TIDMRT90
RNS Number : 9092H
HSBC UK Bank PLC
01 August 2023
Condensed financial statements
Contents
34 Consolidated income statement
35 Consolidated statement of comprehensive income
36 Consolidated balance sheet
37 Consolidated statement of changes in equity
38 Consolidated statement of cash flows
Consolidated income statement
Half-year to
30 Jun 30 Jun
2023 2022
Notes GBPm GBPm
--------------------------------------------------- ------ --------------------------- ----------------------------
Net interest income 3,871 2,752
----------------------------------------------------------- --------------------------- ----------------------------
- interest income 6,012 3,113
-----------------------------------------------------------
- interest expense (2,141) (361)
----------------------------------------------------------- ---------------------------
Net fee income 2 649 597
--------------------------------------------------- ------ --------------------------- ----------------------------
- fee income 782 737
-----------------------------------------------------------
- fee expense (133) (140)
----------------------------------------------------------- ---------------------------
Net income from financial instruments held for trading or
managed on a fair value basis 190 173
Change in fair value of other financial instruments
mandatorily measured at fair value through
profit or loss 7 32
----------------------------------------------------------- --------------------------- ----------------------------
Gains less losses from financial investments 36 21
Gain on acquisition of subsidiary(1) 1,240 -
--------------------------------------------------- ------ --------------------------- ----------------------------
Other operating income 11 21
Net operating income before change in expected credit
losses and other credit impairment
charges 6,004 3,596
----------------------------------------------------------- --------------------------- ----------------------------
Change in expected credit losses and other credit
impairment charges (337) (42)
Net operating income 5,667 3,554
----------------------------------------------------------- --------------------------- ----------------------------
Employee compensation and benefits (487) (498)
----------------------------------------------------------- --------------------------- ----------------------------
General and administrative expenses (1,068) (1,063)
----------------------------------------------------------- --------------------------- ----------------------------
Depreciation and impairment of property, plant and
equipment and right-of-use assets (59) (94)
----------------------------------------------------------- --------------------------- ----------------------------
Amortisation and impairment of intangible assets (151) (149)
Total operating expenses (1,765) (1,804)
----------------------------------------------------------- --------------------------- ----------------------------
Operating profit 3,902 1,750
Profit before tax 3,902 1,750
----------------------------------------------------------- --------------------------- ----------------------------
Tax expense 4 (699) (281)
--------------------------------------------------- ------ --------------------------- ----------------------------
Profit for the period 3,203 1,469
----------------------------------------------------------- --------------------------- ----------------------------
Attributable to:
--------------------------------------------------- ------ --------------------------- ----------------------------
- ordinary shareholders of the parent company 3,200 1,466
- non-controlling interests 3 3
----------------------------------------------------------- ---------------------------
Profit for the period 3,203 1,469
----------------------------------------------------------- --------------------------- ----------------------------
1 Provisional gain of GBP1,240m recognised in respect of the acquisition of SVB UK.
The accompanying notes on pages 39 to 45, 'Profit /(loss) before
tax and balance sheet data for the period' in the 'Financial
summary' section on pages 8 to 11, and the following disclosures in
the Risk section on pages 11 to 31 form an integral part of these
condensed financial statements: 'Distribution of financial
instruments to which the impairment requirements in IFRS 9 are
applied, by credit quality and stage allocation' and
'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including
loan commitments and financial guarantees'.
Consolidated statement of comprehensive income
Half-year to
30 Jun 30 Jun
2023 2022
GBPm GBPm
----------------------------------------------------------- --------------------------- ----------------------------
Profit for the period 3,203 1,469
----------------------------------------------------------- --------------------------- ----------------------------
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 19 (273)
----------------------------------------------------------- --------------------------- ----------------------------
- fair value gains/(losses) 61 (364)
-----------------------------------------------------------
- fair value gains transferred to the income statement on
disposal (37) (21)
-----------------------------------------------------------
- expected credit recoveries recognised in the income
statement - (1)
-----------------------------------------------------------
- income taxes (5) 113
----------------------------------------------------------- ---------------------------
Cash flow hedges (567) (609)
----------------------------------------------------------- --------------------------- ----------------------------
- fair value losses (1,300) (815)
-----------------------------------------------------------
- fair value (gains)/losses reclassified to the income
statement 513 (21)
-----------------------------------------------------------
- income taxes 220 227
Exchange differences 7 (2)
Items that will not be reclassified subsequently to profit
or loss:
----------------------------------------------------------- --------------------------- ----------------------------
Remeasurement of defined benefit asset/liability (16) (53)
----------------------------------------------------------- --------------------------- ----------------------------
- before income taxes (20) (256)
-----------------------------------------------------------
- income taxes(1) 4 203
Other comprehensive income/(expense) for the period, net of
tax (557) (937)
----------------------------------------------------------- --------------------------- ----------------------------
Total comprehensive income for the period 2,646 532
----------------------------------------------------------- --------------------------- ----------------------------
Attributable to:
----------------------------------------------------------- --------------------------- ----------------------------
- ordinary shareholders of the parent company 2,643 529
- non-controlling interests 3 3
----------------------------------------------------------- ---------------------------
Total comprehensive income for the period 2,646 532
----------------------------------------------------------- --------------------------- ----------------------------
1 There is an income tax credit of GBP4m (1H22: credit GBP203m).
1H22 includes an income tax credit of GBP136m, arising upon the
remeasurement of deferred tax following the substantive enactment
of legislation to reduce the UK banking surcharge rate from 8% to
3% with effect from 1 April 2023.
