SCPLC Half Year Results 2024 - Part 2

Standard Chartered PLC

30 July 2024

 

Standard Chartered PLC - Half Year Results 2024 - Part 2

Table of content

Risk review	2
Capital review	59
Financial statements	65
Other supplementary information	120
Glossary	133

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless the context requires, within this document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea.

Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful. Standard Chartered PLC is incorporated in England and Wales with limited liability. Standard Chartered PLC is headquartered in London.

The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC stock codes are: HKSE 02888 and LSE STAN.LN.

Page 1

Risk review and Capital review

Risk Index
Risk profile	Credit risk
	Basis of preparation
	Credit risk overview
	Impairment model
	Staging of financial instruments
	IFRS 9 expected credit loss principles and approaches
	Summary of Credit Risk Performance
	Maximum exposure to Credit risk
	Analysis of financial instrument by stage
	Credit quality analysis
	•  Credit quality by client segment
	•  Loans and advances by client segment credit quality analysis by key geography
	Movement in gross exposures and credit impairment for loans and advances, debt securities, undrawn commitments and financial guarantees
	Movement of debt securities, additional tier one and other eligible bills
	Analysis of stage 2 balances
	Credit impairment charge
	Problem credit management and provisioning
	•  Forborne and other modified loans by client segment
	•  Forborne and other modified loans by country
	Credit risk mitigation
	•  Collateral held on loans and advances
	•  Collateral - Corporate & Investment Banking
	•  Collateral - Wealth & Retail Banking
	•  Mortgage loan-to-value ratios by country
	•  Collateral and other credit enhancements possessed or called upon
	•  Other Credit risk mitigation
	Other portfolio analysis
	•  Credit quality by industry
	•  Industry analysis of loans and advances by key geography
	•  Vulnerable, cyclical and high carbon sectors
	•  China commercial real estate
	•  Debt securities and other eligible bills
	IFRS 9 expected credit loss methodology
	Traded risk
	Market risk movements
	Counterparty Credit risk
	Derivative financial instruments Credit risk mitigation
	Liquidity and Funding risk
	Liquidity and Funding risk metrics
	Liquidity analysis of the Group's balance sheet
	Interest Rate risk in the Banking Book
	Operational and Technology risk
	Operational and Technology risk profile
Capital	Capital summary
	•  Capital ratio
	•  Capital base
	•  Movement in total capital
	Risk-weighted asset
	Leverage ratio

Page 2

The following parts of the Risk review and Capital review form part of these financial statements and are reviewed by the external auditors:

a) Risk review: Disclosures marked as 'reviewed' from the start of Credit risk section to the end of Operational and Technology risk in the same section; and

b) Capital review: Tables marked as 'reviewed' from the start of 'Capital base' to the end of 'Movement in total capital', excluding 'Total risk-weighted assets'

Page 3

Risk review

Credit Risk (reviewed)

Basis of preparation

Unless otherwise stated the balance sheet and income statement information presented within this section is based on the Group's management view. This is principally the location from which a client relationship is managed, which may differ from where it is financially booked and may be shared between businesses and/or regions. This view reflects how the client segments and regions are managed internally.

Loans and advances to customers and banks held at amortised cost in this 'Risk profile' section include reverse repurchase agreement balances held at amortised cost, per Note 16 Reverse repurchase and repurchase agreements including other similar secured lending and borrowing.

Credit Risk overview

Credit Risk is the potential for loss due to the failure of a counterparty to meet its contractual obligations to pay the Group. Credit exposures arise from both the banking and trading books.

Impairment model

IFRS 9 mandates an impairment model that requires the recognition of expected credit losses (ECL) on all financial debt instruments held at amortised cost, Fair Value through Other Comprehensive Income (FVOCI), undrawn loan commitments and financial guarantees.

Staging of financial instruments

Financial instruments that are not already credit-impaired are originated into stage 1 and a 12-month expected credit loss provision is recognised.

Instruments will remain in stage 1 until they are repaid, unless they experience significant credit deterioration (stage 2) or they become credit-impaired (stage 3).

Instruments will transfer to stage 2 and a lifetime expected credit loss provision is recognised when there has been a significant change in the Credit Risk compared to what was expected at origination.

The framework used to determine a Significant increase in Credit Risk (SICR) is set out below.

Stage 1

• 12-month ECL

• Performing

Stage 2

• Lifetime expected credit loss

• Performing but has exhibited significant increase in Credit Risk (SICR)

Stage 3

• Credit-impaired

• Non-performing

Page 4

IFRS 9 expected credit loss principles and approaches

The main methodology principles and approach adopted by the Group are set out in the following table.

Title	Supplementary Information
Approach for determining expected credit losses	IFRS 9 methodology Determining lifetime expected credit loss for revolving products Post model adjustments
Incorporation of forward-looking information	Incorporation of forward-looking information Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact of non-linearity Judgemental adjustments and sensitivity to macroeconomic variables
SICR	Quantitative and qualitative criteria
Assessment of credit-impaired financial assets	Consumer and Business Banking clients Corporate and Investment Banking (CIB) and Private Banking clients Write-offs
Transfers between stages	Movement in loan exposures and expected credit losses
Modified financial assets	Forbearance and other modified loans
Governance and application of expert credit judgement in respect of expected credit losses

Summary of Credit Risk Performance

Maximum exposure

The Group's on-balance sheet maximum exposure to Credit Risk increased by $9.1 billion to $807 billion (31 December 2023: $798 billion). Cash and balances at Central bank decreased by $5.8 billion to $64 billion (31 December 2023: $70 billion) due to reduced placements with a Central Bank. Loans to banks held at amortised cost remained stable at $45 billion (31 December 2023: $45 billion). Fair Value through profit and loss increased by $32 billion to $176 billion (31 December 2023: $144 billion), largely due to an increase in debt securities and reverse repos. This was partly offset by a $11 billion decrease in loans and advances to customers to $276 billion (31 December 2023: $287 billion) of which $5 billion was due to a reduction in mortgages in Korea and Hong Kong due to low new business driven by the higher interest rate environment, as well as a $4.2 billion reduction in Central and other items mainly due to matured loan exposures. Debt securities decreased by $8.7 billion to $152 billion (31 December 2023: $160 billion). Off-balance sheet instruments increased by $7.9 billion to $265 billion (31 December 2023: $257 billion), due to an increase in financial guarantees and other equivalents, which were driven by new business.

Further details can be found in the 'Maximum exposure to Credit Risk' section.

Loans and Advances

94 per cent (31 December 2023: 94 per cent) of the Group's gross loans and advances to customers remain in stage 1 at $281 billion (31 December 2023: $292 billion), reflecting our continued focus on high-quality origination.

Stage 1 loans and advances decreased by $9.4 billion to $264 billion (31 December 2023: $274 billion). For Wealth and Retail Banking (WRB), stage 1 balances decreased by $5.4 billion to $118 billion (31 December 2023: $123 billion), of which $5 billion was mainly due to a decrease in mortgages. This was driven by a slowdown in sales in Korea and Hong Kong, due to the high interest rate environment. For Corporate and Investment Banking (CIB), stage 1 balances remained stable at $121 billion (31 December 2023: $121 billion). For Central and other items, stage 1 balances decreased by $4.5 billion to $24 billion (31 December 2023: $28 billion) due to a reduction in reverse repos. Stage 1 cover ratio remained stable at 0.2 per cent (31 December 2023: 0.2 per cent).

Stage 2 loans and advances to customers decreased by $1.2 billion to $10 billion (31 December 2023: $11.2 billion). For WRB, stage 2 balances decreased by $0.5 billion to $1.8 billion (31 December 2023: $2.3 billion). This was mainly driven by the lower new bookings of the mortgage portfolio in Korea and Hong Kong, due to the high interest rate environment. Higher risk exposure net decrease of $1 billion to $0.1 billion (31 December 2023: $1 billion) from Central and other items, was  due to the maturity of short-term loan exposures being replaced with debt securities in the Middle East. Total stage 2 cover ratio decreased by 0.1 per cent to 3.6 per cent (31 December 2023: 3.7 per cent). The decrease was driven by China commercial real estate (CRE) overlay releases in CIB largely due to repayments, which was partly offset by an increase in WRB due to exposure reductions. Ventures cover ratio increased by 7 per cent to 46 per cent (31 December 2023: 39 per cent) due to higher levels of delinquencies in Q1 2024, however this improved during Q2 2024 following credit measures being put in place in Q4 2023.

Page 5

Stage 3 loans and advances decreased by $0.6 billion to $6.6 billion (31 December 2023: $7.2 billion) due to repayments, debt sales and write-offs in CIB. The CIB stage 3 cover ratio increased by 4 per cent to 68 per cent (31 December 2023: 64 per cent) as a result of repayments and write-offs. The WRB stage 3 loans remains broadly stable at $1.5 billion (31 December 2023: $1.5 billion). The WRB stage 3 cover ratio decreased by 5 per cent to 46 per cent (31 December 2023: 51 per cent) driven by reduction in personal loan provisions in Malaysia due to unsecured assets reclassified as held for sale. Stage 3 Central and other items decreased by $160 million to $0.1 billion (31 December 2023: $0.2 billion) as funds were reinvested into debt securities for liquidity purposes. Total stage 3 cover ratio increased by 3 per cent to 63 per cent (31 December 2023: 60 per cent) due to a decrease in exposures. The cover ratio after collateral increased by 6 per cent to 82 per cent (31 December 2023: 76 per cent).

Further details can be found in the 'Analysis of financial instruments by stage' section in pages 42 and 43; 'Credit quality by client segment' section; and 'Credit quality by industry' section,

Analysis of stage 2

The key SICR driver which caused exposures to be classified as stage 2 remains an increase in probability of default (PD). The proportion of exposures in CIB in stage 2 decreased due to a reduction in clients placed on non-purely precautionary early alert that have not breached PD thresholds. In WRB, the proportion of loans in stage 2 from 30 days past due trigger remained stable. In Central and other items, the decrease in CG12 was due to the maturity of short-term loan exposures being replaced with debt securities in the Middle East.

Further details can be found in the 'Analysis of stage 2 balances' section.

Credit impairment charges

The Group's ongoing credit impairment was a net charge of $249 million (30 June 2023: $172 million).

For CIB, stage 1 and 2 impairment charges decreased by $71 million to a net release of $38 million (30 June 2023: $33 million), due to $55 million China CRE overlay releases driven by repayments, and sovereign upgrades. This was partly offset by portfolio movements.

CIB stage 3 impairment charges decreased by $33 million to $3 million (30 June 2023: $36 million) due to a number of recoveries, which was partly offset by additional impairments on the China CRE portfolio including one new downgrade.

For WRB, stage 1 and 2 impairment charges increased by $120 million to $135 million (30 June 2023: $15 million) mainly due to the release of COVID-19 overlays and other one-off releases present in 2023. Growth in the Digital Partnership portfolio has also resulted in an increase in ECL.

WRB stage 3 impairment charges increased by $54 million to $147 million (30 June 2023: $93 million). This was driven by gross charge-offs in credit cards and personal loans (mainly in China, Hong Kong, Singapore and Korea) on account of the higher interest rate environment impacting customer affordability, as well as maturation of digital partnerships (in China, Indonesia, and Vietnam).

For Ventures, total impairment charges increased by $20 million to $43 million (30 June 2023: $23 million). Of the $43 million charge, Mox Bank accounts for $33 million. Stage 1 and 2 impairment charges decreased by $5 million to $7 million (30 June 2023: $12 million). Out of the $7 million charge, $2 million was from Mox Bank and $5 million was from Trust Bank. Mox Bank's delinquency and flow rates have improved on both the new and legacy books as new credit control measures have taken effect over the course of 2024.

Ventures stage 3 impairment charges increased by $25 million to $36 million (30 June 2023: $11 million). Of the $36 million, $30 million was from Mox Bank due to gross charge-offs and bankruptcy-related charges. These charges declined as we progressed through H1 2024.

For Central and other items, stage 1 and 2 impairment charges decreased by $4 million to a net release of $31 million (30 June 2023: net release of $27 million) due to sovereign upgrades, driven by improvements in the macroeconomic environment. The charges also declined due to a portfolio of debt securities maturing, which were being held by Treasury and accounted for under FVOCI.

Central and other items stage 3 impairment charges decreased by $9 million to a net release of $10 million (30 June 2023: net release of $1 million) due to an upgrade in a sovereign's local currency position to CG12C (higher risk).

Further details can be found in the 'Credit impairment charge' section.

Page 6

Vulnerable and cyclical sectors

Total net on-balance sheet exposure to vulnerable and cyclical sectors increased by $4.8 billion to $33 billion (31 December 2023: $29 billion) largely due to increases in the Oil and Gas and Commodity Traders sectors in stage 1. Stage 2 vulnerable and cyclical sector loans decreased by $0.3 billion to $3.1 billion (31 December 2023: $3.4 billion) mainly due to CRE. Stage 3 vulnerable and cyclical sector loans decreased by $0.3 billion to $3.3 billion (31 December 2023: $3.6 billion) mainly due to a loan sales in the CRE sector, which was partly offset by one new downgrade.

The Group provides loans to CRE counterparties of which $8.9 billion is to counterparties in CIB where the source of repayment is substantially derived from rental or sale of real estate and is secured by real estate collateral. The remaining CRE loans comprise working capital loans to real estate corporates, loans with non-property collateral, unsecured loans and loans to real estate entities of diversified conglomerates. The average LTV ratio of the performing book CRE portfolio has increased to 53 per cent (31 December 2023: 52 per cent). The proportion of loans with an LTV greater than 80 per cent has increased to 4 per cent (31 December 2023: 3 per cent).

Further details can be found in the 'Vulnerable, cyclical and high carbon sectors' section.

China commercial real estate

Total exposure to China CRE decreased by $0.4 billion to $2.2 billion (31 December 2023: $2.6 billion) mainly from repayments. The proportion of credit impaired amortised cost loans to customers increased to 67 per cent (31 December 2023: 58 per cent) largely due to repayments in the performing portfolio and a downgrade. Stage 3 provision coverage increased to 77 per cent (31 December 2023: 72 per cent) reflecting increased provisions made during the period. The proportion of the loan book rated as higher risk was stable at 0.4 per cent (31 December 2023: 0.3 per cent).

