HSBC 20-F
Hsbc Holdings PLC (HSBC)
As filed with the Securities and Exchange Commission on February 26, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
| (Mark one) | |
|---|---|
| ¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT<br><br>OF 1934 |
OR
| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
For the fiscal year ended December 31, 2025
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
OR
| ¨ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF<br><br>1934 |
|---|
Date of event requiring this shell company report ____________
For the transition period from N/A to N/A
Commission file number: 001-14930
HSBC Holdings plc
(Exact name of Registrant as specified in its charter)
| N/A | United Kingdom |
|---|---|
| (Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
8 Canada Square
London E14 5HQ
United Kingdom
(Address of principal executive offices)
Jonathan Bingham
8 Canada Square
London E14 5HQ
United Kingdom
Tel +44 (0) 20 3268 4840
Email [email protected]
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange on which registered | |
|---|---|---|---|
| Ordinary Shares, nominal value US$0.50 each (GB0005405286) | HSBA | London Stock Exchange | |
| 5 | Hong Kong Stock Exchange | ||
| HSBC.BH | Bermuda Stock Exchange | ||
| HSBC | New York Stock Exchange | * | |
| American Depositary Shares, each representing 5 Ordinary<br><br>Shares of nominal value US$0.50 each (US4042804066) | HSBC | New York Stock Exchange | |
| 7.625% Subordinated Notes due 2032 (US404280AF65) | HSBC/32A | New York Stock Exchange | |
| --- | --- | --- | |
| 7.35% Subordinated Notes due 2032 (US404280AE90) | HSBC/32B | New York Stock Exchange | |
| 6.5% Subordinated Notes 2036 (US404280AG49) | HSBC36 | New York Stock Exchange | |
| 6.5% Subordinated Notes 2037 (US404280AH22) | HSBC37 | New York Stock Exchange | |
| 6.8% Subordinated Notes Due 2038 (US404280AJ87) | HSBC38 | New York Stock Exchange | |
| 6.100% Senior Unsecured Notes due 2042 (US404280AM17) | HSBC42 | New York Stock Exchange | |
| 5.250% Subordinated Notes due 2044 (US404280AQ21) | HSBC44 | New York Stock Exchange | |
| 4.300% Senior Unsecured Notes due 2026 (US404280AW98) | HSBC26 | New York Stock Exchange | |
| 3.900% Senior Unsecured Notes due 2026 (US404280BB43) | HSBC26A | New York Stock Exchange | |
| 4.375% Subordinated Notes due 2026 (US404280BH13) | HSBC26B | New York Stock Exchange | |
| 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028 (US404280BK42) | HSBC28 | New York Stock Exchange | |
| 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2029 (US404280BT50) | HSBC29 | New York Stock Exchange | |
| 3.000% Resettable Senior Unsecured Notes due 2028<br><br>(XS1961843171) | HSBC28A | New York Stock Exchange | |
| 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2030 (US404280CC17) | HSBC30 | New York Stock Exchange | |
| 3.00% Resettable Senior Unsecured Notes due 2030<br><br>(XS2003500142) | HSBC30A | New York Stock Exchange | |
| 4.950% Fixed Rate Senior Unsecured Notes due 2030<br><br>(US404280CF48) | HSBC30B | New York Stock Exchange | |
| 2.848% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(US404280CH04) | HSBC31 | New York Stock Exchange | |
| 2.357% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(US404280CK33) | HSBC31A | New York Stock Exchange | |
| 2.013% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028<br><br>(US404280CL16) | HSBC28B | New York Stock Exchange | |
| 1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2027<br><br>(US404280CM98) | HSBC27 | New York Stock Exchange | |
| 1.750% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2027<br><br>(XS2322315727) | HSBC27A | New York Stock Exchange | |
| 2.804% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2032<br><br>(US404280CT42) | HSBC32 | New York Stock Exchange | |
| 2.206% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2029<br><br>(US404280CV97) | HSBC29A | New York Stock Exchange | |
| 2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2027<br><br>(US404280CX53) | HSBC27B | New York Stock Exchange | |
| 2.871% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2032<br><br>(US404280CY37) | HSBC32A | New York Stock Exchange | |
| 4.762% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2033 (US404280DC08) | HSBC33 | New York Stock Exchange | |
| 4.755% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028 (US404280DF39) | HSBC28C | New York Stock Exchange | |
| 5.210% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028 (US404280DG12) | HSBC28D | New York Stock Exchange | |
| --- | --- | --- | |
| 5.402% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2033 (US404280DH94) | HSBC33A | New York Stock Exchange | |
| 7.35% Subordinated Notes due 2032 (US404280DJ50) | HSBC32B | New York Stock Exchange | |
| 7.625% Subordinated Notes due 2032 (US404280DK24) | HSBC32C | New York Stock Exchange | |
| 6.5% Subordinated Notes Due 2036 (US404280DL07) | HSBC36A | New York Stock Exchange | |
| 6.5% Subordinated Notes Due 2037 (US404280DM89) | HSBC37A | New York Stock Exchange | |
| 6.8% Subordinated Notes Due 2038 (US404280DN62) | HSBC38A | New York Stock Exchange | |
| 7.390% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028 (US404280DR76) | HSBC28E | New York Stock Exchange | |
| 8.113% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2033 (US404280DS59) | HSBC33B | New York Stock Exchange | |
| 6.161% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2029<br><br>(US404280DU06) | HSBC29B | New York Stock Exchange | |
| 6.254% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2034<br><br>(US404280DV88) | HSBC34 | New York Stock Exchange | |
| 6.332% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2044<br><br>(US404280DW61) | HSBC44A | New York Stock Exchange | |
| 6.547% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2034 (US404280DX45) | HSBC34A | New York Stock Exchange | |
| 5.887% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2027<br><br>(US404280DZ92) | HSBC27C | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2027<br><br>(US404280DY28) | HSBC27D | New York Stock Exchange | |
| 6.800% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(XS2685873908) | HSBC31B | New York Stock Exchange | |
| 7.399% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2034 (US404280EC98) | HSBC34B | New York Stock Exchange | |
| 5.546% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2030<br><br>(US404280ED71) | HSBC30C | New York Stock Exchange | |
| 5.719% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2035<br><br>(US404280EE54) | HSBC35 | New York Stock Exchange | |
| 5.597% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028<br><br>(US404280EF20) | HSBC28F | New York Stock Exchange | |
| 5.733% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2032<br><br>(US404280EG03) | HSBC32D | New York Stock Exchange | |
| 5.874% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2035 (US404280EL97) | HSBC35A | New York Stock Exchange | |
| 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2028<br><br>(US404280EM70) | HSBC28G | New York Stock Exchange | |
| 5.286% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2030<br><br>(US404280EN53) | HSBC30D | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2028<br><br>(US404280EK15) | HSBC28H | New York Stock Exchange | |
| --- | --- | --- | |
| Floating Rate Senior Unsecured Notes due 2030<br><br>(US404280EP02) | HSBC30E | New York Stock Exchange | |
| 4.899% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2029<br><br>(US404280EQ84) | HSBC29C | New York Stock Exchange | |
| 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(US404280ER67) | HSBC31C | New York Stock Exchange | |
| 5.450% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2036<br><br>(US404280ES41) | HSBC36B | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2029<br><br>(US404280ET24) | HSBC29D | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2031<br><br>(US404280EU96) | HSBC31D | New York Stock Exchange | |
| 5.240% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(US404280EW52) | HSBC31E | New York Stock Exchange | |
| 5.790% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2036<br><br>(US404280EX36) | HSBC36C | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2031<br><br>(US404280EZ83) | HSBC31F | New York Stock Exchange | |
| 5.741% Fixed Rate/Floating Rate Subordinated Unsecured Notes<br><br>due 2036<br><br>(US404280FB07) | HSBC36D | New York Stock Exchange | |
| 4.619% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2031<br><br>(US404280FE46) | HSBC31G | New York Stock Exchange | |
| 5.133% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2036<br><br>(US404280FG93) | HSBC36E | New York Stock Exchange | |
| Floating Rate Senior Unsecured Notes due 2031<br><br>(US404280FF11) | HSBC31H | New York Stock Exchange |
*Not for trading, but only in connection with the registration of American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report:
Ordinary Shares, nominal value US$0.50 each 17,175,239,862
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes ¨
No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes þ No
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). þ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an
emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
| Large accelerated filer | þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Emerging growth company | ¨ |
|---|
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
| U.S. GAAP | ¨ | International Financial Reporting Standards | þ | Other | ¨ |
|---|---|---|---|---|---|
| as issued by the International Accounting Standards Board |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the
registrant has elected to follow. ¨ Item 17 ¨ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). ¨ Yes þ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
¨ Yes ¨ No
| HSBC Holdings plc Annual Report on Form 20-F |
|---|
Opening up a world of opportunity
HSBC is one of the largest banking and financial
services organisations in the world.
Guided by our purpose of opening up a world of
opportunity, our ambition is to become the world’s
most trusted bank globally, putting customers at
the heart of everything we do.
In this year’s report
1Cautionary statement regarding
forward-looking statements
2 Additional cautionary statement
regarding ESG data, metrics and
forward-looking statements
3 Certain defined terms
Strategic report
5 Highlights
7 Who we are
8 Group Chairman’s shareholder letter
10 Group CEO’s shareholder letter
12 Our strategy
15 Financial overview
19 Business segments
28 ESG overview
30 Risk overview
Environmental, social and
governance (‘ESG’) review
33 Environmental
51 Social
57 Governance
Financial review
65 Financial summary
88 Business segments and legal
entities
106 Alternative
performance measures
111Other information
Risk review
119Our approach to risk
121 Top and emerging risks
126Risk factors
138 Our material banking risks
Corporate governance report
220 Biographies of Directors and
senior management
233 Board committees
249 Directors’ remuneration report
Financial statements
286Report of Independent Registered
Public Accounting Firm to the
Board of Directors and Shareholders
of HSBC Holdings plc (PCAOB ID 876)
288Financial statements
300Notes on the financial statements
Additional information
382Shareholder information
394Abbreviations
This Strategic Report was approved by the
Board on 25 February 2026.
Brendan Nelson
Group Chairman
A reminder
The currency we report in is US dollars.
Our approach to ESG reporting
We embed our ESG reporting and Task Force on
Climate-related Financial Disclosures (‘TCFD’) within
our Annual Report and Accounts. Our TCFD
disclosures are highlighted with the following
| TCFD |
|---|
symbol:
Use of alternative performance
measures
We supplement our IFRS Accounting Standards
figures with non-IFRS Accounting Standards
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.
These measures are highlighted with the following
symbol: ø
ÑFurther explanation may be found on page 65.
Financial targets
For our financial targets, medium-term is defined as
between three to five years, and long term as five to
six years, from 1 January 2026.
ÑSee page 6 for details on our forward guidance
and outlook.
None of the websites referred to in this Form 20-F for
the year ended 31 December 2025 (the ‘Form 20-F’)
(including where a link is provided), and none of the
information contained on such websites, are
incorporated by reference in this report.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 1 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Cautionary statement regarding forward-looking statements
This Form 20-F contains certain forward-looking statements with
respect to HSBC’s financial condition; results of operations and
business, including the strategic priorities; financial, investment and
capital targets; and ESG ambitions, targets and commitments
described herein.
Statements that are not historical facts, including statements about
HSBC’s beliefs and expectations, are forward-looking statements.
Words such as ‘may’, ‘will’, ‘should’, ‘expects’, ‘targets’,
‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’,
‘potential’ and ‘reasonably possible’, or the negative thereof, other
variations thereon or similar expressions are intended to identify
forward-looking statements. These statements are based on current
plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking
statements speak only as of the date they are made. HSBC makes
no commitment to revise or update any forward-looking statements
to reflect events or circumstances occurring or existing after the
date of any forward-looking statements. Written and/or oral forward-
looking statements may also be made in the periodic reports to the
US Securities and Exchange Commission, summary financial
statements to shareholders, offering circulars and prospectuses,
press releases and other written materials, and in oral statements
made by HSBC’s directors, officers or employees to third parties,
including financial analysts. Forward-looking statements involve
inherent risks and uncertainties. Readers are cautioned that a
number of factors could cause actual results to differ, in some
instances materially, from those anticipated or implied in any
forward-looking statement. These include, but are not limited to:
–changes in general economic conditions in the markets in which
we operate, such as new, continuing or deepening recessions,
prolonged inflationary pressures and fluctuations in employment
levels and the creditworthiness of customers beyond those
factored into consensus forecasts; the Russia-Ukraine war, further
conflict or military action in the Middle East or elsewhere and their
impact on global economies and the markets where HSBC
operates, which could have a material adverse effect on (among
other things) our financial condition, results of operations,
prospects, liquidity, capital position and credit ratings; deviations
from the market and economic assumptions that form the basis
for our ECL measurements (including, without limitation, as a
result of the Russia-Ukraine war, further conflict or military action
in the Middle East or elsewhere, inflationary pressures,
commodity price changes, and ongoing developments in the
commercial real estate sector in mainland China and Hong Kong);
potential changes in HSBC’s dividend policy; changes and volatility
in foreign exchange rates and interest rates levels, including
fluctuations in HIBOR and the accounting impact resulting from
financial reporting in respect of hyperinflationary economies;
volatility in equity markets and the risk of disruptive correction
stemming from high company valuations; lack of liquidity in
wholesale funding or capital markets, which may affect our ability
to meet our obligations under financing facilities or to fund new
loans, investments and businesses; geopolitical tensions or
diplomatic developments producing social instability or legal
uncertainty, such as the Russia-Ukraine war, conflict in the Middle
East, the US military operation in Venezuela and any potential
military action or conflict elsewhere, and the related imposition of
sanctions, export-control, trade and investment restrictions,
supply chain restrictions and disruptions, sustained increases in
energy prices and key commodity prices, claims of human rights
violations, diplomatic tensions between China and the US, which
may extend to and involve other countries and territories, and
developments in Hong Kong and Taiwan and the surrounding
maritime region, alongside other potential areas of tension, which
may adversely affect HSBC by creating regulatory, reputational
and market risks; the efficacy of government, customer, and
HSBC’s actions in managing and mitigating ESG-related risks, in
particular climate risk, nature-related risks and human rights risks,
and in supporting the global transition to net zero carbon
emissions, each of which can impact HSBC both directly and
indirectly through our customers and which may result in potential
financial and non-financial impacts; illiquidity and downward price
pressure in national real estate markets; adverse changes in
central banks’ policies with respect to the provision of liquidity
support to financial markets; heightened market concerns over
sovereign creditworthiness in over-indebted countries; adverse
changes in the funding status of public or private defined benefit
pensions; the significant depreciation of the US dollar through
2025, with volatility expected to persist; societal shifts in
customer financing and investment needs, including consumer
perception as to the continuing availability of credit; exposure to
counterparty risk, including third parties using us as a conduit for
illegal activities without our knowledge; and price competition in
the market segments we serve;
–changes in government policy and regulation, as well as monetary,
interest rate and other policies of central banks and other
regulatory authorities in the principal markets in which we operate
and the consequences thereof (including, without limitation,
actions taken as a result of changes in government following
national elections in the markets where the Group operates);
continued volatility in trade and tariff policies, changes in tariff
rates, including sector-specific levies imposed by various nations,
including the US, which could further disrupt supply chains and
reduce global trade growth; initiatives to change the size, scope of
activities and interconnectedness of financial institutions in
connection with the implementation of stricter regulation of
financial institutions in key markets worldwide; revised capital and
liquidity benchmarks, which could serve to deleverage bank
balance sheets and lower returns available from the current
business model and portfolio mix; changes to tax laws and tax
rates applicable to HSBC, including the imposition of levies or
taxes designed to change business mix and risk appetite; the
practices, pricing or responsibilities of financial institutions serving
their consumer markets; expropriation, nationalisation,
confiscation of assets and changes in legislation relating to foreign
ownership; the UK’s relationship with the EU, particularly with
respect to the potential divergence of UK and EU law on the
regulation of financial services; changes in government approach
and regulatory treatment in relation to ESG disclosures and
reporting requirements, and the current lack of a single
standardised regulatory approach to ESG across all sectors and
markets; changes in UK macroeconomic and fiscal policy, which
may result in fluctuations in the value of the pound sterling;
general changes in government policy (including, without
limitation, actions taken as a result of changes in government
following national elections in the markets where the Group
operates) that may significantly influence investor decisions; the
costs, effects and outcomes of regulatory reviews, actions or
litigation, including any additional compliance requirements; and
the effects of competition in the markets where we operate
including increased competition from non-bank financial services
companies; and
–factors specific to HSBC, including our success in adequately
identifying the risks we face, such as the incidence of loan losses
or delinquency, and managing those risks (through account
management, hedging and other techniques); our ability to
achieve our financial, investment, capital and ESG ambitions,
targets and commitments (including the positions set forth in our
thermal coal phase-out policy and our energy policy and our
targets to reduce our on-balance sheet financed emissions and,
where applicable, facilitated emissions in our portfolio of selected
high-emitting sectors), which may result in our failure to achieve
any of the expected outcomes of our strategic priorities and may
result in reputational risks; evolving regulatory requirements and
the development of new technologies, including artificial
intelligence, affecting how we manage risk, including model risk;
model limitations or failure, including, without limitation, the
impact that high inflationary pressures and interest rates have had
on the performance and usage of financial models, which may
require us to hold additional capital, incur losses and/or use
compensating controls, such as judgemental post-model
adjustments, to address model limitations; changes to the
judgements, estimates and assumptions we base our financial
statements on; changes in our ability to meet the requirements of
regulatory stress tests; a reduction in the credit ratings assigned
to us or any of our subsidiaries, which could increase the cost or
decrease the availability of our funding and affect our liquidity
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 2 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
position and net interest margin; changes to the reliability and
security of our data management, data privacy, information and
technology infrastructure, including threats from cyber-attacks,
which may impact our ability to service clients and may result in
financial loss, business disruption and/or loss of customer services
and data; the accuracy and effective use of data, including internal
management information that may not have been independently
verified; changes in insurance customer behaviour and insurance
claim rates; our dependence on loan payments and dividends from
subsidiaries to meet our obligations; changes in our reporting
frameworks and accounting standards, which have had and may
continue to have a material impact on the way we prepare our
financial statements; our ability to successfully execute planned
strategic acquisitions and disposals; our success in adequately
integrating acquired businesses into our business; our ability to
successfully execute and implement the announced strategic
reorganisation of the Group; changes in our ability to manage third-
party, fraud, financial crime and reputational risks inherent in our
operations; employee misconduct, which may result in regulatory
sanctions and/or reputational or financial harm; changes in skill
requirements, ways of working and talent shortages, which may
affect our ability to recruit and retain senior management and an
inclusive and skilled workforce; and changes in our ability to
develop sustainable finance and ESG-related products consistent
with the evolving expectations of our regulators, and our capacity
to measure the environmental and social impacts from our
financing activity (including as a result of data limitations and
changes in methodologies), which may affect our ability to achieve
our ESG ambitions, targets and commitments, including our net
zero ambition, our targets to reduce on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors and the positions set
forth in our thermal coal phase-out policy and our energy policy,
and increase the risk of greenwashing. Effective risk management
depends on, among other things, our ability through stress testing
and other techniques to prepare for events that cannot be
captured by the statistical models it uses; our success in
addressing operational, legal and regulatory, and litigation
challenges; and other risks and uncertainties we identify in ‘Top
and emerging risks’ on pages 121 to 125.
This Annual Report and Accounts 2025 contains a number of
images, graphics, infographics, text boxes and illustrative case
studies and credentials which aim to give a high-level overview of
certain elements of our disclosures and to improve accessibility for
readers. These images, graphics, infographics, text boxes and
illustrative case studies and credentials are designed to be read
within the context of the Form 20-F as a whole.
The information, statements and opinions set out in this Form 20-F
do not constitute a public offer for the purposes of any applicable
law or an offer to sell or solicitation of any offer to purchase any
securities or other financial instruments or any advice or
recommendation in respect of such securities or other financial
instruments.
Additional cautionary statement regarding ESG data, metrics and forward-
looking statements
The Form 20-F contains a number of forward-looking statements (as
defined above) with respect to HSBC’s ESG-related ambitions, targets
and commitments, climate-related pathways, processes and plans, and
the methodologies and scenarios we use, or intend to use, to assess
our progress in relation to these (‘ESG-related forward-looking
statements’).
In preparing the ESG-related information contained in the Form 20-F,
HSBC has made a number of key judgements, estimations and
assumptions, and the processes and issues involved are complex. We
have used ESG (including climate) data, models and methodologies that
we consider, as of the date on which they were used, to be appropriate
and suitable to understand and assess climate change risk and its
impact, to analyse financed emissions and operational and supply chain
emissions, to set ESG-related ambitions, targets and commitments and
to evaluate the classification of sustainable finance and investments.
However, these data, models and methodologies are often new, are
rapidly evolving and are not of the same standard as those available in
the context of other financial information, nor are they subject to the
same or equivalent disclosure standards, historical reference points,
benchmarks or globally accepted accounting principles. In particular, it
is not possible to rely on historical data as a strong indicator of future
trajectories in the case of climate change and its evolution. Outputs of
models, processed data and methodologies are also likely to be
affected by underlying data quality, which can be hard to assess and
we expect industry guidance, market practice, and regulations in this
field to continue to change. We also face challenges in relation to our
ability to access data on a timely basis, lack of consistency and
comparability between data that is available and our ability to collect
and process relevant data. Consequently, the ESG-related forward-
looking statements and ESG metrics disclosed in the Annual Report
and Accounts 2025 carry an additional degree of inherent risk and
uncertainty.
Due to the unpredictable evolution of climate change and its future
impact and the uncertainty of future policy and market response to
ESG-related issues and the effectiveness of any such response, HSBC
may have to re-evaluate its progress towards its ESG-related ambitions,
targets and commitments in the future, update the methodologies it
uses or alter its approach to ESG (including climate) analysis and may
be required to amend, update and recalculate its ESG-related
disclosures and assessments in the future, as market practice and data
quality and availability develop.
No assurance can be given by or on behalf of HSBC as to the likelihood
of the achievement or reasonableness of any projections, estimates,
forecasts, ambitions, targets, commitments, prospects or returns
contained herein. Readers are cautioned that a number of factors, both
external and those specific to HSBC, could cause actual achievements,
results, performance or other future events or conditions to differ, in
some cases materially, from those stated, implied and/or reflected in
any ESG-related forward-looking statement or metric due to a variety of
risks, uncertainties and other factors (including without limitation those
referred to below):
–Climate change projection risk: this includes, for example, the
evolution of climate change and its impacts, changes in the scientific
assessment of climate change impacts, transition pathways and
future risk exposure and limitations of climate scenario forecasts;
–ESG projection risk: ESG-related metrics are complex and are still
subject to development. In addition, the scenarios employed in
relation to them, and the models that analyse them, have limitations
that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty, and cannot fully capture all
of the potential effects of climate, policy and technology-driven
outcomes;
–Changes in the ESG regulatory landscape: this involves changes in
government approach and regulatory treatment in relation to ESG
disclosures and reporting requirements, and the current lack of a
single standardised regulatory approach to ESG across all sectors and
markets;
–Variation in reporting standards: ESG reporting standards are still
developing and are not standardised or comparable across all sectors
and markets, and new reporting standards in relation to different ESG
metrics are still emerging;
–Data availability, accuracy, verifiability and data gaps: our disclosures
are limited by the availability of high quality data in some areas and
our own ability to timely collect and process such data as required.
Where data is not available for all sectors or consistently year on year,
there may be an impact to our data quality scores. We may not be
able to fully mitigate financial reporting risks related to our climate
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 3 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
and ESG disclosures due to the limited quantity and consistency of
available data. The accuracy and reliability of data is also impacted by
the diverse range of internal and external data sources and data
structures needed for climate-related reporting. While we expect our
data quality scores to improve over time, as companies continue to
expand their disclosures to meet growing regulatory and stakeholder
expectations, there may be unexpected fluctuations within sectors
year on year, and/or differences between the data quality scores
between sectors. Any such changes in the availability and quality of
data over time, or our ability to collect and process such data, could
result in revisions to reported data going forward, including on
financed emissions, meaning that such data may not be reconcilable
or comparable year-on year;
–Developing methodologies and scenarios: the methodologies and
scenarios HSBC uses to assess financed emissions and set ESG-
related ambitions, targets and commitments may develop over time
in line with market practice, industry standards, regulation and/or
developments in science, where applicable. Such developments
could result in revisions to reported data, including on financed
emissions or the classification of sustainable finance and
investments, meaning that data outputs may not be reconcilable or
comparable year-on year. Consequently, we might need to reassess
our progress towards ESG-related ambitions, targets and
commitments in the future; and
–Risk management capabilities: global actions, including HSBC’s own
actions, may not be effective in transitioning to net zero and in
managing relevant ESG risks, including in particular climate, nature-
related and human rights risks, each of which can impact HSBC both
directly and indirectly through our customers, and which may result in
potential financial and non-financial impacts to HSBC. In particular:
–we may not be able to achieve our ESG-related ambitions, targets
and commitments (including with respect to the positions set
forth in our thermal coal phase-out policy and our energy policy,
and our targets to reduce our on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors), which may result in
our failure to achieve some or all of the expected outcomes of our
strategic priorities and raise reputational concerns; and
–we may not be able to develop sustainable finance and ESG-
related products consistent with the evolving expectations of our
regulators, and our capacity to measure the environmental and
social impacts from our financing activity may diminish (including
as a result of data and model limitations and changes in
methodologies), which may affect our ability to achieve our ESG-
related ambitions, targets and commitments, including our net
zero ambition, our targets to reduce our on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors and the positions set
forth in our thermal coal phase-out policy and energy policy, and
increase the risk of greenwashing. We may face additional risks if
we knowingly or unknowingly make inaccurate, unclear,
misleading or unsubstantiated claims regarding sustainability to
our stakeholders.
Any forward-looking statements made by or on behalf of HSBC speak
only as of the date they are made. HSBC expressly disclaims any
obligation to revise or update these ESG forward-looking statements,
other than as expressly required by applicable law.
Written and/or oral ESG-related forward-looking statements may also
be made in our periodic reports to the US Securities and Exchange
Commission, summary financial statements to shareholders, proxy
statements, offering circulars and prospectuses, press releases and
other written materials, and in oral statements made by HSBC’s
Directors, officers or employees to third parties, including financial
analysts.
Our data dictionaries and methodologies for preparing the above ESG-
related metrics and third-party limited assurance reports can be found
on: www.hsbc.com/who-we-are/esg-and-responsible-business/esg-
reporting-centre.
Certain defined terms
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.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Performance in 2025
Our key performance indicators measure the progress we have
made against our priorities for the benefit of all our stakeholders,
and also inform remuneration outcomes across the Group.
Financial performance
indicators
ÑRead more on our financial performance in 2025
ÑFor an explanation of performance against our
key Group financial targets, see page 15.
ÑTo better align with market practice, from our
2025 full-year results we no longer adjust the
‘average tangible equity‘ for the post-tax impact
of notable items in each period. Comparatives
have been re-presented. This revision improved
RoTE excluding notable items by 16 basis points
(‘bps’) in 2025 (2024: (34)bps).
ÑFor a reconciliation of alternative performance
measures to their reported equivalents, see
page 106.
| Return on average tangible equity<br><br>(‘RoTE’) ø<br><br>13.3%<br><br>(2024: 14.6%) | Profit before tax<br><br>$29.9bn<br><br>(2024: $32.3bn) |
|---|---|
RoTE excluding notable items ø<br><br> <br><br> <br><br>17.2%<br><br>(2024: 15.6%) |
Constant currency profit before tax<br><br>excluding notable items ø<br><br><br><br>$36.6bn<br><br>(2024: $34.2bn) |
| Operating expenses<br><br>$36.4bn<br><br>(2024: $33.0bn) | Common equity tier 1 capital ratio<br><br>14.9%<br><br>(2024: 14.9%) |
| Target basis operating expenses ø<br><br><br><br>$33.5bn<br><br>(2024: $32.5bn) |
Dividend per share in respect of 2025<br><br>$0.75<br><br>(2024 dividend per share: $0.87, inclusive<br><br>of a special dividend of $0.21 per share) |
Strategic performance
indicators
ÑRead more on our strategy on pages 12 to 14.
ÑRead more on our approach to ESG on page 28.
ÑRead more on our definition of sustainable
finance and investment on page 35.
| Organisational simplification<br><br><br><br>$1.2bn<br><br>Annualised impact of cost saving actions taken<br><br>during 2025 |
Sustainable finance and investment<br><br><br><br>$495.6bn<br><br>Cumulative total provided and facilitated<br><br>since 1 January 2020.<br><br>(2024: $393.6bn) |
|---|---|
| Grow our Wealth business<br><br>$80bn<br><br>Net new invested assets generated in 2025,<br><br>of which $39bn were in Asia.<br><br>(2024: $64bn generated, of which $47bn<br><br>were in Asia) |
Link to remuneration
ÑFor details of executive Directors’ pay and
performance in 2025, see the Directors’
Remuneration Report on page 249.
Our remuneration policy supports the
achievement of our strategic objectives by
aligning reward with our long-term
sustainable performance. This includes
review of our performance against financial
and non-financial metrics to determine overall
variable pay for our colleagues and executive
Directors.
Key financial and strategic performance
indicators included in the 2025 annual
incentive and 2023-2025 long-term incentive
scorecards of our executive Directors are
highlighted by the following symbols:
 |
Annual incentive |  |
Long-term incentive | |||
|---|---|---|---|---|---|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Highlights
We are becoming a simple, more agile, focused bank, built on our core strengths.
Financial performance (vs 2024)
–Reported profit before tax decreased by
$2.4bn to $29.9bn, mainly due to a $4.9bn
year-on-year net adverse impact from
notable items. Profit after tax decreased
by $1.9bn to $23.1bn.
–In 2025, notable items included dilution and
impairment losses of $2.1bn related to our
associate Bank of Communications Co.,
Limited (‘BoCom‘), reserve recycling losses
of $1.5bn following the completion of the
sale of our French retained portfolio of home
and certain other loans, legal provisions of
$1.4bn and restructuring and other related
costs associated with our organisational
simplification of $1.0bn. In 2024, notable
items included net losses relating to our
disposals in Canada and Argentina of $1.4bn.
–Constant currency profit before tax
excluding notable items increased by
$2.4bn to $36.6bn, from a strong
performance in Wealth in our International
Wealth and Premier Banking (‘IWPB’) and
Hong Kong businesses, and from Wholesale
Transaction Banking in our Corporate and
Institutional Banking (‘CIB’) business. This
was partly offset by a rise in expected credit
losses and other credit impairment charges
(‘ECL’) and an increase in operating
expenses due to planned investment and
inflation.
–RoTE in 2025 was 13.3%, compared with
14.6% in 2024. Excluding notable items,
RoTE in 2025 was 17.2%, a rise of 1.6
percentage points compared with 2024.
–Revenue of $68.3bn increased by $2.4bn
or 4% compared with 2024. The increase
was primarily due to fee and other income
growth in Wealth from Investment
Distribution and Insurance, and in Wholesale
Transaction Banking, particularly in Foreign
Exchange in CIB. This was partly offset by
the year-on-year impact of notable items,
mainly relating to business disposals and a
dilution loss related to BoCom. Constant
currency revenue excluding notable items
rose by $3.4bn to $71.0bn.
–Net interest income (‘NII’) of $34.8bn was
$2.1bn higher than 2024 reflecting the
benefit of the reinvestment of our structural
hedge at higher yields, deposit balance
growth and higher NII in Markets Treasury.
In addition, the increase included the non-
recurrence of a $0.2bn loss in 2024 on the
early redemption of legacy securities. This
was partly offset by the adverse year-on-
year impact of $1.6bn from business
disposals in Argentina and Canada, and
margin compression on our deposits. The
growth in NII of $2.1bn also reflected a
benefit from lower funding costs associated
with the trading book of $1.7bn. Banking
net interest income (‘banking NII’), which
excludes these funding costs, increased
by $0.3bn to $44.1bn.
–Net interest margin (‘NIM’) of 1.59% was
3bps higher, reflecting the reinvestment of
our structural hedge at higher yields.
–ECL were $3.9bn, an increase of $0.4bn
compared with 2024, including charges in
both periods related to the commercial real
estate (‘CRE’) sectors in Hong Kong and
mainland China. In 2025, the charge in this
sector in Hong Kong of $0.7bn (2024:
$0.1bn) reflected higher allowances for new
defaulted exposures, the impact of an over-
supply of non-residential properties that has
put continued downward pressure on rental
and capital values, and updates to our
models used for ECL calculations. The 2025
charge in the mainland China CRE sector
was $0.2bn (2024: $0.4bn). ECL were 39
bps of average gross loans, including
loans and advances classified as held for
sale.
–Operating expenses increased by $3.4bn
or 10% to $36.4bn. The increase primarily
reflected notable items in 2025 of $3.0bn,
including legal provisions of $1.4bn,
restructuring and other related costs
associated with our organisational
simplification of $1.0bn, and $0.5bn related
to disposals, wind-downs, acquisitions and
related costs.
–Cost growth also reflected planned spend
and investment in technology, higher
performance-related pay and the impacts of
inflation, partly offset by reductions related
to our business disposals and the benefits of
our organisational simplification.
–Target basis operating expenses rose by
3%, in line with our cost growth target. This
increase primarily reflected higher planned
spend and investment in technology, higher
performance-related pay and the impact of
inflation, partly offset by the benefits of our
organisational simplification.
–Customer lending balances rose by
$57.7bn including favourable foreign
currency translation differences. On a
constant currency basis, lending balances
rose by $17.6bn, mainly in our UK business
reflecting growth in mortgage and
commercial customer lending.
–Customer accounts rose by $131.9bn,
including favourable foreign currency
translation differences. On a constant
currency basis, customer accounts
increased by $67.6bn, with growth in all our
businesses, particularly our Hong Kong
business segment.
–Common equity tier 1 (‘CET1’) capital
ratio remained at 14.9%. This reflected an
increase in risk-weighted assets (‘RWAs‘),
which was offset by an increase in CET1
capital through capital generation net of
distributions. The increase in RWAs was
mainly driven by foreign currency translation
differences and asset size movements.
–The Board has approved a fourth interim
dividend of $0.45 per share, resulting in a
total of $0.75 per share in respect of 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Governance<br><br>Report of the Directors | Financial statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Outlook
Group financial targets
–We are targeting a RoTE of 17% or better
for 2026, 2027 and 2028, excluding
notable items. Our revised target reflects
momentum in our earnings and the positive
progress we are making in our strategic
execution.
–We are targeting year-on-year growth in
revenue from 2026 to 2028, rising to 5%
growth in 2028 compared with 2027
excluding notable items and on a constant
currency basis.
–We maintain our dividend payout ratio
target basis of 50% in 2026, 2027 and
- Our target basis payout ratio is
calculated as a percentage of earnings per
share (‘EPS’) excluding material notable
items and related impacts.
In respect of 2026:
–We expect banking NII of at least $45bn,
based on our current expectations for policy
rates.
–We expect ECL charges as a percentage of
average gross loans to be around 40bps
in 2026 (including held for sale loan
balances). Over the medium term, we retain
our planning range of 30-40bps.
–We retain our commitment to Group-wide
cost discipline. We are targeting growth in
target basis operating expenses of
approximately 1% compared with 2025.
–Our target basis operating expenses
measure excludes notable items and
includes the impact of simplification-related
saves associated with our announced
reorganisation.
–We intend to continue to manage the CET1
capital ratio within our medium-term
target range of 14%–14.5%. Capital may fall
below our target range during January 2026
owing to the privatisation of Hang Seng
Bank, which had a net CET1 capital impact of
110bps in January 2026 (based on our CET1
capital ratio as at 31 December 2025). This
included a day one impact of around 120bps
on CET1, partly offset by a release of around
10bps of incremental hedging-related
structural foreign exchange RWAs.
–We expect to restore our CET1 capital ratio
within our target range through a
combination of organic capital generation and
not initiating any further buy-backs until CET1
capital is back within, or above, this range. A
decision to recommence buy-backs will be
subject to our normal buy-back
considerations and process on a quarterly
basis.
ÑOur targets and expectations reflect our current
outlook for the global macroeconomic
environment and market-dependent factors,
such as market-implied interest rates (as of end
January 2026) and rates of foreign exchange, as
well as customer behaviour and activity levels.
ÑWe do not reconcile our forward guidance on
RoTE excluding notable items, constant currency
revenue excluding notable items, target basis
operating expenses, dividend payout ratio target
basis or banking NII to their equivalent reported
measures.
ÑSee pages 107 to 108 for a further explanation of
RoTE excluding notable items, constant currency
revenue excluding notable items, banking NII,
target basis operating expenses and dividend
payout ratio target basis. For further information
on our CET1 ratio, see page 191.
Reshaping the Group for growth
Privatisation of Hang Seng Bank
–On 26 January 2026, we completed our
privatisation of Hang Seng Bank, following
shareholder and Court approval. Hang Seng
Bank is now a wholly-owned subsidiary
of the HSBC Group and Hang Seng Bank
shares have been withdrawn from the Hong
Kong Stock Exchange. This transaction
demonstrates our confidence in the outlook
for Hong Kong and further strengthens our
market-leading position.
–Through the privatisation of Hang Seng
Bank, we expect to realise $0.5bn in pre-tax
revenue and cost synergies across both our
brands in Hong Kong by the end of 2028,
with associated restructuring costs of
$0.6bn. These costs would be reported as a
material notable item. We intend to redeploy
savings we realise from cost synergies into
areas of competitive advantage and
accretive returns.
–We also have an ambition to generate
further revenue and cost opportunities of
around $0.4bn by the end of 2028 across
both our brands in Hong Kong.
Organisational simplification
–At our 2024 full-year results we announced
measures to simplify the Group, and we
have committed to deliver an annualised
reduction of around $1.5bn in our cost
base, expected by the end of 2026 from
our organisational simplification programme.
–We are on track to have taken actions to
deliver our $1.5bn annualised cost
reduction by the end of June 2026, which is
six months earlier than planned. In 2025,
we identified and actioned annualised
cost savings of approximately $1.2bn,
which resulted in a reduction of around
$0.6bn in operating expenses in the
income statement in 2025. In this period
we incurred $1.0bn in restructuring and
other related costs, primarily related to
severance.
Strategic transactions
–We are also focused on opportunities where
we have a clear competitive advantage and
accretive returns, and we aim to redeploy
approximately $1.8bn of additional costs
saved from non-strategic activities into
these areas over the medium term. The
increase from $1.5bn reflects our intention
to redeploy an additional $0.3bn of costs
saved from the synergies generated from
our privatisation of Hang Seng Bank.
–In 2025, we announced a further 11
transactions, which are set to create
incremental investment capacity for
growth. During the fourth quarter of 2025,
we completed the sales of our French
retained portfolio of home and certain other
loans, our France life insurance business, our
German private banking business and our
Bahrain retail banking business. Completed
or announced transactions are expected to
generate approximately $0.7bn of annualised
cost capacity for reallocation. The associated
businesses contributed around $1.0bn to
revenue in 2025.
–Targeted strategic reviews of our retail
businesses in Australia, Indonesia and
Egypt remain underway on which no
decisions have been made. Our CIB
businesses in these markets are unaffected
by these reviews. In addition, we have
commenced a strategic review of HSBC
Life Singapore.
Progress in growth areas
–In Wealth, we are investing in Wealth
Centres and hiring additional relationship
managers. Wealth balances as at 31
December 2025 across all of our business
segments were $2.1tn, an increase of
16% compared with the same period last
year. Within this we have attracted net
new invested assets of $80bn, with
$39bn booked in Asia. This compared with
net new invested assets in 2024 of $64bn,
with $47bn booked in Asia.
–Transaction banking continues to perform
well as we leverage our network and
capabilities to capture opportunities from
changing trade and capital flows. In 2025,
fee and other income in Wholesale
Transaction Banking performed well,
rising by 4% compared with 2024,
particularly from growth in Global Foreign
Exchange.
ÑFor more details on our strategic progress in
2025, see ‘Our strategy’ on page 12.
ÑFor more details on our businesses held for sale
and disposal groups, see Note 23 on the
financial statements on page 355.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Governance<br><br>Report of the Directors | Financial statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Who we are
Founded in 1865, HSBC is one of the world’s largest banking and financial services
organisations. We’re here to use our expertise, capabilities, breadth and
perspectives to help open up a world of opportunity for our customers.
| Our strategy | Our strategy supports our ambition to be the most trusted bank globally, putting customers at the heart of<br><br>everything we do. We help meet our customers’ financial needs and support them to achieve their goals<br><br>with our products and services, while navigating the complexities of the global market through our deep<br><br>international network, supported with the stability and strength of our balance sheet. | |||||
|---|---|---|---|---|---|---|
| Our priorities | u | Be simple<br><br>and agile | u | Drive customer-<br><br>centricity | u | Deliver focused<br><br>sustainable growth |
| --- | --- | --- | --- | --- | --- | --- |
| ÑSee page 12 for further details on<br><br>our strategy. | We aim to make fast, safe<br><br>decisions – adapting to change<br><br>by staying relevant, driving<br><br>simplification and being future<br><br>ready through technology and<br><br>digitisation. | We are intensely focused on<br><br>our customers – helping to<br><br>deliver excellent outcomes,<br><br>drive loyalty, and serve our<br><br>customers for the long term<br><br>through the depth of what we<br><br>offer as a franchise. | As a leading international bank,<br><br>we aim to drive long-term,<br><br>sustainable growth, focused on<br><br>areas of competitive strength. | |||
| Our organisational<br><br>structure | Since 1 January 2025, the HSBC Group has operated through four new businesses to simplify our<br><br>organisational structure and accelerate delivery against our strategic priorities. | |||||
| --- | --- |
Revenue by business ($bn)1
HK
$15.9bn
CIB
$27.6bn
UK
$12.9bn
IWPB
$14.5bn
1 Calculation based on revenue of our business
segments excluding Corporate Centre.
| Hong Kong | UK | |
|---|---|---|
| Our Hong Kong business has a leading<br><br>market position. It comprises Retail Banking<br><br>and Wealth and Commercial Banking of<br><br>HSBC Hong Kong and Hang Seng Bank. | Our UK business has a leading market<br><br>position. It comprises Retail Banking and<br><br>Wealth (including first direct and M&S<br><br>Bank) and UK Commercial Banking,<br><br>including HSBC Innovation Bank. | |
| Corporate and Institutional<br><br>Banking | International Wealth and<br><br>Premier Banking | |
| Our CIB business is a market leader in<br><br>cross-border transaction banking and capital<br><br>markets. It integrates our Commercial<br><br>Banking business (outside the UK and Hong<br><br>Kong) with our Global Banking and Markets<br><br>business. | Our IWPB business comprises Premier<br><br>banking outside of Hong Kong and the UK,<br><br>our Private Bank, Asset Management and<br><br>Insurance businesses. | |
| ÑSee pages 19 to 27 for further details on our four businesses and Corporate Centre. |
Our values
At HSBC, our values guide us in all our actions – from strategic decisions to day-to-day interactions with customers and each other. Our values are
rooted in HSBC’s history, heritage and character, and help us deliver on our purpose.
| We get it done | We value difference | We take responsibility | We succeed together | |||
|---|---|---|---|---|---|---|
| Moving at pace and making<br><br>things happen | Seeking out different<br><br>perspectives | Holding ourselves accountable<br><br>and taking the long view | Collaborating across<br><br>boundaries | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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Group Chairman’s shareholder letter
 |
|---|
| Brendan Nelson<br><br>Group Chairman |
| We delivered strong performance and material returns for our<br><br>shareholders in 2025. By leveraging our unique global network and<br><br>leading capabilities, we helped our customers see past the sustained<br><br>uncertainty in the international environment and find the opportunities<br><br>that are driving the global economy forward. |
It is with great pride that I have begun my
tenure as Group Chairman of HSBC. I am truly
privileged to serve such a remarkable
institution, working alongside exceptionally
talented colleagues.
Our 161-year history is firmly rooted in the
objective set by HSBC’s founders – to
establish a bank in Hong Kong and Shanghai
that would facilitate local and international
trade.
By not losing sight of that foundational
objective and by remaining true to our purpose
and values, we have focused on what matters
most – our customers – moving forward
together through these most complex of
times.
Building on that forward momentum, the
Board and I will continue to closely partner
with our highly capable CEO, Georges
Elhedery, and his management team who are
accelerating the execution of our strategy,
with discipline and confidence.
A Modern HSBC: Simple and More Agile
A key catalyst for achieving that acceleration
was the introduction in January 2025 of our
new organisational structure centred on our
four businesses: Hong Kong, the UK,
Corporate and Institutional Banking, and
International Wealth and Premier Banking.
By halving the number of operating
businesses and significantly streamlining the
new Operating Committee of the Group, we
embarked on a journey to become a simple
and more agile organisation; a modern
institution that reflects its cherished legacy,
while embracing technological advances as a
core enabler of future growth,
competitiveness, and, ultimately, customer
aspirations.
Today, HSBC is clear on its core strengths,
investing to further develop our competitive
advantages and deliver sustainable growth,
with an entirely attainable ambition to be the
most trusted bank globally, putting customers
at the heart of everything we do.
Global Context
Global growth in 2025 was stronger than
expected, as the tariff-related headwinds were
offset by the significant momentum generated
by AI capital expenditure and trade growth,
and by the support provided by the ever-
resilient US consumer.
The global geopolitical context was marked by
continued uncertainty. The war in Ukraine,
which has entered its fifth year, and conflicts
in the Middle East and elsewhere, continue to
have significant human consequences.
In parallel, the changing approach to global
trade relations has increased economic
uncertainty. But as the resilience of global
trade growth demonstrates, the inter-
connectedness of the global economy,
underpinned by growing trade flows, is
compelling.
Faced with the re-configuration of the
globalised world, HSBC is optimally positioned
to help our customers capture the meaningful
opportunities that are driving the global
economy forward, across geographies and
throughout our unique global network. Our
strong financial performance and material
returns in 2025 point to that dynamic, along
with our focused approach to implementing
our strategic priorities.
2025 Performance
In 2025, we delivered reported profit before
tax of $29.9bn. Our return on average tangible
equity was 13.3%, or 17.2% excluding the
impact of notable items.
We delivered material returns for our
shareholders. The Board approved a fourth
quarterly dividend of $0.45 per share, bringing
the total dividend announced for 2025 to $0.75
per share. In addition, we announced two
share buy-backs in respect of 2025 worth a
total of $6bn.
Dividends paid in 2025, together with a more
than 49% increase in the share price, delivered
a total shareholder return for the year of more
than 57%.
With our realigned structure providing a
decisive impetus, we achieved broad-based
profit generation through geographic and
business diversification. Our performance
reflects that, as does our ability to invest for
growth, while continuing to optimise cost and
capital allocation. Indeed, we are keeping to
our committed objective of delivering $1.5bn
of organisational simplification savings and
expect to have taken the relevant actions to
achieve it by the end of June 2026, which is
six months earlier than planned.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Group Chairman’s letter |
”Today, HSBC is clear
on its core strengths,
investing to further
develop our competitive
advantages and deliver
sustainable growth, with
an entirely attainable
ambition to be the most
trusted bank globally,
putting customers at
the heart of everything
we do.”
Against this backdrop, we believe that the
privatisation of Hang Seng Bank is a milestone
development that brings together two seminal
institutions that have served Hong Kong – a
home market for the Group – for generations.
We are absolutely committed to building on
that valued legacy. While respecting Hang
Seng’s heritage and retaining its brand and
distinct customer proposition, we will continue
to invest and build on the complementary
strengths of our businesses, to the benefit of
our valued customers and the communities
that we serve.
Sustainability
Our ambition remains to become a net zero
bank by 2050. Supporting our customers is
core to our strategy – financing their transition
is both critical to them and aligned to our net
zero ambition.
In November 2025, we published our updated
Net Zero Transition Plan, setting out our
commercially-grounded sustainability strategy,
which reflects the realities of an evolving
global transition. We also set out our updated
interim financed emissions targets, metrics
and associated policies, seeking to remain
science-aligned and compatible with our own
net zero ambition.
We believe that supporting our customers’
transition is one of the most significant roles
we can play in the global transition to net zero.
We aim to provide and facilitate between
$750bn and $1tn of sustainable finance and
investment by 2030. In 2025, we provided and
facilitated $102bn in sustainable finance and
investment, bringing our cumulative total to
$495.6bn since January 2020. This puts us on
track to meet our target by 2030.
Leadership and Board Changes
As I begin my first full year as Group
Chairman, I want to acknowledge and pay
tribute to Sir Mark Tucker’s remarkable
leadership and exemplary commitment to the
Group.
Over a period of eight years, Mark helped
steer HSBC through a number of
unprecedented challenges – a global
pandemic, decades-high inflation and profound
shifts in the trade and geopolitical landscape –
leaving the Group more profitable, resilient,
and strongly positioned for accelerated
growth. I am very grateful to him for the
trusted partnership, friendship, and his support
in ensuring a smooth handover.
We also announced the appointment of Wei
Sun Christianson as an independent non-
executive Director, with effect from 1 January
- Wei brings extensive banking and
regulatory experience gained over a 30-year
international career, including as Co-CEO of
Asia Pacific at Morgan Stanley.
Ann Godbehere will be stepping down as a
Director of the Company and retire from the
Board at our 2026 AGM. I want to thank Ann
for her considerable contributions to the HSBC
Board.
In October, we announced the appointment of
Angela McEntee as Group Company Secretary
with effect from 1 January 2026.
In 2025, the Board held meetings in Hong
Kong, India, and London. These were
invaluable opportunities to meet with valued
clients, government representatives,
regulators and colleagues.
We also had productive engagements with our
shareholders on important Group-related
issues at our Annual General Meeting in
London and at the Informal Meeting of our
Hong Kong Shareholders.
Year Ahead
We expect the global economy to expand in
- Despite significant policy uncertainty,
global trade is also set to grow, supported by
the expansion of new trade corridors and the
boom in AI hardware demand. Inflation should
continue drifting downward, although with
divergence across markets. Somewhat
uneven growth across industries and
geographies could contribute to periodic
financial volatility.
In China, a stronger policy push should anchor
its growth, and we expect it to broadly
maintain its expansion pace of recent years, as
structural reforms start to gain traction. As part
of its continued economic transformation, the
emphasis will be on strengthening domestic
demand – particularly consumption, but also
investment. Services consumption will benefit
from government policy priorities, as will
technology development. Hong Kong will
continue to benefit as the super-connector
between mainland China and the rest of the
world. Buoyant markets and improvements in
consumption are expected to support its
growth this year.
Elsewhere in Asia, robust consumption and
rising exports generated impressive growth in
a number of markets, in ASEAN in particular.
That combination is expected to continue in
- In India, domestic demand will likely be
the main driver of growth, reflecting robust
consumption, as well as ongoing government
infrastructure investment.
Economic diversification continues in the
Middle East, with deep capital reserves being
deployed into significant investments in
infrastructure, technology, and human capital.
The Asia–Middle East trade, investment, and
travel corridor continues to grow.
Europe’s economy will be supported by fiscal
expansion, particularly in Germany, coupled
with lower effective interest rates and steady
consumption growth. We see euro area
growth maintaining its recent pace over the
next year. In the UK, greater fiscal headroom
should give markets and businesses more
confidence. Lower expected inflation and
interest rates should provide a tailwind for
consumption growth.
The US should be a key driver of global
growth, reaping the benefits of sizeable
investments in AI, tax cuts and incentives, as
well as substantial deregulation.
Our Colleagues
I will end where I began, by recognising and
wholeheartedly thanking our HSBC colleagues.
They are the ones who deliver for our
customers, day in and day out, with
excellence, dedication, and respect.
They are the backbone of the Group,
embodying our high-performance culture.
Their commitment to our customers and to
maintaining and further strengthening the
relationships we have built with them is what
set us apart in 2025 and what will help us
thrive going forward, to the benefit of our
shareholders.
Brendan Nelson
Group Chairman
25 February 2026
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Group CEO’s shareholder letter
 |
|
|---|---|
| Georges Elhedery<br><br>Group CEO |
RoTE ø
13.3%
(2024: 14.6%)
RoTE excluding notable items ø
17.2%
(2024: 15.6%)
Profit before tax
$29.9bn
(2024: $32.3bn)
Dear fellow shareholders,
In previous letters I set out a clear agenda to
unlock HSBC’s full potential. 2025 marked a
year of decisive action and swift execution.
We are performing, transforming and investing
for growth as demand for globally-connected
financial services increases, especially in the
world’s fastest-growing regions.
We have aligned our structure with our
strategy and strengthened our four
complementary businesses. We are becoming
a simple, more agile, focused bank built for a
fast-changing world. One that stays true to our
strong foundations and hallmark financial
strength yet moves with the speed our
customers need to navigate the modern
world.
The dynamic market environment shows why
our global network, deep local expertise built
over generations and financial strength set us
apart. It also shows why our customers
continue to turn to us as their reliable and
trusted financial partner.
New targets: 2026-2028
Last February, we set out a three-year target
of a mid-teens return on average tangible
equity (‘RoTE’) in each of the three years from
2025 to 2027, excluding notable items. We
made clear progress against this target in
- That is why we are now raising our
ambition and targeting 17% RoTE or better in
each year from 2026 to 2028, excluding
notable items. We are also targeting year-on-
year revenue growth over the same period
rising to 5% in 2028 compared with 2027,
excluding notable items. We maintain our
dividend payout ratio target basis of 50% in
2026, 2027 and 2028. Our target basis payout
ratio is calculated as a percentage of EPS,
excluding material notable items and related
impacts.
Strong performance
On a reported basis, profit before tax of
$29.9bn fell 7% year-on-year due to the impact
of notable items. These included dilution and
impairment losses of $2.1bn related to
BoCom, legal provisions of $1.4bn and $1.0bn
of restructuring and other related costs
associated with our organisational
simplification. On this basis, we delivered a
RoTE of 13.3%.
Excluding notable items, our RoTE was 17.2%
achieving our ‘mid-teens, or better’ target. Our
revenue increased 5% year-on-year to $71bn
and our profit before tax grew 7% to $36.6bn,
excluding notable items on a constant
currency basis. Our common equity tier 1
(‘CET1’) capital ratio was 14.9%, reflecting our
long-standing financial strength.
We maintained tight cost discipline, managing
target basis cost growth to around 3%,
thereby achieving our target. This strong
performance enabled us to announce a total
ordinary dividend per share for 2025 of $0.75,
or $12.9bn, an increase of 14% on the prior
year. In addition, we completed $6bn of share
buy-backs taking total returns to $18.9bn.
Momentum
Our four businesses are built on customer
trust and performed well. Revenue and
deposits grew in each and all four delivered
RoTE of mid-teens, or better, excluding
notable items. We saw growth accelerate in
areas of core strength and we are actively
investing in modern technology to enhance
innovation, productivity and customer
experience.
Turning to business-line performance on a
year-on-year and constant currency basis, our
market-leading Hong Kong business generated
revenue of $15.9bn, or 6% growth. Our
deposit base grew by 7% to more than
$540bn, helping us maintain our number one
position in Hong Kong with market share of
25%. Our UK business delivered revenue of
$12.9bn, an increase of 5%, supported by
robust balance sheet growth with customer
loans increasing by 6% to more than $300bn.
CIB increased revenue by 3% to $27.6bn, and
we generated $13.1bn of fee and other
income, which was 7% higher than the prior
year.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Group CEO's letter |
“We are becoming
a simple, more agile,
focused bank built for
a fast changing world.”
In 2025, we facilitated around $900bn in trade,
which is comparable to the economic output
of a G20 economy. This represents the
equivalent of around $2.5bn of goods and
services moving through our global network
every single day. This scale, which gives
access to 86% of world trade flows, is why
we were voted in a survey of 13,000
corporates as Euromoney’s ‘World’s Best
Trade Finance Bank’ for the ninth consecutive
year. Across our network we processed
around $500tn of payment transactions in 130
currencies, equivalent to almost $1bn every
minute. That is why 30,000 customers
surveyed by Euromoney voted HSBC the
number one payments bank in products,
services and technology.
In IWPB, revenue was $14.5bn, an increase of
5%. Wealth fee and other income across all
our businesses was $9.4bn, up 24%. At 31
December 2025, bank-wide Wealth balances
were $2.1tn, of which more than $1tn was
booked in Asia, reflecting our position as the
leading wealth manager in Asia and the Middle
East. Given the importance of managing
customer deposits as well as their invested
assets, we are changing our wealth
disclosures. In 2026, we will replace Invested
assets (2025: $1.5tn) with a new calculation of
Wealth balances. The new disclosure adds our
wealth customers’ deposits of $608bn and
removes $580bn of Asset Management third-
party distribution assets. On this new basis,
Wealth balances in 2025 were $1.6tn.
In 2025, we were pleased to update our Net
Zero Transition Plan, which reaffirms our
ambition to become a net zero bank by 2050
and emphasises the importance of supporting
our customers in their transitions.
Discipline
We expect to have taken action to deliver our
$1.5bn organisational simplification saves by
the first half of 2026, six months ahead of
plan. The initiative is designed to make HSBC
simple and more agile with an immaterial
revenue impact. Cost efficiency is one of the
key benefits, clearer accountability and greater
collaboration are others. The saves will be
taken straight to the bottom line.
We have reviewed our portfolio against our
strategic priorities and are moving at pace to
exit non-strategic or low-returning activities.
This initiative is expected to release $1.5bn of
incremental investment capacity, which we
are actively reallocating to areas of competitive
strength where we can generate accretive
returns. In 2025, we announced 11 exits, of
which three have fully completed. These are in
addition to the two transactions we
announced in 2024.
Taken together, the completed and announced
exits will generate $0.7bn in annualised cost
savings and exits in active execution, including
activities under strategic review, are expected
to generate a further $0.6bn.
Following the privatisation of Hang Seng Bank,
reported cost synergies across HSBC and
Hang Seng Bank will release $0.3bn, which
we will direct towards growth opportunities in
Hong Kong. To reflect this, we are increasing
our medium-term cost reallocation
commitment from $1.5bn to $1.8bn.
Investing for growth
Our $13.7bn privatisation of Hang Seng Bank
brings together 255 years of history and
heritage, combining global reach and local
depth. It allows us to scale capabilities across
both banks for all customers. Hong Kong is a
dynamic economy, a top three global financial
centre and a thriving trade gateway. It is a
super-connector between mainland China and
the world. It is also poised to become the
world’s leading cross-border wealth hub by
- The privatisation of Hang Seng Bank
reflects our confidence and conviction in Hong
Kong’s future growth.
In our home markets, we are expanding the
number of Wealth Centres and enhancing our
wealth capabilities. In Hong Kong we opened
five new state-of-the-art Wealth Centres. They
provide a space where our Private Banking and
Premier customers can meet our wealth
specialists to plan, invest and manage their
long-term financial future. In the UK, our
flagship Wealth Centre launched in Mayfair,
London, and we opened a second in Leeds, a
major regional wealth hub.
Also in the UK, investment in our Business
Banking coverage model is generating results.
We are growing customer numbers, lowering
attrition rates and seeing greater advocacy.
In IWPB we opened a further 20 new Wealth
Centres focusing on Asia and the Middle East,
excluding those in markets under strategic
review. These are in many of the world’s
fastest-growing wealth economies, such as
mainland China, Singapore and the UAE. We
became the world’s first global asset manager
to establish an onshore platform in the UAE,
offering retail and institutional investors access
to 10 new funds. We refreshed our Premier
proposition for affluent customers in four
markets and it is now live in seven.
In CIB, we are using digital innovation to serve
customers faster. Our tokenised deposits now
offer next-generation real time payments
across our network. They are available in Hong
Kong, Singapore, the UK and Luxembourg.
Other markets will follow in 2026. With
mobile-first consumers changing customer
payment choices, we are changing digital
wallet collection capabilities. Our Digital
Merchant Services solution allows
omnichannel payments, making e-commerce
easier and more efficient for retailers. It is
currently available in Hong Kong, India and
Singapore, with six more markets launching in
2026.
We are also reengineering HSBC while
focusing on resilience and risk management.
We are modernising the bank through AI and
automation to enhance customer experience,
increase productivity and boost efficiency. We
have more than 100 GenAI active use cases
and are increasing AI partnerships to
accelerate adoption of cutting-edge
technologies. More than 31,000 of our
engineers now use an AI-enabled coding
assistant and our HSBC Productivity Suite tool
is available to around 85% of our colleagues to
help summarise, analyse and translate
documents.
High performance culture
A clear strategy sets our direction. A strong
culture is what turns it into results. This is why
we are investing to build a high-performance
culture. First, we refreshed our ambition: ‘To
be the most trusted bank globally, putting
customers at the heart of everything we do’.
Second, we launched six new Leadership
Principles and How We Lead, our new Group-
wide leadership framework. All our senior
leaders, and the broader Managing Director
cohort, have now attended a two-day How We
Lead event and 86% surveyed believe it is
creating a positive cultural change. In 2026, we
will roll it out to our broader people leaders
globally. In the spirit of our Leadership
Principle that ‘great leaders build better
leaders’, more than 150 of our senior leaders
will facilitate a How We Lead event in 2026.
Our people
I would like to thank Sir Mark Tucker for his
exceptional leadership over the last eight years
and congratulate Brendan Nelson on his
appointment as Group Chairman. I look
forward to continue working with Brendan as
we pursue our clear agenda to unlock HSBC’s
full potential.
I would also like to take this opportunity to
thank all my colleagues for their many valuable
contributions to our results. It is a privilege to
work with such talented people. Their
dedication, commitment and passion to deliver
for our customers truly differentiates HSBC
and is key to delivering sustainable long-term
growth for you, our shareholders.
Georges Elhedery
Group CEO
25 February 2026
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| --- | --- | --- | --- | --- | --- | --- |
Our strategy
In 2025, we continued to implement our strategy that supports our ambition to be the most
trusted bank globally, putting customers at the heart of everything we do.
A growing, high-returning HSBC
Our strategic priorities remain clear: we aim to
drive customer-centricity, deliver focused
sustainable growth, and be simple and more
agile.
We are intensely focused on our customers.
The depth and quality of our customer
relationships and our ability to connect
customers globally help enable us to deliver
best-in-class products and service excellence.
Each of our four businesses is built on trust, as
demonstrated by our $2.1tn Wealth balances
and our $500tn annual payment volumes.
We are driving focused sustainable growth by
targeting areas of competitive strengths. The
privatisation of Hang Seng Bank is an example
of this. The transaction allows us to further
capture the growth opportunities in Hong Kong,
one of our home markets where we are already
the number one bank1. All four of our
businesses are high-returning, delivering mid-
teens or better RoTE individually.
We aim to be a simple and agile organisation
in accordance with the strategy we set out in
- We simplified our organisation down to
four connected businesses. We are also
exiting non-strategic businesses at pace,
freeing up investment to grow our core
businesses where we have scale and
competitive advantage.
1Based on deposit market share. Source: Hong
Kong Monetary Authority (‘HKMA’).
Strong performance in 2025
We delivered a strong set of results in 2025.
Our reported revenue was $68.3bn. On a
constant currency basis and excluding notable
items, our revenue was $71.0bn, 5% higher
compared with 2024.
Our reported profit before tax was $29.9bn.
On a constant currency basis and excluding
notable items, we grew our profit before tax
by 7% to $36.6bn.
We continue to grow our deposit base. On a
constant currency basis, customer deposits
increased by $68bn during 2025 and reached
$1.8tn as at 31 December 2025.
In 2025, we achieved a RoTE of 13.3%.
Excluding the impact of notable items, RoTE
was 17.2%, achieving our RoTE target of ‘mid-
teens or better’. We delivered a 15.6% RoTE
excluding notable items in 2024.
Our strong performance in 2025 allowed us to
announce ordinary dividends of $0.75 per
share to our shareholders, compared with
$0.66 in 2024.
CIB
$11.4bn
RoTE excluding notable items ø
17.2%
(2024: 15.6%)
Reported profit before tax by business
segment ($bn)
IWPB
$4.4bn
HK
$9.6bn
UK
$6.7bn
Reshaping and focusing the Group
We continued to make progress in reshaping
the Group. We announced a further 11 exits in
- These included our business in Malta,
Sri Lanka retail banking, our UK life insurance
business, our Germany custody and fund
administration businesses, our stake in Grupo
Financiero Galicia, our French retained
portfolio of home and certain other loans, our
Uruguay business, our Bangladesh retail
banking business, equity capital markets
(‘ECM’) and mergers and acquisitions (‘M&A’)
in the US, UK and Europe, and our Bahrain
retail banking unit.
The targeted strategic reviews of our retail
businesses in Australia, Indonesia and Egypt
remain underway, on which no decisions have
been made. We remain committed to our
wholesale banking activities in these markets.
In addition, we commenced a strategic review
of HSBC Life Singapore.
We completed the privatisation of Hang Seng
Bank on 26 January 2026. This transaction will
further simplify the Group and deepen our
presence in one of our home markets where
we are already the market leader.
We are committed to serving Hong Kong with
two iconic brands. We intend to retain Hang
Seng Bank as a separately-licensed bank with
its own governance, brand, distinct customer
proposition and branch network. We aim to
strengthen both the HSBC and Hang Seng
brands by focusing on their competitive
advantages, while allowing customers to
choose where to bank.
Connectivity – our key strength
Connectivity distinguishes HSBC. We have
four deeply-connected businesses that
complement each other. CIB and IWPB are
leading global franchises that serve the Group
by providing a wide range of products and
capabilities. Hong Kong and the UK are our
home markets where we have substantial
retail and wholesale distribution networks.
Our customers choose us because we are a
trusted bank with extensive international
connectivity. We connect customers across
borders in our 56 markets. We are well placed
to help our clients manage increased
complexity as global trade reconfigures, and
their wealth and investment needs globally.
We partner with our clients for the long term as
their business and wealth grow over time. We
are one of the few global universal banking
franchises that offer our clients a full banking
product suite and services for their diverse
financial needs. We serve clients from small
businesses to global institutions, from retail
customers to ultra-high net worth individuals.
As our customers grow, they grow with us.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategy |
Our home markets
Hong Kong
Our Hong Kong business generated revenue
of $15.9bn in 2025, growing by 6% on a
constant currency basis. We have the market-
leading banking franchise in Hong Kong1. Our
deposit base grew by 7% to over $540bn,
maintaining our number one position in market
share1 in Hong Kong at 25.4%2. We also
consistently lead peers in customer
satisfaction, retaining the number one position
in strategic net promoter scores (‘NPS’)3. In
our Commercial Banking (‘CMB’) business, we
focused on strengthening our market position
across multiple products. In trade finance, we
maintained our strong performance with a
market share of 32.6%2. We continued to
solidify and grow our Retail Banking and
Wealth (‘RBW’) business. We welcomed over
1.1 million new-to-bank customers, bringing
the total to over seven million4, and we
opened five new Wealth Centres in 2025.
These achievements reflect our ongoing
commitment to growth, customer satisfaction
and long-term value creation.
UK
Our UK business delivered revenue of $12.9bn
in 2025, an increase of 5% on a constant
currency basis, supported by robust balance
sheet growth, with customer loans increasing
by 6% to over $300bn. We continue to
support key growth sectors in the UK
economy, with our CMB business voted the
‘Best Bank for Corporates’ in the UK by
Euromoney for the second consecutive year.
We see an opportunity to build share in the
small and medium-sized enterprise (‘SME’)
segment and have introduced fee-free banking
for SME clients. In our RBW business, we aim
to support customers to manage and grow
their wealth. Following the relaunch of our
Premier proposition, we rolled out ‘Funds on
Mobile’ to make it easier for customers to buy,
sell and trade funds via the HSBC app, in
addition to opening two new Wealth Centres.
We continued to build on our mortgage
franchise, growing balances by $9bn on a
constant currency basis, taking market share
to 8.1%5.
32.6%
Trade finance market share in Hong Kong2
8.1%
Mortgage market share in the UK5
1HSBC internal analysis based on HSBC Group
deposit balances in Hong Kong as of 30 June
2025, and the financial data presented in the
2Q25 interim financial reports of 12 selected peer
banks.
2Market share refers to HSBC Group balances in
Hong Kong compared with the HKMA Hong
Kong market data as of December 2025.
3 Strategic NPS ranking based on a survey by
third-party vendors, InMoment and MDRi Asia
Limited. Scores pertain to our Retail Banking and
Wealth business only.
4 New-to-bank and total customer numbers
exclude Hang Seng Bank customers.
5 Source: Bank of England. Retail mortgages only.
Our network business
Corporate and Institutional Banking
In CIB, revenue was $27.6bn, an increase of
3% compared with 2024 on a constant
currency basis. HSBC continued to be a
leading global wholesale transaction bank.
Bank-wide, we generated $10.9bn of
wholesale transaction banking fees and other
income in 2025, which was 4% higher
compared with 2024. We also grew our
deposits by $10bn in 2025, bringing the total
to $600bn. We facilitated around $900bn in
trade6, and were ranked number one in 21
markets around the world7. In Global
Payments Solutions (‘GPS’), HSBC was
recognised as the number one Global Cash
Management service provider in products,
service and technology8. In Foreign Exchange,
we were named the ‘World’s Best FX Bank for
Corporates’9. In addition, we were recognised
as ‘Asia’s Best Bank for Securities Services’ by
Euromoney. We continued to invest in
innovative technologies to help build a bank for
the future. We launched a Tokenised Deposit
Service in four markets, enabling continuous
access to real-time settlement for corporate
clients.
International Wealth and Premier
Banking
In IWPB, revenue was $14.5bn, an increase of
5% compared with 2024 on a constant
currency basis. We continued to execute our
bank-wide Wealth strategy in 2025. Our
Premier 3.0 service is now live in seven
markets and we opened 29 new Wealth
Centres across the Group, including seven in
our home markets. Bank-wide Wealth fee and
other income was $9.4bn, up 24% on a
constant currency basis, delivering on our
ambition of ‘double-digit’ growth. At 31
December 2025, wealth balances across all
our businesses were $2.1tn, of which $1.2tn
was booked in Asia, making us a leading
wealth manager in the region. We attracted
bank-wide net new invested assets of $80bn
in 2025, with $39bn booked in Asia. In our
insurance business, our insurance
manufacturing contractual service margin
(‘CSM’) grew by 21% to $14.6bn, which is a
store of potential future revenue for us.
c.$900bn
Trade volumes facilitated6
$2.1tn
Wealth balances
increased by 16% compared with 2024
6HSBC internal management information.
7 Source: Euromoney Trade Finance Survey in
2025.
8Source: Euromoney Cash Management Survey
2025.
9Source: Euromoney Foreign Exchange Awards
2025.
Performance across geographies
We have an established presence in a number
of markets globally. We are particularly
focused on mainland China, India, Singapore
and the UAE. These markets are especially
well connected to international trade, wealth
and investment flows and are key to our
strategy.
In 2025, we reported profit before tax of
$1.1bn in our mainland China business,
including a loss of $2.1bn related to the
dilution and impairment of our associate
BoCom. We continued to support our
customers expanding internationally, where
we serve approximately half of Fortune Global
500 companies. We were recognised as the
‘Best International Bank’ by Euromoney in
- We continued to perform strongly in
Wealth, where Wealth invested assets grew
by 37% compared with 2024, driven by strong
wealth distribution and growth in Private
Banking.
In Singapore, we generated profit before tax of
$1.5bn, and we remain the largest foreign
bank10. Singapore is our primary wholesale
offshore booking centre and wealth hub within
the ASEAN region. In 2025, we were
recognised by Euromoney as the ‘Best Bank for
Large Corporates’. Singapore, where we
opened two new Wealth Centres, is our largest
Wealth business outside our home markets and
fast growing. Wealth fee and other income
grew by 27% and our Wealth invested assets
surpassed $100bn for the first time.
10Based on 9M25 profit before tax, using peers’
published results.
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| 14 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Strategy |
Performance across geographies (continued)
In India, we reported a profit before tax of
$1.9bn and continued to be the largest foreign
bank1. We are the leading bank for multinational
companies, of which around 50% bank with us2.
We launched HSBC Innovation Bank with a
$1bn financing pool and launched new digital
propositions in Payments and Trade. Our ECM
issuance grew more than 60% in 2025. We
expanded to four new cities with wealth and
international potential, remained the top wealth
manager across foreign banks3 and were the
first bank to launch international wealth
solutions in GIFT City4.
In the UAE, we generated $0.8bn in profit
before tax, and are the largest foreign bank5 .
We continued to further strengthen our
leadership in Corporate and Institutional
Banking. We were named ‘Best Investment
Bank’ in the Middle East6, including being top
ranked in debt capital markets in the region for
the fifth consecutive year7. Our UAE wealth
business saw strong growth, with invested
assets up 33% and international new-to-bank
customers up 12%. In 2025, we launched
Premier 3.0, opened a new Wealth Centre, and
introduced 10 new asset management funds.
1 HSBC internal analysis based on 1H25 revenue,
deposits and advances, using peers’ published
results.
2 Source: Ministry of Commerce of India.
3 By Wealth AUM. Source: Indian Mutual Fund
Industry.
4 Gujarat International Finance Tec-City.
5 HSBC internal analysis based on 9M25 revenue,
deposits and advances, using peers’ published
results.
6 Euromoney Awards for Excellence 2025.
7 Source: Bloomberg league table.
Deposit strength core to our strategy
The strength of our franchise is built on the
solid foundation of our $1.8tn deposit base,
which is comprised primarily of current and
savings accounts. We are proud of our
deposit strength, which is a product of the
trust of our customers and an important
source of funding for us, and forms the
foundation of our financial stability.
We have customer loans of $1.0tn, excluding
held for sale assets, representing 55% of
customer deposits. We operate with a
surplus of customer deposits relative to
loans in each of our four franchises and in
our major operating entities, including The
Hongkong and Shanghai Banking Corporation
Limited, HSBC UK and HSBC Bank plc.
$1.8tn
Customer deposit balances
(2024: $1.7tn)
Improving operational excellence through artificial intelligence
In 2025, we accelerated the adoption of
Generative AI (‘GenAI’) across HSBC, moving
from experimentation to scaled delivery.
Today, we have over 100 GenAI solutions in
use and a strong pipeline of use cases in
development. Our adoption of AI is
underpinned by our people, and we continue
to invest in training and tooling to support
staff in their roles. Around the globe, around
85% of our colleagues have access to our
large language model-based productivity
tool, HSBC Productivity Suite, which helps
them to analyse and translate documents,
summarise information and generate insights.
While the progress this year has been
significant, the opportunity ahead is far
greater. Our strategic partnership with Mistral
strengthens our commitment to scale GenAI
capabilities and we will continue to prioritise
areas that matter most to our customers and
colleagues, and drive performance. Through
2026, we intend to expand enterprise-wide
adoption of AI tools and strive to embed AI
deeper into our core processes.
>100
GenAI solutions in use
Our ambitions
Revenue growth rising to 5% YoY
We are focused on growth opportunities
within our strategy that play to our strengths,
while maintaining tight cost discipline and
continuing to invest in growth and efficiency.
We are targeting revenue growth rising to 5%
year-on-year by 2028 on a constant currency
basis excluding notable items. We see growth
opportunities in each of our four businesses. In
Hong Kong, we intend to consolidate market
leadership with the privatisation of Hang Seng
Bank. In the UK, we see the opportunity to
continue building our mortgage franchise and
build share in SME banking. In IWPB, we
intend to particularly focus on building our
successful wealth business, especially in Asia
and the Middle East. In CIB, the opportunities
include further expanding our international
network business and transaction banking.
Having simplified our approach to now include
a revenue growth target, we no longer provide
separate guidance on Wealth fee and other
income growth.
RoTE of 17% or better
Underpinned by the momentum in our earnings
and the positive progress we are making in our
strategic execution, we are targeting a RoTE
excluding notable items of 17% or better for
each of 2026, 2027 and 2028.
Capital generation
Our business model is designed to be highly
capital generative. In 2025, our CET1 capital
ratio was 14.9%, remaining stable compared
with 31 December 2024. During the calendar
year, we paid $5.2bn ordinary dividends with
respect to 2025, and we expect to pay a
further $7.7bn through the fourth interim
dividend with respect to 2025. We aim to
maintain a CET1 capital ratio in the range of
14-14.5% over the medium term8. Capital may
fall below our target range during the first half
of 2026 owing to the privatisation of Hang
Seng Bank. We plan to address this through
organic capital generation and pausing share
buy-backs until CET1 capital is back within or
above this range. A decision to recommence
buy-backs will be subject to our normal buy-
back considerations and process on a quarterly
basis.
Our primary use of capital generation is to pay
an ordinary dividend of 50% of profit
attributable to ordinary shareholders, excluding
material notable items and related impacts (our
dividend payout ratio target basis9). Our
preferred use of capital after paying the
dividend is to support the growth of our four
businesses.
Our targets for 2026-2028
Rising to 5%
Revenue growth YoY by 2028, on a constant
currency basis excluding notable items9
17% or better
RoTE excluding notable items target for 2026,
2027 and 20289
50%
Dividend payout ratio target basis, 2026-20289
8Medium term is defined as 3-5 years from 1
January 2026.
9 We do not reconcile our forward guidance on
revenue on a constant currency basis excluding
notable items, RoTE excluding the impact of
notable items or dividend payout ratio target
basis to their equivalent reported measures.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 15 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial overview
Performance compared with our 2025 Group financial targets
Return on average tangible equity
excluding notable items ø
17.2%
(2024: 15.6%)
In 2025, RoTE was 13.3%, a decrease of 1.3
percentage points from 2024.
For the purposes of measuring performance
against our Group target, we adjust RoTE to
exclude notable items.
RoTE excluding notable items was 17.2%, an
increase of 1.6 percentage points compared
with 2024 and above our mid-teens target for
2025.
To better align with market practice, from our
2025 full-year results we no longer adjust the
‘average tangible equity‘ for the post-tax
impact of notable items in each period. We
have re-presented comparatives on the
revised basis. This revision improved RoTE
excluding notable items by 16bps in 2025. In
2024, this revision had a 34bps adverse
impact.
ÑSee pages 65 and 107 for further detail on RoTE
excluding notable items.
ÑSee page 65 for further details on notable items.
Target basis operating expenses ø
$33.5bn
(2024: $32.5bn)
In 2025, operating expenses of $36.4bn
increased by $3.4bn or 10%, on a reported
basis.
Target basis operating expenses grew by 3%
compared with 2024 in line with our target of
approximately 3%. This primarily
reflected higher planned spend in technology,
higher performance-related pay and the impact
of inflation.
Our target basis operating expenses exclude
the direct cost impact of the business
disposals in Canada and Argentina, notable
items and the impact of retranslating the prior
year results of hyperinflationary economies at
constant currency.
Our target basis operating expenses included
the impact of simplification-related savings
associated with our reorganisation, which
generated $0.6bn of cost reductions in 2025.
We are on track to have taken actions to
deliver our $1.5bn annualised cost reduction
by the end of June 2026, which is six months
earlier than planned.
ÑSee page 109 for a reconciliation of target basis
operating expenses to reported operating expenses.
Capital and dividend policy
CET1 ratio
14.9%
(2024: 14.9%)
Dividend payout ratio in respect of 2025
50%
on a dividend payout ratio target basis ø
At 31 December 2025, our CET1 capital ratio
was 14.9%, which was higher than our
medium-term target range of 14% to 14.5%.
We intend to continue to manage the CET1
ratio within this range.
The total dividend per share announced in
respect of 2025 was $0.75. On a dividend
payout ratio target basis this resulted in a
payout ratio of 50% of earnings per share. For
the purposes of computing our target basis
dividend payout ratio, we exclude from
earnings per share material notable items and
related impacts.
ÑSee page 110 for a reconciliation of basic
earnings per share excluding material notable
items and related impacts to basic earnings per
share.
Basis of presentation
Constant currency performance
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. Constant currency
performance provides useful information for
investors by aligning internal and external
reporting, reflecting how management
assesses period-on-period performance.
Notable items and material notable items
We separately disclose ‘notable items‘, which
are components of our income statement that
management considers as outside the normal
course of business and generally non-recurring
in nature. Certain notable items are classified
as ‘material notable items’, a subset of notable
items. Categorisation as a material notable
item is dependent on the nature of each item
in conjunction with the financial impact on the
Group’s income statement, and are excluded
from our target basis dividend payout ratio
calculation and earnings per share measure.
Material notable items in 2025 or relevant
comparative periods relate to the following:
–Income statement impacts associated with
actions to exit or wind down certain
businesses to redeploy costs from non-
strategic activities (reported under
‘Disposals, wind-downs, acquisitions and
related costs’ in notable items).
–Dilution and impairment losses on our
investment in BoCom.
–A legal provision following developments in
a claim in Luxembourg relating to the
Bernard L. Madoff Investment Securities
LLC fraud.
Impact of strategic transactions
To aid the understanding of our results, we
separately disclose the impact of strategic
transactions classified as material notable
items on the results of the Group and our
business segments. The distorting impact of
the operating income statement results related
to acquisitions and disposals that affect period-
on-period comparisons primarily related to our
disposals in Canada and Argentina.
Management view of revenue on a
constant currency basis
We provide breakdowns of revenue for each
of our business segments on a constant
currency basis by major product. These reflect
the basis on which revenue performance of
the businesses is assessed and managed. In
the management view of revenue, notable
items are presented separately. We group
certain products in a consistent manner across
our business segments. Wholesale transaction
banking comprises our Global Foreign
Exchange, Global Payments Solutions (‘GPS’),
Global Trade Solutions (‘GTS’) and Securities
Services businesses. Wealth comprises our
Investment Distribution, Insurance, Private
Bank and Asset Management businesses.
On page 18, we provide a summarised
management view of revenue for the Group‘s
results to supplement the Group‘s reported
revenue performance using the product
grouping used to manage and assess our
segmental performance.
ÑSee page 92 for further details on the impact of
strategic transactions.
ÑSee page 65 for further details on basis of
preparation and use of alternative performance
measures.
ÑSee pages 88 to 90 and pages 97 to 102 for
details of notable items in our business segments
and legal entities.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 16 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial overview |
Key financial metrics
| For the year ended 31 Dec | |||
|---|---|---|---|
| Reported results | 2025 | 2024 | 2023 |
| Profit before tax ($m) | 29,907 | 32,309 | 30,348 |
| Profit after tax ($m) | 23,131 | 24,999 | 24,559 |
| Net operating income before change in expected credit losses and other credit<br><br>impairment charges (‘revenue’) ($m) | 68,274 | 65,854 | 66,058 |
| Cost efficiency ratio (%) | 53.4 | 50.2 | 48.5 |
| Net interest margin (%) | 1.59 | 1.56 | 1.66 |
| Basic earnings per share ($) | 1.21 | 1.25 | 1.15 |
| Diluted earnings per share ($) | 1.20 | 1.24 | 1.14 |
| Dividend per ordinary share (in respect of the period) ($)1 | 0.75 | 0.87 | 0.61 |
| Dividend payout ratio (%)2 | 50 | 50 | 50 |
| Alternative performance measures ø | |||
| Constant currency profit before tax ($m) | 29,907 | 32,384 | 29,802 |
| Constant currency revenue ($m) | 68,274 | 66,009 | 65,040 |
| Constant currency banking net interest income ($m) | 44,084 | 43,550 | 42,515 |
| Constant currency cost efficiency ratio (%) | 53.4 | 50.2 | 48.7 |
| Constant currency profit before tax excluding notable items ($m) | 36,617 | 34,181 | 32,841 |
| Constant currency revenue excluding notable items ($m) | 71,020 | 67,591 | 64,835 |
| Constant currency profit before tax excluding notable items and strategic transactions ($m) | 36,617 | 33,768 | N/A |
| Constant currency revenue excluding notable items and strategic transactions ($m) | 71,020 | 66,377 | N/A |
| Expected credit losses and other credit impairment charges (annualised) as a % of<br><br>average gross loans and advances to customers, including held for sale (%) | 0.39 | 0.34 | 0.31 |
| Basic earnings per share excluding material notable items and related impacts ($) | 1.51 | 1.31 | 1.22 |
| Return on average ordinary shareholders’ equity (annualised) (%) | 12.3 | 13.6 | 13.6 |
| Return on average tangible equity (annualised) (%) | 13.3 | 14.6 | 14.6 |
| Return on average tangible equity excluding notable items (annualised) (%) | 17.2 | 15.6 | 16.0 |
| Target basis operating expenses ($m) | 33,464 | 32,478 | N/A |
| At 31 Dec | |||
| Balance sheet | 2025 | 2024 | 2023 |
| Total assets ($m) | 3,233,034 | 3,017,048 | 3,038,677 |
| Net loans and advances to customers ($m) | 988,399 | 930,658 | 938,535 |
| Constant currency net loans and advances to customers ($m) | 988,399 | 970,778 | 955,706 |
| Customer accounts ($m) | 1,786,828 | 1,654,955 | 1,611,647 |
| Constant currency customer accounts ($m) | 1,786,828 | 1,719,240 | 1,641,000 |
| Average interest-earning assets, year to date ($m) | 2,190,078 | 2,099,285 | 2,161,746 |
| Loans and advances to customers as % of customer accounts (%) | 55.3 | 56.2 | 58.2 |
| Total shareholders’ equity ($m) | 198,225 | 184,973 | 185,329 |
| Tangible ordinary shareholders’ equity ($m) | 165,153 | 154,295 | 155,710 |
| Net asset value per ordinary share at period end ($) | 10.36 | 9.26 | 8.82 |
| Tangible net asset value per ordinary share at period end ($) | 9.64 | 8.61 | 8.19 |
| Capital, leverage and liquidity | |||
| Common equity tier 1 capital ratio (%)3,4 | 14.9 | 14.9 | 14.8 |
| Risk-weighted assets ($m)3,4 | 888,647 | 838,254 | 854,114 |
| Total capital ratio (%)3,4 | 20.5 | 20.6 | 20.0 |
| Leverage ratio (%)3,4 | 5.3 | 5.6 | 5.6 |
| High-quality liquid assets (liquidity value) ($m)4,5 | 702,123 | 649,210 | 647,505 |
| Liquidity coverage ratio (%)4,5 | 137 | 138 | 136 |
| Net stable funding ratio (%)4,5 | 143 | 143 | 138 |
| Share count | |||
| Period end basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | 17,140 | 17,918 | 19,006 |
| Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares, after<br><br>deducting own shares held (millions) | 17,276 | 18,062 | 19,135 |
| Average basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | 17,427 | 18,357 | 19,478 |
ÑFor reconciliation and analysis of our reported results on a constant currency basis, including lists of notable items, see page 88. Definitions and calculations of
other alternative performance measures are included in ‘Reconciliation of alternative performance measures’ on page 106.
1In 2024, dividend per share includes the special dividend of $0.21 per ordinary share arising from the proceeds of the sale of our banking business in Canada to
Royal Bank of Canada.
2Our dividend payout ratio is adjusted for material notable items and related impacts, including all associated income statement impacts relating to those items.
3Regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. Effective 1
January 2025, the IFRS 9 transitional arrangements came to an end, followed by the end of the CRR II grandfathering provisions on 28 June 2025.
4Regulatory numbers and ratios are as presented at the date of reporting. Small changes may exist between these numbers and ratios and those submitted in
regulatory filings. Where differences are significant, we may restate in subsequent periods.
5The 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.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 17 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial overview |
Income statement results
2025 compared with 2024
| Movement in reported profit before tax compared with 2024 | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions1 | ||
| Reported results | $m | $m | $m | $m | % | $m |
| Revenue | 68,274 | 65,854 | 66,058 | 2,420 | 4 | (1,936) |
| – of which: net interest income | 34,794 | 32,733 | 35,796 | 2,061 | 6 | (1,628) |
| ECL | (3,850) | (3,414) | (3,447) | (436) | (13) | 87 |
| Net operating income | 64,424 | 62,440 | 62,611 | 1,984 | 3 | (1,849) |
| Total operating expenses | (36,428) | (33,043) | (32,070) | (3,385) | (10) | 606 |
| Operating profit | 27,996 | 29,397 | 30,541 | (1,401) | (5) | (1,243) |
| Share of profit in associates and joint ventures less<br><br>impairment | 1,911 | 2,912 | (193) | (1,001) | (34) | |
| Profit before tax | 29,907 | 32,309 | 30,348 | (2,402) | (7) | (1,243) |
| Tax expense | (6,776) | (7,310) | (5,789) | 534 | 7 | |
| Profit after tax | 23,131 | 24,999 | 24,559 | (1,868) | (7) | |
| Revenue excluding notable items ø | 71,020 | 67,434 | 65,723 | 3,586 | 5 | |
| Profit before tax excluding notable items ø | 36,617 | 34,122 | 33,198 | 2,495 | 7 |
1For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
Reported profit
Reported profit before tax of $29.9bn was
$2.4bn or 7% lower, mainly due to a $4.9bn
year-on-year net adverse impact from notable
items.
In 2025, notable item impacts included
recognition of dilution and impairment losses
of $2.1bn related to BoCom, reserve recycling
losses of $1.5bn following the completion of
the sale of our French retained portfolio of
home and certain other loans, legal provisions
of $1.4bn and restructuring and other related
costs associated with our organisational
simplification of $1.0bn. In 2024, these
included a gain of $4.8bn on the disposal of
our banking business in Canada and the
impacts of the disposal of our business in
Argentina, comprising a $1.0bn loss on
disposal, and the recycling of foreign currency
reserve losses and other reserves of $5.2bn.
They also included a $0.2bn loss on the early
redemption of legacy securities.
On a constant currency basis, profit before tax
of $29.9bn was $2.5bn lower than in 2024,
while excluding notable items it increased by
$2.4bn or 7%.
Reported revenue
Reported revenue of $68.3bn was $2.4bn or
4% higher, reflecting strong fee and other
income growth. This was partly offset by a net
adverse movement in notable items of
$1.2bn, primarily relating to business
disposals, as well as a dilution loss of $1.1bn
following the completion of BoCom’s capital
issuance in June 2025, which reduced our
interest from 19.03% to 16.00%.
Revenue excluding notable items increased by
$3.6bn, primarily reflecting higher fee and
other income in Wealth and Wholesale
Transaction Banking, as well as from the non-
recurrence of adverse hyperinflationary
impacts in Argentina.
In Wealth, there was a strong performance in
Insurance, due to a higher CSM release,
reflecting strong new business growth and
favourable net investment returns and
experience variances, and growth in our
Private Bank and investment distribution from
higher customer activity. In Wholesale
Transaction Banking, fee and other income
growth reflected a strong performance in
2025, particularly in Global Foreign Exchange
amid elevated market volatility.
Net interest income
NII increased by $2.1bn reflecting the benefit
of the reinvestment of our structural hedge at
higher yields, deposit balance growth and
higher NII in Markets Treasury. In addition, the
increase reflected the non-recurrence of a
$0.2bn loss in 2024 on the early redemption of
legacy securities. This was partly offset by the
adverse impact of $1.6bn from business
disposals in Argentina and Canada, and margin
compression on our deposits from lower
interest rates. The growth in NII also reflected
a benefit from lower funding costs associated
with the trading book of $1.7bn. Banking NII,
which excludes these funding costs, increased
by $0.3bn.
On a constant currency basis, revenue
increased by $2.3bn or 3% and banking NII
rose by $0.5bn.
| Notable items – on a reported basis | 2025 | 2024 | 2023 |
|---|---|---|---|
| $m | $m | $m | |
| Revenue | |||
| Disposals, wind-downs, acquisitions and related costs1 | (1,642) | (1,343) | 1,298 |
| Dilution loss of interest in BoCom associate | (1,104) | — | — |
| Fair value movements on financial instruments | — | — | 14 |
| Disposal losses on Markets Treasury repositioning | — | — | (977) |
| Early redemption of legacy securities | — | (237) | — |
| Currency translation on revenue notable items | — | (2) | (130) |
| Operating expenses | |||
| Disposals, wind-downs, acquisitions and related costs | (502) | (199) | (321) |
| Restructuring and other related costs | (1,030) | (34) | 136 |
| Legal provisions | (1,432) | — | — |
| Currency translation on operating expenses notable items | — | 18 | — |
| Share of profit in associates and joint ventures less impairment | |||
| Impairment losses of interest in BoCom associate | (1,000) | — | (3,000) |
| Currency translation on associate notable items | — | — | (59) |
12024 includes losses of $0.2bn related to the sale of our business in Russia, which are not categorised as a material notable item.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 18 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial overview |
Reported ECL
Reported ECL charges of $3.9bn were $0.4bn
or 13% higher than 2024, including charges in
both periods related to the CRE sectors in
Hong Kong and mainland China. In 2025, the
charge in this sector in Hong Kong of $0.7bn
(2024: $0.1bn) reflected higher allowances for
new defaulted exposures, the impact of an
over-supply of non-residential properties that
has put continued downward pressure on
rental and capital values, and updates to our
models used for ECL calculations. The 2025
charge in the mainland China CRE sector was
$0.2bn (2024: $0.4bn).
ÑFor further details of the calculation of ECL, see
pages 157 to 160.
Reported operating expenses
Reported operating expenses of $36.4bn were
$3.4bn or 10% higher. The increase primarily
reflected notable items in 2025, including legal
provisions of $1.4bn, restructuring and other
related costs in 2025 of $1.0bn and $0.5bn
related to disposals, wind-downs, acquisitions
and related costs.
The remaining growth in reported operating
expenses included higher planned spend and
investment in technology, higher performance-
related pay and the impacts of inflation. These
increases were partly offset by reductions
following the completion of business disposals
in Canada and Argentina, and the benefits
delivered by our restructuring activities.
Target basis operating expenses were
$33.5bn or 3% higher than in 2024 due to
higher planned spend and investment in
technology and the impact of inflation.
Reported share of profit in associates and
joint ventures less impairment of $1.9bn
was $1.0bn or 34% lower, primarily due to an
impairment loss of $1.0bn recognised on
BoCom following our value-in-use assessment
made in 2025.
ÑFor further details on our value-in-use
assessment, see Note 18: Interests in associates
and joint ventures on page 345.
Tax expense
In 2025 tax expense was a charge of $6.8bn,
representing an effective tax rate of 22.7%
(2024: 22.6%). Excluding the non-deductible
impairment and dilution loss in BoCom and
legal provisions on which no tax benefit is
recorded, the effective rate for 2025 was
20.6% (2024: 21.5%, excluding the impact of
the non-taxable gains and losses on the sale of
our banking business in Canada and our
business in Argentina).
ÑFor further details on tax expense, see page 70.
| Supplementary management view of revenue ø | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions1 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII2 | 44,084 | 43,975 | 44,095 | 109 | 0 | (1,603) |
| Fee and other income | 26,936 | 23,459 | 21,628 | 3,477 | 15 | 128 |
| – Wealth | 9,390 | 7,559 | 6,339 | 1,831 | 24 | (164) |
| – Wholesale Transaction Banking | 10,860 | 10,433 | 10,654 | 427 | 4 | (171) |
| – Other | 6,686 | 5,467 | 4,635 | 1,219 | 22 | 463 |
| Revenue excluding notable items | 71,020 | 67,434 | 65,723 | 3,586 | 5 | (1,475) |
| Notable items | (2,746) | (1,580) | 335 | (1,166) | (74) | (461) |
| Revenue | 68,274 | 65,854 | 66,058 | 2,420 | 4 | (1,936) |
1For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
2For a reconciliation of banking NII to reported NII, see page 69. In the supplementary management view of revenue, banking NII in 2024 excludes notable items
of $0.2bn, which are separately presented in ‘notable items’. There were no notable items in banking NII in 2025 or 2023.
| Movement in reported profit before tax compared with 2024 – constant currency basis | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions1 | ||
| Results – on a constant currency basis ø | $m | $m | $m | $m | % | $m |
| Revenue | 68,274 | 66,009 | 65,040 | 2,265 | 3 | (1,681) |
| ECL | (3,850) | (3,392) | (3,250) | (458) | (14) | 72 |
| Total operating expenses | (36,428) | (33,146) | (31,691) | (3,282) | (10) | 417 |
| Operating profit | 27,996 | 29,471 | 30,099 | (1,475) | (5) | (1,192) |
| Share of profit in associates and joint ventures less impairment | 1,911 | 2,913 | (297) | (1,002) | (34) | — |
| Profit before tax | 29,907 | 32,384 | 29,802 | (2,477) | (8) | (1,192) |
| Revenue excluding notable items | 71,020 | 67,591 | 64,835 | 3,429 | 5 | |
| Profit before tax excluding notable items | 36,617 | 34,181 | 32,841 | 2,436 | 7 |
1 For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
Balance sheet and capital
Balance sheet strength
Total assets of $3.2tn were $216bn higher than
at 31 December 2024 on a reported basis, and
$93bn higher on a constant currency basis. The
increase was driven by growth in financial
investments balances, higher trading assets
and reverse repurchase agreements and higher
other asset balances. This was partly offset by
lower cash and balances at central banks due
to redeployment opportunities and a decrease
in derivative assets. Loans and advances to
customers also increased, and as a percentage
of customer accounts they were 55.3%,
compared with 56.2% at 31 December 2024
(excluding balances classified as held for sale).
Given customer loan growth has been muted in
recent years, we will no longer provide
guidance on medium- to long-term customer
lending growth.
ÑFor detailed balance sheet commentary, see
page 74.
Distributable reserves
The distributable reserves of HSBC Holdings
at 31 December 2025 were $46.2bn, a
$17.9bn increase since 31 December 2024,
primarily driven by $22.1bn in profits and other
reserve movements generated in 2025,
cancellation of $16.6bn standing to the credit
of its share premium and capital redemption
reserves pursuant to the Court approval
obtained by HSBC Holdings on 24 June 2025,
offset by $20.8bn of dividends on ordinary
shares, additional tier 1 coupon and share buy-
back payments.
Capital and liquidity position
Our CET1 ratio at 31 December 2025
remained at 14.9%, unchanged from
31 December 2024. The average high-quality
liquid assets (‘HQLA’) we held was $702.1bn
(31 December 2024: $649.2bn). This excludes
HQLA in legal entities that are not transferable
due to local restrictions.
ÑFor further details, see ‘Capital overview‘ on
page 191.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 19 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Business segments
| Hong Kong | Our Hong Kong business has a leading market position in our home<br><br>market of Hong Kong. It comprises Retail Banking and Wealth and<br><br>Commercial Banking of HSBC Hong Kong and Hang Seng Bank. |
|---|
Contribution to Group profit
before tax ø
$9.6bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
| 40% | 7% | |||||
|---|---|---|---|---|---|---|
| Growth in Wealth fee and other<br><br>income compared with 2024,<br><br>on a constant currency basis. ø | Growth in deposits compared with<br><br>2024, on a constant currency basis. ø | |||||
| Results – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Revenue | 15,878 | 15,047 | 14,532 | 831 | 6 | — |
| ECL | (1,476) | (1,077) | (1,494) | (399) | (37) | — |
| Operating expenses | (4,826) | (4,841) | (4,514) | 15 | — | — |
| Share of profit/(loss) from associates and joint ventures | — | — | — | — | — | — |
| Profit before tax | 9,576 | 9,129 | 8,524 | 447 | 5 | — |
| RoTE1 (%) | 35.5 | 37.5 | 34.7 | |||
| RoTE excluding notable items1 (%) | 35.5 | 37.5 | 36.4 | |||
| Management view of revenue – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII3 | 12,082 | 11,997 | 12,108 | 85 | 1 | — |
| Fee and other income4 | 3,796 | 3,050 | 2,798 | 746 | 24 | — |
| – Retail Banking and Wealth | 2,658 | 1,941 | 1,678 | 717 | 37 | — |
| – Retail Banking | 326 | 312 | 287 | 14 | 4 | — |
| – Wealth | 2,206 | 1,577 | 1,203 | 629 | 40 | — |
| – Other5 | 126 | 52 | 188 | 74 | >100 | |
| – Commercial Banking | 1,138 | 1,109 | 1,120 | 29 | 3 | — |
| – Wholesale Transaction Banking | 730 | 709 | 692 | 21 | 3 | — |
| – Credit and Lending | 78 | 83 | 76 | (5) | (6) | — |
| – Other5 | 330 | 317 | 352 | 13 | 4 | — |
| Revenue excluding notable items | 15,878 | 15,047 | 14,906 | 831 | 6 | — |
| Notable items | — | — | (374) | — | n/a | — |
| Revenue | 15,878 | 15,047 | 14,532 | 831 | 6 | — |
| 1 For details of our RoTE calculation by business segment, see page 108.<br><br>2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92.<br><br>3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII.<br><br>4 For supplementary analysis of fee and other income, see page 91.<br><br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 20 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| Notable items | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Disposal losses on Markets Treasury repositioning | — | — | (373) | |||
| Currency translation on revenue notable items | — | — | (1) | |||
| Operating expenses | ||||||
| Restructuring and other related costs | (16) | — | — | |||
| Currency translation on operating expenses notable items | — | — | — |
Financial performance
Profit before tax of $9.6bn increased by $0.4bn
or 5% compared with 2024, on a constant
currency basis.
Revenue of $15.9bn was $0.8bn or 6% higher,
on a constant currency basis.
Banking NII of $12.1bn was broadly stable
compared with 2024, as the benefit of growth
in deposit balances was largely offset by
margin compression on deposits in a lower
interest rate environment, together with lower
lending balances.
Fee and other income of $3.8bn grew by
$0.7bn or 24%, primarily reflecting an increase
of $0.6bn or 40% in Wealth from a strong
performance in investment distribution due to
higher customer activity.
ECL of $1.5bn increased by $0.4bn compared
with 2024, on a constant currency basis,
including charges in both periods related to the
Hong Kong CRE sector. In 2025, the increased
charge in this sector reflected higher
allowances for new defaulted exposures, the
impact of an over-supply of non-residential
properties that has put continued downward
pressure on rental and capital values, and
updates to our models used for ECL
calculations.
Operating expenses of $4.8bn were stable, on
a constant currency basis. This reflected lower
operations costs, which were broadly offset by
increases from planned higher spend on
technology, including the development of our
Wealth proposition, and the impact of inflation.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 21 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| UK | Our UK business has a leading market position in our home market of the<br><br>UK. It comprises UK Retail Banking and Wealth (including first direct and<br><br>M&S Bank) and UK Commercial Banking, including HSBC Innovation Bank. | |||||
| --- | --- |
Contribution to Group profit
before tax ø
$6.7bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
| 6% | 7% | |||||
|---|---|---|---|---|---|---|
| Growth in loans and advances to customers<br><br>compared with 2024, on a constant<br><br>currency basis. ø | Growth in banking NII compared with 2024,<br><br>on a constant currency basis.3 ø | |||||
| Results – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Revenue | 12,938 | 12,342 | 13,439 | 596 | 5 | — |
| ECL | (696) | (415) | (545) | (281) | (68) | — |
| Operating expenses | (5,537) | (5,104) | (4,829) | (433) | (8) | (7) |
| Share of profit/(loss) from associates and joint ventures | — | — | — | — | — | — |
| Profit before tax | 6,705 | 6,823 | 8,065 | (118) | (2) | (7) |
| RoTE1 (%) | 22.6 | 25.0 | 33.3 | |||
| RoTE excluding notable items1 (%) | 22.9 | 25.0 | 25.1 | |||
| Management view of revenue – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII3 | 11,096 | 10,355 | 9,903 | 741 | 7 | — |
| Fee and other income4 | 1,842 | 1,987 | 2,036 | (145) | (7) | — |
| – Retail Banking and Wealth | 617 | 744 | 749 | (127) | (17) | — |
| – Retail Banking | 255 | 273 | 260 | (18) | (7) | — |
| – Wealth | 339 | 391 | 419 | (52) | (13) | — |
| – Other5 | 23 | 80 | 70 | (57) | (71) | |
| – Commercial Banking | 1,225 | 1,243 | 1,287 | (18) | (1) | — |
| – Wholesale Transaction Banking | 891 | 912 | 926 | (21) | (2) | — |
| – Credit and Lending | 238 | 216 | 178 | 22 | 10 | — |
| – Other5 | 96 | 115 | 183 | (19) | (17) | — |
| Revenue excluding notable items | 12,938 | 12,342 | 11,939 | 596 | 5 | — |
| Notable items | — | — | 1,500 | — | n/a | — |
| Revenue | 12,938 | 12,342 | 13,439 | 596 | 5 | — |
| 1 For details of our RoTE calculation by business segment, see page 108.<br><br>2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92.<br><br>3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII.<br><br>4 For supplementary analysis of fee and other income, see page 91.<br><br>5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 22 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| Notable items | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs | — | — | 1,591 | |||
| Disposal losses on Markets Treasury repositioning | — | — | (142) | |||
| Currency translation on revenue notable items | — | — | 51 | |||
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | 1 | 6 | (45) | |||
| Restructuring and other related costs | (70) | 7 | 17 | |||
| Currency translation on operating expenses notable items | — | — | (3) |
Financial performance
Profit before tax of $6.7bn was $0.1bn or 2%
lower than 2024, on a constant currency basis.
Revenue of $12.9bn was $0.6bn or 5% higher
on a constant currency basis.
Banking NII of $11.1bn increased by $0.7bn or
7%, despite reductions in interest rates. This
increase was driven by the continued benefit
of our structural hedge, as well as higher
lending balances across mortgages and
corporate lending and from growth in deposit
balances, in line with the increase in the
overall market size. These increases were
partly offset by the impact of lower interest
rates.
Fee and other income of $1.8bn fell by 7%.
–In Retail Banking and Wealth, fee and other
income was lower reflecting an increased
cost of customer rewards following the
relaunch of HSBC Premier.
–In Commercial Banking, lower business
banking fees due to proposition changes
were partly offset by higher corporate
lending fees.
ECL of $0.7bn increased by $0.3bn compared
with 2024, on a constant currency basis. The
increase reflected a more normalised level of
ECL in 2025, as well as the non-recurrence of
releases against retail exposures in 2024.
Operating expenses of $5.5bn increased by
$0.4bn or 8%, on a constant currency basis,
including restructuring and other related costs
associated with our organisational
simplification of $0.1bn. The increase primarily
reflected planned higher investment spend in
technology, including on operational resilience.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 23 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| Corporate and<br><br>Institutional Banking | Our CIB business is a market leader in cross-border transaction banking and<br><br>capital markets. | |||||
| --- | --- |
Contribution to Group profit
before tax ø
$11.4bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
| 7% | 16.2% | |||||
|---|---|---|---|---|---|---|
| Growth in fees and other income compared<br><br>with 2024, on a constant currency basis. ø | RoTE excluding notable items up 2.0<br><br>percentage points compared with 2024. ø | |||||
| Results – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Revenue | 27,637 | 26,772 | 24,723 | 865 | 3 | (638) |
| ECL | (696) | (878) | (524) | 182 | 21 | 36 |
| Operating expenses | (15,556) | (14,612) | (13,755) | (944) | (6) | 96 |
| Share of profit/(loss) from associates and joint ventures | 1 | 1 | (1) | — | — | — |
| Profit before tax | 11,386 | 11,283 | 10,443 | 103 | 1 | (506) |
| RoTE1 (%) | 14.9 | 14.2 | 14.3 | |||
| RoTE excluding notable items1 (%) | 16.2 | 14.2 | 14.8 | |||
| Management view of revenue – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII3 | 14,532 | 14,519 | 13,399 | 13 | 0 | (758) |
| Fee and other income4 | 13,114 | 12,267 | 11,701 | 847 | 7 | 129 |
| – Wholesale Transaction Banking | 9,239 | 8,847 | 8,920 | 392 | 4 | (137) |
| – Investment Banking | 962 | 946 | 851 | 16 | 2 | (26) |
| – Debt and Equity Markets | 2,283 | 2,252 | 1,628 | 31 | 1 | 33 |
| – Wholesale Credit and Lending | 567 | 626 | 668 | (59) | (9) | (52) |
| – Other5 | 63 | (404) | (366) | 467 | >100 | 311 |
| Revenue excluding notable items | 27,646 | 26,786 | 25,100 | 860 | 3 | (629) |
| Notable items | (9) | (14) | (377) | 5 | 36 | (9) |
| Revenue | 27,637 | 26,772 | 24,723 | 865 | 3 | (638) |
| 1 For details of our RoTE calculation by business segment, see page 108.<br><br>2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92.<br><br>3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading<br><br>and fair value net assets are recorded in ’fee and other income’. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was<br><br>$9.7bn (2024: $11.5bn).<br><br>4 For supplementary analysis of fee and other income, see page 91.<br><br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 24 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| Notable items | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs | (9) | (14) | — | |||
| Disposal losses on Markets Treasury repositioning | — | — | (371) | |||
| Currency translation on revenue notable items | — | — | (6) | |||
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | (290) | (10) | (7) | |||
| Restructuring and other related costs | (348) | (2) | 45 | |||
| Legal provisions | (322) | — | — | |||
| Currency translation on operating expenses notable items | — | 3 | 2 |
Financial performance
Profit before tax of $11.4bn was $0.1bn or
1% higher than in 2024, on a constant
currency basis.
Revenue of $27.6bn was $0.9bn or 3%
higher, on a constant currency basis, including
the adverse impact of $0.6bn from strategic
transactions.
Banking NII of $14.5bn was broadly stable in
comparison with 2024 including an adverse
impact of $0.8bn from strategic transactions.
Banking NII benefited from an increase in
allocated revenue from Markets Treasury
along with a strong growth of 8% in GTS,
mainly in Asia. This was offset by a reduction
in GPS due to the impact of lower interest
rates, offsetting a 5% growth in average
balances.
Fee and other income of $13.1bn increased
by $0.8bn or 7%.
–In Wholesale Transaction Banking, fee and
other income increased by $0.4bn or 4%,
mainly due to strong trading performance in
Global Foreign Exchange from elevated
market volatility and Securities Services,
reflecting improved market conditions and
new clients.
–In Debt and Equity Markets, fee and other
income increased by 1% from elevated
market volatility and strong client demand
from both wealth and corporate clients
within Equity Derivatives.
–In Other, fee and other income increased by
$0.5bn, largely due to the non-recurrence of
adverse hyperinflationary impacts in
Argentina.
ECL of $0.7bn decreased by $0.2bn compared
with 2024 on a constant currency basis. The
decrease reflected lower charges in Asia, due
to a reduction in ECL within the CRE sector in
mainland China.
Operating expenses of $15.6bn were $0.9bn
or 6% higher than in 2024 on a constant
currency basis, including a $0.1bn favourable
impact from strategic transactions. The
increase reflected the impact of notable items
of $1.0bn, including restructuring and other
related costs associated with our
organisational simplification of $0.3bn, legal
provisions of $0.3bn, and costs associated
with the wind-down of M&A and ECM
activities in the UK, Europe and the US. Cost
growth also reflected planned higher spend
and investment in technology, and inflationary
impacts.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 25 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| International Wealth and<br><br>Premier Banking | Our IWPB business comprises Premier banking outside of Hong Kong and<br><br>the UK, our Private Bank, Asset Management and Insurance businesses. | |||||
| --- | --- |
Contribution to Group
profit before tax ø
$4.4bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
| 22% | 35% | |||||
|---|---|---|---|---|---|---|
| Growth in wealth fees and other<br><br>income compared with 2024, on a constant<br><br>currency basis. ø | Growth in Insurance manufacturing new<br><br>business CSM compared with 2024, up<br><br>$0.9bn. | |||||
| Results – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Revenue | 14,520 | 13,817 | 12,385 | 703 | 5 | (590) |
| ECL | (892) | (993) | (686) | 101 | 10 | 36 |
| Operating expenses | (9,285) | (8,900) | (8,549) | (385) | (4) | 253 |
| Share of profit/(loss) from associates and joint ventures | 24 | 45 | 62 | (21) | (47) | — |
| Profit before tax | 4,367 | 3,969 | 3,212 | 398 | 10 | (301) |
| RoTE1 (%) | 17.8 | 15.7 | 13.1 | |||
| RoTE excluding notable items1 (%) | 19.0 | 15.5 | 13.6 | |||
| Management view of revenue – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII3 | 7,000 | 7,640 | 7,288 | (640) | (8) | (552) |
| Fee and other income4 | 7,593 | 6,151 | 5,391 | 1,442 | 23 | 61 |
| – Retail Banking | 665 | 765 | 745 | (100) | (13) | (41) |
| – Wealth | 6,845 | 5,618 | 4,661 | 1,227 | 22 | (143) |
| – Other5 | 83 | (232) | (15) | 315 | >100 | 245 |
| Revenue excluding notable items | 14,593 | 13,791 | 12,679 | 802 | 6 | (491) |
| Notable items | (73) | 26 | (294) | (99) | >(100) | (99) |
| Revenue | 14,520 | 13,817 | 12,385 | 703 | 5 | (590) |
| 1 For details of our RoTE calculation by business segment, see page 108.<br><br>2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92.<br><br>3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total<br><br>IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in ‘fee and other income‘ in Wealth.<br><br>4 For supplementary analysis of fee and other income, see page 91.<br><br>5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 26 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments | ||||||
| Notable items | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs | (73) | 28 | 4 | |||
| Disposal losses on Markets Treasury repositioning | — | — | (91) | |||
| Currency translation on revenue notable items | — | (2) | (207) | |||
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | (83) | (3) | (53) | |||
| Restructuring and other related costs | (161) | (14) | 11 | |||
| Currency translation on operating expenses notable items | — | — | — |
Financial performance
Profit before tax of $4.4bn was $0.4bn higher
than in 2024, on a constant currency basis.
Revenue of $14.5bn was $0.7bn or 5% higher
on a constant currency basis. This included an
adverse impact of $0.6bn from strategic
transactions.
Banking NII of $7.0bn decreased by $0.6bn or
8%, primarily driven by the impact of strategic
transactions of $0.6bn, and the effects of
lower interest rates on deposits. This
reduction was partly offset by growth in
deposits and lending balances, mainly in Asia.
Fee and other income of $7.6bn was up by
$1.4bn or 23%, driven by Wealth due to
broad-based growth across all products and in
multiple markets, including Hong Kong,
mainland China, Singapore, Taiwan and
Mexico.
In Wealth, fee and other income of $6.8bn
was up $1.2bn or 22%, including an adverse
impact of $0.1bn from strategic transactions.
–Insurance increased by $0.6bn or 35%,
reflecting a higher CSM release given
continued year-on-year growth in our CSM
balance and favourable net investment
return and experience variances. The
insurance manufacturing CSM balance at 31
December 2025 was $14.6bn, up $2.5bn or
21% compared with 31 December 2024.
The increase primarily reflected new
business CSM growth of $3.4bn or 35% and
favourable market movements, partly offset
by CSM release.
–Private Bank increased by $0.2bn or 16%,
as increased customer activity supported by
business initiatives led to strong
performances in brokerage and trading, and
from higher annuity fees, driven by growth
in invested asset balances.
–Investment Distribution increased by $0.2bn
or 24% driven by higher sales of mutual
funds and structured products, mainly in
Asia.
In Other, fees and other income increased by
$0.3bn largely due to the non-recurrence of
adverse hyperinflationary impacts in Argentina.
The net loss in notable items of $0.1bn in
2025 was primarily related to net losses on
the disposals of our French and UK life
insurance businesses, partly offset by gains on
the sales of our private banking business in
Germany and our retail operations in Bahrain.
ECL of $0.9bn were broadly stable on a
constant currency basis.
Operating expenses of $9.3bn were $0.4bn or
4% higher than in 2024 on a constant currency
basis, including a $0.3bn favourable impact
from strategic transactions. The growth
primarily reflected continued investments in
Wealth, planned higher spend and investment
in technology, and the impact of inflation.
There was also a $0.1bn increase in
restructuring and other related costs
associated with our organisational
simplification.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 27 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments |
Corporate Centre
The results of Corporate Centre primarily comprise the financial impact of certain acquisitions and disposals
and the share of profit from our interests in our associates and joint ventures and related impairments. It also
includes Central Treasury, stewardship costs and consolidation adjustments.
Financial performance
Loss before tax of $2.1bn compared with a
profit before tax of $1.2bn in 2024, on a
constant currency basis, primarily due to the
impact from notable items. In 2025, these
included reserve recycling losses of $1.5bn
following the completion of the sale of our
French retained portfolio of home and certain
other loans, legal provisions of $1.1bn, a
$1.1bn loss from the dilution of our
shareholding and a $1.0bn impairment to the
carrying value of the Group’s interest in our
associate BoCom. In 2024, notable items
included a net loss of $1.4bn related to
business disposals in Canada and Argentina,
as well as a $0.2bn loss related to the early
redemption of legacy securities.
ÑFor further details of the dilution of our
shareholding in BoCom and our impairment
review process see Note 18: Interests in
associates and joint ventures on page 345.
Revenue was $0.7bn lower on a constant
currency basis. This primarily reflected the
impact of notable items, comprising the non-
recurrence of notable items in 2024 as
mentioned above, as well as the reserve
recycling losses recognised following the sale
of our French retained portfolio of home and
certain other loans and the dilution loss related
to BoCom, both in 2025.
Banking NII increased by $0.1bn on a constant
currency basis, primarily on the retained French
portfolio of home and certain other loans,
reflecting the effects of lower interest rates as
well as disposal of the portfolio. Banking NII in
2025 removes from NII the internal cost to fund
trading and fair value net assets, predominantly
in CIB, of $9.7bn (2024: $11.5bn).
Fee and other income of $0.6bn was $0.2bn
higher, primarily due to fair value movements
on financial instruments in Central Treasury
and structural foreign exchange hedges, and
the non-recurrence of an impairment in 2024
related to the sale of our operations in Armenia.
Operating expenses of $1.2bn increased by
$1.5bn on a constant currency basis, primarily
reflecting a legal provision of $1.1bn and a rise
in restructuring and other related costs
associated with our organisational simplification
of $0.4bn.
Share of profit from associates and joint
ventures less impairment of $1.9bn decreased
by $1.0bn on a constant currency basis,
primarily due to an impairment loss of $1.0bn
referred to above.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
| Results – on a constant currency basis ø | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Revenue | (2,699) | (1,969) | (39) | (730) | (37) | (453) |
| ECL | (90) | (29) | (1) | (61) | >(100) | — |
| Operating expenses | (1,224) | 311 | (44) | (1,535) | >(100) | 75 |
| Share of profit in associates and joint ventures less impairment | 1,886 | 2,867 | (358) | (981) | (34) | — |
| Profit/(loss) before tax | (2,127) | 1,180 | (442) | (3,307) | >(100) | (378) |
| RoTE1 (%) | (5.6) | 0.7 | (1.0) | |||
| RoTE excluding notable items1 (%) | 6.1 | 4.3 | 6.0 | |||
| Management view of revenue – on a constant currency basis ø | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic<br><br>transactions2 | ||
| $m | $m | $m | $m | % | $m | |
| Banking NII3 | (626) | (726) | (183) | 100 | 14 | 105 |
| Fee and other income | 591 | 351 | 394 | 240 | 68 | (199) |
| Revenue excluding notable items | (35) | (375) | 211 | 340 | 91 | (94) |
| Notable items | (2,664) | (1,594) | (250) | (1,070) | (67) | (359) |
| Revenue4 | (2,699) | (1,969) | (39) | (730) | (37) | (453) |
1 For details of our RoTE calculation by business segment, see page 108.
2 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 91.
3 For a description of how we derive banking NII, see page 65. Corporate Centre banking NII includes funding charges on property and technology assets, and the
banking NII of the French retained portfolio of home and other loans prior to disposal. Banking NII in 2024 excludes notable items of $0.2bn, which are separately
presented in ‘notable items’. There were no notable items in banking NII in 2025 or 2023.
4 Revenue from Markets Treasury, HSBC Holdings net interest expense and hyperinflation are allocated out to the business segments, to align them better with their
revenue and expense. The total Markets Treasury revenue component of this allocation for 2025 was $2.3bn (2024: $1.5bn; 2023: $0.4bn).
| Notable items | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs | (1,560) | (1,357) | (297) | |||
| Dilution loss of interest in BoCom associate | (1,104) | — | — | |||
| Fair value movements on financial instruments | — | — | 14 | |||
| Early redemption of legacy securities | — | (237) | ||||
| Currency translation on revenue notable items | — | — | 33 | |||
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | (130) | (192) | (216) | |||
| Restructuring and other related costs | (435) | (25) | 63 | |||
| Legal provisions | (1,110) | — | — | |||
| Currency translation on operating expenses notable items | — | 15 | — | |||
| Impairment of interest in associate | (1,000) | — | (3,000) | |||
| Currency translation on associate notable items | — | — | (59) | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| 28 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
ESG overview
Our approach to ESG is focused on creating long-term value for our customers
and wider stakeholders.
Our approach
Our approach to ESG focuses on three main
areas: the transition to net zero, building
inclusion and resilience, and acting
responsibly.
Transition to net zero
Our ambition is to become a net zero bank by
- Supporting our customers is core to our
strategy and financing their transition is both
critical to them and aligned to our net zero
ambition. We want to be our customers’ most
trusted international financial partner through
the transition, creating long-term value for
them and our shareholders.
Our updated Net Zero Transition Plan
Our updated Net Zero Transition Plan,
published in November 2025, sets out our
commercially-grounded approach to helping
our customers succeed as the world moves
towards net zero amid changing economic and
geopolitical conditions. It intensifies our efforts
to be customer-focused, commercial and agile.
Our refreshed strategy supports the transition of
our CIB customers, and Commercial Banking
customers in the UK and Hong Kong, by
directing our financing and capabilities to areas
where we believe we can have the greatest
impact on the real economy. Our aim is to
support our customers’ transition by providing
and facilitating between $750bn and $1tn of
sustainable finance and investment by 2030.
Targets and policies
In our Net Zero Transition Plan, we also set out
our updated interim financed emissions
targets, metrics and associated policies,
seeking to remain science-aligned and
compatible with our own net zero ambition.
Our ability to meet our ambitions, targets and
commitments largely depends on the pace of
our customers’ transition journeys in the real
economy.
In light of the latest credible industry-specific
net zero pathways and decarbonisation rates,
we have updated our interim sector-specific
financed emissions targets from fixed targets
to target ranges.
We have also published a new Sustainability
Risk Policies Framework, which details how
we identify, evaluate and manage risks related
to the delivery of our sustainability approach,
and which sets out our sector-specific
sustainability risk approach. It also includes our
Thermal Coal Phase-Out Policy.
ÑFor more details, see HSBC Net Zero Transition
Plan at https://www.hsbc.com/who-we-are/our-
climate-strategy/our-net-zero-transition-plan
Building inclusion and resilience
We seek to foster inclusion and build
resilience to help create long-term value for all
our stakeholders. For colleagues, we focus on
creating an inclusive environment and offer
resources that support well-being. In 2025, we
achieved an Inclusion Index score of 78%
against an ambition of 75%, as measured by
our employee engagement survey, Snapshot.
We work to improve accessibility through
products that support customers experiencing
challenges, such as disabilities, impairments,
or significant life events, while also fostering
financial education and well-being.
Acting responsibly
Our conduct approach guides us to do the
right thing and focus on the impact we have
on our customers and the financial markets in
which we operate.
Progress on our ESG metrics
We have established ambitions and targets that guide how we do business, including how we operate and how we serve our customers. We set out
below some of the key ESG metrics we use to measure progress against our ambitions. To help us achieve our ESG ambitions, a number of measures
are included in the incentive scorecards of the Group CEO, Group CFO and Group Operating Committee members that underpin some of the ESG
metrics in the table below. For a summary of how our non-financial metrics link to executive remuneration, see pages 253 - 256 of the Director’s
remuneration report.
| Environment | Social | Governance | ||
|---|---|---|---|---|
| Transition to net zero | Building inclusion and resilience | Acting responsibly | ||
| Sustainable finance and<br><br>investment | Net zero in our own<br><br>operations1 | Gender representation | Black heritage | Training |
| $495.6bn | 84.9% | 34.7% | 3.0% | 99% |
| Cumulative total provided and<br><br>facilitated since 1 January 2020<br><br>(2024: $393.6bn) | Reduction in absolute<br><br>operational greenhouse gas<br><br>emissions from 2019 baseline<br><br>(2024: 66.1%) | Senior leadership roles held<br><br>by women<br><br>(2024: 34.6%) | Senior leadership roles held<br><br>by Black heritage colleagues<br><br>in the UK and US combined<br><br>(2024: 3.0%) | Employees who completed<br><br>conduct training in 2025<br><br>(2024: 99%) |
| ÑRead more on page 35. | ÑRead more on page 47. | ÑRead more on page 51. | ÑRead more on page 51. | ÑRead more on page 61. |
| Financed emissions | ||||
| 7 sectors | ||||
| Number of sectors where we have<br><br>set interim financed emissions targets | ||||
| ÑRead more on page 39. |
1This absolute greenhouse gas emission figure covers scope 1, scope 2 and scope 3 (business travel) emissions only.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 29 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| ESG overview |
Task Force on Climate-related Financial Disclosures (‘TCFD’)
| TCFD |
|---|
We have considered our ‘comply or explain’
obligation under both the UK Financial Conduct
Authority’s Listing Rules 6.6.6R(8) (‘UKLR’)
and Sections 414CA and 414CB of the UK
Companies Act 2006 (‘CA 2006’), collectively
referred to as the ‘TCFD requirements’ and
Hong Kong Listing Rules (‘HKLR’) Appendix C2
ESG Reporting Code Part D climate-related
disclosures (‘HKLR Part D’).
We perform an assessment to ascertain the
appropriate level of detail to be included in the
climate-related financial disclosures set out in
our Annual Report and Accounts 2025, as part
of considering what to measure and publicly
report.
Our assessment takes into account factors
such as the level of our exposure to climate-
related risks and opportunities, the scope and
objectives of our climate-related strategy,
transitional challenges, and the nature, size
and complexity of our business. See ‘How we
decide what to measure’ on page 385 for
further information.
Many of the climate-related requirements are
duplicated across both UKLR and HKLR Part
D, and as a result we have streamlined our
reporting approach where possible.
We confirm that we have made disclosures
consistent with the TCFD Recommendations
and Recommended Disclosures, including its
annexes and supplemental guidance, save for
one item: we do not plan to set short-term
targets for financed emissions, sustainable
finance or our own operations as our overall
climate strategy is focused on our ambition to
become a net zero bank by 2050. We have set
interim financed emissions 2030 targets and a
sustainable finance and investment ambition
by 2030. Further information can be found on
pages 35 and 41.
We disclose detailed explanatory statements
for TCFD requirements and HKLR Part D.
These statements include additional items that
we either do not currently disclose or partly
disclose within this report.
We further set out reasons for this, including
associated data and system limitations. Where
relevant, we also outline ongoing efforts to
enhance our reporting in these areas.
ÑFor a full summary of our TCFD disclosures,
including cross-references to detailed disclosure
locations, see page 386.
ÑOur detailed HKLR Index, including HKLR Part D,
can be found in our ESG Data Pack at
www.hsbc.com/esg.
ÑDetailed explanatory statements for TCFD
requirements and HKLR Part D can be found
from pages 386 to 388.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| 30 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Risk overview
Managing risk
We maintain a proactive approach to managing
our exposure to economic, financial and
geopolitical risks, supported by continuous
monitoring and review. Developments in these
areas have historically affected, and may in the
future materially affect, HSBC’s customers,
operations and financial risk profile.
Geopolitical and macroeconomic risk
In 2025, the global economy showed resilience
to unpredictable US trade policies, heightened
geopolitical tensions and increased fiscal
concerns in our major markets. Global GDP
growth exceeded expectations, driven by export
growth related to the front-loading of trade
purchases to avoid US tariffs and a weaker US
dollar, as well as government spending.
Household consumption was more subdued
due to weak confidence, higher unemployment
and inflation concerns. In the US, GDP growth
outperformed initial forecasts, helped by the
surge of investment in the technology sector. In
mainland China and Hong Kong, exports to
markets in Asia and Latin America offset some
of the impact of US tariffs, while supportive
fiscal and monetary policies continued to
underpin growth.
Trade and tariff policies are expected to remain a
source of uncertainty for businesses and
consumers. Changes to tariff rates, including the
application of sector-specific levies, may deter
capital investment and consumer spending,
disrupt supply chains and reduce global trade
growth. Although the reconfiguration of supply
chains may offer new opportunities for
investment and growth, such developments
could also adversely affect the Group and our
customers who operate in some of the most
affected markets.
Financial markets have witnessed significant
valuation gains, including in the artificial
intelligence (‘AI’) and technology sectors. The
investment in these sectors may deliver gains
to productivity, but current high valuations also
raise the risk of a material fall in the markets if
the expected gains to productivity fail to
materialise. A disruptive market correction
could undermine economic growth, which
may in turn have an adverse effect on HSBC’s
risk profile and earnings by increasing the
financial vulnerability of customers and
decreasing the value of collateral and other
claims.
We also remain subject to interest rate risk,
which can affect net interest income, the fair
value of our assets and liabilities, and overall
financial performance.
Major central banks have adjusted their policy
approach in response to changing inflation and
employment risks. The US Federal Reserve
resumed its cycle of interest rate cuts in
September 2025, after it assessed tariff-related
inflation risks as transitory but labour market
risks as having increased. The target range for
the Federal Funds rate is now 3.5%–3.75%. In
the UK, the Bank of England judged that inflation
pressures had moderated sufficiently to cut
interest rates in December 2025.
Although financial markets have priced in further
interest rate cuts, there is uncertainty around
their future trajectory. Policy rates could be
raised if inflation were to accelerate significantly
beyond central bank target ranges. Higher
interest rates may reduce loan demand across
key consumer and business segments, which
could lead to a deterioration in credit quality and
weigh on real estate and other asset prices. By
contrast, lower interest rates could pressure net
interest margins and adversely affect
profitability.
Our risk profile may be influenced by fiscal
policies, public deficits and levels of
indebtedness. In many of our major markets,
government debt levels are rising due to higher
social welfare costs and increased expenditure
on defence and climate transition. A fragmented
political landscape in many markets has
diminished the political will for fiscal tightening.
Higher long-term interest rates across major
economies could adversely impact the fiscal
capacity and debt sustainability of highly-
indebted sovereigns. The rise in funding costs in
our major markets could reduce the potential for
GDP growth by raising the cost of borrowing
while also creating refinancing risks for our
customers and counterparties.
Exchange rate volatility may also affect our risk
exposure through mark-to-market changes in
trading positions and the translation effects of
currency movements.
The geopolitical environment remains complex,
and tensions could impact the Group’s
operations and risk profile. We continue to
monitor the Russia-Ukraine war, developments
in relation to conflict in the Middle East, and the
wider implications as a result of the US military
action in Venezuela, as well as any indication of
other potential military action or conflicts
elsewhere. These conflicts remain key sources
of uncertainty, and may impact HSBC and our
customers, including through increased market
volatility and supply chain disruptions.
Heightened strategic competition between the
US and China, including cross-border
investment restrictions, is also affecting the
configuration of global supply chains, which may
in turn affect the Group’s operations.
Sanctions and restrictions on trade and
investment are continually evolving in response
to geopolitical events and may adversely affect
the Group, its customers and the markets in
which the Group operates. These factors may
result in increased legal, regulatory, reputational
and market risks, and a more complex operating
environment.
Signs of a recovery have begun to emerge in
the residential segment of Hong Kong’s
commercial real estate market in the second
half of 2025. However, the office segment is still
facing pressure and market liquidity remains
tight, particularly for mid-sized and sub-
investment grade corporates. In mainland China,
the property market remains weak with
government stimulus yet to trigger a material
improvement in buyer sentiment.
At the end of 2025, management adjustments
to ECL were applied to reflect sector or portfolio
risks that are not fully captured by our models.
We continue to monitor, and seek to manage,
the potential implications of all the above
developments on our customers and our
business.
Our key risk appetite metrics
At 31 December 2025, our CET1 ratio and ECL
charges were within our defined risk appetite
thresholds. At 31 December 2025, our CET1
ratio was 14.9%, unchanged from 31
December 2024. Wholesale and Retail ECL
charges were within appetite at 0.4% and
0.34% of loans and advances, respectively.
Our operations
We remain committed to investing in the
reliability and resilience of our technology
systems and critical services, including our ability
to withstand and respond to cyber-attacks. We
assess our third parties to help ensure they
deliver the standard of services we require to
provide resilient services to our customers. We
do so to help protect our customers and
counterparties, and to help ensure that we
minimise any disruption to our services. In our
approach to defending against these threats, we
invest in business and technical controls to help
us detect, prevent, respond to, recover and learn
from issues in a timely manner within our risk
appetite.
HSBC is committed to using AI responsibly. We
are working to balance the opportunity AI
presents to accelerate delivery of our strategy
with the need for appropriate controls to help
mitigate the associated risks. To help meet the
Group’s needs and regulatory expectations for
AI, whether developed internally or facilitated
through third parties, we continue to enhance
our Group-wide AI oversight, governance,
lifecycle management and risk framework.
HSBC’s Principles for the Ethical Use of Data
and AI are available at www.hsbc.com/ai.
We continue to focus on improving the quality
and timeliness of the data used to support
informed management decisions, and we are
advancing our strategic and regulatory change
initiatives to help deliver the right outcomes for
our customers, people, investors and
communities.
ÑFor further details of our Central and other
economic scenarios, see page 149.
ÑFor further details on our CET1 ratio, see pages 5
and 192.
ÑFor further details of our risk management
framework and risk appetite, see page 119.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 31 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk overview |
Top and emerging risks
Our top and emerging risks report identifies
forward-looking risks so that they can be
considered in determining whether any
incremental action is needed to either prevent
them from materialising or to limit their effect.
Top risks are those that have the potential to
have a material adverse impact on the financial
results, reputation or business model of the
Group. We actively manage and take actions
to mitigate our top risks. Emerging risks are
those that, while they could have a material
impact on our risk profile were they to occur,
are not considered immediate and are not
under active management. Our suite of top
and emerging risks is subject to regular review
by senior governance forums. We continue to
monitor closely the identified risks and agree
management actions to remediate and/or
reduce them to acceptable levels, as required.
ÑFor further detail on our top and emerging risks,
see page 121.
| Risk | Trend | Description |
|---|---|---|
| Externally driven | ||
| Geopolitical and<br><br>macroeconomic risks | ~ | Our operations and portfolios are subject to risks arising from political instability, civil unrest and military conflict, which may<br><br>lead to disruption of our operations, physical risk to our staff and/or physical damage to our assets. We are also subject to<br><br>macroeconomic risks, which may drive changes to our income growth and asset quality. Heightened geopolitical and<br><br>macroeconomic risk globally, including uncertainty in international trade policy, is subject to close monitoring and review. |
| Technology and<br><br>cybersecurity risk | ~ | There is an increased risk of service disruption or loss of data resulting from technology failures or malicious activities from<br><br>internal or external threats. We continue to monitor changes to the technology and threat landscape, including those arising<br><br>from ongoing geopolitical and macroeconomic events alongside third-party incidents and the impact this may have on risk<br><br>management. We operate a continuous improvement programme to help support the resilience and stability of our technology<br><br>operations and counter a fast-evolving and heightened cyber threat environment. |
| Environmental, social<br><br>and governance<br><br>(‘ESG’) risks | ~ | We are subject to ESG risks, including in relation to climate change, nature and human rights. These risks have increased due<br><br>to diverging national and political agendas, a more complex and prescriptive regulatory environment across the jurisdictions<br><br>we operate in, as well as increasing frequency of severe weather events across the globe. Financial institutions’ actions and<br><br>investment decisions in respect of ESG matters continue to be subject to heightened scrutiny by stakeholders. Failure to meet<br><br>these evolving expectations may have financial and non-financial impacts, including reputational, legal and regulatory<br><br>compliance risks. |
| Financial crime risk | ~ | We are exposed to financial crime risk from our customers, staff and third parties engaging in criminal activity. The financial<br><br>crime risk environment is heightened due to increasingly complex geopolitical challenges, the macroeconomic outlook, the<br><br>complex and dynamic nature of sanctions and export control compliance, evolving financial crime regulations, rapid<br><br>technological developments, an increasing number of national data privacy requirements and the increasing sophistication of<br><br>fraud. As a result, we will continue to face the possibility of regulatory enforcement and reputational risk. |
| Digitalisation and<br><br>technological<br><br>advances risk | ~ | Developments in technology and changes in regulations continue to enable new entrants to the banking industry as well as<br><br>new products and services offered by competitors. This challenges us to continue to innovate with new digital capabilities and<br><br>evolve our products, to attract, retain and best serve our customers. Along with opportunities, new technology, including<br><br>GenAI, can introduce risks and disruption. We seek to manage technology developments with appropriate controls and<br><br>oversight. |
| Evolving regulatory<br><br>environment risk | ~ | The regulatory and compliance risks are set against continued geopolitical risk and regulatory focus on operational resilience,<br><br>resolvability, prudential requirements, financial reporting and data, ESG, conduct, as well as sound risk and financial crime risk<br><br>management practices. The approach to regulation is increasingly fragmented, including in relation to AI and digital assets,<br><br>and a trend towards deregulation has emerged in some jurisdictions, concurrently with regulatory actions to support business<br><br>growth. |
| Internally driven | ||
| Data risk | } | We use data to serve our customers and run our operations, often in real-time within digital experiences and processes. If our<br><br>data is not accurate and timely, our ability to serve customers, operate with resilience or meet regulatory requirements could<br><br>be impacted. We seek to ensure that non-public data is kept confidential, and that we comply with the growing number of<br><br>regulations that govern data privacy and cross-border movement of data. |
| Risks arising from the<br><br>receipt of services<br><br>from third parties | ~ | We procure goods and services from a range of third parties. In the current macroeconomic and geopolitical climate, the risk<br><br>of service disruption in supply chains is elevated, driven by an industry-wide increase in supply chain cyber threats. We<br><br>continue to strengthen our controls, oversight and risk management policies and processes to select and manage third parties,<br><br>including our third parties’ own supply chains, particularly for key activities that could affect our operational resilience. |
| Model risk | } | Model risk arises whenever business decision making includes reliance on models. We use models in both financial and non-<br><br>financial contexts, as well as in a range of business applications. Evolving regulatory requirements and enhanced expectations<br><br>continue to drive changes to the way model risk is managed across the banking industry, with a particular focus on capital and<br><br>credit loss models. New technologies, including AI, are driving a need for enhanced model risk controls. |
| Strategic execution<br><br>risk | ~ | Successful execution of our strategy enables us to help address the swiftly changing needs of our customers and<br><br>stakeholders. We are committed to enhancing the effectiveness of strategic execution risk controls and monitoring. This will<br><br>help us minimise disruptions during a period of heightened execution risk, driven by the complexity and scale of ongoing<br><br>strategic, regulatory and technological change. |
| Risks associated with<br><br>workforce capability,<br><br>capacity and<br><br>environmental factors<br><br>with potential impact<br><br>on growth | ~ | Our businesses, functions and geographies are exposed to risks associated with employee retention and talent availability, the<br><br>evolving skills requirements of our workforce, and compliance with employment laws and regulations. Voluntary attrition<br><br>across the Group remains stable, but failure to manage these risks may impact the delivery of our strategic objectives or lead<br><br>to regulatory sanctions or legal claims, and the risks are heightened during the implementation of organisational change. |
~ Risk heightened during 2025 } Risk remained at the same level as 2024
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 32 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Environmental,
social and
governance review
Our ESG review sets out our approach to our
environment, customers, employees and
governance. It explains how we aim to achieve
our purpose, deliver our strategy in a way that is
sustainable, and build strong relationships with all
of our stakeholders.