Consolidated balance sheet
At
30 Jun 31 Dec
2023 2022
Notes GBPm GBPm
--------------------------------------------------- ------ --------------------------- ----------------------------
Assets
--------------------------------------------------- ------ --------------------------- ----------------------------
Cash and balances at central banks 76,666 94,407
----------------------------------------------------------- --------------------------- ----------------------------
Items in the course of collection from other banks 327 353
Financial assets mandatorily measured at fair value
through profit or loss 6 118 108
Derivatives 422 546
----------------------------------------------------------- --------------------------- ----------------------------
Loans and advances to banks 7,324 6,357
----------------------------------------------------------- --------------------------- ----------------------------
Loans and advances to customers 209,566 204,143
----------------------------------------------------------- --------------------------- ----------------------------
Reverse repurchase agreements - non-trading 6,781 7,406
----------------------------------------------------------- --------------------------- ----------------------------
Financial investments 22,129 16,092
----------------------------------------------------------- --------------------------- ----------------------------
Prepayments, accrued income and other assets 8,164 8,762
Interests in joint ventures 8 9
----------------------------------------------------------- --------------------------- ----------------------------
Goodwill and intangible assets 8 4,265 4,258
Total assets 335,770 342,441
----------------------------------------------------------- --------------------------- ----------------------------
Liabilities and equity
--------------------------------------------------- ------ --------------------------- ----------------------------
Liabilities
Deposits by banks 10,844 10,721
----------------------------------------------------------- --------------------------- ----------------------------
Customer accounts 273,785 281,095
----------------------------------------------------------- --------------------------- ----------------------------
Repurchase agreements - non-trading 7,659 9,333
----------------------------------------------------------- --------------------------- ----------------------------
Items in the course of transmission to other banks 156 308
Derivatives 206 304
----------------------------------------------------------- --------------------------- ----------------------------
Debt securities in issue 1,257 1,299
----------------------------------------------------------- --------------------------- ----------------------------
Accruals, deferred income and other liabilities 3,330 3,543
----------------------------------------------------------- --------------------------- ----------------------------
Current tax liabilities 681 173
Provisions 9 375 424
--------------------------------------------------- ------ --------------------------- ----------------------------
Deferred tax liabilities 441 666
----------------------------------------------------------- --------------------------- ----------------------------
Subordinated liabilities 13,066 12,349
----------------------------------------------------------- --------------------------- ----------------------------
Total liabilities 311,800 320,215
----------------------------------------------------------- --------------------------- ----------------------------
Equity
--------------------------------------------------- ------ --------------------------- ----------------------------
Called up share capital - -
--------------------------------------------------- ------ --------------------------- ----------------------------
Share premium account 9,015 9,015
----------------------------------------------------------- --------------------------- ----------------------------
Other equity instruments 2,196 2,196
----------------------------------------------------------- --------------------------- ----------------------------
Other reserves 5,580 6,121
----------------------------------------------------------- --------------------------- ----------------------------
Retained earnings 7,119 4,834
----------------------------------------------------------- --------------------------- ----------------------------
Total shareholders' equity 23,910 22,166
----------------------------------------------------------- --------------------------- ----------------------------
Non-controlling interests 60 60
----------------------------------------------------------- --------------------------- ----------------------------
Total equity 23,970 22,226
----------------------------------------------------------- --------------------------- ----------------------------
Total liabilities and equity 335,770 342,441
----------------------------------------------------------- --------------------------- ----------------------------
Consolidated statement of changes in equity
Called up share Total
capital and share Other Cash flow share- Non-
premium equity Retained Financial assets at hedging Group re-organisation holders' controlling Total
instruments earnings FVOCI reserve reserve reserve(2) equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 Jan 2023 9,015 2,196 4,834 (246) (1,324) 7,691 22,166 60 22,226
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Profit for the period - - 3,200 - - - 3,200 3 3,203
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Other comprehensive income (net of tax) - - (16) 26 (567) - (557) - (557)
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
* debt instruments at fair value through other
comprehensive income - - - 19 - - 19 - 19
* cash flow hedges - - - - (567) - (567) - (567)
* remeasurement of defined benefit asset/liability - - (16) - - - (16) - (16)
* exchange differences - - - 7 - - 7 - 7
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- -----------------------
Total comprehensive income for the period - - 3,184 26 (567) - 2,643 3 2,646
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Dividends to shareholders - - (908) - - - (908) (3) (911)
Other movements(1) - - 9 - - - 9 - 9
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
At 30 Jun 2023 9,015 2,196 7,119 (220) (1,891) 7,691 23,910 60 23,970
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
At 1 Jan 2022 9,015 2,196 4,877 56 (90) 7,691 23,745 60 23,805
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Profit for the period - - 1,466 - - - 1,466 3 1,469
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Other comprehensive income
(net of tax) - - (53) (275) (609) - (937) - (937)
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
* debt instruments at fair value through other
comprehensive income - - - (273) - - (273) - (273)
-------------------------------------------------------
* cash flow hedges - - - - (609) - (609) - (609)
-------------------------------------------------------
* remeasurement of defined benefit asset/liability - - (53) - - - (53) - (53)
-------------------------------------------------------
* exchange differences - - - (2) - - (2) - (2)
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- -----------------------
Total comprehensive income for the
period - - 1,413 (275) (609) - 529 3 532
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
Dividends to shareholders - - (729) - - - (729) (3) (732)
Other movements(1) - - 12 - - - 12 - 12
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
At 30 Jun 2022 9,015 2,196 5,573 (219) (699) 7,691 23,557 60 23,617
------------------------------------------------------- ------------------ ------------------------ ------------------- -------------------- ----------------- ------------------------- ------------------- ----------------------- ----------------
1 Relates primarily to GBP6m of pension assets transferred from
HSBC Global Services (UK) Limited and HSBC Bank plc (1H22:
GBP8m).
2 The Group reorganisation reserve is an equity reserve which
was used to recognise the contribution of equity reserves
associated with the
ring-fenced businesses that were transferred from HSBC Bank
plc.
