Annual Financial Report - Part 4

RNS Number : 5813Q

HSBC Holdings PLC

21 February 2023

 

Financial review

The financial review gives detailed reporting of our financial performance at Group level as well as across our different global businesses and geographical regions.

98   Financial summary

110   Global businesses and geographical regions

129   Reconciliation of alternative performance measures

Pioneering a sustainable supply chain finance programme

In June 2022, we worked closely with US-based fashion group PVH Corp. to launch the first sustainable supply chain finance programme tied to environmental and social objectives, and based on suppliers' sustainability ratings.

The programme provides the company's global suppliers with access to critical funding based on a set of science-based environmental targets, as well as a series of social elements, including a healthy and safe working environment, compensation and benefits, and employment issues, such as forced labour, child labour, and harassment and abuse.

Sustainable supply chain finance supports leading companies and key sectors like the apparel industry to help ensure progress is made towards their targets and commitments.

Financial summary

Contents

98	Use of alternative performance measures
98	Changes to presentation from 1 January 2022
98	Changes to presentation from 1 January 2023
99	Future accounting developments
99	Critical accounting estimates and judgements
100	Consolidated income statement
101	Income statement commentary
105	Consolidated balance sheet

Use of alternative performance measures

Our reported results are prepared in accordance with IFRSs as detailed in the financial statements starting on page 324.

To measure our performance, we supplement our IFRSs figures with non-IFRSs 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 'adjusted 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 128. All alternative performance measures are reconciled to the closest reported performance measure.

The global business segmental results are presented on an adjusted basis in accordance with IFRS 8 'Operating Segments' as detailed in Note 10 'Segmental analysis' on page 360.

Adjusted performance

Adjusted performance is computed by adjusting reported results for the effects of foreign currency translation differences and significant items, which both distort year-on-year comparisons.

We consider that adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believes to be significant, and providing insight into how management assesses year-on-year performance.

Management does not assess forward-looking reported operating expenses as a target of the business, and therefore a reconciliation of the adjusted operating expenses target to an equivalent IFRS measure is not available without unreasonable efforts.

Significant items

'Significant items' refers collectively to the items that management and investors would ordinarily identify and consider separately to improve the understanding of the underlying trends in the business.

The tables on pages 109 to 112 and pages 119 to 124 detail the effects of significant items on each of our global business segments, geographical regions and selected countries/territories in 2022, 2021 and 2020.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies during 2022.

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 Foreign currency translation differences for 2022 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates: • the income statements for 2021 and 2020 at the average rates of exchange for 2022; and • the balance sheets at 31 December 2021 and 31 December 2020 at the prevailing rates of exchange on 31 December 2022. 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 has 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 has not been adjusted further for the impacts of hyperinflation. When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC's operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.

Changes to presentation from 1 January 2022

Application of IAS 29 'Financial Reporting in Hyperinflationary Economies'

Since 1 June 2022, Türkiye has been deemed a hyperinflationary economy for accounting purposes. The results of HSBC's operations with a functional currency of the Turkish lira have been prepared in accordance with IAS 29 'Financial Reporting in Hyperinflationary Economies' as if the economy had always been hyperinflationary. The results of those operations for the 12-month period ended 31 December 2022 are stated in terms of current purchasing power using the Türkiye Consumer Price Index ('CPI') at 31 December 2022 with the corresponding adjustment presented in the consolidated statement of comprehensive income. In accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates', the results have been translated and presented in US dollars at the prevailing rates of exchange on 31 December 2022. The Group's comparative information presented in US dollars with respect to the 12-month periods ended 31 December 2021 and 31 December 2020 has not been restated. Argentina remains a hyperinflationary economy for accounting purposes. The impact of applying IAS 29 and the hyperinflation provisions of IAS 21 in the current period for both Türkiye and Argentina was a decrease in the Group's profit before tax of $548m, comprising a decrease in revenue of $541m (including a loss of net monetary position of $543m) and an increase in ECL and operating expenses of $7m. The CPI at 31 December 2022 for Türkiye was 1,047 (movement 2022: 359.94) and for Argentina was 1,147 (movement 2022: 563.92, 2021: 197.47).

Changes to presentation from 1 January 2023

Foreign currency and notable items

From 1 January 2023, 'adjusted performance' will no longer exclude the impact of significant items. Rather it will be computed by adjusting reported results only for the effects of foreign currency translation differences between periods to enable users to understand the impact this has had on the Group's performance. We will separately disclose 'notable items', which are components of our income statement which management and investors would consider as outside the normal course of business and generally non-recurring in nature. We will recalibrate applicable targets and guidance to reflect the impact of these changes, as well as the impact on our targets following the implementation of IFRS 17 'Insurance Contracts', and intend to communicate these as part of our first quarter results in May 2023.

Reporting by legal entity

From 1 January 2023, the Group will no longer present results by geographical regions. We will instead report performance by our main legal entities to better reflect the Group's structure.

Future accounting developments

IFRS 17 'Insurance Contracts'

IFRS 17 'Insurance Contracts' was issued in May 2017, with amendments to the standard issued in June 2020 and December 2021. Following the amendments, IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2023 and is applied retrospectively, with comparatives restated from 1 January 2022.

On the basis of the implementation work performed to date, our current assumption remains that the accounting changes will result in a reduction in the earnings of our insurance business by approximately two thirds on transition to IFRS 17, albeit within a range of expected outcomes and before the effect of market impacts in specific periods. Unlike current accounting where market impacts and changes in assumptions are reported immediately in profit or loss, under IFRS 17 these are primarily accumulated with the contractual service margin ('CSM') and recognised in profit or loss over the remaining life of the contracts. While IFRS 17 changes the timing of profit recognition, there is no impact to the underlying economics of the insurance business, including solvency, capital and cash generation.

Results of work performed to date on the half-year to 30 June 2022 IFRS17 comparatives indicate there would be a likely reduction to reported profit before tax for our insurance manufacturing operations from $0.6bn under IFRS 4, to approximately $0.3bn under IFRS 17. IFRS 4 based profit before tax included negative market impacts of $0.7bn and a $0.3bn specific pricing update for policyholder funds held on deposit with us in Hong Kong. The consolidated Group insurance accounting considers the effect of eliminating intra-group distribution fees between insurance manufacturing and non-insurance Group entities, and instead includes the costs of selling insurance contracts incurred by such entities within the Group CSM. These factors generate a further impact on the 30 June 2022 Group IFRS 17 profit before tax of negative $0.1bn, in addition to the impact on insurance manufacturing operations.

We also anticipate some impact on selected key Group metrics. We expect an estimated reduction of approximately $1.1bn to the first half of 2022 Group net interest income due to the reclassification of assets supporting policyholder liabilities from amortised cost to fair value through profit and loss classification, following which the associated interest income will be included within the 'net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss' line item. Group operating expenses are expected to reduce by approximately $0.3bn as a result of the IFRS 17 requirement for directly attributable costs to be included in the CSM and recognised within the insurance service result line, within revenue.

These estimates are based on accounting policies, assumptions, judgements and estimation techniques that remain subject to change.

Critical accounting 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 significant accounting policies, including the policies which include critical accounting 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, and making assumptions and estimates to incorporate relevant information about late-breaking and past events, current conditions and forecasts of economic conditions. 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 341.

• Deferred tax assets: The most significant judgements relate to those made in respect of recoverability, which is based on expected future profitability. See Note 1.2(l) on page 346.

• 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 339.

• Impairment of investment in subsidiaries: Impairment testing 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 HSBC Holdings' investment in HSBC North America Holdings Limited and HSBC Bank Bermuda Limited. See Note 1.2(a) on page 337.

• Impairment of interests in associates: Impairment testing 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 337.

• 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 337.

• 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 346.

• 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 345.

• Non-current assets and disposal groups held for sale: Management judgement is required on 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 347.

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.

Consolidated income statement

Summary consolidated income statement
	2022	2021	2020	2019	2018
	$m	$m	$m	$m	$m
Net interest income	32,610	26,489	27,578	30,462	30,489
Net fee income	11,451	13,097	11,874	12,023	12,620
Net income from financial instruments held for trading or managed on a fair value basis	10,469	7,744	9,582	10,231	9,531
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	(3,394)	4,053	2,081	3,478	(1,488)
Change in fair value of designated debt and related derivatives1	(77)	(182)	231	90	(97)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	226	798	455	812	695
Gains less losses from financial investments	(3)	569	653	335	218
Net insurance premium income	12,825	10,870	10,093	10,636	10,659
Impairment loss relating to the planned sale of our retail banking operations in France2	(2,378)	-	-	-	-
Other operating income/(loss)	(133)	502	527	2,957	960
Total operating income	61,596	63,940	63,074	71,024	63,587
Net insurance claims and benefits paid and movement in liabilities to policyholders	(9,869)	(14,388)	(12,645)	(14,926)	(9,807)
Net operating income before change in expected credit losses and other credit impairment charges3	51,727	49,552	50,429	56,098	53,780
Change in expected credit losses and other credit impairment charges	(3,592)	928	(8,817)	(2,756)	(1,767)
Net operating income	48,135	50,480	41,612	53,342	52,013
Total operating expenses excluding impairment of goodwill and other intangible assets	(33,183)	(33,887)	(33,044)	(34,955)	(34,622)
Impairment of goodwill and other intangible assets	(147)	(733)	(1,388)	(7,394)	(37)
Operating profit	14,805	15,860	7,180	10,993	17,354
Share of profit in associates and joint ventures	2,723	3,046	1,597	2,354	2,536
Profit before tax	17,528	18,906	8,777	13,347	19,890
Tax expense	(858)	(4,213)	(2,678)	(4,639)	(4,865)
Profit for the year	16,670	14,693	6,099	8,708	15,025
Attributable to:
-  ordinary shareholders of the parent company	14,822	12,607	3,898	5,969	12,608
-  preference shareholders of the parent company	-	7	90	90	90
-  other equity holders	1,213	1,303	1,241	1,324	1,029
-  non-controlling interests	635	776	870	1,325	1,298
Profit for the year	16,670	14,693	6,099	8,708	15,025

Five-year financial information
	2022	2021	2020	2019	2018
	$	$	$	$	$
Basic earnings per share	0.75	0.62	0.19	0.30	0.63
Diluted earnings per share	0.74	0.62	0.19	0.30	0.63
Dividends per ordinary share (paid in the period)4	0.27	0.22	-	0.51	0.51
	%	%	%	%	%
Dividend payout ratio5	44	40	79	100	81
Post-tax return on average total assets	0.6	0.5	0.2	0.3	0.6
Return on average ordinary shareholders' equity	8.7	7.1	2.3	3.6	7.7
Return on average tangible equity	9.9	8.3	3.1	8.4	8.6
Effective tax rate	4.9	22.3	30.5	34.8	24.5

1  The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch.

2  Includes impairment of goodwill of $425m.

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

4  Includes an interim dividend of $0.09 per ordinary share in respect of the financial year ending 31 December 2022, paid in September 2022, and an interim dividend of $0.18 per ordinary share in respect of the financial year ending 31 December 2021, paid in April 2022.

5  Dividend per share, in respect of the period, as a percentage of earnings per share adjusted for certain items (recognition of certain deferred tax assets: $0.11 reduction in EPS; planned sales of the retail banking operations in France and banking business in Canada: $0.09 increase in EPS). No items were adjusted in 2021, 2020, 2019 or 2018.

Unless stated otherwise, all tables in the Annual Report and Accounts 2022 are presented on a reported basis.

For a summary of our financial performance in 2022, see page 28.

For further financial performance data for each global business and geographical region, see pages 109 to 112 and 117 to 127 respectively. The global business segmental results are presented on an adjusted basis in accordance with IFRS 8 'Operating Segments', in Note 10: Segmental analysis on page 360.

Income statement commentary

The following commentary compares Group financial performance for the year ended 2022 with 2021.