The Group continues to hold a judgemental management overlay in respect of the performing portfolio, which decreased by $55 million to $86 million (31 December 2023: $141 million) due to repayments and a downgrade to stage 3.

The Group is further indirectly exposed to China CRE through its associate investment in China Bohai Bank.

Further details can be found in the 'China commercial real estate' section.

Page 7

Maximum exposure to Credit Risk (reviewed)

The table below presents the Group's maximum exposure to Credit Risk for its on-balance sheet and off-balance sheet financial instruments as at 30 June 2024, before and after taking into account any collateral held or other Credit Risk mitigation.

Further details can be found in the 'Summary of Credit Risk performance' section.

	30.06.24				31.12.23
	Maximum exposure $million	Credit risk management		Net exposure $million	Maximum exposure $million	Credit risk management		Net exposure $million
		Collateral8 $million	Master netting agreements $million			Collateral8 $million	Master netting agreements $million
On-balance sheet
Cash and balances at central banks	64,086			64,086	69,905			69,905
Loans and advances to banks1	45,231	3,991		41,240	44,977	1,738		43,239
of which - reverse repurchase agreements and other similar secured lending7	3,991	3,991		-	1,738	1,738		-
Loans and advances to customers1	275,896	115, 872		160,024	286,975	118,492		168,483
of which - reverse repurchase agreements and other similar secured lending7	7,788	7,788		-	13,996	13,996		-
Investment securities - Debt securities and other eligible bills2	151,580			151,580	160,263			160,263
Fair value through profit or loss3, 7	176,460	93,202	-	83,258	144,276	81,847	-	62,429
Loans and advances to banks	2,193			2,193	2,265			2,265
Loans and advances to customers	6,877			6,877	7,212			7,212
Reverse repurchase agreements and other similar lending7	93,202	93,202		-	81,847	81,847		-
Investment securities - Debt securities and other eligible bills2	74,188			74,188	52,952			52,952
Derivative financial instruments4, 7	48,647	11,285	34,398	2,964	50,434	8,440	39,293	2,701
Accrued income	2,786			2,786	2,673			2,673
Assets held for sale9	517			517	701			701
Other assets5	42,206			42,206	38,140			38,140
Total balance sheet	807,409	224,350	34,398	548,661	798,344	210,517	39,293	548,534
Off-balance sheet6
Undrawn Commitments	178,568	3,078		175,490	182,390	2,940		179,450
Financial Guarantees and other equivalents	86,094	2,351		83,743	74,414	2,590		71,824
Total off-balance sheet	264,662	5,429	-	259,233	256,804	5,530	-	251,274
Total	1,072,071	229,779	34,398	807,894	1,055,148	216,047	39,293	799,808

1. An analysis of credit quality is set out in the credit quality analysis section. Further details of collateral held by client segment and stage are set out in the collateral analysis section

2. Excludes equity and other investments of $823 million (31 December 2023: $992 million). Further details are set out in Note 13 financial instruments

3. Excludes equity and other investments of $5,264 million (31 December 2023: $2,940 million). Further details are set out in Note 13 financial instruments

4   The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positive and negative mark-to-market values of applicable derivative transactions

5. Other assets include Hong Kong certificates of indebtedness, cash collateral, and acceptances, in addition to unsettled trades and other financial assets

6. Excludes ECL allowances which are reported under Provisions for liabilities and charges

7. Collateral capped at maximum exposure (over-collateralised)

8. Adjusted for over-collateralisation, which has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount arising from expected credit losses

9. The amount is after ECL. Further details are set out in Note 20 Assets held for sale and associated liabilities

Page 8

Analysis of financial instruments by stage (reviewed)

The table below presents the gross and credit impairment balances by stage for the Group's amortised cost and FVOCI financial instruments as at 30 June 2024.

Further details can be found in the 'Summary of Credit Risk performance' section.

	30.06.24
	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million
Cash and balances at central banks	63,238	-	63,238	339	-	339	522	(13)	509	64,099	(13)	64,086
Loans and advances to banks (amortised cost)	44,793	(4)	44,789	392	(3)	389	57	(4)	53	45,242	(11)	45,231
Loans and advances to customers (amortised cost)	264,249	(480)	263,769	10,005	(362)	9,643	6,639	(4,155)	2,484	280,893	(4,997)	275,896
Debt securities and other eligible bills⁵	149,422	(23)		1,787	(10)		387	(16)		151,596	(49)
Amortised cost	55,961	(16)	55,945	396	-	396	62	-	62	56,419	(16)	56,403
FVOCI2	93,461	(7)		1,391	(10)		325	(16)		95,177	(33)
Accrued income (amortised cost)4	2,786		2,786			-			-	2,786	-	2,786
Assets held for sale⁴	429	-	429	50	(1)	49	114	(75)	39	593	(76)	517
Other assets	42,209	(3)	42,206	-	-	-	3	(3)	-	42,212	(6)	42,206
Undrawn commitments3	173,625	(46)		4,935	(47)		8	-		178,568	(93)
Financial guarantees, trade credits and irrevocable letter of credits3	83,957	(12)		1,423	(6)		714	(142)		86,094	(160)
Total	824,708	(568)		18,931	(429)		8,444	(4,408)		852,083	(5,405)

1   Gross carrying amount for off-balance sheet refers to notional values

2   These instruments are held at fair value on the balance sheet. The ECL provision in respect of debt securities measured at FVOCI is held within the OCI reserve

3   These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financial liability and therefore there is no "net carrying amount". ECL allowances on off-balance sheet instruments are held as liability provisions to the extent that the drawn and undrawn components of loan exposures can be separately identified. Otherwise they will be reported against the drawn component

4   Stage 1 ECL is not material

5   Stage 3 gross includes $23 million (31 December 2023: $80 million) originated credit-impaired debt securities with impairment of $nil million (31 December 2023: $14 million)

Page 9

	31.12.23
	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million	Gross balance1 $million	Total credit impairment $million	Net carrying value $million
Cash and balances at central banks	69,313	-	69,313	207	(7)	200	404	(12)	392	69,924	(19)	69,905
Loans and advances to banks (amortised cost)	44,384	(8)	44,376	540	(10)	530	77	(6)	71	45,001	(24)	44,977
Loans and advances to customers (amortised cost)	273,692	(430)	273,262	11,225	(420)	10,805	7,228	(4,320)	2,908	292,145	(5,170)	286,975
Debt securities and other eligible bills5	158,314	(26)		1,860	(34)		164	(61)		160,338	(121)
Amortised cost	56,787	(16)	56,771	103	(2)	101	120	(57)	63	57,010	(75)	56,935
FVOCI2	101,527	(10)		1,757	(32)		44	(4)		103,328	(46)
Accrued income (amortised cost)4	2,673		2,673			-			-	2,673	-	2,673
Assets held for sale4	661	(33)	628	76	(4)	72	1	-	1	738	(37)	701
Other assets	38,139	-	38,139	-	-	-	4	(3)	1	38,143	(3)	38,140
Undrawn commitments3	176,654	(52)		5,733	(39)		3	-		182,390	(91)
Financial guarantees, trade credits and irrevocable letter of credits3	70,832	(10)		2,910	(14)		672	(112)		74,414	(136)
Total	834,662	(559)		22,551	(528)		8,553	(4,514)		865,766	(5,601)

1   Gross carrying amount for off-balance sheet refers to notional values

2   These instruments are held at fair value on the balance sheet. The ECL provision in respect of debt securities measured at FVOCI is held within the OCI reserve

3   These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financial liability and therefore there is no "net carrying amount". ECL allowances on off-balance sheet instruments are held as liability provisions to the extent that the drawn and undrawn components of loan exposures can be separately identified. Otherwise they will be reported against the drawn component

4   Stage 1 ECL is not material

5   Stage 3 gross includes $80 million originated credit-impaired debt securities with impairment of $14 million

Page 10

Credit quality analysis

Credit quality by client segment (reviewed)

For CIB, exposures are analysed by credit grade (CG), which plays a central role in the quality assessment and monitoring of risk. All loans are assigned a CG, which is reviewed periodically and amended in light of changes in the borrower's circumstances or behaviour. CGs 1 to 12 are assigned to stage 1 and stage 2 (performing) clients or accounts, while CGs 13 and 14 are assigned to stage 3 (credit-impaired) clients. Consumer and Business Banking portfolios are analysed by days past due and Private Banking by the type of collateral held.

Mapping of credit quality

The Group uses the following internal risk mapping to determine the credit quality for loans.

Credit quality description	Corporate & Investment Banking			Private Banking1	Wealth & Retail Banking5
	Internal grade mapping	S&P external ratings equivalent	Regulatory PD range (%)	Internal ratings	Internal grade mapping
Strong	1A to 5B	AAA/AA+ to BBB-/BB+²	0 to 0.425	Class I and Class IV	Current loans (no past dues nor impaired)
Satisfactory	6A to 11C	BB+/BB to B-/CCC+³	0.426 to 15.75	Class II and Class III	Loans past due till 29 days
Higher risk	Grade 12	CCC+ to C⁴	15.751 to 99.999	Stressed Assets Group (SAG) managed	Past due loans 30 days and over till 90 days

1   For Private Banking, classes of risk represent the type of collateral held. Class I represents facilities with liquid collateral, such as cash and marketable securities. Class II represents unsecured/partially secured facilities and those with illiquid collateral, such as equity in private enterprises. Class III represents facilities with residential or commercial real estate collateral. Class IV covers margin trading facilities

2   Banks' rating: AAA/AA+ to BB+. Sovereigns' rating: AAA to BB+

3   Banks' rating: BB to "CCC+ to C". Sovereigns' rating: BB+/BB to B-/CCC+

4   Banks' rating: CCC+ to C. Sovereigns' rating: CCC+ to "CCC+ to C"

5   Wealth & Retail Banking excludes Private Banking. Medium enterprise clients within Business Banking are managed using the same internal credit grades as CIB

The table below sets out the gross loans and advances held at amortised cost, expected credit loss provisions and
expected credit loss coverage by business segment and stage. Expected credit loss coverage represents the expected
credit loss reported for each segment and stage as a proportion of the gross loan balance for each segment and stage.

Further details can be found in the 'Summary of Credit Risk performance' section.

Page 11

Loans and advances by client segment (reviewed)

Amortised cost	30.06.24
	Banks $million	Customers					Undrawn commitments $million	Financial Guarantees $million
		Corporate & Investment Banking $million	Wealth & Retail Banking $million	Ventures $million	Central & other items $million	Customer Total $million
Stage 1	44,793	121,272	118,064	1,103	23,810	264,249	173,625	83,957
- Strong	35,029	83,625	112,547	1,088	23,424	220,684	158,620	56,826
- Satisfactory	9,764	37,647	5,517	15	386	43,565	15,005	27,131
Stage 2	392	7,980	1,848	48	129	10,005	4,935	1,423
- Strong	173	1,129	1,333	32	-	2,494	1,768	303
- Satisfactory	161	6,074	172	5	-	6,251	2,953	912
- Higher risk	58	777	343	11	129	1,260	214	208
Of which (stage 2):
- Less than 30 days past due	-	228	172	5	-	405	-	-
- More than 30 days past due	3	7	343	11	-	361	-	-
Stage 3, credit-impaired financial assets	57	5,048	1,518	9	64	6,639	8	714
Gross balance¹	45,242	134,300	121,430	1,160	24,003	280,893	178,568	86,094
Stage 1	(4)	(110)	(350)	(20)	-	(480)	(46)	(12)
- Strong	(2)	(70)	(274)	(19)	-	(363)	(30)	(3)
- Satisfactory	(2)	(40)	(76)	(1)	-	(117)	(16)	(9)
Stage 2	(3)	(206)	(134)	(22)	-	(362)	(47)	(6)
- Strong	(2)	(15)	(49)	(16)	-	(80)	(9)	(1)
- Satisfactory	(1)	(144)	(27)	(3)	-	(174)	(26)	(2)
- Higher risk	-	(47)	(58)	(3)	-	(108)	(12)	(3)
Of which (stage 2):
- Less than 30 days past due	-	(15)	(27)	(3)	-	(45)	-	-
- More than 30 days past due	-	-	(58)	(3)	-	(61)	-	-
Stage 3, credit-impaired financial assets	(4)	(3,449)	(697)	(9)	-	(4,155)	-	(142)
Total credit impairment	(11)	(3,765)	(1,181)	(51)	-	(4,997)	(93)	(160)
Net carrying value	45,231	130,535	120,249	1,109	24,003	275,896
Stage 1	0.0%	0.1%	0.3%	1.8%	0.0%	0.2%	0.0%	0.0%
- Strong	0.0%	0.1%	0.2%	1.7%	0.0%	0.2%	0.0%	0.0%
- Satisfactory	0.0%	0.1%	1.4%	6.7%	0.0%	0.3%	0.1%	0.0%
Stage 2	0.8%	2.6%	7.3%	45.8%	0.0%	3.6%	1.0%	0.4%
- Strong	1.2%	1.3%	3.7%	50.0%	0.0%	3.2%	0.5%	0.3%
- Satisfactory	0.6%	2.4%	15.7%	60.0%	0.0%	2.8%	0.9%	0.2%
- Higher risk	0.0%	6.0%	16.9%	27.3%	0.0%	8.6%	5.6%	1.4%
Of which (stage 2):
- Less than 30 days past due	0.0%	6.6%	15.7%	60.0%	0.0%	11.1%	0.0%	0.0%
- More than 30 days past due	0.0%	0.0%	16.9%	27.3%	0.0%	16.9%	0.0%	0.0%
Stage 3, credit-impaired financial assets (S3)	7.0%	68.3%	45.9%	100.0%	0.0%	62.6%	0.0%	19.9%
- Stage 3 Collateral	2	635	664	-	-	1,299	-	47
- Stage 3 Cover ratio (after collateral)	10.5%	80.9%	89.7%	100.0%	0.0%	82.2%	0.0%	26.5%
Cover ratio	0.0%	2.8%	1.0%	4.4%	0.0%	1.8%	0.1%	0.2%
Fair value through profit or loss
Performing	42,461	59,769	9	-	-	59,778	-	-
- Strong	37,129	40,917	6	-	-	40,923	-	-
- Satisfactory	5,332	18,801	3	-	-	18,804	-	-
- Higher risk	-	51	-	-	-	51	-	-
Defaulted (CG13-14)	-	33	-	-	-	33	-	-
Gross balance (FVTPL)2	42,461	59,802	9	-	-	59,811	-	-
Net carrying value (incl FVTPL)	87,692	190,337	120,258	1,109	24,003	335,707	-	-