Consolidated statement of cash flows
Half-year to
30 Jun 30 Jun
2023 2022
GBPm GBPm
----------------------------------------------------------- --------------------------- ----------------------------
Profit before tax 3,902 1,750
----------------------------------------------------------- --------------------------- ----------------------------
Adjustments for non-cash items:
----------------------------------------------------------- --------------------------- ----------------------------
Depreciation, amortisation and impairment 210 243
----------------------------------------------------------- --------------------------- ----------------------------
Net gain from investing activities (23) (21)
Gain on acquisition of SVB UK (1,240) -
----------------------------------------------------------- --------------------------- ----------------------------
Change in expected credit losses gross of recoveries and
other credit impairment charges 367 86
----------------------------------------------------------- --------------------------- ----------------------------
Provisions including pensions (122) (27)
----------------------------------------------------------- --------------------------- ----------------------------
Share-based payment expense 9 7
----------------------------------------------------------- --------------------------- ----------------------------
Other non-cash items included in profit before tax (42) (6)
----------------------------------------------------------- --------------------------- ----------------------------
Elimination of exchange differences(1) 438 955
Changes in operating assets 1,372 (12,068)
----------------------------------------------------------- --------------------------- ----------------------------
Changes in operating liabilities (17,239) 2,968
Contributions paid to defined benefit plans (5) (11)
----------------------------------------------------------- --------------------------- ----------------------------
Tax (paid) (119) (1,088)
----------------------------------------------------------- --------------------------- ----------------------------
Net cash from operating activities (12,492) (7,212)
----------------------------------------------------------- --------------------------- ----------------------------
Purchase of financial investments (6,825) (6,577)
----------------------------------------------------------- --------------------------- ----------------------------
Proceeds from the sale and maturity of financial
investments 3,521 6,245
----------------------------------------------------------- --------------------------- ----------------------------
Net cash flows from the purchase and sale of property,
plant and equipment 49 (20)
----------------------------------------------------------- --------------------------- ----------------------------
Net investment in intangible assets (158) (163)
----------------------------------------------------------- --------------------------- ----------------------------
Net cash flow from acquisition of SVB UK 1,023 -
Net cash from investing activities (2,390) (515)
Subordinated loan capital issued(2) 1,000 -
Dividends paid to shareholders of the parent company and
non-controlling interests (911) (732)
----------------------------------------------------------- --------------------------- ----------------------------
Net cash from financing activities 89 (732)
----------------------------------------------------------- --------------------------- ----------------------------
Net decrease in cash and cash equivalents (14,793) (8,459)
----------------------------------------------------------- --------------------------- ----------------------------
Cash and cash equivalents at the beginning of the period 100,319 114,134
----------------------------------------------------------- --------------------------- ----------------------------
Exchange differences in respect of cash and cash
equivalents (177) 27
----------------------------------------------------------- --------------------------- ----------------------------
Cash and cash equivalents at the end of the period 85,349 105,702
----------------------------------------------------------- --------------------------- ----------------------------
Interest received was GBP5,775m (1H 2022: GBP2,964m) and
interest paid was GBP1,920m (1H 2022: GBP281m).
1 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.
2 Subordinated liabilities changes during the period are
attributable to cash flows from issuance of securities GBP1,000m
(2022: GBPnil) and repayments of GBPnil (2022: GBPnil). Non-cash
changes during the period included foreign exchange gains/(losses)
of GBP273m (2022: GBP(494)m).
Notes on the interim condensed financial statements
Contents
Basis of preparation and material accounting
39 1 policies 42 9 Provisions
2 Net fee income 43 10 Contingent liabilities, contractual commitments,
40 guarantees and contingent assets
40 3 Post-employment benefit plans
41 4 Tax 43 11 Legal proceedings and regulatory matters
41 5 Dividends 44 12 Transactions with related parties
Fair values of financial instruments carried at
41 6 fair value 44 13 Business acquisitions
Fair values of financial instruments not carried
42 7 at fair value 45 14 Events after the balance sheet date
42 8 Goodwill 45 15 Interim Report 2023 and statutory accounts
1 Basis of preparation and material accounting policies
(a) Compliance with International Financial Reporting Standards
The interim condensed consolidated financial statements of HSBC
UK have been prepared in accordance with the Disclosure Guidance
and Transparency Rules sourcebook of the UK's Financial Conduct
Authority and IAS 34 'Interim Financial Reporting', as issued by
the International Accounting Standards Board ('IASB') and as
adopted by the UK. Therefore, they include an explanation of events
and transactions that are significant to an understanding of the
changes in HSBC UK's financial position and performance since the
end of 2022.
These financial statements should be read in conjunction with
the Annual Report and Accounts 2022, which was prepared in
accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. These
financial statements were also prepared in accordance with
International Financial Reporting Standards ('IFRSs') as issued by
the IASB, including interpretations issued by the IFRS
Interpretations Committee.
At 30 June 2023, there were no unendorsed standards effective
for the half-year to 30 June 2023 affecting these financial
statements, and there was no difference between IFRSs as adopted by
the UK and IFRSs issued by the IASB in terms of their application
to HSBC UK.
Standards applied during the half-year to 30 June 2023
Amendments to IAS 12 ' International Tax Reform - Pillar Two
Model Rules '
On 23 May 2023, the IASB issued its amendments to IAS 12
'International Tax Reform - Pillar Two Model Rules', which became
effective immediately with disclosure requirements effective for
annual reporting periods beginning on or after 1 January 2023. On
20 June 2023, legislation was substantively enacted in the UK to
introduce the OECD's Pillar Two global minimum tax rules and a UK
qualified domestic minimum top-up tax, with effect from 1 January
2024. The group has applied the IAS 12 exception from recognising
and disclosing information on associated deferred tax assets and
liabilities.
There were no other new standards or amendments to standards
that had an effect on these interim condensed financial
statements.
(b) Use of estimates and judgements
Management believes that our critical accounting estimates and
judgements are those that relate to impairment of amortised cost
and FVOCI debt financial assets, provisions for liabilities,
impairment of goodwill and defined benefit pension obligations.
Apart from estimates relating to ECL impairment there were no
material changes in the current period to any of the other critical
accounting estimates and judgements disclosed in 2022, which are
stated on pages 87 to 94 of the Annual Report and Accounts
2022.
(c) Composition of the group
On 13 March 2023, HSBC UK acquired Silicon Valley Bank UK
Limited which was subsequently renamed to HSBC Innovation Bank
Limited. HSBC Innovation Bank Limited is a fully owned subsidiary
of HSBC UK and is fully consolidated. There were no other material
changes in the composition of the group in the half-year to 30 June
2023.