Net interest income

	Year ended			Quarter ended
	31 Dec	31 Dec	31 Dec	31 Dec	30 Sep	31 Dec
	2022	2021	2020	2022	2022	2021
	$m	$m	$m	$m	$m	$m
Interest income	55,059	36,188	41,756	19,548	14,656	9,219
Interest expense	(22,449)	(9,699)	(14,178)	(9,970)	(6,075)	(2,438)
Net interest income	32,610	26,489	27,578	9,578	8,581	6,781
Average interest-earning assets	2,203,639	2,209,513	2,092,900	2,178,281	2,170,599	2,251,433
	%	%	%	%	%	%
Gross interest yield1	2.50	1.64	2.00	3.56	2.68	1.62
Less: gross interest payable1	(1.24)	(0.53)	(0.81)	(2.21)	(1.36)	(0.52)
Net interest spread2	1.26	1.11	1.19	1.35	1.32	1.10
Net interest margin3	1.48	1.20	1.32	1.74	1.57	1.19

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

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

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

Summary of interest income by type of asset
	2022			2021			2020
	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	446,178	5,596	1.25	450,678	1,105	0.25	298,255	1,264	0.42
Loans and advances to customers	1,023,606	32,607	3.19	1,060,658	26,071	2.46	1,046,795	29,391	2.81
Reverse repurchase agreements - non-trading	231,052	4,886	2.11	206,246	1,019	0.49	221,901	1,819	0.82
Financial investments	430,327	9,836	2.29	438,840	6,729	1.53	463,542	8,143	1.76
Other interest-earning assets	72,476	2,134	2.94	53,091	1,264	2.38	62,407	1,139	1.83
Total interest-earning assets	2,203,639	55,059	2.50	2,209,513	36,188	1.64	2,092,900	41,756	2.00

Summary of interest expense by type of liability
	2022			2021			2020
	Average balance	Interest expense	Cost	Average balance	Interest expense	Cost	Average balance	Interest expense	Cost
	$m	$m	%	$m	$m	%	$m	$m	%
Deposits by banks1	75,739	770	1.02	75,671	198	0.26	65,536	330	0.50
Customer accounts2	1,342,342	10,903	0.81	1,362,580	4,099	0.30	1,254,249	6,478	0.52
Repurchase agreements - non-trading	118,309	3,085	2.61	114,201	363	0.32	125,376	963	0.77
Debt securities in issue - non-trading	179,814	5,608	3.12	193,137	3,603	1.87	219,610	4,944	2.25
Other interest-bearing liabilities	87,719	2,083	2.37	70,929	1,436	2.02	76,395	1,463	1.92
Total interest-bearing liabilities	1,803,923	22,449	1.24	1,816,518	9,699	0.53	1,741,166	14,178	0.81

1  Including interest-bearing bank deposits only.

2  Including interest-bearing customer accounts only.

Net interest income ('NII') for 2022 was $32.6bn, an increase of $6.1bn or 23% compared with 2021. The increase reflected the benefit of rising global interest rates, while actively managing our pricing strategy and funding requirements, with growth in all regions, notably in Asia and the UK.

Excluding the unfavourable impact of foreign currency translation differences, net interest income increased by $7.7bn or 31% .

NII for the fourth quarter was $9.6bn, up 41% compared with the previous year, and 12% compared with the previous quarter. This was driven by higher interest rates and management of our funding costs, with growth in all regions, notably in Asia and the UK.

Net interest margin ('NIM') for 2022 of 1.48% was up 28 basis points ('bps') compared with 2021, as the gross yield on AIEA improved by 86bps in the high interest rate environment. This was partly offset by the rise in the funding cost of average interest-bearing liabilities of 71bps. Excluding the adverse impact of foreign currency translation differences, net interest income increased by 29bps.

NIM for the fourth quarter of 2022 was 1.74%, up 55bps year on year, and up 17bps compared with the previous quarter, predominantly driven by the impact of higher market interest rates.

Interest income for 2022 of $55.1bn increased by $18.9bn or 52%, primarily due to higher average interest rates compared with 2021, as the yield on AIEA rose by 86bps, mainly driven by loans and advances to customers, short-term funds, loans and advances to banks, and reverse repurchase agreements. However, mortgage yields rose more modestly due to competitive pressures and market factors in the UK and Hong Kong. The increase in interest income included adverse effects of foreign currency translation differences of $2.2bn. Excluding this, interest income increased by $21.1bn.

Interest income of $19.5bn in the fourth quarter was up $10.3bn year on year, and up $4.9bn from the previous quarter. The increase was driven by the impact of higher interest rates, resulting in improved yields on loans and advances to customers and reverse repurchase agreements.

Interest expense for 2022 of $22.4bn increased by $12.8bn or 131% compared with 2021. This reflected the increase in funding cost of 71bps, mainly arising from higher interest rates paid on interest-bearing customer accounts, repurchase agreements and debt securities in issue. The increase in interest expense included the favourable effects of foreign currency translation differences of $0.6bn. Excluding this, interest expense increased by $13.4bn.

Included within net interest income in 2022 is a $2.5bn interest expense representing a component of centrally allocated funding costs associated with generating 'net income from financial instruments held for trading or managed on a fair value basis'. This compared with an interest expense of $0.4bn in 2021.

Interest expense of $10.0bn in the fourth quarter of 2022 was up $7.5bn year on year, and up $3.9bn compared with the previous quarter. The steep rise in interest expense was mainly driven by higher funding cost on customer accounts as interest rates increased, particularly in Asia and Europe.

Net fee income of $11.5bn was $1.6bn lower than in 2021, and included an adverse impact from foreign currency translation differences of $0.6bn. Net fee income fell in WPB and GBM, although it increased in CMB.

In WPB, net fee income decreased by $0.9bn. The reduction was mainly in Wealth, as adverse market sentiment resulted in lower customer demand, mainly in Hong Kong. Fee income fell due to lower sales of unit trusts and from subdued customer demand in funds under management, as well as from lower broking income. Cards income grew as spending increased compared with 2021. This also resulted in higher fee expense.

In GBM, net fee income decreased by $0.8bn. This was driven by lower fee income from underwriting, in line with the reduction in the global fee pool. Fee income also decreased in credit facilities and in corporate finance, reflecting subdued client demand.

In CMB, net fee income increased by $0.1bn. Fee income grew in cards, as spending increased compared with 2021, and in account services, reflecting greater client activity in transaction banking, notably Global Payments Solutions ('GPS').

Net income from financial instruments held for trading or managed on a fair value basis of $10.5bn was $2.7bn higher compared with 2021. This primarily reflected a strong trading performance in Global Foreign Exchange due to increased client activity, driven by elevated levels of market volatility.

This was partly offset by adverse fair value movements on non-qualifying hedges of $0.5bn.

Net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss of $3.4bn compared with a net income of $4.1bn in 2021. This reduction primarily reflected unfavourable equity market performances in Hong Kong and France. This compared with 2021, which benefited from favourable equity markets.

This adverse movement resulted in a corresponding movement in liabilities to policyholders and the present value of in-force long-term insurance business ('PVIF') (see 'Other operating income/expense'). This reflected the extent to which the policyholders and shareholders respectively participate in the investment performance of the associated assets.

Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss of $0.2bn was $0.6bn lower compared with 2021. This primarily reflected lower revaluation gains in our Principal Investments business in GBM.

Gains less losses from financial investments of $3m were $0.6bn lower compared with 2021, reflecting lower gains on the disposal of debt securities.

Net insurance premium income of $12.8bn was $2.0bn higher than in 2021, primarily reflecting higher sales volumes, particularly in Hong Kong, which had a higher proportion of single premium products in its product mix, as well as in Singapore following our acquisition of AXA Insurance Pte Limited.

Impairment loss relating to the sale of the retail banking operations in France was $2.4bn. 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 $2.4bn, which included impairment of goodwill of $0.4bn and related transaction costs.

Other operating income/expense was an expense of $0.1bn compared with an income of $0.5bn in 2021, and included an adverse impact from foreign currency translation differences of $0.4 bn. The reduction also reflected losses of $0.4bn related to the planned sales of our branch operations in Greece and our business in Russia, as well as the non-recurrence of a prior year gain on the sale of a property in Germany. These reductions were partly offset by a gain of $0.1bn on the completion of our acquisition of AXA Singapore and a favourable change in PVIF of $0.2bn.

The favourable change in PVIF included a $0.2bn increase in the value of new business, notably in Hong Kong, a $0.5bn favourable impact from sharing lower investment returns with policyholders, and a $0.3bn gain following a pricing update for our policyholders' funds held on deposit with us in Hong Kong to reflect the cost to provide this service. These factors were partly offset by a $0.7bn reduction from assumption changes, primarily reflecting the impact of higher interest rates in Hong Kong.

PVIF is presented in accordance with IFRS 4 'Insurance Contracts'. As set out on page 335, IFRS 17 'Insurance Contracts' is effective from 1 January 2023. Under IFRS 17, there will be no PVIF asset recognised. Instead, the estimated future profit will be included in the measurement of the insurance contract liability as the contractual service margin and gradually recognised in revenue as services are provided over the duration of the insurance contract.

Net insurance claims and benefits paid and movement in liabilities to policyholders was $4.5bn lower, primarily in France and Hong Kong due to a reduction in returns on financial assets supporting contracts where the policyholder is subject to part or all of the investment risk. This was in part mitigated by higher sales volumes in Hong Kong.

Change in expected credit losses and other credit impairment charges ('ECL') were a charge of $3.6bn, compared with a net release of $0.9bn in 2021.

The charges in 2022 reflected stage 3 charges of $2.2bn, in part relating to exposures to the commercial real estate sector in mainland China. We also recognised stage 1 and stage 2 charges in all global businesses, reflecting a deterioration in the macroeconomic environment, with many markets experiencing increased interest rates, continued inflation, supply chain risks and heightened recessionary risks. These economic conditions also contributed to the increase in stage 3 charges, mainly in CMB and GBM. These increases were in part mitigated by the release of most of our remaining Covid-19-related allowances.

The charge in 2022 compared with a net release in 2021, primarily relating to Covid-19-related allowances previously built up in 2020.

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 153 to 162.

Operating expenses - currency translation and significant items
	Year ended
	2022	2021
	$m	$m
Significant items	2,864	2,335
-  customer redress programmes	(31)	49
-  disposals, acquisitions and investment in new businesses	18	-
-  impairment of goodwill and other intangibles	(4)	587
-  restructuring and other related costs	2,881	1,836
-  currency translation on significant items		(137)
Currency translation		2,181
Year ended 31 Dec	2,864	4,516

Operating expenses
	Year ended
	2022	2021
	$m	$m
Gross employee compensation and benefits	19,288	19,612
Capitalised wages and salaries	(922)	(870)
Goodwill impairment	-	587
Property and equipment	5,005	5,145
Amortisation and impairment of intangibles	1,716	1,438
UK bank levy1	13	116
Legal proceedings and regulatory matters	246	106
Other operating expenses2	7,984	8,486
Total operating expenses (reported)	33,330	34,620
Total significant items (including currency translation on significant items)	(2,864)	(2,335)
Currency translation		(2,181)
Total operating expenses (adjusted)	30,466	30,104

1  The UK bank levy charge for the year ended 2022 includes adjustments made to prior period UK bank levy charges recognised in the current year.

2  Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel. The decrease was driven by favourable currency translation movements, partly offset by higher costs related to our cost reduction programme.

Staff numbers (full-time equivalents)1
	2022	2021	2020
Global businesses
Wealth and Personal Banking	128,764	130,185	135,727
Commercial Banking	43,640	42,969	43,221
Global Banking and Markets	46,435	46,166	46,729
Corporate Centre	360	377	382
At 31 Dec	219,199	219,697	226,059

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 $33.3bn were $1.3bn or 4% lower than in 2021, primarily as foreign currency translation differences resulted in a favourable impact of $2.2bn, and due to the non-recurrence of a 2021 goodwill impairment of $0.6bn related to our WPB business in Latin America.

Reported operating expenses also reflected the impact of ongoing cost discipline across the Group. This helped mitigate growth from increased investment in technology of $0.5bn, which included investments in our digital capabilities, the impact of business volume growth, and inflation. Restructuring and other related costs increased by $1.0bn.

In 2022, cost to achieve spend, included within restructuring and other related costs, was $2.9bn. This three-year programme ended on 31 December 2022 with a total spend of $6.5bn and cumulative gross saves realised of $5.6bn. We expect additional gross cost savings of approximately $1bn to be delivered in 2023 due to actions taken in 2022.

The number of employees expressed in full-time equivalent staff ('FTE') at 31 December 2022 was 219,199, a decrease of 498 compared with 31 December 2021. The number of contractors at 31 December 2022 was 6,047, a decrease of 145.

Share of profit in associates and joint ventures of $2.7bn was $0.3bn lower, primarily as 2021 included a higher share of profit from Business Growth Fund in the UK due to the recovery in asset valuations. This was partly offset by an increase in the share of profit from The Saudi British Bank.

In relation to Bank of Communications Co., Limited ('BoCom'), we continue to be subject to a risk of impairment in the carrying value of our investment. We have performed an impairment test on the carrying amount of our investment and confirmed there was no impairment at 31 December 2022.

For more information, see Note 18: Interests in associates and joint ventures on page 379.

