain on the acquisition of SVB UK, as well as other non-client revenue.

In WPB, we identify a customer as multi-jurisdictional if they bank with us in more than one of our 11 key markets. It is derived by excluding from WPB reported revenue the revenue from Canada and our retail business in France, as well as other non-customer income.

Wholesale multi-jurisdictional client revenue


2023


$bn

CMB and GBM revenue

                     39.0 

Allocated revenue and other1

                        0.9 

Client facilitation in Fixed Income and Equities

                     (4.8)

Provisional gain on acquisition of SVB UK

                     (1.6)

Wholesale client revenue

                     33.5 

- clients banked in multiple jurisdictions ('multi-jurisdictional')

                     20.4 

- domestic only clients

                     13.1 


 

WPB multi-jurisdictional customer revenue


2023


$bn

WPB revenue

                     27.3 

Allocated revenue and other1

                     (0.5)

France retail and Canada

                     (1.4)

WPB customer revenue

                     25.4 

- international customer revenue

                     10.2 

of which: customers banked in multiple jurisdictions ('multi-jurisdictional')

                        5.3 

of which: non-resident and resident foreigner

                        4.9 

- domestic only clients

                     15.2 

1  including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital held in the global businesses.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
UK 100

Latest directors dealings