(d) Going concern
The financial statements are prepared on a going concern basis
as the Directors are satisfied that the group and bank 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, cash flows, capital
requirements and capital resources. These considerations include
stressed scenarios as well as considering potential impacts from
other top and emerging risks, and the related impact on
profitability, capital and liquidity.
(e) Accounting policies
The accounting policies applied by the group for these interim
condensed consolidated financial statements are consistent with
those described on pages 87 to 94 of the Annual Report and Accounts
2022, as are the methods of computation, with the exception of
those relating to amendments to IAS 12 and as described below.
New material accounting policies
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured at the fair value of
the consideration, including contingent consideration, given at the
date of exchange. Acquisition-related costs are recognised as an
expense in the income statement in the period in which they are
incurred. The acquired identifiable assets, liabilities and
contingent liabilities are generally measured at their fair values
at the date of acquisition.
Goodwill is measured as the excess of the aggregate of the
consideration transferred, the amount of non-controlling interest
and the fair value of HSBC UK's previously held equity interest, if
any, over the net of the amounts of the identifiable assets
acquired and the liabilities assumed. Any gain resulting from a
bargain purchase is recognised in the income statement.
The amount of non-controlling interest is measured either at
fair value or at the non-controlling interest's proportionate share
of the acquiree's identifiable net assets. This election is made
for each business combination.
2 Net fee income
Half-year to
---------------------------------------------------------
30 Jun 30 Jun
2023 2022
Net fee income by product GBPm GBPm
---------------------------------- --------------------------- ----------------------------
Account services 137 132
---------------------------------- --------------------------- ----------------------------
Funds under management 59 58
---------------------------------- --------------------------- ----------------------------
Cards 290 278
---------------------------------- --------------------------- ----------------------------
Credit facilities 69 67
---------------------------------- --------------------------- ----------------------------
Imports/exports 15 15
---------------------------------- --------------------------- ----------------------------
Insurance agency commission 5 12
---------------------------------- --------------------------- ----------------------------
Receivables finance 44 49
---------------------------------- --------------------------- ----------------------------
Other 163 126
---------------------------------- --------------------------- ----------------------------
Fee income 782 737
---------------------------------- --------------------------- ----------------------------
Less: fee expense (133) (140)
---------------------------------- --------------------------- ----------------------------
Net fee income 649 597
---------------------------------- --------------------------- ----------------------------
Net fee income by global business
---------------------------------- --------------------------- ----------------------------
Wealth and Personal Banking 293 282
---------------------------------- --------------------------- ----------------------------
Commercial Banking 464 422
---------------------------------- --------------------------- ----------------------------
Global Banking and Markets (108) (106)
---------------------------------- --------------------------- ----------------------------
Corporate Centre - (1)
---------------------------------- --------------------------- ----------------------------
3 Post-employment benefit plans
We operate a pension plan for our employees called the HSBC Bank
(UK) Pension Scheme ('the plan'). Details of the plan are explained
on pages 96 and 97 of the Annual Report and Accounts 2022, and
details of the policies and practices associated with the plan on
page 58 of the Annual Report and Accounts 2022.
Net assets/(liabilities) under defined benefit pension plans
Fair value of plan assets Present value of defined benefit obligations Net defined benefit assets/(liabilities)
GBPm GBPm GBPm
At 30
Jun
2023 20,174 (14,815) 5,359
----- ------------------------------------------------ -------------------------------------------------- -------------------------------------------------
At 31 20,853 (15,596) 5,257
Dec
2022
----- ------------------------------------------------ -------------------------------------------------- -------------------------------------------------
Post-employment defined benefit plan actuarial financial
assumptions
Key actuarial assumptions for the plan
Discount rate Inflation rate (RPI) Inflation rate (CPI) Rate of increase for pensions Rate of pay increase
% % % % %
At 30
Jun
2023 5.40 3.44 3.01 3.32 3.51
----- ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 31
Dec
2022 4.93 3.39 2.84 3.27 3.34
----- ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Mortality tables and average life expectancy at age 60 for the plan
Life expectancy at age 60 for Life expectancy at age 60 for
a male member currently: a female member currently:
------------------------------- -------------------------------
Mortality Aged 60 Aged 40 Aged 60 Aged 40
table
At 30 Jun 2023 SAPS S3(1) 26.8 28.3 28.0 29.6
-------------------- ------------- --------------- -------------- --------------- --------------
At 31 Dec 2022 SAPS S3(1) 27.1 28.6 28.4 29.9
-------------------- ------------- --------------- -------------- --------------- --------------
1 Self-administered pension scheme ('SAPS') S3 table, with
different tables and multipliers adopted based on gender, pension
amount and member status, reflecting the Scheme's actual mortality
experience. Improvements are projected in accordance with the
Continuous Mortality Investigation's CMI 2022 core projection model
with an initial addition to improvement of 0.25% per annum and a
long-term rate of improvement of 1.25% per annum and a 25%
weighting to 2022 mortality experience reflecting updated long-term
view on mortality improvements post-pandemic.
4 Tax
Tax charge
The effective tax rate is 17.9% (1H22: 16.1%). The effective tax
rate is reduced by 8.5% due to non-taxable provisional gain arising
on the acquisition of SVB UK in the period. The effective tax rate
excluding this item is 26.4% and reflects the statutory blended tax
rate of 27.75% (post main rate of UK corporation tax increasing
from 19% to 25% and surcharge rate decreasing from 8% to 3% as of 1
April 2023), tax relief on AT1 coupon payments and a tax credit
from the release of provisions for uncertain tax positions. The
effective tax rate for 1H22 was reduced by 9.8% by a credit arising
from the remeasurement of the group's deferred tax balances
following the substantive enactment of legislation to reduce the UK
banking surcharge rate from 8% to 3%. The effective tax rate
excluding this item in 1H22 was 25.9%.
5 Dividends
On 19 July, 2023, the Directors resolved to pay an interim
dividend of GBP948m to the ordinary shareholder of the parent
company in respect of the financial year ending 31 December 2023.
No liability is recognised in the financial statements in respect
of this dividend.
Dividends to the shareholder of the parent company
Half-year to
30 Jun 2023 30 Jun 2022
GBP per share GBPm GBP per share GBPm
----------------- ---------------------- ------------------------ ----------------------- ------------------------
Dividends paid on
ordinary shares
----------------- ---------------------- ------------------------ ----------------------- ------------------------
Interim dividend
in respect of
the previous
year 10,780 539 9,820 491
----------------- ---------------------- ------------------------ ----------------------- ------------------------
Interim dividend
in respect of
the current year 5,360 268 3,500 175
----------------- ---------------------- ------------------------ ----------------------- ------------------------
Total 16,140 807 13,320 666
----------------- ---------------------- ------------------------ ----------------------- ------------------------
Total coupons on capital securities classified as equity
Half-year to
30 Jun 2023 30 Jun 2022
First call date GBPm GBPm
-------------------------------------------- ---------------- -------------------------- --------------------------
Undated Subordinated Additional Tier 1
instruments
-------------------------------------------- ---------------- -------------------------- --------------------------
- GBP1,096m Dec 2019 50 31
-------------------------------------------- ---------------- -------------------------- --------------------------
- GBP1,100m Dec 2024 51 32
-------------------------------------------- ---------------- -------------------------- --------------------------
Total 101 63
-------------------------------------------------------------- -------------------------- --------------------------
6 Fair values of financial instruments carried at fair value
The accounting policies, control framework and the hierarchy
used to determine fair values are consistent with those applied for
the Annual Report and Accounts 2022.
Financial instruments carried at fair value and bases of valuation
At 30 Jun 2023 At 31 Dec 2022
---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------
Valuation techniques Valuation techniques
---------------------------------------------------------------------------------------
With significant unobservable With significant
Quoted market price Using observable inputs input Quoted market price Using observable inputs unobservable input
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------------------- ----------------------- ------------------------------ -------------- ------------------- ----------------------- --------------------------- ------------
Recurring
fair value
measurements
------------- --------------------- ----------------------- ------------------------------ -------------- ------------------- ----------------------- --------------------------- ------------
Assets
Financial
assets
mandatorily
measured at
fair value
through
profit or
loss 85 - 33 118 72 - 36 108
------------- --------------------- ----------------------- ------------------------------ -------------- ------------------- ----------------------- --------------------------- ------------
Derivatives - 422 - 422 14 532 - 546
Financial
investments 13,788 587 - 14,375 10,757 175 - 10,932
------------- --------------------- ----------------------- ------------------------------ -------------- ------------------- ----------------------- --------------------------- ------------
Liabilities
Derivatives - 206 - 206 - 304 - 304
------------- --------------------- ----------------------- ------------------------------ -------------- ------------------- ----------------------- --------------------------- ------------
Transfers between levels of the fair value hierarchy are deemed
to occur at the end of each quarterly reporting period. Transfers
into and out of levels of the fair value hierarchy are primarily
attributable to observability of valuation inputs and price
transparency. There were no transfers between Level 1 and Level 2
during 2023 and 2022.
7 Fair values of financial instruments not carried at fair value
The bases for measuring the fair values of loans and advances to
banks and customers, deposits by banks, customer accounts, debt
securities in issue, subordinated liabilities, non-trading
repurchase and reverse repurchase agreements and financial
investments are explained on pages 103 and 104 of the Annual Report
and Accounts 2022.
Fair values of financial instruments not carried at fair value and bases of valuation
At 30 Jun 2023 At 31 Dec 2022
---------------------------------------------- ------------------------------------------------
Carrying amount Fair value Carrying amount Fair value
GBPm GBPm GBPm GBPm
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Assets
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Loans and advances
to banks 7,324 7,324 6,357 6,357
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Loans and advances
to customers 209,566 204,896 204,143 199,957
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Reverse repurchase
agreements -
non-trading 6,781 6,781 7,406 7,406
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Financial
investments - at
amortised cost 7,754 7,134 5,160 4,772
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Liabilities
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Deposits by banks 10,844 10,844 10,721 10,721
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Customer accounts 273,785 273,785 281,095 281,095
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Repurchase
agreements -
non-trading 7,659 7,659 9,333 9,333
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Debt securities in
issue 1,257 1,243 1,299 1,279
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Subordinated
liabilities 13,066 13,050 12,349 11,765
-------------------- ---------------------- ---------------------- ----------------------- -----------------------
Other financial instruments not carried at fair value are
typically short term in nature and repriced to current market rates
frequently. Accordingly, their carrying amount is a reasonable
approximation of fair value. They include cash and balances at
central banks and items in the course of collection from and
transmission to other banks, all of which are measured at amortised
cost.
8 Goodwill
Impairment testing
As described on page 109 of the Annual Report and Accounts 2022,
we test goodwill for impairment at 1 October each year and whenever
there is an indication that goodwill may be impaired. At 30 June
2023, we reviewed the inputs used in our most recent impairment
test in the light of current economic and market conditions and
there was no indication of goodwill impairment.
9 Provisions
Restructuring Legal proceedings and regulatory matters Customer Other
costs(2) remediation provisions Total
GBPm GBPm GBPm GBPm GBPm
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Provisions (excluding
contractual
commitments)
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 1 Jan 2023 63 32 142 82 319
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Additions 22 1 6 5 34
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Amounts utilised (16) (2) (22) (2) (42)
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Unused amounts reversed (13) - (23) (9) (45)
Exchange and other 5 - - (5) -
movements
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 30 Jun 2023 61 31 103 71 266
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Contractual
commitments(1)
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 1 Jan 2023 105
---------------------------------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Net change in expected credit loss provision 4
---------------------------------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 30 Jun 2023 109
---------------------------------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Total provisions
----------------------- --------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 1 Jan 2023 424
---------------------------------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
At 30 Jun 2023 375
---------------------------------------------------------- ---------------------------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
1 Contractual commitments include the provision for contingent
liabilities measured under IFRS 9 Financial Instruments in respect
of financial guarantees and the expected credit loss provision on
off-balance sheet guarantees and commitments.
2 Restructuring costs include charges received from HSBC Global
Services (UK) Limited, which do not form part of the balance sheet
provision movement.
Customer remediation
Customer remediation refers to HSBC UK's activities to
compensate customers for losses or damages associated with a
failure to comply with regulations or to treat customers fairly.
Customer remediation is often initiated by HSBC UK in response to
customer complaints and/or industry developments in sales
practices, and is not necessarily initiated by regulatory
action.
Restructuring costs
The restructuring costs provision is for costs associated with
the group's restructuring programmes.
Legal proceedings and regulatory matters
Further details of 'Legal proceedings and regulatory matters'
are set out in Note 11. Legal proceedings include civil court,
arbitration or tribunal proceedings brought against the group
(whether by way of claim or counterclaim), or civil disputes that
may, if not settled, result in court, arbitration or tribunal
proceedings. Regulatory matters refer to investigations, reviews
and other actions carried out by, or in response to the actions of,
regulatory or law enforcement agencies in connection with alleged
wrongdoing.
10 Contingent liabilities, contractual commitments, guarantees and
contingent assets
At
30 Jun 31 Dec
2023 2022
GBPm GBPm
-------------------------------------------------------------- -------------------------- --------------------------
Guarantees and other contingent liabilities:
-------------------------------------------------------------- -------------------------- --------------------------
- financial guarantees:(1) 1,076 1,148
--------------------------------------------------------------
- performance and other guarantees 2,419 2,530
-------------------------------------------------------------- --------------------------
At the end of the period 3,495 3,678
-------------------------------------------------------------- -------------------------- --------------------------
Commitments:(2)
-------------------------------------------------------------- -------------------------- --------------------------
- documentary credits and short-term trade-related
transactions 65 52
--------------------------------------------------------------
- forward asset purchases and forward deposits placed 330 327
--------------------------------------------------------------
- standby facilities, credit lines and other commitments to
lend 73,294 70,104
-------------------------------------------------------------- --------------------------
At the end of the period 73,689 70,483
-------------------------------------------------------------- -------------------------- --------------------------
1 Financial guarantees contracts are contracts that require the
issuer to make specified payments to reimburse the holder for a
loss incurred because a specified debtor fails to make payment when
due, in accordance with the original or modified terms of a debt
instrument. The amounts in the above table are nominal principal
amounts.
2 Includes GBP71bn of commitments at 30 June 2023 (31 December
2022: GBP68bn), to which the impairment requirements in IFRS 9 are
applied where HSBC UK 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
represents the maximum amounts at risk should the contracts be
fully drawn upon and 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 9. 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 the group's annual credit review process.
Contingent liabilities arising from legal proceedings and
regulatory and other matters against group companies are excluded
from this note but are disclosed in Note 11.
Financial Services Compensation Scheme
The 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 HSBC UK 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. The FCA is currently
reviewing the FSCS Framework with the intention to consult on any
changes in 2023/24. The FCA's goal is to ensure that the
compensation framework continues to provide appropriate and
proportionate consumer protection, with costs distributed across
industry levy payers in a fair and sustainable way. Focus points of
the review will include, the compensation limits, the funding class
threshold and improving the FCA's understanding of how the scheme
impacts consumer and firm behaviour.
UK branches of HSBC overseas entities
In December 2017, HMRC challenged the VAT status of certain UK
branches of HSBC overseas entities. In Q1 2019, HMRC reaffirmed its
assessment that the UK branches are ineligible to be members of the
UK VAT group and HSBC filed appeals. In February 2022, the Upper
Tribunal issued a judgment addressing several preliminary legal
issues, which was partially in favour of HMRC and partially in
favour of HSBC. The case will now return to the First Tier Tax
Tribunal for full trial and we await confirmation of the trial
window. Since January 2018, HSBC's returns have been prepared on
the basis that the UK branches are not in the UK VAT group. In the
event that HSBC is successful, HSBC will seek a refund of this VAT,
of which GBP170m is estimated to be attributable to HSBC UK Bank
plc.
11 Legal proceedings and regulatory matters
The group is party to legal proceedings and regulatory matters
arising out of its normal business operations. Apart from the
matters described below, the group considers that none of these
matters are material:
- litigation in respect of historic PPI sales notwithstanding
the FCA deadline for bringing PPI complaints has passed;
- claims issued by two separate investor groups against HSBC UK
(as successor to HSBC Private Bank (UK) Limited ('PBGB')) in the
High Court of England and Wales in connection with PBGB's role in
the development of Eclipse film finance schemes;
- an investigation by the FCA in connection with collections and recoveries operations in the UK;
- an investigation by the PRA in connection with depositor protection arrangements in the UK; and
- a lawsuit brought in the US District Court for the Northern
District of California, by First-Citizens Bank & Trust Company
('First Citizens') against various HSBC companies and seven HSBC US
employees who had previously worked for Silicon Valley Bank ('SVB')
alleging, among other things, that HSBC 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.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of the pending matters, which
could be significant.
The recognition of provisions is determined in accordance with
the accounting policies set out in Note 1 of the Annual Report and
Accounts 2022. 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 at 30 June
2023. Where an individual provision is material, the fact that a
provision has been made is stated and quantified. 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.
12 Transactions with related parties
There were no changes to the related party transactions
described in the Annual Report and Accounts 2022 that have had a
material effect on the financial position or performance of the
group in the half-year to 30 June 2023. All other related party
transactions that took place in the half-year to 30 June 2023 were
similar in nature to those disclosed in the Annual Report and
Accounts 2022.
13 Business acquisitions
Silicon Valley Bank UK Limited (now HSBC Innovation Bank
Limited)
On 13 March 2023, HSBC UK acquired SVB UK for GBP1, acquiring
100% of the equity and thereby obtaining control. The acquisition
was funded from existing resources and brought the staff, assets
and liabilities of SVB UK into the HSBC UK portfolio.
The acquisition of SVB UK made strategic sense for our business.
We expect the acquisition to strengthen our commercial banking
franchise and enhance our ability to serve innovative and
fast-growing firms. The acquisition accelerates our future
innovation sector plans by 3 to 4 years by bringing in capabilities
immediately, such as the deep industry sector knowledge and the
depth of embedded industry ecosystem relationships with founders
and funders.
On acquisition, we performed a preliminary assessment of the
fair value of the assets and liabilities purchased. We established
a provisional opening balance sheet on 13 March 2023 and applied
the result of the fair value assessment, which resulted in a
reduction in net assets of GBP207m. The provisional gain on
acquisition of GBP1,240m represents the difference between the
consideration paid of GBP1 and the net assets acquired. This gain
could change as further due diligence is performed within 12 months
of the acquisition, as allowed by IFRS 3 'Business
Combinations'.
HSBC Innovation Bank Limited contributed GBP119m of revenue and
GBP54m to the consolidated profit of HSBC UK for the period from 13
March 2023 to 30 June 2023. As per the disclosure requirements set
out in IFRS 3 (Business Combinations), if HSBC Innovation Bank
Limited had been acquired on 1 January 2023, management estimates
that for the six months to 30 June 2023 consolidated revenue would
have been GBP6,124m and consolidated profit after tax GBP3,266m. In
determining these amounts, management has assumed that the fair
value adjustments, determined previously, that arose on acquisition
would have been the same if the acquisition had occurred on 1
January 2023.
The details of the business combination as follows:
GBPm
--------------------------------------------------------------------------------------- ---------------------------
Fair value of consideration transferred -
Recognised fair value of identifiable assets acquired and liabilities assumed at the
acquisition
date
--------------------------------------------------------------------------------------- ---------------------------
Assets
--------------------------------------------------------------------------------------- ---------------------------
Cash and balances at central banks 589
--------------------------------------------------------------------------------------- ---------------------------
Items in course of collection from other banks 302
--------------------------------------------------------------------------------------- ---------------------------
Loans and advances to banks 147
--------------------------------------------------------------------------------------- ---------------------------
Loans and advances to customers 5,369
--------------------------------------------------------------------------------------- ---------------------------
Financial investments 2,540
--------------------------------------------------------------------------------------- ---------------------------
Other assets 344
--------------------------------------------------------------------------------------- ---------------------------
Total assets 9,291
--------------------------------------------------------------------------------------- ---------------------------
Liabilities
--------------------------------------------------------------------------------------- ---------------------------
Customer accounts 7,400
--------------------------------------------------------------------------------------- ---------------------------
Repurchase agreements 403
--------------------------------------------------------------------------------------- ---------------------------
Other liabilities 248
--------------------------------------------------------------------------------------- ---------------------------
Total liabilities 8,051
--------------------------------------------------------------------------------------- ---------------------------
Fair value of identifiable net assets acquired 1,240
Provisional gain on acquisition 1,240
Consideration transferred settled in cash -
--------------------------------------------------------------------------------------- ---------------------------
Cash and cash equivalents acquired 1,023
--------------------------------------------------------------------------------------- ---------------------------
Net cash inflow on acquisition 1,023
--------------------------------------------------------------------------------------- ---------------------------
Acquisition costs charged to expenses 6
--------------------------------------------------------------------------------------- ---------------------------
14 Events after the balance sheet date
In its assessment of events after the balance sheet date, HSBC
UK has considered and concluded that no material events have
occurred resulting in adjustments to the financial statements.
On 19 July 2023, the Directors resolved to pay an interim
dividend to the ordinary shareholder of the parent company of
GBP948m in respect of the financial year ending 31 December 2023.
No liability is recognised in the financial statements in respect
of this dividend as described in Note 5.
15 Interim Report 2023 and statutory accounts
The information in this Interim Report 2023 is unaudited and
does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006. The Interim Report 2023 was
approved by the Board of Directors on 31 July 2023. The statutory
accounts of HSBC UK Bank plc for the year ended 31 December 2022
have been delivered to the Registrar of Companies in England and
Wales in accordance with section 447 of the Companies Act 2006. The
group's auditor, PricewaterhouseCoopers LLP, has reported on those
accounts. Its report was unqualified, did not include a reference
to any matters to which PwC drew attention by way of emphasis
without qualifying their report and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
Reconciliation of alternative performance measures
Return on equity and return on tangible equity
RoTE is computed as reported profit, divided by average reported
equity adjusted for goodwill and intangibles impairment for the
period. The adjustment to reported results and reported equity
excludes amounts attributable to non-controlling interests. We
provide RoTE in addition to RoE as a way of assessing our
performance, which is closely aligned to our capital position. The
measures are calculated in US dollars in line with the standard
HSBC Group-wide calculation methodology.
The following table details the adjustments made to the reported
results and equity:
Return on Equity and Return on Tangible Equity
Half-year to
30 Jun 30 Jun
2023 2022
$m $m
----------------------------------------------------------------- ---------------------- ---------------------------
Profit
----------------------------------------------------------------- ---------------------- ---------------------------
Profit attributable to the ordinary shareholders of the parent
company 3,801 1,827
Profit attributable to the ordinary shareholders, excluding
goodwill and other intangible
assets impairment 3,801 1,827
----------------------------------------------------------------- ---------------------- ---------------------------
Impact of provisional gain on acquisition of SVB UK (1,582) -
----------------------------------------------------------------- ---------------------- ---------------------------
Profit attributable to the ordinary shareholders, excluding
goodwill, other intangible assets
impairment and acquisition of SVB UK 2,219 1,827
----------------------------------------------------------------- ---------------------- ---------------------------
Equity
----------------------------------------------------------------- ---------------------- ---------------------------
Average total shareholders' equity 29,064 30,755
----------------------------------------------------------------- ---------------------- ---------------------------
Effect of average preference shares, additional Tier 1 and other
equity instruments (2,719) (2,842)
----------------------------------------------------------------- ---------------------- ---------------------------
Average ordinary shareholders' equity 26,345 27,913
----------------------------------------------------------------- ---------------------- ---------------------------
Effect of goodwill and other intangibles (net of deferred tax) (5,291) (5,463)
----------------------------------------------------------------- ---------------------- ---------------------------
Average tangible ordinary shareholders' equity 21,054 22,450
----------------------------------------------------------------- ---------------------- ---------------------------
Average impact of acquisition of SVB UK (1,177) -
----------------------------------------------------------------- ---------------------- ---------------------------
Average tangible ordinary shareholders' equity excluding
acquisition of SVB UK 19,877 22,450
Ratio % %
----------------------------------------------------------------- ---------------------- ---------------------------
Return on equity (annualised) 29.1 13.2
----------------------------------------------------------------- ---------------------- ---------------------------
Return on average tangible equity (annualised)(1) 36.4 16.4
----------------------------------------------------------------- ---------------------- ---------------------------
Return on average tangible equity excluding the acquisition of
SVB UK (annualised)(1) 22.5 16.4
----------------------------------------------------------------- ---------------------- ---------------------------
1 Under IAS 19, HSBC UK holds a pension fund surplus, and
records pension income in the Income Statement. The IAS 19 pension
fund surplus increases Tangible Equity but not CET1. In the event
that the IAS 19 Pension fund surplus was zero, RoTE would be 42.4%
(1H22: 16.7%), we refer to this as Pension Adjusted RoTE. Pension
Adjusted RoTE excluding the acquisition of SVB UK would be 25.8%
(1H22: 16.7%).
Abbreviations
Currencies
------------- ---------------------------------
GBP British pound sterling
$ United States dollar
------------- ---------------------------------
Abbreviations
------------- ---------------------------------
1H23 First half of 2023
------------- ---------------------------------
1H22 First half of 2022
4Q24 Fourth quarter of 2024
------------- ---------------------------------
2Q23 Second quarter of 2023
A
AI Artificial Intelligence
------------- ---------------------------------
AIEA Average interest-earning
assets
ALCO Asset and Liability Management
Committee
AT1 Additional tier 1
------------- ---------------------------------
B
------------- ---------------------------------
BACS Bankers' Automated Clearing
System
------------- ---------------------------------
Basel Basel Committee on Banking
Supervision
------------- ---------------------------------
Basel III Basel Committee's reforms
to strengthen global capital
and liquidity rules
------------- ---------------------------------
BB Business Banking
------------- ---------------------------------
BoE Bank of England
C
CBDC Central Bank Digital Currency
------------- ---------------------------------
CET1 Common equity tier 1
CMB Commercial Banking
------------- ---------------------------------
CODM Chief Operating Decision
Maker
CRR Customer risk rating
------------- ---------------------------------
CRR II Revised Capital Requirements
Regulation and Directive,
as implemented
CPI Consumer Price Index
------------- ---------------------------------
D
DTR Disclosure Guidance and
Transparency Rules
------------- ---------------------------------
E
ECL Expected credit losses.
In the income statement,
ECL is recorded as a change
in expected credit losses
and other credit impairment
charges. In the balance
sheet, ECL is recorded as
an allowance for financial
instruments to which only
the impairment requirements
in IFRS 9 are applied
ESG Environmental, social and
governance
EU European Union
------------- ---------------------------------
EVE Economic value of equity
F
------------- ---------------------------------
FCA Financial Conduct Authority
(UK)
FTE Full-time equivalent staff
------------- ---------------------------------
FVOCI Fair value through other
comprehensive income
FY Full Year
------------- ---------------------------------
FY22 Full Year 2022
------------- ---------------------------------
G
GBM Global Banking and Markets
------------- ---------------------------------
GDP Gross domestic product
group HSBC UK Bank plc together
with its subsidiary undertakings
------------- ---------------------------------
Group HSBC Holdings together with
its subsidiary undertakings
H
HMRC HM Revenue & Customs
------------- ---------------------------------
HMT His Majesty's Treasury
HR Human Resources
------------- ---------------------------------
HSBC Group HSBC Holdings together with
its subsidiary undertakings
------------- ---------------------------------
HSBC Holdings HSBC Holdings plc
I
------------- ---------------------------------
IAS International Accounting
Standards
------------- ---------------------------------
IASB International Accounting
Standards Board
Ibor Interbank offered rate
------------- ---------------------------------
ICAAP Internal capital adequacy
assessment process
------------- ---------------------------------
IFRSs International Financial
Reporting Standards
------------- ---------------------------------
ILAAP Internal liquidity adequacy
assessment process
L
LCR Liquidity coverage ratio
------------- ---------------------------------
LFRF Liquidity and Funding Risk
Management Framework
LTV Loan to value
M
MREL EU minimum requirements
for own funds and eligible
liabilities
N
------------- ---------------------------------
NII Net interest income
NPS Net Promoter Score
------------- ---------------------------------
NSFR Net stable funding ratio
O
------------- ---------------------------------
OCI Other comprehensive income
P
PD Probability of default
------------- ---------------------------------
POCI Purchased or originated
credit impaired
PPI Payment protection insurance
------------- ---------------------------------
PRA Prudential Regulation Authority
------------- ---------------------------------
PSR Payment Systems Regulator
PwC PricewaterhouseCoopers LLP
and its network of firms
------------- ---------------------------------
R
Revenue Net operating income before
change in expected credit
losses and other credit
impairment charges/Loan
impairment charges and other
credit provisions, also
referred to as revenue
RoE Return on average ordinary
shareholders' equity
------------- ---------------------------------
RoTE Return on average tangible
equity
RWA Risk-weighted asset
------------- ---------------------------------
S
------------- ---------------------------------
SBB Small Business Banking
------------- ---------------------------------
SME Small and medium-sized enterprise
------------- ---------------------------------
SVB UK Silicon Valley Bank UK Limited
U
------------- ---------------------------------
UK United Kingdom
------------- ---------------------------------
US United States of America
------------- ---------------------------------
V
------------- ---------------------------------
VaR Value at risk
------------- ---------------------------------
VAT Value-added tax
W
------------- ---------------------------------
WPB Wealth and Personal Banking
------------- ---------------------------------
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