1   Loans and advances includes reverse repurchase agreements and other similar secured lending of $7,788 million under Customers and of $3,991 million under Banks, held at amortised cost

2   Loans and advances includes reverse repurchase agreements and other similar secured lending of $52,934 million under Customers and of $40,268 million under Banks, held at fair value through profit or loss

Page 12

Amortised cost	31.12.23
	Banks $million	Customers					Undrawn commitments $million	Financial Guarantees $million
		Corporate & Investment Banking $million	Wealth & Retail Banking $million	Ventures $million	Central & other items $million	Customer Total $million
Stage 1	44,384	120,886	123,486	1,015	28,305	273,692	176,654	70,832
- Strong	35,284	84,248	118,193	1,000	27,967	231,408	162,643	47,885
- Satisfactory	9,100	36,638	5,293	15	338	42,284	14,011	22,947
Stage 2	540	7,902	2,304	54	965	11,225	5,733	2,910
- Strong	55	1,145	1,761	34	-	2,940	1,090	830
- Satisfactory	212	5,840	206	7	-	6,053	4,169	1,823
- Higher risk	273	917	337	13	965	2,232	474	257
Of which (stage 2):
- Less than 30 days past due	-	78	206	7	-	291	-	-
- More than 30 days past due	-	10	337	13	-	360	-	-
Stage 3, credit-impaired financial assets	77	5,508	1,484	12	224	7,228	3	672
Gross balance1	45,001	134,296	127,274	1,081	29,494	292,145	182,390	74,414
Stage 1	(8)	(101)	(314)	(15)	-	(430)	(52)	(10)
- Strong	(3)	(34)	(234)	(14)	-	(282)	(31)	(2)
- Satisfactory	(5)	(67)	(80)	(1)	-	(148)	(21)	(8)
Stage 2	(10)	(257)	(141)	(21)	(1)	(420)	(39)	(14)
- Strong	(1)	(18)	(65)	(14)	-	(97)	(5)	-
- Satisfactory	(2)	(179)	(22)	(3)	-	(204)	(23)	(7)
- Higher risk	(7)	(60)	(54)	(4)	(1)	(119)	(11)	(7)
Of which (stage 2):
- Less than 30 days past due	-	(2)	(22)	(3)	-	(27)	-	-
- More than 30 days past due	-	(1)	(54)	(4)	-	(59)	-	-
Stage 3, credit-impaired financial assets	(6)	(3,533)	(760)	(12)	(15)	(4,320)	-	(112)
Total credit impairment	(24)	(3,891)	(1,215)	(48)	(16)	(5,170)	(91)	(136)
Net carrying value	44,977	130,405	126,059	1,033	29,478	286,975	-	-
Stage 1	0.0%	0.1%	0.3%	1.5%	0.0%	0.2%	0.0%	0.0%
- Strong	0.0%	0.0%	0.2%	1.4%	0.0%	0.1%	0.0%	0.0%
- Satisfactory	0.1%	0.2%	1.5%	6.7%	0.0%	0.4%	0.1%	0.0%
Stage 2	1.9%	3.3%	6.1%	38.9%	0.1%	3.7%	0.7%	0.5%
- Strong	1.8%	1.6%	3.7%	41.2%	0.0%	3.3%	0.5%	(0.0)%
- Satisfactory	0.9%	3.1%	10.7%	42.9%	0.0%	3.4%	0.6%	0.4%
- Higher risk	2.6%	6.5%	16.0%	30.8%	0.1%	5.3%	2.3%	2.7%
Of which (stage 2):
- Less than 30 days past due	0.0%	2.6%	10.7%	42.9%	0.0%	9.3%	0.0%	0.0%
- More than 30 days past due	0.0%	10.0%	16.0%	30.8%	0.0%	16.4%	0.0%	0.0%
Stage 3, credit-impaired financial assets (S3)	7.8%	64.1%	51.2%	100.0%	6.7%	59.8%	0.0%	16.7%
- Stage 3 Collateral	2	621	554	-	-	1,175	-	34
- Stage 3 Cover ratio (after collateral)	10.4%	75.4%	88.5%	100.0%	6.7%	76.0%	0.0%	21.7%
Cover ratio	0.1%	2.9%	1.0%	4.4%	0.1%	1.8%	0.0%	0.2%
Fair value through profit or loss
Performing	32,813	58,465	13	-	-	58,478	-	-
- Strong	28,402	38,014	13	-	-	38,027	-	-
- Satisfactory	4,411	20,388	-	-	-	20,388	-	-
- Higher risk	-	63	-	-	-	63	-	-
Defaulted (CG13-14)	-	33	-	-	-	33	-	-
Gross balance (FVTPL)2	32,813	58,498	13	-	-	58,511	-	-
Net carrying value (incl FVTPL)	77,790	188,903	126,072	1,033	29,478	345,486	-	-

1   Loans and advances includes reverse repurchase agreements and other similar secured lending of $13,996 million under Customers and of $1,738 million under Banks, held at amortised cost

2   Loans and advances includes reverse repurchase agreements and other similar secured lending of $51,299 million under Customers and of $30,548 million under Banks, held at fair value through profit or loss

Page 13

Loans and advances by client segment credit quality analysis

Credit grade	Regulatory 1 year PD range (%)	S&P external ratings equivalent	Corporate & Investment Banking
			30.06.24
			Gross				Credit impairment
			Stage 1 $million	Stage 2 $million	Stage 3 $million	Total $million	Stage 1 $million	Stage 2 $million	Stage 3 $million	Total $million	Total Coverage %
Strong			83,625	1,129	-	84,754	(70)	(15)	-	(85)	0.1%
1A-2B	0 - 0.045	A+ and Above	11,929	28	-	11,957	(2)	-	-	(2)	0.0%
3A-4A	0.046 - 0.110	A/A- to BBB+/BBB	33,470	559	-	34,029	(7)	(3)	-	(10)	0.0%
4B-5B	0.111 - 0.425	BBB to BBB-/BB+	38,226	542	-	38,768	(61)	(12)	-	(73)	0.2%
Satisfactory			37,647	6,074	-	43,721	(40)	(144)	-	(184)	0.4%
6A-7B	0.426 - 1.350	BB+/BB to BB-	24,516	2,010	-	26,526	(19)	(80)	-	(99)	0.4%
8A-9B	1.351 - 4.000	BB-/B+ to B	8,614	2,557	-	11,171	(12)	(49)	-	(61)	0.5%
10A-11C	4.001 - 15.75	B/B- to B-/CCC+	4,517	1,507	-	6,024	(9)	(15)	-	(24)	0.4%
Higher risk			-	777	-	777	-	(47)	-	(47)	6.0%
12	15.751 - 99.999	CCC+/C	-	777	-	777	-	(47)	-	(47)	6.0%
Credit-impaired			-	-	5,048	5,048	-	-	(3,449)	(3,449)	68.3%
13-14	100	Defaulted	-	-	5,048	5,048	-	-	(3,449)	(3,449)	68.3%
Total			121,272	7,980	5,048	134,300	(110)	(206)	(3,449)	(3,765)	2.8%

Credit grade	Regulatory 1 year PD range (%)	S&P external ratings equivalent	Corporate & Investment Banking
			31.12.23
			Gross				Credit impairment
			Stage 1 $million	Stage 2 $million	Stage 3 $million	Total $million	Stage 1 $million	Stage 2 $million	Stage 3 $million	Total $million	Total Coverage %
Strong			84,248	1,145	-	85,393	(34)	(18)	-	(52)	0.1%
1A-2B	0 - 0.045	A+ and Above	10,891	81	-	10,972	(1)	-	-	(1)	0.0%
3A-4A	0.046 - 0.110	A/A- to BBB+/BBB	31,974	558	-	32,532	(3)	-	-	(3)	0.0%
4B-5B	0.111 - 0.425	BBB to BBB-/BB+	41,383	506	-	41,889	(30)	(18)	-	(48)	0.1%
Satisfactory			36,638	5,840	-	42,478	(67)	(179)	-	(246)	0.6%
6A-7B	0.426 - 1.350	BB+/BB to BB-	24,296	1,873	-	26,169	(38)	(77)	-	(115)	0.4%
8A-9B	1.351 - 4.000	BB-/B+ to B	8,196	2,273	-	10,469	(13)	(90)	-	(103)	1.0%
10A-11C	4.001 - 15.75	B/B- to B-/CCC+	4,146	1,694	-	5,840	(16)	(12)	-	(28)	0.5%
Higher risk			-	917	-	917	-	(60)	-	(60)	6.5%
12	15.751 - 99.999	CCC+/C	-	917	-	917	-	(60)	-	(60)	6.5%
Credit-impaired			-	-	5,508	5,508	-	-	(3,533)	(3,533)	64.1%
13-14	100	Defaulted	-	-	5,508	5,508	-	-	(3,533)	(3,533)	64.1%
Total			120,886	7,902	5,508	134,296	(101)	(257)	(3,533)	(3,891)	2.9%

Page 14

Loans and advances by client segment credit quality analysis by key geography

Corporate & Investment Banking

	Corporate & Investment Banking
	30.06.24
	Gross									Credit impairment
	Stage 1			Stage 2				Stage 3		Stage 1			Stage 2				Stage 3		Coverage
	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	%
Hong Kong	31,685	10,144	41,829	199	1,065	27	1,291	1,371	44,491	(36)	(7)	(43)	(2)	(70)	(3)	(75)	(1,111)	(1,229)	2.8%
Corporate Lending	14,459	6,614	21,073	162	853	27	1,042	1,361	23,476	(36)	(4)	(40)	(1)	(70)	(3)	(74)	(1,111)	(1,225)	5.2%
Non Corporate Lending¹	2,848	1,685	4,533	-	212	-	212	10	4,755	-	(2)	(2)	-	-	-	-	-	(2)	0.0%
Banks	14,378	1,845	16,223	37	-	-	37	-	16,260	-	(1)	(1)	(1)	-	-	(1)	-	(2)	0.0%
Singapore	15,821	7,122	22,943	352	665	9	1,026	283	24,252	(5)	(5)	(10)	-	(18)	(3)	(21)	(90)	(121)	0.5%
Corporate Lending	8,421	3,348	11,769	319	515	9	843	236	12,848	(5)	(4)	(9)	-	(13)	(3)	(16)	(90)	(115)	0.9%
Non Corporate Lending¹	1,395	572	1,967	30	144	-	174	-	2,141	-	(1)	(1)	-	(5)	-	(5)	-	(6)	0.3%
Banks	6,005	3,202	9,207	3	6	-	9	47	9,263	-	-	-	-	-	-	-	-	-	0.0%
UK	16,196	3,489	19,685	189	2,085	117	2,391	349	22,425	(7)	-	(7)	(7)	(34)	-	(41)	(198)	(246)	1.1%
Corporate Lending	6,957	835	7,792	188	1,670	-	1,858	224	9,874	(7)	-	(7)	(7)	(31)	-	(38)	(173)	(218)	2.2%
Non Corporate Lending¹	7,096	1,023	8,119	1	353	110	464	121	8,704	-	-	-	-	(3)	-	(3)	(21)	(24)	0.3%
Banks	2,143	1,631	3,774	-	62	7	69	4	3,847	-	-	-	-	-	-	-	(4)	(4)	0.1%
US	14,367	4,151	18,518	104	269	13	386	4	18,908	(4)	(2)	(6)	-	-	-	-	(4)	(10)	0.1%
Corporate Lending	5,706	2,056	7,762	-	264	-	264	1	8,027	(3)	(2)	(5)	-	-	-	-	(1)	(6)	0.1%
Non Corporate Lending¹	7,640	441	8,081	18	5	-	23	3	8,107	(1)	-	(1)	-	-	-	-	(3)	(4)	0.0%
Banks	1,021	1,654	2,675	86	-	13	99	-	2,774	-	-	-	-	-	-	-	-	-	0.0%
China	11,005	2,641	13,646	-	174	21	195	249	14,090	(3)	(1)	(4)	-	-	(2)	(2)	(131)	(137)	1.0%
Corporate Lending	4,976	2,069	7,045	-	174	21	195	246	7,486	(1)	(1)	(2)	-	-	(2)	(2)	(131)	(135)	1.8%
Non Corporate Lending¹	3,515	309	3,824	-	-	-	-	-	3,824	(1)	-	(1)	-	-	-	-	-	(1)	0.0%
Banks	2,514	263	2,777	-	-	-	-	3	2,780	(1)	-	(1)	-	-	-	-	-	(1)	0.0%
Other	29,580	19,864	49,444	458	1,977	648	3,083	2,849	55,376	(17)	(27)	(44)	(8)	(23)	(39)	(70)	(1,919)	(2,033)	3.7%
Corporate Lending	16,478	15,285	31,763	394	1,160	610	2,164	2,740	36,667	(9)	(21)	(30)	(7)	(22)	(39)	(68)	(1,813)	(1,911)	5.2%
Non Corporate Lending¹	4,134	3,410	7,544	17	724	-	741	106	8,391	(7)	(5)	(12)	-	-	-	-	(106)	(118)	1.4%
Banks	8,968	1,169	10,137	47	93	38	178	3	10,318	(1)	(1)	(2)	(1)	(1)	-	(2)	-	(4)	0.0%
Total	118,654	47,411	166,065	1,302	6,235	835	8,372	5,105	179,542	(72)	(42)	(114)	(17)	(145)	(47)	(209)	(3,453)	(3,776)	2.1%

1   Include financing, insurance and non-banking corporations and governments

Page 15

	Corporate & Investment Banking
	31.12.23
	Gross									Credit impairment
	Stage 1			Stage 2				Stage 3		Stage 1			Stage 2				Stage 3		Coverage
	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	%
Hong Kong	32,997	10,151	43,148	167	937	30	1,134	1,284	45,566	(7)	(23)	(30)	(4)	(118)	(3)	(125)	(1,025)	(1,180)	2.6%
Corporate Lending	14,401	6,289	20,690	165	855	30	1,050	1,219	22,959	(5)	(20)	(25)	(3)	(118)	(3)	(124)	(1,024)	(1,173)	5.1%
Non Corporate Lending¹	2,544	2,458	5,002	1	81	-	82	65	5,149	(1)	(2)	(3)	-	-	-	-	(1)	(4)	0.1%
Banks	16,052	1,404	17,456	1	1	-	2	-	17,458	(1)	(1)	(2)	(1)	-	-	(1)	-	(3)	0.0%
Singapore	13,180	6,046	19,226	361	509	36	906	285	20,417	(4)	(4)	(8)	(11)	(14)	(4)	(29)	(75)	(112)	0.5%
Corporate Lending	5,766	2,334	8,100	304	504	36	844	221	9,165	(4)	(3)	(7)	(11)	(13)	(4)	(28)	(74)	(109)	1.2%
Non Corporate Lending¹	1,687	510	2,197	57	2	-	59	-	2,256	-	(1)	(1)	-	-	-	-	-	(1)	0.0%
Banks	5,727	3,202	8,929	-	3	-	3	64	8,996	-	-	-	-	(1)	-	(1)	(1)	(2)	0.0%
UK	8,364	4,171	12,535	56	785	83	924	257	13,716	(5)	(5)	(10)	-	(14)	(7)	(21)	(209)	(240)	1.7%
Corporate Lending	5,407	1,559	6,966	52	539	71	662	250	7,878	(4)	(5)	(9)	-	(13)	(7)	(20)	(202)	(231)	2.9%
Non Corporate Lending¹	558	1,244	1,802	-	160	-	160	3	1,965	(1)	-	(1)	-	(1)	-	(1)	(3)	(5)	0.3%
Banks	2,399	1,368	3,767	4	86	12	102	4	3,873	-	-	-	-	-	-	-	(4)	(4)	0.1%
US	14,550	4,742	19,292	219	176	19	414	5	19,711	(2)	(2)	(4)	-	-	-	-	(5)	(9)	0.0%
Corporate Lending	7,487	2,765	10,252	146	130	-	276	1	10,529	(1)	(2)	(3)	-	-	-	-	(1)	(4)	0.0%
Non Corporate Lending¹	6,181	425	6,606	25	4	-	29	4	6,639	(1)	-	(1)	-	-	-	-	(4)	(5)	0.1%
Banks	882	1,552	2,434	48	42	19	109	-	2,543	-	-	-	-	-	-	-	-	-	0.0%
China	9,737	2,733	12,470	31	298	8	337	262	13,069	(3)	(4)	(7)	-	-	-	-	(125)	(132)	1.0%
Corporate Lending	4,723	2,179	6,902	31	297	8	336	259	7,497	(2)	(1)	(3)	-	-	-	-	(125)	(128)	1.7%
Non Corporate Lending¹	3,254	318	3,572	-	-	-	-	-	3,572	(1)	-	(1)	-	-	-	-	-	(1)	0.0%
Banks	1,760	236	1,996	-	1	-	1	3	2,000	-	(3)	(3)	-	-	-	-	-	(3)	0.2%
Other	40,704	17,895	58,599	366	3,347	1,014	4,727	3,492	66,818	(16)	(34)	(50)	(4)	(35)	(53)	(92)	(2,100)	(2,242)	3.4%
Corporate Lending	16,189	15,034	31,223	345	2,322	678	3,345	3,335	37,903	(8)	(27)	(35)	(3)	(28)	(46)	(77)	(2,012)	(2,124)	5.6%
Non Corporate Lending¹	16,051	1,523	17,574	19	946	94	1,059	151	18,784	(6)	(6)	(12)	(1)	(6)	-	(7)	(87)	(106)	0.6%
Banks	8,464	1,338	9,802	2	79	242	323	6	10,131	(2)	(1)	(3)	-	(1)	(7)	(8)	(1)	(12)	0.1%
Total	119,532	45,738	165,270	1,200	6,052	1,190	8,442	5,585	179,297	(37)	(72)	(109)	(19)	(181)	(67)	(267)	(3,539)	(3,915)	2.2%

1   Include financing, insurance and non-banking corporations and governments

Page 16

Wealth & Retail Banking

	Wealth & Retail Banking
	30.06.24
	Gross									Credit impairment
	Stage 1			Stage 2				Stage 3		Stage 1			Stage 2				Stage 3		Coverage
	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	%
Hong Kong	41,284	196	41,480	351	44	36	431	189	42,100	(28)	(29)	(57)	(12)	(10)	(10)	(32)	(49)	(138)	0.3%
Mortgages	31,424	151	31,575	142	30	13	185	65	31,825	-	-	-	-	-	-	-	(4)	(4)	0.0%
Credit cards	3,300	28	3,328	43	10	14	67	9	3,404	(14)	(28)	(42)	(4)	(9)	(5)	(18)	(9)	(69)	2.0%
Others	6,560	17	6,577	166	4	9	179	115	6,871	(14)	(1)	(15)	(8)	(1)	(5)	(14)	(36)	(65)	0.9%
Singapore	26,551	73	26,624	207	39	36	282	301	27,207	(14)	(15)	(29)	-	(5)	(5)	(10)	(249)	(288)	1.1%
Mortgages	14,287	21	14,308	161	31	15	207	20	14,535	-	-	-	-	-	-	-	(4)	(4)	0.0%
Credit cards	1,617	21	1,638	10	5	16	31	10	1,679	(4)	(15)	(19)	-	(5)	(4)	(9)	(8)	(36)	2.1%
Others	10,647	31	10,678	36	3	5	44	271	10,993	(10)	-	(10)	-	-	(1)	(1)	(237)	(248)	2.3%
Korea	18,532	180	18,712	368	10	21	399	105	19,216	(26)	(2)	(28)	(11)	(2)	(2)	(15)	(29)	(72)	0.4%
Mortgages	13,230	133	13,363	280	8	17	305	57	13,725	-	-	-	-	-	-	-	(1)	(1)	0.0%
Credit cards	64	1	65	1	-	-	1	-	66	(1)	-	(1)	-	-	-	-	-	(1)	1.5%
Others	5,238	46	5,284	87	2	4	93	48	5,425	(25)	(2)	(27)	(11)	(2)	(2)	(15)	(28)	(70)	1.3%
Others	26,180	5,068	31,248	407	79	250	736	923	32,907	(206)	(30)	(236)	(26)	(10)	(41)	(77)	(370)	(683)	2.1%
Mortgages	14,589	2,249	16,838	137	38	136	311	444	17,593	(5)	(4)	(9)	(1)	(1)	(1)	(3)	(123)	(135)	0.8%
Credit cards	1,400	88	1,488	74	1	17	92	47	1,627	(23)	(8)	(31)	(7)	-	(11)	(18)	(21)	(70)	4.3%
Others	10,191	2,731	12,922	196	40	97	333	432	13,687	(178)	(18)	(196)	(18)	(9)	(29)	(56)	(226)	(478)	3.5%
Total	112,547	5,517	118,064	1,333	172	343	1,848	1,518	121,430	(274)	(76)	(350)	(49)	(27)	(58)	(134)	(697)	(1,181)	1.0%

	Wealth & Retail Banking
	31.12.23
	Gross									Credit impairment
	Stage 1			Stage 2				Stage 3		Stage 1			Stage 2				Stage 3		Coverage
	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	Strong $million	Satis-factory $million	Total $million	Strong $million	Satis-factory $million	Higher Risk $million	Total $million	De-faulted $million	Total $million	%
Hong Kong	42,161	230	42,391	480	66	40	586	164	43,141	(17)	(33)	(50)	(14)	(10)	(9)	(33)	(39)	(122)	0.3%
Mortgages	32,374	152	32,526	282	53	13	348	63	32,937	-	-	-	(1)	-	-	(1)	(1)	(2)	0.0%
Credit cards	3,278	32	3,310	46	9	13	68	8	3,386	(2)	(32)	(34)	(5)	(9)	(5)	(19)	(8)	(61)	1.8%
Others	6,509	46	6,555	152	4	14	170	93	6,818	(15)	(1)	(16)	(8)	(1)	(4)	(13)	(30)	(59)	0.9%
Singapore	26,412	64	26,476	379	41	32	452	280	27,208	(8)	(18)	(26)	(2)	(5)	(4)	(11)	(245)	(282)	1.0%
Mortgages	14,992	16	15,008	230	34	11	275	13	15,296	-	-	-	-	-	-	-	(4)	(4)	0.0%
Credit cards	1,679	21	1,700	11	5	14	30	8	1,738	-	(17)	(17)	-	(5)	(3)	(8)	(8)	(33)	1.9%
Others	9,741	27	9,768	138	2	7	147	259	10,174	(8)	(1)	(9)	(2)	-	(1)	(3)	(233)	(245)	2.4%
Korea	22,965	211	23,176	462	20	9	491	93	23,760	(40)	-	(40)	(18)	-	-	(18)	(19)	(77)	0.3%
Mortgages	16,534	164	16,698	364	18	8	390	69	17,157	-	-	-	-	-	-	-	-	-	0.0%
Credit cards	113	2	115	3	-	-	3	-	118	(4)	-	(4)	-	-	-	-	-	(4)	3.4%
Others	6,318	45	6,363	95	2	1	98	24	6,485	(36)	-	(36)	(18)	-	-	(18)	(19)	(73)	1.1%
Others	26,655	4,788	31,443	440	79	256	775	947	33,165	(169)	(29)	(198)	(31)	(7)	(41)	(79)	(457)	(734)	2.2%
Mortgages	14,681	2,297	16,978	155	48	134	337	374	17,689	(5)	(2)	(7)	(2)	(1)	(1)	(4)	(118)	(129)	0.7%
Credit cards	1,420	68	1,488	73	1	15	89	40	1,617	(26)	(9)	(35)	(7)	-	(10)	(17)	(16)	(68)	4.2%
Others	10,554	2,423	12,977	212	30	107	349	533	13,859	(138)	(18)	(156)	(22)	(6)	(30)	(58)	(323)	(537)	3.9%
Total	118,193	5,293	123,486	1,761	206	337	2,304	1,484	127,274	(234)	(80)	(314)	(65)	(22)	(54)	(141)	(760)	(1,215)	1.0%

Movement in gross exposures and credit impairment for loans and advances, debt securities, undrawn commitments and financial guarantees (reviewed)

The tables overleaf set out the movement in gross exposures and credit impairment by stage in respect of amortised cost loans to banks and customers, undrawn commitments, financial guarantees and debt securities classified at amortised cost and FVOCI. The tables are presented for the Group, debt securities and other eligible bills.

Methodology

The movement lines within the tables are an aggregation of monthly movements over the year and will therefore reflect the accumulation of multiple trades during the year. The credit impairment charge in the income statement comprises the amounts within the boxes in the table below, less recoveries of amounts previously written off. Discount unwind is reported in net interest income and related to stage 3 financial instruments only.

Page 17

The approach for determining the key line items in the tables is set out below.

• Transfers - transfers between stages are deemed to occur at the beginning of a month based on prior month closing balances.

• Net remeasurement from stage changes - the remeasurement of credit impairment provisions arising from a change in stage is reported within the stage that the assets are transferred to. For example, assets transferred into stage 2 are remeasured from a 12-month to a lifetime expected credit loss, with the effect of remeasurement reported in stage 2. For stage 3, this represents the initial remeasurement from specific provisions recognised on individual assets transferred into stage 3 in the year.

• Net changes in exposures - new business written less repayments in the year. Within stage 1, new business written will attract up to 12 months of expected credit loss charges. Repayments of non-amortising loans (primarily within CIB) will have low amounts of expected credit loss provisions attributed to them, due to the release of provisions over the term to maturity. In stages 2 and 3, the net change in exposures reflect repayments although stage 2 may include new facilities where clients are on non-purely precautionary early alert, are CG 12, or when non-investment grade debt securities are acquired.

• Changes in risk parameters - for stages 1 and 2, this reflects changes in the probability of default (PD), loss given default (LGD) and exposure at default (EAD) of assets during the year, which includes the impact of releasing provisions over the term to maturity. It also includes the effect of changes in forecasts of macroeconomic variables during the year. In stage 3, this line represents additional specific provisions recognised on exposures held within stage 3.

• Interest due but not paid - change in contractual amount of interest due in stage 3 financial instruments but not paid, being the net of accruals, repayments and write-offs, together with the corresponding change in credit impairment.

Changes to ECL models, which incorporate changes to model approaches and methodologies, are not reported as a separate line item as these have an impact over a number of lines and stages.

Movements during the year

Stage 1 gross exposures decreased by $7.8 billion to $716 billion (31 December 2023: $724 billion). CIB increased by $20.5 billion to $358 billion (31 December 2023: $337 billion) largely due to higher amounts of financial guarantees. WRB decreased by $15.6 billion to $175 billion (31 December 2023: $191 billion), largely due to the mortgage portfolio in Korea and Hong Kong, as well as off balance sheet commitments. Stage 1 debt securities decreased by $8.9 billion to $149 billion (31 December 2023: $158 billion).

Total stage 1 provisions increased by $39 million to $565 million (31 December 2023: $526 million). CIB provisions decreased by $7 million to $144 million (31 December 2023: $151 million), due to China CRE overlay releases driven by repayments. This was partly offset by increases due to portfolio movements. WRB provisions increased by $33 million to $358 million (31 December 2023: $325 million), due to delinquencies in personal loans and unsecured lending portfolio. There was also $10 million overlay charges on Hong Kong and Singapore credit cards due to an increase in industry bankruptcy trends.

Stage 2 gross exposures decreased by $3.7 billion to $19 billion (31 December 2023: $22 billion), primarily driven by a net reduction in CIB exposures from off-balance sheet instruments, and in Central and other items where a portfolio of debt securities were maturing, which were being held by Treasury and accounted for under FVOCI. WRB exposures decreased by $0.5 billion to $2 billion (31 December 2023: $2.5 billion). Debt securities remained broadly stable at $1.8 billion (31 December 2023: $1.9 billion).

Stage 2 provisions decreased by $89 million to $428 million (31 December 2023: $517 million). CIB provisions decreased by $59 million to $259 million (31 December 2023: $318 million) from China CRE overlay releases largely due to repayments, and releases due to a sovereign upgrade. This was partly offset by portfolio movements. Debt securities provisions decreased by $24 million to $10 million (31 December 2023: $34 million) mainly due to a sovereign upgrade, which was driven by an improvement in the macroeconomic environment. The decrease was also due to the maturity of a portfolio of debt securities, which were being held by Treasury and accounted for under FVOCI.

The impact of model and methodology updates in H1 2024 reduced modelled provisions by $13 million across stages 1, 2 and 3 in WRB.

Page 18

Stage 3 gross loans for CIB decreased by $0.4 billion to $5.8 billion (31 December 2023: $6.3 billion) due to repayments and write-offs, which were partly offset by new inflows. CIB provisions decreased by $58 million to $3.6 billion (31 December 2023: $3.7 billion), due to releases from repayments and write-offs, which was offset by charges from new downgrades. WRB stage 3 loans was stable at $1.5 billion (31 December 2023: $1.5 billion) but provisions decreased by $61 million to $0.7 billion (31 December 2023: $0.8 billion) due to the unsecured portfolio being classified as held for sale in Malaysia. Debt securities increased by $223 million to $387 million (31 December 2023: $164 million) due to sovereign client positions.

All segments (reviewed)

	Stage 1			Stage 2			Stage 35			Total
	Gross balance3 $million	Total credit impair-ment $million	Net $million	Gross balance3 $million	Total credit impair-ment $million	Net $million	Gross balance3 $million	Total credit impair-ment $million	Net $million	Gross balance3 $million	Total credit impair-ment $million	Net $million
As at 1 January 2023	720,112	(645)	719,467	27,479	(618)	26,861	8,841	(4,724)	4,117	756,432	(5,987)	750,445
Transfers to stage 1	19,594	(661)	18,933	(19,583)	661	(18,922)	(11)	-	(11)	-	-	-
Transfers to stage 2	(42,628)	174	(42,454)	42,793	(182)	42,611	(165)	8	(157)	-	-	-
Transfers to stage 3	(96)	6	(90)	(2,329)	326	(2,003)	2,425	(332)	2,093	-	-	-
Net change in exposures	23,717	(185)	23,532	(22,727)	22	(22,705)	(1,708)	624	(1,084)	(718)	461	(257)
Net remeasurement from stage changes	-	52	52	-	(199)	(199)	-	(163)	(163)	-	(310)	(310)
Changes in risk parameters	-	202	202	-	(32)	(32)	-	(1,100)	(1,100)	-	(930)	(930)
Write-offs	-	-	-	-	-	-	(1,027)	1,027	-	(1,027)	1,027	-
Interest due but unpaid	-	-	-	-	-	-	(83)	83	-	(83)	83	-
Discount unwind	-	-	-	-	-	-	-	180	180	-	180	180
Exchange translation differences and other movements¹	3,177	531	3,708	(3,365)	(495)	(3,860)	(128)	(102)	(230)	(316)	(66)	(382)
As at 31 December 2023²	723,876	(526)	723,350	22,268	(517)	21,751	8,144	(4,499)	3,645	754,288	(5,542)	748,746
Income statement ECL (charge)/release		69			(209)			(639)			(779)
Recoveries of amounts previously written off		-			-			271			271
Total credit impairment (charge)/release		69			(209)			(368)			(508)
As at 1 January 2024	723,876	(526)	723,350	22,268	(517)	21,751	8,144	(4,499)	3,645	754,288	(5,542)	748,746
Transfers to stage 1	8,877	(299)	8,578	(8,862)	299	(8,563)	(15)	-	(15)	-	-	-
Transfers to stage 2	(18,521)	121	(18,400)	18,617	(122)	18,495	(96)	1	(95)	-	-	-
Transfers to stage 3	(347)	16	(331)	(576)	108	(468)	923	(124)	799	-	-	-
Net change in exposures	13,748	(72)	13,676	(11,669)	27	(11,642)	(563)	165	(398)	1,516	120	1,636
Net remeasurement from stage changes	-	44	44	-	(117)	(117)	-	(145)	(145)	-	(218)	(218)
Changes in risk parameters	-	68	68	-	(25)	(25)	-	(314)	(314)	-	(271)	(271)
Write-offs	-	-	-	-	-	-	(578)	578	-	(578)	578	-
Interest due but unpaid	-	-	-	-	-	-	13	(13)	-	13	(13)	-
Discount unwind	-	-	-	-	-	-	-	69	69	-	69	69
Exchange translation differences and other movements¹	(11,587)	83	(11,504)	(1,236)	(81)	(1,317)	(23)	(35)	(58)	(12,846)	(33)	(12,879)
As at 30 June 2024²	716,046	(565)	715,481	18,542	(428)	18,114	7,805	(4,317)	3,488	742,393	(5,310)	737,083
Income statement ECL (charge)/release⁶		40			(115)			(294)			(369)
Recoveries of amounts previously written off		-			-			130			130
Total credit impairment (charge)/release4		40			(115)			(164)			(239)

1   Includes fair value adjustments and amortisation on debt securities

2   Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets gross balances of $109,690 million (2023: $111,478 million) and Total credit impairment of $95 million (2023: $59 million)

3   Does not include $1 million (2023: Nil) release relating to Other assets

4   Reported basis

5   Stage 3 gross includes $23 million (2023: $80 million) originated credit-impaired debt securities with impairment of Nil (2023: $14 million)

6   The gross balance includes the notional amount of off balance sheet instruments

Page 19

Of which - movement of debt securities, additional tier one and other eligible bills (reviewed)

Amortised cost and FVOCI	Stage 1			Stage 2			Stage 32			Total
	Gross balance $million	Total credit impair-ment $million	Net $million	Gross balance $million	Total credit impair-ment $million	Net $million	Gross balance $million	Total credit impair-ment $million	Net $million	Gross balance $million	Total credit impair-ment $million	Net3 $million
As at 1 January 2023	166,103	(25)	166,078	5,455	(90)	5,365	144	(106)	38	171,702	(221)	171,481
Transfers to stage 1	371	(65)	306	(371)	65	(306)	-	-	-	-	-	-
Transfers to stage 2	(884)	14	(870)	884	(14)	870	-	-	-	-	-	-
Transfers to stage 3	-	-	-	(16)	-	(16)	16	-	16	-	-	-
Net change in exposures	(11,583)	(28)	(11,611)	(1,899)	(44)	(1,943)	7	-	7	(13,475)	(72)	(13,547)
Net remeasurement from stage changes	-	7	7	-	(18)	(18)	-	-	-	-	(11)	(11)
Changes in risk parameters	-	32	32	-	105	105	-	(4)	(4)	-	133	133
Write-offs	-	-	-	-	-	-	-	-	-	-	-	-
Interest due but unpaid	-	-	-	-	-	-	-	-	-	-	-	-
Exchange translation differences and other movements1	4,307	39	4,346	(2,193)	(38)	(2,231)	(3)	49	46	2,111	50	2,161
As at 31 December 2023	158,314	(26)	158,288	1,860	(34)	1,826	164	(61)	103	160,338	(121)	160,217
Income statement ECL (charge)/release		11			43			(4)			50
Recoveries of amounts previously written off		-			-			-			-
Total credit impairment (charge)/release		11			43			(4)			50
As at 1 January 2024	158,314	(26)	158,288	1,860	(34)	1,826	164	(61)	103	160,338	(121)	160,217
Transfers to stage 1	125	-	125	(125)	-	(125)	-	-	-	-	-	-
Transfers to stage 2	(555)	42	(513)	555	(42)	513	-	-	-	-	-	-
Transfers to stage 3	(131)	-	(131)	131	-	131	-	-	-	-	-	-
Net change in exposures	(5,162)	(4)	(5,166)	2	(9)	(7)	272	22	294	(4,888)	9	(4,879)
Net remeasurement from stage changes	-	-	-	-	2	2	-	-	-	-	2	2
Changes in risk parameters	-	4	4	-	26	26	-	-	-	-	30	30
Write-offs	-	-	-	-	-	-	(51)	51	-	(51)	51	-
Interest due but unpaid	-	-	-	-	-	-	-	-	-	-	-	-
Exchange translation differences and other movements1	(3,169)	(39)	(3,208)	(636)	47	(589)	2	(28)	(26)	(3,803)	(20)	(3,823)
As at 30 June 2024	149,422	(23)	149,399	1,787	(10)	1,777	387	(16)	371	151,596	(49)	151,547
Income statement ECL (charge)/release		-			19			22			41
Recoveries of amounts previously written off		-			-			-			-
Total credit impairment (charge)/release		-			19			22			41

1   Includes fair value adjustments and amortisation on debt securities

2   Stage 3 includes gross of $23 million (31 December 2023: $80 million) and ECL Nil (31 December 2023: $14 million) originated credit-impaired debt securities

3   FVOCI instruments are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount to $151,580 million (31 December 2023: $160,263 million). Refer to the Analysis of financial instrument by stage table

Page 20

Corporate & Investment Banking (reviewed)

Amortised cost and FVOCI	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million
As at 1 January 2023	315,437	(194)	315,243	20,148	(411)	19,737	6,994	(3,822)	3,172	342,579	(4,427)	338,152
Transfers to stage 1	14,948	(347)	14,601	(14,948)	347	(14,601)	-	-	-	-	-	-
Transfers to stage 2	(34,133)	80	(34,053)	34,175	(88)	34,087	(42)	8	(34)	-	-	-
Transfers to stage 3	(17)	-	(17)	(1,270)	141	(1,129)	1,287	(141)	1,146	-	-	-
Net change in exposures	41,314	(73)	41,241	(20,084)	89	(19,995)	(1,335)	623	(712)	19,895	639	20,534
Net remeasurement from stage changes	-	15	15	-	(45)	(45)	-	(82)	(82)	-	(112)	(112)
Changes in risk parameters	-	60	60	-	(68)	(68)	-	(668)	(668)	-	(676)	(676)
Write-offs	-	-	-	-	-	-	(340)	340	-	(340)	340	-
Interest due but unpaid	-	-	-	-	-	-	(120)	120	-	(120)	120	-
Discount unwind	-	-	-	-	-	-	-	155	155	-	155	155
Exchange translation differences and other movements	(360)	308	(52)	(1,148)	(283)	(1,431)	(188)	(184)	(372)	(1,696)	(159)	(1,855)
As at 31 December 2023	337,189	(151)	337,038	16,873	(318)	16,555	6,256	(3,651)	2,605	360,318	(4,120)	356,198
Income statement ECL (charge)/release2		2			(24)			(127)			(149)
Recoveries of amounts previously written off		-			-			31			31
Total credit impairment (charge)/release		2			(24)			(96)			(118)
As at 1 January 2024	337,189	(151)	337,038	16,873	(318)	16,555	6,256	(3,651)	2,605	360,318	(4,120)	356,198
Transfers to stage 1	5,730	(144)	5,586	(5,730)	144	(5,586)	-	-	-	-	-	-
Transfers to stage 2	(14,220)	41	(14,179)	14,245	(42)	14,203	(25)	1	(24)	-	-	-
Transfers to stage 3	(118)	13	(105)	(147)	(3)	(150)	265	(10)	255	-	-	-
Net change in exposures	32,957	(23)	32,934	(10,137)	39	(10,098)	(479)	127	(352)	22,341	143	22,484
Net remeasurement from stage changes	-	12	12	(1)	(32)	(33)	-	(83)	(83)	(1)	(103)	(104)
Changes in risk parameters	-	38	38	-	3	3	-	(69)	(69)	-	(28)	(28)
Write-offs	-	-	-	-	-	-	(107)	107	-	(107)	107	-
Interest due but unpaid	-	-	-	-	-	-	16	(16)	-	16	(16)	-
Discount unwind	-	-	-	-	-	-	-	54	54	-	54	54
Exchange translation differences and other movements	(3,878)	70	(3,808)	(538)	(50)	(588)	(102)	(53)	(155)	(4,518)	(33)	(4,551)
As at 30 June 2024	357,660	(144)	357,516	14,565	(259)	14,306	5,824	(3,593)	2,231	378,049	(3,996)	374,053
Income statement ECL (charge)/release²		27			10			(25)			12
Recoveries of amounts previously written off		-			-			5			5
Total credit impairment (charge)/release		27			10			(20)			17

1   The gross balance includes the notional amount of off balance sheet instruments

2   Does not include release relating to Other assets

Page 21

Wealth & Retail Banking (reviewed)

Amortised cost and FVOCI	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million
As at 1 January 2023	193,239	(413)	192,826	1,821	(118)	1,703	1,454	(776)	678	196,514	(1,307)	195,207
Transfers to stage 1	4,265	(246)	4,019	(4,254)	246	(4,008)	(11)	-	(11)	-	-	-
Transfers to stage 2	(7,544)	73	(7,471)	7,667	(73)	7,594	(123)	-	(123)	-	-	-
Transfers to stage 3	(64)	1	(63)	(1,049)	187	(862)	1,113	(188)	925	-	-	-
Net change in exposures	1,965	(78)	1,887	(1,713)	14	(1,699)	(395)	-	(395)	(143)	(64)	(207)
Net remeasurement from stage changes	-	31	31	-	(137)	(137)	-	(38)	(38)	-	(144)	(144)
Changes in risk parameters	-	110	110	-	(69)	(69)	-	(426)	(426)	-	(385)	(385)
Write-offs	-	-	-	-	-	-	(649)	649	-	(649)	649	-
Interest due but unpaid	-	-	-	-	-	-	37	(37)	-	37	(37)	-
Discount unwind	-	-	-	-	-	-	-	24	24	-	24	24
Exchange translation differences and other movements	(862)	197	(665)	-	(190)	(190)	59	33	92	(803)	40	(763)
As at 31 December 2023	190,999	(325)	190,674	2,472	(140)	2,332	1,485	(759)	726	194,956	(1,224)	193,732
Income statement ECL (charge)/release		63			(192)			(464)			(593)
Recoveries of amounts previously written off		-			-			239			239
Total credit impairment (charge)/release		63			(192)			(225)			(354)
As at 1 January 2024	190,999	(325)	190,674	2,472	(140)	2,332	1,485	(759)	726	194,956	(1,224)	193,732
Transfers to stage 1	2,963	(146)	2,817	(2,948)	146	(2,802)	(15)	-	(15)	-	-	-
Transfers to stage 2	(3,684)	36	(3,648)	3,755	(36)	3,719	(71)	-	(71)	-	-	-
Transfers to stage 3	(57)	-	(57)	(568)	112	(456)	625	(112)	513	-	-	-
Net change in exposures	(11,173)	(27)	(11,200)	(668)	(3)	(671)	(196)	-	(196)	(12,037)	(30)	(12,067)
Net remeasurement from stage changes	-	16	16	-	(82)	(82)	-	(26)	(26)	-	(92)	(92)
Changes in risk parameters	-	15	15	-	(54)	(54)	-	(245)	(245)	-	(284)	(284)
Write-offs	-	-	-	-	-	-	(382)	382	-	(382)	382	-
Interest due but unpaid	-	-	-	-	-	-	(3)	3	-	(3)	3	-
Discount unwind	-	-	-	-	-	-	-	15	15	-	15	15
Exchange translation differences and other movements	(3,604)	73	(3,531)	(38)	(81)	(119)	79	44	123	(3,563)	36	(3,527)
As at 30 June 2024	175,444	(358)	175,086	2,005	(138)	1,867	1,522	(698)	824	178,971	(1,194)	177,777
Income statement ECL (charge)/release		4			(139)			(271)			(406)
Recoveries of amounts previously written off		-			-			124			124
Total credit impairment (charge)/release		4			(139)			(147)			(282)

1   The gross balance includes the notional amount of off-balance sheet instruments

Page 22

Wealth & Retail Banking - Secured (reviewed)

Amortised cost and FVOCI	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million
As at 1 January 2023	135,362	(60)	135,302	1,413	(17)	1,396	1,028	(552)	476	137,803	(629)	137,174
Transfers to stage 1	3,311	(20)	3,291	(3,302)	20	(3,282)	(9)	-	(9)	-	-	-
Transfers to stage 2	(5,340)	11	(5,329)	5,436	(9)	5,427	(96)	(2)	(98)	-	-	-
Transfers to stage 3	(28)	1	(27)	(463)	1	(462)	491	(2)	489	-	-	-
Net change in exposures	(3,138)	(16)	(3,154)	(1,250)	3	(1,247)	(216)	-	(216)	(4,604)	(13)	(4,617)
Net remeasurement from stage changes	-	4	4	-	(16)	(16)	-	(3)	(3)	-	(15)	(15)
Changes in risk parameters	-	22	22	-	24	24	-	(110)	(110)	-	(64)	(64)
Write-offs	-	-	-	-	-	-	(109)	109	-	(109)	109	-
Interest due but unpaid	-	-	-	-	-	-	(3)	3	-	(3)	3	-
Discount unwind	-	-	-	-	-	-	-	12	12	-	12	12
Exchange translation differences and other movements	(369)	25	(344)	(7)	(22)	(29)	(24)	20	(4)	(400)	23	(377)
As at 31 December 2023	129,798	(33)	129,765	1,827	(16)	1,811	1,062	(525)	537	132,687	(574)	132,113
Income statement ECL (charge)/release		10			11			(113)			(92)
Recoveries of amounts previously written off		-			-			68			68
Total credit impairment (charge)/release		10			11			(45)			(24)
As at 1 January 2024	129,798	(33)	129,765	1,827	(16)	1,811	1,062	(525)	537	132,687	(574)	132,113
Transfers to stage 1	2,353	(13)	2,340	(2,342)	13	(2,329)	(11)	-	(11)	-	-	-
Transfers to stage 2	(2,542)	3	(2,539)	2,591	(3)	2,588	(49)	-	(49)	-	-	-
Transfers to stage 3	(16)	-	(16)	(234)	2	(232)	250	(2)	248	-	-	-
Net change in exposures	(6,534)	(4)	(6,538)	(431)	2	(429)	(113)	-	(113)	(7,078)	(2)	(7,080)
Net remeasurement from stage changes	-	4	4	-	(10)	(10)	-	(1)	(1)	-	(7)	(7)
Changes in risk parameters	-	(9)	(9)	-	17	17	-	(62)	(62)	-	(54)	(54)
Write-offs	-	-	-	-	-	-	(63)	63	-	(63)	63	-
Interest due but unpaid	-	-	-	-	-	-	23	(23)	-	23	(23)	-
Discount unwind	-	-	-	-	-	-	-	8	8	-	8	8
Exchange translation differences and other movements	(2,768)	13	(2,755)	(26)	(17)	(43)	37	24	61	(2,757)	20	(2,737)
As at 30 June 2024	120,291	(39)	120,252	1,385	(12)	1,373	1,136	(518)	618	122,812	(569)	122,243
Income statement ECL (charge)/release		(9)			9			(63)			(63)
Recoveries of amounts previously written off		-			-			43			43
Total credit impairment (charge)/release		(9)			9			(20)			(20)

1   The gross balance includes the notional amount of off balance sheet instruments

Page 23

Wealth & Retail Banking - Unsecured (reviewed)

Amortised cost and FVOCI	Stage 1			Stage 2			Stage 3			Total
	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million	Gross balance1 $million	Total credit impair-ment $million	Net $million
As at 1 January 2023	57,877	(353)	57,524	408	(101)	307	426	(224)	202	58,711	(678)	58,033
Transfers to stage 1	954	(226)	728	(952)	226	(726)	(2)	-	(2)	-	-	-
Transfers to stage 2	(2,204)	62	(2,142)	2,231	(64)	2,167	(27)	2	(25)	-	-	-
Transfers to stage 3	(36)	-	(36)	(586)	186	(400)	622	(186)	436	-	-	-
Net change in exposures	5,103	(62)	5,041	(463)	11	(452)	(179)	-	(179)	4,461	(51)	4,410
Net remeasurement from stage changes	-	27	27	-	(121)	(121)	-	(35)	(35)	-	(129)	(129)
Changes in risk parameters	-	88	88	-	(93)	(93)	-	(316)	(316)	-	(321)	(321)
Write-offs	-	-	-	-	-	-	(540)	540	-	(540)	540	-
Interest due but unpaid	-	-	-	-	-	-	40	(40)	-	40	(40)	-
Discount unwind	-	-	-	-	-	-	-	12	12	-	12	12
Exchange translation differences and other movements	(493)	172	(321)	7	(168)	(161)	83	13	96	(403)	17	(386)
As at 31 December 2023	61,201	(292)	60,909	645	(124)	521	423	(234)	189	62,269	(650)	61,619
Income statement ECL (charge)/release		53			(203)			(351)			(501)
Recoveries of amounts previously written off		-			-			171			171
Total credit impairment (charge)/release		53			(203)			(180)			(330)
As at 1 January 2024	61,201	(292)	60,909	645	(124)	521	423	(234)	189	62,269	(650)	61,619
Transfers to stage 1	610	(133)	477	(606)	133	(473)	(4)	-	(4)	-	-	-
Transfers to stage 2	(1,142)	33	(1,109)	1,164	(33)	1,131	(22)	-	(22)	-	-	-
Transfers to stage 3	(41)	-	(41)	(334)	110	(224)	375	(110)	265	-	-	-
Net change in exposures	(4,639)	(23)	(4,662)	(237)	(5)	(242)	(83)	-	(83)	(4,959)	(28)	(4,987)
Net remeasurement from stage changes	-	12	12	-	(72)	(72)	-	(25)	(25)	-	(85)	(85)
Changes in risk parameters	-	24	24	-	(71)	(71)	-	(183)	(183)	-	(230)	(230)
Write-offs	-	-	-	-	-	-	(319)	319	-	(319)	319	-
Interest due but unpaid	-	-	-	-	-	-	(26)	26	-	(26)	26	-
Discount unwind	-	-	-	-	-	-	-	7	7	-	7	7
Exchange translation differences and other movements	(836)	60	(776)	(12)	(64)	(76)	42	20	62	(806)	16	(790)
As at 30 June 2024	55,153	(319)	54,834	620	(126)	494	386	(180)	206	56,159	(625)	55,534
Income statement ECL (charge)/release		13			(148)			(208)			(343)
Recoveries of amounts previously written off		-			-			81			81
Total credit impairment (charge)/release		13			(148)			(127)			(262)

1   The gross balance includes the notional amount of off balance sheet instruments

Page 24

Analysis of stage 2 balances

The table below analyses total stage 2 gross on-and off-balance sheet exposures and associated expected credit provisions by the key SICR driver that caused the exposures to be classified as stage 2 as at 30 June 2024 and 31 December 2023 for each segment.

Where multiple drivers apply, the exposure is allocated based on the table order. For example, a loan may have breached the PD thresholds and could also be on non-purely precautionary early alert; in this instance, the exposure is reported under 'Increase in PD'.

Further details can be found in the 'Summary of Credit Risk performance' section.

	30.06.24
	Corporate & Investment Banking			Wealth & Retail Banking			Ventures			Central & other items1			Total
	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %
Increase in PD	7,885	115	1.5%	1,626	125	7.7%	51	25	49.0%	452	4	0.9%	10,014	269	2.7%
Non-purely precautionary early alert	4,019	35	0.9%	30	-	0.0%	-	-	0.0%	-	-	0.0%	4,049	35	0.9%
Higher risk (CG12)	674	22	3.3%	17	-	0.0%	-	-	0.0%	1,427	3	0.2%	2,118	25	1.2%
Sub-investment grade	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%
Top up/Sell down (Private Banking)	-	-	0.0%	39	-	0.0%	-	-	0.0%	-	-	0.0%	39	-	0.0%
Others	1,987	1	0.1%	147	4	2.7%	-	-	0.0%	426	-	0.0%	2,560	5	0.2%
30 days past due	-	-	0.0%	146	9	6.2%	5	-	0.0%	-	-	0.0%	151	9	6.0%
Management overlay	-	86	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	86	0.0%
Total stage 2	14,565	259	1.8%	2,005	138	6.9%	56	25	44.6%	2,305	7	0.3%	18,931	429	2.3%

	31.12.23
	Corporate & Investment Banking			Wealth & Retail Banking			Ventures			Central & other items1			Total
	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %	Gross $million	ECL $million	Cove-rage %
Increase in PD	8,262	75	0.9%	1,962	109	5.6%	96	23	24.0%	599	13	2.2%	10,919	220	2.0%
Non-purely precautionary early alert	5,136	26	0.5%	37	-	0.0%	-	-	0.0%	-	-	0.0%	5,173	26	0.5%
Higher risk (CG12)	1,008	56	5.6%	26	1	3.8%	-	-	0.0%	2,020	17	0.8%	3,054	74	2.4%
Sub-investment grade	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%
Top up/Sell down (Private Banking)	-	-	0.0%	148	2	1.4%	-	-	0.0%	-	-	0.0%	148	2	1.4%
Others	2,467	37	1.5%	151	16	10.6%	-	-	0.0%	489	-	0.0%	3,107	53	1.7%
30 days past due	-	-	0.0%	148	12	8.1%	2	-	0.0%	-	-	0.0%	150	12	8.0%
Management overlay	-	124	0.0%	-	-	0.0%	-	-	0.0%	-	17	0.0%	-	141	0.0%
Total stage 2	16,873	318	1.9%	2,472	140	5.7%	98	23	23.5%	3,108	47	1.5%	22,551	528	2.3%

1   Includes Gross and ECL for Cash and balances at central banks and Assets held for sale

Page 25

Credit impairment charge (reviewed)

The table below analyses credit impairment charges or releases of the ongoing business portfolio and restructuring business portfolio for the half year ended 30 June 2024.

Further details can be found in the 'Summary of Credit Risk performance' section.

	30.06.24			30.06.23
	Stage 1 & 2 $million	Stage 3 $million	Total $million	Stage 1 & 2 $million	Stage 3 $million	Total $million
Ongoing business portfolio
Corporate & Investment Banking	(38)	3	(35)	33	36	69
Wealth & Retail Banking	135	147	282	15	93	108
Ventures	7	36	43	12	11	23
Central & other items	(31)	(10)	(41)	(27)	(1)	(28)
Credit impairment charge/(release)	73	176	249	33	139	172
Restructuring business portfolio
Others	2	(11)	(9)	(2)	(9)	(11)
Credit impairment charge/(release)	2	(11)	(9)	(2)	(9)	(11)
Total credit impairment charge/ (release)	75	165	240	31	130	161

Problem credit management and provisioning

Forborne and other modified loans by client segment (reviewed)

A forborne loan arises when a concession has been made to the contractual terms of a loan in response to a customer's financial difficulties.

Net forborne loans decreased by $139 million to $866 million (31 December 2023: $1,005 million), largely on the non-performing forborne loans stock. The net non-performing forborne loans decreased by $136 million to $831 million (31 December 2023: $967 million) largely due to write-offs and repayments.

Amortised cost	30.06.24				31.12.23
	Corporate & Investment Banking $million	Wealth & Retail Banking $million	Ventures $million	Total $million	Corporate & Investment Banking $million	Wealth & Retail Banking $million	Ventures $million	Total $million
All loans with forbearance measures	2,139	299	-	2,438	2,340	314	-	2,654
Credit impairment (stage 1 and 2)	-	(2)	-	(2)	-	(2)	-	(2)
Credit impairment (stage 3)	(1,450)	(120)	-	(1,570)	(1,529)	(118)	-	(1,647)
Net carrying value	689	177	-	866	811	194	-	1,005
Included within the above table
Gross performing forborne loans	4	33	-	37	-	40	-	40
Modification of terms and conditions1	4	33	-	37	-	40	-	40
Refinancing2	-	-	-	-	-	-	-	-
Impairment provisions	-	(2)	-	(2)	-	(2)	-	(2)
Modification of terms and conditions1	-	(2)	-	(2)	-	(2)	-	(2)
Refinancing2	-	-	-	-	-	-	-	-
Net performing forborne loans	4	31	-	35	-	38	-	38
Collateral	-	22	-	22	-	31	-	31
Gross non-performing forborne loans	2,135	266	-	2,401	2,340	274	-	2,614
Modification of terms and conditions1	1,906	266	-	2,172	2,113	274	-	2,387
Refinancing2	229	-	-	229	227	-	-	227
Impairment provisions	(1,450)	(120)	-	(1,570)	(1,529)	(118)	-	(1,647)
Modification of terms and conditions1	(1,240)	(120)	-	(1,360)	(1,337)	(118)	-	(1,455)
Refinancing2	(210)	-	-	(210)	(192)	-	-	(192)
Net non-performing forborne loans	685	146	-	831	811	156	-	967
Collateral	296	49	-	345	341	49	-	390

1   Modification of terms is any contractual change apart from refinancing, as a result of credit stress of the counterparty, i.e. interest reductions, loan covenant waivers

2   Refinancing is a new contract to a borrower in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour

Page 26

Forborne and other modified loans by country

Net forborne loans decreased by $139 million to $866 million (31 December 2023: $1,005 million), mainly on the non-performing forborne loans stock. Stage 3 forborne loans reductions in the 'Other' category, were largely in CIB and driven by UAE ($53 million) and Bahrain ($30 million).

Amortised cost	30.06.24								31.12.23
	Hong Kong $million	Korea $million	China $million	Singa-pore $million	UK $million	US $million	Other $million	Total $million	Hong Kong $million	Korea $million	China $million	Singa-pore $million	UK $million	US $million	Other $million	Total $million
Performing forborne loans	2	6	-	3	-	-	24	35	-	6	-	3	-	-	29	38
Stage 3 forborne loans	135	20	91	34	49	1	501	831	104	22	114	37	46	1	643	967
Net forborne loans	137	26	91	37	49	1	525	866	104	28	114	40	46	1	672	1,005

Credit Risk mitigation

Potential credit losses from any given account, customer or portfolio are mitigated using a range of tools such as collateral, netting arrangements, credit insurance and credit derivatives, taking into account expected volatility and guarantees.

The reliance that can be placed on these mitigants is carefully assessed in light of issues such as legal certainty and enforceability, market valuation correlation and counterparty risk of the guarantor.

The unadjusted market value of collateral across all asset types, in respect of CIB, without adjusting for over-collateralisation, increased to $343 billion (31 December 2023: $290 billion) predominantly due to an increase in reverse repos.

Collateral held on loans and advances

The table below details collateral held against exposures, separately disclosing stage 2 and stage 3 exposure and corresponding collateral.

Amortised cost	30.06.24
	Net amount outstanding			Collateral			Net exposure
	Total $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million	Total2 $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million	Total $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million
Corporate & Investment Banking1	175,766	8,163	1,652	32,993	2,797	638	142,773	5,366	1,014
Wealth & Retail Banking	120,249	1,714	821	85,192	810	664	35,057	904	157
Ventures	1,109	26	-	-	-	-	1,109	26	-
Central & other items	24,003	129	64	1,678	128	-	22,325	1	64
Total	321,127	10,032	2,537	119,863	3,735	1,302	201,264	6,297	1,235

Amortised cost	31.12.23
	Net amount outstanding			Collateral			Net exposure
	Total $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million	Total2 $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million	Total $million	Stage 2 financial assets $million	Credit-impaired financial assets (S3) $million
Corporate & Investment Banking1	175,382	8,175	2,046	36,458	2,972	623	138,924	5,203	1,423
Wealth & Retail Banking	126,059	2,163	724	86,827	1,136	554	39,232	1,027	170
Ventures	1,033	33	-	-	-	-	1,033	33	-
Central & other items	29,478	964	209	2,475	964	-	27,003	-	209
Total	331,952	11,335	2,979	125,760	5,072	1,177	206,192	6,263	1,802

1   Includes loans and advances to banks

2   Adjusted for over-collateralisation based on the drawn and undrawn components of exposures

Page 27

Collateral - Corporate & Investment Banking (reviewed)

Collateral taken for longer-term and sub-investment grade corporate loans was stable at 40 per cent (31 December 2023: 41 per cent).

Our underwriting standards encourage taking specific charges on assets and we consistently seek high-quality, investment-grade collateral.

84 per cent (31 December 2023: 83 per cent) of tangible collateral excluding reverse repurchase agreements and financial guarantees held comprises physical assets or is property based, with the remainder held in cash. Overall collateral decreased by $3.5 billion to $33 billion (31 December 2023: $36 billion) mainly due to a decrease in reverse repos.

Non-tangible collateral, such as guarantees and standby letters of credit, is also held against corporate exposures,
although the financial effect of this type of collateral is less significant in terms of recoveries. However, this is considered when determining the loss given default and other credit-related factors. Collateral is also held against off balance sheet exposures, including undrawn commitments and trade-related instruments.

Corporate & Investment Banking

Amortised cost	30.06.24 $million	31.12.23 $million
Maximum exposure	175,766	175,382
Property	8,634	9,339
Plant, machinery and other stock	947	933
Cash	2,782	2,985
Reverse repos	10,303	13,826
AAA	616	-
AA- to AA+	383	1,036
A- to A+	5,378	10,606
BBB- to BBB+	758	855
Lower than BBB-	35	169
Unrated	3,133	1,160
Financial guarantees and insurance	5,274	5,057
Commodities	14	5
Ships and aircraft	5,039	4,313
Total value of collateral1	32,993	36,458
Net exposure	142,773	138,924

1   Adjusted for over-collateralisation based on the drawn and undrawn components of exposures

Collateral - Wealth & Retail Banking (reviewed)

In WRB, fully secured products remain stable at 85 per cent of the total portfolio (31 December 2023: 85 per cent).

The following table presents an analysis of loans to individuals by product; split between fully secured, partially secured and unsecured.

Amortised cost	30.06.24				31.12.23
	Fully secured $million	Partially secured $million	Unsecured $million	Total $million	Fully secured $million	Partially secured $million	Unsecured $million	Total $million
Maximum exposure	101,615	522	18,112	120,249	106,914	505	18,640	126,059
Loans to individuals
Mortgages	77,535	-	-	77,535	82,943	-	-	82,943
Credit Cards & Personal Loans	423	-	16,850	17,273	375	-	17,395	17,770
Auto	224	-	-	224	312	-	-	312
Secured wealth products	21,197	-	-	21,197	20,303	-	-	20,303
Other	2,236	522	1,262	4,020	2,981	505	1,245	4,731
Total collateral1				85,192				86,827
Net exposure2				35,057				39,232
Percentage of total loans	85%	0%	15%		85%	0%	15%

1   Collateral values are adjusted where appropriate in accordance with our risk mitigation policy and for the effect of over-collateralisation

2   Amounts net of ECL

Page 28

Mortgage loan-to-value ratios by country (reviewed)

Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties on which they are secured.

In a majority of mortgages, the value of property held as security significantly exceeds principal outstanding of the mortgage loans. The average LTV of the overall mortgage portfolio remains broadly stable at 47.9 per cent (31 December 2023: 47.1 per cent). The top three markets (Hong Kong, Singapore and Korea) which represents 79 per cent of the mortgage portfolio continue to have low portfolio LTVs (Hong Kong, Singapore and Korea at 56.8 per cent, 43.0 per cent and 40.6 per cent respectively).

An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below.

For the Hong Kong residential mortgage portfolio, 8.1 per cent of the portfolio was in negative equity, representing approximately 4,000 accounts that exceeded their property values by a total of $196 million. Of these, 13 accounts with a total loan balance of $9.4 million were more than 90 days past due. Under local regulations, mortgages with LTV exceeding 70 per cent (including those in negative equity) are generally required to be insured by the Mortgage Insurance Program (MIP).

Amortised cost	30.06.24
	Hong Kong % Gross	Singapore % Gross	Korea % Gross	Other % Gross	Total % Gross
Less than 50 per cent	43.3	53.5	68.2	51.7	53.8
50 per cent to 59 per cent	18.8	23.5	11.6	15.7	16.9
60 per cent to 69 per cent	10.6	14.4	10.9	16.6	12.6
70 per cent to 79 per cent	4.8	8.2	8.4	11.3	7.7
80 per cent to 89 per cent	6.3	0.3	0.7	4.1	3.3
90 per cent to 99 per cent	8.1	0.0	0.1	0.4	2.9
100 per cent and greater	8.1	0.0	0.1	0.2	2.8
Average portfolio loan-to-value	56.8	43.0	40.6	47.6	47.9
Loans to individuals - mortgages ($million)	31,821	14,531	13,724	17,458	77,534

Amortised cost	31.12.23
	Hong Kong % Gross	Singapore % Gross	Korea % Gross	Other % Gross	Total % Gross
Less than 50 per cent	44.9	50.9	69.5	51.0	54.9
50 per cent to 59 per cent	19.5	24.7	11.0	16.7	17.1
60 per cent to 69 per cent	9.7	15.2	9.7	16.3	11.9
70 per cent to 79 per cent	4.3	8.7	8.9	11.6	7.9
80 per cent to 89 per cent	7.3	0.5	0.6	3.6	3.3
90 per cent to 99 per cent	7.4	-	0.1	0.4	2.5
100 per cent and greater	7.0	-	0.1	0.4	2.4
Average portfolio loan-to-value	55.7	43.4	40.4	47.8	47.1
Loans to individuals - mortgages ($million)	32,935	15,292	17,157	17,559	82,943

Page 29

Collateral and other credit enhancements possessed or called upon (reviewed)

The Group obtains assets by taking possession of collateral or calling upon other credit enhancements (such as guarantees). Repossessed properties are sold in an orderly fashion. Where the proceeds are in excess of the outstanding loan balance the excess is returned to the borrower.

Certain equity securities acquired may be held by the Group for investment purposes and are classified as fair value through profit or loss, and the related loan written off. The carrying value of collateral possessed and held by the Group is $11.9 million (31 December 2023: $16.5 million).

	30.06.24 $million	31.12.23 $million
Property, plant and equipment	9.0	10.5
Guarantees	2.9	6.0
Total	11.9	16.5

Other Credit risk mitigation (reviewed)

Other forms of credit risk mitigation are set out below.

Credit default swaps

The Group has entered into credit default swaps for portfolio management purposes, referencing loan assets with a notional value of $3.5 billion (31 December 2023: $3.5 billion). These credit default swaps are accounted for as financial guarantees as per IFRS 9 as they will only reimburse the holder for an incurred loss on an underlying debt instrument.

The Group continues to hold the underlying assets referenced in the credit default swaps and it continues to be exposed to related Credit Risk and Foreign Exchange Rate Risk on these assets.

Credit linked notes

The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional value of $29.0 billion (31 December 2023: $22.5 billion). The Group continues to hold the underlying assets for which the credit linked notes provide mitigation. The credit linked notes are recognised as a financial liability at amortised cost on the balance sheet.

Derivative financial instruments

The Group enters into master netting agreements which, in the event of default, result in a single amount owed by or to the counterparty through netting the sum of the positive and negative mark-to-market values of applicable derivative transactions. Credit Risk mitigation for derivative financial instruments is set out below.

Off-balance sheet exposures

For certain types of exposures, such as letters of credit and guarantees, the Group obtains collateral such as cash depending on internal Credit Risk assessments, as well as in the case of letters of credit holding legal title to the underlying assets should a default take place.

Other portfolio analysis

This section provides analysis of Credit quality by industry and Industry analysis of loans and advances by key geography.

Page 30

Credit quality by industry

Loans and advances

This section provides an analysis of the Group's amortised cost portfolio by industry on a gross, total credit impairment and net basis.

Further details can be found in the 'Summary of Credit Risk performance' section.

Amortised cost	30.06.24
	Stage 1			Stage 2			Stage 3			Total
	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount
Industry:
Energy	11,879	(15)	11,864	554	(19)	535	894	(570)	324	13,327	(604)	12,723
Manufacturing	19,050	(9)	19,041	712	(14)	698	500	(383)	117	20,262	(406)	19,856
Financing, insurance and non-banking	30,566	(9)	30,557	666	(5)	661	107	(103)	4	31,339	(117)	31,222
Transport, telecom and utilities	15,188	(10)	15,178	2,178	(48)	2,130	431	(152)	279	17,797	(210)	17,587
Food and household products	8,335	(6)	8,329	356	(8)	348	290	(226)	64	8,981	(240)	8,741
Commercial real estate	12,650	(45)	12,605	1,769	(73)	1,696	1,606	(1,194)	412	16,025	(1,312)	14,713
Mining and quarrying	5,622	(2)	5,620	219	(9)	210	101	(59)	42	5,942	(70)	5,872
Consumer durables	6,166	(3)	6,163	249	(18)	231	311	(277)	34	6,726	(298)	6,428
Construction	2,415	(2)	2,413	466	(3)	463	368	(325)	43	3,249	(330)	2,919
Trading companies & distributors	623	-	623	36	-	36	86	(53)	33	745	(53)	692
Government	27,566	(4)	27,562	771	(3)	768	197	(19)	178	28,534	(26)	28,508
Other	5,022	(5)	5,017	133	(6)	127	221	(88)	133	5,376	(99)	5,277
Total	145,082	(110)	144,972	8,109	(206)	7,903	5,112	(3,449)	1,663	158,303	(3,765)	154,538
Retail Products:
Mortgage	76,084	(8)	76,076	1,008	(4)	1,004	586	(132)	454	77,678	(144)	77,534
Credit Cards	7,628	(112)	7,516	240	(67)	173	74	(53)	21	7,942	(232)	7,710
Personal loans and other unsecured lending	10,488	(215)	10,273	331	(75)	256	243	(100)	143	11,062	(390)	10,672
Auto	223	-	223	1	-	1	-	-	-	224	-	224
Secured wealth products	20,888	(28)	20,860	183	(8)	175	488	(328)	160	21,559	(364)	21,195
Other	3,856	(7)	3,849	133	(2)	131	136	(93)	43	4,125	(102)	4,023
Total	119,167	(370)	118,797	1,896	(156)	1,740	1,527	(706)	821	122,590	(1,232)	121,358
Net carrying value (customers)¹	264,249	(480)	263,769	10,005	(362)	9,643	6,639	(4,155)	2,484	280,893	(4,997)	275,896
Net carrying value (Banks)¹	44,793	(4)	44,789	392	(3)	389	57	(4)	53	45,242	(11)	45,231

1   Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $3,991 million (Loans to Banks) and $7,788 million
(Loans to customers)

Page 31

Amortised cost	31.12.23
	Stage 1			Stage 2			Stage 3			Total
	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount	Gross balance $million	Total credit impair-ment $million	Net carrying amount
Industry:
Energy	9,397	(8)	9,389	672	(22)	650	949	(535)	414	11,018	(565)	10,453
Manufacturing	21,239	(8)	21,231	708	(16)	692	656	(436)	220	22,603	(460)	22,143
Financing, insurance and non-banking	31,633	(13)	31,620	571	(1)	570	80	(77)	3	32,284	(91)	32,193
Transport, telecom and utilities	14,710	(8)	14,702	1,722	(36)	1,686	481	(178)	303	16,913	(222)	16,691
Food and household products	7,668	(15)	7,653	323	(7)	316	355	(262)	93	8,346	(284)	8,062
Commercial real estate	12,261	(30)	12,231	1,848	(129)	1,719	1,712	(1,191)	521	15,821	(1,350)	14,471
Mining and quarrying	5,995	(4)	5,991	220	(10)	210	151	(84)	67	6,366	(98)	6,268
Consumer durables	5,815	(3)	5,812	300	(21)	279	329	(298)	31	6,444	(322)	6,122
Construction	2,230	(2)	2,228	502	(8)	494	358	(326)	32	3,090	(336)	2,754
Trading companies & distributors	581	-	581	57	-	57	107	(58)	49	745	(58)	687
Government	33,400	(6)	33,394	1,783	(5)	1,778	367	(33)	334	35,550	(44)	35,506
Other	4,262	(4)	4,258	161	(3)	158	187	(70)	117	4,610	(77)	4,533
Total	149,191	(101)	149,090	8,867	(258)	8,609	5,732	(3,548)	2,184	163,790	(3,907)	159,883
Retail Products:
Mortgage	81,210	(8)	81,202	1,350	(5)	1,345	519	(123)	396	83,079	(136)	82,943
Credit Cards	7,633	(104)	7,529	244	(65)	179	69	(50)	19	7,946	(219)	7,727
Personal loans and other unsecured lending	10,867	(188)	10,679	324	(77)	247	315	(165)	150	11,506	(430)	11,076
Auto	310	-	310	1	-	1	1	-	1	312	-	312
Secured wealth products	19,923	(22)	19,901	278	(10)	268	474	(340)	134	20,675	(372)	20,303
Other	4,558	(7)	4,551	161	(5)	156	118	(94)	24	4,837	(106)	4,731
Total	124,501	(329)	124,172	2,358	(162)	2,196	1,496	(772)	724	128,355	(1,263)	127,092
Net carrying value (customers)¹	273,692	(430)	273,262	11,225	(420)	10,805	7,228	(4,320)	2,908	292,145	(5,170)	286,975
Net carrying value (Banks)¹	44,384	(8)	44,376	540	(10)	530	77	(6)	71	45,001	(24)	44,977

1   Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $1,738 million (Loans to Banks) and $13,996 million (Loans to customers)

Industry analysis of loans and advances by key geography

This section provides an analysis of the Group's amortised cost loan portfolio, net of provisions, by industry and geography.

The Manufacturing sector group is spread across a diverse range of industries, including automobiles and components, capital goods, pharmaceuticals, biotech and life sciences, technology hardware and equipment, chemicals, paper products and packaging, with lending spread over 3269 clients.

Page 32

Corporate & Investment Banking

Amortised cost	30.06.24							31.12.23
	Hong Kong $million	China $million	Singa-pore $million	UK $million	US $million	Other $million	Total $million	Hong Kong $million	China $million	Singa-pore $million	UK $million	US $million	Other $million	Total $million
Industry:
Energy	2,840	56	3,014	3,646	1,594	1,560	12,710	3,118	42	1,162	1,341	3,638	1,130	10,431
Manufacturing	3,299	4,353	1,302	436	2,111	8,333	19,834	3,570	4,309	1,666	694	2,921	8,982	22,142
Financing, insurance and non-banking	3,505	3,823	2,031	8,535	8,098	3,943	29,935	3,700	3,570	1,708	1,724	6,627	14,864	32,193
Transport, telecom and utilities	5,140	410	3,022	1,336	595	7,078	17,581	4,634	429	2,499	1,030	630	7,470	16,692
Food and household products	359	467	1,746	1,004	626	4,539	8,741	541	519	911	816	664	4,611	8,062
Commercial real estate	4,030	411	1,549	1,100	1,823	5,800	14,713	3,895	588	1,125	1,436	1,236	6,192	14,472
Mining and quarrying	955	691	506	1,520	195	2,005	5,872	1,028	735	427	1,729	279	2,071	6,269
Consumer durables	3,028	310	282	114	487	2,207	6,428	3,030	244	180	177	483	2,008	6,122
Construction	233	146	525	119	385	1,511	2,919	176	163	319	137	389	1,569	2,753
Trading companies and distributors	119	185	125	31	37	195	692	119	75	121	31	20	321	687
Government	1,248	-	103	145	5	4,332	5,833	1,445	1	547	236	6	3,814	6,049
Other	2,247	321	661	349	167	1,532	5,277	1,676	265	646	257	264	1,425	4,533
Net loans and advances to customers - CIB	27,003	11,173	14,866	18,335	16,123	43,035	130,535	26,932	10,940	11,311	9,608	17,157	54,457	130,405
Net loans and advances to banks	16,258	2,779	9,263	3,843	2,774	10,314	45,231	17,457	1,996	8,994	3,868	2,544	10,119	44,978

Wealth & Retail Banking

Amortised cost	30.06.24					31.12.23
	Hong Kong $million	Korea $million	Singapore $million	Other $million	Total $million	Hong Kong $million	Korea $million	Singapore $million	Other $million	Total $million
Retail Products:
Mortgages	31,821	13,724	14,531	17,458	77,534	32,935	17,157	15,292	17,559	82,943
Credit Cards	3,335	65	1,643	1,558	6,601	3,325	114	1,705	1,549	6,693
Personal Loans and other unsecured lending	1,015	2,907	255	6,495	10,672	950	3,230	220	6,676	11,076
Auto	-	-	171	53	224	-	-	240	72	312
Secured wealth products	5,199	25	10,229	5,742	21,195	5,164	33	9,388	5,718	20,303
Other	592	2,423	90	918	4,023	644	3,149	82	856	4,731
Net loans and advances to customers - WRB	41,962	19,144	26,919	32,224	120,249	43,018	23,683	26,927	32,430	126,058

Vulnerable, cyclical and high carbon sectors

Vulnerable and cyclical sectors are those that the Group considers to be most at risk from current economic stresses, including volatile energy and commodity prices, and we continue to monitor exposures to these sectors particularly carefully.

Sectors are identified and grouped as per the International Standard Industrial Classification (ISIC) system and exposure numbers have been updated to include all in-scope ISIC codes used for target setting among the high carbon sectors.

The maximum exposures shown in the table include Loans and Advances to Customers at Amortised cost, Fair Value through profit or loss, and committed facilities available as per IFRS 9 - Financial Instruments in $million.

Further details can be found in the 'Summary of Credit Risk performance' section.

Page 33

Maximum exposure

	30.06.24
	Maximum on Balance Sheet Exposure (net of credit impairment) $million	Collateral $million	Net On Balance Sheet Exposure $million	Undrawn Commitments (net of credit impairment) $million	Financial Guarantees (net of credit impairment) $million	Net Off Balance Sheet Exposure $million	Total On & Off Balance Sheet Net Exposure $million
Industry:
Automotive manufacturers1	3,120	61	3,059	3,350	290	3,640	6,699
Aviation1,2	1,751	935	816	1,964	676	2,640	3,456
Of which: High Carbon Sector	1,395	970	425	1,202	632	1,834	2,259
Commodity Traders2	8,429	324	8,105	2,213	6,539	8,752	16,857
Metals & Mining1,2	4,651	325	4,326	3,653	1,632	5,285	9,611
Of which: Steel1	2,068	216	1,852	692	376	1,068	2,920
Of which: Coal Mining1	13	5	8	50	101	151	159
Of which: Aluminium1	535	33	502	388	118	506	1,008
Shipping1	7,285	4,621	2,664	2,851	433	3,284	5,948
Construction2	3,013	351	2,662	2,577	5,910	8,487	11,149
Of which: Cement1	949	55	894	621	277	898	1,792
Commercial Real Estate2	15,127	5,964	9,163	5,042	802	5,844	15,007
Of which: High Carbon Sector	8,511	3,460	5,051	2,421	659	3,080	8,131
Hotels & Tourism2	1,950	689	1,261	1,290	360	1,650	2,911
Oil & Gas1,2	8,100	1,026	7,074	8,543	7,070	15,613	22,687
Power1	5,356	1,103	4,253	3,516	918	4,434	8,687
Total3	58,782	15,399	43,383	34,999	24,630	59,629	103,012
Of which: Vulnerable and cyclical sectors	43,021	9,614	33,407	25,282	22,989	48,271	81,678
Of which: High carbon sectors	37,332	11,550	25,782	23,634	10,874	34,508	60,290
Total Corporate & Investment Banking4	190,337	27,434	162,903	110,067	74,551	184,618	347,521
Total Group5	423,399	119,863	303,536	178,475	85,934	264,409	567,945

1   High-carbon sectors

2   Vulnerable and cyclical sectors

3   Maximum On Balance sheet exposure include FVTPL portion of $2,254 million, of which Vulnerable sector is $1,650 million and High Carbon sector is $1,186 million

4   Include On Balance sheet FVTPL amount of $59,802 million for Corporate & Investment Banking loans to customers

5   Total Group includes net loans and advances to banks and net loans and advances to customers held at amortised cost of $45,231 million and $275,896 million

       respectively and loans to banks and loans and advances to customers held at FVTPL of $42,461 million and $59,811 million respectively. Refer to credit quality table

Page 34

	31.12.23
	Maximum On Balance Sheet Exposure (net of credit impairment) Million	Collateral Million	Net On Balance Sheet Exposure Million	Undrawn Commitments (net of credit impairment) Million	Financial Guarantees (net of credit impairment) Million	Net Off Balance Sheet Exposure Million	Total On & Off Balance Sheet Net Exposure Million
Industry:
Automotive manufacturers1	3,564	65	3,499	3,791	538	4,329	7,828
Aviation1,2	1,775	974	801	1,794	668	2,462	3,263
Of which: High Carbon Sector	1,330	974	356	944	615	1,559	1,915
Commodity Traders2	7,406	303	7,103	2,591	6,281	8,872	15,975
Metals & Mining1,2,4	4,136	354	3,782	3,862	1,153	5,015	8,797
Of which: Steel1	1,596	193	1,403	601	358	959	2,362
Of which: Coal Mining1	29	9	20	51	99	150	170
Of which: Aluminium1	526	9	517	338	188	526	1,043
Shipping1	5,964	3,557	2,407	2,261	291	2,552	4,959
Construction2	2,853	448	2,405	2,753	5,927	8,680	11,085
Of which: Cement1,4	671	47	624	769	259	1,028	1,652
Commercial Real Estate2	14,533	6,363	8,170	4,658	311	4,969	13,139
Of which: High Carbon Sector	7,498	3,383	4,115	1,587	112	1,699	5,814
Hotels & Tourism2	1,680	715	965	1,339	227	1,566	2,531
Oil & Gas1,2	6,278	894	5,384	7,845	6,944	14,789	20,173
Power1	5,411	1,231	4,180	3,982	732	4,714	8,894
Total3	53,600	14,904	38,696	34,876	23,072	57,948	96,644
Of which: Vulnerable and cyclical sectors	38,661	10,051	28,610	24,842	21,511	46,353	74,963
Of which: High carbon sectors	32,867	10,362	22,505	22,169	10,136	32,305	54,810
Total Corporate & Investment Banking5	188,903	32,744	156,159	104,437	63,183	167,620	323,779
Total Group6	423,276	125,760	297,516	182,299	74,278	256,577	554,093

1   High-carbon sectors

2   Vulnerable and cyclical sectors

3   Maximum On Balance sheet exposure include FVTPL portion of $640 million, of which Vulnerable sector is $602 million and High Carbon sector is $125 million

4   Restated Metals & Mining to align the vulnerable and cyclical sector definition to that used for climate reporting. Other Metals and Mining has been removed from
high carbon sectors and Cement added to provide consistency with climate reporting and individual high carbon sectors

5   Represented to include On Balance sheet FVTPL amount of $58,498 million for Corporate & Investment Banking loans to customers

6   Represented to include On Balance sheet FVTPL amount. In 2023, total Group includes net loans and advances to banks and net loans and advances to customers

       held at amortised cost of $44,977 million and $286,975 million respectively and loans to banks and loans and advances to customers held at FVTPL of $32,813 million

       and $58,511 million respectively. Refer to credit quality table

Page 35

Loans and advances by stage

Amortised Cost	30.06.24
	Stage 1			Stage 2			Stage 3			Total
	Gross Balance $million	Total Credit Impair-ment $million	Net Carrying Amount $million	Gross Balance $million	Total Credit Impair-ment $million	Net Carrying Amount $million	Gross Balance $million	Total Credit Impair-ment $million	Net Carrying Amount $million	Gross Balance $million	Total Credit Impair-ment $million	Net Carrying Amount $million
Industry:
Aviation	1,605	(1)	1,604	77	-	77	63	(12)	51	1,745	(13)	1,732
Commodity Traders	7,838	(2)	7,836	31	(1)	30	503	(491)	12	8,372	(494)	7,878
Metals & Mining	3,889	(2)	3,887	188	(8)	180	110	(66)	44	4,187	(76)	4,111
Construction	2,415	(2)	2,413	466	(3)	463	368	(325)	43	3,249	(330)	2,919
Commercial Real Estate	12,650	(45)	12,605	1,769	(73)	1,696	1,606	(1,194)	412	16,025	(1,312)	14,713
Hotels & Tourism	1,789	(2)	1,787	35	-	35	125	(28)	97	1,949	(30)	1,919
Oil & Gas	7,211	(6)	7,205	530	(11)	519	524	(149)	375	8,265	(166)	8,099
Total	37,397	(60)	37,337	3,096	(96)	3,000	3,299	(2,265)	1,034	43,792	(2,421)	41,371
Total CIB	121,272	(110)	121,162	7,980	(206)	7,774	5,048	(3,449)	1,599	134,300	(3,765)	130,535
Total Group	309,042	(482)	308,560	10,397	(367)	10,030	6,696