How we present our TCFD disclosures
Our overall approach to TCFD can be found on page 29 and
additional information is included on pages 385 to 388. Further
details have been embedded in this section and the Risk review
section on pages 203 to 212. Our TCFD disclosures are
highlighted with the following symbol:
| TCFD | |
|---|---|
| Environmental | |
| --- | --- |
| 33 | Our approach to the transition |
| 34 | Understanding our ESG reporting |
| 35 | Supporting our customers |
| 38 | Partnering for an enabling environment |
| 39 | Embedding net zero into the way we operate |
| Social | |
| 51 | Our commitment to inclusion |
| 53 | Building a healthy workplace |
| 55 | Developing skills, careers and opportunities |
| 56 | Building customer inclusion and resilience |
| 56 | Engaging with our communities |
| Governance | |
| 57 | Setting high standards of governance |
| 58 | Human rights |
| 59 | Customer experience |
| 61 | Integrity, conduct and fairness |
| 63 | Safeguarding data |
2
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 33 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Environmental
| TCFD |
|---|
Transition to net zero
We aim to support the transition to net zero and a sustainable future
in partnership with our customers and other stakeholders
Our approach to the transition
| Our Priorities | Be simple and agile | Drive customer-centricity | Deliver focused sustainable growth | |||
|---|---|---|---|---|---|---|
| Our Values | We value difference | We succeed together | We take responsibility | We get it done | ||
| Our Net Zero<br><br>Ambition | Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy | |||||
| Our Three Net<br><br>Zero Pillars | Supporting<br><br>our customers | Embedding net zero<br><br>into the way we operate | Partnering for an enabling<br><br>environment | |||
| We are seeking to align our capital<br><br>and capabilities with our<br><br>customers’ transition goals, by<br><br>tailoring our products and services<br><br>to the specific needs of different<br><br>customers around the world. | We are working to incorporate net<br><br>zero considerations into our<br><br>broader decision-making activities,<br><br>our climate risk management<br><br>framework, our metrics, and in our<br><br>own operations and supply chains. | Our ability to finance our customers’<br><br>transition is influenced by external<br><br>market and policy conditions,<br><br>therefore we seek to partner with<br><br>stakeholders and advocate for<br><br>progress across the financial system. |
Our ambition is to become a net zero bank by
- Supporting our customers is core to our
strategy and financing our customers'
transition is both critical to them and aligned to
our net zero ambition.
Our updated Net Zero Transition Plan
When we published our first Net Zero
Transition Plan, we committed to evolving our
approach to keep pace with the dynamic world
in which we and our customers operate. Since
early 2024, the global landscape has shifted
markedly, making the pace of transition more
uneven. Against this broader landscape, we
updated our Net Zero Transition Plan in
November 2025, intensifying our efforts to be
customer focused, commercial and agile. It
sets out the actions we are continuing to take
to achieve our net zero ambition and to align
our financing with the Paris Agreement goals
of holding the increase in global average
temperature to well below 2°C above pre-
industrial levels, and pursuing efforts to limit
the temperature increase to 1.5°C.
Our Net Zero Transition Plan remains
structured around our three core
implementation pillars: supporting our
customers, embedding net zero into the way
we operate, and partnering for an enabling
environment.
Supporting our customers
As a global financial institution, we exist to
serve our customers. We believe supporting
our customers’ transition is one of the most
significant roles we can play in the global
transition to net zero. This will help to deliver
long-term value for customers and
shareholders. We have refined our approach
to continue to be responsive to the diverse
realities faced by our different customers
across the world, from individuals through to
multinational corporates and institutions.
Embedding net zero into the way we
operate
Our net zero ambition is an important part of our
corporate strategy. Our global businesses are
developing strategic plans that integrate climate
and sustainability considerations into their
operations. This approach reflects the diverse
transition maturities and local regulatory
expectations across our global footprint.
Our focus on the transition to net zero is well
established within our governance, culture,
and key performance indicators. A number of
measures supporting our progress towards
our net zero ambition are included in executive
performance scorecards and management
reporting, helping align accountability across
the organisation.
Partnering for an enabling environment
Recognising that our customers’ transition, and
our ability to finance it, relies in part on external
market and policy conditions, we also seek to
support enabling environments that can help
accelerate the flow of capital towards business
innovation and transformation.
Our approach seeks to build support across a
range of stakeholder groups and reflect the
varying pace and shape of the transition across
sectors and geographies, as well as the size
and scope of our presence in local markets.
Progress on our Net Zero Transition Plan
We continue to take actions across our
organisation to support the implementation of
our Net Zero Transition Plan. We continue to
focus on developing and maintaining the
capabilities of our people as the sustainability
landscape evolves. This report provides key
updates on our progress in 2025 and includes
our annual TCFD reporting.
ÑFor further details on our climate risk exposures,
see page 203.
ÑFor further details on building our net zero
capabilities and upskilling, and assumptions,
uncertainties and dependencies, see pages 9,
48, 49, and 57 of the HSBC Net Zero Transition
Plan.
ÑFor the HSBC Net Zero Transition Plan refer to
https://www.hsbc.com/who-we-are/our-climate-
strategy/our-net-zero-transition-plan
| Key changes to our 2025 disclosures<br><br>In 2025, there was an impact on certain climate<br><br>disclosures, including:<br><br>–Financed emissions: We have updated our<br><br>interim 2030 financed emissions targets for<br><br>all of our in-scope carbon-intensive sectors,<br><br>apart from thermal coal mining. We have re-<br><br>baselined and restated prior year metrics | to account for the latest methodology and<br><br>scope changes, including the addition of<br><br>short-term lending. For further details, see<br><br>page 39.<br><br>–Thermal coal financing drawn balance<br><br>exposure: In 2025 we amended product<br><br>scope in line with changes made for<br><br>financed emissions as discussed above | and have developed a more detailed<br><br>framework for our approach to exclusions.<br><br>This resulted in a re-baseline of our 2020<br><br>thermal coal financing drawn balance<br><br>exposure. For further details, see page 50. | ||||
|---|---|---|---|---|---|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 34 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Understanding our ESG reporting
Engaging with our stakeholders and our
material ESG topics
We know that engaging with our stakeholders
is core to being a responsible business. To
determine material topics that our
stakeholders are interested in, we conduct a
number of activities throughout the year. The
TCFD requirements, HKLR Appendix C2 ESG
Reporting Code Parts C and D and other
applicable rules and regulations are considered
as part of the identification of material issues
and disclosures. Additional information can be
found in the 'How we decide what to
measure' section on page 385. Material ESG
topics are listed on page 32 and related
disclosures are covered in this ESG review.
Continuing to evolve our climate
disclosures
We engage with standard setters to support
the development of transparent and
consistent climate-related industry standards
in areas such as implementation of new
International Sustainability Standards across
jurisdictions, sustainable finance taxonomy
and emissions accounting. We have aligned
our definitions of risk and opportunities with
our strategic planning cycle. For climate
reporting, we define short-term as time
periods up to 2 years, medium-term is
between 3-5 years, and long-term is between
6-15 years.
We have reviewed our interim financed
emissions targets, metrics and associated
policies, seeking to remain science-aligned
and compatible with our own net zero
ambition, while remaining realistic and credible
given global developments.
We expect to periodically review and, if
required, update our targets. We seek to
monitor the latest developments in climate
science and associated scenarios to help
inform our approach to target setting and our
portfolio alignment to support the transition of
the real economy to net zero. In 2026, we will
continue to review and enhance our approach
to disclosures.
Internal and external data challenges
The effective measurement, governance and
reporting of progress against our climate
ambitions is reliant on the availability of high-
quality, accessible, comparable and reliable
internal and external data. We are also reliant
on our own ability to collect and process such
relevant data as required in a timely manner.
Reported client emission data may have up to
a two-year lag, making alignment to financial
reporting dates challenging and leading to
further reliance on proxies.
Newer data sources and topics may be
difficult to assure using traditional verification
techniques. This, coupled with diverse
external data sources and complex structures,
further complicates data consolidation. Our
internal data on customer groups that was
used to source financial exposure and
emissions data is based on credit and
relationship management factors and is not
always aligned with the need to analyse
emissions across sector value chains. This can
result in inconsistencies in our financed
emissions calculations.
We continue to strengthen our ESG data and
analytics capability, working to deliver trusted
data assets, dashboards, AI, and advanced
analytics solutions that help support initiatives
like financed emissions, climate scenario
analysis, stress testing, sustainable finance
and portfolio optimisation.
Given our dependency on collecting emissions
data from our clients and the manual nature of
the process, enhanced verification and
assurance procedures are performed on a
sample basis over this data, including by the
first and second lines of defence. Our climate
models undergo independent review by an
internal model review group, and we obtain
limited assurance on our financed emissions
and sustainable finance disclosures from
external parties, including our external
auditors.
Lack of consistency across sustainable
finance taxonomies
Sustainable finance metrics, taxonomies and
practices currently lack global consistency. As
standards develop and regulatory guidance
evolves across jurisdictions, our targets,
methodologies and disclosures may also need
to adapt. Recognising these challenges, we
annually refresh and disclose our Sustainable
Finance and Investment Data Dictionary to
accompany reporting against our sustainable
finance and investment ambition. For further
details, see page 35.
Our re-baseline and restatement policy defines
the circumstances for a restatement of
previously reported data. We continue to
engage with standard setters in different
regions to support the development of
transparent and consistent taxonomies to
encourage science-based decarbonisation,
particularly in high transition risk sectors.
Impact on our reporting and financial
statements
We have assessed the impact of climate risk
on our balance sheet and have concluded that
no incremental adjustments were needed to
capture climate impacts in our financial
statements for the year ended 31 December
- The effects of climate change are a
source of uncertainty. We capture known and
observable potential impacts of climate-related
risks in our asset valuations and balance sheet
calculations. These are considered in relevant
areas of our balance sheet, including expected
credit losses, classification and measurement
of financial instruments, goodwill and other
intangible assets; and in making the long-term
viability and going concern assessment. As
part of assessing the impact on our financial
statements we conducted scenario analysis to
understand the impact of climate risk on our
business (see pages 49 and 206), and we also
used available information to perform a
climate ECL sensitivity analysis for both our
retail and wholesale portfolios (see page 212).
ÑFor further details of how management
considered the impact of climate-related risks on
its financial position and performance, see
‘Critical estimates and judgements’ on page 301.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 35 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
Supporting our customers
Sustainable finance and investment
| TCFD |
|---|
We aim to help our customers’ transition to net
zero and a sustainable future by providing and
facilitating between $750bn and $1tn of
sustainable finance and investment by 2030.
Our sustainable finance and investment
ambition aims to help promote green,
sustainable and socially-focused business and
sustainable investment products and solutions.
Since 1 January 2020, we have provided and
facilitated a cumulative $437.9bn of sustainable
finance and $57.7bn of ESG and sustainable
investing, as defined in our Sustainable Finance
and Investment Data Dictionary 2025. This
included 39% where the use of proceeds was
dedicated to green financing, 11% to social
financing, and 14% to other sustainable
financing. It also included 24% of sustainability-
linked financing and 12% of net new
investment flows managed and distributed on
behalf of investors.
In 2025, our underwriting activity for green,
social, sustainability, and sustainability-linked
bonds declined, primarily due to challenging
market conditions, particularly in the latter half
of the year. The global social bond market
contracted during 2025, with HSBC’s volume
reducing by approximately $4bn compared
with the previous year. Despite these
headwinds, on-balance sheet sustainable
lending transactions increased by 12% versus
2024, supported by strong growth of 15% in
ESG and sustainable investing flows.
In 2025, as part of our continued monitoring
and controls processes, we identified $0.3bn of
transactions that no longer fulfil our eligibility
criteria. These were declassified and removed
from the 2025 total, taking the total amount
declassified since 1 January 2020 to $1.6bn.
Continued progress towards achieving our
sustainable finance and investment ambition is
dependent on market demand for the products
and services set out in our Sustainable Finance
and Investment Data Dictionary 2025.
Sustainable finance and investment
$495.6bn†
Cumulative total provided and facilitated since
1 January 2020 (2024: $393.6bn)
| Sustainable finance and investment summary1 | 2025<br><br>($bn) | 2024<br><br>($bn) | 2023<br><br>($bn) | Cumulative<br><br>progress since<br><br>2020<br><br>($bn) |
|---|---|---|---|---|
| Balance sheet-related transactions provided2 | 52.8 | 47.4 | 42.7 | 221.5 |
| Capital markets/advisory (facilitated) | 32.6 | 37.3 | 33.3 | 216.4 |
| ESG and sustainable investing (net new flows) | 16.6 | 14.5 | 7.7 | 57.7 |
| Total contribution† | 102.0 | 99.2 | 83.7 | 495.6 |
| Sustainable finance and investment classification by theme1 | ||||
| Green use of proceeds5 | 41.7 | 42.2 | 37.1 | 196.0 |
| Social use of proceeds | 6.9 | 9.6 | 8.4 | 52.6 |
| Other sustainable use of proceeds3 | 14.2 | 13.9 | 10.7 | 71.4 |
| Sustainability-linked4 | 22.6 | 19.0 | 19.8 | 117.9 |
| ESG and sustainable investing | 16.6 | 14.5 | 7.7 | 57.7 |
| Total contribution† | 102.0 | 99.2 | 83.7 | 495.6 |
† The $495.6bn cumulative progress since 1 January 2020 is subject to independent third-party limited assurance in accordance with International Standard on
Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’. Our Sustainable Finance and
Investment Data Dictionary 2025 and independent third-party limited assurance report is available at: www.hsbc.com/who-we-are/esg-and-responsible-business/
esg-reporting-centre.
1 The 2025 data in this table has been prepared in accordance with our Sustainable Finance and Investment Data Dictionary 2025, which includes green, social and
sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions provided (including drawn and
undrawn amounts), the proportional share of facilitated capital markets/advisory activities and ESG and sustainable investing net new flows of both HSBC Asset
Management sustainable investment funds and third-party solutions distributed through Private Bank and Retail Banking.
2 In 2024 only nine months of retail green/energy efficient mortgages were included for the first time within Other Qualified Green Lending. In 2025 reporting, 12
months of transactions were included, reported a quarter in arrear (1 October 2024 to 30 September 2025) due to the time lag in sourcing supporting third-party
data. For future years’ reporting we will continue to report green/energy efficient mortgages a quarter in arrear.
3Sustainable use of proceeds can be used for green, social or a combination of green and social purposes, assessed by HSBC against internal standards and
relevant industry guidelines.
4 Sustainability-linked products, where the coupon or interest rate is dependent on whether the borrower achieves certain pre-defined sustainability performance
target(s), are assessed by HSBC against internal standards and relevant industry guidelines and can be used for general purposes, which may be sustainable or
non-sustainable.
5 Included within the total cumulative contribution towards our ambition are transactions to customers within the six high transition risk sectors (i.e. automotive,
chemicals, construction and building materials, metal and mining, oil and gas, and power and utilities) as described on page 204, of which approximately $71bn is
defined as green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 36 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
We believe supporting our customers’
transition is one of the most significant roles
we can play in the global transition to net zero.
Our Corporate and Institutional Banking (‘CIB’)
business, which incorporates HSBC
Infrastructure Finance, gives our customers
seamless access to global capital, markets
expertise and financing through a single
platform.
We have refreshed our strategy to support the
transitions of our CIB customers globally and
our Commercial Banking customers in the UK
and Hong Kong, and deliver on our growth
ambition. Our lending to corporate and
institutional customers makes up the majority
of our balance sheet and financed emissions,
so the role we play with these customers is
critical to achieving our net zero ambition.
We intend to become:
–The leading bank for fast-growing
transition ecosystems. Our customer
base spans ecosystems like clean power,
electrification of transport, and data centres
and AI. These ecosystems represent a
significant volume of the transition capex
needed by 2030 as they are key
decarbonisation and transformation vectors
for the economy. Expanding clean
electrification will be an important step to
minimise AI’s operational footprint while
maximising the technology’s potential1.
–The strategic transition partner for all
our customers. We aim to support all our
customers across segments and sectors to
meet their sustainability goals, leveraging
our debt financing and trade finance
capabilities across over 50 markets1.
–Bank of choice to catalyse emerging
climate tech. With our HSBC Innovation
Banking platform and substantial balance
sheet, we can bridge the gap between early-
stage development and large-scale
deployment of climate-critical technologies.
–We are also well-positioned to connect
these start-ups with our corporate and
institutional customers that are looking to
invest in climate tech ventures, and adopt
their solutions to accelerate their transition
journey1.
–
Understanding customer transition
priorities
We take a holistic approach to understanding
and supporting the transition journeys of our
customers and potential customers. We
regularly engage with our corporate customers
to help tailor our solutions to the diverse
realities they face around the globe, and the
different stages of their transition journey.
Supporting personal customers
We offer financing and investing options to
our individual banking customers in the key
areas where they may be able to influence
their carbon footprint.
1 For further details see HSBC Net Zero Transition
Plan at https://www.hsbc.com/who-we-are/our-
climate-strategy/our-net-zero-transition-plan
pages 26-28.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 37 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
ESG and sustainable investing
Our ambition is to be one of the leading global
asset and wealth managers and sustainability
is an important enabler to achieving this
ambition.
We offer a suite of ESG and sustainable
investing solutions to institutional and
individual investors who want to mitigate risk
or seek value creation through considering
climate, nature or other sustainability factors in
their investment horizon. Covering both
traditional and alternative investment areas,
our solutions aim to advance ESG and
sustainable goals. We take different
approaches to achieve this, such as investing
in issuers or securities that may either seek
stronger ESG performance, align to themes
such as climate or the net zero transition, or
seek to deliver environmental or social
outcomes.
As at 31 December 2025, HSBC Asset
Management managed $213bn in ESG and
sustainable investing solutions, marking an
increase of $33.3bn or 18.5% from 2024.
These assets include those that are distributed
by our Private Bank and Retail Banking, and
those that Asset Management manages on
behalf of HSBC Insurance. This increase
underscores our continued focus on providing
a range of solutions tailored to meet the
diverse investment objectives of our clients.
For our individual investors, our ESG and
sustainable investing solutions span multiple
asset classes, including mutual funds, ETFs,
equities, fixed income, alternatives, as well as
discretionary mandates. In 2025, we
expanded our investment offering with the
launch of four additional mutual funds and
ETFs. We regularly publish insights to help our
clients better understand the ESG implications
of their investments.
In our Insurance business, as an asset owner,
we seek to adopt a responsible investment
approach. We give customers access to
sustainability options through investment-
linked insurance products where we offer a
range of investment choices, including those
relating to ESG and sustainable investing.
Some may target specific net zero transition
and climate themes.
ÑFor further details of our Asset Management
policies, see page 50.
Our sustainable finance and investment data dictionary
We define sustainable finance and investment
as any form of financial service that integrates
ESG criteria into business or investment
decisions. This includes financing, investing
and related activities that support the
achievement of the UN Sustainable
Development Goals, including but not limited
to the aims of the Paris Agreement on climate
change.
Our Sustainable Finance and Investment Data
Dictionary sets out our approach for classifying
financing and investment as sustainable for
the purpose of tracking and disclosing our
performance against our sustainable finance
and investment ambition.
We update our data dictionary annually,
including reviewing our product definitions,
adding new qualifying products and removing
products that no longer qualify, making
enhancements to our internal standards, and
developing our reporting and governance.
We engage in industry initiatives to develop
our understanding and approach to ‘transition
finance’. We do not currently include transition
finance as a product label or stand-alone
category in our data dictionary and reporting,
and we will continue to monitor and consider
industry guidance for future updates to our
data dictionary.
We have established internal business
governance forums and processes to assess
and monitor the risks associated with
sustainable finance products, ranging from
product design, origination and approval, as
well as tracking and monitoring product
performance.
We recognise that there are products and
assets included in HSBC’s ESG and
sustainable investing approach which may be
counted towards our sustainable finance and
investment ambition that do not necessarily
qualify as ‘sustainable investments’ as defined
by Sustainable Finance Disclosure Regulation
(SFDR) and/or other relevant regulations, and
may not qualify as ‘sustainable’ products for
the purposes of the UK Sustainability
Disclosure Requirements (SDR) and European
Securities and Markets Authority (ESMA) fund
naming guidance and/or any other regulatory
standards.
ÑFor our 2025 ESG Data Pack and Sustainable
Finance and Investment Data Dictionary, see
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 38 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
Partnering for an enabling environment
Our ability to support our customers’ transition
is heavily influenced by external market and
policy conditions. We seek to partner for an
enabling environment that can help to
accelerate the flow of capital towards scaling
transition solutions and innovation.
We aim to use our global reach and convening
ability to engage and collaborate with a range
of partners – including industry peers,
customers, governments, academia, civil
society and entrepreneurs – on solutions that
can help support the transition.
Through our philanthropy, we also partner with
a range of NGOs to help develop thought
leadership, spur innovation, build capacity,
mobilise capital and test and scale climate
solutions.
Highlights from our sustainability-
aligned partnerships
In 2025, we donated approximately $12.6m in
grant funding to help establish a portfolio of
partnerships aligned to the strategic focus
areas set out in our Net Zero Transition Plan.
We also supported initiatives focused on
driving progress on cross-cutting issues, such
as nature and the just transition.
| Our just transition approach<br><br>The speed and scale of the transition to net<br><br>zero will be influenced by how it impacts<br><br>communities, and how communities view<br><br>and support the transition.<br><br>Our approach to net zero considers how we<br><br>can support a just transition, including how<br><br>best to engage with and inform our<br><br>customers on the topic, as well as helping to<br><br>ensure the transition to net zero can<br><br>positively impact local communities.<br><br>Examples of our engagement include:<br><br>–In 2025, we supported the Just Transition<br><br>Finance Lab at the London School of<br><br>Economics, which produced thought | –<br><br>–leadership on topics including ‘promoting a<br><br>transition with inclusion in India’ and<br><br>‘mobilising bonds for a just transition’.<br><br>–HSBC Asset Management, in line with<br><br>relevant stewardship activities,<br><br>encourages companies to identify and<br><br>address the impacts of their climate<br><br>strategy on stakeholders, including<br><br>workers, suppliers and the communities in<br><br>which they operate. This may involve<br><br>setting specific metrics or objectives<br><br>concerning, but not limited to, employee<br><br>training and development, green job<br><br>creation, safeguarding workers’ rights and<br><br>support for affected communities. | |||||
|---|---|---|---|---|---|---|
| Our approach to nature | ||||||
| --- | --- | --- | ||||
| Nature and its ecosystem services are<br><br>foundational to economic growth, resilience<br><br>and long-term value creation. Nature-related<br><br>opportunities and risks – which can stem<br><br>from the impacts and dependencies the<br><br>global economy and financial system have on<br><br>nature, as well as the complex interactions<br><br>and compounding effects of climate change –<br><br>are areas that require further consideration.<br><br>We have been developing our approach to<br><br>nature, aligning it with our net zero approach:<br><br>supporting our customers through financing<br><br>and investing in nature-related solutions;<br><br>starting to embed nature into the way we<br><br>operate, initially through understanding our<br><br>exposure to nature and managing nature-<br><br>related risk in our European business; and | partnering for a supportive enabling<br><br>environment, for example, through our<br><br>nature-focused philanthropic partnerships.<br><br>In 2025, we established a Group Nature<br><br>Programme, including senior governance,<br><br>to oversee the development of our approach<br><br>to nature. We continued to advance our<br><br>approach to nature-related risk, initially<br><br>focused on key parts of our European<br><br>business, by starting to incorporate nature<br><br>into wholesale credit risk management<br><br>processes and completing a pilot nature<br><br>scenario analysis stress test. We continue to<br><br>enhance our capabilities, methodologies and<br><br>tools, in line with evolving regulatory and<br><br>reporting expectations. | HSBC Asset Management highlights good<br><br>practices relating to nature in its Stewardship<br><br>Plan, emphasising natural capital strategy,<br><br>risk and reporting, governance and<br><br>engagement. We encourage priority investee<br><br>companies (as defined in our Stewardship<br><br>Plan), where nature-related issues are<br><br>relevant, to work towards these practices.<br><br>In 2025, Climate Asset Management, a joint<br><br>venture between HSBC Asset Management<br><br>and climate investment and advisory firm<br><br>Pollination, was ranked as Fund Manager of<br><br>the year in both Global and European<br><br>Categories at the Agri Investor Awards.<br><br>ÑFor further details see HSBC Asset<br><br>Management Stewardship Plan at https://<br><br>www.assetmanagement.hsbc.co.uk/en/<br><br>institutional-investor/about-us/responsible-<br><br>investing/policies | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 39 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
Embedding net zero into the way we operate
Financed emissions
| TCFD |
|---|
Financed emissions is one of the key metrics
we use to measure progress on the transition
of our portfolio. As part of our ambition to
become a net zero bank by 2050, we have set
financed emissions targets for 2030.
Our analysis of financed emissions comprises
‘on-balance sheet financed emissions’ and
‘facilitated emissions’, which we distinguish
where necessary in our reporting.
Financed emissions link the financing we
provide for our customers to their activities in
the real economy and provide an indication of
the associated GHG emissions. They form
part of our scope 3 emissions, which include
emissions associated with the use of a
company’s products and services.
Our on-balance sheet financed emissions
include emissions related to on-balance sheet
lending, such as project finance and direct
lending. Our facilitated emissions include
emissions related to financing we help clients
to raise through capital markets activities. Our
analysis covers financing from CIB, and
Commercial Banking in the UK and Hong
Kong.
Our combined on-balance sheet financed and
facilitated emissions targets are for two
emissions-intensive sectors: oil and gas; and
power and utilities. Our on-balance sheet
financed emissions targets cover the following
sectors: cement; iron and steel; aviation;
automotive; and thermal coal mining.
We have set absolute emissions reduction
targets for the oil and gas, and thermal coal
mining sectors. For the power and utilities;
cement; iron and steel; aviation; and
automotive sectors, we have set emissions
intensity targets that allow us to deploy capital
towards decarbonisation solutions.
As part of our financial reporting, we present the
progress for these sectors against our financed
emissions baselines and targets.
Our approach to financed emissions
In our approach to assessing our financed
emissions, our key methodological decisions
are shaped in line with industry practices and
standards. We recognise that these practices
and standards are still developing. We will also
continue to review our reporting approach as
regulatory standards evolve, such as the
impact of the International Sustainability
Standards Board (ISSB) Standards.
Coverage of our analysis
Our analysis focuses on the most carbon-
emissive sectors and the parts of the value
chain where we believe most of the
emissions are produced, to help reduce
double counting of emissions. Double
counting may occur when GHG emissions are
counted more than once in the financed
emissions calculation. For instance, to
minimise the overlap of emissions captured,
we only include midstream activities of the
automotive sector, as upstream may be
included in other sectors that we finance, such
as iron and steel. This is different to the scope
of sectors within the wholesale corporate
lending portfolio that we use to manage
climate risk. These sectors are set out on page
204.
By estimating emissions and setting targets for
customers that directly account for, or indirectly
influence, the majority of emissions in each of
the most carbon-emissive sectors, we can
focus our engagement and resources where we
believe the potential for change is highest. For
each sector, our reported emissions now
typically include all the major GHGs, including
carbon dioxide, methane and nitrous oxide,
among others. These are reported as tonnes of
CO2 equivalent (‘tCO2e’).
To calculate annual on-balance sheet financed
emissions, we have taken into consideration
guidance from the Partnership for Carbon
Accounting Financials (‘PCAF’) standard. We
use drawn balances as at 31 December in the
year of analysis related to wholesale credit and
lending, including business loans and project
finance, as the value of finance provided to
customers.
For facilitated emissions we considered all
capital market transactions in scope for the year
of analysis. These included debt and equity
capital markets, and syndicated loans.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
| Our financed emissions target refresh and associated changes | ||||||
|---|---|---|---|---|---|---|
| As stated in our 2025 Net Zero Transition<br><br>Plan, we have undertaken a detailed review of<br><br>each of our interim 2030 financed emissions<br><br>targets this year to seek to ensure our<br><br>approach continues to reflect the evolving<br><br>external context, including developments in<br><br>policy, technology, climate science, customer<br><br>actions, available data and methodologies.<br><br>We have updated our targets for all our in-<br><br>scope carbon-intensive sectors, apart from<br><br>thermal coal mining. Our thermal coal mining<br><br>target remains unchanged, in alignment with<br><br>our thermal coal phase-out policy and thermal<br><br>coal financing drawn balance exposure<br><br>reporting. | The key change is the adoption of a target<br><br>range for our interim 2030 financed emissions<br><br>targets, informed by IEA’s 2024 Net Zero<br><br>Emissions (‘NZE’) Scenario and Announced<br><br>Pledges Scenario (‘APS’).<br><br>For our emissions intensity-based targets, we<br><br>have moved the baseline year from 2019 to<br><br>2023 to reflect improvements in available data<br><br>and methodology. Targets for these sectors<br><br>are point-in-time targets and independent<br><br>from the baseline. We continue to use 2019<br><br>as the baseline year for our oil and gas<br><br>combined financed and facilitated emissions<br><br>target, and 2020 for our thermal coal mining<br><br>financed emissions target, as our absolute<br><br>emissions reduction targets are set based on<br><br>a percentage reduction from the baseline<br><br>year. | Lending products that are short term in nature<br><br>are now included in our financed emissions<br><br>reporting. We have included short-term<br><br>lending with the aim to cover in-scope lending<br><br>activity and align with industry guidance. In<br><br>addition, we have descoped aluminium from<br><br>the previously reported iron, steel and<br><br>aluminium sector and changed the reporting<br><br>unit for aviation from revenue passenger<br><br>kilometre (‘rpk’) to revenue tonne kilometre<br><br>(‘rtk’).<br><br>See page 45 for details on the scope and<br><br>methodology changes driving our re-baselines<br><br>and restatements.<br><br>ÑFor further details see our Financed Emissions<br><br>and Thermal Coal Exposures Methodology at<br><br>www.hsbc.com/who-we-are/esg-and-<br><br>responsible-business/esg-reporting-centre | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 40 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
The chart below shows the scope of our
financed emissions analysis of seven sectors,
including upstream, midstream and
downstream activities within each sector. The
allocation of companies to different parts of
the value chain is highly dependent on expert
judgement and data available on company
revenue streams. As data quality improves,
this will be further refined.
Financed emissions analysis
| Sector | Scope of<br><br>emissions | Value chain in scope | Coverage of GHGs | |||
|---|---|---|---|---|---|---|
| Oil and gas | 1, 2 and 3 | Upstream<br><br>(e.g. extraction) | Midstream<br><br>(e.g. transport) | Downstream<br><br>(e.g. fuel use) | Integrated/<br><br>diversified | All GHGs |
| Power and utilities | 1 and 2 | Upstream (e.g.<br><br>generation) | Midstream<br><br>(e.g. transmission and distribution) | Downstream<br><br>(e.g. retail) | Diversified utilities -<br><br>Power generation | All GHGs |
| Cement | 1 and 2 | Upstream (e.g. raw<br><br>materials, extraction) | Midstream<br><br>(e.g. clinker and cement manufacturing) | Downstream<br><br>(e.g. construction) | All GHGs | |
| Iron and steel | 1 and 2 | Upstream (e.g. raw<br><br>materials, extraction) | Midstream<br><br>(e.g. ore to steel) | Downstream<br><br>(e.g. construction) | All GHGs | |
| Aviation | 1 for airlines,<br><br>3 for aircraft<br><br>lessors | Upstream (e.g. parts<br><br>manufacturers) | Midstream<br><br>(e.g. aircraft manufacturing) | Downstream<br><br>(e.g. airlines and air lessors) | All GHGs | |
| Automotive | 1, 2 and 3 | Upstream<br><br>(e.g. suppliers) | Midstream<br><br>(e.g. motor vehicle manufacture) | Downstream<br><br>(e.g. retail) | All GHGs | |
| Thermal coal mining | 1, 2 and 3 | Upstream<br><br>(e.g. extraction) | Midstream<br><br>(e.g. processing) | Downstream<br><br>(e.g. retail) | All GHGs | |
| Key: |
Included in analysis
Setting our targets
Our initial approach to target setting used a
single reference scenario – the 2021
International Energy Agency (‘IEA’) Net Zero
Emissions by 2050 Scenario (‘NZE 2021’). We
have now introduced a target range for all our
in-scope carbon-intensive sectors (except for
thermal coal mining) informed by the IEA’s
2024 NZE and APS Scenarios.
Our approach is aligned with the goals of the
Paris Agreement to hold the global
temperature increase to well below 2°C above
pre-industrial levels and pursuing efforts to
limit the temperature increase to 1.5°C above
pre-industrial levels. Adopting a target range
helps us to better navigate the inherent
uncertainty in the pace of transition in the real
economy.
Facilitated emissions included in our combined
metrics are weighted at 33%, in accordance
with the PCAF standard. To further reduce the
inherent volatility in facilitated emissions, we
apply a moving average up to three years
building up from the baseline year (e.g.
average of 2022, 2023 and 2024 for the 2024
oil and gas progress numbers) to track
progress towards our combined target. This
means that transactions facilitated in 2028 and
2029 will still have an impact on the 2030
progress number and will need to be taken
into consideration as we manage progress
towards our target.
We perform feasibility analysis of our financed
emissions targets, considering multiple
climate-related scenarios.
We do not plan to rely on purchasing credits
to achieve any interim 2030 financed
emissions targets we set.
An evolving approach
We continue to engage with regulators,
standard setters, investors and industry bodies
to help shape our approach to target setting and
managing portfolio alignment to support the
transition to net zero in the global economy.
For the agricultural, corporate and retail real
estate sectors, we continue to expect to
measure and report our financed emissions in
future disclosures and we are working on
improving the quality and granularity of internal
data and sourcing suitable external data for
reliable measurement.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
| Data and methodology limitations | ||||||
|---|---|---|---|---|---|---|
| Our financed emissions estimates and methodological choices are shaped by data availability for our sectors. We are members of the PCAF,<br><br>which defines and develops GHG accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for<br><br>Financed Emissions and for Facilitated Emissions provide detailed methodological guidance. | ||||||
| –We have found that data quality scores vary<br><br>across the different sectors and years of our<br><br>analysis. While we expect our data quality<br><br>scores to improve over time, as companies<br><br>continue to expand their disclosures to meet<br><br>growing regulatory and stakeholder<br><br>expectations, there may be fluctuations<br><br>within sectors year-on-year, and/or<br><br>differences in the data quality scores due to<br><br>changes in data availability. | –Most of our clients do not yet report the full<br><br>scope of GHG emissions included in our<br><br>analysis, in particular scope 3 at a subsidiary<br><br>level. In the absence of client-reported<br><br>emissions, we estimated emissions using<br><br>proxies based on company production and<br><br>revenue figures. We applied industry<br><br>averages in our analysis where company-<br><br>specific data was unavailable, using third-<br><br>party datasets. As data improves for client-<br><br>reported emissions, our reliance on<br><br>estimates will continue to reduce. | –Reported client emissions data may have up<br><br>to a two-year lag, which may result in<br><br>alignment challenges to financial reporting<br><br>dates and lead to further reliance on proxies.<br><br>–Mapping external datasets to our internal<br><br>client entities can be challenging due to<br><br>complex company ownership structures.<br><br>–The methodology and data used to assess<br><br>financed emissions and set targets continue<br><br>to evolve and we expect industry guidance,<br><br>market practice, and regulations to continue<br><br>to change. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 41 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment | ||||||
| Data and methodology limitations continued | ||||||
| --- | --- | --- | ||||
| –We remain conscious that the financed<br><br>emissions calculation is sensitive to volatility<br><br>in drawn amounts or market value<br><br>fluctuations, and we plan to be transparent<br><br>around drivers for change to portfolio<br><br>financed emissions where possible.<br><br>–We calculate sector-level emissions<br><br>intensity metrics using a portfolio-weighted<br><br>approach.<br><br>–Due to data limitations, we are unable to<br><br>obtain production data for all clients and so<br><br>we calculate an emissions intensity figure<br><br>using the 75th percentile of available data<br><br>points to meet this data gap, which we<br><br>consider as a conservative approach.<br><br>–Classification of our clients into sectors is<br><br>performed at a counterparty group level with<br><br>inputs from SMEs, and will continue to<br><br>evolve with improvements to data and our<br><br>sector classification approach. Our internal<br><br>data on customer groups used to source<br><br>financial exposure and emissions data is<br><br>based on credit and relationship<br><br>management attributes and may not always<br><br>be aligned to the data required to analyse<br><br>emissions across sector value chains. | –As the sub-sector, and therefore the value<br><br>chain classification of a client, is based on<br><br>expert judgement, and as clients continue to<br><br>transition, classification changes can result<br><br>in sectoral movement year-on-year.<br><br>–Emissions are calculated at a counterparty<br><br>group level, rather than at subsidiary level,<br><br>mainly due to the availability of emissions<br><br>data, and this may lead to over- or under-<br><br>estimation of emissions compared with<br><br>calculation at the subsidiary level.<br><br>–Companies with multiple activities, such as<br><br>conglomerates with near to equal business<br><br>activity split across multiple sectors, are<br><br>excluded from our reporting as these can<br><br>have different activities and cannot be<br><br>allocated to one sector target.<br><br>–For scope 2 emissions, companies may<br><br>often choose between reporting location or<br><br>market-based emissions. For our analysis,<br><br>where available, market-based emissions<br><br>data is prioritised for sourcing compared<br><br>with location-based emissions. | –We use structured entities to securitise<br><br>customer loans and advances we originate<br><br>and to diversify sources of funding for asset<br><br>origination and capital efficiency. These are<br><br>currently excluded and we will continue to<br><br>review our reporting approach as industry<br><br>guidance and methodology evolves.<br><br>–Where we have sponsored or invested in<br><br>our clients’ securitisation vehicles, these<br><br>have been included in our analysis where<br><br>possible, recognising current data<br><br>limitations, applying the PCAF business<br><br>loans approach.<br><br>–The operating environment for climate<br><br>analysis and portfolio alignment is maturing.<br><br>We continue to work to improve our data<br><br>management processes.<br><br>ÑFor further details see our Financed Emissions<br><br>and Thermal Coal Exposures Methodology at<br><br>www.hsbc.com/who-we-are/esg-and-<br><br>responsible-business/esg-reporting-centre |
Targets and progress
We have set out in the table below our
combined on-balance sheet financed and
facilitated emissions targets for the oil and
gas, and power and utilities sectors. We also
set out our updated targets for the on-balance
sheet financed emissions for cement, iron and
steel, aviation and automotive, and our
existing thermal coal mining target.
For our combined on-balance sheet financed
and facilitated emissions targets in 2024, the
moving average for facilitated emissions with
a 33% weighting for the oil and gas sector
totals 5.0 Mt CO2e and for the power and
utilities sector, it totals 279 tCO2e/GWh.
These values are then combined with the on-
balance sheet numbers for the relevant year to
track progress to target. We set out the annual
figures before the application of the three-year
average built up from the baseline in the
facilitated emissions table on page 46.
This year we have a three-year moving
average for oil and gas in 2023 and 2024, and
a two-year moving average for power and
utilities in 2024. Averages will be built up to
three years over time.
We disclose emissions in 2023 and 2024 and
progress achieved in 2024 versus baseline for
each sector.
The table incorporates re-baselines and
restatements, where relevant, and in this
section we set out the approach we take to
target setting.
When assessing the changes from 2019 to
2024, it is important to emphasise how
changes to exposure and market fluctuations
impact yearly updates as we make progress
towards our interim targets. Movement from
one year to the next may not reflect future
trends for the financed emissions of our
portfolio.
See specific sector sections for further
information on key movements.
| Sector1 | Baseline | 2023 | 2024 | 2024 % change<br><br>vs. baseline | 2030 target | Unit2 | Target<br><br>type | Target scenario |
|---|---|---|---|---|---|---|---|---|
| Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average | ||||||||
| Oil and gas | 46.2 in 2019 | 28.9 | 28.5 | (38)% | (14-30)% | Mt CO2e | Absolute | IEA APS and NZE 2024 |
| Power and utilities | 295 in 2023 | 295 | 242 | (18)% | 195-270 | tCO2e/GWh | Intensity | IEA NZE and APS 2024 |
| On-balance sheet financed emissions | ||||||||
| Cement | 0.59 in 2023 | 0.59 | 0.61 | 3% | 0.47-0.56 | tCO2e/t cement | Intensity | IEA NZE and APS 2024 |
| Iron and steel | 1.73 in 2023 | 1.73 | 1.81 | 5% | 1.29-1.52 | tCO2e/t steel | Intensity | IEA NZE and APS 2024 |
| Aviation | 747 in 2023 | 747 | 737 | (1)% | 709-776 | tCO2e/million rtk3 | Intensity | IEA NZE and APS 2024 |
| Automotive | 152.8 in 2023 | 152.8 | 146.8 | (4)% | 65.5-95.3 | tCO2e/million vkm | Intensity | IEA NZE and APS 2024 |
| Thermal coal mining4 | 3.4 in 2020 | 1.03 | 0.22 | (94)% | (70)%4 | Mt CO2e | Absolute | IEA NZE 2021 |
1 Our absolute and intensity emissions metrics and targets are measured based on the drawn exposures of the counterparties in scope for each sector. Emissions
intensity is a weighted average according to the portfolio weight of each investment, as a proportion of the total portfolio value.
2 For the oil and gas sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent (‘Mt CO2e’); for the power and utilities sector, intensity
is measured in tonnes of carbon dioxide equivalent per gigawatt hour (‘tCO2e/GWh’); for the cement sector, intensity is measured in tonnes of carbon dioxide
equivalent per tonne of cement (‘tCO2e/t cement’); for the iron and steel sector, intensity is measured in tonnes of carbon dioxide equivalent per tonne of steel
(‘tCO2e/t steel’); for the aviation sector, intensity is measured in tonnes of carbon dioxide equivalent per million revenue tonne kilometres (‘tCO2e/million rtk’); for
the automotive sector, intensity is measured in tonnes of carbon dioxide equivalent per million vehicle kilometres (‘tCO2e/million vkm’); and for the thermal coal
mining sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent (‘Mt CO2e’).
3 We have changed our reporting unit for aviation from revenue passenger kilometre (‘rpk’) to revenue tonne kilometre (‘rtk’) to better align to counterparties in scope
which often include all airline activities (passengers, belly cargo, dedicated cargo). Additionally, this metric enables direct comparison to climate scenarios that are based
on traffic demand forecasts and aligns to industry practice.
4 The thermal coal mining scope differs from the other target sectors. We include solely emissions from thermal coal production and coal power generation, rather than
the total emissions of a counterparty within a sector, to reflect the thermal coal mining absolute financed emissions reduction target.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 42 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
We plan to report financed emissions and
progress against our targets annually, and to
be transparent in our disclosures about the
methodologies applied and any challenges or
dependencies. However, financed emissions
figures may not be reconcilable or comparable
year-on-year in future, and baselines and
targets may require updates or revisions as
data, methodologies and reference scenarios
develop.
Consistent with the PCAF guidance on
financed emissions accounting, we only
consider the outstanding drawn financing
amount, given this has a direct link to real
economy emissions.
A number of clients have material undrawn
balances that, if drawn, could significantly
increase the financed emissions related to
those clients. We expect to assess how to
manage these exposures on a forward-looking
basis as we progress towards our 2030
targets. In addition, for the sectors with
intensity-based targets, the emissions
intensity is sensitive to material clients, and
changes to drawn balances year-on-year can
therefore influence the trend.
We continue to engage with and support our
clients in their decarbonisation journey by
providing financing and advisory services.
The charts below display our progress to date
in relation to the updated 2030 target,
including historical progress metrics based on
our previous methodology.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
Oil and gas
For the oil and gas sector, our analysis
included scope 1, 2 and 3 emissions, including
carbon dioxide and methane, for upstream and
integrated companies. Our baseline and
progress figures reflect combined on-balance
sheet financed and facilitated emissions.
We have set a target to reduce absolute
combined on-balance sheet financed and
facilitated emissions for our oil and gas
portfolio by 14-30% by 2030 relative to our
2019 baseline. The percentage reduction
range is equivalent to the percentage decrease
that the IEA indicates in its APS and NZE 2024
scenarios for global sector emissions to 2030,
from a 2019 baseline.
We show in the chart our progress to date
against our 2030 target. For 2024, the oil and
gas sector represents 48% of the financed
emission footprint of our target sectors. In
2024, absolute combined on-balance sheet
financed and facilitated emissions in our
portfolio decreased by 38% to 28.5 million
tonnes of carbon dioxide equivalent (‘Mt
CO2e’) relative to the 2019 baseline and
decreased by 1% from 2023 to 2024.
The reduction was due to strategic portfolio
management actions, complemented by
temporary factors, such as low loan drawdown
levels. These factors offset increases in 2024
for both short-term lending and capital markets
transaction volumes, where capital markets
activity remains subdued compared with the
baseline year. Facilitated emissions are
incorporated on a three-year rolling average
basis, and lower volumes from 2022 and 2023
continue to be included in the 2024 reported
number.
We are currently reporting below the 2030
target range. Achieving the target range is
sensitive to market activities, such as clients
increasing capital markets transactions, and
volatility in short-term lending or external
factors leading clients to draw down on
existing facilities, all of which could lead to
increased financed emissions in our portfolio.
We continue to engage and support our clients
in their transition journey while managing
towards our risk appetite.
| Oil and gas<br><br>Mt CO2e | 2024 progress<br><br>from baseline |
|---|---|
| (38)% |
(14-30)%
Power and utilities
For the power and utilities sector, our analysis
included scope 1 and 2 emissions for
upstream power generation, and diversified
utilities power generation companies. Our
baseline and progress figures reflect combined
on-balance sheet financed and facilitated
emissions.
We target a combined on-balance sheet
financed and facilitated emissions intensity of
195-270 tonnes of carbon dioxide equivalent
per gigawatt hour (‘tCO2e/GWh’) by 2030. This
reduction range is equivalent to the global
sector average emissions intensity for 2030
that the IEA indicates in its NZE and APS 2024
scenarios.
We have chosen an intensity-based target to
enable increased financing of clients engaging
in low-emissions solutions and transition
initiatives, such as renewable and clean energy
deployment, grid modernisation, energy
storage and efficiency improvements. With
electricity demand expected to more than
double by 2050 due to population growth,
electrification of industry, transport and
buildings, and demand from air conditioners
and data centres, a shift to low carbon-
intensive power generation will be critical.
We show in the chart our progress to date
against our 2030 target. For 2024, the power
and utilities sector represents 14% of the
financed emission footprint of our target
sectors. In 2024, the combined on-balance
sheet financed and facilitated emissions
intensity in our portfolio decreased by 18% to
242 tCO2e/GWh relative to the 2023 baseline
and is currently within the 2030 target range.
This reduction was primarily driven by
increased financing to lower emission-
intensive clients and a greater shift towards
financing renewable energy projects and pure-
play companies.
| Power and utilities<br><br>tCO2e/GWh | 2024 progress<br><br>from baseline |
|---|---|
| (18)% |
195-270
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| Environment |
Cement
For the cement sector, our analysis included
scope 1 and 2 emissions for midstream
companies with clinker and cement
manufacturing facilities.
We target an on-balance sheet financed
emissions intensity of 0.47-0.56 tonnes of
carbon dioxide equivalent per tonne of cement
(‘tCO2e/t cement’) by 2030, using 2023 as our
baseline. This reduction is equivalent to the
global sector average emissions intensity for
2030 that the IEA indicates in its NZE and APS
2024 scenarios.
In the short term, the global cement industry
has demonstrated emissions reductions
through energy efficiency, alternative fuels,
kiln optimisation, lowering the clinker-to-
cement ratio and incorporating supplementary
cementitious materials. Achieving further
emissions reductions and enabling near-zero
emissions cement production in the medium
to long term will require significant investment
in emerging technologies, including alternative
cementitious materials, renewable industrial
heat, and large-scale carbon capture and
storage.
Globally, over 50 million tonnes per annum of
near-zero emissions cement and concrete
production capacity has been announced or is
under development.
We show in the chart our progress to date
against our 2030 target. For 2024, the cement
sector represents 11% of the financed
emission footprint of our target sectors.
The 2024 emissions intensity of our portfolio,
at 0.61 tCO2e/t cement, was 3% higher than
the 2023 baseline. The increase in 2024 was
mainly driven by sector mix. Our portfolio in
this sector is heavily concentrated and
emissions intensity trends are highly sensitive
to material client exposures and changes to
drawn balances year-on-year.
| Cement<br><br>tCO2e/t cement | 2024 progress<br><br>from baseline |
|---|---|
| 3% |
0.47-0.56
Iron and steel
For the iron and steel sector, our analysis
included scope 1 and 2 for midstream iron and
steel production. We have now descoped
aluminium as our exposure to this sector is
very limited and the combination of two
metals with different emissions intensity
ranges and decarbonisation trajectories
created volatility in reporting.
We have currently not set a separate
aluminium target due to our low exposure to
the sector, both in terms of client numbers
and financed emissions. We will continue to
monitor our aluminium exposure and in the
event that it becomes a more material part of
our portfolio in future, we may consider
creating a separate target.
We target an on-balance sheet financed
emissions intensity of 1.29-1.52 tonnes of
carbon dioxide equivalent per tonne of steel
(‘tCO2e/t steel’) by 2030, using 2023 as our
baseline. This reduction is equivalent to the
global sector average emissions intensity for
2030 that the IEA indicates in its NZE and APS
2024 scenarios.
To achieve near-term emissions reductions,
we note that steel producers are focusing on
enhanced energy efficiency, increased scrap
utilisation, procuring green electricity and
testing alternatives to coke. A smaller group of
clients are looking at more transformative
investments, such as closing old coal-reliant
capacity and replacing it with direct reduction
and electric arc furnaces, and investing in
upstream enablers, like high quality iron ore,
and green iron supply chains.
Further innovation and investments this
decade will be crucial to scale and
commercialise low-emissions iron and steel
production processes, which will be an
important factor in achieving our 2030 target.
We show in the chart our progress to date
against our 2030 target. For 2024, the iron and
steel sector represents 8% of the financed
emissions footprint of our target sectors.
The emissions intensity of our portfolio in 2024
rose by 5% to 1.81 tCO2e/t steel against our
2023 baseline, driven by a shift in our sector
mix across our low to high emissions-intensive
clients. The emissions intensity trends in this
sector are highly sensitive to volatility in client
exposures and changes to drawn balances
year-on-year.
| Iron and steel<br><br>tCO2e/t steel1 | 2024 progress<br><br>from baseline |
|---|---|
| 5% |
1.29-1.52
1Previously reported progress figures include
aluminium.
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| Environment |
Aviation
For the aviation sector, our analysis included
passenger airlines’ scope 1 and aircraft
lessors‘ scope 3 emissions, focusing on
downstream. We have changed our reporting
unit for aviation from revenue passenger
kilometre (‘rpk’) to revenue tonne kilometre
(‘rtk’) to better align counterparties in scope,
which often include all airline activities
(passengers, belly cargo, dedicated cargo).
Additionally, this metric enables a direct
comparison with climate scenarios that are
based on traffic demand forecasts, and aligns
to industry practice.
We target an on-balance sheet financed
emissions intensity of 709-776 tonnes of
carbon dioxide equivalent per million revenue
tonne kilometres (‘tCO2e/million rtk’) by 2030,
using 2023 as our baseline. This reduction is
equivalent to the global sector average
emissions intensity for 2030 that the IEA
indicates in its NZE and APS 2024 scenarios.
We believe the sector needs significant policy
support, investments in alternative fuels, such
as sustainable aviation fuel (‘SAF’), and new
efficient aircraft to reduce emissions.
The adoption of SAF is in its infancy, currently
accounting for an estimated 0.1% of all
aviation fuels consumed.
SAF use needs to increase to over 10% by
2030 to be in line with the IEA NZE 2024
scenario. This requires a significant ramp-up of
investment in production capacity and
supportive policies, such as fuel taxes and low
carbon fuel standards, as existing and planned
SAF projects are expected to meet just 2–4%
of jet fuel demand by 2030.
We show in the chart our progress to date
against our 2030 target. Historical progress
metrics are based on our previous
methodology, with tCO2e/rpk converted to
tCO2e/rtk using a multiplier of 10. For 2024,
the aviation sector represents 7% of the
financed emission footprint of our target
sectors.
In 2024, the emissions intensity of our
portfolio fell by 1% to 737 tCO2e/million rtk
relative to the 2023 baseline and is currently
within the 2030 target range. This decline was
primarily driven by higher exposure to airlines
that are transitioning to lower emissions.
Improved availability of client reported data has
also improved the quality of our reported
numbers. This sector is heavily concentrated,
and emissions-intensity trends are highly
sensitive to material client exposures and
changes to drawn balances year-on-year.
| Aviation<br><br>tCO2e/million rtk1 | 2024 progress<br><br>from baseline |
|---|---|
| (1)% |
709-776
1Previously reported progress figures in tCO2e/
million rpk are converted to tCO2e/million rtk
using a multiplier of 10.
Automotive
For the automotive sector, our analysis
included scope 1 and 2 for midstream
manufacturing of vehicles, and scope 3 for
tank-to-wheel exhaust pipe emissions for light-
duty vehicles. We excluded heavy-duty
vehicles from our analysis as the target
pathway derived from the IEA excludes them
as they have a different decarbonisation
pathway relative to light-duty vehicles. This
approach is also consistent with industry
practice. We will consider including heavy-duty
vehicles at a later stage of our analysis, as data
and methodologies develop.
We target an on-balance sheet financed
emissions intensity of 65.5-95.3 tonnes of
carbon dioxide equivalent per million vehicle
kilometres (‘tCO2e/million vkm’) by 2030 using
2023 as our baseline. This reduction is
equivalent to the global sector average
emissions intensity for 2030 that the IEA
indicates in its NZE and APS 2024 scenarios.
The IEA NZE 2024 scenario implies that by
2030, electric vehicle (‘EV’) share of sales
would be 30%, based on HSBC analysis.
During 2025, BloombergNEF estimates that
EV sales were 24%.
Achieving our 2030 financed emissions target
will be challenging unless there is a strong
acceleration in the share of EV sales in certain
markets. This will require large-scale
investments in new EVs and battery
manufacturing plants, alongside widespread
charging infrastructure and government
policies to support EVs.
We show in the chart our progress to date
against our 2030 target. For 2024, the
automotive sector represents 12% of the
financed emissions footprint of our target
sectors.
The 2024 emissions intensity of our portfolio
dropped by 4% to 146.8 tCO2e/million vkm
against our 2023 baseline of 152.8 tCO2e/
million vkm. The decline against our baseline
was driven by a sector mix towards lower
emissions-intensity clients.
| Automotive<br><br>tCO2e/million vkm | 2024 progress<br><br>from baseline |
|---|---|
| (4)% |
65.5-95.3
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| Environment |
Thermal coal mining
For the thermal coal mining sector, our
analysis focused on scope 1, 2 and 3
emissions in upstream companies, including
those involved in extraction. When calculating
our financed emissions from thermal coal
mining, we focused on thermal coal extraction
and processing companies, and diversified
mining companies. The majority of our
reported financed emissions relate to scope 3
emissions associated with coal mining,
representing financing provided to large
conglomerates that own diversified business
interests including coal.
We have set a target to reduce our absolute
on-balance sheet financed emissions by 70%
by 2030, relative to the re-baselined 2020
figure of 3.4 million tonnes of carbon dioxide
equivalent (‘Mt CO2e’). We used 2020 as a
baseline to align with the baseline used for our
drawn balance exposure targets in our thermal
coal phase-out policy. Our target is consistent
with a global 1.5°C-aligned pathway, as
defined by the IEA NZE 2021 scenario.
We show in the chart our progress to date
against our 2030 target. For 2024, thermal coal
mining represents 0.5% of the financed
emissions footprint of our target sectors.
In 2024, absolute on-balance sheet financed
emissions decreased by 94% to 0.22 Mt CO2e
relative to the 2020 baseline and decreased by
79% from 2023 to 2024. The overall reduction
from the 2020 baseline figure for 2023 and
2024 was due to reduced project financing and
specific coal purpose loans, combined with
strategic decisions and low client drawdown
levels.
We are currently reporting below the 2030
target. Looking ahead, this number remains
sensitive to risk factors, such as increased
client drawdowns of existing facilities and
volatility in short-term lending products that
could result in an increase from the current
reported number. We continue to engage with
and support our clients in their transition
journey while managing these dynamics within
our risk appetite to remain on track to meet
the 2030 target.
| Thermal coal mining<br><br>Mt CO2e | 2024 progress<br><br>from baseline |
|---|---|
| (94)% |
Our approach to re-baselines and restatements
Our re-baseline and restatement policy
defines the circumstances for a restatement
of previously reported data and targets,
including a re-baseline.
Changes to methodology, errors, and scope
or boundary changes are our key drivers of
change.
Climate-related data and processes are
continually evolving. Therefore, we do not
consider data and process enhancements to
be a key driver of change. This may change
over time as data and processes mature.
When key drivers, in aggregate, breach our
defined significance thresholds, a
restatement of previously reported data and
targets, including where necessary a re-
baseline, is required.
We expect our policy to evolve with further
industry guidance.
Financed emissions re-baselines and restatements
In 2025, we have re-baselined and restated
previously reported metrics to account for the
latest methodology and scope changes.
Lending products that are short term in
nature are now included in our financed
emissions reporting. This represents a scope
change and was a key driver of change for all
sectors except thermal coal mining.
We have refined our scope to include project
finance for the relevant part of the value chain
for each sector. This is a key driver of change
for oil and gas.
Divestments as at the latest reporting year
have been removed from all years of
reporting. This scope change mainly impacts
the oil and gas sector. We have also
descoped aluminium from the previously
reported iron, steel and aluminium sector.
Methodology changes include consideration
of use of proceeds financing and financing for
pure-play green clients, driving change in the
power and utilities sector. We also changed
the reporting unit for aviation from revenue
passenger kilometre (‘rpk’) to revenue tonne
kilometre (‘rtk’). We have aligned thermal coal
mining financed emissions to the refined
thermal coal financing exposure basis of
preparation.
Additionally, enhancements to our internal and
external data have been reflected in our
restated metrics. This includes improvements
in our data sourcing of customer groups and
sector classifications, and other sector-specific
data enhancements aimed at reducing our
reliance on proxy emission calculations.
The aggregated change across all of these
items breaches the significance threshold for
absolute financed emissions or emissions
intensity for all sectors. We have set out in
the table below our re-baselined and restated
target metrics.
ÑFor further details of our re-baselined and
restated metrics, see our ESG Data Pack at
www.hsbc.com/esg
| Restated target metrics | Previously Reported | Restated Metrics1 | Percentage Change | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Sector | Unit | 2019 | 2020 | 2023 | 2019 | 2020 | 2023 | 2019 | 2020 | 2023 |
| Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average | ||||||||||
| Oil and gas | Mt CO2e | 42.6 | — | 23.2 | 46.2 | — | 28.9 | 8% | — | 25% |
| Power and utilities | tCO2e/GWh | — | — | 349.0 | — | — | 295 | — | — | (15)% |
| On-balance sheet financed emissions | ||||||||||
| Cement | tCO2e/t cement | — | — | 0.59 | — | — | 0.59 | — | — | 0% |
| Iron and steel2 | tCO2e/t steel | — | — | 2.1 | — | — | 1.73 | — | — | (18)% |
| Aviation3 | tCO2e/million rtk | — | — | 796 | — | — | 747 | — | — | (6)% |
| Automotive | tCO2e/million vkm | — | — | 152.4 | — | — | 152.8 | — | — | 0.3% |
| Thermal coal mining | Mt CO2e | — | 4.7 | — | — | 3.4 | — | — | (28)% | — |
1 All of the restated metrics set out below represent new baseline figures, apart from oil and gas 2023 which is a restated prior year comparative. Rounding in the
restated metrics has been adjusted to align with the updated target metrics where relevant.
2 Previously reported metrics for iron and steel include aluminium, which has now been descoped.
3 Previously reported progress numbers for aviation in tCO2e/million rpk are converted to tCO2e/million rtk using a multiplier of 10.
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| Environment |
On-balance sheet financed emissions
The table below summarises the results of our assessment of on-balance sheet financed emissions using 2023 and 2024 data.
| On-balance sheet financed emissions – wholesale credit lending and project finance1 | ||||||
|---|---|---|---|---|---|---|
| Sector | Year | Scope 1-2 (Mt<br><br>CO2e)† | Scope 3 (Mt<br><br>CO2e)† | Emissions<br><br>intensity | PCAF Data quality score2,† | |
| Scope 1 and 2 | Scope 3 | |||||
| Oil and gas | 2023 | 2.6 | 19.7 | N/A | 2.2 | 2.7 |
| 2024 | 3.0 | 20.4 | N/A | 2.3 | 2.8 | |
| Power and utilities | 2023 | 7.1 | N/A | 288 | 2.9 | N/A |
| 2024 | 6.6 | N/A | 232 | 3.0 | N/A | |
| Cement | 2023 | 7.2 | N/A | 0.59 | 2.3 | N/A |
| 2024 | 5.1 | N/A | 0.61 | 2.2 | N/A | |
| Iron and steel | 2023 | 3.2 | N/A | 1.73 | 2.9 | N/A |
| 2024 | 3.7 | N/A | 1.81 | 2.9 | N/A | |
| Aviation | 2023 | 2.9 | 0.51 | 747 | 2.2 | 2.5 |
| 2024 | 2.8 | 0.60 | 737 | 2.2 | 2.7 | |
| Automotive | 2023 | 0.16 | 9.3 | 152.8 | 2.2 | 3.2 |
| 2024 | 0.11 | 5.9 | 146.8 | 2.3 | 3.2 | |
| Thermal coal mining | 2023 | 0.06 | 0.97 | N/A | 3.2 | 3.2 |
| 2024 | 0.01 | 0.21 | N/A | 3.0 | 3.0 |
Facilitated emissions
The table below summarises the results of our assessment of facilitated emissions for the oil and gas, and the power and utilities sectors.
As per the PCAF Standard for Facilitated Emissions, the facilitated emissions figures are weighted at 33%. We also disclose values at 100%
weighting. For all 100%-weighted facilitated values, please refer to the ESG Data Pack at www.hsbc.com/esg.
| Facilitated emissions – ECM, DCM and syndicated loans3 (33% weighting) | ||||||
|---|---|---|---|---|---|---|
| Sector | Year | Scope 1-2 (Mt<br><br>CO2e)† | Scope 3 (Mt<br><br>CO2e)† | Emissions<br><br>intensity | PCAF Data quality score2,† | |
| Scope 1 and 2 | Scope 3 | |||||
| Oil and gas | 2023 | 0.32 | 3.1 | N/A | 2.1 | 2.5 |
| 2024 | 0.50 | 6.7 | N/A | 2.2 | 2.4 | |
| Power and utilities | 2023 | 1.2 | N/A | 320 | 2.4 | N/A |
| 2024 | 1.7 | N/A | 247 | 2.5 | N/A |
1 For all sectors in scope of financed emissions targets, the total lending exposures included were approximately 3.3% of total loans and advances to customers at 31
December 2023 and approximately 3.5% at 31 December 2024. The total loans and advances have not been adjusted for assets held for sale. The methodology for
quantifying our lending exposure to financed emissions sectors will evolve over time as data and processes continue to improve.
2 PCAF scores where 1 is high and 5 is low. This is a weighted average score based on financing for on-balance sheet financed emissions or facilitated volumes.
3 The total capital markets activity analysed applying a 100% weighting in 2024 was $17.1.bn, representing 4.3% of in-scope capital markets activity at 31 December
2024.
† Data is subject to independent third-party limited assurance in accordance with ISAE 3000 / ISAE 3410. For further details, see our Financed Emissions and Thermal
Coal Exposures Methodology and the independent third-party limited assurance report, which are available at www.hsbc.com/who-we-are/esg-and-responsible-
business/esg-reporting-centre.
Reducing emissions in assets under management
HSBC Asset Management continues to work
towards its interim target1 of reducing scope 1
and 2 financed emissions intensity by 58%
between 2019 and 2030 for the in scope
assets under management (‘AUM‘), consisting
of listed equities and corporate fixed income
managed within our major investment hubs.
As of 31 December 2019, in scope assets
amounted to $193.9bn, equating to 38% of
global AUM. This financed emissions target
remains subject to developments in transition
pathways and consultation with stakeholders,
including investors, fund boards, industry
bodies and regulators.
As at 31 December 2024, the scope 1 and 2
financed emissions intensity of HSBC Asset
Management’s in scope assets stood at 60.7
tCO2e/M$ invested, representing a 51%
reduction compared with the 2019 baseline.
The PCAF2 Data Quality score for the 31
December 2024 financed emissions intensity
was 2.3.
Reported metrics3
| 2019 | 2023 | 2024 | Unit | |
|---|---|---|---|---|
| Scope 1 and 2 financed emissions intensity | 124.0 | 69.8 | 60.7 | tCO2e/M$ invested |
| AUM in scope | 193.9 | 223.0 | 250.2 | Billions $ |
| PCAF Data Quality Score4 | 2.6 | 2.6 | 2.3 |
1This target remains subject to consultation with stakeholders including investors and fund boards on whose behalf we manage the assets. The 58% reduction
target is based on assumptions for financial markets and other data, including the IEA’s 2021 Net Zero Emissions by 2050 scenario and its underlying activity
growth assumptions. Carbon emissions intensity is measured as tonnes of carbon dioxide equivalent per million USD invested (tCO2e/M$ invested), where
emissions are scaled by enterprise values including cash.
2 PCAF defines and develops greenhouse gas accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standard for Financed
Emissions provides detailed methodological guidance to measure and disclose financed emissions. PCAF Standards are available at: https://
carbonaccountingfinancials.com/standard. HSBC Asset Management reports financed emissions based on Part A – Financed emissions 2nd edition (2022).
3The 2024 metrics were subject to independent third-party limited assurance in accordance with the International Standard on Assurance Engagements 3000
(Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’, and with respect to the GHG emissions, in accordance with
the International Standard on Assurance Engagements 3410 ‘Assurance Engagements on Greenhouse Gas Statements’, issued by the International Auditing and
Assurance Standards Board. For the independent third party’s limited assurance report, see http://www.assetmanagement.hsbc.com/about-us/net-zero. The
methodology used is available at: http://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/creating-a-new-climate-for-change/financed-
emissions-disclosures-reporting-criteria.pdf.
4From 2024, PCAF Data Quality Score is weighted by market value. In prior years, PCAF Data Quality Score was weighted by financed emissions.
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| Environment |
Net zero in our own operations
| TCFD |
|---|
In line with our ambition to become a net zero
bank, we aim to achieve net zero emissions in
our own operations and supply chain by 2050.
Reduce, replace and remove
We continue to address the emissions from
our own operations and supply chain by
focusing on reducing our consumption and
replacing consumption with low carbon
alternatives.
Based on our current pathway to net zero, in
the interim we expect to achieve a reduction of
around 40% in emissions across our
operations, business travel and supply chain by
2030, compared with our 2019 baseline year.
We will only use high-integrity carbon credits to
remove any residual emissions from our own
operations that cannot otherwise be reasonably
reduced. We continue to monitor external
guidance, including from the Science Based
Targets initiative, to seek to ensure our
approach remains credible.
Our energy consumption
In 2025 we achieved a 34.5% reduction in our
energy consumption compared with 2019. This
was driven by our strategic divestments and
adoption of energy conservation programmes,
supported by more detailed and automated
metering and monitoring of our consumption.
In 2025, we increased our purchase of
electricity from renewable sources to 94.2%, a
key milestone towards our ambition to
purchase 100% renewable electricity across
our own operations by 2030.
We continue to search for opportunities to
procure renewable electricity in each of our
markets. We follow RE100 principles to focus
on creating additional renewable capacity
through power purchase agreements (PPAs),
where possible. Where regulation or our
energy profile does not allow for PPAs, we
pursue the procurement of renewable
electricity through our utility partners, as is the
case in France and regions of India. We are
also investigating bespoke solutions such as
on-site generation, direct investment into
renewable assets and private wire
agreements. If none of these options are
available to us, we source remaining renewable
electricity through energy attribute certificates.
Business travel
Connecting with clients and colleagues
remains an important part of how we do
business. We have introduced internal carbon
budgets and enhanced our internal reporting to
allow businesses and markets to monitor their
travel emissions in greater detail. Through
guidance on more sustainable ways to travel,
we encourage ownership and conscious
decision making.
Recognising the importance of sustainable
aviation fuel (‘SAF’) to the decarbonisation of
the aviation sector and following our 2024
strategic investment made in SAF through a
partnership with EcoCeres and Cathay Pacific,
we continue to explore new opportunities to
invest in SAF. We do not currently account for
the emissions reduction of SAF purchases in
our emissions reporting.
Engaging with our supply chain
Our supply chain is the largest source of our
operational emissions and where we face the
most significant decarbonisation challenge,
reflecting the pace of the transition across the
real economy.
Our suppliers are at various stages in their
sustainability journey, and we aim to support
their transition while navigating external factors
and challenges. Given many of our suppliers are
also our customers, our customer engagement
model is also beneficial to reducing our supply
chain emissions. We consider sustainability and
supply chain decarbonisation in our sourcing and
supplier management process, where possible,
to support the reduction of our supply chain
emissions, being mindful of the business
importance of certain goods and services and
the varying regional approaches to the transition.
We support our sourcing teams to further
integrate sustainability into sourcing strategy
and decisions, including new supplier selection,
renewals and ongoing supplier management.
We continue to deepen collaboration with
suppliers and have increased our focus on
those without public disclosures or emissions
reduction plans, for example, by providing
them with additional guidance. We have
enhanced the questions we ask suppliers at
onboarding, to get a better view of their
transition journey, and are now including
suppliers’ carbon footprint as a consideration in
our selection process.
Through ongoing engagement and targeted
collaboration events, we are partnering with
some of our suppliers that are more advanced
in their sustainability journey, to jointly develop
innovative ideas on decarbonisation and nature-
related topics. We aim to support smaller
suppliers in their transitions by providing
educational materials.
Nature in our operations and supply chain
Alongside our net zero operations ambition, we
aim to be a responsible consumer of natural
resources across our operations and supply
chain. In our supply chain, we have begun
developing sustainable sourcing roadmaps
across key categories, following a materiality
assessment of biodiversity and nature risks.
Wherever possible, we aim to protect the
environment and mitigate our impact on natural
resources through our procurement choices,
design and construction, and our operations
(e.g. reduction in waste generation and paper
consumption).
| Our presence in environmentally<br><br>sensitive areas | ||||||
|---|---|---|---|---|---|---|
| Our global portfolio of buildings support<br><br>customers and communities in some<br><br>areas of water stress, and/or protected<br><br>areas of biodiversity. About 53% of our<br><br>global offices, branches and data centres<br><br>are in urban or city centre locations with<br><br>large, concentrated populations. These<br><br>areas have been identified as being<br><br>subject to water stress, accounting for<br><br>almost half of our annual water<br><br>consumption, with about 0.9% in<br><br>protected areas of biodiversity.<br><br>Although our industry is a low user of<br><br>potable water, we continue to implement<br><br>measures to reduce water consumption<br><br>across our portfolio, including the<br><br>installation of water efficient taps and<br><br>flow restrictors. | ||||||
 |
||||||
| --- | --- | |||||
| Environmental management of our portfolio | ||||||
| Our buildings policy recognises that regulatory and environmental requirements differ across<br><br>regions. Supported by our real estate services procedures for environmental and sustainability<br><br>management, our buildings policy seeks to ensure that HSBC properties minimise their overall direct<br><br>environmental impact. Our green leasing programme supports close collaboration with our landlords<br><br>to drive better energy efficiency and we aim to achieve Leadership in Energy and Environmental<br><br>Design (LEED) or equivalent certification for our construction projects in key premises.<br><br>We seek to identify new opportunities to further reduce emissions and one of our emerging<br><br>priorities is decarbonising our heating through electrification and heat networks by overcoming<br><br>technical and engineering challenges. Detailed design considerations documented in our global<br><br>engineering standards aim to reduce or avoid depletion of critical resources, such as energy, water,<br><br>land and raw materials. Our suppliers are requested to comply with our Supplier Code of Conduct,<br><br>including having in place environmental policies appropriate to the size and nature of their operations<br><br>to reduce environmental impacts. | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 48 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment | ||||||
| Operational and supply chain greenhouse gas emissions in tonnes CO2e | ||||||
| --- | --- | --- | --- | --- | ||
| 2025 | 2024 | 2019 baseline | ||||
| Scope 11† | ~ | 16,698 | 15,025 | 22,066 | ||
| Scope 2 (market-based)1† | Ä | 19,919 | 83,760 | 392,270 | ||
| Scope 3 | Ä | 1,040,300 | 1,127,909 | 1,356,631 | ||
| Category 1: Purchased goods and services2† | Ä | 807,293 | 866,873 | 1,033,972 | ||
| Category 2: Capital goods2† | ~ | 165,988 | 127,158 | 50,651 | ||
| Category 6: Business travel1† | Ä | 67,019 | 133,878 | 272,008 | ||
| Total | Ä | 1,076,917 | 1,226,693 | 1,770,967 | ||
| Included scope 1 and 2 of UK | ~ | 6,357 | 5,887 | 10,432 | ||
| † Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE<br><br>3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/<br><br>who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024,<br><br>see our relevant Annual Report and Accounts.<br><br>1 Our reporting period aligns with our financial year January – December. Due to a three-month time<br><br>lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current<br><br>year’s Q4 data<br><br>2. Supply chain emissions are calculated using a combination of supplier emissions data and industry<br><br>average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is<br><br>low, based on the quality of emissions data. This is a weighted average score based on HSBC<br><br>supplier spend. Data quality scores can be found in the ESG Data Pack.<br><br>ÑOur scope 2 location-based emissions in 2025 were 259,129† tonnes CO2e. For a detailed<br><br>breakdown, information about contractual instruments, and relevant environmental key facts, see<br><br>our ESG Data Pack at www.hsbc.com/esg. |
2025 emissions performance
We continue to make progress towards our
2050 net zero ambition. In 2025 we achieved a
reduction in absolute operational greenhouse
gas emissions (scope 1, 2 and business travel)
of 84.9% from our 2019 baseline. Overall,
including supply chain emissions, we achieved
a 39.2% reduction against 2019 and 12.2%
compared with 2024.
Scope 1 and 2 emissions
We have already reduced our scope 1 and 2
emissions considerably and are on track to
achieve a reduction of at least 90% by 2030.
In 2025, we reduced these emissions (i.e.
energy and road fleet) to 36,617 tonnes CO2e,
representing a 91.2% reduction from our 2019
baseline, and a 62.9% reduction from 2024,
driven by a reduction in energy consumption
and significant investment in renewable
electricity, in conjunction with an overall
reduction of the emission factors. For scope 1,
we saw an increase due to an adjustment of
our uplift rate to include estimated emissions
from refrigerant leaks in our cooling systems.
Refrigerant leaks occur when cooling gases
escape from equipment, contributing to
greenhouse gas emissions. Currently 94.2% of
our electricity comes from renewable sources
and we are on track for 100% renewable
electricity by 2030.
In addition to the reduction in energy
consumption driven by our strategic
divestments, we are increasingly adopting
innovative metering technologies and
collaborating with strategic partners to seek to
target the more challenging elements, such as
our remaining data centres.
Specifically in the UK, the increase in energy
and scope 1 and 2 emissions is driven by an
increase in electricity consumption in data
centres and an increase in primary fuels in our
offices and branches.
In addition to our focus on energy
consumption, we continue to transition our
vehicles to electric, ordering fully electric or
hybrid options, wherever possible.
Emissions from travel
We reduced our emissions from scope 3
business travel by 75.4% compared with 2019
and 49.9% compared with 2024. The decrease
was driven by improved oversight,
strengthened internal reporting and an overall
reduction in the emissions factors provided by
the UK Department for Energy Security and
Net Zero.
Emissions from our supply chain
In 2025, we reduced our overall supply chain
emissions (scope 3: category 1 and 2) by
10.3% against the 2019 baseline, and 2.1%
compared with 2024. This was primarily due to
the reduced emissions intensity (i.e. ratio of
emissions vs revenue) of suppliers providing
professional services and marketing, and who
reported emissions to us. However, this has
been partly counteracted by an increase in
spend on servers and data centres, and an
increase in the emissions intensity of suppliers
providing real estate services, which also
caused the increase in emissions from capital
goods.
| Greenhouse gas emissions in tonnes CO2e<br><br>per FTE | Energy consumption in kWh in 000s | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2019 | 2025 | 2024 | 2019 | ||||
| Scope 1, 2 and<br><br>3 (Category 6) | Ä | 0.5 | 1.1 | 2.9 | Total | Ä | 687,521 | 728,890 | 1,049,072 |
| Scope 1, 2 and<br><br>3 (Category 1, 2<br><br>and 6) | Ä | 5.1 | 5.7 | 7.8 | UK only | ~ | 211,033 | 206,028 | 281,271 |
We continue to expand and improve our
reporting as more suppliers make emissions
data available.
Emissions calculations approach
Our emissions report adheres to the GHG
Protocol, which incorporates the scope 2
market-based emissions methodology. We
report GHG emissions associated with the
energy used in our premises and employees’
business travel and our supply chain in tonnes
of CO2 equivalent.
Based on our operational control boundary, in
2025 we collected data on energy use and
business travel for our operations in 34
countries and territories out of the 56 markets
we operate in, which accounted for
approximately 98.2% of our full-time equivalent
staff (‘FTEs’). To estimate the emissions of our
operations in entities where we have
operational control and a small presence, we
scale up the emissions to 100%.
We have reviewed and updated the emission
uplift rate for scope 1 to reflect the actual data
and the uncertainty regarding the volume of
the estimated fugitive emissions. Following
improvements in our reporting process, we
have removed the uplift for scopes 2 and 3
(category 6: business travel). This approach is
consistent with both the Intergovernmental
Panel on Climate Change’s Good Practice
Guidance and Uncertainty Management in
National Greenhouse Gas Inventories and our
internal analysis.
Our calculation methodology for supply chain
emissions follows the spend-based method
under the GHG Protocol; a combination of
supplier emissions data and industry averages.
We source actual data via CDP, or direct
engagement with suppliers through a third
party. In the absence of this we use
estimations data provided by a third party and
industry average carbon intensities from CDP
to estimate supply chain emissions.
As more of our suppliers report their
emissions, we should be able to include more
accurate data and fewer industry averages in
the calculation. We have applied a data quality
score to the sources of data we used to
determine supplier emissions.
In 2025 we conducted a materiality
assessment on scope 3 categories, and we
have identified categories 1 (purchased goods
and services), 2 (capital goods), and 6 (business
travel) as material.
ÑFor further details of our methodologies,
assumptions, and sources of conversion factors
used for the reporting of emissions, see the GHG
Reporting Guidance 2025 at www.hsbc.com/
esg.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 49 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
Managing climate risk
| TCFD |
|---|
Climate risk relates to the financial and non-
financial impacts that may arise as a result of
climate change and the move to a net zero
economy. We manage climate risk across all
our businesses and incorporate climate
considerations within our traditional risk types,
in line with our Group-wide risk management
framework.
Our material exposure to climate risk relates to
wholesale and retail client financing activity
within our banking portfolio. We are also
exposed to climate risk in relation to asset
ownership by our insurance business and
employee pension plans. Our clients are
exposed to climate-related investment risk in
our Asset Management business.
ÑFor further details of our approach to climate
risk, see ‘ESG risk’ on page 122 and ‘Climate
risk’ on page 203.
Banking
Our banking business is well positioned to
support our customers managing their own
climate risk through financing. For our most
material wholesale customers, we use our
transition engagement questionnaire to
understand clients’ climate strategies and
risks. We have set out a suite of policies to
guide our management of climate risk. We
continue to develop our climate risk appetite
and metrics to help manage climate exposures
in our wholesale and retail portfolios. We use
climate scenario analysis to gain insights into
the long-term effects of transition and physical
risks across our wholesale and retail portfolios
(for further details, see page 206).
Asset management
HSBC Asset Management recognises that
climate-related risks may impact the
operational and financial performance of
investee companies. The impact of these risks
will vary depending on characteristics such as
asset class, sector, business model and
geography. We continue to integrate climate
analysis into our actively managed product
offerings and seek to assess climate-related
risks that may impact investment
performance, where relevant.
As part of our stewardship activities, we
engage on climate change issues with
investee companies on a priority list, as
defined in our Stewardship Plan. HSBC Asset
Management acts independently in its
investment and voting decisions.
Employee pensions
The Trustee of the HSBC Bank (UK) Pension
Scheme (‘the Scheme’), our largest plan with
$38bn of assets under management, aims to
achieve net zero greenhouse gas emissions
across its defined benefit and defined
contribution assets by 2050. The amount
within the scheme includes defined benefit
assets of $25bn and defined contribution
assets amounting to $13bn. To help achieve
this, it is targeting an interim emissions
reduction of 50% by 2030 from 2019 levels for
its equity and corporate bond mandates. This
commitment was made in the context of
wider efforts to manage the impact of climate
change on the Scheme’s investments and the
consequent impact on the financial interests of
members.
The Scheme reports the carbon footprint for
its equity and corporate bond mandates in its
annual TCFD Report, and will seek to widen
the coverage of its assessment and reporting
over time. In line with the Trustee’s
commitment to good stewardship, the Trustee
engages its asset managers to seek to ensure
that financially material ESG risks are explicitly
considered in the investment process.
Insurance
We are improving our ability to perform
exploratory solvency assessment of our
biggest insurance businesses under climate
stress scenarios.
ÑFor further details of HSBC Asset Management’s
Stewardship Plan, see:
www.assetmanagement.hsbc.co.uk/en/
institutional-investor/about-us/responsible-
investing/-/media/files/attachments/uk/policies/
stewardship-plan-uk.pdf.
ÑFor further details of the HSBC Bank (UK)
Pension Scheme’s annual TCFD statements and
UK Stewardship Code submission, see https://
futurefocus.staff.hsbc.co.uk/active-dc/
information-centre/search-documents.
Sustainability risk policies
| TCFD |
|---|
Our sustainability risk policies form part of our
broader risk management framework and are
important mechanisms for managing risks,
including delivering our net zero ambition.
These policies focus on mitigating reputational,
credit, legal and other risks related to our
customers’ environmental and social impacts.
Our policies
HSBC has sector-specific sustainability risk
policies covering the energy sector, thermal
coal, agricultural commodities, forestry, and
mining and metals. These are summarised in
our Sustainability Risk Policies Framework
which also contains HSBC’s Thermal Coal
Phase-Out Policy. We also implement a cross-
sector policy for project-related financing,
informed by international standards.
The Framework provides an overview of how
HSBC identifies, evaluates and manages risks
related to the delivery of our sustainability
approach.
Implementation of the sector-specific policies
is achieved through internal policies and
procedures, supported by technical experts
and specialists and our relationship managers.
We take a risk-based approach when
identifying transactions and clients to which
our sustainability risk policies apply and, where
relevant, when reporting on relevant
exposures, adopting approaches proportionate
to risk and materiality. This helps to focus our
efforts on areas that we consider to be most
critical, taking into account experience from
policy implementation over time.
We continue to review policy implementation
as we apply our policies in practice, engage
customers on their transition plans and
consider how we can support them. We
conduct periodic policy reviews, incorporating
feedback and where appropriate, updating
based on factors including risk materiality,
implementation experience, evolving scientific
guidance, regulatory requirements and
evolving industry practices.
For customers in scope of sector-specific
policies, we will look to take actions as
outlined in our policies, such as enhanced due
diligence. Such instances may require
additional review and approval by our
sustainability risk specialists and risk
committees.
Governance and implementation
Our Group Risk and Compliance function has
specialists who review and support
implementation of our sustainability risk
policies. Our relationship managers are
primarily responsible for assessing relevant
considerations under our risk management
framework, including whether our clients may
be in scope of applicable sustainability risk
policies. Where considered appropriate, policy
matters are escalated to relevant governance
committees.
Oversight of the development and
implementation of policies is the responsibility
of relevant governance committees
comprising senior members of the Group Risk
and Compliance function and global
businesses.
ÑFor further details of how we manage
sustainability risk and our Sustainability
Risk Policies Framework, see
https://www.hsbc.com/sustainability-risk.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 50 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Environment |
Nature-related policies
Our sustainability risk policies impose
restrictions on certain financing activities that
may have material negative impacts on nature.
Our forestry and agricultural commodities
policies focus specifically on the upstream
impacts of key agricultural commodities
including palm oil, timber, soy and cattle. We
also require palm oil customers to obtain
certification under the Roundtable on
Sustainable Palm Oil.
Our energy policy
Our energy policy applies to the broader
energy system, including upstream oil and gas,
fossil fuel power generation, hydrogen,
renewables and hydropower, nuclear, biomass
and energy from waste sectors.
The policy seeks to achieve two objectives: to
help drive global greenhouse gas emissions
reductions, both to achieve a net zero HSBC
portfolio and to support our customers in the
transition to a net zero global energy future;
and to identify and manage risks arising from
the provision of financing or advisory services
to customers with energy assets.
The energy policy was first published in
December 2022, and is reviewed periodically,
with the most recent update in November
2025.
Our thermal coal phase-out policy
Our thermal coal phase-out policy seeks to
achieve two objectives: to phase out the
financing of thermal coal-fired power and
thermal coal mining by 2030 in markets in the
European Union (‘EU’) and Organisation for
Economic Cooperation and Development
(‘OECD’), and by 2040 in other markets
(Phase-Out Commitment); and to identify and
manage risks arising from the provision of
financing or advisory services to customers
with thermal coal assets.
The policy was first published in December
2021 and is reviewed annually, with the most
recent update in November 2025.
ÑFor further details of our energy policy and our
thermal coal phase-out policy see our
Sustainability Risk Policies Framework, at
https://www.hsbc.com/sustainability-risk
ÑFor further details of our oil and gas, and power
and utilities financed emissions targets, see page
42.
Thermal coal financing exposures
We aim to reduce thermal coal financing
drawn balance exposure from a 2020 baseline
by at least 25% by 2025, and aim to reduce it
by 50% by 2030.
Our basis of preparation for reporting on
thermal coal financing drawn balance
exposures is aligned with our thermal coal
phase-out policy and applies a risk-based
approach to reporting on relevant exposures.
This includes the use of globally recognised
third-party data sources to screen clients and
applies materiality considerations to product
type, customer type and exposure type, which
informs inclusion and exclusion requirements.
Specifically, for customer types, exclusions are
applied for certain customer types such as
sovereigns and individuals. For exposure
types, a threshold of $15m for drawn balances
is applied for thermal coal financing exposures
reporting.
We recognise that we provide financing to
groups of connected companies where the
wider group has thermal coal exposures, and
this introduces additional complexities when
estimating thermal coal exposure. In such
cases, we consider relevant factors, including
the nature and the extent of the connection to
thermal coal activity, any relevant structural
considerations in relation to the wider group
and any restrictions on use of financing
proceeds to fund thermal coal activities.
We continue to refine our basis of preparation
and have made further enhancements in 2025
to develop a more detailed framework for our
approach to exclusions from reporting.
In line with changes to financed emissions
product scope, short-term lending products are
now included in scope for thermal coal drawn
balance exposures.
Thermal coal financing drawn balance
exposure is sensitive to volatility from both
short-term lending products and additional
drawdowns under committed facilities.
Applying our refined basis of preparation
resulted in a net 10% increase in the thermal
coal financing drawn balance exposure
baseline (as of 31 December 2020) to $1.1bn†
from $1.0bn. This year we present figures for
2023 and 2024, therefore we are not restating
2021 and 2022 figures.
Our thermal coal financing drawn balance
exposures for 2023 and 2024 were $0.6bn†
and $0.5bn† respectively. We intend to
present our 2025 figures in our Annual Report
and Accounts 2026. The reductions from the
revised baseline were primarily driven by
natural amortisation and portfolio level
financing decisions.
| Thermal coal financing drawn balance<br><br>exposure |
|---|
| $bn |
† Data is subject to independent third-party limited
assurance, in accordance with ISAE 3000/ISAE
- For further details, see our Financed
Emissions and Thermal Coal Exposures
Methodology and independent third-party limited
assurance report, which are available at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre.
ÑFor further details of our approach to financed
emissions, see page 39.
ÑFor further details of our financed emissions and
thermal coal exposures methodology, see
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre.
Asset Management’s Energy and Thermal Coal Policies
HSBC Asset Management’s Energy and
Thermal Coal policies have been developed in
support of HSBC Group’s net zero ambition.
Under the Energy Policy, HSBC Asset
Management aims to engage with and assess
transition plans of listed issuers responsible for
around 70% of relevant emissions covering
listed equity and corporate fixed income
issuers managed in its major investment
hubs. Engagement and assessment are
undertaken for the oil and gas, and power and
utilities issuers in this group.
The Thermal Coal Policy is developed in
support of the transition from thermal coal-
fired power and thermal coal mining (collectively
‘thermal coal’) within the 2030/40 timelines set
out in the HSBC Thermal Coal Phase-Out Policy.
ÑThe current policies including their application can
be found here: https://
www.assetmanagement.hsbc.co.uk/en/
institutional-investor/about-us/responsible-
investing/policies.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 51 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Social
Building inclusion and resilience
We play an active role in opening up a world of opportunity for our customers,
colleagues and communities by connecting across our international networks
to help build a more inclusive and resilient society.
Our commitment to inclusion
Our approach
For 160 years, our core strategy has been
connecting people and businesses across
geographies and cultures.
By embracing diversity and fostering inclusive
thinking, we better meet our customers’
needs and deliver improved outcomes.
We are committed to continuing to build an
inclusive organisation by focusing on four key
areas as detailed below.
| The focus of our Global Inclusion strategy | |||
|---|---|---|---|
| Building an<br><br>inclusive culture<br><br>We recognise the importance<br><br>of fostering an inclusive<br><br>culture, benefiting both our<br><br>colleagues and customers.<br><br>Embracing differences<br><br>enhances diversity of thought<br><br>and experiences, leading to<br><br>better outcomes. Our Global<br><br>Inclusion strategy embraces<br><br>our unique international<br><br>footprint, while seeking to<br><br>ensure it remains locally<br><br>relevant and compliant with<br><br>local laws. | Fair and inclusive<br><br>recruiting<br><br>Having a diverse and<br><br>inclusive workforce that<br><br>better reflects the<br><br>communities we serve<br><br>remains one of our key<br><br>strategic pillars.<br><br>By ensuring a fair and<br><br>transparent recruitment<br><br>process, we aim to attract<br><br>and retain talent from all<br><br>backgrounds. | Fair progression of<br><br>talent<br><br>We understand the<br><br>importance of having<br><br>motivated and engaged<br><br>teams.<br><br>By offering growth<br><br>opportunities, such as<br><br>training and development<br><br>programmes, and internal<br><br>mobility opportunities, we<br><br>aim to foster a strong sense<br><br>of belonging and equip our<br><br>people with the skills needed<br><br>for the future. | Supporting an<br><br>inclusive society<br><br>We are dedicated to fostering<br><br>a culture where everyone<br><br>feels they belong, guided by<br><br>shared values and a<br><br>commitment to inclusion.<br><br>By listening to the voices of<br><br>both colleagues and<br><br>customers from all<br><br>backgrounds, we seek to<br><br>create a more inclusive and<br><br>accessible banking<br><br>experience, impacting<br><br>communities positively. |
Our progress
Prior analysis of our workforce identified that
both women and Black heritage colleagues
were underrepresented across senior leadership
roles. We introduced a set of public aspirational
ambitions, which aimed to increase
representation of these two groups by 2025 and
improve our Inclusion Index score as measured
in our employee engagement survey, Snapshot.
By the end of 20251, we achieved:
–a 34.7% representation of women in senior
leadership roles against an ambition of 35%1;
–a 3.0% representation of Black heritage
colleagues in senior leadership roles (UK/US
combined) against an ambition of 3.4%1 ; and
–an Inclusion Index score of 78% against an
ambition of 75%.
We have made annual progress in increasing
the representation of women in senior
leadership roles, strengthened by our hiring,
promotion and retention strategies. Over this
period, representation of women in senior
leadership roles has increased by three
percentage points. We narrowly missed our
gender representation ambition of 35%,
primarily due to a reduction in the number of
promotions and new hires in 2025. This has
also impacted our progress against our
ambition to achieve 3.4% of Black heritage
colleagues in senior leadership roles in the UK/
US combined since 2021, which has remained
steady since 20231..
Previously in 2020, we set an initial ambition to
double the number of Black heritage
colleagues in senior leadership roles globally
by the end of 2025. Over the past five years,
changes in our global organisation, such as the
divestiture of the US Wealth and Personal
Banking business, and increased investment
across Asia, have made achieving this
ambition more challenging. By the end of
2025, we increased the number of Black
heritage colleagues in senior leadership roles
by 48%1.
While our publicly stated aspirational ambitions
concluded at the end of 2025, we remain
committed to building an inclusive culture for
all colleagues, measured using our Inclusion
Index. We continue to work towards better
reflecting the communities we serve, in order
to deliver better outcomes for our customers.
Data and transparency
Colleagues’ self-identification data enables us
to refine and evolve our Global Inclusion
strategy by ensuring we make informed
decisions and set priorities that will have the
greatest impact. It also helps us to identify and
address any inequalities or barriers.
We invite colleagues to voluntarily share their
demographic data with us including ethnicity,
sexual orientation and disability. In 2025,
69.1% of colleagues shared their ethnic
background. We collect data in markets and
territories where we are legally permitted to
do so.
We continue to disclose the shape of our
workforce publicly, as well as participating in
the government-led FTSE Women Leaders
Review and Parker Review benchmarks in the
UK, which track the gender and ethnicity
representation of our Operating Committee
and senior leadership population.
ÑFor further details of our representation data, pay
gap data, and actions, see www.hsbc.com/who-
we-are/our-people/inclusion-at-hsbc and the ESG
Data Pack at www.hsbc.com/esg
1These numerical ambitions do not form part of
any US-based senior leader performance or
other objectives, or in other jurisdictions where
application of such objectives would be contrary
to local law.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 52 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Social |
Fostering an inclusive culture
Embedding inclusion
Our recruitment practices are designed to be
fair and transparent providing equal
opportunities for all colleagues to progress
their careers. We promote inclusive leadership
and recognise that diverse perspectives drive
innovation and stronger business outcomes.
In 2025, we partnered with KPMG to support
personal development opportunities for UK-
based Black heritage colleagues in our IWPB
and Global Functions teams. Fifteen individuals
were matched with sponsors aligned to their
career aspirations, who aim to broaden
participants’ network and advocate for their
talent and career progression. In 2025 we
continued Solaris, our UK development
programme for female Black heritage
colleagues, with 19 individuals completing the
course in 2025.
Removing barriers for colleagues with a
disability
In 2025, we led the way in benchmarking
disability confidence across Asia, aligning with
United Nations Guidelines for People with
Disabilities. HSBC is recognised for disability
inclusion as featured by the International
Labour Organisation (ILO) Global Business
Disability Network.
In 2025, our Digital Accessibility programme
garnered 15 awards, including recognition
from the Hong Kong Digital Accessibility
Recognition Scheme for the accessibility of
our digital channels. We were also honoured at
the Pay 360 Awards in the UK celebrating
outstanding achievements in the payments
industry.
We retained our Business Disability Forum
‘Smart Gold’ status in the UK in 2025. The
Disability Smart Framework helps businesses
enhance their performance for disabled
customers, service users, colleagues and
stakeholders.
We have developed a Disability Toolkit to
support colleagues with a disability and their
line managers, outlining the well-being
resources available and how each can help
colleagues manage their condition.
In the US, we have been recognised as a ‘Best
Place to Work for Disability Inclusion’ in the
Disability:IN, 2025 Disability Index.
We are enhancing our workplace adjustments
programme to better support colleagues with
their needs. In 2025, it was extended to
include colleagues in UAE, Egypt, Algeria,
Kuwait and Oman.
Supporting colleagues from a lower
socio-economic background
Research indicates that individuals from low
socio-economic backgrounds encounter
additional barriers when entering the financial
services industry, and are less likely to
advance to senior leadership.
To support early career colleagues from these
backgrounds, we launched a grant initiative in
2025, offering new joiners £1,000 to support
pre-joining expenses.
In 2025, we improved our position in the UK
Social Mobility Index to 18th, up from 37th in
2024 and 67th in 2023.
We have also partnered with Community
Business, which is a non-governmental
organisation that advances research on social
mobility across Asia, focusing on Hong Kong,
mainland China, India, Singapore, Japan,
Korea, the Philippines and Malaysia.
Inclusion for all
In 2025, the Hong Kong-based Equal
Opportunities Commission introduced the
Racial Diversity & Inclusion Employers Award
Scheme to honour organisations committed to
racial equality, diversity and inclusion in the
workplace, and we received three gold
awards.
We were also named the Best Bank for
Diversity and Inclusion in Hong Kong at the
Euromoney Awards 2025 for the second year
running. We climbed to 2nd in the 2025 Hong
Kong Community Business LGBTQ+ Index,
marking us as the top financial institution and
improving from 6th in 2023.
In the US, we partnered with organisations
Handshake and HelloHive to broaden our
reach to undergraduate students from all
backgrounds. Community engagement
opportunities to support career readiness have
in turn resulted in increased candidate
applications to the HSBC US Early Careers
programme.
Gender representation (%)
| Holdings<br><br>Board |
|---|
| Group<br><br>Operating<br><br>Committee<br><br>('Group OpCo') |
| Combined<br><br>Group OpCo<br><br>and direct<br><br>reports1 |
| Subsidiary<br><br>directors2 |
| Senior<br><br>leadership3 |
| Middle<br><br>management3 |
| Junior<br><br>management3 |
| All employees4 |
1 Combined Group OpCo and direct reports
includes Group OpCo members and their direct
reports (excluding administrative staff) as of 31
December 2025.
2 Directors (or equivalent) of subsidiary companies
that are included in the Group’s consolidated
financial statements, excluding corporate
directors.
3 In our leadership structure, we classify senior
leadership as those at global career band 3 and
above; middle management as those at global
career band 4; and junior management as those
at global career bands 5 and 6.
4 As at 31 December 2025, the Group’s headcount
consisted of 103,086 Males and 108,393
Females. Employees with undisclosed gender
have been included in the ‘Male’ category. Due
to local restrictions, Saudi Arabia headcount has
been excluded from gender reporting.
ÑFor further details of our employee profile data,
see the ESG Data Pack at www.hsbc.com/esg
| Representation and pay gaps<br><br>Our reports on gender, ethnicity and disability<br><br>pay gaps show the difference in average pay<br><br>between these groups of people and the<br><br>wider workforce, regardless of their role or<br><br>seniority.<br><br>We have reported our UK gender<br><br>representation and pay gap data since 2017, in<br><br>line with reporting regulations. These UK<br><br>disclosures are available in our ESG Data Pack.<br><br>We have voluntarily extended this to include<br><br>the US, mainland China, Hong Kong, India,<br><br>Mexico, Singapore, Malaysia and the UAE,<br><br>alongside ethnicity data for the UK and US,<br><br>which are available on our website. | In 2025, our mean aggregate UK-wide gender<br><br>pay gap was 39.4% (2024: 40.6%), and the<br><br>ethnicity pay gap was 9.8% (2024: 7.7%).<br><br>These gaps are primarily driven by workforce<br><br>composition, with more men in senior, higher-<br><br>paid roles and more women in junior, lower-paid<br><br>roles. While we are confident in our approach to<br><br>pay equity, average pay gaps will persist until<br><br>there is proportional representation of women<br><br>and ethnic minority colleagues at all levels. | We are committed to paying colleagues fairly<br><br>regardless of their gender or ethnicity and<br><br>have processes to review that remuneration is<br><br>free from bias. We review our pay practices<br><br>regularly to ensure that our commitments to<br><br>equal pay are upheld.<br><br>ÑFor further details of our representation data, pay<br><br>gap data, and actions see www.hsbc.com/who-<br><br>we-are/our-people/inclusion-at-hsbc and the ESG<br><br>Data Pack at www.hsbc.com/esg | ||||
|---|---|---|---|---|---|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 53 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Social |
Building a healthy workplace
Listening to our colleagues
We value difference at HSBC, and we do this
by seeking out different perspectives and
listening. Our colleagues succeed together by
being connected across the organisation, and
they take responsibility by speaking up. These
activities are core to our values and we
capture regular feedback from our colleagues
to help improve HSBC and the employee
experience.
How we listen
At the heart of our employee dialogue strategy
is listening to our people and responding to
their feedback, fostering open, two-way
communication between colleagues and the
organisation.
To support organisational change in 2025, we
enhanced our feedback process. In addition to
our annual Snapshot survey, we introduced a
monthly Pulse survey for quick leadership
insights. This complements our event-based
lifecycle surveys, capturing colleague
sentiment as they apply, join, transition and
leave HSBC.
We streamlined our 2025 Snapshot survey by
reducing the number of questions by 40%,
and aligning our reporting with overall strategic
priorities. A response rate of 87% was
achieved, with over 186,000 colleagues
sharing their insights.
Survey insights are shared with the Group
Operating Committee, the Board, and over
11,000 people leaders who receive 10 or more
team responses. We facilitate effective
feedback discussions by providing interactive
dashboards, action planning tools and
discussion guides.
Despite organisational change, our Snapshot
results remain robust, with only slight declines
in some areas. Our Employee Engagement
index, which reflects how our people feel
about HSBC, decreased by two percentage
points to 78%. This is four percentage points
above the global financial services benchmark.
Our Inclusion Index, an indicator of our
commitment to fostering an inclusive culture
at HSBC, remained at 78%. Our Well-being
Index increased by one percentage point,
positioning us five percentage points ahead of
our peers in the financial services sector.
While we were eight percentage points above
the financial services benchmark for our
Sustainable Growth Index, confidence in our
future direction decreased by three percentage
points to 76%. This decline was mainly due to
lower scores among groups more impacted by
ongoing organisational changes. We continue
to prioritise clear communication with our
colleagues about what these changes mean
for them.
Our new How We Lead Index, designed to
gauge the embedding of our new Group-wide
leadership framework, achieved 77%. This
surpassed the financial services benchmark by
five percentage points.
We launched four new values-aligned indices,
each scoring between 79% and 81%. Each
overall index score surpassed the financial
services benchmark.
Going forward we will continue to encourage
high levels of engagement and feedback.
ÑFor further details of our Snapshot data, see the
ESG Data Pack at www.hsbc.com/esg.
Employee relations
We engage, consult, and where appropriate,
negotiate with employee representative
bodies. Our policy is to maintain well-
developed communications and consultation
programmes with all employee representative
bodies.
We are committed to complying with the
applicable employment laws and regulations in
all the jurisdictions in which we operate.
HSBC’s employment practices and relations
policy provides the framework and controls
through which we seek to uphold that
commitment.
Employee conduct and harassment
We expect our employees to treat each other
with dignity and respect, and we do not
tolerate or condone discrimination,
harassment, bullying or retaliation in any form
as outlined in our Global Anti-Bullying and
Harassment Code. This is supported by our
Global Code of Conduct.
We encourage our colleagues to speak up
about poor behaviour. We measure confidence
of colleagues to speak up via our Snapshot
response, which stood at 81% in 2025.
We recognise the need for ongoing focus on
our speak-up culture to ensure we create the
right environment. We are committed to
raising awareness and providing education on
poor behaviours and strengthening our
response to these issues across the
organisation. Our colleagues receive training
on bullying, harassment, discrimination and
retaliation at least every other year through our
global mandatory training and as part of other
learning resources.
We monitor cases raised via our speak-up
channels, and data is reported to senior
leadership to ensure visibility. In 2025, we
received a total of 793 cases raised in relation
to bullying and harassment. Where the
concerns were substantiated following an
investigation, appropriate actions were taken,
including dismissal where warranted. In 2025,
30% of cases raised were either partly or fully
substantiated, and 38 colleagues were
dismissed in relation to bullying, harassment,
discrimination or retaliation.
We continue to act where we find that any
colleague has breached our values and high
standards of conduct.
How we listen
Snapshot survey response
87%
A response rate of 87% was achieved, with
over 186,000 colleagues sharing their insights.
Employee Engagement Index
78%
Our Employee Engagement Index decreased
by two percentage points to 78%. This is four
percentage points above the global financial
services benchmark.
How We Lead Index
77%
Our new How We Lead Index achieved 77%.
This surpasses the financial services
benchmark by five percentage points.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 54 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Social |
Being a great place to work
Reward and recognition
Our aim is to create an environment that
energises colleagues to perform at their best.
This is critical for attracting, retaining and
motivating our colleagues, supported by our
core reward principles: rewarding colleagues
responsibly, recognising colleagues’ success
and supporting our colleagues to grow.
Rewarding colleagues responsibly
Pay is a key element of our overall proposition.
We aim to enhance transparency and clarity,
helping our colleagues to better understand
how we make our pay decisions. We remain
committed to providing a competitive total
compensation package that balances an
appropriate mix of fixed and variable pay.
HSBC achieved accreditation on 31 December
2024 from the Fair Wage Network, which
provides an independent source of wage
levels, as a global living wage employer for
two years. Following our accreditation, we
have collaborated with the Fair Wage Network
to ensure we continue to meet or surpass
local living wage benchmarks. A living wage
should be sufficient to cover an adequate
standard of living, given the cost of goods and
services in each country and territory where
we operate.
We also seek to implement contractual
clauses that encourage our suppliers to pay at
least a living wage in the UK, including our
most material consultancy and workforce
contracts.
Recognising colleagues’ success
We have performance routines to foster a
high-performance culture, and in 2025 these
routines encouraged colleagues to set
challenging goals aligned with our strategic
priorities. Regular feedback exchanges helped
colleagues understand their progress and
areas for improvement. Ongoing performance
check-ins result in a clear and focused year-
end performance assessment that wraps up
these discussions.
In 2025, our Snapshot results showed that
86% of colleagues clearly understood what is
expected of them, aligned to the 2024 result
of 87%. Also, 81% of colleagues received
performance-improving feedback, consistent
with the results from 2024.
Our variable pay plans recognise the
performance and behaviours of our colleagues.
We operate Target Variable Pay for over
127,000 colleagues across 48 markets,
promoting clarity and transparency in pay
decisions. This helps colleagues understand
how they contribute to the organisation’s
performance.
Our ‘At Our Best’ recognition platform
empowers our colleagues to recognise each
other for role model behaviours aligned with
our values. In 2025, we celebrated each other
1.4 million times. We also launched short-
term recognition campaigns engaging over
30,000 colleagues, encouraging nominations
for outstanding ‘How We Succeed’
behaviours.
Share plans also empower colleagues to
engage in HSBC’s success. In 2025, we
invited around 199,000 colleagues to join our
share plans, and 95% of colleagues globally
have eligibility. Currently, around 63,000
colleagues participate in one of the plans.
Supporting our colleagues to grow
We recognise the importance of personal and
professional growth for our colleagues, and
seek to support their mental, physical and
financial well-being.
We have refined our Well-being index in the
Snapshot survey to focus on where we can
make the most positive impact and updated
our questions to focus on happiness at work,
stress levels, job satisfaction, and sense of
purpose, aligning our methodology to the
Organisation for Economic Co-operation and
Development (‘OECD’) measures of well-
being.
In 2025 our Well-being index increased to
66%, with improvements of one percentage
point across happiness at work, stress levels
and job satisfaction.
Mental health
We were ranked 1st globally for the fourth
consecutive year in the CCLA Corporate
Mental Health Benchmark Global 100+. We
are the only organisation to achieve Tier 1
status since the benchmark’s inception. In
2025, we scored 83%, significantly higher
than the financial services industry average of
34%.
In 2025, we hosted two global masterclass
series, one focused on mental health and
performance, and the other on sleep and well-
being. These events brought together senior
leaders and industry experts to share
evidence-based strategies for enhancing well-
being and performance, while addressing
workplace myths and stigma.
In 2025, we updated the well-being content in
our global mandatory training and launched a
new voluntary mental health module. The new
module has been completed over 1,300 times
since launch in November, with 27% of those
completions being done by people leaders.
Our network of over 250 mindfulness
champions delivered sessions to over 27,000
colleagues, up 43% on 2024, and enrolment to
the meditation app, Headspace, increased by
8%.
Physical health
We provided private medical insurance to 99%
of our permanent employees, and offered
telemedicine services in most countries and
territories. In some markets, we also have on-
site medical centres. In 2025, 80% of
colleagues can access free health
assessments. We also expanded medical
outpatient reimbursement to over 35,000
colleagues in India. In Singapore and the UK,
we introduced fertility medical support,
increasing the number of countries offering
this benefit to 10.
In 2025, we continued to offer the Personify
Health app to colleagues, helping boost their
physical activity. Over 33,000 colleagues have
downloaded the app, an increase of 57% on
- Additionally, over 11,400 colleagues
participated in the HSBC Global Activity
Challenge in September, an increase of over
149% in participation from 2024. We set a
new Guinness World Record for the most
participants in a 10,000 step challenge in 24
hours.
Financial health
We introduced a four-part financial well-being
series providing ‘Money Skills That Make Life
Easier’, which gained an overall satisfaction
score of 97%. According to our Performance
and Reward survey, 37% of colleagues
expressed a desire for more financial well-
being support. In response, we trialled an
independent financial well-being platform for
colleagues in Mexico, UAE, the UK and India
to enhance financial literacy. Over 1,600
colleagues are participating in the trial, which
concludes in March 2026.
Flexible working
We support hybrid working, with 85% of our
colleagues embracing this approach.
We value flexibility but also emphasise the
importance of in-person interactions to foster
collaboration, build trust, and demonstrate care
and empathy. Strong relationships among
colleagues lead to better outcomes for our
customers.
In 2025, we reset our expectations that
Managing Directors are present in the office a
minimum of four days a week, emphasising
the importance of relationships, as we evolve
our culture.
We enhanced our family leave policies to
promote flexibility and work-life balance. Over
99% of colleagues now have access to at
least 18 weeks of fully-paid parental leave for
primary caregivers, along with five paid
compassionate leave days. Additionally,
around 72% of colleagues can also use up to
five paid days as carer leave days, when
regular arrangements unexpectedly fall
through.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 55 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Social |
Developing skills, careers and opportunities
Learning and skills development
Employee development energises our
colleagues for growth and helps equip them
with the skills they need today while also
preparing them to meet future challenges.
Establishing our leadership framework
To support our refreshed strategy and
ambition, a cross-section of business leaders
developed and launched a set of leadership
principles and a new Group-wide leadership
framework called How We Lead. This is
characterised by simple, practical and universal
tools and consistent leadership language for all
people leaders across HSBC.
Supporting future skills
We have evolved our platforms to offer skills,
opportunities and development pathways,
supporting our colleagues to grow, perform
and adapt in a changing environment. In 2025,
we:
–increased the number of active users and
participation in learning programmes. To
bridge skill gaps we offered access to
learning content, fostering knowledge-
sharing, collaboration and structured learning
pathways; and
–increased efforts in our digital badging to
recognise skill-building achievements, with
46 new badges launched and more than
42,000 credentials issued in areas across
data, digital, banking and finance, and
wealth.
Maintaining our risk management
culture
We continue to improve our risk management
learning programmes to seek to ensure that
they maintain relevance and reinforce our risk
management culture.
In 2025, we introduced a multi-year Financial
Crime learning programme aimed at enhancing
our ability to manage financial crime risks. This
programme seeks to equip our colleagues in
high-risk roles with essential skills and
knowledge to effectively mitigate these risks.
Learning is delivered through role-specific
scenarios that assess capability by applying
knowledge and addressing skill gaps with
tailored content.
We have evolved our global mandatory
training, a key component of our risk and
compliance framework. Moving away from
traditional compliance methods, we have
adopted thematic structures in risk
management, financial crime, and conduct,
focusing on skills and behaviours. This
approach emphasises practical application and
tailors content to individual capabilities. By
2026, the training will develop into a dynamic,
personalised experience, emphasising
foundational knowledge for new joiners and
ongoing improvement for colleagues.
Fostering AI adoption
Our AI Academy continues to drive innovation
and improvement, equipping colleagues with
the skills to use AI technologies effectively
and ethically. Since its launch in 2024, the
Academy has evolved to focus on specialised
technical pathways tailored to employee roles
and their level of AI involvement. It provides
comprehensive training on AI literacy,
responsible AI, and AI ethics, with
participants earning badges to recognise their
achievements. In 2025, we piloted the AI
Ambassador mentorship programme to
empower a future-ready workforce. This
initiative accelerates skills development and
expands professional networks through
dynamic peer-to-peer mentorship and
meaningful connections.
Engagement with the AI Academy remained
strong throughout 2025, with 26,000
colleagues completing over 122,000 hours of
learning.
Hong Kong has progressed AI capability-
building with its ‘Skills Galaxy’ and ‘Skills
Master’ initiatives. These programmes focus
on AI, data and leadership. The Skills Galaxy
carnival attracted over 1,400 colleagues,
offering interactive booths, workshops and
information sessions. The Skills Master
initiative was launched as a self-paced online
learning journey, engaging over 3,300
colleagues in themed semesters to promote
continuous learning in AI and data.
Advancing wealth management
expertise
In 2025 we introduced the Wealth Academy to
cultivate top-tier wealth managers. The
Academy offers a wealth knowledge hub with
198 topics across five core skills, offering 26
hours of learning content in four languages.
Our colleagues can earn digital badges at three
competency levels through passing online
assessments. By September 2025, over 1,000
team members interacted with the Hub, and
720 qualified for competency badges.
We have teamed up with the London
Business School for a nine-month programme
for our 70 top-performing wealth managers.
This programme combines academic rigour
with practical wealth management strategies,
virtual learning and customer-focused
challenges. Wealth managers will earn a
certificate from the London Business School
upon completion.
Supporting in-person development
In June, we opened our fourth HSBC
University campus in Nansha, Guangzhou with
an event that brought together senior leaders
from across the Group. Our flagship residential
learning campus is dedicated to uniting our
colleagues globally in a space designed for
learning and engagement. It features 170
guest rooms, a large auditorium, a multi-
purpose hall, modern flexible classrooms and
well-being areas. To date, over 4,500 senior
leaders globally have attended leadership
events held at the China campus.
 |
|
|---|---|
| Energising our<br><br>colleagues for growth | |
| This year, we made significant upskilling<br><br>efforts to fast track our digital,<br><br>sustainability and growth ambitions:<br><br>–Since its inception in 2024, our Digital<br><br>Acceleration Programme has delivered<br><br>over 25,000 hours of targeted training<br><br>for key roles, including product owners<br><br>and scrum masters. This strategic<br><br>investment in professional<br><br>development empowers our teams to<br><br>build superior products and deliver<br><br>services more efficiently, driving better<br><br>outcomes for our customers.<br><br>–We launched a programme to<br><br>strengthen our Sustainable Supply<br><br>Chain Finance CIB capabilities. This<br><br>initiative increased ESG-related activity<br><br>including client calls, deal pipeline and<br><br>mandates awarded.<br><br>–Expanding on our ‘Doing Business In’<br><br>series, we focused on new growth<br><br>markets, such as India. In collaboration<br><br>with the Indian School of Business, we<br><br>conducted a four-day on-campus<br><br>programme that provided bankers with<br><br>a comprehensive understanding of the<br><br>Indian economy, business<br><br>environment, regulatory framework and<br><br>clients’ banking priorities. |
Training at HSBC
5.6 million
Training hours by our colleagues in 2025.
(2024: 6.2 million)
26.8 hours
Training hours per FTE in 2025.
(2024: 29.6 hours)
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 56 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Social |
Building customer inclusion and resilience
Our approach to customer inclusion and resilience
We support our customers, colleagues and
communities through offering solutions that
aim to remove barriers to accessing financial
services. This section highlights some of the
solutions that we offer.
Access to HSBC products and services
In the UK and Hong Kong, we offer no-cost
accounts for customers who do not qualify for
standard accounts or who might need additional
support due to social or financial vulnerability.
This aims to enable them access to essential
banking services. In the UK, through our
partnership with Shelter, we extend this service
to include customers with no fixed address, so
that people experiencing homelessness may be
able to access HSBC services.
| The reduction in no-cost accounts between 2024<br><br>and 2025 is in part due to bulk closure of inactive<br><br>accounts in the UK. |
|---|
Making banking accessible
The table shows the number of no-cost
accounts held by customers in the UK and
Hong Kong
| 2025 |
|---|
| 2024 |
| 2023 |
Supporting financial knowledge and
education
We continue to invest in financial education
content and tools across different channels to
help customers, colleagues and communities
be confident users of financial services.
Supporting customer financial well-being
We seek to support the financial well-being of
our customers and employees so that they
can make the most of their money both day-
to-day and in the long term. We offer a
combination of personalised services and
digital tools, including a financial fitness test,
future planner, webinars and financial health
checks.
Creating an inclusive banking
experience
We seek to ensure that our banking products
and services are designed to be accessible for
customers experiencing either temporary or
permanent challenges, such as disability,
impairment or a major life event. We regularly
assess our web and mobile banking platforms
against Web Content Accessibility Guidelines
(‘WCAG’) 2.2 AA standards. Our digital
accessibility programme has received industry
awards including accolades from the Hong
Kong Digital Accessibility Recognition Scheme,
and recognition at the UK Pay 360 Awards. To
foster inclusive digital environments, we are
providing public training resources through our
Accessibility Hub and Train 1000 programme,
which offer resources for digital professionals,
including developers, designers and content
authors. Over 100,000 individuals engaged
with these resources in 2025.
Engaging with our communities
Helping people and communities
We seek to support the communities in which
we operate, and work with charity partners to
initiate a range of programmes that help
people and communities respond to
opportunities and challenges.
We continued our partnership with the British
Council in Brazil, Mexico, India, Indonesia and
Vietnam, and with The King’s Trust Group in
Australia, India and Malaysia to empower
young, marginalised people through training
and skills development on topics including
employability and climate, and to help equip
them for the new economy.
In the UK, Egypt and Mexico, we supported
financial and social empowerment: over
286,000 young people in the UK were
provided with financial skills in partnership
with Young Enterprise; 1,150 widows in Egypt
were supported to improve their self-reliance
through micro-banking with Global Fund For
Widows; and 800 incarcerated women in
Mexico with our charity partner La Cana were
supported in gaining employability and
emotional skills.
In China and India, HSBC initiatives aimed to
support financial literacy and entrepreneurship:
46,003 children and 26,291 families in China
benefited from financial education, while over
15,000 entrepreneurs in India, primarily
women, saw on average a 20% income
increase and improved access to credit,
markets and social security.
HSBC grants in the US trained 639 individuals
from low-income communities about clean
energy, benefiting 6,484 people.
In Hong Kong, Food Angel launched a new
production line to scale up cook-chill meal
operations, supporting 27,000 marginalised
elderly people with HSBC’s support.
Philanthropy can also play an important role in
addressing the barriers to action, helping to
build capacity, and testing and scaling the
innovation required to achieve a resilient and
sustainable net zero future.
ÑFor more information about our environment-
related philanthropy, refer to ‘Partnering for an
enabling environment’ on page 38.
Community engagement and
volunteering
We offer paid volunteering days, and
encourage our people to offer their time, skills
and knowledge to causes within their
communities. In 2025, our colleagues gave
over 248,639 hours to community activities
during work hours and 272,088 hours during
their own time.
Charitable contributions in 2025 (%)
Social, including Future Skills: 36%
Environment, including the Climate
Solutions Partnership: 38%
Local Priorities: 7%
Disaster relief and other giving: 19%
Cash charitable contributions
$103.7m
Total value of our contribution to
communities
$137.8m
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 57 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Governance
Acting responsibly
Setting high standards of governance TCFD
How ESG is governed
The Board takes overall responsibility for ESG
strategy, overseeing executive management in
developing the approach, execution and
associated reporting. Progress against our ESG
ambitions is reviewed through Board discussion
and review of key topics, such as updates on
the sustainability strategy and reviewing the
ESG strategy dashboard. The Board is regularly
provided with specific updates on ESG matters,
including the Net Zero Transition Plan,
philanthropy strategy, human rights and
workforce engagement. Board members
receive ESG-related training as part of their
induction and ongoing development, and seek
out further opportunities to build their skills and
experience in this area. For further details of
Board members’ ESG skills and experience,
see page 220. For further details of their
induction and training in 2025, see page 231.
In March 2025, we streamlined our ESG
governance with the demise of the ESG
Committee, which was part of the Group
Operating Committee, with the business of the
meeting being embedded across the formal
Operating Committee level governance
meetings or managed via individual
accountability. We expect that our approach to
ESG governance is likely to continue to develop,
in line with our evolving approach to ESG
matters and stakeholder expectations.
The diagram on the right provides an illustration
of our ESG governance process, including how
the Board’s strategy on climate is cascaded and
implemented throughout the organisation. It
identifies examples of forums that manage both
climate-related opportunities and risks, as well
as considering the associated trade-offs. Details
are also provided on their responsibilities and
the responsible chair. The structure of the
process remains consistent with a defined
escalation pathway for issues and emerging
challenges, with issues either resolved in a
given forum or raised to the appropriate level of
governance with appropriate scope and
authority.
Given the wide-ranging remit of ESG matters,
the governance activities are managed through
a combination of specialist governance
infrastructure and regular meetings and
committees, where appropriate. These include
the Group Risk Committee and Group Audit
Committee, which provide oversight for the
scope and content of ESG disclosures.
For some areas, such as climate where our
approach is more advanced, dedicated
governance activities exist to support the wide
range of activities.
The Group Chief Risk and Compliance Officer
and the chief risk officers of our PRA-regulated
businesses are the senior managers
responsible for climate financial risks under the
UK Senior Managers Regime. Climate risks are
considered in the Group Risk Management
Meeting and the Group Risk Committee, with
scheduled updates provided, as well as detailed
reviews of material matters, such as climate-
related stress-testing exercises.
| How HSBC’s climate strategy is cascaded | |||||||
|---|---|---|---|---|---|---|---|
| Opportunities | Risks | ||||||
| Board level governance | |||||||
| Group Board | Group Audit<br><br>Committee | Group Risk<br><br>Committee | |||||
| Takes overall responsibility<br><br>for climate strategy,<br><br>overseeing executive<br><br>management in<br><br>developing the approach<br><br>and execution. | Monitors and assesses the<br><br>integrity of the Group’s<br><br>financial disclosures,<br><br>including those relating to<br><br>ESG. | Oversees and advises the<br><br>Board on risk-related<br><br>matters including those<br><br>related to ESG risks<br><br>(incorporating climate<br><br>risk). | |||||
| Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: James Forese | |||||
| Specialist Board governance | |||||||
| Sustainability Working Group<br><br>Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term<br><br>sustainability strategy, including our progress towards our net zero ambition, taking into account<br><br>key factors such as risk appetite, commerciality, capability and data.<br><br>Chair: Geraldine Buckingham | |||||||
| Management level governance | |||||||
| Group Operating Committee<br><br>Receives regular ESG updates and<br><br>shapes and influences our strategy.<br><br>Chair: Group Chief Executive Officer | Group Risk Management Meeting<br><br>Oversees the enterprise-wide<br><br>management of all risks, including<br><br>updates relating to the Group’s climate<br><br>risk profile and risk appetite, top and<br><br>emerging climate risks.<br><br>Chair: Group Chief Risk and<br><br>Compliance Officer | ||||||
| Regional, global business and group infrastructure | |||||||
| Examples of ESG-related management governance<br><br>The following governance bodies support management in its delivery of ESG activities. | |||||||
| Group Reputational Risk Committee<br><br>Provides recommendations and advice on<br><br>significant reputational risk matters with<br><br>impact across the Group.<br><br>Chair: Group Chief Risk and Compliance<br><br>Officer | Sustainability Leadership Meeting<br><br>Monitors execution of the Group’s<br><br>sustainability strategy and requirements.<br><br>Chair: Group Chief Sustainability Officer |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 58 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
Human rights
Our respect for human rights
As set out in our Human Rights Statement, we
recognise the role of business in respecting
human rights. Our approach is guided by the
UN Guiding Principles on Business and Human
Rights (‘UNGPs’) and the OECD Guidelines for
Multinational Enterprises on Responsible
Business Conduct.
Our salient human rights issues
| Our salient human rights issues | ||||||
|---|---|---|---|---|---|---|
| Illustration of HSBC Group’s inherent human rights risks mapped to our business activities. | ||||||
| Inherent human rights risks | Employer | Buyer | Provider of products<br><br>and services | Investor | ||
| Personal<br><br>customers | Business<br><br>customers | |||||
| Right to<br><br>decent<br><br>work | Freedom from forced labour | u | u | u | ||
| Just and favourable conditions of work | u | u | u | u | ||
| Right to health and safety at work | u | u | u | u | ||
| Right to equality and freedom from discrimination | u | u | u | u | u | |
| Right to privacy | u | u | u | |||
| Cultural and land rights | u | u | u | |||
| Right to dignity and justice | u | u | u | u | u |
We continue to develop our understanding of
our salient human rights issues. These are the
human rights at risk of the most severe
negative impact through our business activities
and relationships.
An extensive review of our salient human
rights issues conducted in 2022 identified five
human rights risks inherent to HSBC’s
business globally, and five types of activity
through which such risks might arise. These
are represented in the adjacent table. We
reviewed those earlier findings in 2025,
drawing on consultations with stakeholders
including employees, customers, investors,
public authorities and civil society groups
representing potentially affected people. This
review validated our existing assessment, and
no substantive changes have been made to the
table as a result. Respondents highlighted
several developing issues, including the
potential social impacts of AI on communities.
In 2025, we continued to focus on our
approach to human rights risk management
relating to the goods and services we buy
from third parties and in respect of our
business customers.
Managing risks to human rights
We continued the process of adapting our risk
management procedures, reflecting what we
learned from the recent work on salient
human rights issues and continued to embed
the guidance documents issued in 2024 for
those who manage our relationships with
suppliers and with business customers.
Our Global Procurement function continued to
implement its human rights due diligence
operating procedure. This procedure sets out
how HSBC aims to identify suppliers where
the risk of human rights impact is considered
to be higher, and the process to be followed to
review and mitigate the associated risks. We
continued the human rights audits of suppliers
and closed out findings from the 2024 audits.
We use independent negative news data to
help identify controversies related to our
corporate customers, including on human
rights, which may lead to further review and
escalation.
ÑFor further details of the actions taken to respect
the right to decent work, see our 2024 Annual
Statement under the UK Modern Slavery Act at
www.hsbc.com/modern-slavery-act.
ÑSee ’Our approach to inclusion’ on page 51 for
details relating to freedom from discrimination.
Sustainability risk policies
Some of our business customers operate in
sectors in which the risk of adverse human
rights impact is considered greater. Our
sustainability risk policies consider human
rights issues such as forced labour, harmful or
exploitative child labour, workers’ rights, health
and safety of communities and land rights.
Through our membership of international
certification schemes, such as the Forestry
Stewardship Council, the Roundtable on
Sustainable Palm Oil and the Equator
Principles, we support standards aimed at
respecting human rights.
ÑFor further details on our sustainability risk policies
see page 49.
Financial crime controls
Our financial crime risk framework also seeks
to mitigate the risk of being associated with
adverse human rights impacts, by helping to
identify and assess the financial crime risk
associated with our customers, employees
and third parties.
ÑFor further details of how we fight financial crime
see www.hsbc.com/fighting-financial-crime.
Other principles
HSBC’s Principles for the Ethical Use of Data
and Artificial Intelligence include how we seek
to respect the right to privacy while making
use of these technologies.
ÑFor further details see www.hsbc.com/ai-principles.
Supporting change
We continued to participate in industry forums,
including the Thun Group of Banks, which is an
informal group that seeks to promote
understanding of the UNGPs within the sector,
and the UN Global Compact Human Rights
Working Group.
HSBC has been a member of the Mekong
Club since 2016. We are a participant in their
financial services working group, and we use
their informative typological toolkits,
infographics and other multimedia resources
covering current and emerging issues. Our
compliance teams regularly collaborate and
engage with the Mekong Club in designing
Group-wide knowledge sharing and training
sessions.
Investments
HSBC Asset Management acknowledges the
important role that business plays in
respecting human rights.
HSBC Asset Management engages with
companies prioritised for purposeful
engagement under its stewardship plan on
core relevant themes, including human rights.
Engagements may be on a one-on-one basis,
or collaboratively with other investors. Further
details can be found in its stewardship plan.
The Global Voting Guidelines provide an
overview of its approach to exercising its
shareholder rights in respect of ESG issues,
including human rights.
Supporting those impacted and those
potentially at risk
We continued to expand our Survivor Bank
programme, which has now supported over
4,100 (a more than 15% increase since last
year) survivors of modern slavery and human
trafficking in the UK.
Our personal customers (IWPB) team
continues to deliver training to raise
awareness of modern slavery, which seeks to
enable employees to spot signs of abuse and
escalate their concerns through established
channels. In addition, our customer-facing
employees globally are given training as part of
their induction which aims to help them
identify and support vulnerable customers.
ÑFor further details of our work to support
vulnerable communities, see page 56.
Effectiveness
We increased the proportion of our suppliers
who had either confirmed adherence to
HSBC’s code of conduct or their own
alternative, which was accepted by our Global
Procurement function, to 97.3%. We also
continued to train employees in relevant roles
on one or more aspects of a range of human
rights related topics, having now reached over
11,300 employees over the past 24 months.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 59 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
Customer experience
We remain committed to improving customers’ experiences. In 2025, we gathered feedback from over one million customers across our four
business segments to help us understand our strengths and the areas we need to focus on.
Customer satisfaction
Listening to drive improvement
We continue to listen, learn and act on
customer feedback. We use the net promoter
score (‘NPS’) system to share feedback with
our front-line teams, allowing them to respond
directly to customers. We also run dedicated
global forums to provide oversight of our retail
and business customers’ experiences and
promote continuous improvement.
How we fared
In Hong Kong, we were ranked in first place
for both RBW and CMB. Notably, we reached
a record high NPS in RBW.
We also reached our highest NPS to date in
the UK among RBW customers and improved
our rank.
In CMB, we ranked second for mid-market
enterprises, and improved our SME Business
Banking ranking to fifth.
In IWPB, among the mass affluent we
improved our NPS or rank in seven of 10 key
markets. We ranked in the top 3 of the eight
competitively benchmarked markets. We rose
to first place in Singapore and China and
maintained second place in Malaysia.
India and Mexico both experienced a decline in
NPS during the period. Although NPS is
influenced by various factors, the increase in
customer complaints contributed to a shift in
overall customer sentiment. For further details
on IWPB customer complaints, please refer to
page 60.
In our private bank, our global NPS increased
to 54 points, compared with 48 points in 2024.
In CIB, among Corporates we were ranked
among the top 3 in seven of 10 key markets.
We led in three markets and held a stronger
position in Asia and the Middle East than in
Europe and the Americas.
How we listen
To improve how we serve our customers, we must be open to feedback and acknowledge when things go wrong. We continue to adapt at pace to
provide support for customers facing new challenges, new ways of working and those that require enhanced care needs. We aim to be open and
consistent in how we track, record and manage complaints, although as we serve a wide range of customers – from personal banking and wealth
customers to large corporates, institutions and governments – we tailor our approach in each of our global businesses.
| How we handle complaints | |
|---|---|
| Our principles | Our actions |
| Making it easy for<br><br>customers to complain | Customers can complain through the channel that best suits them. We provide a point of contact along with<br><br>clear information on next steps and timescales. |
| Acknowledging complaints | All colleagues welcome complaints as opportunities and exercise empathy to acknowledge our customers’<br><br>issues. Complaints are escalated if they cannot be resolved at first point of contact. |
| Keeping the customer up to<br><br>date | We set clear expectations and keep customers informed throughout the complaint resolution process<br><br>through their preferred channel. |
| Ensuring fair resolution | We thoroughly investigate all complaints to address concerns and ensure the right outcome for our<br><br>customers. |
| Providing available rights | We provide customers with information on their rights and the appeal process if they are not satisfied with<br><br>the outcome of the complaint. |
| Undertaking root cause<br><br>analysis | Complaint causes are analysed on a regular basis to identify and address any systemic issues and to inform<br><br>process improvements. |
Hong Kong
As of 31 December 2025, Hong Kong CMB
received 7,324 customer complaints, down
3.5% from the year before. The primary
drivers of these complaints were related to
servicing, policy, and digital issues. Policy-
related complaints focused on Client Selection
and Exit Management (‘CSEM’) cases and
CSEM appeals, while digital complaints
involved business internet banking log-on
problems, webpage design and online
transactions issues.
In 2025, despite a growing customer base, the
Hong Kong RBW average complaints per
1,000 customers per month decreased from
0.71 to 0.68.
Acting on feedback
The bi-monthly CMB complaint review forum
brings together key decision makers,
customer relationship owners and product and
process owners to identify the latest complaint
trends and concern areas. It oversees root
cause analysis and implements improvement
actions with the aim of reducing complaints
and enhancing customer service. Awareness
sessions are provided to client-facing staff to
reinforce the CMB complaint handling
procedure and customer feedback tool
functionalities, to help equip staff with relevant
skills and knowledge to manage complaints
effectively.
The improvement for Hong Kong RBW was
achieved through enhanced banking
capabilities and a focus on customer
experience. The positive trend stemmed from
fostering a customer-centric culture,
emphasising service resolutions, and
proactively addressing feedback through root
cause analysis and insights from complaint
management information and NPS.
Strengthened cross-departmental collaboration
and advanced technological methods in
complaint management further enhanced our
efficiency and responsiveness.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 60 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
UK
For UK CMB, complaints reduced by 13.8% in
2025 compared with 2024, with the most
common complaint categories continuing to
relate to telephony, servicing and transactions.
A refined customer contact strategy has been
embedded to drive improved outcomes and
customer experience.
In 2025, average complaints per 1,000
customers per month for UK RBW were 0.84.
Overall, complaints fell by 18% in 2025 vs
2024.
During 2025, our two key priorities continued
to be complaints prevention and improving the
quality of resolution of the complaints we
received. We made good progress in both
areas, driven by targeted intervention in
priority areas and ongoing regular oversight.
Acting on feedback
A focus on root cause analysis identified
more than 240 opportunities to reduce
dissatisfaction in key customer journeys in
CMB.
In RBW, we focused on the top 35 complaint
themes – such as telephony customer
experience, transaction disputes and
international payment processing – and
allocating them to individual executives as
accountable ‘owners’ to remedy the root
cause.
Corporate and Institutional Banking
Within CIB, excluding Hong Kong CMB and UK
CMB, we achieved a 3.7% reduction in
complaints. Complaint volumes decreased in
2025, with 7,373 complaints received
compared with 7,655 in 2024, indicating an
overall downward trend.
In Markets and Securities Services (MSS)
complaints increased slightly by 4.6% to 320.
The majority of the complaints were
operational in nature and resolved in a timely
manner. Of the overall MSS complaints in
2025, 46% came from Asia-Pacific and 44%
came from Europe, our two largest markets.
Acting on feedback
These complaints were mainly related to
servicing and transactions across all regions,
with a notable concentration in Latin America,
the Middle East and North Africa, Asia-Pacific
and Europe.
To mitigate potential risks, comprehensive
mandated conduct and complaints training has
been provided to all CIB employees. This
training aims to strengthen a culture of
accountability, transparency and learning
aligned to our conduct principles.
In 2025, focus continued to be on increasing
the quality of the documentation of customer
feedback received within MSS. Continuous
training for front-line staff on recurring themes
that are identified when managing complaints
ensured that we continued to learn from
feedback, allowing us to further embed
changes into our processes, leading to a better
customer experience. Although complaint
volumes increased slightly, we identified
better quality of complaint documentation,
allowing us to address the issues more
effectively.
International Wealth and Premier Banking
In 2025, IWPB received approximately
717,000 complaints from customers in eight
priority markets. Average complaints per 1,000
customers (CPK) per month increased from
4.2 in 2024 to 4.7 in 2025. Our top three
markets – Mexico, Australia and India –
accounted for 88% of IWPB complaints
globally. The rise in complaints was primarily
driven by disputes in Mexico, largely
stemming from customer concerns about
unauthorised or fraudulent transactions.
Additionally, the introduction of credit card
annual fees, and more frequent risk reviews
contributed to higher complaint volumes in
Australia and India. We are closely monitoring
these trends and have initiated targeted
actions in each market to address the
underlying causes.
We continue our commitment to drive
accuracy over how we log and respond to
customer feedback.
In our Private Bank, we received 593
complaints, a decrease of 54 compared with
2024, helped by the sale of our private bank in
Germany. Banking products and service issues
accounted for the largest volume of
complaints overall, a high proportion of which
were attributable to issues with payment
processing and credit cards. Overall, our
Private Bank resolved 578 complaints in 2025.
Acting on feedback
In 2025, we further strengthened our
customer capabilities – the tools, skills, and
processes that empower our teams to better
understand, actively listen and improve the
customer experience globally.
We upgraded our listening platforms which
support our colleagues in meeting minimum
service standards and in prioritising customer
experience in their daily routines. A key
milestone was the launch of a new platform
designed to gather and analyse customer
feedback, generating actionable insights for
continuous improvement. These upgrades
help us to improve customer experience and
systematically track and measure our
progress.
ÑFor further details of complaints volumes by
business lines, see our ESG Data Pack at
www.hsbc.com/esg.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 61 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
Integrity, conduct and fairness
Safeguarding the financial system
We have continued our efforts to combat
financial crime and reduce its impact on our
organisation, customers and the communities
that we serve. Financial crime includes fraud,
bribery and corruption, tax evasion and the
facilitation of tax evasion, sanctions and
export control violations and evasion, money
laundering, terrorist financing and proliferation
financing.
We manage financial crime risk because it is
the right thing to do to protect our customers,
shareholders, staff, the communities in which
we operate, as well as the integrity of the
financial system on which we all rely. Our
financial crime risk management framework
is applicable across all global businesses and
functions, and in all countries and territories
in which we operate. The financial crime risk
framework is overseen by the Board,
supported by our financial crime policy, and is
designed to enable adherence to applicable
laws and regulations globally.
Annual global mandatory training is provided
to all colleagues, with additional targeted
training tailored to certain individuals. We
carry out regular risk assessments to identify
where we need to respond to evolving
financial crime threats, as well as to monitor
and test our financial crime risk management
programme.
Our anti-bribery and corruption policy
We are required to comply with all applicable
anti-bribery and corruption laws in every
market and jurisdiction in which we operate.
We seek to focus not only on the letter, but
also on the spirit of relevant laws and
regulations to demonstrate our commitment
to ethical behaviours and conduct, as part of
our environmental, social and corporate
governance.
Our global financial crime policy requires that
all activity must be: conducted without intent
to bribe or corrupt; reasonable and
transparent; considered to be neither lavish
nor disproportionate to the professional
relationship; appropriately documented with
business rationale; and authorised at an
appropriate level of seniority. Our global
financial crime policy requires that we identify
and mitigate the risk of our employees,
customers and third parties committing
bribery or corruption. Among other controls,
we use risk assessments, due diligence and
ongoing monitoring following a risk-based
approach, to identify and help mitigate the
risk that our customers are involved in, or use
HSBC’s products or services, to commit
bribery or corruption.
There were no concluded legal cases
regarding bribery or corruption brought
against HSBC or its employees in 2025.
 |
|
|---|---|
| The scale of our work | |
| Each month in 2025 we monitored<br><br>approximately 980 million transactions for<br><br>signs of financial crime. We performed<br><br>daily screening of approximately 109<br><br>million customer records for sanctions<br><br>exposure. In 2025, we filed nearly 137,000<br><br>suspicious activity reports to law<br><br>enforcement and regulatory authorities<br><br>where we identified potential financial<br><br>crime. |
99%
Total percentage of permanent and non-
permanent employees who received financial
crime training, including on anti-bribery and
corruption in 2025.
Whistleblowing
We want colleagues and stakeholders to
have confidence in speaking up when they
observe unlawful or unethical behaviour. We
offer a range of speak-up channels to listen to
the concerns of individuals and have a zero-
tolerance policy for acts of retaliation.
Listening through whistleblowing
channels
Our global whistleblowing channel, HSBC
Confidential, is one of our speak-up channels,
which allows colleagues past and present and
other stakeholders to raise concerns
confidentially and, if preferred, anonymously
(subject to local laws). In most of our
markets, HSBC Confidential concerns are
raised through an independent third party,
offering 24/7 hotlines and a web portal in
multiple languages. We also provide and
monitor an external email address for
concerns about accounting, internal financial
controls or auditing matters
Concerns are investigated proportionately and
independently, with action taken where
appropriate. This can include disciplinary
action, such as dismissal and adjustments to
variable pay and performance ratings, or
operational actions including changes to
policies and procedures.
We continue to actively promote our full range
of speak-up channels to colleagues to help
ensure their concerns are handled through the
most effective route. In 2025, 1,100 concerns
were investigated through HSBC Confidential
(2024: 925) with 34% found to have some
level of substantiation (2024: 35%) and a
further 19% identifying other issues (2024:
22%).
The Group Audit Committee has oversight of
the Group’s whistleblowing arrangements, and
the Chair of the Group Audit Committee acts
as HSBC’s Whistleblowers’ Champion with
responsibility for ensuring and overseeing the
integrity, independence and effectiveness of
the Group’s policies and procedures.
Regulatory Compliance sets the
whistleblowing policy and procedures and
provides the Group Audit Committee with
periodic updates on their effectiveness.
Specialist teams and investigation functions
own whistleblowing controls, with monitoring
in place to determine control effectiveness.
ÑFor further details of the role of the Group Audit
Committee in relation to whistleblowing, see
page 238.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 62 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
A responsible approach to tax
We seek to pay our fair share of tax in all
jurisdictions in which we operate, applying
both the letter and spirit of the law, and to
minimise the risk of customers using our
products and services to evade or
inappropriately avoid tax. Our approach to tax
and governance processes is designed to
achieve these goals.
We maintain open and transparent
relationships with tax authorities. We
cooperate to resolve differing interpretations
or disputes in a timely manner.
Through adoption of the Group’s risk
management framework, we seek to ensure
that we do not adopt inappropriately tax-
motivated transactions or products, and that
tax planning is scrutinised and supported by
genuine commercial activity. HSBC has no
appetite for using aggressive tax structures.
With respect to our customers’ taxes, we
have made considerable investments to
support external tax transparency initiatives to
reduce the risk of banking services being used
to facilitate customer tax evasion and
implemented processes that aim to ensure
that inappropriately tax-motivated products and
services are not provided to our customers.
Our tax contributions
During 2025, we paid $7.7bn (2024: $9.2bn) in
respect of our own tax liabilities and collected
taxes of $10.0bn (2024: $10.1bn) on behalf of
governments around the world. Tax paid was
lower than in the previous year primarily due to
the 2025 corporate income tax assessments
for the Group’s entities in Hong Kong being
received and paid in January 2026, whereas
the 2024 assessments were received and
settled during 2024.
Taxes paid – by type of tax
Tax on profits $4,296m (2024: $6,080m)
Withholding taxes $685m (2024: $667m)
Employer taxes $1,102m (2024: $1,003m)
Bank levy $273m (2024: $135m)
Irrecoverable VAT $1,160m (2024: $1,098m)
Other duties and levies $221m1 (2024: $229m)
1Other duties and levies includes property taxes of
$83m (2024: $76m).
Our approach to customer and market conduct
Our Conduct Approach guides us to do the
right thing and to focus on the impact we have
for our customers and the financial markets in
which we operate. It is embedded throughout
our product and services lifecycle, with a focus
on five clear outcomes:
–We understand our customers’ needs.
–We provide products and services that offer
a fair exchange of value.
–We service customers’ ongoing needs and
put it right if we make a mistake.
–We act with integrity in the financial markets
we operate in.
–We operate resiliently and securely to avoid
harm to customers and markets.
Our principles, policies and procedures set
standards to help ensure that we consider and
meet customer needs and protect market
integrity. They help ensure our products and
services remain fit-for-purpose, offer fair value
exchange and mitigate the risk of customer or
market detriment.
We train all our colleagues on the importance
of customer and market conduct, helping to
ensure our conduct outcomes are part of
everything we do.
Our approach with suppliers
We maintain global policies and procedures for
the onboarding and use of third-party
suppliers. We expect suppliers to meet our
third-party risk compliance requirements and
assess them to identify any financial stability
concerns.
Sustainable procurement
Supporting and engaging with our supply chain
is vital to progressing our sustainable
procurement goals. In 2025:
–We continued gathering carbon emission
data from our suppliers through CDP
(formerly the Carbon Disclosure Project) and
an additional data collection source
introduced in 2024 to simplify and expand
our supplier outreach for scope 3 data
collection.
–We continued to deepen our collaboration
with suppliers and have increased our focus
on those without public disclosures or
emissions reduction plans, and supported
them by providing additional guidance where
appropriate.
–Through ongoing engagement and targeted
collaboration events, we are partnering with
–some of our suppliers who are more
advanced in their sustainability journey to
jointly develop innovative ideas on
decarbonisation and nature-related topics.
–We also supported our sourcing teams to
further integrate sustainability into sourcing
strategy and decision making, including new
supplier selection, renewals and ongoing
supplier management.
–As part of our nature approach, we have
begun developing sustainable sourcing
roadmaps across key sectors, such as
support services, technology services and
corporate real estate, following a materiality
assessment of biodiversity and nature risks.
The roadmaps will help us address high-risk
areas and include considerations for nature
and biodiversity within our procurement
activities.
–We continue to implement our human rights
due diligence process to help identify
supplier risks.
–We maintained an inclusive approach to
supplier engagement, supporting fair access
to procurement opportunities for all
suppliers.
Supplier Code of Conduct
Our Supplier Code of Conduct (‘the Code’)
sets out the minimum standards we expect of
our suppliers in respect of the environment,
inclusion and human rights. In 2025, we
refreshed the Code to include principles on
responsible use of AI. We continue to
formalise adherence to the Code by seeking to
add clauses to our supplier contracts which
support the right to audit and act if a breach is
discovered. At the end of 2025, 97.3% of
approximately 9,830 contracted suppliers had
either confirmed adherence to the Code, or
provided their own alternative that was
accepted by our Global Procurement function.
Our Supplier Code of Conduct is available at:
www.hsbc.com/who-we-are/esg-and-
responsible-business/working-with-suppliers
ÑFor further details of the number of suppliers in
each geographical region, see the ESG Data
Pack at www.hsbc.com/esg
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 63 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Governance |
Safeguarding data
Data privacy
We are committed to protecting and managing
the data we process, in accordance with the
laws and regulations of the markets in which
we operate. Our strategy rests on having the
right talent, technology, and processes to
manage privacy risks effectively. Our Group-
wide data risk policy provides a consistent
approach to data and privacy risk
management, applicable across all global
businesses and infrastructure. This policy is
reviewed annually with the aim of ensuring
that we remain responsive to regulatory
changes. Our HSBC Privacy Principles can be
found at: www.hsbc.com/ who-we-are/esg-
and-responsible-business/ managing-risk/
operational-risk.
We regularly provide employees with training
and awareness sessions on data privacy and
security, offering both mandatory and
supplementary sessions as required. In
addition, we mark International Data Privacy
Day each year, with events that discuss
developments in the data privacy landscape
and reinforce privacy awareness across HSBC.
We provide transparency to our customers,
employees and other stakeholders regarding
processing of personal data and their rights.
Where relevant, we work with third parties to
help ensure adequate protections are
provided, in line with our data risk policy and
regulatory requirements. We offer a broad
range of channels for customers, employees
and other stakeholders to raise privacy
concerns and questions.
Data privacy is regularly monitored at multiple
governance forums, including at Board level,
providing senior executive oversight on privacy
risk and global programmes. Our Global Internal
Audit function independently assures whether
our data privacy risk management approach is
effectively designed and operational. In addition,
we have established data privacy governance
structures and continue to embed accountability
across all businesses and functions.
We continue to review and implement
industry best practices for data privacy and
security, working closely with our data
protection officers, industry bodies, and
research institutions. Regular reviews and
privacy risk assessments are conducted to
strengthen our data privacy controls.
Procedures are in place to address data privacy
considerations, including notifying regulators,
customers and data subjects as required by
law in the event of a data privacy breach.
Intellectual property rights practices
Our Group intellectual property risk policy,
supported by comprehensive controls and
guidance, is designed to manage risks
associated with intellectual property. This
policy seeks to ensure that our commercially
and strategically valuable intellectual property
is properly identified and safeguarded. This
includes applying to register trademarks and
patents and enforcing our rights against third
parties making unauthorised use of our
intellectual property. Additionally, our
intellectual property framework helps prevent
infringement of third-party rights, thereby
supporting the consistent and effective
management of intellectual property risk in
alignment with our risk appetite.
Cybersecurity
The threat of a significant cyber incident
remains a concern for the Group and the
broader financial sector. As cyber threats
continue to evolve, failure to protect our
operations may result in disruption to our
business services and negative impacts on our
customers, such as a financial loss, loss of
sensitive data or damage to our reputation,
among other risks.
Identify, protect, detect, respond and
recover
We invest in business and technical controls to
help prevent, detect and mitigate cyber threats.
Our controls follow a ’defence in depth’
approach, leveraging multiple security layers,
and recognising the complexity of our
environment. Our ability to detect and respond
to attacks through our round-the-clock security
operations is intended to help reduce the impact
of attacks. We routinely test our data backup
and disaster recovery processes with the aim of
limiting the impact on customers and restoring
services in the event of a cyber-attack.
Our cyber intelligence and threat analysis team
proactively collects and analyses internal and
external cyber information to evaluate threat
levels, including from ongoing geopolitical
events, potential outcomes, and what control
adjustments are needed to best defend
against them. We collaborate with the broader
cyber intelligence community, the financial
services industry and global government
agencies.
In 2025, we continued to enhance our
cybersecurity capabilities to help reduce the
likelihood and impact of unauthorised access,
security vulnerabilities being exploited, data
leakage, third-party security exposure and
advanced malware. We focused on
preparedness for emerging technology risks,
such as AI and quantum computing.
We work with third parties, suppliers and
financial infrastructure bodies to help reduce
the threat of cyber-attacks impacting our
business services. We have a third-party
security risk management process in place to
continually assess, identify and manage
cybersecurity risks with suppliers and other
third-party relationships. This includes
assessments of the third parties against our
own cybersecurity standards and
requirements.
Policy and governance
We have a suite of cybersecurity policies,
procedures and controls to help with the
effective oversight and management of the
organisation. This includes but is not limited to
defined information security responsibilities for
employees, contractors and third parties, as
well as standard procedures for cyber incident
identification, investigation, mitigation and
reporting. We operate a three lines of defence
model, aligned to the enterprise risk
management framework, to help the oversight
and challenge of our cybersecurity capabilities.
The assessment and management of our
cybersecurity risk is led and coordinated by our
Global Chief Information Security Officer
(‘CISO’), who has extensive experience in
financial services, security and resilience as
well as strategy, governance, risk
management and regulatory compliance. The
Global CISO is supported by business and
regional level CISOs. In the event of incidents,
both the Global and relevant supporting CISOs
are informed and are engaged in line with our
cybersecurity incident response protocols. Key
risk indicators, significant cyber incidents and
other matters related to cybersecurity are
presented on a regular basis to various risk and
control committees, including Board
committees, the Group Risk Management
Meeting and global businesses.
Our cybersecurity capabilities are periodically
assessed against standards issued by the
National Institute of Standards and Technology
and by independent third parties, and we
proactively collaborate with regulators to
participate in regular testing activities. In
addition, HSBC engages external, independent
third parties to support our penetration and
threat-led penetration testing.
Cyber training and awareness
Our people play an important role in protecting
against cybersecurity threats and we aim to
provide tools, and encourage behaviours, to
keep our organisation and customer data safe.
This includes cybersecurity training and
awareness for all our people and targeted
training for staff that are identified as having
elevated cyber risk exposure. We host an
annual Cyber Awareness Month, covering
topics such as online safety at home, social
media safety, safe hybrid working and cyber
incidents and response. We also provide a
wide range of education and guidance to our
customers about how to spot and prevent
online fraud.
ÑSee ‘Top and emerging risks’ on pages 121 and
122 for more information relevant to data privacy
and cybersecurity.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 64 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial
review
The financial review gives detailed reporting of our
financial performance in 2025 at Group level, our
business segments and legal entities.
| 65 | Financial summary |
|---|---|
| 88 | Business segments and legal entities |
| 106 | Alternative performance measures |
| 111 | Other information |
3
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 65 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial summary
Basis of presentation
Constant currency performance
Constant currency performance is computed by adjusting reported
results for the effects of foreign currency translation differences, which
reflect the movements of the US dollar against most major currencies
during 2025. Excluding these differences allows us to assess balance
sheet and income statement performance on a like-for-like basis and to
better understand the underlying trends in the business. Foreign
currency translation differences for 2025 are computed by retranslating
into US dollars for non-US dollar branches, subsidiaries, joint ventures
and associates:
–the income statement for the year ended 31 December 2024 at the
average rate of exchange for the year ended 31 December 2025;
and
–the balance sheets at 31 December 2024 at the prevailing rates of
exchange on 31 December 2025.
No adjustment has been made to the exchange rates used to translate
foreign currency-denominated assets and liabilities into the functional
currencies of any HSBC branches, subsidiaries, joint ventures or
associates. The constant currency data of our operations in Türkiye has
not been adjusted further for the impacts of hyperinflation. When
reference is made to foreign currency translation differences in tables
or commentaries, comparative data reported in the functional
currencies of HSBC’s operations has been translated at the appropriate
exchange rates applied in the current period on the basis described
above.
Notable items and material notable items
We separately disclose ‘notable items’, which are components of our
income statement that management would consider as outside the
normal course of business and generally non-recurring in nature.
Certain notable items are classified as ‘material notable items’, which
are a subset of notable items. Categorisation as a material notable item
is dependent on the nature of each item in conjunction with the
financial impact on the Group’s income statement, and are excluded
from our target basis dividend payout ratio calculation and earnings per
share measure. Material notable items in 2025 or relevant comparative
periods relate to the operating expenses associated with actions to exit
or wind down non-strategic businesses. They also include a dilution
loss and the recognition of an impairment of our investment in BoCom,
and a legal provision relating to developments in a claim in Luxembourg
relating to the Bernard L. Madoff Investment Securities LLC fraud.
ÑThe tables on pages 88 to 90 and pages 97 to 102 detail the effects of notable
items on each of our business segments, legal entities and selected countries/
territories in 2025 and 2024.
Impact of strategic transactions
In addition to the items categorised as material notable items, the
impacts of strategic transactions include the distorting impact observed
between the periods of the operating income statement results related
to acquisitions, disposals and wind-downs that affect period-on-period
comparisons. Once a transaction has completed or a wind-down has
commenced, the impact will include the operating income statement
results of each business, which are not classified as notable items, in
any comparative period if there are no results in the current period as a
result of a transaction, or a reduction in revenue or costs has arisen
from the wind-down of a business. We consider the monthly impact of
distorting income statement results when calculating the impact of
strategic transactions. In the case of wind-downs, or transactions that
complete in phased tranches, there may be timing differences between
the recognition of operating cost impacts and operating revenue
impacts. These would arise in the event there is a timing lag between
the impact of cost actions and the resultant impact on operating
revenue.
Impact of hyperinflationary accounting
The sale of our business in Argentina, previously treated as a
hyperinflationary economy for accounting purposes, was completed in
- We continue to treat Türkiye as a hyperinflationary economy for
accounting purposes. The impact of applying International Accounting
Standard (‘IAS’) 29 ‘Financial Reporting in Hyperinflationary Economies’
and the hyperinflation provisions of IAS 21 ’The Effects of Changes in
Foreign Exchange Rates’ in the current period for our operations in
Türkiye was a decrease in the Group’s profit before tax of $150m (2024:
$157m), comprising a decrease in revenue, including a loss on net
monetary position of $145m (2024: $146m) and an increase in ECL and
operating expenses of $4m (2024: increase of $11m). The consumer
price index at 31 December 2025 for Türkiye was 3,513.87, with an
increase in the period of 829.32 (2024: 825.55 increase).
Use of alternative performance
measures
Our reported results are prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IFRS Accounting Standards’), as detailed in the
financial statements starting on page 288.
To measure our performance, we supplement our IFRS Accounting
Standards figures with non-IFRS Accounting Standards measures,
which constitute alternative performance measures under European
Securities and Markets Authority guidance and non-GAAP financial
measures defined in and presented in accordance with US Securities
and Exchange Commission rules and regulations. These measures
include those derived from our reported results that eliminate factors
distorting year-on-year comparisons. The ‘constant currency
performance’ measure used throughout this report is described above.
Definitions and calculations of other alternative performance measures
are included in our ‘Alternative performance measures’ on page 106.
Additionally, the insurance-specific non-GAAP measure ‘Insurance
equity plus CSM net of tax‘ is provided on page 93, along with its
definition and reconciliation to the GAAP measure. All alternative
performance measures are reconciled to the closest reported
performance measure.
Return on average tangible equity
excluding notable items
The calculation for RoTE excluding notable items adjusts the ‘profit
attributable to the ordinary shareholders, excluding goodwill and other
intangible assets impairment‘ for the post-tax impact of notable items. To
better align with market practice, from 2025 we no longer adjust the
‘average tangible equity‘ for the post-tax impact of notable items in each
period. Comparatives have been re-presented.
ÑSee page 106 for the definition of return on average tangible equity excluding
notable items and page 107 for the reconciliation to the GAAP measure.
Banking net interest income
Banking net interest income (‘banking NII’) adjusts our NII primarily for
the impact of funding trading and fair value activities reported in interest
expense. It represents the Group’s banking revenue that is directly
impacted by changes in interest rates. We use this measure to
determine the deployment of our surplus funding, and to help optimise
our structural hedging and risk management actions. For more
information on banking NII, see page 69.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 66 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Constant currency revenue and profit
before tax excluding notable items and the
impact of strategic transactions
To aid the understanding of our results, we separately report ‘constant
currency revenue excluding notable items‘ and ‘constant currency profit
before tax excluding notable items‘, which exclude the impact of notable
items and the impact of foreign exchange translation. We also separately
disclose ‘constant currency revenue excluding notable items and the
impact of strategic transactions‘ and ‘constant currency profit before tax
excluding notable items and the impact of strategic transactions‘, which
also exclude the impact of strategic transactions classified as material
notable items as described above. We consider these measures to provide
useful information to investors as they remove items that distort period-on-
period comparisons.
The impact of strategic transactions also includes the distorting impact
between the periods of the operating income statement results related
to acquisitions and disposals and that affect period-on-period
comparisons. These impacts are not included in our notable or material
notable items. The impact of strategic transactions is computed by
including the operating income statement results of each business in any
period for which there are no results in the comparative period.
ÑSee page 107 for the reconciliation to the GAAP measure.
Target basis operating expenses
Target basis operating expenses is computed by excluding the direct cost
impact of the disposals of our banking business in Canada and our
business in Argentina from the 2024 baseline. It 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, which we consider to be outside of our control. We
consider target basis operating expenses to provide useful information to
investors by quantifying and excluding the notable items that
management considered when setting and assessing cost-related targets.
ÑSee page 109 for further details and the reconciliation to the GAAP measure.
Basic earnings per share excluding
material notable items and related impacts
We established a dividend payout ratio target basis of 50% for 2025.
For the purposes of computing our dividend payout ratio target basis,
we exclude from earnings per share material notable items and related
impacts. Material notable items for the ‘basic earnings per share
excluding material notable items and related impacts‘ measure in 2025
and comparative periods are described above.
Related impacts include those items that do not qualify for designation
as notable items but whose adjustment is considered by management
to be appropriate for the purposes of determining the basis for our
dividend payout ratio target basis calculation, for which we exclude
from earnings per share material notable items and related impacts.
ÑSee page 92 for the supplementary analysis of the impact of strategic
transactions.
ÑSee page 106 for the definition of basic earnings per share excluding material
notable items and related impacts and page 110 for the reconciliation to the
GAAP measure.
Critical estimates and judgements
The results of HSBC reflect the choice of accounting policies,
assumptions and estimates that underlie the preparation of HSBC’s
consolidated financial statements. The material accounting policies,
including the policies which include critical estimates and judgements,
are described in Note 1.2 on the financial statements. The accounting
policies listed below are highlighted as they involve a high degree of
uncertainty and have a material impact on the financial statements:
–Impairment of amortised cost financial assets and financial assets
measured at fair value through other comprehensive income
(‘FVOCI’): The most significant judgements relate to defining what is
considered to be a significant increase in credit risk, determining the
lifetime and point of initial recognition of revolving facilities,
selecting and calibrating the probability of default (‘PD’), the loss
given default (‘LGD’) and the exposure at default (‘EAD’) models, as
well as selecting model inputs and economic forecasts, making
assumptions and estimates to incorporate relevant information
about late-breaking and past events, current conditions and
forecasts of economic conditions, and selecting applicable recovery
strategies for certain wholesale credit-impaired loans. A high degree
of uncertainty is involved in making estimations using assumptions
that are highly subjective and very sensitive to the risk factors.
See Note 1.2(j) on page 306.
–Deferred tax assets: The most significant judgements relate to
those made in respect of recoverability, which are based on
expected future profitability. See Note 1.2(m) on page 310.
–Valuation of financial instruments: In determining the fair value of
financial instruments a variety of valuation techniques are used,
some of which feature significant unobservable inputs and are
subject to substantial uncertainty. See Note 1.2(d) on page 304.
–Impairment of investment in subsidiaries: Impairment testing,
including testing for reversal of impairment, involves significant
judgement in determining the value in use, and in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of
management assumptions. See Note 1.2(a) on page 301.
–Impairment of interests in associates: Impairment testing, including
testing for reversal of impairment, involves significant judgement in
determining the value in use, and in particular estimating the
present values of cash flows expected to arise from continuing to
hold the investment, based on a number of management
assumptions. The most significant judgements relate to the
impairment testing of our investment in Bank of Communications
Co., Limited (‘BoCom’). See Note 1.2(a) on page 301.
–Impairment of goodwill and non-financial assets: A high degree of
uncertainty is involved in estimating the future cash flows of the
cash-generating units (‘CGUs’) and the rates used to discount these
cash flows. See Note 1.2(b) on page 302.
–Provisions: Significant judgement may be required due to the high
degree of uncertainty associated with determining whether a
present obligation exists, and estimating the probability and amount
of any outflows that may arise. See Note 1.2(n) on page 311.
–Post-employment benefit plans: The calculation of the defined
benefit pension obligation involves the determination of key
assumptions including discount rate, inflation rate, pension
payments and deferred pensions, pay and mortality. See Note 1.2(l)
on page 310.
Given the inherent uncertainties and the high level of subjectivity
involved in the recognition or measurement of the items above, it is
possible that the outcomes in the next financial year could differ from
the expectations on which management’s estimates are based,
resulting in the recognition and measurement of materially different
amounts from those estimated by management in these financial
statements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 67 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Consolidated income statement
| Summary consolidated income statement | |||||
|---|---|---|---|---|---|
| 2025 | 2024 | 20231 | 2022 | 2021 | |
| $m | $m | $m | $m | $m | |
| Net interest income | 34,794 | 32,733 | 35,796 | 30,377 | 26,489 |
| Net fee income | 13,343 | 12,301 | 11,845 | 11,770 | 13,097 |
| Net income from financial instruments held for trading or managed on a fair value basis2 | 19,682 | 21,116 | 16,661 | 10,278 | 7,744 |
| Net income/(expense) from assets and liabilities of insurance businesses, including related<br><br>derivatives, measured at fair value through profit or loss | 11,175 | 5,901 | 7,887 | (13,831) | 4,053 |
| Net insurance premium income | — | — | — | — | 10,870 |
| Insurance finance (expense)/income | (11,197) | (5,978) | (7,809) | 13,799 | — |
| Insurance service result | 1,825 | 1,310 | 1,078 | 809 | — |
| Gain on acquisition3 | — | — | 1,591 | — | — |
| Losses recognised on sale of business operations4 | (47) | (1,752) | (61) | (2,678) | — |
| Other operating income/(expense)5,6 | (1,301) | 223 | (930) | 96 | 1,687 |
| Total operating income | 68,274 | 65,854 | 66,058 | 50,620 | 63,940 |
| Net insurance claims and benefits paid and movement in liabilities to policyholders | — | — | — | — | (14,388) |
| Net operating income before change in expected credit losses and other<br><br>credit impairment charges7 | 68,274 | 65,854 | 66,058 | 50,620 | 49,552 |
| Change in expected credit losses and other credit impairment charges | (3,850) | (3,414) | (3,447) | (3,584) | 928 |
| Net operating income | 64,424 | 62,440 | 62,611 | 47,036 | 50,480 |
| Total operating expenses excluding impairment of goodwill and other intangible assets | (36,023) | (32,966) | (32,355) | (32,554) | (33,887) |
| (Impairment)/reversal of impairment of goodwill and other intangible assets | (405) | (77) | 285 | (147) | (733) |
| Operating profit | 27,996 | 29,397 | 30,541 | 14,335 | 15,860 |
| Share of profit in associates and joint ventures | 2,911 | 2,912 | 2,807 | 2,723 | 3,046 |
| Impairment of interest in associate6 | (1,000) | — | (3,000) | — | — |
| Profit before tax | 29,907 | 32,309 | 30,348 | 17,058 | 18,906 |
| Tax expense | (6,776) | (7,310) | (5,789) | (809) | (4,213) |
| Profit for the year | 23,131 | 24,999 | 24,559 | 16,249 | 14,693 |
| Attributable to: | |||||
| – ordinary shareholders of the parent company | 21,102 | 22,917 | 22,432 | 14,346 | 12,607 |
| – preference shareholders of the parent company | — | — | — | — | 7 |
| – other equity holders | 1,183 | 1,062 | 1,101 | 1,213 | 1,303 |
| – non-controlling interests | 846 | 1,020 | 1,026 | 690 | 776 |
| Profit for the year | 23,131 | 24,999 | 24,559 | 16,249 | 14,693 |
| Five-year financial information | |||||
| --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 20231 | 2022 | 2021 | |
| $ | $ | $ | $ | $ | |
| Basic earnings per share | 1.21 | 1.25 | 1.15 | 0.72 | 0.62 |
| Diluted earnings per share | 1.20 | 1.24 | 1.14 | 0.72 | 0.62 |
| Dividends per ordinary share (paid in the period)8 | 0.66 | 0.82 | 0.53 | 0.27 | 0.22 |
| % | % | % | % | % | |
| Dividend payout ratio9 | 50 | 50 | 50 | 44 | 40 |
| Post-tax return on average total assets | 0.7 | 0.8 | 0.8 | 0.5 | 0.5 |
| Return on average ordinary shareholders’ equity | 12.3 | 13.6 | 13.6 | 9.0 | 7.1 |
| Return on average tangible equity | 13.3 | 14.6 | 14.6 | 10.0 | 8.3 |
| Effective tax rate | 22.7 | 22.6 | 19.1 | 4.7 | 22.3 |
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 is prepared on an IFRS 4 basis.
2 In 2025, the amounts include a $0.1bn (2024: $0.1bn gain) mark-to-market gain on interest rate hedging of the portfolio of retained loans post sale of our retail
banking operations in France and a $0.1bn fair value loss on Grupo Financiero Galicia‘s (‘Galicia‘) American Depositary Receipts (‘ADRs‘) received as purchase
consideration from the sale of our business in Argentina. In 2024, the amounts include a $0.3bn gain (2023: $0.3bn loss) on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
3 Gain recognised in respect of the acquisition of SVB UK.
4 In 2024, the amount includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves
arising on sale of our business in Argentina. This was partly offset by a gain of $4.6bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves losses but excluding the $0.3bn gain on the foreign exchange hedging (see footnote 2 above) on the sale of our banking
business in Canada. The amount in 2023 primarily reflected losses due to restrictions impacting the recoverability of assets in Russia, partly offset by a gain on
sale of our retail banking operations in France. The amount in 2022 included losses from classifying businesses as held for sale as part of a broader restructuring
of our European business.
5Includes a loss on net monetary positions of $0.2bn (2024: $1.2bn; 2023: $1.7bn) as a result of applying IAS 29 ‘Financial Reporting in Hyperinflationary
Economies’.
6 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans
following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the
dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment loss following an impairment test on the carrying value of the Group’s
investment in BoCom in ‘Impairment of interest in associate’. See Note 18 on pages 345 to 348.
7Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.
8Includes dividend paid during the period, which consisted of a fourth interim dividend of $0.36 per ordinary share in respect of the financial year ended
31 December 2024 paid in April 2025 and the first, second and third interim dividends of $0.30 per ordinary share in respect of the financial year ending
31 December 2025. In 2024, a special dividend of $0.21 per ordinary share from the Canada sale proceeds was paid in June.
9In 2025, 2024 and 2023, our dividend payout ratio was adjusted for material notable items and related impacts. In 2022, our dividend payout ratio was adjusted
for the loss on classification to held for sale of our retail banking business in France, items relating to the sale of our banking business in Canada, and the
recognition of certain deferred tax assets. No items were adjusted for in 2021.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 68 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Income statement commentary
The following commentary compares Group financial performance for the year ended 2025 with 2024, unless otherwise stated.
Net interest income
| Year ended | Quarter ended | |||||
|---|---|---|---|---|---|---|
| 31 Dec 2025 | 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2025 | 30 Sep 2025 | 31 Dec 2024 | |
| $m | $m | $m | $m | $m | $m | |
| Interest income | 97,872 | 108,631 | 100,868 | 24,503 | 24,361 | 26,004 |
| Interest expense | (63,078) | (75,898) | (65,072) | (15,307) | (15,584) | (17,819) |
| Net interest income | 34,794 | 32,733 | 35,796 | 9,196 | 8,777 | 8,185 |
| Average interest-earning assets | 2,190,078 | 2,099,285 | 2,161,746 | 2,221,054 | 2,218,472 | 2,113,276 |
| % | % | % | % | % | % | |
| Gross interest yield1 | 4.47 | 5.17 | 4.67 | 4.38 | 4.36 | 4.90 |
| Less: gross interest payable1 | (3.11) | (3.95) | (3.47) | (2.93) | (3.01) | (3.60) |
| Net interest spread2 | 1.36 | 1.22 | 1.20 | 1.45 | 1.35 | 1.30 |
| Net interest margin3 | 1.59 | 1.56 | 1.66 | 1.64 | 1.57 | 1.54 |
1Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’), net of amortised premiums and loan fees. Gross
interest payable is the average annualised interest cost as a percentage of average interest-bearing liabilities.
2Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average
annualised interest rate payable on average interest-bearing funds.
3Net interest margin is net interest income expressed as an annualised percentage of AIEA.
| Summary of interest income by type of asset | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | |||||||
| Average<br><br>balance | Interest<br><br>income | Yield | Average<br><br>balance | Interest<br><br>income | Yield | Average<br><br>balance | Interest<br><br>income | Yield | |
| $m | $m | % | $m | $m | % | $m | $m | % | |
| Short-term funds and loans and advances to banks | 325,790 | 11,460 | 3.52 | 349,517 | 14,727 | 4.21 | 403,674 | 14,770 | 3.66 |
| Loans and advances to customers | 971,804 | 46,036 | 4.74 | 949,825 | 49,879 | 5.25 | 957,717 | 47,673 | 4.98 |
| Reverse repurchase agreements – non-trading1 | 273,941 | 16,616 | 6.07 | 238,694 | 17,721 | 7.42 | 240,263 | 14,391 | 5.99 |
| Financial investments | 539,107 | 20,830 | 3.86 | 470,182 | 20,587 | 4.38 | 407,363 | 16,858 | 4.14 |
| Other interest-earning assets | 79,436 | 2,930 | 3.69 | 91,067 | 5,717 | 6.28 | 152,729 | 7,176 | 4.70 |
| Total interest-earning assets | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 | 2,161,746 | 100,868 | 4.67 |
| Summary of interest expense by type of liability | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |||||||
| Average<br><br>balance | Interest<br><br>expense | Cost | Average<br><br>balance | Interest<br><br>expense | Cost | Average<br><br>balance | Interest<br><br>expense | Cost | |
| $m | $m | % | $m | $m | % | $m | $m | % | |
| Deposits by banks2 | 76,081 | 2,613 | 3.43 | 66,405 | 2,930 | 4.41 | 60,392 | 2,401 | 3.98 |
| Customer accounts3 | 1,487,032 | 33,289 | 2.24 | 1,385,840 | 40,173 | 2.90 | 1,334,803 | 34,162 | 2.56 |
| Repurchase agreements – non-trading1 | 188,748 | 13,629 | 7.22 | 187,337 | 15,617 | 8.34 | 146,605 | 10,858 | 7.41 |
| Debt securities in issue – non-trading | 198,317 | 10,847 | 5.47 | 196,440 | 12,806 | 6.52 | 184,867 | 11,223 | 6.07 |
| Other interest-bearing liabilities | 77,793 | 2,700 | 3.47 | 84,773 | 4,372 | 5.16 | 146,216 | 6,428 | 4.40 |
| Total interest-bearing liabilities | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 | 1,872,883 | 65,072 | 3.47 |
1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
2Including interest-bearing bank deposits only.
3Including interest-bearing customer accounts only.
Net interest income (‘NII’) for 2025 was $34.8bn, an increase of
$2.1bn or 6% compared with 2024. The increase reflected the benefit
of the reinvestment of our structural hedge at higher yields, deposit
balance growth and higher NII in Markets Treasury. In addition, the
increase included the non-recurrence of a $0.2bn loss in 2024 on the
early redemption of legacy securities. This was partly offset by the
adverse impact of $1.6bn from business disposals in Argentina and
Canada, and margin compression on our deposits from lower interest
rates. The growth in NII also reflected a benefit from lower funding
costs associated with the trading book of $1.7bn.
Excluding the unfavourable impact of foreign currency translation
differences of $0.2bn, net interest income increased by $2.3bn or 7%.
NII for 4Q25 was $9.2bn, up 5% compared with 3Q25, and up 12%
compared with 4Q24. The increase in NII compared with 3Q25 was
predominantly driven by the increase in short-term interest rates in
Hong Kong and deposit balance growth.
Net interest margin (‘NIM’) for 2025 of 1.59% was 3bps higher
compared with 2024, reflecting the reinvestment of our structural
hedge at higher yields and lower funding costs associated with the
trading book The increase in NIM included the adverse impact of
foreign currency translation differences. Excluding this, NIM increased
by 6bps.
4Q25 NIM was 1.64%, up 7bps compared with 3Q25, and up 10bps
compared with 4Q24. The increase against the previous quarter was
primarily driven by higher short-term interest rates in Hong Kong.
Interest income for 2025 of $97.9bn decreased by $10.8bn compared
with 2024, primarily due to lower market interest rates.
Interest income of $25bn in 4Q25 was $0.1bn higher compared with
3Q25, due to the increase of short-term interest rates in Hong Kong,
partly offset by lower interest rates in currencies including pounds
sterling and US dollar. Interest income in 4Q25 was down $1.5bn
compared with 4Q24.
The change in interest income in 2025 compared with 2024 included a
favourable impact of foreign currency translation differences of $0.2bn.
After excluding foreign currency translation differences, interest income
decreased by $11.0bn.
Interest expense for 2025 of $63.1bn decreased by $12.8bn compared
with 2024, primarily due to lower market interest rates. The fall in
interest expense included the adverse effects of foreign currency
translation differences of $0.5bn. Excluding this, interest expense
decreased by $13.3bn. Interest expense of $15.3bn in 4Q25 was
$0.3bn lower than 3Q25, and $2.5bn lower compared with 4Q24. The
decrease against the previous quarter was due lower market interest
rates, particularly in US dollars and pounds sterling.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 69 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Banking net interest income | ||||||
| --- | --- | --- | --- | --- | --- | |
| Year ended | Quarter ended | |||||
| 31 Dec 2025 | 31 Dec 2024 | 31 Dec 2025 | 30 Sep 2025 | 31 Dec 2024 | ||
| $m | $m | $m | $m | $m | ||
| Net interest income | 34,794 | 32,733 | 9,196 | 8,777 | 8,185 | |
| Banking book funding costs used to generate ‘net income from financial<br><br>instruments held for trading or managed on a fair value basis’ | 9,686 | 11,434 | 2,592 | 2,384 | 2,874 | |
| Third-party net interest income from insurance | (396) | (429) | (66) | (112) | (109) | |
| Banking net interest income | 44,084 | 43,738 | 11,722 | 11,049 | 10,950 | |
| Currency translation | (188) | (34) | 136 | |||
| Banking net interest income – on a constant currency basis | 44,084 | 43,550 | 11,722 | 11,015 | 11,086 | |
| Banking net interest income – on a reported basis | 44,084 | 43,738 | 11,722 | 11,049 | 10,950 | |
| – of which: | ||||||
| The Hongkong and Shanghai Banking Corporation Limited | 21,676 | 21,691 | 5,710 | 5,351 | 5,464 | |
| HSBC UK Bank plc | 11,523 | 10,368 | 3,046 | 2,969 | 2,663 | |
| HSBC Bank plc | 5,257 | 4,630 | 1,477 | 1,351 | 1,182 |
Banking net interest income adjusts our NII, primarily for the impact
of funding trading and fair value activities reported in interest expense.
It represents the Group’s banking revenue that is directly impacted by
changes in interest rates. It is defined as Group net interest income
after deducting:
–the internal cost to fund trading and fair value net assets for which
associated revenue is reported in ‘Net income from financial
instruments held for trading or managed on a fair value basis’, also
referred to as ‘trading and fair value income’. These funding costs
reflect proxy overnight or term interest rates as applied by internal
funds transfer pricing;
–the funding costs of foreign exchange swaps in Markets Treasury,
where an offsetting income or loss is recorded in trading and fair
value income. These instruments are used to manage foreign
currency deployment and funding in our entities; and
–third-party net interest income in our insurance business.
In our segmental disclosures, the funding costs of trading and fair value
net assets are predominantly recorded in CIB in ‘net income from
financial instruments held for trading or managed on a fair value basis’.
On consolidation, this funding is eliminated in Corporate Centre,
resulting in an increase in the funding cost reported in NII with an
equivalent offsetting increase in ‘net income from financial instruments
held for trading or managed on a fair value basis’ in this segment. In the
consolidated Group results, the cost to fund these trading and fair value
net assets is reported in NII.
Banking NII was $44.1bn in 2025, an increase of $0.3bn or 1%
compared with 2024. The growth reflected the benefits of the
reinvestment of our structural hedge at higher yields, deposit balance
growth and higher NII in Markets Treasury. In addition, the increase
included the non-recurrence of a loss of $0.2bn in 2024 on the early
redemption of legacy securities. This was partly offset by the adverse
impact of $1.6bn from the disposals of our business in Argentina and
our banking business in Canada, and the impact of margin compression
on our deposits from lower interest rates.
Banking NII also deducts third-party NII related to our Insurance
business, which was $0.4bn, broadly stable compared with 2024. The
funding costs associated with generating trading and fair value income
were $9.7bn, a decrease of $1.7bn compared with 2024, reflecting the
reduction in interest rates that more than offset a rise in trading book
balances.
The internally allocated funding to generate trading and fair value
income was approximately $225bn at 31 December 2025, a rise of
approximately $25bn since 31 December 2024, and $11bn lower
compared with 30 September 2025. This relates to trading, fair value
and associated net asset balances predominantly in CIB.
Net fee income of $13.3bn was $1.0bn or 8% higher than in 2024, and
included an adverse impact of $0.3bn due to the disposal of our
banking business in Canada and business in Argentina. On a constant
currency basis, net fee income was $1.0bn higher. This primarily
reflected increased broking fee income in our Hong Kong business and
higher fee income from unit trusts and funds under management in
IWPB, primarily in Hong Kong and mainland China.
Net income from financial instruments held for trading or
managed on a fair value basis of $19.7bn was $1.4bn lower
compared with 2024. This primarily reflected a decrease in the trading
book funding costs of $1.7bn associated with generating this income,
due to lower interest rates which more than offset the impact of a rise
in trading book balances, resulting in a corresponding increase in NII.
Inclusive of the reduction in funding costs, net trading income in CIB
was higher, notably as elevated market volatility and higher trading
volumes benefited Global Foreign Exchange and Debt and Equity
Markets.
The reduction of trading income in Corporate Centre also included an
adverse movement of $0.1bn in 2025 on American Depositary Receipts
received as purchase consideration from the sale of our business in
Argentina, which we disposed of in 2025. It also included the non-
recurrence of favourable fair value movements of $0.3bn in 2024 on
the foreign exchange hedging of the proceeds of the sale of our
banking business in Canada until the completion of the sale.
Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit
or loss of $11.2bn increased by $5.3bn compared with 2024 reflecting
strong equity markets and the favourable impact of the downward
movement in interest rates on our fixed income investments in our
IWPB business in Hong Kong, partly offset by rising interest rates in
mainland China.
This favourable movement resulted in a corresponding movement in
insurance finance expense, which has an offsetting impact for the
related liabilities to policyholders.
Insurance finance expense of $11.2bn was $5.2bn higher than in
2024, reflecting the impact of investment returns on underlying assets
on the value of liabilities to policyholders, which moves inversely with
‘net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit or
loss’.
Insurance service result of $1.8bn increased by $0.5bn compared
with 2024, reflecting higher contractual service margin (‘CSM’) release
as a result of strong new business growth, and favourable experience
variances from positive investment management fee, maintenance
expense and claims experience.
Losses recognised on the sale of business operations fell by $1.7bn
in 2025. In 2025, the net loss included a loss on the sale of our France life
insurance business, including the recycling of related reserves, and a loss
related to the sale of our UK life insurance entity. These were partly
offset by gains on the disposals of our private banking business in
Germany and our retail operations in Bahrain. In 2024, losses arose from
the completion of the disposal of our business in Argentina, comprising
the recycling of $5.2bn of foreign currency translation reserve losses and
other reserves to the income statement and a $1.0bn loss on disposal.
These were partly offset by a gain of $4.6bn in 2024 on the sale of our
banking business in Canada, inclusive of recycling of foreign currency
translation reserve and other reserve losses to the income statement.
Other operating income/(expense) was $1.5bn lower than in 2024.
The 2025 period included reserve recycling losses of $1.5bn following
the completion of the sale of our French retained portfolio of home and
certain other loans, and a dilution loss of $1.1bn on BoCom following the
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 70 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
completion of its capital issuance. This was partly offset by a lower loss
on net monetary positions in hyperinflationary economies following the
disposal of our business in Argentina.
Change in expected credit losses and other credit impairment
charges (‘ECL’) of $3.9bn was $0.4bn higher than in 2024, including
charges in both periods related to the CRE sectors in Hong Kong and
mainland China. In 2025, the charge in this sector in Hong Kong of
$0.7bn (2024: $0.1bn) reflected higher allowances for new defaulted
exposures, the impact of an over-supply of non-residential properties
that has put continued downward pressure on rental and capital values,
and updates to our models used for ECL calculations. The 2025 charge
in the mainland China CRE sector was $0.2bn (2024: $0.4bn).
ÑFor further details on the calculation of ECL, including the measurement
uncertainties and significant judgements applied to such calculations, the
impact of the economic scenarios and management judgemental
adjustments, see pages 148 to 157.
| Operating expenses | |||
|---|---|---|---|
| Year ended | |||
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Gross employee compensation and benefits | 21,512 | 20,153 | 19,623 |
| Capitalised wages and salaries | (1,959) | (1,688) | (1,403) |
| Property and equipment | 5,066 | 4,786 | 4,285 |
| Amortisation and impairment of intangibles | 2,945 | 2,235 | 1,827 |
| UK bank levy | 290 | 249 | 339 |
| Legal proceedings and regulatory matters | 1,542 | 145 | 188 |
| Other operating expenses1 | 7,032 | 7,163 | 7,211 |
| Reported operating expenses | 36,428 | 33,043 | 32,070 |
| Currency translation | — | 103 | (379) |
| Constant currency operating expenses | 36,428 | 33,146 | 31,691 |
1Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel.
| Staff numbers (full-time equivalents)1 | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| Business segments | |||
| Hong Kong | 29,633 | 34,578 | 34,886 |
| UK | 29,922 | 30,783 | 30,638 |
| Corporate and Institutional Banking | 78,981 | 71,935 | 72,713 |
| International Wealth and Premier Banking | 69,854 | 73,668 | 82,287 |
| Corporate Centre | 330 | 340 | 337 |
| At 31 Dec | 208,720 | 211,304 | 220,861 |
| – of which (by country/territory): | |||
| India | 47,423 | 44,262 | 42,287 |
| UK | 32,294 | 33,970 | 34,125 |
| Hong Kong | 25,639 | 26,599 | 26,472 |
1Represents the number of full-time equivalent staff (‘FTE’) with contracts of service with the Group who are being paid at the reporting date. Comprises FTE in
front-line roles and those providing dedicated support services managed by the business segments (‘direct FTE’) (at 31 December 2025: Hong Kong: 20,290; UK:
20,969; CIB: 45,970; IWPB: 53,136) and an allocation of Corporate Centre FTE in proportion to business usage of shared support services and global
infrastructure. During 2025, certain Operations FTE were transferred from Corporate Centre to the business segments for which they provide dedicated support
services (if these FTE had been transferred at 31 December 2024, the direct FTE of the segments would have been as follows: Hong Kong: 20,471; UK: 20,794;
CIB: 46,914; IWPB: 55,482).
Reported operating expenses of $36.4bn were $3.4bn or 10% higher
than in 2024. The increase primarily reflected notable items in 2025,
including legal provisions of $1.4bn, restructuring and other related
costs in 2025 of $1.0bn related to our organisational simplification,
mainly severance costs, and $0.5bn related to strategic transactions.
In addition, growth in reported operating expenses included higher
planned spend and investment in technology, and the impacts of
inflation. These increases were partly offset by reductions following the
completion of business disposals in Canada and Argentina, and benefits
delivered by our organisational simplification of $0.6bn.
Target basis operating expenses were $33.5bn or 3% higher than in
2024 due to higher planned spend and investment in technology,
higher performance-related pay and the impact of inflation.
ÑFor a reconciliation of target basis operating expenses to reported operating
expenses see page 109.
The number of employees expressed in full-time equivalent (‘FTE’) staff
at 31 December 2025 was 208,720, a reduction of 2,584 compared
with 31 December 2024. The number of contractors at 31 December
2025 was 3,974, a reduction of 252 from 31 December 2024.
Share of profit in associates and joint ventures of $2.9bn was stable
compared with 2024.
Impairment of interest in associate of $1.0bn related to BoCom.
ÑFor further details of our impairment review process, see Note 18: Interests
in associates and joint ventures on page 345.
Tax expense
Tax expense in 2025 was a charge of $6.8bn, representing an effective
tax rate of 22.7% (2024: 22.6%). The effective tax rate for 2025 was
increased by the non-deductible impairment and dilution loss in BoCom
and legal provisions on which no tax benefit is recorded. Excluding these
items, the effective rate for 2025 was 20.6% (2024: 21.5%, excluding
the impact of the non-taxable gains and losses on the sale of our
banking business in Canada and our business in Argentina). The
decrease in the effective tax rate excluding these items was primarily
the result of a reduction in the unfavourable impact of hyperinflation
following the sale of our business in Argentina in 2024.
| Tax expense | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Tax (charge)/credit | ||
| Reported | (6,776) | (7,310) |
| Currency translation | — | (39) |
| Constant currency tax (charge)/credit | (6,776) | (7,349) |
| Notable items | ||
| --- | --- | --- |
| 2025 | 2024 | |
| $m | $m | |
| Tax | ||
| Tax (charge)/credit on notable items | 440 | 108 |
Return on average tangible equity
In 2025, RoTE was 13.3%, compared with 14.6% in 2024. RoTE excluding
notable items was 17.2% in 2025, compared with 15.6% in 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 71 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Income statement commentary: 2024 compared with 2023
The following commentary compares Group financial performance for
the year ended 2024 with 2023.
Net interest income (‘NII’) for 2024 was $32.7bn, a decrease of
$3.1bn or 9% compared with 2023. The decrease included a $2.7bn
reduction mainly due to the redeployment of our commercial surplus to
net trading and fair value assets, for which the associated revenue is
reported in ‘net income on financial instruments held for trading or
managed on a fair value basis‘. The fall also reflected a $1.0bn loss due
to the disposal of our business in Canada and a $0.2bn loss in 2024
related to the early redemption of legacy securities. NII in HSBC UK
grew by $0.6bn, including the benefit of our structural hedge and
balance sheet growth, partly offset by mortgage pricing pressures.
There was also higher NII in Markets Treasury due to reinvestments in
our portfolio at higher yields. Excluding the unfavourable impact of
foreign currency translation differences, net interest income decreased
by $1.4bn or 4%. NII for the fourth quarter of 2024 was $8.2bn, up 7%
compared with the previous quarter, and down 1% compared with the
fourth quarter of 2023. The increase compared with 3Q24 was
predominantly driven by the non-recurrence of the adverse impact in
3Q24 from the early redemption of legacy securities. The decline in NII
compared with 4Q23 was predominantly driven by the impact of lower
AIEA.
Net interest margin (‘NIM’) for 2024 of 1.56% was 10bps lower
compared with 2023, reflecting redeployment of our commercial
surplus to net trading and fair value assets, and higher interest expense
due to higher market rates and an adverse impact of $0.2bn from the
early redemption of legacy securities. The decrease in NIM in 2024
included the unfavourable impact of foreign currency translation
differences. Excluding this, NIM decreased by 6bps. NIM for the fourth
quarter of 2024 was 1.54%, up 8bps compared with the previous
quarter, and up 2bps compared with the fourth quarter of 2023. The
increase against the previous quarter was primarily due to the non-
recurrence of the adverse impact from the early redemption of legacy
securities. The year-on-year increase was predominantly driven by
HSBC UK.
Interest income for 2024 of $108.6bn increased by $7.8bn compared
with 2023, primarily due to an increase in market interest rates.
Interest income of $26bn in the fourth quarter of 2024 was down
$1.3bn compared with the previous quarter, and down $0.7bn
compared with the fourth quarter of 2023. Both the declines were
primarily due to lower market interest rates.
The change in interest income in 2024 compared with 2023 included an
adverse impact of foreign currency translation differences of $2.7bn.
After excluding foreign currency translation differences, interest income
increased by $10.5bn.
Interest expense for 2024 of $75.9bn increased by $10.8bn compared
with 2023, primarily due to an increase in market interest rates, growth
in customer accounts with higher proportion for term deposits and the
impact of the early redemption of legacy securities.
The rise in interest expense included the favourable effects of foreign
currency translation differences of $1.1bn. Excluding this, interest
expense increased by $11.9bn.
Interest expense of $17.8bn in the fourth quarter of 2024 was $1.8bn
and $0.6bn lower compared with the third quarter of 2024 and the
fourth quarter of 2023 respectively. The decrease against the previous
quarter was due to the non-recurrence of an adverse impact from the
early redemption of legacy securities. The year-on-year decline was
primarily due to lower market interest rates.
Banking NII was $43.7bn in 2024. The funding costs associated with
generating trading and fair value income were $11.4bn, an increase of
$2.7bn compared with 2023, primarily reflecting redeployment of our
commercial surplus to net trading and fair value assets. Banking NII
also deducts third-party NII related to our insurance business, which
was $0.4bn, stable compared with 2023. The movement in banking NII
also included a reduction from the disposal of our business in Canada of
$1.0bn, a $0.2bn loss in 2024 related to the early redemption of legacy
securities and from higher interest expense on deposits in part due to
balance growth. Banking NII in HSBC UK grew by $0.7bn, including the
benefit of our structural hedge and balance sheet growth, partly offset
by mortgage pricing pressures. There was higher NII in Markets
Treasury due to reinvestments in our portfolio at higher yields.
The internally allocated funding to generate trading and fair value
income was approximately $200bn at 31 December 2024, a rise of
approximately $37bn since 31 December 2023, although it decreased
by approximately $9bn during 4Q24. This relates to trading, fair value
and associated net asset balances predominantly in CIB. The increase
reflected management decisions on the deployment of our commercial
surplus.
Net fee income of $12.3bn was $0.5bn or 4% higher than in 2023, and
included an adverse impact from foreign currency translation
differences of $0.2bn, as well as a reduction of $0.4bn due to the
impact of the disposal of our banking business in Canada.
The increase in net fee income was mainly in Wealth products in our
Hong Kong business and in IWPB in Hong Kong, reflecting stronger
equity markets and improved customer sentiment. It also included an
increase in cards income, mainly in Mexico and Asia in IWPB, as
customer spending increased, and in our Hong Kong business.
In CIB, net fee income was down by $0.1 bn. This included lower fees
from credit facilities, notably due to the disposal of our banking
operations in Canada. In addition, there was higher fee expense relating
to custody. This was partly offset by higher broking and underwriting
income in our main entity in Europe, although the associated fee
expense also increased.
Net income from financial instruments held for trading or
managed on a fair value basis of $21.1bn was $4.5bn higher
compared with 2023. This included favourable fair value movements of
$0.6bn on the foreign exchange hedging of the proceeds of the sale of
our banking business in Canada until completion of the sale. The
increase also reflected higher client activity and elevated volatility in
Debt and Equity Markets in CIB. A component of funding costs
incurred to generate this income are reported in NII, and these
increased by $2.7bn, compared with 2023.
In IWPB, income rose by $0.2bn due to a favourable movement related
to derivatives in our insurance business and from higher customer
trading activity in Wealth, including in our main legal entity in Asia.
Net expense from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit
or loss of $5.9bn fell by $2.0bn compared with 2023. This decrease
reflected adverse fair value movements on debt securities, due to
movements in interest rates, including in our portfolios in Hong Kong
and France, partly offset by improved equity returns.
This unfavourable movement resulted in a corresponding movement in
insurance finance expense, which has an offsetting impact for the
related liabilities to policyholders.
Insurance finance expense of $6.0bn was $1.8bn lower than in 2023,
reflecting the impact of investment returns on underlying assets on the
value of liabilities to policyholders, which moves inversely with ‘net
income from assets and liabilities of insurance businesses, including
related derivatives, measured at fair value through profit or loss’.
Insurance service result of $1.3bn increased by $0.2bn compared
with 2023, primarily due to an increase in the release of the contractual
service margin (‘CSM’).
Gain on acquisition fell by $1.6bn, reflecting the non-recurrence of a
gain recognised in respect of the acquisition of SVB UK in 1Q23.
Losses recognised on sale of business operations were $1.8bn in
- This compared with a gain of $61m in 2023. In 2024, there were
losses from completion of the disposal of our business in Argentina,
comprising the recycling of $5.2bn of foreign currency translation
reserve losses and other reserves to the income statement and a
$1.0bn loss on disposal. This was partly offset by a gain of $4.6bn on
the sale of our banking business in Canada, inclusive of recycling of
foreign currency translation reserve and other reserve losses to the
income statement.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 72 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Other operating income of $0.2bn was $1.3bn higher than in 2023.
The increase primarily related to the non-recurrence of losses in 2023
of $1.0bn relating to Treasury repositioning and risk management.
The increase also included the non-recurrence of a loss of $0.3bn in
2023 relating to corrections to historical valuation estimates in our life
insurance business, and losses related to the disposal of our New
Zealand retail mortgage loan portfolio and the merger of HSBC Bank
Oman in 2023 with Sohar International.
Changes in expected credit losses and other credit impairment
charges (‘ECL’) were a charge of $3.4bn, stable compared with 2023.
ECL in 2024 included charges of $0.4bn in respect of commercial real
estate in mainland China and of $0.1bn in the Hong Kong real estate
sector. This compared with charges of $1.0bn and $0.1bn respectively
in these sectors in 2023. In addition, ECL in CIB in 2024 included a
charge related to a single exposure in the UK, partly offset by a release
of stage 3 allowances in HSBC Bank plc related to a single exposure.
Charges in our UK business were $0.1bn lower compared with 2023.
In WPB, ECL charges were $1.1bn. up $0.2bn compared with 2023.
These primarily related to our legal entity in Mexico, reflecting growth
in our unsecured lending portfolio and unemployment trends.
ÑFor further details on the calculation of ECL, including the measurement
uncertainties and significant judgements applied to such calculations, the
impact of the economic scenarios and management judgemental
adjustments, see pages 153 to 157.
Operating expenses of $33.0bn were $1.0bn or 3% higher than in
2023, including a favourable impact of $0.6bn from foreign currency
translation differences. The increase reflected higher spend and
investment in technology and inflationary impacts, while performance-
related pay remained stable. Operating expenses were adversely
impacted by the non-recurrence of a $0.2bn reversal of historical asset
impairments in 2023.
These increases were partly offset by the favourable impacts from the
completion of business disposals in Canada and France, and a lower UK
bank levy of $0.1bn, as 2023 included adjustments relating to prior
years. Operating expenses in 2024 benefited from the non-recurrence
of a $0.2bn charge in 2023 incurred in the US relating to the FDIC
special assessment.
Target basis operating expense growth was 5% compared with 2023,
in line with our cost growth target. This primarily reflected higher
investment spend, including in technology and from inflationary
pressures, while our performance-related pay accrual was broadly in
line with 2023. Our target basis operating expenses are measured on a
constant currency basis, excluding notable items, the impact of
retranslating the prior year results of hyperinflationary economies at
constant currency, and the direct costs from the sales of our French
retail banking operations and our banking business in Canada.
The number of employees expressed in full-time equivalent staff (‘FTE’)
at 31 December 2024 was 211,304, a decrease of 9,557 compared
with 31 December 2023, primarily reflecting the completion of the
sales of our banking business in Canada, our retail banking operations in
France and our business in Argentina. The number of contractors at 31
December 2024 was 4,226, a decrease of 450.
Share of profit in associates and joint ventures of $2.9bn was
$3.1bn higher than in 2023, including an increase in the share of profit
from SAB.
Impairment of interest in associate In relation to our investment in
BoCom, at 31 December 2024 we concluded that there was no
indication of further significant impairment (or indication that an
impairment may no longer exist or may have decreased significantly)
since 31 December 2023.
At 31 December 2023, the Group performed an impairment test on the
carrying value of our investment in BoCom which resulted in an
impairment of $3.0bn.
ÑFor further details, see Note 18: Interests in associates and joint ventures
on page 345.
Tax expense The effective tax rate for 2024 of 22.6% was higher than
the 19.1% in 2023. The effective tax rate for 2024 was increased by 4.8
percentage points by the non-deductible loss on disposal of our
business in Argentina and by 0.7 percentage points by the tax charge
arising under the Global Minimum Tax rules, and reduced by 3.6
percentage points by the non-taxable gain on disposal of our banking
business in Canada. The effective tax rate for 2023 was increased by
2.3 percentage points by the non-deductible impairment of investments
in associates, and reduced by 1.6 percentage points by the release of
provisions for uncertain tax positions and by 1.5 percentage points by
the non-taxable accounting gain arising on the acquisition of SVB UK.
ÑFurther details are provided in Note 7 on the financial statements of the
HSBC Holdings plc Form 20-F for the year ended 31 December 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 73 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Consolidated balance sheet
| Five-year summary consolidated balance sheet | |||||
|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 20221 | 2021 | |
| $m | $m | $m | $m | $m | |
| Assets | |||||
| Cash and balances at central banks | 242,859 | 267,674 | 285,868 | 327,002 | 403,018 |
| Trading assets | 366,153 | 314,842 | 289,159 | 218,093 | 248,842 |
| Financial assets designated and otherwise mandatorily measured at fair value<br><br>through profit or loss | 133,063 | 115,769 | 110,643 | 100,101 | 49,804 |
| Derivatives | 237,740 | 268,637 | 229,714 | 284,159 | 196,882 |
| Loans and advances to banks | 108,462 | 102,039 | 112,902 | 104,475 | 83,136 |
| Loans and advances to customers | 988,399 | 930,658 | 938,535 | 923,561 | 1,045,814 |
| Reverse repurchase agreements – non-trading | 298,392 | 252,549 | 252,217 | 253,754 | 241,648 |
| Financial investments | 567,211 | 493,166 | 442,763 | 364,726 | 446,274 |
| Assets held for sale | 11,115 | 27,234 | 114,134 | 115,919 | 3,411 |
| Other assets | 279,640 | 244,480 | 262,742 | 257,496 | 239,110 |
| Total assets at 31 Dec | 3,233,034 | 3,017,048 | 3,038,677 | 2,949,286 | 2,957,939 |
| Liabilities | |||||
| Deposits by banks | 97,952 | 73,997 | 73,163 | 66,722 | 101,152 |
| Customer accounts | 1,786,828 | 1,654,955 | 1,611,647 | 1,570,303 | 1,710,574 |
| Repurchase agreements – non-trading | 204,974 | 180,880 | 172,100 | 127,747 | 126,670 |
| Trading liabilities | 72,122 | 65,982 | 73,150 | 72,353 | 84,904 |
| Financial liabilities designated at fair value | 158,456 | 138,727 | 141,426 | 127,321 | 145,502 |
| Derivatives | 237,854 | 264,448 | 234,772 | 285,762 | 191,064 |
| Debt securities in issue | 99,675 | 105,785 | 93,917 | 78,149 | 78,557 |
| Insurance contract liabilities | 122,955 | 107,629 | 120,851 | 108,816 | 112,745 |
| Liabilities of disposal groups held for sale | 23,382 | 29,011 | 108,406 | 114,597 | 9,005 |
| Other liabilities | 223,170 | 203,361 | 216,635 | 212,319 | 190,989 |
| Total liabilities at 31 Dec | 3,027,368 | 2,824,775 | 2,846,067 | 2,764,089 | 2,751,162 |
| Equity | |||||
| Total shareholders’ equity | 198,225 | 184,973 | 185,329 | 177,833 | 198,250 |
| Non-controlling interests | 7,441 | 7,300 | 7,281 | 7,364 | 8,527 |
| Total equity at 31 Dec | 205,666 | 192,273 | 192,610 | 185,197 | 206,777 |
| Total liabilities and equity at 31 Dec | 3,233,034 | 3,017,048 | 3,038,677 | 2,949,286 | 2,957,939 |
1From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended
31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.
ÑA more detailed consolidated balance sheet is contained in the financial statements on page 290.
| Five-year selected financial information | |||||
|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 20221 | 2021 | |
| $m | $m | $m | $m | $m | |
| Called up share capital | 8,588 | 8,973 | 9,631 | 10,147 | 10,316 |
| Capital resources2 | 182,371 | 172,386 | 171,204 | 162,423 | 177,786 |
| Undated subordinated loan capital | — | 17 | 18 | 1,967 | 1,968 |
| Preferred securities and dated subordinated loan capital3 | 37,581 | 35,258 | 36,413 | 29,921 | 28,568 |
| Risk-weighted assets | 888,647 | 838,254 | 854,114 | 839,720 | 838,263 |
| Total shareholders’ equity | 198,225 | 184,973 | 185,329 | 177,833 | 198,250 |
| Less: preference shares and other equity instruments | (20,716) | (19,070) | (17,719) | (19,746) | (22,414) |
| Total ordinary shareholders’ equity | 177,509 | 165,903 | 167,610 | 158,087 | 175,836 |
| Less: goodwill and intangible assets (net of deferred tax) | (12,356) | (11,608) | (11,900) | (11,160) | (17,643) |
| Tangible ordinary shareholders’ equity | 165,153 | 154,295 | 155,710 | 146,927 | 158,193 |
| Financial statistics | |||||
| Loans and advances to customers as a percentage of customer accounts (%) | 55.3 | 56.2 | 58.2 | 58.8 | 61.1 |
| Average total shareholders’ equity to average total assets (%) | 5.99 | 6.12 | 6.01 | 5.97 | 6.62 |
| Net asset value per ordinary share at year-end ($)4 | 10.36 | 9.26 | 8.82 | 8.01 | 8.76 |
| Tangible net asset value per ordinary share at year-end ($)4 | 9.64 | 8.61 | 8.19 | 7.44 | 7.88 |
| Tangible net asset value per fully diluted share at year-end ($) | 9.56 | 8.54 | 8.14 | 7.39 | 7.84 |
| Number of $0.50 ordinary shares in issue (millions) | 17,175 | 17,947 | 19,263 | 20,294 | 20,632 |
| Basic number of $0.50 ordinary shares outstanding, after deducting own shares<br><br>held (millions) | 17,140 | 17,918 | 19,006 | 19,739 | 20,073 |
| Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary<br><br>shares, after deducting own shares held (millions) | 17,276 | 18,062 | 19,135 | 19,876 | 20,189 |
| Closing foreign exchange translation rates to $: | |||||
| $1: £ | 0.746 | 0.797 | 0.784 | 0.830 | 0.739 |
| $1: € | 0.853 | 0.964 | 0.903 | 0.937 | 0.880 |
1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended
31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.
2Capital resources are regulatory total capital, the calculation of which is set out on page 192.
3 Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 359.
4 For the definition, see page 106.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 74 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Combined view of customer lending and customer deposits1 | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| Loans and advances to customers | 988,399 | 930,658 | ||||
| Loans and advances to customers of disposal groups reported in ‘Assets held for sale’ | 2,190 | 965 | ||||
| – private banking business in Germany | — | 309 | ||||
| – Germany custody business | 323 | — | ||||
| – business in South Africa | 431 | 656 | ||||
| – retail banking business in Sri Lanka | 101 | — | ||||
| – business in Uruguay | 1,314 | — | ||||
| – other | 21 | — | ||||
| Non-current assets held for sale | 1,303 | 12 | ||||
| Combined customer lending | 991,892 | 931,635 | ||||
| Currency translation | — | 40,108 | ||||
| Combined customer lending at constant currency | 991,892 | 971,743 | ||||
| Customer accounts | 1,786,828 | 1,654,955 | ||||
| Customer accounts reported in ‘Liabilities of disposal groups held for sale’ | 16,173 | 5,399 | ||||
| – private banking business in Germany | — | 2,085 | ||||
| – Germany custody business | 12,316 | — | ||||
| – business in South Africa | 2,056 | 3,294 | ||||
| – retail banking business in Sri Lanka | 430 | — | ||||
| – business in Uruguay | 1,369 | — | ||||
| – other | 2 | 20 | ||||
| Combined customer deposits | 1,803,001 | 1,660,354 | ||||
| Currency translation | — | 64,285 | ||||
| Combined customer deposits at constant currency | 1,803,001 | 1,724,639 |
1On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to sell its business in Argentina to Galicia. The sale was completed on 6 December
2024, so is not included in the table above.
Balance sheet commentary compared with 31 December 2024
At 31 December 2025, total assets of $3.2tn were $216bn or 7%
higher on a reported basis and increased by $93bn or 3% on a constant
currency basis.
Reported loans and advances to customers as a percentage of
customer accounts was 55.3% compared with 56.2% at 31 December
2024 (excluding balances classified as held for sale). The movement in
this ratio reflected a higher growth in customer accounts than in
lending.
Assets
Cash and balances at central banks decreased by $25bn or 9%,
which included a $22bn favourable impact of foreign currency
translation differences. The reduction was primarily due to lower
allocated balances from Markets Treasury within HSBC Bank plc,
leading to decreases across CIB and IWPB. Cash also declined in our
UK business, driven by increased customer lending and redeployment
into other asset classes.
Trading assets rose by $51bn or 16%, which included a favourable
impact of foreign currency translation differences of $13bn. The growth
was mainly in our CIB business reflecting increased client demand and
an increase in valuations.
Derivative assets decreased by $31bn or 12%, which included a
favourable impact of foreign currency translation differences of $17bn.
The reduction was primarily in our CIB business and reflected fair value
movements on foreign exchange contracts, driven by foreign exchange
rate volatility, and reductions in the fair value of interest rate contracts
resulting from curve movements. The decrease in derivative assets
was consistent with the decrease in derivative liabilities, as the
underlying risk is broadly matched.
Loans and advances to customers of $988bn were $58bn or 6%
higher on a reported basis. This included a favourable impact of foreign
currency translation differences of $40bn.
On a constant currency basis, loans and advances to customers
increased by $18bn, reflecting the following movements:
–In our UK business, customer lending rose by $18bn, primarily
driven by continued growth in mortgage balances as well as
increased commercial lending.
–In CIB, customer lending increased by $7bn. This was driven by
term lending growth in our main legal entities in Asia, including,
Australia, India and Hong Kong, and from an increase in the Middle
East, partly offset by the reclassification of our business in Uruguay
to held for sale.
–In IWPB, customer lending increased by $6bn, primarily driven by
wealth lending growth in the Private Bank, notably in our main legal
entity in Hong Kong.
–In our Hong Kong business, customer lending decreased by $6bn,
primarily in wholesale lending, reflecting low demand driven by
macroeconomic conditions.
–In Corporate Centre, customer lending decreased by $8bn following
the reclassification and subsequent sale of a portfolio of home and
certain other loans retained in France following the disposal of our
French retail operations.
Reverse repurchase agreements – non-trading rose by $46bn or
18%, primarily reflecting client demand.
Financial investments increased by $74bn or 15% The increase was
across both debt instruments held at fair value through other
comprehensive income and instruments held at amortised cost, as we
redeployed our commercial surplus to benefit from higher yield curves
and enhanced our structural hedge.
Assets held for sale decreased by $16bn or 59%, primarily due to the
reductions in IWPB following the completion of the sales of our French
life insurance business and our German private banking business, partly
offset by reclassification of assets from our UK life insurance business.
There were also increases in CIB and IWPB following the
announcement of the planned sale of our Uruguay business.
Other assets grew by $35bn or 14% reflecting higher settlement
accounts balances, notably in CIB, from higher client-driven trading
activity with a corresponding increase in settlement liabilities. In
addition, the growth reflected higher valuations on bullion.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 75 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Liabilities
Deposits by banks increased by $24bn or 32%, reflecting an increase
in client inflows, notably in our CIB business.
Customer accounts of $1.8tn increased by $132bn or 8% on a
reported basis. This included a favourable impact of foreign currency
translation differences of $64bn, mainly in our UK entities.
On a constant currency basis, customer accounts increased by $68bn,
reflecting the following movements:
–In our Hong Kong business, customer accounts increased by $37bn,
primarily in retail deposits, reflecting broader market growth.
–In our UK business, customer accounts increased by $11bn
primarily due to market growth in retail and corporate savings.
–In CIB, customer accounts increased by $10bn mainly driven by
strong deposit momentum in Asia, including in mainland China and
India, partly offset by the reclassification of our Germany custody
business to held for sale.
–In IWPB, customer accounts rose by $9bn, notably in the Private
Bank in Hong Kong, Singapore and the UK, reflecting strong wealth
deposit inflows amidst market volatility.
Repurchase agreements – non-trading increased by $24bn or 13%,
with increases in our CIB and UK businesses.
Financial liabilities designated at fair value increased by $20bn or
14%, notably in Corporate Centre, reflecting an increase in debt
securities in issue of $10bn in 2025, and in our CIB business from
increased medium-term note issuances by our Debt and Equity
Markets business.
Liabilities of disposal groups held for sale decreased by $6bn or
19%, primarily due to reductions in IWPB following the completion of
the sales of our French life insurance business and our German private
banking business, partly offset by reclassification of liabilities from our
UK life insurance business. There were also additions in CIB and IWPB
following the announcement of the planned sale of our Uruguay
business.
Other liabilities increased by $20bn or 10%. This included a rise of
$7bn in settlement accounts in our main legal entity in the US from an
increase in trading activity.
Equity
Total shareholders’ equity, including non-controlling interests, of
$206bn increased by $13bn or 7% compared with 31 December 2024.
Profits generated of $22bn and net gains through other comprehensive
income (‘OCI’) of $10bn were partly offset by the impact of dividends
paid of $13bn, and the impact of our $8bn share buy-back activities in
2025, which included the $2bn buy-back announced with our 2024
annual results in February 2025.
The net gains through OCI of $10bn included $7bn of exchange
differences and a $2bn increase in the cash flow hedging reserve.
Financial investments
As part of our interest rate hedging strategy, we hold a portfolio of debt
instruments, reported within financial investments, which are classified
as hold-to-collect-and-sell. As a result, the change in value of these
instruments is recognised through ‘debt instruments at fair value
through other comprehensive income’ in equity. At 31 December 2025,
we had recognised a pre-tax cumulative unrealised loss reserve
through other comprehensive income of $1.1bn related to these hold-
to-collect-and-sell positions, excluding investments held in our
insurance business. This compared with an unrealised loss of $3.8bn at
31 December 2024, and reflected a $2.7bn pre-tax gain in 2025,
inclusive of movements on related fair value hedges.
We also hold a portfolio of financial investments measured at amortised
cost, which are classified as hold-to-collect and are primarily held to
manage our interest rate exposure. At 31 December 2025, the debt
instruments within this portfolio had a cumulative unrecognised loss of
$0.4 bn, representing a $2.5bn improvement during 2025.
| Customer accounts by country/territory | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Hong Kong | 619,029 | 575,141 |
| UK | 568,712 | 524,251 |
| US | 99,458 | 99,278 |
| Singapore | 81,740 | 76,737 |
| Mainland China | 69,473 | 63,169 |
| France | 50,880 | 40,384 |
| Australia | 34,171 | 31,951 |
| Germany1 | 15,588 | 23,564 |
| Mexico | 29,493 | 27,525 |
| UAE | 30,861 | 28,008 |
| India | 28,725 | 27,199 |
| Taiwan | 18,771 | 17,067 |
| Malaysia | 20,252 | 17,038 |
| Egypt | 5,610 | 4,137 |
| Indonesia | 5,777 | 5,558 |
| Türkiye | 3,624 | 3,489 |
| Other1 | 104,664 | 90,459 |
| At 31 Dec | 1,786,828 | 1,654,955 |
1At 31 December 2025, customer accounts of $16.2bn met the criteria to be classified as held for sale and are reported within ‘Liabilities of disposal groups held
for sale’ on the balance sheet, of which $12.3bn, $2.1bn, $1.4bn and $0.4bn belongs to the planned sale of our German custody business, South Africa business,
HSBC Bank (Uruguay) S.A., and Sri Lanka retail banking business, respectively. Refer to Note 23 on page 355 for further details.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
|---|---|---|---|---|---|---|---|
| 76 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Financial summary | |||||||
| Loans and advances, deposits by currency | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| At 31 Dec 2025 | |||||||
| $m | USD | GBP | HKD | EUR | CNY | Others1 | Total |
| Loans and advances to banks | 38,546 | 17,085 | 3,716 | 4,810 | 9,146 | 35,159 | 108,462 |
| Loans and advances to customers | 171,177 | 323,026 | 201,691 | 71,148 | 54,015 | 167,342 | 988,399 |
| Total loans and advances | 209,723 | 340,111 | 205,407 | 75,958 | 63,161 | 202,501 | 1,096,861 |
| Deposits by banks | 43,915 | 14,910 | 4,427 | 11,995 | 5,308 | 17,397 | 97,952 |
| Customer accounts | 529,437 | 465,673 | 320,778 | 134,689 | 72,626 | 263,625 | 1,786,828 |
| Total deposits | 573,352 | 480,583 | 325,205 | 146,684 | 77,934 | 281,022 | 1,884,780 |
| At 31 Dec 2024 | |||||||
| Loans and advances to banks | 33,727 | 15,267 | 5,340 | 4,137 | 8,129 | 35,439 | 102,039 |
| Loans and advances to customers | 171,530 | 286,797 | 203,586 | 68,437 | 51,966 | 148,342 | 930,658 |
| Total loans and advances | 205,257 | 302,064 | 208,926 | 72,574 | 60,095 | 183,781 | 1,032,697 |
| Deposits by banks | 31,415 | 18,771 | 3,973 | 8,788 | 4,114 | 6,936 | 73,997 |
| Customer accounts | 476,210 | 426,747 | 316,997 | 124,452 | 67,405 | 243,144 | 1,654,955 |
| Total deposits | 507,625 | 445,518 | 320,970 | 133,240 | 71,519 | 250,080 | 1,728,952 |
1‘Others’ includes items with no currency information available of $0.5bn for loans and advances to banks (2024: $0.9bn), and $1.3bn for loans and advances to
customers (2024: $0.9bn), Nil for deposits by banks (2024: Nil) and $0.2bn for customer accounts (2024: $6m).
Risk-weighted assets
Risk-weighted assets (‘RWAs‘) increased by $50.3bn during the year,
including an increase of $27.4bn from foreign currency translation
differences. The remaining increase was largely driven by $39.9bn of
asset size movements; which included an $11.6bn rise in operational
risk, driven by higher average income. Further increases were due to
corporate lending growth, largely in our UK and CIB business segments
and in SAB within Corporate Centre.
These increases were partly offset by an $11.6bn decrease in RWAs
due to credit risk parameter refinements, including methodology
changes to our undrawn exposures within our UK and CIB businesses;
and a UK transaction where some credit risk was transferred to a third
party, and a $4.5bn decrease from strategic disposals.
| RWAs by currency | |||||||
|---|---|---|---|---|---|---|---|
| At 31 Dec 2025 | |||||||
| $m | USD | GBP | HKD | EUR | CNY | Others | Total |
| RWAs1 | 210,900 | 189,045 | 133,894 | 75,334 | 55,811 | 223,663 | 888,647 |
| At 31 Dec 2024 | |||||||
| RWAs1 | 205,645 | 165,684 | 136,001 | 67,440 | 56,561 | 206,923 | 838,254 |
1 RWAs include credit risk, counterparty credit risk, market risk and operational risk RWAs.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 77 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Average balance sheet
Average balance sheet and net interest income
Average balances and related interest are shown for the domestic
operations of our principal commercial banks by legal entity. ‘Other
trading entities’ comprise the operations of our principal commercial
banking and consumer finance entities outside their domestic markets
and all other banking operations, including investment banking balances
and transactions.
Average balances are based on daily averages for the principal areas of
our banking activities with monthly or less frequent averages used
elsewhere.
Balances and transactions with fellow subsidiaries are reported gross in
the principal commercial banking and consumer finance entities, and
the elimination entries are included within ‘Holding companies, shared
service centres and intra-group eliminations’.
Net interest margin numbers are calculated by dividing net interest
income as reported in the income statement by the average interest-
earning assets from which interest income is reported within the ‘Net
interest income’ line of the income statement. Total interest-earning
assets include credit-impaired loans where the carrying amount has
been adjusted as a result of impairment allowances. In accordance with
IFRSs, we recognise interest income on credit-impaired assets after the
carrying amount has been adjusted as a result of impairment. Fee
income that forms an integral part of the effective interest rate of a
financial instrument is recognised as an adjustment to the effective
interest rate and recorded in ‘Interest income’.
| Assets | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Average<br><br>balance | Interest<br><br>income | Yield | Average<br><br>balance | Interest<br><br>income | Yield | |
| $m | $m | % | $m | $m | % | |
| Summary | ||||||
| Interest-earning assets measured at amortised cost (itemised below) | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 |
| Trading assets and financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | 262,719 | 8,169 | 3.11 | 244,686 | 7,943 | 3.25 |
| Expected credit losses provision | (10,151) | N/A | N/A | (10,633) | N/A | N/A |
| Non-interest-earning assets | 755,734 | N/A | N/A | 729,136 | N/A | N/A |
| Total assets and interest income | 3,198,380 | 106,041 | 3.32 | 3,062,474 | 116,574 | 3.81 |
| Average yield on all interest-earning assets | 4.32 | 4.97 | ||||
| Short-term funds and loans and advances to banks | ||||||
| HSBC Bank plc | 146,469 | 4,321 | 2.95 | 151,675 | 5,993 | 3.95 |
| HSBC UK Bank plc | 65,457 | 2,493 | 3.81 | 76,705 | 3,255 | 4.24 |
| The Hongkong and Shanghai Banking Corporation Limited | 82,451 | 2,561 | 3.11 | 86,976 | 3,250 | 3.74 |
| HSBC Bank Middle East Limited | 7,398 | 464 | 6.27 | 6,960 | 418 | 6.01 |
| HSBC North America Holdings Inc. | 28,832 | 1,136 | 3.94 | 29,434 | 1,275 | 4.33 |
| HSBC Bank Canada | — | — | — | 13 | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 2,759 | 208 | 7.54 | 3,037 | 298 | 9.81 |
| Other trading entities | 5,761 | 957 | 16.61 | 5,992 | 812 | 13.55 |
| Holding companies, shared service centres and intra-group eliminations | (13,337) | (680) | 5.10 | (11,275) | (574) | 5.09 |
| At 31 Dec | 325,790 | 11,460 | 3.52 | 349,517 | 14,727 | 4.21 |
| Loans and advances to customers | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Bank plc | 107,315 | 4,850 | 4.52 | 110,123 | 5,740 | 5.21 |
| HSBC UK Bank plc | 295,491 | 14,060 | 4.76 | 275,614 | 13,176 | 4.78 |
| The Hongkong and Shanghai Banking Corporation Limited | 459,820 | 18,940 | 4.12 | 455,258 | 21,804 | 4.79 |
| HSBC Bank Middle East Limited | 21,910 | 1,220 | 5.57 | 20,558 | 1,313 | 6.39 |
| HSBC North America Holdings Inc. | 56,893 | 3,136 | 5.51 | 56,149 | 3,403 | 6.06 |
| HSBC Bank Canada | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 25,872 | 3,299 | 12.75 | 26,704 | 3,631 | 13.60 |
| Other trading entities | 4,901 | 662 | 13.51 | 5,642 | 918 | 16.27 |
| Holding companies, shared service centres and intra-group eliminations | (398) | (131) | 32.91 | (223) | (106) | 47.53 |
| At 31 Dec | 971,804 | 46,036 | 4.74 | 949,825 | 49,879 | 5.25 |
| Reverse repurchase agreements – banks1 | ||||||
| HSBC Bank plc | 41,903 | 2,695 | 6.43 | 38,819 | 3,293 | 8.48 |
| HSBC UK Bank plc | 5,424 | 220 | 4.06 | 2,401 | 109 | 4.54 |
| The Hongkong and Shanghai Banking Corporation Limited | 56,488 | 2,058 | 3.64 | 57,293 | 2,384 | 4.16 |
| HSBC Bank Middle East Limited | 5,723 | 267 | 4.67 | 4,195 | 243 | 5.79 |
| HSBC North America Holdings Inc. | 13,708 | 745 | 5.43 | 12,262 | 840 | 6.85 |
| HSBC Bank Canada | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 2,217 | 188 | 8.48 | 2,599 | 281 | 10.81 |
| Other trading entities | 1,641 | 155 | 9.45 | 2,182 | 363 | 16.64 |
| Holding companies, shared service centres and intra-group eliminations | (8,702) | (576) | 6.62 | (15,962) | (833) | 5.22 |
| At 31 Dec | 118,402 | 5,752 | 4.86 | 103,789 | 6,680 | 6.44 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 78 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Assets (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Average<br><br>balance | Interest<br><br>income | Yield | Average<br><br>balance | Interest<br><br>income | Yield | |
| $m | $m | % | $m | $m | % | |
| Reverse repurchase agreements – customers1 | ||||||
| HSBC Bank plc | 53,110 | 4,083 | 7.69 | 46,092 | 4,178 | 9.06 |
| HSBC UK Bank plc | 12,062 | 629 | 5.21 | 7,832 | 478 | 6.10 |
| The Hongkong and Shanghai Banking Corporation Limited | 51,842 | 1,491 | 2.88 | 41,295 | 1,368 | 3.31 |
| HSBC Bank Middle East Limited | 3,155 | 146 | 4.63 | 2,644 | 135 | 5.11 |
| HSBC North America Holdings Inc. | 44,485 | 4,495 | 10.10 | 42,410 | 4,851 | 11.44 |
| HSBC Bank Canada | — | — | — | 2 | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 274 | 21 | 7.66 | 280 | 32 | 11.43 |
| Other trading entities | — | — | — | — | — | — |
| Holding companies, shared service centres and intra-group eliminations | (9,389) | (1) | 0.01 | (5,650) | (1) | 0.02 |
| At 31 Dec | 155,539 | 10,864 | 6.98 | 134,905 | 11,041 | 8.18 |
| Financial investments | ||||||
| HSBC Bank plc | 79,377 | 3,025 | 3.81 | 70,702 | 3,013 | 4.26 |
| HSBC UK Bank plc | 54,417 | 2,157 | 3.96 | 41,036 | 1,845 | 4.50 |
| The Hongkong and Shanghai Banking Corporation Limited | 313,880 | 10,934 | 3.48 | 274,924 | 11,023 | 4.01 |
| HSBC Bank Middle East Limited | 13,379 | 591 | 4.42 | 11,690 | 565 | 4.83 |
| HSBC North America Holdings Inc. | 48,984 | 2,085 | 4.26 | 44,044 | 1,945 | 4.42 |
| HSBC Bank Canada | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 6,839 | 577 | 8.44 | 5,150 | 481 | 9.34 |
| Other trading entities | 4,226 | 759 | 17.96 | 3,375 | 802 | 23.76 |
| Holding companies, shared service centres and intra-group eliminations | 18,005 | 702 | 3.90 | 19,261 | 913 | 4.74 |
| At 31 Dec | 539,107 | 20,830 | 3.86 | 470,182 | 20,587 | 4.38 |
| Other interest-earning assets | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Bank plc | 66,389 | 2,206 | 3.32 | 59,244 | 2,587 | 4.37 |
| HSBC UK Bank plc | 336 | 30 | 8.93 | 252 | 35 | 13.89 |
| The Hongkong and Shanghai Banking Corporation Limited | 14,897 | 599 | 4.02 | 10,747 | 653 | 6.08 |
| HSBC Bank Middle East Limited | 289 | 13 | 4.50 | (178) | 1 | (0.56) |
| HSBC North America Holdings Inc. | 5,710 | 229 | 4.01 | 3,726 | 195 | 5.23 |
| HSBC Bank Canada | — | — | — | 19,475 | 984 | 5.05 |
| Grupo Financiero HSBC, S.A. de C.V. | 279 | 9 | 3.23 | 315 | 15 | 4.76 |
| Other trading entities | 749 | 171 | 22.83 | 3,551 | 1,922 | 54.13 |
| Holding companies, shared service centres and intra-group eliminations | (9,213) | (327) | 3.55 | (6,065) | (675) | 11.13 |
| At 31 Dec | 79,436 | 2,930 | 3.69 | 91,067 | 5,717 | 6.28 |
| Total interest-earning assets | ||||||
| HSBC Bank plc | 494,563 | 21,180 | 4.28 | 476,655 | 24,804 | 5.20 |
| HSBC UK Bank plc | 433,187 | 19,589 | 4.52 | 403,840 | 18,898 | 4.68 |
| The Hongkong and Shanghai Banking Corporation Limited | 979,378 | 36,583 | 3.74 | 926,493 | 40,482 | 4.37 |
| HSBC Bank Middle East Limited | 51,854 | 2,701 | 5.21 | 45,869 | 2,675 | 5.83 |
| HSBC North America Holdings Inc. | 198,612 | 11,826 | 5.95 | 188,025 | 12,509 | 6.65 |
| HSBC Bank Canada | — | — | — | 19,490 | 984 | 5.05 |
| Grupo Financiero HSBC, S.A. de C.V. | 38,240 | 4,302 | 11.25 | 38,085 | 4,738 | 12.44 |
| Other trading entities | 17,278 | 2,704 | 15.65 | 20,742 | 4,817 | 23.22 |
| Holding companies, shared service centres and intra-group eliminations | (23,034) | (1,013) | 4.40 | (19,914) | (1,276) | 6.41 |
| At 31 Dec | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 |
1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 79 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Equity and liabilities | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Average<br><br>balance | Interest<br><br>expense | Cost | Average<br><br>balance | Interest<br><br>expense | Cost | |
| $m | $m | % | $m | $m | % | |
| Summary | ||||||
| Interest-bearing liabilities measured at amortised cost (itemised below) | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 |
| Trading liabilities and financial liabilities designated at fair value<br><br>(excluding own debt issued) | 153,896 | 5,114 | 3.32 | 143,636 | 5,271 | 3.67 |
| Non-interest bearing current accounts | 214,507 | N/A | N/A | 220,291 | N/A | N/A |
| Total equity and other non-interest bearing liabilities | 802,006 | N/A | N/A | 777,753 | N/A | N/A |
| Total equity and liabilities | 3,198,380 | 68,192 | 2.13 | 3,062,475 | 81,169 | 2.65 |
| Average cost on all interest-bearing liabilities | 3.13 | 3.93 | ||||
| Deposits by banks1 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Bank plc | 39,910 | 1,236 | 3.10 | 33,041 | 1,376 | 4.16 |
| HSBC UK Bank plc | 12,550 | 602 | 4.80 | 13,265 | 743 | 5.60 |
| The Hongkong and Shanghai Banking Corporation Limited | 25,823 | 532 | 2.06 | 24,561 | 611 | 2.49 |
| HSBC Bank Middle East Limited | 7,693 | 355 | 4.61 | 5,870 | 303 | 5.16 |
| HSBC North America Holdings Inc. | 12,509 | 345 | 2.76 | 9,012 | 329 | 3.65 |
| HSBC Bank Canada | — | — | — | 27 | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 563 | 53 | 9.41 | 648 | 74 | 11.42 |
| Other trading entities | 1,468 | 161 | 10.97 | 890 | 46 | 5.17 |
| Holding companies, shared service centres and intra-group eliminations | (24,435) | (671) | 2.75 | (20,909) | (552) | 2.64 |
| At 31 Dec | 76,081 | 2,613 | 3.43 | 66,405 | 2,930 | 4.41 |
| Debt Securities in issue – non trading | ||||||
| HSBC Bank plc | 47,563 | 1,909 | 4.01 | 47,684 | 2,536 | 5.32 |
| HSBC UK Bank plc | 24,781 | 1,334 | 5.38 | 22,042 | 1,357 | 6.16 |
| The Hongkong and Shanghai Banking Corporation Limited | 42,396 | 2,305 | 5.44 | 45,303 | 2,772 | 6.12 |
| HSBC Bank Middle East Limited | 2,132 | 89 | 4.17 | 1,668 | 67 | 4.02 |
| HSBC North America Holdings Inc. | 25,048 | 1,408 | 5.62 | 26,551 | 1,694 | 6.38 |
| HSBC Bank Canada | — | — | — | 181 | 12 | 6.63 |
| Grupo Financiero HSBC, S.A. de C.V. | 3,712 | 334 | 9.00 | 3,429 | 353 | 10.29 |
| Other trading entities | 1,386 | 150 | 10.82 | 1,608 | 142 | 8.83 |
| Holding companies, shared service centres and intra-group eliminations | 51,299 | 3,318 | 6.47 | 47,974 | 3,873 | 8.07 |
| At 31 Dec | 198,317 | 10,847 | 5.47 | 196,440 | 12,806 | 6.52 |
| Customer accounts2 | ||||||
| HSBC Bank plc | 275,748 | 8,778 | 3.18 | 258,026 | 10,753 | 4.17 |
| HSBC UK Bank plc | 304,835 | 5,863 | 1.92 | 279,227 | 6,156 | 2.20 |
| The Hongkong and Shanghai Banking Corporation Limited | 793,610 | 14,024 | 1.77 | 738,028 | 17,654 | 2.39 |
| HSBC Bank Middle East Limited | 18,669 | 520 | 2.78 | 14,725 | 520 | 3.53 |
| HSBC North America Holdings Inc. | 80,866 | 2,627 | 3.25 | 78,919 | 3,030 | 3.84 |
| HSBC Bank Canada | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 21,679 | 1,135 | 5.24 | 22,573 | 1,555 | 6.89 |
| Other trading entities | 5,805 | 828 | 14.26 | 7,123 | 1,012 | 14.21 |
| Holding companies, shared service centres and intra-group eliminations | (14,180) | (486) | 3.43 | (12,781) | (507) | 3.97 |
| At 31 Dec | 1,487,032 | 33,289 | 2.24 | 1,385,840 | 40,173 | 2.90 |
| Repurchase agreements – with banks3 | ||||||
| HSBC Bank plc | 15,015 | 1,615 | 10.76 | 17,981 | 2,212 | 12.30 |
| HSBC UK Bank plc | 1,856 | 123 | 6.63 | 317 | 23 | 7.26 |
| The Hongkong and Shanghai Banking Corporation Limited | 66,984 | 2,293 | 3.42 | 60,491 | 2,640 | 4.36 |
| HSBC Bank Middle East Limited | 4,516 | 198 | 4.38 | 3,276 | 178 | 5.43 |
| HSBC North America Holdings Inc. | 11,369 | 604 | 5.31 | 10,110 | 655 | 6.48 |
| HSBC Bank Canada | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 1,684 | 156 | 9.26 | 181 | 25 | 13.81 |
| Other trading entities | 363 | 7 | 1.93 | 304 | 43 | 14.14 |
| Holding companies, shared service centres and intra-group eliminations | (15,877) | (614) | 3.87 | (18,373) | (881) | 4.80 |
| At 31 Dec | 85,910 | 4,382 | 5.10 | 74,287 | 4,895 | 6.59 |
| Repurchase agreements – with customers3 | ||||||
| HSBC Bank plc | 40,513 | 3,721 | 9.18 | 44,267 | 4,090 | 9.24 |
| HSBC UK Bank plc | 2,597 | 251 | 9.66 | 3,147 | 273 | 8.67 |
| The Hongkong and Shanghai Banking Corporation Limited | 14,778 | 549 | 3.71 | 22,262 | 1,108 | 4.98 |
| HSBC Bank Middle East Limited | 11 | 0.4 | 3.64 | 19 | 1 | 5.26 |
| HSBC North America Holdings Inc. | 42,483 | 4,360 | 10.26 | 42,071 | 4,821 | 11.46 |
| HSBC Bank Canada | — | — | — | 230 | 13 | 5.65 |
| Grupo Financiero HSBC, S.A. de C.V. | 4,521 | 365 | 8.07 | 3,850 | 415 | 10.78 |
| Other trading entities | — | — | — | 10 | 1 | 10.00 |
| Holding companies, shared service centres and intra-group eliminations | (2,065) | 0.6 | (0.03) | (2,806) | — | — |
| At 31 Dec | 102,838 | 9,247 | 8.99 | 113,050 | 10,722 | 9.48 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 80 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Equity and liabilities (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||
| Average<br><br>balance | Interest<br><br>expense | Cost | Average<br><br>balance | Interest<br><br>expense | Cost | |
| $m | $m | % | $m | $m | % | |
| Other interest-bearing liabilities | ||||||
| HSBC Bank plc | 66,070 | 2,236 | 3.38 | 54,689 | 2,582 | 4.72 |
| HSBC UK Bank plc | 309 | 11 | 3.56 | 426 | 16 | 3.76 |
| The Hongkong and Shanghai Banking Corporation Limited | 12,607 | 410 | 3.25 | 14,052 | 619 | 4.41 |
| HSBC Bank Middle East Limited | 823 | 18 | 2.19 | 274 | 14 | 5.11 |
| HSBC North America Holdings Inc. | 9,180 | 350 | 3.81 | 7,582 | 367 | 4.84 |
| HSBC Bank Canada | — | — | — | 16,483 | 659 | 4.00 |
| Grupo Financiero HSBC, S.A. de C.V. | 157 | 31 | 19.75 | 183 | 24 | 13.11 |
| Other trading entities | 757 | 138 | 18.23 | 2,882 | 798 | 27.69 |
| Holding companies, shared service centres and intra-group eliminations | (12,110) | (494) | 4.08 | (11,798) | (707) | 5.99 |
| At 31 Dec | 77,793 | 2,700 | 3.47 | 84,773 | 4,372 | 5.16 |
| Total interest-bearing liabilities | ||||||
| HSBC Bank plc | 484,819 | 19,495 | 4.02 | 455,688 | 23,549 | 5.17 |
| HSBC UK Bank plc | 346,928 | 8,184 | 2.36 | 318,424 | 8,568 | 2.69 |
| The Hongkong and Shanghai Banking Corporation Limited | 956,198 | 20,113 | 2.10 | 904,697 | 25,404 | 2.81 |
| HSBC Bank Middle East Limited | 33,844 | 1,179 | 3.48 | 25,832 | 1,083 | 4.19 |
| HSBC North America Holdings Inc. | 181,455 | 9,694 | 5.34 | 174,245 | 10,896 | 6.25 |
| HSBC Bank Canada | — | — | — | 16,921 | 684 | 4.04 |
| Grupo Financiero HSBC, S.A. de C.V. | 32,316 | 2,074 | 6.42 | 30,864 | 2,446 | 7.93 |
| Other trading entities | 9,779 | 1,284 | 13.13 | 12,817 | 2,042 | 15.93 |
| Holding companies, shared service centres and intra-group eliminations | (17,368) | 1,055 | (6.07) | (18,693) | 1,226 | (6.56) |
| At 31 Dec | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 |
1This includes interest-bearing bank deposits only. See page 12 for an analysis of all bank deposits.
2This includes interest-bearing customer accounts only. See page 13 for an analysis of all customer accounts.
3The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
| Net interest margin1 | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| % | % | % | |
| HSBC Bank plc | 0.34 | 0.26 | 0.55 |
| HSBC UK Bank plc | 2.63 | 2.56 | 2.43 |
| The Hongkong and Shanghai Banking Corporation Limited | 1.68 | 1.63 | 1.81 |
| HSBC Bank Middle East Limited | 2.94 | 3.47 | 3.62 |
| HSBC North America Holdings Inc. | 1.07 | 0.86 | 0.98 |
| HSBC Bank Canada | — | 1.54 | 1.54 |
| Grupo Financiero HSBC, S.A. de C.V. | 5.83 | 6.02 | 6.17 |
| Other trading entities | 8.23 | 13.37 | 7.71 |
| At 31 Dec | 1.59 | 1.56 | 1.66 |
1Net interest margin is calculated as net interest income divided by average interest-earning assets.
| Distribution of average total assets | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| % | % | % | ||||
| HSBC Bank plc | 30.5 | 30.6 | 30.0 | |||
| HSBC UK Bank plc | 14.1 | 13.7 | 14.0 | |||
| The Hongkong and Shanghai Banking Corporation Limited | 45.9 | 45.4 | 44.0 | |||
| HSBC Bank Middle East Limited | 2.0 | 1.9 | 2.0 | |||
| HSBC North America Holdings Inc. | 8.4 | 8.4 | 8.0 | |||
| HSBC Bank Canada | — | 0.7 | 3.0 | |||
| Grupo Financiero HSBC, S.A. de C.V. | 1.5 | 1.6 | 2.0 | |||
| Other trading entities | 1.0 | 1.1 | 2.0 | |||
| Holding companies, shared service centres and intra-group eliminations | (3.4) | (3.4) | (5.0) | |||
| At 31 Dec | 100.0 | 100.0 | 100.0 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 81 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Analysis of changes in net interest income and net interest expense
The following tables allocate changes in interest income and interest expense between volume and rate for 2025 compared with 2024, and for
2024 compared with 2023. We isolate rate variances and allocate any change arising from both volume and rate/volume to volume.
| Interest income | |||||||
|---|---|---|---|---|---|---|---|
| Increase/(decrease)<br><br>in 2025 compared<br><br>with 2024 | Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023 | ||||||
| 2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
| $m | $m | $m | $m | $m | $m | $m | |
| Short-term funds and loans and advances to banks | |||||||
| HSBC Bank plc | 4,321 | (155) | (1,517) | 5,993 | (887) | 679 | 6,201 |
| HSBC UK Bank plc | 2,493 | (432) | (330) | 3,255 | (1,017) | 786 | 3,486 |
| The Hongkong and Shanghai Banking Corporation Limited | 2,561 | (141) | (548) | 3,250 | (48) | 220 | 3,078 |
| HSBC Bank Middle East Limited | 464 | 28 | 18 | 418 | 40 | 24 | 354 |
| HSBC North America Holdings Inc. | 1,136 | (24) | (115) | 1,275 | (155) | 294 | 1,136 |
| HSBC Bank Canada | — | — | — | — | — | (2) | 2 |
| Grupo Financiero HSBC, S.A. de C.V. | 208 | (21) | (69) | 298 | 42 | (11) | 267 |
| Other trading entities | 957 | (38) | 183 | 812 | (916) | 921 | 807 |
| Holding companies, shared service centres and intra-group eliminations | (680) | (105) | (1) | (574) | 138 | (151) | (561) |
| At 31 Dec | 11,460 | (855) | (2,412) | 14,727 | (2,263) | 2,220 | 14,770 |
| Loans and advances to customers | |||||||
| HSBC Bank plc | 4,850 | (130) | (760) | 5,740 | 28 | 723 | 4,989 |
| HSBC UK Bank plc | 14,060 | 939 | (55) | 13,176 | 676 | 1,281 | 11,219 |
| The Hongkong and Shanghai Banking Corporation Limited | 18,940 | 186 | (3,050) | 21,804 | (578) | 561 | 21,821 |
| HSBC Bank Middle East Limited | 1,220 | 76 | (169) | 1,313 | 50 | 34 | 1,229 |
| HSBC North America Holdings Inc. | 3,136 | 42 | (309) | 3,403 | 125 | 103 | 3,175 |
| HSBC Bank Canada | — | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 3,299 | (105) | (227) | 3,631 | 252 | (27) | 3,406 |
| Other trading entities | 662 | (100) | (156) | 918 | (2,512) | 1,092 | 2,338 |
| Holding companies, shared service centres and intra-group eliminations | (131) | (58) | 33 | (106) | 74 | 324 | (504) |
| At 31 Dec | 46,036 | 1,001 | (4,844) | 49,879 | (380) | 2,586 | 47,673 |
| Reverse repurchase agreements – with banks | |||||||
| HSBC Bank plc | 2,695 | 198 | (796) | 3,293 | (1,205) | 1,321 | 3,177 |
| HSBC UK Bank plc | 220 | 123 | (12) | 109 | 32 | 8 | 69 |
| The Hongkong and Shanghai Banking Corporation Limited | 2,058 | (28) | (298) | 2,384 | (334) | 281 | 2,437 |
| HSBC Bank Middle East Limited | 267 | 71 | (47) | 243 | 63 | 9 | 171 |
| HSBC North America Holdings Inc. | 745 | 79 | (174) | 840 | 233 | (38) | 645 |
| HSBC Bank Canada | — | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 188 | (32) | (61) | 281 | 20 | 7 | 254 |
| Other trading entities | 155 | (51) | (157) | 363 | (274) | 33 | 604 |
| Holding companies, shared service centres and intra-group eliminations | (576) | 480 | (223) | (833) | 481 | (443) | (871) |
| At 31 Dec | 5,752 | 712 | (1,640) | 6,680 | (609) | 803 | 6,486 |
| Reverse repurchase agreements – with customers | |||||||
| HSBC Bank plc | 4,083 | 536 | (631) | 4,178 | 877 | 594 | 2,707 |
| HSBC UK Bank plc | 629 | 221 | (70) | 478 | 122 | 29 | 327 |
| The Hongkong and Shanghai Banking Corporation Limited | 1,491 | 301 | (178) | 1,368 | (254) | 652 | 970 |
| HSBC Bank Middle East Limited | 146 | 24 | (13) | 135 | 11 | 11 | 113 |
| HSBC North America Holdings Inc. | 4,495 | 212 | (568) | 4,851 | 865 | 230 | 3,756 |
| HSBC Bank Canada | — | — | — | — | — | (2) | 2 |
| Grupo Financiero HSBC, S.A. de C.V. | 21 | — | (11) | 32 | 1 | — | 31 |
| Other trading entities | — | — | — | — | — | — | — |
| Holding companies, shared service centres and intra-group eliminations | (1) | (1) | 1 | (1) | (1) | 1 | (1) |
| At 31 Dec | 10,864 | 1,442 | (1,619) | 11,041 | 645 | 2,491 | 7,905 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
| --- | |||||||
| 82 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Financial summary | |||||||
| Interest income (continued) | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Increase/(decrease)<br><br>in 2025 compared<br><br>with 2024 | Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023 | ||||||
| 2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
| $m | $m | $m | $m | $m | $m | $m | |
| Financial investments | |||||||
| HSBC Bank plc | 3,025 | 330 | (318) | 3,013 | 835 | 312 | 1,866 |
| HSBC UK Bank plc | 2,157 | 534 | (222) | 1,845 | 630 | 324 | 891 |
| The Hongkong and Shanghai Banking Corporation Limited | 10,934 | 1,368 | (1,457) | 11,023 | 1,345 | 1,014 | 8,664 |
| HSBC Bank Middle East Limited | 591 | 74 | (48) | 565 | 49 | 65 | 451 |
| HSBC North America Holdings Inc. | 2,085 | 210 | (70) | 1,945 | 179 | 132 | 1,634 |
| HSBC Bank Canada | — | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 577 | 142 | (46) | 481 | 103 | 87 | 291 |
| Other trading entities | 759 | 153 | (196) | 802 | (1,834) | 728 | 1,908 |
| Holding companies, shared service centres and intra-group eliminations | 702 | (49) | (162) | 913 | (126) | (114) | 1,153 |
| At 31 Dec | 20,830 | 2,688 | (2,445) | 20,587 | 2,751 | 978 | 16,858 |
| Interest expense | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Increase/(decrease)<br><br>in 2025 compared<br><br>with 2024 | Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023 | ||||||
| 2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
| $m | $m | $m | $m | $m | $m | $m | |
| Deposits by banks | |||||||
| HSBC Bank plc | 1,236 | 210 | (350) | 1,376 | 160 | 79 | 1,137 |
| HSBC UK Bank plc | 602 | (35) | (106) | 743 | 20 | 107 | 616 |
| The Hongkong and Shanghai Banking Corporation Limited | 532 | 27 | (106) | 611 | 52 | 52 | 507 |
| HSBC Bank Middle East Limited | 355 | 84 | (32) | 303 | 83 | 20 | 200 |
| HSBC North America Holdings Inc. | 345 | 96 | (80) | 329 | 32 | (18) | 315 |
| HSBC Bank Canada | — | — | — | — | — | (6) | 6 |
| Grupo Financiero HSBC, S.A. de C.V. | 53 | (8) | (13) | 74 | 12 | (39) | 101 |
| Other trading entities | 161 | 63 | 52 | 46 | (122) | 137 | 31 |
| Holding companies, shared service centres and intra-group eliminations | (671) | (96) | (23) | (552) | (7) | (33) | (512) |
| At 31 Dec | 2,613 | 334 | (651) | 2,930 | 269 | 260 | 2,401 |
| Customer accounts | |||||||
| HSBC Bank plc | 8,778 | 579 | (2,554) | 10,753 | 1,134 | 1,108 | 8,511 |
| HSBC UK Bank plc | 5,863 | 489 | (782) | 6,156 | 225 | 1,399 | 4,532 |
| The Hongkong and Shanghai Banking Corporation Limited | 14,024 | 946 | (4,576) | 17,654 | 882 | 2,249 | 14,523 |
| HSBC Bank Middle East Limited | 520 | 110 | (110) | 520 | 61 | 77 | 382 |
| HSBC North America Holdings Inc. | 2,627 | 63 | (466) | 3,030 | 51 | 248 | 2,731 |
| HSBC Bank Canada | — | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 1,135 | (48) | (372) | 1,555 | (2) | 68 | 1,489 |
| Other trading entities | 828 | (188) | 4 | 1,012 | (3,094) | 1,710 | 2,396 |
| Holding companies, shared service centres and intra-group eliminations | (486) | (48) | 69 | (507) | (115) | 10 | (402) |
| At 31 Dec | 33,289 | 2,263 | (9,147) | 40,173 | 1,473 | 4,538 | 34,162 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
| --- | |||||||
| 83 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Financial summary | |||||||
| Interest expense (continued) | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Increase/(decrease)<br><br>in 2025 compared<br><br>with 2024 | Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023 | ||||||
| 2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
| $m | $m | $m | $m | $m | $m | $m | |
| Repurchase agreements – with banks | |||||||
| HSBC Bank plc | 1,615 | (320) | (277) | 2,212 | (511) | 808 | 1,915 |
| HSBC UK Bank plc | 123 | 102 | (2) | 23 | (25) | 14 | 34 |
| The Hongkong and Shanghai Banking Corporation Limited | 2,293 | 222 | (569) | 2,640 | 758 | 514 | 1,368 |
| HSBC Bank Middle East Limited | 198 | 54 | (34) | 178 | 70 | 9 | 99 |
| HSBC North America Holdings Inc. | 604 | 67 | (118) | 655 | 296 | (85) | 444 |
| HSBC Bank Canada | — | — | — | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 156 | 139 | (8) | 25 | (16) | 5 | 36 |
| Other trading entities | 7 | 1 | (37) | 43 | (61) | (10) | 114 |
| Holding companies, shared service centres and intra-group eliminations | (614) | 96 | 171 | (881) | 309 | (181) | (1,009) |
| At 31 Dec | 4,382 | 594 | (1,107) | 4,895 | 1,621 | 273 | 3,001 |
| Repurchase agreements – with customers | |||||||
| HSBC Bank plc | 3,721 | (342) | (27) | 4,090 | 929 | 647 | 2,514 |
| HSBC UK Bank plc | 251 | (53) | 31 | 273 | (382) | 227 | 428 |
| The Hongkong and Shanghai Banking Corporation Limited | 549 | (276) | (283) | 1,108 | (12) | 126 | 994 |
| HSBC Bank Middle East Limited | 0.4 | (0.6) | — | 1 | 1 | — | — |
| HSBC North America Holdings Inc. | 4,360 | 44 | (505) | 4,821 | 1,249 | 34 | 3,538 |
| HSBC Bank Canada | — | (13) | — | 13 | (15) | 3 | 25 |
| Grupo Financiero HSBC, S.A. de C.V. | 365 | 54 | (104) | 415 | 45 | (12) | 382 |
| Other trading entities | — | (1) | — | 1 | — | — | 1 |
| Holding companies, shared service centres and intra-group eliminations | 0.6 | (0.2) | 0.8 | — | — | 25 | (25) |
| At 31 Dec | 9,247 | (921) | (554) | 10,722 | 1,537 | 1,328 | 7,857 |
| Debt securities in issue – non trading | |||||||
| HSBC Bank plc | 1,909 | (2) | (625) | 2,536 | 512 | 137 | 1,887 |
| HSBC UK Bank plc | 1,334 | 149 | (172) | 1,357 | 230 | 368 | 759 |
| The Hongkong and Shanghai Banking Corporation Limited | 2,305 | (159) | (308) | 2,772 | (210) | 166 | 2,816 |
| HSBC Bank Middle East Limited | 89 | 19 | 3 | 67 | (12) | 6 | 73 |
| HSBC North America Holdings Inc. | 1,408 | (84) | (202) | 1,694 | 167 | 22 | 1,505 |
| HSBC Bank Canada | — | (12) | — | 12 | (37) | (2) | 51 |
| Grupo Financiero HSBC, S.A. de C.V. | 334 | 25 | (44) | 353 | 178 | 83 | 92 |
| Other trading entities | 150 | (24) | 32 | 142 | (3) | (10) | 155 |
| Holding companies, shared service centres and intra-group eliminations | 3,318 | 213 | (768) | 3,873 | (147) | 135 | 3,885 |
| At 31 Dec | 10,847 | 104 | (2,063) | 12,806 | 751 | 832 | 11,223 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
| --- | |||||||
| 84 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Financial summary |
Loan maturity and interest sensitivity analysis
The analysis of loan maturity and interest sensitivity is presented for
loans where repayment is expected to occur on a contractual
repayment basis (presented within Loans and advances to banks and
Loans and advances to customers on our balance sheet). Loans that
have been re-classified to Assets held for sale are excluded as recovery
is expected from sale proceeds within the next 12 months rather than
individual contractual repayment terms. The analysis of loan maturity
and interest sensitivity by loan type on a contractual repayment basis
was as follows.
| Total | Total | |||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| $m | $m | |||||
| Maturity of 1 year or less | ||||||
| Loans and advances to banks | 101,823 | 97,156 | ||||
| Loans and advances to customers | 361,354 | 341,022 | ||||
| 463,177 | 438,178 | |||||
| Maturity after 1 year but within 5 years | ||||||
| Loans and advances to banks | 5,968 | 4,513 | ||||
| Loans and advances to customers | 285,116 | 268,427 | ||||
| 291,084 | 272,940 | |||||
| Interest rate sensitivity of loans and advances to banks | ||||||
| Fixed interest rate | 1,937 | 1,217 | ||||
| Variable interest rate | 4,031 | 3,296 | ||||
| 5,968 | 4,513 | |||||
| Interest rate sensitivity of loans and advances to customers | ||||||
| Fixed interest rate | 66,999 | 60,088 | ||||
| Variable interest rate | 218,117 | 208,339 | ||||
| 285,116 | 268,427 | |||||
| Maturity after 5 years but within 15 years | ||||||
| Loans and advances to banks | 678 | 383 | ||||
| Loans and advances to customers | 177,571 | 164,603 | ||||
| 178,249 | 164,986 | |||||
| Interest rate sensitivity of loans and advances to banks | ||||||
| Fixed interest rate | 678 | 333 | ||||
| Variable interest rate | — | 50 | ||||
| 678 | 383 | |||||
| Interest rate sensitivity of loans and advances to customers | ||||||
| Fixed interest rate | 77,525 | 69,464 | ||||
| Variable interest rate | 100,045 | 95,139 | ||||
| 177,570 | 164,603 | |||||
| Maturity after 15 years | ||||||
| Loans and advances to banks | — | — | ||||
| Loans and advances to customers | 175,050 | 166,321 | ||||
| 175,050 | 166,321 | |||||
| Interest rate sensitivity of loans and advances to banks | ||||||
| Fixed interest rate | — | — | ||||
| Variable interest rate | — | — | ||||
| — | — | |||||
| Interest rate sensitivity of loans and advances to customers | ||||||
| Fixed interest rate | 83,388 | 76,945 | ||||
| Variable interest rate | 91,662 | 89,376 | ||||
| 175,050 | 166,321 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 85 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Deposits
The following tables summarise the average amount of bank deposits,
customer deposits and certificates of deposit (‘CDs’) and other money
market instruments (that are included within ‘Debt securities in issue’
in the balance sheet), together with the average interest rates paid
thereon for each of the past two years.
The analysis of average deposits by legal entity is based on the legal
entity in which the deposits are recorded and excludes balances with
HSBC companies.
| Deposits by banks | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Average<br><br>balance | Average<br><br>rate | Average<br><br>balance | Average<br><br>rate | |||
| $m | % | $m | % | |||
| HSBC UK Bank plc | 12,498 | — | 13,243 | |||
| – demand and other – non-interest bearing | 13 | — | 31 | — | ||
| – demand – interest bearing | 30 | 4.5 | 11 | 2.7 | ||
| – time | 12,455 | 4.8 | 13,201 | 5.5 | ||
| – other | — | — | — | — | ||
| HSBC Bank plc | 40,789 | — | 33,104 | |||
| – demand and other – non-interest bearing | 8,031 | — | 6,159 | — | ||
| – demand – interest bearing | 23,186 | 3.4 | 18,384 | 4.9 | ||
| – time | 8,145 | 3.5 | 8,197 | 3.9 | ||
| – other | 1,427 | — | 364 | — | ||
| The Hongkong and Shanghai Banking Corporation Limited | 22,932 | — | 21,785 | |||
| – demand and other – non-interest bearing | 3,480 | — | 3,412 | — | ||
| – demand – interest bearing | 15,211 | 2.1 | 13,326 | 2.3 | ||
| – time | 4,236 | 3.8 | 5,035 | 5.0 | ||
| – other | 5 | — | 12 | — | ||
| HSBC Bank Middle East Limited | 3,333 | — | 2,566 | |||
| – demand and other – non-interest bearing | 113 | — | 101 | — | ||
| – demand – interest bearing | 744 | 0.9 | 721 | 0.6 | ||
| – time | 2,401 | 5.2 | 1,665 | 5.9 | ||
| – other | 75 | — | 79 | — | ||
| HSBC North America Holdings Inc. | 7,837 | — | 5,449 | |||
| – demand and other – non-interest bearing | 706 | — | 942 | — | ||
| – demand – interest bearing | 6,471 | 3.7 | 4,271 | 4.8 | ||
| – time | 660 | 4.1 | 236 | 5.5 | ||
| – other | — | — | — | — | ||
| Grupo Financiero HSBC, S.A. de C.V | 575 | — | 662 | |||
| – demand and other – non-interest bearing | 13 | — | 14 | — | ||
| – demand – interest bearing | 45 | 8.4 | 34 | 11.8 | ||
| – time | 517 | 9.0 | 614 | 10.7 | ||
| – other | — | — | — | — | ||
| Other trading entities | 489 | — | 271 | |||
| – demand and other – non-interest bearing | 16 | — | 16 | — | ||
| – demand – interest bearing | 2 | 1.5 | 13 | 7.7 | ||
| – time | 471 | 4.1 | 242 | 10.7 | ||
| – other | — | — | — | — | ||
| Total | 88,453 | 3.0 | 77,080 | 3.8 | ||
| – demand and other – non-interest bearing | 12,372 | — | 10,675 | — | ||
| – demand – interest bearing | 45,689 | 3.0 | 36,760 | 3.9 | ||
| – time | 28,885 | 4.4 | 29,190 | 5.1 | ||
| – other | 1,507 | — | 455 | — | ||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 86 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary | ||||||
| Customer accounts | ||||||
| --- | --- | --- | --- | --- | ||
| 2025 | 2024 | |||||
| Average<br><br>balance | Average<br><br>rate | Average<br><br>balance | Average<br><br>rate | |||
| $m | % | $m | % | |||
| HSBC UK Bank plc | 356,138 | — | 336,151 | |||
| – demand and other – non-interest bearing | 56,526 | — | 58,672 | — | ||
| – demand – interest bearing | 255,665 | 1.6 | 224,061 | 1.9 | ||
| – savings | 30,936 | 3.4 | 39,915 | 3.0 | ||
| – time | 13,011 | 3.4 | 13,473 | 4.3 | ||
| – other | — | 0.5 | 30 | 3.3 | ||
| HSBC Bank plc | 311,416 | — | 297,942 | |||
| – demand and other – non-interest bearing | 43,164 | — | 49,569 | — | ||
| – demand – interest bearing | 174,895 | 3.3 | 164,360 | 4.2 | ||
| – savings | 58,187 | 2.7 | 49,037 | 3.3 | ||
| – time | 35,061 | 4.0 | 34,976 | 5.1 | ||
| – other | 109 | 3.1 | — | — | ||
| The Hongkong and Shanghai Banking Corporation Limited | 866,221 | — | 805,694 | |||
| – demand and other – non-interest bearing | 73,600 | — | 68,539 | — | ||
| – demand – interest bearing | 465,021 | 0.7 | 416,431 | 1.0 | ||
| – savings | 318,953 | 3.3 | 311,870 | 4.1 | ||
| – time | 8,643 | 3.6 | 8,704 | 4.9 | ||
| – other | 4 | 3.3 | 150 | — | ||
| HSBC Bank Middle East Limited | 35,832 | — | 33,470 | |||
| – demand and other – non-interest bearing | 17,184 | — | 18,761 | — | ||
| – demand – interest bearing | 10,102 | 2.0 | 6,372 | 2.4 | ||
| – savings | 7,451 | 3.7 | 7,186 | 4.2 | ||
| – time | 1,095 | 4.6 | 1,151 | 5.6 | ||
| – other | — | — | — | — | ||
| HSBC North America Holdings Inc. | 97,508 | — | 95,893 | |||
| – demand and other – non-interest bearing | 17,066 | — | 17,409 | — | ||
| – demand – interest bearing | 37,156 | 3.2 | 34,270 | 3.7 | ||
| – savings | 43,286 | 3.3 | 44,214 | 4.0 | ||
| – time | — | — | — | — | ||
| – other | — | — | — | — | ||
| Grupo Financiero HSBC, S.A. de C.V. | 28,009 | 4.1 | 29,311 | 5.3 | ||
| – demand and other – non-interest bearing | 6,330 | — | 6,738 | — | ||
| – demand – interest bearing | 13,432 | 4.2 | 13,881 | 5.6 | ||
| – savings | — | — | — | — | ||
| – time | 8,247 | 6.9 | 8,692 | 8.9 | ||
| – other | — | — | — | — | ||
| Other trading entities | 10,442 | 8.0 | 11,504 | 12.8 | ||
| – demand and other – non-interest bearing | 4,664 | — | 4,438 | — | ||
| – demand – interest bearing | 1,374 | 1.2 | 2,252 | 8.0 | ||
| – savings | 4,183 | 19.2 | 4,060 | 30.9 | ||
| – time | 221 | 7.1 | 754 | 5.6 | ||
| – other | — | — | — | — | ||
| Total | 1,705,566 | 2.0 | 1,609,965 | 2.6 | ||
| – demand and other – non-interest bearing | 218,534 | — | 224,126 | — | ||
| – demand – interest bearing | 957,645 | 1.6 | 861,627 | 2.1 | ||
| – savings | 462,996 | 3.4 | 456,282 | 4.3 | ||
| – time | 66,278 | 4.2 | 67,750 | 5.4 | ||
| – other | 113 | 3.7 | 180 | 2.2 | ||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 87 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Financial summary |
Net charge-offs to average loans
The following table provides the net charge-offs to average loans for
loans and advances to banks and customers.
| Net charge-offs to average loans | ||
|---|---|---|
| 2025 | 2024 | |
| % | % | |
| Loans and advances to banks | — | — |
| Loans and advances to customers | 0.33 | 0.44 |
Allowances for credit losses to total loans are presented in Summary of
credit risk (excluding debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at page 145.
Estimate of uninsured deposits and
uninsured time deposits
HSBC provides deposit services to customers across the many
countries in which we operate and are therefore subject to differing
national and state deposit insurance regimes. Uninsured deposits are
presented on an estimated basis using the same methodologies and
assumptions inherent in our liquidity reporting requirements to our
primary regulator, the Prudential Regulation Authority.
The insured status of a deposit is determined on the basis of individual
insurance limits enacted within local regulations.
At 31 December 2025, the amount of uninsured deposits was $1.4tn
(31 December 2024: $1.3tn).
Uninsured time deposits are uninsured deposits which are subject to
contractual maturity requirements prior to withdrawal. Amounts are
presented on a residual contractual maturity basis and exclude
overnight deposits where contractual requirements are imminently
satisfied.
| Maturity analysis of uninsured time deposits | ||||||
|---|---|---|---|---|---|---|
| At 31 Dec 2025 | ||||||
| 3 months or<br><br>less | After 3 months<br><br>but within 6<br><br>months | After 6 months<br><br>but within 12<br><br>months | After<br><br>12 months | Total | ||
| $m | $m | $m | $m | $m | ||
| Uninsured time deposits | 294,755 | 15,139 | 8,416 | 6,340 | 324,650 | |
| At 31 Dec 2024 | ||||||
| --- | --- | --- | --- | --- | --- | |
| Uninsured time deposits | 262,268 | 20,540 | 9,433 | 4,783 | 297,024 | |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 88 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Business segments and legal entities
Basis of preparation
Business segments
Our business segments – Hong Kong, UK, Corporate and Institutional
Banking, and International Wealth and Premier Banking – along with
Corporate Centre, are our reportable segments under IFRS 8 ‘Operating
Segments’. Reconciliations of the total constant currency business
segment results to the Group’s reported results are presented on
page 330.
The Group Operating Committee is considered the Chief Operating
Decision Maker (‘CODM’) for the purposes of identifying the Group’s
reportable segments. Business segment results are assessed by the
CODM on the basis of constant currency performance. We separately
disclose ‘notable items’, as described on page 65.
Our operations are closely integrated and, accordingly, the presentation
of data includes internal allocations of certain items of income and
expense. These allocations include the costs of certain support services
and global infrastructures to the extent that they can be meaningfully
attributed to business segments. While such allocations have been
made on a systematic and consistent basis, they involve a certain
degree of subjectivity. Costs that are not allocated to business
segments are included in Corporate Centre.
Where relevant, income and expense amounts presented include the
results of inter-segment funding along with inter-company and inter-
business line transactions. All such transactions are undertaken on
arm’s length terms. The intra-Group elimination items for business
segments are presented in Corporate Centre.
Effective 1 January 2026, we have transitioned certain clients, primarily
from Hong Kong and the UK to the Corporate and Institutional Banking
segment to better serve their specific needs. Such transition did not
involve a change in our reportable segments.
Legal entities
The results of main legal entities are presented on a reported and
constant currency basis, including HSBC UK Bank plc, HSBC Bank plc,
The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank
Middle East Limited, HSBC North America Holdings Inc., and Grupo
Financiero HSBC, S.A. de C.V.
HSBC Holdings incurs the liability of the UK bank levy, with the cost
being recharged to its UK operating subsidiaries. The current year
expense will be reflected in the fourth quarter as it is assessed on our
balance sheet position as at 31 December.
The results of legal entities are presented on a reported basis on
page 95 and a constant currency basis on page 97.
Supplementary analysis of constant currency results and notable items by business
segment
| Constant currency results | ||||||
|---|---|---|---|---|---|---|
| 2025 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Revenue | 15,878 | 12,938 | 27,637 | 14,520 | (2,699) | 68,274 |
| ECL | (1,476) | (696) | (696) | (892) | (90) | (3,850) |
| Operating expenses | (4,826) | (5,537) | (15,556) | (9,285) | (1,224) | (36,428) |
| Share of profit in associates and joint ventures | — | — | 1 | 24 | 1,886 | 1,911 |
| Profit/(loss) before tax | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
| Loans and advances to customers (net) | 229,491 | 303,698 | 305,022 | 150,047 | 141 | 988,399 |
| Customer accounts | 543,381 | 364,323 | 597,719 | 281,058 | 347 | 1,786,828 |
| Notable items | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Notable items | ||||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs1 | — | — | (9) | (73) | (1,560) | (1,642) |
| Dilution loss of interest in BoCom associate2 | — | — | — | — | (1,104) | (1,104) |
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | — | 1 | (290) | (83) | (130) | (502) |
| Restructuring and other related costs3 | (16) | (70) | (348) | (161) | (435) | (1,030) |
| Legal provisions4 | — | — | (322) | — | (1,110) | (1,432) |
| Impairment loss of interest in BoCom associate2 | — | — | — | — | (1,000) | (1,000) |
1Amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of
its sale to a consortium comprising Rothesay Life plc and CCF.
2 Amounts include a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn
impairment loss following an impairment test on the carrying value of the Group’s investment in BoCom in ‘Impairment loss of interest in BoCom associate’. See
Note 18 on pages 345 to 348.
3Amounts include a $1.0bn organisational simplification provision recognised in 2025.
4 Amounts include a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff
Investment Securities LLC fraud and a $0.3bn provision in connection with certain historical trading activities in HSBC Bank plc.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 89 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities | ||||||
| Reconciliation of reported results to constant currency results – business segments (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||
| – Reported | 15,034 | 11,954 | 26,819 | 13,976 | (1,929) | 65,854 |
| – Currency translation | 13 | 388 | (47) | (159) | (40) | 155 |
| – Constant currency | 15,047 | 12,342 | 26,772 | 13,817 | (1,969) | 66,009 |
| ECL | ||||||
| – Reported | (1,076) | (402) | (869) | (1,038) | (29) | (3,414) |
| – Currency translation | (1) | (13) | (9) | 45 | — | 22 |
| – Constant currency | (1,077) | (415) | (878) | (993) | (29) | (3,392) |
| Operating expenses | ||||||
| – Reported | (4,837) | (4,947) | (14,544) | (9,013) | 298 | (33,043) |
| – Currency translation | (4) | (157) | (68) | 113 | 13 | (103) |
| – Constant currency | (4,841) | (5,104) | (14,612) | (8,900) | 311 | (33,146) |
| Share of profit/(loss) in associates and joint ventures | ||||||
| – Reported | — | — | 1 | 47 | 2,864 | 2,912 |
| – Currency translation | — | — | — | (2) | 3 | 1 |
| – Constant currency | — | — | 1 | 45 | 2,867 | 2,913 |
| Profit/(loss) before tax | ||||||
| – Reported | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
| – Currency translation | 8 | 218 | (124) | (3) | (24) | 75 |
| – Constant currency | 9,129 | 6,823 | 11,283 | 3,969 | 1,180 | 32,384 |
| Loans and advances to customers (net) | ||||||
| – Reported | 235,208 | 267,293 | 284,701 | 136,325 | 7,131 | 930,658 |
| – Currency translation | (155) | 18,485 | 13,176 | 7,702 | 912 | 40,120 |
| – Constant currency | 235,053 | 285,778 | 297,877 | 144,027 | 8,043 | 970,778 |
| Customer accounts | ||||||
| – Reported | 507,389 | 330,012 | 557,796 | 259,443 | 315 | 1,654,955 |
| – Currency translation | (832) | 22,821 | 30,130 | 12,145 | 21 | 64,285 |
| – Constant currency | 506,557 | 352,833 | 587,926 | 271,588 | 336 | 1,719,240 |
| Notable items (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Notable items | ||||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs1 | — | — | (14) | 28 | (1,357) | (1,343) |
| Early redemption of legacy securities | — | — | — | — | (237) | (237) |
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | — | 6 | (10) | (3) | (192) | (199) |
| Restructuring and other related costs2 | — | 7 | (2) | (14) | (25) | (34) |
1Amounts include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of
our business in Argentina, partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign exchange
hedging of the sale proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.
2Amounts include organisational simplification provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 90 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities | ||||||
| Reconciliation of reported results to constant currency results – business segments (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||
| – Reported | 14,476 | 12,690 | 25,762 | 13,329 | (199) | 66,058 |
| – Currency translation | 56 | 749 | (1,039) | (944) | 160 | (1,018) |
| – Constant currency | 14,532 | 13,439 | 24,723 | 12,385 | (39) | 65,040 |
| ECL | ||||||
| – Reported | (1,488) | (516) | (601) | (841) | (1) | (3,447) |
| – Currency translation | (6) | (29) | 77 | 155 | — | 197 |
| – Constant currency | (1,494) | (545) | (524) | (686) | (1) | (3,250) |
| Operating expenses | ||||||
| – Reported | (4,499) | (4,551) | (14,005) | (9,072) | 57 | (32,070) |
| – Currency translation | (15) | (278) | 250 | 523 | (101) | 379 |
| – Constant currency | (4,514) | (4,829) | (13,755) | (8,549) | (44) | (31,691) |
| Share of profit/(loss) in associates and joint ventures | ||||||
| – Reported | — | — | (1) | 65 | (257) | (193) |
| – Currency translation | — | — | — | (3) | (101) | (104) |
| – Constant currency | — | — | (1) | 62 | (358) | (297) |
| Profit/(loss) before tax | ||||||
| – Reported | 8,489 | 7,623 | 11,155 | 3,481 | (400) | 30,348 |
| – Currency translation | 35 | 442 | (712) | (269) | (42) | (546) |
| – Constant currency | 8,524 | 8,065 | 10,443 | 3,212 | (442) | 29,802 |
| Loans and advances to customers (net) | ||||||
| – Reported | 239,218 | 264,544 | 288,351 | 146,155 | 267 | 938,535 |
| – Currency translation | 955 | 13,681 | 1,876 | 650 | 9 | 17,171 |
| – Constant currency | 240,173 | 278,225 | 290,227 | 146,805 | 276 | 955,706 |
| Customer accounts | ||||||
| – Reported | 485,039 | 330,480 | 539,139 | 256,393 | 596 | 1,611,647 |
| – Currency translation | 1,834 | 17,090 | 9,136 | 1,271 | 22 | 29,353 |
| – Constant currency | 486,873 | 347,570 | 548,275 | 257,664 | 618 | 1,641,000 |
| Notable items (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2023 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Notable items | ||||||
| Revenue | ||||||
| Disposals, wind-downs, acquisitions and related costs1,2,3 | — | 1,591 | — | 4 | (297) | 1,298 |
| Fair value movements on financial instruments4 | — | — | — | — | 14 | 14 |
| Disposal losses on Markets Treasury repositioning | (373) | (142) | (371) | (91) | — | (977) |
| Operating expenses | ||||||
| Disposals, wind-downs, acquisitions and related costs | — | (45) | (7) | (53) | (216) | (321) |
| Restructuring and other related costs5 | — | 17 | 45 | 11 | 63 | 136 |
| Impairment loss of interest in BoCom associate6 | — | — | — | — | (3,000) | (3,000) |
1Amounts include impact of the sale of our retail banking operations in France.
2Amounts include the gain of $1.6bn recognised in respect of the acquisition of SVB UK.
3Amounts include fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.
4Amounts relate to fair value movements on non-qualifying hedges in HSBC Holdings.
5Amounts relate to reversals of restructuring provisions recognised during 2022.
6Amounts relate to an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 91 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
Fee and other income supplementary analysis
The following table presents an analysis of the components of fee and other income by business segment.
| 2025 | ||||||
|---|---|---|---|---|---|---|
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $bn | $bn | $bn | $bn | $bn | $bn | |
| Net fee income | 2,776 | 1,804 | 4,489 | 4,263 | 11 | 13,343 |
| Net income from financial instruments held for trading or managed<br><br>on a fair value basis | 622 | (25) | 7,660 | 678 | 10,747 | 19,682 |
| Insurance revenue1 | 89 | — | — | 1,756 | (42) | 1,803 |
| Gain less impairment relating to sale of business operations | — | — | (15) | (31) | (1) | (47) |
| Other operating (expense)/income | 309 | 63 | 971 | 458 | (3,102) | (1,301) |
| Total | 3,796 | 1,842 | 13,105 | 7,124 | 7,613 | 33,480 |
| Banking book funding costs used to generate ‘net income from<br><br>financial instruments held for trading or managed on a fair value<br><br>basis’ | — | — | — | — | (9,686) | (9,686) |
| Third-party net interest income from insurance | — | — | — | 396 | — | 396 |
| Notable items | — | — | 9 | 73 | 2,664 | 2,746 |
| Fee and other income | 3,796 | 1,842 | 13,114 | 7,593 | 591 | 26,936 |
| Supplementary management view of fee and other income -<br><br>on a constant currency basis | ||||||
| Wholesale Transaction Banking | 730 | 891 | 9,239 | — | — | 10,860 |
| –Global Foreign Exchange | 183 | 166 | 5,345 | — | — | 5,694 |
| –Global Payments Solutions | 343 | 534 | 1,417 | — | — | 2,294 |
| –Global Trade Solutions | 204 | 191 | 1,067 | — | — | 1,462 |
| –Securities Services | — | — | 1,410 | — | — | 1,410 |
| Wealth | 2,206 | 339 | — | 6,845 | — | 9,390 |
| –Investment Distribution | 2,124 | 335 | — | 1,165 | — | 3,624 |
| –Insurance1 | 82 | 4 | — | 2,513 | — | 2,599 |
| –Asset Management | — | — | — | 1,500 | — | 1,500 |
| –Private Bank | — | — | — | 1,667 | — | 1,667 |
| Investment Banking, Debt and Equity Markets | — | — | 3,245 | — | — | 3,245 |
| Retail Banking | 326 | 255 | — | 665 | — | 1,246 |
| Wholesale Credit and Lending | 78 | 238 | 567 | — | — | 883 |
| Other | 456 | 119 | 63 | 83 | 591 | 1,312 |
| 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Net fee income | 2,305 | 1,821 | 4,345 | 3,857 | (27) | 12,301 |
| Net income from financial instruments held for trading or managed<br><br>on a fair value basis | 390 | 13 | 7,304 | 517 | 12,892 | 21,116 |
| Insurance revenue1 | 27 | — | — | 1,209 | (3) | 1,233 |
| Gain less impairment relating to sale of business operations | — | — | (26) | (3) | (1,723) | (1,752) |
| Other operating (expense)/income | 325 | 91 | 422 | 85 | (700) | 223 |
| Total | 3,047 | 1,925 | 12,045 | 5,665 | 10,439 | 33,121 |
| Banking book funding costs used to generate ‘net income from<br><br>financial instruments held for trading or managed on a fair value<br><br>basis’ | — | — | — | — | (11,434) | (11,434) |
| Third-party net interest income from insurance | — | — | — | 429 | — | 429 |
| Notable items | — | — | 14 | (28) | 1,357 | 1,343 |
| Currency translation | 3 | 62 | 208 | 85 | (11) | 347 |
| Fee and other income | 3,050 | 1,987 | 12,267 | 6,151 | 351 | 23,806 |
| Supplementary management view of fee and other income - on a<br><br>constant currency basis | ||||||
| Wholesale Transaction Banking | 709 | 912 | 8,847 | — | — | 10,468 |
| –Global Foreign Exchange | 180 | 165 | 5,096 | — | — | 5,441 |
| –Global Payments Solutions | 326 | 552 | 1,383 | — | — | 2,261 |
| –Global Trade Solutions | 203 | 195 | 1,059 | — | — | 1,457 |
| –Securities Services | — | — | 1,309 | — | — | 1,309 |
| Wealth | 1,577 | 391 | — | 5,618 | — | 7,586 |
| –Investment Distribution | 1,535 | 384 | — | 938 | — | 2,857 |
| –Insurance1 | 42 | 7 | — | 1,864 | — | 1,913 |
| –Asset Management | — | — | — | 1,373 | — | 1,373 |
| –Private Bank | — | — | — | 1,443 | — | 1,443 |
| Investment Banking, Debt and Equity Markets | — | — | 3,198 | — | — | 3,198 |
| Retail Banking | 312 | 273 | — | 765 | — | 1,350 |
| Wholesale Credit and Lending | 83 | 216 | 626 | — | — | 925 |
| Other | 369 | 195 | (404) | (232) | 351 | 279 |
1Includes Group ‘net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’,
‘insurance finance expense’ and ‘insurance service result’.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 92 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
Strategic transactions supplementary analysis
The following table presents the selected impacts of strategic transactions on the Group and our business segments for transactions that are
classified as material notable items. See page 65 for further information on material notable items and the impact of strategic transactions.
| Constant currency results | ||||||||
|---|---|---|---|---|---|---|---|---|
| of which | ||||||||
| 2025 | 2024 | Variance<br><br>2025 vs. 2024 | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | (1,642) | 39 | (1,681) | — | — | (638) | (590) | (453) |
| – distorting impact of operating<br><br>results | — | 1,214 | (1,214) | — | — | (629) | (491) | (94) |
| – notable items | (1,642) | (1,175) | (467) | — | — | (9) | (99) | (359) |
| ECL | — | (72) | 72 | — | — | 36 | 36 | — |
| Operating expenses | (502) | (919) | 417 | — | (7) | 96 | 253 | 75 |
| – distorting impact of operating<br><br>results | — | (729) | 729 | — | — | 381 | 336 | 12 |
| – notable items | (502) | (190) | (312) | — | (7) | (285) | (83) | 63 |
| Share of profit in associates and<br><br>joint ventures | — | — | — | — | — | — | — | — |
| Profit before tax | (2,144) | (952) | (1,192) | — | (7) | (506) | (301) | (378) |
| – distorting impact of operating<br><br>results | — | 413 | (413) | — | — | (212) | (119) | (82) |
| – notable items | (2,144) | (1,365) | (779) | — | (7) | (294) | (182) | (296) |
| Profit before tax1 | ||||||||
| – business in Argentina | (107) | (5,990) | 5,883 | — | — | (160) | (14) | 6,057 |
| – banking business in Canada | (3) | 4,980 | (4,983) | — | — | (143) | (67) | (4,773) |
| – wind-down of M&A and ECM<br><br>in the UK, Europe and US | (114) | (98) | (16) | — | — | (16) | — | — |
| – France life insurance business | (231) | (6) | (225) | — | — | — | (214) | (11) |
| – retained French portfolio of<br><br>home and certain other loans | (1,468) | 91 | (1,559) | — | — | — | — | (1,559) |
| – Germany private banking<br><br>business | 142 | 13 | 129 | — | — | — | 134 | (5) |
| – other strategic transactions | (363) | 58 | (421) | — | (7) | (187) | (140) | (87) |
1Represents the impact on profit before tax due to strategic transactions, inclusive of the notable items impacts and the distorting impact of operating results.
This does not represent the profit before tax of each disposed business. In the case of wind-downs, there may be timing differences between the recognition of
operating cost impacts and operating revenue impacts. These would arise in the event there is a timing lag between the impact of cost actions and the resultant
impact on operating revenue.
Reconciliation of reported and constant currency risk-weighted assets
| At 31 Dec 2025 | ||||||
|---|---|---|---|---|---|---|
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total<br><br>RWAs | |
| $bn | $bn | $bn | $bn | $bn | $bn | |
| Risk-weighted assets | ||||||
| Reported | 139.6 | 152.9 | 408.7 | 89.9 | 97.5 | 888.6 |
| Constant currency | 139.6 | 152.9 | 408.7 | 89.9 | 97.5 | 888.6 |
| At 31 Dec 2024 | ||||||
| Risk-weighted assets | ||||||
| Reported | 143.7 | 133.5 | 388.0 | 85.7 | 87.4 | 838.3 |
| Currency translation | 0.1 | 9.3 | 12.7 | 4.0 | 1.1 | 27.2 |
| Constant currency | 143.8 | 142.8 | 400.7 | 89.7 | 88.5 | 865.5 |
| At 31 Dec 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Risk-weighted assets | ||||||
| Reported | 145.2 | 124.9 | 398.2 | 97.6 | 88.2 | 854.1 |
| Currency translation | 0.7 | 6.5 | (3.9) | (1.9) | (0.5) | 0.9 |
| Constant currency | 145.9 | 131.4 | 394.3 | 95.7 | 87.7 | 855.0 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 93 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
Supplementary tables for Wealth
Insurance business performance
The following table provides an analysis of the results of our insurance business for the year. It comprises income earned by IWPB insurance
manufacturing operations, income earned by wealth distribution channels within our IWPB, Hong Kong and UK business segments, and
consolidation adjustments.
| Total insurance profit and loss (constant currency) | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Net fee income | 287 | 223 | 194 |
| Insurance service result | 1,825 | 1,317 | 1,078 |
| – release of contractual service margin | 1,593 | 1,339 | 1,125 |
| – risk adjustment release | 65 | 66 | 36 |
| – experience variance and other | 254 | 35 | 26 |
| – loss from onerous contracts | (87) | (123) | (109) |
| Investment income | 11,387 | 6,115 | 8,027 |
| – net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair<br><br>value through profit or loss | 11,175 | 5,865 | 7,743 |
| – other investment income | 212 | 250 | 284 |
| Insurance finance expense | (11,197) | (5,949) | (7,781) |
| Other income | 297 | 207 | (54) |
| Revenue1 | 2,599 | 1,913 | 1,464 |
| ECL | (1) | — | 4 |
| Net operating income | 2,598 | 1,913 | 1,468 |
| Operating expenses | (789) | (724) | (690) |
| Operating profit | 1,809 | 1,189 | 778 |
| Share of profit in associates and JVs | 15 | 32 | 49 |
| Profit before tax | 1,824 | 1,221 | 827 |
1‘Revenue’ of $2.6bn (2024: $1.9bn; 2023: $1.5bn) includes $2.5bn earned within IWPB (2024: $1.8bn; 2023: $1.4bn) and $0.1bn earned within Hong Kong (2024:
$0.1bn; 2023: $0.1bn). This comprises revenue from insurance manufacturing operations of $2.3bn (2024: $1.7bn; 2023: $1.3bn), and revenue from wealth
distribution channels and consolidation impacts of $0.3bn (2024: $0.2bn; 2023: $0.2bn).
Total insurance revenue of $2.6bn was $0.7bn higher than in 2024
reflecting the following:
–Insurance service result of $1.8bn increased by $0.5bn compared
with 2024 reflecting higher CSM release as a result of strong new
business growth, and favourable experience variances from positive
investment management fee, maintenance expense and claims
experience.
–Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit or
loss of $11.2bn increased by $5.3bn compared with 2024 reflecting
strong equity markets and the favourable impact of downward
movements in interest rates on our fixed income investments in
Hong Kong, partly offset by rising rates in mainland China.
–This was offset by Insurance finance expense of $11.2bn, which
moves inversely with investment income. The margin between
investment income and insurance finance expense benefited from
increases in interest rates in mainland China.
–Other income increased by $0.1bn compared with 2024 from gains
on reinsurance contracts in Hong Kong.
| Insurance key performance metrics | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Annualised new business premiums of insurance manufacturing operations | 6,505 | 4,912 | 3,797 |
| Insurance manufacturing new business contractual service margin | 3,405 | 2,515 | 1,686 |
| Consolidated Group new business contractual service margin | 3,799 | 2,729 | 1,812 |
| Net dividends of insurance manufacturing operations | 962 | 1,522 | 813 |
| Insurance equity plus CSM net of tax ø | 18,800 | 17,025 | 16,583 |
Annualised new business premiums (‘ANP’) is used to assess new
insurance premiums generated by the business. It is calculated as
100% of annualised first year regular premiums and 10% of single
premiums, before reinsurance ceded. ANP increased by 32%
compared with 2024, primarily from strong new business sales in Hong
Kong.
Consolidated Group new business contractual service margin
represents insurance manufacturing new business CSM and the
consolidation impact of inclusion of our bank distribution channel.
Consolidated Group new business contractual service margin increased
by $1.1bn compared with 2024, reflecting strong sales in Hong Kong
and increased sales of higher margin products, contributing to the
overall Group CSM at 31 December 2025 of $15.7bn (2024: $12.8bn;
2023: $11.4bn).
Net dividends of insurance manufacturing operations represents
dividends paid to immediate parent companies net of CET1 qualifying
injections to fund business growth. Net dividends of insurance
manufacturing operations in 2025 included dividends paid to immediate
parent companies of $1.2bn (2024: $1.6bn; 2023: $1.0bn) net of CET1
qualifying injections to fund business growth of $0.2bn (2024: $0.1bn;
2023: $0.2bn). Net dividends decreased by $0.6bn due to the non-
recurrence of a 2024 release of surplus regulatory capital in Hong Kong.
Insurance equity plus CSM net of tax is a non-GAAP alternative
performance measure that provides information about our insurance
manufacturing operations’ net asset value plus the future earnings from
in-force business. At 31 December 2025, insurance equity plus CSM
net of tax was calculated as follows:
| Insurance equity plus CSM net of tax | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Insurance manufacturing operations<br><br>equity | 6,715 | 7,015 | 7,731 | |||
| Insurance manufacturing CSM | 14,598 | 12,063 | 10,786 | |||
| CSM deferred tax recognised | (2,513) | (2,053) | (1,934) | |||
| Insurance equity plus CSM net of tax ø | 18,800 | 17,025 | 16,583 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 94 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
Wealth balances
The following table shows our wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets
either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our
customers. From 1 January 2026, we have updated the definition of our wealth balances to exclude Asset Management third-party distribution.
This will enhance comparability with industry peers.
| Reported wealth balances1 | ||
|---|---|---|
| 2025 | 2024 | |
| $bn | $bn | |
| Private Bank invested assets2 | 465 | 395 |
| Retail invested assets | 490 | 409 |
| Asset Management third-party distribution3 | 580 | 489 |
| Reported invested assets1 | 1,535 | 1,293 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | 773 | 645 |
| Wealth deposits (Premier and Private Bank)4 | 608 | 555 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | 407 | 372 |
| Total reported wealth balances | 2,143 | 1,848 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | 1,180 | 1,017 |
| Total reported wealth balances excluding Asset Management third-party distribution | 1,563 | 1,359 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | 1,055 | 907 |
1Invested assets are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as
investment manager.
2Private Bank client balances, which comprise invested assets and customer deposits, were $566bn (31 December 2024: $484bn).
3Total assets under management manufactured by Asset Management, which includes third-party distribution and other components that are reported in the
Private Bank and Retail invested assets in the table above, were $866bn (31 December 2024: $731bn). This includes balances related to The Hongkong and
Shanghai Banking Corporation Limited, of which $260bn (31 December 2024: $223bn).
4Premier and Private Bank deposits, which include Prestige deposits in Hang Seng Bank, form part of the total IWPB, Hong Kong and UK businesses’ customer
accounts balance on page 88.
Invested assets
‘Net new invested assets’ represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Private
Bank invested assets. It excludes all customer deposits.
| Invested assets | 2025 | 2024 |
|---|---|---|
| $bn | $bn | |
| Opening balance | 1,293 | 1,191 |
| Net new invested assets | 80 | 64 |
| – of which: The Hongkong and Shanghai Banking Corporation Limited | 39 | 47 |
| Net market movements | 125 | 97 |
| Foreign exchange and others | 37 | (59) |
| Closing balance | 1,535 | 1,293 |
Net new money
Net new money ('NNM') represents our net customer inflows from
Private Bank and Retail invested assets and wealth deposits. It
excludes foreign exchange movements and market and other
movements not relating to client inflows/outflows which are reported
within ‘foreign exchange and others’ and ‘net market movements’,
respectively. This metric excludes net customer inflows from Asset
Management third-party distribution. From 1 January 2026
management will disclose NNM as the key wealth metric, offering
greater comparability to industry peers. From 1 January 2026, we no
longer intend to disclose invested assets as a key metric.
| Net new money | 2025 | 2024 |
|---|---|---|
| $bn | $bn | |
| Opening balance (total reported wealth balances excluding Asset Management third-party distribution) | 1,359 | 1,282 |
| Net new money3 | 86 | 80 |
| – of which: Net new invested assets excluding Asset Management third-party distribution | 46 | 51 |
| – of which: Change in deposits | 40 | 29 |
| Net market movements excluding Asset Management third-party distribution | 91 | 60 |
| Foreign exchange and others excluding Asset Management third-party distribution, including wealth deposits1 | 27 | (63) |
| Closing balance2 | 1,563 | 1,359 |
| Net new money – The Hongkong and Shanghai and Banking Corporation Limited | 72 | 71 |
| – of which: net new invested assets excluding Asset Management third-party distribution | 41 | 43 |
| – of which: change in deposits on a constant currency basis | 31 | 28 |
1Includes foreign exchange on wealth deposits.
2Closing balance includes invested assets of $1,535bn (2024: $1,293bn), excluding Asset Management third-party distribution invested assets of $580bn (2024:
$489bn) and includes wealth deposit balances of $608bn (2024: $555bn).
3 Clients’ assets are translated at the average quarterly rates of foreign exchange applicable to the respective quarters, with the effects of currency translation
reported separately.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 95 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
CIB: Securities Services and Issuer Services
Assets held in custody
Custody is the safekeeping and servicing of securities and other
financial assets on behalf of clients. Assets held in custody are not
reported on the Group’s balance sheet, except where it is deemed that
we are acting as principal rather than agent in our role as investment
manager. At 31 December 2025, we held $12.9tn of assets as
custodian, an increase of 21% compared with 31 December 2024. The
balance comprised $11.9tn of assets in Securities Services, which
were recorded at market value, and $1.0tn of assets in Issuer Services,
recorded at book value.
Assets under administration
Our assets under administration business includes the provision of
bond and loan administration services, transfer agency services and the
valuation of portfolios of securities and other financial assets on behalf
of clients and complements the custody business. At 31 December
2025, the value of assets held under administration by the Group
amounted to $6.0tn, which was 16% higher than at 31 December
- The balance comprised $3.6tn of assets in Securities Services,
which were recorded at market value, and $2.4tn of assets in Issuer
Services, recorded at book value.
Analysis of reported results by legal entities
| HSBC reported profit/(loss) before tax and balance sheet data | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC,<br><br>S.A. de<br><br>C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Net interest income | 11,406 | 1,684 | 16,471 | 1,524 | 2,130 | — | 2,229 | 1,422 | (2,072) | 34,794 |
| Net fee income | 1,696 | 1,618 | 6,483 | 555 | 1,513 | — | 635 | 996 | (153) | 13,343 |
| Net income from financial<br><br>instruments held for trading or<br><br>managed on a fair value basis | 568 | 6,490 | 10,910 | 339 | 548 | — | 440 | 112 | 275 | 19,682 |
| Net income from assets and<br><br>liabilities of insurance businesses,<br><br>including related derivatives,<br><br>measured at fair value through<br><br>profit and loss | — | 1,364 | 9,741 | — | — | — | 49 | 15 | 6 | 11,175 |
| Insurance finance income/(expense) | — | (1,462) | (9,695) | — | — | — | (43) | — | 3 | (11,197) |
| Insurance service result | — | 218 | 1,538 | — | — | — | 69 | — | — | 1,825 |
| Other income/(expense)1 | 132 | (874) | (194) | 192 | 539 | — | 94 | 150 | (1,387) | (1,348) |
| Net operating income before<br><br>change in expected credit losses<br><br>and other credit impairment<br><br>charges | 13,802 | 9,038 | 35,254 | 2,610 | 4,730 | — | 3,473 | 2,695 | (3,328) | 68,274 |
| Change in expected credit losses<br><br>and other credit impairment<br><br>charges | (710) | (203) | (1,635) | (186) | (201) | — | (786) | (25) | (104) | (3,850) |
| Net operating income | 13,092 | 8,835 | 33,619 | 2,424 | 4,529 | — | 2,687 | 2,670 | (3,432) | 64,424 |
| Total operating expenses excluding<br><br>impairment of goodwill and other<br><br>intangible assets | (5,663) | (8,818) | (15,132) | (1,332) | (3,326) | — | (2,045) | (1,544) | 1,837 | (36,023) |
| Impairment of goodwill and other<br><br>intangible assets | (21) | (323) | (49) | (2) | (5) | — | (3) | — | (2) | (405) |
| Operating profit/(loss) | 7,408 | (306) | 18,438 | 1,090 | 1,198 | — | 639 | 1,126 | (1,597) | 27,996 |
| Share of profit in associates and<br><br>joint ventures less impairment2 | 1 | 82 | 1,150 | — | — | — | 10 | 672 | (4) | 1,911 |
| Profit/(loss) before tax | 7,409 | (224) | 19,588 | 1,090 | 1,198 | — | 649 | 1,798 | (1,601) | 29,907 |
| % | % | % | % | % | % | % | % | % | % | |
| Share of HSBC’s profit before tax | 24.8 | (0.7) | 65.5 | 3.6 | 4.0 | — | 2.2 | 6.0 | (5.4) | 100.0 |
| Cost efficiency ratio | 41.2 | 101.1 | 43.1 | 51.1 | 70.4 | — | 59.0 | 57.3 | 55.1 | 53.4 |
| Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers<br><br>(net) | 310,116 | 106,409 | 467,842 | 22,618 | 52,178 | — | 25,252 | 3,971 | 13 | 988,399 |
| Total assets | 475,752 | 950,562 | 1,492,150 | 64,295 | 261,401 | — | 50,197 | 32,339 | (93,662) | 3,233,034 |
| Customer accounts | 376,903 | 321,451 | 911,725 | 37,010 | 99,458 | — | 29,493 | 10,781 | 7 | 1,786,828 |
| Risk-weighted assets3,4 | 157,963 | 146,010 | 411,824 | 27,180 | 73,961 | — | 32,509 | 57,014 | 2,106 | 888,647 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 96 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Business segments and legal entities | ||||||||||
| HSBC reported profit/(loss) before tax and balance sheet data (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Net interest income | 10,331 | 1,254 | 15,077 | 1,590 | 1,613 | 300 | 2,292 | 2,774 | (2,498) | 32,733 |
| Net fee income | 1,672 | 1,629 | 5,449 | 508 | 1,372 | 129 | 630 | 1,076 | (164) | 12,301 |
| Net income from financial<br><br>instruments held for trading or<br><br>managed on a fair value basis | 580 | 6,042 | 11,781 | 331 | 914 | 33 | 504 | 411 | 520 | 21,116 |
| Net income from assets and<br><br>liabilities of insurance businesses,<br><br>including related derivatives,<br><br>measured at fair value through<br><br>profit and loss | — | 1,100 | 4,608 | — | — | — | 22 | 183 | (12) | 5,901 |
| Insurance finance income/(expense) | — | (1,261) | (4,562) | — | — | — | (26) | (150) | 21 | (5,978) |
| Insurance service result | — | 217 | 1,042 | — | — | — | 76 | (7) | (18) | 1,310 |
| Other income/(expense) | 169 | 576 | 658 | 75 | 365 | — | 75 | (984) | (2,463) | (1,529) |
| Net operating income before<br><br>change in expected credit losses<br><br>and other credit impairment<br><br>charges | 12,752 | 9,557 | 34,053 | 2,504 | 4,264 | 462 | 3,573 | 3,303 | (4,614) | 65,854 |
| Change in expected credit losses<br><br>and other credit impairment<br><br>charges | (405) | (211) | (1,532) | (198) | (81) | (40) | (864) | (93) | 10 | (3,414) |
| Net operating income | 12,347 | 9,346 | 32,521 | 2,306 | 4,183 | 422 | 2,709 | 3,210 | (4,604) | 62,440 |
| Total operating expenses excluding<br><br>impairment of goodwill and other<br><br>intangible assets | (5,124) | (6,718) | (14,296) | (1,191) | (3,349) | (236) | (1,992) | (1,959) | 1,899 | (32,966) |
| Impairment of goodwill and other<br><br>intangible assets | (11) | (5) | (33) | (1) | (2) | — | (2) | (22) | (1) | (77) |
| Operating profit/(loss) | 7,212 | 2,623 | 18,192 | 1,114 | 832 | 186 | 715 | 1,229 | (2,706) | 29,397 |
| Share of profit in associates and<br><br>joint ventures less impairment | 1 | 22 | 2,278 | — | — | — | 15 | 600 | (4) | 2,912 |
| Profit/(loss) before tax | 7,213 | 2,645 | 20,470 | 1,114 | 832 | 186 | 730 | 1,829 | (2,710) | 32,309 |
| % | % | % | % | % | % | % | % | % | % | |
| Share of HSBC’s profit before tax | 22.2 | 8.2 | 63.4 | 3.4 | 2.6 | 0.6 | 2.3 | 5.7 | (8.4) | 100.0 |
| Cost efficiency ratio | 40.3 | 70.3 | 42.1 | 47.6 | 78.6 | 51.1 | 55.8 | 60.0 | 41.1 | 50.2 |
| Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers<br><br>(net) | 272,973 | 103,464 | 449,940 | 20,440 | 55,786 | — | 23,439 | 4,617 | (1) | 930,658 |
| Total assets | 426,165 | 914,506 | 1,400,456 | 57,215 | 253,251 | — | 46,007 | 26,623 | (107,175) | 3,017,048 |
| Customer accounts | 340,233 | 297,785 | 845,284 | 34,808 | 99,278 | — | 27,525 | 9,999 | 43 | 1,654,955 |
| Risk-weighted assets3,4 | 138,332 | 137,609 | 402,847 | 26,624 | 74,416 | — | 29,671 | 50,731 | (648) | 838,254 |
| 2023 | ||||||||||
| Net interest income | 9,684 | 2,674 | 16,705 | 1,551 | 1,712 | 1,275 | 2,148 | 3,765 | (3,718) | 35,796 |
| Net fee income | 1,597 | 1,527 | 4,859 | 475 | 1,237 | 559 | 581 | 1,225 | (215) | 11,845 |
| Net income from financial<br><br>instruments held for trading or<br><br>managed on a fair value basis | 516 | 4,220 | 9,507 | 397 | 729 | 110 | 437 | 1,054 | (309) | 16,661 |
| Net income/(expense) from assets<br><br>and liabilities of insurance<br><br>businesses, including related<br><br>derivatives, measured at fair value<br><br>through profit and loss | — | 1,438 | 6,258 | — | — | — | 39 | 323 | (171) | 7,887 |
| Insurance finance income/(expense) | — | (1,460) | (6,237) | — | — | — | (44) | (166) | 98 | (7,809) |
| Insurance service result | — | 154 | 838 | — | — | — | 87 | 9 | (10) | 1,078 |
| Other income/(expense) | 1,608 | 736 | (31) | 2 | 185 | 22 | 65 | (1,481) | (506) | 600 |
| Net operating income before<br><br>change in expected credit losses<br><br>and other credit impairment<br><br>charges | 13,405 | 9,289 | 31,899 | 2,425 | 3,863 | 1,966 | 3,313 | 4,729 | (4,831) | 66,058 |
| Change in expected credit losses<br><br>and other credit impairment<br><br>(charges)/recoveries | (523) | (212) | (1,641) | (90) | (94) | (46) | (696) | (279) | 134 | (3,447) |
| Net operating income | 12,882 | 9,077 | 30,258 | 2,335 | 3,769 | 1,920 | 2,617 | 4,450 | (4,697) | 62,611 |
| Total operating expenses excluding<br><br>impairment of goodwill and other<br><br>intangible assets | (4,602) | (6,483) | (13,379) | (1,095) | (3,473) | (1,049) | (1,823) | (2,631) | 2,180 | (32,355) |
| Impairment of goodwill and other<br><br>intangible assets | (10) | 97 | (16) | (1) | 222 | — | (3) | (4) | — | 285 |
| Operating profit/(loss) | 8,270 | 2,691 | 16,863 | 1,239 | 518 | 871 | 791 | 1,815 | (2,517) | 30,541 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 97 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Business segments and legal entities | ||||||||||
| HSBC reported profit/(loss) before tax and balance sheet data (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Share of profit in associates and<br><br>joint ventures less impairment2 | — | (52) | (696) | — | — | — | 14 | 544 | (3) | (193) |
| Profit/(loss) before tax | 8,270 | 2,639 | 16,167 | 1,239 | 518 | 871 | 805 | 2,359 | (2,520) | 30,348 |
| % | % | % | % | % | % | % | % | % | % | |
| Share of HSBC’s profit before tax | 27.2 | 8.7 | 53.3 | 4.1 | 1.7 | 2.9 | 2.6 | 7.8 | (8.3) | 100.0 |
| Cost efficiency ratio | 34.4 | 68.7 | 42.0 | 45.2 | 84.2 | 53.4 | 55.1 | 55.7 | 45.1 | 48.5 |
| Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers<br><br>(net) | 270,208 | 95,750 | 455,315 | 20,072 | 54,829 | — | 26,410 | 15,951 | — | 938,535 |
| Total assets | 423,029 | 896,682 | 1,333,911 | 50,612 | 252,339 | 90,731 | 47,309 | 59,051 | (114,987) | 3,038,677 |
| Customer accounts | 339,611 | 274,733 | 801,430 | 31,341 | 99,607 | — | 29,423 | 35,326 | 176 | 1,611,647 |
| Risk-weighted assets3,4 | 129,211 | 131,468 | 396,677 | 24,294 | 72,248 | 31,890 | 32,639 | 59,574 | 6,704 | 854,114 |
1 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans
following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the
dilution of our shareholding in BoCom.
2Includes impairment losses of $1.0bn (2025) and $3.0bn (2023) recognised in respect of the Group’s investment in BoCom. See Note 18 on pages 345 to 348.
3Risk-weighted assets are non-additive across the legal entities due to market risk diversification effects within the Group.
4Balances are on a third-party Group consolidated basis.
Summary information – legal entities and selected countries/territories
| Legal entity reported and constant currency results | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | ||||||||||
| HSBC<br><br>UK Bank<br><br>plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corpo-<br><br>ration<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities1 | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | 13,802 | 9,038 | 35,254 | 2,610 | 4,730 | — | 3,473 | 2,695 | (3,328) | 68,274 |
| ECL | (710) | (203) | (1,635) | (186) | (201) | — | (786) | (25) | (104) | (3,850) |
| Operating expenses | (5,684) | (9,141) | (15,181) | (1,334) | (3,331) | — | (2,048) | (1,544) | 1,835 | (36,428) |
| Share of profit in associates and joint<br><br>ventures less impairment | 1 | 82 | 1,150 | — | — | — | 10 | 672 | (4) | 1,911 |
| Profit/(loss) before tax | 7,409 | (224) | 19,588 | 1,090 | 1,198 | — | 649 | 1,798 | (1,601) | 29,907 |
| Loans and advances to customers (net) | 310,116 | 106,409 | 467,842 | 22,618 | 52,178 | — | 25,252 | 3,971 | 13 | 988,399 |
| Customer accounts | 376,903 | 321,451 | 911,725 | 37,010 | 99,458 | — | 29,493 | 10,781 | 7 | 1,786,828 |
1Includes the results of entities located in Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do not consolidate into
HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group’s reported profit before tax of $1.5bn.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 98 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Business segments and legal entities | ||||||||||
| Legal entity results: notable items | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corpo-<br><br>ration<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||||||
| Disposals, wind-downs, acquisitions<br><br>and related costs1 | — | (1,546) | — | 71 | — | — | — | — | (167) | (1,642) |
| Dilution loss of interest in BoCom2 | — | — | (1,138) | — | — | — | — | — | 34 | (1,104) |
| Operating expenses | ||||||||||
| Disposals, wind-downs, acquisitions<br><br>and related costs | (1) | (388) | (46) | (16) | (18) | — | — | (2) | (31) | (502) |
| Restructuring and other related costs3 | (161) | (350) | (300) | (27) | (66) | — | (65) | (31) | (30) | (1,030) |
| Legal provisions4 | — | (1,197) | — | — | — | — | — | — | (235) | (1,432) |
| Impairment loss of interest in BoCom<br><br>associate2 | — | — | (1,000) | — | — | — | — | — | — | (1,000) |
1Includes recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of its sale
to a consortium comprising Rothesay Life plc and CCF.
2 Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment
loss following an impairment test on the carrying value of the Group’s investment in BoCom in ‘Impairment loss of interest in BoCom associate’. See Note 18 on
pages 345 to 348.
3Amounts include organisational simplification provision recognised in 2025.
4 Includes a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff
Investment Securities LLC fraud in HSBC Bank plc and Holding companies and a $0.3bn provision in connection with certain historical trading activities in HSBC
Bank plc.
| Selected countries/territories results | |||||
|---|---|---|---|---|---|
| 2025 | |||||
| UK1 | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | |
| $m | $m | $m | $m | $m | |
| Revenue | 22,346 | 23,935 | 3,314 | 4,644 | 3,473 |
| ECL | (839) | (1,478) | (68) | (200) | (785) |
| Operating expenses | (16,064) | (9,429) | (3,236) | (3,332) | (2,048) |
| Share of profit/(loss) in associates and joint ventures less impairment | 81 | (2) | 1,077 | — | 10 |
| Profit before tax | 5,524 | 13,026 | 1,087 | 1,112 | 650 |
| Loans and advances to customers (net) | 357,246 | 273,396 | 45,585 | 52,178 | 25,252 |
| Customer accounts | 568,712 | 619,029 | 69,473 | 99,458 | 29,493 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately
incorporated group of service companies (‘ServCo Group’).
| Selected countries/territories results: notable items | |||||
|---|---|---|---|---|---|
| 2025 | |||||
| UK | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | |
| $m | $m | $m | $m | $m | |
| Revenue | |||||
| Disposals, wind-downs, acquisitions and related costs | (211) | — | — | — | — |
| Restructuring and other related costs | 188 | 18 | 12 | 6 | — |
| Dilution loss of interest in BoCom associate | — | — | (1,104) | — | — |
| Operating expenses | |||||
| Disposals, wind-downs, acquisitions and related costs | (41) | (16) | (5) | (18) | — |
| Restructuring and other related costs | (481) | (179) | (60) | (72) | (65) |
| Legal provisions1 | (566) | — | — | — | — |
| Impairment loss of interest in BoCom associate | — | — | (1,000) | — | — |
1 Includes $0.2bn in relation to internal reinsurance arrangements relating to the Bernard L. Madoff Investment Securities LLC fraud provision and a $0.3bn
provision in connection with certain historical trading activities in HSBC Bank plc.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 99 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Business segments and legal entities | ||||||||||
| Legal entity reported and constant currency results (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC,<br><br>S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities1 | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||||||
| – Reported | 12,752 | 9,557 | 34,053 | 2,504 | 4,264 | 462 | 3,573 | 3,303 | (4,614) | 65,854 |
| – Currency translation | 405 | 296 | 13 | 1 | — | (27) | (163) | (380) | 10 | 155 |
| – Constant currency | 13,157 | 9,853 | 34,066 | 2,505 | 4,264 | 435 | 3,410 | 2,923 | (4,604) | 66,009 |
| ECL | ||||||||||
| – Reported | (405) | (211) | (1,532) | (198) | (81) | (40) | (864) | (93) | 10 | (3,414) |
| – Currency translation | (14) | (6) | (1) | — | 1 | 2 | 24 | 15 | 1 | 22 |
| – Constant currency | (419) | (217) | (1,533) | (198) | (80) | (38) | (840) | (78) | 11 | (3,392) |
| Operating expenses | ||||||||||
| – Reported | (5,135) | (6,723) | (14,329) | (1,192) | (3,351) | (236) | (1,994) | (1,981) | 1,898 | (33,043) |
| – Currency translation | (162) | (258) | (14) | — | — | 14 | 84 | 240 | (7) | (103) |
| – Constant currency | (5,297) | (6,981) | (14,343) | (1,192) | (3,351) | (222) | (1,910) | (1,741) | 1,891 | (33,146) |
| Share of profit/(loss) in<br><br>associates and joint ventures | ||||||||||
| – Reported | 1 | 22 | 2,278 | — | — | — | 15 | 600 | (4) | 2,912 |
| – Currency translation | — | 1 | — | — | — | — | (1) | 1 | — | 1 |
| – Constant currency | 1 | 23 | 2,278 | — | — | — | 14 | 601 | (4) | 2,913 |
| Profit before tax | ||||||||||
| – Reported | 7,213 | 2,645 | 20,470 | 1,114 | 832 | 186 | 730 | 1,829 | (2,710) | 32,309 |
| – Currency translation | 229 | 33 | (2) | 1 | 1 | (11) | (56) | (124) | 4 | 75 |
| – Constant currency | 7,442 | 2,678 | 20,468 | 1,115 | 833 | 175 | 674 | 1,705 | (2,706) | 32,384 |
| Loans and advances to<br><br>customers (net) | ||||||||||
| – Reported | 272,973 | 103,464 | 449,940 | 20,440 | 55,786 | — | 23,439 | 4,617 | (1) | 930,658 |
| – Currency translation | 18,878 | 10,852 | 6,722 | 9 | — | — | 3,607 | 51 | 1 | 40,120 |
| – Constant currency | 291,851 | 114,316 | 456,662 | 20,449 | 55,786 | — | 27,046 | 4,668 | — | 970,778 |
| Customer accounts | ||||||||||
| – Reported | 340,233 | 297,785 | 845,284 | 34,808 | 99,278 | — | 27,525 | 9,999 | 43 | 1,654,955 |
| – Currency translation | 23,529 | 26,782 | 9,773 | 28 | — | — | 4,236 | (62) | (1) | 64,285 |
| – Constant currency | 363,762 | 324,567 | 855,057 | 34,836 | 99,278 | — | 31,761 | 9,937 | 42 | 1,719,240 |
1Other trading entities includes the results of entities located in Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do
not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group’s reported profit before tax of $1.4bn, and constant
currency profit before tax of $1.4bn.
| Legal entity results: notable items (continued) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||||||
| Disposals, acquisitions and<br><br>related costs1 | — | (148) | — | — | — | — | — | (23) | (1,172) | (1,343) |
| Early redemption of legacy<br><br>securities | — | — | — | — | — | — | — | — | (237) | (237) |
| Operating expenses | ||||||||||
| Disposals, acquisitions and<br><br>related costs | 8 | (9) | — | — | (29) | (36) | — | (61) | (72) | (199) |
| Restructuring and other<br><br>related costs2 | 3 | 15 | (5) | (2) | (4) | — | — | (9) | (32) | (34) |
1Includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of our
business in Argentina. This was partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign exchange
hedging of the sales proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.
2Amounts relate to organisational simplification provision recognised in 2024 and reversals of restructuring provisions recognised during 2022.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 100 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities | ||||||
| Selected countries/territories results (continued) | ||||||
| --- | --- | --- | --- | --- | --- | |
| 2024 | ||||||
| UK1 | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | ||
| $m | $m | $m | $m | $m | ||
| Revenue | ||||||
| – Reported | 21,017 | 22,038 | 4,078 | 4,216 | 3,573 | |
| – Currency translation | 704 | 18 | 3 | — | (163) | |
| – Constant currency | 21,721 | 22,056 | 4,081 | 4,216 | 3,410 | |
| ECL | ||||||
| – Reported | (526) | (1,273) | (121) | (81) | (864) | |
| – Currency translation | (13) | (1) | — | — | 24 | |
| – Constant currency | (539) | (1,274) | (121) | (81) | (840) | |
| Operating expenses | ||||||
| – Reported | (13,725) | (8,886) | (2,971) | (3,350) | (1,994) | |
| – Currency translation | (420) | (6) | (6) | — | 84 | |
| – Constant currency | (14,145) | (8,892) | (2,977) | (3,350) | (1,910) | |
| Share of profit/(loss) in associates and joint ventures | ||||||
| – Reported | 24 | 8 | 2,241 | — | 15 | |
| – Currency translation | — | 1 | 2 | — | (1) | |
| – Constant currency | 24 | 9 | 2,243 | — | 14 | |
| Profit before tax | ||||||
| – Reported | 6,790 | 11,887 | 3,227 | 785 | 730 | |
| – Currency translation | 271 | 12 | (1) | — | (56) | |
| – Constant currency | 7,061 | 11,899 | 3,226 | 785 | 674 | |
| Loans and advances to customers (net) | ||||||
| – Reported | 313,925 | 272,152 | 44,551 | 55,786 | 23,439 | |
| – Currency translation | 21,709 | (629) | 1,956 | — | 3,607 | |
| – Constant currency | 335,634 | 271,523 | 46,507 | 55,786 | 27,046 | |
| Customer accounts | ||||||
| – Reported | 524,251 | 575,141 | 63,169 | 99,278 | 27,525 | |
| – Currency translation | 36,254 | (1,330) | 2,773 | — | 4,236 | |
| – Constant currency | 560,505 | 573,811 | 65,942 | 99,278 | 31,761 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo
Group.
| Selected countries/territories results: notable items (continued) | |||||
|---|---|---|---|---|---|
| 2024 | |||||
| UK | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | |
| $m | $m | $m | $m | $m | |
| Revenue | |||||
| Disposals, acquisitions and related costs1 | 285 | — | — | — | — |
| Early redemption of legacy securities | (237) | — | — | — | — |
| Operating expenses | |||||
| Disposals, acquisitions and related costs | (50) | (2) | (7) | (28) | — |
| Restructuring and other related costs | (42) | (4) | — | (4) | — |
1Includes fair value movements on the foreign exchange hedging of the sale of our banking business in Canada, which is booked in HSBC Overseas Holdings (UK)
Limited.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 101 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Business segments and legal entities | ||||||||||
| Legal entity reported and constant currency results (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC,<br><br>S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities1 | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||||||
| – Reported | 13,405 | 9,289 | 31,899 | 2,425 | 3,863 | 1,966 | 3,313 | 4,729 | (4,831) | 66,058 |
| – Currency translation | 775 | 287 | (86) | 2 | — | (67) | (250) | (1,800) | 121 | (1,018) |
| – Constant currency | 14,180 | 9,576 | 31,813 | 2,427 | 3,863 | 1,899 | 3,063 | 2,929 | (4,710) | 65,040 |
| ECL | ||||||||||
| – Reported | (523) | (212) | (1,641) | (90) | (94) | (46) | (696) | (279) | 134 | (3,447) |
| – Currency translation | (30) | (15) | (2) | (1) | — | 1 | 48 | 193 | 3 | 197 |
| – Constant currency | (553) | (227) | (1,643) | (91) | (94) | (45) | (648) | (86) | 137 | (3,250) |
| Operating expenses | ||||||||||
| – Reported | (4,612) | (6,386) | (13,395) | (1,096) | (3,251) | (1,049) | (1,826) | (2,635) | 2,180 | (32,070) |
| – Currency translation | (283) | (330) | 16 | — | — | 36 | 139 | 910 | (109) | 379 |
| – Constant currency | (4,895) | (6,716) | (13,379) | (1,096) | (3,251) | (1,013) | (1,687) | (1,725) | 2,071 | (31,691) |
| Share of profit/(loss) in<br><br>associates and joint ventures | ||||||||||
| – Reported | — | (52) | (696) | — | — | — | 14 | 544 | (3) | (193) |
| – Currency translation | — | — | (102) | — | — | — | (1) | — | (1) | (104) |
| – Constant currency | — | (52) | (798) | — | — | — | 13 | 544 | (4) | (297) |
| Profit before tax | ||||||||||
| – Reported | 8,270 | 2,639 | 16,167 | 1,239 | 518 | 871 | 805 | 2,359 | (2,520) | 30,348 |
| – Currency translation | 462 | (58) | (174) | 1 | — | (30) | (64) | (697) | 14 | (546) |
| – Constant currency | 8,732 | 2,581 | 15,993 | 1,240 | 518 | 841 | 741 | 1,662 | (2,506) | 29,802 |
| Loans and advances to<br><br>customers (net) | ||||||||||
| – Reported | 270,208 | 95,750 | 455,315 | 20,072 | 54,829 | — | 26,410 | 15,951 | — | 938,535 |
| – Currency translation | 13,974 | 5,357 | 186 | 7 | — | — | (1,595) | (758) | — | 17,171 |
| – Constant currency | 284,182 | 101,107 | 455,501 | 20,079 | 54,829 | — | 24,815 | 15,193 | — | 955,706 |
| Customer accounts | ||||||||||
| – Reported | 339,611 | 274,733 | 801,430 | 31,341 | 99,607 | — | 29,423 | 35,326 | 176 | 1,611,647 |
| – Currency translation | 17,563 | 14,913 | 1,855 | 17 | — | — | (1,777) | (3,218) | — | 29,353 |
| – Constant currency | 357,174 | 289,646 | 803,285 | 31,358 | 99,607 | — | 27,646 | 32,108 | 176 | 1,641,000 |
1Other trading entities includes the results of entities located in Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank)
which do not consolidate into HSBC Bank Middle East Limited. These entities had an aggregated impact on the Group’s reported profit before tax of $1.3bn and
constant currency profit before tax of $1.1bn.
| Legal entity results: notable items (continued) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | HSBC<br><br>Bank<br><br>Canada | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Revenue | ||||||||||
| Disposals, acquisitions and<br><br>related costs1,2,3 | 1,591 | (14) | — | — | — | — | — | — | (279) | 1,298 |
| Fair value movements on<br><br>financial instruments4 | — | — | — | — | — | — | — | — | 14 | 14 |
| Restructuring and other<br><br>related costs | — | 361 | — | — | — | — | — | — | (361) | — |
| Disposal losses on Markets<br><br>Treasury repositioning | (145) | (94) | (473) | (20) | (246) | — | — | — | 1 | (977) |
| Operating expenses | ||||||||||
| Disposals, acquisitions and<br><br>related costs | (45) | (111) | — | — | (11) | (115) | — | — | (39) | (321) |
| Restructuring and other<br><br>related costs5 | 20 | 30 | 10 | 2 | 10 | — | 6 | 2 | 56 | 136 |
| Impairment loss of interest<br><br>in BoCom associate6 | — | — | (3,000) | — | — | — | — | — | — | (3,000) |
1 Includes the impact of the sale of our retail banking operations in France.
2 Includes the gain of $1.6bn recognised in respect of the acquisition of SVB UK.
3 Includes fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.
4 Fair value movements on non-qualifying hedges in HSBC Holdings.
5 Balances relate to reversals of restructuring provisions recognised during 2022.
6 Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 102 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities | ||||||
| Selected countries/territories results (continued) | ||||||
| --- | --- | --- | --- | --- | --- | |
| 2023 | ||||||
| UK1 | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | ||
| $m | $m | $m | $m | $m | ||
| Revenue | ||||||
| – Reported | 19,092 | 20,611 | 3,923 | 3,796 | 3,313 | |
| – Currency translation | 1,310 | 86 | (59) | — | (250) | |
| – Constant currency | 20,402 | 20,697 | 3,864 | 3,796 | 3,063 | |
| ECL | ||||||
| – Reported | (594) | (1,529) | (93) | (94) | (696) | |
| – Currency translation | (35) | (5) | (2) | — | 48 | |
| – Constant currency | (629) | (1,534) | (95) | (94) | (648) | |
| Operating expenses | ||||||
| – Reported | (12,485) | (8,244) | (2,713) | (3,251) | (1,826) | |
| – Currency translation | (726) | (33) | 37 | — | 139 | |
| – Constant currency | (13,211) | (8,277) | (2,676) | (3,251) | (1,687) | |
| Share of profit/(loss) in associates and joint ventures | ||||||
| – Reported | (53) | 30 | (746) | — | 14 | |
| – Currency translation | 1 | 1 | (102) | — | (1) | |
| – Constant currency | (52) | 31 | (848) | — | 13 | |
| Profit before tax | ||||||
| – Reported | 5,960 | 10,868 | 371 | 451 | 805 | |
| – Currency translation | 550 | 49 | (126) | — | (64) | |
| – Constant currency | 6,510 | 10,917 | 245 | 451 | 741 | |
| Loans and advances to customers (net) | ||||||
| – Reported | 309,262 | 279,551 | 44,275 | 54,829 | 26,410 | |
| – Currency translation | 15,994 | 1,013 | 685 | — | (1,595) | |
| – Constant currency | 325,256 | 280,564 | 44,960 | 54,829 | 24,815 | |
| Customer accounts | ||||||
| – Reported | 508,181 | 543,504 | 56,006 | 99,607 | 29,423 | |
| – Currency translation | 26,280 | 1,969 | 868 | — | (1,777) | |
| – Constant currency | 534,461 | 545,473 | 56,874 | 99,607 | 27,646 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo
Group.
| Selected countries/territories results: notable items (continued) | |||||
|---|---|---|---|---|---|
| 2023 | |||||
| UK | Hong<br><br>Kong | Mainland<br><br>China | US | Mexico | |
| $m | $m | $m | $m | $m | |
| Revenue | |||||
| Disposals, acquisitions and related costs1 | 1,272 | — | — | — | — |
| Fair value movements on financial instruments | 14 | — | — | — | — |
| Disposal losses on Markets Treasury repositioning | (239) | (473) | — | (246) | — |
| Operating expenses | |||||
| Disposals, acquisitions and related costs | (71) | (1) | (5) | (11) | — |
| Restructuring and other related costs | 75 | 9 | 4 | 10 | 6 |
| Impairment loss of interest in BoCom associate | — | — | (3,000) | — | — |
1Includes the impairment gain relating to the sale of our retail banking operations in France.
Analysis by country/territory
| Profit/(loss) before tax by country/territory within business segments | ||||||
|---|---|---|---|---|---|---|
| 2025 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| UK1 | (346) | 6,687 | (487) | 75 | (405) | 5,524 |
| – of which: HSBC UK Bank plc (ring-fenced bank) | — | 7,044 | 161 | 135 | 68 | 7,408 |
| – of which: HSBC Bank plc (non-ring-fenced bank) | — | — | 758 | 375 | (145) | 988 |
| – of which: Holdings and other | (346) | (357) | (1,406) | (435) | (328) | (2,872) |
| France | — | — | 116 | (71) | (1,566) | (1,521) |
| Germany | — | — | 46 | 147 | (57) | 136 |
| Hong Kong | 9,891 | — | 1,770 | 1,948 | (583) | 13,026 |
| Australia | — | — | 519 | 159 | (14) | 664 |
| India | — | 12 | 1,500 | 88 | 266 | 1,866 |
| Indonesia | — | — | 172 | 3 | (1) | 174 |
| Mainland China2 | 5 | — | 888 | 98 | 96 | 1,087 |
| Malaysia | 1 | — | 367 | 168 | (6) | 530 |
| Singapore | 2 | — | 967 | 598 | (29) | 1,538 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 103 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities | ||||||
| Profit/(loss) before tax by country/territory within business segments (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Taiwan | — | — | 277 | 144 | (10) | 411 |
| Egypt | — | 1 | 453 | 100 | (5) | 549 |
| UAE | — | — | 547 | 283 | (51) | 779 |
| Saudi Arabia3 | — | — | 97 | — | 665 | 762 |
| US | — | — | 1,165 | 152 | (205) | 1,112 |
| Canada | — | — | — | — | 6 | 6 |
| Mexico | — | — | 497 | 195 | (42) | 650 |
| Other | 23 | 5 | 2,492 | 280 | (186) | 2,614 |
| Year ended 31 Dec 2025 | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
| 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| $m | $m | $m | $m | $m | $m | |
| UK1 | (288) | 6,605 | (457) | 85 | 845 | 6,790 |
| – of which: HSBC UK Bank plc (ring-fenced bank) | — | 6,889 | 146 | 106 | 72 | 7,213 |
| – of which: HSBC Bank plc (non-ring-fenced bank) | — | — | 754 | 534 | (359) | 929 |
| – of which: Holdings and other | (288) | (284) | (1,357) | (555) | 1,132 | (1,352) |
| France | — | — | 322 | 61 | (153) | 230 |
| Germany | — | — | 182 | 27 | 5 | 214 |
| Hong Kong | 9,377 | — | 1,373 | 1,619 | (482) | 11,887 |
| Australia | — | — | 477 | 141 | (9) | 609 |
| India | — | — | 1,323 | 96 | 269 | 1,688 |
| Indonesia | — | — | 219 | 7 | (5) | 221 |
| Mainland China2 | 9 | — | 891 | (154) | 2,481 | 3,227 |
| Malaysia | — | — | 374 | 143 | (3) | 514 |
| Singapore | 1 | — | 823 | 572 | (21) | 1,375 |
| Taiwan | — | — | 293 | 113 | (8) | 398 |
| Egypt | — | — | 501 | 122 | (16) | 607 |
| UAE | — | — | 583 | 371 | (83) | 871 |
| Saudi Arabia3 | — | — | 112 | — | 596 | 708 |
| US | — | — | 909 | 74 | (198) | 785 |
| Canada4 | — | — | 153 | 70 | 4,503 | 4,726 |
| Mexico | — | — | 542 | 185 | 3 | 730 |
| Other5 | 22 | — | 2,787 | 440 | (6,520) | (3,271) |
| Year ended 31 Dec 2024 | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
| 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| $m | $m | $m | $m | $m | $m | |
| UK1 | (346) | 7,623 | (1,011) | (106) | (200) | 5,960 |
| – of which: HSBC UK Bank plc (ring-fenced bank) | — | 7,922 | 144 | 114 | 90 | 8,270 |
| – of which: HSBC Bank plc (non-ring fenced bank) | — | — | 416 | 396 | 177 | 989 |
| – of which: Holdings and other | (346) | (299) | (1,571) | (616) | (467) | (3,299) |
| France | — | — | 364 | (36) | 10 | 338 |
| Germany | — | — | 273 | 43 | 4 | 320 |
| Hong Kong | 8,760 | — | 1,150 | 1,262 | (304) | 10,868 |
| Australia | — | — | 403 | 178 | (15) | 566 |
| India | — | — | 1,171 | 57 | 289 | 1,517 |
| Indonesia | — | — | 191 | 24 | (7) | 208 |
| Mainland China2 | 31 | — | 976 | (96) | (540) | 371 |
| Malaysia | — | — | 377 | 111 | (21) | 467 |
| Singapore | — | — | 879 | 234 | (31) | 1,082 |
| Taiwan | — | — | 270 | 99 | (7) | 362 |
| Egypt | — | — | 401 | 141 | (11) | 531 |
| UAE | — | — | 589 | 387 | (83) | 893 |
| Saudi Arabia3 | — | — | 118 | — | 539 | 657 |
| US | — | — | 624 | 225 | (398) | 451 |
| Canada | — | — | 681 | 293 | (96) | 878 |
| Mexico | — | — | 520 | 316 | (31) | 805 |
| Other | 44 | — | 3,179 | 349 | 502 | 4,074 |
| Year ended 31 Dec 2023 | 8,489 | 7,623 | 11,155 | 3,481 | (400) | 30,348 |
1 UK includes results from the ultimate holding company, HSBC Holdings plc, and the ServCo Group.
2Includes our share of the profits of our associate, BoCom. Amounts in 2025 include a $1.1bn loss on dilution of our shareholding in BoCom and a $1.0bn
impairment loss on Group’s investment in BoCom. See Note 18 on pages 345 to 348. Amounts in 2023 include an impairment loss of $3.0bn recognised in
respect of the Group’s investment in BoCom.
3Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.
4Corporate Centre in 2024 includes a gain on the sale of our banking business in Canada excluding the fair value movements on the foreign exchange hedging of
the sale which is booked in HSBC Overseas Holdings (UK) Limited.
5Corporate Centre in 2024 includes a loss of $6.2bn relating to the sale of our business in Argentina and inter-company debt eliminations of $0.3bn.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 104 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
The following commentary compares business segment financial
performance on a constant currency basis for the year ended 31
December 2024 with 31 December 2023, represented based on our
reportable segments under IFRS 8 'Operating Segments' effective
from 1 January 2025.
ÑFor business segment performance commentary for the year ended 31
December 2025 compared with 31 December 2024, see pages 19 to 27.
Hong Kong Business
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $9.1bn was $0.6bn or 7% higher than in 2023 on a
constant currency basis.
Revenue of $15.0bn was $0.5bn or 4% higher on a constant currency
basis.
Banking NII of $12.0bn fell $0.1bn or 1%. This was due to the impact
of lower margins in 2024 relative to 2023 but partly offset by deposit
balance growth.
Fee and other income of $3.1bn was up $0.3bn or 9%.
–In Wealth, investment distribution revenue grew by $0.4bn or 31%
driven by higher sales of mutual funds, structured products and
bonds due to our focus on investment in Wealth and improved
market sentiment.
–In Other, revenue decreased by $0.1bn due to lower revenue
allocated from Markets Treasury.
Notable items in 2023 include $0.4bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL were $1.1bn, a decrease of $0.4bn compared with 2023 on a
constant currency basis, reflecting a reduction in ECL in the commercial
real estate sector in 2024.
Operating expenses of $4.8bn were $0.3bn higher on a constant
currency basis, reflecting continued investments in Wealth, higher
spend and investment in technology, higher performance-related pay
and inflationary impacts. These were partly offset by continued cost
discipline.
UK Business
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $6.8bn was $1.2bn or (15)% lower than in 2023 on
a constant currency basis.
Revenue of $12.3bn was $1.1bn or (8)% lower on a constant currency
basis.
Banking NII of $10.4bn increased by $0.5bn or 4.6% despite two base
rate cut in 2024. The increase reflected balance sheet growth, the full
year impact of our acquisition of SVB UK, and benefit from our
structural hedges. These increases were partly offset by mortgage
pricing pressures, as well as a change in deposit mix towards interest-
bearing deposit accounts.
Fee and other income of $2.0bn was broadly stable.
Notable items in 2023 include the non-recurrence of a $1.7bn gain
recognised on the acquisition of SVB UK which was partly offset by the
non-recurrence of $0.1bn disposal losses relating to Markets Treasury
repositioning and risk management.
ECL were $0.4bn, a decrease of $0.1bn compared with 2023 on a
constant currency basis, reflecting lower stage 3 charges combined
with improved forward economic outlook in 2024.
Operating expenses of $5.1bn were $0.3bn higher on a constant
currency basis. This includes the Bank of England levy introduced in
- The increase also reflects incremental costs in IVB following the
acquisition of SVB, higher spend and investment in technology, higher
performance-related pay and inflationary impacts. These were partly
offset by continued cost discipline.
Corporate and Institutional Banking
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $11.3bn was $0.8bn or 8% higher than in 2023 on a
constant currency basis.
Revenue of $26.8bn was $2.0bn or 8% higher on a constant currency
basis.
Banking NII of $14.5bn was up $1.1bn or 8%. This was largely driven
by the hyperinflationary impacts in Argentina along with higher
allocated revenue from Markets Treasury.
Fee and other income of $12.3bn was up $0.6bn or 5%.
–In Debt and Equity Markets, fee and other income rose by $0.6bn or
38.3%. In Equities, fee and other income increased amid improved
market sentiment, which drove higher client demand for wealth
products, as well as higher levels of volatility in 2H24. In Debt
Markets the growth reflected client demand for financing products
and increased volumes, primarily from emerging markets credit,
–In Investment Banking, fee and other income increased by $0.1bn
or 11%, due to higher advisory and financing activity, supported by
the recovery in global capital markets.
–In Wholesale Transaction Banking, fee and other income fell by
$0.1bn or 1% driven by a decrease in Foreign Exchange as client
activity remained resilient given the market environment, and the
impact of the disposal of our banking business in Canada. This was
partly offset by an increase fee and other income in GPS reflecting
business initiatives, repricing and transaction volume growth, and in
GTS reflecting growth from guarantees.
Notable items in 2023 included $0.4bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL charges of $0.9bn were $0.4bn higher on a constant currency
basis. ECLs in 2024 reflected higher CRE charges in Asia, and in the
Middle East reflecting higher oil and gas and construction sector
charges.
Operating expenses of $14.6bn were $0.9bn or 6% higher on a
constant currency basis. The increase reflected hyperinflationary
impacts in Argentina, incremental costs following the acquisition of
SVB UK, higher spend and investment in technology, and inflationary
impacts. These increases were in part mitigated by continued cost
discipline and lower costs following the disposal of our banking
business in Canada.
International Wealth and Premier
Banking
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $4.0bn was $0.8bn or 24% higher than in 2023 on a
constant currency basis.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 105 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Business segments and legal entities |
Revenue of $13.8bn was $$1.4bn or 12% higher on a constant
currency basis.
Banking NII of $7.6bn was $0.4bn higher or 5%. This was driven by
increase in revenue allocated from Markets Treasury and continued
balance sheet growth, partly offset by narrower margins and our
business disposals in Canada and France.
Fee and other income of $6.2bn was up $0.8bn or 14% driven by
strong growth across all products in Wealth.
In Wealth, fee and other income of $5.6bn was up $1.0bn or 21%.
–Insurance increased by $0.5bn, reflecting a higher contractual
service margin (‘CSM’) release, largely due to continued growth in
the CSM balance, as well as due to the impact of corrections to
historical valuation estimates recognised in 2023.
–Private Bank increased by $0.3bn, primarily driven by a strong
performance in brokerage and trading in our entities in Asia.
–Asset Management increased by $0.1bn, driven by an increase in
assets under management due to inflows and positive market
movements partly offset by the impact of our business disposal in
Canada and France.
Notable items in 2023 included $0.2bn impact of the sale of our retail
banking operations in France, and $0.1bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL were $1.0bn, an increase of $0.3bn compared with 2023 on a
constant currency basis, primarily reflecting higher charges in our legal
entity in Mexico, mainly in our unsecured portfolio, due to portfolio
growth and unemployment trends.
Operating expenses of $8.9bn were $0.4bn higher on a constant
currency basis, reflecting continued investments in Wealth in Asia,
higher spend and investment in technology, higher performance-related
pay and from the impact of higher inflation. These were partly offset by
continued cost discipline and the impact of the business disposals in
France and Canada.
Corporate Centre
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $1.2bn was $1.6bn higher than in 2023 on a
constant currency basis.
Revenue of $2.0bn was $1.9bn lower on a constant currency basis,
primarily due to the impact of notable items.
In 2024, these included a loss on disposal of $1.0bn, as well as foreign
currency and other reserve losses of $5.2bn, following the disposal of
our business in Argentina. They also included a loss of $0.1bn related to
the recycling of reserves following the completion of the sale of our
business in Russia, and a $0.2bn loss on the early redemption of legacy
securities. These were partly offset by a $4.8bn gain on the sale of our
banking business in Canada, inclusive of fair value gains on related
hedging and recycling of related reserves.
In 2023, notable items included fair value losses of $0.3bn relating to
the hedging of the proceeds of the sale of our business in Canada.
Banking NII in 2024 removes from NII the internal costs to funding
trading and fair value net assets, predominately in CIB, of $11.4bn
(2023: $8.7bn). Banking NII was a net expense of $0.7bn. This was
$0.5bn higher than in 2023. The movement in Banking NII reflected the
impact of the transfer of the retained French retail lending portfolio
from IWPB.
Fee and other income of $0.4bn was broadly stable.
Operating expenses decreased by $0.4bn on a constant currency basis.
This included a lower impact from levies, including in relation to the
FDIC special assessment and the UK bank levy.
Share of profit from associates and joint ventures of $2.9bn increased
by $3.2bn on a constant currency basis, primarily reflecting the non-
recurrence of an impairment charge of $3.0bn in 2023 relating to our
investment in BoCom and an increase in share of profit from SAB.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 106 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Alternative performance measures
The following tables provide the calculation, definition and reconciliation of alternative performance measures to the closest reported performance
measure. For further details and an explanation of their basis of preparation, including constant currency, notable items and material notable items,
and the impact of strategic transactions and hyperinflationary accounting, see page 65.
| Alternative performance measure | Definition |
|---|---|
| Reported revenue excluding notable items | Reported revenue after excluding notable items reported under revenue |
| Reported profit before tax excluding notable items | Reported profit before tax after excluding notable items reported under revenue less notable<br><br>items reported under operating expenses |
| Constant currency revenue excluding notable items | Reported revenue excluding notable items and the impact of foreign exchange translation |
| Constant currency profit before tax excluding notable items | Reported profit before tax excluding notable items and the impact of foreign exchange<br><br>translation |
| Constant currency revenue excluding notable items and<br><br>strategic transactions | Reported revenue excluding notable items, strategic transactions and the impact of foreign<br><br>exchange translation |
| Constant currency profit before tax excluding notable items<br><br>and strategic transactions | Reported profit before tax excluding notable items, strategic transactions and the impact of<br><br>foreign exchange translation |
| Return on average ordinary shareholders’ equity (‘RoE’) | Profit attributable to the ordinary shareholders |
| Average ordinary shareholders’ equity | |
| Return on average tangible equity (‘RoTE‘) | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other<br><br>intangible assets |
| Average ordinary shareholders’ equity adjusted for goodwill and intangibles | |
| Return on average tangible equity (‘RoTE‘) excluding<br><br>notable items | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other<br><br>intangible assets and notable items |
| Average ordinary shareholders’ equity adjusted for goodwill and intangibles | |
| Net asset value per ordinary share | Total ordinary shareholders’ equity1 |
| Basic number of ordinary shares in issue after deducting own shares held | |
| Tangible net asset value per ordinary share | Tangible ordinary shareholders’ equity2 |
| Basic number of ordinary shares in issue after deducting own shares held | |
| Post-tax return on average total assets | Profit after tax |
| Average total assets | |
| Average total shareholders’ equity on average total assets | Average total shareholders’ equity |
| Average total assets | |
| Banking net interest income | Banking net interest income adjusts our reported NII, primarily for the impact of funding<br><br>trading and fair value activities reported in interest expense and to exclude third-party<br><br>insurance NII3 |
| Expected credit losses and other credit impairment<br><br>charges (‘ECL’) as % of average gross loans and advances<br><br>to customers | Annualised constant currency ECL |
| Constant currency average gross loans and advances to customers | |
| Expected credit losses and other credit impairment<br><br>charges (‘ECL’) as % of average gross loans and advances<br><br>to customers, including held for sale | Annualised constant currency ECL |
| Constant currency average gross loans and advances to customers, including held for sale | |
| Target basis operating expenses | Reported operating expenses excluding notable items, foreign exchange translation and<br><br>other excluded items |
| Basic earnings per share excluding material notable items<br><br>and related impacts | Profit attributable to ordinary shareholders excluding material notable items and related<br><br>impacts |
| Weighted average number of ordinary shares outstanding after deducting own shares held | |
| Multi-jurisdictional client revenue | Total client revenue we generate from clients that hold a relationship with us that<br><br>generates revenue in more than one market |
1Total ordinary shareholders’ equity is total shareholders‘ equity less non-cumulative preference shares and capital securities.
2Tangible ordinary shareholders’ equity is total ordinary shareholders’ equity excluding goodwill and other intangible assets (net of deferred tax).
3For details on the calculation of banking NII, see page 69.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 107 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Alternative performance measures | ||||||
| Constant currency revenue and profit before tax excluding notable items and strategic transactions | ||||||
| --- | --- | --- | --- | |||
| Year ended | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Revenue | ||||||
| Reported | 68,274 | 65,854 | 66,058 | |||
| Notable items | 2,746 | 1,580 | (335) | |||
| Reported revenue excluding notable items | 71,020 | 67,434 | 65,723 | |||
| Currency translation1 | 157 | (888) | ||||
| Constant currency revenue excluding notable items | 71,020 | 67,591 | 64,835 | |||
| Constant currency impact of strategic transactions (distorting impact of operating results between periods)2 | — | (1,214) | N/A | |||
| Constant currency revenue excluding notable items and strategic transactions | 71,020 | 66,377 | N/A | |||
| Profit before tax | ||||||
| Reported | 29,907 | 32,309 | 30,348 | |||
| Notable items | 6,710 | 1,813 | 2,850 | |||
| Reported profit before tax excluding notable items | 36,617 | 34,122 | 33,198 | |||
| Currency translation1 | — | 59 | (357) | |||
| Constant currency profit before tax excluding notable items | 36,617 | 34,181 | 32,841 | |||
| Constant currency impact of strategic transactions (distorting impact of operating results between periods)2 | — | (413) | N/A | |||
| Constant currency profit before tax excluding notable items and strategic transactions | 36,617 | 33,768 | N/A |
1Currency translation on the reported balance excluding currency translation on notable items.
2For more details of strategic transactions, please refer to page 92.
| Return on average ordinary shareholders’ equity, return on average tangible equity and return on average tangible equity excluding notable<br><br>items | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Profit after tax | |||
| Profit attributable to the ordinary shareholders of the parent company | 21,102 | 22,917 | 22,432 |
| Impairment of goodwill and other intangible assets (net of tax) | 144 | 118 | 43 |
| Profit attributable to the ordinary shareholders, excluding goodwill and other<br><br>intangible assets impairment | 21,246 | 23,035 | 22,475 |
| Impact of notable items1 | 6,126 | 1,588 | 2,173 |
| Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment<br><br>and notable items | 27,372 | 24,623 | 24,648 |
| Equity | |||
| Average total shareholders’ equity | 191,598 | 187,507 | 184,029 |
| Effect of average preference shares and other equity instruments | (19,987) | (18,480) | (18,794) |
| Average ordinary shareholders’ equity | 171,611 | 169,027 | 165,235 |
| Effect of goodwill and other intangibles (net of deferred tax) | (12,040) | (11,626) | (11,480) |
| Average tangible equity | 159,571 | 157,401 | 153,755 |
| % | % | % | |
| Ratio | |||
| Return on average ordinary shareholders’ equity | 12.3 | 13.6 | 13.6 |
| Return on average tangible equity | 13.3 | 14.6 | 14.6 |
| Return on average tangible equity excluding notable items | 17.2 | 15.6 | 16.0 |
1For details of notable items please refer to Supplementary financial information on page 88.
To better align our return on average tangible equity (‘RoTE’) excluding notable items measure with market practice, from our 2025 full-year results
we no longer adjust the ‘average tangible equity‘ for the post-tax impact of notable items in each period. Comparatives have been re-presented.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 108 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Alternative performance measures |
The following table details the adjustments made to reported results by business segment:
| Return on average tangible equity by business segment | ||||||
|---|---|---|---|---|---|---|
| Year ended 31 Dec 2025 | ||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Profit before tax | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
| Tax expense | (1,604) | (1,953) | (2,414) | (987) | 182 | (6,776) |
| Profit after tax | 7,972 | 4,752 | 8,972 | 3,380 | (1,945) | 23,131 |
| Less attributable to: preference shareholders, other equity<br><br>holders, non-controlling interests | (898) | (221) | (504) | (193) | (213) | (2,029) |
| Profit attributable to ordinary shareholders of the parent<br><br>company | 7,074 | 4,531 | 8,468 | 3,187 | (2,158) | 21,102 |
| Other adjustments | 339 | 210 | (168) | 64 | (301) | 144 |
| Profit attributable to ordinary shareholders | 7,413 | 4,741 | 8,300 | 3,251 | (2,459) | 21,246 |
| Impact of notable items | 9 | 45 | 717 | 226 | 5,129 | 6,126 |
| Profit attributable to ordinary shareholders, excluding notable<br><br>items | 7,422 | 4,786 | 9,017 | 3,477 | 2,670 | 27,372 |
| Average tangible shareholders’ equity | 20,889 | 20,936 | 55,828 | 18,313 | 43,605 | 159,571 |
| RoTE (%) (annualised) | 35.5 | 22.6 | 14.9 | 17.8 | (5.6) | 13.3 |
| RoTE (%), excluding notable items (annualised) | 35.5 | 22.9 | 16.2 | 19.0 | 6.1 | 17.2 |
| Year ended 31 Dec 2024 | ||||||
| Profit before tax | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
| Tax expense | (1,219) | (1,844) | (2,734) | (781) | (732) | (7,310) |
| Profit after tax | 7,902 | 4,761 | 8,673 | 3,191 | 472 | 24,999 |
| Less attributable to: preference shareholders, other equity<br><br>holders, non-controlling interests | (944) | (225) | (487) | (158) | (268) | (2,082) |
| Profit attributable to ordinary shareholders of the parent company | 6,958 | 4,536 | 8,186 | 3,033 | 204 | 22,917 |
| Other adjustments | 239 | 222 | (427) | (46) | 130 | 118 |
| Profit attributable to ordinary shareholders | 7,197 | 4,758 | 7,759 | 2,987 | 334 | 23,035 |
| Impact of notable items | — | (9) | 18 | (34) | 1,613 | 1,588 |
| Profit attributable to ordinary shareholders, excluding notable<br><br>items | 7,197 | 4,749 | 7,778 | 2,953 | 1,946 | 24,623 |
| Average tangible shareholders’ equity | 19,199 | 19,010 | 54,819 | 19,019 | 45,354 | 157,401 |
| RoTE (%) (annualised) | 37.5 | 25.0 | 14.2 | 15.7 | 0.7 | 14.6 |
| RoTE (%), excluding notable items (annualised) | 37.5 | 25.0 | 14.2 | 15.5 | 4.3 | 15.6 |
| Net asset value and tangible net asset value per ordinary share | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Total shareholders’ equity | 198,225 | 184,973 | 185,329 | |||
| Preference shares and other equity instruments | (20,716) | (19,070) | (17,719) | |||
| Total ordinary shareholders’ equity | 177,509 | 165,903 | 167,610 | |||
| Goodwill and intangible assets (net of deferred tax) | (12,356) | (11,608) | (11,900) | |||
| Tangible ordinary shareholders’ equity | 165,153 | 154,295 | 155,710 | |||
| Basic number of $0.50 ordinary shares outstanding, after deducting own shares held | 17,140 | 17,918 | 19,006 | |||
| Value per share | $ | $ | $ | |||
| Net asset value per ordinary share | 10.36 | 9.26 | 8.82 | |||
| Tangible net asset value per ordinary share | 9.64 | 8.61 | 8.19 | |||
| Post-tax return and average total shareholders’ equity on average total assets | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Profit after tax | 23,131 | 24,999 | 24,559 | |||
| Average total shareholders’ equity | 191,598 | 187,507 | 184,029 | |||
| Average total assets | 3,198,379 | 3,062,474 | 3,059,887 | |||
| Ratio | % | % | % | |||
| Post-tax return on average total assets | 0.7 | 0.8 | 0.8 | |||
| Average total shareholders’ equity to average total assets | 5.99 | 6.12 | 6.01 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 109 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Alternative performance measures | ||||||
| Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit<br><br>losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Expected credit losses and other credit impairment charges (‘ECL’) | (3,850) | (3,414) | (3,447) | |||
| Currency translation | — | 22 | 197 | |||
| Constant currency | (3,850) | (3,392) | (3,250) | |||
| Average gross loans and advances to customers | 975,905 | 952,484 | 955,585 | |||
| Currency translation | 12,891 | 23,848 | 30,056 | |||
| Constant currency | 988,796 | 976,332 | 985,641 | |||
| Average gross loans and advances to customers, including held for sale | 977,814 | 968,785 | 1,020,992 | |||
| Currency translation | 12,959 | 23,308 | 29,489 | |||
| Constant currency | 990,773 | 992,093 | 1,050,481 | |||
| Ratio | % | % | % | |||
| Expected credit losses and other credit impairment charges (annualised) as a % of<br><br>average gross loans and advances to customers (%) | 0.39 | 0.35 | 0.33 | |||
| Expected credit losses and other credit impairment charges (annualised) as a % of<br><br>average gross loans and advances to customers, including held for sale (%) | 0.39 | 0.34 | 0.31 |
Target basis operating expenses
| Target basis operating expenses | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Reported operating expenses | 36,428 | 33,043 |
| Notable items | (2,964) | (233) |
| – disposals, wind-downs, acquisitions and related costs | (502) | (199) |
| – restructuring and other related costs | (1,030) | (34) |
| – legal provisions1,2 | (1,432) | — |
| Currency translation3 | — | 121 |
| Excluding the constant currency impact of the sale of our business in Argentina and banking business in Canada4 | — | (509) |
| Excluding the impact of retranslating prior year costs of hyperinflationary economies at a constant currency foreign exchange rate | — | 56 |
| Target basis operating expenses | 33,464 | 32,478 |
1During 2025, a $0.3bn provision was recognised in connection with certain historical trading activities in HSBC Bank plc.
2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard
L. Madoff Investment Securities LLC fraud.
3Currency translation on reported operating expenses, excluding currency translation on notable items.
4This represents the business as usual costs which are not classified as notable items relating to our business in Argentina and banking business in Canada, on a
constant currency basis. This does not include the disposal costs which relate to these transactions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 110 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Alternative performance measures |
Basic earnings per share excluding material notable items and related impacts
| Basic earnings per share excluding material notable items and related impacts | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Profit attributable to shareholders of company | 22,285 | 23,979 |
| Coupon payable on capital securities classified as equity | (1,183) | (1,062) |
| Profit attributable to ordinary shareholders of company | 21,102 | 22,917 |
| Dilution and impairment losses of interest in associate | 1,956 | — |
| Legal provisions2 | 1,110 | — |
| Impact of disposals, wind-downs, acquisitions and related costs | 2,077 | 1,137 |
| – of which: impact of the sale of our banking business in Canada1 | 1 | (4,963) |
| – of which: impact of the sale of our business in Argentina | 98 | 6,161 |
| – of which: other strategic transactions3 | 1,978 | (61) |
| Profit attributable to ordinary shareholders of company excluding material notable items and related impacts | 26,245 | 24,054 |
| Number of shares | ||
| Weighted average basic number of ordinary shares (millions) after deducting own shares held | 17,427 | 18,357 |
| Basic earnings per share ($) | 1.21 | 1.25 |
| Basic earnings per share excluding material notable items and related impacts ($) | 1.51 | 1.31 |
| Dividend per ordinary share (in respect of the period) ($)4 | 0.75 | 0.87 |
| Dividend payout ratio (%) (dividend per ordinary share divided by basic earnings per share excluding material notable items and<br><br>related impacts) | 50% | 50% |
1Represents gain on sale of our banking business in Canada recognised on completion, inclusive of the earnings recognised by the banking business from 30 June
2022, the recycling of losses in foreign currency translation reserves and other reserves, and gain on the foreign exchange hedging of the sale proceeds.
2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard
L. Madoff Investment Securities LLC fraud.
3For the year ended 31 December 2025, this includes a loss of $1.5bn from the recycling of other reserves associated with the sale of retained home loan
portfolio, after the sale of our retail banking operations in France. Additionally, it also includes the loss of $0.3bn recognised from the sale of our French and UK
life insurance businesses.
4In 2024, dividend per share includes the special dividend of $0.21 per ordinary share arising from the proceeds of the sale of our banking business in Canada to
Royal Bank of Canada.
Multi-jurisdictional client revenue
Multi-jurisdictional client revenue is a financial metric we use to assess
our ability to drive value from our international network.
In our wholesale businesses, we identify a client as multi-jurisdictional if
they hold a relationship with us that generates revenue in any market
outside of where the primary relationship is managed. A client is
defined as a master group (HSBC’s own client groupings) that includes
both the parent and, where relevant, any subsidiaries.
Multi-jurisdictional client revenue is a component of wholesale client
revenue and represents the total client revenue we generate from
multi-jurisdictional clients. Wholesale client revenue is derived by
excluding from wholesale revenue the revenue we generate from Fixed
Income, Equities, Commodities, and non-cash foreign exchange, as
well as other non-client revenue.
| Wholesale multi-jurisdictional client revenue | ||
|---|---|---|
| 2025 | 2024 | |
| $bn | $bn | |
| Wholesale revenue | 40.3 | 39.1 |
| Allocated revenue and other1 | (2.2) | (1.3) |
| Fixed Income, Equities, Commodities, and non-Cash FX | (6.4) | (5.6) |
| Wholesale client revenue | 31.7 | 32.3 |
| – clients banked in multiple jurisdictions (‘multi-jurisdictional’) | 20.0 | 20.0 |
| – domestic only clients2 | 11.7 | 12.3 |
1Including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital
held in the business segment.
2The fall in wholesale client revenue from domestic only clients primarily reflected the sale of our businesses in Canada and Argentina in 2024, as well as the
impact of lower interest rates.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 111 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Other information
| 111 | Disclosure controls |
|---|---|
| 111 | Management’s assessment of internal controls over financial<br><br>reporting |
| 111 | Regulation and supervision |
| 116 | Disclosures pursuant to Section 13(r) of the Securities Exchange<br><br>Act |
Disclosure controls
The Group CEO and Group CFO, with the assistance of other members
of management, carried out an evaluation of the effectiveness of the
design and operation of HSBC Holdings’ disclosure controls
and procedures as at 31 December 2025. Based upon that evaluation,
the Group CEO and Group CFO concluded that the disclosure controls
and procedures at 31 December 2025 were effective to provide
reasonable assurance that information required to be disclosed in the
reports that the company files and submits under the US Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarised and reported as and when required. There are inherent
limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only
provide reasonable assurance of achieving their control objectives.
Management’s assessment of internal
controls over financial reporting
Management is responsible for establishing and maintaining an
adequate internal control structure and procedures for financial
reporting, and has completed an assessment of the effectiveness of
the Group’s internal controls over financial reporting for the year ended
31 December 2025. In making the assessment, management used the
framework for internal control evaluation contained in the Financial
Reporting Council’s Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting (September 2014), as
well as the criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission (‘COSO’) in ‘Internal
Control-Integrated Framework (2013)’.
There have been no changes in HSBC Holdings’ internal control over
financial reporting during the year ended 31 December 2025 that have
materially affected, or are reasonably likely to materially affect, HSBC
Holdings’ internal control over financial reporting.
Based on the assessment performed, management concluded that for
the year ended 31 December 2025, the Group’s internal controls over
financial reporting were effective.
PricewaterhouseCoopers LLP, which has audited the consolidated
financial statements of the Group for the year ended 31 December
2025, has also audited the effectiveness of the Group’s internal control
over financial reporting as stated in their report on page 286.
Regulation and supervision
The ordinary shares of HSBC Holdings are listed in London, Hong Kong,
New York and Bermuda. As a result of the listing in London, HSBC
Holdings is subject to the UK Listing Rules of the FCA. As a result of
the listing in Hong Kong, HSBC Holdings is subject to The Rules
Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited (‘HKEX’). In the US, where the listing is through an
American Depositary Receipt Programme, shares are traded in the
form of American Depositary Shares (‘ADS’), which are registered with
the US Securities and Exchange Commission (‘SEC’). As a
consequence of its US listing, HSBC Holdings is also subject to the
reporting and other requirements of: the US Securities Act of 1933, as
amended; the Securities Exchange Act of 1934, as amended; and the
New York Stock Exchange’s (‘NYSE’) Listed Company Manual, in each
case as applied to foreign private issuers. In Bermuda, HSBC Holdings
is subject to the listing rules of the Bermuda Stock Exchange applicable
to companies with secondary listings.
A statement of our compliance with the provisions of the UK Corporate
Governance Code issued by the Financial Reporting Council and with
the Hong Kong Corporate Governance Code set out in Appendix 14 to
the Rules Governing the Listing of Securities on HKEX can be found in
the ‘Corporate Governance Report: Statement of Compliance’ on page
284.
Our operations throughout the world are regulated and supervised
globally by a large number of different regulatory authorities, central
banks and other bodies in those jurisdictions in which we have offices,
branches or subsidiaries. These authorities impose a variety of
requirements and controls designed to provide financial stability,
transparency in financial markets and a contribution to economic
growth. The requirements to which our operations must adhere include
those relating to capital and liquidity, disclosure standards and
restrictions on certain types of products or transaction structures,
recovery and resolution, governance standards, conduct of business
and financial crime.
The UK's Prudential Regulation Authority (‘PRA’) is the HSBC Group’s
consolidated lead regulator. HSBC Holdings is approved by, and directly
responsible to the PRA for ensuring the HSBC Group meets
consolidated prudential requirements. The Group‘s other lead UK
regulator, the FCA, supervises 11 of HSBC’s entities in the UK,
including six where the PRA is responsible for those entities‘ prudential
supervision. The FCA maintains global oversight of the Group’s
management of financial crime risk in the exercise of its wider powers
under the Financial Services and Markets Act 2000, and through the
exercise of direct supervisory powers over HSBC Holdings. In addition,
and as required under relevant local laws, each operating bank, finance
company and insurance operation within HSBC is regulated by relevant
local regulatory authorities.
UK regulation and supervision
The UK‘s financial services regulatory structure is chiefly comprised of
three regulatory bodies: the Bank of England ('BoE'); the PRA; and the
FCA.
The BoE is responsible for macro-prudential supervision, focusing on
systemic risks that may affect the UK’s financial stability. This is largely
affected through the Financial Policy Committee, a statutory body.
The BoE conducts micro-prudential regulation and supervision of
financial services firms through the PRA (also a statutory body), and in
addition to its wider role as the UK’s central bank, the BoE is the UK
resolution authority responsible for taking action to manage the failure
of certain types of financial institutions in the UK, if necessary. The
latter involves a set of responsibilities and powers that apply outside of
an actual bank failure and relate to general resolution planning, including
an assessment of any barriers to the resolution of banks, the exercise
of powers to require the removal of impediments to resolvability and
the setting of minimum requirements for own funds and eligible
liabilities (‘MREL‘), through the Banking Act and the Bank Recovery and
Resolution (Amendment) Regulations 2025.
These include own funds and liabilities that can be written down or
converted into equity capital to absorb losses or recapitalise a bank in
the event of its failure. These requirements are based on the resolution
strategy for the Group, as agreed by the BoE in consultation with our
local regulators.
The PRA and the FCA are micro-prudential supervisors. The Group’s
banking subsidiaries in the UK, such as HSBC Bank plc and HSBC UK,
are ‘dual-regulated’ firms, subject to prudential regulation by the PRA
and to conduct regulation by the FCA. Other (generally smaller, non-
bank) UK-based subsidiaries are ‘solo regulated’ by the FCA (i.e. the
FCA is responsible for both prudential and conduct regulation of those
subsidiaries). HSBC Group is subject to consolidated supervision by the
PRA.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 112 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Other information |
UK banking and financial services institutions are subject to numerous
laws and regulations, plus related regulatory rules, guidance and
expectations. The primary UK statute in this context is the Financial
Services and Markets Act 2000, as amended and supplemented by
subsequent legislation and statutory instruments, in addition to EU
financial services legislation that has been assimilated into UK law
pursuant to the European Union (Withdrawal) Act 2018, as amended
(‘EUWA’). In 2023, the Financial Services and Markets Act 2023
(‘FSMA 2023’) was passed creating a new set of regulatory
frameworks, providing powers to HM Treasury and the UK’s financial
services regulators to revoke and replace EU ’assimilated’ law and to
establish new objectives, and accountability frameworks.
The PRA and FCA are together responsible for authorising and
supervising all our operating businesses in the UK that require
authorisation under the Financial Services and Markets Act 2000.
These include deposit-taking, retail banking, consumer credit, life and
general insurance, pensions, investments, mortgages, custody and
share-dealing businesses, and treasury and capital markets activity.
The FCA is also responsible for promoting effective competition in the
interests of consumers, and an independent subsidiary of the FCA, the
Payment Systems Regulator, is the economic regulator of payment
systems in the UK. Additionally, the Competition and Markets Authority
(CMA) is responsible for promoting competitive markets in the UK. It
can investigate aspects of the financial services sector where HSBC
operates, and take action against firms where it sees fit. The CMA and
FCA have established a Memorandum of Understanding for regulatory
coordination between the authorities.
The PRA and FCA set the minimum standards for authorising banks
and financial institutions engaged in regulated activities. In the UK, both
regulators may object—on prudential grounds—to any individual or
entity seeking to acquire, or holding, 10% or more of the voting rights
or shares in a regulated institution or its parent. The PRA supervises
HSBC on a consolidated basis, receiving capital adequacy information
and establishing group-wide requirements. It also conducts stress tests
across HSBC’s UK entities and the broader Group. Meanwhile, each
banking subsidiary within the Group is overseen by its respective local
regulator, which sets and monitors its capital adequacy standards.
The Group complies with capital requirements under the UK Capital
Requirements Legislative Package, which includes on-shored EU
Regulation No. 575/2013 (as amended), the PRA Rulebook, and UK law
implementing the Capital Requirements Directive.
The UK introduced the initial set of Basel 3.1 reforms in January 2022,
targeting risk-weighted assets (‘RWAs’) for counterparty risk, equity
investments in funds and market risk, and the leverage ratio. The PRA
subsequently released two near-final rule packages for the second
tranche: the first in December 2023, covering market risk, credit
valuation adjustment, and operational risk; and the second in
September 2024, addressing credit risk, the output floor and
requirements for reporting and disclosures. Additionally, the PRA also
published the first of two proposals to modify the Pillar 2A capital
framework and capital communications.
The PRA initially planned to implement the second tranche of Basel 3.1
on 1 January 2026, with a four-year phase-in for the output floor. In
January 2025, this was deferred to 1 January 2027 to align with US
timelines, and the output floor phase-in was reduced to three years.
Following the UK Government’s announcement of its 10-year Financial
Services Growth and Competitiveness Strategy in July 2025, the 1
January 2027 implementation date was confirmed for credit risk,
operational risk, credit valuation adjustment, and non-modelled market
risk. A further one-year extension was proposed for the internal model
approach to market risk, moving its implementation to 1 January 2028.
The Group is also subject to liquidity requirements, namely the Liquidity
Coverage Ratio (‘LCR’) and the Net Stable Funding Ratio (‘NSFR’) as set
out in the Liquidity Coverage Ratio (CRR) and Liquidity (CRR) Parts of
the PRA Rulebook respectively.
The PRA and FCA monitor authorised institutions through ongoing
supervision and the review of routine and ad hoc reports relating to
financial, prudential, conduct of business and financial crime matters.
They may also obtain independent reports from a Skilled Person on the
adequacy of procedures and systems covering internal controls and
governing records and accounting. The PRA meets the Group’s senior
executives regularly to discuss our adherence to its prudential
requirements. In addition, both the PRA and FCA regularly discuss with
relevant management fundamental matters relating to our business in
the UK and internationally, including areas such as strategic and
operating plans, risk control, loan portfolio composition, organisational
changes, succession planning and recovery and resolution
arrangements.
Hong Kong regulation and supervision
The Banking Ordinance provides the legal framework for banking
supervision in Hong Kong. Section 7(1) of the Ordinance provides that
the principal function of the Hong Kong Monetary Authority (‘HKMA’) is
to ‘promote the general stability and effective working of the banking
system’. The HKMA seeks to establish a regulatory framework in line
with international standards, in particular those issued by the Basel
Committee on Banking Supervision (‘Basel‘) and the Financial Stability
Board (‘FSB’). The objective is to maintain a prudential supervisory
system that underpins the general stability and effective working of the
banking system, while at the same time providing sufficient flexibility
for authorised institutions to take commercial decisions. Under the
Banking Ordinance, the HKMA is the licensing authority responsible for
the authorisation, suspension, and revocation of authorised institutions.
To provide checks and balances, the HKMA is required under the
Ordinance to consult with the Financial Secretary on important
authorisation decisions, such as suspension and involuntary revocation.
The Hongkong and Shanghai Banking Corporation Limited and its
overseas branches and subsidiaries are licensed under the Banking
Ordinance and hence subject to the supervision, regulation, and
examination of the HKMA.
The HKMA follows international practices as recommended by Basel to
supervise authorised institutions. Under the Banking Ordinance, the
HKMA imposes capital requirements on authorised institutions through
the Banking (Capital) Rules, liquidity requirements through the Banking
(Liquidity) Rules and large exposure limits through the Banking
(Exposure Limits) Rules. These rules take into account the latest
standards set by Basel. In December 2023, the HKMA published final
rules for the implementation of the Basel 3.1 standards, which became
effective on 1 January 2025.
The Banking Ordinance empowers the HKMA to collect prudential data
from authorised institutions on a routine or ad hoc basis and to require
any holding company or subsidiary or sister company of an authorised
institution to submit such information as may be required for the
exercise of the HKMA’s functions under the Ordinance. The HKMA has
the power to serve a notice of objection on persons if they are no
longer deemed to be fit and proper to be controllers of the authorised
institution, if they may otherwise threaten the interests of depositors or
potential depositors, or if they have contravened any conditions
specified by the HKMA. The HKMA may revoke authorisation in the
event of an institution’s non-compliance with the provisions of the
Banking Ordinance. These provisions require, among other things, the
furnishing of accurate reports.
To enhance the exchange of supervisory information and cooperation,
the HKMA has entered into Memoranda of Understanding (’MoU’) or
other formal arrangements with a number of banking supervisory
authorities within and outside Hong Kong, including Singapore. The
marketing of, dealing in, and provision of advice and asset management
services in relation to securities and futures in Hong Kong are subject
to the provisions of the Securities and Futures Ordinance of Hong
Kong. Entities engaging in activities regulated by the Ordinance
(including HSBC) are required to be licensed or registered with the
Securities and Futures Commission (‘SFC’). The HKMA is the front-line
regulator for banks involved in the securities and futures business.
The HKMA and the SFC work very closely to ensure that there is an
open market with a level playing field for all intermediaries in the
securities industry of Hong Kong.
Among other functions, the Securities and Futures Ordinance vests the
SFC with powers to set and enforce market regulations, including
investigating breaches of rules and market misconduct and taking
appropriate enforcement action.
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The SFC is responsible for licensing and supervising intermediaries
conducting SFC-regulated activities, such as investment advisers, fund
managers, brokers, trustees and custodians. Additionally, the SFC sets
standards for the authorisation and regulation of investment products,
and it reviews and authorises offering documents of retail investment
products to be marketed to the public.
To promote proper conduct and increase awareness of individual
responsibility and accountability, the SFC introduced and implemented
the Manager-In-Charge (‘MIC’) regime in Hong Kong. The MIC regime
applies to senior individuals of licensed corporations responsible for
managing core functions within financial services businesses
supervised by the SFC. The regime required SFC-licensed corporations
to review their organisational structure and the roles of senior
management and their responsible officers in light of the SFC’s
classification of core functions within licensed corporations and its
guidelines on identifying MIC of core functions. The regime also
imposes reporting requirements on SFC-licensed corporations.
Similar to the SFC, the HKMA launched its Management Accountability
Initiative, which is aimed at increasing the accountability of the senior
management of Hong Kong registered institutions (‘RIs’) i.e. Hong
Kong banks registered to carry on one or more regulated activities
under the SFO. The Management Accountability Initiative clarified the
HKMA’s expectations on the responsibility and accountability of RIs’
senior management, and enhanced its information-gathering on RIs’
regulated activities, while requiring RIs to better identify lines of
responsibility and accountability for their regulated activities.
To support capacity building and talent development, the HKMA has
been working with the banking industry and relevant professional
bodies to implement an industry-wide enhanced competency
framework for banking practitioners. Currently, the enhanced
competency framework for banking practitioners covers ten
professional work streams: anti-money laundering and counter-
financing of terrorism; cybersecurity; treasury management; retail
wealth management; credit risk management; operational risk
management; fintech; private wealth management; green and
sustainable finance; and compliance.
Relevant to the Group‘s insurance business in Hong Kong, the HKMA
and the Hong Kong Insurance Authority (‘IA’) have signed an ‘MoU’ to
enhance the cooperation, exchange of information and mutual
assistance between the two authorities. This MoU sets out the
framework between the HKMA and the IA for strengthening co-
operation in respect of regulation and supervision of entities or financial
groups in which the two authorities have a common regulatory interest.
Pursuant to the statutory regulatory regime for insurance intermediaries
under the Insurance Ordinance, the IA has delegated its inspection and
investigation powers to the HKMA in relation to the insurance-related
businesses of authorised institutions in Hong Kong, which aims to
minimise possible regulatory overlap.
Under the statutory regime for the regulation of Mandatory Provident
Fund (‘MPF’) intermediaries, the Mandatory Provident Fund Schemes
Authority is the lead regulator in respect of regulation of MPF
intermediaries whereas the HKMA, the IA and the SFC are the front-
line regulators of the MPF intermediaries.
The Financial Institutions (Resolution) Ordinance (‘FIRO‘) established
the legal basis for a cross-sector resolution regime in Hong Kong under
which the HKMA is the resolution authority for banking sector entities,
including all authorised institutions. The HKMA is also designated as
the lead resolution authority for the cross-sectoral groups in Hong Kong
that include banking sector entities within the scope of the FIRO. The
HKMA’s function as a resolution authority is undertaken by the
Resolution Office within the HKMA. The Resolution Office is
operationally independent and has a direct reporting line to the chief
executive of the HKMA.
For resolution to be both feasible and credible, the HKMA requires
authorised institutions to be organised and managed at all times in a
way that facilitates the effective use of its resolution powers in the
event of their failure or likely failure. Institutions must comply with
HKMA resolution standards, which support resolution planning and
address barriers to resolvability. Key requirements include regular
submission of core data to the Resolution Office, maintaining adequate
loss-absorbing capacity, ensuring liquidity and funding during resolution,
operational continuity, contractual recognition of suspension of
termination rights, and continuity of access to financial market
infrastructure services.
US regulation and supervision
The Group is subject to federal and state supervision and regulation in
the US. Banking laws and regulations of the Federal Reserve Board (the
‘FRB’), the Office of the Comptroller of the Currency (the ‘OCC’) and
the Federal Deposit Insurance Corporation (the ‘FDIC’) (collectively, the
‘US banking regulators’) govern various aspects of our US business.
HSBC Bank USA, N.A. (‘HSBC Bank USA’) is subject to direct
supervision and regulation by the Consumer Financial Protection
Bureau (‘CFPB’), which has the authority to examine and take
enforcement action related to compliance with US federal consumer
financial laws and regulations. HSBC Bank USA’s derivative activities
are subject to supervision and regulation by the Securities and
Exchange Commission (‘SEC’) and Commodity Futures Trading
Commission (‘CFTC’). The Group’s US securities broker/dealer and
investment banking operations are also subject to ongoing supervision
and regulation by SEC, the Financial Industry Regulatory Authority and
other government agencies and self-regulatory organisations under US
federal and state securities laws. Similarly, the Group’s US commodity
futures, commodity options and swaps-related and client clearing
operations are subject to ongoing supervision and regulation by the
CFTC, the National Futures Association and other self-regulatory
organisations under US federal commodities laws. Furthermore, since
we have substantial operations outside the US that conduct many of
their day-to-day transactions with the US, HSBC entities’ operations
outside the US are also subject to the extraterritorial effects of US
regulation in many respects.
HSBC Holdings and its US operations are subject to supervision,
regulation and examination by the FRB because HSBC Holdings is a
‘bank holding company’ (‘BHC‘) under the US Bank Holding Company
Act of 1956, as a result of its control of HSBC Bank USA and HSBC
Trust Company (Delaware), N.A., Wilmington, Delaware (‘HTCD’).
HSBC North America Holdings (‘HNAH‘) and HSBC USA Inc., are each
a ‘bank holding company’ and HNAH is also an intermediate holding
company (‘IHC’) regulated by the FRB. HSBC Holdings, HNAH and
HSBC USA Inc. have elected to be financial holding companies
pursuant to the provisions of the Gramm-Leach-Bliley Act and,
accordingly, may affiliate with securities firms and insurance
companies, and engage in other activities that are financial in nature or
incidental or complementary to activities that are financial in nature.
Under regulations implemented by the FRB, if any financial holding
company, or any depository institution controlled by a financial holding
company, ceases to meet certain capital or management standards, the
FRB may impose corrective capital and/or managerial requirements on
the financial holding company and place limitations on its ability to
conduct the broader financial activities permissible for financial holding
companies. In addition, the FRB may require divestiture of the holding
company’s depository institutions, or its affiliates engaged in broader
financial activities in reliance on the Gramm-Leach-Bliley Act if the
deficiencies persist.
The regulations also provide that if any depository institution controlled
by a financial holding company fails to maintain a satisfactory rating
under the Community Reinvestment Act of 1977, the FRB must
prohibit the financial holding company and its subsidiaries from
engaging in any additional activities other than those permissible for
bank holding companies that are not financial holding companies.
The two US banks, HSBC Bank USA and HTCD, are subject to
regulation and examination primarily by the OCC. HSBC Bank USA and
HTCD are subject to additional regulation and supervision by the FDIC,
the CFPB and the FRB. Banking laws and regulations restrict many
aspects of their operations and administration, including the
establishment and maintenance of branch offices, capital and reserve
requirements, deposits and borrowings, investment and lending
activities, payment of dividends and numerous other matters.
In 2019, the FRB and other US banking regulators introduced the
Tailoring Rules, which refine the application of enhanced prudential
standards for large US banking organisations and the US operations of
certain foreign banks. Under these rules, institutions with $50 billion or
more in total US assets are categorised into five groups (Categories I–
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IV and ‘Other Firms’) according to factors such as asset size, cross-
jurisdictional activity, short-term wholesale funding reliance, non-bank
asset size, and off-balance sheet exposures.
As of 1 January 2026, HNAH remains classified as a Category IV firm,
subject to the specific enhanced prudential standards for this category.
HSBC Bank USA is also required to comply with the regulatory capital
and liquidity requirements applicable to Category IV firms.
HNAH, HSBC USA Inc. (‘HUSI’) and HSBC Bank USA (‘HBUS’) are
required to maintain minimum capital ratios (exclusive of any capital
buffers), including a minimum Tier 1 leverage ratio of 4%, and a
minimum total risk-based capital ratio of at least 8%. HNAH, HUSI and
HBUS each calculate their risk-based capital requirements as Non-
Advanced Approaches banks in accordance with the Basel III rules as
adopted by US banking regulators. Over and above the minimum risk-
based requirements, HNAH is subject to a Stress Capital Buffer (‘SCB’),
which is floored at 2.5% and is recalibrated every other year unless
HNAH opts to be subject to supervisory stress testing by the FRB
during an ‘off year’. HUSI and HBUS continue to be subject to the static
2.5% capital conservation buffer (‘CCB‘). Compliance with the SCB/
CCB does not represent minimum requirements, but rather a
necessary condition to allow capital distributions and discretionary
bonus payments.
In 2023, US banking regulators proposed changes to the regulatory
capital rules applicable to US banks, BHCs and IHCs, including HNAH,
HSBC USA Inc. and HSBC Bank USA. The 2023 proposal has not yet
been finalised, and as of December 2025, a re-proposal of the rule
changes, rather than a finalised version of the 2023 proposal, is
expected to be issued, likely sometime in early 2026.
Under FRB regulations, HNAH is subject to supervisory stress testing
requirements (on an every other year basis, with the next FRB
supervisory stress test expected to take place in 2026) that are
designed to evaluate whether a BHC has sufficient capital on a total
consolidated basis to absorb losses and support operations under
severely adverse economic conditions. As part of the Comprehensive
Capital Analysis and Review (‘CCAR‘), the FRB uses pro-forma capital
positions and ratios under such stress scenarios to determine the size
of the SCB for each CCAR participating firm.
As part of CCAR, HNAH is required to submit an annual capital plan to
the FRB on or before 5 April of each year. Category IV firms may opt
into CCAR supervisory stress testing in an ‘off year’ in order to
recalibrate their SCB, based on their most recent supervisory stress
test. The SCB equals (i) a firm‘s projected decline in common equity tier
1 under the supervisory severely adverse stress testing scenario plus
(ii) one year of planned common stock dividends. HNAH’s SCB
requirement effective from 1 October 2025 is 5.1%, unchanged from
2024.
HNAH already utilises an internal capital assessment approach that is
analogous to the SCB and continues to review the composition of its
capital structures and capital buffers in light of these developments.
Under the Tailoring Rules, certain US banking organisations are subject
to heightened liquidity and risk management requirements, including
the US LCR and NSFR. Category IV firms whose weighted short term
wholesale funding equals or exceeds $50bn, including HNAH, are
subject to a less stringent US LCR and NSFR modified regulatory
requirement. As a result, under the modified US LCR requirement, a
LCR of 100% or higher reflects an unencumbered HQLA balance that is
equal to or exceeds 70% of the firm’s liquidity needs (net cash
outflows) for a 30-calendar day liquidity stress scenario.
Under the modified US NSFR requirement as applied to HNAH, a NSFR
of 100% or more reflects an available stable funding balance from
liabilities and capital over the next 12 months that is equal to or
exceeds 70% of the firm’s required stable funding amount for assets
and off-balance sheet exposures. As a Category IV firm, HNAH is also
subject to tailored liquidity risk management and liquidity buffer
requirements, as well as liquidity stress testing on a quarterly basis.
Section 165(d) of the Dodd-Frank Act requires designated financial
institutions, including foreign bank holding companies such as HSBC
Holdings plc (HSBC Group), to periodically submit a resolution plan to
the FDIC and Federal Reserve. This plan outlines the strategy for the
rapid and orderly resolution of their U.S. operations under the U.S.
Bankruptcy Code in the event of material financial distress or failure.
Following the transition of HSBC Group’s US Operations from Category
III to Category IV, HSBC Holdings now qualifies for triennial reduced
filings. The last reduced resolution plan was submitted in July 2025,
with the next submission due 1 July, 2028. In July 2024, the FDIC
finalised a rule requiring insured depository institutions (IDIs) with total
assets of $100 billion or more to submit resolution plans (the ‘IDI plan’).
The rule revises existing requirements concerning the content and
timing of full resolution submissions and interim supplements, in the
off years and enhancing the FDIC’s preparedness for potential distress
or failure of large IDIs. It also strengthens the assessment of
submission credibility, broadens expectations for engagement and
capabilities testing, and clarifies the FDIC’s approach to review,
feedback, and enforcement of compliance. HSBC Bank USA continues
to be required to submit an IDI Plan every three years and would
become subject to increased content requirements and an emphasis
on capabilities testing and engagement with the FDIC. In April 2025,
the FDIC waived several of the substantive requirements associated
with all IDI Plan submissions due in July 2025, and, in December 2025,
extended that waiver for certain IDI Plan submissions due in 2026,
including HSBC Bank USA's full IDI Plan. In December 2025, the FDIC
indicated that it intends to consider further changes to its resolution
plan requirements in 2026. As a result, the future of these
requirements is uncertain. HSBC Bank USA submitted an interim
supplement on 1 July 2025, while its next full IDI Plan submission is
due by 1 July 2026.
In Q4 2024, the Office of the Comptroller of the Currency (OCC) issued
guidelines establishing recovery planning standards for certain financial
institutions, effective 1 January 2025. These requirements apply to
insured national banks, Federal savings associations, and Federal
branches with average total consolidated assets of $100 billion or more.
HSBC Bank USA became subject to these standards, with compliance
deadlines set for 1 January 2026 (overall recovery plan) and 1 January
2027 (scenario testing). HSBC Bank USA submitted its recovery plan in
December 2025, in line with the Guideline. In October 2025, the OCC
proposed rescinding the recovery planning guidelines; however, as no
final rule has been issued, the requirement for the 1 January 2027
submission remains uncertain.
The FRB has separately established a framework for recovery plans,
although HSBC is not currently required to submit a recovery plan to US
regulators unless specifically requested to do so. The FRB limits credit
exposures to single counterparties for large BHCs and IHCs. HNAH is
not directly subject to these single counterparty credit limits.
Independent of HNAH‘s classification as a Category IV firm, HNAH,
together with its subsidiaries, could become subject to limits on its
exposures to unaffiliated counterparties if its parent, HSBC, cannot
certify its compliance with a large exposure regime in the UK that is
consistent with the Basel large exposure framework.
Pursuant to Title VII of the Dodd-Frank (‘Title VII’), the SEC and CFTC
have adopted extensive requirements to regulate over-the-counter
(‘OTC’) derivatives, including, among other requirements, registration
for swap dealers, major swap participants, security-based swap (‘SBS’)
dealer and major SBS participants, mandatory clearing and trade
execution of certain OTC derivatives, position limits for certain physical
positions and economically equivalent swaps, real-time public and
regulatory trade reporting, business conduct, enhanced documentation,
supervision, recordkeeping, and financial reporting requirements.
HSBC Bank USA and HSBC Bank plc are registered as swap dealers
with the CFTC and registered as SBS dealers with the SEC. Because it
is a non-US dealer, HSBC Bank plc is only subject to certain of the
CFTC’s requirements in respect of swap transactions with US persons
and certain persons guaranteed by or affiliated with US persons, and
only subject to certain of the SEC’s requirements in respect of SBS
transactions with US persons or which are arranged, negotiated, or
executed by US personnel. HSBC Bank plc is also permitted to satisfy
certain CFTC requirements and SEC requirements through ‘substituted
compliance’ pursuant to relevant determinations and related relief
issued by the SEC and the CFTC.
Pursuant to Title VII, the US prudential regulators adopted margin
requirements for non-cleared swaps and SBS for prudentially regulated
swap dealers and SBS dealers, such as HSBC Bank USA and HSBC
Bank plc. Subject to certain exceptions, the margin rules require HSBC
Bank USA and HSBC Bank plc to collect and post initial and variation
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margin for non-cleared swaps and SBS entered into with other swap
dealers and certain financial end-users. The prudential regulators’
margin requirements, the parallel margin rules adopted by the CFTC
and the SEC and certain non-US regulators, as well as other regulations
of OTC derivatives under Title VII, have increased the costs associated
with trading OTC derivatives and may adversely affect our business in
such products.
Dodd-Frank also expanded the extra-territorial jurisdiction of US courts
over actions brought by the SEC or the US with respect to violations of
the anti-fraud provisions in the Securities Act, the Securities Exchange
Act of 1934 and the Investment Advisers Act of 1940.
In addition, regulations could affect the nature of the activities that our
FDIC-insured depository institution subsidiaries may conduct, and may
impose restrictions and limitations on the conduct of such activities.
The implementation of the remaining Dodd-Frank provisions could
result in additional costs, or limit or restrict the way we conduct our
business in the US.
EU Regulation and supervision
HSBC Continental Europe (‘HBCE’), headquartered in France, is the
parent company of all HSBC European subsidiaries. In accordance with
provisions of the Capital Requirements Directive (‘CRD’), HBCE is an
Intermediate Parent Undertaking (‘IPU’) for HSBC's European
subgroup, centralising all coordination and requests to the unique Joint
Supervisory Team (‘JST‘) and the unique Internal Resolution Team
(‘IRT‘), made up respectively of the European Central Bank (‘ECB‘) and
the national supervisory authorities on the one hand, and the Single
Resolution Board (‘SRB‘) and the national resolution authorities on the
other. In particular, HBCE will have to submit consolidated reports
directly onto the portal of the French resolution authority (ACPR), as the
host authority of HBCE.
At the end of 2025, HBCE operated ten branches in the following
jurisdictions: Belgium, Czech Republic, Germany, Ireland, Italy,
Luxembourg, Netherlands, Poland, Spain and Sweden with two
principal subsidiaries, HSBC Bank Malta plc (‘HBMT’) and HSBC Private
Bank (Luxembourg) SA (‘PBLU’) following further transformation in
2022 and 2023 to support HBCE’s role as the Group’s EU IPU.
The revised Capital Requirements Regulation (‘CRR3’) implementing
EU’s Basel 3.1 package entered into force on 1 January 2025; however,
the market risk framework was delayed. In June 2025, the European
Commission (‘EC’) announced a further one-year delay to market risk
implementation to 1 January 2027. The one-year delay aims to ensure
that implementation in Europe is aligned to other major jurisdictions.
Furthermore, the European Banking Authority (‘EBA’) continues to
publish technical standards in line with its mandate to develop 140
technical standards.
In June 2024, the EU adopted amendments to the Capital
Requirements Directive (‘CRD6’) which EU member states are in the
process of transposing. While CRR3 and most CRD6 provisions apply
solely to HSBC’s European subsidiaries, CRD6 Article 21c introduces
restrictions on cross-border services offered by non-EU banking entities
to EU clients, with certain exemptions. Such cross-border restrictions
will generally come into effect in January 2027, although precise
effective dates will vary across EU member states.
Global and regional prudential and other
regulatory developments
The Group operates under the oversight of numerous regulatory
authorities and agencies. Regulatory changes are introduced both at the
national level and by global organisations such as Basel, FSB and the
G20. These global standards are subsequently adopted by individual
countries.
We are subject to regulatory stress testing across multiple jurisdictions,
with increasing frequency and more detailed data requirements from
supervisors. These include programmes from the BoE, FRB (see ‘US
regulation and supervision’), OCC, EBA, ECB, HKMA, and other
authorities. For further information, refer to ‘Stress testing’ on page
- Details on prudential changes are available in the ‘Regulatory
developments’ section on page 7 of the Pillar 3 Disclosures as at 31
December 2025.
Recovery and resolution
The HSBC Group is subject to recovery and resolution requirements in
many of the jurisdictions in which it operates. In Europe, the Bank
Recovery and Resolution Directive (BRRD) establishes a framework for
the recovery and resolution of EU credit institutions and investment
firms. This framework applies to HSBC’s operating banks in the
European region. In Hong Kong, the Banking Ordinance and Financial
Institutions (Resolution) Ordinance sets out requirements for recovery
and resolution planning. In general, each respective part of the HSBC
Group is responsible for ensuring that it meets local recovery and
resolution requirements where they exist, which are mainly applicable
only to those regulated entities in a particular jurisdiction. The PRA and
BoE, however, are the lead regulators from a recovery and resolution
perspective respectively for the consolidated HSBC Group.
HSBC maintains recovery plans designed to outline credible
management actions that the HSBC Group could implement in the
event of severe stress in order to restore its business to a stable and
sustainable condition. The HSBC Group submits a Group recovery plan
to the PRA, the latest plan being submitted to the PRA in June 2024. In
addition, certain HSBC entities also submit local recovery plans to host
regulators, where local recovery planning requirements are in place.
HSBC’s recovery plans are frequently re-appraised to reflect HSBC’s
Group structure as well as meet regulatory and internal feedback,
including through regular stress testing and ‘fire drill’ simulations.
In general terms, resolution refers to the exercise of statutory powers
where a financial institution and/or its parent or other group company is
deemed by its regulators to be failing, or likely to fail and it is not
reasonably likely that any action taken would result in the institution
recovering.
In view of the HSBC Group’s corporate structure, which comprises a
group of locally regulated operating banks, the preferred resolution
strategy for the HSBC Group, as confirmed by its regulators, is a
multiple point of entry (‘MPE’) bail-in strategy. This provides flexibility
for HSBC to be resolved either (i) through a bail-in at the HSBC
Holdings level, which enables the recapitalisation of operating bank
subsidiaries in the HSBC Group (as required) while restructuring actions
are undertaken, with the HSBC Group remaining together; or (ii) at a
local subsidiary level pursuant to the application of statutory resolution
powers by local resolution authorities.
In the event of a resolution of the HSBC Group, it is anticipated that the
MREL eligible debt issued externally by HSBC Holdings plc would be
written down or converted to equity by the BoE using its statutory
powers. This would enable subsidiaries of the HSBC Group to be
recapitalised, as needed, to support the resolution objectives and
maintain the provision of critical functions locally. Recapitalisation of
operating bank subsidiaries could be achieved through the write-down,
or conversion to equity, of internally issued MREL, Total Loss
Absorbing Capacity (‘TLAC‘) or Loss Absorbing Capacity (‘LAC‘). It is
anticipated that this approach to recapitalising the HSBC Group’s
operating bank subsidiaries would allow the Group to stay together in
order to ensure an effective stabilisation of the whole Group whilst also
facilitating an orderly restructuring process post resolution. Any
resolution of HSBC as a group would be coordinated by the BoE.
Given the geographical footprint of the HSBC Group, resolution
authorities have determined that HSBC has three resolution groups that
together account for over 92% ($817bn) of the Group’s consolidated
RWAs ($889bn): The Asia resolution group ('ARG'), the European
resolution group ('ERG') and the US resolution group ('USRG'). As a
result, HSBC is overseen by various regulators and resolution
authorities including its lead global regulators and resolution authority,
the BoE and the PRA and a number of host regulators and resolution
authorities. Examples include the European SRB, the HKMA, FRB,
FDIC and OCC. These host resolution authorities have statutory
resolution group powers which could be applied to subsidiaries of the
HSBC Group in their jurisdictions. The application of these local
statutory resolution powers may result in one or more individual
resolution authorities leading to a local resolution of the subsidiaries
within their jurisdiction.
This may or may not result in such subsidiaries ceasing to be part of the
HSBC Group, depending on the drivers of failure and the resolution
powers exercised by the relevant resolution authority.
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HSBC considers that a bail-in at the HSBC Holdings plc level that
enables subsidiaries in the HSBC Group to be recapitalised, (as
required), and the subsequent implementation of restructuring actions
while the HSBC Group remains together, is the strategy most likely to
deliver the optimal resolution outcome for all of HSBC’s stakeholders.
In July 2019, the BoE and PRA published final policies on the
Resolvability Assessment Framework (‘RAF‘), which places the onus
on firms to demonstrate their own resolvability and is designed to
increase transparency and accountability for resolution planning. In
order to be considered resolvable, HSBC must meet three outcomes:
(i) have adequate resources in resolution; (ii) be able to continue
business through resolution and restructuring; and (iii) be able to co-
ordinate its resolution and communicate effectively with stakeholders.
The RAF requires HSBC to prepare a report on the HSBC Group’s
assessment of its resolvability, which must be submitted to the BoE on
a periodic basis as requested by the BoE. HSBC Group submitted its
second report to the BoE in October 2023. In August 2024, HSBC
made its second public disclosure on its resolvability, which
summarised the key findings from the second RAF Self-assessment. In
line with the previous BoE RAF cycle, alongside HSBC's disclosure, the
BoE also disclosed its own assessment of UK banks’ resolvability,
including HSBC, against expectations set out in the RAF.
Regular engagement with the BoE and PRA is maintained on Recovery
and Resolution Planning topics. HSBC continues to engage with the
BoE, PRA and its global regulators in other jurisdictions to help ensure
that it meets current and future recovery and resolution requirements.
Financial crime regulation
HSBC is committed to preventing our products and services from being
exploited for criminal activity. We do this because it is the right thing to
do to protect our customers, shareholders, staff, the communities in
which we operate and the integrity of the financial system on which we
all rely. We recognise that financial institutions are inherently exposed
to financial crime risk, which cannot be mitigated in its entirety. We
employ a risk-based approach to managing our exposure by focusing
our resources in a manner that is proportionate to the level of financial
crime risk inherent in our business strategy and operating model. We
remain committed to conducting our activities in accordance with all
applicable financial crime laws and regulations in the markets in which
we operate, the expectations of our regulators, measures associated
with corporate criminal liability, and our own risk appetite.
HSBC has an established financial crime risk management programme
that is applicable across all global businesses and functions, and all
countries and territories in which we operate. This enables the bank
and its staff to detect, analyse, investigate, report and mitigate the risk
of HSBC facilitating or being used to facilitate financial crime, including
bribery and corruption, fraud, money laundering, terrorist financing and
proliferation financing, tax evasion, sanctions and export control
violations and evasion.
HSBC could be subject to heightened commercial, operational,
regulatory, reputational and market risks resulting from sanctions, trade
restrictions and other regulatory changes related to foreign policy or
national security concerns, as well as shifts in the geopolitical
landscape. These risks may increase or evolve due to changing
geopolitical dynamics, economic uncertainties, strategic competition in
technology, and political instability and conflicts. HSBC has developed a
comprehensive compliance framework to seek to manage sanctions
and other financial crime risks. It is designed to identify and respond to
changes in financial crime laws and regulations affecting the Group, to
identify and address exposure that may arise from the activities of the
Group, while fostering a strong compliance culture. This is supported
through an extensive training programme aimed at equipping HSBC
employees with the knowledge and skills necessary to maintain high
standards of compliance.
Technical and digital innovation in how we engage with customers and
the services we provide to them continue at pace. Considering the
dynamic and changing environment, including the increasing use of
alternative (including digitised) payment methods and technologies,
HSBC continues to shape its risk appetite and enhance its control
framework to detect, deter and disrupt financial crime more effectively,
increasing its use of intelligence-led technologies and artificial
intelligence to monitor customers for unusual or suspicious activity.
HSBC also maintains clear whistleblowing policies and processes, to
enable individuals to report concerns confidentially.
Disclosures pursuant to Section 13(r)
of the Securities Exchange Act
Section 13(r) of the Securities Exchange Act requires each issuer
registered with the SEC to disclose in its annual or quarterly reports
whether it or any of its affiliates have knowingly engaged in specified
activities or transactions with persons or entities targeted by U.S.
sanctions programmes relating to Iran, terrorism, or the proliferation of
weapons of mass destruction, even if those activities are not prohibited
by U.S. law, are conducted outside the U.S. by non-U.S. affiliates in
compliance with local laws and regulations, and are not material to the
business of the issuer or any of its affiliates.
To comply with this requirement, HSBC Holdings plc (together with its
affiliates, “HSBC”) has requested relevant information from its affiliates
globally. The following activities conducted by HSBC are disclosed in
response to Section 13(r) and are not material to the business of HSBC:
Legacy contractual obligations related to
guarantees
Between 1996 and 2007, we provided guarantees to a number of our
non-Iranian customers in Europe and the Middle East for various
business activities in Iran. In a number of cases, we issued counter
indemnities involving Iranian banks as the Iranian beneficiaries of the
guarantees required that they be backed directly by Iranian banks. The
Iranian banks to which we provided counter indemnities included Bank
Tejarat, Bank Melli, and the Bank of Industry and Mine.
There was no measurable gross revenue in 2025 under those
guarantees and counter indemnities. We do not allocate direct costs to
fees and commissions and, therefore, have not disclosed a separate
net profit measure. We are seeking to cancel all relevant guarantees
and counter indemnities, and do not currently intend to provide any
new guarantees or counter indemnities involving Iran. No guarantees
were cancelled in 2025, and approximately 14 remain outstanding.
Other relationships with Iranian banks
Activity related to U.S.-sanctioned Iranian banks not covered elsewhere
in this disclosure includes the following:
We act as the trustee and administrator for a pension scheme involving
employees of a U.S.-sanctioned Iranian bank in Asia. Under the rules of
this scheme, we accept contributions from the Iranian bank each
month and allocate the funds into the pension accounts of the Iranian
bank’s employees. We run and operate this pension scheme in
accordance with applicable laws and regulations. Estimated gross
revenue, which includes fees and/or commissions, generated by this
pension scheme during 2025, was approximately $2,224.
For the Iranian bank-related activity discussed above, we do not allocate
direct costs to fees and commissions and, therefore, have not
disclosed a separate net profit measure.
We currently intend to continue to wind down the above activities, to
the extent legally permissible, and not enter into any new such activity.
Activity related to U.S. Executive Order
13224
We have a corporate customer in Asia that was designated under
Executive Order 13224 in 2025. Immediately following the designation,
and prior to the accounts being restricted, we processed two low-value
local currency domestic payments for the customer.
We had an individual customer in Europe that was designated under
Executive Order 13224 in 2021. The relationship was exited in 2025
and, as part of the exit process, we wrote off a de minimis local
currency balance owed by the customer.
We had an individual customer in Latin America that was designated
under Executive Order 13224 in 2025. Shortly following the designation
and before the account was restricted, we processed three small local
currency domestic payments for our customer.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 117 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Other information |
We had an individual customer in the Middle East that was designated
under Executive Order 13224 in 2021. The customer’s accounts were
restricted at the time of designation and the relationship was exited
during 2025. As part of the exit process, we returned the customer’s
funds to the customer.
During 2025, as part of the settlement of the estate of a deceased
customer in the Middle East, we processed a local currency domestic
payment from the deceased customer’s account to an individual
designated under Executive Order 13224 who acted as representative
for the deceased customer’s heirs.
We have individual and corporate customers in the Middle East that,
during 2025, made local currency cheque payments for the rental of
property to a corporate entity designated under Executive Order 13224.
We processed these cheques on behalf of our customers.
During 2025, pursuant to general licences issued by the U.S.
Department of the Treasury’s Office of Foreign Assets Control, we
processed a small number of low-value U.S. dollar payments to the
account of a non-designated non-governmental organisation held at a
financial institution designated under Executive Order 13224 and one
U.S. dollar payment from an entity designated pursuant to Executive
Order 13224 to a non-designated corporate customer of HSBC.
For these activities, there was no measurable gross revenue or net
profit to HSBC during 2025.
Activity related to U.S. Executive Order
13382
We had a corporate customer in Asia that was designated under
Executive Order 13382 in 2025. Immediately following the designation,
and prior to the accounts being restricted, we processed two payments
for the customer. The relationship was exited in 2025 and, as part of
the exit process, we returned the customer’s funds to the customer.
For this activity, there was no measurable gross revenue or net profit to
HSBC during 2025.
Other activity
We have a non-Iranian insurance company customer in the Middle East
that, during 2025, made local currency domestic payments for the
reimbursement of medical treatment to a hospital located outside Iran
that is owned by the Government of Iran. We processed these
payments from our customer to the hospital.
We have three customers in the Middle East that, during 2025, made
local currency domestic payments for medical treatment to a hospital
located outside Iran that is owned by the Government of Iran. We
processed these payments from our customers to the hospital.
We have three corporate customers in the Middle East that, during
2025, received local currency cheques from a hospital located outside
Iran that is owned by the Government of Iran. We processed the
cheques from the hospital to our customers.
We have individual and corporate customers in the Middle East that,
during 2025, received local currency cheques from an insurance
company located outside Iran that is owned by the Government of Iran.
We processed these cheques from the insurance company to our
customers.
We have individual and corporate customers in Europe that, during
2025, made local currency domestic payments to, or received such
payments from, an Iranian embassy. Generally, these customers
appear to receive consular or other services provided by the embassy
or provide goods and services that support the conduct of the official
business of the embassy. We processed these payments between our
customers and the Iranian embassy.
We have an individual customer in Europe that is employed by a bank
located outside Iran that is owned by the Government of Iran. During
2025, we processed local currency salary payments received via a bank
that is not owned by the Government of Iran to our customer. We are
in the process of exiting the customer.
During 2025, we processed two low value local currency payments to a
pension fund in Europe from an account held at a non-designated
financial institution by an insurance company located outside Iran that is
owned by the Government of Iran.
For these activities, there was no measurable gross revenue or net
profit to HSBC during 2025.
Frozen accounts and transactions
We maintain several accounts that are frozen as a result of relevant
sanctions programmes, and safekeeping boxes and other similar
custodial relationships, for which no activity, except as licensed,
authorised, or otherwise related to the maintenance of such accounts
as consistent with applicable law, took place during 2025. There was no
measurable gross revenue or net profit to HSBC during 2025 relating to
these frozen accounts.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 118 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Risk
review
Our risk review outlines our approach to risk
management, how we identify and monitor top
and emerging risks, and the actions we take to
mitigate them. In addition, it explains our
material banking risks, including how we
manage capital.
| 119 | Our approach to risk |
|---|---|
| 121 | Top and emerging risks |
| 126 | Risk factors |
| 138 | Our material banking risks |
| 140 | Credit risk |
| 189 | Treasury risk |
| 200 | Market risk |
| 203 | Climate risk |
| 213 | Resilience risk |
| 213 | Regulatory compliance risk |
| 214 | Financial crime risk |
| 214 | Model risk |
| 215 | Insurance manufacturing operations risk |
4
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 119 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Our approach to risk
We recognise that the primary role of risk management is to help
protect our customers, business, colleagues, shareholders and the
communities that we serve, while ensuring we are able to support our
strategy and provide sustainable growth.
In addition, we recognise the importance of a strong culture, which
refers to our shared attitudes, beliefs, values and standards that shape
behaviours including those related to risk awareness, risk taking and
risk management. All our people are responsible for the management
of risk, with ultimate supervisory oversight residing with the Board.
The implementation of our business strategy remains a key focus. As
we deliver change initiatives, we seek to actively manage the execution
risks. We also perform periodic risk assessments, including against
strategies, to help ensure retention of key personnel for our continued
safe operation.
Our risk management framework
We aim to use a comprehensive risk management approach across the
organisation and across all risk types, underpinned by our culture and
values. This is outlined in our Risk Management Framework (‘RMF’),
including the key principles and practices that we employ in managing
material risks, both financial and non-financial.
The RMF sets out in a consistent way how we identify, assess and
manage the risks that matter the most with respect to our ability to
operate, grow, and meet external commitments. It translates our
strategy, values and commitments into practical actions and risk-based
decisions.
Our Group Risk and Compliance function is responsible for the Group’s
RMF. Independent from the business segments, including our sales
and trading functions, it provides challenge, oversight and appropriate
balance of risk and reward in decision-making. Its responsibility includes
establishing global policy, monitoring risk profiles, and identifying and
managing forward-looking risk.
Our people are responsible for managing both financial and non-
financial risk, including regulatory compliance and financial crime risks.
They are required to manage the risks of the business and operational
activities for which they are responsible. We maintain adequate
oversight of our risks through our various specialist risk stewards and
the collective accountability held by our chief risk officers (‘CROs’) and
chief risk and compliance officers (‘CRCOs’). We seek to maintain a
sound control environment and regularly test and monitor our
controls, which aim to prevent risks from materialising, detect when
they do, and recover and learn from issues in a timely manner within
our risk appetite.
Our risk appetite
Our risk appetite defines the level and types of risk that we are willing
to take to achieve our strategic objectives.
The Board approves the Group’s risk appetite and reviews it regularly to
help ensure it remains fit for purpose.
Our enterprise-wide risk appetite is expressed holistically through
various risk management mechanisms and activities, in both
quantitative and qualitative terms and is formally articulated through our
Risk Appetite Statement (‘RAS’).
The Group’s risk appetite is established considering:
–alignment with our strategy, purpose, values, external risk
environment, reputational and customer needs;
–compliance with applicable laws, regulations and regulatory
priorities;
–forward-looking insights into future risk exposure;
–sufficiency of available capital, liquidity and balance sheet leverage
to absorb the risks;
–capacity and capabilities of people to manage the risk landscape;
–functionality, capacity and resilience of available systems to manage
the risk landscape;
–effectiveness of the applicable control environment to mitigate risk;
and
–internally and externally disclosed commitments.
Performance against the Group’s RAS is reported to the Group Risk
Management Meeting to support targeted insight and discussion of
breaches of risk appetite and any associated mitigating actions. This
reporting helps risks to be promptly identified and mitigated and
informs risk-adjusted remuneration to drive a strong risk culture.
Each principal subsidiary and material operating entity is covered by a
RAS, and their alignment with the Group’s RAS is monitored.
Our risk governance
The Board has ultimate supervisory responsibility for the effective
management of risk.
The Group Chief Risk and Compliance Officer (‘GCRCO’), supported by
members of the Group Risk Management Meeting, holds executive
accountability for the ongoing monitoring, assessment and
management of the risk environment and the effectiveness of the risk
management framework.
The GCRCO is also responsible for the oversight of reputational risk,
with the support of the Group Reputational Risk Committee. Further
details can be found under the ‘Reputational risk’ section of
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-
risk.
Day-to-day responsibility for risk management is delegated to senior
managers with individual accountability for decision making.
We use a defined executive risk governance structure to help enable
appropriate oversight and accountability of risk, which facilitates
reporting and escalation to the Group Risk Management Meeting. This
structure is summarised in the following table.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 120 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Our approach to risk | ||||||
| Governance structure for the management of risk and compliance | ||||||
| --- | --- | --- | ||||
| Authority | Membership | Responsibilities include: | ||||
| Group Risk Management<br><br>Meeting | GCRCO<br><br>Group Chief Legal Officer<br><br>Group CEO<br><br>Group CFO<br><br>All other Group Operating Committee<br><br>members | –Supporting the GCRCO in exercising Board-delegated risk management authority<br><br>–Overseeing the implementation of risk appetite and the risk management framework<br><br>–Forward-looking assessment of the risk environment, analysing possible risk impacts<br><br>and taking appropriate action<br><br>–Monitoring all categories of risk and determining appropriate mitigating action<br><br>–Promoting a supportive Group culture in relation to risk management and conduct | ||||
| Group Risk and Compliance<br><br>Leadership Meeting | GCRCO<br><br>CRCOs of HSBC’s business segments<br><br>Regional CRCOs and CROs<br><br>Heads of Global Risk and Compliance<br><br>sub-functions | –Supporting the GCRCO in providing strategic direction for the Group Risk and<br><br>Compliance function, setting priorities and providing oversight<br><br>–Overseeing a consistent approach to accountability for, and mitigation of, risk and<br><br>compliance across the Group | ||||
| Global business/regional risk<br><br>management meetings | Global business/regional CRCOs and<br><br>CROs<br><br>Global business/regional CEOs<br><br>Global business/regional CFOs<br><br>Global business/regional heads of global<br><br>functions | –Supporting the GCRCO in exercising Board-delegated risk management authority<br><br>–Forward-looking assessment of the risk environment<br><br>–Implementation of risk appetite and the risk management framework<br><br>–Monitoring all categories of risk and overseeing appropriate mitigating actions<br><br>–Embedding a supportive culture in relation to risk management and controls |
ÑThe Board committees with responsibility for oversight of risk-related matters are set out on page 228.
ÑTreasury risks, excluding pension and insurance risks, are the responsibility of the Group Finance Management Meeting and the Group Risk Committee. Global
Treasury actively manages these risks, supported by the Holdings Asset and Liability Management Committee (‘ALCO’) and local ALCOs, overseen by Treasury
Risk Management and Risk Management Meetings. Further details on treasury risk management are set out on page 189.
Our responsibilities
All our people are responsible for identifying and managing risk within
the scope of their roles. Roles are defined using the three lines of
defence model, which takes into account our business and functional
structures as described below.
Three lines of defence
To create a robust control environment to manage risks, we use an
activity-based three lines of defence model. This model delineates
management accountabilities and responsibilities for risk management
and the control environment.
The model underpins our approach to risk management by clarifying
responsibility and encouraging collaboration, as well as enabling
effective coordination of risk and control activities. The three lines of
defence are summarised below:
–The first line of defence owns the risks and is responsible
for identifying, recording, reporting and managing these risks in line
with risk appetite, including that the right controls and assessments
are in place to mitigate them.
–The second line of defence challenges the first line of defence on
effective risk management, and provides advice, guidance and
assurance of the first line of defence to help ensure it is managing
risk effectively.
–The third line of defence is our Global Internal Audit function,
which provides independent assurance as to whether our risk
management approach and processes are designed and operating
effectively.
Stress testing
Our stress testing programme assesses potential financial risks to our
business model, and forms part of our risk management and capital and
liquidity planning. As well as undertaking regulatory-driven stress tests,
we conduct our own internally defined stress tests to understand the
nature of our potential vulnerabilities, quantify their impact, and develop
plausible mitigating actions. The outcome of a stress test provides
management with key insights into the impact of severely adverse
events on the Group and provides an indication to regulators of the
Group’s resilience to shocks and any consequences for financial
stability.
Our internal capital assessment uses a range of stress scenarios that
explore systemic risks, as well as other potential events that are
idiosyncratic to HSBC.
During 2025, we completed a Group-wide internal stress test of the
Group’s strategy and corporate plan. The stress scenario assessed the
impact of the ongoing trade policy uncertainty, including tariffs and
geopolitical conflicts which remain key risks for the global economy.
In addition to the Group-wide stress testing scenarios, each principal
subsidiary conducts regular macroeconomic and event-driven scenario
analysis specific to its region. They also participate, as required, in the
regulatory stress testing programmes of the jurisdictions in which they
operate, including stress tests required by the Bank of England (‘BoE’)
in the UK, the Federal Reserve Board (‘FRB’) in the US, and the Hong
Kong Monetary Authority (‘HKMA’) in Hong Kong.
We also conduct reverse stress tests each year at the Group level and,
where required, at a subsidiary entity level to understand potential
extreme conditions that would make our business model non-viable.
Reverse stress testing identifies potential stresses and vulnerabilities
we might face, and helps inform early warning triggers, management
actions and contingency plans designed to mitigate risks.
ÑFor further details of our stress testing and recovery and resolution planning,
see ‘Stress testing and recovery and resolution planning’ on page 190.
Key developments in 2025
In 2025, we continued to manage risks related to macroeconomic and
geopolitical uncertainties and develop risk management capabilities
through the continued enhancement of our risk management
framework. We work to maintain and build stronger relationships with
regulators and other external stakeholders to support our business and
customer objectives. We retained our focus on risk transformation and
financial crime and continued to assess the Group’s operational
resilience capability while prioritising the most significant enterprise
risks. More specifically, we sought to enhance our risk management in
the following areas:
–We have been advancing our programme aimed at strengthening
our global regulatory reporting processes and making them more
sustainable, including enhancing data, consistency and controls.
While this programme continues, there may be further impacts on
some of our regulatory ratios as we implement recommended
changes and continue to enhance our controls across the process.
–We strengthened our control environment through the continued
embedding of our Group Chief Control Oversight Office which
established a centralised approach to controls oversight across the
first line of defence business and process owners, including a
consistent approach to control standards, aggregated reporting and
testing.
–We enhanced our technology and cybersecurity controls to help
improve the resilience and security of our technology services in
response to the heightened external threat environment.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 121 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Our approach to risk |
–We responded to new innovations in the financial system, including
growing adoption of digital assets and currencies, as well as the
evolving use of AI through reviewing and enhancing controls across
risk areas to help us and our customers safely benefit from
innovation.
–We continue to enhance our processes, framework and controls to
improve the oversight of our third parties. We have strengthened
our due diligence and monitoring capabilities, with respect to the
financial stability of our third parties to better manage our supply
chain and we continue to assess and seek to manage our
operational resilience.
–We have further enhanced the way we identify and manage HSBC
Group climate-related risks, which have also been embedded
across the wider organisation. This has been achieved through risk
policy and guideline updates, including updates to our HSBC Group
climate risk approach document, and further development of our
risk metrics and assessments to help monitor and manage
exposures across our organisation. We have also reviewed a
number of climate models and have sought to enhance our internal
climate scenario analysis capabilities.
–We deployed advanced technology and analytics capabilities into
new markets to improve our ability to identify suspicious activities
and prevent financial crime. We will continue to evaluate
technological solutions to improve our capabilities in the detection
and prevention of financial crime.
–We continued to promote our whistleblowing service, HSBC
Confidential, ensuring it is embedded in our speak-up culture.
Continual enhancement is being undertaken to help ensure optimal
effectiveness of the service, while maintaining adherence to
regulation and legislation.
–We have refreshed our conduct approach to ensure it remains clear,
accessible and aligned with how we work today, while maintaining
the same strong standards and enhancing our capability to drive
positive outcomes for our customers and protect the integrity of
financial markets.
Top and emerging risks
We use a top and emerging risks process to provide a forward-looking
view of issues with the potential to threaten our operations or the
execution of our strategy over the medium to long term.
We proactively assess the internal and external risk environment, and
review the themes identified across our regions and business
segments, for any risks that may require global escalation. We update
our top and emerging risks as necessary.
Our current top and emerging risks are as follows.
Externally driven
Geopolitical and macroeconomic risks
Key economic and financial risks are monitored closely. The Group
remains exposed to these risks through its operations, investments and
business activity.
The global economy proved resilient to trade policy changes and
geopolitical shocks through 2025 and growth was stronger than
expected. Economic activity was supported by a decline in policy
interest rates and deficit spending across major economies. At the
same time, oil prices remained broadly stable despite heightened
geopolitical tensions over Venezuela and the Middle East. Asset prices
also rose on account of strong corporate earnings and investor
enthusiasm for technology stocks and investment in AI.
A key source of ongoing uncertainty is the volatility of US trade and
tariff policies. Changes to tariff rates, including sector-specific levies,
may deter capital investment and consumer spending, disrupt supply
chains and reduce global trade growth. Policy uncertainty and trade
disruption may also deter businesses from hiring. During 2025,
unemployment rose across many of our major markets, and there
remains a risk of further increases if layoffs begin to increase more
significantly, employment growth continues to be constrained by
uncertainty, or if investment in AI starts to yield productivity gains that
reduce demand for labour.
A broader escalation of tariffs and a trade war remain a risk. Strategic
competition between countries is reshaping trading relationships and
increasing the focus on long-term economic and supply chain security,
which could adversely affect the Group and our customers.
Tariffs are a particular challenge to China and other export-led
economies. While China has responded by diversifying trade to other
markets, it faces cyclical and structural challenges in the short to
medium term, including reviving the property sector. In contrast, the
effect of tariffs on the UK has been smaller, given the less significant
role of trade with the US. The UK benefited from securing an early
trade agreement with the US on relatively preferential terms, however
it now faces the possibility that the deal is replaced by alternative US
tariffs on different terms.
The disruption of key supply routes caused by geopolitical conflicts has
continued to impact global supply chains. The Russia-Ukraine war and
further conflict or military action, in the Middle East, Venezuela or
elsewhere, could impact economic activity regionally or globally which,
if continued for a prolonged period, could have a material adverse effect
on the Group’s business, financial condition, results of operations,
prospects, liquidity, capital position and credit ratings. The financial
impact on the Group of geopolitical risks in Asia is heightened due to
the region’s relatively high contribution to the Group’s profitability.
The monetary policy outlook remains uncertain across major
economies. During 2025, major central banks cut policy interest rates,
but several, including the US Federal Reserve, have had to balance
inflation – that has persisted above target – against weaker
employment growth. The Group’s financial performance could be
affected by changes to interest rate expectations. Policy interest rates
could be reduced further if inflation continues to moderate. However,
that trajectory could be disrupted if wage growth, tariffs or key
commodity prices keep inflation higher for longer.
The US dollar depreciated in 2025 driven by changing interest rates and
tariff policy uncertainty. The decline marked the end of a long period of
sustained appreciation against major currencies. Although the US dollar
remains the primary trade invoicing and reserve asset currency,
elevated volatility is expected to persist, reflecting concern over fiscal
sustainability and an increasingly complex fiscal and monetary policy
environment.
Equity markets rose strongly during 2025, led by significant gains for
the technology sector and AI company valuations in particular. While
high asset prices may create a tailwind from positive wealth effects,
current high valuations also raise the risk of a material fall in the
markets if the expected gains to productivity fail to materialise. In
addition, the Group remains exposed to the market risk and any
potential impact on economic growth of an abrupt revaluation of asset
prices.
Fiscal policy and high levels of government debt are monitored closely.
Debt levels in many of our major markets have continued to rise due to
higher social welfare costs and increased expenditures on defence and
climate transition. Rising government debt and high interest payments
could adversely impact the fiscal capacity and debt sustainability of
highly-indebted sovereign issuers. Emerging markets with substantial
debt and weak fiscal positions may also face increased repayment
costs, heightened refinancing risks, a greater likelihood of sovereign
rating downgrades, and a higher tax burden. This could prove negative
for short and long-term growth prospects. Uncertainty about future
taxation could undermine confidence, business investment and
consumer spending, which would be negative for the Group’s retail and
corporate operations in various markets.
Demographic shifts, including population ageing and migration patterns,
may alter savings and investment behaviours and result in reduced
demand for bank borrowing.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 122 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Top and emerging risks |
We continue to closely monitor market conditions in the Hong Kong
and mainland China commercial real estate (‘CRE’) markets. In Hong
Kong, market sentiment and the economic outlook continue to show
signs of improvement, supported by interest rate cuts, the positive
wealth effect from a buoyant equities market and improving economic
conditions. Nevertheless, recovery is likely to take time, with liquidity
and valuation pressures expected to continue in the near term,
particularly for mid-sized and sub-investment grade corporates. In
mainland China, market fundamentals remain weak and refinancing
risks continue.
ÑFor further details of market conditions, see page 177.
Sanctions and restrictions on trade and investment are continually
evolving in response to geopolitical events, and may adversely affect
the Group, its customers and the markets in which the Group operates.
These factors may result in increased legal, regulatory, reputational and
market risks, and a more complex operating environment. HSBC
actively monitors and responds to financial sanctions and restrictions on
trade and investment.
Global tensions over trade and technology are resulting in divergent
regulatory standards and compliance regimes, presenting long-term
strategic challenges for multinational businesses such as HSBC. As the
geopolitical landscape evolves, compliance by multinational
corporations with their legal or regulatory obligations or other initiatives
in one jurisdiction may be seen as supporting the law or policy
objectives of that jurisdiction over another, creating additional legal,
regulatory, reputational and political risks for the Group. We maintain
dialogue with our regulators in various jurisdictions on the impact of
legal and regulatory obligations on our business and customers.
While it is the Group‘s policy to comply with all applicable laws and
regulations of all jurisdictions in which it operates, geopolitical tensions
and potential ambiguities in the Group’s compliance obligations
continue to present challenges and risks for the Group, and could have
a material adverse impact on the Group’s strategy, business,
customers, operations, financial results and reputation.
Expanding data privacy, national security and cybersecurity laws in a
number of markets could pose potential challenges to intra-group data
sharing. These developments may affect our ability to manage financial
crime risks across markets due to limitations on cross-border transfers
of personal information.
Provisioning against credit loss is conducted under the IFRS 9 ‘Financial
Instruments’ (’IFRS 9’) calculations of ECL, which use forward-looking
scenarios that incorporate the economic and financial risks detailed
above. There remains uncertainty regarding the adequacy of our
models in capturing credit losses under emerging risks which are not
captured by the historical loss experience of our models, or to
effectively distinguish risks for specific sectors and portfolios.
The above risks could also have an impact on our customers, and we
continue to closely monitor the potential impacts and offer support to
our customers in line with regulatory, government and wider
stakeholder expectations.
ÑFor further details of our Central and other scenarios, see ‘Measurement
uncertainty and sensitivity analysis of ECL estimates’ on page 148.
Mitigating actions
–We closely monitor geopolitical and economic developments in key
markets and sectors. We may undertake scenario analysis, including
stress testing portfolios of particular concern to identify sensitivity to
loss under a range of scenarios. This helps us to take actions to
manage our portfolios where necessary, including through
enhanced monitoring, amending our risk appetite and/or reducing
limits and exposures.
–We regularly review key portfolios, including our commercial real
estate portfolio, to help ensure that individual customer or portfolio
risks are understood and that our ability to manage the level of
facilities offered through any downturn is appropriate.
–We apply management judgemental adjustments where modelled
ECL does not fully reflect the identified risks and related uncertainty,
or to capture significant late-breaking events.
–We continue to seek to manage the impact of sanctions and
restrictions on trade and investment through the use of reasonably
designed policies, procedures and controls, which are subject to
ongoing testing and enhancements.
–We have taken steps, where necessary, to enhance physical
security in geographical areas deemed to be at high risk from
terrorism and military conflicts.
Technology and cybersecurity risk
We operate in an extensive and complex technology landscape. We
need to remain resilient to support customers, our colleagues and
financial markets globally. Risks arise where, for example, technology –
including rapidly advancing AI – is not understood, maintained or
developed appropriately. We also continue to operate in an increasingly
complex cyber threat environment globally. These threats include
potential unauthorised access to systems, whether ours or those of our
third-party suppliers, including access to and potential exfiltration of
customer data. These threats require ongoing investment in business
and technical controls to defend against them.
Mitigating actions
–We continue to upgrade many of our technology systems and are
transforming how software solutions are developed, delivered,
maintained and tested as part of our investment in the Group’s
operational resilience to seek to meet the expectations of our
customers and regulators, and to help prevent disruptions to our
services and recover when they occur.
–Our cyber intelligence and threat analysis team continually evaluate
threat levels for the most prevalent cyber-attack types and their
potential outcomes (see page 63), and we continue to seek to
strengthen our controls to help reduce the likelihood and impact of
attacks including advanced malware, data leakage, exposure
through third parties and security vulnerabilities.
–We continue to seek to enhance our cybersecurity capabilities,
including infrastructure and network security, cloud security, identity
and access management, metrics and data analytics, and third-party
security assurance, and to invest in mitigating the potential threats
of emerging technologies.
–We regularly report and review cyber risk and control effectiveness
at executive level across business segments, functions and regions,
as well as at non-executive Board level to help enable appropriate
visibility and governance of the risk and its mitigating actions.
–We participate globally in industry bodies and working groups,
working together to seek to protect against, detect, respond to and
recover from cyber-attacks on financial organisations globally.
–We respond to attempts to compromise our cybersecurity in
accordance with our cybersecurity framework. To date, none of
these attacks have had a material impact on our business or
operations.
Environmental, social and governance
(‘ESG’) risks
We are subject to financial and non-financial risks associated with ESG-
related matters, such as climate change, nature-related and human
rights issues. These matters can impact us both directly and indirectly
through our business activities and relationships. For details of how we
govern ESG, see page 57.
We may face credit and trading losses, liquidity impacts and/or impacts
to our real estate portfolios if climate-related regulatory, legislative or
technological developments impact customers’ business models or if
extreme weather events disrupt or interrupt customers’ operations,
resulting in financial difficulty for customers and/or stranded assets, and
impacting their ability to repay their debts or secure insurance. Our
customers may find that their business models fail to align to a net zero
economy or face disruption to their operations or deterioration to their
assets as a result of extreme weather. Operational risk may also
increase if extreme weather events impact critical operations and
premises.
We may face regulatory compliance, legal, conduct and reputational
risks resulting from the increasing pace, breadth and depth of climate-
related regulatory expectations, including on the management of
climate risk, and variations in external ESG-related reporting standards
and taxonomies, requiring implementation in short timeframes across
multiple jurisdictions. Such risks may also arise from how we decide to
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 123 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Top and emerging risks |
support our customers in high-emitting sectors in their transition to net
zero, the preferences of different stakeholders in relation to our
approach to the transition to net zero, and if we make insufficient
progress in achieving our ESG-related ambitions, targets and
commitments.
We may face additional risks if we knowingly or unknowingly make
inaccurate, unclear, misleading, or unsubstantiated claims regarding
sustainability to our stakeholders.
Requirements, policy objectives, expectations, views or market and
public perceptions and preferences in connection with the transition to
a net zero economy and ESG-related matters may vary by jurisdiction
and stakeholder, particularly in light of the differing perspectives and
responses to climate change of stakeholders in different markets, such
as the UK, the US, the EU, and others. We may be subject to
potentially conflicting approaches to ESG matters in certain
jurisdictions, which may impact our ability to conduct certain business
within those jurisdictions or result in additional regulatory compliance,
reputational, political or litigation risks.
For example, our reputation and client relationships may be damaged
as a result of our decision to participate, or not to participate, in certain
projects perceived to be associated with causing or exacerbating
climate change, as well as any decisions we make to continue to
conduct or change our activities in response to considerations relating
to climate change, including the transition to net zero. These risks may
also arise from divergence in the implementation of ESG, climate policy
and financial regulation in the many regions in which we operate,
including initiatives to apply and enforce policy and regulation with
extraterritorial effect.
Our strategy and business model, including our products, services, and
risk management processes, will need to continue to evolve to align
with evolving regulatory requirements, stakeholder expectations and to
manage ESG-related risks. This may involve adapting the way we
measure and manage both financial and non-financial risks associated
with ESG matters. Achieving our strategy with respect to ESG matters,
including any related ambitions, targets and commitments we may set,
depends on a number of factors beyond the Group’s control, such as
technological advancements and supportive public policies in our
operating markets. If these external factors do not materialise or are
delayed, we may not meet our ESG-related ambitions, targets and
commitments.
We may encounter financial reporting risks concerning our climate and
ESG disclosures due to model limitations and the limited quality and
consistency of available data. As methodologies, data, scenarios, and
industry standards evolve with market practices, regulations, or
scientific advancements, our ability to collect and process required data
may be challenged, exposing us to financial reporting risk in relation to
our climate and ESG disclosures. This could result in the Group having
to re-evaluate its progress towards its ESG-related ambitions, targets
and commitments in the future, resulting in reputational, regulatory
compliance and legal risks.
We recognise the importance of nature-related risks, as well as the
complex interactions and compounding effects of climate and nature-
related risk drivers. Nature-related risks may emerge when
dependencies on natural capital – such as plants, soils and minerals and
ecosystem services – such as water availability and air quality – are
affected by key drivers of nature loss, or when there is a lack of
alignment between an organisation’s impact on the natural
environment and actions to protect, restore or reduce negative impacts
on nature. Such risks can affect both HSBC and our customers through
various channels, including macroeconomic, market, credit,
reputational, regulatory compliance and legal risks.
Businesses are expected to be transparent about their efforts to
identify and respond to the risk of adverse human rights impacts arising
from their business activities and relationships. Failure to manage this
risk may negatively impact people and communities, which in turn may
result in reputational, regulatory compliance and legal risks for HSBC.
Mitigating actions
–We continue to develop our climate risk management capabilities
across four key pillars: governance and risk appetite, risk
management, stress testing and scenario analysis, and disclosures.
–We continue to enhance our approach to managing and mitigating
the risk of greenwashing.
–Our sustainability risk policies form part of our broader risk
management framework and are important mechanisms for
managing risks. Our sustainability risk policies focus on mitigating
reputational, credit, legal and other risks related to our customers’
environmental and social impacts. For further details of our
sustainability risk policies, see page 49.
–Sustainability execution risk has been defined as a new risk type to
help identify and manage the risks around the delivery and
execution of our sustainability strategy. For further details, see page
204.
–We continue to develop our understanding of nature-related risks in
line with European and other emerging regulatory expectations.
–In 2025, we continued to focus on our approach to human rights risk
management relating to the goods and services we buy from third
parties and in respect of our business customers. For further details
of our approach to human rights risk management, see page 58.
–The scope of our financial reporting risk framework includes
oversight of the accuracy and completeness of climate and ESG-
related disclosures. Our risk appetite statement references our
climate and ESG-related disclosures. Our internal controls
incorporate requirements for addressing the risk of misstatement in
climate and ESG-related disclosures. We developed a framework to
support the implementation of controls for climate and ESG-related
disclosures, which includes areas such as process and data
governance, and risk assessment.
–We continue to engage with our customers, investors and
regulators on the management of climate and ESG risks. We also
engage with initiatives, including the Climate Financial Risk Forum,
to help with informing developing practice for climate risk
management.
ÑFor further details of our approach to climate risk management, see ‘Climate
risk’ on page 203.
ÑOur ESG review can be found on page 32.
Financial crime risk
Financial institutions remain under considerable regulatory scrutiny
regarding their ability to detect and prevent financial crime. In 2025,
these risks continued to be exacerbated by rising geopolitical tensions
and ongoing macroeconomic factors. These challenges require not only
the management of conflicting laws and approaches to legal and
regulatory regimes, but also the implementation of more complex and
less predictable sanctions and restrictions on trade and investment.
Amid growing cost of living pressures, we continue to face increasing
regulatory expectations with respect to managing internal and external
fraud and protecting customers. The accessibility and increasing
sophistication of Generative AI (‘GenAI’) can create additional financial
crime risks. While there is potential for the technology to support
financial crime detection, there is also a risk that criminals use GenAI to
perpetrate fraud, particularly scams.
The digitisation of financial services continues to have an impact on the
payments ecosystem, with an increasing number of new market
entrants and payment mechanisms, not all of which are subject to the
same level of regulatory scrutiny or regulations as banks.
Developments in digital assets and currencies have continued at pace,
with an increasing regulatory and enforcement focus on the financial
crimes linked to these types of assets.
We also continue to face increasing challenges presented by national
data privacy requirements, which may affect our ability to manage
financial crime risks across markets.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 124 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Top and emerging risks |
Mitigating actions
–We continue to seek to manage sanctions and restrictions on trade
and investment through the use of reasonably designed policies,
procedures and controls, which are subject to ongoing testing and
enhancements.
–We continue to develop our fraud controls and invest in capabilities
to fight financial crime through the application of advanced analytics
and AI, while monitoring technological developments and engaging
with third parties.
–We continue to assess the impact of a rapidly changing payments
ecosystem, as well as risks associated with direct and indirect
exposure to digital assets and currencies, in an effort to maintain
appropriate financial crime controls.
–We engage with regulators, policymakers and relevant international
bodies, to improve the effectiveness of managing financial crime
risk through changes to international standards, guidance and
legislation, including seeking to address data privacy challenges.
Digitalisation and technological
advances risk
Developments in technology and changes to regulations are enabling
new entrants to the industry, particularly with respect to payments.
This challenges us to continue innovating, enhancing efficiency, and
adapting our products to attract and retain customers, which may
require increased investment to meet evolving customer needs. We
aim to ensure that new digital capabilities do not weaken our resilience
or wider risk management capabilities.
New technologies such as GenAI, large language models, blockchain,
and quantum computing not only offer business opportunities but also
pose potential risks for HSBC. As with the use of all technologies, we
aim to maximise their potential while seeking to ensure a robust control
environment is in place to help manage the inherent risks.
Mitigating actions
–We continue to monitor this emerging risk and advances in
technology, as well as changes in customer behaviours, to
understand how these may impact our business.
–We assess new technologies to help develop appropriate controls
and maintain resilience.
–We closely monitor and assess financial crime risk and the impact
on payment transparency and wider payment infrastructure.
–We conduct risk assessments and have governance in place (for
example on AI and digital assets and currencies) to help enable
Group-wide cross-risk focus on areas of emerging technology.
–We seek to be transparent as to how we are engaging with new
technology innovation, for example publishing HSBC’s Principles for
the Ethical Use of Data and AI.
–We continue to make improvements to our related policies and to
our control framework to enhance the end-to-end management of
risks from new technology innovations.
Evolving regulatory environment risk
We operate across a range of highly regulated markets, designed to
protect customers, ensure the stability of the financial system and
prevent financial crime. Regulatory approvals and permissions are
required to operate in these markets. The approach to regulation is
increasingly fragmented, including in relation to AI and digital assets,
and a trend towards deregulation has emerged in some jurisdictions,
concurrently with regulatory actions to support business growth.
Mitigating actions
–We proactively manage relationships with regulators globally
covering a range of topics which include but are not limited to:
prudential requirements; operational resilience; resolvability; financial
reporting and data; ESG; conduct; sound risk and financial crime risk
management practices. We also engage with financial services
regulators to inform them of changes to the business and to
address their concerns, including meetings with them to discuss
strategic contingency plans, including those arising from geopolitical
issues.
–We monitor and track regulatory developments to understand the
evolving regulatory landscape and implement necessary changes
required by legislation and regulations.
–We engage with governments and regulators directly, and by
responding to formal consultations, to help shape legislation and
regulations to support our customers and strategic objectives.
Internally driven
Data risk
We use multiple systems and an increasing volume of data to support
our customers. Risk arises if data is incorrect, unavailable, misused or
unprotected. Like other banks and financial institutions, we must
comply with external regulatory obligations and laws governing data,
such as the Basel Committee on Banking Supervision’s 239
(‘BCBS239’) principles and the UK/EU General Data Protection
Regulation.
Mitigating actions
–We actively monitor the quality, availability and security of data that
supports our customers and internal processes, seeking to address
any identified issues.
–We continue to make regular improvements to our data policies and
control framework, including trusted sources, data flows and data
quality, to enhance comprehensive management of data risk.
–We seek to protect customer data through our data privacy
processes and controls, which set practices, design principles and
guidelines to help ensure compliance with data privacy laws and
regulations.
–We have established a comprehensive Risk Data Aggregation and
Risk Reporting framework, seeking to ensure compliance with
BCBS239 principles.
–We continue to modernise our data and analytics infrastructure
through investments in cloud technology, data visualisation,
machine learning and AI.
–We provide regular mandatory training globally to educate our
employees on data risk management, seeking to ensure they know
how to process and protect data effectively.
Risks arising from the receipt of services
from third parties
We use third parties to provide a range of goods and services. It is
critical that we seek to have appropriate risk management policies,
processes and practices over the selection, governance and oversight
of third parties and their supply chain, particularly for key activities that
could affect our operational resilience. Any deficiency in the
management of risks associated with our third parties could affect our
ability to support our customers and meet regulatory expectations.
Mitigating actions
We continue to:
–monitor the effectiveness of the controls operated by our third-party
providers and request third-party control reports, where required;
–develop the management of our intra-group arrangements using
equivalent control requirements as we apply to external third-party
arrangements;
–strengthen our due diligence and monitoring capabilities in respect
of the financial stability of our third parties;
–strengthen third-party risk oversight across all non-financial risks and
to enhance our processes and framework;
–enhance reporting capabilities to help improve the visibility of risk
and enable more robust management of our material third parties by
our business segments, functions and regions; and
–implement changes required by new regulations.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 125 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Top and emerging risks |
Model risk
Model risk remains a key area of focus given the regulatory scrutiny in
this area, with local regulatory exams taking place in many jurisdictions
and uplifted requirements from the PRA’s supervisory statement 1/23
(‘SS1/23’) being implemented.
We continued to prioritise the redevelopment of internal ratings-based
(‘IRB’) and internal model methods (‘IMM’) models, in relation to
counterparty credit, as part of the IRB repair and Basel 3.1 and
Fundamental Review of the Trading Book programmes. We have a key
focus on enhancing the quality of data used as model inputs and
ensuring that models adhere to both the letter and spirit of the
regulation. Some models have been approved, and a number are
pending approval decisions from the UK’s Prudential Regulation
Authority (‘PRA’) and other key regulators. We are a year into a major
project to redevelop our Wholesale IRB models which are expected to
be submitted for regulatory approval over the next two years. Should
the agreed timelines not be met, there is a potential risk of
requirements to hold additional capital or fines being applied by
regulators.
Focus remains on AI and machine learning models given the rapid pace
of technological advances, including the development of GenAI and
agentic AI (autonomous systems powered by AI agents). AI is driving
significant changes in modelling techniques, and regulators across the
globe are beginning to publish regulations and guidance.
Mitigating actions
–We are investing in the redevelopment of our IRB models used in
our wholesale businesses to enhance our modelling capability and
help ensure we meet regulatory expectations for the adoption of
Basel 3.1 requirements.
–We further enhanced our Model Risk Management (‘MRM’)
framework to meet the requirements of the PRA’s SS1/23 with a
programme of work in progress to implement these changes across
our model landscape.
–We completed the identification of tools that meet the definition of
Deterministic Quantitative Methods (‘DQMs’), which are complex
and material calculators, and although not technically models, they
present similar risks. We have now commenced a programme for
uplifting the controls for these DQMs.
–We made changes to our Model Risk Governance committees at
the Group, business and functional levels as part of our
organisational simplification, to help ensure they continue to provide
effective and efficient oversight of model risk.
–Model Risk Management works closely with businesses to support
the development of IRB/IMM/IMA/IFRS 9/stress testing models by
providing independent validation, review and challenge to help meet
risk management, pricing, capital management, and credit risk
measurement needs.
–Additional assurance work is performed by the model risk
governance teams, which act as second lines of defence. The
teams test whether controls implemented by model users comply
with model risk policy and if model risk procedures are adequate.
–Models using AI or GenAI techniques are reviewed by the relevant
risk teams and monitored by the business to help ensure that
identified risks have adequate oversight and review. A framework
has been developed to manage the range of risks that are generated
by these advanced techniques and to recognise the multidisciplinary
nature of these risks.
–We have enhanced our inventory control to apply heightened
scrutiny of agentic AI use cases before deployment.
Strategic execution risk
Effective management of strategic execution risk is essential to
delivering our strategy, fulfilling shareholder expectations, and
sustaining stakeholder confidence. To achieve the Group’s strategic
commitments, it is essential to engage in effective financial resource
planning that helps ensure safe and sustainable delivery of strategic
outcomes. Strategic execution risk remains elevated due to the
complexity and scale of ongoing strategic, regulatory and technological
change. It is critical to uphold and enhance strategic execution risk
controls and monitoring.
Mitigating actions
–We have refreshed our Strategic Risk Policy to strengthen control
requirements.
–We have clarified strategic execution risk management
requirements and oversight accountabilities.
–The Group Finance Management Meeting oversees the prioritisation
and funding, strategic alignment, and management of strategic
execution risk for transformative initiatives. Additionally, the HSBC
Holdings Board provides enhanced oversight over the simplification
programme, directly supervising its mobilisation and delivery.
–We have updated our strategic execution risk metrics and reporting
to help support improved monitoring and oversight of performance.
Risks associated with workforce
capability, capacity and environmental
factors with potential impact on growth
Our business segments and functions in all of our markets are exposed
to risks associated with workforce capacity challenges, including
challenges to retain, develop and attract high-performing employees in
key labour markets, the evolving skills requirements of our workforce
and compliance with employment laws and regulations. Failure to
manage these risks may have an impact on the delivery of our strategic
objectives. It could also result in poor customer outcomes or a breach
of employment laws and regulations, which may lead to regulatory
sanctions or legal claims.
Mitigating actions
–We seek to promote an inclusive workforce and provide health and
wellbeing support. We continue to build our speak-up culture
through active campaigns.
–We monitor hiring activities and levels of employee attrition, with
each business and function putting in place plans to help ensure
they have effective workforce forecasting to meet business
demands.
–We monitor people risks that could arise due to the implementation
of organisational restructuring, seeking to ensure that we manage
redundancies sensitively and support impacted employees. We
encourage our people leaders to focus on talent retention at all
levels, with an empathetic mindset and approach, while ensuring
the whole proposition of working at HSBC is well understood.
–Our Future Skills curriculum aims to provide skills that enable
employees and HSBC to be successful in the future.
–We develop succession plans for key management roles, with
oversight from the Group Operating Committee.
–We have introduced ‘How We Lead’, a new Group-wide leadership
framework designed to shape the way we operate. This initiative
brings with it a new set of Leadership Principles, and we expect it to
drive meaningful changes in our ways of working across the
organisation.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 126 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Risk factors
We have identified a suite of risk factors that cover a broad range of
risks to which our businesses are exposed. These risks have the
potential to have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position, strategy,
reputation and/or customers.
They may not necessarily be deemed as top or emerging risks;
however, they inform the ongoing assessment of our top and emerging
risks that may result in our risk appetite being revised. The risk factors
are set out below.
Macroeconomic and geopolitical risk
Economic and market conditions and
geopolitical developments may
adversely affect our financial condition
and results
Our earnings are affected by global and local economic, financial and
geopolitical changes. Uncertain economic conditions and volatile
markets can create a challenging operating environment for our
business operations.
HSBC has experience of financial and operational loss sustained as a
consequence of the economic cycle, financial crises and wars. Our
earnings, operations and operating model have been and could in future
be affected by the following factors:
–The economic cycle: Deteriorating business, consumer or investor
confidence and lower levels of investment and productivity growth,
may lead to economic recession and lower customer and client
activity. Rapid changes to the economic environment can also
create challenging operating conditions for financial institutions such
as HSBC and may affect our earnings and profits. The volatility of
US trade and tariff policies remains a key source of uncertainty.
Changes to tariff rates, including sector-specific levies, may deter
capital investment and consumer spending, disrupt supply chains
and reduce global trade growth. A broader escalation of tariffs, and a
potential trade war remain a risk. Policy uncertainty may also deter
businesses from hiring. During 2025, unemployment rose across
many of our major markets, and there remains a risk of further
increases if layoffs begin to increase more significantly, employment
growth continues to be constrained by uncertainty, or if investment
in artificial intelligence (’AI’) starts to yield productivity gains that
reduce demand for labour. Slowing growth in China over the second
half of 2025 also suggests that additional economic policy support
may be needed to stimulate domestic growth. Weak growth, higher
unemployment and rising costs could affect the earnings and
activity of our customers, which could, in turn, reduce demand for
our products and services.
–Inflation and monetary policy: The future path for interest rates
remains uncertain and changes to interest rate expectations could
affect net interest income, the fair value of our assets and liabilities
and overall financial performance. The combined pressure of tariffs,
persistent inflation and restrictive interest rates could have material
impacts on our customers as these factors could erode real
purchasing power, increase debt service costs and weigh on real
estate and other asset prices. High interest rates may affect the
credit rating of our customers and their ability to repay debt. This
could negatively impact the Group’s risk-weighted assets (’RWAs’)
and capital position, resulting in increases in expected credit losses
and other impairment charges (’ECL’) and potential liquidity stresses
due to, amongst other factors, increased customer drawdowns.
There could be further adverse impacts on the Group’s income if
high rates were to result in lower lending volumes and weaker
wealth and insurance revenue. Alternatively, lowering interest rates,
while stimulating demand for new lending, could reduce revenue
from net interest margins and profitability. Major central banks,
including the US Federal Reserve, the European Central Bank and
the Bank of England (‘BoE‘), eased monetary policy during 2025 as
higher inflation risks were seen to diminish as unemployment rose.
However, that trajectory could be disrupted if wage growth, tariffs
or key commodity prices keep inflation higher for longer.
–Financial stability: Changing economic conditions and shifting policy
create a more uncertain and volatile environment for asset markets.
Financial markets have seen significant gains over 2025, including in
the AI and the technology sectors, supported by the decline in short-
term interest rates. The investment in these sectors may lead to
future gains to productivity, while high equity market valuations may
create a tailwind from positive wealth effects. However, current
high valuations also raise the risk of a material fall in the markets, if
the expected gains to productivity fail to materialise. This could
adversely affect economic growth, which may, in turn, have an
adverse impact on HSBC’s risk profile and earnings by increasing
the financial vulnerability of customers and decreasing the value of
collateral and other claims. The depreciation of the US dollar through
2025 driven by changing interest rates and tariff policy uncertainty,
is also an area of focus due to the associated hedging and
revaluation risks. Elevated volatility is expected to persist,
reflecting concern over fiscal sustainability and an increasingly
complex fiscal and monetary policy environment. Exchange rate
volatility may affect our risk exposure through mark-to-market
changes in trading positions and the translation effects of currency
movements.
–Fiscal policy and high levels of government debt: Debt levels in
many of our major markets have continued to rise due to higher
social welfare costs and increased expenditures on defence and
climate transition. Rising government debt and high interest
payments could adversely affect the fiscal capacity and debt
sustainability of highly indebted sovereign issuers. Emerging
markets with substantial debt and weak fiscal positions may also
face increased repayment costs, heightened refinancing risks and
greater likelihood of sovereign rating downgrades. A fragmented
political landscape in many markets has diminished the political will
for fiscal tightening. These factors could drive higher refinancing
costs and could lead to tax increases that prove negative for growth.
Uncertainty about future taxation could undermine confidence,
business investment and consumer spending, which would be
negative for the Group’s retail and corporate operations in various
markets. Additionally, where HSBC has exposure to such
sovereigns or related parties, it could incur losses. At the same
time, sovereign rating downgrades and/or a disorderly increase in
long-term government funding costs, could increase the cost of
funding for HSBC and/or limit access to market funding, resulting in
an adverse impact on interest margins and liquidity.
–Longer term trends: Strategic competition between countries is
reshaping trading relationships and increasing the focus on long-
term economic and supply chain security, which could adversely
affect the Group and our customers. Diversification in trade
invoicing currencies, payment systems and reserve holdings is also
increasing as a consequence of these trends, raising liquidity and
volatility risks, as well as increasing operational complexity.
Evolving demographics, including population ageing and changing
migration patterns, may also result in changes to long-term savings
and investment behaviours, including reduced demand for bank
borrowing.
–Geopolitical risks: Geopolitical risks remain high. The disruption of
key supply routes caused by geopolitical conflicts has continued to
impact global supply chains. The Russia-Ukraine war and further
conflict or military action, in the Middle East, Venezuela or
elsewhere, could impact economic activity regionally or globally
which, if continued for a prolonged period, could have a material
adverse effect on the Group’s business, financial condition, results
of operations, prospects, liquidity, capital position and credit ratings.
(For further details see ’We are subject to political, social and other
risks in the countries in which we operate’).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 127 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
Adverse changes to the current economic, financial and geopolitical
situation including in relation to any of the factors listed above, could
result in:
–Idiosyncratic losses: Impairment estimates attempt to capture the
effects of economic, financial and geopolitical risks in the aggregate,
but credit losses on specific exposures, with idiosyncratic features
that make them particularly susceptible to the risks described
above, may not be fully captured in our impairment estimates;
–Sector-wide impairment: Changing economic conditions, policies
and funding costs may give rise to a deterioration in specific
industries and sectors that may reduce the creditworthiness of our
customers. For example, in mainland China, excess supply
conditions continued to weigh on the property market, despite
various central government policies introduced to support the
property market and wider economy. In contrast, the Hong Kong
real estate market showed some signs of recovery in the second
half of 2025, particularly in the residential segment, supported by
lower interest rates. Nevertheless, valuation pressures and liquidity
constraints are expected to continue in the near term, particularly for
mid-sized and sub-investment grade corporates. In addition, certain
products, sectors and countries may be targeted by material
increases in trade tariffs, potentially driving a slowdown in export
demand;
–Reduced credit demand: The demand for borrowing from
creditworthy customers may diminish during periods of recession or
where economic activity slows or remains subdued;
–A tightening of financial market conditions: Our ability to borrow
from other financial institutions or to engage in funding transactions
may be adversely affected by market disruption; and
–Goodwill and intangibles: A changing economic and geopolitical
outlook may change the recoverable value of assets and necessitate
a write down in the value of intangible balance sheet items such as
goodwill.
Provisioning against credit loss is conducted under the IFRS 9 ‘Financial
Instruments’ (IFRS 9) calculations of ECL, which use forward looking
scenarios that incorporate the economic and financial risks detailed
above. In the fourth quarter of 2025, HSBC’s Central scenario, which
has the highest probability weighting, assumes that GDP growth in
many of our major markets will remain stable, or slow down in 2026,
relative to 2025. Slower growth is assumed to result from the higher
global tariffs and weaker labour market conditions across major
economies. The scenario also assumes that central banks will cut
policy interest rates further over 2026, as inflation is expected to
converge towards official target rates.
However, forecasts remain uncertain, and changing economic
conditions and the materialisation of key risks could reduce the
accuracy of our Central scenario. There remains uncertainty regarding
the adequacy of our models in capturing credit losses under emerging
risks which are not captured by the historical loss experience of our
models, or to effectively distinguish risks for specific sectors and
portfolios. Our financial model outputs (including retail and wholesale
credit models such as IFRS loss models) continue to be monitored and
management judgemental adjustments are used where modelled ECL
does not fully reflect the identified risks and related uncertainty, or to
capture significant late-breaking events. Nevertheless, our model
outputs may fail to accurately capture the effects of complex economic,
financial and geopolitical risks. See also ’We could incur losses or be
required to hold additional capital as a result of model limitations or
failure‘.
The occurrence of any of these events or circumstances could have a
material adverse effect on our business, financial condition, results of
operations, prospects and customers.
We are subject to political, social and
other risks in the countries in which we
operate
We operate through an international network of subsidiaries and
affiliates across countries and territories around the world. Our global
operations are subject to potentially unfavourable political, social,
environmental and economic developments in such jurisdictions, which
may include:
–coups, armed conflict or acts of terrorism;
–political and/or social instability;
–geopolitical tensions;
–epidemics and pandemics (such as the Covid-19 pandemic);
–climate change, acts of God and natural disasters (such as floods
and hurricanes); and
–infrastructure issues, such as transportation and power failures.
Each of the above could impact RWAs, and the financial losses caused
by any of these risk events or developments could impair asset values
and the creditworthiness of customers.
These risk events or developments may also give rise to disruption to
the Group’s services and some may result in physical damage to our
operations and/or risks to the safety of our personnel and customers.
Geopolitical tensions could have significant ramifications for the Group
and its customers. In particular:
–Throughout 2025, the US government announced far-reaching tariffs
against a broad spectrum of countries, including the UK, China, the
EU, Canada, India, and Mexico. Although subsequent bilateral and
multilateral negotiations have moderated certain tariff rates,
particularly in sectors deemed critical to domestic supply chains,
there is a possibility that these deals are replaced by alternative US
tariffs on different terms, and the overall trade policy environment
remains fluid and unpredictable;
–While globalisation appears to remain deeply embedded in the
international system, it is increasingly challenged by protectionism,
including trade tariffs. The broad geographic footprint and coverage
of HSBC may make us and our customers susceptible to
protectionist measures taken by national governments and
authorities, including imposition of trade tariffs, restrictions on
market access and investment, restrictions on the ability to transact
on a cross-border basis, expropriation, restrictions on international
ownership, interest rate caps, limits on dividend flows and increases
in taxation. There may be uncertainty as to the conflicting nature of
such measures, their duration, the potential for escalation, and their
potential impact on global economies;
–Following the US military operation in Venezuela, further action
elsewhere remains possible. Such developments, including the
actual or threatened use of force, could have regional or global
economic and political implications, leading to further trade
disruption. (For further details, see ’Economic and market conditions
and geopolitical developments may adversely affect our financial
conditions and results’);
–Sanctions and restrictions on trade and investment are continually
evolving in response to geopolitical events and may adversely affect
the Group, its customers and the markets in which the Group
operates. These factors may result in increased legal, regulatory,
reputational and market risks, and a more complex operating
environment;
–The Russia-Ukraine war along with related financial sanctions, trade
restrictions and Russian countermeasures, has had global economic
and political implications. The US, the UK, and the EU, as well as
other countries, have continued to impose sanctions against Russia.
The US retains broad discretion to impose sanctions on non-US
financial institutions that knowingly or unknowingly engage in
transactions or provide services to sanctioned parties or otherwise
involve Russia’s military-industrial base. The imposition of such
sanctions against any non-US HSBC entity could result in significant
adverse commercial, operational, and reputational consequences for
HSBC;
–Strategic competition between the US and China, including in the
form of escalation and de-escalation over tariffs, sanctions, export
controls, the trade of rare earth minerals and semiconductors, and
cross-border investment restrictions, have increased risk and
uncertainty. Diplomatic tensions between China and the US and
related actions, which may extend to and involve other countries,
and developments in Hong Kong and Taiwan and the surrounding
maritime region, may further adversely affect the Group.
Developments in alternative payment systems, such as projects to
explore how tokenised commercial and central bank money could be
used for cross-border payments, continue with implications for the
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Risk factors |
future architecture of global finance. Development of new payments
infrastructure and use of alternative currencies may present operational
and other challenges, if, for example, certain governments mandate the
use of payment channels that do not integrate with our payment
architecture and financial crime controls.
Global tensions over trade and technology are resulting in divergent
regulatory standards and compliance regimes, presenting long-term
strategic challenges for multinational businesses such as HSBC. As the
geopolitical landscape evolves, compliance by multinational
corporations with their legal or regulatory obligations or other initiatives
in one jurisdiction may be seen as supporting the law or policy
objectives of that jurisdiction over another, creating additional legal,
regulatory, reputational and political risks for the Group. The financial
impact on the Group of geopolitical risks in Asia is heightened due to
the region’s relatively high contribution to the Group’s profitability,
particularly in Hong Kong.
While it is the Group’s policy to comply with all applicable laws and
regulations of all jurisdictions in which it operates, geopolitical tensions,
and potential ambiguities in the Group’s compliance obligations,
continue to present challenges and risks for the Group and could have a
material adverse impact on the Group‘s strategy, business, customers,
operations, financial results and reputation.
We are subject to financial and non-
financial risks associated with
Environmental, Social and Governance
(‘ESG‘) related matters, such as climate
change, nature-related and human rights
issues
ESG-related matters such as climate change, society’s impact on
nature and human rights issues bring risks to our business, our
customers and wider society. If we fail to meet evolving regulatory
expectations or requirements relating to these matters, this could have
regulatory compliance and reputational impacts.
Climate change could have both financial and non-financial impacts on
HSBC either directly or indirectly through our business activities and
relationships. Our climate risk approach identifies physical risk and
transition risk as primary drivers of climate risk. We continue to identify
the risk of greenwashing as a thematic risk issue related to climate risk,
which may arise if we knowingly or unknowingly make inaccurate,
unclear, misleading or unsubstantiated claims regarding sustainability to
our stakeholders.
Physical risk may arise from the increased frequency and severity of
extreme weather events, such as hurricanes and floods or chronic
gradual shifts in weather patterns or rises in sea level.
Transition risk may arise from the process of moving to a net zero
economy including changes in government policy and legislation,
technology, market demand and reputational implications triggered by a
change in stakeholder expectations in relation to our action or inaction.
We currently expect the following to be the most likely ways in which
climate risk may materialise for the Group:
–credit risk may increase if climate-related regulatory, legislative or
technological changes impact customers' business models or if
extreme weather events disrupt or interrupt operations, resulting in
financial difficulty for customers and/or stranded assets, or
impacting their ability to repay their debts. Clients may find that their
business models fail to align to a net zero economy or face
disruption to their operations or deterioration to their assets as a
result of extreme weather;
–trading losses if climate change results in changes to
macroeconomic and financial variables which negatively impact our
trading book exposures;
–liquidity impacts in the form of deposit outflows due to changes in
customer behaviours driven by impacts to profitability and wealth, or
from reputational concerns relating to the progress we make
towards our ESG-related ambitions, targets and commitments;
–our real estate portfolios may be impacted due to changes to the
climate, an increase in the frequency and severity of extreme
weather events and chronic gradual shifts in weather patterns,
which could impact both property values and the ability of borrowers
to afford their mortgage payments. This may lead to the reduced
availability or increased cost of insurance, including insurance that
protects property pledged as collateral for HSBC mortgages;
–operational risk may increase if extreme weather events impact
critical operations and premises;
–regulatory compliance risk may result from the increasing pace,
breadth and depth of climate-related regulatory expectations,
including on the management of climate risk, and variations in
climate-related external reporting standards and taxonomies,
requiring implementation in short timeframes across multiple
jurisdictions;
–conduct risk may arise in association with the increasing demand for
’green‘ or ’sustainable‘ products where there are differing and
developing standards or taxonomies;
–reputational risks may arise from how we decide to support our
customers in high-emitting sectors in their transition to net zero, the
preferences of different stakeholders in relation to our approach to
the transition to net zero, and if we make insufficient progress in
achieving our ESG-related ambitions, targets and commitments; and
–model risk may arise from the uncertain and evolving impacts of
climate change, as well as data and methodology limitations, which
present challenges to creating reliable and accurate model outputs.
We may face heightened reputational, regulatory compliance, and legal
risks as we advance towards our ESG-related ambitions, targets and
commitments. Stakeholders are likely to scrutinise our actions,
including the formulation of our ESG and sustainability risk policies, our
disclosures, and our financing and investment decisions in relation to
these ambitions, targets and commitments. Additional risks may arise if
we fail to:
–make sufficient progress towards our ESG-related ambitions,
targets and commitments;
–set adequate plans and execute, or adapt those plans as necessary,
in response to changes in the external environment;
–manage the risks associated both with meeting and not meeting our
ESG-related ambitions, targets and commitments; and
–meet evolving regulatory expectations and requirements on the
management of ESG risks.
We may also face risks related to climate and ESG-related litigation and
regulatory enforcement. This could occur directly if stakeholders
believe we are not effectively managing these risks, or indirectly if our
customers are involved in litigation, which might lead to a revaluation of
their assets.
Requirements, policy objectives, expectations, views or market and
public perceptions and preferences in connection with the transition to
a net zero economy and ESG-related matters may vary by jurisdiction
and stakeholder, particularly in light of the differing perspectives and
responses to climate change of stakeholders in different markets, such
as the UK, the US, the EU and others. We may be subject to potentially
conflicting approaches to ESG matters in certain jurisdictions, which
may impact our ability to conduct certain business within those
jurisdictions or result in additional regulatory compliance, reputational,
political or litigation risks.
For example, our reputation and client relationships may be damaged
as a result of our decision to participate, or not to participate, in certain
projects perceived to be associated with causing or exacerbating
climate change, as well as any decisions we make to continue to
conduct or change our activities in response to considerations relating
to climate change, including the transition to net zero. These risks may
also arise from divergence in the implementation of ESG, climate policy
and financial regulation in the many regions in which we operate,
including initiatives to apply and enforce policy and regulation with
extraterritorial effect.
We recognise the importance of nature-related risks, as well as the
complex interactions and compounding effects of climate and nature-
related risk drivers. Nature related-risks may emerge when
dependencies on natural capital - such as plants, soils and minerals -
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
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| Risk factors |
and ecosystem services - such as water availability and air quality - are
affected by key drivers of nature loss, or when there is a lack of
alignment between an organisation’s impact on the natural
environment and actions to protect, restore or reduce negative impacts
on nature. Such risks can affect both HSBC and our customers through
various channels, including macroeconomic, market, credit,
reputational, regulatory compliance, and legal risks.
Businesses are expected to be transparent about their efforts to
identify and respond to the risk of adverse human rights impacts arising
from their business activities and relationships. Failure to manage this
risk may negatively impact people and communities, which in turn may
result in reputational, regulatory compliance and legal risks for HSBC.
Our strategy and business model, including our products, services, and
risk management processes, will need to continue to evolve to align
with evolving regulatory requirements, stakeholder expectations and to
manage ESG-related risks. This may involve adapting the way we
measure and manage both financial and non-financial risks associated
with ESG matters. Achieving our strategy with respect to ESG matters,
including any related ambitions, targets and commitments we may set,
depends on a number of factors beyond the Group’s control, such as
technological advancements and supportive public policies in our
operating markets. If these external factors do not materialise or are
delayed, we may not meet our ESG-related ambitions, targets and
commitments.
We may encounter financial reporting risks concerning our climate and
ESG disclosures due to the limited quality and consistency of available
data. Such uncertainty poses a risk of relying on incomplete or
inaccurate data and models, potentially leading to sub-optimal decision-
making. As methodologies, data, scenarios, and industry standards
evolve with market practices, regulations, or scientific advancements,
our ability to collect and process required data may be challenged,
exposing us to financial reporting risk in relation to our climate and ESG
disclosures. Such developments could also necessitate revisions to our
internal measurement frameworks and reported data, including on
financed emissions, making year-on-year comparisons difficult. This
could result in the Group having to re-evaluate its progress towards its
ESG-related ambitions, targets and commitments in the future,
resulting in reputational, regulatory compliance and legal risks.
If any of the above risks materialise, this could have financial and non-
financial impacts for HSBC which could, in turn, have a material adverse
effect on our business, financial condition, results of operations,
reputation, prospects and strategy.
The UK’s trading relationship with the
EU, following the UK’s withdrawal from
the EU, may adversely affect our
operating model and financial results
The uncertain outcome of potential developments relating to the
financial services trading relationship between the UK and EU, including
the rules under which financial services may be provided on a cross-
border basis into the EU and its member states, remains a source of
risk for the Group.
The EU Capital Requirements Directive (’CRDVI’), which EU member
states are in the process of transposing into national law, introduces a
new requirement (‘the EU branch requirement’) under which non-EU
banks and significant investment firms would have to establish a
branch in each EU member state in which they carry out ‘core banking
activities’, defined as deposit taking, lending and guarantees, and
commitments. The EU branch requirement, which will be subject to
certain exclusions and exemptions will generally come into effect on 11
January 2027, although precise effective dates vary across EU member
states. Grandfathering of cross border core banking contracts entered
into before 11 July 2026 is provided for under CRDVI, although the
availability of such grandfathering may vary subject to transposition by
EU member states.
The Financial Services and Markets Act (‘FSMA’) 2023 became law in
June 2023 and provides for a number of changes to the regulatory
architecture in the UK. It contains provisions that would allow for
specified ‘onshored’ EU legislation, also known as ‘retained EU law’ or
‘REUL’ (and known as ‘assimilated law’ after 1 January 2024), to be
revoked and replaced by legislation or rules made by HM Treasury or
the regulators. FSMA 2023 allows for the eventual repeal of assimilated
law related to financial services and enables the government and
regulators to replace it in line with the FSMA model. Each piece of
assimilated law related to financial services is now within a ‘transitional
period’, lasting until its repeal is individually commenced by HM
Treasury in a phased and sequenced manner. Furthermore, as of 1
January 2024, certain legal effects previously associated with REUL
(now referred to as assimilated law) no longer apply, including the
supremacy of REUL over other types of conflicting domestic UK law,
general principles of EU law (which informed REUL’s interpretation and
application) and directly effective EU rights.
Uncertainty remains as to the extent to which EU and UK laws will
diverge in the future, as a result of the future repeal of assimilated law
under FSMA 2023 or further development of the EU‘s own regulatory
regime. In particular, the UK is in the process of revoking the remainder
of the assimilated version of the Capital Requirements Regulation and
replacing it with rules published and maintained by the Prudential
Regulation Authority (’PRA’), which will also reflect the UK’s
implementation of the Basel Committee on Banking Supervision‘s
(’BCBS’) final reforms to the prudential framework (’Basel 3.1’).
Any changes to the current EU and UK banking and financial services
rules, including as a result of the EU branch requirement, the UK’s
revocation and replacement of EU-derived laws, the UK and EU
implementation of Basel 3.1 reforms and any further divergences
between the two legal regimes, could require modifications to our UK
and EU operating models, with resulting impacts to our customers and
employees. The precise impacts on our customers will depend on the
nature of any developments and their individual circumstances and
could include disruption to the provision of products and services, and
this could in turn increase operational complexity and/or costs for the
Group.
More generally, over the medium to long term, the UK’s withdrawal
from the EU and the operation of the Trade and Cooperation
Agreement agreed between the EU and the UK (and any complexities
that may result therefrom), may lead to increased market volatility and
economic risk, particularly in the UK, which could adversely impact our
profitability and prospects for growth in this market.
In addition, the UK’s future trading relationship with the EU and the rest
of the world will likely take a number of years to fully stabilise. This may
result in a prolonged period of uncertainty, unstable economic
conditions and market volatility. This could include reduced international
trade flows and loss of export market shares, as well as currency
fluctuations. If any of the above risks materialise, this could have a
material adverse effect on our business, financial condition, results of
operations, reputation, prospects and strategy.
We operate in markets that are highly
competitive
We compete with other financial institutions in a highly competitive
industry that continues to undergo significant change as a result of
financial regulatory reform, as well as increased public scrutiny and a
continued challenging macroeconomic environment.
We target internationally mobile customers who need sophisticated
global financial solutions. We generally compete on the basis of the
quality of our customer service, the variety of products and services
that we can offer our customers, the ability of our products and
services to satisfy our customers’ needs, the extensive distribution
channels available for our customers, our innovation, and our
reputation. Continued and/or increased competition in any one or all of
these areas may negatively affect our market share and/or require
increased capital investment in our businesses in order to remain
competitive.
In the highly competitive markets in which we operate, our ability to
reposition or reprice our products and services from time to time may
be limited, and could be influenced significantly by the actions of our
customers or competitors. Any changes in the types of products and
services that we offer our customers, and/or the pricing for those
products and services, could result in a loss of customers and market
share.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
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| Risk factors |
Developments in technology and changes to regulations are enabling
new entrants to the industry. This challenges HSBC to continue
innovating and taking advantage of new digital capabilities so that we
improve how we serve our customers, drive efficiency and adapt our
products to attract and retain customers. As a result, we may need to
increase our investment in our business to adapt or develop products
and services to respond to evolving customer needs and regulatory
requirements. New digital capabilities have the potential to weaken our
resilience or wider risk management capabilities. If HSBC fails to
develop and adapt its products and services to take advantage of new
digital capabilities this could have an adverse impact on our business.
The digitisation of financial services continues to have an impact on the
payment services ecosystem, including new market entrants and
payment mechanisms, not all of which are subject to the same level of
regulatory scrutiny or regulations as financial institutions. This presents
ongoing challenges in terms of maintaining required levels of payment
transparency, notably where financial institutions serve as
intermediaries. Developments around digital assets and currencies
have continued at pace, with an increasing regulatory and enforcement
focus.
Any of these factors could have a material adverse effect on our
business, financial condition, results of operations, prospects and
reputation.
Changes in foreign currency exchange
rates may affect our results
We prepare our accounts in US dollars because the US dollar and
currencies linked to it form the major currency bloc in which we
transact and fund our business. However, a substantial portion of our
assets, liabilities, assets under management, revenues and expenses
are denominated in other currencies. Changes in foreign exchange
rates, including those that may result from a currency becoming de-
pegged from the US dollar, may have an effect on our accounting
standards, reported income, cash flows and shareholders’ equity.
Unfavourable changes in foreign exchange rates could have a material
adverse effect on our business, financial condition, results of
operations, capital position and prospects.
Market fluctuations may reduce our
income or the value of our portfolios
Our businesses are inherently subject to risks in financial markets and
in the wider economy, including changes in, and increased volatility of,
interest rates, inflation rates, credit spreads, foreign exchange rates,
commodity, equity, bond and property prices, and the risk that our
customers act in a manner inconsistent with our business, pricing and
hedging assumptions.
Market pricing can be volatile and ongoing market movements could
significantly affect us in a number of key areas. For example, banking
and trading activities are subject to interest rate risk, foreign exchange
risk, inflation risk and credit spread risk. Changes in interest rate levels,
interbank spreads over official rates and yield curves affect the interest
rate spread realised between lending and borrowing costs. The
potential for future volatility and margin changes remains. See
‘Economic and market conditions and geopolitical developments may
adversely affect our financial condition and results‘ above regarding the
impact of these on the interest rate environment. Competitive
pressures on fixed rates or product terms in existing loans and
deposits sometimes restrict our ability to change interest rates applying
to customers in response to changes in official and wholesale market
rates. Our pension scheme assets include equity and debt securities,
the cash flows of which change as equity prices and interest rates vary.
Our insurance businesses are exposed to the risk that market
fluctuations may cause mismatches to occur between product liabilities
and the investment assets that back them. Market risks can affect our
insurance products in a number of ways depending upon the product
and the associated contract. For example, mismatches between assets
and liability yields and maturities give rise to interest rate risk. Some of
these risks are borne directly by the customer and some are borne by
the insurance businesses, with their excess capital invested in the
markets. Some insurance contracts involve guarantees and options that
increase in value in adverse investment markets. There is a risk that the
insurance businesses could bear some of the cost of such guarantees
and options. The performance of the investment markets could thus
have a direct effect upon the value embedded in the insurance and
investment contracts and our operating results, financial condition and
prospects.
It is difficult to predict with any degree of accuracy changes in market
conditions, and such changes could have a material adverse effect on
our business, financial condition, results of operations, capital position
and prospects.
Liquidity, or ready access to funds, is
essential to our businesses
Our ability to borrow on a secured or unsecured basis, and the cost of
doing so, can be affected by increases in interest rates or credit
spreads, the availability of credit, regulatory requirements relating to
liquidity or the market perceptions of risk relating to the Group or the
banking sector, including our perceived or actual creditworthiness.
Current accounts and savings deposits payable on demand or at short
notice form a significant part of our funding, and we place considerable
importance on maintaining their stability. For deposits, stability depends
upon preserving investor confidence in our capital strength and liquidity,
and on comparable and transparent pricing.
We also access wholesale markets in order to provide funding for
entities that do not accept deposits, to align asset and liability
maturities and currencies, and to maintain a presence in local markets.
In 2025, we issued the equivalent of $28.1bn of senior debt securities
in the public capital markets in a range of currencies and maturities
from a number of Group entities, including $25.7bn of senior securities
issued by HSBC Holdings.
An inability to obtain financing in the unsecured long-term or short-term
debt capital markets, or to access the secured lending markets, could
have a material adverse effect on our liquidity.
Unfavourable macroeconomic developments, market disruptions or
regulatory developments may increase our funding costs or challenge
our ability to raise funds to support or expand our businesses.
If we are unable to raise funds through deposits and/or in the capital
markets, our liquidity position could be adversely affected, and we
might be unable to meet deposit withdrawals on demand or at their
contractual maturity, to repay borrowings as they mature, to meet our
obligations under committed financing facilities and insurance contracts
or to fund new loans, investments and businesses.
We may need to liquidate unencumbered assets to meet our liabilities.
In a time of reduced liquidity, we may be unable to sell some of our
assets, or we may need to sell assets at reduced prices, which in either
case could materially adversely affect our business, financial condition,
results of operations, capital position and prospects.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
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| Risk factors |
Macro-prudential, regulatory and
legal risks to our business model
We are subject to numerous new and
existing legislative and regulatory
requirements, and to the risk of failure to
comply with applicable regulations
Our businesses are subject to ongoing regulation, policies, voluntary
codes of practice and interpretations in the various markets in which
we operate. A number of regulatory changes affecting our business
have effects beyond the country in which they are enacted. Increased
fragmentation in regulatory requirements may limit our ability to
implement globally consistent standards in response to regulatory
change.
The areas where regulatory changes and increased supervisory
expectations could have a material adverse effect on our business,
financial condition, results of operations, prospects, capital position,
reputation and strategy include, but are not limited to, those listed
below, grouped around prudential and non-prudential themes.
Prudential and related issues
In recent years, regulators and governments have focused on
reforming both the prudential regulation of the financial services
industry and the ways in which the business of financial services is
conducted. The measures taken include enhanced capital, liquidity and
funding requirements, the separation or prohibition of certain activities
by banks, changes in the operation of capital markets activities, the
introduction of tax levies and transaction taxes and changes in
compensation practices. Specific examples of such measures and
initiatives include:
–the implementation of Basel 3.1, which includes changes to the
RWA approaches to credit risk, market risk, operational risk,
counterparty risk and credit valuation adjustments, and the
application of an RWA output floor. The majority of the rules in the
new framework will take effect from 1 January 2027, while the
Internal Model Approach for market risk rules has been delayed until
1 January 2028;
–the UK government‘s Financial Services Growth and
Competitiveness Strategy, which was published in July 2025 and
which re-iterated proposals to reform the UK capital framework for
banks, including reforms to the UK’s bank ring fencing regime.
Finally, the BoE’s Financial Policy Committee (‘FPC’) was asked to
undertake a review of capital levels for banks in the UK. While the
FPC published the initial findings of its review in December 2025,
there remain a number of areas subject to further review, including
the capital buffers, the leverage ratio and the application of the RWA
output floor to the ring-fenced bank;
–enhanced supervisory expectations regarding regulatory reporting,
including increased focus on data integrity, governance, and
controls. To seek to address these expectations, we have been
advancing a programme aimed at strengthening our global
regulatory reporting processes and making them more sustainable,
including enhancing data, consistency and controls and, while this
programme continues, there may be further impacts on some of our
regulatory ratios, such as the common equity tier 1 (‘CET1’) ratio,
the liquidity coverage ratio (‘LCR’), and the net stable funding ratio
(‘NSFR’);
–the financial effects of climate risk and other ESG-related changes
being incorporated within the global prudential framework, including
physical risks from climate change and the transition risks resulting
from a shift to a low carbon economy;
–heightened supervisory concern regarding the growth of private
markets and their interconnection with banks, as demonstrated by
the BoE’s launch of a system-wide exploratory scenario in 2026 and
the PRA’s ‘Dear Chief Risk Officer’ letter on private equity related
financing activities from the PRA in 2024; and
–BCBS’s review of the cryptoassets RWA standard, following delays
in implementation reported by various jurisdictions, which attribute
the postponements to technological advancements in the
cryptoassets sector that have made parts of the Basel standards
outdated.
Non-prudential and related issues
With regard to the non-financial risk agenda, there is a focus on
business practices (including customers and markets), operational and
cyber resilience, AI, digital and technology changes, ESG, payments
and financial crime, including:
–continued focus by regulators, international bodies and policymakers
on banks’ business practices. This includes ensuring fair outcomes
for customers, fostering effective competition and maintaining the
orderly and transparent functioning of global financial markets. We
also continue to focus on employee culture and behaviour,
whistleblowing, and inclusion;
–the EU’s CRDVI Article 21c amendment requiring non-EU entities to
provide core banking services to EU clients through an EU branch or
subsidiary;
–the high regulatory expectations and requirements relating to
various aspects of operational and cyber resilience, and third-party
risks, including an ongoing focus on the response of institutions to
operational disruptions, including those arising out of the application
of the EU’s Digital Operational Resilience Act (‘DORA’), which came
into effect in January 2025;
–regulatory expectations and requirements around the use of AI,
including in connection with, the implementation of the EU’s AI Act
and the US’s AI Action Plan;
–the supervisory and regulatory focus on technology adoption and
digital delivery, underpinned by consumer protection, including in
respect of the use of digital assets and currencies and wider
financial technology risks. For example, the UK FCA and PRA
launched consultations in 2025 relating to stablecoin issuance,
custody of cryptoassets, associated requirements and the regulation
of systemic stablecoins. In the US, the Stablecoin (GENIUS) Act
was signed into law in July 2025. In Hong Kong, the HKMA
Stablecoin Ordinance came into effect in August 2025;
–the ongoing transition of a small number of legacy contracts tied to
benchmark rates that have been demised, which continues to
expose HSBC to regulatory compliance, legal and conduct risks. In
particular, if HSBC does not successfully transition its remaining
legacy contracts to the appropriate replacement benchmarks, this
could lead to reliance on fallback provisions which do not
contemplate the permanent cessation of the relevant demised
benchmark rate or on recently implemented legislative solutions the
operation and enforceability of which may, in certain circumstances,
remain uncertain, and this could result in unfavourable outcomes for
clients and investors;
–compliance with existing and future ESG-related risk management
and disclosure requirements applicable to banks and businesses
more generally, particularly those relating to climate change,
transition plans, greenwashing and supply chain due diligence (such
as requirements under the UK’s Sustainability Disclosure
Requirements, proposed amendments to the EU’s Sustainable
Finance Disclosure Regulation (‘SFDR’) and proposed changes to
the Corporate Sustainability Reporting Directive (‘CSRD’) and the
Corporate Sustainability Due Diligence Directive (‘CSDDD’) in the
EU). The US Agencies (the Federal Reserve Board, the Federal
Deposit Insurance Corporation, the Office of the Comptroller of the
Currency) have rescinded the interagency Principles for Climate-
Related Financial Risk Management for Large Financial Institutions
published in 2023, although various individual US states have issued
their own requirements, such as California's climate disclosure
rules;
–continuing supervisory and regulatory change globally on payment
services and related infrastructure, including future changes in the
EU as a result of the EU’s Third Payment Services Directive (‘PSD3’)
and an accompanying Payment Services Regulation, which are
expected to come into force in 2026; and
–the ongoing expectations with respect to managing emerging
financial crime risks and their impact on customers, managing
conflicting laws and approaches to legal and regulatory regimes, and
implementing complex sanctions and restrictions on trade and
investment.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 132 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
We are subject to the risk of current and
future legal, regulatory or administrative
actions and investigations, the outcomes
of which are inherently difficult to
predict
We face significant risks in our business relating to legal, regulatory or
administrative actions and investigations. The amounts of damages
claimed in litigation, regulatory proceedings, investigations,
administrative actions and other adversarial proceedings against
financial institutions remain elevated for many reasons. These reasons
include a substantial increase in the number of regulatory changes
taking place globally, increasing focus from regulators, investors and
other stakeholders on ESG disclosures, including in relation to the
measurement and reporting of such matters as both local and
international standards in this area continue to significantly evolve and
develop, increased media attention, higher expectations from
regulators and the public, and the globalisation of class actions,
including in relation to competition matters and data breach litigation. In
addition, criminal prosecutions of, and civil proceedings involving,
financial institutions for, among other things, alleged conduct breaches,
breaches of anti-money laundering, anti-bribery and anti-corruption and
sanctions regulations, antitrust violations, market manipulation, aiding
and abetting tax evasion, and providing unlicensed cross-border banking
services, have become more commonplace and may increase in
frequency due to increased media attention and higher expectations
from regulators and the public.
Any such legal, regulatory or administrative action or investigation
against HSBC Holdings or one or more of our subsidiaries could result
in, among other things, substantial fines, civil penalties, criminal
penalties, cease and desist orders, forfeitures, the suspension or
revocation of key licences, requirements to exit certain businesses,
other disciplinary actions and/or withdrawal of funding from depositors
and other stakeholders. Any threatened or actual litigation, regulatory
proceeding, administrative action, investigation, or other adversarial
proceedings against HSBC Holdings or one or more of our subsidiaries
could have a material adverse effect on our business, financial
condition, results of operations, prospects and reputation. Additionally,
the Group’s financial statements reflect provisioning for legal
proceedings, regulatory and customer remediation matters. Provisions
for legal proceedings, regulatory and customer remediation matters,
typically require a higher degree of judgement than other types of
provisions, and the actual costs resulting from such proceedings and
matters may exceed existing provisioning.
Additionally, as described in Note 35 to the Financial Statements, we
continue to be subject to a number of material legal proceedings,
regulatory actions and investigations, the outcomes of which are
inherently difficult to predict, particularly those cases in which the
matters are brought on behalf of various classes of claimants, seek
damages of unspecified or indeterminate amounts or involve novel
legal claims. Moreover, we may face additional legal proceedings,
investigations, or regulatory actions in the future, including in other
jurisdictions and/or with respect to matters similar to, or broader than,
the existing legal proceedings, investigations or regulatory actions. An
unfavourable result in one or more of these proceedings could have a
material adverse effect on our business, financial condition, results of
operations, prospects and reputation.
We may fail to meet the requirements of
regulatory stress tests
We are subject to supervisory stress tests in many jurisdictions, which
are described on page 190. These exercises are designed to assess the
resilience of banks to potential adverse economic developments or
operational failure to inform mitigation actions and ensure that they
have robust, forward looking capital planning processes that account for
the risks associated with their business profile. Assessment by
supervisors is both on a quantitative and qualitative basis, the latter
focusing on our data provision, stress testing capability and internal
management processes and controls.
Failure to meet quantitative or qualitative requirements of regulatory
stress tests, or the failure by supervisors to approve our stress test
results and capital plans, could result in the Group being required to
enhance its capital position, and this could, in turn, have a material
adverse effect on our business, financial returns, capital position,
operational capabilities and reputation.
HSBC and its UK subsidiaries may
become subject to stabilisation
provisions under the UK Banking Act
2009, in certain significant stress
situations
Under the Special Resolution Regime set out in the UK Banking Act
2009 (the ‘SRR’), HM Treasury, the BoE, the PRA and the FCA
(together, the ‘Authorities’) are granted substantial powers to
implement the following stabilisation options: (i) transfer of all or part of
the business of a relevant entity or the shares of the relevant entity to a
private sector purchaser; (ii) transfer of all or part of the business of the
relevant entity to a ‘bridge bank’ wholly owned by the BoE temporarily,
to allow for preparation for an onward sale to a private sector purchaser
or an initial public offering; (iii) transfer of part of the assets, rights or
liabilities of the relevant entity to one or more asset management
vehicles for management of the transferor’s assets, rights or liabilities;
(iv) the write-down, conversion, transfer, modification, or suspension of
the relevant entity’s equity, capital instruments and liabilities (the so-
called ‘bail-in power’); and (v) temporary public ownership of the
relevant entity.
The SRR also provides for modified insolvency and administration
procedures for relevant entities, and confers ancillary powers on the
Authorities, including the power to modify or override certain
contractual arrangements in certain circumstances. The UK Banking Act
2009 gives power to HM Treasury to make further amendments to the
law for the purpose of enabling it to use the SRR powers effectively,
potentially with retrospective effect.
These stabilisation options and powers may also be applied to a UK
bank or investment firm or to certain of their affiliates (which, in respect
of HSBC, could include HSBC Holdings) where certain conditions are
met.
In view of the HSBC Group’s corporate structure, which comprises a
group of locally regulated operating banks, the preferred resolution
strategy for the HSBC Group, as confirmed by its lead home and host
regulators through the annual Crisis Management Group, is Multiple
Point of Entry bail-in strategy. This approach provides flexibility for
HSBC to be resolved either (i) through a bail-in at the HSBC Holdings
level (using the above-mentioned bail-in power), which enables the
recapitalisation of operating bank subsidiaries in the HSBC Group (as
required) while restructuring actions are undertaken, with the HSBC
Group remaining together; or (ii) at a local subsidiary level pursuant to
the application of statutory resolution powers by local resolution
authorities. Further details on HSBC’s resolution strategy can be found
in the section entitled ‘Recovery and resolution’ on page 20.
In addition to the stabilisation options, the relevant Authority may, in
certain circumstances, require the permanent write-down or conversion
into equity of any outstanding tier 1 capital instruments and tier 2
capital instruments prior to the exercise of any stabilisation option
(including the bail-in power), which may lead to the cancellation,
transfer or dilution of HSBC Holdings’ ordinary share capital.
In general, the UK Banking Act 2009 requires the Authorities to have
regard to specified objectives in exercising the powers provided for by
the Act. One of the objectives (which is required to be balanced as
appropriate with the other specified objectives) refers to the protection
and enhancement of the stability of the financial system of the UK. The
UK Banking Act 2009 includes, in certain circumstances, and with
respect to the exercise of certain powers provided for by the Act,
provisions related to compensation in respect of transfer instruments
and orders made under it. This includes a ‘no creditor worse off’
safeguard, which requires that no shareholder or creditor must be left
worse off from the use of resolution powers than they would have
been had the entity entered insolvency rather than resolution.
However, if we are at or approaching the point where we may be
deemed by our regulators to be failing, or likely to fail, so as to require
regulatory intervention, any exercise of the above mentioned powers
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 133 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
by the Authorities may result in holders of our ordinary shares, or other
instruments that may fall within the scope of the ‘bail in’ or other write-
down and conversion powers granted under the UK Banking Act 2009,
being materially adversely affected, including by the cancellation of
shares, the write-down or conversion into shares of other instruments,
the transfer of shares to a third party appointed by the BoE, the loss of
rights associated with shares or other instruments (including rights to
dividends or interest payments), the dilution of their percentage
ownership of our share capital, and any corresponding material adverse
effect on the market price of our ordinary shares and other instruments.
We are subject to tax-related risks in the
countries in which we operate
We are subject to the substance and interpretation of tax laws in all
countries in which we operate and are subject to routine review and
audit by tax authorities in relation thereto. Our interpretation or
application of these tax laws may differ from those of the relevant tax
authorities and we provide for potential tax liabilities that may arise on
the basis of the amounts expected to be paid to the tax authorities. The
amounts ultimately paid may differ materially from the amounts
provided depending on the ultimate resolution of such matters.
In addition, potential changes to tax legislation, the approach taken by
tax authorities in audits, and tax rates in the countries and territories in
which we operate, in particular, those arising as a consequence of the
OECD‘s Base Erosion and Profit Shifting project, could increase our
effective tax rate in the future and have a material adverse effect on our
business, financial condition, results of operations, prospects and
capital position.
Risks related to our operations
Our operations are highly dependent on
our information technology systems
We operate in an extensive and complex technology landscape, which
must remain resilient to support customers, the Group and markets
globally. Risks can arise where technology is not understood,
maintained, or developed appropriately.
The reliability and security of the HSBC Group’s information technology
infrastructure is crucial to the HSBC Group’s provision of financial
services to our customers and protecting the HSBC brand.
The effective functioning of our payment systems, financial control, risk
management, credit analysis and reporting, accounting, customer
service and other information technology systems, as well as the
communication networks between our branches and main data
processing centres, are important to our operations.
Critical system failure, prolonged service unavailability or a material
breach of data security, particularly of customer data, could
compromise HSBC Group’s ability to serve its customers. Rapid
advances in AI may further facilitate cyber-attacks or data compromise.
Such scenarios could breach regulations and could cause long-term
damage to HSBC Group’s business and brand that could have a
material adverse effect on our financial condition, results of operations,
prospects and reputation.
We remain susceptible to a wide range
of cyber risks
The threat of cyber-attacks remains a concern for HSBC, as it does
across the global financial sector. As cyber-attacks continue to evolve,
failure to protect our operations may result in disruption for customers,
manipulation of data or financial loss. This could adversely impact our
customers and the Group.
Adversaries attempt to achieve their objectives by compromising HSBC
or our third-party suppliers. They use techniques that include malware
(such as ransomware), exploitation of both known and unpublished
(zero-day) software vulnerabilities, phishing emails, distributed denial of
service attacks, as well as physical compromise of premises, or
coercion of staff. Our customers may also be subject to these attack
techniques. The Group, like other financial institutions, has experienced
numerous common cyber-attacks, including for example, distributed
denial of service and phishing attacks. Some of our third-party service
providers have also experienced cyber-attacks. To date, we have not
been materially affected by cybersecurity threats. However, we expect
cyber-attacks to continue, and our business strategy, results of
operations and financial condition could be materially affected by
cybersecurity risks and any future material incidents.
Cybersecurity risks will continue to increase due to several factors,
including the growing delivery of services over the internet; increased
dependence on internet-based products, applications and data storage;
and the expanding use of AI, which could enable sophisticated cyber-
attacks. Additionally, the adoption of hybrid working models by HSBC’s
employees, contractors, and third-party service providers and their sub-
contractors contributes to this trend.
Failure to adhere to HSBC’s cybersecurity policies, procedures or
controls, employee or third-party wrongdoing, human error, or
governance or technological error could compromise HSBC’s ability to
defend against cyber-attacks. Should any of these cybersecurity risks
materialise, they could have a material adverse effect on our
customers, business, financial condition, results of operations,
prospects and reputation.
We could incur losses or be required to
hold additional capital as a result of
model limitations or failure
HSBC uses models for a range of purposes in managing its business,
including regulatory capital calculations, stress testing, credit approvals,
calculation of ECLs on an IFRS 9 basis, financial crime and fraud risk
management and financial reporting.
HSBC could face adverse consequences as a result of decisions that
may lead to actions by management based on models that are poorly
developed, implemented or used, or as a result of the modelled
outcome being misunderstood, or the use of modelled information for
purposes which it was not designed for, or by inherent limitations
arising from the uncertainty inherent in predicting or estimating future
outcomes. Regulatory scrutiny and supervisory concerns over banks’
use of models are considerable, particularly the internal models and
assumptions used by banks in the calculation of regulatory capital. If
regulatory approval for key capital models is not achieved in a timely
manner or if those models are subject to negative feedback from
regulators HSBC could face fines or be required to hold additional
capital. Evolving regulatory requirements have resulted in changes to
HSBC’s approach to model risk management, which poses execution
challenges. The adoption of more sophisticated modelling approaches
including AI and technology related developments by both HSBC and
the financial services industry could also lead to increased model risk.
HSBC’s commitment to changes to business activities due to climate
and sustainability challenges will also have an impact on model risk
going forward. Models will play an important role in risk management
and financial reporting of climate-related risks. Uncertainty around the
long-dated impacts of climate change and lack of robust and high-
quality climate related data present challenges to creating reliable and
accurate model outputs for these models.
Model risk remains a key area of focus given the regulatory scrutiny in
this area with local regulatory examinations taking place in many
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 134 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
jurisdictions and revised principles on model risk published by the PRA
which came into force in 2024.
Risks arising from the use of models could have a material adverse
effect on our business, financial condition, results of operations,
prospects, capital position and reputation. See also ‘Economic and
market conditions and geopolitical developments may adversely affect
our financial condition and results’.
Our operations use third-party suppliers
and service providers
HSBC relies on third parties to provide goods and services. The use of
third-party providers by financial institutions is of particular focus to
global regulators. This includes how outsourcing decisions are made,
how key relationships are managed, our understanding of third-party
dependencies, and the potential impacts of third parties on our
operational resilience.
The inadequate management of third-party risk could impact our ability
to meet strategic, regulatory and customer expectations.
This may lead to a range of impacts, including regulatory censure,
penalties or damage both to shareholder value and to our reputation.
This could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position and
reputation.
Risks related to our governance and
internal controls
Our data management and data privacy
controls must be sufficiently robust to
support the increasing data volumes and
evolving regulations
As the HSBC Group becomes more data-driven and our business
processes move to digital channels, the volume of data that we rely on
has increased. As a result, management of data (including data storage
and deletion, data quality, data privacy and data architecture) from
creation to destruction must be robust and designed to identify quality
and availability issues. Inadequate data management could result in
negative impacts to customer service, business processes, or require
manual intervention to reduce the risk of errors in reporting to senior
management, executives or regulators.
Expanding data privacy, national security and cybersecurity laws in a
number of markets could pose potential challenges to intra-group data
sharing. These developments could increase financial institutions’
compliance obligations in respect of cross-border transfers of personal
information, which may affect our ability to manage financial crime risks
across markets.
In addition, failure to comply with data privacy laws and other legislation
in the jurisdictions in which we operate may result in regulatory
sanctions. Any of these failures could have a material adverse effect on
our business, financial condition, results of operations, prospects, and
reputation.
Third parties may use us as a conduit for
illegal activities without our knowledge
We are required to comply with applicable financial crime laws and
regulations, and have adopted various policies, procedures and controls
aimed at preventing the exploitation of HSBC‘s products and services
for criminal activity. Financial crime includes fraud, bribery and
corruption, tax evasion and the facilitation of tax evasion, sanctions and
export control violations and evasion, money laundering, terrorist
financing and proliferation financing (see ‘Regulation and supervision -
Financial crime regulation’). There are instances, as permitted by
regulation, where we may rely upon third parties to undertake certain
financial crime risk management activities on our behalf. Any controls
implemented and maintained by HSBC to manage the risk created by
such reliance may not prevent third parties from using us (and our
relevant counterparties) as a conduit for financial crime, without our
knowledge (and that of those counterparties).
Becoming a party to, associated with, or accused of being associated
with, financial crime could damage our reputation and could make us
subject to fines, sanctions and / or legal or regulatory enforcement. Any
one of these outcomes could have a material adverse effect on our
strategy, business, customers, financial condition, results of operations,
prospects and reputation.
We are subject to the risk of financial
crime
We are exposed to financial crime risk from our customers, staff and
third parties engaging in criminal activity (see also ‘Third parties may
use us as a conduit for illegal activities without our knowledge’) and, as
such, we continue facing increasing regulatory expectations. In 2025,
financial crime risk continued to be exacerbated by increasingly
complex geopolitical challenges, the macroeconomic outlook, the
complex and dynamic nature of sanctions and export control
compliance, evolving financial crime regulations, rapid technological
developments, an increasing number of national data privacy
requirements and the increasing sophistication of fraud and other
criminal activities. Our ability to manage financial crime risk is
dependent on the use and effectiveness of our financial crime risk
assessments, systems and controls. Weak or ineffective financial crime
processes and controls may risk HSBC inadvertently facilitating financial
crime, which may result in regulatory investigation, sanction, litigation,
fines and reputational damage.
In addition, HSBC Bank USA, as the primary US dollar correspondent
bank for the Group, is subject to heightened financial crime risk arising
from business conducted on behalf of its non-US HSBC affiliates.
HSBC Bank USA has implemented policies, procedures and controls
reasonably designed to comply with financial crime legal and regulatory
requirements and mitigate financial crime risk from its affiliates.
Nevertheless, in the event that these controls are ineffective, this could
lead to a breach of these requirements resulting in a potential
enforcement action by the US Department of the Treasury or other US
agencies that may include substantial fines or penalties. Any such
action against HSBC Bank USA could have a material adverse effect on
our strategy, business, customers, financial condition, results of
operations, prospects and reputation.
We may suffer losses due to employee
misconduct
Our businesses are exposed to risk from potential non-compliance with
Group policies, including the HSBC Values, and associated behaviours
and employee misconduct such as fraud, negligence or non-financial
misconduct. These issues could lead to regulatory penalties and
damage to our reputation or finances. In recent years, several global
financial institutions have incurred significant losses due to rogue
employee actions. While we strive to prevent and detect such
misconduct, our measures may not always be effective, or a regulator
could find HSBC‘s efforts to deter such activities inadequate.
The risk of misconduct may be heightened if our prevent-and-detect
measures are less effective, particularly in remote and home working
environments.
If any of these risks materialise, this could have a material adverse
effect on our business, financial condition, results of operations,
prospects and reputation.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 135 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
The delivery of our strategic actions is
subject to execution risk and we may not
achieve all of the expected benefits of
our strategic initiatives
Management of strategic execution risk is required for us to be able to
deliver our strategy, meet shareholder expectations and maintain
stakeholder confidence.
Executing our strategy and meeting our targets necessitates effective
prioritisation, planning, and management. This process may be
influenced by operational capacity, the efficacy of key controls, and
structural challenges arising from any mergers or acquisitions.
Additionally, there is a possibility of unforeseen changes in the market
or regulatory environment in which we operate, while complex
technological changes are underway. The global economic outlook
remains uncertain, particularly concerning legislative changes and
geopolitical tensions. The scale, complexity, and concurrent demands
of such transformation initiatives can result in heightened execution
risk.
Our strategic actions seek to align with investor expectations, yet they
carry increased execution risk due to the emphasis on cost
management and funding capacity. Consequently, there is a risk that
our cost and investment measures may not fully realise the anticipated
benefits of our strategic initiatives.
The development and implementation of our strategy requires difficult
and complex judgements, including forecasts of economic conditions in
various parts of the world. We may fail to correctly identify the relevant
factors in making decisions as to capital deployment and cost
reduction. We may also encounter unpredictable changes in the
external environment that are disadvantageous to our strategy.
There is a risk that the Group’s reorganisation announced in 2024 may
not achieve some or all of its goals and may fail to deliver or achieve
the expected benefits of the Group’s strategic initiatives.
If any of these risks materialise, this could have a material adverse
effect on our customers, business, financial condition, prospects,
operational resilience and reputation.
Our risk management measures may not
be successful
The management of risk is a fundamental component of all our
activities, as outlined in our Risk Management Framework (‘RMF’). Risk
represents our exposure to uncertainty and the potential variability in
outcomes. Specifically, risk encompasses the negative impact on
profitability or financial condition due to various sources of uncertainty,
including retail and wholesale credit risk, treasury risk, traded risk,
financial reporting and tax risk, resilience risk, strategic risk, legal risk,
regulatory compliance risk, financial crime risk, people risk and model
risk.
We employ a comprehensive and diversified set of risk monitoring and
mitigation techniques, supported by the Three Lines of Defence model,
which defines clear accountabilities across risk ownership, oversight,
and independent assurance. However, these methods and the
judgements involved cannot foresee every adverse event or the
specifics and timing of every outcome. Inadequate risk management
could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position, strategy and
reputation.
Risks related to our business
Our business has inherent reputational
risk
Reputational risk is the risk of failing to meet stakeholder expectations
as a result of any event, behaviour, action or inaction, either by HSBC,
our employees or those with whom we are associated. Any material
lapse in standards of integrity, compliance, customer service or
operating efficiency may represent a potential reputational risk.
Stakeholder expectations constantly evolve, and so reputational risk is
dynamic and varies between geographical regions, groups and
individuals. In addition, our business faces increasing scrutiny in respect
of ESG-related matters. If we fail to act responsibly, or to achieve our
announced targets, commitments, goals or ambitions, in a number of
areas, such as inclusion, climate, sustainability, workplace conduct,
human rights, and support for local communities, our reputation and the
value of our brand may be negatively affected.
Social media and other broadcasting channels that facilitate
communication with large audiences in short time frames and with
minimal costs, may significantly enhance and accelerate the distribution
and effect of damaging information and allegations. Reputational risk
could also arise from negative public opinion about the actual, or
perceived, manner in which we conduct our business activities, or our
financial performance, as well as actual or perceived practices in
banking and the financial services industry generally. Negative public
opinion may adversely affect our ability to retain and attract customers,
in particular, corporate and retail depositors, and to retain and motivate
staff, and could have a material adverse effect on our business,
financial condition, results of operations, prospects and reputation.
Non-Financial risks are inherent in our
business
We are exposed to many types of non-financial risks that are inherent in
our operations. Non-financial risk can be defined as the risk to HSBC of
not achieving its strategy or objectives because of inadequate or failed
internal processes, people and systems, or external events. It includes:
breakdowns in processes or procedures, breaches of regulations or
law, financial crime, financial reporting and tax errors, external events
and systems failure or non-availability. These risks are also present
when we rely on outside suppliers or vendors to provide services to us
and our customers.
These non-financial risks may result in financial losses to the Group and
our customers, an adverse customer experience, reputational damage
and potential litigation, regulatory proceedings, administrative action or
other adversarial proceedings in any jurisdiction in which we operate,
depending on the circumstances of the event.
These could have a material adverse effect on our business, financial
condition, results of operations, prospects, operational resilience,
strategy and reputation.
We rely on recruiting, retaining and
developing appropriate senior
management and skilled personnel
Our ongoing success and the successful execution of our strategy are
partly reliant on retaining key management team members and our
broader workforce, as well as ensuring the availability of skilled
management and personnel across our global businesses and
functions. The complexity of our talent supply challenge is heightened
by the shortage of talent and capabilities in our major markets,
especially where specialist skills require global mobility. This challenge
is further compounded by ongoing organisational changes, rapidly
evolving skill requirements, regulatory developments, and heightened
expectations for employing local nationals and fostering inclusion in
certain jurisdictions.
HSBC’s ability to continue to attract, train, motivate and retain highly
qualified professionals may also depend on factors beyond our control,
including economic, market and regulatory conditions.
When acquiring or disposing of a Group operation, it is essential to
comply with employment requirements, support affected employees
and integrate new employees into HSBC‘s values, culture and working
practices.
Should global businesses or functions fail to adequately staff their
operations, lose key senior executives without timely and satisfactory
replacements, or fail to implement necessary organisational changes to
support the Group’s strategy, this could have a material adverse effect
on our business performance, reputation, operational resilience and
overall control environment.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 136 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
We have significant exposure to
counterparty risk
We are exposed to counterparties that are involved in virtually all major
industries, and we routinely execute transactions with counterparties in
financial services, including brokers and dealers, central clearing
counterparties, commercial banks, investment banks, mutual and
hedge funds, and other institutional clients.
Many of these transactions expose us to credit risk in the event of
default by our counterparty or client.
Our ability to engage in routine transactions to fund our operations and
manage our risks could be materially adversely affected by the actions
and commercial soundness of other financial services institutions.
Financial institutions are necessarily interdependent because of trading,
clearing, counterparty or other relationships. As a consequence, a
default by, or decline in market confidence in, individual institutions, or
anxiety about the financial services industry generally, can lead to
further individual and/or systemic difficulties, defaults and losses.
Mandatory central clearing of OTC derivatives poses risks to the Group.
As a clearing member, we are required to underwrite losses incurred at
a central counterparty by the default of other clearing members and
their clients. An increased move towards central clearing brings with it
a further element of interconnectedness between clearing members
and clients that we believe may increase rather than reduce our
exposure to systemic risk. At the same time, our ability to manage
such risk ourselves will be reduced because control has been largely
outsourced to central counterparties, and it is unclear at present how,
at a time of stress, regulators and resolution authorities will intervene.
Where bilateral counterparty risk has been mitigated by taking
collateral, our credit risk may remain high if the collateral we hold
cannot be realised or has to be liquidated at prices that are insufficient
to recover the full amount of our loan or derivative exposure.
There is a risk that collateral cannot be realised, including situations
where this arises by change of law or the imposition of sanctions, that
may influence our ability to foreclose on collateral or otherwise enforce
contractual rights.
The Group also has credit exposure arising from mitigants, such as
credit default swaps, and other credit derivatives, each of which is
carried at fair value. The risk of default by counterparties to credit
default swaps and other credit derivatives used as mitigants affects the
fair value of these instruments depending on the valuation and the
perceived credit risk of the underlying instrument against which
protection has been purchased. Any such adjustments or fair value
changes could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position and
reputation.
Any reduction in the credit rating
assigned to HSBC Holdings, any
subsidiaries of HSBC Holdings or any of
their respective debt securities could
increase the cost or decrease the
availability of our funding and materially
adversely affect our liquidity position
and/or net interest margin
Credit ratings affect the cost and other terms upon which we are able
to obtain market funding. Rating agencies regularly evaluate HSBC
Holdings and certain of its subsidiaries, as well as their respective debt
securities. Their ratings are based on a number of factors, including
their assessment of the relative financial strength of the Group or of the
relevant subsidiary, as well as conditions affecting the financial services
industry generally. There can be no assurance that the rating agencies
will maintain HSBC Holdings’ or the relevant subsidiary’s current
ratings, or outlook based on bank rating methodologies applied by
ratings agencies.
Any reductions in these current ratings or the outlook could increase
the cost of our funding, limit access to capital markets and require
additional collateral to be placed and, consequently, materially adversely
affect our interest margins and our liquidity position.
Risks concerning borrower credit quality
are inherent in our businesses
Risks arising from changes in credit quality and the recoverability of
loans and amounts due from borrowers and counterparties (for
example, reinsurers and counterparties in derivative transactions) are
inherent in a wide range of our businesses. Adverse changes in the
credit quality of our borrowers and counterparties or reduced
recoverability of our assets arising from a general deterioration in
economic conditions or systemic risks in the financial systems, could
require an increase in our ECLs (see ’Economic and market conditions
and geopolitical developments may adversely affect our financial
condition and results’).
We estimate and recognise ECLs in our credit exposure. This process,
which is critical to our results and financial condition, requires difficult,
subjective and complex judgements, including forecasts of how the
macroeconomic and geopolitical conditions might impair the ability of
our borrowers to repay their loans and the ability of other
counterparties to meet their obligations. This assessment considers
multiple alternative forward-looking economic conditions (including GDP
estimates) and incorporates this into the ECL estimates to meet the
measurement objective of IFRS 9. As is the case with any such
assessments, we may fail to estimate accurately the effect of factors
that we identify or fail to identify relevant factors. Further, the
information we use to assess the creditworthiness of our
counterparties may be inaccurate or incorrect. Any failure by us to
accurately estimate the ability of our counterparties to meet their
obligations could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Our insurance businesses are subject to
risks relating to insurance claim rates
and changes in insurance customer
behaviour
We provide various insurance products for customers, including several
types of life insurance products. The cost to support insurance claims
and benefits can be influenced by many factors, including mortality and
morbidity rates, lapse and surrender rates and the performance of
assets to support the liabilities. Adverse developments in any of these
factors could materially adversely affect our business, financial
condition, results of operations, capital position, prospects and
reputation.
HSBC Holdings is a holding company
and, as a result, is dependent on loan/
instrument payments and dividends
from its subsidiaries to meet its
obligations, including obligations with
respect to its debt securities, and to
provide profits for payment of future
dividends to shareholders
HSBC Holdings is a non-operating holding company and, as such, its
principal source of income is from operating subsidiaries that hold the
principal assets of the Group. As a separate legal entity, HSBC Holdings
relies on remittance of its subsidiaries’ loan/instrument interest
payments and dividends in order to be able to pay obligations to debt
holders as they fall due, and to pay dividends to its shareholders. The
ability of HSBC Holdings’ subsidiaries and affiliates to pay interest and
dividends to HSBC Holdings is subject to such subsidiaries’ and
affiliates’ financial performance and could also be restricted by
applicable laws, regulations, exchange controls and other requirements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 137 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Risk factors |
We may be required to make substantial
contributions to our pension plans
We operate a number of pension plans throughout the world for our
personnel, including defined benefit pension plans. Pension scheme
obligations fluctuate with changes in long-term interest rates, inflation,
salary levels and the longevity of scheme members. They can also be
affected by operational and legal risks. The level of contributions we
make to our pension plans has a direct effect on our cash flow. To the
extent plan assets are insufficient to cover existing liabilities, higher
levels of contributions may be required. As a result, deficits in those
pension plans could have a material adverse effect on our business,
financial condition, results of operations, prospects and reputation.
Risk related to our financial
statements and accounts
Our financial statements are based in
part on judgements, estimates and
assumptions that are subject to
uncertainty
The preparation of financial information requires management to make
judgements and use estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making estimates, particularly those
involving the use of complex models, actual results reported in future
periods could differ from the expectations on which management’s
estimates are based. Judgements, estimates, assumptions and models
are continually evaluated, and are based on historical experience and
other factors, including expectations of future events that are believed
to be reasonable under the prevailing circumstances. The impacts of
revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected.
Accounting policies deemed critical to our results and financial position
are those that involve a high degree of uncertainty and have a material
impact on the financial statements. In 2025, these included impairment
of amortised cost financial assets and financial assets measured at
FVOCI, impairment of goodwill and non-financial assets, valuation of
financial instruments, deferred tax assets, provisions, impairment of
interests in associates, post-employment benefit plans, and impairment
of investments in subsidiaries, which are discussed in detail in ‘Critical
estimates and judgements’ on page 66.
The measurement of ECLs requires the selection and calibration of
complex models and the use of estimates and assumptions to
incorporate relevant information about past events, current conditions
and forecasts of economic conditions. Additionally, significant
judgement is involved in determining what is considered to be
significant increases in credit risk and what the point of initial
recognition is for revolving facilities.
The assessment of whether goodwill and non-financial assets are
impaired, and the measurement of any impairment, involve the
application of judgement in determining key assumptions, including
discount rates, estimated cash flows for the periods for which detailed
cash flows are available and projecting the long-term pattern of
sustainable cash flows thereafter. The recognition and measurement of
deferred tax assets involve significant judgement regarding the
probability and sufficiency of future taxable profits, taking into account
the future reversal of existing taxable temporary differences and tax
planning strategies, including corporate reorganisations.
The recognition and measurement of provisions involve significant
judgements due to the high degree of uncertainty in determining
whether a present obligation exists, and in estimating the probability
and amount of any outflows that may arise. The valuation of financial
instruments measured at fair value can be subjective, in particular
where models are used that include unobservable inputs.
The assessment of interests in associates for impairment involves
significant judgements in determining the value in use, in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of management
assumptions.
The Group’s impairment test on the carrying amount at 30 June 2025
resulted in an impairment of $1.0bn, as the recoverable amount as
determined by a value-in-use calculation was lower than the carrying
amount. No further impairment (or reversal) was required for the period
from 1 July 2025 to 31 December 2025. Impairment reviews are
complex and require significant judgments, such as the
appropriateness of projected future cash flows, discount rate, and
regulatory capital assumptions. There can be no assurance that no
additional impairment will be required in future financial periods. See
Note 18 to the Financial Statements for further details.
The calculation of the defined benefit pension obligation involves the
determination of key assumptions, including discount rate, inflation
rate, pay, pension payments and deferred pension, and mortality.
The assessment of interests in subsidiaries for impairment involves
significant judgements in determining the value in use, in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of management
assumptions.
Given the uncertainty and subjectivity associated with the above critical
accounting judgements and estimates, future outcomes may differ
materially from those assumed using information available at the
reporting date.
These judgements and estimates could have a material adverse effect
on the future financial position of the Group, results of operations,
capital position, prospects and reputation. For further details, see
‘Critical estimates and judgements’ on page 66.
Changes in accounting standards may
have a material impact on how we
report our financial results and financial
condition
We prepare our consolidated financial statements in conformity with
UK-adopted international accounting standards and with the
requirements of the UK 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. Our
consolidated financial statements are also prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB‘) (‘IFRS Accounting
Standards’), including interpretations issued by the IFRS Interpretations
Committee.
From time to time, the IASB or the IFRS Interpretations Committee
may issue new accounting standards or interpretations that could
materially impact how we calculate, report and disclose our financial
results and financial condition, and which may affect our capital ratios,
including the CET1 ratio. We could also be required to apply new or
revised standards retrospectively, resulting in our restating prior period
financial statements in material amounts. This could have a material
adverse effect on our business, financial condition, results of operations
and capital position.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 138 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Our material banking risks
The material risk types associated with our banking and insurance manufacturing operations are described in the following tables:
| Description of risks – banking operations | ||||||
|---|---|---|---|---|---|---|
| Risks | Arising from | Measurement, monitoring and management of risk | ||||
| Credit risk u See page 140 | ||||||
| Credit risk is the risk of financial loss<br><br>if a customer or counterparty fails to<br><br>meet an obligation under a contract. | Credit risk arises principally from direct<br><br>lending, trade finance and leasing<br><br>business, but also from other products<br><br>such as guarantees and derivatives. | Credit risk is:<br><br>–measured as the amount that could be lost if a customer or counterparty fails<br><br>to make repayments;<br><br>–monitored using various internal risk management measures and within limits<br><br>approved by individuals within a framework of delegated authorities; and<br><br>–managed through a risk control framework, which seeks to outline clear<br><br>and consistent policies, principles and guidance for risk managers; and by<br><br>setting limits and appetite across geographical markets, portfolios or sectors. | ||||
| Treasury risk u See page 189 | ||||||
| Treasury risk is the risk of having<br><br>insufficient capital, liquidity or funding<br><br>resources to meet financial obligations<br><br>and satisfy regulatory requirements,<br><br>including the risk of an adverse impact<br><br>on earnings or capital due to structural<br><br>and transactional foreign exchange<br><br>exposures and changes in market<br><br>interest rates, together with pension<br><br>and insurance risk. | Treasury risk arises from changes to the<br><br>respective resources and risk profiles<br><br>driven by customer behaviour,<br><br>management decisions or the external<br><br>environment. | Treasury risk is:<br><br>–measured through risk appetite and more granular limits, set to provide an<br><br>early warning of increasing risk, minimum ratios of relevant regulatory<br><br>metrics, and metrics to monitor the key risk drivers impacting treasury<br><br>resources;<br><br>–monitored and projected against appetites and by using operating plans<br><br>based on strategic objectives together with stress and scenario testing; and<br><br>–managed through control of resources in conjunction with risk profiles,<br><br>strategic objectives and cash flows. | ||||
| Market risk u See page 200 | ||||||
| Market risk is the risk of an adverse<br><br>financial impact on trading activities<br><br>arising from changes in market<br><br>parameters such as interest rates,<br><br>foreign exchange rates, asset prices,<br><br>volatilities, correlations and credit<br><br>spreads. | Market risk arises from both trading<br><br>portfolios and non-trading portfolios.<br><br>Market risk for trading portfolios is<br><br>discussed in the Market risk section on<br><br>page 201.<br><br>Market risk for non-trading portfolios is<br><br>discussed in the Treasury risk section on<br><br>page 198. Market risk exposures arising<br><br>from our insurance operations are<br><br>discussed on page 217. | Market risk is:<br><br>–measured using sensitivities, value at risk (‘VaR’) and stress testing, giving a<br><br>detailed picture of potential gains and losses for a range of market<br><br>movements and scenarios, as well as tail risks over specified time horizons;<br><br>–monitored using VaR, stress testing and other measures; and<br><br>–managed using risk limits approved by the Group Risk Management Meeting<br><br>and the risk management meetings in various business segments. | ||||
| Climate risk u See page 203 | ||||||
| Climate risk relates to the financial<br><br>and non-financial impacts that may<br><br>arise as a result of climate change<br><br>and the move to a net zero economy. | Climate risk can materialise through:<br><br>–physical risk, which arises from the<br><br>increased frequency and severity of<br><br>extreme weather events, such as<br><br>hurricanes and floods, or chronic<br><br>gradual shifts in weather patterns or<br><br>rises in the sea level;<br><br>–transition risk, which arises from the<br><br>process of moving to a net zero<br><br>economy, including changes in<br><br>government policy and legislation,<br><br>technology, market demand, and<br><br>reputational implications triggered by<br><br>a change in stakeholder expectations,<br><br>action or inaction; and<br><br>–the risk of greenwashing, which<br><br>arises from the act of knowingly or<br><br>unknowingly making inaccurate,<br><br>unclear, misleading or<br><br>unsubstantiated claims regarding<br><br>sustainability to stakeholders. | Climate risk is:<br><br>–measured using risk metrics and stress testing;<br><br>–monitored against risk appetite statements;<br><br>–managed through adherence to risk appetite thresholds, through specific<br><br>policies, and through enhancements to processes and development of tools;<br><br>and<br><br>–this includes the development of product controls to manage the risk of<br><br>greenwashing and the development of portfolio steering capabilities to<br><br>manage our net zero ambitions. | ||||
| Sustainability execution risk u See page 206 | ||||||
| Sustainability execution risk is the<br><br>risk of not meeting our sustainability<br><br>ambitions, targets and commitments<br><br>as set out in firm-level external<br><br>reporting, sustainability risk policies<br><br>and associated internal policies, and<br><br>other ESG commitments. | Sustainability execution risk can arise<br><br>from:<br><br>–financing or engaging in business<br><br>activities with clients and/or<br><br>transactions that are not aligned or<br><br>that are inconsistent with our<br><br>sustainability risk appetite and<br><br>policies;<br><br>–incorrectly including products or<br><br>transactions as counting towards our<br><br>sustainable finance ambition;<br><br>–engaging in activities that do not<br><br>support our ambition to become a net<br><br>zero bank by 2050. | Sustainability execution risk is:<br><br>–measured through progress against sustainability ambitions, targets and<br><br>commitments using risk metrics;<br><br>–monitored against targets to reduce emissions and risk appetite which<br><br>includes sectoral decarbonisation pathways; and<br><br>–managed through a risk control framework, appropriate policies and<br><br>continual monitoring. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 139 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Our material banking risks | ||||||
| Description of risks – banking operations (continued) | ||||||
| --- | --- | --- | ||||
| Risks | Arising from | Measurement, monitoring and management of risk | ||||
| Resilience risk u See page 213 | ||||||
| Resilience risk is the risk of sustained<br><br>and significant business disruption<br><br>causing the inability to provide critical<br><br>services to our customers, affiliates,<br><br>and counterparties. | Resilience risk arises from failures or<br><br>inadequacies in processes, people,<br><br>systems or external events. | Resilience risk is:<br><br>–measured using a range of metrics and against our agreed risk appetite;<br><br>–monitored through oversight of enterprise processes, risks, controls and<br><br>strategic change programmes; and<br><br>–managed by continual monitoring and thematic reviews. | ||||
| Regulatory compliance risk u See page 213 | ||||||
| Regulatory compliance risk is the risk<br><br>associated with breaching our duty to<br><br>clients and other counterparties,<br><br>inappropriate market conduct<br><br>(including unauthorised trading) and<br><br>breaching related financial services<br><br>regulatory standards. | Regulatory compliance risk arises from<br><br>the failure to observe relevant laws,<br><br>codes, rules and regulations, potentially<br><br>resulting in adverse market or conduct<br><br>outcomes, fines, penalties and<br><br>reputational harm. | Regulatory compliance risk is:<br><br>–assessed and measured with reference to risk appetite, identified metrics,<br><br>incident assessments, regulatory feedback and the judgement of our<br><br>regulatory compliance teams;<br><br>–monitored against the first line of defence risk and control assessments and<br><br>testing, alongside the outcome of the second line of defence monitoring and<br><br>control assurance activities, as well as internal and external audits and<br><br>regulatory inspections; and<br><br>–managed by establishing and communicating appropriate policies and<br><br>procedures, training employees accordingly, and monitoring activities to help<br><br>ensure compliance. | ||||
| Financial crime risk u See page 214 | ||||||
| Financial crime risk is the risk that<br><br>HSBC’s products and services will be<br><br>exploited for criminal activity. This<br><br>includes fraud, bribery and<br><br>corruption, tax evasion and the<br><br>facilitation of tax evasion, sanctions<br><br>and export control violations and<br><br>evasion, money laundering, terrorist<br><br>financing and proliferation financing. | Financial crime risk arises from day-to-<br><br>day banking operations involving<br><br>customers, third parties and employees. | Financial crime risk is:<br><br>–measured by reference to risk appetite, identified metrics, incident<br><br>assessments, regulatory feedback and the judgement of, and assessment<br><br>by, our financial crime teams;<br><br>–monitored against the first line of defence risk and control assessments, and<br><br>the results of the monitoring and control assurance activities of the second<br><br>line of defence functions; and<br><br>–managed by establishing and communicating appropriate policies and<br><br>procedures, training employees and monitoring activity to help embed them.<br><br>Proactive risk control and/or remediation work is undertaken where required. | ||||
| Model risk u See page 214 | ||||||
| Model risk is the risk of the potential<br><br>for adverse consequences from<br><br>model errors or the inappropriate use<br><br>of modelled outputs to inform<br><br>business decisions. | Model risk arises in both financial and<br><br>non-financial contexts whenever<br><br>business decision making includes<br><br>reliance on models. | Model risk is:<br><br>–measured by reference to model performance tracking and the output of<br><br>detailed technical reviews and regulatory feedback, with key metrics<br><br>including model validation outcomes and monitoring results;<br><br>–monitored against model risk appetite statements, insight from the<br><br>independent validations completed by the model risk management team; and<br><br>–managed by creating and communicating appropriate policies, procedures<br><br>and guidance, training colleagues in their application, supervising their<br><br>adoption to help ensure operational effectiveness, and ensuring models are<br><br>approved for use. |
Our insurance manufacturing subsidiaries are regulated separately from our banking operations. Risks in our insurance entities are managed using
methodologies and processes that are subject to Group oversight. Our insurance operations are also subject to many of the same risks as our
banking operations, and these are covered by the Group’s risk management processes. However, there are specific risks inherent to the insurance
operations as noted below.
| Description of risks – insurance manufacturing operations | ||||||
|---|---|---|---|---|---|---|
| Risks | Arising from | Measurement, monitoring and management of risk | ||||
| Financial risk u See page 217 | ||||||
| For insurance entities, financial risk<br><br>includes the risk of not being able to<br><br>effectively match liabilities arising<br><br>under insurance contracts with<br><br>appropriate investments and that the<br><br>expected sharing of financial<br><br>performance with policyholders<br><br>under certain contracts is not<br><br>possible. | Exposure to financial risk arises from:<br><br>–market risk affecting the fair values of<br><br>financial assets or their future cash<br><br>flows;<br><br>–credit risk; and<br><br>–liquidity risk of entities being unable to<br><br>make payments to policyholders as they<br><br>fall due. | Financial risk is:<br><br>–measured for market risk, in terms of fluctuation in key financial reporting<br><br>metrics; for credit risk, in terms of the market value that could be lost if a<br><br>counterparty fails to make repayments; and for liquidity risk, in terms of<br><br>internal metrics including stressed operational cash flow projections;<br><br>–monitored through a framework of approved limits and delegated<br><br>authorities; and<br><br>–managed through a risk control framework, which seeks to outline clear and<br><br>consistent policies, principles and guidance. This includes using product<br><br>design, asset liability matching and bonus rates. | ||||
| Insurance risk u See page 218 | ||||||
| Insurance risk is the risk that, over<br><br>time, the cost of insurance policies<br><br>written, including claims and<br><br>benefits, may exceed the total<br><br>amount of premiums and investment<br><br>income received. | The cost of claims and benefits can be<br><br>influenced by many factors, including<br><br>mortality and morbidity experience, as well<br><br>as lapse and surrender rates. | Insurance risk is:<br><br>–measured in terms of the variance between actual experience and<br><br>expected assumptions and impact on key financial reporting metrics;<br><br>–monitored through a framework of approved limits and delegated<br><br>authorities; and<br><br>–managed through a risk control framework, which seeks to outline clear and<br><br>consistent policies, principles and guidance. This includes using product<br><br>design, underwriting, reinsurance and claims-handling procedures. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 140 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Credit risk
ÑSee page 138 for our definition of Credit risk.
Credit risk management
Key developments in 2025
There were no material changes to the policies and practices for the
management of credit risk in 2025. We continued to apply the
requirements of IFRS 9 ‘Financial Instruments’ within the Credit Risk
sub-function.
We actively managed the risks related to macroeconomic uncertainties,
including interest rates, inflation, fiscal and monetary policy, broader
geopolitical uncertainties and conflicts.
ÑFor further details, see ‘Top and emerging risks’ on page 121.
Governance and structure
We have established Group-wide credit risk management and related
IFRS 9 processes. We continue to assess the impact of economic
developments in key markets on specific customers, customer
segments or portfolios. As credit conditions change, we take mitigating
actions, including the revision of risk appetites or limits and tenors, as
appropriate. In addition, we continue to evaluate the terms under which
we provide credit facilities within the context of individual customer
requirements, the quality of the relationship, local regulatory
requirements, market practices and our local market position.
Credit Risk sub-function
(Audited)
The Credit Risk sub-function in Group Risk and Compliance is
responsible for the key policies and processes for managing credit risk,
which include formulating Group credit policies and risk rating
frameworks, guiding the Group’s appetite for credit risk exposures,
undertaking independent reviews and objective assessment of credit
risk, and monitoring performance and management of portfolios while
fostering a culture of responsible lending.
Key risk management processes
IFRS 9 ‘Financial Instruments’ process
The IFRS 9 'Financial Instruments' process focuses on three main
areas: modelling, data and forward economic guidance;
implementation; and governance.
Modelling, data, and forward economic guidance
This involves establishing IFRS 9 modelling and data processes across
various geographies, including internal model risk governance and
independent reviews. A centralised process generates unbiased global
economic scenarios, which are reviewed quarterly for consistency with
current economic conditions and risks. These scenarios are subject to
final review and approval by senior management in a forward economic
guidance global business impairment committee.
Implementation
A centralised impairment engine calculates expected credit losses
using data from various systems, which is subject to validation checks
and enhancements from a variety of client, finance and risk systems.
Where possible, these checks and processes are performed in a
globally consistent and centralised manner.
Governance
Regional management review forums, including representatives from
Credit Risk and Finance, review and approve impairment results. These
approvals are reviewed by retail and wholesale impairment committees
for final approval. Required committee members include the relevant
Chief Risk Officers, Chief Financial Officers and the Global Financial
Controller.
Concentration of exposure
(Audited)
Concentration of credit risk occurs when multiple counterparties share
similar economic traits or operate in the same sectors or regions,
making them collectively vulnerable to changes in economic or political
conditions. To mitigate this risk, the Group uses various controls such
as portfolio and counterparty limits, approval and review processes, and
stress testing across industries, countries and businesses.
Credit quality of financial instruments
(Audited)
Our risk rating system facilitates the internal ratings-based approach
under the Basel framework to support the calculation of our minimum
capital requirement. The five credit quality classifications encompass a
range of granular internal credit rating grades assigned to wholesale
and retail customers, and the external ratings attributed by external
agencies to debt securities.
For debt securities and certain other financial instruments, external
ratings have been aligned to the five quality classifications based upon
the mapping of related customer risk rating (‘CRR’) to external credit
rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying
23-grade scale of obligor probability of default (‘PD’). All corporate
customers are rated using the 10- or 23-grade scale, depending on the
degree of sophistication of the Basel approach adopted for the
exposure.
Each CRR band is associated with an external rating grade by reference
to long-run default rates for that grade, represented by the average of
issuer-weighted historical default rates. This mapping between internal
and external ratings is indicative and may vary over time.
Retail lending
Retail lending credit quality is based on a 12-month point-in-time
probability-weighted PD.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 141 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk | ||||||
| Credit quality classification | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Sovereign<br><br>debt securities<br><br>and bills | Other<br><br>debt securities<br><br>and bills | Wholesale lending<br><br>and derivatives | Retail<br><br>lending | |||
| External credit<br><br>rating | External credit<br><br>rating | Internal credit<br><br>rating1 | 12-month regulatory<br><br>probability of<br><br>default % | Internal credit<br><br>rating | 12 month probability-<br><br>weighted<br><br>PD %2 | |
| Quality classification | ||||||
| Strong | BBB and above | A- and above | CRR 1 to CRR 2 | 0–0.169 | Band 1 and 2 | 0 – <=0.5 |
| Good | BBB- to BB | BBB+ to BBB- | CRR 3 | 0.170–0.740 | Band 3 | >0.5 – <=1.5 |
| Satisfactory | BB- to B and unrated | BB+ to B and unrated | CRR 4 to CRR 5 | 0.741–4.914 | Band 4 and 5 | >1.5 – <=20 |
| Sub-standard | B- to C | B- to C | CRR 6 to CRR 8 | 4.915–99.999 | Band 6 | >20 – <100 |
| Credit impaired | Default | Default | CRR 9 to CRR 10 | 100 | Band 7 | 100 |
1Customer risk rating (‘CRR’).
212-month point-in-time probability-weighted PD.
| Quality classification definitions<br><br>–‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of<br><br>expected loss.<br><br>–‘Good’ exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk.<br><br>–‘Satisfactory’ exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk.<br><br>–‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern.<br><br>–‘Credit-impaired’ exposures have been assessed as described in Note 1.2(j) to the financial statements. |
|---|
Forborne loans and advances
(Audited)
Forbearance measures consist of concessions towards an obligor that
is experiencing, or about to experience, difficulties in meeting its
financial commitments.
We continue to class loans as forborne when we modify the
contractual payment terms due to having concerns about the
borrowers’ ability to meet contractual payments when they were due.
Our definition of forborne captures non-payment-related concessions,
such as covenant waivers.
ÑFor details of our policy on forbearance, see Note 1.2(j) in the financial
statements.
Credit quality of forborne loans
For wholesale lending, where payment-related forbearance measures
result in a diminished financial obligation, or if there are other indicators
of impairment, the loan will be classified as credit impaired if it is not
already so classified. All facilities with a customer, including loans that
have not been modified, are considered credit impaired following the
identification of a payment-related forborne loan. For retail lending,
where a material payment-related concession has been granted, the
loan will be classified as credit impaired. In isolation, non-payment
related forbearance measures may not result in the loan being
classified as credit impaired unless combined with other indicators of
credit impairment. These are classed as performing forborne loans for
both wholesale and retail lending.
Wholesale and retail lending forborne loans are classified as credit
impaired until there is sufficient evidence to demonstrate a significant
reduction in the risk of non-payment of future cash flows, observed
over a minimum one-year period, and there are no other indicators of
impairment. Any forborne loans not considered credit impaired will
remain forborne for a minimum of two years from the date that credit
impairment no longer applies. For wholesale and retail lending, any
forbearance measures granted on a loan already classed as forborne
results in the customer being classed as credit impaired.
Forborne loans and recognition of expected
credit losses
(Audited)
Forborne loans expected credit loss assessments reflect the higher
rates of losses typically experienced with these types of loans; as such
they are categorised as stage 2 and stage 3. The higher rates are more
pronounced in unsecured retail lending requiring further segmentation.
For wholesale lending, forborne loans are typically assessed
individually. Credit risk ratings are intrinsic to the impairment
assessments. The individual impairment assessment takes into
account the higher risk of the future non-payment inherent in forborne
loans.
Impairment assessment
(Audited)
For details of our impairment policies on loans and advances and
financial investments, see Note 1.2(j) on the financial statements.
Write-off of loans and advances
(Audited)
Under IFRS 9, write-off should occur when there is no reasonable
expectation of recovering further cash flows from the financial asset.
This principle does not prohibit early write-off, which is defined in local
policies to ensure effectiveness in the management of customers in
the collections process.
Unsecured personal facilities, including credit cards, are generally
written off at between 150 and 210 days past due. The standard period
runs until the end of the month in which the account becomes 180
days contractually delinquent. However, in exceptional circumstances,
to avoid unfair customer outcomes, deliver customer duty or meet
regulatory expectations, the period may be extended further.
For secured facilities, write-off should occur upon repossession of
collateral, receipt of proceeds via settlement, or determination that
recovery of the collateral will not be pursued. Where these assets are
maintained on the balance sheet beyond 60 months of consecutive
delinquency-driven default, the prospect of recovery is reassessed.
Recovery activity, on both secured and unsecured assets, may
continue after write-off.
Any unsecured exposures that are not written off at 180 days past due,
and any secured exposures that are in ‘default’ status for 60 months or
greater but are not written off, are subject to additional monitoring via
the appropriate governance forums.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 142 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Credit risk in 2025
At 31 December 2025, gross loans and advances to banks and
customers of $1,108bn increased by $65.1bn on a reported basis
compared with 31 December 2024. Gross loans and advances to
customers increased by $58.7bn and gross loans and advances to
banks increased by $6.4bn. This included total favourable foreign
exchange movements of $44.1bn.
On a constant currency basis, the increase of $21.0bn was driven by an
$11.4bn rise in wholesale loans and advances to customers and a
$6.8bn rise in personal loans and advances to customers. There was a
further increase of $2.8bn in loans and advances to banks.
The rise in wholesale loans and advances to customers was driven by
an increase in balances in HSBC UK (up $8.4bn) and in Asia (up $3.8bn),
across multiple industry sectors.
The rise in personal loans and advances to customers was driven by
mortgage growth of $8.8bn, mainly in HSBC UK (up $8.5bn), and higher
other personal lending in our entities in Asia (up $4.8bn). This was
partly offset by the disposal of our retained portfolio of home and
certain other loans in France ($7.2bn).
There was a decrease in stage 2 loans and advances to banks and
customers of $17.1bn on a constant currency basis. This was mainly
driven by model recalibration for retail portfolios where the probability
of default (‘PD’) was aligned to the most recent observed performance.
This resulted in a shift of balances from stage 2 to stage 1, mainly in
HSBC UK mortgages. The balances transferred consisted of up-to-date
loans mainly in the ‘Strong’ and ‘Good’ credit quality buckets.
At 31 December 2025, the allowance for ECL of $11.2bn increased by
$0.9bn compared with 31 December 2024, including adverse foreign
exchange movements of $0.4bn, and write-offs of $3.6bn. The $11.2bn
allowance comprised $10.8bn in respect of assets held at amortised
cost and $0.4bn in respect of loan commitments and financial
guarantees.
On a constant currency basis, the allowance for ECL in relation to loans
and advances to customers increased by $0.6bn from 31 December
- This was attributable to:
–a $0.5bn increase in wholesale loans and advances to customers,
which included a $0.8bn increase in stage 3 and a $0.3bn decrease
in stages 1 and 2; and
–a $0.1bn increase in personal loans and advances to customers
driven by stages 1 and 2.
The ECL charge for 2025 was $3.9bn (2024: $3.4bn), inclusive of
recoveries. The ECL charge comprised: $2.4bn in respect of wholesale
lending, of which the stage 3 charge was $2.1bn; and $1.5bn in respect
of personal lending, of which $0.9bn was in stage 3.
Wholesale lending charges were recognised mainly in our legal entities
in Hong Kong ($1.2bn). This included charges related to the Hong Kong
CRE sector of $0.7bn. This reflected updates to our models used for
ECL calculations, an increase in allowances for new defaulted
exposures, as well as continued negative migration in the portfolio as
market conditions remained challenging. ECL charges in the mainland
China CRE sector of $0.2bn were mainly driven by a new default.
ÑIncome statement movements are analysed further on page 68.
While credit risk arises across most of our balance sheet, ECL have
typically been recognised on loans and advances to customers and
banks, in addition to securitisation exposures and other structured
products. As a result, our disclosures focus primarily on these two
areas. For further details of:
–maximum exposure to credit risk, see page 148;
–measurement uncertainty and sensitivity analysis of ECL estimates,
see page 148;
–reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers
including loan commitments and financial guarantees, see page 158;
–credit quality, see page 161;
–total wholesale lending for loans and advances to banks and
customers by stage distribution, see page 169;
–wholesale and personal lending collateral, see page 167; and
–total personal lending for loans and advances to customers at
amortised cost by stage distribution, see page 179.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 143 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Summary of credit risk
The following disclosure presents the gross carrying/nominal amount of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL.
| Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||||||||||
| Gross carrying/nominal amount | Allowance for ECL1 | Gross carrying/nominal amount | Allowance for ECL1 | |||||||||||||||||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Loans and<br><br>advances to<br><br>customers at<br><br>amortised cost | 233,389 | 305,700 | 308,169 | 151,657 | 176 | 999,091 | (3,898) | (2,002) | (3,146) | (1,610) | (36) | (10,692) | 238,416 | 269,141 | 287,842 | 137,789 | 7,185 | 940,373 | (3,208) | (1,848) | (3,141) | (1,464) | (54) | (9,715) |
| Loans and<br><br>advances to<br><br>banks at<br><br>amortised cost | 11,478 | 7,696 | 67,733 | 16,630 | 4,932 | 108,469 | — | — | (4) | (2) | (1) | (7) | 13,034 | 7,505 | 63,524 | 15,713 | 2,276 | 102,052 | (1) | (2) | (7) | (1) | (2) | (13) |
| Other financial<br><br>assets<br><br>measured at<br><br>amortised cost | 58,210 | 106,752 | 599,580 | 59,114 | 66,670 | 890,326 | (28) | (10) | (65) | (25) | (1) | (129) | 52,869 | 100,322 | 553,664 | 58,713 | 63,012 | 828,580 | (25) | (9) | (39) | (19) | — | (92) |
| – cash and<br><br>balances at<br><br>central banks | 6,717 | 52,218 | 165,027 | 18,174 | 723 | 242,859 | — | — | — | — | — | — | 5,565 | 63,981 | 177,095 | 20,260 | 773 | 267,674 | — | — | — | — | — | — |
| – Hong Kong<br><br>Government<br><br>certificates of<br><br>indebtedness | — | — | — | — | 44,063 | 44,063 | — | — | — | — | — | — | — | — | — | — | 42,293 | 42,293 | — | — | — | — | — | — |
| – reverse<br><br>repurchase<br><br>agreements –<br><br>non-trading | 6,076 | 26,197 | 258,424 | 6,354 | 1,341 | 298,392 | — | — | — | — | — | — | 2,896 | 13,188 | 229,672 | 5,844 | 949 | 252,549 | — | — | — | — | — | — |
| – financial<br><br>investments | 38,967 | 24,871 | 72,693 | 28,344 | 17,226 | 182,101 | (2) | (1) | (4) | (5) | — | (12) | 40,345 | 20,072 | 56,537 | 25,059 | 11,969 | 153,982 | (1) | (1) | (4) | (3) | — | (9) |
| – assets held<br><br>for sale2 | — | 14 | 3,229 | 864 | 8 | 4,115 | — | — | (18) | (9) | — | (27) | — | 5 | 670 | 2,595 | 3 | 3,273 | — | — | (4) | — | — | (4) |
| – prepayments,<br><br>accrued<br><br>income and<br><br>other assets3 | 6,450 | 3,452 | 100,207 | 5,378 | 3,309 | 118,796 | (26) | (9) | (43) | (11) | (1) | (90) | 4,063 | 3,076 | 89,690 | 4,955 | 7,025 | 108,809 | (24) | (8) | (31) | (16) | — | (79) |
| Total on-<br><br>balance sheet | 303,077 | 420,148 | 975,482 | 227,401 | 71,778 | 1,997,886 | (3,926) | (2,012) | (3,215) | (1,637) | (38) | (10,828) | 304,319 | 376,968 | 905,030 | 212,215 | 72,473 | 1,871,005 | (3,234) | (1,859) | (3,187) | (1,484) | (56) | (9,820) |
| Loan and other<br><br>credit-related<br><br>commitments | 108,011 | 103,230 | 353,721 | 125,138 | 692 | 690,792 | (24) | (92) | (196) | (3) | — | (315) | 109,369 | 90,848 | 307,197 | 111,762 | 191 | 619,367 | (29) | (116) | (187) | (16) | — | (348) |
| Financial<br><br>guarantees | 622 | 1,199 | 13,946 | 1,709 | — | 17,476 | (1) | (16) | (33) | (1) | — | (51) | 1,171 | 939 | 13,186 | 1,702 | — | 16,998 | (2) | (3) | (24) | — | — | (29) |
| Total off-<br><br>balance sheet4 | 108,633 | 104,429 | 367,667 | 126,847 | 692 | 708,268 | (25) | (108) | (229) | (4) | — | (366) | 110,540 | 91,787 | 320,383 | 113,464 | 191 | 636,365 | (31) | (119) | (211) | (16) | — | (377) |
| 411,710 | 524,577 | 1,343,149 | 354,248 | 72,470 | 2,706,154 | (3,951) | (2,120) | (3,444) | (1,641) | (38) | (11,194) | 414,859 | 468,755 | 1,225,413 | 325,679 | 72,664 | 2,507,370 | (3,265) | (1,978) | (3,398) | (1,500) | (56) | (10,197) | |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||||||||||||
| --- | ||||||||||||||||||||||||
| 144 | ||||||||||||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||
| Credit risk | ||||||||||||||||||||||||
| Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by business segment (continued) | ||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||||||||||
| Fair value | Memorandum allowance for ECL5 | Fair value | Memorandum allowance for ECL5 | |||||||||||||||||||||
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Debt<br><br>instruments<br><br>measured at<br><br>FVOCI | 133,840 | 29,306 | 170,258 | 48,939 | 1,225 | 383,568 | (1) | — | (20) | (9) | — | (30) | 128,568 | 26,405 | 137,538 | 51,516 | 2,097 | 346,124 | (1) | (1) | (18) | (14) | (20) | (54) |
1The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision.
2At 31 December 2025, the gross carrying amount comprised $3.6bn of loans and advances to customers and banks (31 December 2024: $1.1bn) and $0.5bn of other financial assets at amortised cost (31 December 2024: $2.1bn) including:
the planned sales of our business in Uruguay ($1.4bn), our private banking and custody businesses in Germany ($0.3bn, 31 December 2024: $2.2bn), our business in South Africa ($0.4bn, 31 December 2024: $0.4bn) and sale of individual
assets in the US ($1.3bn, 31 December 2024: $11m)). The corresponding allowance for ECL comprised $27m of loans and advances to customers and banks (31 December 2024: $4m) and nil of other financial assets at amortised cost
(31 December 2024: $0.3m).
3Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as presented within the consolidated balance sheet on page 73 comprises both financial
and non-financial assets, including cash collateral, settlement accounts and items in the course of collection from other banks.
4Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
5Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in ‘Change in expected credit losses and other credit impairment charges’ in the
income statement.
| Change in expected credit losses and other credit impairment charges by business segment | ||||||
|---|---|---|---|---|---|---|
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| Full-year to | $m | $m | $m | $m | $m | $m |
| 31 Dec 2025 | (1,476) | (696) | (696) | (892) | (90) | (3,850) |
| 31 Dec 2024 | (1,076) | (402) | (869) | (1,038) | (29) | (3,414) |
The following table provides an overview of the Group’s credit risk by stage and industry, and the associated ECL coverage. The financial assets recorded in each stage have the following characteristics:
–Stage 1: These financial assets are unimpaired and without a significant increase in credit risk for which a 12-month allowance for ECL is recognised.
–Stage 2: A significant increase in credit risk has been experienced on these financial assets since initial recognition for which a lifetime ECL is recognised.
–Stage 3: There is objective evidence of impairment and the financial assets are therefore considered to be in default or otherwise credit impaired for which a lifetime ECL is recognised.
–Purchased or originated credit-impaired financial assets (‘POCI’): Financial assets that are purchased or originated at a deep discount are seen to reflect the incurred credit losses on which a lifetime ECL is
recognised.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 145 | |||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||
| Credit risk | |||||||||||||||
| Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | |||||||||||||||
| Gross carrying/nominal amount1 | Allowance for ECL | ECL coverage % | |||||||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | % | % | % | % | % | |
| Loans and advances to customers at<br><br>amortised cost | 893,433 | 80,936 | 24,389 | 333 | 999,091 | (1,201) | (2,318) | (7,097) | (76) | (10,692) | 0.1 | 2.9 | 29.1 | 22.8 | 1.1 |
| – personal | 446,696 | 23,887 | 3,945 | — | 474,528 | (667) | (1,235) | (895) | — | (2,797) | 0.1 | 5.2 | 22.7 | — | 0.6 |
| – corporate and commercial | 349,763 | 54,636 | 19,966 | 140 | 424,505 | (478) | (1,064) | (5,909) | (75) | (7,526) | 0.1 | 1.9 | 29.6 | 53.6 | 1.8 |
| – non-bank financial institutions | 96,974 | 2,413 | 478 | 193 | 100,058 | (56) | (19) | (293) | (1) | (369) | 0.1 | 0.8 | 61.3 | 0.5 | 0.4 |
| Loans and advances to banks at<br><br>amortised cost | 108,336 | 132 | 1 | — | 108,469 | (4) | (2) | (1) | — | (7) | — | 1.5 | 100.0 | — | — |
| Other financial assets measured at<br><br>amortised cost | 888,491 | 1,651 | 184 | — | 890,326 | (76) | (11) | (42) | — | (129) | — | 0.7 | 22.8 | — | — |
| Loan and other credit-related<br><br>commitments | 669,648 | 20,488 | 652 | 4 | 690,792 | (149) | (97) | (69) | — | (315) | — | 0.5 | 10.6 | — | — |
| – personal | 270,494 | 1,945 | 92 | — | 272,531 | (22) | (5) | — | — | (27) | — | 0.3 | — | — | — |
| – corporate and commercial | 255,740 | 14,649 | 560 | 4 | 270,953 | (115) | (88) | (69) | — | (272) | — | 0.6 | 12.3 | — | 0.1 |
| – financial | 143,414 | 3,894 | — | — | 147,308 | (12) | (4) | — | — | (16) | — | 0.1 | — | — | — |
| Financial guarantees | 15,913 | 1,371 | 192 | — | 17,476 | (8) | (17) | (26) | — | (51) | 0.1 | 1.2 | 13.5 | — | 0.3 |
| – personal | 1,446 | — | — | — | 1,446 | (1) | — | — | — | (1) | 0.1 | — | — | — | 0.1 |
| – corporate and commercial | 10,071 | 1,287 | 190 | — | 11,548 | (6) | (17) | (26) | — | (49) | 0.1 | 1.3 | 13.7 | — | 0.4 |
| – financial | 4,396 | 84 | 2 | — | 4,482 | (1) | — | — | — | (1) | — | — | — | — | — |
| At 31 Dec 2025 | 2,575,821 | 104,578 | 25,418 | 337 | 2,706,154 | (1,438) | (2,445) | (7,235) | (76) | (11,194) | 0.1 | 2.3 | 28.5 | 22.6 | 0.4 |
| Loans and advances to customers at<br><br>amortised cost | 824,420 | 93,248 | 22,615 | 90 | 940,373 | (1,078) | (2,546) | (6,040) | (51) | (9,715) | 0.1 | 2.7 | 26.7 | 56.7 | 1.0 |
| – personal | 403,746 | 39,919 | 3,560 | — | 447,225 | (570) | (1,158) | (796) | — | (2,524) | 0.1 | 2.9 | 22.4 | — | 0.6 |
| –corporate and commercial | 340,987 | 51,231 | 18,376 | 90 | 410,684 | (463) | (1,358) | (4,883) | (51) | (6,755) | 0.1 | 2.7 | 26.6 | 56.7 | 1.6 |
| – non-bank financial institutions | 79,687 | 2,098 | 679 | — | 82,464 | (45) | (30) | (361) | — | (436) | 0.1 | 1.4 | 53.2 | — | 0.5 |
| Loans and advances to banks at<br><br>amortised cost | 101,852 | 198 | 2 | — | 102,052 | (9) | (2) | (2) | — | (13) | — | 1.0 | 100.0 | — | — |
| Other financial assets measured at<br><br>amortised cost | 826,621 | 1,806 | 153 | — | 828,580 | (64) | (5) | (23) | — | (92) | — | 0.3 | 15.0 | — | — |
| Loan and other credit-related<br><br>commitments | 597,231 | 21,175 | 958 | 3 | 619,367 | (137) | (121) | (90) | — | (348) | — | 0.6 | 9.4 | — | 0.1 |
| – personal | 251,489 | 1,680 | 86 | — | 253,255 | (17) | — | (5) | — | (22) | — | — | 5.8 | — | — |
| – corporate and commercial | 231,201 | 17,453 | 838 | 3 | 249,495 | (111) | (116) | (83) | — | (310) | — | 0.7 | 9.9 | — | 0.1 |
| – financial | 114,541 | 2,042 | 34 | — | 116,617 | (9) | (5) | (2) | — | (16) | — | 0.2 | 5.9 | — | — |
| Financial guarantees | 15,353 | 1,397 | 248 | — | 16,998 | (8) | (5) | (16) | — | (29) | 0.1 | 0.4 | 6.5 | — | 0.2 |
| – personal | 1,416 | 11 | — | — | 1,427 | — | — | — | — | — | — | — | — | — | — |
| – corporate and commercial | 10,048 | 1,232 | 195 | — | 11,475 | (7) | (5) | (15) | — | (27) | 0.1 | 0.4 | 7.7 | — | 0.2 |
| – financial | 3,889 | 154 | 53 | — | 4,096 | (1) | — | (1) | — | (2) | — | — | 1.9 | — | — |
| At 31 Dec 2024 | 2,365,477 | 117,824 | 23,976 | 93 | 2,507,370 | (1,296) | (2,679) | (6,171) | (51) | (10,197) | 0.1 | 2.3 | 25.7 | 54.8 | 0.4 |
1Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
2Purchased or originated credit-impaired (‘POCI’).
Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due (‘DPD’) and are transferred from stage 1 to stage 2. The following
disclosure presents the ageing of stage 2 financial assets by those less than 30 DPD and greater than 30 DPD and therefore presents those financial assets classified as stage 2 due to ageing (30 DPD) and those
identified at an earlier stage (less than 30 DPD).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 146 | ||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Credit risk | ||||||||||||
| Stage 2 days past due analysis | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||||
| Gross carrying amount | Allowance for ECL | ECL coverage % | ||||||||||
| Stage 2 | Up-to-<br><br>date | 1 to 29<br><br>DPD1 | 30 and ><br><br>DPD1 | Stage 2 | Up-to-<br><br>date | 1 to 29<br><br>DPD1 | 30 and ><br><br>DPD1 | Stage 2 | Up-to-<br><br>date | 1 to 29<br><br>DPD1 | 30 and ><br><br>DPD1 | |
| At 31 Dec 2025 | $m | $m | $m | $m | $m | $m | $m | $m | % | % | % | % |
| Loans and advances to<br><br>customers at amortised<br><br>cost | 80,936 | 77,615 | 1,894 | 1,427 | (2,318) | (1,837) | (211) | (270) | 2.9 | 2.4 | 11.1 | 18.9 |
| – personal | 23,887 | 21,481 | 1,483 | 923 | (1,235) | (797) | (188) | (250) | 5.2 | 3.7 | 12.7 | 27.1 |
| – corporate and<br><br>commercial | 54,636 | 53,898 | 400 | 338 | (1,064) | (1,024) | (23) | (17) | 1.9 | 1.9 | 5.8 | 5.0 |
| – non-bank financial<br><br>institutions | 2,413 | 2,236 | 11 | 166 | (19) | (16) | — | (3) | 0.8 | 0.7 | — | 1.8 |
| Loans and advances to<br><br>banks at amortised cost | 132 | 132 | — | — | (2) | (2) | — | — | 1.5 | 1.5 | — | — |
| Other financial assets<br><br>measured at amortised<br><br>cost | 1,651 | 1,611 | 21 | 19 | (11) | (10) | — | (1) | 0.7 | 0.6 | — | 5.3 |
| At 31 Dec 2024 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Loans and advances to<br><br>customers at amortised<br><br>cost | 93,248 | 90,157 | 1,888 | 1,203 | (2,546) | (2,147) | (192) | (207) | 2.7 | 2.4 | 10.2 | 17.2 |
| – personal | 39,919 | 37,676 | 1,361 | 882 | (1,158) | (799) | (169) | (190) | 2.9 | 2.1 | 12.4 | 21.5 |
| – corporate and<br><br>commercial | 51,231 | 50,486 | 506 | 239 | (1,358) | (1,326) | (21) | (11) | 2.7 | 2.6 | 4.2 | 4.6 |
| – non-bank financial<br><br>institutions | 2,098 | 1,995 | 21 | 82 | (30) | (22) | (2) | (6) | 1.4 | 1.1 | 9.5 | 7.3 |
| Loans and advances to<br><br>banks at amortised cost | 198 | 198 | — | — | (2) | (2) | — | — | 1.0 | 1.0 | — | — |
| Other financial assets<br><br>measured at amortised<br><br>cost | 1,806 | 1,794 | 3 | 9 | (5) | (5) | — | — | 0.3 | 0.3 | — | — |
1The days past due amounts presented above are on a contractual basis.
Stage 2 decomposition
The following table presents the stage 2 decomposition of gross
carrying amount and allowances for ECL for loans and advances to
customers and banks. It also sets out the reasons why an exposure is
classified as stage 2 and therefore presented as a significant increase
in credit risk at 31 December 2025.
The quantitative classification shows gross carrying amount and
allowances for ECL for which the applicable reporting date PD measure
exceeds defined quantitative thresholds for retail and wholesale
exposures, as set out in Note 1.2(j) ‘Summary of material accounting
policies’, on page 306.
The qualitative classification primarily accounts for CRR deterioration,
watch-and-worry and retail management judgemental adjustments.
ÑA summary of our current policies and practices for the significant increase
in credit risk is set out in ‘Summary of material accounting policies’ on
page 306.
| Loans and advances to customers and banks1 | ||||||||
|---|---|---|---|---|---|---|---|---|
| At 31 Dec 2025 | ||||||||
| Loans and advances to customers | Loans and<br><br>advances to<br><br>banks at<br><br>amortised<br><br>cost | Total<br><br>stage 2 | ||||||
| Personal | of which: | Corporate<br><br>and<br><br>commercial | Non-bank<br><br>financial<br><br>institutions | |||||
| first lien<br><br>mortgages | credit<br><br>cards | other<br><br>personal<br><br>lending | ||||||
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Quantitative | 21,339 | 16,111 | 3,031 | 2,197 | 40,294 | 1,153 | 102 | 62,888 |
| Qualitative | 2,442 | 1,958 | 226 | 258 | 14,160 | 1,249 | 30 | 17,881 |
| – of which: forbearance | 242 | 142 | 29 | 71 | 904 | 102 | — | 1,248 |
| 30 DPD backstop2 | 106 | 79 | 3 | 24 | 182 | 11 | — | 299 |
| Total gross carrying amount | 23,887 | 18,148 | 3,260 | 2,479 | 54,636 | 2,413 | 132 | 81,068 |
| Quantitative | (1,128) | (81) | (690) | (357) | (830) | (10) | — | (1,968) |
| Qualitative | (101) | (27) | (40) | (34) | (230) | (9) | (2) | (342) |
| – of which: forbearance | (34) | (16) | (5) | (13) | (17) | — | — | (51) |
| 30 DPD backstop2 | (6) | (1) | (1) | (4) | (4) | — | — | (10) |
| Total allowance for ECL | (1,235) | (109) | (731) | (395) | (1,064) | (19) | (2) | (2,320) |
| ECL coverage % | 5.2 | 0.6 | 22.4 | 15.9 | 1.9 | 0.8 | 1.5 | 2.9 |
| Residual average life3 (in years) | 15.0 | 19.2 | <1.0 | 2.9 | 2.9 | 1.8 | <1.0 | |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
| --- | ||||||||
| 147 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Credit risk | ||||||||
| Loans and advances to customers and banks1 (continued) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At 31 Dec 2024 | ||||||||
| Loans and advances to customers | Loans and<br><br>advances to<br><br>banks at<br><br>amortised cost | Total<br><br>stage 2 | ||||||
| Personal | of which: | Corporate and<br><br>commercial | Non-bank<br><br>financial<br><br>institutions | |||||
| first lien<br><br>mortgages | credit<br><br>cards | other<br><br>personal<br><br>lending | ||||||
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Quantitative | 36,356 | 30,992 | 2,904 | 2,460 | 37,787 | 1,658 | 176 | 75,977 |
| Qualitative | 3,452 | 3,107 | 85 | 260 | 13,327 | 438 | 22 | 17,239 |
| – of which: forbearance | 175 | 70 | 40 | 65 | 1,086 | 3 | — | 1,264 |
| 30 DPD backstop2 | 111 | 78 | 2 | 31 | 117 | 2 | — | 230 |
| Total gross carrying amount | 39,919 | 34,177 | 2,991 | 2,751 | 51,231 | 2,098 | 198 | 93,446 |
| Quantitative | (1,118) | (121) | (651) | (346) | (1,124) | (28) | — | (2,270) |
| Qualitative | (35) | (8) | (9) | (18) | (229) | (2) | (2) | (268) |
| – of which: forbearance | (5) | — | (1) | (4) | (12) | — | — | (17) |
| 30 DPD backstop2 | (5) | (1) | — | (4) | (5) | — | — | (10) |
| Total allowance for ECL | (1,158) | (130) | (660) | (368) | (1,358) | (30) | (2) | (2,548) |
| ECL coverage % | 2.9 | 0.4 | 22.1 | 13.4 | 2.7 | 1.4 | 1.0 | 2.7 |
| Residual average life3 (in years) | 17.0 | 19.5 | <1.0 | 3.6 | 2.7 | 1.9 | <1.0 |
1Where balances satisfy more than one of the above three criteria for determining a significant increase in credit risk, the corresponding gross carrying amount
and allowance for ECL have been assigned in order of categories presented.
2Days past due (‘DPD’).
3Calculated as the difference between final contractual maturities and the reporting date, weighted based on the contribution of the instrument to the stage 2
total gross carrying amount of the corresponding product or sector.
Credit exposure
Maximum exposure to credit risk
(Audited)
This section provides information on balance sheet items and their
offsets as well as loan and other credit-related commitments.
Commentary on consolidated balance sheet movements in 2025
is provided on page 74.
Other credit risk mitigants
While not disclosed as an offset in the following ‘Maximum exposure
to credit risk’ table, other arrangements are in place that reduce our
maximum exposure to credit risk. These include a charge over
collateral on borrowers’ specific assets, such as residential properties,
collateral held in the form of financial instruments that are not held on
the balance sheet and short positions in securities. In addition, for
financial assets held as part of linked insurance/investment contracts
the credit risk is predominantly borne by the policyholder. See page
305 and Note 31 on the financial statements for further details of
collateral in respect of certain loans and advances and derivatives.
Collateral available to mitigate credit risk is disclosed in the ‘Collateral’
section on page 165.
The following table presents our maximum exposure before taking
account of any collateral held or other credit enhancements (unless
such enhancements meet accounting offsetting requirements).
The table excludes trading assets, financial assets designated and
otherwise mandatorily measured at fair value through profit or loss, and
financial investments measured at fair value through other
comprehensive income as their carrying amount best represents the
net exposure to credit risk. Equity securities are also excluded as they
are not subject to credit risk.
For the financial assets recognised on the balance sheet, the maximum
exposure to credit risk equals their carrying amount and is net of the
allowance for ECL. For financial guarantees and other guarantees
granted, it is the maximum amount that we would have to pay if the
guarantees were called upon. For loan commitments and other credit-
related commitments, it is generally the full amount of the committed
facilities.
The offset in the table relates to amounts where there is a legally
enforceable right of offset in the event of counterparty default and
where, as a result, there is a net exposure for credit risk purposes.
However, as there is no intention to settle these balances on a net
basis under normal circumstances, they do not qualify for net
presentation for accounting purposes. No offset has been applied to
off-balance sheet collateral. In the case of derivatives, the offset
column also includes collateral received in cash and other financial
assets.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 148 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk | ||||||
| Maximum exposure to credit risk | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||
| At 31 Dec 2025 | At 31 Dec 2024 | |||||
| Maximum exposure | Offset | Net | Maximum exposure | Offset | Net | |
| $m | $m | $m | $m | $m | $m | |
| Loans and advances to customers held at amortised cost | 988,399 | (25,671) | 962,728 | 930,658 | (22,822) | 907,836 |
| – personal | 471,731 | (3,568) | 468,163 | 444,701 | (2,256) | 442,445 |
| – corporate and commercial | 416,979 | (20,636) | 396,343 | 403,929 | (18,897) | 385,032 |
| – non-bank financial institutions | 99,689 | (1,467) | 98,222 | 82,028 | (1,669) | 80,359 |
| Loans and advances to banks at amortised cost | 108,462 | — | 108,462 | 102,039 | — | 102,039 |
| Other financial assets held at amortised cost | 888,882 | (5,865) | 883,017 | 827,193 | (4,383) | 822,810 |
| – cash and balances at central banks | 242,859 | — | 242,859 | 267,674 | — | 267,674 |
| – Hong Kong Government certificates of indebtedness | 44,063 | — | 44,063 | 42,293 | — | 42,293 |
| – reverse repurchase agreements – non-trading | 298,392 | (5,865) | 292,527 | 252,549 | (4,383) | 248,166 |
| – financial investments | 182,089 | — | 182,089 | 153,973 | — | 153,973 |
| – prepayments, accrued income and other assets | 121,479 | — | 121,479 | 110,704 | — | 110,704 |
| Assets held for sale | 11,115 | — | 11,115 | 27,234 | — | 27,234 |
| Derivatives | 237,740 | (229,223) | 8,517 | 268,637 | (254,257) | 14,380 |
| Total on-balance sheet exposure to credit risk | 2,234,598 | (260,759) | 1,973,839 | 2,155,761 | (281,462) | 1,874,299 |
| Total off-balance sheet | 1,068,162 | — | 1,068,162 | 970,610 | — | 970,610 |
| – financial and other guarantees | 119,840 | — | 119,840 | 109,380 | — | 109,380 |
| – loan and other credit-related commitments | 948,322 | — | 948,322 | 861,230 | — | 861,230 |
| Total | 3,302,760 | (260,759) | 3,042,001 | 3,126,371 | (281,462) | 2,844,909 |
Concentration of exposure
Our business segments offer a broad range of products, with the
majority of our exposures in Asia and Europe.
For an analysis of:
–financial investments, see Note 16 on the financial statements;
–trading assets, see Note 11 on the financial statements;
–derivatives, see page 178 and Note 15 on the financial statements;
and
–loans and advances by industry sector and by the location of the
principal operations of the lending subsidiary (or, in the case of the
operations of The Hongkong and Shanghai Banking Corporation
Limited, HSBC Bank plc, HSBC Bank Middle East Limited and
HSBC Bank USA, by the location of the lending branch), see page
169 for wholesale lending and page 179 for personal lending.
Credit deterioration of financial
instruments
(Audited)
ÑA summary of our current policies and practices regarding the identification,
treatment and measurement of stage 1, stage 2, stage 3 (credit impaired)
and POCI financial instruments can be found in Note 1.2(j) on the financial
statements.
Measurement uncertainty and sensitivity analysis of ECL estimates
(Audited)
The recognition and measurement of ECL involves the use of
significant judgement and estimation. We form multiple scenarios
based on economic forecasts and distributional estimates and apply
these to credit risk models to estimate future credit losses. The results
are then probability-weighted to determine an unbiased ECL estimate.
Management assessed the current economic environment, reviewed
the latest economic forecasts and discussed key risks before selecting
economic scenarios and their weightings.
Management judgemental adjustments are used where modelled
allowance for ECL does not fully reflect the identified risks and related
uncertainty, or to capture significant late-breaking events.
Methodology
At 31 December 2025, four economic scenarios were used to capture
the latest economic expectations and to articulate management’s view
of the range of risks and potential outcomes. Scenarios are created
using the latest economic forecasts and distributional estimates, each
quarter.
Three scenarios, the Upside, Central and Downside, are drawn from
external consensus forecasts, market data and distributional estimates
of the entire range of economic outcomes. These estimates are used
as conditioning assumptions in a modelled expansion of other
variables, to ensure scenarios that are economically coherent and
internally consistent. The fourth scenario, the Downside 2, represents
management’s view of severe downside risks.
The consensus Central scenario is deemed the ‘most likely’ scenario,
and will attract the largest probability weighting.
The consensus outer scenarios represent short-term cyclical deviations
from the Central scenario, where variable paths converge back to long-
term trend expectations. They are calibrated to a 10% probability.
HSBC’s Central scenario assumes that the effects of announced
climate measures, carbon pricing and green levies are incorporated into
economic forecasts where their short-term effects are known from
enacted legislation, or may be reasonably projected from current trends
and statutory targets. Variable paths and projections aligned to long-
term climate outcomes, but which are dependent on additional policy
adjustments, carry greater uncertainty. Further details about climate
scenarios may be found in the ‘Insights from climate scenario analysis’
section of our Risk review on page 206.
The Downside 2 explores a more extreme economic outcome than
those captured by the consensus scenarios. In this scenario, variables
do not, by design, revert to long-term trend expectations and may
instead explore alternative states of equilibrium, where economic
variables move permanently away from past trends. It is calibrated to a
5% probability.
In most circumstances, the alignment of weightings with the calibrated
probability of scenarios is deemed appropriate for the unbiased
estimation of ECL. However, management may depart from this
probability-based scenario weighting approach when the economic
outlook and forecasts are determined to be particularly uncertain and
risks are elevated.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 149 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Description of economic scenarios
The economic assumptions presented in this section are formed by
HSBC with reference to external forecasts and estimates for the
purpose of calculating ECL.
Forecasts may change, and remain subject to uncertainty. Outer
scenarios are designed to capture the potential crystallisation of key
economic and financial risks and alternative paths for economic
variables. The scenarios used to calculate ECL are described below.
The consensus Central scenario
HSBC’s Central scenario incorporates higher growth forecasts for 2026
relative to the fourth quarter of 2024, in most of our major markets.
The change in forecasts for 2027 is more mixed, reflecting differing
regional dynamics. The scenario is modelled consistent with a US tariff
rate, measured as an effective trade-weighted average, of 15% at the
start of 2026. That rate has fallen in recent months to reflect the
lowering of US tariff rates on imports from mainland China, the
conclusion of a trade agreement with Switzerland and targeted tariff
exemptions on key products.
Forecasts for mainland China and Hong Kong have improved relative to
the fourth quarter of 2024, when projections were weighed down by
expectations that the imposition of US tariffs would result in much
slower growth. Growth expectations have since been revised upwards,
supported by China’s success in redirecting trade away from the US,
and further anticipated official policy support. In Hong Kong, further
increases in residential property sector transactions and domestic
consumption are expected to be driven by a lowering of interest rates.
Forecast US GDP growth has also improved relative to the fourth
quarter of 2024 despite trade policy uncertainty, the persistence of
higher inflation and a weaker labour market. The economy has proved
more resilient to tariffs than had been expected, and robust growth in
private sector investment, related to the technology sector, has further
supported growth. The key exception to the improved outlook is the
UK, where forecasts have deteriorated as unemployment has risen and
both household and business confidence has weakened.
Global GDP is expected to grow by 2.5% in 2026 in the Central
scenario, and the average rate of global GDP growth is forecast to be
2.6% over the five-year forecast period.
The key features of our Central scenario are:
–Forecast GDP growth has improved since the fourth quarter of
2024, although the outlook still envisages either a slowdown or
stabilisation in growth in 2026, relative to 2025, for most markets.
The exceptions are Mexico and the UAE, where growth is forecast
to improve in 2026.
–In most markets, unemployment is forecast to rise moderately in
2026 in line with slower economic activity and subdued hiring. It will
remain relatively low by historical standards.
–The evolution of inflation is mixed. In the US and UK, inflation is
expected to fall gradually but remain above central bank target rates
through 2026, reflecting higher tariffs in the US and the effects of
services price inflation in the UK. In mainland China, inflation is
expected to remain subdued due to soft consumer demand and
continued manufacturing growth.
–House prices in mainland China are expected to continue to fall. In
Hong Kong, prices are forecast to see further moderate
improvements due to a revival in buyer interest, spurred by lower
interest rates. House price growth is projected to remain positive,
but subdued, in the UK and the US.
–Challenging conditions are also forecast to continue in certain
segments of the commercial property sector in a number of our
major markets, including Hong Kong. Structural changes to demand
in the office segment in particular have driven lower valuations.
–Policy interest rates in major markets are forecast to gradually
decline further in 2026. In the longer term, they are expected to
remain at a higher level than in recent years.
–The Brent crude oil price is forecast to average around $65 per
barrel over the projection period.
The Central scenario was created with forecasts available in late
November 2025, and subsequently kept under review until the end of
December 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 150 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
The following tables describe key macroeconomic variables in the consensus Central scenario.
| Consensus Central scenario | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026–2030 (as at 4Q25) | 2025–2029 (as at 4Q24) | |||||||||||||
| UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | |
| GDP (annual average growth rate, %) | ||||||||||||||
| 2025 | 1.2 | 2.0 | 1.7 | 4.0 | 0.9 | 4.4 | 0.9 | |||||||
| 2026 | 1.1 | 1.9 | 2.3 | 4.4 | 0.9 | 4.7 | 1.3 | 1.3 | 1.6 | 1.8 | 3.7 | 0.9 | 4.2 | 1.2 |
| 2027 | 1.4 | 2.0 | 2.3 | 4.2 | 1.2 | 4.1 | 2.0 | 1.8 | 1.6 | 3.5 | 4.3 | 1.4 | 3.9 | 1.7 |
| 2028 | 1.5 | 2.1 | 2.3 | 4.0 | 1.3 | 3.8 | 2.2 | 1.6 | 1.8 | 3.1 | 3.9 | 1.5 | 3.6 | 1.9 |
| 2029 | 1.5 | 2.1 | 2.4 | 3.8 | 1.3 | 3.5 | 2.2 | 1.6 | 2.0 | 2.7 | 3.7 | 1.4 | 3.6 | 2.0 |
| 2030 | 1.5 | 2.0 | 2.4 | 3.8 | 1.3 | 3.5 | 2.2 | |||||||
| 5-year average1 | 1.4 | 2.0 | 2.3 | 4.0 | 1.2 | 3.9 | 2.0 | 1.5 | 1.8 | 2.6 | 3.9 | 1.2 | 3.9 | 1.5 |
| Unemployment rate (%) | ||||||||||||||
| 2025 | 4.9 | 4.4 | 3.3 | 5.2 | 7.5 | 2.7 | 3.5 | |||||||
| 2026 | 4.9 | 4.4 | 3.6 | 5.2 | 7.6 | 2.5 | 3.2 | 4.7 | 4.3 | 3.7 | 5.4 | 7.3 | 2.6 | 3.5 |
| 2027 | 4.7 | 4.3 | 3.4 | 5.2 | 7.6 | 2.4 | 3.2 | 4.5 | 4.3 | 3.3 | 5.2 | 7.2 | 2.6 | 3.5 |
| 2028 | 4.7 | 4.1 | 3.1 | 5.1 | 7.5 | 2.4 | 3.2 | 4.3 | 4.2 | 3.0 | 5.0 | 7.0 | 2.5 | 3.5 |
| 2029 | 4.7 | 4.1 | 3.0 | 5.0 | 7.4 | 2.4 | 3.1 | 4.3 | 4.1 | 2.9 | 5.0 | 7.0 | 2.5 | 3.5 |
| 2030 | 4.7 | 4.1 | 3.0 | 5.0 | 7.4 | 2.4 | 3.1 | |||||||
| 5-year average1 | 4.7 | 4.2 | 3.2 | 5.1 | 7.5 | 2.4 | 3.2 | 4.5 | 4.2 | 3.2 | 5.2 | 7.2 | 2.6 | 3.5 |
| House prices (annual average growth rate, %) | ||||||||||||||
| 2025 | 1.4 | 4.4 | (0.5) | (5.9) | 2.1 | 9.3 | 7.6 | |||||||
| 2026 | 1.2 | 1.1 | 0.5 | (1.6) | 4.3 | 5.8 | 4.8 | 3.8 | 3.2 | 2.4 | (0.7) | 4.4 | 5.1 | 4.5 |
| 2027 | 2.8 | 1.9 | 1.5 | 2.1 | 5.0 | 3.2 | 4.5 | 4.6 | 2.4 | 3.0 | 3.2 | 4.4 | 3.6 | 4.2 |
| 2028 | 3.3 | 2.7 | 2.5 | 3.5 | 4.1 | 2.3 | 4.4 | 3.5 | 2.5 | 2.7 | 4.1 | 3.8 | 1.8 | 4.0 |
| 2029 | 2.7 | 3.2 | 2.1 | 3.4 | 3.1 | 2.0 | 4.3 | 2.7 | 2.6 | 2.7 | 2.9 | 3.1 | 1.3 | 4.0 |
| 2030 | 2.4 | 3.2 | 2.1 | 2.3 | 2.2 | 2.1 | 4.2 | |||||||
| 5-year average1 | 2.5 | 2.4 | 1.8 | 1.9 | 3.7 | 3.1 | 4.4 | 3.2 | 3.0 | 2.1 | 0.7 | 3.6 | 4.2 | 4.9 |
| Inflation (annual average growth rate, %) | ||||||||||||||
| 2025 | 2.4 | 2.4 | 1.4 | 0.3 | 1.2 | 2.1 | 5.0 | |||||||
| 2026 | 2.5 | 2.9 | 1.8 | 0.7 | 1.4 | 2.0 | 3.7 | 2.1 | 2.8 | 1.9 | 1.0 | 1.6 | 1.9 | 3.9 |
| 2027 | 2.1 | 2.3 | 1.9 | 1.2 | 1.7 | 1.9 | 3.6 | 2.1 | 2.5 | 2.2 | 1.5 | 2.0 | 1.8 | 3.4 |
| 2028 | 2.1 | 2.2 | 2.0 | 1.4 | 2.1 | 1.9 | 3.5 | 2.0 | 2.2 | 2.2 | 1.7 | 2.3 | 1.9 | 3.4 |
| 2029 | 2.0 | 2.2 | 2.2 | 1.5 | 2.1 | 2.0 | 3.4 | 2.0 | 2.1 | 2.3 | 1.6 | 2.2 | 1.8 | 3.4 |
| 2030 | 2.0 | 2.2 | 2.2 | 1.5 | 1.9 | 2.0 | 3.4 | |||||||
| 5-year average | 2.2 | 2.4 | 2.0 | 1.3 | 1.9 | 1.9 | 3.5 | 2.1 | 2.4 | 2.0 | 1.2 | 1.9 | 1.9 | 3.8 |
| Central bank policy rate (annual average, %) | ||||||||||||||
| 2025 | 4.2 | 4.1 | 4.5 | 2.9 | 2.1 | 4.1 | 9.4 | |||||||
| 2026 | 3.5 | 3.4 | 3.8 | 3.0 | 1.9 | 3.5 | 7.0 | 3.9 | 3.7 | 4.1 | 2.9 | 1.8 | 3.8 | 8.8 |
| 2027 | 3.4 | 3.1 | 3.5 | 3.0 | 2.0 | 3.1 | 7.2 | 3.8 | 3.7 | 4.0 | 3.0 | 2.0 | 3.7 | 8.8 |
| 2028 | 3.5 | 3.2 | 3.6 | 3.1 | 2.1 | 3.3 | 7.5 | 3.7 | 3.6 | 4.0 | 3.2 | 2.0 | 3.6 | 8.9 |
| 2029 | 3.7 | 3.4 | 3.8 | 3.1 | 2.3 | 3.4 | 7.7 | 3.7 | 3.6 | 4.0 | 3.3 | 2.1 | 3.6 | 8.9 |
| 2030 | 3.8 | 3.6 | 3.9 | 3.2 | 2.5 | 3.6 | 7.9 | |||||||
| 5-year average1 | 3.6 | 3.3 | 3.7 | 3.1 | 2.2 | 3.4 | 7.5 | 3.9 | 3.7 | 4.1 | 3.1 | 2.0 | 3.8 | 8.9 |
1The five-year average is calculated over a projected period of 20 quarters from 1Q26 to 4Q30 for the 4Q25 scenario and 1Q25 to 4Q29 for the 4Q24 scenario.
2For mainland China, the rate shown is the Loan Prime Rate.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 151 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
The consensus Upside scenario
Compared with the Central scenario, the consensus Upside scenario
features stronger economic activity in the near term, before converging
to long-run trend expectations. It also incorporates lower
unemployment and higher asset prices than incorporated in the Central
scenario. Inflation accelerates modestly, driven by increased
investment and higher consumption spending.
The scenario is consistent with a number of key upside risk themes.
These include a partial rollback of tariff measures, deregulation, an
improvement in the US-China relationship, and a de-escalation in
geopolitical tensions.
The following tables describe key macroeconomic variables in the
consensus Upside scenario.
| Consensus Upside scenario 2026–2030 (as at 4Q25) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-peak)1 | 11.0 | (4Q30) | 15.2 | (4Q30) | 20.7 | (4Q30) | 28.6 | (4Q30) | 8.5 | (4Q30) | 29.0 | (4Q30) | 16.9 | (4Q30) |
| Unemployment rate (%, min)2 | 3.2 | (4Q27) | 3.5 | (4Q27) | 2.8 | (2Q28) | 4.7 | (4Q27) | 6.6 | (4Q27) | 2.0 | (4Q27) | 2.8 | (3Q26) |
| House price index (%, start-to-peak)1 | 20.0 | (4Q30) | 23.2 | (4Q30) | 19.4 | (4Q30) | 14.9 | (4Q30) | 22.6 | (4Q30) | 22.2 | (4Q30) | 29.5 | (4Q30) |
| Inflation rate (YoY % change, max)3 | 3.5 | (1Q26) | 3.6 | (3Q26) | 2.9 | (2Q26) | 1.5 | (4Q30) | 2.4 | (4Q27) | 3.1 | (2Q26) | 4.2 | (1Q26) |
| Central bank policy rate (%, max)3 | 3.9 | (1Q26) | 3.9 | (1Q26) | 4.2 | (1Q26) | 3.4 | (1Q27) | 2.5 | (4Q30) | 3.9 | (1Q26) | 8.1 | (4Q30) |
| Consensus Upside scenario 2025–2029 (as at 4Q24) | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-peak)1 | 11.3 | (4Q29) | 13.6 | (4Q29) | 21.4 | (4Q29) | 27.5 | (4Q29) | 8.9 | (4Q29) | 28.9 | (4Q29) | 13.6 | (4Q29) |
| Unemployment rate (%, min)2 | 3.5 | (3Q26) | 3.6 | (1Q26) | 2.9 | (4Q29) | 4.9 | (4Q26) | 6.4 | (4Q26) | 2.2 | (4Q26) | 3.0 | (1Q25) |
| House price index (%, start-to-peak)1 | 24.2 | (4Q29) | 23.6 | (4Q29) | 25.3 | (4Q29) | 9.8 | (4Q29) | 22.8 | (4Q29) | 26.1 | (4Q29) | 31.7 | (4Q29) |
| Inflation rate (YoY % change, min)3 | 1.4 | (1Q26) | 1.6 | (2Q26) | (0.1) | (4Q25) | (1.0) | (4Q25) | 0.1 | (4Q25) | 0.6 | (4Q25) | 3.1 | (2Q26) |
| Central bank policy rate (%, min)3 | 3.6 | (4Q25) | 3.6 | (1Q29) | 4.0 | (1Q29) | 2.7 | (1Q26) | 1.4 | (3Q25) | 3.6 | (1Q29) | 7.6 | (1Q26) |
1Cumulative change to the highest level of the series during the 20-quarter projection.
2Lowest projected unemployment rate in the scenario.
3Highest/lowest projected policy rate and year-on-year percentage change in inflation in the scenario. For mainland China, the rate shown is the Loan Prime Rate.
Downside scenarios
Downside scenarios explore the intensification and crystallisation of
key risk themes and are modelled so that economic shocks drive
consumption and investment lower and commodity prices fall. For
most markets, inflation and interest rates are lower compared with the
Central scenario. That narrative is disrupted in the US and Mexico as
higher tariff rates and other countermeasures are assumed to drive a
broad increase in import prices.
Key downside risks include:
–an increase in protectionist policies. This lowers investment,
complicates international supply chains, and impedes trade flows;
–abrupt asset repricing given elevated valuations, particularly in the
tech sector, eroding wealth effects and ultimately increasing credit
risks;
–broader and more prolonged conflict in the Middle East and the
Russia-Ukraine war, which undermine confidence and investment;
and
–continued differences between the US and China, which affect
economic confidence and the global goods trade and supply chains
for critical technologies.
The consensus Downside scenario
In the consensus Downside scenario, the effects of tariffs on the
global economy are worse than expected, leading to weaker economic
activity compared with the Central scenario. The scenario is consistent
with the tariff rate, measured as an effective trade-weighted average,
rising to 19% in 2026, and remaining at that level in 2027. The key
driver of that increase is the application of sector-specific tariff rates.
In this scenario, GDP declines and unemployment rates rise, while
asset prices and commodity prices fall. The scenario features an
escalation in geopolitical tensions and an increase in tariffs over and
above those assumed in the Central scenario. Existing and recently
approved trade agreements are assumed to hold. In most markets,
inflation declines relative to the Central scenario, as tariffs are assumed
to drive a drop in export demand from the US. In the US and Mexico,
the scenario sees inflation rise as higher tariffs across a broad range of
imported goods pass through to consumer prices.
In the scenario, oil prices trough at $40 per barrel.
The following tables describe key macroeconomic variables in the
consensus Downside scenario.
| Consensus Downside scenario 2026–2030 (as at 4Q25) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| UK | US | Hong Kong | Mainland China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-trough)1 | (0.2) | (2Q27) | (0.8) | (3Q26) | (1.7) | (4Q27) | (1.7) | (3Q26) | (0.4) | (3Q26) | 0.4 | (1Q26) | (1.0) | (1Q27) |
| Unemployment rate (%, max)2 | 6.2 | (4Q26) | 5.3 | (3Q26) | 4.8 | (4Q26) | 6.8 | (4Q27) | 8.6 | (3Q26) | 3.2 | (3Q27) | 3.8 | (3Q26) |
| House price index (%, start-to-trough)1 | (4.1) | (1Q27) | (3.1) | (1Q27) | (3.8) | (1Q27) | (5.6) | (1Q27) | 0.7 | (1Q26) | (3.4) | (2Q26) | 0.6 | (1Q26) |
| Inflation rate (YoY % change)3 | 1.3 | (3Q26) | 3.4 | (1Q26) | 0.1 | (4Q26) | (2.9) | (4Q26) | 0.4 | (4Q26) | 0.5 | (4Q26) | 4.7 | (1Q26) |
| Central bank policy rate (%)3 | 2.2 | (3Q28) | 4.6 | (2Q26) | 5.0 | (2Q26) | 1.5 | (4Q26) | 0.6 | (1Q27) | 4.6 | (2Q26) | 9.5 | (2Q26) |
| Consensus Downside scenario 2025–2029 (as at 4Q24) | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| UK | US | Hong Kong | Mainland China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-trough)1 | (1.0) | (4Q26) | (0.6) | (3Q25) | (4.5) | (4Q25) | (2.5) | (3Q25) | (0.6) | (1Q26) | 0.3 | (1Q25) | (2.1) | (4Q26) |
| Unemployment rate (%, max)2 | 6.1 | (4Q25) | 5.3 | (3Q25) | 5.1 | (2Q26) | 6.9 | (4Q26) | 8.3 | (3Q25) | 3.4 | (1Q26) | 4.1 | (4Q25) |
| House price index (%, start-to-trough)1 | (4.5) | (1Q26) | (0.2) | (1Q25) | (1.9) | (2Q26) | (12.8) | (3Q26) | (0.3) | (1Q25) | (0.4) | (1Q25) | 2.1 | (1Q25) |
| Inflation rate (YoY % change, max)3 | 3.4 | (4Q25) | 4.5 | (1Q26) | 3.1 | (1Q26) | 2.0 | (1Q26) | 2.6 | (3Q25) | 2.8 | (1Q26) | 7.4 | (4Q25) |
| Central bank policy rate (%, max)3 | 5.0 | (1Q25) | 4.8 | (1Q25) | 5.2 | (1Q25) | 3.0 | (1Q25) | 3.2 | (1Q25) | 4.8 | (1Q25) | 11.5 | (3Q25) |
1Cumulative change to the lowest level of the series during the 20-quarter projection.
2The highest projected unemployment rate in the scenario.
3The table for 4Q25 shows highest year-on-year percentage change in inflation and projected policy rates for the US and Mexico, and lowest for other countries
and territories. For the UAE and Hong Kong, the policy rate is shown as the maximum, consistent with the operation of US-dollar-linked exchange rates. For
mainland China, the rate shown is the Loan Prime Rate.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 152 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Downside 2 scenario
The Downside 2 scenario reflects management’s view of the tail of the
economic distribution. It incorporates the simultaneous crystallisation
of a number of risks that lead to a deep global recession. The
subsequent drop in demand leads to a steep fall in commodity prices,
and a rapid increase in unemployment.
The narrative features an escalation in tariff actions, resulting in a global
trade war, and further intensification of geopolitical crises. Asset prices
fall steeply, with technology-related stocks expected to experience the
most significant price adjustments. The scenario is consistent with the
US tariff rate, measured as an effective trade-weighted average, rising
to 25% in 2026, and remaining at that level in 2027.
In the scenario, oil prices trough at $30 per barrel.
The following tables describe key macroeconomic variables in the
Downside 2 scenario.
| Downside 2 scenario 2026–2030 (as at 4Q25) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| UK | US | Hong Kong | Mainland China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-trough)1 | (5.3) | (2Q27) | (4.5) | (1Q27) | (9.3) | (3Q27) | (6.0) | (1Q27) | (6.2) | (2Q27) | (5.7) | (2Q27) | (10.0) | (1Q27) |
| Unemployment rate (%, max)2 | 8.9 | (2Q27) | 9.0 | (1Q28) | 7.0 | (4Q26) | 7.0 | (4Q27) | 10.7 | (4Q27) | 3.9 | (3Q26) | 5.2 | (2Q27) |
| House price index (%, start-to-trough)1 | (24.2) | (4Q27) | (17.1) | (4Q26) | (19.6) | (2Q29) | (23.1) | (4Q27) | (5.9) | (3Q27) | (30.5) | (1Q28) | 0.6 | (1Q26) |
| Inflation rate (YoY % change)3 | (1.9) | (4Q26) | 4.1 | (2Q26) | (1.7) | (2Q27) | (6.5) | (4Q26) | (0.6) | (4Q26) | 0.3 | (4Q26) | 4.8 | (1Q26) |
| Central bank policy rate (%)3 | 1.4 | (1Q27) | 4.7 | (2Q26) | 5.0 | (2Q26) | 1.2 | (2Q27) | 0.1 | (4Q26) | 4.7 | (2Q26) | 9.9 | (2Q26) |
| Downside 2 scenario 2025–2029 (as at 4Q24) | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| UK | US | Hong Kong | Mainland China | France | UAE | Mexico | ||||||||
| GDP level (%, start-to-trough)1 | (9.1) | (2Q26) | (4.1) | (2Q26) | (10.1) | (4Q25) | (8.7) | (4Q25) | (7.9) | (2Q26) | (6.8) | (2Q26) | (10.5) | (3Q26) |
| Unemployment rate (%, max)2 | 8.4 | (2Q26) | 9.3 | (2Q26) | 7.1 | (1Q26) | 7.1 | (4Q26) | 10.4 | (1Q27) | 5.0 | (3Q25) | 5.6 | (1Q26) |
| House price index (%, start-to-trough)1 | (27.2) | (4Q26) | (15.8) | (4Q25) | (34.4) | (3Q27) | (30.5) | (4Q26) | (14.0) | (2Q27) | (13.2) | (2Q27) | 2.0 | (1Q25) |
| Inflation rate (YoY % change, max)3 | 10.1 | (2Q25) | 4.9 | (4Q25) | 3.6 | (1Q26) | 3.8 | (4Q25) | 7.6 | (2Q25) | 3.7 | (2Q25) | 7.9 | (4Q25) |
| Central bank policy rate (%, max)3 | 5.5 | (1Q25) | 5.5 | (1Q25) | 5.9 | (1Q25) | 3.5 | (3Q25) | 4.2 | (1Q25) | 5.6 | (1Q25) | 12.1 | (3Q25) |
1Cumulative change to the lowest level of the series during the 20-quarter projection.
2 The highest projected unemployment rate in the scenario.
3 The table for 4Q25 shows highest year-on-year percentage change in inflation and projected policy rates for the US and Mexico, and lowest for other countries
and territories. For the UAE and Hong Kong, the policy rate is shown as the maximum, consistent with the operation of US-dollar-linked exchange rates. For
mainland China, the rate shown is the Loan Prime Rate.
The following graphs show the historical and forecasted GDP growth rate for the various economic scenarios in our four largest markets.
| Hong Kong |
|---|
| Mainland China |
|---|
| UK |
|---|
| US |
|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 153 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Scenario weighting
Scenario weightings are calibrated to probabilities that are determined
with reference to consensus forecast probability distributions.
Management may then choose to vary weights if they assess that the
calibration lags more recent events, or does not reflect their view of
the distribution of economic and geopolitical risk. Management’s view
of the scenarios and the probability distribution takes into consideration
the relationship of the consensus scenario to both internal and external
assessments of risk.
For the fourth quarter of 2025, forecast and distributional estimates
were assessed to have incorporated available information around tariffs
and policy uncertainties and no major events had occurred since
scenario production that changed the outlook materially. Forecast
dispersion, financial market volatility and other measures of uncertainty
remained close to their long-term average.
Consequently, there was no variation in scenario weights and they
were aligned to the calibrated probabilities of the scenarios. The
consensus Central scenario was assigned a 75% probability weighting
in our major markets. The consensus Upside scenario was assigned a
10% weighting, and the consensus Downside scenario was given
10%. The Downside 2 was assigned a 5% weighting.
In light of the US intervention in the political leadership and energy
assets of Venezuela during early January 2026, management assessed
the potential implications, including to oil prices, and concluded that
expected spillovers remain within the scope of existing scenarios,
including potentially significantly lower oil prices. Subsequent tariff
developments in relation to Greenland were also assessed on the
same basis and no additional action was deemed necessary for
economic scenarios or weights.
The following tables describe the probabilities assigned in each
scenario.
| Scenario weightings, % | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4Q25 | 4Q24 | |||||||||||||||
| Standard<br><br>weights | UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | Standard<br><br>weights | UK | US | Hong<br><br>Kong | Mainland<br><br>China | France | UAE | Mexico | |
| Upside scenario | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Central scenario | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 |
| Downside scenario | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Downside 2 scenario | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |
At 31 December 2025, the consensus Upside and Central scenarios for
all markets had a combined weighting of 85%, unchanged from the
weightings at 31 December 2024. Weightings assigned to downside
scenarios also remained unchanged.
Critical estimates and judgements
The IFRS 9 Expected Credit Losses (‘ECL’) calculation involved
significant judgements, assumptions and estimates. These included
selecting and configuring economic scenarios amid changing
economic conditions and risks and estimating their effects on ECL,
especially when historical conditions are not fully captured by credit
risk models.
How economic scenarios are reflected in
ECL calculations
Models are used to reflect economic scenarios for the ECL estimates.
We have developed globally consistent methodologies for the
application of forward economic guidance into the calculation of ECL
for wholesale and retail credit risk.
For wholesale portfolios, a global methodology is used for the
estimation of the term structure of probability of default (‘PD’) and loss
given default (‘LGD’). PDs use the correlation of forward economic
guidance with default rates for a particular industry within a country,
and LGDs use the correlation of forward economic guidance with
collateral values and realisation rates for a particular country and
industry. PDs and LGDs are estimated for the entire term structure of
each instrument.
For impaired loans, allowances for ECL estimates are based on
discounted cash flow (‘DCF’) calculations for internal forward-looking
scenarios specific to individual borrower circumstances. Probability-
weighted outcomes are applied and, depending on materiality and the
status of the borrower, the number of scenarios considered will
change. Where relevant for the case being assessed, forward
economic guidance is considered as part of these scenarios. LGD-
driven ECL estimates are used for certain less material cases.
For our retail portfolios, the models are predominantly based on
historical observations and correlations with default rates and collateral
values.
For PD, the impact of economic scenarios is modelled for each
portfolio, using historical relationships between default rates and
macroeconomic variables. These are included within IFRS 9 ECL
estimates using either economic response models or models that
contain internal, external and macroeconomic variables. The
macroeconomic impact on PD is modelled over the period equal to the
remaining maturity of the assets.
For LGD, the impact is modelled for mortgage portfolios by forecasting
future loan-to-value profiles for the remaining maturity of the asset,
using national level house price index forecasts and applying the
corresponding LGD expectation relative to the updated forecast
collateral values.
For unsecured retail portfolios, historically observed recovery rates are
leveraged to measure loss. For both mortgages and unsecured loans, a
limited number of portfolios utilise a stressed LGD applied to the
Downside 2 scenario.
Management judgemental adjustments
IFRS 9 management judgemental adjustments are typically short-term
increases or decreases to the modelled allowance for ECL at a
customer, segment or portfolio level where management believes
allowances do not sufficiently reflect the ECL at the reporting date.
These relate to risks or uncertainties that are not reflected in the
models or to any late-breaking events with significant uncertainty,
subject to management review and challenge.
Management judgemental adjustments impacts are considered for
both gross balances and allowances for ECL when determining
whether a significant increase in credit risk has occurred, and is
allocated to an appropriate stage in accordance with the internal
adjustments framework.
Management judgemental adjustments are reviewed under the IFRS 9
governance process see page 107. Management’s review and
challenge focuses on the rationale and adjustment amounts and,
where significant, is subject to a further review by the second line of
defence. Internal frameworks establish the conditions where some
management judgemental adjustments should no longer be required
and as such are considered as part of the governance process.
The internal governance process regularly reviews management
judgemental adjustments and, where possible, mitigates these through
a model recalibration or redevelopment.
Management judgemental adjustment drivers evolve as the economic
environment changes and new risks emerge. In addition to
management judgemental adjustments there are also ‘Other
adjustments’, which are made to address process limitations and data/
model deficiencies and can also include, where appropriate, the impact
of new models where governance has sufficiently progressed to allow
an accurate estimate of ECL allowance to be incorporated into the total
reported ECL.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 154 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
For the wholesale portfolio, management judgemental adjustments
apply to the performing portfolio only as defaulted exposures are
individually assessed.
At 31 December 2025, there was a $0.1bn increase in management
judgemental adjustments compared with 31 December 2024.
Management judgemental adjustments made in estimating the
scenario-weighted reported allowance for ECL at 31 December 2025
are set out in the following table.
| Management judgemental adjustments to ECL | ||||||
|---|---|---|---|---|---|---|
| At 31 December 20251 | At 31 December 20241 | |||||
| Retail | Wholesale2 | Total | Retail | Wholesale2 | Total | |
| $bn | $bn | $bn | $bn | $bn | $bn | |
| Modelled ECL (A)3 | 2.8 | 1.8 | 4.6 | 2.6 | 2.0 | 4.6 |
| Banks, sovereigns, government entities and low-risk<br><br>counterparties | 0.0 | 0.0 | ||||
| Corporate lending adjustments | 0.1 | 0.1 | 0.1 | 0.1 | ||
| Other credit judgements | 0.1 | 0.1 | 0.0 | 0.0 | ||
| Total management judgemental adjustments (B)4 | 0.1 | 0.1 | 0.2 | 0.0 | 0.1 | 0.1 |
| Other adjustments (C)5 | (0.0) | 0.1 | 0.1 | (0.0) | 0.1 | 0.1 |
| Final ECL (A + B + C)6 | 2.9 | 2.0 | 4.9 | 2.6 | 2.2 | 4.8 |
1Management judgemental adjustments presented in the table reflect increases or (decreases) to allowance for ECL, respectively.
2The wholesale portfolio corresponds to adjustments to the performing portfolio (stage 1 and stage 2).
3(A) refers to probability-weighted allowance for ECL before any adjustments are applied.
4(B) refers to adjustments that are applied where management believes allowance for ECL does not sufficiently reflect the credit risk/ECL of any given portfolio at
the reporting date. These can relate to risks or uncertainties that are not reflected in the model and/or to any late-breaking events.
5(C) refers to adjustments to allowance for ECL made to address process limitations and data/model deficiencies and can also include where appropriate, the impact of
new models where governance has sufficiently progressed to allow an accurate estimate of ECL allowance to be incorporated into the total reported ECL.
6As presented within our internal credit risk governance (see page 140).
Management judgemental adjustments at 31 December 2025 were an
increase to allowance for ECL of $0.1bn for the wholesale portfolio,
and $0.1bn for the retail portfolio.
At 31 December 2025, wholesale management judgemental
adjustments to the allowance for ECL remained stable at $0.1bn,
consistent with the position at 31 December 2024. These were mainly
to corporate exposures to reflect heightened uncertainty in specific
sectors and geographies, including offsetting adjustments to the real
estate sector in mainland China, Hong Kong and the US, and
adjustments to exposures to the automotive and industrial sectors in
Germany.
At 31 December 2025, retail management judgemental adjustments
were an increase to allowance for ECL of $0.1bn (31 December 2024:
$0.0bn). The marginal increase in ‘Other credit judgements’ compared
with 31 December 2024 was in relation to a number of market-specific
adjustments that were not individually significant.
Economic scenarios sensitivity analysis
of ECL estimates
Management considered the sensitivity of the ECL outcome against
the economic forecasts as part of the ECL governance process by
recalculating the allowance for ECL under each scenario described
above for selected portfolios, applying a 100% weighting to each
scenario in turn. The weighting is reflected in both the determination of
a significant increase in credit risk and the measurement of the
resulting allowances.
The allowance for ECL calculated for the Upside and Downside
scenarios should not be taken to represent the upper and lower limits
of possible ECL outcomes. The impact of defaults that might occur in
the future under different economic scenarios is captured by
recalculating allowances for loans at the balance sheet date.
There is a particularly high degree of estimation uncertainty in numbers
representing tail risk scenarios when assigned a 100% weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
allowance for ECL and financial instruments related to defaulted (stage
- obligors. The measurement of stage 3 ECL is relatively more
sensitive to credit factors specific to the obligor than future economic
scenarios, and therefore the effects of macroeconomic factors are not
necessarily the key consideration when performing individual
assessments of allowances for obligors in default. Loans to defaulted
obligors are a small portion of the overall wholesale lending exposure,
even if representing the majority of the allowance for ECL. Due to the
range and specificity of the credit factors to which the ECL is sensitive,
it is not possible to provide a meaningful alternative sensitivity analysis
for a consistent set of risks across all defaulted obligors.
For retail mortgage exposures the sensitivity analysis includes
allowance for ECL for defaulted obligors of loans and advances. This is
because the retail ECL for secured mortgage portfolios, including loans
in all stages, is sensitive to macroeconomic variables.
Wholesale and retail sensitivity
The wholesale and retail sensitivity tables present the 100% weighted
results for each of our scenarios. These exclude portfolios held by the
insurance business and small portfolios, and as such cannot be directly
compared with personal and wholesale lending presented in other
credit risk tables. In both the wholesale and retail analysis, the
comparative period results for Downside 2 scenarios are also not
directly comparable with the current period, because they reflect
different risks relative to the consensus scenarios for the period end.
The wholesale and retail sensitivity analysis is stated inclusive of
management judgemental adjustments, as appropriate to each
scenario.
For both retail and wholesale portfolios, the gross carrying amount of
financial instruments are the same under each scenario. For exposures
with similar risk profile and product characteristics, the sensitivity
impact is therefore largely the result of changes in macroeconomic
assumptions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 155 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Wholesale analysis
| IFRS 9 ECL sensitivity to future economic conditions1,2,3 | ||||||
|---|---|---|---|---|---|---|
| Reported Gross<br><br>carrying amount4 | Reported<br><br>allowance<br><br>for ECL | Consensus<br><br>Central scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Upside scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Downside scenario<br><br>allowance<br><br>for ECL | Downside 2<br><br>scenario<br><br>allowance<br><br>for ECL | |
| By geography at 31 Dec 2025 | $m | $m | $m | $m | $m | $m |
| UK | 465,228 | 598 | 571 | 513 | 680 | 1,119 |
| US | 208,425 | 210 | 194 | 166 | 264 | 563 |
| Hong Kong | 472,454 | 439 | 401 | 305 | 570 | 1,143 |
| Mainland China | 133,814 | 188 | 176 | 137 | 256 | 397 |
| Mexico | 38,076 | 62 | 58 | 47 | 76 | 202 |
| UAE | 62,827 | 52 | 51 | 47 | 56 | 82 |
| France | 196,137 | 121 | 117 | 103 | 139 | 188 |
| Other geographies5 | 487,987 | 234 | 208 | 158 | 358 | 790 |
| Total | 2,064,949 | 1,905 | 1,778 | 1,477 | 2,399 | 4,485 |
| of which: | ||||||
| Stage 1 | 1,940,746 | 690 | 638 | 522 | 830 | 971 |
| Stage 2 | 124,203 | 1,214 | 1,139 | 955 | 1,569 | 3,514 |
| By geography at 31 Dec 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| UK | 432,160 | 717 | 667 | 526 | 850 | 2,389 |
| US | 202,888 | 216 | 201 | 205 | 247 | 461 |
| Hong Kong | 450,966 | 659 | 616 | 465 | 906 | 1,496 |
| Mainland China | 137,960 | 178 | 141 | 84 | 329 | 886 |
| Mexico | 34,713 | 69 | 61 | 46 | 86 | 302 |
| UAE | 58,909 | 51 | 49 | 40 | 58 | 120 |
| France | 184,591 | 82 | 80 | 69 | 97 | 125 |
| Other geographies5,6 | 455,823 | 234 | 216 | 176 | 304 | 774 |
| Total | 1,958,010 | 2,205 | 2,031 | 1,612 | 2,877 | 6,555 |
| of which: | ||||||
| Stage 1 | 1,830,264 | 689 | 632 | 494 | 797 | 803 |
| Stage 2 | 127,746 | 1,516 | 1,399 | 1,118 | 2,080 | 5,751 |
1Allowance for ECL sensitivity includes off-balance sheet financial instruments. These are subject to significant measurement uncertainty.
2Includes low credit-risk financial instruments such as debt instruments at FVOCI, which have high carrying amounts but low ECL under all the above scenarios.
3Excludes defaulted obligors. For a detailed breakdown of performing and non-performing wholesale portfolio exposures, see page 169.
4Staging refers only to probability-weighted/reported gross carrying amount. Stage allocation of gross exposures varies by scenario, with higher allocation to
stage 2 under the Downside 2 scenario.
5Includes small portfolios that use less complex modelling approaches and are not sensitive to macroeconomic changes.
6Includes the Argentina and Armenia businesses, which were sold in 2024.
At 31 December 2025, the highest level of 100% scenario-weighted
allowance for ECL was observed in the UK and Hong Kong under the
Downside 2 scenario, driven primarily by a larger exposure to those
geographies, namely in the real estate sector. In relation to the
underlying exposure, mainland China and Mexico have the higher
Downside 2 ECL coverage, mostly due to the relatively larger
proportion of higher risk exposures in those geographies.
Compared with 31 December 2024, the ECL impact on all consensus
scenarios has decreased due to the effects of enhanced credit risk
models and updates to our forward economic scenarios.
In the wholesale portfolio, off-balance sheet financial instruments have
a lower likelihood to be fully converted to a funded exposure at the
point of default, and consequently the sensitivity of the allowance for
ECL is lower in relation to its nominal amount, when compared with an
on-balance sheet exposure with a similar risk profile.
Retail analysis
At 31 December 2025, the most significant level of allowance for ECL
sensitivity was observed in the UK, Mexico and Hong Kong. Mortgages
reflected the lowest level of allowance for ECL sensitivity across most
markets given the significant levels of collateral relative to the exposure
values. Credit cards and other unsecured lending across stages 1 and 2
are more sensitive to economic forecasts and therefore reflected the
highest level of allowance for ECL sensitivity during 2025.
The ECL allowance in all consensus scenarios compared with
31 December 2024 was stable. There was a decrease in the
Downside 2 scenario, which was primarily due to improvements in the
House Price Index forecasts in Hong Kong.
There was limited sensitivity in credit cards and other unsecured
lending in stage 3 as levels of loss on defaulted exposures remained
consistent through various economic conditions. The Downside 2
scenario reflects the tail of the economic distribution where allowance
for ECL is more sensitive based on historical experience and includes a
stressed LGD for a limited number of portfolios.
The reported gross carrying amount by stage is representative of the
weighted scenario allowance for ECL. The allowance for ECL
sensitivity to the other scenarios includes changes in allowance for
ECL due to the levels of loss and the migration of additional lending
balances in, or out, of stage 2.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 156 | ||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Credit risk | ||||||||||||
| IFRS 9 ECL sensitivity to future economic conditions1 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||
| Reported<br><br>gross<br><br>carrying<br><br>amount | Reported<br><br>allowance<br><br>for ECL | Consensus<br><br>Central<br><br>scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Upside<br><br>scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Downside<br><br>scenario<br><br>allowance<br><br>for ECL | Downside 2<br><br>scenario<br><br>allowance<br><br>for ECL | Reported<br><br>gross carrying<br><br>amount | Reported<br><br>allowance<br><br>for ECL | Consensus<br><br>Central<br><br>scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Upside<br><br>scenario<br><br>allowance<br><br>for ECL | Consensus<br><br>Downside<br><br>scenario<br><br>allowance<br><br>for ECL | Downside 2<br><br>scenario<br><br>allowance<br><br>for ECL | |
| By geography | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
| UK | ||||||||||||
| Mortgages | 183,128 | 132 | 124 | 117 | 138 | 274 | 163,541 | 126 | 117 | 107 | 132 | 288 |
| Credit cards | 8,317 | 356 | 354 | 338 | 355 | 419 | 7,415 | 280 | 275 | 265 | 276 | 447 |
| Other | 9,513 | 265 | 261 | 238 | 276 | 370 | 8,249 | 241 | 233 | 217 | 243 | 351 |
| Mexico | ||||||||||||
| Mortgages | 8,430 | 190 | 188 | 180 | 193 | 237 | 7,482 | 165 | 162 | 155 | 168 | 215 |
| Credit cards | 2,322 | 407 | 403 | 398 | 409 | 514 | 2,227 | 337 | 333 | 330 | 338 | 423 |
| Other | 3,727 | 437 | 437 | 435 | 442 | 589 | 3,722 | 419 | 416 | 413 | 422 | 593 |
| Hong Kong | ||||||||||||
| Mortgages | 106,736 | 5 | 4 | 3 | 6 | 13 | 106,866 | 5 | 5 | 4 | 5 | 10 |
| Credit cards | 9,739 | 313 | 306 | 300 | 324 | 496 | 9,419 | 293 | 275 | 268 | 300 | 770 |
| Other | 6,085 | 146 | 137 | 136 | 144 | 173 | 6,210 | 106 | 102 | 101 | 105 | 249 |
| UAE | ||||||||||||
| Mortgages | 2,306 | 6 | 6 | 6 | 6 | 7 | 1,993 | 8 | 8 | 8 | 8 | 8 |
| Credit cards | 591 | 39 | 39 | 38 | 40 | 46 | 536 | 31 | 31 | 31 | 31 | 35 |
| Other | 620 | 12 | 11 | 11 | 12 | 13 | 688 | 17 | 17 | 17 | 17 | 19 |
| US | ||||||||||||
| Mortgages | 17,797 | 4 | 4 | 4 | 5 | 8 | 16,965 | 6 | 6 | 6 | 6 | 8 |
| Credit cards | 187 | 14 | 14 | 14 | 14 | 16 | 193 | 15 | 14 | 14 | 15 | 17 |
| Other geographies | ||||||||||||
| Mortgages | 56,067 | 109 | 106 | 102 | 114 | 175 | 51,064 | 131 | 127 | 124 | 136 | 180 |
| Credit cards | 3,834 | 175 | 174 | 173 | 179 | 202 | 3,500 | 162 | 159 | 156 | 164 | 223 |
| Other | 2,313 | 78 | 78 | 77 | 78 | 85 | 2,292 | 72 | 72 | 69 | 73 | 93 |
| Total | 421,712 | 2,688 | 2,646 | 2,570 | 2,735 | 3,637 | 392,361 | 2,413 | 2,351 | 2,285 | 2,440 | 3,928 |
| of which: mortgages | 374,464 | 446 | 432 | 412 | 462 | 714 | 347,910 | 440 | 425 | 405 | 456 | 708 |
| Stage 1 | 353,960 | 54 | 53 | 50 | 61 | 161 | 311,875 | 51 | 47 | 43 | 58 | 129 |
| Stage 2 | 18,056 | 106 | 97 | 88 | 108 | 216 | 33,761 | 126 | 117 | 107 | 129 | 275 |
| Stage 3 | 2,448 | 286 | 282 | 274 | 293 | 337 | 2,274 | 263 | 261 | 255 | 269 | 304 |
| of which: credit cards | 24,990 | 1,304 | 1,290 | 1,261 | 1,321 | 1,693 | 23,290 | 1,116 | 1,086 | 1,064 | 1,124 | 1,915 |
| Stage 1 | 21,258 | 353 | 347 | 335 | 366 | 553 | 19,915 | 276 | 267 | 258 | 284 | 701 |
| Stage 2 | 3,450 | 731 | 723 | 706 | 735 | 913 | 3,107 | 655 | 634 | 621 | 656 | 1,027 |
| Stage 3 | 282 | 220 | 220 | 220 | 220 | 227 | 267 | 185 | 185 | 185 | 185 | 188 |
| of which: others | 22,258 | 938 | 924 | 897 | 952 | 1,230 | 21,161 | 856 | 839 | 816 | 860 | 1,305 |
| Stage 1 | 19,494 | 253 | 249 | 233 | 265 | 444 | 18,574 | 216 | 204 | 193 | 217 | 532 |
| Stage 2 | 2,177 | 403 | 393 | 382 | 405 | 494 | 2,005 | 360 | 355 | 343 | 363 | 483 |
| Stage 3 | 587 | 282 | 282 | 282 | 282 | 292 | 583 | 279 | 279 | 279 | 279 | 290 |
1Allowance for ECL sensitivities exclude portfolios utilising less complex modelling approaches.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 157 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Group ECL sensitivity results
The allowance for ECL of the scenarios and management judgemental
adjustments is highly sensitive to movements in economic forecasts.
Based upon the sensitivity tables presented above, if the Group
allowance for ECL balance was estimated solely on the basis of the
Central scenario, Downside scenario or the Downside 2 scenario at
31 December 2025, it would increase/(decrease) as presented in the
below table.
| Total Group ECL at 31 December 2025 | ||||
|---|---|---|---|---|
| At 31 December 2025 | At 31 December 2024 | |||
| Retail1 | Wholesale1 | Retail1 | Wholesale1 | |
| $bn | $bn | $bn | $bn | |
| Reported allowance for ECL | 2.7 | 1.9 | 2.4 | 2.2 |
| Scenarios | ||||
| 100% Consensus Central scenario | (0.0) | 0.0 | (0.1) | (0.2) |
| 100% Consensus Upside scenario | (0.1) | (0.3) | (0.1) | (0.6) |
| 100% Consensus Downside scenario | 0.0 | 0.6 | 0.0 | 0.7 |
| 100% Downside 2 scenario | 0.9 | 2.7 | 1.5 | 4.3 |
1On the same basis as retail and wholesale sensitivity analysis.
At 31 December 2025, the Group allowance for ECL increased in the retail portfolio by $0.3bn and decreased by $0.3bn in the wholesale portfolio,
compared with 31 December 2024.
Compared with 31 December 2024, both the retail and wholesale portfolio Group ECL sensitivity across all consensus scenarios decreased due
to an improving economic outlook. For the retail portfolios the ECL sensitivity decrease across the Downside 2 scenario was primarily due to
improvements in Hong Kong and UK unsecured portfolios. For the wholesale portfolios, the decrease was largely driven by crystallisation of
defaults in certain sectors and an improving economic outlook.
| Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL | ||||||
|---|---|---|---|---|---|---|
| Wholesale | Retail | Total | ||||
| Gross carrying/<br><br>nominal amount | Allowance<br><br>for ECL | Gross carrying/<br><br>nominal amount | Allowance<br><br>for ECL | Gross carrying/<br><br>nominal amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | |
| Included in sensitivity analysis | 2,064,949 | (1,905) | 421,712 | (2,688) | 2,486,661 | (4,593) |
| – Exclusions from sensitivity as described in the section above1 | 21,336 | (6,394) | 330,144 | (147) | 351,480 | (6,541) |
| – Debt instruments measured at fair value through other<br><br>comprehensive income2 | (383,568) | 30 | — | — | (383,568) | 30 |
| – Performance guarantees2 | (102,684) | 269 | — | — | (102,684) | 269 |
| – Other financial assets at amortised cost not presented as<br><br>wholesale or personal lending, including held for sale2 | (539,467) | 102 | (616) | 9 | (540,083) | 111 |
| – Other3 | 6,757 | (342) | (2,735) | 1 | 4,022 | (341) |
| As reported in the Summary of credit risk (excluding debt<br><br>instruments measured at FVOCI) by stage distribution<br><br>and ECL coverage by industry sector at 31 Dec 2025 | 1,067,323 | (8,240) | 748,505 | (2,825) | 1,815,828 | (11,065) |
| Other financial assets at amortised cost | 890,326 | (129) | ||||
| Total reported in the Summary of credit risk (excluding debt<br><br>instruments measured at FVOCI) by stage distribution and<br><br>ECL coverage by industry sector at 31 Dec 2025 | 2,706,154 | (11,194) | ||||
| Included in sensitivity analysis | 1,958,010 | (2,205) | 392,361 | (2,413) | 2,350,371 | (4,618) |
| --- | --- | --- | --- | --- | --- | --- |
| – Exclusions from sensitivity as described in the section above1 | 20,409 | (5,419) | 309,178 | (124) | 329,587 | (5,543) |
| – Debt instruments measured at fair value through other<br><br>comprehensive income2 | (346,124) | 54 | — | — | (346,124) | 54 |
| – Performance guarantees2 | (92,722) | 311 | — | — | (92,722) | 311 |
| – Other financial assets at amortised cost not presented as<br><br>wholesale or personal lending, including held for sale2 | (568,668) | 141 | (130) | — | (568,798) | 141 |
| – Other3 | 5,978 | (441) | 498 | (9) | 6,476 | (450) |
| As reported in the Summary of credit risk (excluding debt<br><br>instruments measured at FVOCI) by stage distribution and<br><br>ECL coverage by industry sector at 31 Dec 2024 | 976,883 | (7,559) | 701,907 | (2,546) | 1,678,790 | (10,105) |
| Other financial assets at amortised cost | 828,580 | (92) | ||||
| Total reported in the Summary of credit risk (excluding debt<br><br>instruments measured at FVOCI) by stage distribution and<br><br>ECL coverage by industry sector at 31 Dec 2024 | 2,507,370 | (10,197) |
1Comprises wholesale defaulted obligors, retail portfolios utilising less complex modelling approaches, private banking and insurance.
2The sensitivity analysis includes certain items reported in ‘Other assets at amortised cost’, which are not allocated to an industry in the credit tables. It also
includes debt instruments measured at FVOCI and performance guarantees, which are presented separately in the credit tables.
3Includes FX and other operational variances.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 158 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Reconciliations of changes in gross carrying/nominal amount and allowances
The following disclosure provides a reconciliation by stage of the
Group’s gross carrying/nominal amount and allowances for loans and
advances to banks and customers, including loan commitments and
financial guarantees.
In addition, a reconciliation by stage of the Group’s gross carrying
amount and allowances for loans and advances to banks and
customers and a reconciliation by stage of the Group’s nominal amount
and allowances for loan commitments and financial guarantees, were
included in this section following adoption of the recommendations of
the third report from The Taskforce on Disclosures about Expected
Credit Losses (‘DECL’).
Movements are calculated on a quarterly basis and therefore fully
capture stage movements between quarters. If movements were
calculated on a year-to-date basis they would only reflect the opening
and closing position of the financial instrument.
The transfers of financial instruments represents the impact of stage
transfers upon the gross carrying/nominal amount and associated
allowance for ECL.
The net remeasurement of ECL arising from transfer of stage
represents the increase or decrease due to these transfers, for
example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL
measurement basis. Net remeasurement excludes the underlying
CRR/PD movements of the financial instruments transferring stage.
This is captured, along with other credit quality movements in the
‘changes to risk parameters – credit quality’ line item.
Changes in ‘Net new and further lending/repayments’ represents the
impact from volume movements within the Group’s lending portfolio
and includes new financial assets originated or purchased, further
lending and repayments (including final repayments).
| Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including<br><br>loan commitments and financial guarantees | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Audited) | ||||||||||
| Non-credit impaired | Credit impaired | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 1,489,687 | (1,232) | 115,898 | (2,674) | 23,823 | (6,148) | 93 | (51) | 1,629,501 | (10,105) |
| Transfers of financial<br><br>instruments: | (28,196) | (931) | 18,327 | 2,101 | 9,869 | (1,170) | — | — | — | — |
| –transfers from stage 1 to<br><br>stage 2 | (134,309) | 368 | 134,309 | (368) | — | — | — | — | — | — |
| –transfers from stage 2 to<br><br>stage 1 | 107,223 | (1,233) | (107,223) | 1,233 | — | — | — | — | — | — |
| – transfers to stage 3 | (1,873) | 15 | (10,260) | 1,434 | 12,133 | (1,449) | — | — | — | — |
| – transfers from stage 3 | 763 | (81) | 1,501 | (198) | (2,264) | 279 | — | — | — | — |
| Net remeasurement of ECL<br><br>arising from transfer of<br><br>stage | — | 664 | — | (604) | — | (58) | — | — | — | 2 |
| Changes due to<br><br>modifications not<br><br>derecognised | — | — | — | — | — | — | — | — | — | — |
| Net new and further<br><br>lending/repayments | 107,733 | (178) | (35,843) | 614 | (6,060) | 768 | 238 | 2 | 66,068 | 1,206 |
| Changes to risk parameters<br><br>– credit quality | — | 390 | — | (1,991) | — | (3,737) | — | (24) | — | (5,362) |
| Changes to models used<br><br>for ECL calculation | — | (59) | — | 272 | — | (16) | — | — | — | 197 |
| Assets written off | — | — | — | — | (3,569) | 3,569 | — | — | (3,569) | 3,569 |
| Credit-related modifications<br><br>that resulted in<br><br>derecognition | — | — | — | — | (88) | 9 | — | — | (88) | 9 |
| Foreign exchange and<br><br>others1,2 | 42,772 | (16) | 4,507 | (152) | 1,259 | (410) | 6 | (3) | 48,544 | (581) |
| At 31 Dec 2025 | 1,611,996 | (1,362) | 102,889 | (2,434) | 25,234 | (7,193) | 337 | (76) | 1,740,456 | (11,065) |
| ECL income statement<br><br>change for the period | 817 | (1,709) | (3,043) | (22) | (3,957) | |||||
| Recoveries | 320 | |||||||||
| Others | (248) | |||||||||
| Total ECL income<br><br>statement change for the<br><br>period | (3,885) |
1Total includes $6.0bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding
allowance for ECL of $27m, including business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page
355.
2This includes $7.2bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $7m in relation to disposal of our retained
home and other retail loans in France as disclosed in Note 23 on page 355.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 159 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including<br><br>loan commitments and financial guarantees (continued) | ||||||||||
| --- | --- | --- | --- | |||||||
| (Audited) | ||||||||||
| At 31 Dec 2025 | 12 months ended 31 Dec 2025 | |||||||||
| Gross carrying/<br><br>nominal amount | Allowance<br><br>for ECL | ECL<br><br>charge | ||||||||
| $m | $m | $m | ||||||||
| As above | 1,740,456 | (11,065) | (3,885) | |||||||
| Other financial assets measured at amortised cost | 890,326 | (129) | (29) | |||||||
| Non-trading reverse purchase agreement commitments | 75,372 | — | — | |||||||
| Performance and other guarantees not considered for IFRS 9 | — | — | 46 | |||||||
| Summary of financial instruments to which the impairment requirements<br><br>in IFRS 9 are applied/Summary consolidated income statement | 2,706,154 | (11,194) | (3,868) | |||||||
| Debt instruments measured at FVOCI | 383,568 | (30) | 18 | |||||||
| Total allowance for ECL/total income statement ECL change for the period | n/a | (11,224) | (3,850) | |||||||
| Non-credit impaired | Credit impaired | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>exposure | Allowance/<br><br>provision<br><br>for ECL | Gross<br><br>exposure | Allowance/<br><br>provision<br><br>for ECL | Gross<br><br>exposure | Allowance/<br><br>provision<br><br>for ECL | Gross<br><br>exposure | Allowance/<br><br>provision<br><br>for ECL | Gross<br><br>exposure | Allowance/<br><br>provision<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 1,496,805 | (1,300) | 153,084 | (3,102) | 20,799 | (7,063) | 85 | (30) | 1,670,773 | (11,495) |
| Transfers of financial instruments: | (19,629) | (1,259) | 6,652 | 2,302 | 12,977 | (1,043) | — | — | — | — |
| – transfers from stage 1 to<br><br>stage 2 | (116,211) | 419 | 116,211 | (419) | — | — | — | — | — | — |
| – transfers from stage 2 to<br><br>stage 1 | 98,731 | (1,627) | (98,731) | 1,627 | — | — | — | — | — | — |
| – transfers to stage 3 | (2,799) | 16 | (12,230) | 1,321 | 15,029 | (1,337) | — | — | — | — |
| – transfers from stage 3 | 650 | (67) | 1,402 | (227) | (2,052) | 294 | — | — | — | — |
| Net remeasurement of ECL<br><br>arising from transfer of stage | — | 959 | — | (831) | — | (144) | — | — | — | (16) |
| Changes due to modifications not<br><br>derecognised | — | — | — | — | (25) | — | — | — | (25) | — |
| Net new and further lending/<br><br>repayments | 87,833 | (168) | (37,731) | 589 | (5,246) | 1,689 | 7 | (7) | 44,863 | 2,103 |
| Changes to risk parameters –<br><br>credit quality | — | 363 | — | (1,773) | — | (3,945) | — | (11) | — | (5,366) |
| Changes to models used for ECL<br><br>calculation | — | 68 | — | (4) | — | (20) | — | — | — | 44 |
| Assets written off | — | — | — | — | (4,459) | 4,459 | — | — | (4,459) | 4,459 |
| Credit-related modifications that<br><br>resulted in derecognition | — | — | — | — | — | — | — | — | — | — |
| Foreign exchange and others1,2,3 | (75,322) | 105 | (6,107) | 145 | (223) | (81) | 1 | (3) | (81,651) | 166 |
| At 31 Dec 2024 | 1,489,687 | (1,232) | 115,898 | (2,674) | 23,823 | (6,148) | 93 | (51) | 1,629,501 | (10,105) |
| ECL income statement change for<br><br>the period | 1,222 | (2,019) | (2,420) | (18) | (3,235) | |||||
| Recoveries | 260 | |||||||||
| Others | (158) | |||||||||
| Total ECL income statement<br><br>change for the period | (3,133) |
1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding
allowance for ECL of $46m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page
355.
2Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina
during 2024.
| At 31 Dec 2024 | 12 months ended 31 Dec 2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Gross carrying/<br><br>nominal amount | Allowance<br><br>for ECL | ECL<br><br>charge | ||||||||
| $m | $m | $m | ||||||||
| As above | 1,629,501 | (10,105) | (3,133) | |||||||
| Other financial assets measured at amortised cost | 828,580 | (92) | (114) | |||||||
| Non-trading reverse purchase agreement commitments | 49,289 | — | — | |||||||
| Performance and other guarantees not considered for IFRS 9 | — | — | (173) | |||||||
| Summary of financial instruments to which the impairment requirements in IFRS 9 are<br><br>applied/Summary consolidated income statement | 2,507,370 | (10,197) | (3,420) | |||||||
| Debt instruments measured at FVOCI | 346,124 | (54) | 6 | |||||||
| Total allowance for ECL/total income statement ECL change for the period | n/a | (10,251) | (3,414) | |||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 160 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Non-credit impaired | Credit impaired | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 926,272 | (1,087) | 93,446 | (2,548) | 22,617 | (6,042) | 90 | (51) | 1,042,425 | (9,728) |
| Transfers of financial instruments: | (19,240) | (873) | 9,888 | 2,039 | 9,352 | (1,166) | — | — | — | — |
| – transfers from stage 1 to stage 2 | (96,905) | 350 | 96,905 | (350) | — | — | — | — | — | — |
| – transfers from stage 2 to stage 1 | 78,715 | (1,158) | (78,715) | 1,158 | — | — | — | — | — | — |
| – transfers to stage 3 | (1,522) | 15 | (9,650) | 1,428 | 11,172 | (1,443) | — | — | — | — |
| – transfers from stage 3 | 472 | (80) | 1,348 | (197) | (1,820) | 277 | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 613 | — | (570) | — | (58) | — | — | — | (15) |
| Changes due to modifications not<br><br>derecognised | — | — | — | — | — | — | — | — | — | — |
| Net new and further lending/<br><br>repayments | 69,338 | (169) | (26,413) | 579 | (5,119) | 705 | 238 | 2 | 38,044 | 1,117 |
| Changes to risk parameters – credit<br><br>quality | — | 382 | — | (1,945) | — | (3,693) | — | (24) | — | (5,280) |
| Changes to models used for ECL<br><br>calculation | — | (60) | — | 269 | — | (16) | — | — | — | 193 |
| Assets written off | — | — | — | — | (3,569) | 3,569 | — | — | (3,569) | 3,569 |
| Credit-related modifications that<br><br>resulted in derecognition | — | — | — | — | (88) | 9 | — | — | (88) | 9 |
| Foreign exchange and others1,2 | 25,399 | (11) | 4,147 | (144) | 1,197 | (406) | 5 | (3) | 30,748 | (564) |
| At 31 Dec 2025 | 1,001,769 | (1,205) | 81,068 | (2,320) | 24,390 | (7,098) | 333 | (76) | 1,107,560 | (10,699) |
| ECL income statement change for<br><br>the period | 766 | (1,667) | (3,062) | (22) | (3,985) | |||||
| Recoveries | 320 | |||||||||
| Others | (264) | |||||||||
| Total ECL income statement<br><br>change for the period | (3,929) |
1Total includes $6.0bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding
allowance for ECL of $27m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page
355.
2This includes $7.2bn of gross carrying loans and advances to customers and a corresponding allowance for ECL of $7m in relation to the disposal of our retained
portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.
| Non-credit impaired | Credit impaired | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 920,863 | (1,140) | 122,307 | (2,967) | 19,275 | (6,952) | 81 | (30) | 1,062,526 | (11,089) |
| Transfers of financial instruments: | (19,794) | (1,227) | 7,344 | 2,259 | 12,450 | (1,032) | — | — | — | — |
| – transfers from stage 1 to stage 2 | (90,611) | 404 | 90,611 | (404) | — | — | — | — | — | — |
| – transfers from stage 2 to stage 1 | 72,935 | (1,580) | (72,935) | 1,580 | — | — | — | — | — | — |
| – transfers to stage 3 | (2,559) | 16 | (11,512) | 1,310 | 14,071 | (1,326) | — | — | — | — |
| – transfers from stage 3 | 441 | (67) | 1,180 | (227) | (1,621) | 294 | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 932 | — | (801) | — | (144) | — | — | — | (13) |
| Changes due to modifications not<br><br>derecognised | — | — | — | — | (25) | — | — | — | (25) | — |
| Net new and further lending/<br><br>repayments | 52,439 | (161) | (33,154) | 570 | (4,535) | 1,606 | 7 | (7) | 14,757 | 2,008 |
| Changes to risk parameters – credit<br><br>quality | — | 361 | — | (1,724) | — | (3,873) | — | (11) | — | (5,247) |
| Changes to models used for ECL<br><br>calculation | — | 66 | — | (18) | — | (20) | — | — | — | 28 |
| Assets written off | — | — | — | — | (4,459) | 4,459 | — | — | (4,459) | 4,459 |
| Credit-related modifications that<br><br>resulted in derecognition | — | — | — | — | — | — | — | — | — | — |
| Foreign exchange and others1 | (27,236) | 82 | (3,051) | 133 | (89) | (86) | 2 | (3) | (30,374) | 126 |
| At 31 Dec 2024 | 926,272 | (1,087) | 93,446 | (2,548) | 22,617 | (6,042) | 90 | (51) | 1,042,425 | (9,728) |
| ECL income statement change for<br><br>the period | 1,198 | (1,973) | (2,431) | (18) | (3,224) | |||||
| Recoveries | 260 | |||||||||
| Others | (161) | |||||||||
| Total ECL income statement<br><br>change for the period | (3,125) |
1Total includes $3.7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding
allowance for ECL of $46m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page
355.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 161 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Non-credit impaired | Credit impaired | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Nominal<br><br>amount | Allowance<br><br>for ECL | Nominal<br><br>amount | Allowance<br><br>for ECL | Nominal<br><br>amount | Allowance<br><br>for ECL | Nominal<br><br>amount | Allowance<br><br>for ECL | Nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 563,415 | (145) | 22,452 | (126) | 1,206 | (106) | 3 | — | 587,076 | (377) |
| Transfers of financial instruments: | (8,956) | (58) | 8,439 | 62 | 517 | (4) | — | — | — | — |
| – transfers from stage 1 to stage 2 | (37,404) | 18 | 37,404 | (18) | — | — | — | — | — | — |
| – transfers from stage 2 to stage 1 | 28,508 | (75) | (28,508) | 75 | — | — | — | — | — | — |
| – transfers to stage 3 | (351) | — | (610) | 6 | 961 | (6) | — | — | — | — |
| – transfers from stage 3 | 291 | (1) | 153 | (1) | (444) | 2 | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 51 | — | (34) | — | — | — | — | — | 17 |
| Net new and further lending/<br><br>repayments | 38,395 | (9) | (9,430) | 35 | (941) | 63 | — | — | 28,024 | 89 |
| Changes to risk parameters – credit<br><br>quality | — | 8 | — | (46) | — | (44) | — | — | — | (82) |
| Changes to models used for ECL<br><br>calculation | — | 1 | — | 3 | — | — | — | — | — | 4 |
| Foreign exchange and others | 17,373 | (5) | 360 | (8) | 62 | (4) | 1 | — | 17,796 | (17) |
| At 31 Dec 2025 | 610,227 | (157) | 21,821 | (114) | 844 | (95) | 4 | — | 632,896 | (366) |
| ECL income statement change for<br><br>the period | 51 | (42) | 19 | — | 28 | |||||
| Others | 16 | |||||||||
| Total ECL income statement<br><br>change for the period | 44 | |||||||||
| At 1 Jan 2024 | 575,942 | (160) | 30,777 | (135) | 1,524 | (111) | 4 | — | 608,247 | (406) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Transfers of financial instruments: | 165 | (32) | (692) | 43 | 527 | (11) | — | — | — | — |
| – transfers from stage 1 to stage 2 | (25,600) | 15 | 25,600 | (15) | — | — | — | — | — | — |
| – transfers from stage 2 to stage 1 | 25,796 | (47) | (25,796) | 47 | — | — | — | — | — | — |
| – transfers to stage 3 | (240) | — | (718) | 11 | 958 | (11) | — | — | — | — |
| – transfers from stage 3 | 209 | — | 222 | — | (431) | — | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 27 | — | (30) | — | — | — | — | — | (3) |
| Net new and further lending/<br><br>repayments | 35,394 | (7) | (4,577) | 19 | (711) | 83 | — | — | 30,106 | 95 |
| Changes to risk parameters – credit<br><br>quality | — | 2 | — | (49) | — | (72) | — | — | — | (119) |
| Changes to models used for ECL<br><br>calculation | — | 2 | — | 14 | — | — | — | — | — | 16 |
| Foreign exchange and others1,2 | (48,086) | 23 | (3,056) | 12 | (134) | 5 | (1) | — | (51,277) | 40 |
| At 31 Dec 2024 | 563,415 | (145) | 22,452 | (126) | 1,206 | (106) | 3 | — | 587,076 | (377) |
| ECL income statement change for<br><br>the period | 24 | (46) | 11 | — | (11) | |||||
| Others | 3 | |||||||||
| Total ECL income statement change<br><br>for the period | (8) |
1Total includes $35.3bn of nominal amount and $21m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
2Total includes $2.7bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina
during 2024.
Credit quality
Credit quality of financial instruments
(Audited)
We assess the credit quality of all financial instruments that are subject to credit risk. The credit quality of financial instruments is a point-in-time
assessment of PD, whereas stages 1 and 2 are determined based on relative deterioration of credit quality since initial recognition for the majority
of portfolios. Accordingly, for non-credit-impaired financial instruments, there is no direct relationship between the credit quality assessment and
stages 1 and 2, although typically the lower credit quality bands exhibit a higher proportion in stage 2. The five credit quality classifications provided
below each encompass a range of granular internal credit rating grades assigned to wholesale and personal lending businesses and the external
ratings attributed by external agencies to debt securities, as shown in the table on page 172.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 162 | ||||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Credit risk | ||||||||||||||||
| Distribution of financial instruments by credit quality | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||||||||
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||
| Gross carrying/notional amount | Allowance<br><br>for ECL/<br><br>other credit<br><br>provisions | Net | Gross carrying/notional amount | Allowance<br><br>for ECL/<br><br>other credit<br><br>provisions | Net | |||||||||||
| Strong | Good | Satisfactory | Sub-<br><br>standard | Credit<br><br>impaired | Total | Strong | Good | Satisfactory | Sub-<br><br>standard | Credit<br><br>impaired | Total | |||||
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| In-scope for IFRS 9 ECL | ||||||||||||||||
| Loans and advances to customers held<br><br>at amortised cost | 545,487 | 215,781 | 191,839 | 21,455 | 24,529 | 999,091 | (10,692) | 988,399 | 515,266 | 193,080 | 186,416 | 22,906 | 22,705 | 940,373 | (9,715) | 930,658 |
| – personal | 380,030 | 57,064 | 30,688 | 2,801 | 3,945 | 474,528 | (2,797) | 471,731 | 360,317 | 53,595 | 27,774 | 1,979 | 3,560 | 447,225 | (2,524) | 444,701 |
| – corporate and commercial | 113,787 | 132,972 | 139,599 | 18,041 | 20,106 | 424,505 | (7,526) | 416,979 | 114,504 | 118,785 | 138,705 | 20,224 | 18,466 | 410,684 | (6,755) | 403,929 |
| – non-bank financial institutions | 51,670 | 25,745 | 21,552 | 613 | 478 | 100,058 | (369) | 99,689 | 40,445 | 20,700 | 19,937 | 703 | 679 | 82,464 | (436) | 82,028 |
| Loans and advances to banks held at<br><br>amortised cost | 97,524 | 6,222 | 4,613 | 109 | 1 | 108,469 | (7) | 108,462 | 92,621 | 4,255 | 5,040 | 134 | 2 | 102,052 | (13) | 102,039 |
| Cash and balances at central banks | 242,187 | 590 | 82 | — | — | 242,859 | — | 242,859 | 266,713 | 949 | 12 | — | — | 267,674 | — | 267,674 |
| Hong Kong Government certificates of<br><br>indebtedness | 44,063 | — | — | — | — | 44,063 | — | 44,063 | 42,293 | — | — | — | — | 42,293 | — | 42,293 |
| Reverse repurchase agreements – non-<br><br>trading | 193,352 | 78,296 | 26,740 | 4 | — | 298,392 | — | 298,392 | 155,831 | 70,877 | 25,799 | 42 | — | 252,549 | — | 252,549 |
| Financial investments | 171,057 | 654 | 10,390 | — | — | 182,101 | (12) | 182,089 | 146,970 | 3,681 | 3,331 | — | — | 153,982 | (9) | 153,973 |
| Assets held for sale | 449 | 2,751 | 864 | — | 51 | 4,115 | (27) | 4,088 | 2,425 | 458 | 367 | 1 | 22 | 3,273 | (4) | 3,269 |
| Other assets | 95,589 | 11,950 | 10,789 | 335 | 133 | 118,796 | (90) | 118,706 | 88,338 | 9,735 | 10,151 | 454 | 131 | 108,809 | (79) | 108,730 |
| – endorsements and acceptances | 1,504 | 3,331 | 3,624 | 236 | 11 | 8,706 | (11) | 8,695 | 2,101 | 2,663 | 3,090 | 243 | 10 | 8,107 | (14) | 8,093 |
| – accrued income and other | 94,085 | 8,619 | 7,165 | 99 | 122 | 110,090 | (79) | 110,011 | 86,237 | 7,072 | 7,061 | 211 | 121 | 100,702 | (65) | 100,637 |
| Debt instruments measured at FVOCI1 | 375,950 | 2,592 | 7,572 | 286 | — | 386,400 | (30) | 386,370 | 336,313 | 9,448 | 7,768 | 380 | — | 353,909 | (54) | 353,855 |
| Out-of-scope for IFRS 9 ECL | ||||||||||||||||
| Trading assets | 143,943 | 22,187 | 22,943 | 603 | 165 | 189,841 | — | 189,841 | 119,546 | 21,951 | 15,804 | 2,300 | 47 | 159,648 | — | 159,648 |
| Other financial assets designated and<br><br>otherwise mandatorily measured at fair<br><br>value through profit or loss | 61,509 | 13,037 | 5,014 | 351 | 19 | 79,930 | — | 79,930 | 53,282 | 11,862 | 4,390 | 231 | 11 | 69,776 | — | 69,776 |
| Derivatives | 194,320 | 33,752 | 9,382 | 283 | 3 | 237,740 | — | 237,740 | 224,870 | 34,124 | 9,373 | 258 | 12 | 268,637 | — | 268,637 |
| Assets held for sale | 10 | 103 | — | — | 148 | 261 | — | 261 | 3,019 | — | — | — | — | 3,019 | — | 3,019 |
| Total gross carrying amount on<br><br>balance sheet | 2,165,440 | 387,915 | 290,228 | 23,426 | 25,049 | 2,892,058 | (10,858) | 2,881,200 | 2,047,487 | 360,420 | 268,451 | 26,706 | 22,930 | 2,725,994 | (9,874) | 2,716,120 |
| Percentage of total credit quality (%) | 74.9 | 13.4 | 10.0 | 0.8 | 0.9 | 100 | 75.1 | 13.2 | 9.9 | 1.0 | 0.8 | 100 | ||||
| Loan and other credit-related<br><br>commitments | 441,740 | 146,923 | 91,400 | 10,073 | 656 | 690,792 | (315) | 690,477 | 400,120 | 131,396 | 77,220 | 9,670 | 961 | 619,367 | (348) | 619,019 |
| Financial guarantees | 7,436 | 4,145 | 5,144 | 559 | 192 | 17,476 | (51) | 17,425 | 7,365 | 4,263 | 4,399 | 723 | 248 | 16,998 | (29) | 16,969 |
| In-scope for IFRS 9 ECL | 449,176 | 151,068 | 96,544 | 10,632 | 848 | 708,268 | (366) | 707,902 | 407,485 | 135,659 | 81,619 | 10,393 | 1,209 | 636,365 | (377) | 635,988 |
| Loan and other credit-related<br><br>commitments | 105,985 | 81,431 | 67,475 | 2,702 | 252 | 257,845 | — | 257,845 | 96,952 | 76,340 | 65,619 | 2,847 | 453 | 242,211 | — | 242,211 |
| Performance and other guarantees | 47,441 | 33,190 | 19,857 | 1,351 | 845 | 102,684 | (269) | 102,415 | 39,940 | 32,956 | 17,339 | 1,671 | 817 | 92,723 | (312) | 92,411 |
| Out-of-scope for IFRS 9 ECL | 153,426 | 114,621 | 87,332 | 4,053 | 1,097 | 360,529 | (269) | 360,260 | 136,892 | 109,296 | 82,958 | 4,518 | 1,270 | 334,934 | (312) | 334,622 |
1For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset before adjusting for any loss allowance. As such, the gross carrying amount of debt instruments at FVOCI as presented above
will not reconcile to the balance sheet as it excludes fair value gains and losses.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 163 | ||||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Credit risk | ||||||||||||||||
| Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||||||||
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||
| Gross carrying/notional amount | Allowance<br><br>for ECL | Net | Gross carrying/notional amount | Allowance<br><br>for ECL | Net | |||||||||||
| Strong | Good | Satisfactory | Sub-<br><br>standard | Credit<br><br>impaired | Total | Strong | Good | Satisfactory | Sub-<br><br>standard | Credit<br><br>impaired | Total | |||||
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Loans and advances to<br><br>customers at amortised cost | 545,487 | 215,781 | 191,839 | 21,455 | 24,529 | 999,091 | (10,692) | 988,399 | 515,266 | 193,080 | 186,416 | 22,906 | 22,705 | 940,373 | (9,715) | 930,658 |
| – stage 1 | 540,253 | 194,680 | 152,578 | 5,922 | — | 893,433 | (1,201) | 892,232 | 498,415 | 170,420 | 150,818 | 4,767 | — | 824,420 | (1,078) | 823,342 |
| – stage 2 | 5,234 | 21,101 | 39,068 | 15,533 | — | 80,936 | (2,318) | 78,618 | 16,851 | 22,660 | 35,598 | 18,139 | — | 93,248 | (2,546) | 90,702 |
| – stage 3 | — | — | — | — | 24,389 | 24,389 | (7,097) | 17,292 | — | — | — | — | 22,615 | 22,615 | (6,040) | 16,575 |
| – POCI | — | — | 193 | — | 140 | 333 | (76) | 257 | — | — | — | — | 90 | 90 | (51) | 39 |
| Loans and advances to banks<br><br>at amortised cost | 97,524 | 6,222 | 4,613 | 109 | 1 | 108,469 | (7) | 108,462 | 92,621 | 4,255 | 5,040 | 134 | 2 | 102,052 | (13) | 102,039 |
| – stage 1 | 97,426 | 6,215 | 4,608 | 87 | — | 108,336 | (4) | 108,332 | 92,528 | 4,226 | 4,981 | 117 | — | 101,852 | (9) | 101,843 |
| – stage 2 | 98 | 7 | 5 | 22 | — | 132 | (2) | 130 | 93 | 29 | 59 | 17 | — | 198 | (2) | 196 |
| – stage 3 | — | — | — | — | 1 | 1 | (1) | — | — | — | — | — | 2 | 2 | (2) | — |
| – POCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Other financial assets<br><br>measured at amortised cost | 746,697 | 94,241 | 48,865 | 339 | 184 | 890,326 | (129) | 890,197 | 702,570 | 85,700 | 39,660 | 497 | 153 | 828,580 | (92) | 828,488 |
| – stage 1 | 746,536 | 93,759 | 48,121 | 75 | — | 888,491 | (76) | 888,415 | 702,373 | 85,032 | 38,977 | 239 | — | 826,621 | (64) | 826,557 |
| – stage 2 | 161 | 482 | 744 | 264 | — | 1,651 | (11) | 1,640 | 197 | 668 | 683 | 258 | — | 1,806 | (5) | 1,801 |
| – stage 3 | — | — | — | — | 184 | 184 | (42) | 142 | — | — | — | — | 153 | 153 | (23) | 130 |
| – POCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Loan and other credit-related<br><br>commitments | 441,740 | 146,923 | 91,400 | 10,073 | 656 | 690,792 | (315) | 690,477 | 400,120 | 131,396 | 77,220 | 9,670 | 961 | 619,367 | (348) | 619,019 |
| – stage 1 | 437,973 | 143,849 | 82,145 | 5,681 | — | 669,648 | (149) | 669,499 | 398,779 | 125,956 | 67,949 | 4,547 | — | 597,231 | (137) | 597,094 |
| – stage 2 | 3,767 | 3,074 | 9,255 | 4,392 | — | 20,488 | (97) | 20,391 | 1,341 | 5,440 | 9,271 | 5,123 | — | 21,175 | (121) | 21,054 |
| – stage 3 | — | — | — | — | 652 | 652 | (69) | 583 | — | — | — | — | 958 | 958 | (90) | 868 |
| – POCI | — | — | — | — | 4 | 4 | — | 4 | — | — | — | — | 3 | 3 | — | 3 |
| Financial guarantees | 7,436 | 4,145 | 5,144 | 559 | 192 | 17,476 | (51) | 17,425 | 7,365 | 4,263 | 4,399 | 723 | 248 | 16,998 | (29) | 16,969 |
| – stage 1 | 7,430 | 4,040 | 4,351 | 92 | — | 15,913 | (8) | 15,905 | 7,352 | 4,192 | 3,625 | 184 | — | 15,353 | (8) | 15,345 |
| – stage 2 | 6 | 105 | 793 | 467 | — | 1,371 | (17) | 1,354 | 13 | 71 | 774 | 539 | — | 1,397 | (5) | 1,392 |
| – stage 3 | — | — | — | — | 192 | 192 | (26) | 166 | — | — | — | — | 248 | 248 | (16) | 232 |
| – POCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total | 1,838,884 | 467,312 | 341,861 | 32,535 | 25,562 | 2,706,154 | (11,194) | 2,694,960 | 1,717,942 | 418,694 | 312,735 | 33,930 | 24,069 | 2,507,370 | (10,197) | 2,497,173 |
| Debt instruments at FVOCI1 | ||||||||||||||||
| – stage 1 | 375,894 | 2,592 | 7,015 | 3 | — | 385,504 | (28) | 385,476 | 336,264 | 9,448 | 7,290 | — | — | 353,002 | (31) | 352,971 |
| – stage 2 | 56 | — | 557 | 283 | — | 896 | (2) | 894 | 49 | — | 478 | 380 | — | 907 | (23) | 884 |
| – stage 3 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| – POCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total | 375,950 | 2,592 | 7,572 | 286 | — | 386,400 | (30) | 386,370 | 336,313 | 9,448 | 7,768 | 380 | — | 353,909 | (54) | 353,855 |
1For the purposes of this disclosure, gross carrying amount is defined as the amortised cost of a financial asset before adjusting for any loss allowance. As such, the gross carrying amount of debt instruments at FVOCI as presented above
will not reconcile to the balance sheet as it excludes fair value gains and losses.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 164 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Credit-impaired loans
(Audited)
We determine that a financial instrument is credit impaired and in stage
3 by considering relevant objective evidence, primarily whether:
–contractual payments of either principal or interest are past due for
more than 90 days;
–there are other indications that the borrower is unlikely to pay, such
as when a concession has been granted to the borrower for
economic or legal reasons relating to the borrower’s financial
condition; and
–the loan is otherwise considered to be in default. If such unlikeliness
to pay is not identified at an earlier stage, it is deemed to occur
when an exposure is 90 days past due. Therefore, the definitions of
credit impaired and default are aligned as far as possible so that
stage 3 represents all loans that are considered defaulted or
otherwise credit impaired.
Forbearance
The following table shows the gross carrying amount and allowance for
ECL of the Group’s holdings of forborne loans and advances to
customers by industry sector and by stages.
ÑA summary of our current policies and practices for forbearance is set out in
‘Credit risk management’ on page 140.
| Forborne loans and advances to customers at amortised cost by stage allocation | ||||
|---|---|---|---|---|
| Performing forborne | Non-performing forborne | Total forborne | ||
| Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | |
| Gross carrying amount | ||||
| Personal | 619 | 1,658 | — | 2,277 |
| – first lien residential mortgages | 332 | 1,162 | — | 1,494 |
| – credit cards | 81 | 110 | — | 191 |
| – other personal lending | 206 | 386 | — | 592 |
| – other personal lending which is secured1 | 47 | 99 | — | 146 |
| – other personal lending which is unsecured | 159 | 287 | — | 446 |
| Wholesale | 4,116 | 8,201 | 139 | 12,456 |
| – corporate and commercial | 3,951 | 8,193 | 139 | 12,283 |
| – non-bank financial institutions | 165 | 8 | — | 173 |
| At 31 Dec 2025 | 4,735 | 9,859 | 139 | 14,733 |
| Allowance for ECL | ||||
| Personal | (65) | (328) | — | (393) |
| – first lien residential mortgages | (21) | (147) | — | (168) |
| – credit cards | (14) | (70) | — | (84) |
| – other personal lending | (30) | (111) | — | (141) |
| – other personal lending which is secured1 | (1) | (8) | — | (9) |
| – other personal lending which is unsecured | (29) | (103) | — | (132) |
| Wholesale | (307) | (2,298) | (75) | (2,680) |
| – corporate and commercial | (303) | (2,295) | (75) | (2,673) |
| – non-bank financial institutions | (4) | (3) | — | (7) |
| At 31 Dec 2025 | (372) | (2,626) | (75) | (3,073) |
| Gross carrying amount | ||||
| --- | --- | --- | --- | --- |
| Personal | 545 | 1,424 | — | 1,969 |
| – first lien residential mortgages | 266 | 1,040 | — | 1,306 |
| – credit cards | 86 | 87 | — | 173 |
| – other personal lending | 193 | 297 | — | 490 |
| – other personal lending which is secured1 | 46 | 17 | — | 63 |
| – other personal lending which is unsecured | 147 | 280 | — | 427 |
| Wholesale | 4,325 | 7,542 | 85 | 11,952 |
| – corporate and commercial | 4,247 | 7,351 | 85 | 11,683 |
| – non-bank financial institutions | 78 | 191 | — | 269 |
| At 31 Dec 2024 | 4,870 | 8,966 | 85 | 13,921 |
| Allowance for ECL | ||||
| Personal | (73) | (305) | — | (378) |
| – first lien residential mortgages | (12) | (148) | — | (160) |
| – credit cards | (17) | (45) | — | (62) |
| – other personal lending | (44) | (112) | — | (156) |
| – other personal lending which is secured1 | (6) | (3) | — | (9) |
| – other personal lending which is unsecured | (38) | (109) | — | (147) |
| Wholesale | (461) | (2,008) | (51) | (2,520) |
| – corporate and commercial | (460) | (1,972) | (51) | (2,483) |
| – non-bank financial institutions | (1) | (36) | — | (37) |
| At 31 Dec 2024 | (534) | (2,313) | (51) | (2,898) |
1‘Other personal lending which is secured’ has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to
residential property, which were previously reported as separate line items.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 165 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Credit risk | ||||||||
| Forborne loans and advances to customers by legal entities | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| HSBC UK<br><br>Bank plc | HSBC Bank<br><br>plc | The Hongkong<br><br>and Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC Bank<br><br>Middle East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc. | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Gross carrying amount | ||||||||
| Performing forborne | 1,298 | 1,172 | 1,079 | 78 | 804 | 276 | 28 | 4,735 |
| Non-performing forborne | 2,032 | 1,196 | 4,975 | 571 | 403 | 560 | 261 | 9,998 |
| At 31 Dec 2025 | 3,330 | 2,368 | 6,054 | 649 | 1,207 | 836 | 289 | 14,733 |
| Allowance for ECL | ||||||||
| Performing forborne | (94) | (35) | (129) | (25) | (50) | (38) | (1) | (372) |
| Non-performing forborne | (379) | (358) | (1,285) | (246) | (84) | (173) | (176) | (2,701) |
| At 31 Dec 2025 | (473) | (393) | (1,414) | (271) | (134) | (211) | (177) | (3,073) |
| Gross carrying amount | ||||||||
| Performing forborne | 1,251 | 1,506 | 1,073 | 10 | 787 | 201 | 42 | 4,870 |
| Non-performing forborne | 2,231 | 1,578 | 3,698 | 460 | 464 | 355 | 265 | 9,051 |
| At 31 Dec 2024 | 3,482 | 3,084 | 4,771 | 470 | 1,251 | 556 | 307 | 13,921 |
| Allowance for ECL | ||||||||
| Performing forborne | (101) | (36) | (296) | (1) | (52) | (48) | — | (534) |
| Non-performing forborne | (393) | (464) | (943) | (196) | (71) | (127) | (170) | (2,364) |
| At 31 Dec 2024 | (494) | (500) | (1,239) | (197) | (123) | (175) | (170) | (2,898) |
Collateral and other credit enhancements
(Audited)
Although collateral can be an important mitigant of credit risk, it is the
Group’s practice to typically lend on the basis of the customer’s ability
to meet their obligations out of cash flow resources rather than placing
primary reliance on collateral and other credit risk enhancements.
Depending on the customer’s standing and the type of product,
facilities may be provided without any collateral or other credit
enhancements. For other lending, a charge over collateral is obtained
and considered in determining the credit decision and pricing. In the
event of default, the Group may utilise the collateral as a source of
repayment.
Depending on its form, collateral can have a significant financial effect
in mitigating our exposure to credit risk. Where there is sufficient
collateral, an expected credit loss is not recognised. This is the case for
reverse repurchase agreements and for certain loans and advances to
customers where the loan to value (‘LTV’) is very low.
Mitigants may include a charge on borrowers’ specific assets, such as
real estate or financial instruments. Other credit risk mitigants include
short positions in securities and financial assets held as part of linked
insurance/investment contracts where the risk is predominantly borne
by the policyholder. Additionally, risk may be managed by employing
other types of collateral and credit risk enhancements, such as second
charges, other liens and unsupported guarantees. Guarantees are
normally taken from corporates and export credit agencies. Corporates
would normally provide guarantees as part of a parent/subsidiary
relationship and span a number of credit grades. The export credit
agencies will normally be investment grade.
Certain credit mitigants are used strategically in portfolio management
activities. Across Corporate and Institutional Banking, risk limits and
utilisations, maturity profiles and risk quality are monitored and
managed proactively. This process is key to the setting of risk appetite
for these larger, more complex, geographically distributed customer
groups. While the principal form of risk management continues to be at
the point of exposure origination, through the lending decision-making
process, Corporate and Institutional Banking also utilises loan sales and
credit default swap (‘CDS’) hedges to manage concentrations and
reduce risk.
These transactions are the responsibility of a dedicated Corporate and
Institutional Banking portfolio management team. Hedging activity is
carried out within agreed credit parameters, and is subject to market
risk limits and a robust governance structure. Where applicable, CDSs
are entered into directly with a central clearing house counterparty.
Otherwise, the Group’s exposure to CDS protection providers is
diversified among mainly banking counterparties with strong credit
ratings.
CDS mitigants are held at portfolio level and are not included in the
expected credit loss calculations. CDS mitigants are not reported in the
following tables.
Collateral on loans and advances
Collateral held is analysed separately for CRE and for other corporate,
commercial and financial (non-bank) lending. The following tables
include off-balance sheet loan commitments, primarily undrawn credit
lines.
The collateral measured in the following tables consists of fixed first
charges on real estate, and charges over cash and marketable financial
instruments. The values in the tables represent the expected market
value on an open market basis, actual values realised are a function of
market conditions. No adjustment has been made to the collateral for
any expected costs of recovery. Marketable securities are measured at
their fair value.
Other types of collateral, such as unsupported guarantees and floating
charges over the assets of a customer’s business, are not measured in
the following tables. While such mitigants have value, often providing
rights in insolvency, their assignable value is not sufficiently certain and
they are therefore assigned no value for disclosure purposes.
The LTV ratios presented are calculated by directly associating loans
and advances with the collateral that individually and uniquely supports
each facility. When collateral assets are shared by multiple loans and
advances, whether specifically or, more generally, by way of an all
monies charge, the collateral value is pro-rated across the loans and
advances protected by the collateral.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 166 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
For credit-impaired loans, the collateral values cannot be directly
compared with impairment allowances recognised. The LTV figures use
open market values with no adjustments, actual values realised are a
function of market conditions. Impairment allowances are calculated on
a different basis, by considering other cash flows and adjusting
collateral values for costs of realising collateral as explained further on
page 305.
Mortgage loans
The following table provides a quantification of the value of fixed
charges we hold over specific assets where we have a history
of enforcing, and are able to enforce, collateral in satisfying a debt in
the event of the borrower failing to meet its contractual obligations, and
where the collateral is cash or can be realised by sale in an established
market. The collateral valuation excludes any adjustments for obtaining
and selling the collateral and, in particular, loans shown as not
collateralised or partially collateralised may also benefit from other
forms of credit mitigants.
The quality of both our Hong Kong and UK mortgage books remained
strong, with low levels of impairment allowances. The average LTV
ratio on new mortgage lending in Hong Kong was 70%, compared
with an estimated 60% for the overall mortgage portfolio. The
average LTV ratio on new lending in the UK was 69%, compared with
an estimated 55% for the overall mortgage portfolio.
Commercial real estate loans and advances
The value of CRE collateral is determined by using a combination of
external and internal valuations and physical inspections. For CRE,
where the facility exceeds regulatory threshold requirements, Group
policy requires an independent review of the valuation at least every
three years, or more frequently as the need arises.
In Hong Kong, unsecured lending is typically limited to major property
companies. In Europe, facilities of a working capital nature are generally
not secured by a first fixed charge, and are therefore disclosed as not
collateralised.
Other corporate, commercial and financial (non-bank) loans and
advances
Other corporate, commercial and financial (non-bank) loans are
analysed separately in the following table. For financing activities in
other corporate and commercial lending, collateral value is not strongly
correlated to principal repayment performance. Collateral values are
generally refreshed when an obligor’s general credit performance
deteriorates and we have to assess the likely performance of
secondary sources of repayment should it prove necessary to rely on
them.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 167 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2025 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||
| Gross carrying/nominal amount | ECL coverage | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | % | % | % | % | % | |
| Residential mortgages | ||||||||||
| Fully collateralised by LTV ratio | 383,401 | 18,150 | 2,573 | 404,124 | — | 0.6 | 10.5 | 0.1 | ||
| – less than 50% | 159,089 | 9,161 | 1,336 | 169,586 | — | 0.4 | 8.3 | 0.1 | ||
| – 51% to 70% | 125,204 | 5,484 | 751 | 131,439 | — | 0.6 | 11.2 | 0.1 | ||
| – 71% to 80% | 46,175 | 1,934 | 258 | 48,367 | — | 0.7 | 13.8 | 0.1 | ||
| – 81% to 90% | 37,415 | 971 | 167 | 38,553 | — | 0.9 | 15.9 | 0.1 | ||
| – 91% to 100% | 15,518 | 600 | 61 | 16,179 | — | 1.5 | 20.2 | 0.1 | ||
| Partially collateralised (A): LTV > 100% | 4,924 | 138 | 97 | 5,159 | — | 2.2 | 44.3 | 0.9 | ||
| – collateral value on A | 4,707 | 129 | 66 | 4,902 | ||||||
| of which: UK | ||||||||||
| Fully collateralised by LTV ratio | 190,214 | 13,257 | 816 | 204,287 | — | 0.3 | 9.7 | 0.1 | ||
| – less than 50% | 77,859 | 7,260 | 421 | 85,540 | — | 0.1 | 8.2 | 0.1 | ||
| – 51% to 70% | 61,605 | 4,183 | 254 | 66,042 | — | 0.3 | 8.7 | 0.1 | ||
| – 71% to 80% | 25,237 | 1,226 | 85 | 26,548 | — | 0.5 | 14.0 | 0.1 | ||
| – 81% to 90% | 22,218 | 548 | 46 | 22,812 | — | 0.7 | 16.1 | 0.1 | ||
| – 91% to 100% | 3,295 | 40 | 10 | 3,345 | — | 1.0 | 27.0 | 0.1 | ||
| Partially collateralised (B): LTV > 100% | 58 | 2 | 8 | 68 | — | 0.6 | 32.5 | 3.8 | ||
| – collateral value on B | 29 | 1 | 7 | 37 | ||||||
| of which: Hong Kong | ||||||||||
| Fully collateralised by LTV ratio | 102,801 | 1,503 | 165 | 104,469 | — | — | 0.7 | — | ||
| – less than 50% | 40,518 | 762 | 83 | 41,363 | — | — | 0.2 | — | ||
| – 51% to 70% | 31,015 | 345 | 41 | 31,401 | — | — | 0.5 | — | ||
| – 71% to 80% | 6,698 | 83 | 17 | 6,798 | — | 0.1 | 1.8 | — | ||
| – 81% to 90% | 12,906 | 132 | 12 | 13,050 | — | 0.2 | 0.8 | — | ||
| – 91% to 100% | 11,664 | 181 | 12 | 11,857 | — | 0.2 | 2.5 | — | ||
| Partially collateralised (C): LTV > 100% | 4,781 | 87 | 18 | 4,886 | — | 0.2 | 8.3 | — | ||
| – collateral value on C | 4,593 | 85 | 16 | 4,694 | ||||||
| Commercial real estate | ||||||||||
| Not collateralised | 36,879 | 3,792 | 1,310 | 6 | 41,987 | 0.1 | 2.7 | 64.6 | — | 2.3 |
| Fully collateralised by LTV ratio | 26,814 | 16,633 | 6,942 | 13 | 50,402 | 0.1 | 1.7 | 13.3 | — | 2.4 |
| – less than 50% | 13,415 | 10,682 | 2,563 | 13 | 26,673 | 0.1 | 1.4 | 11.0 | — | 1.7 |
| – 51% to 75% | 9,168 | 4,770 | 2,755 | — | 16,693 | 0.2 | 2.2 | 13.5 | — | 2.9 |
| – 76% to 90% | 2,232 | 915 | 1,055 | — | 4,202 | 0.1 | 1.9 | 13.6 | — | 3.9 |
| – 91% to 100% | 1,999 | 266 | 569 | — | 2,834 | 0.1 | 2.3 | 21.6 | — | 4.6 |
| Partially collateralised (A): LTV > 100% | 3,635 | 350 | 1,093 | 80 | 5,158 | 0.1 | 3.1 | 35.4 | 57.5 | 8.7 |
| – collateral value on A | 2,317 | 240 | 780 | 33 | 3,370 | |||||
| of which: UK | ||||||||||
| Not collateralised | 8,633 | 389 | 56 | — | 9,078 | 0.2 | 8.2 | 19.6 | — | 0.7 |
| Fully collateralised by LTV ratio | 12,426 | 1,661 | 354 | — | 14,441 | 0.2 | 2.6 | 21.8 | — | 1.0 |
| – less than 50% | 4,606 | 430 | 36 | — | 5,072 | 0.2 | 1.4 | 38.9 | — | 0.6 |
| – 51% to 75% | 5,772 | 914 | 209 | — | 6,895 | 0.2 | 3.8 | 24.9 | — | 1.4 |
| – 76% to 90% | 1,511 | 308 | 107 | — | 1,926 | 0.1 | 1.0 | 9.3 | — | 0.7 |
| – 91% to 100% | 537 | 9 | 2 | — | 548 | 0.2 | 5.1 | 61.2 | — | 0.4 |
| Partially collateralised (B): LTV > 100% | 2,111 | 115 | 67 | 61 | 2,354 | 0.1 | 0.9 | 17.9 | 47.5 | 1.9 |
| – collateral value on B | 1,381 | 109 | 42 | 30 | 1,562 | |||||
| of which: Hong Kong | ||||||||||
| Not collateralised | 14,360 | 2,691 | 1,088 | 6 | 18,145 | — | 2.4 | 66.5 | — | 4.4 |
| Fully collateralised by LTV ratio | 5,588 | 12,969 | 5,467 | — | 24,024 | 0.1 | 0.8 | 10.6 | — | 2.9 |
| – less than 50% | 4,008 | 9,705 | 2,284 | — | 15,997 | 0.1 | 0.9 | 8.2 | — | 1.8 |
| – 51% to 75% | 1,167 | 2,927 | 2,033 | — | 6,127 | 0.2 | 0.5 | 10.9 | — | 3.9 |
| – 76% to 90% | 59 | 294 | 705 | — | 1,058 | — | 1.7 | 8.4 | — | 6.0 |
| – 91% to 100% | 354 | 43 | 445 | — | 842 | — | 2.3 | 25.2 | — | 13.4 |
| Partially collateralised (C): LTV > 100% | 198 | 110 | 1,022 | 19 | 1,349 | — | 0.3 | 36.7 | 84.2 | 29.0 |
| – collateral value on C | 149 | 11 | 734 | 3 | 897 | |||||
| Other corporate, commercial and financial<br><br>(non-bank) | ||||||||||
| Not collateralised | 797,344 | 60,899 | 6,186 | 215 | 864,644 | 0.1 | 0.9 | 43.5 | 6.5 | 0.4 |
| Fully collateralised by LTV ratio | 88,647 | 13,101 | 3,611 | 29 | 105,388 | 0.1 | 1.6 | 14.5 | 55.2 | 0.8 |
| – less than 50% | 37,949 | 5,009 | 1,446 | — | 44,404 | 0.1 | 1.2 | 12.3 | — | 0.6 |
| – 51% to 75% | 21,397 | 4,855 | 1,249 | 29 | 27,530 | 0.1 | 2.4 | 16.7 | 55.2 | 1.3 |
| – 76% to 90% | 8,253 | 1,318 | 677 | — | 10,248 | 0.1 | 1.5 | 14.0 | — | 1.2 |
| – 91% to 100% | 21,048 | 1,919 | 239 | — | 23,206 | — | 0.6 | 16.7 | — | 0.3 |
| Partially collateralised (A): LTV > 100% | 53,980 | 6,337 | 2,130 | — | 62,447 | 0.1 | 0.7 | 45.6 | — | 1.7 |
| – collateral value on A | 24,763 | 2,942 | 1,199 | — | 28,904 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 168 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Loans and advances to customers including loan commitments by level of collateral for key countries/territories (by stage) at 31 December 2024 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||
| Gross carrying/nominal amount | ECL coverage | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | % | % | % | % | % | |
| Residential mortgages | ||||||||||
| Fully collateralised by LTV ratio | 332,641 | 34,203 | 2,371 | 369,215 | — | 0.4 | 10.0 | 0.1 | ||
| – less than 50% | 141,331 | 18,076 | 1,238 | 160,645 | — | 0.2 | 7.6 | 0.1 | ||
| – 51% to 70% | 111,963 | 11,507 | 698 | 124,168 | — | 0.4 | 11.2 | 0.1 | ||
| – 71% to 80% | 39,374 | 3,040 | 242 | 42,656 | — | 0.7 | 13.1 | 0.1 | ||
| – 81% to 90% | 25,514 | 1,264 | 131 | 26,909 | — | 0.9 | 15.0 | 0.1 | ||
| – 91% to 100% | 14,459 | 316 | 62 | 14,837 | — | 1.8 | 22.4 | 0.1 | ||
| Partially collateralised (A): LTV > 100% | 12,031 | 139 | 103 | 12,273 | — | 3.2 | 46.2 | 0.4 | ||
| – collateral value on A | 11,274 | 126 | 70 | 11,470 | ||||||
| of which: UK | ||||||||||
| Fully collateralised by LTV ratio | 151,264 | 30,574 | 747 | 182,585 | — | 0.2 | 8.5 | 0.1 | ||
| – less than 50% | 62,753 | 16,689 | 445 | 79,887 | — | 0.1 | 6.9 | 0.1 | ||
| – 51% to 70% | 50,374 | 10,456 | 206 | 61,036 | — | 0.2 | 9.7 | 0.1 | ||
| – 71% to 80% | 20,552 | 2,423 | 64 | 23,039 | — | 0.4 | 12.1 | 0.1 | ||
| – 81% to 90% | 15,965 | 939 | 23 | 16,927 | — | 0.6 | 13.0 | 0.1 | ||
| – 91% to 100% | 1,620 | 67 | 9 | 1,696 | — | 0.7 | 16.7 | 0.1 | ||
| Partially collateralised (B): LTV > 100% | 146 | 15 | 5 | 166 | — | 1.0 | 27.7 | 0.9 | ||
| – collateral value on B | 109 | 12 | 4 | 125 | ||||||
| of which: Hong Kong | ||||||||||
| Fully collateralised by LTV ratio | 95,751 | 756 | 138 | 96,645 | — | — | 1.3 | — | ||
| – less than 50% | 38,894 | 372 | 79 | 39,345 | — | — | 0.4 | — | ||
| – 51% to 70% | 30,088 | 227 | 31 | 30,346 | — | — | 0.4 | — | ||
| – 71% to 80% | 6,783 | 47 | 11 | 6,841 | — | — | 5.1 | — | ||
| – 81% to 90% | 7,602 | 42 | 9 | 7,653 | — | 0.2 | 1.1 | — | ||
| – 91% to 100% | 12,384 | 68 | 8 | 12,460 | — | 0.1 | 8.8 | — | ||
| Partially collateralised (C): LTV > 100% | 11,744 | 103 | 14 | 11,861 | — | 0.2 | 19.1 | — | ||
| – collateral value on C | 11,034 | 96 | 12 | 11,142 | ||||||
| Commercial real estate | ||||||||||
| Not collateralised | 36,168 | 4,709 | 1,704 | — | 42,581 | 0.1 | 9.0 | 47.5 | — | 3.0 |
| Fully collateralised by LTV ratio | 37,090 | 11,909 | 5,254 | — | 54,253 | 0.1 | 1.7 | 7.8 | — | 1.2 |
| – less than 50% | 20,522 | 5,154 | 2,413 | — | 28,089 | 0.1 | 1.7 | 5.7 | — | 0.9 |
| – 51% to 75% | 11,392 | 3,840 | 1,691 | — | 16,923 | 0.1 | 2.2 | 7.6 | — | 1.3 |
| – 76% to 90% | 2,554 | 2,277 | 767 | — | 5,598 | 0.1 | 0.9 | 12.5 | — | 2.1 |
| – 91% to 100% | 2,622 | 638 | 383 | — | 3,643 | 0.2 | 2.3 | 12.3 | — | 1.8 |
| Partially collateralised (A): LTV > 100% | 2,119 | 698 | 815 | 64 | 3,696 | 0.2 | 2.8 | 19.7 | 45.8 | 5.8 |
| – collateral value on A | 1,255 | 457 | 570 | 29 | 2,311 | |||||
| of which: UK | ||||||||||
| Not collateralised | 4,487 | 1,890 | 127 | — | 6,504 | 0.4 | 3.8 | 27.8 | — | 1.9 |
| Fully collateralised by LTV ratio | 9,139 | 3,194 | 305 | — | 12,638 | 0.2 | 1.1 | 8.2 | — | 0.6 |
| – less than 50% | 2,903 | 761 | 160 | — | 3,824 | 0.2 | 1.5 | 8.0 | — | 0.8 |
| – 51% to 75% | 4,202 | 1,693 | 69 | — | 5,964 | 0.2 | 1.2 | 12.0 | — | 0.6 |
| – 76% to 90% | 1,173 | 732 | 24 | — | 1,929 | 0.1 | 0.4 | 10.2 | — | 0.3 |
| – 91% to 100% | 861 | 8 | 52 | — | 921 | 0.1 | 7.7 | 2.7 | — | 0.3 |
| Partially collateralised (B): LTV > 100% | 503 | 565 | 119 | 46 | 1,233 | 0.2 | 2.9 | 21.1 | 48.6 | 5.3 |
| – collateral value on B | 296 | 350 | 69 | 26 | 741 | |||||
| of which: Hong Kong | ||||||||||
| Not collateralised | 16,380 | 2,312 | 1,404 | — | 20,096 | — | 14.3 | 47.9 | — | 5.0 |
| Fully collateralised by LTV ratio | 17,115 | 6,045 | 4,127 | — | 27,287 | 0.1 | 1.4 | 5.8 | — | 1.2 |
| – less than 50% | 12,935 | 3,589 | 2,102 | — | 18,626 | 0.1 | 1.3 | 3.8 | — | 0.7 |
| – 51% to 75% | 3,534 | 1,059 | 1,243 | — | 5,836 | 0.1 | 2.2 | 6.2 | — | 1.8 |
| – 76% to 90% | 336 | 1,050 | 654 | — | 2,040 | 0.1 | 1.1 | 11.8 | — | 4.4 |
| – 91% to 100% | 310 | 347 | 128 | — | 785 | — | 0.5 | 2.4 | — | 0.6 |
| Partially collateralised (C): LTV > 100% | 185 | 62 | 562 | 18 | 827 | — | 1.9 | 17.6 | 38.1 | 12.9 |
| – collateral value on C | 119 | 41 | 397 | 3 | 560 | |||||
| Other corporate, commercial and financial (non-<br><br>bank) | ||||||||||
| Not collateralised | 713,028 | 62,844 | 6,870 | 5 | 782,747 | 0.1 | 0.9 | 41.5 | 14.2 | 0.5 |
| Fully collateralised by LTV ratio | 87,488 | 11,992 | 3,394 | 21 | 102,895 | 0.1 | 2.0 | 8.0 | 98.1 | 0.6 |
| – less than 50% | 39,432 | 4,360 | 1,703 | — | 45,495 | 0.1 | 1.6 | 6.9 | — | 0.5 |
| – 51% to 75% | 20,169 | 4,643 | 778 | 21 | 25,611 | 0.1 | 2.8 | 12.0 | 98.1 | 1.0 |
| – 76% to 90% | 9,016 | 1,515 | 512 | — | 11,043 | 0.1 | 1.6 | 7.1 | — | 0.6 |
| – 91% to 100% | 18,871 | 1,474 | 401 | — | 20,746 | — | 0.8 | 6.3 | — | 0.2 |
| Partially collateralised (A): LTV > 100% | 51,536 | 5,772 | 2,411 | 3 | 59,722 | 0.1 | 0.8 | 34.3 | 7.0 | 1.5 |
| – collateral value on A | 22,800 | 2,519 | 1,162 | 1 | 26,482 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 169 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk |
Wholesale lending
The table below provides a breakdown by industry sector and stage of the Group’s gross carrying amount and allowances for ECL for wholesale
loans and advances to banks and customers. Counterparties or exposures are classified when presenting comparable economic characteristics, or
engaged in similar activities so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political or
other conditions. Therefore, the industry classification does not adhere to Nomenclature des Activités Économiques dans la Communauté
Européenne, which is applicable to other financial regulatory reporting.
| Total wholesale lending for loans and advances to banks and customers by stage distribution | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Gross carrying amount | Allowance for ECL | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Corporate and commercial | 349,763 | 54,636 | 19,966 | 140 | 424,505 | (478) | (1,064) | (5,909) | (75) | (7,526) |
| – agriculture, forestry and fishing | 6,179 | 1,058 | 355 | — | 7,592 | (11) | (26) | (60) | — | (97) |
| – mining and quarrying | 6,109 | 747 | 126 | — | 6,982 | (6) | (10) | (70) | — | (86) |
| – manufacturing | 74,321 | 9,785 | 2,229 | 37 | 86,372 | (87) | (132) | (720) | (21) | (960) |
| – electricity, gas, steam and air-<br><br>conditioning supply | 18,020 | 1,096 | 206 | — | 19,322 | (19) | (22) | (85) | — | (126) |
| – water supply, sewerage, waste<br><br>management and remediation | 2,319 | 132 | 112 | — | 2,563 | (3) | (2) | (36) | — | (41) |
| – real estate and construction | 56,041 | 21,222 | 10,497 | 92 | 87,852 | (84) | (449) | (2,679) | (51) | (3,263) |
| – of which: commercial real estate | 41,893 | 18,183 | 9,175 | 87 | 69,338 | (65) | (384) | (2,116) | (45) | (2,610) |
| – wholesale and retail trade, repair of<br><br>motor vehicles and motorcycles | 74,621 | 7,387 | 2,538 | 11 | 84,557 | (69) | (92) | (1,123) | (3) | (1,287) |
| – transportation and storage | 16,594 | 3,818 | 307 | — | 20,719 | (17) | (82) | (75) | — | (174) |
| – accommodation and food | 10,881 | 2,072 | 1,436 | — | 14,389 | (31) | (65) | (303) | — | (399) |
| – publishing, audiovisual and<br><br>broadcasting | 22,860 | 2,110 | 377 | — | 25,347 | (52) | (38) | (108) | — | (198) |
| – professional, scientific and technical<br><br>activities | 22,580 | 1,923 | 520 | — | 25,023 | (29) | (36) | (153) | — | (218) |
| – administrative and support services | 16,962 | 1,993 | 570 | — | 19,525 | (21) | (53) | (321) | — | (395) |
| – public administration and defence,<br><br>compulsory social security | 64 | — | — | — | 64 | — | — | — | — | — |
| – education | 1,975 | 244 | 40 | — | 2,259 | (5) | (10) | (11) | — | (26) |
| – health and care | 3,982 | 323 | 98 | — | 4,403 | (7) | (11) | (14) | — | (32) |
| – arts, entertainment and recreation | 2,074 | 116 | 123 | — | 2,313 | (4) | (5) | (42) | — | (51) |
| – other services | 5,764 | 524 | 311 | — | 6,599 | (31) | (31) | (106) | — | (168) |
| – activities of households | 835 | 6 | — | — | 841 | — | — | — | — | — |
| – extra-territorial organisations and<br><br>bodies activities | 164 | — | — | — | 164 | — | — | — | — | — |
| – government | 7,418 | 80 | 121 | — | 7,619 | (2) | — | (3) | — | (5) |
| – asset-backed securities | — | — | — | — | — | — | — | — | — | — |
| Non-bank financial institutions | 96,974 | 2,413 | 478 | 193 | 100,058 | (56) | (19) | (293) | (1) | (369) |
| Loans and advances to banks | 108,336 | 132 | 1 | — | 108,469 | (4) | (2) | (1) | — | (7) |
| At 31 Dec 2025 | 555,073 | 57,181 | 20,445 | 333 | 633,032 | (538) | (1,085) | (6,203) | (76) | (7,902) |
| By legal entity | ||||||||||
| HSBC UK Bank plc | 98,719 | 10,488 | 3,430 | — | 112,637 | (180) | (325) | (753) | — | (1,258) |
| HSBC Bank plc | 98,175 | 5,582 | 1,756 | 58 | 105,571 | (68) | (96) | (611) | (29) | (804) |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 283,206 | 33,990 | 12,837 | 77 | 330,110 | (171) | (480) | (3,694) | (41) | (4,386) |
| HSBC Bank Middle East Limited | 26,643 | 1,171 | 1,242 | 5 | 29,061 | (19) | (31) | (630) | (5) | (685) |
| HSBC North America Holdings Inc. | 28,456 | 3,518 | 517 | 193 | 32,684 | (41) | (100) | (145) | (1) | (287) |
| Grupo Financiero HSBC, S.A. de C.V. | 12,057 | 2,268 | 378 | — | 14,703 | (47) | (49) | (190) | — | (286) |
| Other trading entities | 7,727 | 164 | 285 | — | 8,176 | (12) | (4) | (180) | — | (196) |
| Holding companies, shared service<br><br>centres and intra-Group eliminations | 90 | — | — | — | 90 | — | — | — | — | — |
| At 31 Dec 2025 | 555,073 | 57,181 | 20,445 | 333 | 633,032 | (538) | (1,085) | (6,203) | (76) | (7,902) |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 170 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Total wholesale lending for loans and advances to banks and customers by stage distribution (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Gross carrying amount | Allowance for ECL | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Corporate and commercial | 340,987 | 51,231 | 18,376 | 90 | 410,684 | (463) | (1,358) | (4,883) | (51) | (6,755) |
| – agriculture, forestry and fishing | 5,437 | 1,314 | 282 | — | 7,033 | (14) | (34) | (46) | — | (94) |
| – mining and quarrying | 6,811 | 463 | 318 | — | 7,592 | (6) | (7) | (32) | — | (45) |
| – manufacturing | 70,987 | 10,250 | 1,466 | 21 | 82,724 | (83) | (172) | (618) | (20) | (893) |
| – electricity, gas, steam and air-<br><br>conditioning supply | 15,277 | 971 | 209 | — | 16,457 | (14) | (23) | (85) | — | (122) |
| – water supply, sewerage, waste<br><br>management and remediation | 2,530 | 388 | 43 | — | 2,961 | (4) | (4) | (16) | — | (24) |
| – real estate and construction | 63,794 | 17,320 | 8,887 | 62 | 90,063 | (90) | (666) | (1,811) | (31) | (2,598) |
| – of which: commercial real estate | 49,994 | 14,720 | 7,558 | 61 | 72,333 | (67) | (604) | (1,355) | (29) | (2,055) |
| – wholesale and retail trade, repair of<br><br>motor vehicles and motorcycles | 66,977 | 8,125 | 2,725 | 3 | 77,830 | (67) | (117) | (1,188) | — | (1,372) |
| – transportation and storage | 18,589 | 3,637 | 417 | — | 22,643 | (15) | (74) | (232) | — | (321) |
| – accommodation and food | 11,406 | 1,718 | 1,610 | — | 14,734 | (30) | (55) | (214) | — | (299) |
| – publishing, audiovisual and<br><br>broadcasting | 18,181 | 1,416 | 229 | — | 19,826 | (42) | (55) | (61) | — | (158) |
| – professional, scientific and technical<br><br>activities | 23,044 | 2,436 | 644 | 4 | 26,128 | (29) | (49) | (188) | — | (266) |
| – administrative and support services | 17,671 | 1,707 | 739 | — | 20,117 | (26) | (40) | (254) | — | (320) |
| – public administration and defence,<br><br>compulsory social security | 64 | — | — | — | 64 | — | — | — | — | — |
| – education | 1,361 | 192 | 43 | — | 1,596 | (4) | (7) | (16) | — | (27) |
| – health and care | 3,357 | 489 | 184 | — | 4,030 | (8) | (18) | (25) | — | (51) |
| – arts, entertainment and recreation | 1,817 | 171 | 78 | — | 2,066 | (5) | (4) | (26) | — | (35) |
| – other services | 6,470 | 491 | 327 | — | 7,288 | (24) | (20) | (66) | — | (110) |
| – activities of households | 582 | 7 | — | — | 589 | — | — | — | — | — |
| – extra-territorial organisations and<br><br>bodies activities | 118 | — | — | — | 118 | — | — | — | — | — |
| – government | 6,495 | 123 | 175 | — | 6,793 | (2) | — | (5) | — | (7) |
| – asset-backed securities | 19 | 13 | — | — | 32 | — | (13) | — | — | (13) |
| Non-bank financial institutions | 79,687 | 2,098 | 679 | — | 82,464 | (45) | (30) | (361) | — | (436) |
| Loans and advances to banks | 101,852 | 198 | 2 | — | 102,052 | (9) | (2) | (2) | — | (13) |
| At 31 Dec 2024 | 522,526 | 53,527 | 19,057 | 90 | 595,200 | (517) | (1,390) | (5,246) | (51) | (7,204) |
| By legal entity | ||||||||||
| HSBC UK Bank plc | 81,630 | 12,772 | 3,356 | — | 97,758 | (197) | (403) | (603) | — | (1,203) |
| HSBC Bank plc | 85,022 | 5,843 | 2,305 | 47 | 93,217 | (54) | (111) | (752) | (22) | (939) |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 279,535 | 27,078 | 11,483 | 39 | 318,135 | (170) | (677) | (2,999) | (28) | (3,874) |
| HSBC Bank Middle East Limited | 26,359 | 951 | 848 | 4 | 28,162 | (20) | (6) | (463) | (1) | (490) |
| HSBC North America Holdings Inc. | 30,107 | 4,665 | 503 | — | 35,275 | (31) | (141) | (121) | — | (293) |
| Grupo Financiero HSBC, S.A. de C.V. | 11,957 | 1,703 | 230 | — | 13,890 | (35) | (48) | (128) | — | (211) |
| Other trading entities | 7,840 | 515 | 332 | — | 8,687 | (10) | (4) | (180) | — | (194) |
| Holding companies, shared service<br><br>centres and intra-Group eliminations | 76 | — | — | — | 76 | — | — | — | — | — |
| At 31 Dec 2024 | 522,526 | 53,527 | 19,057 | 90 | 595,200 | (517) | (1,390) | (5,246) | (51) | (7,204) |
| Total wholesale lending for loan and other credit-related commitments and financial guarantees to banks and customers by stage distribution1 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nominal amount | Allowance for ECL | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Corporate and commercial | 265,811 | 15,936 | 750 | 4 | 282,501 | (121) | (105) | (95) | — | (321) |
| Financial | 147,810 | 3,978 | 2 | — | 151,790 | (13) | (4) | — | — | (17) |
| At 31 Dec 2025 | 413,621 | 19,914 | 752 | 4 | 434,291 | (134) | (109) | (95) | — | (338) |
| By legal entity | ||||||||||
| HSBC UK Bank plc | 49,287 | 2,566 | 278 | — | 52,131 | (30) | (17) | (42) | — | (89) |
| HSBC Bank plc | 183,897 | 5,118 | 188 | 4 | 189,207 | (30) | (23) | (17) | — | (70) |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 70,937 | 4,425 | 41 | — | 75,403 | (44) | (29) | (6) | — | (79) |
| HSBC Bank Middle East Limited | 9,294 | 417 | 29 | — | 9,740 | (3) | (2) | (11) | — | (16) |
| HSBC North America Holdings Inc. | 95,560 | 7,259 | 179 | — | 102,998 | (25) | (37) | (18) | — | (80) |
| Grupo Financiero HSBC, S.A. de C.V. | 2,585 | 41 | — | — | 2,626 | (2) | — | — | — | (2) |
| Other trading entities | 2,061 | 88 | 37 | — | 2,186 | — | (1) | (1) | — | (2) |
| At 31 Dec 2025 | 413,621 | 19,914 | 752 | 4 | 434,291 | (134) | (109) | (95) | — | (338) |
1Included in loan and other credit-related commitments and financial guarantees is $75.4bn relating to unsettled reverse repurchase agreements, which once
drawn are classified as ‘Reverse repurchase agreements – non-trading’.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 171 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Total wholesale lending for loan and other credit-related commitments and financial guarantees by stage distribution1 (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nominal amount | Allowance for ECL | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Corporate and commercial | 241,249 | 18,685 | 1,033 | 3 | 260,970 | (118) | (121) | (98) | — | (337) |
| Financial | 118,430 | 2,196 | 87 | — | 120,713 | (10) | (5) | (3) | — | (18) |
| At 31 Dec 2024 | 359,679 | 20,881 | 1,120 | 3 | 381,683 | (128) | (126) | (101) | — | (355) |
| By legal entity | ||||||||||
| HSBC UK Bank plc | 37,848 | 4,540 | 445 | — | 42,833 | (27) | (36) | (57) | — | (120) |
| HSBC Bank plc | 144,941 | 6,118 | 256 | 3 | 151,318 | (21) | (30) | (21) | — | (72) |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 72,860 | 3,973 | 99 | — | 76,932 | (54) | (32) | (6) | — | (92) |
| HSBC Bank Middle East Limited | 8,879 | 329 | 35 | — | 9,243 | (5) | (1) | (10) | — | (16) |
| HSBC North America Holdings Inc. | 91,314 | 5,723 | 226 | — | 97,263 | (20) | (26) | (5) | — | (51) |
| Grupo Financiero HSBC, S.A. de C.V. | 2,334 | 53 | — | — | 2,387 | (1) | (1) | — | — | (2) |
| Other trading entities | 1,503 | 145 | 59 | — | 1,707 | — | — | (2) | — | (2) |
| At 31 Dec 2024 | 359,679 | 20,881 | 1,120 | 3 | 381,683 | (128) | (126) | (101) | — | (355) |
1Included in loan and other credit-related commitments and financial guarantees is $49bn relating to unsettled reverse repurchase agreements, which once drawn
are classified as ‘Reverse repurchase agreements – non-trading’.
| Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br><br>customers including loan commitments and financial guarantees | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Audited) | ||||||||||
| Non-credit impaired | Credit impaired | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 833,036 | (645) | 74,288 | (1,516) | 20,177 | (5,347) | 93 | (51) | 927,594 | (7,559) |
| Transfers of financial instruments: | (35,399) | (267) | 27,793 | 859 | 7,606 | (592) | — | — | — | — |
| –transfers from stage 1 to stage 2 | (93,205) | 143 | 93,205 | (143) | — | — | — | — | — | — |
| –transfers from stage 2 to stage 1 | 58,517 | (372) | (58,517) | 372 | — | — | — | — | — | — |
| – transfers to stage 3 | (1,210) | 4 | (7,605) | 678 | 8,815 | (682) | — | — | — | — |
| – transfers from stage 3 | 499 | (42) | 710 | (48) | (1,209) | 90 | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 253 | — | (226) | — | (49) | — | — | — | (22) |
| Net new and further lending/<br><br>repayments | 66,354 | (171) | (27,221) | 304 | (5,593) | 690 | 238 | 2 | 33,778 | 825 |
| Change to risk parameters – credit<br><br>quality | — | 181 | — | (826) | — | (2,596) | — | (24) | — | (3,265) |
| Changes to models used for ECL<br><br>calculation | — | (30) | — | 277 | — | — | — | — | — | 247 |
| Assets written off | — | — | — | — | (1,928) | 1,928 | — | — | (1,928) | 1,928 |
| Credit-related modifications that<br><br>resulted in derecognition | — | — | — | — | (88) | 9 | — | — | (88) | 9 |
| Foreign exchange and others1 | 29,369 | 7 | 2,197 | (66) | 1,023 | (341) | 6 | (3) | 32,595 | (403) |
| At 31 Dec 2025 | 893,360 | (672) | 77,057 | (1,194) | 21,197 | (6,298) | 337 | (76) | 991,951 | (8,240) |
| ECL income statement change for<br><br>the period | 233 | (471) | (1,955) | (22) | (2,215) | |||||
| Recoveries | 77 | |||||||||
| Others | (267) | |||||||||
| Total ECL income statement<br><br>change for the period | (2,405) |
1Total includes $3.3bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $11m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for
sale’ on page 355.
During the year, there was a net transfer between stage 1 and stage 2 of $34,688m gross carrying/nominal amounts. It was primarily driven by our
entities in Asia ($31,809m) due to credit deterioration and updates to our models used for ECL calculations, in the US ($1,652m) and in Mexico
($1,069m).
ÑA summary of basis of preparation is available on page 158.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 172 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Wholesale lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and<br><br>customers including loan commitments and financial guarantees (continued) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Audited) | ||||||||||
| Non-credit impaired | Credit impaired | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 845,982 | (698) | 102,129 | (1,668) | 16,939 | (6,207) | 85 | (30) | 965,135 | (8,603) |
| Transfers of financial instruments: | (17,606) | (214) | 6,997 | 825 | 10,609 | (611) | — | — | — | — |
| – transfers from stage 1 to stage 2 | (70,991) | 173 | 70,991 | (173) | — | — | — | — | — | — |
| – transfers from stage 2 to stage 1 | 55,182 | (380) | (55,182) | 380 | — | — | — | — | — | — |
| – transfers to stage 3 | (2,056) | 7 | (9,515) | 636 | 11,571 | (643) | — | — | — | — |
| – transfers from stage 3 | 259 | (14) | 703 | (18) | (962) | 32 | — | — | — | — |
| Net remeasurement of ECL arising<br><br>from transfer of stage | — | 214 | — | (226) | — | (12) | — | — | — | (24) |
| Net new and further lending/<br><br>repayments | 58,044 | (151) | (29,842) | 311 | (4,450) | 1,219 | 7 | (7) | 23,759 | 1,372 |
| Changes to risk parameters – credit<br><br>quality | — | 112 | — | (899) | — | (2,508) | — | (11) | — | (3,306) |
| Changes to models used for ECL<br><br>calculation | — | 39 | — | 105 | — | — | — | — | — | 144 |
| Assets written off | — | — | — | — | (2,925) | 2,925 | — | — | (2,925) | 2,925 |
| Credit-related modifications that<br><br>resulted in derecognition | — | — | — | — | — | — | — | — | — | — |
| Foreign exchange and others1,2,3 | (53,384) | 53 | (4,996) | 36 | 4 | (153) | 1 | (3) | (58,375) | (67) |
| At 31 Dec 2024 | 833,036 | (645) | 74,288 | (1,516) | 20,177 | (5,347) | 93 | (51) | 927,594 | (7,559) |
| ECL income statement change for<br><br>the period | 214 | (709) | (1,301) | (18) | (1,814) | |||||
| Recoveries | 40 | |||||||||
| Others | (126) | |||||||||
| Total ECL income statement<br><br>change for the period | (1,900) |
1Total includes $2.9bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a
corresponding allowance for ECL of $23m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for
sale’ on page 355.
2Total includes $28.9bn of nominal amount and $20m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees
following the sale of our banking business in Canada during 2024.
3Total includes $0.3bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina
during 2024.
| Wholesale lending – distribution of financial instruments to which the impairment requirements of IFRS 9 are applied by credit quality | ||||||||
|---|---|---|---|---|---|---|---|---|
| Gross carrying amount | Allowance<br><br>for ECL | Net | ||||||
| Strong | Good | Satisfactory | Sub-<br><br>standard | Credit<br><br>impaired | Total | |||
| $m | $m | $m | $m | $m | $m | $m | $m | |
| By legal entity | ||||||||
| HSBC UK Bank plc | 22,638 | 39,864 | 41,093 | 5,612 | 3,430 | 112,637 | (1,258) | 111,379 |
| HSBC Bank plc | 48,153 | 23,369 | 28,238 | 3,997 | 1,814 | 105,571 | (804) | 104,767 |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 163,599 | 80,183 | 67,919 | 5,495 | 12,914 | 330,110 | (4,386) | 325,724 |
| HSBC Bank Middle East Limited | 17,724 | 3,587 | 6,195 | 308 | 1,247 | 29,061 | (685) | 28,376 |
| HSBC North America Holdings Inc. | 6,966 | 11,025 | 11,727 | 2,449 | 517 | 32,684 | (287) | 32,397 |
| Grupo Financiero HSBC, S.A. de C.V. | 1,764 | 5,833 | 6,090 | 638 | 378 | 14,703 | (286) | 14,417 |
| Other trading entities | 2,047 | 1,078 | 4,502 | 264 | 285 | 8,176 | (196) | 7,980 |
| Holding companies, shared service centres<br><br>and intra-Group eliminations | 90 | — | — | — | — | 90 | — | 90 |
| At 31 Dec 2025 | 262,981 | 164,939 | 165,764 | 18,763 | 20,585 | 633,032 | (7,902) | 625,130 |
| Percentage of total credit quality (%) | 41.4 | 26.1 | 26.2 | 3.0 | 3.3 | 100.0 | ||
| By legal entity | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| HSBC UK Bank plc | 21,548 | 30,317 | 36,450 | 6,087 | 3,356 | 97,758 | (1,203) | 96,555 |
| HSBC Bank plc | 42,189 | 21,755 | 24,150 | 2,771 | 2,352 | 93,217 | (939) | 92,278 |
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 157,900 | 69,084 | 71,651 | 7,978 | 11,522 | 318,135 | (3,874) | 314,261 |
| HSBC Bank Middle East Limited | 15,854 | 4,263 | 6,927 | 266 | 852 | 28,162 | (490) | 27,672 |
| HSBC North America Holdings Inc. | 6,095 | 11,726 | 13,967 | 2,984 | 503 | 35,275 | (293) | 34,982 |
| Grupo Financiero HSBC, S.A. de C.V. | 1,476 | 5,523 | 5,974 | 687 | 230 | 13,890 | (211) | 13,679 |
| Other trading entities | 2,432 | 1,072 | 4,563 | 288 | 332 | 8,687 | (194) | 8,493 |
| Holding companies, shared service centres<br><br>and intra-Group eliminations | 76 | — | — | — | — | 76 | — | 76 |
| At 31 Dec 2024 | 247,570 | 143,740 | 163,682 | 21,061 | 19,147 | 595,200 | (7,204) | 587,996 |
| Percentage of total credit quality (%) | 41.6 | 24.2 | 27.5 | 3.5 | 3.2 | 100.0 | ||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
| --- | ||||||||
| 173 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Credit risk |
Our risk rating system facilitates the internal ratings-based approach under the Basel framework adopted by the Group to support calculation of our
minimum credit regulatory capital requirement. The credit quality classifications can be found on page 141.
| Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Basel one-year<br><br>PD range | Gross carrying amount | Allowance for ECL | ECL<br><br>coverage | Mapped<br><br>external rating | |||||||||
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||
| % | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | % | ||
| Corporate and<br><br>commercial | 349,763 | 54,636 | 19,966 | 140 | 424,505 | (478) | (1,064) | (5,909) | (75) | (7,526) | 1.8 | ||
| – CRR 1 | 0.000 to 0.053 | 32,672 | 824 | — | — | 33,496 | (5) | (2) | — | — | (7) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 79,233 | 1,058 | — | — | 80,291 | (28) | (2) | — | — | (30) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 122,351 | 10,621 | — | — | 132,972 | (113) | (57) | — | — | (170) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 71,923 | 14,821 | — | — | 86,744 | (151) | (98) | — | — | (249) | 0.3 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 38,615 | 14,240 | — | — | 52,855 | (144) | (158) | — | — | (302) | 0.6 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 2,479 | 4,679 | — | — | 7,158 | (17) | (111) | — | — | (128) | 1.8 | B- |
| – CRR 7 | 8.861 to 15.000 | 1,733 | 4,712 | — | — | 6,445 | (5) | (166) | — | — | (171) | 2.7 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 757 | 3,681 | — | — | 4,438 | (15) | (470) | — | — | (485) | 10.9 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 19,966 | 140 | 20,106 | — | — | (5,909) | (75) | (5,984) | 29.8 | D |
| Non-bank<br><br>financial<br><br>institutions | 96,974 | 2,413 | 478 | 193 | 100,058 | (56) | (19) | (293) | (1) | (369) | 0.4 | ||
| – CRR 1 | 0.000 to 0.053 | 24,948 | — | — | — | 24,948 | (2) | — | — | — | (2) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 26,457 | 265 | — | — | 26,722 | (8) | — | — | — | (8) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 25,468 | 277 | — | — | 25,745 | (14) | (2) | — | — | (16) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 13,733 | 747 | — | — | 14,480 | (20) | (2) | — | — | (22) | 0.2 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 6,099 | 780 | — | 193 | 7,072 | (9) | (9) | — | (1) | (19) | 0.3 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 97 | 194 | — | — | 291 | (1) | (4) | — | — | (5) | 1.7 | B- |
| – CRR 7 | 8.861 to 15.000 | 136 | 128 | — | — | 264 | (1) | (2) | — | — | (3) | 1.1 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 36 | 22 | — | — | 58 | (1) | — | — | — | (1) | 1.7 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 478 | — | 478 | — | — | (293) | — | (293) | 61.3 | D |
| Banks | 108,336 | 132 | 1 | — | 108,469 | (4) | (2) | (1) | — | (7) | — | ||
| – CRR 1 | 0.000 to 0.053 | 86,254 | 34 | — | — | 86,288 | (1) | — | — | — | (1) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 11,172 | 64 | — | — | 11,236 | (1) | — | — | — | (1) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 6,215 | 7 | — | — | 6,222 | (1) | — | — | — | (1) | — | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 2,552 | 4 | — | — | 2,556 | — | — | — | — | — | — | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 2,056 | 1 | — | — | 2,057 | (1) | — | — | — | (1) | — | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 86 | 20 | — | — | 106 | — | — | — | — | — | — | B- |
| – CRR 7 | 8.861 to 15.000 | 1 | — | — | — | 1 | — | — | — | — | — | — | CCC+ |
| – CRR 8 | 15.001 to 99.999 | — | 2 | — | — | 2 | — | (2) | — | — | (2) | 100.0 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 1 | — | 1 | — | — | (1) | — | (1) | 100.0 | D |
| At 31 Dec 2025 | 555,073 | 57,181 | 20,445 | 333 | 633,032 | (538) | (1,085) | (6,203) | (76) | (7,902) | 1.2 | ||
| Corporate and<br><br>commercial | 340,987 | 51,231 | 18,376 | 90 | 410,684 | (463) | (1,358) | (4,883) | (51) | (6,755) | 1.6 | ||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| – CRR 1 | 0.000 to 0.053 | 32,564 | 121 | — | — | 32,685 | (3) | (5) | — | — | (8) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 79,350 | 2,469 | — | — | 81,819 | (25) | (15) | — | — | (40) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 111,229 | 7,556 | — | — | 118,785 | (103) | (72) | — | — | (175) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 73,050 | 12,591 | — | — | 85,641 | (144) | (99) | — | — | (243) | 0.3 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 40,391 | 12,673 | — | — | 53,064 | (158) | (159) | — | — | (317) | 0.6 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 2,491 | 7,436 | — | — | 9,927 | (16) | (190) | — | — | (206) | 2.1 | B- |
| – CRR 7 | 8.861 to 15.000 | 1,370 | 3,735 | — | — | 5,105 | (7) | (172) | — | — | (179) | 3.5 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 542 | 4,650 | — | — | 5,192 | (7) | (646) | — | — | (653) | 12.6 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 18,376 | 90 | 18,466 | — | — | (4,883) | (51) | (4,934) | 26.7 | D |
| Non-bank<br><br>financial<br><br>institutions | 79,687 | 2,098 | 679 | — | 82,464 | (45) | (30) | (361) | — | (436) | 0.5 | ||
| – CRR 1 | 0.000 to 0.053 | 19,516 | 191 | — | — | 19,707 | (1) | (1) | — | — | (2) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 20,572 | 166 | — | — | 20,738 | (5) | — | — | — | (5) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 20,370 | 330 | — | — | 20,700 | (12) | (3) | — | — | (15) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 12,987 | 502 | — | — | 13,489 | (16) | (2) | — | — | (18) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 6,058 | 390 | — | — | 6,448 | (11) | (6) | — | — | (17) | 0.3 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 48 | 319 | — | — | 367 | — | (8) | — | — | (8) | 2.2 | B- |
| – CRR 7 | 8.861 to 15.000 | 63 | 79 | — | — | 142 | — | (1) | — | — | (1) | 0.7 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 73 | 121 | — | — | 194 | — | (9) | — | — | (9) | 4.6 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 679 | — | 679 | — | — | (361) | — | (361) | 53.2 | D |
| Banks | 101,852 | 198 | 2 | — | 102,052 | (9) | (2) | (2) | — | (13) | — | ||
| – CRR 1 | 0.000 to 0.053 | 79,213 | 53 | — | — | 79,266 | (3) | — | — | — | (3) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 13,315 | 40 | — | — | 13,355 | (2) | — | — | — | (2) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 4,226 | 29 | — | — | 4,255 | (2) | — | — | — | (2) | — | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 3,275 | 12 | — | — | 3,287 | (1) | — | — | — | (1) | — | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 1,706 | 47 | — | — | 1,753 | (1) | (1) | — | — | (2) | 0.1 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 10 | 1 | — | — | 11 | — | — | — | — | — | — | B- |
| – CRR 7 | 8.861 to 15.000 | 107 | 13 | — | — | 120 | — | — | — | — | — | — | CCC+ |
| – CRR 8 | 15.001 to 99.999 | — | 3 | — | — | 3 | — | (1) | — | — | (1) | 33.3 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 2 | — | 2 | — | — | (2) | — | (2) | 100.0 | D |
| At 31 Dec 2024 | 522,526 | 53,527 | 19,057 | 90 | 595,200 | (517) | (1,390) | (5,246) | (51) | (7,204) | 1.2 | ||
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||||
| --- | |||||||||||||
| 174 | |||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||
| Credit risk | |||||||||||||
| Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nominal amount | Allowance for ECL | ||||||||||||
| Basel one-year<br><br>PD range | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | ECL<br><br>coverage | Mapped<br><br>external rating | |
| % | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | % | ||
| Loan and<br><br>other credit-<br><br>related<br><br>commitments | 399,154 | 18,543 | 560 | 4 | 418,261 | (127) | (92) | (69) | — | (288) | 0.1 | ||
| – CRR 1 | 0.000 to 0.053 | 109,371 | 2,013 | — | — | 111,384 | (4) | — | — | — | (4) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 99,018 | 1,578 | — | — | 100,596 | (12) | (3) | — | — | (15) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 110,555 | 2,651 | — | — | 113,206 | (33) | (11) | — | — | (44) | — | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 47,586 | 4,197 | — | — | 51,783 | (30) | (15) | — | — | (45) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 27,073 | 3,858 | — | — | 30,931 | (25) | (12) | — | — | (37) | 0.1 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 1,747 | 1,754 | — | — | 3,501 | (4) | (13) | — | — | (17) | 0.5 | B- |
| – CRR 7 | 8.861 to 15.000 | 2,757 | 847 | — | — | 3,604 | (7) | (9) | — | — | (16) | 0.4 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 1,047 | 1,645 | — | — | 2,692 | (12) | (29) | — | — | (41) | 1.5 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 560 | 4 | 564 | — | — | (69) | — | (69) | 12.2 | D |
| Financial<br><br>guarantees | 14,467 | 1,371 | 192 | — | 16,030 | (7) | (17) | (26) | — | (50) | 0.3 | ||
| – CRR 1 | 0.000 to 0.053 | 2,151 | — | — | — | 2,151 | — | — | — | — | — | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 3,897 | 6 | — | — | 3,903 | (2) | — | — | — | (2) | 0.1 | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 3,995 | 105 | — | — | 4,100 | (3) | — | — | — | (3) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 2,888 | 139 | — | — | 3,027 | (1) | (1) | — | — | (2) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 1,445 | 654 | — | — | 2,099 | (1) | (4) | — | — | (5) | 0.2 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 64 | 259 | — | — | 323 | — | (3) | — | — | (3) | 0.9 | B- |
| – CRR 7 | 8.861 to 15.000 | 17 | 73 | — | — | 90 | — | (5) | — | — | (5) | 5.6 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 10 | 135 | — | — | 145 | — | (4) | — | — | (4) | 2.8 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 192 | — | 192 | — | — | (26) | — | (26) | 13.5 | D |
| At 31 Dec 2025 | 413,621 | 19,914 | 752 | 4 | 434,291 | (134) | (109) | (95) | — | (338) | 0.1 | ||
| Loan and other<br><br>credit-related<br><br>commitments | 345,742 | 19,495 | 872 | 3 | 366,112 | (120) | (121) | (85) | — | (326) | 0.1 | ||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| – CRR 1 | 0.000 to 0.053 | 92,090 | 89 | — | — | 92,179 | (3) | — | — | — | (3) | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 92,967 | 1,009 | — | — | 93,976 | (12) | (2) | — | — | (14) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 97,876 | 5,051 | — | — | 102,927 | (38) | (15) | — | — | (53) | 0.1 | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 40,135 | 4,349 | — | — | 44,484 | (28) | (22) | — | — | (50) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 18,581 | 3,976 | — | — | 22,557 | (26) | (22) | — | — | (48) | 0.2 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 1,828 | 2,297 | — | — | 4,125 | (4) | (22) | — | — | (26) | 0.6 | B- |
| – CRR 7 | 8.861 to 15.000 | 1,378 | 678 | — | — | 2,056 | (1) | (12) | — | — | (13) | 0.6 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 887 | 2,046 | — | — | 2,933 | (8) | (26) | — | — | (34) | 1.2 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 872 | 3 | 875 | — | — | (85) | — | (85) | 9.7 | D |
| Financial<br><br>guarantees | 13,937 | 1,386 | 248 | — | 15,571 | (8) | (5) | (16) | — | (29) | 0.2 | ||
| – CRR 1 | 0.000 to 0.053 | 1,895 | 1 | — | — | 1,896 | — | — | — | — | — | — | AA- and above |
| – CRR 2 | 0.054 to 0.169 | 4,326 | 12 | — | — | 4,338 | (1) | — | — | — | (1) | — | A+ to A- |
| – CRR 3 | 0.170 to 0.740 | 4,137 | 71 | — | — | 4,208 | (2) | — | — | — | (2) | — | BBB+ to BBB- |
| – CRR 4 | 0.741 to 1.927 | 2,106 | 286 | — | — | 2,392 | (3) | — | — | — | (3) | 0.1 | BB+ to BB- |
| – CRR 5 | 1.928 to 4.914 | 1,295 | 478 | — | — | 1,773 | (2) | (1) | — | — | (3) | 0.2 | BB- to B |
| – CRR 6 | 4.915 to 8.860 | 162 | 232 | — | — | 394 | — | (1) | — | — | (1) | 0.3 | B- |
| – CRR 7 | 8.861 to 15.000 | 5 | 128 | — | — | 133 | — | (2) | — | — | (2) | 1.5 | CCC+ |
| – CRR 8 | 15.001 to 99.999 | 11 | 178 | — | — | 189 | — | (1) | — | — | (1) | 0.5 | CCC to C |
| – CRR 9/10 | 100.000 | — | — | 248 | — | 248 | — | — | (16) | — | (16) | 6.5 | D |
| At 31 Dec 2024 | 359,679 | 20,881 | 1,120 | 3 | 381,683 | (128) | (126) | (101) | — | (355) | 0.1 |
Commercial real estate
CRE lending includes the financing of corporate, institutional and high
net worth customers who are investing primarily in income-producing
assets and, to a lesser extent, in their construction and development.
The portfolio has larger concentrations in Hong Kong, the UK and
mainland China.
Our global exposure is centred largely on cities with economic, political
or cultural significance. In more developed markets, our exposure
mainly comprises the financing of investment assets, the
redevelopment of existing stock and the augmentation of both
commercial and residential markets to support economic and
population growth. In less developed CRE markets, our exposures
comprise lending for development assets on relatively short tenors with
a particular focus on supporting larger, better-capitalised developers
involved in residential construction or assets supporting economic
expansion.
Excluding adverse foreign exchange movements of $2.0bn, CRE
lending decreased by $5.0bn, mainly from $5.3bn in our entities in Asia
due to loan repayments and write-offs.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 175 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Commercial real estate lending to customers | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| of which: | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The Hongkong and<br><br>Shanghai Banking<br><br>Corporation<br><br>Limited | HSBC Bank<br><br>Middle East<br><br>Limited | HSBC North<br><br>America<br><br>Holdings Inc. | Grupo<br><br>Financiero<br><br>HSBC, S.A. de<br><br>C.V. | Other<br><br>trading<br><br>entities | Total | UK | Hong<br><br>Kong | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Gross loans<br><br>and advances | ||||||||||
| Stage 1 | 14,864 | 3,482 | 21,777 | 1,071 | 237 | 406 | 56 | 41,893 | 15,654 | 11,007 |
| Stage 2 | 1,956 | 151 | 15,245 | 59 | 678 | 94 | — | 18,183 | 1,956 | 13,927 |
| Stage 3 | 355 | 390 | 8,052 | 89 | 238 | 25 | 26 | 9,175 | 355 | 7,568 |
| POCI | — | 57 | 30 | — | — | — | — | 87 | 58 | 25 |
| At 31 Dec 2025 | 17,175 | 4,080 | 45,104 | 1,219 | 1,153 | 525 | 82 | 69,338 | 18,023 | 32,527 |
| – of which:<br><br>forborne<br><br>loans | 410 | 65 | 3,477 | 89 | 314 | 73 | 26 | 4,454 | 468 | 2,941 |
| Allowance for<br><br>ECL | (199) | (124) | (2,150) | (26) | (77) | (10) | (24) | (2,610) | (230) | (1,876) |
| Gross loans and<br><br>advances | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Stage 1 | 9,394 | 3,285 | 34,337 | 1,136 | 1,420 | 380 | 42 | 49,994 | 9,758 | 22,643 |
| Stage 2 | 4,052 | 313 | 9,103 | — | 1,184 | 67 | 1 | 14,720 | 4,112 | 7,619 |
| Stage 3 | 492 | 213 | 6,451 | 117 | 240 | 22 | 23 | 7,558 | 492 | 5,967 |
| POCI | — | 43 | 18 | — | — | — | — | 61 | 43 | 18 |
| At 31 Dec 2024 | 13,938 | 3,854 | 49,909 | 1,253 | 2,844 | 469 | 66 | 72,333 | 14,405 | 36,247 |
| – of which:<br><br>forborne<br><br>loans | 502 | 54 | 3,087 | 116 | 273 | 19 | 23 | 4,074 | 545 | 2,729 |
| Allowance for<br><br>ECL | (203) | (72) | (1,627) | (23) | (103) | (8) | (19) | (2,055) | (227) | (1,418) |
| Commercial real estate gross loans and advances to customers by credit quality | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| of which: | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong and<br><br>Shanghai Banking<br><br>Corporation<br><br>Limited | HSBC Bank<br><br>Middle East<br><br>Limited | HSBC North<br><br>America<br><br>Holdings Inc. | Grupo<br><br>Financiero<br><br>HSBC, S.A. de<br><br>C.V. | Other<br><br>trading<br><br>entities | Total | UK | Hong<br><br>Kong | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Strong | 4,102 | 1,055 | 7,818 | 327 | — | 8 | 56 | 13,366 | 4,342 | 3,501 |
| Good | 7,636 | 1,195 | 13,998 | 473 | — | 127 | — | 23,429 | 7,773 | 8,438 |
| Satisfactory | 4,482 | 1,289 | 12,330 | 307 | 559 | 326 | — | 19,293 | 4,895 | 10,481 |
| Sub-standard | 600 | 94 | 2,876 | 23 | 356 | 39 | — | 3,988 | 600 | 2,514 |
| Credit impaired | 355 | 447 | 8,082 | 89 | 238 | 25 | 26 | 9,262 | 413 | 7,593 |
| At 31 Dec 2025 | 17,175 | 4,080 | 45,104 | 1,219 | 1,153 | 525 | 82 | 69,338 | 18,023 | 32,527 |
| Strong | 4,663 | 739 | 9,106 | 137 | — | 18 | 42 | 14,705 | 4,875 | 4,522 |
| Good | 2,098 | 1,430 | 16,113 | 407 | 566 | 111 | — | 20,725 | 2,107 | 10,421 |
| Satisfactory | 5,770 | 1,312 | 13,556 | 592 | 1,423 | 283 | — | 22,936 | 5,948 | 10,850 |
| Sub-standard | 915 | 117 | 4,665 | — | 615 | 35 | 1 | 6,348 | 940 | 4,469 |
| Credit impaired | 492 | 256 | 6,469 | 117 | 240 | 22 | 23 | 7,619 | 535 | 5,985 |
| At 31 Dec 2024 | 13,938 | 3,854 | 49,909 | 1,253 | 2,844 | 469 | 66 | 72,333 | 14,405 | 36,247 |
| Commercial real estate lending to customers - Hong Kong excluding exposure to mainland China borrowers | ||||||||||
| --- | --- | --- | --- | --- | ||||||
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||
| Total | of which: Hang Seng Bank | Total | of which: Hang Seng Bank | |||||||
| $m | $m | $m | $m | |||||||
| Gross loans and advances | ||||||||||
| By stage | ||||||||||
| Stage 1 | 10,666 | 5,079 | 22,132 | 10,465 | ||||||
| Stage 2 | 13,652 | 6,416 | 6,515 | 3,791 | ||||||
| Stage 3 | 6,306 | 3,467 | 4,554 | 2,550 | ||||||
| POCI | — | — | — | — | ||||||
| By credit quality | ||||||||||
| Strong | 3,314 | 1,662 | 4,484 | 2,596 | ||||||
| Good | 8,225 | 3,449 | 9,754 | 4,367 | ||||||
| Satisfactory | 10,352 | 4,637 | 10,716 | 5,135 | ||||||
| Sub-standard | 2,427 | 1,747 | 3,693 | 2,158 | ||||||
| Credit impaired | 6,306 | 3,467 | 4,554 | 2,550 | ||||||
| Total | 30,624 | 14,962 | 33,201 | 16,806 | ||||||
| Allowance for ECL | (1,077) | (652) | (405) | (213) | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 176 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk |
The Hong Kong CRE portfolio (excluding exposure to mainland China
borrowers) saw an increase in allowances for ECL in 2025, driven by a
combination of negative credit migration and pressure on collateral
values. Negative credit migration was mainly driven by the secured
portfolio, which accounts for 57% of the total portfolio (31 December
2024: 54%), although the pace of migration slowed in the fourth
quarter.
‘Sub-standard’ and ‘credit-impaired’ exposures increased to $8.7bn
(31 December 2024: $8.2bn), of which 95% was secured
(31 December 2024: 92%). As at 31 December 2025, the weighted
average loan to value (‘LTV’):
–of performing exposures rated ‘sub-standard’ was 42%
(31 December 2024: 46%). There was immaterial exposure with an
LTV of greater than 70% (31 December 2024: $0.1bn); and
–of ‘credit impaired’ exposures was 71% (31 December 2024: 58%).
Within this portfolio, $1.9bn had an LTV of greater than 70%
(31 December 2024: $1.2bn).
Within which, for Hang Seng Bank, the weighted average LTV:
–of performing exposures rated ‘sub-standard’ was 42%
(31 December 2024: 49%). There was nil exposure with an LTV of
greater than 70% (31 December 2024: $0.1bn); and
–of ‘credit-impaired’ exposures was 74% (31 December 2024: 60%).
Within this portfolio, $1.1bn had an LTV of greater than 70%
(31 December 2024: $0.7bn).
Collateral information and LTV calculations were based on total limits,
inclusive of off-balance sheet commitments of $42.8bn as of
31 December 2025 (31 December 2024: $49.2bn).
The unsecured portfolio remains largely stable, with some migration
between performing credit grades and 89% rated ‘strong’ or
‘good’ (31 December 2024: 91%). ‘Credit impaired’ levels are limited.
Unsecured exposures are typically granted to strong, listed Hong Kong
CRE developers, which are commonly members of conglomerate
groups with diverse cash flows.
Market conditions remain challenging, with valuation pressures and
liquidity constraints likely to continue in the near term, particularly for
mid-sized and sub-investment grade corporates. The recent
improvement in sentiment is nevertheless expected to gradually
translate into improved cash flows and liquidity, with signs of a
recovery beginning to emerge. In particular, the residential property
sector showed positive momentum in 2025 driven by government
support measures and lower interest rates. This, together with the
associated positive wealth effect from a buoyant equities market, has
supported a rebound in retail sales and improved leasing activity in the
second half of 2025. However, a full recovery in the retail property
sector will take time as landlords adapt to changing consumer
behaviours, while oversupply in the office property sector is expected
to keep pressure on rents and capital values in 2026. The broader Hong
Kong economy nevertheless remains resilient, providing a supportive
backdrop for stabilisation in the property market.
We continue to closely assess and manage the risk in the portfolio,
including through portfolio reviews and stress testing. Vulnerable
borrowers, including those with debt serviceability challenges and
higher LTV levels, are subject to heightened monitoring and
management.
Refinance risk in commercial real estate
CRE lending tends to require the repayment of a significant proportion
of the principal at maturity. Typically, a customer will arrange
repayment through the acquisition of a new loan to settle the existing
debt. Refinance risk is the risk that a customer, being unable to repay
the debt on maturity, fails to refinance it at commercial terms. We
monitor our CRE portfolio closely, assessing indicators for signs of
potential issues with refinancing.
| Maturity analysis commercial real estate gross loans and advances to customers | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| of which: | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The<br><br>Hongkong and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC Bank<br><br>Middle East<br><br>Limited | HSBC North<br><br>America<br><br>Holdings Inc. | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Total | UK | Hong<br><br>Kong | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| < 1 year | 3,892 | 1,213 | 18,961 | 435 | 335 | 209 | 36 | 25,081 | 4,438 | 14,667 |
| 1–2 years | 3,800 | 822 | 11,251 | 78 | 442 | 74 | 20 | 16,487 | 4,090 | 7,939 |
| 2–5 years | 8,776 | 1,575 | 12,735 | 518 | 373 | 183 | 25 | 24,185 | 8,784 | 8,475 |
| > 5 years | 707 | 470 | 2,157 | 188 | 3 | 59 | 1 | 3,585 | 711 | 1,446 |
| At 31 Dec 2025 | 17,175 | 4,080 | 45,104 | 1,219 | 1,153 | 525 | 82 | 69,338 | 18,023 | 32,527 |
| < 1 year | 3,488 | 846 | 22,244 | 455 | 1,084 | 111 | 20 | 28,248 | 3,826 | 18,204 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1–2 years | 3,303 | 876 | 11,213 | 162 | 603 | 142 | 6 | 16,305 | 3,373 | 7,196 |
| 2–5 years | 6,634 | 1,600 | 14,079 | 447 | 1,145 | 143 | 40 | 24,088 | 6,685 | 9,254 |
| > 5 years | 513 | 532 | 2,373 | 189 | 12 | 73 | — | 3,692 | 521 | 1,593 |
| At 31 Dec 2024 | 13,938 | 3,854 | 49,909 | 1,253 | 2,844 | 469 | 66 | 72,333 | 14,405 | 36,247 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
| --- | ||||||||||
| 177 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk |
The following table presents the Group’s exposure to borrowers
classified in the CRE sector where the ultimate parent is based in
mainland China, as well as all CRE exposures booked on mainland
China balance sheets. In addition to CRE as defined in our primary CRE
disclosure above, this table includes financing provided to a corporate
or financial entity for the purchase or financing of a property which
supports the overall operations of the business. This provides a more
comprehensive view of our mainland China CRE exposures. The
exposures at 31 December 2025 are split by country/territory and credit
quality including allowances for ECL by stage.
| Mainland China commercial real estate | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Audited) | At 31 Dec 2025 | At 31 Dec 2024 | ||||||
| Hong Kong | Mainland<br><br>China | Rest of the<br><br>Group | Total | Hong Kong | Mainland<br><br>China | Rest of the<br><br>Group | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Loans and advances to customers1 | 2,079 | 3,474 | 118 | 5,671 | 3,161 | 3,694 | 303 | 7,158 |
| Guarantees issued and others2 | 105 | 14 | 12 | 131 | 80 | 16 | 5 | 101 |
| Total mainland China commercial real<br><br>estate exposure | 2,184 | 3,488 | 130 | 5,802 | 3,241 | 3,710 | 308 | 7,259 |
| Distribution of mainland China<br><br>commercial real estate exposure by<br><br>credit quality | ||||||||
| Strong | 293 | 1,818 | 64 | 2,175 | 118 | 1,817 | 109 | 2,044 |
| Good | 240 | 583 | — | 823 | 578 | 595 | 1 | 1,174 |
| Satisfactory | 154 | 511 | 8 | 673 | 196 | 899 | 49 | 1,144 |
| Sub-standard | 87 | 334 | 57 | 478 | 777 | 136 | 149 | 1,062 |
| Credit impaired | 1,410 | 242 | 1 | 1,653 | 1,572 | 263 | — | 1,835 |
| Total | 2,184 | 3,488 | 130 | 5,802 | 3,241 | 3,710 | 308 | 7,259 |
| Allowance for ECL by credit quality | ||||||||
| Strong | — | (2) | — | (2) | — | (4) | — | (4) |
| Good | — | (4) | — | (4) | — | (3) | — | (3) |
| Satisfactory | — | (5) | — | (5) | — | (13) | — | (13) |
| Sub-standard | (9) | (99) | (1) | (109) | (261) | (30) | (17) | (308) |
| Credit impaired | (799) | (99) | — | (898) | (749) | (81) | — | (830) |
| Total | (808) | (209) | (1) | (1,018) | (1,010) | (131) | (17) | (1,158) |
| Allowance for ECL by stage distribution | ||||||||
| Stage 1 | — | (4) | — | (4) | — | (9) | — | (9) |
| Stage 2 | (9) | (106) | (1) | (116) | (261) | (41) | (17) | (319) |
| Stage 3 | (783) | (99) | — | (882) | (743) | (81) | — | (824) |
| POCI | (16) | — | — | (16) | (6) | — | — | (6) |
| Total | (808) | (209) | (1) | (1,018) | (1,010) | (131) | (17) | (1,158) |
| ECL coverage % | 37.0 | 6.0 | 0.8 | 17.6 | 31.2 | 3.5 | 5.5 | 16.0 |
1Amounts represent gross carrying amount.
2Amounts represent nominal amount for guarantees and other contingent liabilities.
(Unaudited)
We continue to closely monitor the mainland China CRE market. The
portfolio of loans booked in Hong Kong continues to be impacted by
the challenges in this sector, with further migration seen in the fourth
quarter of 2025. This portfolio nevertheless continues to reduce due to
repayments and write-offs, driving an overall reduction in allowances
for ECL to $1.0bn as of 31 December 2025 (31 December 2024:
$1.2bn), mainly held against unsecured exposures.
Of the residual portfolio of mainland China CRE loans booked in Hong
Kong, the large majority of performing exposure is lending to state-
owned enterprises and relatively strong privately-owned enterprises.
This is reflected in the relatively low allowances for ECL in this part of
the portfolio.
The onshore portfolio booked in mainland China remains of higher
credit quality, with lower ECL allowances reflecting collateral held. The
portfolio continues to rebalance in favour of strong-rated borrowers.
Market fundamentals in the mainland China property sector remain
weak. Despite some stabilisation in certain cities, property values
continued to decline in 2025 and are expected to remain under
pressure in 2026 reflecting ongoing weakness in demand. Liquidity
constraints are therefore likely to continue, with ongoing polarisation in
the operating performance of corporates operating in this sector, as
state-owned enterprises continue to benefit from better access to
funding and liquidity. A full recovery remains dependent on further
government support as well as a sustained improvement in underlying
sentiment.
The Group has additional exposures to mainland China CRE as a result
of lending to multinational corporates booked outside of mainland
China, which is not incorporated in the table above.
Other credit risk exposures
In addition to collateralised lending, other credit enhancements are
employed and methods used to mitigate credit risk arising from
financial assets. These are summarised below:
–Some securities issued by governments, banks and other financial
institutions benefit from additional credit enhancements provided by
government guarantees that cover the assets.
–Debt securities issued by banks and financial institutions include
asset-backed securities (‘ABSs’) and similar instruments, which are
supported by underlying pools of financial assets. Credit risk
associated with ABSs is reduced through the purchase of credit
default swap (‘CDS’) protection.
–Trading loans and advances mainly consist of reverse repos and
stock borrowing, which are by their nature collateralised.
–Cash collateral is posted to satisfy margin requirements. There is
limited credit risk on cash collateral posted since in the event of
default of the counterparty this would be set off against the related
liability.
ÑCollateral accepted as security that the Group is permitted to sell or
repledge under these arrangements is described on page 344 of the
financial statements.
The Group’s maximum exposure to credit risk includes financial
guarantees and similar contracts granted, as well as loan and other
credit-related commitments. Depending on the terms of the
arrangement, we may use additional credit mitigation if a guarantee is
called upon or a loan commitment is drawn and subsequently defaults.
ÑFor further information on these arrangements, see Note 33 on the financial
statements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 178 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Derivatives
We participate in transactions exposing us to counterparty credit risk.
Counterparty credit risk is the risk of financial loss if the counterparty to
a transaction defaults before satisfactorily settling it. It arises principally
from over-the-counter (‘OTC’) derivatives and securities financing
transactions and is calculated in both the trading and non-trading books.
Transactions vary in value by reference to a market factor such as an
interest rate, exchange rate or asset price.
The counterparty risk from derivative transactions is taken into account
when reporting the fair value of derivative positions. The adjustment to
the fair value is known as the credit valuation adjustment (‘CVA’).
The following table reflects the fair values and gross notional contract
amounts of derivatives cleared through an exchange, central
counterparty or non-central counterparty.
| Notional contract amounts and fair values of derivatives | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Notional<br><br>amount | Fair value | Notional<br><br>amount | Fair value | |||
| Assets | Liabilities | Assets | Liabilities | |||
| $m | $m | $m | $m | $m | $m | |
| Total OTC derivatives | 31,083,167 | 324,708 | 325,401 | 29,273,397 | 368,938 | 367,759 |
| – total OTC derivatives cleared by central counterparties | 13,448,210 | 98,779 | 99,109 | 13,484,581 | 111,974 | 113,091 |
| – total OTC derivatives not cleared by central counterparties | 17,634,957 | 225,929 | 226,292 | 15,788,816 | 256,964 | 254,668 |
| Total exchange traded derivatives | 1,625,677 | 10,275 | 9,696 | 1,267,685 | 12,445 | 9,435 |
| Gross | 32,708,844 | 334,983 | 335,097 | 30,541,082 | 381,383 | 377,194 |
| Offset | (97,243) | (97,243) | (112,746) | (112,746) | ||
| At 31 Dec | 237,740 | 237,854 | 268,637 | 264,448 |
ÑThe purposes for which HSBC uses derivatives are described in Note 15 on the financial statements.
The International Swaps and Derivatives Association (‘ISDA’) master
agreement is our preferred agreement for documenting derivatives
activity. It is common, and our preferred practice, for the parties
involved in a derivative transaction to execute a credit support annex
(‘CSA’) in conjunction with the ISDA master agreement. Under a CSA,
collateral is passed between the parties to mitigate the counterparty
risk inherent in outstanding positions. The majority of our CSAs are with
financial institutional clients.
We manage the counterparty exposure on our OTC derivative contracts
by using collateral agreements with counterparties and netting
agreements. Currently, we do not actively manage our general OTC
derivative counterparty exposure in the credit markets, although we
may manage individual exposures in certain circumstances.
We place strict policy restrictions on collateral types and as a
consequence the types of collateral received and pledged are, by value,
highly liquid and of a strong quality, being predominantly cash.
Where a collateral type is required to be approved outside the collateral
policy, approval is required from a committee of senior representatives
from Markets, Legal and Risk.
ÑSee Note 31 on the financial statements for details regarding legally
enforceable right of offset in the event of counterparty default and collateral
received in respect of derivatives.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 179 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Personal lending
| Total personal lending for loans and advances to customers at amortised cost by stage distribution | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||
| Gross carrying amount | Allowance for ECL | Gross carrying amount | Allowance for ECL | |||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| By portfolio | ||||||||||||||||
| First lien residential mortgages | 365,498 | 18,148 | 2,655 | 386,301 | (58) | (109) | (313) | (480) | 324,703 | 34,177 | 2,450 | 361,330 | (59) | (130) | (284) | (473) |
| Credit cards | 22,781 | 3,260 | 373 | 26,414 | (339) | (731) | (231) | (1,301) | 21,611 | 2,991 | 313 | 24,915 | (268) | (660) | (199) | (1,127) |
| Other personal lending | 58,417 | 2,479 | 917 | 61,813 | (270) | (395) | (351) | (1,016) | 57,432 | 2,751 | 797 | 60,980 | (243) | (368) | (313) | (924) |
| – other personal lending which is secured1 | 39,906 | 517 | 270 | 40,693 | (24) | (19) | (65) | (108) | 39,234 | 887 | 199 | 40,320 | (29) | (23) | (34) | (86) |
| – other personal lending which is unsecured | 18,511 | 1,962 | 647 | 21,120 | (246) | (376) | (286) | (908) | 18,198 | 1,864 | 598 | 20,660 | (214) | (345) | (279) | (838) |
| Total | 446,696 | 23,887 | 3,945 | 474,528 | (667) | (1,235) | (895) | (2,797) | 403,746 | 39,919 | 3,560 | 447,225 | (570) | (1,158) | (796) | (2,524) |
| By legal entity | ||||||||||||||||
| HSBC UK Bank plc | 191,726 | 14,515 | 1,200 | 207,441 | (201) | (315) | (256) | (772) | 152,338 | 31,325 | 1,075 | 184,738 | (148) | (307) | (211) | (666) |
| HSBC Bank plc | 17,416 | 1,076 | 365 | 18,857 | (16) | (14) | (107) | (137) | 23,501 | 1,198 | 324 | 25,023 | (17) | (24) | (99) | (140) |
| The Hongkong and Shanghai Banking Corporation Limited | 201,779 | 6,407 | 1,108 | 209,294 | (199) | (432) | (170) | (801) | 191,614 | 5,519 | 1,170 | 198,303 | (174) | (385) | (164) | (723) |
| HSBC Bank Middle East Limited | 4,061 | 134 | 47 | 4,242 | (18) | (23) | (29) | (70) | 3,678 | 158 | 40 | 3,876 | (14) | (29) | (30) | (73) |
| HSBC North America Holdings Inc. | 19,607 | 512 | 404 | 20,523 | (4) | (12) | (14) | (30) | 20,851 | 497 | 327 | 21,675 | (4) | (12) | (11) | (27) |
| Grupo Financiero HSBC, S.A. de C.V. | 11,705 | 1,212 | 817 | 13,734 | (229) | (438) | (316) | (983) | 11,016 | 1,172 | 620 | 12,808 | (207) | (400) | (279) | (886) |
| Other trading entities | 402 | 31 | 4 | 437 | — | (1) | (3) | (4) | 748 | 50 | 4 | 802 | (6) | (1) | (2) | (9) |
| Total | 446,696 | 23,887 | 3,945 | 474,528 | (667) | (1,235) | (895) | (2,797) | 403,746 | 39,919 | 3,560 | 447,225 | (570) | (1,158) | (796) | (2,524) |
1‘Other personal lending which is secured’ has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to residential property, which were previously reported as separate line items.
| Total personal lending for loan and other credit-related commitments and financial guarantees by stage distribution | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||||
| Nominal amount | Allowance for ECL | Nominal amount | Allowance for ECL | |||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| HSBC UK Bank plc | 55,615 | 803 | 43 | 56,461 | (15) | (5) | — | (20) | 51,078 | 442 | 47 | 51,567 | (6) | — | (3) | (9) |
| HSBC Bank plc | 1,819 | 28 | — | 1,847 | (1) | — | — | (1) | 1,605 | 7 | 2 | 1,614 | — | — | — | — |
| The Hongkong and Shanghai Banking Corporation<br><br>Limited | 204,293 | 1,025 | 47 | 205,365 | (5) | — | — | (5) | 189,737 | 1,165 | 35 | 190,937 | (4) | — | (2) | (6) |
| HSBC Bank Middle East Limited | 2,542 | 10 | — | 2,552 | — | — | — | — | 2,452 | 7 | — | 2,459 | — | — | — | — |
| HSBC North America Holdings Inc. | 2,172 | 75 | 1 | 2,248 | — | — | — | — | 3,707 | 68 | 2 | 3,777 | — | — | — | — |
| Grupo Financiero HSBC, S.A. de C.V. | 4,970 | — | — | 4,970 | (2) | — | — | (2) | 3,892 | — | — | 3,892 | (7) | — | — | (7) |
| Other trading entities | 529 | 4 | 1 | 534 | — | — | — | — | 434 | 2 | — | 436 | — | — | — | — |
| Total | 271,940 | 1,945 | 92 | 273,977 | (23) | (5) | — | (28) | 252,905 | 1,691 | 86 | 254,682 | (17) | — | (5) | (22) |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||||
| --- | ||||||||||||||||
| 180 | ||||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Credit risk |
The following disclosure provides a reconciliation by stage of the Group’s personal lending gross carrying/nominal amount and allowances for loans and advances to customers, including loan commitments and financial
guarantees.
In addition, three reconciliations by stage of the Group’s gross carrying/nominal amount and allowances for first lien mortgages, credit cards and other personal lending, including loan commitments and financial
guarantees, have been included following the adoption of the recommendations of the DECL Taskforce’s third report in 2023.
| Personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Audited) | 2025 | 2024 | ||||||||||||||
| Non-credit impaired | Credit impaired | Non-credit impaired | Credit impaired | |||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |||||||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan | 656,651 | (587) | 41,610 | (1,158) | 3,646 | (801) | 701,907 | (2,546) | 650,823 | (602) | 50,955 | (1,434) | 3,860 | (856) | 705,638 | (2,892) |
| Transfers of financial instruments: | 7,203 | (664) | (9,466) | 1,242 | 2,263 | (578) | — | — | (2,023) | (1,045) | (345) | 1,477 | 2,368 | (432) | — | — |
| – transfers from stage 1 to stage 2 | (41,104) | 225 | 41,104 | (225) | — | — | — | — | (45,220) | 246 | 45,220 | (246) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 48,706 | (861) | (48,706) | 861 | — | — | — | — | 43,549 | (1,247) | (43,549) | 1,247 | — | — | — | — |
| – transfers to stage 3 | (663) | 11 | (2,655) | 756 | 3,318 | (767) | — | — | (743) | 9 | (2,715) | 685 | 3,458 | (694) | — | — |
| – transfers from stage 3 | 264 | (39) | 791 | (150) | (1,055) | 189 | — | — | 391 | (53) | 699 | (209) | (1,090) | 262 | — | — |
| Net remeasurement of ECL arising from<br><br>transfer of stage | — | 411 | — | (378) | — | (9) | — | 24 | — | 745 | — | (605) | — | (132) | — | 8 |
| Changes due to modifications not<br><br>derecognised | — | — | — | — | — | — | — | — | — | — | — | — | (25) | — | (25) | — |
| Net new and further lending/repayments | 41,379 | (7) | (8,622) | 310 | (467) | 78 | 32,290 | 381 | 29,789 | (17) | (7,889) | 278 | (796) | 470 | 21,104 | 731 |
| Change to risk parameters – credit quality | — | 209 | — | (1,165) | — | (1,141) | — | (2,097) | — | 251 | — | (874) | — | (1,437) | — | (2,060) |
| Changes to models used for ECL calculation | — | (29) | — | (5) | — | (16) | — | (50) | — | 29 | — | (109) | — | (20) | — | (100) |
| Assets written off | — | — | — | — | (1,641) | 1,641 | (1,641) | 1,641 | — | — | — | — | (1,534) | 1,534 | (1,534) | 1,534 |
| Foreign exchange and others1,2,3,4 | 13,403 | (23) | 2,310 | (86) | 236 | (69) | 15,949 | (178) | (21,938) | 52 | (1,111) | 109 | (227) | 72 | (23,276) | 233 |
| At 31 Dec | 718,636 | (690) | 25,832 | (1,240) | 4,037 | (895) | 748,505 | (2,825) | 656,651 | (587) | 41,610 | (1,158) | 3,646 | (801) | 701,907 | (2,546) |
| ECL income statement change for the<br><br>period | 584 | (1,238) | (1,088) | (1,742) | 1,008 | (1,310) | (1,119) | (1,421) | ||||||||
| Recoveries | 243 | 220 | ||||||||||||||
| Others | 19 | (32) | ||||||||||||||
| Total ECL income statement change for<br><br>the period | (1,480) | (1,233) |
1At 31 December 2025, total includes $2.7bn (31 December 2024: $0.8bn) of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of $16m (31 December
2024: $23m), reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 355.
2This includes $7.2bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $7m in relation to disposal of our retained portfolio of home and other retail loans in France as disclosed in Note 23 on page
355.
3At 31 December 2024, total includes $6.4bn of nominal amount and $1m of corresponding allowance for ECL related to derecognition of loan commitments and financial guarantees following the sale of our banking business in Canada
during 2024.
4At December 2024, total includes $2.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our business in Argentina during 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 181 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
During the year, there was a net transfer from stage 2 to stage 1 of $7,602m gross carrying/nominal amounts. This was mainly driven by model
recalibration for retail portfolios in HSBC UK ($11,245m) where the PD was aligned to the most recent observed performance. This was partly
offset by a net transfer from stage 1 to stage 2 in Hong Kong ($1,152m) primarily due to a new mortgage model implementation and in Mexico
($1,042m) within the unsecured lending portfolios.
ÑA summary of basis of preparation is available on page 158.
| First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to<br><br>customers including loan commitments and financial guarantees | ||||||||
|---|---|---|---|---|---|---|---|---|
| Non-credit impaired | Credit impaired | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 344,676 | (58) | 34,341 | (130) | 2,474 | (285) | 381,491 | (473) |
| Transfers of financial instruments: | 10,647 | (89) | (11,388) | 82 | 741 | 7 | — | — |
| – transfers from stage 1 to stage 2 | (29,872) | 9 | 29,872 | (9) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 40,658 | (84) | (40,658) | 84 | — | — | — | — |
| – transfers to stage 3 | (289) | — | (1,146) | 50 | 1,435 | (50) | — | — |
| – transfers from stage 3 | 150 | (14) | 544 | (43) | (694) | 57 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 52 | — | (31) | — | (1) | — | 20 |
| Net new and further lending/repayments | 20,746 | (4) | (6,856) | 29 | (657) | 28 | 13,233 | 53 |
| Change to risk parameters – credit quality | — | 39 | — | (43) | — | (104) | — | (108) |
| Changes to models used for ECL calculation | — | 5 | — | (4) | — | — | — | 1 |
| Assets written off | — | — | — | — | (63) | 63 | (63) | 63 |
| Foreign exchange and others1,2 | 12,254 | (5) | 2,190 | (11) | 176 | (20) | 14,620 | (36) |
| At 31 Dec 2025 | 388,323 | (60) | 18,287 | (108) | 2,671 | (312) | 409,281 | (480) |
| ECL income statement change for the period | 92 | (49) | (77) | (34) | ||||
| Recoveries | 6 | |||||||
| Others | 4 | |||||||
| Total ECL income statement change for the<br><br>period | (24) |
1Total includes $2.3bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding
allowance for ECL of $2m, including business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 355.
2This includes $0.4bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $1m in relation to disposal of our retained
portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.
| First lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to<br><br>customers including loan commitments and financial guarantees (continued) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Non-credit impaired | Credit impaired | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 340,764 | (109) | 38,513 | (202) | 2,258 | (264) | 381,535 | (575) |
| Transfers of financial instruments: | (3,561) | (232) | 2,694 | 232 | 867 | — | — | — |
| – transfers from stage 1 to stage 2 | (33,524) | 23 | 33,524 | (23) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 30,113 | (244) | (30,113) | 244 | — | — | — | — |
| – transfers to stage 3 | (290) | 6 | (1,127) | 90 | 1,417 | (96) | — | — |
| – transfers from stage 3 | 140 | (17) | 410 | (79) | (550) | 96 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 163 | — | (152) | — | (30) | — | (19) |
| Net new and further lending/repayments | 14,008 | 20 | (6,336) | 26 | (523) | 33 | 7,149 | 79 |
| Change to risk parameters – credit quality | — | 115 | — | (73) | — | (103) | — | (61) |
| Changes to models used for ECL calculation | — | (8) | — | 29 | — | 1 | — | 22 |
| Assets written off | — | — | — | — | (63) | 63 | (63) | 63 |
| Foreign exchange and others | (6,535) | (7) | (530) | 10 | (65) | 15 | (7,130) | 18 |
| At 31 Dec 2024 | 344,676 | (58) | 34,341 | (130) | 2,474 | (285) | 381,491 | (473) |
| ECL income statement change for the period | 290 | (170) | (99) | 21 | ||||
| Recoveries | 7 | |||||||
| Others | (1) | |||||||
| Total ECL income statement change for the period | 27 | |||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
| --- | ||||||||
| 182 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Credit risk | ||||||||
| Credit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan<br><br>commitments | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Non-credit impaired | Credit impaired | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 156,312 | (280) | 3,760 | (658) | 343 | (199) | 160,415 | (1,137) |
| Transfers of financial instruments: | (2,134) | (381) | 1,322 | 742 | 812 | (361) | — | — |
| – transfers from stage 1 to stage 2 | (7,206) | 144 | 7,206 | (144) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 5,138 | (518) | (5,138) | 518 | — | — | — | — |
| – transfers to stage 3 | (122) | 3 | (828) | 408 | 950 | (411) | — | — |
| – transfers from stage 3 | 56 | (10) | 82 | (40) | (138) | 50 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 255 | — | (246) | — | (4) | — | 5 |
| Changes due to modifications not derecognised | — | — | — | — | — | — | — | — |
| Net new and further lending/repayments | 5,503 | 61 | (758) | 108 | 103 | 34 | 4,848 | 203 |
| Change to risk parameters – credit quality | — | 39 | — | (640) | — | (517) | — | (1,118) |
| Changes to models used for ECL calculation | — | (34) | — | — | — | (17) | — | (51) |
| Assets written off | — | — | — | — | (847) | 847 | (847) | 847 |
| Foreign exchange and others | 4,118 | (14) | 147 | (43) | 23 | (14) | 4,288 | (71) |
| At 31 Dec 2025 | 163,799 | (354) | 4,471 | (737) | 434 | (231) | 168,704 | (1,322) |
| ECL income statement change for the period | 321 | (778) | (504) | (961) | ||||
| Recoveries | 123 | |||||||
| Others | (5) | |||||||
| Total ECL income statement change for the<br><br>period | (843) | |||||||
| At 1 Jan 2024 | 153,292 | (253) | 6,547 | (698) | 450 | (144) | 160,289 | (1,095) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Transfers of financial instruments: | 796 | (453) | (1,469) | 717 | 673 | (264) | — | — |
| – transfers from stage 1 to stage 2 | (6,427) | 129 | 6,427 | (129) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 7,255 | (569) | (7,255) | 569 | — | — | — | — |
| – transfers to stage 3 | (179) | 2 | (765) | 327 | 944 | (329) | — | — |
| – transfers from stage 3 | 147 | (15) | 124 | (50) | (271) | 65 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 280 | — | (256) | — | (45) | — | (21) |
| Changes due to modifications not derecognised | — | — | — | — | (2) | — | (2) | — |
| Net new and further lending/repayments | 9,604 | 18 | (1,122) | 127 | (1) | 194 | 8,481 | 339 |
| Change to risk parameters – credit quality | — | 79 | — | (476) | — | (694) | — | (1,091) |
| Changes to models used for ECL calculation | — | 22 | — | (122) | — | 1 | — | (99) |
| Assets written off | — | — | — | — | (736) | 736 | (736) | 736 |
| Foreign exchange and others1 | (7,380) | 27 | (196) | 50 | (41) | 17 | (7,617) | 94 |
| At 31 Dec 2024 | 156,312 | (280) | 3,760 | (658) | 343 | (199) | 160,415 | (1,137) |
| ECL income statement change for the period | 399 | (727) | (544) | (872) | ||||
| Recoveries | 106 | |||||||
| Others | (10) | |||||||
| Total ECL income statement change for the period | (776) |
1Total includes $4.5bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada and our business in Argentina during 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 183 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Credit risk | ||||||||
| Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers<br><br>including loan commitments and financial guarantees | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Non-credit impaired | Credit impaired | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 155,663 | (249) | 3,509 | (370) | 829 | (317) | 160,001 | (936) |
| Transfers of financial instruments: | (1,310) | (194) | 600 | 418 | 710 | (224) | — | — |
| – transfers from stage 1 to stage 2 | (4,026) | 72 | 4,026 | (72) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 2,910 | (259) | (2,910) | 259 | — | — | — | — |
| – transfers to stage 3 | (252) | 8 | (681) | 298 | 933 | (306) | — | — |
| – transfers from stage 3 | 58 | (15) | 165 | (67) | (223) | 82 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 104 | — | (101) | — | (4) | — | (1) |
| Changes due to modifications not derecognised | — | — | — | — | — | — | — | — |
| Net new and further lending/repayments | 15,130 | (64) | (1,008) | 173 | 87 | 16 | 14,209 | 125 |
| Change to risk parameters – credit quality | — | 131 | — | (482) | — | (520) | — | (871) |
| Changes to models used for ECL calculation | — | — | — | (1) | — | 1 | — | — |
| Assets written off | — | — | — | — | (731) | 731 | (731) | 731 |
| Foreign exchange and others1,2 | (2,969) | (4) | (27) | (32) | 37 | (35) | (2,959) | (71) |
| At 31 Dec 2025 | 166,514 | (276) | 3,074 | (395) | 932 | (352) | 170,520 | (1,023) |
| ECL income statement change for the period | 171 | (411) | (507) | (747) | ||||
| Recoveries | 114 | |||||||
| Others | 20 | |||||||
| Total ECL income statement change for the<br><br>period | (613) |
1Total includes $0.4bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $11m,
reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 355.
2This includes $6.8bn of gross carrying loans and advances to customers and corresponding allowance for ECL of $6m in relation to disposal of our retained
portfolio of home and other retail loans in France as disclosed in Note 23 on page 355.
| Other personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers<br><br>including loan commitments and financial guarantees (continued) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Non-credit impaired | Credit impaired | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | Gross<br><br>carrying/<br><br>nominal<br><br>amount | Allowance<br><br>for ECL | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 156,767 | (240) | 5,895 | (534) | 1,152 | (448) | 163,814 | (1,222) |
| Transfers of financial instruments: | 742 | (360) | (1,570) | 528 | 828 | (168) | — | — |
| – transfers from stage 1 to stage 2 | (5,269) | 94 | 5,269 | (94) | — | — | — | — |
| – transfers from stage 2 to stage 1 | 6,181 | (434) | (6,181) | 434 | — | — | — | — |
| – transfers to stage 3 | (274) | 1 | (823) | 268 | 1,097 | (269) | — | — |
| – transfers from stage 3 | 104 | (21) | 165 | (80) | (269) | 101 | — | — |
| Net remeasurement of ECL arising from transfer of<br><br>stage | — | 302 | — | (197) | — | (57) | — | 48 |
| Changes due to modifications not derecognised | — | — | — | — | (23) | — | (23) | — |
| Net new and further lending/repayments | 6,177 | (55) | (431) | 125 | (272) | 243 | 5,474 | 313 |
| Change to risk parameters – credit quality | — | 57 | — | (325) | — | (640) | — | (908) |
| Changes to models used for ECL calculation | — | 15 | — | (16) | — | (22) | — | (23) |
| Assets written off | — | — | — | — | (735) | 735 | (735) | 735 |
| Foreign exchange and others1,2 | (8,023) | 32 | (385) | 49 | (121) | 40 | (8,529) | 121 |
| At 31 Dec 2024 | 155,663 | (249) | 3,509 | (370) | 829 | (317) | 160,001 | (936) |
| ECL income statement change for the period | 319 | (413) | (476) | (570) | ||||
| Recoveries | 107 | |||||||
| Others | (21) | |||||||
| Total ECL income statement change for the period | (484) |
1Total includes $0.3bn of gross carrying loans and advances, which were classified to assets held for sale, and a corresponding allowance for ECL of $10m,
reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 355.
2Total includes $4.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in
Canada during 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 184 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Gross carrying amount | Allowance for ECL | |||||||||
| PD range1,2 | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | ECL<br><br>coverage | |
| % | $m | $m | $m | $m | $m | $m | $m | $m | % | |
| First lien residential<br><br>mortgages | 365,498 | 18,148 | 2,655 | 386,301 | (58) | (109) | (313) | (480) | 0.1 | |
| – Band 1 | 0.000 to 0.250 | 251,963 | 1,147 | — | 253,110 | (14) | (4) | — | (18) | — |
| – Band 2 | 0.251 to 0.500 | 81,972 | 1,911 | — | 83,883 | (15) | (5) | — | (20) | — |
| – Band 3 | 0.501 to 1.500 | 26,508 | 9,975 | — | 36,483 | (11) | (21) | — | (32) | 0.1 |
| – Band 4 | 1.501 to 5.000 | 4,458 | 3,160 | — | 7,618 | (16) | (15) | — | (31) | 0.4 |
| – Band 5 | 5.001 to 20.000 | 327 | 1,130 | — | 1,457 | — | (11) | — | (11) | 0.8 |
| – Band 6 | 20.001 to 99.999 | 270 | 825 | — | 1,095 | (2) | (53) | — | (55) | 5.0 |
| – Band 7 | 100.000 | — | — | 2,655 | 2,655 | — | — | (313) | (313) | 11.8 |
| Credit cards | 22,781 | 3,260 | 373 | 26,414 | (339) | (731) | (231) | (1,301) | 4.9 | |
| – Band 1 | 0.000 to 0.250 | 10,033 | 1 | — | 10,034 | (25) | — | — | (25) | 0.2 |
| – Band 2 | 0.251 to 0.500 | 1,583 | 5 | — | 1,588 | (11) | (1) | — | (12) | 0.8 |
| – Band 3 | 0.501 to 1.500 | 6,389 | 86 | — | 6,475 | (89) | (9) | — | (98) | 1.5 |
| – Band 4 | 1.501 to 5.000 | 3,960 | 834 | — | 4,794 | (125) | (75) | — | (200) | 4.2 |
| – Band 5 | 5.001 to 20.000 | 799 | 1,736 | — | 2,535 | (86) | (279) | — | (365) | 14.4 |
| – Band 6 | 20.001 to 99.999 | 17 | 598 | — | 615 | (3) | (367) | — | (370) | 60.2 |
| – Band 7 | 100.000 | — | — | 373 | 373 | — | — | (231) | (231) | 61.9 |
| Other personal lending | 58,417 | 2,479 | 917 | 61,813 | (270) | (395) | (351) | (1,016) | 1.6 | |
| – Band 1 | 0.000 to 0.250 | 25,714 | 3 | — | 25,717 | (26) | — | — | (26) | 0.1 |
| – Band 2 | 0.251 to 0.500 | 5,680 | 18 | — | 5,698 | (5) | — | — | (5) | 0.1 |
| – Band 3 | 0.501 to 1.500 | 13,964 | 142 | — | 14,106 | (44) | (1) | — | (45) | 0.3 |
| – Band 4 | 1.501 to 5.000 | 11,219 | 387 | — | 11,606 | (114) | (13) | — | (127) | 1.1 |
| – Band 5 | 5.001 to 20.000 | 1,443 | 1,235 | — | 2,678 | (79) | (132) | — | (211) | 7.9 |
| – Band 6 | 20.001 to 99.999 | 397 | 694 | — | 1,091 | (2) | (249) | — | (251) | 23.0 |
| – Band 7 | 100.000 | — | — | 917 | 917 | — | — | (351) | (351) | 38.3 |
| At 31 Dec 2025 | 446,696 | 23,887 | 3,945 | 474,528 | (667) | (1,235) | (895) | (2,797) | 0.6 | |
| First lien residential<br><br>mortgages | 324,703 | 34,177 | 2,450 | 361,330 | (59) | (130) | (284) | (473) | 0.1 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| – Band 1 | 0.000 to 0.250 | 234,451 | 1,820 | — | 236,271 | (15) | (4) | — | (19) | — |
| – Band 2 | 0.251 to 0.500 | 64,340 | 11,816 | — | 76,156 | (10) | (9) | — | (19) | — |
| – Band 3 | 0.501 to 1.500 | 22,005 | 14,631 | — | 36,636 | (16) | (25) | — | (41) | 0.1 |
| – Band 4 | 1.501 to 5.000 | 3,668 | 3,990 | — | 7,658 | (17) | (27) | — | (44) | 0.6 |
| – Band 5 | 5.001 to 20.000 | 117 | 1,178 | — | 1,295 | — | (13) | — | (13) | 1.0 |
| – Band 6 | 20.001 to 99.999 | 122 | 742 | — | 864 | (1) | (52) | — | (53) | 6.1 |
| – Band 7 | 100.000 | — | — | 2,450 | 2,450 | — | — | (284) | (284) | 11.6 |
| Credit cards | 21,611 | 2,991 | 313 | 24,915 | (268) | (660) | (199) | (1,127) | 4.5 | |
| – Band 1 | 0.000 to 0.250 | 10,051 | 1 | — | 10,052 | (26) | — | — | (26) | 0.3 |
| – Band 2 | 0.251 to 0.500 | 2,340 | 4 | — | 2,344 | (15) | (1) | — | (16) | 0.7 |
| – Band 3 | 0.501 to 1.500 | 5,113 | 23 | — | 5,136 | (72) | (5) | — | (77) | 1.5 |
| – Band 4 | 1.501 to 5.000 | 3,847 | 1,013 | — | 4,860 | (123) | (103) | — | (226) | 4.7 |
| – Band 5 | 5.001 to 20.000 | 260 | 1,526 | — | 1,786 | (32) | (263) | — | (295) | 16.5 |
| – Band 6 | 20.001 to 99.999 | — | 424 | — | 424 | — | (288) | — | (288) | 67.9 |
| – Band 7 | 100 | — | — | 313 | 313 | — | — | (199) | (199) | 63.6 |
| Other personal lending | 57,432 | 2,751 | 797 | 60,980 | (243) | (368) | (313) | (924) | 1.5 | |
| – Band 1 | 0.000 to 0.250 | 29,124 | 19 | — | 29,143 | (30) | — | — | (30) | 0.1 |
| – Band 2 | 0.251 to 0.500 | 6,109 | 242 | — | 6,351 | (9) | (1) | — | (10) | 0.2 |
| – Band 3 | 0.501 to 1.500 | 11,702 | 121 | — | 11,823 | (37) | (3) | — | (40) | 0.3 |
| – Band 4 | 1.501 to 5.000 | 9,006 | 660 | — | 9,666 | (95) | (25) | — | (120) | 1.2 |
| – Band 5 | 5.001 to 20.000 | 1,433 | 1,076 | — | 2,509 | (70) | (111) | — | (181) | 7.2 |
| – Band 6 | 20.001 to 99.999 | 58 | 633 | — | 691 | (2) | (228) | — | (230) | 33.3 |
| – Band 7 | 100.000 | — | — | 797 | 797 | — | — | (313) | (313) | 39.3 |
| At 31 Dec 2024 | 403,746 | 39,919 | 3,560 | 447,225 | (570) | (1,158) | (796) | (2,524) | 0.6 |
112-month point in time adjusted for multiple economic scenarios.
2PD bands do not consider the impact of any management judgemental adjustments on stage or allowances for ECL including the impact of new models not yet
formally implemented. For a list of management judgemental adjustments see page 153.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 185 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Credit risk | ||||||||||
| Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nominal amount | Allowance for ECL | |||||||||
| PD range1 | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | ECL<br><br>coverage | |
| % | $m | $m | $m | $m | $m | $m | $m | $m | % | |
| Loan and other credit-<br><br>related commitments | 270,494 | 1,945 | 92 | 272,531 | (22) | (5) | — | (27) | — | |
| – Band 1 | 0.000 to 0.250 | 218,170 | 98 | — | 218,268 | (9) | — | — | (9) | — |
| – Band 2 | 0.251 to 0.500 | 11,412 | 76 | — | 11,488 | (2) | — | — | (2) | — |
| – Band 3 | 0.501 to 1.500 | 33,294 | 423 | — | 33,717 | (7) | — | — | (7) | — |
| – Band 4 | 1.501 to 5.000 | 6,694 | 615 | — | 7,309 | (3) | (3) | — | (6) | 0.1 |
| – Band 5 | 5.001 to 20.000 | 793 | 586 | — | 1,379 | (1) | — | — | (1) | 0.1 |
| – Band 6 | 20.001 to 99.999 | 131 | 147 | — | 278 | — | (2) | — | (2) | 0.7 |
| – Band 7 | 100.000 | — | — | 92 | 92 | — | — | — | — | — |
| Financial guarantees | 1,446 | — | — | 1,446 | (1) | — | — | (1) | 0.1 | |
| – Band 1 | 0.000 to 0.250 | 1,353 | — | — | 1,353 | (1) | — | — | (1) | 0.1 |
| – Band 2 | 0.251 to 0.500 | 30 | — | — | 30 | — | — | — | — | — |
| – Band 3 | 0.501 to 1.500 | 44 | — | — | 44 | — | — | — | — | — |
| – Band 4 | 1.501 to 5.000 | 19 | — | — | 19 | — | — | — | — | — |
| – Band 5 | 5.001 to 20.000 | — | — | — | — | — | — | — | — | — |
| – Band 6 | 20.001 to 99.999 | — | — | — | — | — | — | — | — | — |
| – Band 7 | 100.000 | — | — | — | — | — | — | — | — | — |
| At 31 Dec 2025 | 271,940 | 1,945 | 92 | 273,977 | (23) | (5) | — | (28) | — | |
| Loan and other credit-<br><br>related commitments | 251,489 | 1,680 | 86 | 253,255 | (17) | — | (5) | (22) | — | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| – Band 1 | 0.000 to 0.250 | 199,314 | 65 | — | 199,379 | (9) | — | — | (9) | — |
| – Band 2 | 0.251 to 0.500 | 14,409 | 178 | — | 14,587 | (2) | — | — | (2) | — |
| – Band 3 | 0.501 to 1.500 | 28,081 | 389 | — | 28,470 | (1) | — | — | (1) | — |
| – Band 4 | 1.501 to 5.000 | 8,431 | 463 | — | 8,894 | (3) | — | — | (3) | — |
| – Band 5 | 5.001 to 20.000 | 800 | 484 | — | 1,284 | (2) | — | — | (2) | 0.2 |
| – Band 6 | 20.001 to 99.999 | 454 | 101 | — | 555 | — | — | — | — | — |
| – Band 7 | 100.000 | — | — | 86 | 86 | — | — | (5) | (5) | 5.8 |
| Financial guarantees | 1,416 | 11 | — | 1,427 | — | — | — | — | — | |
| – Band 1 | 0.000 to 0.250 | 743 | — | — | 743 | — | — | — | — | — |
| – Band 2 | 0.251 to 0.500 | 389 | — | — | 389 | — | — | — | — | — |
| – Band 3 | 0.501 to 1.500 | 55 | — | — | 55 | — | — | — | — | — |
| – Band 4 | 1.501 to 5.000 | 220 | — | — | 220 | — | — | — | — | — |
| – Band 5 | 5.001 to 20.000 | 3 | 11 | — | 14 | — | — | — | — | — |
| – Band 6 | 20.001 to 99.999 | 6 | — | — | 6 | — | — | — | — | — |
| – Band 7 | 100.000 | — | — | — | — | — | — | — | — | — |
| At 31 Dec 2024 | 252,905 | 1,691 | 86 | 254,682 | (17) | — | (5) | (22) | — |
112-month point in time adjusted for multiple economic scenarios.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 186 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
Supplementary information
| Wholesale lending – loans and advances to customers at amortised cost by country/territory | ||||||||
|---|---|---|---|---|---|---|---|---|
| Gross carrying amount | Allowance for ECL | |||||||
| Corporate<br><br>and<br><br>commercial | of which: real<br><br>estate and<br><br>construction1 | Non-bank<br><br>financial<br><br>institutions | Total | Corporate<br><br>and<br><br>commercial | of which: real<br><br>estate and<br><br>construction1 | Non-bank<br><br>financial<br><br>institutions | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| UK | 116,284 | 21,104 | 27,232 | 143,516 | (1,270) | (286) | (127) | (1,397) |
| –of which: HSBC UK Bank<br><br>plc (ring-fenced bank) | 93,186 | 20,112 | 11,518 | 104,704 | (1,173) | (253) | (84) | (1,257) |
| –of which: HSBC Bank plc<br><br>(non-ring-fenced bank) | 23,098 | 992 | 15,714 | 38,812 | (97) | (33) | (43) | (140) |
| France | 25,655 | 4,032 | 10,556 | 36,211 | (379) | (90) | (28) | (407) |
| Germany | 5,883 | 431 | 142 | 6,025 | (175) | (10) | — | (175) |
| Hong Kong | 114,792 | 37,890 | 18,591 | 133,383 | (3,515) | (1,991) | (117) | (3,632) |
| Australia | 14,472 | 4,725 | 4,627 | 19,099 | (28) | (3) | (1) | (29) |
| India | 13,789 | 2,131 | 6,687 | 20,476 | (53) | (5) | (7) | (60) |
| Indonesia | 3,063 | 172 | 573 | 3,636 | (74) | — | (1) | (75) |
| Mainland China | 27,663 | 5,254 | 12,272 | 39,935 | (281) | (197) | (4) | (285) |
| Malaysia | 5,560 | 1,059 | 486 | 6,046 | (34) | (7) | — | (34) |
| Singapore | 16,619 | 2,878 | 1,912 | 18,531 | (126) | (54) | (1) | (127) |
| Taiwan | 4,685 | 69 | — | 4,685 | (1) | — | — | (1) |
| Egypt | 806 | 34 | 41 | 847 | (111) | (24) | — | (111) |
| UAE | 14,082 | 1,792 | 2,714 | 16,796 | (535) | (333) | (42) | (577) |
| US | 22,054 | 2,355 | 9,916 | 31,970 | (276) | (80) | (10) | (286) |
| Mexico | 11,655 | 683 | 1,133 | 12,788 | (263) | (35) | (23) | (286) |
| Other | 27,443 | 3,243 | 3,176 | 30,619 | (405) | (148) | (8) | (413) |
| At 31 Dec 2025 | 424,505 | 87,852 | 100,058 | 524,563 | (7,526) | (3,263) | (369) | (7,895) |
| UK | 102,245 | 17,540 | 21,771 | 124,016 | (1,412) | (289) | (234) | (1,646) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| –of which: HSBC UK Bank<br><br>plc (ring-fenced bank) | 79,833 | 16,722 | 10,268 | 90,101 | (1,146) | (260) | (54) | (1,200) |
| –of which: HSBC Bank plc<br><br>(non-ring-fenced bank) | 22,412 | 818 | 11,503 | 33,915 | (266) | (29) | (180) | (446) |
| France | 25,950 | 3,986 | 7,222 | 33,172 | (257) | (42) | (9) | (266) |
| Germany | 6,256 | 264 | 421 | 6,677 | (153) | — | — | (153) |
| Hong Kong | 118,332 | 42,042 | 17,846 | 136,178 | (2,922) | (1,494) | (112) | (3,034) |
| Australia | 12,532 | 4,509 | 2,931 | 15,463 | (30) | (3) | — | (30) |
| India | 12,540 | 2,581 | 6,425 | 18,965 | (45) | (5) | (6) | (51) |
| Indonesia | 3,132 | 184 | 356 | 3,488 | (109) | (44) | — | (109) |
| Mainland China | 29,930 | 5,326 | 8,044 | 37,974 | (222) | (117) | (6) | (228) |
| Malaysia | 5,773 | 1,067 | 278 | 6,051 | (40) | (10) | — | (40) |
| Singapore | 17,267 | 3,266 | 1,830 | 19,097 | (234) | (80) | (1) | (235) |
| Taiwan | 3,848 | 60 | — | 3,848 | — | — | — | — |
| Egypt | 777 | 32 | 51 | 828 | (115) | (20) | — | (115) |
| UAE | 13,278 | 1,809 | 1,589 | 14,867 | (408) | (258) | — | (408) |
| US | 24,084 | 4,028 | 10,348 | 34,432 | (246) | (106) | (47) | (293) |
| Mexico | 10,318 | 525 | 1,407 | 11,725 | (201) | (9) | (11) | (212) |
| Other | 24,422 | 2,844 | 1,945 | 26,367 | (361) | (121) | (10) | (371) |
| At 31 Dec 2024 | 410,684 | 90,063 | 82,464 | 493,148 | (6,755) | (2,598) | (436) | (7,191) |
1Real estate lending within this disclosure corresponds solely to the industry of the borrower. Commercial real estate on page 174 includes borrowers in multiple
industries investing in income-producing assets and, to a lesser extent, their construction and development.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 187 | ||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| Credit risk | ||||||||||||||
| Personal lending – loans and advances to customers at amortised cost by country/territory | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| Gross carrying amount | Allowance for ECL | |||||||||||||
| First lien<br><br>residential<br><br>mortgages | Credit<br><br>cards | Other<br><br>personal<br><br>lending | Total | First lien<br><br>residential<br><br>mortgages | Credit<br><br>cards | Other<br><br>personal<br><br>lending | Total | |||||||
| $m | $m | $m | $m | $m | $m | $m | $m | |||||||
| UK | 191,180 | 9,083 | 15,671 | 215,934 | (138) | (345) | (324) | (807) | ||||||
| –of which: HSBC UK Bank plc (ring-fenced bank) | 186,776 | 8,992 | 11,673 | 207,441 | (134) | (344) | (294) | (772) | ||||||
| – of which: HSBC Bank plc (non-ring-fenced<br><br>bank) | 4,404 | 91 | 3,998 | 8,493 | (4) | (1) | (30) | (35) | ||||||
| France | 22 | — | 3 | 25 | (12) | — | (2) | (14) | ||||||
| Hong Kong | 108,200 | 10,379 | 25,551 | 144,130 | (4) | (311) | (170) | (485) | ||||||
| Australia | 25,619 | 288 | 19 | 25,926 | (8) | (8) | — | (16) | ||||||
| India | 2,344 | 323 | 667 | 3,334 | (3) | (20) | (3) | (26) | ||||||
| Indonesia | 36 | 152 | 58 | 246 | (2) | (8) | (5) | (15) | ||||||
| Mainland China | 5,417 | 164 | 402 | 5,983 | (20) | (22) | (6) | (48) | ||||||
| Malaysia | 3,494 | 1,070 | 267 | 4,831 | (16) | (38) | (26) | (80) | ||||||
| Singapore | 6,776 | 691 | 7,415 | 14,882 | — | (38) | (36) | (74) | ||||||
| Taiwan | 6,570 | 437 | 1,123 | 8,130 | — | (5) | (14) | (19) | ||||||
| Egypt | — | 119 | 278 | 397 | — | (1) | (1) | (2) | ||||||
| UAE | 2,456 | 587 | 970 | 4,013 | (5) | (39) | (18) | (62) | ||||||
| US | 19,773 | 183 | 567 | 20,523 | (14) | (14) | (2) | (30) | ||||||
| Mexico | 8,390 | 2,289 | 3,055 | 13,734 | (192) | (415) | (376) | (983) | ||||||
| Other | 6,024 | 649 | 5,767 | 12,440 | (66) | (37) | (33) | (136) | ||||||
| At 31 Dec 2025 | 386,301 | 26,414 | 61,813 | 474,528 | (480) | (1,301) | (1,016) | (2,797) | ||||||
| UK | 170,809 | 8,016 | 13,410 | 192,235 | (139) | (284) | (256) | (679) | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| – of which: HSBC UK Bank plc (ring-fenced bank) | 166,709 | 7,933 | 10,096 | 184,738 | (132) | (283) | (251) | (666) | ||||||
| – of which: HSBC Bank plc (non-ring-fenced<br><br>bank) | 4,100 | 83 | 3,314 | 7,497 | (7) | (1) | (5) | (13) | ||||||
| France | 377 | 1 | 6,600 | 6,978 | (12) | — | (12) | (24) | ||||||
| Hong Kong | 107,759 | 10,165 | 21,511 | 139,435 | (5) | (291) | (130) | (426) | ||||||
| Australia | 22,154 | 372 | 35 | 22,561 | (7) | (8) | (1) | (16) | ||||||
| India | 1,984 | 265 | 600 | 2,849 | (3) | (14) | (4) | (21) | ||||||
| Indonesia | 46 | 142 | 181 | 369 | (3) | (6) | (5) | (14) | ||||||
| Mainland China | 6,087 | 227 | 544 | 6,858 | (12) | (33) | (9) | (54) | ||||||
| Malaysia | 3,252 | 938 | 260 | 4,450 | (23) | (36) | (26) | (85) | ||||||
| Singapore | 5,802 | 571 | 6,082 | 12,455 | — | (28) | (28) | (56) | ||||||
| Taiwan | 5,788 | 340 | 1,084 | 7,212 | — | (4) | (11) | (15) | ||||||
| Egypt | — | 89 | 232 | 321 | — | — | (1) | (1) | ||||||
| UAE | 2,082 | 543 | 795 | 3,420 | (3) | (31) | (24) | (58) | ||||||
| US | 21,021 | 195 | 458 | 21,674 | (12) | (14) | (2) | (28) | ||||||
| Mexico | 7,488 | 2,242 | 3,078 | 12,808 | (167) | (339) | (380) | (886) | ||||||
| Other | 6,681 | 809 | 6,110 | 13,600 | (87) | (39) | (35) | (161) | ||||||
| At 31 Dec 2024 | 361,330 | 24,915 | 60,980 | 447,225 | (473) | (1,127) | (924) | (2,524) | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||||||
| --- | ||||||||||||||
| 188 | ||||||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| Credit risk | ||||||||||||||
| Loans and advances to customers and banks – other supplementary information | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At 31 Dec 2025 | At 31 Dec 2024 | |||||||||||||
| Gross<br><br>carrying<br><br>amount | of which:<br><br>stage 3<br><br>and POCI | Allowance<br><br>for ECL | of which:<br><br>stage 3<br><br>and POCI | Change in<br><br>ECL | Write-offs | Recoveries | Gross<br><br>carrying<br><br>amount | of which:<br><br>stage 3<br><br>and POCI | Allowance<br><br>for ECL | of which:<br><br>stage 3<br><br>and POCI | Change in<br><br>ECL | Write-offs | Recoveries | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| First lien residential mortgages | 386,301 | 2,655 | (480) | (313) | (24) | (63) | 6 | 361,330 | 2,450 | (473) | (284) | 33 | (63) | 7 |
| Credit cards | 26,414 | 373 | (1,301) | (231) | (830) | (847) | 123 | 24,915 | 313 | (1,127) | (199) | (804) | (736) | 106 |
| Other personal lending | 61,813 | 917 | (1,016) | (351) | (621) | (731) | 114 | 60,980 | 797 | (924) | (313) | (508) | (735) | 107 |
| – other personal lending which is secured1 | 40,693 | 270 | (108) | (65) | (46) | (35) | 5 | 40,320 | 199 | (86) | (34) | (24) | (36) | 4 |
| – other personal lending which is unsecured | 21,120 | 647 | (908) | (286) | (575) | (696) | 109 | 20,660 | 598 | (838) | (279) | (484) | (699) | 103 |
| Personal lending | 474,528 | 3,945 | (2,797) | (895) | (1,475) | (1,641) | 243 | 447,225 | 3,560 | (2,524) | (796) | (1,279) | (1,534) | 220 |
| – agriculture, forestry and fishing | 7,592 | 355 | (97) | (60) | (11) | (10) | — | 7,033 | 282 | (94) | (46) | 4 | (10) | 1 |
| – mining and quarrying | 6,982 | 126 | (86) | (70) | (58) | (19) | — | 7,592 | 318 | (45) | (32) | 29 | (26) | — |
| – manufacturing | 86,372 | 2,266 | (960) | (741) | (271) | (307) | 16 | 82,724 | 1,487 | (893) | (638) | (170) | (403) | 3 |
| – electricity, gas, steam and air-conditioning supply | 19,322 | 206 | (126) | (85) | (19) | (17) | — | 16,457 | 209 | (122) | (85) | — | — | — |
| – water supply, sewerage, waste management and<br><br>remediation | 2,563 | 112 | (41) | (36) | (22) | (6) | — | 2,961 | 43 | (24) | (16) | 2 | (40) | — |
| – real estate and construction | 87,852 | 10,589 | (3,263) | (2,730) | (1,296) | (574) | 19 | 90,063 | 8,949 | (2,598) | (1,842) | (812) | (1,554) | 12 |
| – wholesale and retail trade, repair of motor vehicles and<br><br>motorcycles | 84,557 | 2,549 | (1,287) | (1,126) | (234) | (286) | 28 | 77,830 | 2,728 | (1,372) | (1,188) | (369) | (337) | 8 |
| – transportation and storage | 20,719 | 307 | (174) | (75) | (40) | (205) | 2 | 22,643 | 417 | (321) | (232) | (104) | (20) | 1 |
| – accommodation and food | 14,389 | 1,436 | (399) | (303) | (124) | (31) | 2 | 14,734 | 1,610 | (299) | (214) | (81) | (27) | — |
| – publishing, audiovisual and broadcasting | 25,347 | 377 | (198) | (108) | (75) | (46) | — | 19,826 | 229 | (158) | (61) | (79) | (75) | 2 |
| – professional, scientific and technical activities | 25,023 | 520 | (218) | (153) | (66) | (89) | 1 | 26,128 | 648 | (266) | (188) | (132) | (174) | 1 |
| – administrative and support services | 19,525 | 570 | (395) | (321) | (151) | (59) | — | 20,117 | 739 | (320) | (254) | (39) | (88) | 1 |
| – public administration and defence, compulsory social<br><br>security | 64 | — | — | — | — | — | — | 64 | — | — | — | — | — | — |
| – education | 2,259 | 40 | (26) | (11) | (2) | (3) | — | 1,596 | 43 | (27) | (16) | (16) | (3) | — |
| – health and care | 4,403 | 98 | (32) | (14) | 3 | (13) | — | 4,030 | 184 | (51) | (25) | (3) | (12) | 1 |
| – arts, entertainment and recreation | 2,313 | 123 | (51) | (42) | (29) | (16) | — | 2,066 | 78 | (35) | (26) | (19) | (22) | — |
| – other services | 6,599 | 311 | (168) | (106) | 44 | (51) | 7 | 7,288 | 327 | (110) | (66) | (82) | (115) | 10 |
| – activities of households | 841 | — | — | — | — | — | — | 589 | — | — | — | — | — | — |
| – extra-territorial organisations and bodies activities | 164 | — | — | — | — | — | — | 118 | — | — | — | — | — | — |
| – government | 7,619 | 121 | (5) | (3) | (1) | — | — | 6,793 | 175 | (7) | (5) | 6 | — | — |
| – asset-backed securities | — | — | — | — | (1) | (14) | — | 32 | — | (13) | — | 1 | — | — |
| Corporate and commercial | 424,505 | 20,106 | (7,526) | (5,984) | (2,353) | (1,746) | 75 | 410,684 | 18,466 | (6,755) | (4,934) | (1,864) | (2,906) | 40 |
| Non-bank financial institutions | 100,058 | 671 | (369) | (294) | (112) | (182) | 2 | 82,464 | 679 | (436) | (361) | (59) | (19) | — |
| Wholesale lending | 524,563 | 20,777 | (7,895) | (6,278) | (2,465) | (1,928) | 77 | 493,148 | 19,145 | (7,191) | (5,295) | (1,923) | (2,925) | 40 |
| Loans and advances to customers | 999,091 | 24,722 | (10,692) | (7,173) | (3,940) | (3,569) | 320 | 940,373 | 22,705 | (9,715) | (6,091) | (3,202) | (4,459) | 260 |
| Loans and advances to banks | 108,469 | 1 | (7) | (1) | 9 | — | — | 102,052 | 2 | (13) | (2) | (1) | — | — |
| At 31 Dec 2025 | 1,107,560 | 24,723 | (10,699) | (7,174) | (3,931) | (3,569) | 320 | 1,042,425 | 22,707 | (9,728) | (6,093) | (3,203) | (4,459) | 260 |
1‘Other personal lending which is secured’ has been expanded to encompass second lien mortgages, motor vehicle finance, and guaranteed loans related to residential property, which were previously reported as separate line items.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 189 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Credit risk |
HSBC Holdings
(Audited)
Credit risk in HSBC Holdings primarily arises from transactions with
Group subsidiaries.
In HSBC Holdings, the maximum exposure to credit risk arises from
two components:
–financial assets on the balance sheet, where maximum exposure
equals the carrying amount (see page 297); and
–financial guarantees and other guarantees, where the maximum
exposure is the maximum that we would have to pay if the
guarantees were called upon (see Note 33).
In the case of our derivative asset balances (see page 297), there is a
legally enforceable right of offset in the event of counterparty default
and where, as a result, there is a net exposure for credit risk purposes.
However, as there is no intention to settle these balances on a net
basis under normal circumstances, they do not qualify for net
presentation for accounting purposes. These offsets also include
collateral received in cash and other financial assets.
The total offset relating to our derivative asset balances was $1.8bn at
31 December 2025 (2024: $3.0bn).
The credit quality of loans and advances and financial investments,
both of which consist of intra-Group lending and US Treasury bills and
bonds, is assessed as ‘strong’, with 100% of the exposure being
neither past due nor impaired (2024: 100%). For further details of credit
quality classification, see page 141.
Treasury risk
ÑSee page 138 for our definition of Treasury risk.
Approach and policy
(Audited)
We manage treasury risks in order to maintain appropriate levels of
capital, liquidity, funding, foreign exchange and non-traded market risk
to support our business strategy, and meet our regulatory and stress
testing-related requirements.
Our approach to treasury risk management is shaped by our
organisational needs and the regulatory, economic and commercial
environment. We aim to maintain a strong capital and liquidity base to
manage inherent business risks and invest in accordance with our
strategy, adhering to both consolidated and local regulatory
requirements at all times.
Our policy is supported by a risk management framework, with further
details provided on page 119.
ÑFor further details, refer to our Pillar 3 Disclosures at 31 December 2025.
Treasury risk management
Key developments in 2025
–The Group continues to maintain and benefit from a healthy capital,
liquidity and funding position, which has been resilient throughout
periods of volatility in the macroeconomic environment and global
markets during 2025. This was further demonstrated by our strong
CET1 performance in the Bank Capital Stress Test published by the
Bank of England as part of the Financial Stability Report on 2
December 2025.
–See page 121 for a summary of key risks including geopolitical and
macroeconomic risks that we are managing.
–The CET1 capital impact of the privatisation of Hang Seng Bank was
a net 110bps in January 2026 (based on the CET1 capital ratio as at
31 December 2025). This included a day one impact on CET1 capital
of around 120bps, partly offset by the release of structural foreign
exchange RWAs, which related to hedging in the run up to the
transaction. These had an adverse impact on CET1 capital of around
10bps at 31 December 2025, which unwound upon the privatisation
taking effect.
ÑFor quantitative disclosures on capital ratios, own funds and risk-weighted
assets (‘RWAs’), see pages 191 to 192. For quantitative disclosures on
liquidity and funding metrics, see pages 194 to 195. For quantitative
disclosures on interest rate risk in the banking book, see pages 197 to 199.
Governance and structure
The Group Treasurer owns all treasury risks, except for pension and
insurance risks. Pension risk is jointly owned with the Group Head of
Performance and Reward, while insurance risk is owned by the Chief
Executive Officer for Global Insurance. The Global Head of Traded and
Treasury Risk Management and Risk Analytics is the risk steward for all
treasury risks.
Treasury risks excluding pension and insurance risks are the
responsibility of the Group Finance Management Meeting (‘GFMM’)
and the Group Risk Committee (‘GRC’). These risks are actively
managed by Global Treasury with support from the Holdings Asset and
Liability Management Committee (‘ALCO’) and local ALCOs, overseen
by Treasury Risk Management and Risk Management Meetings.
Pension risk is monitored through local and regional pension risk
management meetings, with global oversight provided by the Global
Pension Financial Risk Management Meeting, chaired by the
accountable risk steward. Insurance risk is overseen by the Global
Insurance Risk Management Meeting, chaired by the Chief Risk and
Compliance Officer for Global Insurance.
Capital, liquidity and funding risk
management processes
Assessment and risk appetite
Our capital management approach is underpinned by a global capital
risk policy, complemented by frameworks for recovery and resolution
planning and stress testing. The policy sets out our approach to
determining key capital risk appetites including for our CET1 ratio, total
capital, minimum requirements for own funds and eligible liabilities
(‘MREL’), leverage ratio and double leverage. Our internal capital
adequacy assessment process (‘ICAAP’) evaluates the Group’s capital
position, considering both regulatory and internal capital resources and
requirements. Subsidiaries align their ICAAPs with global guidance,
while considering local regulatory regimes to establish their own risk
appetite.
HSBC Holdings provides MREL to its subsidiaries, encompassing both
equity and non-equity capital. These investments are funded by HSBC
Holdings’ own equity capital and MREL-eligible debt. MREL includes
own funds and eligible liabilities that can be written down or converted
into capital resources in order to absorb losses or recapitalise a bank in
the event of its failure. HSBC has three resolution groups – the
European, the Asian and the US, with some smaller entities outside
these groups.
HSBC Holdings seeks to maintain a prudent balance between the
composition of its capital and its investments in subsidiaries.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 190 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
As a matter of long-standing policy, HSBC Holdings retains a
substantial holdings capital buffer comprising cash and other high-
quality liquid assets, which we seek to manage within our target
operating range of $19bn - $24bn.
HSBC maintains an adequate and well-diversified liquidity buffer, as
well as a stable funding base, to meet its liquidity and funding
regulatory requirements. We seek to ensure contractual or contingent
obligations can be met by having the appropriate amount, tenor and
composition of funding and liquidity to support our assets.
We aim to ensure management oversight of liquidity and funding risks
at both Group and entity levels through governance arrangements
aligned with our risk management framework. Liquidity and funding
risks are managed at the operating entity level seeking to adhere to
globally consistent policies, procedures and reporting standards.
Operating entities are required to meet internal minimum requirements
and any applicable regulatory requirements at all times.
Our internal liquidity adequacy assessment process (‘ILAAP’) seeks to
ensure operating entities have strategies, policies, processes and
systems for the identification, measurement, management and
monitoring of liquidity risk across various time horizons, including intra-
day. The ILAAP informs risk appetite setting, and assesses the
capability to manage liquidity and funding effectively in major entities.
Metrics are locally set and managed but undergo global review and
challenge to ensure consistency with the Group’s policies and controls.
Planning and performance
Capital and RWA plans are integral to our annual financial resource
strategy approved by the Board. Monthly forecasts are submitted to
the Group Operating Committee, ensuring ongoing monitoring and
management. The responsibility for global capital allocation principles
rests with the Group Chief Financial Officer, supported by the Group
Capital Management Meeting. This is a specialist forum addressing
capital management, reporting into the Holdings ALCO.
Our internal governance processes aim to enhance discipline over our
investment and capital allocation decisions, helping to ensure that
returns align with management’s objectives. The Group strategically
allocates financial resources to support business execution and fulfil
regulatory and economic capital needs. We assess business returns by
using a return on average tangible equity measure and a related
economic profit measure.
Funding and liquidity are part of the Board-approved financial resource
plan. Key measures include the liquidity coverage ratio (‘LCR’) and net
stable funding ratio (‘NSFR’) and internal liquidity metrics, at the entity
level. We employ a set of measures to help maintain a suitable funding
and liquidity profile such as depositor concentration limits, intra-day
liquidity and forward-looking funding assessments.
ÑFor details on regulatory developments see our Pillar 3 Disclosures at
31 December 2025.
Stress testing and recovery and resolution
planning
HSBC employs stress testing to guide the management of capital and
liquidity required to withstand both internal and external shocks to the
organisation, such as systems failure or a global economic downturn.
In addition to our internal stress tests, HSBC undergoes supervisory
stress testing across various jurisdictions, and results from these tests
are critical for evaluating our internal capital and liquidity needs through
the ICAAP and ILAAP. The outcomes from these assessments
influence the setting of regulatory requirements and inform internally
set management buffers.
Stress tests input into business performance through tangible equity
allocation and prompt a reassessment of business plans when
capital, liquidity or returns fall short of targets. These tests also
inform risk mitigation strategies and aid in recovery and resolution
planning. We maintain recovery plans, including contingency funding
plans for the Group and material entities, outlining potential stress
events that could result in a breach of capital or liquidity buffers.
The Group recovery plan establishes a framework and governance
arrangements to support restoring HSBC to a stable and viable
position, reducing the probability of failure from either specific or
market-wide stresses. The recovery plans of our material entities
provide detailed actions that could be taken to stabilise their financial
position in stress environments.
HSBC is equipped with the necessary capabilities and resources to
help manage the unlikely event that the Group might not be
recoverable and would require resolution by regulators. We are
committed to continuing to improve our recovery and resolution
capabilities, aligning with the BoE’s expectations and Resolvability
Assessment Framework (‘RAF’) requirements.
Measurement of interest rate risk in the
banking book processes
Interest rate risk in the banking book (‘IRRBB’) refers to the potential
negative impact on earnings or capital due to fluctuations in market
interest rates or changes in the expected repricing of client products.
The risk arises from our non-traded assets and liabilities that are not
held for trading intent or in order to hedge positions held with trading
intent. Our global IRRBB risk management framework is designed to
identify, measure, manage and monitor all material sources of IRRBB.
We have established policies and frameworks to help ensure oversight.
To help manage IRRBB and provide more stable earnings, we use a
structural hedge, which is a portfolio of fixed rate assets such as
bonds, derivatives and customer loans. The size and duration of this
hedge may be limited in certain currencies and locations, depending
on available financial resources and market conditions. To reduce
accounting mismatches, we mostly hedge with amortised cost
financial instruments or hedge-accounted derivatives. However,
bonds measured at fair value through other comprehensive income
are also used. We utilise a combination of economic value and
earnings-based measures to help manage IRRBB effectively. These
measures are used to assess IRRBB across the banking book,
supporting the overall monitoring against risk appetite. They include:
–Banking net interest income (‘banking NII’) sensitivity; and
–Economic value of equity (‘EVE’) sensitivity.
ÑFurther details of HSBC’s risk management of interest rate risk in the
banking book can be found in the Group’s Pillar 3 Disclosures at
31 December 2025.
Other Group risks
Non-trading book foreign exchange
exposures
Structural foreign exchange exposures
Structural foreign exchange exposures occur when capital is invested
or net assets are held in a foreign operation, such as a subsidiary,
associate, joint venture or branch operating in a different currency than
the reporting entity. The functional currency of an entity typically aligns
with the primary economic environment in which the entity operates.
Exchange differences from these structural exposures are recognised
in other comprehensive income. We present our consolidated financial
statements in US dollars because the US dollar and linked currencies
form the primary currency bloc for our transaction and funding.
Consequently, our consolidated balance sheet is impacted by foreign
exchange differences between the US dollar and all the non-US dollar
functional currencies of our foreign operations. Our main goal in
managing these exposures is to protect our consolidated capital ratios
and those of our banking subsidiaries from exchange rate fluctuations.
We employ hedging strategies, such as net investment and economic
hedges, when it is capital efficient to do so and within approved limits.
The hedging positions are monitored and rebalanced to manage RWAs
or downside risks associated with HSBC’s foreign currency
investments.
ÑFor further details of our structural foreign exchange exposures, see page
196.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 191 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
Transactional foreign exchange exposures
Transactional foreign exchange risk stems from day-to-day transactions
in the banking book generating profit and loss or fair value through
other comprehensive income reserves in a currency different from the
entity’s reporting currency. Transactional foreign exchange exposure
generated through profit and loss is periodically transferred to Markets
and Securities Services and managed within limits, except for minor
residual foreign exchange exposure arising from timing differences or
for other reasons. Transactional foreign exchange exposure generated
through other comprehensive income reserves is managed by Global
Treasury within approved appetite.
HSBC Holdings risk management
As a financial services holding company, HSBC Holdings has limited
market risk activities. HSBC Holdings focuses on maintaining sufficient
capital resources to support its diverse activities, distributing these
resources across businesses, and generating dividend and interest
income from its investments. Additionally, it manages operating
expenses, provides dividends to shareholders, pays interest to debt
capital providers, and ensures a reserve of short-term liquid assets for
unexpected situations.
The primary market risks HSBC Holdings is exposed to are banking book
interest rate risk and foreign currency risk. These risks stem from short-
term cash balances, funding positions, loans to subsidiaries, investments
in long-term assets, financial liabilities and foreign exchange hedges. The
objective of HSBC Holdings’ market risk management strategy is to
manage volatility in capital resources, cash flows and distributable
reserves due to market changes.
To manage interest rate and foreign currency risk from long-term debt,
HSBC Holdings employs interest rate swaps and cross-currency
interest rate swaps. Additionally, forward foreign exchange contracts
are used to manage structural foreign exchange exposures. Holdings
ALCO oversees market risk in accordance with the company’s risk
appetite statement.
ÑFor quantitative disclosures on HSBC Holdings’ interest rate risk in the
banking book see page 200.
Pension risk management processes
Our global pensions strategy is to move from defined benefit to
defined contribution plans, where local law allows and it is considered
competitive to do so. Our most significant defined benefit plans have
been closed to new members for years, and many (including the
largest plan in the UK) are also closed to future accrual.
In defined contribution pension plans, the contributions that HSBC is
required to make are known, while the final pension benefits depend
on investment returns from employee selected options. While the
market risk of defined contribution plans is minimal for HSBC,
operational and reputational risks remain.
In defined benefit pension plans, the level of pension benefit is known,
but HSBC’s contribution levels can fluctuate due to a number of risks,
including:
–investments delivering a return below the level required to provide
the projected plan benefits;
–economic environment downturns causing asset value reductions
(both equity and debt);
–changes in interest rates or inflation expectations, causing an
increase in the value of plan liabilities; and
–plan members living longer than expected (longevity risk).
Pension risk is assessed using an economic capital model that takes
into account potential variations in these factors. The impact of these
variations on both pension assets and pension liabilities is assessed
using a one-in-200-year stress test. Scenario analysis and other stress
tests are also used to support pension risk management, including the
review of de-risking opportunities.
To fund the benefits associated with defined benefit plans, sponsoring
Group companies, and in some instances employees, make regular
contributions based on actuarial advice and fiduciary consultations.
Contributions ensure that there are sufficient funds to meet the cost of
the accruing benefits for the future service of active members, with
higher contributions required when plan assets are considered
insufficient to cover the existing pension liabilities. Contribution rates
are revised annually or once every three years, depending on the plan.
The defined benefit plans invest in a range of investments designed to
limit the risk of assets failing to meet a plan’s liabilities. Any changes in
expected returns may change future contribution requirements. Asset
allocations are strategically set, with benchmarks reviewed every three
to five years.
In addition, some of the Group’s pension plans hold longevity swap
contracts, offering long-term protection against increased costs from
longer than expected lifespans. Notably, the HSBC Bank (UK) Pension
Scheme covers approximately 50% of the plan’s pensioner liabilities
with such swaps.
Capital risk in 2025
Capital overview
| Capital and liquidity adequacy metrics | ||
|---|---|---|
| At | ||
| 31 Dec 2025 | 31 Dec 2024 | |
| Risk-weighted assets (‘RWAs’) ($bn) | ||
| Credit risk | 687.0 | 657.9 |
| Counterparty credit risk | 42.4 | 37.7 |
| Market risk | 38.5 | 36.2 |
| Operational risk | 120.7 | 106.5 |
| Total RWAs | 888.6 | 838.3 |
| Capital on a transitional basis ($bn) | ||
| Common equity tier 1 capital | 132.6 | 124.9 |
| Tier 1 capital | 153.4 | 144.1 |
| Total capital | 182.4 | 172.4 |
| Capital ratios on a transitional basis (%) | ||
| Common equity tier 1 ratio | 14.9 | 14.9 |
| Tier 1 ratio | 17.3 | 17.2 |
| Total capital ratio | 20.5 | 20.6 |
| Capital on an end point basis ($bn) | ||
| Common equity tier 1 (‘CET1’) capital | 132.6 | 124.9 |
| Tier 1 capital | 153.4 | 144.1 |
| Total capital | 182.4 | 168.5 |
| Capital ratios on an end point basis (%) | ||
| Common equity tier 1 ratio | 14.9 | 14.9 |
| Tier 1 ratio | 17.3 | 17.2 |
| Total capital ratio | 20.5 | 20.1 |
| Liquidity coverage ratio (‘LCR’) | ||
| Total high-quality liquid assets ($bn) | 702.1 | 649.2 |
| Total net cash outflow ($bn) | 512.1 | 470.7 |
| LCR (%) | 137 | 138 |
| Net stable funding ratio (‘NSFR’) | ||
| Total available stable funding ($bn) | 1,621.0 | 1,523.4 |
| Total required stable funding ($bn) | 1,133.3 | 1,064.5 |
| NSFR (%) | 143 | 143 |
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.
Capital figures and ratios in the previous table are calculated in
accordance with the regulatory requirements of the Capital
Requirements Regulation and Directive, the CRR II regulation and the
Prudential Regulation Authority (‘PRA’) Rulebook (‘CRR II’).
Effective 1 January 2025, the IFRS 9 transitional arrangements came
to an end, followed by the end of the CRR II grandfathering
provisions on 28 June 2025. Accordingly, our current period capital
figures are the same on both the transitional and end-point basis.
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 the four preceding quarters.
Regulatory numbers and ratios are presented as at the date of
reporting. Small changes may exist between these numbers and ratios
and those submitted in regulatory filings. Where differences are
significant, we may restate in subsequent periods.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 192 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk | ||||||
| Own funds disclosure | ||||||
| --- | --- | --- | --- | |||
| (Table audited) | At | |||||
| 31 Dec 2025 | 31 Dec 2024 | |||||
| Ref* | $m | $m | ||||
| Common equity tier 1 capital: instruments and reserves | ||||||
| 1 | Capital instruments and the related share premium accounts | 8,699 | 22,378 | |||
| – ordinary shares | 8,699 | 22,378 | ||||
| 2 | Retained earnings | 152,936 | 138,959 | |||
| 3 | Accumulated other comprehensive income (and other reserves) | (27) | (8,410) | |||
| 5 | Minority interests (amount allowed in consolidated CET1) | 3,303 | 3,960 | |||
| 5a | Independently reviewed net profits net of any foreseeable charge or dividend | 8,076 | 7,184 | |||
| 6 | Common equity tier 1 capital before regulatory adjustments | 172,987 | 164,071 | |||
| 28 | Total regulatory adjustments to common equity tier 1 | (40,394) | (39,160) | |||
| 29 | Common equity tier 1 capital | 132,593 | 124,911 | |||
| 36 | Additional tier 1 capital before regulatory adjustments | 20,874 | 19,286 | |||
| 43 | Total regulatory adjustments to additional tier 1 capital | (70) | (70) | |||
| 44 | Additional tier 1 capital | 20,804 | 19,216 | |||
| 45 | Tier 1 capital | 153,397 | 144,127 | |||
| 51 | Tier 2 capital before regulatory adjustments | 30,167 | 29,334 | |||
| 57 | Total regulatory adjustments to tier 2 capital | (1,193) | (1,075) | |||
| 58 | Tier 2 capital | 28,974 | 28,259 | |||
| 59 | Total capital | 182,371 | 172,386 |
*The references identify lines prescribed in the PRA template, which are applicable and where there is a value.
At 31 December 2025, our CET1 capital ratio remained at 14.9%,
unchanged from 31 December 2024. The increase in CET1 capital of
$7.7bn was offset by an increase in RWAs of $50.3bn. The key drivers
of the movements within the CET1 ratio during the year were:
–a 0.5 percentage point increase from capital generation, mainly
through regulatory profits net of dividends and share buy-backs.
Share buy-backs were paused following the announcement of the
privatisation of Hang Seng Bank;
–a 0.1 percentage point increase in the fair value of hold-to-collect-
and-sell debt instruments, following a decrease in yields, and the
net impact from foreign exchange fluctuations, partly offset by
regulatory deductions;
–a 0.2 percentage point decrease due to the loss on our portfolio of
home and certain other loans in France under hold-to-collect-and-
sell, measured at FVOCI in 1Q25, which was partly offset by PRA
waivers granted for the exclusion of operational risk RWAs in
2Q25; and
–a 0.4 percentage point decrease due to an increase in RWAs,
mainly driven by organic balance sheet growth.
Our Pillar 2A requirement at 31 December 2025, as per the PRA’s
Individual Capital Requirement based on a point-in-time assessment,
was equivalent to 2.5% of RWAs, of which 1.4% must be met by
CET1. Throughout 2025, we complied with the PRA’s regulatory capital
adequacy requirement.
Risk-weighted assets
| RWAs by business segment | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Hong<br><br>Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total<br><br>RWAs | ||||
| $bn | $bn | $bn | $bn | $bn | $bn | ||||
| Credit risk | 114.5 | 130.3 | 282.3 | 71.5 | 88.4 | 687.0 | |||
| Counterparty credit risk | 0.1 | 0.1 | 40.2 | 0.8 | 1.2 | 42.4 | |||
| Market risk | 0.7 | — | 24.4 | 0.3 | 13.1 | 38.5 | |||
| Operational risk | 24.3 | 22.5 | 61.8 | 17.3 | (5.2) | 120.7 | |||
| At 31 Dec 2025 | 139.6 | 152.9 | 408.7 | 89.9 | 97.5 | 888.6 | |||
| At 31 Dec 2024 | 143.7 | 133.5 | 388.0 | 85.7 | 87.4 | 838.3 | |||
| RWAs by legal entities1 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc | The Hongkong<br><br>and Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited | HSBC Bank<br><br>Middle East<br><br>Limited | HSBC North<br><br>America<br><br>Holdings Inc | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding companies,<br><br>shared service<br><br>centres and intra-<br><br>Group eliminations | Total<br><br>RWAs | |
| $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | |
| Credit risk | 133.5 | 73.8 | 319.1 | 18.8 | 58.6 | 25.1 | 46.9 | 11.2 | 687.0 |
| Counterparty credit risk | 0.3 | 23.9 | 10.3 | 0.9 | 4.3 | 0.7 | 2.0 | — | 42.4 |
| Market risk2 | 0.1 | 24.9 | 18.9 | 2.4 | 2.8 | 0.6 | 2.1 | 6.7 | 38.5 |
| Operational risk | 24.1 | 23.4 | 63.5 | 5.1 | 8.3 | 6.1 | 6.0 | (15.8) | 120.7 |
| At 31 Dec 2025 | 158.0 | 146.0 | 411.8 | 27.2 | 74.0 | 32.5 | 57.0 | 2.1 | 888.6 |
| At 31 Dec 2024 | 138.3 | 137.6 | 402.8 | 26.6 | 74.4 | 29.7 | 50.7 | (0.6) | 838.3 |
1Balances are on a third-party Group consolidated basis.
2Market risk RWAs are non-additive across the legal entities due to diversification effects within the Group.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 193 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Treasury risk | ||||||||||
| RWA movement by legal entities by key driver1 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Credit risk, counterparty credit risk and operational risk | ||||||||||
| HSBC UK<br><br>Bank plc | HSBC<br><br>Bank plc2 | The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited2 | HSBC<br><br>Bank<br><br>Middle<br><br>East<br><br>Limited | HSBC<br><br>North<br><br>America<br><br>Holdings<br><br>Inc | Grupo<br><br>Financiero<br><br>HSBC, S.A.<br><br>de C.V. | Other<br><br>trading<br><br>entities | Holding<br><br>companies,<br><br>shared<br><br>service<br><br>centres and<br><br>intra-Group<br><br>eliminations | Market<br><br>risk | Total<br><br>RWAs | |
| $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | |
| RWAs at 1 Jan 2025 | 138.1 | 111.5 | 379.8 | 24.5 | 71.7 | 29.2 | 49.4 | (2.1) | 36.2 | 838.3 |
| Asset size | 15.9 | 2.1 | 13.3 | 1.1 | 2.5 | (1.1) | 6.7 | (2.8) | 2.2 | 39.9 |
| Asset quality | 1.1 | 0.9 | 1.8 | (0.6) | (2.5) | (0.1) | (0.1) | — | — | 0.5 |
| Model updates | (0.5) | — | (0.5) | (0.1) | (0.3) | — | — | — | — | (1.4) |
| Methodology and policy | (6.1) | 1.6 | (8.2) | (0.1) | (0.3) | 0.2 | 0.1 | 1.1 | 0.1 | (11.6) |
| Acquisitions and disposals2 | — | (3.4) | 1.5 | (0.1) | — | — | (1.5) | (1.0) | — | (4.5) |
| Foreign exchange movements3 | 9.4 | 8.4 | 5.2 | 0.1 | 0.1 | 3.7 | 0.3 | 0.2 | — | 27.4 |
| Total RWA movement | 19.8 | 9.6 | 13.1 | 0.3 | (0.5) | 2.7 | 5.5 | (2.5) | 2.3 | 50.3 |
| RWAs at 31 Dec 2025 | 157.9 | 121.1 | 392.9 | 24.8 | 71.2 | 31.9 | 54.9 | (4.6) | 38.5 | 888.6 |
| RWA movement by business segment by key driver | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||
| Credit risk, counterparty credit risk and operational risk | ||||||||||
| Hong<br><br>Kong | UK | CIB | IWPB2 | Corporate<br><br>Centre2 | Market<br><br>risk | Total<br><br>RWAs | ||||
| $bn | $bn | $bn | $bn | $bn | $bn | $bn | ||||
| RWAs at 1 Jan 2025 | 142.0 | 133.5 | 360.7 | 85.6 | 80.3 | 36.2 | 838.3 | |||
| Asset size | 0.2 | 16.0 | 13.9 | 2.5 | 5.1 | 2.2 | 39.9 | |||
| Asset quality | (0.4) | 0.8 | (0.2) | (0.1) | 0.4 | — | 0.5 | |||
| Model updates | 0.2 | (0.5) | (1.1) | — | — | — | (1.4) | |||
| Methodology and policy | (3.7) | (6.1) | (0.6) | 0.1 | (1.4) | 0.1 | (11.6) | |||
| Acquisitions and disposals2 | — | — | (1.0) | (2.4) | (1.1) | — | (4.5) | |||
| Foreign exchange movements3 | 0.6 | 9.2 | 12.6 | 3.9 | 1.1 | — | 27.4 | |||
| Total RWA movement | (3.1) | 19.4 | 23.6 | 4.0 | 4.1 | 2.3 | 50.3 | |||
| RWAs at 31 Dec 2025 | 138.9 | 152.9 | 384.3 | 89.6 | 84.4 | 38.5 | 888.6 |
1Balances are on a third-party Group consolidated basis.
2Includes changes in the allocation of $1.5bn significant investment RWAs from HSBC Bank plc to The Hongkong and Shanghai Banking Corporation Limited,
following the disposal of the French life insurance business.
3Credit risk foreign exchange movements in this disclosure are computed by retranslating the RWAs into US dollars based on the underlying transactional
currencies, and other movements in the table are presented on a constant currency basis.
RWAs increased by $50.3bn during the year, mainly due to asset size
movements of $39.9bn and foreign currency translation differences of
$27.4bn, which were partly offset by methodology and policy changes
of $11.6bn and strategic disposals of $4.5bn.
Asset size
Asset size RWAs increased by $39.9bn, of which $26.1bn related to
credit risk asset size, largely driven by corporate lending in our UK and
CIB businesses, and in SAB within Corporate Centre.
Additionally, there was an $11.6bn rise in operational risk RWAs driven
by higher average income across our business segments.
Market risk RWAs increased by $2.2bn, mainly as a result of higher
structural foreign exchange exposures of $5.7bn, to hedge the
anticipated impact of the Hang Seng Bank privatisation, which was
partly offset by lower stressed value at risk (‘SVaR’) of $3bn due to an
improved risk profile in the rates portfolio.
Asset quality
The marginal $0.5bn increase in RWAs was mainly driven by
unfavourable credit risk migrations, which were largely offset by
increased credit risk mitigation in our Hong Kong and CIB businesses.
This included an increase due to portfolio mix changes in our UK
business.
Model updates
The decrease of $1.4bn in RWAs was primarily driven by the
recalibration of post-model adjustments to address wholesale internal-
ratings credit risk model limitations, mainly in CIB.
Methodology and policy
The $11.6bn decrease in RWAs was primarily due to credit risk
parameter refinements, including methodology changes to our
undrawn exposures within the UK and CIB businesses; and a UK
transaction where some credit risk was transferred to a third party.
Acquisitions and disposals
RWAs decreased by $4.5bn, due to the PRA waiver granted in 2025
for the exclusion of operational risk RWAs previously associated with
the sale of our retail banking operations in France and the disposal of
our business in Argentina. Additionally, we sold the ADRs in Grupo
Financiero Galicia that we received as purchase consideration from the
sale of our business in Argentina. A further decrease resulted from the
sale of our French retained portfolio of home and certain other loans.
Leverage ratio
| At | ||
|---|---|---|
| 31 Dec 2025 | 31 Dec 2024 | |
| $bn | $bn | |
| Tier 1 capital (leverage) | 153.4 | 144.1 |
| Total leverage ratio exposure | 2,877.1 | 2,571.1 |
| % | % | |
| Leverage ratio | 5.3 | 5.6 |
Our leverage ratio was 5.3% at 31 December 2025, down from 5.6%
at 31 December 2024. The increase in the leverage exposures led to a
0.6 percentage points fall in the leverage ratio, which was partly offset
by higher tier 1 capital of 0.3 percentage points.The change in leverage
exposure was driven by 0.4 percentage points increase due to growth
in the balance sheet and by a 0.2 percentage points increase from
foreign currency translation differences.
At 31 December 2025, our UK minimum leverage ratio requirement
was 3.25%, with an additional buffer of 0.9% - comprising a 0.7%
additional leverage ratio buffer and a 0.2% countercyclical leverage
ratio buffer. These buffers translated into capital values of $20.1bn and
$5.8bn, respectively. We exceeded these leverage requirements
throughout 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 194 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
Pillar 3 disclosure requirements
Pillar 3 of the Basel regulatory framework is related to market discipline
and aims to make financial services firms more transparent by requiring
publication of wide-ranging information on their risks, capital and
management.
ÑFor further details, see our Pillar 3 Disclosures at 31 December 2025, which
is published at www.hsbc.com/investors.
Liquidity and funding risk in 2025
Liquidity metrics
At 31 December 2025, all of the Group’s material operating entities
were above the required regulatory minimum liquidity and funding
levels. Each entity maintains sufficient unencumbered liquid assets to
comply with internal and local regulatory requirements. Each entity
maintains a sufficient stable funding profile and is assessed using the
NSFR or other appropriate metrics.
In addition to regulatory metrics, we use a wide set of measures to
manage our liquidity and funding profile.
The Group liquidity and funding position on an average basis is
analysed in the following sections.
| Operating entities’ liquidity | ||||
|---|---|---|---|---|
| At 31 Dec 2025 | ||||
| LCR1 | HQLA | Net outflows | NSFR1 | |
| % | $bn | $bn | % | |
| HSBC UK Bank plc (ring-fenced bank)2 | 175 | 124 | 71 | 146 |
| HSBC Bank plc (non-ring-fenced bank)3 | 148 | 145 | 99 | 114 |
| The Hongkong and Shanghai Banking Corporation – Hong Kong branch4, 6 | 189 | 170 | 90 | 125 |
| HSBC Singapore5 | 228 | 37 | 16 | 168 |
| Hang Seng Bank | 322 | 64 | 20 | 184 |
| HSBC Bank China | 203 | 26 | 13 | 153 |
| HSBC Bank USA | 167 | 84 | 50 | 129 |
| HSBC Continental Europe | 147 | 100 | 68 | 148 |
| HSBC Bank Middle East Ltd – UAE branch | 232 | 16 | 7 | 152 |
| HSBC Mexico | 166 | 9 | 5 | 110 |
| At 31 Dec 2024 | ||||
| --- | --- | --- | --- | --- |
| HSBC UK Bank plc (ring-fenced bank)2 | 190 | 117 | 61 | 154 |
| HSBC Bank plc (non-ring-fenced bank)3 | 148 | 138 | 93 | 115 |
| The Hongkong and Shanghai Banking Corporation – Hong Kong branch4 | 191 | 145 | 76 | 124 |
| HSBC Singapore5 | 287 | 32 | 11 | 184 |
| Hang Seng Bank | 299 | 57 | 19 | 174 |
| HSBC Bank China | 191 | 27 | 14 | 147 |
| HSBC Bank USA | 167 | 80 | 48 | 127 |
| HSBC Continental Europe | 149 | 82 | 55 | 139 |
| HSBC Bank Middle East Ltd – UAE branch | 251 | 14 | 6 | 151 |
| HSBC Mexico | 164 | 9 | 6 | 125 |
1The LCR and NSFR ratios presented in the above table are based on average values. The LCR is the average of the preceding 12 months. The NSFR is the average of the
preceding four quarters. LCR details are based on local regulations wherever applicable except the LCR for our UAE branch, which is reported on a PRA basis. NSFR
details are reported based on the PRA’s NSFR rules.
2HSBC UK Bank plc refers to the HSBC UK liquidity group, which comprises four legal entities: HSBC UK Bank plc, Marks and Spencer Financial Services plc, HSBC
Private Bank (UK) Ltd and HSBC Innovation Bank Limited, managed as a single operating entity, in line with the application of UK liquidity regulation as agreed with the
PRA.
3HSBC Bank plc includes overseas branches and special purpose entities consolidated by HSBC for financial statements purposes.
4The Hongkong and Shanghai Banking Corporation – Hong Kong branch represents the material activities of The Hongkong and Shanghai Banking Corporation Limited. It
is monitored and controlled for liquidity and funding risk purposes as a stand-alone operating entity.
5HSBC Singapore includes HSBC Bank Singapore Limited and The Hongkong and Shanghai Banking Corporation – Singapore branch. Liquidity and funding risk is
monitored and controlled at country level in line with the local regulator’s approval.
6In 4Q25, The Hongkong and Shanghai Banking Corporation – Hong Kong branch segregated $16.6bn of Level 1 high-quality liquid assets towards funding the
privatisation of Hang Seng Bank. These assets were excluded from the liquid asset buffer for the purpose of LCR reporting and reduced the entity’s local LCR
by c. 5.5% on an average basis.
Consolidated liquidity metrics
Net stable funding ratio
We manage funding risk based on the PRA’s NSFR rules. The Group’s
NSFR at 31 December 2025, calculated from the average of the four
preceding quarters, was 143%.
| At | |||
|---|---|---|---|
| 31 Dec 2025 | 30 Jun 2025 | 31 Dec 2024 | |
| $bn | $bn | $bn | |
| Total available stable funding ($bn) | 1,621 | 1,572 | 1,523 |
| Total required stable funding ($bn) | 1,133 | 1,083 | 1,064 |
| NSFR ratio (%) | 143 | 145 | 143 |
Liquidity coverage ratio
At 31 December 2025, the average high-quality liquid assets (‘HQLA‘)
held at entity level amounted to $862bn (31 December 2024: $790bn).
The Group consolidation methodology includes a deduction to
reflect the impact of limitations in the transferability of entity liquidity
around the Group. That resulted in an adjustment of $160bn to LCR
HQLA and $5bn to LCR inflows on an average basis.
| At1 | |||
|---|---|---|---|
| 31 Dec 2025 | 30 Jun 2025 | 31 Dec 2024 | |
| $bn | $bn | $bn | |
| High-quality liquid assets (in<br><br>entities) | 862 | 833 | 790 |
| Group LCR HQLA | 702 | 678 | 649 |
| Net outflows | 512 | 486 | 471 |
| Liquidity coverage ratio (%) | 137 | 140 | 138 |
| Adjustment for transfer<br><br>restrictions2 | (165) | (161) | (147) |
1Group LCR numbers above are based on average values. The LCR is the
average of the preceding 12 months.
2This includes adjustments made to high-quality liquid assets and inflows in
entities to reflect liquidity transfer restrictions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 195 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
Liquid assets
After the $160bn deduction, the average Group LCR HQLA of $702bn (31 December 2024: $649bn) was held in a range of asset classes and
currencies. Of these, 97% were eligible as Level 1 (31 December 2024: 95%). The following tables reflect the composition of the average liquidity
pool by asset type and currency at 31 December 2025.
| Liquidity pool by asset type1 | |||
|---|---|---|---|
| Liquidity<br><br>pool | Level 12 | Level 22 | |
| $bn | $bn | $bn | |
| Cash and balance at central bank | 248 | 248 | — |
| Central and local government bonds | 413 | 401 | 12 |
| Regional government public sector<br><br>entities | 2 | 2 | — |
| International organisation and multilateral<br><br>developments banks | 29 | 29 | — |
| Covered bonds | 7 | 2 | 5 |
| Other | 3 | — | 3 |
| Total at 31 Dec 2025 | 702 | 682 | 20 |
| Total at 31 Dec 2024 | 649 | 615 | 34 |
1Group liquid assets numbers are based on average values.
2As defined in the PRA Rulebook, Level 1 assets means ‘assets of extremely
high liquidity and credit quality’, and Level 2 assets means ‘assets of high
liquidity and credit quality’.
| Liquidity pool by currency1 | ||||||
|---|---|---|---|---|---|---|
| $ | £ | € | HK$ | Other | Total | |
| $bn | $bn | $bn | $bn | $bn | $bn | |
| Liquidity pool at<br><br>31 Dec 2025 | 232 | 170 | 136 | 43 | 121 | 702 |
| Liquidity pool at<br><br>31 Dec 2024 | 196 | 170 | 113 | 47 | 123 | 649 |
1Group liquid assets numbers are based on average month-end values over
the preceding 12 months.
Sources of funding
Our primary sources of funding are customer current accounts and
savings deposits payable on demand or at short notice. We issue
secured and unsecured wholesale securities to supplement customer
deposits, meet regulatory obligations and seek to ensure that we
maintain a diversified funding profile through a balanced mix of
currencies, maturities and locations of our liabilities. The following
‘Funding sources’ and ‘Funding uses’ tables provide a view of how our
consolidated balance sheet is funded. In practice, all the principal
operating entities are required to manage liquidity and funding risk on a
stand-alone basis.
The tables analyse our consolidated balance sheet according to the
assets that primarily arise from operating activities and the sources of
funding primarily supporting these activities. Assets and liabilities that
do not arise from operating activities are presented as a net balancing
source or deployment of funds.
The funding risk management framework seeks to ensure operating
entities maintain a diversified funding profile defined in their funding
plans which are taken through regular governance, in line with globally
consistent policies and standards. Diversification is achieved through a
balanced mix of funding sources, tenors, currencies and geographies,
seeking to mitigate concentration risks and to avoid extraordinary
reliance on central banks or intra-group funding support. The
framework requires entities to have policies, processes and controls
for monitoring and managing funding by tenors and sources, supported
by governance of limits. Entities also model cashflows from maturing
short-term debts within the internal liquidity monitoring to help ensure
sufficient liquidity is maintained to meet the maturing debt obligations.
| Funding sources | ||||||
|---|---|---|---|---|---|---|
| (Audited) | ||||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| Customer accounts | 1,786,828 | 1,654,955 | ||||
| Deposits by banks | 97,952 | 73,997 | ||||
| Repurchase agreements – non-trading | 204,974 | 180,880 | ||||
| Debt securities in issue | 99,675 | 105,785 | ||||
| Cash collateral, margin, settlement accounts and<br><br>items in course of transmission to other banks | 91,087 | 82,732 | ||||
| Liabilities of disposal groups held for sale | 23,382 | 29,011 | ||||
| Subordinated liabilities | 28,406 | 25,958 | ||||
| Financial liabilities designated at fair value | 158,456 | 138,727 | ||||
| Insurance contract liabilities | 122,955 | 107,629 | ||||
| Trading liabilities | 72,122 | 65,982 | ||||
| – repos | 13,113 | 14,806 | ||||
| – stock lending | 6,250 | 3,525 | ||||
| – other trading liabilities | 52,759 | 47,651 | ||||
| Total equity | 205,666 | 192,273 | ||||
| Other balance sheet liabilities | 341,531 | 359,119 | ||||
| At 31 Dec | 3,233,034 | 3,017,048 | ||||
| Funding uses | ||||||
| --- | --- | --- | ||||
| (Audited) | ||||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| Loans and advances to customers | 988,399 | 930,658 | ||||
| Loans and advances to banks | 108,462 | 102,039 | ||||
| Reverse repurchase agreements – non-trading | 298,392 | 252,549 | ||||
| Cash collateral, margin, settlement accounts and<br><br>items in course of collection from other banks | 87,667 | 78,538 | ||||
| Assets held for sale | 11,115 | 27,234 | ||||
| Trading assets | 366,153 | 314,842 | ||||
| – reverse repos | 18,449 | 16,823 | ||||
| – stock borrowing | 14,947 | 8,374 | ||||
| – other trading assets | 332,757 | 289,645 | ||||
| Financial investments | 567,211 | 493,166 | ||||
| Cash and balances with central banks | 242,859 | 267,674 | ||||
| Other balance sheet assets | 562,776 | 550,348 | ||||
| At 31 Dec | 3,233,034 | 3,017,048 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 196 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
Wholesale term debt maturity profile
The maturity profile of our wholesale term debt obligations is set out in
the following table. The balances in the table are not directly
comparable with those in the consolidated balance sheet because the
table presents gross cash flows relating to principal payments and not
the balance sheet carrying value, which includes debt securities and
subordinated liabilities measured at fair value.
| Wholesale funding cash flows payable by HSBC under financial liabilities by remaining contractual maturities1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Due not<br><br>more<br><br>than<br><br>1 month | Due over<br><br>1 month<br><br>but not<br><br>more than<br><br>3 months | Due over<br><br>3 months<br><br>but not<br><br>more than<br><br>6 months | Due over<br><br>6 months<br><br>but not<br><br>more than<br><br>9 months | Due over<br><br>9 months<br><br>but not<br><br>more than<br><br>1 year | Due over<br><br>1 year<br><br>but not<br><br>more than<br><br>2 years | Due over<br><br>2 years<br><br>but not<br><br>more than<br><br>5 years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Debt securities issued | 14,531 | 12,338 | 14,004 | 7,561 | 8,780 | 26,365 | 70,542 | 65,835 | 219,956 |
| – unsecured CDs and CP | 5,729 | 4,484 | 6,781 | 4,211 | 5,198 | 1,855 | 999 | 570 | 29,827 |
| – unsecured senior MTNs | 5,835 | 6,262 | 5,020 | 1,853 | 1,416 | 17,953 | 52,645 | 53,455 | 144,439 |
| – unsecured senior structured notes | 2,459 | 1,060 | 2,037 | 1,150 | 1,739 | 5,572 | 11,145 | 9,164 | 34,326 |
| – secured covered bonds | — | — | — | — | — | 671 | 1,550 | — | 2,221 |
| – secured asset-backed commercial paper | 486 | — | — | — | — | — | — | — | 486 |
| – secured ABS | 22 | 43 | 62 | 58 | 338 | 201 | 693 | 1,401 | 2,818 |
| – others | — | 489 | 104 | 289 | 89 | 113 | 3,510 | 1,245 | 5,839 |
| Subordinated liabilities | — | — | — | — | 892 | 874 | 2,049 | 34,541 | 38,356 |
| – subordinated debt securities | — | — | — | — | 892 | 874 | 2,049 | 33,602 | 37,417 |
| – preferred securities | — | — | — | — | — | — | — | 939 | 939 |
| At 31 Dec 2025 | 14,531 | 12,338 | 14,004 | 7,561 | 9,672 | 27,239 | 72,591 | 100,376 | 258,312 |
| Debt securities issued | 14,260 | 15,011 | 13,841 | 10,235 | 11,644 | 29,639 | 62,434 | 53,814 | 210,878 |
| – unsecured CDs and CP | 5,346 | 7,803 | 10,495 | 6,623 | 6,829 | 662 | 1,787 | 1,598 | 41,143 |
| – unsecured senior MTNs | 7,528 | 3,351 | 1,014 | 1,269 | 2,736 | 21,593 | 47,236 | 42,899 | 127,626 |
| – unsecured senior structured notes | 874 | 1,826 | 2,258 | 1,457 | 1,526 | 6,055 | 9,160 | 6,520 | 29,676 |
| – secured covered bonds | — | — | — | — | — | — | 1,254 | — | 1,254 |
| – secured asset-backed commercial paper | 488 | — | — | — | — | — | — | — | 488 |
| – secured ABS | 24 | 47 | 67 | 64 | 61 | 664 | 520 | 864 | 2,311 |
| – others | — | 1,984 | 7 | 822 | 492 | 665 | 2,477 | 1,933 | 8,380 |
| Subordinated liabilities | — | — | 1,737 | 1,030 | — | 892 | 2,694 | 30,349 | 36,702 |
| – subordinated debt securities | — | — | 1,737 | 1,030 | — | 892 | 2,694 | 29,471 | 35,824 |
| – preferred securities | — | — | — | — | — | — | — | 878 | 878 |
| At 31 Dec 2024 | 14,260 | 15,011 | 15,578 | 11,265 | 11,644 | 30,531 | 65,128 | 84,163 | 247,580 |
1Excludes financial liabilities of disposal groups.
Structural foreign exchange risk in 2025
Structural foreign exchange exposures represent net assets or capital investments in subsidiaries, branches, joint arrangements or associates,
together with any associated hedges, the functional currencies of which are currencies other than the US dollar. Exchange differences on
structural exposures are usually recognised in ‘other comprehensive income’.
| Net structural foreign exchange exposures | ||||||
|---|---|---|---|---|---|---|
| 2025 | ||||||
| Currency of structural exposure | Net investment in<br><br>foreign operations<br><br>(excl non-controlling<br><br>interest) | Net<br><br>investment<br><br>hedges | Structural foreign<br><br>exchange<br><br>exposures (pre-<br><br>economic hedges) | Economic<br><br>hedges –<br><br>structural FX<br><br>hedges1 | Economic<br><br>hedges – equity<br><br>securities (AT1)2 | Net structural<br><br>foreign<br><br>exchange<br><br>exposures |
| $m | $m | $m | $m | $m | $m | |
| Hong Kong dollars | 45,486 | (5,737) | 39,749 | (9,905) | — | 29,844 |
| Pounds sterling | 51,315 | (17,254) | 34,061 | — | (1,341) | 32,720 |
| Chinese renminbi | 36,084 | (7,622) | 28,462 | (1,078) | — | 27,384 |
| Euros | 18,017 | (4,162) | 13,855 | — | (1,466) | 12,389 |
| Indian rupees | 7,747 | (3,264) | 4,483 | — | — | 4,483 |
| Mexican pesos | 4,873 | — | 4,873 | — | — | 4,873 |
| Saudi riyals | 5,132 | — | 5,132 | — | — | 5,132 |
| UAE dirhams | 5,436 | (1,176) | 4,260 | (2,691) | — | 1,569 |
| Malaysian ringgit | 3,473 | (1,727) | 1,746 | — | — | 1,746 |
| Singapore dollars | 2,711 | (493) | 2,218 | 1,728 | (1,770) | 2,176 |
| Australian dollars | 2,367 | — | 2,367 | — | — | 2,367 |
| Taiwanese dollars | 2,473 | (1,387) | 1,086 | — | — | 1,086 |
| Indonesian rupiah | 1,561 | (501) | 1,060 | (98) | — | 962 |
| Swiss francs | 1,549 | (617) | 932 | (248) | — | 684 |
| Korean won | 1,326 | (856) | 470 | — | — | 470 |
| Thai baht | 1,048 | (757) | 291 | — | — | 291 |
| Egyptian pound | 1,125 | — | 1,125 | — | — | 1,125 |
| Qatari rial | 736 | (172) | 564 | (299) | — | 265 |
| Vietnamese dong | 767 | — | 767 | — | — | 767 |
| Others, each less than $700m | 4,692 | (658) | 4,034 | — | — | 4,034 |
| At 31 Dec | 197,918 | (46,383) | 151,535 | (12,591) | (4,577) | 134,367 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 197 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk | ||||||
| Net structural foreign exchange exposures (continued) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | ||||||
| Currency of structural exposure | Net investment in<br><br>foreign operations<br><br>(excl non-controlling<br><br>interest) | Net<br><br>investment<br><br>hedges | Structural foreign<br><br>exchange<br><br>exposures (pre-<br><br>economic hedges) | Economic<br><br>hedges –<br><br>structural FX<br><br>hedges1 | Economic<br><br>hedges – equity<br><br>securities (AT1)2 | Net structural<br><br>foreign<br><br>exchange<br><br>exposures |
| $m | $m | $m | $m | $m | $m | |
| Hong Kong dollars | 40,106 | (5,841) | 34,265 | (9,861) | — | 24,404 |
| Pounds sterling | 46,462 | (15,024) | 31,438 | — | (1,254) | 30,184 |
| Chinese renminbi | 35,032 | (4,725) | 30,307 | (1,080) | — | 29,227 |
| Euros | 17,391 | (2,013) | 15,378 | — | (1,297) | 14,081 |
| Indian rupees | 7,056 | (1,973) | 5,083 | — | — | 5,083 |
| Mexican pesos | 3,991 | — | 3,991 | — | — | 3,991 |
| Saudi riyals | 4,675 | — | 4,675 | — | — | 4,675 |
| UAE dirhams | 5,264 | (893) | 4,371 | (2,543) | — | 1,828 |
| Malaysian ringgit | 3,036 | — | 3,036 | — | — | 3,036 |
| Singapore dollars | 2,405 | — | 2,405 | 1,092 | (1,089) | 2,408 |
| Australian dollars | 2,126 | — | 2,126 | — | — | 2,126 |
| Taiwanese dollars | 2,199 | (1,015) | 1,184 | — | — | 1,184 |
| Indonesian rupiah | 1,541 | (533) | 1,008 | — | — | 1,008 |
| Swiss francs | 1,096 | (541) | 555 | — | — | 555 |
| Korean won | 1,204 | (756) | 448 | — | — | 448 |
| Thai baht | 976 | (460) | 516 | — | — | 516 |
| Egyptian pound | 891 | — | 891 | — | — | 891 |
| Qatari rial | 728 | (97) | 631 | (299) | — | 332 |
| Vietnamese dong | 769 | — | 769 | — | — | 769 |
| Others, each less than $700m | 4,370 | (463) | 3,907 | — | — | 3,907 |
| At 31 Dec | 181,318 | (34,334) | 146,984 | (12,691) | (3,640) | 130,653 |
1Represents hedges that do not qualify as net investment hedges for accounting purposes. The SGD position represents the hedge against our SGD AT1
issuances.
2Represents foreign currency-denominated preference share and AT1 instruments. These are accounted for at historical cost under IFRS Accounting Standards
and do not qualify as net investment hedges for accounting purposes. The gain or loss arising from changes in the US dollar value of these instruments is
recognised on redemption in retained earnings.
ÑFor a definition of structural foreign exchange exposures, see page 190.
Interest rate risk in the banking book in 2025
Banking net interest income sensitivity
Banking NII sensitivity is the sensitivity of our banking net interest
income to interest rate shocks. This metric includes the sensitivity
arising from the use of banking book liabilities to fund trading assets, as
well as the impacts of vanilla foreign exchange swaps to optimise cash
management across the Group. It is aligned with the presentation in
the Group’s financial disclosures of banking NII as an alternative
performance measure intended to approximate the Group’s banking
revenue that is directly impacted by changes in interest rates.
The following tables set out the assessed impact to a hypothetical
base case projection of our banking NII under an immediate shock of
100bps to the current market-implied path of interest rates across all
currencies on 31 December 2025 (effects in the first, second and third
years). For example, Year 3 shows the impact of an immediate rate
shock on the banking NII projected for the third year.
The banking NII sensitivities shown represent a hypothetical simulation
of the base case banking NII, assuming a static balance sheet
(specifically no assumed migration from current account to term
deposits), and no management actions from Global Treasury. This also
incorporates the effect of interest rate behaviouralisation, prepayment
of mortgages and commercial margins. The sensitivity calculations
exclude pensions, insurance exposures, and our interests in
associates.
All forecasted market rates are based on implied forward rates from
the reporting date. Customer pricing includes flooring where there
are contractual obligations.
As the market and policy rates move, the degree to which these
changes are passed on to customers will vary based on several factors,
including the absolute level of market interest rates, regulatory and
contractual frameworks, and competitive dynamics. To aid
comparability between markets, we have simplified the basis of
preparation for our disclosure and have used a 50% pass-on
assumption for major entities on certain interest-bearing deposits. Our
asset pass-on assumptions are largely in line with our contractual
agreements or established market practice, which typically results in a
significant portion of interest rate changes being passed on.
An immediate interest rate rise of 100bps would increase projected
banking NII by $2.4bn. An immediate interest rate fall of 100bps would
decrease projected banking NII by $3.4bn.
The sensitivity of banking NII for the 12 months as at 31 December
2025 increased by $0.3bn in the plus 100bps parallel shock and by
$0.5bn in the minus 100bps parallel shock, when compared with
31 December 2024. The increase in sensitivities was primarily driven
by deposit growth and the impact of rate floors due to lower prevailing
market rates offset by stabilisation initiatives executed during the year.
ÑFor further details of measurement of interest rate risk in the banking book,
see page 190.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 198 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk | ||||||
| Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Currency | ||||||
| $ | HK$ | £ | € | Other | Total | |
| $m | $m | $m | $m | $m | $m | |
| Change in Jan 2026 to Dec 2026 (based on balance sheet at 31 Dec 2025) | ||||||
| +100bps parallel | 798 | 310 | 351 | 91 | 871 | 2,421 |
| -100bps parallel | (1,184) | (606) | (499) | (129) | (971) | (3,389) |
| Change in Jan 2025 to Dec 2025 (based on balance sheet at 31 Dec 2024) | ||||||
| +100bps parallel | 572 | 220 | 219 | 301 | 821 | 2,133 |
| -100bps parallel | (862) | (403) | (353) | (314) | (954) | (2,886) |
| Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Currency | ||||||
| $ | HK$ | £ | € | Other | Total | |
| $m | $m | $m | $m | $m | $m | |
| Change in banking NII (based on balance sheet at 31 Dec 2025) | ||||||
| Year 2 (Jan 2027 to Dec 2027) | (1,327) | (745) | (849) | (223) | (1,331) | (4,475) |
| Year 3 (Jan 2028 to Dec 2028) | (1,559) | (906) | (1,275) | (274) | (1,499) | (5,513) |
| Change in banking NII (based on balance sheet at 31 Dec 2024) | ||||||
| Year 2 (Jan 2026 to Dec 2026) | (1,226) | (509) | (563) | (444) | (1,333) | (4,075) |
| Year 3 (Jan 2027 to Dec 2027) | (1,531) | (550) | (1,022) | (504) | (1,449) | (5,056) |
Non-trading portfolios
Value at risk of non-trading portfolios
Non-trading portfolios comprise positions that primarily arise from the
interest rate management of our retail and wholesale banking assets
and liabilities and financial investments measured at fair value through
other comprehensive income (‘FVOCI’) or at amortised cost. The use
of value at risk (‘VaR’) is integrated into the market risk management of
non-trading portfolios to have a complete picture of risk,
complementing risk sensitivity analysis.
VaR of non-trading portfolios is a technique for estimating potential
losses on risk positions as a result of movements in market rates and
prices over a specified time horizon and to a given level of confidence.
Our models predominantly rely on historical simulations incorporating:
–historical market rates and prices, calculated with reference to
interest rates, credit spreads and associated volatilities;
–potential market movements derived from data covering the past
two years; and
–calculations to a 99% confidence level with a 10-day holding period.
Although a valuable guide to risk, VaR is used for non-trading portfolios
with awareness of its limitations. For example:
–Historical data is used to estimate future market movements, and
may not cover all potential events, particularly those that are
extreme in nature. As the model is calibrated on the last 500
business days, it does not adjust instantly to a change in market
regime.
–The 10-day holding period for risk management purposes of non-
trading books is an indication and does not reflect the actual time
period needed to hedge or liquidate positions.
–The use of a 99% confidence level does not consider losses that
might occur beyond this level of confidence.
Non-trading VaR includes non-trading financial instruments held in
portfolios managed by Global Treasury. The management of interest
rate risk in the banking book is described further in ‘Banking net
interest income sensitivity’ on page 197.
The interest rate risk on the fixed-rate securities issued by HSBC
Holdings is not included in the Group non-trading VaR. The
management of this risk is described on page 200. Insurance
operations were excluded from non-trading VaR as of 30 June 2025
which resulted in an immaterial impact. Details on insurance operations
can be found on page 215 and the market risk impact of insurance
operations on page 217. Non-trading VaR also excludes the equity risk
on securities held at fair value and non-trading book foreign exchange
risk.
The weekly levels of total non-trading VaR in 2025 are set out in the
graph below.
| Weekly VaR (non-trading portfolios), 99% 10 day ($m) |
|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 199 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk |
The Group non-trading VaR for 2025 is shown in the table below.
| Non-trading VaR, 99% 10 day | ||||
|---|---|---|---|---|
| (Audited) | ||||
| Interest rate | Credit spread | Portfolio diversification1 | Total2 | |
| $m | $m | $m | $m | |
| Balance at 31 Dec 2025 | 499.6 | 149.6 | (102.5) | 546.6 |
| Average | 465.2 | 190.8 | (115.8) | 540.1 |
| Maximum | 575.3 | 254.6 | 617.5 | |
| Minimum | 378.9 | 93.9 | 458.0 | |
| Balance at 31 Dec 2024 | 528.4 | 246.1 | (220.7) | 553.8 |
| Average | 603.7 | 315.1 | (222.9) | 695.8 |
| Maximum | 1,000.6 | 369.1 | 1,097.6 | |
| Minimum | 292.1 | 242.4 | 408.7 |
1Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic
market risk that occurs when combining a number of different risk types – such as interest rate and credit spreads – together in one portfolio. It is measured as
the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of portfolio
diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit
for these measures.
2The total VaR is non-additive across risk types due to diversification effects.
The VaR for non-trading activity remained stable, decreasing by $7m
due to lower historical shocks in our two-year historical window, largely
offset by an increase in the duration risk of Global Treasury’s portfolios.
The average portfolio diversification effect between interest rate and
credit spread exposure decreased from $223m to $116m, mainly due
to higher correlations between the two asset classes. The reduction in
credit spread VaR at the end of September was the result of volatile
scenarios dropping out of the two-year historical window. Non-trading
VaR is managed and controlled through a limit approved by the Group
Chief Risk and Compliance Officer for HSBC Holdings.
Sensitivity of capital and reserves
The Group holds various portfolios of securities under a hold-to-collect-
and-sell business model, of which the most material is the portfolio of
high quality assets held by Global Treasury for contingent liquidity and
NII stabilisation purposes. These portfolios, together with any
associated derivatives in designated hedge accounting relationships,
are accounted for at fair value through comprehensive income, and
changes in mark-to-market value have an impact on CET1. We use a
variety of tools, including risk sensitivities and VaR measures, to
manage the risk of these portfolios.
The table below measures the sensitivity of our hold-to-collect-and-sell
portfolios to an instantaneous 100 basis point increase in interest rates,
based on the risk sensitivity of a shift in value for a 1 basis point (‘bps‘)
parallel movement in interest rates.
| Sensitivity of hold-to-collect-and-sell reserves to interest rate<br><br>movements | |
|---|---|
| $m | |
| At 31 Dec 2025 | |
| +100 basis point parallel move in all yield curves | (4,424) |
| As a percentage of total shareholders’ equity | (2.23)% |
| At 31 Dec 2024 | |
| +100 basis point parallel move in all yield curves | (3,433) |
| As a percentage of total shareholders’ equity | (1.86)% |
The increase in the sensitivity of the portfolio during 2025 was mainly
driven by an increase in NII stabilisation hedging in line with our
strategy. While this hedging has increased the capital sensitivity of the
portfolio it has the effect of further dampening the volatility of our
banking NII over time and through the cycle. The figures in the table
above do not take into account the effects of interest rate convexity.
The portfolio mostly comprises vanilla sovereign bonds in a variety of
currencies and the primary risk is interest rate duration risk, although
the portfolio also generates asset swap, credit spread and asset spread
risks that are managed within appetite as part of our risk management
framework. A minus 100bps shock would lead to an approximately
symmetrical gain.
Alongside our monitoring of the hold-to-collect-and-sell reserve
sensitivity, we also monitor the sensitivity of reported cash flow
hedging reserves to interest rate movements annually by
assessing the expected reduction in the valuation of cash flow hedges
due to an instantaneous 100bps increase in all yield curves.
The sensitivity is indicative and based on a simplified scenario.
The following table details the sensitivity of our cash flow hedging
reserve which remained stable compared with 31 December 2024 and
continued to be mainly driven by our NII stabilisation activity. Our
exposure to fixed rate pound sterling hedges continued to be the
largest in size followed by Hong Kong dollar and United States dollar
hedges. A minus 100bps shock would lead to a largely symmetrical
gain.
| Sensitivity of cash flow hedging reported reserves to interest rate<br><br>movements | |
|---|---|
| $m | |
| At 31 Dec 2025 | |
| +100 basis point parallel move in all yield curves | (4,438) |
| As a percentage of total shareholders’ equity | (2.24)% |
| At 31 Dec 2024 | |
| +100 basis point parallel move in all yield curves | (4,496) |
| As a percentage of total shareholders’ equity | (2.43)% |
Third-party assets in Markets Treasury
Third-party assets in Markets Treasury increased by 6% compared with
31 December 2024. The net increase of $55bn is partly reflective of
higher commercial surpluses during the year, with the increase of
$68bn in ‘Financial investments’ and the decrease of $25bn in ‘Cash
and balances at central banks’ largely driven by NII stabilisation activity.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 200 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Treasury risk | ||||||
| Third-party assets in Markets Treasury | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| Cash and balances at central banks | 236,259 | 261,284 | ||||
| Trading assets | (8) | 163 | ||||
| Loans and advances: | ||||||
| – to banks | 66,614 | 66,518 | ||||
| – to customers | 1,113 | 743 | ||||
| Reverse repurchase agreements | 58,191 | 47,812 | ||||
| Financial investments | 533,519 | 465,123 | ||||
| Other | 12,774 | 12,232 | ||||
| At 31 Dec | 908,462 | 853,875 |
Defined benefit pension plans
Market risk arises within our defined benefit pension plans to the
extent that the obligations of the plans are not fully matched by assets
with determinable cash flows.
ÑFor details of our defined benefit plans, including asset allocation, see Note
5 on the financial statements, and for pension risk management, see page
191.
Additional market risk measures
applicable only to the parent company
HSBC Holdings monitors and manages foreign exchange risk and
interest rate risk. In order to manage interest rate risk, HSBC Holdings
uses the projected sensitivity of its NII to future changes in yield
curves.
Foreign exchange risk
HSBC Holdings’ foreign exchange exposures derive almost entirely
from the execution of structural foreign exchange hedges on behalf of
the Group. At 31 December 2025, HSBC Holdings had forward foreign
exchange contracts of $34.4bn (2024: $33.9bn) to manage the Group’s
structural foreign exchange exposures.
ÑFor further details of our Group structural foreign exchange exposures, see
page 196.
Sensitivity of banking net interest income
Banking NII sensitivity is the assessed impact to a hypothetical base
case projection of our banking NII under an immediate shock of 100bps
to the current market-implied path of interest rates across all currencies
on 31 December 2025.
Banking NII sensitivity includes the impact of AT1 instruments as well
as vanilla foreign exchange swaps to optimise cash management, with
the assumption of a static balance sheet and no management actions
from Global Treasury. The sensitivity assumes that any issuance where
HSBC Holdings has an option to redeem at a future call date is called at
that date.
An immediate interest rate rise of 100bps would decrease projected
banking NII for the 12 months to 31 December 2026 by $163m.
Conversely, an immediate fall of 100bps would increase projected
banking NII for the 12 months to 31 December 2026 by $163m. This
compares with the prior year sensitivities for the 12 months to
31 December 2025 of a $156m decrease, and a $156m increase,
respectively.
Overall the banking NII sensitivity is mainly driven by interest rate
sensitive liabilities funding equity (non-interest bearing) investments in
subsidiaries.
Market risk
ÑSee page 138 for our definition of Market risk.
Market risk arises from both trading portfolios and non-trading
portfolios. Trading portfolios comprise positions held for client servicing
and market-making, with the intention of short-term resale and/or to
hedge risks resulting from such positions.
ÑFor further details of market risk in non-trading portfolios, see page 198.
Market risk management
Governance and structure
The following table summarises the main business areas where trading
market risks reside and the market risk measures used to monitor and
limit exposures.
| Risk types | Trading risk |
|---|---|
| –Foreign exchange and commodities<br><br>–Interest rates<br><br>–Credit spreads<br><br>–Equities | |
| Global business | CIB |
| Risk measure | Value at risk | Sensitivity | Stress testing |
The objective of our risk management policies and measurement
techniques is to manage and control market risk exposures through
prudent oversight, to ensure that our market risk profile aligns with our
established risk appetite and strategic objectives.
Market risk is managed and controlled through limits approved by the
Group’s senior management. These limits are allocated across
business lines and to the Group’s legal entities. Each major operating
entity has an independent market risk management and control sub-
function, which is responsible for measuring, monitoring and reporting
market risk exposures against limits on a daily basis. Each operating
entity is required to assess the market risks arising in its business and
to transfer them either to its local Markets and Securities Services or
Markets Treasury unit for management, or to separate books managed
under the supervision of the local ALCO. The Traded Risk function
enforces the controls around trading in permissible instruments
approved for each site as well as changes that follow the approval of
new products. Traded Risk also restricts trading in the more complex
derivative products to only those offices with appropriate levels of
product expertise and control systems.
Key risk management processes
Monitoring and limiting market risk
exposures
Our objective is to manage and control market risk exposures while
maintaining a market profile consistent with our risk appetite.
We use a range of tools to monitor and limit market risk exposures
including sensitivity analysis, VaR and stress testing.
Sensitivity analysis
Sensitivity analysis measures the impact of movements in individual
market factors on specific instruments or portfolios, including interest
rates, foreign exchange rates and equity prices. We use sensitivity
measures to monitor the market risk positions within each risk type.
Granular sensitivity limits are set for trading desks with consideration of
market liquidity, customer demand and capital constraints, among
other factors.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 201 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Market risk |
Value at risk
(Audited)
VaR is a technique for estimating potential losses on risk positions as a
result of movements in market rates and prices over a specified time
horizon and to a given level of confidence. The use of VaR is integrated
into market risk management and calculated for all trading positions
regardless of how we capitalise them.
Our models are predominantly based on historical simulation that
incorporates the following features:
–historical market rates and prices, which are calculated with
reference to foreign exchange rates, commodity prices, interest
rates, equity prices and the associated volatilities;
–potential market movements that are calculated with reference to
data from the past two years; and
–calculations to a 99% confidence level and using a one-day holding
period.
The models also incorporate the effect of option features on the
underlying exposures. The nature of the VaR models means that an
increase in observed market volatility will lead to an increase in VaR
without any changes in the underlying positions.
VaR model limitations
Although a valuable guide to risk, VaR is used with awareness of its
limitations. For example:
–The use of historical data as a proxy for estimating future market
moves may not encompass all potential market events, particularly
those that are extreme in nature. As the model is calibrated on the
last 500 business days, it does not adjust instantaneously to a
change in the market regime.
–The use of a one-day holding period for risk management purposes
of trading books assumes that this short period is sufficient to
hedge or liquidate all positions.
–The use of a 99% confidence level by definition does not take into
account losses that might occur beyond this level of confidence.
–VaR is calculated on the basis of exposures outstanding at the close
of business and therefore does not reflect intra-day exposures.
Risk not in VaR framework
The risks not in VaR (‘RNIV’) framework captures and capitalises
material market risks that are not adequately covered in the VaR
model.
Risk factors are reviewed on a regular basis and are either incorporated
directly into the VaR models, where possible, or quantified through
either the VaR-based RNIV approach or a stress test approach within
the RNIV framework. While VaR-based RNIVs are calculated by using
historical scenarios, stress-type RNIVs are estimated on the basis of
stress scenarios whose severity is calibrated to be in line with the
capital adequacy requirements. The outcome of the VaR-based RNIV
approach is included in the overall VaR calculation but excluded from
the VaR measure used for regulatory back-testing.
Stress-type RNIVs include a deal contingent derivatives capital charge
to capture risk for these transactions and a de-peg risk measure to
capture risk to pegged and heavily-managed currencies.
Stress testing
Stress testing is an important procedure that is integrated into our
market risk management framework to evaluate the potential impact
on portfolio values of more extreme, although plausible, events or
movements in a set of financial variables. In such scenarios, losses can
be much greater than those predicted by VaR modelling. Stress testing
and reverse stress testing provide senior management with insights
regarding the ‘tail risk’ beyond VaR.
Stress testing is implemented at legal entity, regional and overall Group
levels. A set of scenarios is used consistently across all regions within
the Group. Market risk stress testing incorporates both historical and
hypothetical events. Market risk reverse stress tests are designed to
identify vulnerabilities in our portfolios by looking for scenarios that lead
to loss levels considered severe for the relevant portfolio. These
scenarios may be local or idiosyncratic in nature and complement the
systematic top-down stress testing.
The risk appetite around potential stress losses for the Group is set and
monitored against limits.
Back-testing
We routinely validate the accuracy of our VaR models by back-testing
the VaR metric against both actual and hypothetical profit and loss.
Hypothetical profit and loss excludes non-modelled items such as fees,
commissions and revenue related to intra-day transactions.
The hypothetical profit and loss reflects the profit and loss that would
be realised if positions were held constant from the end of one trading
day to the end of the next. This measure of profit and loss does not
align with how risk is dynamically hedged, and is therefore not
necessarily indicative of the actual performance of the business.
The number of hypothetical loss back-testing exceptions, together with
a number of other indicators, is used to assess model performance and
to consider whether enhanced internal monitoring of a VaR model is
required. We back-test our VaR at set levels of our Group entity
hierarchy.
During 2025, the Group experienced one back-testing exception
against hypothetical losses. This exception was mainly driven by
heightened market volatility observed after tariff policy
announcements, with equity volatilities and credit spreads as the main
contributing risk factors.
Key developments in 2025
There were no material changes to our policies and practices for the
management of market risk in 2025.
We continued to manage market risk prudently during 2025. Market
risk was managed using a complementary set of risk measures and
limits, including stress testing and scenario analysis. Main sensitivity
exposures and VaR remained within appetite as the business pursued
its core market-making activity in support of our customers. We
employed stress testing tools to assess a range of geopolitical and
technical scenarios that were relevant during the year.
Trading portfolios
Value at risk of the trading portfolios
Trading VaR is predominantly generated by Markets and Securities
Services. As of 31 December 2025, Trading VaR stood at $38.9m, a
small increase compared with $38.3m as of 31 December 2024. At the
end of December 2025, Trading VaR was mainly driven by exposures
to foreign exchange and interest rate risk factors from the Global
Foreign Exchange business line to facilitate client-driven activity.
Trading VaR peaked at $57.1m in January 2025, driven by exposures to
US dollar interest rates. Trading VaR reduced during the rest of 2025
mainly as a result of some volatile interest rate scenarios rolling off the
VaR scenario window.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 202 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Market risk |
The daily levels of total trading VaR during 2025 are set out in the graph below.
| Daily VaR (trading portfolios), 99% 1 day ($m) |
|---|
The Group trading VaR for the year is shown in the table below.
| Trading VaR, 99% 1 day1 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Audited) | At 31 Dec 2025 | At 31 Dec 2024 | ||||||||||
| Foreign<br><br>exchange and<br><br>commodity | Interest<br><br>rate | Equity | Credit<br><br>spread | Portfolio<br><br>diversification1 | Total2 | Foreign<br><br>exchange and<br><br>commodity | Interest<br><br>rate | Equity | Credit<br><br>spread | Portfolio<br><br>diversification1 | Total2 | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Balance | 13.9 | 18.9 | 17.1 | 8.5 | (19.5) | 38.9 | 14.6 | 34.9 | 16.3 | 8.2 | (35.7) | 38.3 |
| Average | 13.6 | 27.5 | 16.3 | 10.1 | (29.1) | 38.5 | 15.2 | 48.3 | 14.8 | 9.9 | (35.1) | 53.1 |
| Maximum | 26.9 | 54.9 | 24.6 | 17.9 | 57.1 | 29.8 | 78.1 | 20.5 | 13.1 | 83.3 | ||
| Minimum | 6.2 | 17.1 | 12.3 | 6.4 | 27.3 | 6.9 | 24.8 | 12.7 | 6.6 | 37.0 |
1See page 199 for our definition of ‘Portfolio diversification’.
2The total VaR is non-additive across risk types due to diversification effects.
The table below shows trading VaR at a 99% confidence level
compared with trading VaR at a 95% confidence level at
31 December 2025. This comparison facilitates the benchmarking of
the trading VaR, which can be stated at different confidence levels,
with financial institution peers. The 95% VaR is unaudited.
| Comparison of trading VaR, 99% 1 day vs trading VaR, 95% 1 day | ||
|---|---|---|
| Trading VaR, 99% 1 day | Trading VaR, 95% 1 day | |
| $m | $m | |
| Balance at<br><br>31 Dec 2025 | 38.9 | 21.0 |
| Average | 38.5 | 23.3 |
| Maximum | 57.1 | 31.4 |
| Minimum | 27.3 | 18.1 |
| Balance at<br><br>31 Dec 2024 | 38.3 | 23.4 |
| Average | 53.1 | 33.0 |
| Maximum | 83.3 | 48.9 |
| Minimum | 37.0 | 22.0 |
Market risk balance sheet linkages
The following balance sheet lines in the Group’s consolidated position
are subject to market risk:
Trading assets and liabilities
The Group’s trading assets and liabilities are in almost all cases
originated by CIB. Other than a limited number of exceptions, these
assets and liabilities are treated as traded risk for the purposes of
market risk management. The exceptions primarily arise in the Banking
business, where the short-term acquisition and disposal of assets is
linked to other non-trading-related activities, such as loan origination.
Derivative assets and liabilities
We undertake derivative activity for three primary purposes: to create
risk management solutions for clients, to manage the portfolio risks
arising from client business, and to manage and hedge our own risks.
Most of our derivative exposures arise from sales and trading activities
within CIB. The assets and liabilities included in trading VaR give rise to
a large proportion of the income included in net income from financial
instruments held for trading or managed on a fair value basis.
Adjustments to trading income such as valuation adjustments are not
measured by the trading VaR model.
ÑFor information on the accounting policies applied to financial instruments
at fair value, see Note 1.2 on the financial statements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 203 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Climate risk
| TCFD |
|---|
Our climate risk approach identifies two primary drivers of climate risk:
–physical risk, which arises from the increased frequency and
severity of extreme weather events, such as hurricanes and floods,
or chronic gradual shifts in weather patterns or rises in the sea level;
and
–transition risk, which arises from the process of moving to a net
zero economy, including changes in government policy and
legislation, technology, market demand, and reputational
implications triggered by a change in stakeholder expectations,
action or inaction.
We continue to identify a thematic issue related to climate risk that
could manifest as reputational, regulatory compliance, and litigation
risks: the risk of greenwashing. This risk arises from knowingly or
unknowingly making inaccurate, unclear, misleading or unsubstantiated
claims regarding sustainability to our stakeholders.
Net zero alignment risk had previously been identified as a thematic
issue and is now replaced and managed within the new risk type,
sustainability execution risk.
ÑSee page 138 for our definition of climate risk.
Approach
We acknowledge that the physical effects of climate change and the
shift towards a net zero economy may pose substantial financial risks
to companies, investors, and the financial system. HSBC may
encounter climate risks directly or indirectly through our customer
relationships, potentially leading to both financial and non-financial
consequences.
Our climate risk approach aims to effectively manage the material risks
that could impact our operations, financial performance and stability,
and reputation. It is informed by the evolving expectations of our
regulators and is aligned to our Group-wide risk management
framework, which sets out how we identify, assess and manage our
risks across our three lines of defence.
We continue to work to enhance our climate risk capabilities across our
businesses by prioritising sectors, portfolios and counterparties with
the highest impacts. Recognising this as a long-term iterative process,
we aim to expand our coverage and integrate more advanced data,
climate analytics, frameworks and tools, while adapting to emerging
industry best practices and climate-related regulations.
We regularly reflect on the evolving nature of financial and non-financial
climate risks in the real world to improve the integration of climate risk
factors into strategic planning, transactions, and decision-making
across our operations. Our current processes for managing climate and
sustainability-related targets, net zero transition plans, and climate
strategy include conducting impact assessments of HSBC's M&A
activities.
The tables below provide an overview of the risk drivers and thematic
issue considered within HSBC’s climate risk approach.
| Climate risk – risk drivers | ||||
|---|---|---|---|---|
| Details | Potential impacts | Time horizons | ||
| Physical | Acute | Increased frequency and severity of weather events causing<br><br>disruption to business operations. | –Decreased real estate<br><br>values or stranded assets.<br><br>–Decreased household<br><br>income and wealth.<br><br>–Increased costs of legal<br><br>and compliance.<br><br>–Increased public scrutiny.<br><br>–Decreased profitability.<br><br>–Lower asset performance. | Short-term<br><br>Medium-term<br><br>Long-term |
| Chronic | Longer-term shifts in climate patterns (e.g. sustained higher<br><br>temperatures, sea level rise, shifting monsoons or chronic heat<br><br>waves). | |||
| Transition | Policy and legal | Mandates for, and regulation of products, and services and/or<br><br>policy support for low-carbon alternatives. Litigation from parties<br><br>who have suffered loss and damage from climate impacts. | ||
| Technology | Replacement of existing products with lower emissions options. | |||
| End-demand (market) | Changing consumer demand from individuals and corporates. | |||
| Reputational | Increased scrutiny following a change in stakeholder perceptions<br><br>of climate-related action or inaction, and diverging national and<br><br>political agendas. | |||
| Climate risk – thematic issue | ||||
| --- | --- | --- | ||
| Risk of<br><br>greenwashing | Firm | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to our sustainability ambitions, targets and<br><br>commitments, as well as the reporting of our performance towards them. | ||
| Product | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to products or services offered to clients<br><br>that have stated sustainability objectives, characteristics, impacts or features. | |||
| Client | Making inaccurate, unclear, misleading or unsubstantiated claims as a consequence of our relationships with clients or<br><br>transactions we undertake with them, where their sustainability commitments or related performance are<br><br>misrepresented or are not aligned to our own commitments. |
Our annual climate risk materiality assessment helps us to understand
how climate risk may impact across HSBC’s risk taxonomy. It
assesses the type of impact, likelihood and severity over a 12-month
period, and also considers forward-looking risk impacts.
It is used to support policy, control enhancements, and scenario
analysis. For further details of scenario analysis and the definition of the
time horizons used for assessing potential risks, see page 206.
| Climate risk drivers | Credit risk | Traded risk | Reputational risk | Regulatory<br><br>compliance risk | Resilience risk | Other financial<br><br>and non-financial<br><br>risk types |
|---|---|---|---|---|---|---|
| Physical risk | u | u | u | u | ||
| Transition risk | u | u | u | u | u | u |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 204 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
Climate risk management
Key developments in 2025
We continue to develop our climate risk management capabilities. The
following outlines key developments in 2025:
–We have enhanced our approach to managing our financed
emission targets in our wholesale portfolio, through developing
portfolio steering capabilities and revenue at risk assessments.
–We enhanced our approach to assessing the impact of climate
change on capital, focusing on credit, traded and operational risk.
–We enhanced our internal climate scenario analysis, including
through improvements to input data and models. For further details
of scenario analysis, see page 206.
–We enhanced our approach to managing and mitigating the risk of
greenwashing.
–We revised our climate risk guidelines for relationship managers to
further embed climate risk considerations into credit risk
assessments.
While we have made progress, further work remains, including the
need to develop additional metrics and tools to measure our exposure
to climate-related risks.
Governance and structure
The Board takes overall supervisory responsibility for our ESG strategy,
overseeing executive management in developing the approach,
execution and associated reporting.
The Group Chief Risk and Compliance Officer is the senior manager
responsible for the management of climate risk under the UK Senior
Managers Regime.
The Group Reputational Risk Committee provides recommendations
and advice on significant reputational risk matters with impacts across
the Group.
The Environmental Risk Steering Meeting provides oversight of
environmental risk and the risk of greenwashing. Equivalent forums
have been established at a regional level, and we will continue to
develop our approach to governance and oversight.
The Group Risk Management Meeting and the Group Risk Committee
receive updates on our climate risk profile.
ÑFor further details of the Group’s ESG governance structure, see page 57.
Risk appetite
Our climate risk appetite statement forms part of the Group’s risk
appetite statement and is approved and overseen by the Board. This
supports the business in delivering our net zero ambition effectively
and sustainably, and is reviewed annually, or sooner should a breach
occur.
Climate risk indicators are reported on a quarterly basis for oversight by
the Group Risk Management Meeting and the Group Risk Committee.
Policies, processes and controls
We continue to update and integrate climate risk into policies,
processes and controls across many areas of our organisation.
ÑFor further details of how we manage climate risk across our business
segments, see page 49.
Embedding our climate risk approach
The below details how we have embedded the management of
climate risk across key risk types. For further details of our internal
scenario analysis, see ‘Insights from climate scenario analysis’ on page
206.
Wholesale credit risk
We have metrics in place to monitor the exposure of our wholesale
corporate lending portfolio to six high transition risk sectors, as shown
in the below table. As at 31 December 2025, the overall exposure to
the six high transition risk sectors was 17.5% of the total gross
carrying amount of wholesale loans and advances. These disclosures
cover the whole of the value chain of the sector. The sector
classifications are based on internal HSBC definitions and are applied
on a group of counterparties, which can be judgemental in nature. We
use publicly available data, as well as internal data and input from
subject matter experts to determine the appropriate sector. The sector
classifications are subject to ongoing data quality improvements and
continuous enhancement of our processes. The data will continue to
be refined in future years.
Our relationship managers engage with our material wholesale
customers, including those in higher transition risk sectors, through a
transition engagement questionnaire (‘TEQ’). The TEQ covers all
geographies, and it helps to gather information and assess our
wholesale customers’ business model alignment to a net zero
transition and their exposure to physical and transition risks. We use
the responses to the questionnaire to support risk assessments of our
material wholesale customers.
Our credit policies require that relationship managers comment on
climate risk factors in credit applications for new money requests and
annual credit reviews. Our credit policies also require manual credit risk
rating overrides if climate is deemed to have a material impact on
credit risk under 12 months if not already captured under the original
credit risk rating.
In 2025, we continued to develop our approach towards credit risk
management, and refine climate risk guidelines for relationship
managers to further embed climate risk considerations into credit risk
assessments.
Key challenges for further embedding climate risk into credit risk
management relate to the availability of adequate physical risk data to
assess impacts on our wholesale customers.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 205 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Climate risk | ||||||||
| Wholesale loan exposure to high transition risk sectors at 31 December 2025 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Units | Automotive | Chemicals | Construction, Contracting<br><br>& Building Materials | Metals and<br><br>mining | Oil and<br><br>gas | Power and<br><br>utilities | Total | |
| Wholesale loan exposure1,2,3,4 | $bn | 20 | 12 | 19 | 17 | 18 | 25 | 111 |
1 Amounts shown in the table also include green and other sustainable finance loans, which support the transition to the net zero economy. The methodology for
quantifying our exposure to high transition risk sectors and the transition risk metrics will evolve over time as more data becomes available and is incorporated
into our risk management systems and processes. We are aiming to develop the appropriate systems, data and processes to provide enhanced disclosures in
future years.
2 Counterparties are allocated to the high transition risk sectors via a two-step approach. Firstly, where the main business of a group of connected counterparties
is in a high transition risk sector, all lending to the group is included in one high transition risk sector irrespective of the sector of each individual obligor within
the group. Secondly, where the main business of a group of connected counterparties is not in a high transition risk sector, only lending to individual obligors in
the high transition risk sectors is included. The main business of a group of connected counterparties is identified by the industry that generates the majority of
revenue within a group. Customer revenue data utilised during this allocation process is the most recent and readily available and will not always align to our
own reporting period.
3 The six high transition risk sectors make up 17.5% of the total gross carrying amount of wholesale loans and advances to banks and customers of $635bn.
Amounts include assets held for sale.
4 The sectors used to monitor the wholesale corporate lending portfolio set out in the table are different to the scope of sectors we focus on for financed
emissions targets and reporting. The latter focus on the most carbon-emissive sectors, and the parts of the value chain where we believe the majority of
emissions are produced to help reduce double counting. These sectors are set out within the 'Financed emissions' section on page 41.
Retail credit risk
Climate risk may impact retail credit risk through an increase in credit
losses on our global retail mortgage portfolio, primarily due to the
impact of physical risk. Our climate scenario analysis conducted over
the last two years shows that climate-related risk is not expected to
become significant for credit default in the medium term to 2030, due
to a relatively low loan-to-value (‘LTV’) profile of properties, their
locations and availability of property insurance for our customers.
Property insurance remains a mitigant. However, as climate risk
increases, alongside uncertainties of how the insurance market will
evolve, impacts are expected to increase over the longer term beyond
- Results are considered directional and will evolve over time as
our approach continues to mature. Within our mortgage portfolios,
properties or areas with potential heightened physical risk are identified
and assessed locally with exposure monitored. A reduction in property
value, higher insurance costs and insurance availability are potential
future negative financial impacts for higher physical risk properties.
Retail mortgage book and relevant 2025
enhancements
The UK and Hong Kong are our most material mortgage markets by
exposure, which at December 2025, represented approximately 50%
and approximately 30% respectively of our global mortgage portfolio,
with other IWPB markets accounting for the remaining balance.
Analysis conducted over the last two years on the maturity profile of
the UK mortgage book shows that the average remaining contractual
term is 22.2 years. However, with some customers undertaking
refinancing options during this term, the average term of the mortgage
in practice is between five and eight years. This means our strategic
approach to climate risk needs to consider short-term risk through to
long-term forward-looking risk, given that customers may choose to
remain with us over the whole life of the loan. We have also performed
forward-looking climate scenario analysis on UK, Hong Kong and
additional markets, including US and Australia, collectively covering
over 90% of our retail portfolio. For further information, see page 209.
We continue to improve our climate risk management approach,
including enhancements to our internal climate risk policy in 2025 and
associated controls. This includes mandating key risk indicators for
physical risk and introducing a climate risk assessment in mortgage
decision making. The UK already considers physical risk in relation to
flooding and coastal erosion as part of an established mortgage
decisioning process, using data sourced from third-party providers.
Hong Kong introduced physical risk considerations into the mortgage
origination process during 2025, utilising third-party data.
Physical risk
UK flood data considers present day risk from tidal, river and surface
water flooding baselined to 2021. A flood risk rating score of 0-100 is
provided, with 100 being the highest risk. Flood risk bands are based
on the average annual loss generated using flood hazard frequency,
flood depths, and the probability of flooding events occurring. Based on
available data, 3.6% of the UK mortgage book by balances is at very
high/high risk of flooding. Geographically, our highest risk exposures
are Greater London and the South East.
ÑFor the Hong Kong physical risk information, please refer to the scenario
analysis section on page 209.
Transition risk
Transition risk for retail mortgages is the risk of potential loss of
property value and/or customer financial impairment resulting from the
adjustment towards a lower carbon economy. Examples of these
impacts include changes in energy prices and evolving government
regulation for energy efficiency standards.
For the UK, we monitor the energy performance certificate (‘EPC’)
ratings of individual properties from A (highest efficiency) through to G
(least efficient), as EPCs are commonly used as an indicator of
transition risk. All UK rental properties must have a minimum EPC
rating of E. We track EPC ratings for both owner occupier (‘OO’) and
buy to let (‘BTL’) properties. The ESG data file details the profile of
current EPCs. For completeness, where we do not hold a current EPC,
we have included expired EPCs. For OO, 85.3% of properties by
lending balances hold a valid EPC/expired certificate, of which 41% are
EPC A-C. For BTL, 83.1% of properties by lending balances hold a valid
EPC/expired certificate, of which 60.2% are EPC A-C. We continue to
monitor the profile of EPC ratings and closely track evolving
government legislation, which will be a key factor in the
decarbonisation of buildings.
ÑFor further details of flood risk, EPC breakdown and the average
tenor of our UK retail mortgage portfolio, see our ESG Data Pack at
www.hsbc.com/esg.
Treasury risk
Climate risk may impact Treasury risk through increased regulatory
requirements and from changes to customer behaviours, which may
result in increased deposit outflows. Climate risk may also impact
interest rates and consequently the repricing profile of the balance
sheet.
As part of our ICAAP, we assess the impact of climate change on
capital, focusing on credit risk, traded risk and operational risk, and
perform sensitivity analysis on our Internal Capital Planning Buffer.
As part of our ILAAP, we assess how climate risk could impact the
Group liquidity position.
Pension risk
Climate risk could result in additional costs within our defined benefit
pension plans, due to changes in the investment performance of
pension plans or through having to meet evolving regulatory
requirements.
Our global policies covering the oversight of pension investments
include climate considerations. We also conduct an annual exercise to
estimate the exposure of our largest pension plans to climate risk.
Insurance risk
We are improving our ability to perform exploratory assessments of the
solvency resilience of our biggest insurance businesses under climate
stress scenarios.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 206 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
Traded risk
Climate risk may result in trading losses due to increases in market
volatility and widening spreads from the macro and microeconomic
impacts of transition and physical risk. We monitor climate sensitive
exposures against regional and global limits in our global and entity
mandates, including for vulnerable countries and high-transition risk
sectors.
Climate scenarios are included in our stress testing scenario library
and run every month to identify the vulnerabilities of the trading book
in a climate-stressed context. The scenarios are updated annually in
light of the most recent developments in terms of policy and climate
events, with exposures and stress testing results reported to global
and regional senior management.
Reputational risk
We manage the reputational impact of climate risk through our broader
reputational risk framework, which plays a role in managing the risk of
greenwashing, and is supported by our sustainability risk policies and
metrics.
Our global network of sustainability risk managers provides local policy
guidance to relationship managers for the oversight of policy
compliance, and in support of implementation across our wholesale
banking activities.
ÑFor further details of our sustainability risk policies, see page 49.
ÑFor further details of our approach to reputational risk, see https://
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/
reputational-risk.
Sustainability execution risk
Sustainability execution risk has been formally defined as a new risk
type and embedded in our Risk Taxonomy to help identify and
manage the risks around the delivery and execution of our
sustainability ambitions, targets and commitments. Sustainability
execution risk enables effective end-to-end risk management through
dedicated risk stewardship, monitoring and assessment of controls
and emerging risks.
Regulatory compliance risk
Regulatory compliance oversees and supports the business in the
management of climate-related risks that could cause breaches of our
regulatory duties to customers and inappropriate market conduct. Our
policies include sustainability considerations, particularly in relation to
new and ongoing product management, sales outcomes, conflicts of
interest and product marketing. We continue to enhance the
associated control frameworks, processes and customer outcomes.
Resilience risk
Climate risk may influence resilience risks through impacts on our
buildings or through physical and/or transition disruption to third-party
supplier relationships.
As part of our Internal Climate Scenarios Analysis (‘ICSA’), we have
developed different scenarios to understand the impact of physical
climate risk on our properties. For further details, please see page 210.
We continue to review and adapt our resilience risk policies as climate
risk requirements evolve.
Model risk
Model risk in a climate-related context refers to the uncertainties and
complexities inherent in the modelling of the financial impact
translation of climate-related changes and scenarios.
Climate risk models are used for climate scenario analysis, risk
management, and emissions reporting among other use cases. Key
challenges, shared across the industry, include the quality and
consistency of data, and assumptions required to mitigate these
inherent model limitations.
Model risk policy and procedures continue to evolve in line with
regulation, setting out the minimum control requirements for
identifying, measuring and managing model risk for climate-related
models.
Financial reporting risk
Climate risk impacts financial reporting risk through increased
disclosure requirements.
The scope of financial reporting risk includes oversight of the accuracy
and completeness of ESG and climate-related reporting. Our risk
appetite statement states that HSBC has no appetite for material errors
in ESG disclosures in our key markets, balanced with the evolving
requirements and data availability.
In addition, our internal controls incorporate requirements for
addressing the risk of misstatement in ESG and climate reporting. To
support this, a framework is used to provide guidance on control
implementation over ESG and climate reporting and disclosures, which
includes areas such as process and data governance, and risk
assessment.
Challenges
Key challenges include:
–an increasingly complex and divergent regulatory environment
across jurisdictions;
–the diverse range of internal and external data sources and data
structures needed for climate-related reporting, which introduces
data accuracy and reliability risks;
–industry-wide data gaps on customer emissions and transition plan
and methodology gaps, which limit our ability to assess transition
risks accurately; and
–data limitations on customer assets and supply chains, and
methodology gaps, which hinder our ability to assess physical risks
accurately.
.
Insights from climate scenario analysis
Climate scenario analysis supports our strategy by assessing our
potential exposures to risks and vulnerabilities under a range of climate
scenarios.
Our exercises focus on areas most vulnerable to climate risks across
various business sectors, portfolios, counterparties and our own
properties. They serve as forward-looking tools that assess the
potential impacts of climate-related risks on our operations, credit
portfolio and capital. By simulating the impacts on our customers’
financials and collateral, the analysis provides insights into the long-
term effects that climate risks may have on our balance sheet. While
credit risk is the primary focus, we also examine potential impacts
upon other principal risk types. For further details about these risks,
see ‘Climate risk’ on page 203.
Our Group-wide internal climate scenario analysis exercises are
sufficiently diverse to enable key physical and transition risk
vulnerabilities to be explored using a wide range of potential climate
outcomes. They provide insights that enhance how we understand the
various transition and global warming pathways that may unfold, which
help to inform how we manage the potential financial implications for
our customers and our shareholders.
We have conducted an internal climate scenario analysis exercise
annually since 2021. The 2025 exercise supplements bespoke analyses
prepared in response to regulatory requirements in various
jurisdictions. It focused on the following time horizons:
–Short-term: 2025-2027 (0-2 years)
–Medium-term: 2028-2030 (3-5 years)
–Long-term: 2031-2040 (6-15 years)
The short- and medium-term horizons align with our internal strategic
planning cycle, while the long-term highlights risks beyond that horizon.
The scenario analysis exercise supports our assessment that the Group
is well capitalised in relation to the potential risks and challenges posed
by climate change. The results are reviewed and endorsed by the
Group Risk Committee.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 207 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
Climate scenario analysis is an evolving discipline. While we seek
continuous methodology enhancement to utilise the latest
developments and best-available data, it remains the case that there
are significant limitations and assumptions. As capabilities improve,
climate scenario analysis outcomes may change. For further details see
‘Assumptions and limitations’ on page 211.
Our climate scenario analysis approach
Our internal climate scenario analysis exercise used four scenarios designed to examine a range of climate pathways. These are shown in
‘Characteristics of our climate scenarios’ below:
Characteristics of our climate scenarios
+Physical Risk Transition Risk+
| Scenarios | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Downside Physical Risk | Severe Climate Stress2 | Current Commitments | Below 2 Degrees | |||||||
| Scenario<br><br>outcomes | Scenario narrative | Climate action is limited<br><br>to currently implemented<br><br>governmental policies,<br><br>new decarbonisation<br><br>policies fail to get<br><br>introduced leading to<br><br>significant global warming<br><br>and physical risk events | An extreme scenario<br><br>assessing concurrent<br><br>impacts of accelerated<br><br>climate policies and severe<br><br>physical risk events. It<br><br>specifically explores<br><br>disorderly climate action that<br><br>has been triggered by<br><br>physical events leading to a<br><br>short sharp economic<br><br>recession. | Climate action includes<br><br>policies already in place<br><br>and governmental<br><br>commitments likely to be<br><br>implemented. This leads<br><br>to a slower-than-required<br><br>transition to a net zero<br><br>economy reflective of the<br><br>current pace of transition. | A Paris Agreement-aligned<br><br>scenario that assumes an<br><br>orderly and gradual rise in<br><br>the stringency of climate<br><br>policies over time. Net zero<br><br>is achieved but after 2050. | |||||
| Rise in global temperatures<br><br>by 2100 (vs pre-industrial<br><br>levels) | 4°C+ |  |
N/A | 2.6˚C |  |
1.7˚C |  |
|||
| How scenario aligns to RCP3 | RCP 8.5 | N/A | RCP 4.5 | RCP 2.6 | ||||||
| Scenario end point | 2050 | 2030 | 2050 | 2050 | ||||||
| Underlying<br><br>assumptions<br><br>based on<br><br>global<br><br>averages | Global climate actions | Implemented policies only | Rapid & disorderly transition | Viable pledged policies | Gradually rising stringency<br><br>of policies | |||||
| Assumed pace of technology<br><br>change and adoption | Slow change | Accelerated progress | Limited progress | Moderate change | ||||||
| Assumed socioeconomic<br><br>impact | High | Very high | Moderate | Moderate to high | ||||||
| 2030 | 2040 | 2030 | 2030 | 2040 | 2030 | 2040 | ||||
| Assumed carbon price<br><br>($/tCO2)1 | 18 | 18 | 326 | 29 | 54 | 44 | 81 | |||
| Assumed % increase in GDP<br><br>since 2020 | 29% | 55% | 24% | 32% | 65% | 32% | 69% | |||
| Assumed % increase in<br><br>energy usage since 2020 | 23% | 38% | 4% | 15% | 23% | 9% | 9% | |||
| % renewable energy mix | 12% | 16% | 26% | 16% | 25% | 19% | 36% | |||
| Scenario risk<br><br>characteristics | Climate<br><br>risk | Physical | p | Higher | p | Higher | u | Moderate | q | Lower |
| Transition | q | Lower | p | Higher | u | Moderate | p | Higher |
1Carbon price represents the cost effects of climate-related policies that aim to discourage carbon-emitting activities and encourage low-carbon solutions. The
expected result of higher carbon prices is a reduction in emissions as high emissions become uneconomical.
2The scenario characteristics shown for the Severe Climate Stress scenario only describe the scenario that was used to assess credit risk.
3Representative Concentration Pathways (RCPs) are a set of greenhouse gas concentration trajectories developed for climate modelling and research. They were
formally adopted by the IPCC and are used to assess the potential impacts of climate change based on different levels of greenhouse gas emissions.
Our climate scenarios
We have designed a suite of diverse climate scenarios that explore
plausible pathways which can support a holistic view that supplements
the Group’s current and future strategic thinking.
The climate scenarios are underpinned by well-established industry
bodies, such as the Network for Greening the Financial System
(‘NGFS’) Phase V, the Intergovernmental Panel on Climate Change
(‘IPCC’) and International Energy Agency (‘IEA’), which are further
enriched for additional granularity, to seek to ensure consistency with
industry-recognised approaches and to reflect the latest climate policy
and economic outlook and our portfolio vulnerabilities.
There are three long-term scenarios. The Below 2 Degrees scenario is
our Paris Agreement-aligned scenario. We use the Current
Commitments scenario to support the Group’s financial planning, as
this is deemed to be the most likely scenario to occur over the five-
year planning horizon. The Downside Physical Risk scenario is a less
probable scenario with higher global warming and more significant
physical risk impacts.
To support how we assess the climate-related impacts observed
within our climate scenarios, we have also artificially constructed a
counterfactual scenario (which is a climate agnostic scenario). This
entailed taking our Current Commitments scenario and removing the
climate impacts, using climate-related GDP deviations as a proxy.
The Severe Climate Stress scenario is a highly improbable short- and
medium-term stress scenario, aligned to NGFS’s Short-Term Scenario
Framework. The scenario envisages that extreme physical risk events
– which include 1-in-100 year flooding, heatwave and drought events –
pivot the public consensus on climate change, which accelerates the
transition to net zero. It has the effect of compressing both physical
risks and transition risks into a short timeframe. Although the scenario
is extreme and highly unlikely, it assists us in understanding our current
exposures.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 208 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
We use the scenarios to assess our key risk types and businesses as follows:
| Evaluating key risk types and businesses using climate scenario analysis | ||||||
|---|---|---|---|---|---|---|
| Resulting Climate Vulnerabilities and Opportunities | Climate scenarios1 | Climate risk type assessed2 | ||||
| DP | SCS | CC | B2C | TR | PR | |
| Theme: More frequent and disruptive weather events and rising temperature over long term | ||||||
| Retail and wholesale credit risk (real estate portfolios) – our clients may<br><br>experience property valuation impacts due to heightened physical risk or<br><br>revenue loss due to business disruption | u | u | u | u | ||
| Traded risk – a re-pricing of assets exposed to acute and chronic physical risks | u | u | u | |||
| Resilience risk – physical damage to our buildings, business interruption and<br><br>inability to process transactions can result in operational impacts | u | u | u | u | u | |
| Liquidity risk – evaluating both physical risk and greenwashing risk stress tested<br><br>over a 90-day horizon to analyse the resulting liquidity impact | u | u | ||||
| Theme: Our ambition to support customer decarbonisation creates risks & opportunities | ||||||
| Wholesale credit risk – corporates exposed to transition risk may experience<br><br>revenue loss or increased costs | u | u | u | u | ||
| Theme: Assessing how we meet our interim 2030 financed emissions targets and wider net-zero ambitions | ||||||
| Sustainability execution risk – assessing our revenue at risk as a result of HSBC<br><br>meeting or not meeting its ESG ambitions, targets and commitments | u | u | u | |||
| Wholesale credit risk – reshaping our portfolios away from high emitting clients<br><br>to low emitting clients | u | u | u | |||
| Theme: Unpacking ESG risks may uncover hidden risks for HSBC | ||||||
| Specific non-financial risks3 – ESG is a relatively new area with uncertainty over<br><br>future environmental and policy changes and potential greenwashing risks | u | u | u | u | ||
| Pension risk – pension funding levels may shrink if climate risk crystalises | u | u | u |
1Climate scenarios are explained in the previous section. DP = Downside Physical Risk; SCS = Severe Climate Stress; CC = Current Commitments; and B2C = Below 2
Degrees. The Severe Climate Stress scenario used to assess credit risk employed a different narrative from the tailored scenarios used to assess the other risk types.
2TR = Transition risk; PR = Physical risk. A selected climate risk type does not imply that it was assessed against all selected climate scenarios on the same row.
3Specific non-financial risks refer to financial reporting risk and regulatory compliance risk.
Assessing our resilience to climate risk
Overall, climate-related risks are not currently projected to significantly
impact our strategic priorities or business models, however the
exercise did highlight the likely challenges of meeting any net-zero
objectives in a world that is not on a net-zero pathway.
Our climate strategy includes approaches to mitigate climate change
impacts, such as portfolio steering and credit decisioning. These
support efforts to manage climate-related risks over time. Our focus is
on supporting our customers to implement quality climate transition
plans; reducing our financed emissions; continued investment into
climate modelling capabilities; and the embedding of climate risk
assessment into business-as-usual risk management processes.
Conducting climate scenario analysis involves significant assumptions
and inherent limitations. For further details see ‘Assumptions and
limitations’ on page 211.
Within the scope and limitations of our exercise, our analysis
anticipates that climate risk will be heightened within our wholesale
lending portfolio. In line with expectations of increasing transition and
physical risks, we expect climate-related credit risk to grow over time,
with the speed dependent on the severity of the risks in the assessed
scenarios. However, our global portfolios remain resilient to risks
arising from the transition to a low carbon economy. While exposures
to other risk types may also contribute to climate-related losses, their
financial impacts are expected to remain minimal in the near term.
Wholesale credit risk is projected to be the primary contributor to our
climate-related financial impacts, driven by transition risk.
The chart on the right shows how, under the Current Commitments
and Below 2 Degrees scenarios, climate transition-related ECL will
change relative to a counterfactual scenario that incorporates no
climate change effects. It shows how transition risks in our wholesale
lending portfolio are expected to remain low in the near term but
become a bigger driver of ECL into the long term as global transition
policies are forecast to increase in stringency. As shown by the
difference in results between the two regional entities referred to in
the chart, the effects of transition risks can vary significantly due to
each entity-level portfolio exposure, and the differing climate policies in
different parts of the world. The future stringency of global climate
policies, a critical differentiator in our climate scenarios, will significantly
influence climate-related financial impacts.
Projected climate transition risk-related ECL impacts on the Group’s
wholesale lending portfolio1
25%
20%
15%
10%
5%
0%
1A 10% increase is equivalent to a 1.1x-fold increase in the table on page 209.
Near-term acute physical risk shocks due to perils, such as typhoons and
heatwaves, are becoming more common as surface temperatures rise
with a slow transition to a low carbon economy. These have the potential
to increase our climate-related losses each year. The size of these losses
is dependent on the availability of insurance and the resilience of buildings
to extreme weather. While our existing analysis indicates resiliency, this
will be an area of particular focus as we further develop our capabilities.
During the five-year period assessed under the Severe Climate Stress
scenario, the Group demonstrated robust resilience. Despite the
substantial projected increase in climate-related losses, compared with
the results observed under our other climate scenarios, the stress test
results indicate that we are well-positioned to withstand adverse
climate-related conditions and maintain operational stability.
The Current Commitments scenario shows muted impacts over the
Group’s five-year planning horizon, with the projected climate-related
impacts on ECL remaining within the Group’s current risk appetite. A shift
towards the Below 2 Degrees pathway would be expected to crystallise
some incremental climate-related losses over the planning horizon but
these are expected to remain minimal at Group level. Beyond the long-
term horizon, unmitigated climate stress has the potential to be a
headwind to the Group’s financial performance and capital position as
transition and physical risks intensify.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 209 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
How climate change is impacting our wholesale lending portfolio
The primary channel of climate risk exposure within our wholesale
portfolio is through lending activities. We have identified six key
sectors with elevated transition risk as detailed on page 204. These
sectors, together with an additional five sectors, were selected due to
the size of our climate risk exposures for in-depth assessments to be
evaluated as part of our climate scenario analysis.
Our assessment specifically examines the influence of transition risk
on the portfolio with an emphasis on the high transition risk sectors.
We quantify the modelled climate-related impact on our projected ECL
across the short-, medium- and long-term horizons under our transition
risk scenarios. This was compared with a counterfactual scenario that
excludes climate change impacts to isolate the climate-related changes
within our ECL.
Our results, as shown in the adjacent table, suggest that in the short
and medium term, we expect climate-related financial impacts to
remain relatively muted, but to increase in the long term particularly
under the Below 2 Degrees scenario, where transition risks grow at a
faster rate. A key risk driver comes from the phasing out of climate-
related government subsidies and ‘free carbon allowances’ within the
EU, introducing a potential situation where some of our customers may
lose their competitive advantages.
We project that we would see our most significant climate-related
financial impacts across a few key sectors, including: the
manufacturing sector, which includes the construction, contracting and
building materials sectors and the chemicals sector due to higher costs
following rising carbon prices; in the oil and gas sector, due to higher
production costs and lower demand; in the automotive sector due to
increased competition within the EV market; and in the metals and
mining sector due to high climate transition costs.
This year the exercise benefited from a significantly higher prevalence
of customer transition plans used in our modelling. We experienced a
46% increase compared with our 2024 exercise, allowing us to place
more emphasis on how our customers expect to transition to net zero
within our approach.
The impact on our wholesale portfolios is demonstrated by the
adjacent table, which shows the size of exposures by sector in 2024
and the increase in ECL compared with the counterfactual scenario
(expressed as a multiple). The size of our exposure in each sector is
represented by our exposure at default (‘EAD’) relative to one another.
Overall, our analysis indicates that our wholesale lending portfolio is
expected to remain resilient to climate-related risks across our
assessed time horizon.
| Impact on wholesale lending portfolios | |||||||
|---|---|---|---|---|---|---|---|
| Wholesale sectors | Exposure at<br><br>default<br><br>(EAD)3<br><br>2024 | Average ECL increase 1, 2 | |||||
| Climate Scenarios | |||||||
| Current<br><br>Commitments | Below 2<br><br>Degrees | ||||||
| ST | MT | LT | ST | MT | LT | ||
| Wholesale Lending<br><br>Portfolio - Overall4 | 100% | ||||||
| Other wholesale sectors<br><br>(low - medium risk)5 | 50% | ||||||
| Conglomerates and<br><br>industrials | n | ||||||
| Power and utilities | n | ||||||
| Automotive | n | ||||||
| Oil and gas | n | ||||||
| Construction, contracting<br><br>and building materials | n | ||||||
| Metals and mining | n | ||||||
| Land transport and<br><br>logistics | n | ||||||
| Chemicals | n | ||||||
| Agriculture & soft<br><br>commodities | n | ||||||
| Aviation | n | ||||||
| Marine | n |
1 Increase in ECL compared with counterfactual over short-, medium- and
long-term time horizons, expressed as a multiple. It represents the average
increase across the stated time period.
2 Values in the key represent the fold-increase in ECL, i.e. <1.1 equates to
less than 10% increase over the counterfactual.
3 The size of the bubbles is a visual representation of the portfolios, in terms
of EAD, relative to one another.
4 “Wholesale lending portfolio - Overall" refers to the entire portfolio including
the CRE sector.
5 "Other wholesale sectors" include the remaining sectors not listed in the
table. The CRE sector, which is disclosed on page 210, is not included.
| Lower<br><br>Impact | <1.1x | <1.25x | <1.5x | <2x | <2.5x | <3x | Higher<br><br>Impact |
|---|
How climate change is impacting our retail mortgage portfolio
Since 2023, as part of our climate scenario analysis exercises, we have
executed a climate risk assessment, at least once, for the following
mortgage portfolios: UK, Hong Kong (including Hang Seng Bank), the
United States, Singapore, Malaysia, Australia, mainland China and the
UAE. These portfolios collectively account for over 90% of the
balances in our global retail mortgage portfolio.
Our physical risk assessment methodology evaluates the impacts of
physical risk perils on property valuations, as well as on affordability for
customers arising from increased insurance and repair costs.
Additionally, for our UK portfolio, we conducted a transition risk
assessment that includes an assessment of the impacts of rising
energy costs and government legislation, including requirements for
homeowner energy efficiency upgrades.
The results of the climate scenario analysis exercise conducted on the
retail mortgage portfolio indicated that, over the long term, we
anticipate minimal climate-related losses. Although the severity of
climate perils is projected to increase, our overall losses are anticipated
to remain low, even under a severe Downside Physical Risk scenario
through to the long term. This projection assumes the ongoing
availability of insurance and reflects the portfolio’s relatively low loan-
to-value ratio.
Given the limited availability of historical climate loss data and the
uncertainty surrounding future changes in insurance provision, our
assessment should be regarded as indicative. Our analysis will
continue to evolve as our lending profile, assessment methodologies,
data sources and modelling techniques mature.
Our ESG Data Pack offers detailed analysis of the flood risk exposure
within our retail mortgage portfolio across our key markets. The
accompanying table presents projected flood depths based on the
locations of our mortgaged properties under different climate
scenarios, enabling an assessment of the potential impacts. However,
it does not consider building archetypes.
ÑPlease refer to the ESG Data Pack at www.hsbc.com/esg
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 210 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
How climate change is impacting our
commercial real estate portfolios
The commercial real estate (‘CRE’) sector within our wholesale lending
portfolio is a globally-diversified portfolio with our largest concentrations
in Hong Kong and the UK. In 2025, we carried out a detailed
assessment of our portfolios in Hong Kong, the UAE and France.
Properties in a real estate-focused portfolio are exposed to physical
climate risk, which varies significantly by geographical location. They
may also face future transition risks should governments introduce
climate-related regulation for commercial properties, such as
requirements for climate-resilient retrofitting, which we have assessed
in previous years.
When assessing physical risk impacts across the portfolio, we analysed
how the specific perils such as coastal inundation, riverine flooding,
surface flooding, cyclones and wildfires may affect the financial
performance of our portfolio under various climate scenarios. Our
primary objective was to quantify the potential damage and assess how
these events could influence the repayment capacity of borrowers
taking into account both direct impacts, such as repair costs, and
indirect impacts, such as downtime resulting from business disruption.
However, our methodology is subject to several constraints, including
limited historical data, a dependence on precise building co-ordinates
and limited insight into the resilience of individual properties. The
results are also sensitive to key assumptions, particularly those relating
to insurance coverage and reinstatement values.
The table below shows the proportion of our CRE portfolio exposed to
specific physical perils in our key markets. This analysis only focuses on
the properties within the portfolio for which we have required data.
| Exposure to peril (%)1 | ||||||
|---|---|---|---|---|---|---|
| Market | Exposure<br><br>at default<br><br>(EAD)2<br><br>2024 | Coastal<br><br>inundation | Cyclone<br><br>wind3 | Surface<br><br>water<br><br>flooding | Riverine<br><br>flooding | Forest<br><br>Fires |
| Hong<br><br>Kong | n | 17 | 100 | 20 | 15 | 2 |
| UK | n | 15 | 0 | 17 | 23 | 0 |
1 Proportion of our CRE portfolio exposed to specific physical perils in the
Downside Physical Risk scenario as at 2050.
2 The size of the bubbles is a visual representation of the portfolios, in terms
of EAD, relative to one another.
3 Although all properties in the UK could be impacted by some damage due to
extreme wind, the intensity of impact is projected to be very insignificant
and highly muted in some regions, represented by approximately 0%
exposure to this peril.
Over a long-term horizon, we assess chronic physical risks using the
Current Commitments and Downside Physical Risk scenarios to
capture the gradual evolution of physical climate impacts. The table
below shows the ECL impact on our CRE portfolio compared with a
counterfactual scenario (expressed as a multiple).
| Impact on our commercial real estate portfolio | |||||||
|---|---|---|---|---|---|---|---|
| Climate Scenarios | ECL increase 1,2 | ||||||
| Short-term | Medium-term | Long-term | |||||
| Current Commitments | |||||||
| Downside Physical Risk (2024)3 | |||||||
| Lower<br><br>Impact | <1.1x | <1.25x | <1.5x | <2x | <2.5x | <3x | Higher<br><br>Impact |
| --- | --- | --- | --- | --- | --- | --- | --- |
1 Increase in ECL compared with counterfactual over short, medium and long-
term time horizons, expressed as a multiple.
2 Values in the key represent the fold-increase in ECL, i.e. <1.1 equates to
less than 10% increase over the counterfactual which excludes climate
change impacts.
3Results under the Downside Physical Risk scenario refers to 2024 exercise.
In the most likely Current Commitments scenario, chronic physical risks
are expected to increase slowly over time with ECL estimated to be
less than 5% higher relative to the counterfactual scenario by 2040. In
the more severe Downside Physical Risk scenario, greater global
warming leads to heightened physical risks over time and the ECL
impact is estimated to be less than 15% higher than relative to the
counterfactual scenario.
This year, we also conducted a sensitivity analysis to test the impact of
extreme tail-end physical risks materialising earlier than expected under
the Downside Physical Risk scenario. In this assessment, we shift the
physical risk effects that are expected to occur between 2055-2080
towards the period between 2025-2050. Under these stressed
conditions, projected ECL were higher but still manageable, and up to
40% higher than they would have been under the counterfactual
scenario by 2040. These results show our CRE portfolio is resilient to
climate risk.
Our portfolio in Hong Kong, which represents our largest CRE portfolio,
is primarily exposed to flooding risks, including coastal inundation and
tropical cyclones. The severity and frequency of these events have
increased in recent years. Through our climate scenarios, we assess
both long-term chronic physical risks and short-term acute weather
events, with the latter being significantly more severe than those
experienced to date.
Our analysis continues to indicate that strong building standards, local
flood-mitigation measures, such as drainage tunnels, and insurance
coverage are likely to limit the financial impact of climate change on the
Hong Kong portfolio. We have also conducted sensitivity analyses to
account for variations in insurance availability.
In France, the principal physical risks are coastal inundation from storm-
driven tidal surges and riverine flooding due to overflowing river banks.
Only a small proportion of the portfolio is exposed to these hazards,
resulting in minimal financial exposure. Our clients typically hold
diversified CRE portfolios, and property elevation serves as a key
mitigator, making the portfolio more resilient to both chronic and acute
physical risks.
This year, we also analysed our UAE portfolio as part of a regulatory
exercise by the Central Bank of the UAE, focusing on physical risks.
The exercise separately modelled two key perils – storm surge and
rainfall – using severity levels and valuation shocks provided directly by
the regulator. The capital impact was found to be minimal, as customer
assets tend to be located in less vulnerable zones. Strong loan-to-value
ratios further mitigated the effect of severe valuation shocks.
Overall, and consistent with our previous assessments, our analysis
shows that our CRE portfolio remains resilient to climate risk. We
continue to monitor emerging risks closely and adapt our strategies to
ensure the ongoing financial stability of the portfolio under evolving
climate scenarios.
How climate change may impact our
properties
We use stress testing to evaluate the potential impact on our owned or
leased premises. Our 2025 scenario stress test analysed how six
climate change-related hazards – comprising coastal inundation, surface
water flooding, riverine flooding, forest fires, extreme wind and tropical
cyclones – could impact 2,276 of our properties.
Key findings from the RCP8.5, Downside Physical Risk scenario
included that by 2050, 20 of our 2,276 properties will have a high
potential for impact due to climate change, with insurance-related
losses estimated to be in excess of 3% of the insured value of the
buildings.
A key finding from the RCP4.5, Current Commitments scenario
showed that the total number of buildings at risk reduces to 15. The
highlighted facilities are still at risk from the same perils of coastal
inundation and tropical cyclone by 2050.
The resilience of our properties
Climate change poses a physical risk to the buildings that we occupy,
potentially impacting our operational resilience. This includes our
offices, retail branches and data centres, both in terms of loss and
damage, and business interruption.
We measure the impacts of climate and weather events on our
buildings on an ongoing basis using historical, current and scenario-
modelled forecast data. In 2025, there were 33 major storms.
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
No facilities were impacted but two branches were proactively closed
to mitigate any risk due to the extreme weather conditions.
Forward-looking analysis along with historical data helps inform real
estate planning. We will continue to enhance our understanding of how
extreme weather events impact our buildings portfolio as climate risk
assessment tools improve and evolve. We buy insurance for property
damage and business interruption and consider insurance as a loss-
mitigation strategy.
We regularly review and enhance our building selection process and
global engineering standards and will continue to assess historical
claims data to help ensure our building selection and design standards
address the potential impacts of climate change.
How we use the outputs of climate
scenario analysis
Scenario analysis is used to assess our ability to withstand, adapt to
and recover from climate-related risks. It supports the Group to assess
the impact of our net zero ambitions on our revenue and profitability
which helps to strengthen our understanding of business model risk,
and supports how we increase the awareness of our climate risk. It
informs strategic planning, including any strategic management actions
needed to mitigate the identified risks.
From a financial and capital planning perspective, climate scenario
analysis informs IFRS 9 ECL provisioning (see page 212), and the
assessment of capital adequacy as part of the Group’s Internal Capital
Adequacy Assessment Process (‘ICAAP’). This supports how we
assess the appropriate levels of capital needed to guard against
climate-related risks.
Climate scenario analysis also supports the management of financed
emissions at a portfolio level and enhances the forward-looking
elements of our climate risk appetite framework. In addition, it assists
in the assessment of climate-related opportunities, such as potential
increases in lending under accelerated transition scenarios. These
contribute to the development of a more climate-resilient balance
sheet.
We have completed our first quantitative analysis of the potential
forward-looking impact on our revenue due to the alignment or
misalignment with our net zero ambitions, as well as climate-related
risks and opportunities. There is a high degree of uncertainty and
subjective assumptions with these results.
We will continue to enhance the use of climate scenario analysis in our
business decision making and continue to develop our modelling
capabilities, including the assessment of nature-related risks, over time.
Our climate scenario analysis modelling
approach
The models that we use for climate scenario analysis incorporate a
range of climate-specific metrics that could potentially impact our
customers, including expected production volumes, revenue, costs and
capital expenditure.
For transition risk, we assess how these metrics interplay with
economic factors, such as carbon prices, which represent the cost
effects of climate-related policies that aim to discourage carbon-
emitting activities and encourage low-carbon solutions. The expected
result of higher carbon prices is a reduction in emissions as high-
emission activities become uneconomical.
For physical risks, our models assess the impacts of acute and chronic
climate hazards on our customers’ operations and asset bases. Key
loss drivers include damage to physical assets and property from
extreme weather events, as well as business disruption caused by
operational downtime. These factors can reduce revenues, increase
repair and operating costs, and place pressure on liquidity and capital
expenditure, leading to a deterioration in our customers’ credit profiles.
ÑFor a broad overview of the models that we use for our climate scenario
analysis, as well as graphs that show how global carbon prices and carbon
emissions will differ under our climate scenarios, see our ESG Data Pack at
www.hsbc.com/esg.
Assumptions and limitations
Our climate scenario analysis exercises rely on a significant set of
assumptions and limitations, which may constrain the reliability and
robustness of our resulting outputs. Outcomes may change in the
future, potentially materially, as capabilities improve.
The information provided within this section is supplemented by the
ESG cautionary statement on page 1.
Assumptions that we use within our wholesale lending modelling
approach include the following:
–Scenario analysis is conducted on counterparties with sufficient data
and extrapolated to the remaining portfolio. It assumes that there is
a broadly consistent climate risk profile across each portfolio.
–Transition risk impacts are assumed to be limited for sectors that
we have assessed as having a low transition risk exposure.
–Our customers will successfully execute their transition plans,
where those plans are assessed as credible.
–Customers in certain wholesale sectors are assumed to pass some
of their costs relating to higher carbon prices through to their own
customers. These pass-through rates are based on externally
calibrated pass-through rates and reviewed by internal sector
experts.
–State support will continue for government-owned or government-
backed customers, and for customers providing essential goods and
services critical to societal functioning.
Within our retail lending models, we assume that:
–When quantifying the impacts of climate events, insurance
availability is recognised as a key mitigant of loss. Our approach
incorporates benchmarking against insurance industry standards to
assess both the availability of cover and premium levels, using
calculations based on average annualised loss.
–Flood Re, the UK government-backed insurance scheme established
to ensure the availability of insurance for properties at higher risk of
flooding, is expected to operate effectively only until its current
anticipated expiry date in 2039. Beyond this point, affected
properties are likely to face increased insurance costs, with some
potentially becoming uninsurable.
Our models are designed to produce outputs that can support our
assessment of the level of our climate resilience. However, there are a
number of industry-wide limitations, including:
–Data availability – Climate scenario analysis is a data-intensive
exercise and the required information is only available for a subset
of the Group’s exposures. In particular, we see a number of climate-
related financial data gaps relating to reliable forward-looking
climate-aligned data.
–Scenario limitations – There are inherent uncertainties in the ways
our scenarios are designed, which are largely attributed to the
limited history of the interactions between climate risks and the
economy. Our climate scenarios consider a range of possible future
outcomes, however quantifying the full effects of all climate-related
outcomes, such as the effects of potential tipping points, remains
challenging.
–Modelling uncertainties – There are inherent limitations within
climate models due to the challenges of modelling (with any
precision) how climate-related interactions (both physical and
transition risks) will manifest. These include estimating how policy
changes, carbon pricing or new technologies will impact specific
customers, how these customers will adapt, and uncertainty in
estimating physical risk losses as historical data may not be
representative under evolving climate patterns. These limitations are
further compounded as the modelled time horizon lengthens and
the uncertainties behind higher-order impacts increase. However,
internal judgements are used to mitigate some of these effects.
Our wholesale methodology for our non-real estate portfolios did not
consider the potential impacts from climate-related physical risk,
second order supply chain impacts, the volatility of commodity prices,
and how climate risks are correlated between sectors.
Our wholesale physical risk methodology did not include the indirect
impact of factors such as supply chain disruption and the risk of
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| 212 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Climate risk |
stranded assets. However, we are building capabilities to capture these
effects.
How we are enhancing our climate scenario
analysis approach
We continue to enhance our climate scenario analysis methodology by
incorporating lessons learnt from previous exercises, feedback from
key stakeholders, which includes internal stakeholders as well as
external regulators, and by assessing the direction of general industry
practices.
We have made several key enhancements across climate scenario
development and climate risk modelling, which include improvements
to our cash flow models, and more granular assumptions with respect
to how we model carbon prices. We have also improved how we
embed the outputs from climate scenario analysis exercises into our
risk management frameworks. Our climate scenarios and modelling
capabilities are being integrated into the wider bank-wide stress testing
procedures.
In 2025, improvements within our wholesale lending climate modelling
process included targeted improvements to our oil and gas, automotive
and emission-based models, and the continued enhancement of our
customer transition plans. These support how we improve the quality
of our modelled outcomes.
Over the last 12 months, we have strengthened our commercial and
retail real estate climate assessment capability by bringing the
geocoding process in house, which will go live in 2026 and further
enhance our ability to identify and address data quality and accuracy.
We have also conducted independent model validation and
implemented continuous enhancements based on validation outcomes.
In 2026, we intend to increase our focus on how physical risk events
could impact our non-commercial real estate portfolio, including the
impact from asset damage and business model disruption channels.
We will also continue to explore the impacts on our portfolio from a
nature risk perspective and expect our modelling capabilities to evolve
over time.
Assessing the effect of climate credit
risk on IFRS 9 ECL
We continue to integrate climate considerations into our business and
risk management processes to ensure climate-related risks are
appropriately managed. As part of our ECL assessment for 31
December 2025, we conducted a climate-related ECL sensitivity
analysis. Additionally, where climate events have previously influenced
or recently affected our economies, these impacts were implicitly
reflected within our IFRS 9 scenarios.
We used available information including our ICSA results to determine
areas of potential risk in the credit portfolios to perform a climate ECL
sensitivity analysis for both our wholesale and retail portfolios. In our
wholesale portfolio, the exercise covers both physical and transition
risk. For retail, the exercise covers physical risk for our largest
mortgage portfolios (UK and Hong Kong). Properties with elevated
climate risk and insurance vulnerability are identified, and the
associated potential losses are estimated by assessing the impact on
customer affordability and collateral valuations under physical stress
conditions.
The overall estimated sensitivity of ECL under IFRS 9 as at
31 December 2025 was less than $50m.
This ECL sensitivity is influenced by several factors including the tenor
of the underlying portfolios and observable market prices of collateral. A
significant proportion of our wholesale portfolio is short dated.
Furthermore, our secured retail portfolio has low average loan-to-value
ratios, which helps to mitigate the effect of property damage on
customer default risk and loss given default.
Our wholesale ECL is likely to remain relatively muted in the short and
medium terms, as illustrated in the graph on page 208. While this
impact may increase over time, long dated cashflows are less likely to
impact current expectations of credit loss, as future cashflows are
discounted as part of the ECL modelling process.
The ECL sensitivity is dependent on the timing and severity of climate
change within the period over which HSBC measures ECL. As there is
limited historical climate loss data available and uncertainty on how
insurance will change over time, our assessment is considered
indicative and will evolve as our lending profile, assessment approach,
data, and modelling methodologies continue to mature. For more
information on the impact of climate on our reporting and financial
statements, see page 34.
How we assess the climate risk impacts
on other risk types
We use climate scenario analysis to assess the impacts on other risks,
including non-financial risks, traded risk and treasury risk.
Non-financial risk – financial reporting risk
and regulatory compliance risk
We analysed the potential impacts associated with greenwashing,
specifically focusing on inaccuracies in climate-related disclosures and
shortcomings in product governance and marketing of sustainable
finance offerings. Our findings indicate that under scenarios involving
accelerated net-zero transitions and heightened regulatory scrutiny, we
may face increased financial exposure to greenwashing incidents.
Traded risk
In 2025, we explored the potential fair value impacts of climate risks on
our trading and banking portfolio. Our analysis evaluated portfolio
performance under the long-term Downside Physical Risk scenario as
well as two shorter-term scenarios focused on dry perils and wet perils
aligned with NGFS’s short-term “Disasters and Policy Stagnation”
scenario focusing on physical risk impacts over a one-year horizon. The
assessment encompassed all major asset classes including interest
rates, foreign exchange, credit and equities.
The results supported our understanding of the climate resilience of the
trading portfolio. Under both short-term scenarios, the portfolio exhibited
gains driven by the long defensive profile in our Equity Derivatives
positions and from Rate Options. Offsetting these were losses
generated by distressed debt and secondary private credit loans and by
rate exposures to countries and territories more sensitive to physical risk.
Treasury risk – pensions
This year, we conducted balance sheet and income statement
projections for six of our largest pension plans and all regional plans,
utilising macroeconomic variables influenced by climate change, which
focused on the short- and medium-term horizons. Our exercise focused
on a shorter-term scenario assessing the concurrent impacts of severe
physical hazards with moderate transition risk. The scenario
concentrated on physical climate risks, carbon pricing, economic
growth trajectories, and evolving regulatory requirements.
Key findings indicated that, at the peak stress point in the climate
stress scenario (which was in the first projection year), the Group’s
pension scheme funding levels were projected to decline slightly. This
reduction was primarily attributable to a reduction in climate-sensitive
bond and equity values.
Treasury risk – liquidity
Under the climate scenario analysis exercise, other risk types – aside
from liquidity – are assessed over annual or multi-year horizons and are
primarily capital-related stress events with limited effects on the bank’s
liquidity. To specifically assess liquidity risk, a tailored 90-day climate
scenario was developed, building on previous exercises and reflecting
current industry perspectives on plausible climate outcomes.
The analysis considered the impact of climate risk on key liquidity risk
drivers including wholesale and retail deposit risk off-balance sheet
facilities risk, credit downgrade risk, and intraday liquidity risk. No
significant impact on our liquidity position was identified in the analysis.
Insurance risk
We are improving our ability to perform exploratory assessments of the
solvency resilience of our biggest insurance businesses under climate
stress scenarios.
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Resilience risk
ÑSee page 138 for our definition of Resilience risk
Resilience risk management
Key developments in 2025
During the year, we conducted several initiatives to keep pace with
geopolitical, regulatory and technology changes, and to help strengthen
the management of resilience risk.
–Where HSBC identified that enhancements were required to the
Group’s operational resilience capabilities, these were incorporated
into the Group’s business and investment planning, helping to
ensure we continue to meet the expectations of our customers and
our regulators.
–We recognise that our customers were impacted at times by
service disruptions. We responded to these in line with our Incident
Management plans and aimed to recover with minimal delay and
customer impact. Following any operational disruption, we
conducted post-incident reviews to identify lessons and strengthen
our operations.
–We monitored markets affected by geopolitical events for any
potential impact they may have on our colleagues and operations,
enhancing response playbooks as events evolved.
–We provided analysis and easy-to-access risk and control
information and metrics to enable management to focus on non-
financial risks in their decision making and appetite setting.
–We prioritised our efforts on material risks and areas undergoing
strategic growth, aligning our location strategy to this need. We also
remotely provide oversight and stewardship, including support of
chief risk officers, in territories where we have no physical
presence.
Governance and structure
The Group Resilience Risk target operating model provides a globally
consistent view across resilience risks, strengthening our risk
management oversight. We view resilience risk across seven sub-risk
types related to: technology and cybersecurity risk; third-party risk;
transaction and payment processing risk; business interruption and
incident risk; data risk; facilities availability, safety and security risk; and
operational and resilience regulatory reporting risk.
Risk appetite and key escalations for resilience risk are reported to the
Group Risk Management Meeting and Group Risk Committee.
Operational resilience
We operate processes to support our operational resilience according
to our Risk Management Framework. Operational resilience is our
ability to anticipate, prevent, adapt, respond to, recover, and learn from
internal or external disruption, and provide Important Business Services
(IBS) to customers and clients, while seeking to minimise impact on
the wider financial system when disruption occurs. We seek to achieve
this via day-to-day oversight and ongoing assurance. We have invested
to seek to improve response and recovery strategies for our IBS and
Important Group Business Services, to align to regulatory and
customer expectations and to help minimise any potential impacts
should disruption occur.
Business operations continuity
We continue to monitor potential disruptive events, such as geopolitical
volatility, adverse weather conditions and cyber attacks, and remain ready
to take measures to help ensure business continuity in affected markets
should the situation require. When disruptive events occur, businesses
and infrastructure functions continually review their continuity plans and
response to minimise any potential impacts.
Regulatory compliance risk
ÑSee page 138 for our definition of Regulatory compliance risk.
Regulatory compliance risk management
Key developments in 2025
Regulatory Compliance risk stewardship is provided across a wide
range of transformational change and control enhancement initiatives
supporting HSBC’s strategy and organisational structure; such as the
framework for digital assets, including Regulatory Compliance’s
stewardship of Markets and Securities Services (MSS)’ asset
tokenisation and issuance initiatives, as well as Regulatory Compliance
control frameworks, policies and governance processes.
Regulatory horizon scanning and mapping capabilities continue to
evolve with a focus on enhanced connectivity to risk management
systems to support better traceability of regulatory obligations. Work is
underway to transition from event-driven technology to incorporate
cloud and analytics capability to enhance our oversight abilities in areas
such as surveillance.
Governance and structure
The Group Head of Regulatory Compliance reports to the Group Chief
Risk and Compliance Officer. Regulatory Compliance and Financial
Crime teams work together and with relevant stakeholders to help
achieve good conduct outcomes and provide enterprise-wide support
on the Compliance risk agenda in close collaboration with colleagues
from the Group Risk and Compliance function.
Key risk management processes
The Global Regulatory Compliance function is responsible for
establishing global policies, standards, risk appetite, frameworks and
tools to guide the Group’s management of Regulatory Compliance risk.
The function provides oversight, review and challenge to the business,
aiding them in identifying, assessing and mitigating Regulatory
Compliance risks.
Relevant events and issues are escalated in line with the Group’s Risk
Management Framework including reporting to executive and non-
executive risk governance committees for transparency, accountability
and informed decision making. The Group Head of Regulatory
Compliance attends the Risk and Compliance Leadership Meeting, the
Group Risk Management Meeting, and the Group Risk Committee.
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial crime risk
ÑSee page 138 for our definition of Financial crime risk.
Financial crime risk management
Key developments in 2025
We regularly review the effectiveness of our financial crime risk
management framework, which includes continued consideration of
complex sanctions and export control risks. We continued to respond
to evolving financial sanctions and trade restrictions, including methods
used to evade sanctions and export controls.
We continued to make progress with several key financial crime risk
management initiatives, including:
–deployment of our intelligence-led, dynamic risk assessment
capability for customer account monitoring in additional entities and
business segments;
–deployment and optimisation of a capability to increase our
monitoring coverage of correspondent banking activity in additional
markets;
–enhancing our fraud controls and continuing to invest in, and
monitor, technological developments; and
–enhancements in response to the rapidly evolving and complex
global payments landscape and refinement of the control
framework required to support HSBC’s digital assets and currencies
strategy.
Governance and structure
The structure of the Financial Crime team in Risk and Compliance
remained substantively unchanged in 2025. The Group Head of
Financial Crime continues to report to the Group Chief Risk and
Compliance Officer, while the Group Risk Committee retains oversight
of matters relating to financial crime.
Key risk management processes
We will not tolerate knowingly conducting business with individuals or
entities believed to be engaged in criminal activity. We require
everybody in HSBC to play their role in maintaining effective systems
and controls to help prevent and detect financial crime. Where we
believe we have identified suspected criminal activity or vulnerabilities
in our control framework, we will take appropriate mitigating action.
We manage financial crime risk because it is the right thing to do to
protect our customers, shareholders, staff, the communities in which
we operate, as well as the integrity of the financial system on which
we all rely. We operate in a highly regulated industry in which these
same policy goals are codified in law and regulation.
We are committed to complying with the laws and regulations of all
the markets in which we operate and apply a consistently high financial
crime standard globally.
We continued to invest in enhancing our operational control capabilities
and technology solutions to deter and detect criminal activity. We
further strengthened our financial crime risk taxonomy and control
libraries and our monitoring capabilities through technology
deployments. We developed more targeted metrics, and continued to
seek to enhance our governance and reporting.
We are committed to working in partnership with the wider industry
and the public sector in managing financial crime risk. In 2025, our
focus remained on measures to improve the overall effectiveness of
the global financial crime risk management framework and promote a
risk-based approach.
Through our work with industry bodies, such as the Wolfsberg Group,
we provided input into legislative and regulatory reform activities and
supported the efforts of the global financial crime standard setter, the
Financial Action Task Force. We did this by participating in
consultations and other engagements focused on delivering more
effective outcomes in managing financial crime risk, which also
enhances financial inclusion. Key themes for external engagement
include risk-based supervision, the use of innovative technology,
payment transparency standards, fraud risk management, and tackling
sanctions and export controls evasion.
Model risk
ÑSee page 138 for our definition of Model risk.
Key developments in 2025
In 2025, we continued to make improvements in our Model Risk
Management (‘MRM’) processes amid regulatory changes in MRM
requirements.
Initiatives during the year included:
–further updates to our MRM Framework to meet the requirements
of the PRA’s SS1/23. Our multi-year programme of work is in
progress to implement these changes across the full model
landscape;
–completing the identification of Deterministic Quantitative Methods
(DQMs) across the organisation. These are complex and material
calculators that although not technically models, still present similar
risks;
–continued enhancements to the development and validation
processes for internal ratings-based (‘IRB’) models;
–continued enhancements to our framework for the independent
validation of models, including new GenAI techniques that are
becoming more widely used; and
–continued to work closely with businesses and infrastructure teams
in developing a governance framework to manage the range of risks
these AI techniques, including machine learning and agentic AI
(autonomous systems powered by AI agents), can introduce.
Governance and structure
We have completed a review of model risk governance committees
at the Group, business and functional levels to help ensure they
provide effective and efficient oversight of model risk. The
committees include senior leaders from the businesses,
infrastructure teams and the Group Risk and Compliance function.
They focus on model-related concerns and are supported by key
model risk metrics. We have aligned our Committees to our new
organisational structure with each of the four business segments
having a Model Risk Committee focused on local requirements. The
Group-level Model Risk Committee remains in place and is chaired by
the Group Chief Risk and Compliance Officer, and the heads of key
businesses participate in these meetings.
Key risk management processes
We use a variety of modelling approaches, including regression,
simulation, sampling, machine learning and judgemental scorecards for a
range of business applications. These activities include customer
selection, product pricing, financial crime transaction monitoring,
creditworthiness evaluation and financial reporting. Global responsibility
for managing model risk is delegated from the Board to the Group Chief
Risk and Compliance Officer, who authorises the Group Model Risk
Committee. This committee regularly reviews our model risk
management policies and procedures, and requires the first line of
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|---|---|---|---|---|---|---|
| 215 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Model risk |
defence to demonstrate comprehensive and effective controls based on
a library of model risk controls provided by Model Risk Management.
Model Risk Management also reports on model risk to senior
management and the Group Risk Committee on a regular basis through
the use of the risk map, risk appetite metrics and top and emerging risks.
We regularly review the effectiveness of these processes, including
the model risk committee structure, to help ensure the appropriate
understanding and ownership of model risk is embedded in the
businesses and functions.
Insurance manufacturing operations risk
ÑSee page 139 for our definition of Insurance manufacturing operations risk.
HSBC’s insurance business
We sell insurance products through a range of channels including our
branches, insurance sales forces, direct channels and third-party
distributors. The majority of sales are through an integrated
bancassurance model that provides insurance products principally for
customers with whom we have a banking relationship, meanwhile the
proportion of sales through other sources such as independent
financial advisers, tied agents and digital platforms is increasing.
For the insurance products we manufacture, the majority of sales are
savings, universal life and protection contracts.
We choose to manufacture these insurance products in HSBC
subsidiaries based on an assessment of operational scale and risk
appetite. Manufacturing insurance allows us to retain the risks and
rewards associated with writing insurance contracts by keeping part of
the underwriting profit and investment income within the Group.
Our life insurance manufacturing subsidiaries operate in seven
markets, which are Hong Kong, Macau, Singapore, mainland China,
UK, Malta and Mexico. This excludes France where the sale of the
insurance business was completed on 31 October 2025. In addition,
we have: an interest in a life insurance manufacturing associate in
India; captive insurance entities in Bermuda and Hong Kong; and a
reinsurance entity in Bermuda.
Where we do not have the risk appetite or operational scale to be an
effective insurance manufacturer, we engage with a select number of
leading external insurance companies in order to provide insurance
products to our customers. These arrangements are generally
structured with our exclusive strategic partners and earn the Group a
combination of commissions, fees and a share of profits. We distribute
insurance products in all of our geographical regions.
This section focuses only on the risks relating to the insurance
products we manufacture.
Insurance manufacturing operations
risk management
Key developments in 2025
The insurance manufacturing subsidiaries follow the Group’s risk
management framework. In 2025, we continued to strengthen the
insurance specific policies, frameworks and controls particularly across
the financial and capital reporting processes, stress testing, asset-
liability management, reinsurance and insurance underwriting risks.
During the year, there was continued market volatility observed across
interest rates, equity and credit markets and foreign exchange rates.
This was predominantly driven by geopolitical factors including the
introduction of trade tariffs by the US, and wider inflationary concerns.
The sale of the French insurance business HSBC Assurances Vie
(France) was completed on 31 October 2025. Following HSBC’s
announcement on 3 July 2025 of entering into a binding agreement to
sell its UK life insurance business HSBC Life (UK) Limited, the balance
sheet of the UK business has been reported as held for sale at 31
December 2025. Further details are provided on page 355.
Governance and structure
Insurance manufacturing risks are managed to a defined risk appetite,
which is aligned to the Group’s risk appetite and risk management
framework, including its three lines of defence model. For details of
the Group’s governance framework, see page 119. The Global
Insurance Risk Management Meeting oversees the control framework
globally and is accountable to the IWPB Risk Management Meeting on
risk matters relating to the insurance business.
The monitoring of the risks within our insurance operations is carried
out by Insurance Risk teams. The Group’s risk stewardship functions
support the Insurance Risk teams in their respective areas of expertise.
Stress and scenario testing
Stress testing forms a key part of the risk management framework for
the insurance business. We participate in local and Group-wide
regulatory stress tests, as well as internally developed stress and
scenario tests, including Group internal stress test exercises.
The results of these stress tests and the adequacy of management
action plans to mitigate these risks are considered in the Group’s
ICAAP and the entities’ regulatory Own Risk and Solvency
Assessments, which are produced by all material entities.
Key risk management processes
Market risk
(Audited)
All our insurance manufacturing subsidiaries have market risk
mandates and limits that specify the investment instruments in which
they are permitted to invest and the maximum quantum of market risk
that they may retain. They manage market risk by using some or all of
the techniques listed below, among others, depending on the nature of
the contracts written.
–We are able to adjust bonus rates and other discretionary benefits
to manage the liabilities to policyholders for products with
participating features. The effect is that a significant proportion of
the market risk is shared with the policyholders.
–We use asset and liability matching where asset portfolios are
structured to support projected liability cash flows.
–We use derivatives and other financial instruments, along with
reinsurance to protect against adverse market movements.
–We design new products to mitigate market risk, such as changing
the investment return sharing proportion between policyholders and
the shareholder.
Credit risk
(Audited)
Our insurance manufacturing subsidiaries also have credit risk
mandates and limits within which they are permitted to operate, which
consider the credit risk exposure, quality and performance of their
investment portfolios. Our assessment of the creditworthiness of
issuers and counterparties is based primarily upon internationally
recognised credit ratings and other publicly available information.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 216 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Insurance manufacturing operations risk |
Stress testing is performed on investment credit exposures using
credit spread sensitivities and default probabilities.
We use a number of tools to manage and monitor credit risk. These
include a credit report containing a watch-list of investments with
current credit concerns, primarily investments that may be at risk of
future impairment or where high concentrations to counterparties are
present in the investment portfolio. Sensitivities to credit spread risk
are assessed and monitored regularly.
Capital and liquidity risk
(Audited)
Capital risk for our insurance manufacturing subsidiaries is assessed in
the Group’s ICAAP, based on their financial capacity to support the
risks to which they are exposed. Capital adequacy is assessed on both
the relevant local insurance regulatory basis and an internal capital
basis.
Risk appetite buffers are set to ensure that the operations are able to
remain solvent, allowing for business-as-usual volatility and extreme
but plausible stress events.
Liquidity risk is less material for the insurance business. It is managed
by cash flow matching and maintaining sufficient cash resources,
investing in high credit-quality investments with deep and liquid
markets, monitoring investment concentrations and restricting them
where appropriate, and establishing committed contingency borrowing
facilities.
Insurance manufacturing subsidiaries complete quarterly liquidity risk
reports and an annual review of the liquidity risks to which they are
exposed.
Insurance underwriting risk
(Audited)
Our insurance manufacturing subsidiaries primarily use the following
frameworks and processes to manage and mitigate insurance
underwriting risks:
–a formal approval process for launching new products or making
changes to products to ensure insurance risks are identified and
mitigated;
–a product pricing and profitability framework, which requires initial
and ongoing assessment of the adequacy of premiums charged on
new insurance contracts to meet the risks associated with them;
–a framework for customer underwriting;
–reinsurance, which cedes risks to third-party reinsurers to keep risks
within risk appetite, reduce volatility and improve capital efficiency;
and
–oversight by actuarial review committees in each of our entities of
the methodology and assumptions that underpin IFRS 17 reporting
to ensure that appropriate reserves are established to cover
insurance underwriting risks.
Insurance manufacturing operations
risk in 2025
Measurement
The following tables show the composition of the fair value of
underlying items of the Group’s participating contracts at the reporting
date and by the following type of contract:
–‘Life direct participating and investment discretionary participation
feature (‘DPF’) contracts’ are life direct participating contracts and
investment contracts with DPF. These are substantially measured
under the variable fee approach measurement model.
–‘Life other contracts’ are measured under the general measurement
model and mainly include protection insurance contracts as well as
reinsurance contracts. The reinsurance contracts primarily provide
diversification benefits over the life direct participating and
investment DPF contracts.
–‘Other contracts’ includes investment contracts for which HSBC
does not bear significant insurance risk.
| Balance sheet of insurance manufacturing subsidiaries by type of contract | ||||||
|---|---|---|---|---|---|---|
| (Audited) | ||||||
| Life direct participating<br><br>and investment DPF<br><br>contracts | Life<br><br>other<br><br>contracts | Other<br><br>contracts | Shareholder<br><br>assets<br><br>and liabilities | Total | ||
| At 31 Dec 2025 | $m | $m | $m | $m | $m | |
| Financial assets | 111,078 | 5,277 | 5,672 | 5,405 | 127,432 | |
| –financial assets designated and otherwise mandatorily measured<br><br>at fair value through profit or loss | 106,705 | 4,984 | 4,337 | 579 | 116,605 | |
| – derivatives | 136 | 8 | — | — | 144 | |
| – financial investments – at amortised cost | 609 | 115 | 1,010 | 3,654 | 5,388 | |
| – financial assets at fair value through other comprehensive income | — | — | 3 | 214 | 217 | |
| – other financial assets | 3,628 | 170 | 322 | 958 | 5,078 | |
| Insurance contract assets | 12 | 98 | — | — | 110 | |
| Reinsurance contract assets | — | 5,948 | — | — | 5,948 | |
| Assets held for sale1 | 4,748 | 258 | 1,347 | 271 | 6,624 | |
| Other assets and investment properties | 1,785 | 118 | 45 | 2,696 | 4,644 | |
| Total assets | 117,623 | 11,699 | 7,064 | 8,372 | 144,758 | |
| Liabilities under investment contracts designated at fair value | — | — | 5,288 | — | 5,288 | |
| Insurance contract liabilities | 117,107 | 4,761 | — | — | 121,868 | |
| Reinsurance contract liabilities | — | 680 | — | — | 680 | |
| Liabilities of disposal groups held for sale1 | 4,734 | 234 | — | 1,418 | 6,386 | |
| Other liabilities | — | — | — | 3,821 | 3,821 | |
| Total liabilities | 121,841 | 5,675 | 5,288 | 5,239 | 138,043 | |
| Total equity | — | — | — | 6,715 | 6,715 | |
| Total liabilities and equity | 121,841 | 5,675 | 5,288 | 11,954 | 144,758 | |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 217 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Insurance manufacturing operations risk | ||||||
| Balance sheet of insurance manufacturing subsidiaries by type of contract (continued) | ||||||
| --- | --- | --- | --- | --- | --- | |
| (Audited) | ||||||
| Life direct participating<br><br>and investment DPF<br><br>contracts | Life<br><br>other<br><br>contracts | Other<br><br>contracts | Shareholder<br><br>assets<br><br>and liabilities | Total | ||
| At 31 Dec 2024 | $m | $m | $m | $m | $m | |
| Financial assets | 98,676 | 4,452 | 6,227 | 5,967 | 115,322 | |
| – financial assets designated and otherwise mandatorily measured<br><br>at fair value through profit or loss | 94,327 | 4,233 | 4,839 | 690 | 104,089 | |
| – derivatives | 207 | 7 | 1 | — | 215 | |
| – financial investments – at amortised cost | 545 | 90 | 1,060 | 4,335 | 6,030 | |
| – financial assets at fair value through other comprehensive income | — | — | 6 | 73 | 79 | |
| – other financial assets | 3,597 | 122 | 321 | 869 | 4,909 | |
| Insurance contract assets | 14 | 104 | — | — | 118 | |
| Reinsurance contract assets | — | 5,013 | — | — | 5,013 | |
| Assets held for sale1 | 22,855 | — | — | 1,367 | 24,222 | |
| Other assets and investment properties | 1,792 | 64 | 36 | 1,970 | 3,862 | |
| Total assets | 123,337 | 9,633 | 6,263 | 9,304 | 148,537 | |
| Liabilities under investment contracts designated at fair value | — | — | 5,931 | — | 5,931 | |
| Insurance contract liabilities | 102,605 | 4,427 | — | — | 107,032 | |
| Reinsurance contract liabilities | — | 701 | — | — | 701 | |
| Liabilities of disposal groups held for sale1 | 21,772 | 39 | — | 1,609 | 23,420 | |
| Other liabilities | — | — | — | 4,438 | 4,438 | |
| Total liabilities | 124,377 | 5,167 | 5,931 | 6,047 | 141,522 | |
| Total equity | — | — | — | 7,015 | 7,015 | |
| Total liabilities and equity | 124,377 | 5,167 | 5,931 | 13,062 | 148,537 |
1HSBC Life (UK) Limited is classified as held for sale at 31 December 2025. HSBC Assurances Vie (France) was classified as held for sale at 31 December 2024.
Further details are provided on page 355.
Key risk types
Market risk
(Audited)
Description and exposure
Market risk is the risk of changes in market factors affecting HSBC’s
capital or profit. Market factors include interest rates, equity and
growth assets, credit spreads and foreign exchange rates.
Our exposure varies depending on the type of contract issued. Our
most significant life insurance products are contracts with participating
features. These products typically include some form of capital
guarantee or guaranteed return on the sums invested by the
policyholders, to which bonuses are added if allowed by the overall
performance of the funds. For contracts without participating features,
some form of guarantee may still exist but HSBC’s ability to share risks
with policyholders will be reduced. Funds supporting these savings
products are invested in a mix of fixed income assets (to support
guarantees) and other asset classes (to provide customers with the
potential for enhanced returns).
These products expose HSBC to the risk of variation in asset returns,
which will impact our participation in the investment performance.
In certain circumstances, asset returns may be insufficient to meet the
policyholders’ guaranteed benefits. For non-participating contracts, any
resulting shortfall is borne by HSBC.
For unit-linked contracts, market risk is substantially borne by the
policyholder, but some market risk exposure typically remains, as fees
earned are typically related to the market value of the linked assets.
Sensitivities
The following table shows the sensitivity of the CSM, profit and total
equity of our insurance manufacturing subsidiaries to changes in
interest rates, credit spreads, growth assets and foreign exchange
rates. These sensitivities are prepared in accordance with current IFRS
Accounting Standards.
Due in part to the nature of the guarantees, and the reinsurance and
hedging strategies which may be in place, the relationship between the
CSM, profit and total equity is not linear. The sensitivities are before
management actions that may mitigate the effect of changes in the
market environment. The lower profit after tax sensitivity to yield curve
shifts is driven by improved asset and liability matching in mainland
China, partly offset by the impact of methodology updates in Hong
Kong.
The 2025 sensitivities below exclude HSBC Assurances Vie (France)
following completion of its sale on 31 October 2025. Further details are
provided on page 355.
| Sensitivity of HSBC’s insurance manufacturing subsidiaries to market risk factors | ||||||
|---|---|---|---|---|---|---|
| (Audited) | ||||||
| 2025 | 2024 | |||||
| Effect on<br><br>CSM | Effect on<br><br>profit after tax<br><br>for the year | Effect on<br><br>total equity | Effect on<br><br>CSM | Effect on<br><br>profit after tax<br><br>for the year | Effect on<br><br>total equity | |
| $m | $m | $m | $m | $m | $m | |
| +100 basis point parallel shift in yield curves | (370) | 36 | 36 | (155) | 83 | 52 |
| -100 basis point parallel shift in yield curves | (51) | (127) | (127) | (249) | (217) | (186) |
| +100 basis point shift in credit spreads | (918) | (15) | (15) | (907) | (84) | (115) |
| -100 basis point shift in credit spreads | 897 | 74 | 74 | 876 | 60 | 91 |
| 10% increase in growth assets1 | 461 | 64 | 64 | 467 | 73 | 73 |
| 10% decrease in growth assets1 | (533) | (75) | (75) | (514) | (79) | (79) |
| 10% appreciation in US dollar exchange rate against local functional currency | 102 | 20 | 20 | 71 | 17 | 17 |
| 10% depreciation in US dollar exchange rate against local functional currency | (75) | (15) | (15) | (26) | (3) | (3) |
1‘Growth assets’ primarily comprise equity securities and investment properties. Variability in growth asset fair value constitutes a market risk to insurance
manufacturing subsidiaries.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 218 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Insurance manufacturing operations risk |
Credit risk
(Audited)
Description and exposure
Credit risk is the risk of financial loss if a customer or counterparty fails
to meet their obligation under a contract. It arises in two main risks for
our insurance manufacturers:
–the risk associated with credit spread volatility and default by debt
security counterparties after investing premiums to generate a
return for policyholders and shareholders; and
–the risk of default by reinsurance counterparties and non-
reimbursement for claims made after ceding insurance risk.
The amounts outstanding at the balance sheet date in respect of these
items are shown in the table on page 216.
The credit quality of the reinsurers’ share of liabilities under insurance
contracts is assessed as ‘satisfactory’ or higher (as defined on
page 141), with none of the exposure being either past due or impaired
(2024: none).
Credit risk on assets supporting unit-linked liabilities is predominantly
borne by the policyholders. Therefore, our exposure is primarily related
to liabilities under non-linked insurance and investment contracts and
shareholders’ funds. The credit quality of insurance financial assets is
included in the table on page 161.
The risk associated with credit spread volatility is to a large extent
mitigated by holding debt securities to maturity, and sharing a degree
of credit spread experience with policyholders.
Liquidity risk
(Audited)
Description and exposure
Liquidity risk is the risk that an insurance operation, though solvent,
either does not have sufficient financial resources available to meet its
obligations when they fall due, or can secure them only at excessive
cost. Liquidity risk may be able to be shared with policyholders for
products with participating features.
The remaining maturity of insurance contract liabilities is included in
Note 4 on page 319.
The amounts of insurance contract liabilities that are payable on
demand are set out by the product grouping below and exclude
insurance businesses classified as held for sale (2025: HSBC Life (UK)
Limited; 2024: HSBC Assurances Vie (France). Further details are
provided on page 355.
| Amounts payable on demand | ||||
|---|---|---|---|---|
| (Audited) | ||||
| 2025 | 2024 | |||
| Amounts<br><br>payable on<br><br>demand | Carrying<br><br>amount for<br><br>these<br><br>contracts | Amounts<br><br>payable on<br><br>demand | Carrying<br><br>amount for<br><br>these<br><br>contracts | |
| $m | $m | $m | $m | |
| Life direct participating<br><br>and investment DPF<br><br>contracts | 108,416 | 117,107 | 98,275 | 102,605 |
| Life other contracts | 3,820 | 4,761 | 2,960 | 4,427 |
| At 31 Dec | 112,236 | 121,868 | 101,235 | 107,032 |
Insurance underwriting risk
(Audited)
Description and exposure
Insurance underwriting risk is the risk of loss through adverse
experience, in either timing or amount, of insurance underwriting
parameters (non-economic assumptions). These parameters include
mortality, morbidity, longevity, lapse and expense rates.
The principal risk we face is that, over time, the cost of the contract,
including claims and benefits, may exceed the total amount of
premiums and investment income received.
The tables on page 216 analyse our life insurance underwriting risk
exposures by type of contract.
The insurance underwriting risk profile and related exposures remain
largely consistent with those observed at 31 December 2024.
Sensitivities
(Audited)
The following table shows the sensitivity of the CSM, profit and total
equity of our insurance manufacturing subsidiaries to changes in non-
economic assumptions, after considering the impacts of reinsurance
contracts held as risk mitigation.
These sensitivities are prepared in accordance with current IFRS
Accounting Standards.
Sensitivity to lapse rates depends on the type of contracts
being written. An increase in lapse rates typically has a negative effect
on CSM (and therefore expected future profits) due to the loss
of future income on the lapsed policies. However, some contract
lapses have a positive effect on profit due to the existence of policy
surrender charges.
Mortality and morbidity risk is typically associated with life insurance
contracts. The effect on profit of an increase in mortality or morbidity
depends on the type of business being written.
Expense rate risk is the exposure to a change in the allocated cost
of administering insurance contracts. To the extent that increased
expenses cannot be passed on to policyholders, an increase in
expense rates will have a negative effect on CSM and profits.
The impact of changing insurance underwriting risk factors is primarily
absorbed within the CSM, unless contracts are onerous in which case
the impact is directly to profit. The impact of changes to the CSM is
released to profits over the expected coverage periods of the related
insurance contracts.
The 2025 sensitivities below exclude HSBC Assurances Vie (France)
following completion of its sale on 31 October 2025. Further details are
provided on page 355.
| Sensitivity of HSBC’s insurance manufacturing subsidiaries to<br><br>insurance underwriting risk factors | ||||||
|---|---|---|---|---|---|---|
| (Audited) | ||||||
| Effect on<br><br>CSM | Effect on<br><br>profit after tax<br><br>for the year | Effect on<br><br>total equity | ||||
| At 31 Dec 2025 | $m | $m | $m | |||
| 10% increase in lapse rates | (310) | (6) | (6) | |||
| 10% decrease in lapse rates | 322 | 3 | 3 | |||
| 5% increase in mortality and/or<br><br>morbidity rates | (85) | (15) | (17) | |||
| 5% decrease in mortality and/or<br><br>morbidity rates | 87 | 12 | 14 | |||
| 10% increase in expense rates | (48) | (14) | (14) | |||
| 10% decrease in expense rates | 49 | 12 | 12 | |||
| At 31 Dec 2024 | ||||||
| 10% increase in lapse rates | (282) | (21) | (30) | |||
| 10% decrease in lapse rates | 297 | 23 | 36 | |||
| 5% increase in mortality and/or<br><br>morbidity rates | (92) | (16) | (20) | |||
| 5% decrease in mortality and/or<br><br>morbidity rates | 102 | 14 | 23 | |||
| 10% increase in expense rates | (66) | (11) | (15) | |||
| 10% decrease in expense rates | 68 | 12 | 15 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 219 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Corporate
governance
report
In this report, which constitutes our Directors'
Report, we provide insights into our Group
governance practices and the systems and
policies in place that help ensure the Group
is well managed, with effective oversight
and controls.
| 220 | The Board |
|---|---|
| 224 | Senior management |
| 226 | How we are governed |
| 233 | Board committees |
| 249 | Directors’ remuneration report |
| 275 | Share capital and other governance<br><br>disclosures |
| 280 | Internal control |
| 282 | Employees |
| 284 | Statement of compliance |
5
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 220 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
The Board
The Board, which seeks to promote the Group’s long-term success, deliver sustainable value to shareholders and promote a culture
of openness and debate, comprises diverse, high-calibre members who have experience in our global markets.
Group Chairman and executive Directors
Brendan Nelson (76)<br><br> <br><br> <br><br> <br><br> |
|||
|---|---|---|---|
 |
Skills and experience: Brendan has<br><br>extensive experience in financial<br><br>services, gained through leadership<br><br>positions at global firms and senior<br><br>appointments on the Boards of global<br><br>organisations. | from KPMG in 2010. He served as<br><br>non-executive Director on the Boards<br><br>of bp plc, from 2010 to 2021, and<br><br>NatWest Group plc, from 2010 to<br><br>2019. He was Chairman of the Audit<br><br>Committee at both companies.<br><br>Brendan is a qualified Chartered<br><br>Accountant. He was President of the<br><br>Institute of Chartered Accountants of<br><br>Scotland from 2013 to 2014. He was a<br><br>member of the Financial Services<br><br>Practitioner Panel and the Financial<br><br>Reporting Review Panel of the UK<br><br>Financial Reporting Council. He<br><br>currently serves as a non-executive<br><br>Director of HSBC UK Bank plc. | External appointments:<br><br>–Chairman of BP Pension Trustees<br><br>Limited<br><br>–Director of the Institute of<br><br>International Finance |
| Career: Brendan spent over 25 years<br><br>at KPMG LLP, where he was<br><br>admitted as a Partner in 1984. During<br><br>his time at KPMG, he held various<br><br>positions, including Global Chairman<br><br>of Banking and Global Chairman of<br><br>Financial Services. He served on the<br><br>KPMG UK Board, starting in 2000. He<br><br>became a Vice Chairman in 2006 – a<br><br>position he held until his retirement | |||
| Group Chairman<br><br>Appointed to the Board: September 2023<br><br>Group Chairman since: October 2025 | |||
| Georges Elhedery (51) | |||
| --- | --- | --- | --- |
 |
Skills and experience: Georges has<br><br>almost 30 years of experience in the<br><br>banking industry across Europe, the<br><br>Middle East and Asia, and has held a<br><br>number of executive roles at a<br><br>regional, global business and<br><br>functional level. | Head of Global Banking and Markets,<br><br>Middle East and North Africa; Chief<br><br>Executive Officer for HSBC, Middle<br><br>East, North Africa and Türkiye; Global<br><br>Head of Markets; and co-Chief<br><br>Executive Officer, Global Banking and<br><br>Markets based in London. | –Member of the UK-India CEO<br><br>Forum<br><br>–Member of the Semafor World<br><br>Economy Global Advisory Board<br><br>–Member of the Board of Directors<br><br>of the Peterson Institute for<br><br>International Economics<br><br>–Member of the World Bank<br><br>Private Sector Investment Lab<br><br>–Member of Advisory Board of The<br><br>China Children Development Fund<br><br>–Principal Member of The Glasgow<br><br>Financial Alliance for Net Zero<br><br>–Member of Financial Services<br><br>Task Force of the SMI |
| Career: Georges was appointed<br><br>Group CEO from 2 September 2024.<br><br>He most recently served as Group<br><br>CFO between January 2023 and<br><br>September 2024. Georges joined<br><br>HSBC in 2005 with extensive trading<br><br>experience in London, Paris and<br><br>Tokyo. He has since held a number of<br><br>senior leadership roles, including | External appointments:<br><br>–Member of Monetary Authority of<br><br>Singapore, International Advisory<br><br>Panel<br><br>–Member of the Asia Business<br><br>Council<br><br>–Member of the International<br><br>Business Leaders Advisory<br><br>Council (Beijing IBLAC) | ||
| Group CEO<br><br>Appointed to the Board: January 2023 | |||
| Manveen Kaur (known as Pam Kaur) (62) | |||
| --- | --- | --- | --- |
 |
Skills and experience: Pam has<br><br>extensive global banking experience,<br><br>gained over an almost 40-year career<br><br>with a number of global financial<br><br>institutions. She has performed many<br><br>senior roles in audit, business,<br><br>compliance, finance and risk<br><br>management. | Career: Pam was appointed Group<br><br>CFO on 1 January 2025. Prior to this,<br><br>she served as Group Chief Risk<br><br>Officer from January 2020 and<br><br>assumed responsibility for<br><br>Compliance in June 2021. She served<br><br>as Group Chief Risk and Compliance<br><br>Officer until December 2024. Prior to<br><br>joining HSBC in April 2013 as Group<br><br>Head of Internal Audit, Pam held<br><br>several senior positions including<br><br>Global Head of Group Audit for<br><br>Deutsche Bank; Chief Financial<br><br>Officer and Chief Operating Officer of<br><br>the Restructuring and Risk Division | for Royal Bank of Scotland Group plc;<br><br>Group Head of Compliance and Anti-<br><br>Money Laundering for Lloyds TSB;<br><br>and Chief Compliance Officer for<br><br>Citigroup International. Pam<br><br>previously served as a non-executive<br><br>Director of Centrica plc and Aberdeen<br><br>Group plc. She currently serves as a<br><br>non-executive Director of The<br><br>Hongkong and Shanghai Banking<br><br>Corporation Limited. |
| External appointments:<br><br>–No external appointments | |||
| Group CFO<br><br>Appointed to the Board: January 2025 |
Board committee membership key
Committee Chair
Group Audit Committee
Group Risk Committee
Group Remuneration Committee
Nomination & Corporate
Governance Committee
Group Technology and Operations
Committee
ÑFor full biographical details of our
Board members, see
www.hsbc.com/who-we-are/our-
people/board-of-directors.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 221 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| The Board |
Independent non-executive Directors
| Geraldine Buckingham (48)<br><br><br><br> |
||||||
|---|---|---|---|---|---|---|
 |
Skills and experience: Geraldine is<br><br>an experienced executive within the<br><br>global financial services industry, with<br><br>significant leadership experience in<br><br>Asia. | Career: Geraldine is the former Chair<br><br>and Head of Asia-Pacific at<br><br>BlackRock, where she was<br><br>responsible for all business activities<br><br>across Hong Kong, mainland China,<br><br>Japan, Australia, Singapore, India and<br><br>Korea. After stepping down from this<br><br>role, she acted as senior adviser to<br><br>the Chairman and Chief Executive<br><br>Officer of BlackRock. She earlier<br><br>served as BlackRock’s Global Head of<br><br>Corporate Strategy, and previously<br><br>was a partner within McKinsey &<br><br>Company’s financial services practice. | External appointments:<br><br>–Independent non-executive<br><br>Director of Brunswick Group<br><br>Partnership Ltd<br><br>–Independent non-executive<br><br>Director of H.R.L. Morrison & Co<br><br>Limited<br><br>–Member of the Advisory Board of<br><br>the McKinsey Health Institute | |||
| Independent non-executive Director<br><br>Appointed to the Board: May 2022 | ||||||
| Wei Sun Christianson (69)<br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Wei brings<br><br>extensive banking and regulatory<br><br>experience gained over a 30-year<br><br>international career. | Career: Wei previously served as a<br><br>Senior Advisor at Morgan Stanley,<br><br>following her retirement in 2022 after<br><br>serving as Co-CEO, Asia Pacific since<br><br>2011. She was also CEO, Morgan<br><br>Stanley China from 2006 to 2022. Prior<br><br>to joining Morgan Stanley, Wei held<br><br>senior regulatory roles at the Hong Kong<br><br>Securities and Futures Commission,<br><br>where she was involved in drafting the<br><br>regulatory structure that enabled<br><br>companies from the People’s Republic<br><br>of China to be listed outside China. | External appointments:<br><br>–Independent non-executive<br><br>Director of LVMH Moët Hennessy<br><br>Louis Vuitton SE | |||
| Independent non-executive Director<br><br>Appointed to the Board: January 2026 | ||||||
| Rachel Duan (55)<br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Rachel is an<br><br>experienced business leader with<br><br>exceptional international experience<br><br>in the US, Japan, mainland China and<br><br>Hong Kong. | Career: Rachel spent 24 years at<br><br>General Electric (‘GE’), where she<br><br>held positions including Senior Vice<br><br>President of GE, and President and<br><br>Chief Executive Officer of GE’s Global<br><br>Markets where she was responsible<br><br>for driving GE’s growth in Asia-<br><br>Pacific, the Middle East, Africa, Latin<br><br>America, Russia and the<br><br>Commonwealth of Independent<br><br>States. She also previously served as<br><br>President and Chief Executive Officer<br><br>of GE Advanced Materials China and<br><br>then of Asia-Pacific; President and<br><br>CEO of GE Healthcare China; and<br><br>President and CEO of GE China. She<br><br>has previously served as a non-<br><br>executive Director of AXA S.A. | External appointments:<br><br>–Independent non-executive<br><br>Director of Sanofi S.A.<br><br>–Independent non-executive<br><br>Director of the Adecco Group AG<br><br>–Independent non-executive<br><br>Director of Kering S.A. | |||
| Independent non-executive Director<br><br>Appointed to the Board: September 2021 | ||||||
Dame Carolyn Fairbairn (65)<br><br> <br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Carolyn has<br><br>significant experience across the<br><br>media, government and finance<br><br>sectors, and a deep understanding of<br><br>the macroeconomic, regulatory and<br><br>political environment. | Career: An economist by training,<br><br>Carolyn has served as a partner at<br><br>McKinsey & Company, a member of<br><br>the UK prime minister John Major’s<br><br>Number 10 Policy Unit, and as Director-<br><br>General of the Confederation of British<br><br>Industry, and held senior executive<br><br>positions at the BBC and ITV plc. She<br><br>has extensive board experience, having<br><br>previously served as non-executive<br><br>Director of Lloyds Banking Group plc,<br><br>The Vitec Group plc, Capita plc and BAE<br><br>Systems plc. She has also served as a<br><br>non-executive Director of the UK<br><br>Competition and Markets Authority and<br><br>the Financial Services Authority. | External appointments:<br><br>–Senior Independent Director of<br><br>Tesco plc<br><br>–Member of the Advisory Council of<br><br>Frontier Economics | |||
| Independent non-executive Director<br><br>Appointed to the Board: September 2021 | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 222 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| The Board | ||||||
James Forese (63)<br><br> <br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Jamie has<br><br>over 30 years of international<br><br>business and management<br><br>experience in the finance industry<br><br>working in areas including global<br><br>markets, investment and private<br><br>banking. | Career: Jamie formerly served as<br><br>President of Citigroup. He began his<br><br>career in securities trading with Salomon<br><br>Brothers, one of Citigroup’s predecessor<br><br>companies, in 1985. In addition to his<br><br>most recent role as Citigroup’s<br><br>President, he was Chief Executive<br><br>Officer of Citigroup’s Institutional Clients<br><br>Group. He has held the positions of<br><br>Chief Executive of its Securities and<br><br>Banking division and Head of its Global<br><br>Markets business. He previously served<br><br>as non-executive Chairman of Global<br><br>Bamboo Technologies. Jamie currently<br><br>serves as non-executive Chair of HSBC<br><br>North America Holdings Inc. | External appointments:<br><br>–No external appointments | |||
| Independent non-executive Director<br><br>Appointed to the Board: May 2020 | ||||||
| Ann Godbehere (70)<br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Ann brings<br><br>deep financial acumen and extensive<br><br>financial services experience over a<br><br>30-year career spanning insurance,<br><br>retail and private banking, and wealth<br><br>management. She also provides<br><br>global perspectives, drawing upon<br><br>experiences and insights gained from<br><br>a long career in international<br><br>business. | Career: After joining Swiss Re in 1996,<br><br>Ann served as the company’s Chief<br><br>Financial Officer from 2003 to 2007.<br><br>She was also Interim Chief Financial<br><br>Officer of Northern Rock Bank from<br><br>2008 to 2009 in the period immediately<br><br>after its nationalisation. Ann also has<br><br>extensive board experience, including<br><br>with FTSE 100 companies, having<br><br>previously served as non-executive<br><br>Director of Prudential plc, British<br><br>American Tobacco plc, UBS AG, UBS<br><br>Group AG and as Senior Independent<br><br>Director of Rio Tinto plc and Rio Tinto<br><br>Limited. She currently serves as non-<br><br>executive Chair of HSBC Bank plc. | External appointments:<br><br>–Non-executive Director and Chair of<br><br>the Audit Committee of Stellantis<br><br>N.V.<br><br>–Non-executive Director and Chair of<br><br>the Audit and Risk Committee of<br><br>Shell plc | |||
| Independent non-executive Director<br><br>Appointed to the Board: September 2023<br><br>Senior Independent Director: May 2024 | ||||||
| Steven Guggenheimer (60)<br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Steven<br><br>brings extensive insight into<br><br>technologies ranging from artificial<br><br>intelligence to Cloud computing,<br><br>through his experience advising<br><br>businesses on digital transformation. | Career: Steven has more than 25 years<br><br>of experience at Microsoft, including<br><br>more than a decade as Corporate Vice<br><br>President, where he led teams focused<br><br>on original equipment manufacturers,<br><br>developers and independent software<br><br>vendors and artificial intelligence<br><br>solutions. | External appointments:<br><br>–Independent non-executive<br><br>Director of BT Group plc<br><br>–Independent non-executive<br><br>Director of Leupold & Stevens, Inc<br><br>–Independent non-executive<br><br>Director of Forrit Holdings Limited<br><br>–Member of Advisory Board of<br><br>Quantexa Limited | |||
| Independent non-executive Director<br><br>Appointed to the Board: May 2020 | ||||||
| Dr José Antonio Meade Kuribreña (56)<br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: José has<br><br>extensive experience in public<br><br>administration, banking and financial<br><br>policy. | Career: José has held cabinet-level<br><br>positions in the federal government of<br><br>Mexico, including as Secretary of<br><br>Finance and Public Credit, Secretary of<br><br>Social Development, Secretary of<br><br>Foreign Affairs and Secretary of Energy.<br><br>Prior to his appointment to the cabinet,<br><br>he served as Undersecretary and as<br><br>Chief of Staff in the Ministry of Finance<br><br>and Public Credit. José is also a former<br><br>Director General of Banking and Savings<br><br>at the Ministry of Finance and Public<br><br>Credit, and served as Chief Executive<br><br>Officer of the National Bank for Rural<br><br>Credit. He currently serves as non-<br><br>executive Chair of Grupo Financiero<br><br>HSBC, S. A. de C. V, HSBC Latin<br><br>America Holdings (UK) Limited and of | HSBC Mexico, S.A., Institucion de<br><br>Banca Multiple, Grupo Financiero<br><br>HSBC.<br><br>External appointments:<br><br>–Independent non-executive<br><br>Director of Grupo Comercial<br><br>Chedraui, S.A.B. de C.V.<br><br>–Independent Member of the<br><br>Technical Committee of Fibra Uno<br><br>Administracion SA de CV<br><br>–Member of the Advisory Board of<br><br>the University of California, Centre<br><br>for US-Mexican Studies<br><br>–Member of the UNICEF Mexico<br><br>Advisory Board<br><br>–Independent non-executive<br><br>Director of Nemak, S.A.B de C.V | |||
| Independent non-executive Director<br><br>Appointed to the Board: March 2019<br><br>Workforce engagement non-executive Director since: June 2022 | ||||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 223 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| The Board | ||||||
| Kalpana Morparia (76)<br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Kalpana is a<br><br>skilled business leader with<br><br>significant experience gained through<br><br>a 45-year career in banking across<br><br>Asia, primarily in India. | Career: Kalpana’s most recent<br><br>executive role was as Chair of J.P.<br><br>Morgan, South and Southeast Asia and<br><br>a member of J.P. Morgan’s Asia<br><br>executive committee, held until her<br><br>retirement in 2021. Before J.P. Morgan,<br><br>she was the Joint Managing Director of<br><br>ICICI Bank, India’s second-largest bank,<br><br>from 2001 to 2007. She has previously<br><br>served as a non-executive Director on<br><br>the boards of Hindustan Unilever<br><br>Limited, Dr.Reddy’s Laboratories Ltd<br><br>and Meesho Inc. Kalpana also serves as<br><br>a board and governing council member<br><br>of several non-profit organisations in the<br><br>education sector. | External appointments:<br><br>–Independent non-executive<br><br>Director of The Great Eastern<br><br>Shipping Company Limited<br><br>–Independent non-executive<br><br>Director of Philip Morris<br><br>International Inc<br><br>–Member of the Mentor Council of<br><br>the Institute for Sustainability,<br><br>Employment and Growth (ISEG<br><br>Foundation) | |||
| Independent non-executive Director<br><br>Appointed to the Board: March 2023 | ||||||
Eileen Murray (67)<br><br> <br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Eileen has<br><br>extensive knowledge in financial<br><br>services, technology and corporate<br><br>strategy from a career spanning more<br><br>than 40 years. | Career: Eileen previously served as co-<br><br>CEO of Bridgewater Associates, LP.<br><br>Before this, she was CEO for<br><br>Investment Risk Management LLC, and<br><br>President and co-CEO of Duff Capital<br><br>Advisors. She also served as Chair of<br><br>the Financial Industry Regulatory<br><br>Authority. Eileen started her career at<br><br>Morgan Stanley, where she held<br><br>positions including Controller, Treasurer,<br><br>and Global Head of Technology and<br><br>Operations, as well as Chief Operating<br><br>Officer for its Institutional Securities<br><br>Group. She was also Head of Global<br><br>Technology, Operations and Product<br><br>Control at Credit Suisse. | External appointments:<br><br>–Independent non-executive<br><br>Director of Guardian Life Insurance<br><br>Company of America<br><br>–Chair of Broadridge Financial<br><br>Solutions, Inc<br><br>–Chair of Invisible Urban Charging<br><br>–Operating partner of Liberty City<br><br>Ventures | |||
| Independent non-executive Director<br><br>Appointed to the Board: July 2020 | ||||||
| Swee Lian Teo (66)<br><br><br><br><br><br> |
||||||
| --- | --- | --- | --- | |||
 |
Skills and experience: Swee Lian<br><br>brings extensive experience within<br><br>the international financial services<br><br>industry, having previously spent over<br><br>27 years with the Monetary Authority<br><br>of Singapore (‘MAS‘). | Career: During Swee Lian’s time at the<br><br>MAS, she worked in foreign reserves<br><br>management, financial sector<br><br>development, strategic planning and<br><br>financial supervision, before she<br><br>became the Deputy Managing Director<br><br>for Financial Supervision. She retired<br><br>from the MAS in 2015 after serving as<br><br>Special Advisor, focused on MAS’s role<br><br>in the international regulatory<br><br>framework, in the Managing Director’s<br><br>office. Swee Lian previously served as a<br><br>non-executive Director on the boards of<br><br>AIA Group Limited, Singapore<br><br>Telecommunications Limited and the<br><br>Dubai Financial Services Authority. | External appointments:<br><br>–Chair of CapitaLand Integrated<br><br>Commercial Trust Management<br><br>Limited<br><br>–Director of Clifford Capital Pte Ltd<br><br>–Chair of Singapore Post Limited | |||
| Independent non-executive Director<br><br>Appointed to the Board: October 2023 | ||||||
| Angela McEntee (49) | ||||||
| --- | --- | --- | ||||
 |
Skills and experience: Angela is a<br><br>qualified solicitor with extensive legal,<br><br>regulatory, risk, and corporate<br><br>governance experience. She has<br><br>significant expertise in the UK and<br><br>Hong Kong Corporate Governance<br><br>Codes and Listing Rules having<br><br>worked with the Holdings Board and<br><br>Management Committees since<br><br>joining HSBC. | Career: Prior to joining HSBC in 2020,<br><br>Angela held senior roles in the<br><br>Governance function at NatWest Group<br><br>plc including legal, governance,<br><br>regulatory affairs and compliance, latterly<br><br>providing support to the Board Risk and<br><br>Audit Committees, together with<br><br>oversight for regulatory engagement<br><br>and advice on individual accountabilities. | ||||
| Group Company Secretary<br><br>Appointed: January 2026 |
Former Directors who served during the year
Sir Mark Tucker retired from the Board on 30 September 2025
ÑFor full biographical details of our Board members, see www.hsbc.com/who-we-are/our-people/board-of-directors.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 224 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| The Board |
Senior management
Senior management, which includes the Group Operating Committee, supports the Group CEO in the day-to-day management of the business and
the implementation of strategy.
Richard Blackburn (60)
Group Chief Risk and Compliance
Officer
Richard was appointed Group Chief Risk
and Compliance Officer in April 2025,
having held the role in an interim
capacity since January 2025. With 36
years in financial services and over 20
years at HSBC, he has held several
senior positions including Regional Chief
Risk Officer for Europe and MENAT,
Chief Risk & Compliance Officer for
Global Banking and Markets, and Chief
Risk & Compliance Officer for Global
Commercial Banking.
Barry O’Byrne (50)
Chief Executive Officer, International
Wealth & Premier Banking
Barry was appointed CEO of
International Wealth and Premier
Banking in October 2024. He joined
HSBC in 2017 as Chief Operating
Officer for Global Commercial Banking
and became CEO of the business in
- Before HSBC, Barry spent 19
years at GE Capital where he held
various senior leadership roles,
including CEO and Chief Operating
Officer for GE Capital International.
Bob Hoyt (61)
Group Chief Legal Officer
Bob joined HSBC as Group Chief Legal
Officer in January 2021. He leads
HSBC’s global legal function, advising
the Board, Chief Executive and senior
management on legal and regulatory
matters. Bob previously held positions
in the US government as General
Counsel of the US Department of the
Treasury, and Associate Counsel to the
President.
Russell Jackson (42)
Group Head of Internal Audit
Russell Jackson was appointed Group
Head of Internal Audit in June 2025. He
is a standing attendee of the Group
Operating Committee. He joined HSBC
in 2023 as Group Head of Enterprise
Risk. Prior to joining HSBC, he served
as CEO of Fnality Services. He has also
previously held a range of risk and
regulatory roles at the Bank of England
and Prudential Regulation Authority.
David Liao (53)
Co-Chief Executive, Asia and
Middle East
David was appointed Co-Chief
Executive of the Asia-Pacific region in
2021, with his role expanding to cover
the Middle East in January 2025. Since
joining HSBC in 1997, he has held
many senior roles and now serves as
Chair of HSBC Bank (China) Company
Limited, and as a Director of Bank of
Communications Co., Limited and
Hang Seng Bank Limited.
David Lindberg (50)
Chief Executive Officer, HSBC UK
Bank plc
David was appointed CEO of HSBC UK
Bank plc in December 2025. With 27
years’ international banking experience, he
has led businesses in the UK, America and
Australia, focusing on retail, commercial
banking, and digital transformation. He
previously served as CEO of Retail Banking
at NatWest, CEO of Commercial and
Business Banking for Westpac Group,
CEO of Consumer Banking for Westpac
Group and other senior roles at CBA, ANZ
and First Manhattan.
Stuart Riley (51)
Group Chief Information Officer
Stuart was appointed Group Chief
Information Officer in February 2024.
He is responsible for leading the bank’s
technology strategy, enabling the
delivery of an efficient, resilient,
and innovative digital bank. Prior
to joining HSBC, he was Co-Chief
Information Officer of Citi and
previously held senior technology
roles at Deutsche Bank.
Michael Roberts (65)
Chief Executive Officer, HSBC
Bank plc, and Corporate and
Institutional Banking
Michael was appointed CEO of
Corporate and Institutional Banking and
Western Markets in January 2025, also
serving as CEO of HSBC Bank plc. He
previously led HSBC US and Americas
until December 2024. Before joining
HSBC in 2019, Michael spent over 30
years at Citigroup, holding senior roles
such as Global Head of Corporate
Banking and Capital Management.
Surendra Rosha (57)
Co-Chief Executive, Asia and
Middle East
Surendra was appointed Co-Chief
Executive of the Asia-Pacific region in
2021, with his role expanding to the
Middle East in January 2025. He is a
Director of The Hongkong and
Shanghai Banking Corporation Limited
and Saudi Awwal Bank. Since joining
HSBC in 1991, he has held senior
positions including Head of Institutional
Sales, Asia-Pacific and Chief Executive
for HSBC India.
Aileen Taylor (53)
Group Chief People & Governance
Officer
Aileen was appointed Group Chief
People & Governance Officer in
October 2024. Aileen joined HSBC in
2019 as Group Company Secretary and
Chief Governance Officer and became
Group Chief People & Governance
Officer in 2024. Prior to joining HSBC,
she spent 19 years at the Royal Bank
of Scotland Group, holding various
legal, risk and compliance roles.
Suzy White (49)
Group Chief Operating Officer
Suzy was appointed Group COO in
October 2024. With over 25 years at
HSBC, she has held numerous senior
roles including COO for Global Banking
and Markets, Regional COO for Global
Markets (Americas) and Chief Risk
Officer for Global Banking and Markets
and Commercial Banking in the US.
She is a Director of HSBC Bank
(Singapore) Limited.
| Other Senior Management<br><br>who served during<br><br>the year:<br><br>–Jonathan Calvert Davies,<br><br>former Group Head of Internal<br><br>Audit and standing attendee of<br><br>the Group Operating<br><br>Committee, stepped down on<br><br>2 June 2025.<br><br>–John David (Ian) Stuart, former<br><br>Chief Executive Officer, HSBC<br><br>UK Bank plc stepped down as a<br><br>Group Operating Committee<br><br>member on 7 December 2025.<br><br>He assumed the role of Group<br><br>Customer and Culture Director<br><br>on 8 December and is a standing<br><br>attendee of the Group Operating<br><br>Committee. | ||||||
|---|---|---|---|---|---|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 225 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Board and senior management diversity
We value difference
We believe that a diverse and inclusive Board, reflective of the communities we serve, is a
critical component of effective decision-making and of developing a sustainable and
successful business for HSBC.
Gender and ethnic representation
As at 31 December 2025, the Board met the targets set out within the
UK Listing Rule 6.6.6 (9) and FTSE Women Leaders Review. Female
representation on the Board was 62% and two women held senior
Board positions. The Board had six Directors who identified as being
from an ethnic minority background. Following Wei Sun Christianson’s
appointment on 1 January 2026, female representation increased to
64% and the number of Directors from ethnic minority backgrounds
increased to seven.
The tables below outline the current gender and ethnic representation
of the HSBC Holdings Board and executive management reflecting
data gathered through self-identification as at 31 December 2025 in
accordance with the requirements of UK Listing Rule 6.6.6 (10).
Gender identity
| Board members | Executive<br><br>management2 | ||||
|---|---|---|---|---|---|
| Number | % | Number of<br><br>senior<br><br>positions1 | Number | % | |
| Men | 5 | 38 | 2 | 10 | 77 |
| Women | 8 | 62 | 2 | 3 | 23 |
| Other | — | — | — | — | — |
| Not specified/prefer<br><br>not to say | — | — | — | — | — |
Ethnic background
| Board members | Executive<br><br>management2 | ||||
|---|---|---|---|---|---|
| Number | % | Number of<br><br>senior<br><br>positions1 | Number | % | |
| White British or other<br><br>White (including<br><br>minority-White groups) | 7 | 54 | 2 | 9 | 69 |
| Mixed/multiple ethnic<br><br>groups | — | — | — | — | — |
| Asian/Asian British | 4 | 31 | 1 | 3 | 23 |
| Black/African/<br><br>Caribbean/Black British | — | — | — | — | — |
| Other ethnic groups | 2 | 15 | 1 | 1 | 8 |
| Not specified/prefer<br><br>not to say | — | — | — | — | — |
1Senior positions on the Board comprise the Group Chairman, Group CEO,
Group CFO and Senior Independent Director.
2Executive management comprises the Group Operating Committee
members and the Group Head of Internal Audit.
Skills and experience
As it is essential to the effective governance of the Group, and the
Board’s oversight and challenge of management, the Board ensures
that collectively and individually, the Board possess the necessary
skills, knowledge, expertise and experience.
The summary provides an overview of the skills and experiences held
by the non-executive Directors on the Board. This is based on the
current skills matrix, which is reviewed annually by the Nomination &
Corporate Governance Committee to ensure that the Board has the
skills and experience required to effectively discharge its duties and to
support succession planning discussions. The skills and experiences of
the newly appointed non-executive Director are also included in the
summary.
| 11 |
|---|
| 8 |
| 9 |
| 7 |
| 4 |
| 5 |
| 6 |
| 3 |
| 9 |
Banking
Finance
Risk
Customer
Digital technology
Sustainability
Direct Asia market experience
Direct UK market experience
Global business experience
1.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 226 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
How we are governed
We are committed to high standards of corporate governance. The Group has in place a comprehensive range of policies and procedures to help
ensure that its end-to-end governance is well managed, with appropriate and effective oversight and controls.
| Board of Directors<br><br>A schedule of matters<br><br>reserved for the Board is<br><br>set out within its terms of<br><br>reference, which are<br><br>available at<br><br>www.hsbc.com/who-we-<br><br>are/our-people/board-of-<br><br>directors/board-<br><br>responsibilities. | The Board has overall, collective responsibility for the long-term success of the Group and delivery of sustainable value to<br><br>shareholders. Led by the Group Chairman, the Board is responsible for, among other matters:<br><br>–approving the Group’s strategy and objectives, and monitoring the alignment of the Group’s purpose, strategy and values with the<br><br>desired culture and standards;<br><br>–setting the Group’s risk appetite and monitoring the Group’s risk profile;<br><br>–approving and monitoring capital and financial resource plans for achieving strategic objectives, including material transactions;<br><br>–considering and approving the Group’s technology and environmental, social and governance strategies;<br><br>–reviewing the effectiveness of stakeholder engagement mechanisms, including engagement with the workforce;<br><br>–approving appointments to the Board and Board roles, and the remuneration of independent non-executive Directors;<br><br>–reviewing and approving changes to the Group’s overall corporate governance arrangements; and<br><br>–providing entrepreneurial leadership of the Group within a framework of prudent and effective controls, which enable risks to be<br><br>assessed and managed. |
|---|
The Board delegates oversight of certain matters to its committees, which are each chaired by a non-executive Director. Board committees provide
regular reports on their activities and make recommendations to the Board. Only the Group Chairman and non-executive Directors are members of
Board committees. Details of committee memberships are in the Directors' biographies in 'The Board' section on pages 220 to 223. Terms of
reference of the Board committees are available at www.hsbc.com/who-we-are/our-people/board-of-directors/board-committees.
| Chairman’s Committee | An ad hoc committee which provides Board members with the opportunity to consider time-critical matters between scheduled Board<br><br>meetings. | |
|---|---|---|
| Group Audit Committee<br><br>('GAC') | Oversees matters relating to the Group’s internal controls, financial resourcing and reporting, internal and external audit, and<br><br>whistleblowing arrangements. For more information, see the Committee’s report from page 236. | |
| Nomination & Corporate<br><br>Governance Committee | Oversees Board and senior management succession planning and monitors the corporate governance framework of the Group. For<br><br>more information, see the Committee’s report from page 233. | |
| Group Remuneration<br><br>Committee | Responsible for reviewing and making recommendations to the Board, for approval by shareholders, on the Group remuneration policy<br><br>and approving the remuneration of the executive Directors and other senior employees. For more information, see the committee’s<br><br>report from page 249. | |
| Group Risk Committee<br><br>('GRC') | Oversees and advises the Board on all risk-related matters, including financial and non-financial risks. For more information, see the<br><br>Committee’s report from page 242. | |
| Group Technology &<br><br>Operations Committee<br><br>('GTO') | Oversees HSBC’s technology and operations strategies and monitors alignment with overall Group strategy. For more information, see<br><br>the Committee’s report from page 246. | |
| Other Governance<br><br>Forums | Board Oversight Sub-Group: an informal mechanism whereby a<br><br>smaller group of Board members and management may meet on<br><br>an ad hoc basis to discuss emerging issues and upcoming Board<br><br>matters. This Sub-Group is chaired by the Group Chairman. | Board Sustainability Working Group ('SWG'): supports the<br><br>delivery of the sustainability strategy and provides oversight and<br><br>guidance in relation to the Group’s sustainability activities. The<br><br>SWG is comprised of four non-executive Directors. Further<br><br>information about SWG activities is on page 57. |
The Board delegates day-to-day management of the business and delivery of strategy to the Group CEO. During the year, the Group CEO was
supported in these responsibilities by the Group Operating Committee ('Group OpCo').
| Group Operating<br><br>Committee (Group<br><br>OpCo) | Supports the Group CEO in the day-to-day management of the Group. Comprised of 12 members of senior management including<br><br>infrastructure heads and the CEOs of each of our four business areas. The Group OpCo members are set out on page 224. The Group<br><br>OpCo operates under written terms of reference and its members report to the Board on matters as appropriate. |
|---|
A number of committees support the Group OpCo by providing specialist oversight and guidance of the matters delegated to them. Such
matters include restructuring and investment considerations, risk management and controls, financial reporting and disclosures.
| Group Finance Management<br><br>Meeting | Group Risk Management<br><br>Meeting | Group Disclosure Committee | Acquisitions and Disposals<br><br>Committee | |||
|---|---|---|---|---|---|---|
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 227 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed |
Board roles and responsibilities
The roles of Group Chairman and Group CEO are held by two different individuals. There is a clear division of responsibilities between the
leadership of the Board by the Group Chairman, and the executive responsibility for day-to-day business management undertaken by the Group
CEO. A summary of director roles and their responsibilities is set out below. Full details are available at https://www.hsbc.com/who-we-are/our-
people/board-of-directors/board-responsibilities.
| Roles | Responsibilities |
|---|---|
| Group Chairman | –Provides effective leadership of the Board and promotes the highest standards of corporate governance practices.<br><br>–Leads the Board in providing strong strategic oversight and setting the Board’s agenda, culture and values.<br><br>–Leads the Board in challenging management’s thinking and proposals, and fosters open and constructive debate among Directors.<br><br>–Maintains internal and external relationships with key stakeholders, and communicates investors’ views to the Board.<br><br>–Organises periodic monitoring and evaluation, including externally facilitated evaluation, of the performance of the Board, its<br><br>committees and individual Directors.<br><br>–Leads on succession planning for the Board and its committees, ensuring appointments reflect diverse cultures, skills and<br><br>experiences. |
| Group CEO | –Leads and directs the fulfilment of the Group’s purpose and strategy, in alignment with the desired culture and values as set by<br><br>the Board.<br><br>–Leads the Group Operating Committee with responsibility for the day-to-day leadership and management of the Group, in<br><br>accordance with the authority delegated to him by the Board.<br><br>–Maintains effective relationships with key internal and external stakeholders including the Group Chairman, the Board, customers,<br><br>regulators, governments and investors.<br><br>–Maintains accountability for the Group’s compliance with applicable laws, codes, rules and regulations, good market practice and<br><br>HSBC’s own standards, value and policies. |
| Group CFO | –Supports the Group CEO in developing and implementing the Group strategy, and recommends the annual budget and long-term<br><br>strategic and financial resource plan.<br><br>–Leads the Finance function and is responsible for effective financial and regulatory reporting, including the effectiveness of the<br><br>processes and controls, to ensure the financial control framework is robust and fit for purpose.<br><br>–Maintains relationships with key stakeholders including shareholders. |
| Senior Independent<br><br>Director | –Supports the Group Chairman, acting as intermediary for non-executive Directors when necessary.<br><br>–Leads the non-executive Directors in the oversight of the Group Chairman, supporting the clear division of responsibility between<br><br>the Group Chairman and the Group CEO.<br><br>–Listens to shareholders’ views if they have concerns that cannot be resolved through the normal channels. |
| Non-executive Directors | –Provide input on the development of Group strategy.<br><br>–Challenge and oversee the performance of management in achieving agreed corporate goals and objectives.<br><br>–Contribute to the assessment and monitoring of culture.<br><br>–Maintain internal and external relationships with the Group’s key stakeholders. |
| Group Company<br><br>Secretary | –Maintains strong and consistent governance practices at Board level and throughout the Group.<br><br>–Supports the Group Chairman in ensuring effective functioning of the Board and its committees and engagement between senior<br><br>management and non-executive Directors.<br><br>–Facilitates induction and professional development of non-executive Directors.<br><br>–Advises and supports the Board and management in ensuring effective end-to-end governance and decision making across the<br><br>Group. |
Operation of the Board
The Board is ordinarily scheduled to meet at least seven times a year.
In 2025, the Board held eight scheduled meetings, supplemented by
two ad hoc meetings. The Board agendas are set by the Group
Chairman, supported by the Group CEO and the Group Company
Secretary.
The Board approved the appointment of Angela McEntee as Group
Company Secretary, with effect from 1 January 2026. Angela is a
qualified solicitor with significant legal, regulatory, risk and corporate
governance experience (for further details, read Angela's biography on
page 223). Aileen Taylor, formerly the duly appointed Group Company
Secretary, remains in her role as Group Chief People & Governance
Officer.
The Group Chief People & Governance Officer, Group Chief Risk and
Compliance Officer and the Group Chief Legal Officer were regular
attendees at Board meetings during the year. Other members of senior
management were invited to attend to present specific matters. The
CEOs of our four business areas attended Board strategy sessions.
External presenters, including representatives from regulators, were
invited to attend meetings to provide specialist input and context.
Governance practices are in place to enable Board and Board
committee meetings to operate effectively. Papers presented are
expected to follow a template to ensure that Directors have the
appropriate information to take informed decisions. Each template
requires authors to describe any steps taken to engage with relevant
stakeholders and explain the extent to which stakeholders are, or will
be, impacted by the matter under consideration, and how this has
influenced any recommendations to the Board or committee. The
Board receives regular reports from committee Chairs on key matters
and discussions from committee meetings. The Group Chairman
meets with the non-executive Directors without the executive
Directors in attendance after Board meetings and otherwise, as
necessary.
All Directors are encouraged to have contact with management at all
levels and have full access to management information as needed.
Visits to local businesses are arranged for the Directors when they
attend Board meetings in different locations, and when travelling for
other reasons. Members of senior management often attend Directors’
engagements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 228 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed |
Meeting attendance
Meeting attendance by Board and Board committee members in 2025 is shown below. Attendance is shown as the number of meetings attended
out of the total number of meetings each person was eligible to attend during the year.
| Board of<br><br>Directors1 | Group Audit<br><br>Committee | Nomination &<br><br>Corporate<br><br>Governance<br><br>Committee | Group<br><br>Remuneration<br><br>Committee | Group Risk<br><br>Committee | Group<br><br>Technology &<br><br>Operations<br><br>Committee | General<br><br>Meetings2 | |
|---|---|---|---|---|---|---|---|
| Group Chairman | |||||||
| Sir Mark Tucker3 | 7/7 | 6/6 | 1/1 | ||||
| Brendan Nelson3 | 10/10 | 9/9 | 8/8 | 8/8 | 6/6 | 1/1 | |
| Executive Directors | |||||||
| Georges Elhedery | 10/10 | 1/1 | |||||
| Pam Kaur | 10/10 | 1/1 | |||||
| Non-Executive Directors | |||||||
| Geraldine Buckingham4,5 | 9/10 | 8/9 | 8/8 | 1/1 | 1/1 | ||
| Rachel Duan4 | 10/10 | 8/9 | 8/8 | 6/6 | 1/1 | ||
| Dame Carolyn Fairbairn4 | 10/10 | 8/8 | 6/6 | 7/8 | 1/1 | ||
| James Forese | 10/10 | 9/9 | 8/8 | 8/8 | 1/1 | ||
| Ann Godbehere | 10/10 | 9/9 | 8/8 | 6/6 | 1/1 | ||
| Steven Guggenheimer2,4 | 10/10 | 7/8 | 8/8 | 5/6 | 0/1 | ||
| José Antonio Meade Kuribreña | 10/10 | 9/9 | 8/8 | 6/6 | 1/1 | ||
| Kalpana Morparia | 10/10 | 8/8 | 6/6 | 6/6 | 1/1 | ||
| Eileen Murray | 10/10 | 8/8 | 6/6 | 8/8 | 6/6 | 1/1 | |
| Swee Lian Teo | 10/10 | 8/8 | 8/8 | 6/6 | 1/1 |
1 The total number of Board of Directors meetings comprises eight scheduled meetings and two ad hoc meetings.
2 Comprised of the AGM held on 2 May 2025. Steven Guggenheimer was unable to attend the AGM due to personal circumstances.
3 Sir Mark Tucker retired from the Board with effect from 30 September 2025. Brendan Nelson was appointed Group Chairman on an interim basis with effect
from 1 October 2025 and assumed the role on a permanent basis on 3 December 2025. Brendan Nelson attended seven Board meetings as an independent non-
executive Director and three Board meetings as Group Chairman.
4 Due to prior commitments, Geraldine Buckingham was unable to attend the Board meeting in March and the Group Audit Committee meeting in October, Dame
Carolyn Fairbairn was unable to attend the Group Risk Committee meeting in June, Steven Guggenheimer was unable to attend the Nomination & Corporate
Governance Committee and Group Technology and Operations Committee meetings in July, and Rachel Duan was unable to attend the Group Audit Committee
Meeting in September.
5 Geraldine Buckingham stepped down from the Remuneration Committee with effect from 31 January 2025.
Matters considered by the Board in 2025
| Activities and areas of focus | ||||||
|---|---|---|---|---|---|---|
| Group strategy and<br><br>business performance | –Agreed and monitored performance towards delivery of Group strategic priorities and reviewed and approved home market and<br><br>global business strategies.<br><br>–Provided strategic input to the Group's refreshed ambition and oversaw operational and governance progress towards creating<br><br>a more simple, agile and customer-centric organisation, including implementation of the new organisational design, our new<br><br>Leadership Principles and Group-wide leadership framework, How We Lead.<br><br>–Reviewed strategic growth opportunities, including detailed consideration of the proposal to privatise Hang Seng Bank Limited.<br><br>–Oversaw strategic disposals and targeted business reviews to support long-term, sustainable growth by focusing on areas of<br><br>competitive strengths.<br><br>–Monitored the continued development of the Group's environmental, social and governance strategies, including oversight and<br><br>approval of the Net Zero Transition Plan 2025, with the support of the Board Sustainability Working Group. ESG matters formed<br><br>a regular part of Board discussions during the year with formal updates provided at six scheduled Board meetings. | |||||
| Financials | –Reviewed and approved key disclosures, including the Annual Report and Accounts 2024, Interim Report 2025 and quarterly<br><br>earnings releases.<br><br>–Reviewed and approved distributions, including dividend payments and share buy-backs.<br><br>–Approved renewal of the various debt issuance programmes.<br><br>–Reviewed and approved the Financial Resource Plan; oversaw resource allocation and investment decisions.<br><br>–Provided oversight of key accounting judgements, monitored ECLs and the impact of strategic transactions and significant<br><br>litigation from an accounting perspective. | |||||
| Risk, Regulatory and Legal | – Reviewed and approved frameworks, control documents, core processes and legal and regulatory responsibilities including:<br><br>–the Group’s risk appetite statement;<br><br>–Individual Liquidity and Capital Adequacy Assessment Processes, Internal Climate Scenario Analysis, Group Internal Stress<br><br>Test, Bank Capital Stress Test and other stress testing;<br><br>–the Group’s Human Rights and Modern Slavery Statement;<br><br>–consideration of updates in relation to the Group’s recovery and resolution capabilities and related documentation,<br><br>including testing;<br><br>–the PRA Operational Resilience self-assessment;<br><br>–risk data aggregation and risk reporting framework aligned to the Basel Committee on Banking Supervision 239 Principles;<br><br>–the efficacy of Model Risk Management (’MRM’) activities within HSBC;<br><br>–supervisory requirements, which included preparations in anticipation of new reporting requirements in respect of material<br><br>controls, under the UK and Hong Kong Corporate Governance Codes that take effect for the company's financial year<br><br>starting on 1 January 2026, and listing authority renewals;<br><br>–reviewed the legal implications of strategic transactions, and the impact of significant litigation faced by the Group; and<br><br>–PRA attendance at meetings and other engagements, including continued regular engagement in relation to leadership and<br><br>organisational changes. | |||||
| Technology | –Oversaw continued strategic alignment of the Group’s technology infrastructure, and the programme to simplify and enhance<br><br>system resilience, and accelerate digital transformation across the bank. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 229 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed | ||||||
| Activities and areas of focus | ||||||
| --- | --- | |||||
| People & