FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the
month of February
HSBC Holdings plc
42nd
Floor, 8 Canada Square, London E14 5HQ, England
(Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form
20-F X Form 40-F
21 February 2024
HSBC HOLDINGS PLC
2023 RESULTS - HIGHLIGHTS
Noel Quinn, Group Chief Executive, said:
"Our record profit performance in 2023 enabled us to reward our
shareholders with our highest full-year dividend since 2008, three
share buy-backs last year totalling $7bn,
and a further share buy-back of up to $2bn. This reflected four
years of hard work and the strength of our balance sheet in a
higher interest rate environment.
We have a strong platform for growth with the opportunities that
exist within our two home markets and across our international
wholesale, market-leading transaction banking, and wealth
management businesses. We are focused on capturing these growth
opportunities, improving our earnings sustainability and targeting
mid-teens returns in 2024."
2023 financial performance (vs 2022)
- Profit
before tax rose
by $13.3bn to $30.3bn, primarily
reflecting revenue growth. This included a favourable
year-on-year impact of $2.5bn relating to the sale of our retail
banking operations in France, which completed on 1 January 2024,
and a $1.6bn provisional gain recognised on the acquisition of
Silicon Valley Bank UK Limited ('SVB UK') in 2023. These were
partly offset by the recognition of an impairment charge in 2023 of
$3.0bn relating to the investment in our associate, Bank of
Communications Co., Limited ('BoCom'), which followed the
reassessment of our accounting
value-in-use. On a constant
currency basis, profit before tax increased by $13.8bn
to $30.3bn.
Profit after tax increased by $8.3bn to
$24.6bn.
- Revenue
rose by $15.4bn or 30% to $66.1bn, including growth in net interest
income ('NII') of $5.4bn, with
rises in all of our global businesses due to the higher interest
rate environment. Non-interest
income increased by $10.0bn, reflecting
a rise in trading and fair value income of $6.4bn, mainly in Global
Banking and Markets. The associated funding costs reported in NII
grew by $6.2bn. The increase also included the impact of the
strategic transactions referred to above, partly offset by disposal
losses of $1.0bn relating to repositioning and risk management
activities in our hold-to-collect-and-sell
portfolio.
- Net
interest margin ('NIM') of 1.66% increased by 24 basis
points ('bps'), reflecting higher interest
rates.
- Expected
credit losses and other credit impairment charges ('ECL') were
$3.4bn, a
reduction of $0.1bn. The net charge in 2023 primarily
comprised stage 3 charges, notably related to mainland China
commercial real estate sector exposures. It also reflected
continued economic uncertainty, rising interest rates and
inflationary pressures. ECL were 33bps
of average gross loans, including a 3bps reduction
due to the inclusion of loans and advances classified as held for
sale.
- Operating
expenses fell by $0.6bn or 2% to $32.1bn, mainly
due to the non-recurrence of restructuring and other related costs
following the completion of our cost to achieve programme at the
end of 2022. This more than offset higher technology costs,
inflationary pressures and an increase in performance-related pay.
We also incurred a higher UK bank levy and a charge relating to the
Federal Deposit Insurance Corporation ('FDIC') special assessment
in the US. Target basis
operating expenses rose by 6%. This is measured on a
constant currency basis, excluding notable items and the impact of
the acquisition of SVB UK and related investments internationally.
It also excludes the impact of retranslating the prior year results
of hyperinflationary economies at constant
currency.
- Customer
lending balances rose by $15bn on a reported basis, but fell
by $3bn on a constant currency basis. Growth
included a $7.8bn reclassification of secured loans in France from
held for sale, an addition of $8bn from the acquisition of SVB UK,
and higher mortgage balances in HSBC UK and Hong Kong. These
increases were more than offset by a reduction in wholesale term
lending, notably in Asia, and from business divestments in Oman and
New Zealand.
- Customer
accounts rose by $41bn on a reported basis, and $13bn on a constant
currency basis, primarily
in Wealth and Personal Banking, reflecting growth in Asia, partly
offset by reductions in HSBC UK, reflecting cost of living
pressures and the competitive environment, despite an increase
of $6bn from the acquisition of SVB UK. There was also a reduction
due to the sale of our business in Oman.
- Common
equity tier 1 ('CET1') capital ratio of 14.8% rose by 0.6
percentage points, as
capital generation was partly offset by dividends and share
buy-backs.
- The
Board has approved a fourth interim
dividend of $0.31 per share, resulting in a total for 2023 of $0.61
per share. We also intend to initiate
a share buy-back
of up to $2.0bn, which we expect to complete
by our first quarter 2024 results announcement.
4Q23 financial performance (vs 4Q22)
- Reported
profit before tax down $4.1bn to $1.0bn. The
reduction included the recognition of an impairment charge in 4Q23
of $3.0bn relating to the investment in our associate BoCom, and
the impact of a 4Q23 impairment relating to the sale of our retail
banking operations in France of $2.0bn as we reclassified these
operations as held for sale. On a constant
currency basis, profit before tax
down $4.0bn to $1.0bn. Reported profit after tax
down $4.4bn to $0.2bn.
- Reported
revenue down 11% to $13.0bn, due
the impact of 4Q23 impairment relating to the sale of our retail
banking operations in France, as mentioned above, disposal losses
relating to repositioning and risk management activities in our
hold-to-collect and sell portfolio and the impact of
hyperinflationary accounting in Argentina. These factors were in
part offset by revenue growth in Global Payments Solutions, Capital
Markets and Advisory and Markets and Securities Services
('MSS').
- Reported
ECL down $0.4bn to $1.0bn. The
charge in 4Q23 included $0.2bn of charges relating to exposures in
the mainland China commercial real estate
sector.
- Reported
operating expenses
down 2% to $8.6bn, as
lower restructuring expenses following the completion of our
cost-saving programme at the end of 2022, more than offset growth
from a higher UK bank levy, the FDIC special assessment in the US,
the impact of rising inflation and higher performance-related
pay.
Outlook
- We
continue to target a return on average tangible equity ('RoTE') in
the mid-teens for 2024, excluding
the impact of notable items (see page 25 of
our Annual Report
and Accounts 2023 for information on our RoTE
target for 2024). Our guidance reflects our current outlook for the
global macroeconomic environment, including customer and financial
markets activity.
- Based
upon our current forecasts, we expect banking NII of at least $41bn
for 2024. This
guidance reflects our current modelling of a number of market
dependent factors, including market-implied interest rates (as of
mid-February 2024), as well as customer behaviour and activity
levels, which we would also expect to impact our non-interest
income. We do not reconcile our forward guidance on banking NII to
reported NII.
- While
our outlook for loan growth remains cautious for the first half of
2024, we continue to
expect year-on-year customer lending percentage growth in the
mid-single digits over the medium to long
term.
- Given
continued uncertainty in the forward economic outlook, we
expect ECL charges as
a percentage of average gross loans to be around 40bps in
2024 (including customer lending
balances transferred to held for sale). We continue to expect our
ECL charges to normalise towards a range of 30bps to 40bps of
average loans over the medium to long term.
- We
retain a Group-wide focus on cost discipline. We are targeting cost
growth of approximately 5% for 2024 compared with 2023, on a target
basis. This
target reflects our current business plan for 2024, and includes an
increase in staff compensation, higher technology spend and
investment for growth and efficiency, in part mitigated by cost
savings from actions taken during 2023.
- Our
cost target basis for 2024 excludes the impact of the disposal of
our retail banking business in France and the planned disposal of
our banking business in Canada from the 2023 baseline. Our cost
target basis is measured on a constant currency basis and excludes
notable items and the impact of retranslating the prior year
results of hyperinflationary economies at constant
currency. We
do not reconcile our forward guidance on target basis costs to
reported operating expenses.
- We
intend to continue to manage the CET1 capital ratio within our
medium-term target range of 14% to 14.5%.
- Our
dividend payout ratio target remains at 50% for
2024,
excluding material notable items and related impacts. We have
announced a further share buy-back of up to $2.0bn. Further
buy-backs remain subject to appropriate capital
levels.
Key financial metrics
|
For the year ended
|
Reported results
|
2023
|
20221
|
2021
|
Profit before tax ($m)
|
30,348
|
17,058
|
18,906
|
Profit after tax ($m)
|
24,559
|
16,249
|
14,693
|
Cost efficiency ratio (%)
|
48.5
|
64.6
|
69.9
|
Net interest margin (%)
|
1.66
|
1.42
|
1.20
|
Basic earnings per share ($)
|
1.15
|
0.72
|
0.62
|
Diluted earnings per share ($)
|
1.14
|
0.72
|
0.62
|
Dividend per ordinary share (in respect of the period)
($)
|
0.61
|
0.32
|
0.25
|
Dividend
payout ratio (%)2
|
50
|
44
|
40
|
Alternative performance measures
|
|
|
|
Constant
currency profit before tax ($m)
|
30,348
|
16,541
|
17,400
|
Constant
currency cost efficiency ratio (%)
|
48.5
|
64.8
|
70.0
|
Expected credit losses and other credit impairment charges ('ECL')
as % of average gross loans and advances to customers
(%)
|
0.36
|
0.36
|
(0.07)
|
Expected
credit losses and other credit impairment charges ('ECL') as % of
average gross loans and advances to customers, including held for
sale (%)
|
0.33
|
0.35
|
(0.07)
|
Basic earnings per share excluding material notable items and
related impacts ($)
|
1.22
|
N/A
|
N/A
|
Return on average ordinary shareholders' equity (%)
|
13.6
|
9.0
|
7.1
|
Return on average tangible equity (%)
|
14.6
|
10.0
|
8.3
|
Return
on average tangible equity excluding strategic transactions and
impairment of BoCom (%)
|
15.6
|
11.3
|
N/A
|
Target
basis operating expenses ($m)
|
31,614
|
29,811
|
N/A
|
|
At 31 December
|
Balance sheet
|
2023
|
20221
|
2021
|
Total assets ($m)
|
3,038,677
|
2,949,286
|
2,957,939
|
Net loans and advances to customers ($m)
|
938,535
|
923,561
|
1,045,814
|
Customer accounts ($m)
|
1,611,647
|
1,570,303
|
1,710,574
|
Average interest-earning assets ($m)
|
2,161,746
|
2,143,758
|
2,209,513
|
Loans and advances to customers as % of customer accounts
(%)
|
58.2
|
58.8
|
61.1
|
Total shareholders' equity ($m)
|
185,329
|
177,833
|
198,250
|
Tangible ordinary shareholders' equity ($m)
|
155,710
|
146,927
|
158,193
|
Net asset value per ordinary share at period end ($)
|
8.82
|
8.01
|
8.76
|
Tangible net asset value per ordinary share at period end
($)
|
8.19
|
7.44
|
7.88
|
Capital, leverage and liquidity
|
|
|
|
Common
equity tier 1 capital ratio (%)3
|
14.8
|
14.2
|
15.8
|
Risk-weighted
assets ($m)3,4
|
854,114
|
839,720
|
838,263
|
Total
capital ratio (%)3,4
|
20.0
|
19.3
|
21.2
|
Leverage
ratio (%)3,4
|
5.6
|
5.8
|
5.2
|
High-quality
liquid assets (liquidity value) ($m)4,5
|
647,505
|
647,046
|
688,209
|
Liquidity
coverage ratio (%)4,5
|
136
|
132
|
139
|
Net
stable funding ratio (%)4,5
|
133
|
136
|
N/A
|
Share count
|
|
|
|
Period end basic number of $0.50 ordinary shares outstanding
(millions)
|
19,006
|
19,739
|
20,073
|
Period end basic number of $0.50 ordinary shares outstanding and
dilutive potential ordinary shares (millions)
|
19,135
|
19,876
|
20,189
|
Average basic number of $0.50 ordinary shares outstanding
(millions)
|
19,478
|
19,849
|
20,197
|
|
|
|
|
For reconciliation and analysis of our reported results on a
constant currency basis, including lists of notable items, see
page 111 of the Annual Report and Accounts
2023. Definitions and
calculations of other alternative performance measures are included
in 'Reconciliation of alternative performance measures' on
page 130 of the Annual Report and Accounts
2023.
1 From 1 January 2023, we adopted IFRS 17 'Insurance
Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly. Comparative data for the year ended 31
December 2021 are prepared on an IFRS 4 basis.
2 In 2023, our dividend payout ratio was adjusted for
material notable items and related impacts, including all
associated income statement impacts relating to those items. In
2022, our dividend payout ratio was adjusted for the loss on
classification to held for sale of our retail banking business in
France, items relating to the planned sale of our banking business
in Canada, and the recognition of certain deferred tax assets. No
items were adjusted for in 2021.
3 Unless otherwise stated, regulatory capital ratios
and requirements are based on the transitional arrangements of the
Capital Requirements Regulation in force at the time. References to
EU regulations and directives (including technical standards)
should, as applicable, be read as references to the UK's version of
such regulation or directive, as onshored into UK law under the
European Union (Withdrawal) Act 2018, and as may be subsequently
amended under UK law.
4 Regulatory numbers and ratios are as presented at the
date of reporting. Small changes may exist between these numbers
and ratios and those subsequently submitted in regulatory filings.
Where differences are significant, we may restate in subsequent
periods.
5 The liquidity coverage ratio is based on the average
value of the preceding 12 months. The net stable funding ratio is
based on the average value of four preceding quarters.
Highlights
|
Year ended 31 Dec
|
|
2023
|
2022¹
|
|
$m
|
$m
|
Reported
|
|
|
Revenue2,3,4,5
|
66,058
|
50,620
|
Change in expected credit losses and other credit impairment
charges
|
(3,447)
|
(3,584)
|
Operating expenses
|
(32,070)
|
(32,701)
|
Share
of profit in associates and joint ventures less
impairment9
|
(193)
|
2,723
|
Profit before tax
|
30,348
|
17,058
|
Tax
charge
|
(5,789)
|
(809)
|
Profit after tax
|
24,559
|
16,249
|
Constant currency6
|
|
|
Revenue2,3,4,5
|
66,058
|
49,871
|
Change in expected credit losses and other credit impairment
charges
|
(3,447)
|
(3,630)
|
Operating expenses
|
(32,070)
|
(32,302)
|
Share
of profit in associates and joint ventures less
impairment9
|
(193)
|
2,602
|
Profit before tax
|
30,348
|
16,541
|
Tax
charge
|
(5,789)
|
(649)
|
Profit after tax
|
24,559
|
15,892
|
Notable items
|
|
|
Revenue
|
|
|
Disposals,
acquisitions and related costs3,4,5
|
1,298
|
(2,737)
|
Fair
value movements on financial instruments7
|
14
|
(618)
|
Restructuring
and other related costs8
|
-
|
(247)
|
Disposal losses on Markets Treasury repositioning
|
(977)
|
-
|
Operating expenses
|
|
|
Disposals, acquisitions and investment in new
businesses
|
(321)
|
(18)
|
Restructuring
and other related costs9
|
136
|
(2,882)
|
Impairment of interest in associate10
|
(3,000)
|
-
|
Tax
|
|
|
Tax
credit on notable items
|
207
|
1,026
|
Recognition of losses
|
-
|
2,333
|
Uncertain tax positions
|
427
|
(142)
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the year ended 31 December 2022 have been
restated accordingly.
2 Net operating income before change in expected
credit losses and other credit impairment charges, also referred to
as revenue.
3 Includes losses from classifying businesses as held
for sale as part of a broader restructuring of our European
business which includes the impact of the sale of our retail
banking operations in France.
4 Includes fair value movements on the foreign exchange
hedging of the expected proceeds from the planned sale of our
banking business in Canada.
5 Includes the provisional gain of $1.6bn recognised in
respect of the acquisition of SVB UK in 1Q23.
6 Constant currency performance is computed by
adjusting reported results of comparative periods for the effects
of foreign currency translation differences, which distort
period-on-period comparisons.
7 Fair value movements on non-qualifying hedges in HSBC
Holdings.
8 Comprises gains and losses relating to the business
update in February 2020, including losses associated with the RWA
reduction programme.
9 Amounts in 2023 relate to reversals of restructuring
provisions recognised during 2022.
10 Relates to an impairment loss of $3.0bn recognised in
respect of the Group's investment in BoCom. See Note 18 on
page 391 of our Annual
Report and Accounts 2023.
Statement by Mark E Tucker, Group Chairman
The global economy performed better than expected in 2023, but
growth remained sluggish and the economic environment was
challenging for many of our customers. Although inflation fell
globally, core inflation levels and interest rates remained
elevated. There was also significant variability in growth from
market to market and increased volatility within the banking
sector. Our core purpose of 'opening up a world of opportunity'
underlines our focus on helping our customers and clients to
navigate this complexity and access growth, wherever it
is.