Tax expense
	Year ended
	2022	2021
	$m	$m
Reported tax charge	858	4,213
Currency translation		(279)
Tax significant items	3,429	307
-  tax credit on significant items	1,118	328
-  recognition of losses	2,330	(4)
-  uncertain tax positions	(19)	-
-  currency translation		(17)
Adjusted tax charge	4,287	4,241

Tax expense

The effective tax rate for 2022 of 4.9% was lower than the 22.3% in 2021. Tax in 2022 included a $2.2bn credit arising from the recognition of a deferred tax asset from historical tax losses in HSBC Holdings, which was recognised as a significant item. This was a result of improved profit forecasts for the UK tax group, which accelerated the expected utilisation of these losses and reduced uncertainty regarding their recoverability. We also benefited from other deferred tax asset reassessments during 2022. Excluding these, the effective tax rate for 2022 was 19.2%, which was 3.1 percentage points lower than in 2021. The effective tax rate for 2022 was also decreased by the remeasurement of deferred tax balances following the substantive enactment in the first quarter of 2022 of legislation to reduce the rate of the UK banking surcharge from 8% to 3% from 1 April 2023.

Supplementary table for planned disposals

The income statements and selected balance sheet metrics for the year ended 31 December 2022 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 2022.

Income statement and selected balance sheet metrics of disposal groups held for sale
	Year ended 2022
	Canada1	France retail2
	$bn	$bn
Revenue	1.9	0.6
ECL	(0.1)	-
Operating expenses3	(1.0)	(0.5)
Profit before tax	0.8	0.1
Loans and advances to customers	55.2	25.0
Customer accounts	60.6	22.3
RWA4	31.9	5.0

1  Under the terms of the sale agreement, the pre-tax profit on the 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 retail banking business, HSBC SFH and associated supporting services. For more information, see Note 23: Assets held for sale and liabilities of disposal groups held for sale on page 389.

3  Includes $0.3bn in Canada and $0.1bn in France retail in respect of Group recharges and other costs not transferring as part of the planned transactions.

4  Includes $3.0bn in Canada and $0.9bn in France retail in respect of operational risk RWAs.

Consolidated balance sheet

Five-year summary consolidated balance sheet
	2022	2021	2020	2019	2018
	$m	$m	$m	$m	$m
Assets
Cash and balances at central banks	327,002	403,018	304,481	154,099	162,843
Trading assets	218,093	248,842	231,990	254,271	238,130
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	45,063	49,804	45,553	43,627	41,111
Derivatives	284,146	196,882	307,726	242,995	207,825
Loans and advances to banks	104,882	83,136	81,616	69,203	72,167
Loans and advances to customers	924,854	1,045,814	1,037,987	1,036,743	981,696
Reverse repurchase agreements - non-trading	253,754	241,648	230,628	240,862	242,804
Financial investments	425,564	446,274	490,693	443,312	407,433
Assets held for sale1	115,919	3,411	299	123	735
Other assets	267,253	239,110	253,191	229,917	203,380
Total assets at 31 Dec	2,966,530	2,957,939	2,984,164	2,715,152	2,558,124
Liabilities and equity
Liabilities
Deposits by banks	66,722	101,152	82,080	59,022	56,331
Customer accounts	1,570,303	1,710,574	1,642,780	1,439,115	1,362,643
Repurchase agreements - non-trading	127,747	126,670	111,901	140,344	165,884
Trading liabilities	72,353	84,904	75,266	83,170	84,431
Financial liabilities designated at fair value	127,327	145,502	157,439	164,466	148,505
Derivatives	285,764	191,064	303,001	239,497	205,835
Debt securities in issue	78,149	78,557	95,492	104,555	85,342
Liabilities of disposal groups held for sale1	114,597	9,005	-	-	313
Liabilities under insurance contracts	114,844	112,745	107,191	97,439	87,330
Other liabilities	212,696	190,989	204,019	194,876	167,261
Total liabilities at 31 Dec	2,770,502	2,751,162	2,779,169	2,522,484	2,363,875
Equity
Total shareholders' equity	187,484	198,250	196,443	183,955	186,253
Non-controlling interests	8,544	8,527	8,552	8,713	7,996
Total equity at 31 Dec	196,028	206,777	204,995	192,668	194,249
Total liabilities and equity at 31 Dec	2,966,530	2,957,939	2,984,164	2,715,152	2,558,124

1   'Assets held for sale' in 2021, including $2.4bn of loans and advances to customers in relation to our exit of mass market retail banking business in the US, were reported within 'Other assets' in the Annual Report and Accounts 2021. Similarly, $8.8bn of customer accounts classified as 'Liabilities of disposal groups' were previously presented within 'Other liabilities'.

A more detailed consolidated balance sheet is contained in the financial statements on page 326.

Five-year selected financial information
	2022	2021	2020	2019	2018
	$m	$m	$m	$m	$m
Called up share capital	10,147	10,316	10,347	10,319	10,180
Capital resources1	162,423	177,786	184,423	172,150	173,238
Undated subordinated loan capital	1,967	1,968	1,970	1,968	1,969
Preferred securities and dated subordinated loan capital2	29,921	28,568	30,721	33,063	35,014
Risk-weighted assets	839,720	838,263	857,520	843,395	865,318
Total shareholders' equity	187,484	198,250	196,443	183,955	186,253
Less: preference shares and other equity instruments	(19,746)	(22,414)	(22,414)	(22,276)	(23,772)
Total ordinary shareholders' equity	167,738	175,836	174,029	161,679	162,481
Less: goodwill and intangible assets (net of tax)	(18,383)	(17,643)	(17,606)	(17,535)	(22,425)
Tangible ordinary shareholders' equity	149,355	158,193	156,423	144,144	140,056
Financial statistics
Loans and advances to customers as a percentage of customer accounts	58.9%	61.1%	63.2%	72.0%	72.0%
Average total shareholders' equity to average total assets	6.34%	6.62%	6.46%	6.97%	7.16%
Net asset value per ordinary share at year-end ($)3	8.50	8.76	8.62	8.00	8.13
Tangible net asset value per ordinary share at year-end ($)4	7.57	7.88	7.75	7.13	7.01
Tangible net asset value per fully diluted share at year-end ($)	7.51	7.84	7.72	7.11	6.98
Number of $0.50 ordinary shares in issue (millions)	20,294	20,632	20,694	20,639	20,361
Basic number of $0.50 ordinary shares outstanding (millions)	19,739	20,073	20,184	20,206	19,981
Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	19,876	20,189	20,272	20,280	20,059
Closing foreign exchange translation rates to $:
$1: £	0.830	0.739	0.732	0.756	0.783
$1: €	0.937	0.880	0.816	0.890	0.873

1   Capital resources are regulatory total capital, the calculation of which is set out on page 205.

2   Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 393.

3   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.

4   The definition of tangible net asset value per ordinary share is total ordinary shareholders' equity excluding goodwill, PVIF 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
	2022	2021
	$m	$m
Combined customer lending
Loans and advances to customers	924,854	1,045,814
Loans and advances to customers of disposal groups reported in 'Assets held for sale'	80,576	2,385
-  Canada	55,197
-  France retail banking operations	25,029
-  other1	350	2,385
At 31 Dec	1,005,430	1,048,199
Combined customer deposits
Customer accounts	1,570,303	1,710,574
Customer accounts reported in 'Liabilities of disposal groups held for sale'	85,274	8,750
-  Canada	60,606
-  France retail banking operations	22,348
-  other1	2,320	8,750
At 31 Dec	1,655,577	1,719,324

1  At 31 December 2021, 'other' included loans and advances and customer accounts relating to the disposal of the US mass market retail banking business. This sale completed in February 2022.

Balance sheet commentary compared with 31 December 2021

At 31 December 2022, total assets of $3.0tn, were broadly unchanged on a reported basis and increased by $161bn or 6% on a constant currency basis.

During the period, asset and liability balances mainly relating to the planned sales of our retail banking operations in France and our banking business in Canada were reclassified to 'Assets held for sale' and 'Liabilities of disposal groups held for sale'.

Reported loans and advances to customers as a percentage of customer accounts was 58.9%, compared with 61.1% at 31 December 2021. The movement in this ratio reflected the reclassifications to held for sale mentioned above.

Assets

Cash and balances at central banks decreased by $76bn or 19%, which included a $32bn adverse impact of foreign currency translation differences. The decrease was mainly in the US, reflecting the redeployment of liquidity into reverse repurchase agreements, and also due to a reduction in customer accounts. In addition, lower balances in the UK primarily reflected growth in lending to customers and banks, on a constant currency basis.

Trading assets decreased by $31bn or 12%, reflecting a reduction in equity and debt securities held, particularly in Hong Kong and the UK, reflecting weaker client demand.

Derivative assets increased by $87bn or 44%, mainly in Europe, reflecting favourable revaluation movements on interest rate contracts due to movements in long-term yield curve rates in most major markets. Foreign exchange contracts also increased, primarily in the UK, as a result of foreign exchange rate movements. The increase in derivative assets was consistent with the increase in derivative liabilities, as the underlying risk is broadly matched.

Loans and advances to banks increased by $22bn or 26%, primarily reflecting increases in the UK and Hong Kong.

Loans and advances to customers of $925bn decreased by $121bn or 12% on a reported basis. This included the following items:

• adverse impacts of foreign currency translation differences of $55bn; and

• the reclassification of $81bn to 'Assets held for sale' primarily relating to the planned sales of our retail banking operations in France and our banking business in Canada in 2022, and $2bn in 2021 primarily associated with the US mass market retail banking business sales which were disposed of during 2022.

On a constant currency basis and including balances classified as held for sale, loans and advances to customers increased by $12bn. This included the impact of the subsequent sale of US mass market retail balances that were held for sale at 31 December 2021 of $2bn with the remaining growth of $14bn reflecting the following movements.

In WPB, customer lending increased by $15bn, reflecting growth in mortgage balances, notably in the UK (up $9bn), Hong Kong (up $3bn) and Australia (up $2bn).

In CMB, customer lending was $3bn higher from term lending increases in India, Australia and the US. Lending also increased in the UK, primarily in trade lending. This was partly offset by a reduction in term lending of $8bn in Hong Kong as customer demand for lending softened in the second half of 2022.

In GBM, lending fell by $3bn due to a reduction in Global Banking term lending in the fourth quarter of 2022, primarily in Hong Kong, partly offset by a growth in overdrafts balances in the UK.

Financial investments decreased by $21bn or 5%, mainly in Europe from the adverse impact of foreign currency translation differences since 31 December 2021. The reduction included adverse fair value movements recorded in 'other comprehensive income' in equity on debt securities, treasury and other eligible bills as a result of higher yield curves and wider macroeconomic pressures. It also included reductions due to disposals and maturity of these securities. The reductions were partly offset by increases in debt instruments measured at amortised cost, as we repositioned our portfolio to reduce capital volatility.

Assets held for sale of $116bn primarily comprised the assets relating to the planned sales of our retail banking operations in France and our banking business in Canada.

Other assets increased by $28bn , reflecting growth in cash collateral of $21bn due to an increase in the fair value of derivative liabilities.

Liabilities

Deposits by banks decreased by $34bn or 34%, primarily in Europe, Hong Kong and the US.

Customer accounts of $1.6tn decreased by $140bn or 8% on a reported basis. This included the following items:

• adverse impacts of foreign currency translation differences of $88bn; and

• the reclassification of $85bn to 'Liabilities of disposal groups held for sale' primarily relating to the planned sales of our retail banking operations in France and our banking business in Canada in 2022, and $9bn in 2021 primarily associated with the US mass market retail banking business which was disposed of during 2022.

On a constant currency basis and including balances classified as held for sale, customer accounts increased by $24bn. This included the impact of the subsequent sale of US mass market retail balances that were held for sale at 31 December 2021 of $9bn with the remaining growth of $33bn reflecting the following movements.

In GBM, customer accounts rose by $16bn. This was driven by growth in interest-bearing and term deposit balances as customers demonstrated a preference for higher yielding accounts as interest rates rose, notably in Europe.

In WPB, customer accounts grew by $17bn, reflecting higher interest-bearing and term deposit balances, as interest rates rose, primarily in the UK and Asia.

In CMB, customer accounts remained broadly stable, with reductions in Hong Kong, the US, and the UK, mitigated by growth in other Asia markets.

Derivative liabilities increased by $95bn or 50%, which is consistent with the increase in derivative assets, since the underlying risk is broadly matched.

Liabilities of disposal groups held for sale of $115bn primarily comprised the liabilities relating to the planned sales of our retail banking operations in France and our banking business in Canada.

Other liabilities increased by $22bn , notably from growth in cash collateral of $20bn, mainly due to the increase in fair value of derivative assets.

Equity

Total shareholders' equity, including non-controlling interests, decreased by $11bn or 5% compared with 31 December 2021 .

Profits generated of $17bn were offset by net losses through other comprehensive income ('OCI') of $17bn. In addition, shareholders' equity fell as a result of dividends paid of $7bn, the redemption of perpetual subordinated contingent convertible capital securities of $3bn and the impact of our $1bn share buy-back announced at our 2021 results in February 2022.

The net losses in OCI of $17bn included adverse movements of $5bn on financial instruments designated as hold-to-collect-and-sell, which are held as hedges to our exposure to interest rate movements, as a result of the increase in term market yield curves in 2022. The net loss also included an adverse impact from foreign exchange differences of $10bn and losses of $4bn on cash flow hedges. These losses were partly offset by fair value gains on liabilities related to changes in own credit risk of $2bn.

In the earlier stages of a rising interest rate environment, the Group is positively exposed to rising interest rates through net interest income, although there is an impact on our capital base due to the fair value of hold-to-collect-and-sell instruments. These instruments are reported within 'financial investments'. There is an initial negative effect materialising through reserves, after which the net interest income is expected to result in a net benefit for the Group over time, provided policy rates follow market implied rates.

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

Risk-weighted assets

Risk-weighted assets ('RWAs') totalled $839.7bn at 31 December2022, a $1.4bn increase since 2021. Excluding foreign currency translation differences of $41.9bn, RWAs rose by $43.3bn in 2022. This was mainly due to the following movements:

• a $20.9bn asset size increase, mostly caused by CMB and WPB lending growth in Europe and Asia, offset by reduced lending in GBM; and

• a $24.2bn increase in RWAs due to changes in methodology and policy. This was mostly due to regulatory changes, data enhancements driven by internal and external reviews of our regulatory reporting processes and the reversal of the beneficial changes to the treatment of software assets.

Customer accounts by country/territory
	2022	2021
	$m	$m
Europe	601,473	667,769
-  UK	493,028	535,797
-  France1	33,726	56,841
-  Germany	28,949	22,509
-  Switzerland	5,167	10,680
-  other	40,603	41,942
Asia	784,236	792,098
-  Hong Kong	542,543	549,429
-  Singapore	61,475	57,572
-  mainland China	56,948	59,266
-  Australia	28,506	28,240
-  India	22,636	24,507
-  Malaysia	16,008	16,500
-  Taiwan	15,316	15,483
-  Indonesia	5,840	6,019
-  other	34,964	35,082
Middle East and North Africa (excluding Saudi Arabia)	43,933	42,629
-  United Arab Emirates	23,331	20,943
-  Türkiye	3,497	4,258
-  Egypt	6,045	6,699
-  other	11,060	10,729
North America	109,093	178,565
-  US	100,404	111,921
-  Canada1	-	58,071
-  other	8,689	8,573
Latin America	31,568	29,513
-  Mexico	25,531	23,583
-  other	6,037	5,930
At 31 Dec	1,570,303	1,710,574

1   At 31 December 2022, customer accounts of $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 $61bn and $22bn belongs to the planned sales of the banking business in Canada and retail banking operations in France, respectively. Refer to Note 23 on page 389 for further details.

Loans and advances, deposits by currency
	At
	31 Dec 2022
$m	USD	GBP	HKD	EUR	CNY	Others1	Total
Loans and advances to banks	34,495	12,292	5,188	6,328	7,833	38,746	104,882
Loans and advances to customers	182,719	265,988	221,150	57,077	49,036	148,884	924,854
Total loans and advances	217,214	278,280	226,338	63,405	56,869	187,630	1,029,736
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
	At
	31 Dec 2021
$m	USD	GBP	HKD	EUR	CNY	Others1	Total
Loans and advances to banks	21,474	3,991	524	3,970	6,545	46,632	83,136
Loans and advances to customers	169,055	280,909	223,714	83,457	44,093	244,586	1,045,814
Total loans and advances	190,529	284,900	224,238	87,427	50,638	291,218	1,128,950
Deposits by banks	37,962	20,909	2,757	24,393	5,049	10,082	101,152
Customer accounts	453,864	463,232	318,702	133,604	65,052	276,120	1,710,574
Total deposits	491,826	484,141	321,459	157,997	70,101	286,202	1,811,726

1   'Others' includes items with no currency information available ($1,519m for loans to banks (2021: $11,028m), $3,405m for loans to customers (2021: $64,491m), $13m for deposits by banks (2021: $23m) and $6m for customer accounts (2021: $5m)).

RWAs by currency
	At
	31 Dec 2022
$m	USD	GBP	HKD	EUR	CNY	Others	Total
RWAs1	223,657	143,474	152,804	60,843	49,867	209,075	839,720
	At
	31 Dec 2021
$m	USD	GBP	HKD	EUR	CNY	Others	Total
RWAs	216,664	150,130	145,851	67,934	55,343	202,341	838,263

1   RWAs of $840bn includes credit risk, market risk and operational risk RWAs.

Global businesses and geographical regions

Contents

110	Summary
110	Reconciliation of reported and adjusted items - global businesses
113	Reconciliation of reported and adjusted risk-weighted assets
113	Supplementary tables for WPB and GBM
118	Analysis of reported results by geographical regions
120	Reconciliation of reported and adjusted items - geographical regions
126	Analysis by country

.

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 geographical region. 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 360.

Geographical information is classified by the location of the principal operations of the subsidiary or, for The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank plc, HSBC UK Bank plc, HSBC Bank Middle East Limited and HSBC Bank USA, by the location of the branch responsible for reporting the results or providing funding.

The expense of the UK bank levy is included in the Europe geographical region as HSBC regards the levy as a cost of being headquartered in the UK. From 2021, the UK bank levy was partially allocated to global businesses, which was previously retained in Corporate Centre. Comparative periods have not been re-presented.

The results of geographical regions are presented on a reported basis on page 117 and an adjusted basis on page 119.

Reconciliation of reported and adjusted items - global businesses

Supplementary unaudited analysis of significant items by global business is presented below.

	2022
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Revenue1
Reported	22,197	16,197	15,267	(1,934)	51,727
Significant items	2,170	18	92	1,338	3,618
-  customer redress programmes	(10)	2	-	-	(8)
-  disposals, acquisitions and investment in new businesses2	2,274	-	-	525	2,799
-  fair value movements on financial instruments3	5	2	(93)	665	579
-  restructuring and other related costs4	(99)	14	185	148	248
Adjusted	24,367	16,215	15,359	(596)	55,345
ECL
Reported	(1,137)	(1,858)	(587)	(10)	(3,592)
Adjusted	(1,137)	(1,858)	(587)	(10)	(3,592)
Operating expenses
Reported	(15,049)	(6,893)	(9,579)	(1,809)	(33,330)
Significant items	323	251	254	2,036	2,864
-  customer redress programmes	(37)	-	-	6	(31)
-  disposals, acquisitions and investment in new businesses	2	-	-	16	18
-  impairment of goodwill and other intangibles	-	(13)	-	9	(4)
-  restructuring and other related costs	358	264	254	2,005	2,881
Adjusted	(14,726)	(6,642)	(9,325)	227	(30,466)
Share of profit/(loss) in associates and joint ventures
Reported	29	1	(2)	2,695	2,723
Adjusted	29	1	(2)	2,695	2,723
Profit/(loss) before tax
Reported	6,040	7,447	5,099	(1,058)	17,528
Significant items	2,493	269	346	3,374	6,482
-  revenue	2,170	18	92	1,338	3,618
-  operating expenses	323	251	254	2,036	2,864
Adjusted	8,533	7,716	5,445	2,316	24,010
Loans and advances to customers (net)
Reported	423,553	308,094	192,852	355	924,854
Adjusted	423,553	308,094	192,852	355	924,854
Customer accounts
Reported	779,310	458,714	331,844	435	1,570,303
Adjusted	779,310	458,714	331,844	435	1,570,303

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

2  Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.4bn relates to the planned sale of our retail banking operations in France.

3  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

Reconciliation of reported and adjusted items (continued)
	2021
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Revenue1
Reported	22,117	13,431	14,588	(584)	49,552
Currency translation	(1,152)	(885)	(987)	(50)	(3,074)
Significant items	(2)	(8)	381	171	542
-  customer redress programmes	7	(18)	-	-	(11)
-  fair value movements on financial instruments2	-	(1)	19	224	242
-  restructuring and other related costs3	(14)	3	395	(77)	307
-  currency translation on significant items	5	8	(33)	24	4
Adjusted	20,963	12,538	13,982	(463)	47,020
ECL
Reported	288	300	337	3	928
Currency translation	(75)	(75)	(24)	-	(174)
Adjusted	213	225	313	3	754
Operating expenses
Reported	(16,306)	(7,055)	(10,203)	(1,056)	(34,620)
Currency translation	914	429	781	57	2,181
Significant items	903	72	172	1,188	2,335
-  customer redress programmes	39	1	-	9	49
-  impairment of goodwill and other intangibles	587	-	-	-	587
-  restructuring and other related costs	296	81	197	1,262	1,836
-  currency translation on significant items	(19)	(10)	(25)	(83)	(137)
Adjusted	(14,489)	(6,554)	(9,250)	189	(30,104)
Share of profit in associates and joint ventures
Reported	34	1	-	3,011	3,046
Currency translation	-	-	-	(113)	(113)
Adjusted	34	1	-	2,898	2,933
Profit/(loss) before tax
Reported	6,133	6,677	4,722	1,374	18,906
Currency translation	(313)	(531)	(230)	(106)	(1,180)
Significant items	901	64	553	1,359	2,877
-  revenue	(2)	(8)	381	171	542
-  operating expenses	903	72	172	1,188	2,335
Adjusted	6,721	6,210	5,045	2,627	20,603
Loans and advances to customers (net)
Reported	488,786	349,126	207,162	740	1,045,814
Currency translation	(27,739)	(18,443)	(8,383)	(52)	(54,617)
Adjusted	461,047	330,683	198,779	688	991,197
Customer accounts
Reported	859,029	506,688	344,205	652	1,710,574
Currency translation	(39,710)	(26,487)	(21,770)	(60)	(88,027)
Adjusted	819,319	480,201	322,435	592	1,622,547

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

2  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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 adjusted items (continued)
	2020
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Revenue1
Reported	21,999	13,294	14,994	142	50,429
Currency translation	(532)	(423)	(581)	13	(1,523)
Significant items	14	18	283	(373)	(58)
-  customer redress programmes	5	16	-	-	21
-  disposals, acquisitions and investment in new businesses	9	-	-	1	10
-  fair value movements on financial instruments2	-	1	2	(267)	(264)
-  restructuring and other related costs3	-	1	307	(138)	170
-  currency translation on significant items	-	-	(26)	31	5
Adjusted	21,481	12,889	14,696	(218)	48,848
ECL
Reported	(2,855)	(4,754)	(1,209)	1	(8,817)
Currency translation	(23)	44	(18)	(1)	2
Adjusted	(2,878)	(4,710)	(1,227)	-	(8,815)
Operating expenses
Reported	(15,446)	(6,900)	(10,169)	(1,917)	(34,432)
Currency translation	498	230	400	42	1,170
Significant items	412	195	874	1,336	2,817
-  customer redress programmes	(64)	1	-	9	(54)
-  impairment of goodwill and other intangibles	294	45	577	174	1,090
-  past service costs of guaranteed minimum pension benefits equalisation	-	-	-	17	17
-  restructuring and other related costs4	192	165	326	1,225	1,908
-  settlements and provisions in connection with legal and regulatory matters	-	-	2	10	12
-  currency translation on significant items	(10)	(16)	(31)	(99)	(156)
Adjusted	(14,536)	(6,475)	(8,895)	(539)	(30,445)
Share of profit/(loss) in associates and joint ventures
Reported	6	(1)	-	1,592	1,597
Currency translation	-	-	-	48	48
Significant items	-	-	-	462	462
-  impairment of goodwill5	-	-	-	462	462
-  currency translation on significant items	-	-	-	-	-
Adjusted	6	(1)	-	2,102	2,107
Profit/(loss) before tax
Reported	3,704	1,639	3,616	(182)	8,777
Currency translation	(57)	(149)	(199)	102	(303)
Significant items	426	213	1,157	1,425	3,221
-  revenue	14	18	283	(373)	(58)
-  operating expenses	412	195	874	1,336	2,817
-  share of profit in associates and joint ventures	-	-	-	462	462
Adjusted	4,073	1,703	4,574	1,345	11,695
Loans and advances to customers (net)
Reported	469,186	343,182	224,364	1,255	1,037,987
Currency translation	(33,081)	(23,098)	(12,854)	(104)	(69,137)
Adjusted	436,105	320,084	211,510	1,151	968,850
Customer accounts
Reported	834,759	470,428	336,983	610	1,642,780
Currency translation	(46,716)	(30,539)	(26,226)	(70)	(103,551)
Adjusted	788,043	439,889	310,757	540	1,539,229

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

2  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

4  Includes impairment of software intangible assets of $189m (of the total software intangible asset impairment of $1,347m) and impairment of tangible assets of $197m.

5  In 2020, The Saudi British Bank ('SABB'), an associate of HSBC, impaired the goodwill that arose following the merger with Alawwal Bank in 2019. HSBC's post-tax share of the goodwill impairment was $462m.

Reconciliation of reported and adjusted risk-weighted assets

	At 31 Dec 2022
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$bn	$bn	$bn	$bn	$bn
Risk-weighted assets
Reported	182.9	334.8	233.5	88.5	839.7
Adjusted1	182.9	334.8	233.5	88.5	839.7
	At 31 Dec 2021
Risk-weighted assets
Reported	178.3	332.9	236.2	90.9	838.3
Currency translation	(8.2)	(19.6)	(9.3)	(1.6)	(38.7)
Adjusted1	170.1	313.3	226.9	89.3	799.6

	At 31 Dec 2020
Risk-weighted assets
Reported	172.8	327.7	265.1	91.9	857.5
Currency translation	(10.2)	(24.2)	(13.5)	(2.7)	(50.6)
Adjusted1	162.6	303.5	251.6	89.2	806.9

1  Adjusted risk-weighted assets are calculated using reported risk-weighted assets adjusted for the effects of currency translation differences and significant items.

Supplementary tables for WPB and GBM

WPB adjusted 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 (adjusted basis)
		Consists of1
	Total WPB	Banking operations	Insurance manufacturing	Global Private Banking	Asset management
	$m	$m	$m	$m	$m
2022
Net operating income before change in expected credit losses and other credit impairment charges2	24,367	19,342	1,914	1,978	1,133
-  net interest income	18,137	14,791	2,406	946	(6)
-  net fee income/(expense)	5,030	3,848	(701)	776	1,107
-  other income	1,200	703	209	256	32
ECL	(1,137)	(1,114)	(17)	(5)	(1)
Net operating income	23,230	18,228	1,897	1,973	1,132
Total operating expenses	(14,726)	(11,624)	(879)	(1,399)	(824)
Operating profit	8,504	6,604	1,018	574	308
Share of profit in associates and joint ventures	29	11	18	-	-
Profit before tax	8,533	6,615	1,036	574	308
2021
Net operating income before change in expected credit losses and other credit impairment charges2	20,963	15,519	2,547	1,746	1,151
-  net interest income	13,458	10,585	2,255	620	(2)
-  net fee income/(expense)	5,649	4,236	(599)	901	1,111
-  other income	1,856	698	891	225	42
ECL	213	219	(18)	13	(1)
Net operating income	21,176	15,738	2,529	1,759	1,150
Total operating expenses	(14,489)	(11,660)	(564)	(1,491)	(774)
Operating profit	6,687	4,078	1,965	268	376
Share of profit in associates and joint ventures	34	17	17	-	-
Profit before tax	6,721	4,095	1,982	268	376

WPB - summary (adjusted basis) (continued)
	Total WPB	Consists of1
		Banking operations	Insurance manufacturing	Global Private Banking	Asset management
	$m	$m	$m	$m	$m
2020
Net operating income before change in expected credit losses and other credit impairment charges2	21,481	16,925	1,834	1,712	1,010
-  net interest income	14,752	11,904	2,189	661	(2)
-  net fee income/(expense)	5,306	4,027	(505)	813	971
-  other income	1,423	994	150	238	41
ECL	(2,878)	(2,746)	(63)	(68)	(1)
Net operating income	18,603	14,179	1,771	1,644	1,009
Total operating expenses	(14,536)	(12,010)	(463)	(1,359)	(704)
Operating profit	4,067	2,169	1,308	285	305
Share of profit in associates and joint ventures	6	6	-	-	-
Profit before tax	4,073	2,175	1,308	285	305

1  The results presented for insurance manufacturing operations are shown before elimination of inter-company transactions with HSBC non-insurance operations. These eliminations are presented within Banking operations.

2  Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue. This may differ from the WPB Life insurance manufacturing revenue shown in the managed view of adjusted revenue on page 32, which excludes the impact of Argentina hyperinflation.

WPB insurance manufacturing adjusted results

The following table shows the results of our insurance manufacturing operations by income statement line item. It shows the results of insurance manufacturing operations for WPB and for all global business segments in aggregate, and separately the insurance distribution income earned by HSBC bank channels.

These results are prepared in accordance with current IFRSs, which will change following the adoption of IFRS 17 'Insurance Contracts', effective from 1 January 2023. Further information about the adoption of IFRS 17 is provided on page 99.

Adjusted results of insurance manufacturing operations and insurance distribution income earned by HSBC bank channels1,2
	2022		2021		2020
	WPB	All global businesses	WPB	All global businesses	WPB	All global businesses
	$m	$m	$m	$m	$m	$m
Net interest income	2,406	2,595	2,255	2,430	2,189	2,352
Net fee income/(expense)	(701)	(724)	(599)	(629)	(505)	(541)
-  fee income	140	159	100	123	108	129
-  fee expense	(841)	(883)	(699)	(752)	(613)	(670)
Net income/(expenses) from financial instruments held for trading or managed on a fair value basis	95	94	(4)	(12)	60	76
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	(3,411)	(3,413)	3,867	3,903	1,903	1,853
Gains less losses from financial investments	(12)	(12)	85	89	12	12
Net insurance premium income	12,413	12,942	10,145	10,617	9,522	10,005
Other operating income	504	453	164	148	329	342
-  of which: PVIF	369	324	76	69	365	377
Total operating income	11,294	11,935	15,913	16,546	13,510	14,100
Net insurance claims and benefits paid and movement in liabilities to policyholders	(9,380)	(9,929)	(13,366)	(13,863)	(11,676)	(12,166)
Net operating income before change in expected credit losses and other credit impairment charges3	1,914	2,006	2,547	2,683	1,834	1,934
Change in expected credit losses and other credit impairment charges	(17)	(18)	(18)	(22)	(63)	(72)
Net operating income	1,897	1,988	2,529	2,661	1,771	1,862
Total operating expenses	(879)	(918)	(564)	(590)	(463)	(492)
Operating profit	1,018	1,070	1,965	2,071	1,308	1,370
Share of profit in associates and joint ventures	18	18	17	17	-	-
Profit before tax of insurance manufacturing operations4	1,036	1,088	1,982	2,088	1,308	1,370
Annualised new business premiums of insurance manufacturing operations	2,295	2,354	2,777	2,830	2,272	2,333
Insurance distribution income earned by HSBC bank channels	764	823	726	795	718	781

1  Adjusted results are derived by adjusting for year-on-year effects of foreign currency translation differences, and the effect of significant items that distort year-on-year comparisons. There are no significant items included within insurance manufacturing, and the impact of foreign currency translation on all global businesses' profit before tax is 2021: $53m unfavourable (reported: $2,141m), 2020: $7m unfavourable (reported: $1,377m).

2  The results presented for insurance manufacturing operations are shown before elimination of inter-company transactions with HSBC non-insurance operations.

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

4  The effect on the insurance manufacturing operations of applying hyperinflation accounting in Argentina resulted in a decrease in adjusted revenue in 2022 of $3m (2021: increase of $6m, 2020: increase of $1m) and a decrease in profit before tax in 2022 of $2m (2021: increase of $5m, 2020: increase of $13m). These effects are recorded within 'All global businesses'.

Insurance manufacturing

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

HSBC recognises the present value of long-term in-force insurance contracts and investment contracts with discretionary participation features ('PVIF') as an asset on the balance sheet. The overall balance sheet equity, including PVIF, is therefore a measure of the embedded value in the insurance manufacturing entities, and the movement in this embedded value in the period drives the overall income statement result.

Adjusted profit before tax of $1.1bn decreased by $1.0bn or 48% compared with 2021.

Adjusted net operating income before change in expected credit losses and other credit impairment changes was $2.0bn or 25% lower than in 2021. This reflected the following:

• 'Net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss' of $3.4bn in 2022 compared with a net income of $3.9bn in 2021. This decrease primarily reflected unfavourable equity market performance impacting our Hong Kong and France businesses in 2022, compared with favourable market performances in 2021.

• This unfavourable movement resulted in a corresponding movement in liabilities to policyholders and PVIF (see 'Other operating income' below), to the extent to which policyholders and shareholders respectively participate in the investment performance of the associated assets.

• Net insurance premium income of $12.9bn was $2.3bn higher than in 2021, primarily reflecting higher sales volumes, particularly in Hong Kong which had a higher proportion of single premium products in its product mix, and in Singapore following the acquisition of AXA Insurance Pte Limited ('AXA Singapore') during 2022.

•
Other operating income of $0.5bn increased by $0.3bn compared with 2021. This reflected increases in Hong Kong of $0.2bn from the value of new business, a $0.5bn favourable impact from sharing lower investment returns with policyholders, a $0.3bn one-off gain from a pricing update for policyholder funds held on deposit with us in Hong Kong to reflect the cost of provision of these services, and a $0.1bn gain on completion of our acquisition of AXA Singapore in 2022. These were partly offset by a $0.7bn reduction from PVIF assumption changes primarily in Hong Kong, reflecting the impact of higher interest rates.

• Net insurance claims and benefits paid and movement in liabilities to policyholders of $9.9bn were $3.9bn lower, primarily due to a decline in returns on financial assets supporting contracts where the policyholder is subject to part or all of the investment risk, mainly in France and Hong Kong. It also reflected higher sales volumes in Hong Kong.

Total operating expenses of $0.9bn increased by $0.3bn compared with 2021, reflecting the incorporation of the results of AXA Singapore in 2022 and investment in our Pinnacle proposition in mainland China.

Annualised new business premiums ('ANP') is used to assess new insurance premium generation by the business. It is calculated as 100% of annualised first year regular premiums and 10% of single premiums, before reinsurance ceded. Lower ANP in the year mainly reflect a change in product mix in Hong Kong towards single premium new business, partially offset by higher ANP from business growth in mainland China and the inclusion of the results of AXA Singapore.

Insurance distribution income from HSBC channels included $503m (2021: $469m; 2020: $460m) from HSBC manufactured products, for which a corresponding fee expense is recognised within insurance manufacturing, and $320m (2021: $326m; 2020: $321m) from products manufactured by third-party providers. The WPB component of this distribution income was $461m (2021: $417m; 2020: $413m) from HSBC manufactured products and $303m (2021: $309m; 2020: $305m) from third-party products.

WPB: Wealth adjusted revenue by geography

The following table shows the adjusted revenue of our Wealth business by region. Our Wealth business comprises investment distribution, life insurance manufacturing, Global Private Banking and Asset Management.

Wealth adjusted revenue by geography
	2022	2021	2020
	$m	$m	$m
Europe	2,456	2,152	1,666
Asia	4,549	5,701	5,199
MENA	198	165	148
North America	581	522	513
Latin America	307	243	211
Total	8,091	8,783	7,737

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
	2022	2021
	$bn	$bn
Global Private Banking invested assets	312	351
-  managed by Global Asset Management	57	67
-  external managers, direct securities and other	255	284
Retail invested assets	364	434
-  managed by Global Asset Management	198	229
-  external managers, direct securities and other	166	205
Asset Management third-party distribution	340	334
Reported invested assets1	1,016	1,119
Wealth deposits (Premier, Jade and Global Private Banking)2	503	551
Total reported wealth balances	1,519	1,670

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 2022, $31bn 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 $779bn (2021: $859bn) on page 109. At 31 December 2022, $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
	2022	2021
	$bn	$bn
Opening balance	630	602
Net new invested assets	45	27
Net market movements	(36)	18
Foreign exchange and others	(44)	(17)
Closing balance	595	630
Asset Management - reported funds under management by geography
	2022	2021
	$bn	$bn
Europe	327	367
Asia	196	180
MENA	2	5
North America	60	69
Latin America	10	9
Closing balance	595	630

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.

At 31 December 2022, Asset Management funds under management amounted to $595bn, a decrease of $35bn or 6%. The decrease reflected adverse market performance and foreign exchange translation, which more than offset strong net new invested assets of $45bn received in 2022.Within 'foreign exchange and others' is a $14bn reduction related to the reclassification to held for sale of our banking operations in Canada, which we continue to manage but are no longer considered part of our core funds under management. This was partly offset by an increase of $9bn due to the acquisition of L&T Investment Management. Net new invested assets were notably from additions in passive, private equity and money market products.

Global Private Banking: client assets¹

Global Private Banking client assets 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 assets2
	2022	2021
	$bn	$bn
Opening balance	423	394
Net new invested assets	18	19
Increase/(decrease) in deposits	(1)	4
Net market movements	(53)	17
Foreign exchange and others	(4)	(11)
Closing Balance	383	423

Global Private Banking - reported client assets by geography
	2022	2021
	$bn	$bn
Europe	153	174
Asia	174	178
North America	56	71
Closing balance	383	423

1  Client assets are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately.

2  Client 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. Customer deposits included in these client assets 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
	2022	2021
	$bn	$bn
Opening balance	434	407
Net new invested assets1	26	26
Net market movements	(46)	5
Foreign exchange and others	(50)	(4)
Closing balance	364	434
Retail invested assets by geography
	2022	2021
	$bn	$bn
Europe	54	81
Asia	285	293
MENA	5	4
North America	12	47
Latin America	8	9
Closing balance	364	434

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

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
	2022	2021
	$bn	$bn
Opening balance	1,119	1,050
Net new invested assets	80	64
Net market movements	(116)	33
Foreign exchange and others	(67)	(28)
Closing balance	1,016	1,119
WPB: Net new invested assets by geography
	2022	2021
	$bn	$bn
Europe	13	17
Asia	59	36
MENA	-	-
North America	7	10
Latin America	1	1
Total	80	64

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 2022, we held $9.1tn of assets as custodian, a reduction of 15% compared with 31 December 2021. The balance comprised $8.4tn of assets in Securities Services, which were recorded at market value, and $0.8tn of assets in Issuer Services, recorded at book value.

The reduction was mainly in Securities Services balances. This was driven by an adverse impact of currency translation differences in Europe and Asia, and adverse market movements, notably impacting Asia and the US. In addition, there was a net outflow of assets in Asia and Europe.

Assets under administration

Our assets under administration business, which 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, complements the custody business. At 31 December 2022, the value of assets held under administration by the Group amounted to $4.5tn, which was 9% lower than at 31 December 2021. The balance comprised $2.6tn of assets in Securities Services, which were recorded at market value, and $1.8tn of assets in Issuer Services, recorded at book value.

The decrease was mainly driven by Securities Services balances due to an adverse impact of currency translation differences in Europe, a net outflow of assets, mainly in Asia and Europe, and adverse market movements in Europe and Asia. These decreases were partly offset by an inflow of assets from new customers in Europe.

Analysis of reported results by geographical regions

HSBC reported profit/(loss) before tax and balance sheet data
	2022
	Europe	Asia	MENA	North America	Latin America	Intra-HSBC	Total
	$m	$m	$m	$m	$m	$m	$m
Net interest income	7,185	16,157	1,665	3,395	2,754	1,454	32,610
Net fee income	3,554	4,695	830	1,824	547	1	11,451
Net income from financial instruments held for trading or managed on a fair value basis	3,242	5,329	578	587	756	(23)	10,469
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	(1,760)	(1,683)	-	-	48	1	(3,394)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	1,639	4	2	(8)	20	(1,431)	226
Other income/(expense)1	3,046	4,297	(138)	630	(317)	(7,153)	365
Net operating income before change in expected credit losses and other credit impairment charges2	16,906	28,799	2,937	6,428	3,808	(7,151)	51,727
Change in expected credit losses and other credit impairment charges	(857)	(2,089)	8	(93)	(561)	-	(3,592)
Net operating income	16,049	26,710	2,945	6,335	3,247	(7,151)	48,135
Total operating expenses excluding impairment of goodwill and other intangible assets	(16,370)	(15,343)	(1,582)	(4,639)	(2,401)	7,152	(33,183)
Impairment of goodwill and other intangible assets	(54)	(52)	(5)	(30)	(5)	(1)	(147)
Operating profit/(loss)	(375)	11,315	1,358	1,666	841	-	14,805
Share of profit/(loss) in associates and joint ventures	(40)	2,409	342	-	12	-	2,723
Profit/(loss) before tax	(415)	13,724	1,700	1,666	853	-	17,528
	%	%	%	%	%		%
Share of HSBC's profit before tax	(2.4)	78.3	9.7	9.5	4.9		100.0
Cost efficiency ratio	97.1	53.5	54.0	72.6	63.2		64.4
Balance sheet data	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers (net)	343,670	475,278	26,475	55,790	23,641	-	924,854
Total assets	1,345,971	1,316,876	70,755	341,125	51,708	(159,905)	2,966,530
Customer accounts	601,473	784,236	43,933	109,093	31,568	-	1,570,303
Risk-weighted assets3	251,195	409,320	60,946	106,546	38,904		839,720
HSBC reported profit/(loss) before tax and balance sheet data (continued)
	2021
	Europe	Asia	MENA	North America	Latin America	Intra-HSBC items	Total
	$m	$m	$m	$m	$m	$m	$m
Net interest income	6,454	12,596	1,299	2,845	2,195	1,100	26,489
Net fee income	3,882	5,871	774	2,056	514	-	13,097
Net income from financial instruments held for trading or managed on a fair value basis	2,602	3,643	431	426	476	166	7,744
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	1,670	2,340	-	-	45	(2)	4,053
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	1,973	(3)	(3)	54	40	(1,263)	798
Other income/(expense)1	3,523	1,316	59	673	(212)	(7,988)	(2,629)
Net operating income before change in expected credit losses and other credit impairment charges2	20,104	25,763	2,560	6,054	3,058	(7,987)	49,552
Change in expected credit losses and other credit impairment charges	1,601	(840)	132	238	(203)	-	928
Net operating income	21,705	24,923	2,692	6,292	2,855	(7,987)	50,480
Total operating expenses excluding impairment of goodwill and other intangible assets	(18,099)	(15,136)	(1,536)	(4,905)	(2,198)	7,987	(33,887)
Impairment of goodwill and other intangible assets	(95)	(24)	(8)	(13)	(593)	-	(733)
Operating profit/(loss)	3,511	9,763	1,148	1,374	64	-	15,860
Share of profit/(loss) in associates and joint ventures	268	2,486	275	-	17	-	3,046
Profit/(loss) before tax	3,779	12,249	1,423	1,374	81	-	18,906
	%	%	%	%	%		%
Share of HSBC's profit before tax	20.0	64.8	7.5	7.3	0.4		100.0
Cost efficiency ratio	90.5	58.8	60.3	81.2	91.3		69.9
Balance sheet data	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers (net)	397,090	492,525	26,375	108,717	21,107	-	1,045,814
Total assets	1,354,483	1,261,707	70,974	362,150	46,602	(137,977)	2,957,939
Customer accounts	667,769	792,098	42,629	178,565	29,513	-	1,710,574
Risk-weighted assets3	261,115	396,206	60,223	110,412	35,915	-	838,263
	2020
Net interest income	5,695	14,318	1,465	2,836	1,960	1,304	27,578
Net fee income	3,499	5,418	695	1,795	467	-	11,874
Net income from financial instruments held for trading or managed on a fair value basis	3,266	4,273	402	997	593	51	9,582
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	327	1,699	-	-	55	-	2,081
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	1,747	17	3	2	40	(1,354)	455
Other income/(expense)1	3,885	1,197	63	745	(95)	(6,936)	(1,141)
Net operating income before loan impairment (charges)/recoveries and other credit risk provisions2	18,419	26,922	2,628	6,375	3,020	(6,935)	50,429
Change in expected credit losses and other credit impairment (charges)/recoveries	(3,751)	(2,284)	(758)	(900)	(1,124)	-	(8,817)
Net operating income	14,668	24,638	1,870	5,475	1,896	(6,935)	41,612
Total operating expenses excluding impairment of goodwill and other intangible assets	(17,860)	(13,584)	(1,521)	(5,081)	(1,933)	6,935	(33,044)
Impairment of goodwill and other intangible assets	(1,014)	(78)	(65)	(226)	(5)	-	(1,388)
Operating profit/(loss)	(4,206)	10,976	284	168	(42)	-	7,180
Share of profit in associates and joint ventures	1	1,856	(265)	-	5	-	1,597
Profit/(loss) before tax	(4,205)	12,832	19	168	(37)	-	8,777
	%	%	%	%	%		%
Share of HSBC's profit before tax	(47.9)	146.2	0.2	1.9	(0.4)		100.0
Cost efficiency ratio	102.5	50.7	60.4	83.2	64.2		68.3
Balance sheet data	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers (net)	408,495	473,165	28,700	107,969	19,658	-	1,037,987
Total assets	1,416,111	1,206,404	68,860	373,167	49,703	(130,081)	2,984,164
Customer accounts	629,647	762,406	41,221	182,028	27,478	-	1,642,780
Risk-weighted assets3	284,322	384,228	60,181	117,755	35,240	-	857,520

1  'Other income/(expense)' in this context comprises where applicable net income/expense from other financial instruments designated at fair value, gains less losses from financial investments, dividend income, net insurance premium income and other operating income less net insurance claims and benefits paid and movement in liabilities to policyholders.

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

3  Risk-weighted assets are non-additive across geographical regions due to market risk diversification effects within the Group.

Reconciliation of reported and adjusted items - geographical regions

Reconciliation of reported and adjusted items
	2022
	Europe	Asia	MENA	North America	Latin America	Total
	$m	$m	$m	$m	$m	$m
Revenue1
Reported2	16,906	28,799	2,937	6,428	3,808	51,727
Significant items2	3,065	(223)	9	(108)	15	3,618
-  customer redress programmes	(8)	-	-	-	-	(8)
-  disposals, acquisitions and investment in new businesses3	2,799	-	-	-	-	2,799
-  fair value movements on financial instruments4	562	22	(3)	(3)	1	579
-  restructuring and other related costs2,5	(288)	(245)	12	(105)	14	248
Adjusted2	19,971	28,576	2,946	6,320	3,823	55,345
ECL
Reported	(857)	(2,089)	8	(93)	(561)	(3,592)
Adjusted	(857)	(2,089)	8	(93)	(561)	(3,592)
Operating expenses
Reported2	(16,424)	(15,395)	(1,587)	(4,669)	(2,406)	(33,330)
Significant items2	2,119	833	73	544	155	2,864
-  customer redress programmes	(31)	-	-	-	-	(31)
-  disposals, acquisitions and investment in new businesses	18	-	-	-	-	18
-  impairment of goodwill and other intangibles	(4)	-	-	-	-	(4)
-  restructuring and other related costs2	2,136	833	73	544	155	2,881
Adjusted2	(14,305)	(14,562)	(1,514)	(4,125)	(2,251)	(30,466)
Share of profit/(loss) in associates and joint ventures
Reported	(40)	2,409	342	-	12	2,723
Adjusted	(40)	2,409	342	-	12	2,723
Profit/(loss) before tax
Reported	(415)	13,724	1,700	1,666	853	17,528
Significant items	5,184	610	82	436	170	6,482
-  revenue2	3,065	(223)	9	(108)	15	3,618
-  operating expenses2	2,119	833	73	544	155	2,864
Adjusted	4,769	14,334	1,782	2,102	1,023	24,010
Loans and advances to customers (net)
Reported	343,670	475,278	26,475	55,790	23,641	924,854
Adjusted	343,670	475,278	26,475	55,790	23,641	924,854
Customer accounts
Reported	601,473	784,236	43,933	109,093	31,568	1,570,303
Adjusted	601,473	784,236	43,933	109,093	31,568	1,570,303

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

2  Amounts are non-additive across geographical regions due to inter-company transactions within the Group.

3  Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.4bn relates to the planned sale of our retail banking operations in France.

4  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

Reconciliation of reported and adjusted items (continued)
	2022
	UK	Hong Kong	Mainland China	US	Mexico
	$m	$m	$m	$m	$m
Revenue1
Reported	17,353	16,155	4,246	4,107	2,749
Significant items	215	163	(73)	(99)	19
-  customer redress programmes	(8)	-	-	-	-
-  disposals, acquisitions and investment in new businesses	60	-	-	-	-
-  fair value movements on financial instruments2	571	39	(1)	(1)	1
-  restructuring and other related costs3	(408)	124	(72)	(98)	18
Adjusted	17,568	16,318	4,173	4,008	2,768
ECL
Reported	(712)	(1,680)	(328)	(20)	(507)
Adjusted	(712)	(1,680)	(328)	(20)	(507)
Operating expenses
Reported	(13,224)	(8,275)	(2,906)	(3,438)	(1,642)
Significant items	1,710	393	70	423	115
-  customer redress programmes	(31)	-	-	-	-
-  restructuring and other related costs	1,741	393	70	423	115
Adjusted	(11,514)	(7,882)	(2,836)	(3,015)	(1,527)
Share of profit/(loss) in associates and joint ventures
Reported	(41)	5	2,386	-	12
Adjusted	(41)	5	2,386	-	12
Profit before tax
Reported	3,376	6,205	3,398	649	612
Significant items	1,925	556	(3)	324	134
-  revenue	215	163	(73)	(99)	19
-  operating expenses	1,710	393	70	423	115
Adjusted	5,301	6,761	3,395	973	746
Loans and advances to customers (net)
Reported	286,032	295,873	50,481	54,159	20,446
Adjusted	286,032	295,873	50,481	54,159	20,446
Customer accounts
Reported	493,028	542,543	56,948	100,404	25,531
Adjusted	493,028	542,543	56,948	100,404	25,531

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

2  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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 adjusted items (continued)
	2021
	Europe	Asia	MENA	North America	Latin America	Total
	$m	$m	$m	$m	$m	$m
Revenue1
Reported2	20,104	25,763	2,560	6,054	3,058	49,552
Currency translation2	(2,096)	(769)	(224)	(70)	(148)	(3,074)
Significant items2	138	(154)	(1)	10	5	542
-  customer redress programmes	(11)	-	-	-	-	(11)
-  fair value movements on financial instruments3	226	11	-	5	-	242
-  restructuring and other related costs2,4	(90)	(175)	-	5	5	307
-  currency translation on significant items2	13	10	(1)	-	-	4
Adjusted2	18,146	24,840	2,335	5,994	2,915	47,020
ECL
Reported	1,601	(840)	132	238	(203)	928
Currency translation	(177)	19	(1)	(1)	(14)	(174)
Adjusted	1,424	(821)	131	237	(217)	754
Operating expenses
Reported 2	(18,194)	(15,160)	(1,544)	(4,918)	(2,791)	(34,620)
Currency translation2	1,645	490	109	43	127	2,181
Significant items2	1,234	492	51	429	673	2,335
-  customer redress programmes	49	-	-	-	-	49
-  impairment of goodwill and other intangibles	-	-	-	-	587	587
-  restructuring and other related costs2	1,318	509	56	432	83	1,836
-  currency translation on significant items2	(133)	(17)	(5)	(3)	3	(137)
Adjusted2	(15,315)	(14,178)	(1,384)	(4,446)	(1,991)	(30,104)
Share of profit in associates and joint ventures
Reported	268	2,486	275	-	17	3,046
Currency translation	(23)	(90)	-	-	-	(113)
Adjusted	245	2,396	275	-	17	2,933
Profit before tax
Reported	3,779	12,249	1,423	1,374	81	18,906
Currency translation	(651)	(350)	(116)	(28)	(35)	(1,180)
Significant items	1,372	338	50	439	678	2,877
-  revenue2	138	(154)	(1)	10	5	542
-  operating expenses2	1,234	492	51	429	673	2,335
Adjusted	4,500	12,237	1,357	1,785	724	20,603
Loans and advances to customers (net)
Reported	397,090	492,525	26,375	108,717	21,107	1,045,814
Currency translation	(38,699)	(11,301)	(1,395)	(3,572)	350	(54,617)
Adjusted	358,391	481,224	24,980	105,145	21,457	991,197
Customer accounts
Reported	667,769	792,098	42,629	178,565	29,513	1,710,574
Currency translation	(66,300)	(13,859)	(3,686)	(3,826)	(356)	(88,027)
Adjusted	601,469	778,239	38,943	174,739	29,157	1,622,547

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

2   Amounts are non-additive across geographical regions due to inter-company transactions within the Group.

3  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

Reconciliation of reported and adjusted items (continued)
	2021
	UK	Hong Kong	Mainland China	US	Mexico
	$m	$m	$m	$m	$m
Revenue1
Reported	16,415	14,463	3,734	4,006	2,341
Currency translation	(1,664)	(103)	(159)	(1)	19
Significant items	7	60	(39)	14	15
-  customer redress programmes	(11)	-	-	-	-
-  fair value movements on financial instruments2	220	7	-	5	-
-  restructuring and other related costs3	(227)	54	(41)	9	15
-  currency translation on significant items	25	(1)	2	-	-
Adjusted	14,758	14,420	3,536	4,019	2,375
ECL
Reported	1,645	(608)	(89)	205	(224)
Currency translation	(182)	3	9	-	(7)
Adjusted	1,463	(605)	(80)	205	(231)
Operating expenses
Reported	(14,808)	(7,955)	(2,773)	(3,683)	(1,565)
Currency translation	1,292	53	121	-	(20)
Significant items	1,079	226	30	355	66
-  customer redress programmes	49	-	-	-	-
-  restructuring and other related costs	1,144	227	32	355	59
-  currency translation on significant items	(114)	(1)	(2)	-	7
Adjusted	(12,437)	(7,676)	(2,622)	(3,328)	(1,519)
Share of profit in associates and joint ventures
Reported	267	16	2,461	-	17
Currency translation	(23)	-	(89)	-	-
Adjusted	244	16	2,372	-	17
Profit before tax
Reported	3,519	5,916	3,333	528	569
Currency translation	(577)	(47)	(118)	(1)	(8)
Significant items	1,086	286	(9)	369	81
-  revenue	7	60	(39)	14	15
-  operating expenses	1,079	226	30	355	66
Adjusted	4,028	6,155	3,206	896	642
Loans and advances to customers (net)
Reported	306,464	311,947	54,239	52,678	18,043
Currency translation	(33,683)	111	(4,228)	-	924
Adjusted	272,781	312,058	50,011	52,678	18,967
Customer accounts
Reported	535,797	549,429	59,266	111,921	23,583
Currency translation	(58,889)	193	(4,620)	-	1,208
Adjusted	476,908	549,622	54,646	111,921	24,791

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

2  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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 adjusted items (continued)
	2020
	Europe	Asia	MENA	North America	Latin America	Total
	$m	$m	$m	$m	$m	$m
Revenue1
Reported2	18,419	26,922	2,628	6,375	3,020	50,429
Currency translation2	(819)	(412)	(252)	49	(195)	(1,523)
Significant items2	(234)	(34)	-	41	-	(58)
-  customer redress programmes	21	-	-	-	-	21
-  disposals, acquisitions and investment in new businesses	-	-	-	10	-	10
-  fair value movements on financial investments3	(254)	(5)	-	(2)	(3)	(264)
-  restructuring and other related costs2,4	(9)	(32)	-	35	-	170
-  currency translation on significant items2	8	3	-	(2)	3	5
Adjusted2	17,366	26,476	2,376	6,465	2,825	48,848
ECL
Reported	(3,751)	(2,284)	(758)	(900)	(1,124)	(8,817)
Currency translation	45	2	20	(18)	(47)	2
Adjusted	(3,706)	(2,282)	(738)	(918)	(1,171)	(8,815)
Operating expenses
Reported2	(18,874)	(13,662)	(1,586)	(5,307)	(1,938)	(34,432)
Currency translation2	756	250	146	(28)	152	1,170
Significant items2	2,074	164	75	600	73	2,817
-  customer redress programmes	(54)	-	-	-	-	(54)
-  impairment of goodwill and other intangibles	803	-	64	223	-	1,090
-  past service costs of guaranteed minimum pension benefits equalisation	17	-	-	-	-	17
-  restructuring and other related costs2,5	1,425	171	19	378	91	1,908
-  settlements and provisions in connection with legal and regulatory matters	12	-	-	-	-	12
-  currency translation on significant items2	(129)	(7)	(8)	(1)	(18)	(156)
Adjusted2	(16,044)	(13,248)	(1,365)	(4,735)	(1,713)	(30,445)
Share of profit/(loss) in associates and joint ventures
Reported	1	1,856	(265)	-	5	1,597
Currency translation	(11)	59	-	-	-	48
Significant items	-	-	462	-	-	462
-  impairment of goodwill6	-	-	462	-	-	462
-  currency translation on significant items	-	-	-	-	-	-
Adjusted	(10)	1,915	197	-	5	2,107
Profit/(loss) before tax
Reported	(4,205)	12,832	19	168	(37)	8,777
Currency translation	(29)	(101)	(86)	3	(90)	(303)
Significant items	1,840	130	537	641	73	3,221
-  revenue2	(234)	(34)	-	41	-	(58)
-  operating expenses2	2,074	164	75	600	73	2,817
-  share of profit in associates and joint ventures	-	-	462	-	-	462
Adjusted	(2,394)	12,861	470	812	(54)	11,695
Loans and advances to customers (net)
Reported	408,495	473,165	28,700	107,969	19,658	1,037,987
Currency translation	(48,299)	(14,753)	(2,814)	(2,974)	(297)	(69,137)
Adjusted	360,196	458,412	25,886	104,995	19,361	968,850
Customer accounts
Reported	629,647	762,406	41,221	182,028	27,478	1,642,780
Currency translation	(74,348)	(19,820)	(4,466)	(3,505)	(1,412)	(103,551)
Adjusted	555,299	742,586	36,755	178,523	26,066	1,539,229

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

2   Amounts are non-additive across geographical regions due to inter-company transactions within the Group.

3  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

5  Includes impairment of software intangible assets of $189m (of total software intangible asset impairment of $1,347m) and impairment of tangible assets of $197m.

6  In 2020, The Saudi British Bank ( ' SABB ' ), an associate of HSBC, impaired the goodwill that arose following the merger with Alawwal bank in

  2019. HSBC ' s post-tax share of the goodwill impairment was $462m.

Reconciliation of reported and adjusted items (continued)
	2020
	UK	Hong Kong	Mainland China	US	Mexico
	$m	$m	$m	$m	$m
Revenue1
Reported	13,886	16,345	3,088	4,590	2,234
Currency translation	(540)	(145)	90	(1)	141
Significant items	(187)	14	(5)	40	(12)
-  customer redress programmes	21	-	-	-	-
-  disposals, acquisitions and investment in new businesses	-	-	-	10	-
-  fair value movements on financial instruments2	(256)	-	(1)	(2)	(1)
-  restructuring and other related costs3	48	15	(4)	33	(12)
-  currency translation on significant items	-	(1)	-	(1)	1
Adjusted	13,159	16,214	3,173	4,629	2,363
ECL
Reported	(3,256)	(824)	(114)	(622)	(1,050)
Currency translation	30	9	(10)	-	(77)
Adjusted	(3,226)	(815)	(124)	(622)	(1,127)
Operating expenses
Reported	(14,855)	(7,312)	(2,211)	(4,194)	(1,376)
Currency translation	438	62	(49)	-	(89)
Significant items	1,275	98	18	556	44
-  customer redress programmes	(54)	-	-	-	-
-  impairment of goodwill and other intangibles	650	-	-	223	-
-  past service costs of guaranteed minimum pension benefits equalisation	17	-	-	-	-
-  restructuring and other related costs	693	100	19	333	42
-  settlements and provisions in connection with legal and regulatory matters	12	-	-	-	-
-  currency translation on significant items	(43)	(2)	(1)	-	2
Adjusted	(13,142)	(7,152)	(2,242)	(3,638)	(1,421)
Share of profit/(loss) in associates and joint ventures
Reported	1	(2)	1,849	-	5
Currency translation	(10)	-	58	-	-
Adjusted	(9)	(2)	1,907	-	5
Profit/(loss) before tax
Reported	(4,224)	8,207	2,612	(226)	(187)
Currency translation	(82)	(74)	89	(1)	(25)
Significant items	1,088	112	13	596	32
-  revenue	(187)	14	(5)	40	(12)
-  operating expenses	1,275	98	18	556	44
Adjusted	(3,218)	8,245	2,714	369	(180)
Loans and advances to customers (net)
Reported	314,530	302,454	46,113	58,082	17,296
Currency translation	(37,030)	(1,635)	(2,417)	-	391
Adjusted	277,500	300,819	43,696	58,082	17,687
Customer accounts
Reported	504,275	531,489	56,826	117,485	22,220
Currency translation	(59,369)	(2,873)	(2,978)	-	503
Adjusted	444,906	528,616	53,848	117,485	22,723

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

2  Includes fair value movements on non-qualifying hedges and debit valuation adjustments on derivatives.

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

Analysis by country

Profit/(loss) before tax by country/territory within global businesses
	2022
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Europe	(95)	2,652	(77)	(2,895)	(415)
-  UK1	1,853	2,094	(534)	(37)	3,376
-  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)	386	315	141	(474)	368
-  of which: Holdings and other	(645)	(883)	(818)	867	(1,479)
-  France2	(2,016)	210	81	(268)	(1,993)
-  Germany	17	8	133	(147)	11
-  Switzerland	25	17	13	(30)	25
-  other3	26	323	230	(2,413)	(1,834)
Asia	4,995	2,981	3,529	2,219	13,724
-  Hong Kong	4,521	1,309	955	(580)	6,205
-  Australia	147	180	157	(37)	447
-  India	45	304	622	306	1,277
-  Indonesia	4	71	100	(9)	166
-  mainland China	(109)	303	526	2,678	3,398
-  Malaysia	110	89	219	(35)	383
-  Singapore	244	255	351	(78)	772
-  Taiwan	36	43	137	(17)	199
-  other	(3)	427	462	(9)	877
Middle East and North Africa	313	290	861	236	1,700
-  Egypt	101	76	194	(5)	366
-  UAE	128	107	320	(86)	469
-  Saudi Arabia4	30	-	94	345	469
-  other	54	107	253	(18)	396
North America	541	1,169	461	(505)	1,666
-  US	209	557	270	(387)	649
-  Canada	243	548	140	(89)	842
-  other	89	64	51	(29)	175
Latin America	286	355	325	(113)	853
-  Mexico	269	273	180	(110)	612
-  other	17	82	145	(3)	241
Year ended 31 Dec 2022	6,040	7,447	5,099	(1,058)	17,528

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 impact of goodwill impairment of $425m as a result of the reclassification of our retail banking operations in France to held for sale. As per Group accounting policy, HSBC's cash-generating units are based on geographical regions, sub-divided by global businesses.

3  Corporate Centre includes inter-company debt eliminations of $1,850m.

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

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
Europe	1,817	2,893	(299)	(632)	3,779
-  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
-  other	7	163	130	(574)	(274)
Asia	4,366	2,364	3,193	2,326	12,249
-  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
-  other	9	264	370	(5)	638
Middle East and North Africa	194	235	805	189	1,423
-  Egypt	79	42	163	(2)	282
-  UAE	91	3	342	(61)	375
-  Saudi Arabia2	17	-	65	274	356
-  other	7	190	235	(22)	410
North America	60	1,023	697	(406)	1,374
-  US	(131)	472	524	(337)	528
-  Canada	141	544	145	(62)	768
-  other	50	7	28	(7)	78
Latin America	(304)	162	326	(103)	81
-  Mexico	305	88	222	(46)	569
-  other3	(609)	74	104	(57)	(488)
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, The Saudi British Bank.

3  Includes the impact of goodwill impairment of $587m. As per Group accounting policy, HSBC's cash-generating units are based on geographical regions, sub-divided by global businesses.

Profit/(loss) before tax by country/territory within global businesses (continued)
	2020
	Wealth and Personal Banking	Commercial  Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Europe	(680)	(529)	(1,809)	(1,187)	(4,205)
-  UK1	(357)	(543)	(1,769)	(1,555)	(4,224)
-  of which: HSBC UK Bank plc (ring-fenced bank)	113	167	90	(124)	246
-  of which: HSBC Bank plc (non-ring fenced bank)	109	36	(1,030)	(454)	(1,339)
-  of which: Holdings and other	(579)	(746)	(829)	(977)	(3,131)
-  France	(340)	(168)	(347)	(310)	(1,165)
-  Germany	17	16	197	(15)	215
-  Switzerland	(2)	(4)	-	(10)	(16)
-  other	2	170	110	703	985
Asia	5,031	1,944	4,002	1,855	12,832
-  Hong Kong	4,927	1,787	1,674	(181)	8,207
-  Australia	108	76	138	(7)	315
-  India	16	187	593	228	1,024
-  Indonesia	(6)	(14)	147	(13)	114
-  mainland China	(34)	295	506	1,845	2,612
-  Malaysia	8	33	141	(55)	127
-  Singapore	45	(644)	239	(12)	(372)
-  Taiwan	9	18	104	(2)	129
-  other	(42)	206	460	52	676
Middle East and North Africa	(15)	(120)	478	(324)	19
-  Egypt	68	46	185	(1)	298
-  UAE	(21)	(210)	102	(39)	(168)
-  Saudi Arabia2	21	-	26	(264)	(217)
-  other	(83)	44	165	(20)	106
North America	(449)	366	712	(461)	168
-  US	(547)	139	573	(391)	(226)
-  Canada	52	225	100	(67)	310
-  other	46	2	39	(3)	84
Latin America	(183)	(22)	233	(65)	(37)
-  Mexico	(115)	(106)	59	(25)	(187)
-  other	(68)	84	174	(40)	150
Year ended 31 Dec 2020	3,704	1,639	3,616	(182)	8,777

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, The Saudi British Bank.

Reconciliation of alternative performance measures

Contents

128	Use of alternative performance measures
128	Return on average ordinary shareholders' equity and return on average tangible equity
129	Net asset value and tangible net asset value per ordinary share
130	Post-tax return and average total shareholders' equity on average total assets
130	Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers

Use of alternative performance measures

Our reported results are prepared in accordance with IFRSs as detailed in our financial statements starting on page 324.

As described on page 98, 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.

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

Return on average ordinary shareholders' equity ('RoE') is computed by taking profit attributable to the ordinary shareholders of the parent company ('reported results'), divided by average ordinary shareholders' equity ('reported equity') for the period. The adjustment to reported results and reported equity excludes amounts attributable to non-controlling interests and other equity instruments.

Return on average tangible equity ('RoTE') is computed by adjusting reported results for the movements in the present value of in-force long-term insurance business ('PVIF') and for impairment of goodwill and other intangible assets (net of tax), divided by average reported equity adjusted for goodwill, intangibles and PVIF for the period.

Return on average tangible equity excluding significant items is annualised profit attributable to ordinary shareholders, excluding changes in PVIF and significant items (net of tax), divided by average tangible shareholders' equity excluding fair value of own debt, debit valuation adjustment ('DVA') and other adjustments for the period. Since 1 January 2021, the UK bank levy has no longer been excluded from the calculation of this measure. Comparative data have not been re-presented.

We provide RoTE ratios in addition to RoE as a way of assessing our performance, which is closely aligned to our capital position.

Return on average ordinary shareholders' equity and return on average tangible equity
	2022	2021	2020
	$m	$m	$m
Profit
Profit attributable to the ordinary shareholders of the parent company	14,822	12,607	3,898
Impairment of goodwill and other intangible assets (net of tax)	531	608	1,036
Decrease/(increase) in PVIF (net of tax)	(264)	(58)	(253)
Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment and PVIF	15,089	13,157	4,681
Significant items (net of tax) and other adjustments1,2	2,561	2,086	2,402
Profit attributable to the ordinary shareholders, excluding goodwill impairment, PVIF and significant items1	17,650	15,243	7,083
Equity
Average total shareholders' equity	191,998	199,295	189,719
Effect of average preference shares and other equity instruments	(21,202)	(22,814)	(22,326)
Average ordinary shareholders' equity	170,796	176,481	167,393
Effect of goodwill, PVIF and other intangibles (net of deferred tax)	(17,935)	(17,705)	(17,292)
Average tangible equity	152,861	158,776	150,101
Fair value of own debt, DVA and other adjustments	(1,125)	1,278	422
Average tangible equity excluding fair value of own debt, DVA and other adjustments	151,736	160,054	150,523
	%	%	%
Ratio
Return on average ordinary shareholders' equity	8.7	7.1	2.3
Return on average tangible equity	9.9	8.3	3.1
Return on average tangible equity excluding significant items1	11.6	9.5	4.7

1  Since 1 January 2021, the UK bank levy has no longer been excluded from the calculation of this measure. Comparative data have not been represented.

2  Other adjustments includes entries relating to the timing of payments on additional tier 1 coupons.

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 2022
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Profit before tax	6,040	7,447	5,099	(1,058)	17,528
Tax expense	(1,218)	(1,737)	(823)	2,920	(858)
Profit after tax	4,822	5,710	4,276	1,862	16,670
Less attributable to: preference shareholders, other equity holders, non-controlling interests	(696)	(493)	(603)	(56)	(1,848)
Profit attributable to ordinary shareholders of the parent company	4,126	5,217	3,673	1,806	14,822
Increase in PVIF (net of tax)	(251)	36	-	(49)	(264)
Significant items (net of tax)	1,960	197	300	581	3,038
Other adjustments	6	(15)	(24)	87	54
Profit attributable to ordinary shareholders, excluding PVIF, significant items	5,841	5,435	3,949	2,425	17,650
Average tangible shareholders' equity excluding fair value of own debt, DVA and other adjustments	31,519	38,373	36,944	44,900	151,736
Return on average tangible equity excluding significant items (%)	18.5	14.2	10.7	5.4	11.6
	Year ended 31 Dec 2021
Profit before tax	6,133	6,677	4,722	1,374	18,906
Tax expense	(1,540)	(1,783)	(1,020)	130	(4,213)
Profit after tax	4,593	4,894	3,702	1,504	14,693
Less attributable to: preference shareholders, other equity holders, non-controlling interests	(735)	(665)	(618)	(68)	(2,086)
Profit attributable to ordinary shareholders of the parent company	3,858	4,229	3,084	1,436	12,607
Increase in PVIF (net of tax)	(65)	4	-	3	(58)
Significant items (net of tax)	850	51	517	1,269	2,687
Other adjustments	3	(4)	(3)	11	7
Profit attributable to ordinary shareholders, excluding PVIF, significant items	4,646	4,280	3,598	2,719	15,243
Average tangible shareholders' equity excluding fair value of own debt, DVA and other adjustments	30,587	39,487	41,816	48,164	160,054
Return on average tangible equity excluding significant items (%)	15.2	10.8	8.6	5.6	9.5

Net asset value and tangible net asset value per ordinary share

Net asset value per ordinary share is total shareholders' equity less non-cumulative preference shares and capital securities ('total ordinary shareholders' equity'), divided by the number of ordinary shares in issue excluding shares that the company has purchased and are held in treasury.

Tangible net asset value per ordinary share is total ordinary shareholders' equity excluding goodwill, PVIF and other intangible assets (net of deferred tax) ('tangible ordinary shareholders' equity'), divided by the number of basic ordinary shares in issue excluding shares that the company has purchased and are held in treasury.

Net asset value and tangible net asset value per ordinary share
	2022	2021	2020
	$m	$m	$m
Total shareholders' equity	187,484	198,250	196,443
Preference shares and other equity instruments	(19,746)	(22,414)	(22,414)
Total ordinary shareholders' equity	167,738	175,836	174,029
Goodwill, PVIF and intangible assets (net of deferred tax)	(18,383)	(17,643)	(17,606)
Tangible ordinary shareholders' equity	149,355	158,193	156,423
Basic number of $0.50 ordinary shares outstanding	19,739	20,073	20,184
	$	$	$
Value per share
Net asset value per ordinary share	8.50	8.76	8.62
Tangible net asset value per ordinary share	7.57	7.88	7.75

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

Post-tax return on average total assets is profit after tax divided by average total assets for the period. Average total shareholders' equity to average total assets is average total shareholders' equity divided by average total assets for the period.

Post-tax return and average total shareholders' equity on average total assets
	2022	2021	2020
	$m	$m	$m
Profit after tax	16,670	14,693	6,099
Average total shareholders' equity	191,998	199,295	189,719
Average total assets	3,030,574	3,012,437	2,936,939
Ratio	%	%	%
Post-tax return on average total assets	0.6	0.5	0.2
Average total shareholders' equity to average total assets	6.34	6.62	6.46

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

Expected credit losses and other credit impairment charges ('ECL') as % of average gross loans and advances to customers is the annualised adjusted ECL divided by adjusted average gross loans and advances to customers for the period. The adjusted numbers are derived by adjusting reported ECL and loans and advances to customers for the effects of foreign currency translation differences.

Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers
	2022	2021	2020
	$m	$m	$m
Expected credit losses and other credit impairment charges ('ECL')	(3,592)	928	(8,817)
Currency translation		(174)	2
Adjusted ECL	(3,592)	754	(8,815)
Average gross loans and advances to customers	1,015,445	1,057,412	1,047,114
Currency translation	(13,325)	(63,174)	(34,883)
Average gross loans and advances to customers - at most recent balance sheet foreign exchange rates	1,002,120	994,238	1,012,231
Average gross loans and advances to customers, including held for sale	1,036,974	1,058,947	1,047,114
Currency translation	(12,846)	(63,012)	(34,883)
Average gross loans and advances to customers, including held for sale - at most recent balance sheet foreign exchange rates	1,024,128	995,935	1,012,231
Ratio	%	%	%
Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers	0.36	(0.08)	0.87
Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale	0.35	(0.08)	0.87

 

END

 

 

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