Many of our customers and colleagues are living through very
difficult times. Higher interest rates have had a significant
impact on businesses and households, and we will remain conscious
of this with interest rates expected to begin to fall back in 2024.
The wars between Russia and Ukraine, and now between Israel and
Hamas, are absolutely devastating. Our thoughts are with all those
impacted, including our colleagues in those parts of the world, and
their families and friends. Their resilience, professionalism and
care for one another during these most testing of times has been,
and is, exceptional.
Progress and performance
Turning to our performance, I want to again pay tribute to my
colleagues. The record profit performance that we delivered in 2023
was supported by the impact of interest rates on our strong balance
sheet, but it was also testament to the tireless efforts of our
people around the world. I would like to thank them sincerely for
their hard work, dedication and commitment to serving our
customers.
In 2023, reported profit before tax was $30.3bn, which was an
increase of $13.3bn compared with 2022. This was due mainly to
higher revenue and a number of notable items. Our three global
businesses delivered good revenue growth, and we ended the year
with strong capital, funding and liquidity positions.
We remain committed to sharing the benefits of our improved
performance with our shareholders. The Board approved a fourth
quarterly dividend of $0.31 per share, bringing the total dividend
for 2023 to $0.61 per share. Furthermore, in 2023 we announced
three share buy-backs worth a total of $7bn and, today, have
announced a further share buy-back of up to $2bn.
The planned sale of our banking operations in Canada received final
approval from the Canadian government at the end of last year.
Subject to completion of the transaction, which is expected in the
first quarter of 2024, the Board will consider a special dividend
of $0.21 per share, to be paid in the first half of 2024, as a
priority use of the proceeds.
With this anticipated transaction and the completion of the sale of
our retail banking business in France last month, our focus has
moved to investing for growth, while maintaining efficiency. Two
examples of growth opportunities last year were the agreed
acquisition of Citi's retail wealth business in mainland China,
which will help accelerate our Wealth strategy, and the acquisition
of SVB UK, following the difficulties experienced by its US parent
entity. Acquiring SVB UK was opportunistic, but the deal made
excellent strategic sense for HSBC, and it also helped to protect
clients, safeguard jobs and maintain financial
stability.
Technology and sustainability are two of the trends transforming
banking and the world around us. The opportunities from generative
AI are among the most transformative within my working life. We are
actively exploring a number of use cases, while also working to
manage the associated risks.
Meanwhile the global climate challenge is becoming increasingly
acute. Our presence in many of the sectors and markets where the
need to reduce emissions is the greatest provides us with an
opportunity to work with our clients to help address it. This is
set out in our first net zero transition plan. The Board discussed
and contributed to the net zero transition plan in depth. We
believe that it is a realistic and ambitious assessment of the
long-term journey ahead, as we continue to work with our clients on
their transitions to a low-carbon future. It is clear there will be
many uncertainties and dependencies, and that our approach will
need to continue to evolve with the real world around
us.
Board operations
Our work on sustainability was one of the many topics discussed
with our shareholders at our 2023 Annual General Meeting ('AGM') in
May. Ahead of that, Noel and I were pleased to meet with Hong Kong
shareholders at our Informal Shareholders' Meeting. At both
meetings, we also discussed the resolutions that were requisitioned
by shareholders on the Group's strategy and dividend policy.
Shareholders expressed strong support for the Group's current
strategy by voting overwhelmingly with the Board and against these
resolutions at the AGM. This enabled the Board, my colleagues and
our shareholders to focus on our shared objectives of serving our
customers, driving stronger performance, and creating more value
for our investors.
In 2023, the Board held meetings in London, Birmingham, Hong Kong,
Paris, New York, Mumbai and Delhi. We also returned to Beijing and
Shanghai last month. On each occasion, the Board engaged with
clients, colleagues, government officials and regulators - with
these discussions underlining that HSBC continues to have a key
role connecting the world's trade and finance hubs.
There were a number of changes to the composition of the Board last
year. At the 2023 AGM, we said farewell to Jackson Tai, who made an
important, extensive and lasting contribution to the success of
HSBC during his time as a non-executive Director. His leadership in
strengthening risk and conduct governance and oversight was
particularly critical through a period of significant change. We
also announced in December that David Nish intends to retire from
the Board at the 2024 AGM. David has made an invaluable
contribution to the Board over the past eight years, particularly
in recent years as Chair of the Group Audit Committee and as Senior
Independent Director. I would like to thank him warmly for his
consistent counsel and guidance.
I am pleased that Kalpana Morparia, Ann Godbehere, Brendan Nelson
and Swee Lian Teo joined the Board during 2023. Each of them brings
experience and expertise that is an asset to the Board.
Specifically, Ann's extensive public-listed company board
experience means that she is ideally placed to take over as Senior
Independent Director, while Brendan's UK and international
financial expertise and significant experience as audit chair at
UK-listed companies will be particularly valuable as he takes over
leadership of the Group Audit Committee.
Macroeconomic outlook
Looking ahead, 2024 is likely to be another eventful year. The
slowing of inflation in the second half of 2023 means that monetary
tightening now appears to be coming to an end. However, current
inflation levels in many economies remain above their targets. As
central banks continue to try to bridge this gap, voters head to
the polls in a significant number of countries across the globe.
The timing and outcomes of these elections will impact the decision
making of governments and have geopolitical, as well as fiscal,
implications. We will monitor the results closely, and take a
long-term view of strategy, purpose and capital allocation, while
cognisant of any short-term challenges.
Among these potential challenges are the increased uncertainties
due to wars in Europe and the Middle East, and disruption to global
trade and supply chains caused by these and attacks on shipping in
the Red Sea. However, we remain cautiously optimistic about
economic prospects for 2024. We expect growth to slow in the first
half of the year and recover thereafter. We also expect the
variable economic growth that has characterised recent years to
continue.
The economies of south and south-east Asia carry good economic
momentum into 2024. India and Vietnam are currently among the
fastest-growing economies in the world, benefiting from competitive
labour costs, supportive policies and changing supply chains.
Chinese companies are among those increasingly looking towards
these and other markets, as China's economic transformation
towards high-quality growth and domestic consumption
continues.
China's recovery after reopening was bumpier than expected, but its
economy grew in line with its annual target of around 5% in 2023.
We expect this to be maintained in 2024, with recently announced
policy measures to support the property sector and local government
debt gradually flowing through to the wider economy. Hong Kong's
growth has moved along at a slower but healthy pace and is likely
to remain in line with pre-pandemic levels.
As Asia continues to grow, a significant opportunity is emerging to
connect it to another high-growth region. The Middle East region
performed very well economically in 2023 and the outlook remains
strong for 2024, notwithstanding the risks arising from conflicts
in the region. As countries like Saudi Arabia and the UAE continue
to diversify their economies, new opportunities are created to
connect them to Asia, and Asia to them.
The US economy grew more quickly than expected in 2023 in the face
of higher interest rates. Growth is likely to be lower in 2024,
although it should remain higher than in Europe where growth
remains subdued. The UK economy, which entered a technical
recession at the end of 2023, has nonetheless been resilient.
Headline inflation should fall in the first half of the year, with
core inflation following by the end of 2024. This will of course
determine the pace of interest rate cuts.
I would like to end by reiterating my thanks to my colleagues for
all that they have done, and all that they continue to do, for
HSBC. Their tireless efforts are reflected by our improved
financial performance and increased returns for shareholders in
2023 - and I look forward to them securing the foundations for our
future success.
Mark E Tucker
Group Chairman
21 February 2024
Review by Noel Quinn, Group Chief Executive
2023 was a very good year for HSBC. I would like to start by paying
tribute to my colleagues for all that they did last year, and in
the preceding three years. As I have said before, they have fully
embraced our core purpose of 'opening up a world of opportunity' in
all they do - from helping clients and customers to expand to new
markets or move overseas, to digitising our business and helping
our people to be their best, to our ongoing work on the transition
to net zero.
Our performance last year was great credit to them. We delivered
strong revenue growth across all three global businesses, supported
by higher interest rates, which enabled us to deliver our best
return on average tangible equity in more than a decade. As well as
improving financial performance, our strategy is increasing
shareholder returns. I am pleased that we have rewarded our
shareholders for their loyalty with the highest full-year dividend
per share since 2008, as well as three share buy-backs in 2023
totalling $7bn. In total, we returned $19bn to shareholders by way
of dividend and share buy-backs in respect of 2023. In addition, we
have today announced a further share buy-back of up to
$2bn.
As we move into 2024, I am confident that there are opportunities
ahead for us and our clients that can help us to sustain our good
performance going into the next phase of the interest rate
cycle.
The environment does, however, remain challenging. The wars in
Europe and the Middle East are beyond comprehension on a human
level, and my thoughts remain with all those impacted. Both
conflicts also still have the potential to escalate further. That
would first and foremost deepen the humanitarian crisis, but also
likely lead to another wave of market and economic turmoil.
Interest rates are expected to fall this year, which we believe
should in turn help to increase economic activity. The outlook
currently remains uncertain, however, and many of our customers
remain concerned about their finances. In the midst of these
challenges, we will stay focused on what we are here to do - which
is to serve our customers and clients, and help them with any
financial difficulties they face.
Financial performance
Our results are a testament to the way we stayed focused in 2023.
Reported profit before tax was $30.3bn, which was $13.3bn higher
than in 2022. This included a number of notable items, including a
favourable year-on-year impact of $2.5bn relating to the sale of
our retail banking operations in France and a $1.6bn provisional
gain on the acquisition of SVB UK. These were offset by a valuation
adjustment of $3.0bn relating to our investment in BoCom, which
followed the reassessment of our accounting value-in-use in line
with recent market developments in mainland China. This adjustment
has no material impact on our capital, capital ratio and
distribution capacity, and therefore no impact on our share
buy-backs or dividends. We remain confident in the resilience of
the Chinese economy, and the growth opportunities in mainland China
over the medium to long term.
Reported revenue grew by 30% or $15.4bn, driven by an increase in
net interest income of $5.4bn from all three global businesses.
Non-interest income increased by $10bn, reflecting increased
trading and fair value income of $6.4bn, mainly in Global Banking
and Markets, and the favourable year-on-year impact from the
impairment relating to the sale of our retail banking operations in
France and provisional gain on the acquisition of SVB
UK.
In 2023, we delivered a return on average tangible equity of 14.6%,
or 15.6% excluding strategic transactions and the impairment on our
investment in BoCom.
Our three global businesses performed well. In Commercial Banking,
profit before tax was up by 76% to $13.3bn on a constant currency
basis, driven by revenue increases across all our main legal
entities. Within this, Global Payments Solutions revenue increased
by 78% or $5.4bn on a constant currency basis, driven by higher
margins reflecting higher interest rates and repricing. Fee income
increased by 4% due to growth in transaction banking and higher
volumes in cards and international payments, while our trade
business performed well relative to the market and we increased our
market share.
Global Banking and Markets delivered profit before tax of $5.9bn,
up 26% compared with 2022, on a constant currency basis. Revenue
grew by 10% on a constant currency basis, due to higher net
interest income in Global Payments Solutions and Securities
Services. In Wealth and Personal Banking, profit before tax of
$11.5bn was $6.1bn higher than in 2022, on a constant currency
basis. Revenue was up by 31% or $6.4bn on a constant currency
basis, reflecting growth in Personal Banking and in Wealth, as well
as the positive year-on-year impact relating to the sale of our
French retail banking business. Within this, Wealth revenue of
$7.5bn was up 8% or $0.6bn on a constant currency basis, with good
growth in private banking and asset management.
Reported costs for 2023 were down by 2% compared with the previous
year, as lower restructuring costs offset higher technology
spending, inflation, higher performance-related pay and levies. On
a target basis, costs increased by 6%, which was 1% higher than
previously guided due to levies including a charge relating to the
FDIC special assessment levy in the US. Our reported
cost-efficiency ratio improved to 48.5% from 64.6% in 2022,
supported by higher net interest income.
Our 2023 reported ECL charge of $3.4bn was $0.1bn lower than in
2022. This primarily comprised stage 3 net charges, notably related
to mainland China commercial real estate sector exposures, and
reflected the continued uncertainty within the global economy.
After good capital generation in 2023, we ended the year with a
CET1 ratio of 14.8%. We are able to pay a fourth interim dividend
of $0.31 per share, bringing the total 2023 dividend to $0.61 per
share, which is the highest since 2008.
From transform to sustain and grow
Looking forward, supportive interest rates and good underlying
business growth have given us strong momentum. We continue to
target a mid-teens return on average tangible equity. We are also,
however, mindful of the interest rate cycle and the subsequent
impact on net interest income. In 2023, we increased the size and
duration of our structural hedges to reduce the sensitivity of
banking net interest income to interest rate movements and help
stabilise future earnings. We also see a number of growth
opportunities within our strategy that play to our
strengths.
The first is to further grow our international businesses, which
remains our biggest differentiator and growth opportunity.
International expansion remains a core strategy for corporates and
institutions seeking to develop and expand, especially the
mid-market corporates that HSBC is very well-positioned to serve.
Rather than de-globalising, we are seeing the world re-globalise,
as supply chains change and intra-regional trade flows increase.
Our international network and presence in markets that are
benefiting like the ASEAN region and Mexico help us to capitalise
on these trends. As a result, our market-leading trade franchise
facilitated more than $850bn of trade in 2023, while we are the
second biggest payments company by revenue and we processed around
$500tn of payments electronically in 2023. This helped to grow
wholesale multi-jurisdictional client revenue from customers who
bank with us in more than one market, by 29% in 2023. With
multi-jurisdictional corporate customers in Commercial Banking
generating around five times as much client revenue as an average
domestic customer, we continue to focus on growing this further,
especially in the mid-market segment where we have a competitive
advantage and there is still potential to further extend our market
leadership.
The second is to diversify our revenue. Building our wealth
business to meet the rising demand for wealth management services,
especially in Asia, has been a strategic priority. Last year, we
attracted net new invested assets of $84bn, following $80bn in 2022
and $64bn in 2021, underlining the traction that we have gained.
Our agreement to acquire Citi's retail wealth management portfolio
in mainland China helps accelerate our plans. Another trend is the
increasing demand for seamless, integrated, cross-border banking
services, which innovation is helping us to deliver. We now have
1.3 million Global Money customers, up from 550,000 in 2022, and
grew revenue from Wealth and Personal Banking international
customers by 41% last year, from $7.2bn to $10.2bn. Critically,
there was a 43% increase in new-to-bank international customers
compared with 2022, driven by the new international proposition
that we launched and continue to develop. As in wholesale, these
international customers generate higher revenue, bringing in around
three times as much as average domestic-only
customers.
The third is continued growth in our two home markets. Our business
is built on two very deep pools of liquidity in Hong Kong and the
UK, which underpin our exceptional balance sheet strength and,
therefore, all that we do as a business. Hong Kong and the UK are
both also very profitable, well-connected markets. We are well
positioned to capitalise on our positions as the number one bank in
Hong Kong and a leading bank in the UK. Hong Kong's connectivity,
both globally and to mainland China, are helping us to grow our
franchise. We have increased our market share in trade in Hong Kong
by 6.6 percentage points over the last three years, according to
HKMA data. Meanwhile new-to-bank customers in Hong Kong increased
by 36% over the same period as we have capitalised on the return of
visitors from mainland China. In the UK, we have good traction in
Commercial Banking and continue to grow market share in Wealth and
Personal Banking. We are the leading bank for UK large corporates,
with more than 70% market penetration last year, according to
Coalition Greenwich. Euromoney also named us as the best bank in
the UK for small and medium-sized enterprises, as digitisation
helped to grow new-to-bank clients through Kinetic. We also
increased our market share of UK mortgage stock, from 7.4% in 2020
to 8% in 2023, according to Bank of England data. As economic
conditions improve and we continue to invest, we are confident in
our ability to grow further in these critical markets.
We have also continued to diversify our profit generation
geographically across multiple markets. The positions that we have
as a leading foreign bank in mainland China, India, Singapore, the
UAE, Saudi Arabia and Mexico - all of which are also well connected
to our international network - mean we are well placed to capture
opportunities in these fast-growing economies. This was again
evident as they all grew reported profits significantly in 2023,
with mainland China (excluding associates), India, and Singapore
each contributing in excess of $1bn of profits to the
Group.
It is critical that we maintain tight cost discipline. This was
challenging in 2023 in a high inflation environment, and will
likely remain so in 2024. At the same time, we need to invest in
growth, so we remain very focused on maintaining tight underlying
costs. The sale of our French retail banking operations completed
on 1 January 2024, and the planned sale of our banking business in
Canada remains due to complete in the first quarter of 2024. A
number of smaller exits remain underway as we continue to look at
opportunities to reshape our portfolio. At the same time, our
acquisition of SVB UK enabled us to create a bigger, new
proposition in HSBC Innovation Banking, which combines deep sector
specialisms with our balance sheet strength and global reach,
ensuring we continue our long history of supporting
entrepreneurs.
Driving cost savings enables us to invest in technology, which is
the fourth opportunity. The digitisation of our business continues
to improve customer experience and increase efficiency. Using AI to
help price complex structural options in our Foreign Exchange
business has cut execution times down from hours to minutes. We
have also identified hundreds of opportunities to leverage
generative AI, and will focus our efforts on use cases with
tangible benefits for the Group and our customers.
Innovation also creates new avenues for growth. We recently
launched Zing, which is our open market mobile platform focused on
cross-border payments, initially available in the UK. It offers
similar capabilities as Global Money does to our international
Wealth and Personal Banking customers, but is targeted at non-HSBC
customers and allows us to drive growth beyond our traditional
customer footprint.
Underpinning all of this is our work to build a stronger
performance culture, improve colleague experience and prepare our
workforce for the future. This is important because achieving our
ambitions depends on our 220,000 colleagues feeling motivated and
believing in our strategy. In our most recent staff survey, I was
pleased that the number of colleagues seeing the positive impact of
our strategy in 2023 was up 11 percentage points on 2020, which is
also above the financial services sector benchmark.
Finally, helping to finance the substantial investment needs of our
customers in the transition to net zero is a growing commercial
opportunity, as well as a necessity to mitigate rising financial
and wider societal risks. Our first net zero transition plan shows
how we intend to finance and support the transition to net zero and
collaborate globally to help enable change at scale. It also sets
out our roadmap for implementing net zero, which we will do by
supporting our customers, embedding net zero into the way we
operate and partnering for systemic change. We understand that our
approach - including our own transition plan - will need to evolve
over time to keep pace with both the evolving science and real
economy decarbonisation across the sectors and geographies we
serve.
Thank you
On a personal note, one of the most enjoyable parts of 2023 for me
was spending time with many of my colleagues around the world.
Reconnecting with them, and seeing first-hand their passion for
serving our customers, pride in HSBC and ambitions for the future,
was energising and inspiring. Leading HSBC is a privilege, and my
colleagues are the main reason why.
2023 was a very good year for HSBC. We now have an opportunity to
ensure that it becomes part of a longer-term trend of ongoing good
performance and to secure the foundations for future success. I am
confident that we have the opportunities, the platform and the team
to enable us to get it done.
Noel Quinn
Group Chief Executive
21 February 2024
Financial summary
|
Year ended 31 December
|
|
2023
|
2022¹
|
|
$m
|
$m
|
For the year
|
|
|
Profit before tax
|
30,348
|
17,058
|
Profit attributable to:
|
|
|
- ordinary shareholders of the parent company
|
22,432
|
14,346
|
Dividends
on ordinary shares
|
10,492
|
5,330
|
|
At 31 December
|
|
2023
|
2022
|
|
$m
|
$m
|
Total shareholders' equity
|
185,329
|
177,833
|
Total regulatory capital
|
171,204
|
162,423
|
Customer accounts
|
1,611,647
|
1,570,303
|
Total assets
|
3,038,677
|
2,949,286
|
Risk-weighted assets
|
854,114
|
839,720
|
|
|
|
Per ordinary share
|
$
|
$
|
Basic earnings per share
|
1.15
|
0.72
|
Dividend per ordinary share (in respect of the period)
|
0.61
|
0.32
|
Dividends per ordinary share (paid in the period)
|
0.53
|
0.27
|
Net
asset value per ordinary share at period end2
|
8.82
|
8.01
|
Tangible
net asset value per ordinary share at period end3
|
8.19
|
7.44
|
|
|
|
Share information
|
|
|
Number of $0.50 ordinary shares in issue (millions)
|
19,263
|
20,294
|
Basic number of $0.50 ordinary shares outstanding
(millions)
|
19,006
|
19,739
|
Basic number of $0.50 ordinary shares outstanding and dilutive
potential ordinary shares (millions)
|
19,135
|
19,876
|
1 From
1 January 2023, we adopted IFRS 17 'Insurance Contracts', which
replaced IFRS 4 'Insurance Contracts'. Comparative data for the
year ended 31 December 2022 have been restated
accordingly.
2 The
definition of net asset value per ordinary share is total
shareholders' equity, less non-cumulative preference shares and
capital securities, divided by the number of ordinary shares in
issue, excluding own shares held by the company, including those
purchased and held in treasury.
3 The
definition of tangible net asset value per ordinary share is total
ordinary shareholders' equity excluding goodwill and other
intangible assets (net of deferred tax), divided by the number of
basic ordinary shares in issue, excluding own shares held by the
company, including those purchased and held in
treasury.
Distribution of results by global business
Constant currency profit/(loss) before tax
|
|
Year ended 31 Dec
|
|
2023
|
20221
|
|
$m
|
%
|
$m
|
%
|
Wealth and Personal Banking
|
11,544
|
38.0
|
5,480
|
33.1
|
Commercial
Banking2
|
13,280
|
43.8
|
7,527
|
45.6
|
Global
Banking and Markets2
|
5,924
|
19.5
|
4,689
|
28.3
|
Corporate Centre
|
(400)
|
(1.3)
|
(1,155)
|
(7.0)
|
Profit before tax
|
30,348
|
100.0
|
16,541
|
100.0
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the year ended 31 December 2022 have been
restated accordingly.
2 In the first quarter of 2023, following an internal
review to assess which global businesses were best suited to serve
our customers' respective needs, a portfolio of our customers
within our entities in Latin America was transferred from GBM to
CMB for reporting purposes. Comparative data have been re-presented
accordingly.
Distribution of results by legal entity
Reported profit/(loss) before tax
|
|
Year ended 31 Dec
|
|
2023
|
20221
|
|
$m
|
%
|
$m
|
%
|
HSBC UK
Bank plc
|
8,270
|
27.2
|
4,487
|
26.3
|
HSBC
Bank plc
|
2,639
|
8.7
|
(1,395)
|
(8.2)
|
The
Hongkong and Shanghai Banking Corporation Limited
|
16,167
|
53.3
|
12,899
|
75.6
|
HSBC
Bank Middle East Limited
|
1,239
|
4.1
|
728
|
4.3
|
HSBC
North America Holdings Inc.
|
518
|
1.7
|
705
|
4.1
|
HSBC
Bank Canada
|
871
|
2.9
|
832
|
4.9
|
Grupo
Financiero HSBC, S.A. de C.V.
|
805
|
2.6
|
583
|
3.4
|
Other
trading entities2
|
2,359
|
7.8
|
1,432
|
8.4
|
- of which: other Middle East entities (including Oman,
Türkiye, Egypt and Saudi Arabia)
|
748
|
2.5
|
655
|
3.8
|
- of which: Saudi Awwal Bank
|
538
|
1.8
|
342
|
2.0
|
Holding companies, shared service centres and intra-Group
eliminations
|
(2,520)
|
(8.3)
|
(3,213)
|
(18.8)
|
Profit before tax
|
30,348
|
100.0
|
17,058
|
100.0
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the year ended 31 December 2022 have been
restated accordingly.
2 Other trading entities includes the results of
entities located in Oman, Türkiye, Egypt and Saudi Arabia
(including our share of the results of Saudi Awwal Bank) which do
not consolidate into HSBC Bank Middle East Limited. Supplementary
analysis is provided on page 130 in
the Annual
Report and Accounts 2023 for a fuller
picture of the MENAT regional performance.
HSBC
constant currency profit before tax and balance sheet
data
|
|
2023
|
|
Wealth and
Personal
Banking
|
Commercial
Banking3
|
Global
Banking and
Markets3
|
Corporate Centre
|
Total
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
Net operating income/(expense) before change in expected credit
losses and other credit impairment charges2
|
27,275
|
22,867
|
16,115
|
(199)
|
66,058
|
- external
|
19,107
|
24,209
|
28,021
|
(5,279)
|
66,058
|
- inter-segment
|
8,168
|
(1,342)
|
(11,906)
|
5,080
|
-
|
of which: net interest income/(expense)5
|
20,492
|
17,147
|
7,141
|
(8,984)
|
35,796
|
Change
in expected credit losses and other credit impairment
charges
|
(1,058)
|
(2,062)
|
(326)
|
(1)
|
(3,447)
|
Net operating income/(expense)
|
26,217
|
20,805
|
15,789
|
(200)
|
62,611
|
Total operating expenses
|
(14,738)
|
(7,524)
|
(9,865)
|
57
|
(32,070)
|
Operating profit/(loss)
|
11,479
|
13,281
|
5,924
|
(143)
|
30,541
|
Share
of profit in associates and joint ventures less
impairment6
|
65
|
(1)
|
-
|
(257)
|
(193)
|
Constant currency profit/(loss) before tax
|
11,544
|
13,280
|
5,924
|
(400)
|
30,348
|
|
%
|
%
|
%
|
%
|
%
|
Share
of HSBC's constant currency profit before tax
|
38.0
|
43.8
|
19.5
|
(1.3)
|
100.0
|
Constant
currency cost efficiency ratio
|
54.0
|
32.9
|
61.2
|
28.6
|
48.5
|
Constant currency balance sheet data
|
$m
|
$m
|
$m
|
$m
|
$m
|
Loans and advances to customers (net)
|
454,878
|
309,422
|
173,966
|
269
|
938,535
|
Interests in associates and joint ventures
|
551
|
28
|
111
|
26,654
|
27,344
|
Total external assets
|
937,079
|
632,406
|
1,331,395
|
137,797
|
3,038,677
|
Customer accounts
|
804,863
|
475,666
|
330,522
|
596
|
1,611,647
|
Constant
currency risk-weighted assets4
|
192,938
|
354,541
|
218,488
|
88,147
|
854,114
|
|
|
|
|
|
|
|
20221
|
Net
operating income/(expense) before change in expected credit losses
and other credit impairment charges2
|
20,884
|
16,283
|
14,602
|
(1,898)
|
49,871
|
- external
|
18,299
|
16,973
|
18,744
|
(4,145)
|
49,871
|
- inter-segment
|
2,585
|
(690)
|
(4,142)
|
2,247
|
-
|
of which: net interest income/(expense)5
|
15,971
|
11,763
|
4,696
|
(2,668)
|
29,762
|
Change in expected credit losses and other credit impairment
charges
|
(1,186)
|
(1,862)
|
(573)
|
(9)
|
(3,630)
|
Net operating income/(expense)
|
19,698
|
14,421
|
14,029
|
(1,907)
|
46,241
|
Total operating expenses
|
(14,248)
|
(6,894)
|
(9,338)
|
(1,822)
|
(32,302)
|
Operating profit/(loss)
|
5,450
|
7,527
|
4,691
|
(3,729)
|
13,939
|
Share of profit in associates and joint ventures
|
30
|
-
|
(2)
|
2,574
|
2,602
|
Constant
currency profit/(loss) before tax
|
5,480
|
7,527
|
4,689
|
(1,155)
|
16,541
|
|
%
|
%
|
%
|
%
|
%
|
Share
of HSBC's constant currency profit before tax
|
33.1
|
45.6
|
28.3
|
(7.0)
|
100.0
|
Constant
currency cost efficiency ratio
|
68.2
|
42.3
|
64.0
|
(96.0)
|
64.8
|
Constant
currency balance sheet data
|
$m
|
$m
|
$m
|
$m
|
$m
|
Loans and advances to customers (net)
|
434,122
|
316,863
|
190,202
|
361
|
941,548
|
Interests in associates and joint ventures
|
514
|
33
|
93
|
28,143
|
28,783
|
Total external assets
|
893,867
|
620,193
|
1,341,575
|
152,049
|
3,007,684
|
Customer
accounts
|
793,310
|
472,424
|
332,303
|
458
|
1,598,495
|
Constant
currency risk-weighted assets4
|
184,519
|
344,217
|
225,836
|
88,496
|
843,068
|
1 From
1 January 2023, we adopted IFRS 17 'Insurance Contracts', which
replaced IFRS 4 'Insurance Contracts'. Comparative data for the
financial year ended 31 December 2022 have been restated
accordingly.
2 Net
operating income/(expense) before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
3 In
the first quarter of 2023, following an internal review to assess
which global businesses were best suited to serve our customers'
respective needs, a portfolio of our customers within our entities
in Latin America was transferred from GBM to CMB for reporting
purposes. Comparative data have been re-presented
accordingly.
4 Constant
currency risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency
translation differences.
5 Net
interest expense recognised in the Corporate Centre includes $8.7bn
(2022: $2.5bn) of interest expense in relation to the internal cost
to fund trading and fair value net assets; and the funding cost of
foreign exchange swaps in our Markets Treasury function. In the
second quarter of 2023, we implemented a consistent reporting
approach across the most material entities that contribute to our
trading and fair value net assets, which resulted in an increase to
the associated funding costs reported through the intersegment
elimination in Corporate Centre.
6 Includes
an impairment loss of $3.0bn recognised in respect of the Group's
investment in BoCom. See Note 18 on page 391 of
the Annual
Report and Accounts 2023.
Consolidated
income statement
|
for the year ended 31 December 2023
|
2023
|
20221
|
|
$m
|
$m
|
Net interest income
|
35,796
|
30,377
|
-
interest income2,3
|
100,868
|
52,826
|
-
interest expense4
|
(65,072)
|
(22,449)
|
Net fee income
|
11,845
|
11,770
|
- fee income
|
15,616
|
15,124
|
- fee expense
|
(3,771)
|
(3,354)
|
Net income from financial instruments held for trading or managed
on a fair value basis
|
16,661
|
10,278
|
Net income/(expense) from assets and liabilities of insurance
businesses, including related derivatives, measured at fair value
through profit or loss
|
7,887
|
(13,831)
|
Insurance
finance (expense)/income
|
(7,809)
|
13,799
|
Insurance service result
|
1,078
|
809
|
-
insurance revenue
|
2,259
|
1,977
|
- insurance service expense
|
(1,181)
|
(1,168)
|
Gain on
acquisition5
|
1,591
|
-
|
(Impairment)/reversal
of impairment relating to the sale of our retail banking operations
in France6
|
150
|
(2,316)
|
Other
operating (expense)/income7
|
(1,141)
|
(266)
|
Net operating income before change in expected credit losses and
other credit impairment charges8
|
66,058
|
50,620
|
Change in expected credit losses and other credit impairment
charges
|
(3,447)
|
(3,584)
|
Net operating income
|
62,611
|
47,036
|
Employee compensation and benefits
|
(18,220)
|
(18,003)
|
General and administrative expenses
|
(10,383)
|
(10,848)
|
Depreciation
and impairment of property, plant and equipment and right-of-use
assets9
|
(1,640)
|
(2,149)
|
Amortisation and impairment of intangible assets
|
(1,827)
|
(1,701)
|
Total operating expenses
|
(32,070)
|
(32,701)
|
Operating profit
|
30,541
|
14,335
|
Share
of profit in associates and joint ventures
|
2,807
|
2,723
|
Impairment
of interest in associate
|
(3,000)
|
-
|
Profit before tax
|
30,348
|
17,058
|
Tax expense
|
(5,789)
|
(809)
|
Profit for the year
|
24,559
|
16,249
|
Attributable to:
|
|
|
- ordinary shareholders of the parent company
|
22,432
|
14,346
|
- other equity holders
|
1,101
|
1,213
|
- non-controlling interests
|
1,026
|
690
|
Profit for the year
|
24,559
|
16,249
|
|
$
|
$
|
Basic earnings per ordinary share
|
1.15
|
0.72
|
Diluted earnings per ordinary share
|
1.14
|
0.72
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly.
2 Interest income includes $88,657m (2022:
$45,994m) of interest recognised on financial assets measured at
amortised cost and $12,134m (2022: $6,293m) of interest recognised
on financial assets measured at fair value through other
comprehensive income.
3 Interest income is calculated using the
effective interest method and comprises mainly interest recognised
on financial assets measured at either amortised cost or fair value
through other comprehensive income.
4 Interest expense includes $62,095m (2022:
$20,798m) of interest on financial instruments, excluding interest
on debt instruments issued by HSBC for funding purposes that are
designated under the fair value option to reduce an accounting
mismatch and on derivatives managed in conjunction with those debt
instruments included in interest expense.
5 Provisional gain recognised in respect of the
acquisition of SVB UK.
6 In the fourth quarter of 2023, an impairment loss of
$2.0bn was
recognised relating to the sale of our retail banking
operations in France. This largely offset the $2.1bn
recognised in the first quarter of 2023 on the reversal of the held
for sale classification at that time. In 2023, a total
net $0.1bn of credit was recognised in other operating income,
reflecting the net asset value disposed under the final terms of
sale. The $0.4bn impairment of goodwill recognised in the third
quarter in 2022 has not been reversed.
7 Other operating (expense)/income includes a loss on
net monetary positions of $1,667m (2022: $678m) as a result of
applying IAS 29 'Financial Reporting in Hyperinflationary
Economies' and the disposal losses on capitalised Markets
Treasury repositioning of $977m in 2023.
8 Net operating income before change in
expected credit losses and other credit impairment charges also
referred to as revenue.
9 Includes depreciation of the right-of-use assets of
$663m (2022: $717m).
Consolidated
statement of comprehensive income
|
for the year ended 31 December 2023
|
2023
|
2022¹
|
|
$m
|
$m
|
Profit for the year
|
24,559
|
16,249
|
Other comprehensive income/(expense)
|
|
|
Items that will be reclassified subsequently to profit or loss when
specific conditions are met:
|
|
|
Debt instruments at fair value through other comprehensive
income
|
2,599
|
(7,232)
|
- fair value gains/(losses)
|
2,381
|
(9,618)
|
-
fair value losses/(gains) transferred to the income statement on
disposal
|
905
|
(18)
|
-
expected credit (recoveries)/losses recognised in the income
statement
|
59
|
56
|
- income taxes
|
(746)
|
2,348
|
Cash flow hedges
|
2,953
|
(3,655)
|
- fair value gains/(losses)
|
2,534
|
(4,207)
|
- fair value (gains)/losses reclassified to the income
statement
|
1,463
|
(758)
|
- income taxes
|
(1,044)
|
1,310
|
Share of other comprehensive income/(expense) of associates and
joint ventures
|
47
|
(367)
|
- share for the year
|
47
|
(367)
|
Net
finance income/(expenses) from insurance contracts
|
(364)
|
1,775
|
- before income taxes
|
(491)
|
2,393
|
- income taxes
|
127
|
(618)
|
Exchange differences
|
(204)
|
(9,918)
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
Fair value gains on property revaluation
|
1
|
280
|
Remeasurement
of defined benefit liability
|
(314)
|
(1,031)
|
- before income taxes
|
(413)
|
(1,723)
|
- income taxes
|
99
|
692
|
Changes
in fair value of financial liabilities designated at fair value
upon initial recognition arising from changes in own credit
risk
|
(1,219)
|
1,922
|
-
before income taxes
|
(1,617)
|
2,573
|
-
income taxes
|
398
|
(651)
|
Equity instruments designated at fair value through other
comprehensive income
|
(120)
|
107
|
- fair value gains/(losses)
|
(120)
|
107
|
Effects of hyperinflation
|
1,604
|
877
|
Other comprehensive income/(expense) for the year, net of
tax
|
4,983
|
(17,242)
|
Total comprehensive income/(expense) for the year
|
29,542
|
(993)
|
Attributable to:
|
|
|
- ordinary shareholders of the parent company
|
27,397
|
(2,810)
|
- other equity holders
|
1,101
|
1,213
|
- non-controlling interests
|
1,044
|
604
|
Total comprehensive income/(expense) for the year
|
29,542
|
(993)
|
1 From 1 January 2023, we adopted IFRS 17 'Insurance
Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly.
Consolidated
balance sheet
|
|
|
at 31 December 2023
|
|
|
|
At1
|
|
31 Dec
|
31 Dec
|
|
2023
|
2022
|
|
$m
|
$m
|
Assets
|
|
|
Cash and balances at central banks
|
285,868
|
327,002
|
Items in the course of collection from other banks
|
6,342
|
7,297
|
Hong Kong Government certificates of indebtedness
|
42,024
|
43,787
|
Trading assets
|
289,159
|
218,093
|
Financial assets designated and otherwise mandatorily measured at
fair value through profit or loss
|
110,643
|
100,101
|
Derivatives
|
229,714
|
284,159
|
Loans and advances to banks
|
112,902
|
104,475
|
Loans and advances to customers
|
938,535
|
923,561
|
Reverse repurchase agreements - non-trading
|
252,217
|
253,754
|
Financial investments
|
442,763
|
364,726
|
Assets
held for sale
|
114,134
|
115,919
|
Prepayments, accrued income and other assets
|
165,255
|
156,149
|
Current tax assets
|
1,536
|
1,230
|
Interests in associates and joint ventures
|
27,344
|
29,254
|
Goodwill and intangible assets
|
12,487
|
11,419
|
Deferred tax assets
|
7,754
|
8,360
|
Total assets
|
3,038,677
|
2,949,286
|
Liabilities
|
|
|
Hong Kong currency notes in circulation
|
42,024
|
43,787
|
Deposits by banks
|
73,163
|
66,722
|
Customer accounts
|
1,611,647
|
1,570,303
|
Repurchase agreements - non-trading
|
172,100
|
127,747
|
Items in the course of transmission to other banks
|
7,295
|
7,864
|
Trading liabilities
|
73,150
|
72,353
|
Financial liabilities designated at fair value
|
141,426
|
127,321
|
Derivatives
|
234,772
|
285,762
|
Debt securities in issue
|
93,917
|
78,149
|
Liabilities
of disposal groups held for sale
|
108,406
|
114,597
|
Accruals, deferred income and other liabilities
|
136,606
|
134,313
|
Current tax liabilities
|
2,777
|
1,135
|
Insurance
contract liabilities
|
120,851
|
108,816
|
Provisions
|
1,741
|
1,958
|
Deferred tax liabilities
|
1,238
|
972
|
Subordinated liabilities
|
24,954
|
22,290
|
Total liabilities
|
2,846,067
|
2,764,089
|
Equity
|
|
|
Called up share capital
|
9,631
|
10,147
|
Share premium account
|
14,738
|
14,664
|
Other equity instruments
|
17,719
|
19,746
|
Other reserves
|
(8,907)
|
(9,133)
|
Retained earnings
|
152,148
|
142,409
|
Total shareholders' equity
|
185,329
|
177,833
|
Non-controlling interests
|
7,281
|
7,364
|
Total equity
|
192,610
|
185,197
|
Total liabilities and equity
|
3,038,677
|
2,949,286
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the year ended 31 December 2022 have been
restated accordingly.
Consolidated
statement of changes in equity
|
for the year ended 31 December 2023
|
|
|
Other reserves
|
|
|
|
|
|
Called up
share capital
and share
premium
|
Other
equity
instru-ments
|
Financial
assets at
FVOCI
reserve
|
Cash
flow
hedging
reserve
|
Foreign
exchange
reserve
|
Merger
and other
reserves1,2
|
Insurance
finance
reserve3
|
Retained earnings
1,4
|
Total
share-
holders'
equity
|
Non-
controlling
interests
|
Total
equity
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
At 1 Jan 2023
|
24,811
|
19,746
|
(7,038)
|
(3,808)
|
(32,575)
|
33,209
|
1,079
|
142,409
|
177,833
|
7,364
|
185,197
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
23,533
|
23,533
|
1,026
|
24,559
|
Other comprehensive income (net of tax)
|
-
|
-
|
2,402
|
3,030
|
(211)
|
1
|
(371)
|
114
|
4,965
|
18
|
4,983
|
- debt instruments at fair value through other comprehensive
income
|
-
|
-
|
2,574
|
-
|
-
|
-
|
-
|
-
|
2,574
|
25
|
2,599
|
- equity instruments designated at fair value through other
comprehensive income
|
-
|
-
|
(93)
|
-
|
-
|
-
|
-
|
-
|
(93)
|
(27)
|
(120)
|
- cash flow hedges
|
-
|
-
|
-
|
2,919
|
-
|
-
|
-
|
-
|
2,919
|
34
|
2,953
|
- changes in fair value of financial liabilities designated
at fair value upon initial recognition arising from changes in own
credit risk
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,220)
|
(1,220)
|
1
|
(1,219)
|
- property revaluation
|
-
|
-
|
-
|
-
|
-
|
1
|
-
|
-
|
1
|
-
|
1
|
- remeasurement of defined benefit
asset/liability
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(317)
|
(317)
|
3
|
(314)
|
- share of other comprehensive income of associates and joint
ventures
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
47
|
47
|
-
|
47
|
- effects of hyperinflation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,604
|
1,604
|
-
|
1,604
|
- insurance finance income/(expense) recognised in other
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
(364)
|
-
|
(364)
|
-
|
(364)
|
- exchange differences
|
-
|
-
|
(79)
|
111
|
(211)
|
-
|
(7)
|
-
|
(186)
|
(18)
|
(204)
|
Total comprehensive income for the year
|
-
|
-
|
2,402
|
3,030
|
(211)
|
1
|
(371)
|
23,647
|
28,498
|
1,044
|
29,542
|
Shares issued under employee remuneration and
share plans
|
79
|
-
|
-
|
-
|
-
|
-
|
-
|
(79)
|
-
|
-
|
-
|
Capital
securities issued5
|
-
|
1,996
|
-
|
-
|
-
|
-
|
-
|
-
|
1,996
|
-
|
1,996
|
Dividends to shareholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(11,593)
|
(11,593)
|
(603)
|
(12,196)
|
Redemption
of securities6
|
-
|
(4,023)
|
-
|
-
|
-
|
-
|
-
|
20
|
(4,003)
|
-
|
(4,003)
|
Transfers7
|
-
|
-
|
-
|
-
|
-
|
(5,130)
|
-
|
5,130
|
-
|
-
|
-
|
Cost of share-based payment arrangements
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
482
|
482
|
-
|
482
|
Share
buy-back8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,025)
|
(7,025)
|
-
|
(7,025)
|
Cancellation
of shares
|
(521)
|
-
|
-
|
-
|
-
|
521
|
-
|
-
|
-
|
-
|
-
|
Other movements
|
-
|
-
|
1,129
|
(255)
|
(967)
|
-
|
77
|
(843)
|
(859)
|
(524)
|
(1,383)
|
At 31 Dec 2023
|
24,369
|
17,719
|
(3,507)
|
(1,033)
|
(33,753)
|
28,601
|
785
|
152,148
|
185,329
|
7,281
|
192,610
|
Consolidated statement of changes in equity
(continued)
|
for the year ended 31 December 2022
|
|
|
|
Other reserves
|
|
|
|
|
|
Called up share capital and share premium
|
Other
equity
instru-ments
|
Financial assets at FVOCI reserve
|
Cash flow
hedging
reserve
|
Foreign
exchange
reserve
|
Merger
and
other reserves1,2
|
Insurance
finance
reserve3
|
Retainedearnings
1,4
|
Total
share-
holders'
equity
|
Non-
controlling
interests
|
Total
equity
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
At 31 Dec 2021 (IFRS 4)
|
24,918
|
22,414
|
(634)
|
(197)
|
(22,769)
|
30,060
|
-
|
144,458
|
198,250
|
8,527
|
206,777
|
Impact
on transition to IFRS 179
|
-
|
-
|
683
|
-
|
-
|
-
|
(696)
|
(9,222)
|
(9,235)
|
(1,224)
|
(10,459)
|
At 1 Jan 2022
|
24,918
|
22,414
|
49
|
(197)
|
(22,769)
|
30,060
|
(696)
|
135,236
|
189,015
|
7,303
|
196,318
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,559
|
15,559
|
690
|
16,249
|
Other comprehensive income (net of tax)
|
-
|
-
|
(7,089)
|
(3,613)
|
(9,806)
|
174
|
1,775
|
1,403
|
(17,156)
|
(86)
|
(17,242)
|
- debt instruments at fair value through other comprehensive
income
|
-
|
-
|
(7,181)
|
-
|
-
|
-
|
-
|
-
|
(7,181)
|
(51)
|
(7,232)
|
- equity
instruments designated at fair value through other comprehensive
income
|
-
|
-
|
92
|
-
|
-
|
-
|
-
|
-
|
92
|
15
|
107
|
- cash flow hedges
|
-
|
-
|
-
|
(3,613)
|
-
|
-
|
-
|
-
|
(3,613)
|
(42)
|
(3,655)
|
- changes in fair value of financial liabilities designated
at fair value upon initial recognition arising from changes in own
credit risk
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,922
|
1,922
|
-
|
1,922
|
- property revaluation
|
-
|
-
|
-
|
-
|
-
|
174
|
-
|
-
|
174
|
106
|
280
|
- remeasurement of defined benefit
asset/liability
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,029)
|
(1,029)
|
(2)
|
(1,031)
|
- share of other comprehensive income of associates and joint
ventures
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(367)
|
(367)
|
-
|
(367)
|
- effects of hyperinflation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
877
|
877
|
-
|
877
|
- insurance finance income/(expense) recognised in other
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
1,775
|
-
|
1,775
|
-
|
1,775
|
- exchange differences
|
-
|
-
|
-
|
-
|
(9,806)
|
-
|
-
|
-
|
(9,806)
|
(112)
|
(9,918)
|
Total comprehensive income for the year
|
-
|
-
|
(7,089)
|
(3,613)
|
(9,806)
|
174
|
1,775
|
16,962
|
(1,597)
|
604
|
(993)
|
Shares issued under employee remuneration and
share plans
|
67
|
-
|
-
|
-
|
-
|
-
|
-
|
(67)
|
-
|
-
|
-
|
Dividends to shareholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,544)
|
(6,544)
|
(426)
|
(6,970)
|
Redemption
of securities
|
-
|
(2,668)
|
-
|
-
|
-
|
-
|
-
|
402
|
(2,266)
|
-
|
(2,266)
|
Transfers
|
-
|
-
|
-
|
-
|
-
|
2,499
|
-
|
(2,499)
|
-
|
-
|
-
|
Cost of share-based payment arrangements
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
400
|
400
|
-
|
400
|
Share
buy-back
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,000)
|
(1,000)
|
-
|
(1,000)
|
Cancellation
of shares
|
(174)
|
-
|
-
|
-
|
-
|
174
|
-
|
-
|
-
|
-
|
-
|
Other movements
|
-
|
-
|
2
|
2
|
-
|
302
|
-
|
(481)
|
(175)
|
(117)
|
(292)
|
At 31 Dec 2022
|
24,811
|
19,746
|
(7,038)
|
(3,808)
|
(32,575)
|
33,209
|
1,079
|
142,409
|
177,833
|
7,364
|
185,197
|
1 Cumulative goodwill amounting to $5,138m
was charged against reserves in respect of acquisitions of
subsidiaries prior to 1 January 1998, including $3,469m charged
against the merger reserve arising on the acquisition of HSBC Bank
plc. The balance of $1,669m was charged against retained
earnings.
2 Statutory share premium relief under
section 131 of the Companies Act 1985 was taken in respect of the
acquisition of HSBC Bank plc in 1992, HSBC Continental Europe
in 2000 and HSBC Finance Corporation in 2003, and the shares issued
were recorded at their nominal value only. In HSBC's consolidated
financial statements, the fair value differences of $8,290m in
respect of HSBC Continental Europe and $12,768m in respect of HSBC
Finance Corporation were recognised in the merger reserve. The
merger reserve created on the acquisition of HSBC Finance
Corporation subsequently became attached to HSBC Overseas Holdings
(UK) Limited, following a number of intra-Group reorganisations.
During 2009, pursuant to section 131 of the Companies Act 1985,
statutory share premium relief was taken in respect of the rights
issue and $15,796m was recognised in the merger
reserve.
3 The insurance finance reserve reflects
the impact of the adoption of the other comprehensive income option
for our insurance business in France. Underlying assets supporting
these contracts are measured at fair value through other
comprehensive income. Under this option, only the amount that
matches income or expenses recognised in profit or loss on
underlying items is included in finance income or expenses,
resulting in the elimination of income statement accounting
mismatches. The remaining amount of finance income or expenses for
these insurance contracts is recognised in other comprehensive
income ('OCI').
4 At 31 December 2023, retained earnings
included 256,289,431 treasury shares (2022: 554,452,437). These
include treasury shares held within HSBC's insurance business's
retirement funds for the benefit of policyholders or beneficiaries
within employee trusts for the settlement of shares expected to be
delivered under employee share schemes or bonus plans, and the
market-making activities in Markets and Securities
Services.
5 In March 2023, HSBC Holdings issued
$2,000m 8.000% contingent convertible securities on which there
were $4m of
external issue costs.
6 In March 2023, HSBC Holdings redeemed
$2,350m 6.250% contingent convertible securities. In September
2023, HSBC Holdings further redeemed €1,000m 6.000% and
SGD750m 5.000% contingent convertible securities.
7 At 31 December 2023, an impairment of
$5,512m of HSBC Overseas Holdings (UK) Limited was recognised,
resulting in a permitted transfer of $5,130m from the merger
reserve to retained earnings and a realisation of $382m
shared-based payment reserve within retained
earnings.
8 In May 2023, HSBC Holdings announced a
share buy-back of up to $2.0bn, which was completed in July 2023.
In August 2023, HSBC Holdings announced another share buy-back of
up to $2.0bn, which was completed in October 2023. In October 2023,
HSBC Holdings further announced a share buy-back of up to $3.0bn,
which was completed in February 2024.
9 The impact of IFRS 17 on previously
reported total equity was $(10,831)m at 31 December
2022.
Consolidated
statement of cash flows
|
for the year ended 31 December 2023
|
|
2023
|
20221
|
|
$m
|
$m
|
Profit before tax
|
30,348
|
17,058
|
Adjustments for non-cash items:
|
|
|
Depreciation, amortisation and impairment
|
3,466
|
3,850
|
Net loss/(gain) from investing activities
|
1,213
|
11
|
Share
of profit in associates and joint ventures
|
(2,807)
|
(2,723)
|
Impairment
of interest in associate
|
3,000
|
-
|
(Gain)/loss
on acquisition/disposal of subsidiaries, businesses, associates and
joint ventures
|
(1,775)
|
2,554
|
Change
in expected credit losses gross of recoveries and other credit
impairment charges
|
3,717
|
3,898
|
Provisions
including pensions
|
266
|
638
|
Share-based
payment expense
|
482
|
400
|
Other
non-cash items included in profit before tax
|
(4,299)
|
(774)
|
Elimination
of exchange differences2
|
(10,678)
|
48,718
|
Changes in operating assets and liabilities
|
|
|
Change
in net trading securities and derivatives
|
(63,247)
|
20,166
|
Change
in loans and advances to banks and customers
|
(14,145)
|
31,649
|
Change
in reverse repurchase agreements - non-trading
|
(2,095)
|
(23,405)
|
Change in financial assets designated and otherwise mandatorily
measured at fair value
|
(9,994)
|
14,164
|
Change
in other assets3
|
(10,254)
|
(12,858)
|
Change
in deposits by banks and customer accounts
|
45,021
|
(91,194)
|
Change
in repurchase agreements - non-trading
|
43,366
|
4,344
|
Change
in debt securities in issue
|
11,945
|
12,518
|
Change
in financial liabilities designated at fair value
|
10,097
|
(13,654)
|
Change
in other liabilities
|
8,742
|
6,021
|
Dividends
received from associates
|
1,067
|
944
|
Contributions
paid to defined benefit plans
|
(208)
|
(194)
|
Tax
paid
|
(4,117)
|
(2,776)
|
Net cash from operating activities
|
39,111
|
19,355
|
Purchase
of financial investments3
|
(563,561)
|
(511,097)
|
Proceeds
from the sale and maturity of financial investments3
|
504,174
|
492,624
|
Net
cash flows from the purchase and sale of property, plant and
equipment
|
(1,145)
|
(1,284)
|
Net
cash flows from disposal of loan portfolio and customer
accounts
|
623
|
(3,530)
|
Net
investment in intangible assets
|
(2,550)
|
(3,125)
|
Net
cash flow from (acquisition)/disposal of subsidiaries, businesses,
associates and joint ventures4
|
(453)
|
(989)
|
Net cash from investing activities
|
(62,912)
|
(27,401)
|
Issue
of ordinary share capital and other equity instruments
|
1,996
|
-
|
Cancellation
of shares
|
(5,812)
|
(2,285)
|
Net
sales/(purchases) of own shares for market-making and investment
purposes
|
(614)
|
(91)
|
Net cash flow from change in stake of subsidiaries
|
(19)
|
(197)
|
Redemption
of preference shares and other equity instruments
|
(4,003)
|
(2,266)
|
Subordinated
loan capital issued
|
5,237
|
7,300
|
Subordinated
loan capital repaid5
|
(2,147)
|
(1,777)
|
Dividends
paid to shareholders of the parent company and non-controlling
interests
|
(12,196)
|
(6,970)
|
Net cash from financing activities
|
(17,558)
|
(6,286)
|
Net increase/(decrease) in cash and cash equivalents
|
(41,359)
|
(14,332)
|
Cash and cash equivalents at 1 Jan
|
521,671
|
574,032
|
Exchange
differences in respect of cash and cash equivalents
|
10,621
|
(38,029)
|
Cash and cash equivalents at 31 Dec6
|
490,933
|
521,671
|
Cash and cash equivalents comprise:
|
|
|
- cash and balances at central banks
|
285,868
|
327,002
|
- items in the course of collection from other
banks
|
6,342
|
7,297
|
- loans and advances to banks of one month or
less
|
76,620
|
72,295
|
- reverse repurchase agreements with banks of one month or
less
|
64,341
|
68,682
|
- treasury bills, other bills and certificates of deposit
less than three months
|
33,303
|
26,727
|
- cash collateral and net settlement accounts
|
15,819
|
19,445
|
-
cash and cash equivalents held for sale7
|
15,935
|
8,087
|
- less: items in the course of transmission to other
banks
|
(7,295)
|
(7,864)
|
Cash and cash equivalents at 31 Dec6
|
490,933
|
521,671
|
Interest received was $98,910m (2022: $55,664m),
interest paid was $65,980m (2022: $22,856m) and
dividends received (excluding dividends received from associates,
which are presented separately above)
were $1,869m (2022: $1,638m).
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly.
2 Adjustment to bring changes between opening and
closing balance sheet amounts to average rates. This is not done on
a line-by-line basis, as details cannot be determined without
unreasonable expense.
3 Post adoption of IFRS 17 'Insurance
Contracts', certain assets have been reclassified from 'Investing
activities' to 'Operating activities'. The comparative data have
not been re-presented.
4 The 'Net cash flow on (acquisition)/disposal of
subsidiaries, businesses, associates and joint ventures' includes
$1.2bn of net cash inflows from the acquisition of Silicon Valley
Bank UK Limited in March 2023.
5 Subordinated liabilities changes during the year
are attributable to repayments of $(2.1)bn (2022: $(1.8)bn) of
securities. Non-cash changes during the year included foreign
exchange gains/(losses) of $0.6bn (2022:
$(1.1)bn) and fair value gains/(losses) of $0.8bn
(2022: $(3.1)bn).
6 At 31 December
2023, $61.8bn (2022: $59.3bn) was not available for
use by HSBC due to a range of restrictions, including currency
exchange and other restrictions.
7 Includes $5.6bn (2022: $6.5bn) of cash and
balances at central banks, $0.2bn (2022: $1.3bn) of reverse
repurchase agreements with banks of one month or less, $10.5bn
(2022: $0.2bn) of loans and advances to banks of one month or
less and items in the course of transmission to other banks
$(0.4)bn (2022: $(0.2)bn).
1
|
Basis
of preparation and material accounting policies
|
The basis of preparation and summary of material accounting
policies applicable to the consolidated financial statements of
HSBC and the separate financial statements of HSBC Holdings can be
found in Note 1, or the relevant Note, in the Financial Statements
in the Annual Report and Accounts
2023.
(a) Compliance with International Financial Reporting
Standards
The consolidated financial statements of HSBC and the separate
financial statements of HSBC Holdings comply with UK-adopted
international accounting standards and with the requirements of the
Companies Act 2006, and have also applied international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. These financial
statements are also prepared in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board ('IFRS Accounting Standards'), including
interpretations issued by the IFRS Interpretations Committee, as
there are no applicable differences from IFRS Accounting Standards
for the periods presented. There were no unendorsed standards
effective for the year ended 31 December 2023 affecting
these consolidated and separate financial
statements.
Standards adopted during the year ended 31
December 2023
IFRS 17 'Insurance Contracts'
On 1 January 2023, the Group adopted the requirements of IFRS 17
'Insurance Contracts' retrospectively with comparatives restated
from the transition date, 1 January 2022. At transition, the
Group's total equity reduced by $10,459m.
On adoption of IFRS 17, balances based on IFRS 4, including the
present value of in-force long-term insurance business ('PVIF')
asset in relation to the upfront recognition of future profits of
in-force insurance contracts, were derecognised. Insurance contract
liabilities have been remeasured under IFRS 17 based on groups
of insurance contracts, which include the fulfilment cash flows
comprising the best estimate of the present value of the future
cash flows (for example premiums and payouts for claims, benefits
and expenses), together with a risk adjustment for non-financial
risk, as well as the contractual service margin ('CSM'). The CSM
represents the unearned profits that will be released and
systematically recognised in insurance revenue as services are
provided over the expected coverage period.
In addition, the Group has made use of the option under the
standard to re-designate certain eligible financial assets held to
support insurance contract liabilities, which were predominantly
measured at amortised cost, as financial assets measured at fair
value through profit or loss, with comparatives restated from the
transition date. The effects of adoption of IFRS 17 are set out in
Note 38 of the Annual Report and Accounts
2023 with a description of
the policy in Note 1.2(j) of the Annual Report and Accounts
2023.
(b) Differences between IFRS Accounting Standards and
Hong Kong Financial Reporting Standards
There are no significant differences between IFRS Accounting
Standards and Hong Kong Financial Reporting Standards in terms of
their application to HSBC, and consequently there would be no
significant differences had the financial statements been prepared
in accordance with Hong Kong Financial Reporting Standards. The
'Notes on the financial statements', taken together with the
'Report of the Directors' in the Annual Report and Accounts
2023, include the aggregate of
all disclosures necessary to satisfy IFRS Accounting Standards and
Hong Kong Financial Reporting Standards.
(c) Going concern
The financial statements are prepared on a going concern basis, as
the Directors are satisfied that the Group and parent company have
the resources to continue in business for the foreseeable future.
In making this assessment, the Directors have considered a wide
range of information relating to present and future conditions,
including future projections of profitability, liquidity, capital
requirements and capital resources.
These considerations include stressed scenarios that reflect the
uncertainty in the macroeconomic environment following rising
inflation, slower Chinese economic activity, and disrupted supply
chains as a result of the ongoing Russia-Ukraine and Israel-Hamas
wars. They also included other top and emerging risks, including
climate change, as well as the related impacts on profitability,
capital and liquidity.
Tax expense
|
|
2023
|
2022
|
|
$m
|
$m
|
Current
tax1
|
5,718
|
2,984
|
- for this year
|
5,737
|
3,264
|
- adjustments in respect of prior years
|
(19)
|
(280)
|
Deferred tax
|
71
|
(2,175)
|
- origination and reversal of temporary
differences
|
19
|
(2,278)
|
- effect of changes in tax rates
|
17
|
(293)
|
- adjustments in respect of prior years
|
35
|
396
|
Year ended 31 Dec2
|
5,789
|
809
|
1 Current tax included Hong Kong profits tax of $1,328m
(2022: $604m). The Hong Kong tax rate applying to the profits of
subsidiaries assessable in Hong Kong was 16.5% (2022:
16.5%).
2 In addition to amounts recorded in the income
statement, a tax credit of $41m (2022:
credit of $145m) was recorded directly to
equity.
Tax reconciliation
The tax charged to the income statement differs from the tax charge
that would apply if all profits had been taxed at the UK
corporation tax rate as follows:
|
2023
|
2022
|
|
$m
|
%
|
$m
|
%
|
Profit before tax
|
30,348
|
|
17,058
|
|
Tax expense
|
|
|
|
|
Taxation
at UK corporation tax rate of 23.5% (2022: 19.0%)
|
7,132
|
23.5
|
3,241
|
19.0
|
Impact of differently taxed overseas profits in overseas
locations
|
(612)
|
(2.0)
|
459
|
2.7
|
UK banking surcharge
|
350
|
1.2
|
283
|
1.7
|
Items increasing tax charge in 2023:
|
|
|
|
|
-
impairment of interest in associate
|
705
|
2.3
|
-
|
-
|
-
local taxes and overseas withholding taxes
|
419
|
1.4
|
346
|
2.0
|
- impacts of hyperinflation
|
348
|
1.1
|
171
|
1.0
|
-
other permanent disallowables
|
227
|
0.7
|
363
|
2.1
|
-
bank levy
|
112
|
0.4
|
59
|
0.3
|
-
impact of changes in tax rates
|
17
|
0.1
|
(293)
|
(1.7)
|
-
adjustments in respect of prior period
|
16
|
0.1
|
116
|
0.7
|
-
tax impact of sale of French retail banking business
|
-
|
-
|
115
|
0.7
|
Items reducing tax charge in 2023:
|
|
|
|
|
- non-taxable income and gains
|
(1,189)
|
(3.9)
|
(825)
|
(4.8)
|
- effect of profits in associates and joint
ventures
|
(571)
|
(1.9)
|
(504)
|
(3.1)
|
- movements in provisions for uncertain tax
positions
|
(472)
|
(1.6)
|
27
|
0.2
|
-
accounting gain on acquisition of SVB UK
|
(442)
|
(1.5)
|
-
|
-
|
- deductions for AT1 coupon payments
|
(229)
|
(0.7)
|
(246)
|
(1.4)
|
- movements in unrecognised deferred tax
|
(22)
|
(0.1)
|
(2,503)
|
(14.7)
|
Year ended 31 December
|
5,789
|
19.1
|
809
|
4.7
|
The Group's profits are taxed at different rates depending on the
country or territory in which the profits arise. The key applicable
tax rates for 2023 include Hong Kong (16.5%), the US (21%) and the
UK (23.5%). If the Group's profits were taxed at the statutory
rates of the countries in which the profits arose, then the tax
rate for the year would have been 22.6% (2022: 23.3%).
The effective tax rate for the year of 19.1% was higher than in the
previous year (2022: 4.7%). The effective tax rate for the year was
increased by 2.3% by the non-taxable impairment of the Group's
interest in BoCom, reduced by 1.6% by the release of provisions for
uncertain tax positions and reduced by 1.5% by the non-taxable
accounting gain on the acquisition of SVB UK. The effective
tax rate for 2022 was reduced by 14.7% as a result of the
recognition of previously unrecognised losses in the UK of $2.2bn
and France of $0.3bn, in light of improved forecast
profitability.
On 20 June 2023, legislation was substantively enacted in the UK to
introduce the 'Pillar Two' global minimum tax model rules of the
OECD's Inclusive Framework on Base Erosion and Profit Shifting
('BEPS') and a UK qualified domestic minimum top-up tax, with
effect from 1 January 2024. Under these rules, a top-up tax
liability arises where the effective tax rate of the Group's
operations in a jurisdiction, calculated using principles set out
in the Pillar Two legislation, is below 15%. Any resulting tax is
payable by HSBC Holdings plc, being the Group's ultimate parent, to
HMRC. In response to the OECD's Pillar Two global minimum tax
rules, many national governments have announced their intention to
introduce domestic minimum tax rules that are closely aligned to
the OECD's Pillar Two model rules. Where such qualifying domestic
minimum tax rules are introduced, they may be expected to have the
effect of increasing local tax liabilities to
the 15%minimum
rate, eliminating the top-up tax liability payable in the UK by
HSBC Holdings plc in such cases. Based on the Group's forecasts,
top-up tax liabilities are expected to arise in approximately 10
jurisdictions as a result of low or 0% statutory tax rates, in
particular in respect of the Group's banking operations in Bermuda
and the Channel Islands. Additionally, the application of local tax
laws in Hong Kong and mainland China, particularly with regard to
the non-taxation of dividend income and income on government bonds,
has typically resulted in effective tax rates of below 15%. This is
expected to create future top-up tax liabilities in these
jurisdictions, which have statutory tax rates
of16.5% and 25%, respectively. The application of the
Pillar Two global minimum tax rules and the introduction of new
domestic minimum tax regimes are currently forecast to increase the
Group's annual effective tax rate by around 0.5 and 1.0 percentage
points.
Accounting for taxes involves some estimation because tax law is
uncertain and its application requires a degree of judgement, which
authorities may dispute. Liabilities are recognised based on best
estimates of the probable outcome, taking into account external
advice where appropriate. Exposures relating to legacy tax cases
were reassessed during 2023, resulting in a credit of $472m to the
income statement. We do not expect significant liabilities to arise
in excess of the amounts provided. HSBC only recognises current and
deferred tax assets where recovery is probable.
Movement of deferred tax assets and liabilities
|
|
Loan
impairment
provisions
|
Unused tax
losses and
tax credits
|
Financial assets at FVOCI
|
Cash flow hedges
|
Retirement obligations
|
Other
|
Total
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Assets
|
1,062
|
4,397
|
850
|
1,271
|
-
|
3,048
|
10,628
|
Liabilities
|
-
|
-
|
-
|
-
|
(1,673)
|
(1,567)
|
(3,240)
|
At 1 Jan 2023
|
1,062
|
4,397
|
850
|
1,271
|
(1,673)
|
1,481
|
7,388
|
Income statement
|
(39)
|
102
|
541
|
1
|
(114)
|
(562)
|
(71)
|
Other comprehensive income
|
-
|
-
|
(598)
|
(974)
|
99
|
399
|
(1,074)
|
Foreign exchange and other adjustments
|
135
|
45
|
83
|
121
|
(126)
|
15
|
273
|
At 31 Dec 2023
|
1,158
|
4,544
|
876
|
419
|
(1,814)
|
1,333
|
6,516
|
Assets1
|
1,158
|
4,544
|
876
|
419
|
-
|
2,933
|
9,930
|
Liabilities1
|
-
|
-
|
-
|
-
|
(1,814)
|
(1,600)
|
(3,414)
|
|
|
|
|
|
|
|
|
Assets2
|
1,151
|
2,001
|
382
|
154
|
-
|
1,744
|
5,432
|
Liabilities2
|
-
|
-
|
-
|
-
|
(2,819)
|
(475)
|
(3,294)
|
At 1
Jan 2022
|
1,151
|
2,001
|
382
|
154
|
(2,819)
|
1,269
|
2,138
|
Income statement
|
7
|
2,425
|
(1,127)
|
1
|
217
|
652
|
2,175
|
Other comprehensive income
|
-
|
-
|
2,281
|
1,159
|
692
|
(1,260)
|
2,872
|
Foreign exchange and other adjustments
|
(96)
|
(29)
|
(686)
|
(43)
|
237
|
820
|
203
|
At 31
Dec 2022
|
1,062
|
4,397
|
850
|
1,271
|
(1,673)
|
1,481
|
7,388
|
Assets1
|
1,062
|
4,397
|
850
|
1,271
|
-
|
3,048
|
10,628
|
Liabilities1
|
-
|
-
|
-
|
-
|
(1,673)
|
(1,567)
|
(3,240)
|
1 After netting off balances within
countries, the balances as disclosed in the accounts are as
follows: deferred tax assets of $7,754m (2022: $8,360m) and
deferred tax liabilities of $1,238m (2022: $972m).
2 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
We have restated 2022 comparative data.
In applying judgement in recognising deferred tax assets,
management has assessed all relevant information, including future
business profit projections and the track record of meeting
forecasts. Management's assessment of the likely availability of
future taxable profits against which to recover deferred tax assets
is based on the most recent financial forecasts approved by
management, which cover a five-year period and are extrapolated
where necessary, and takes into consideration the reversal of
existing taxable temporary differences and past business
performance. When forecasts are extrapolated beyond five years, a
number of different scenarios are considered, reflecting different
downward risk adjustments, in order to assess the sensitivity of
our recognition and measurement conclusions in the context of such
longer-term forecasts.
The Group's net deferred tax asset of $6.5bn (2022: $7.4bn)
included $3.3bn (2022: $4.0bn) of deferred tax assets relating to
the UK, $3.1bn (2022: $3.3bn) of deferred tax assets
relating to the US and a net deferred asset of $0.9bn (2022:
$1.0bn) in France.
The UK deferred tax asset of $3.3bn excluded a $1.9bn deferred tax
liability arising on the UK pension scheme surplus, the reversal of
which is not taken into account when estimating future taxable
profits. The UK deferred tax assets are supported by forecasts of
taxable profit, also taking into consideration the history of
profitability in the relevant businesses. The majority of the
deferred tax asset relates to tax attributes which do not expire
and are forecast to be recovered within four years and as such are
less sensitive to changes in long-term profit
forecasts.
The net US deferred tax asset of $3.1bn included $1.3bn related to
US tax losses, of which $1.0bn expire in 10 to 15 years. Management
expects the US deferred tax asset to be substantially recovered
within 14 years, with the majority recovered in the first nine
years.
The net deferred tax asset in France of $0.9bn included $0.7bn
related to tax losses, which are expected to be substantially
recovered within
12 years.
Unrecognised deferred tax
The amount of gross temporary differences, unused tax losses and
tax credits for which no deferred tax asset is recognised in the
balance sheet was $10.4bn (2022: $9.2bn). This amount included
unused US state tax losses of $4.0bn (2022: $4.1bn) which are
forecast to expire before they are recovered and unused UK tax
losses of $4.5bn (2022: $3.5bn), which arose prior to 1 April 2017
and can only be recovered against future taxable profits of HSBC
Holdings. No deferred tax was recognised on these losses due to the
absence of convincing evidence regarding the availability of
sufficient future taxable profits against which to recover them.
Deferred tax asset recognition is reassessed at each balance sheet
date based on the available evidence. Of the total amounts
unrecognised, $5.1bn (2022: $3.6bn) had no expiry date, $0.5bn
(2022: $1.2bn) was scheduled to expire within 10 years and the
remaining balance is expected to expire after 10
years.
Deferred tax is not recognised in respect of the Group's
investments in subsidiaries and branches where HSBC is able to
control the timing of remittance or other realisation and where
remittance or realisation is not probable in the foreseeable
future. The aggregate temporary differences relating to
unrecognised deferred tax liabilities arising on investments in
subsidiaries and branches was $14.4bn (2022: $11.7bn) and the
corresponding unrecognised deferred tax liability was $0.7bn (2022:
$0.7bn).
Dividends to shareholders of the parent company
|
|
2023
|
2022
|
|
Per
share
|
Total
|
Per
share
|
Total
|
|
$
|
$m
|
$
|
$m
|
Dividends paid on ordinary shares
|
|
|
|
|
In respect of previous year:
|
|
|
|
|
-
second interim dividend
|
0.23
|
4,589
|
0.18
|
3,576
|
In respect of current year:
|
|
|
|
|
- first interim dividend
|
0.10
|
2,001
|
0.09
|
1,754
|
-
second interim dividend
|
0.10
|
1,956
|
-
|
-
|
-
third interim dividend
|
0.10
|
1,946
|
-
|
-
|
Total
|
0.53
|
10,492
|
0.27
|
5,330
|
Total coupons on capital securities classified as
equity
|
|
1,101
|
|
1,214
|
Dividends to shareholders
|
|
11,593
|
|
6,544
|
On 4 January 2024, HSBC paid a coupon on its €1,250m
subordinated capital securities, representing a total distribution
of €30m ($33m). No liability was recorded in the balance
sheet at 31 December 2023 in respect of this coupon
payment.
The distributable reserves of HSBC Holdings at 31 December 2023
were $30.9bn, a $4.3bn decrease since 2022, primarily driven by
$18.6bn in ordinary dividend, additional tier 1 coupon and share
buy-back payments, offset by profits generated and other reserve
movements of $14.3bn. Distributable reserves are sensitive to
impairments of investments in subsidiaries to the extent they are
not offset by the realisation of related reserves. The impairment
of BoCom in 2023 did not impact distributable reserves, as its
intermediate parent and direct subsidiary of HSBC Holdings, HSBC
Asia Holdings Limited, was not impaired.
Fourth interim dividend for 2023
On 21 February 2024, the Directors approved a fourth interim
dividend in respect of the financial year ended 31 December 2023 of
$0.31 per ordinary share, a distribution of approximately
$5,913m. The fourth interim dividend for 2023 will be payable
on 25 April 2024 to holders on the Principal Register in the UK,
the Hong Kong Overseas Branch Register or the Bermuda Overseas
Branch Register on 8 March 2024. No liability was
recorded in the financial statements in respect of the fourth
interim dividend for 2023.
The dividend will be payable in US dollars, or in pounds sterling
or Hong Kong dollars at the forward exchange rates quoted by HSBC
Bank plc in London at or about 11.00am on 15 April 2024. The
ordinary shares in London, Hong Kong and Bermuda, and American
Depositary Shares ('ADSs') in New York will be quoted ex-dividend
on 7 March 2024.
The default currency on the Principal Register in the UK is pounds
sterling, and dividends can also be paid in Hong Kong dollars or US
dollars, or a combination of these currencies. International
shareholders can register to join the Global Dividend Service to
receive dividends in their local currencies. Please register and
read the terms and conditions at www.investorcentre.co.uk. UK
shareholders can also register their sterling bank mandates at
www.investorcentre.co.uk.
The default currency on the Hong Kong Overseas Branch Register is
Hong Kong dollars, and dividends can also be paid in US dollars or
pounds sterling, or a combination of these currencies. Shareholders
can arrange for direct credit of Hong Kong dollar cash dividends
into their bank account, or arrange to send US dollar or pounds
sterling cheques to the credit of their bank account. Shareholders
can register for these services at www.investorcentre.com/hk.
Shareholders can also download a dividend currency election form
from www.hsbc.com/dividends, www.investorcentre.com/hk, or
www.hkexnews.hk.
The default currency on the Bermuda Overseas Branch Register is US
dollars, and dividends can also be paid in Hong Kong dollars or
pounds sterling, or a combination of these currencies. Shareholders
can change their dividend currency election by contacting the
Bermuda investor relations team. Shareholders can download a
dividend currency election form from
www.hsbc.com/dividends.
Changes to currency elections must be received by 11 April 2024 to
be effective for this dividend.
The dividend will be payable on ADSs, each of which represents five
ordinary shares, on 25 April 2024 to holders of record on
8 March 2024. The dividend of $1.55 per ADS will be payable by
the depositary in US dollars. Alternatively, the cash dividend may
be invested in additional ADSs by participants in the dividend
reinvestment plan operated by the depositary, elections must be
received by 4 April 2024.
Any person who has acquired ordinary shares registered on the
Principal Register in the UK, the Hong Kong Overseas Branch
Register or the Bermuda Overseas Branch Register but who has not
lodged the share transfer with the Principal Registrar in the UK,
Hong Kong or Bermuda Overseas Branch Registrar should do so before
4.00pm local time on 8 March 2024 in order to receive the
dividend.
Ordinary shares may not be removed from or transferred to the
Principal Register in the UK, the Hong Kong Overseas Branch
Register or the Bermuda Overseas Branch Register on 8 March 2024.
Any person wishing to remove ordinary shares to or from each
register must do so before 4.00pm local time on 7 March
2024.
Transfers of ADSs must be lodged with the depositary by 11.00am on
8 March 2024 in order to receive the dividend. ADS holders who
receive a cash dividend will be charged a fee, which will be
deducted by the depositary, of $0.005 per ADS per cash
dividend.
Basic earnings per ordinary share is calculated by dividing the
profit attributable to ordinary shareholders of the parent company
by the weighted average number of ordinary shares outstanding,
excluding own shares held. Diluted earnings per ordinary share is
calculated by dividing the basic earnings, which require no
adjustment for the effects of dilutive potential ordinary shares,
by the weighted average number of ordinary shares outstanding,
excluding own shares held, plus the weighted average number of
ordinary shares that would be issued on conversion of dilutive
potential ordinary shares.
Basic and diluted earnings per share
|
|
2023
|
2022¹
|
|
Profit
|
Number of
shares
|
Per share
|
Profit
|
Number of
shares
|
Per share
|
|
$m
|
(millions)
|
$
|
$m
|
(millions)
|
$
|
Basic2
|
22,432
|
19,478
|
1.15
|
14,346
|
19,849
|
0.72
|
Effect of dilutive potential ordinary shares
|
|
122
|
|
|
137
|
|
Diluted2
|
22,432
|
19,600
|
1.14
|
14,346
|
19,986
|
0.72
|
1 From 1 January 2023, we adopted IFRS 17 'Insurance
Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly.
2 Weighted average number of ordinary shares
outstanding (basic) or assuming dilution (diluted).
The number of anti-dilutive employee share options excluded from
the weighted average number of dilutive potential ordinary shares
was
23 million (2022: 9.4million).
5
|
Constant
currency balance sheet reconciliation
|
|
At
|
|
31 Dec 2023
|
31 Dec
20221
|
|
Reported and
constant
currency
|
Constant currency
|
Currency translation
|
Reported
|
|
$m
|
$m
|
$m
|
$m
|
Loans and advances to customers (net)
|
938,535
|
941,548
|
(17,987)
|
923,561
|
Interests in associates and joint ventures
|
27,344
|
28,783
|
471
|
29,254
|
Total external assets
|
3,038,677
|
3,007,684
|
(58,398)
|
2,949,286
|
Customer accounts
|
1,611,647
|
1,598,495
|
(28,192)
|
1,570,303
|
1 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data for the financial year ended 31 December 2022 have
been restated accordingly.
6
|
Reported and constant currency results1
|
|
Year ended
|
|
2023
|
20222
|
|
$m
|
$m
|
Revenue3
|
|
|
Reported
|
66,058
|
50,620
|
Currency translation
|
0
|
(749)
|
Constant currency
|
66,058
|
49,871
|
Change in expected credit losses and other credit impairment
charges
|
|
|
Reported
|
(3,447)
|
(3,584)
|
Currency translation
|
0
|
(46)
|
Constant currency
|
(3,447)
|
(3,630)
|
Operating expenses
|
|
|
Reported
|
(32,070)
|
(32,701)
|
Currency translation
|
0
|
399
|
Constant currency
|
(32,070)
|
(32,302)
|
Share of profit in associates and joint ventures less
impairment
|
|
|
Reported4
|
(193)
|
2,723
|
Currency translation
|
0
|
(121)
|
Constant currency
|
(193)
|
2,602
|
Profit before tax
|
|
|
Reported
|
30,348
|
17,058
|
Currency translation
|
0
|
(517)
|
Constant currency
|
30,348
|
16,541
|
1 In the current period constant currency
results are equal to reported as there is no currency
translation.
2 From 1 January 2023, we adopted IFRS 17
'Insurance Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data have been restated accordingly.
3 Net operating income before change in
expected credit losses and other credit impairment charges, also
referred to as revenue.
4 Includes an impairment loss of $3.0bn recognised in
respect of the Group's investment in BoCom. See Note 18 on
page 391 of the Annual
Report and Accounts 2023.
Notable items
|
|
Year ended
|
|
2023
|
2022
|
|
$m
|
$m
|
Revenue
|
|
|
Disposals,
acquisitions and related costs1,2,3
|
1,298
|
(2,737)
|
Fair
value movements on financial instruments4
|
14
|
(618)
|
Restructuring
and other related costs5
|
-
|
(247)
|
Disposal
losses on Markets Treasury repositioning
|
(977)
|
-
|
Operating expenses
|
|
|
Disposals,
acquisitions and related costs
|
(321)
|
(18)
|
Restructuring
and other related costs6
|
136
|
(2,882)
|
Impairment of interest in associate7
|
(3,000)
|
-
|
Tax
|
|
|
Tax
credit on notable items
|
207
|
1,026
|
Recognition of losses
|
-
|
2,333
|
Uncertain
tax positions
|
427
|
(142)
|
1 Includes losses from classifying
businesses as held for sale as part of a broader restructuring of
our European business which includes the impact of the sale of our
retail banking operations in France.
2 Includes fair value movements on the
foreign exchange hedging of the expected proceeds from the planned
sale of our banking operations in
Canada.
3 Includes the provisional gain of $1.6bn recognised in
respect of the acquisition of SVB UK.
4 Fair value movements on non-qualifying
hedges in HSBC Holdings.
5 Comprises gains and losses relating to the business
update in February 2020, including losses associated with the RWA
reduction programme.
6 Amounts in 2023 relate to reversals of
restructuring provisions recognised during 2022.
7 Relates to an impairment loss of $3.0bn recognised in
respect of the Group's investment in BoCom. See Note 18 on
page 391 of the Annual
Report and Accounts 2023.
7
|
Contingent
liabilities, contractual commitments and guarantees
|
|
2023
|
2022
|
|
$m
|
$m
|
Guarantees and other contingent liabilities:
|
|
|
- financial guarantees
|
17,009
|
18,783
|
- performance and other guarantees
|
94,277
|
88,240
|
- other contingent liabilities
|
636
|
676
|
At 31 Dec
|
111,922
|
107,699
|
Commitments1:
|
|
|
- documentary credits and short-term trade-related
transactions
|
7,818
|
8,241
|
- forward asset purchases and forward deposits
placed
|
78,535
|
50,852
|
- standby facilities, credit lines and other commitments to
lend
|
810,797
|
768,761
|
At 31 Dec
|
897,150
|
827,854
|
1 Includes $661,015m of
commitments at 31 December 2023 (31 December 2022: $618,788m),
to which the impairment requirements in IFRS 9 are applied where
HSBC has become party to an irrevocable commitment.
The preceding table discloses the nominal principal amounts of
off-balance sheet liabilities and commitments for the Group, which
represent the maximum amounts at risk should the contracts be fully
drawn upon and the clients default. As a significant portion of
guarantees and commitments are expected to expire without being
drawn upon, the total of the nominal principal amounts is not
indicative of future liquidity requirements. The expected credit
loss provision relating to guarantees and commitments under IFRS 9
is disclosed in Note 28 of the Annual Report and Accounts
2023.
The majority of the guarantees have a term of less than one year,
while guarantees with terms of more than one year are subject to
HSBC's annual credit review process.
Contingent liabilities arising from legal proceedings, regulatory
and other matters against Group companies are excluded from this
note but are disclosed in Notes 28 and 36 of
the Annual Report
and Accounts 2023.
Financial Services Compensation Scheme
The Financial Services Compensation Scheme ('FSCS') provides
compensation, up to certain limits, to eligible customers of
financial services firms that are unable, or likely to be unable,
to pay claims against them. The FSCS may impose a further levy on
the Group to the extent the industry levies imposed to date are not
sufficient to cover the compensation due to customers in any future
possible collapse. The ultimate FSCS levy to the industry as a
result of a collapse cannot be estimated reliably. It is dependent
on various uncertain factors including the potential recovery of
assets by the FSCS, changes in the level of protected products
(including deposits and investments) and the population of FSCS
members at the time.
Associates
HSBC's share of associates' contingent liabilities, contractual
commitments and guarantees amounted to $69.9bn at
31 December 2023 (2022: $64.8bn). No matters arose where HSBC
was severally liable.
8
|
Legal
proceedings and regulatory matters
|
HSBC is party to legal proceedings and regulatory matters in a
number of jurisdictions arising out of its normal business
operations. Apart from the matters described below, HSBC considers
that none of these matters are material. The recognition of
provisions is determined in accordance with the accounting policies
set out in Note 1 of our Annual Report and Accounts
2023. While the outcomes
of legal proceedings and regulatory matters are inherently
uncertain, management believes that, based on the information
available to it, appropriate provisions have been made in respect
of these matters as at 31 December 2023 (see Note 28 of
our Annual Report and Accounts
2023). Where an
individual provision is material, the fact that a provision has
been made is stated and quantified, except to the extent that doing
so would be seriously prejudicial. Any provision recognised does
not constitute an admission of wrongdoing or legal liability. It is
not practicable to provide an aggregate estimate of potential
liability for our legal proceedings and regulatory matters as a
class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration
and similar services to a number of funds incorporated outside the
US whose assets were invested with Bernard L. Madoff Investment
Securities LLC ('Madoff Securities'). Based on information provided
by Madoff Securities as at 30 November 2008, the purported
aggregate value of these funds was $8.4bn, including
fictitious profits reported by Madoff. Based on information
available to HSBC, the funds' actual transfers to Madoff Securities
minus their actual withdrawals from Madoff Securities during the
time HSBC serviced the funds are estimated to have totalled
approximately $4bn. Various HSBC companies have been named as
defendants in lawsuits arising out of Madoff Securities'
fraud.
US litigation: The
Madoff Securities Trustee has brought lawsuits against various HSBC
companies and others, seeking recovery of alleged transfers from
Madoff Securities to HSBC in the amount of $543m (plus
interest), and these lawsuits remain pending in the US Bankruptcy
Court for the Southern District of New York (the 'US Bankruptcy
Court').
Certain Fairfield entities (together, 'Fairfield') (in liquidation)
have brought a lawsuit in the US against fund shareholders,
including HSBC companies that acted as nominees for clients,
seeking restitution of redemption payments in the amount
of $382m (plus interest). Fairfield's claims against most
of the HSBC companies have been dismissed by the US Bankruptcy
Court and the US District Court for the Southern District of New
York, but remain pending on appeal before the US Court of Appeals
for the Second Circuit. Fairfield's claims against HSBC Private
Bank (Suisse) SA and HSBC Securities Services Luxembourg ('HSSL')
have not been dismissed and their appeals are also pending before
the US Court of Appeals for the Second Circuit. Meanwhile,
proceedings before the US Bankruptcy Court with respect to the
claims against HSBC Private Bank (Suisse) SA and HSSL are
ongoing.
UK litigation: The
Madoff Securities Trustee has filed a claim against various HSBC
companies in the High Court of England and Wales, seeking recovery
of transfers from Madoff Securities to HSBC. The claim has not yet
been served and the amount claimed has not been
specified.
Cayman Islands litigation: In
February 2013, Primeo Fund ('Primeo') (in liquidation) brought an
action against HSSL and Bank of Bermuda (Cayman) Limited (now known
as HSBC Cayman Limited), alleging breach of contract and breach of
fiduciary duty and claiming damages. Following dismissal of
Primeo's action by the Grand Court and Court of Appeal of the
Cayman Islands, in 2019, Primeo appealed to the Judicial Committee
of the Privy Council. In November 2023, the Privy Council issued a
judgment upholding the dismissal of Primeo's claims. This matter is
now closed.
Luxembourg litigation: In
2009, Herald Fund SPC ('Herald') (in liquidation) brought an action
against HSSL before the Luxembourg District Court, seeking
restitution of cash and securities in the amount of $2.5bn
(plus interest), or damages in the amount of $2bn (plus
interest). In 2018, HSBC Bank plc was added to the claim and Herald
increased the amount of the alleged damages claim to $5.6bn
(plus interest). The Luxembourg District Court has dismissed
Herald's securities restitution claim, but reserved Herald's cash
restitution and damages claims. Herald has appealed this dismissal
to the Luxembourg Court of Appeal, where the matter is
pending.
Beginning in 2009, various HSBC companies have been named as
defendants in a number of actions brought by Alpha Prime Fund
Limited ('Alpha Prime') in the Luxembourg District Court seeking
damages for alleged breach of contract and negligence in the amount
of $1.16bn (plus interest). These matters are currently
pending before the Luxembourg District Court.
Beginning in 2014, HSSL and the Luxembourg branch of HSBC Bank plc
have been named as defendants in a number of actions brought by
Senator Fund SPC ('Senator') before the Luxembourg District Court
seeking restitution of securities in the amount
of $625m (plus interest), or damages in the amount
of $188m (plus interest). These matters are currently
pending before the Luxembourg District Court.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of the pending matters,
including the timing or any possible impact on HSBC, which could be
significant.
US Anti-Terrorism Act litigation
Since November 2014, a number of lawsuits have been filed in
federal courts in the US against various HSBC companies and others
on behalf of plaintiffs who are, or are related to, alleged victims
of terrorist attacks in the Middle East. In each case, it is
alleged that the defendants aided and abetted the unlawful conduct
of various sanctioned parties in violation of the US Anti-Terrorism
Act, or provided banking services to customers alleged to have
connections to terrorism financing. Seven actions, which
seek damages for unspecified amounts, remain pending and HSBC's
motions to dismiss have been granted in three of these
cases. These dismissals are subject to appeals and/or the
plaintiffs re-pleading their claims. The four other
actions are at an early stage.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of these matters, including
the timing or any possible impact on HSBC, which could be
significant.
Interbank offered rates investigation and litigation
Euro interest rate derivatives: In
December 2016, the European Commission ('EC') issued a decision
finding that HSBC, among other banks, engaged in anti-competitive
practices in connection with the pricing of euro interest rate
derivatives, and the EC imposed a fine on HSBC based on
a one-month infringement in 2007. The fine was annulled in
2019 and a lower fine was imposed in 2021. In January 2023, the
European Court of Justice dismissed an appeal by HSBC and upheld
the EC's findings on HSBC's liability. A separate appeal by HSBC
concerning the amount of the fine remains pending before the
General Court of the European Union.
US dollar Libor: Beginning
in 2011, HSBC and other panel banks have been named as defendants
in a number of individual and putative class action lawsuits filed
in federal and state courts in the US with respect to the setting
of US dollar Libor. The complaints assert claims under various US
federal and state laws, including antitrust and racketeering laws
and the Commodity Exchange Act ('US CEA'). HSBC has concluded class
settlements with five groups of plaintiffs, and several class
action lawsuits brought by other groups of plaintiffs have been
voluntarily dismissed. A number of individual US dollar
Libor-related actions seeking damages for unspecified amounts
remain pending.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of the pending matters,
including the timing or any possible impact on HSBC, which could be
significant.
Foreign exchange-related investigations and litigation
In December 2016, Brazil's Administrative Council of Economic
Defense initiated an investigation into the onshore foreign
exchange market and identified a number of banks, including HSBC,
as subjects of its investigation, which remains
ongoing.
Since 2017, HSBC Bank plc, among other financial institutions, has
been defending a complaint filed by the Competition Commission of
South Africa before the South African Competition Tribunal for
alleged anti-competitive behaviour in the South African foreign
exchange market. In 2020, a revised complaint was filed which also
named HSBC Bank USA N.A. ('HSBC Bank USA') as a defendant. In
January 2024, the South African Competition Appeal Court dismissed
HSBC Bank USA from the revised complaint, but denied HSBC Bank
plc's application to dismiss. The Competition Commission has
appealed the dismissal of HSBC Bank USA to the Constitutional Court
of South Africa.
Since 2015, various HSBC companies and other banks have been named
as defendants in a putative class action in the US District Court
for the Southern District of New York filed by a group of retail
customers who dealt in foreign exchange products. The plaintiffs
allege that the defendants conspired to manipulate foreign exchange
rates and seek damages for unspecified amounts. This action has
been dismissed but remains pending on appeal.
In January 2023, HSBC Bank plc and HSBC Holdings reached a
settlement-in-principle with plaintiffs in Israel to resolve a
class action filed in the local courts alleging foreign
exchange-related misconduct. The settlement remains subject to
court approval. Lawsuits alleging foreign exchange-related
misconduct remain pending against HSBC and other banks in courts in
Brazil.
In February 2024, HSBC Bank plc and HSBC Holdings were joined to an
existing claim brought in the UK Competition Appeals Tribunal
against various other banks alleging historical anti-competitive
behaviour in the foreign exchange market and seeking damages for
unspecified amounts. This matter is at an early stage. It is
possible that additional civil actions will be initiated against
HSBC in relation to its historical foreign exchange
activities.
There are many factors that may affect the range of outcomes, and
the resulting financial impact, of the pending matters, which could
be significant.
Precious metals fix-related litigation
US litigation: HSBC
and other members of The London Silver Market Fixing Limited are
defending a class action pending in the US District Court for the
Southern District of New York alleging that, from January 2007 to
December 2013, the defendants conspired to manipulate the price of
silver and silver derivatives for their collective benefit in
violation of US antitrust laws, the US CEA and New York state law.
In May 2023, this action, which seeks damages for unspecified
amounts, was dismissed but remains pending on
appeal.
HSBC and other members of The London Platinum and Palladium Fixing
Company Limited are defending a class action pending in the US
District Court for the Southern District of New York alleging that,
from January 2008 to November 2014, the defendants conspired to
manipulate the price of platinum group metals and related financial
products for their collective benefit in violation of US antitrust
laws and the US CEA. In February 2023, the court reversed an
earlier dismissal of the plaintiffs' third amended complaint and
this action, which seeks damages for unspecified amounts, is
proceeding.
Canada litigation: HSBC
and other financial institutions are defending putative class
actions filed in the Ontario and Quebec Superior Courts of Justice
alleging that the defendants conspired to manipulate the price of
silver, gold and related derivatives in violation of the Canadian
Competition Act and common law. These actions each seek CA$1bn in
damages plus CA$250m in punitive damages. Two of the
actions are proceeding and the others have been
stayed.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of these matters, including
the timing or any possible impact on HSBC, which could
be significant.
Tax-related investigations
Various tax administration, regulatory and law enforcement
authorities around the world are conducting investigations in
connection with allegations of tax evasion or tax fraud, money
laundering and unlawful cross-border banking solicitation. HSBC
continues to cooperate with these investigations.
In March 2023, the French National Financial Prosecutor announced
an investigation into a number of banks, including HSBC Continental
Europe and the Paris branch of HSBC Bank plc, in connection with
alleged tax fraud related to the dividend withholding tax treatment
of certain trading activities. HSBC Bank plc and HSBC Germany also
continue to cooperate with investigations by the German public
prosecutor into numerous financial institutions and their
employees, in connection with the dividend withholding tax
treatment of certain trading activities.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of these matters, including
the timing or any possible impact on HSBC, which could be
significant.
Gilts trading investigation and litigation
Since 2018, the UK Competition and Markets Authority ('CMA') has
been investigating HSBC and four other banks for suspected
anti-competitive conduct in relation to the historical trading of
gilts and related derivatives. In May 2023, the CMA announced its
case against HSBC Bank plc and HSBC Holdings; both HSBC companies
are contesting the CMA's allegations.
In June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among
other banks, were named as defendants in a putative class action
filed in the US District Court for the Southern District of New
York by plaintiffs alleging anti-competitive conduct in the gilts
market and seeking damages for unspecified amounts. In September
2023, the defendants filed a motion to dismiss which remains
pending. It is possible that additional civil actions will be
initiated against HSBC in relation to its historical gilts trading
activities.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of these matters, including
the timing or any possible impact on HSBC, which could be
significant.
UK depositor protection arrangements investigation
In January 2022, the UK Prudential Regulation Authority ('PRA')
commenced an investigation into HSBC Bank plc's and HSBC UK Bank
plc's compliance with depositor protection arrangements under the
Financial Services Compensation Scheme in the UK. In January 2024,
the PRA concluded its investigation and imposed
a £57m fine on HSBC Bank plc and HSBC UK Bank plc,
which has been paid, and this matter is now closed.
UK collections and recoveries investigation
Since 2019, the FCA has been investigating HSBC Bank plc's, HSBC UK
Bank plc's and Marks and Spencer Financial Services plc's
compliance with regulatory standards relating to collections and
recoveries operations in the UK between 2017 and 2018. HSBC
continues to cooperate with this investigation.
There are many factors that may affect the range of outcomes, and
the resulting financial impact, of this matter, which could be
significant.
Korean short selling investigation
In December 2023, the Korean Securities and Futures Commission
issued a decision to impose a fine on The Hongkong and Shanghai
Banking Corporation Limited in connection with trades in breach of
Korean short selling rules and to refer the case to the Korean
Prosecutors' Office for investigation.
There are many factors that may affect the range of outcomes, and
the resulting financial impact, of this matter, which could be
significant.
Silicon Valley Bank ('SVB') litigation
In May 2023, First-Citizens Bank & Trust Company ('First
Citizens') brought a lawsuit in the US District Court for the
Northern District of California against various HSBC companies
and seven US-based HSBC employees who had previously
worked for SVB. The lawsuit seeks $1bn in damages and alleges,
among other things, that the various HSBC companies conspired with
the individual defendants to solicit employees from First Citizens
and that the individual defendants took confidential information
belonging to SVB and/or First Citizens. In January 2024, the court
denied the defendants' motion to dismiss in part and granted it in
part, and directed the plaintiff to amend its complaint to specify
its allegations as to each defendant. In February 2024, First
Citizens filed its amended complaint. This action is
ongoing.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of this matter, including
the timing or any possible impact on HSBC, which could be
significant.
Film Finance litigation
In June 2020, two separate investor groups issued claims
against HSBC UK Bank plc (as successor to HSBC Private Bank (UK)
Limited ('PBGB')) in the High Court of England and Wales seeking
damages for unspecified amounts in connection with PBGB's role in
the development of Eclipse film finance schemes. These actions are
ongoing.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of these matters, including
the timing or any possible impact on HSBC, which could be
significant.
US mortgage securitisation litigation
Beginning in 2014, a number of lawsuits were filed in various state
and federal courts in the US against HSBC Bank USA, as a trustee of
more than 280 mortgage securitisation trusts, seeking unspecified
damages for losses in collateral value allegedly sustained by the
trusts. HSBC Bank USA has reached settlements with a number of
plaintiffs to resolve nearly all of these lawsuits. The remaining
two actions are pending in a New York state court. HSBC Bank USA
and certain of its affiliates continue to defend a mortgage loan
repurchase action seeking unspecified damages and specific
performance brought by the trustee of a mortgage securitisation
trust in New York state court.
There are many factors that may affect the range of outcomes, and
the resulting financial impact, of the pending matters, which could
be significant.
Mexican government bond litigation
HSBC Mexico S.A. and other banks are named as defendants in a
consolidated putative class action pending in the US District Court
for the Southern District of New York alleging anti-competitive
conduct in the Mexican government bond market between 2006 and 2017
and seeking damages for unspecified amounts. In February 2024, the
US Court of Appeals for the Second Circuit reversed an earlier
dismissal of this lawsuit and this matter is
proceeding.
Based on the facts currently known, it is not practicable at this
time for HSBC to predict the resolution of this matter, including
the timing or any possible impact on HSBC, which could be
significant.
Stanford litigation
Since 2009, HSBC Bank plc has been named as a defendant in numerous
claims filed in courts in the UK and the US arising from the
collapse of Stanford International Bank Ltd, for which it was a
correspondent bank from 2003 to 2009. In February 2023, HSBC Bank
plc reached settlements with the plaintiffs to resolve these
claims. The US settlement is subject to court approval and the UK
settlement has concluded.
Other regulatory investigations, reviews and
litigation
HSBC Holdings and/or certain of its affiliates are also subject to
a number of other enquiries and examinations, requests for
information, investigations and reviews by various regulators and
competition and law enforcement authorities, as well as legal
proceedings including litigation, arbitration and other contentious
proceedings, in connection with various matters arising out of
their ordinary course businesses and operations.
At the present time, HSBC does not expect the ultimate resolution
of any of these matters to be material to the Group's financial
position; however, given the uncertainties involved in legal
proceedings and regulatory matters, there can be no assurance
regarding the eventual outcome of a particular matter or
matters.
9
|
Impairment
of interest in associate
|
We maintain a 19.03% interest in BoCom. Since our investment in
2004, BoCom has grown its business significantly to the extent that
it has recently been designated as a global systemically important
bank ('GSIB').
For accounting purposes, the balance sheet carrying value
attributed to BoCom represents our share of its net assets. We
perform quarterly impairment tests incorporating a value-in-use
calculation, recognising the gap between this carrying value and
the fair value (based on the list share price). We have previously
disclosed that the excess of the value-in-use calculation over its
carrying value has been marginal in recent years, and that
reasonably possible changes in assumptions could generate an
impairment.
Recent macroeconomic, policy and industry factors resulted in a
wider range of reasonably possible value-in-use outcomes for our
BoCom valuation. At 31 December 2023, the Group performed an
impairment test on the carrying value which resulted in an
impairment of $3.0bn, as the recoverable amount as determined by a
value-in-use calculation was lower than the carrying value. Our
value-in-use calculation uses both historical experience and market
participant views to estimate future cash flows, relevant discount
rates and associated capital assumptions.
This impairment will have no material impact on HSBC's capital,
capital ratios or distribution capacity, and therefore no impact on
dividends or share buy-backs. The insignificant impact on HSBC's
capital and CET1 ratio is due to the compensating release of
regulatory capital deductions to offset the impairment
charge.
We remain strategically committed to mainland China as demonstrated
by our recent announcements to acquire Citi's retail wealth
management portfolio and the investments made into mainland China
in recent years. BoCom remains a strong partner in China, and we
remain focused on maximising the mutual value of our partnership.
Our positive views on the medium- and long-term structural growth
opportunities in mainland China are unchanged.
For further details, see Note 18: Interests in
associates and joint ventures on page 391 of
our Annual Report and Accounts
2023.
10
|
Events
after the balance sheet date
|
On 1 January 2024, HSBC Continental Europe completed the sale of
its retail banking business in France to CCF, a subsidiary of
Promontoria MMB SAS ('My Money Group'). The sale also included HSBC
Continental Europe's 100% ownership interest in HSBC SFH (France)
and its 3% ownership interest in Crédit Logement. In the
fourth quarter of 2023, a loss of $2.0bn was recognised upon
reclassification to held for sale, in accordance with IFRS 5, which
net of the $2.1bn partial reversal of impairment recognised in
the first quarter of 2023, gave rise to a net reversal of
impairment recognised in the year of $0.1bn.
On 30 January 2024, the PRA concluded its investigation into HSBC
Bank plc's and HSBC UK Bank plc's compliance with depositor
protection arrangements under the Financial Services Compensation
Scheme in the UK. The PRA imposed a fine of $73m (£57m) on
these entities, which was fully provided for as at 31 December
2023, and has now been paid.
On 31 January 2024, HSBC Global Asset Management Limited, through
its indirect subsidiary HSBC Global Asset Management Singapore
Limited, completed the acquisition of the Asia-Pacific-focused real
estate investment manager Silkroad Property Partners Pte Ltd. HSBC
Global Asset Management Limited also acquired Silkroad's affiliated
General Partner entities as part of the transaction.
On 6 February 2024, HSBC Europe B.V., an indirect subsidiary of
HSBC Holdings plc, signed an agreement to sell HSBC Bank Armenia
CJSC, its wholly-owned subsidiary, to Ardshinbank CJSC subject to
regulatory approvals. The transaction is expected to complete
within the next 12 months.
A fourth interim dividend for 2023 of $0.31 per ordinary share (a
distribution of approximately $5,913m)
was approved by the Directors after 31 December 2023. On 21
February 2024, HSBC Holdings announced a share buy-back programme
to purchase its ordinary shares up to a maximum consideration of
$2.0bn, which is expected to commence shortly and complete by our
first quarter 2024 results announcement. HSBC Holdings called
$2,500m 3.803% and $500m floating rate senior unsecured debt
securities on 25 January 2024. These securities are expected to be
redeemed and cancelled on 11 March 2024. These accounts were
approved by the Board of Directors on 21 February 2024 and
authorised for issue.
Capital ratios
|
|
At 31 Dec
|
|
2023
|
2022
|
|
%
|
%
|
Transitional basis
|
|
|
Common
equity tier 1 ratio
|
14.8
|
14.2
|
Tier 1 ratio
|
16.9
|
16.6
|
Total capital ratio
|
20.0
|
19.3
|
|
|
|
End point basis
|
|
|
Common equity tier 1 ratio
|
14.8
|
14.2
|
Tier 1 ratio
|
16.9
|
16.6
|
Total capital ratio
|
19.6
|
18.7
|
Total regulatory capital and risk-weighted assets
|
|
At 31 Dec
|
|
2023
|
2022
|
|
$m
|
$m
|
Transitional basis
|
|
|
Common
equity tier 1 capital
|
126,501
|
119,291
|
Additional tier 1 capital
|
17,662
|
19,776
|
Tier 2 capital
|
27,041
|
23,356
|
Total regulatory capital
|
171,204
|
162,423
|
Risk-weighted assets
|
854,114
|
839,720
|
|
|
|
End point basis
|
|
|
Common equity tier 1 capital
|
126,501
|
119,291
|
Additional tier 1 capital
|
17,662
|
19,776
|
Tier 2 capital
|
22,894
|
18,091
|
Total regulatory capital
|
167,057
|
157,158
|
Risk-weighted assets
|
854,114
|
839,720
|
Leverage ratio1
|
|
|
|
At 31 Dec
|
|
2023
|
2022
|
|
$bn
|
$bn
|
Tier 1 capital
|
144.2
|
139.1
|
Total leverage ratio exposure
|
2,574.8
|
2,417.2
|
|
%
|
%
|
Leverage ratio
|
5.6
|
5.8
|
1 Leverage ratio calculation is in line
with the PRA's UK leverage rules. This includes IFRS 9 transitional
arrangement and excludes central bank claims.
The information in this news release does not constitute statutory
accounts within the meaning of section 434 of the Companies
Act 2006 ('the Act'). The statutory accounts for the year
ended 31 December 2023 will be delivered to the Registrar of
Companies in England and Wales in accordance with section 441
of the Act. The auditor has reported on those accounts. Its report
was unqualified and did not contain a statement under section
498(2) or (3) of the Act.
13
|
Dealings
in HSBC Holdings plc listed securities
|
The Group has policies and procedures that, except where permitted
by statute and regulation, prohibit specified transactions in
respect of its securities listed on The Stock Exchange of Hong Kong
Limited. Except for dealings as intermediaries or as trustees by
subsidiaries of HSBC Holdings, and purchases by HSBC Holdings under
the share buy-back programme, neither HSBC Holdings nor any of its
subsidiaries has purchased, sold or redeemed any of its securities
listed on The Stock Exchange of Hong Kong Limited during the
year ended 31 December 2023.
14
|
Interim
dividends for 2024
|
For the financial year 2023, the Group reverted to paying quarterly
dividends, and achieved a dividend payout ratio of 50% of reported
earnings per ordinary share ('EPS'), in line with our published
target for 2023 and 2024. EPS for this purpose excludes material
notable items and related impacts (including those associated with
the sale of our retail banking operations in France, the agreed
sale of our banking business in Canada and our acquisition of SVB
UK). The Board has adopted a dividend policy designed to provide
sustainable cash dividends, while retaining the flexibility to
invest and grow the business in the future, supplemented by
additional shareholder distributions, if appropriate.
Dividends are approved in US dollars and, at the election of the
shareholder, paid in cash in one of, or in a combination of, US
dollars, pounds sterling and Hong Kong dollars.
15
|
Earnings releases and interim results
|
First and third quarter results for 2024 will be released on 30
April 2024 and 29 October 2024, respectively. The interim results
for the six months to 30 June 2024 will be issued on 31 July
2024.
16
|
Corporate
governance codes
|
HSBC is subject to corporate governance requirements in both the UK
and Hong Kong. During 2023, HSBC complied with the provisions and
requirements of both the UK and Hong Kong Corporate Governance
Codes.
Under the Hong Kong Code, the audit committee should be responsible
for the oversight of all risk management and internal control
systems. HSBC's Group Risk Committee is responsible for oversight
of internal control, other than internal control over financial
reporting, and risk management systems. This is permitted under the
UK Corporate Governance Code.
HSBC Holdings has codified obligations for transactions in Group
securities in accordance with the requirements of the UK Market
Abuse Regulation and the rules governing the listing of securities
on HKEx. The Group has been granted certain waivers by HKEx from
strict compliance with rules that take into account accepted
practices in the UK, particularly in respect of employee share
plans. During the year, all Directors were reminded of their
obligations in respect of transacting in HSBC Group securities.
Following specific enquiry all Directors have confirmed that they
have complied with their obligations.
The Group Audit Committee has reviewed and provided assurance to
the HSBC Holdings Board on the publication of
the Annual Report and Accounts
2023.
The Directors of HSBC Holdings plc as at the date of this
announcement comprise:
Mark Edward Tucker*, Noel Paul Quinn, Geraldine Joyce
Buckingham†,
Rachel Duan†,
Georges Bahjat Elhedery, Dame Carolyn Julie
Fairbairn†,
James Anthony Forese†,
Ann Frances Godbehere†,
Steven Craig Guggenheimer†,
Dr José Antonio Meade Kuribreña†,
Kalpana Jaisingh Morparia†,
Eileen K Murray†,
Brendan Robert Nelson†,
David Thomas Nish†,
and Swee Lian Teo†.
* Non-executive Group Chairman
† Independent non-executive Director
As announced on Wednesday, 6 December 2023, and following receipt
of regulatory approval, Brendan Nelson has succeeded David Nish as
Chair of the Group Audit Committee with effect from today's date.
The Company also announces that Ann Godbehere has been appointed as
a member of the Group Audit Committee with effect from today's
date.
As detailed in 'Board and Group Executive committees and working
groups' on page 252 of the Annual Report and Accounts
2023, the Board has taken the
decision to establish a Group Technology Committee ('GTC'),
effective 1 March 2024. The GTC will have responsibility for
oversight of Technology-related matters across the Group, and the
full terms of reference can be found on hsbc.com. The membership of
the GTC will be Eileen Murray (Chair), Steven Guggenheimer, Swee
Lian Teo, Kalpana Morparia and Brendan Nelson. As a result of the
establishment of the GTC, the Technology Governance Working Group
will be demised with effect from 1 March 2024.
18
|
Cautionary
statement regarding forward-looking statements
|
This news release may contain projections, estimates, forecasts,
targets, commitments, ambitions, opinions, prospects, results,
returns and forward-looking statements with respect to the
financial condition, results of operations, capital position, ESG
related matters, strategy and business of the Group which can be
identified by the use of forward-looking terminology such as 'may',
'will', 'should', 'expect', 'anticipate', 'project', 'estimate',
'seek', 'intend', 'target', 'plan', 'believe', 'potential' or
'reasonably possible', or the negatives thereof or other variations
thereon or comparable terminology (together, 'forward-looking
statements'), including the strategic priorities and any financial,
investment and capital targets and any ESG targets, commitments and
ambitions described herein.
Any such forward-looking statements are not a reliable indicator of
future performance, as they may involve significant stated or
implied assumptions and subjective judgements which may or may not
prove to be correct. There can be no assurance that any of the
matters set out in forward-looking statements are attainable, will
actually occur or will be realised or are complete or accurate. The
assumptions and judgements may prove to be incorrect and involve
known and unknown risks, uncertainties, contingencies and other
important factors, many of which are outside the control of the
Group.
Actual achievements, results, performance or other future events or
conditions may differ materially from those stated, implied and/or
reflected in any forward-looking statements due to a variety of
risks, uncertainties and other factors (including without
limitation those which are referable to general market or economic
conditions, regulatory changes, increased volatility in interest
rates and inflation levels and other macroeconomic risks,
geopolitical tensions such as the Russia-Ukraine war and the
Israel-Hamas war and potential further escalations, specific
economic developments, such as the uncertain performance of the
commercial real estate sector in mainland China, or as a result of
data limitations and changes in applicable methodologies in
relation to ESG related matters).
Any such forward-looking statements are based on the beliefs,
expectations and opinions of the Group at the date the statements
are made, and the Group does not assume, and hereby disclaims, any
obligation or duty to update, revise or supplement them if
circumstances or management's beliefs, expectations or opinions
should change. For these reasons, recipients should not place
reliance on, and are cautioned about relying on, any
forward-looking statements. No representations or warranties,
expressed or implied, are given by or on behalf of the Group as to
the achievement or reasonableness of any projections, estimates,
forecasts, targets, commitments, ambitions, prospects or returns
contained herein.
Additional detailed information concerning important factors,
including but not limited to ESG related factors, that could cause
actual results to differ materially from this news release is
available in our Annual Report and Accounts for the fiscal year
ended 31 December 2023 which we expect to file with the U.S.
Securities and Exchange Commission on Form 20-F on or around 22
February 2024.
19
|
Use of
alternative performance measures
|
This news release contains non-IFRS measures used by management
internally that constitute alternative performance measures under
European Securities and Markets Authority guidance and non-GAAP
financial measures defined in and presented in accordance with US
Securities and Exchange Commission rules and regulations
('alternative performance measures'). The primary alternative
performance measures we use are presented on a 'constant currency'
basis which is computed by adjusting reported results for the
effects of foreign currency translation differences, which distort
period-on-period comparisons. We consider constant currency
performance to provide useful information for investors by aligning
internal and external reporting, and reflecting how management
assesses period-on-period performance. We separately disclose
'notable items', which are components of our income statement that
management would consider as outside the normal course of business
and generally non-recurring in nature. Reconciliations between
alternative performance measures and the most directly comparable
measures under IFRS are provided in our Annual Report and Accounts
2023, which is available at
www.hsbc.com.
Unless the context requires otherwise, 'HSBC Holdings' means HSBC
Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to
HSBC Holdings together with its subsidiaries. Within this document
the Hong Kong Special Administrative Region of the People's
Republic of China is referred to as 'Hong Kong'. When used in the
terms 'shareholders' equity' and 'total shareholders' equity',
'shareholders' means holders of HSBC Holdings ordinary shares and
those preference shares and capital securities issued by HSBC
Holdings classified as equity. The abbreviations '$m', '$bn' and
'$tn' represent millions, billions (thousands of millions) and
trillions of US dollars, respectively.
21
|
For
further information contact:
|
Media Relations
UK -
Gillian James
Telephone:
+44 (0)7584 404 238
Email:
pressoffice@hsbc.com
UK -
Kirsten Smart
Telephone:
+44 (0)7725 733 311
Email:
pressoffice@hsbc.com
|
Investor Relations
UK -
Neil Sankoff
Telephone:
+44 (0) 20 7991 5072
Email:
investorrelations@hsbc.com
Hong
Kong - Yafei Tian
Telephone:
+852 2899 8909
Email:
investorrelations@hsbc.com.hk
|
Hong
Kong - Aman Ullah
Telephone:
+852 3941 1120
Email:
aspmediarelations@hsbc.com.hk
|
|
22
|
Registered
Office and Group Head Office
|
8 Canada Square
London E14 5HQ
United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered number
617987
Please click on the following link to view the associated data
pack:
http://www.rns-pdf.londonstockexchange.com/rns/8448D_1-2024-2-21.pdf
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HSBC
Holdings plc
|
|
|
|
By:
|
|
Name:
Aileen Taylor
|
|
Title:
Group Company Secretary and Chief Governance Officer
|
|
|
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Date:
21 February 2024
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HSBC (PK) (USOTC:HBCYF)
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From Apr 2024 to May 2024
HSBC (PK) (USOTC:HBCYF)
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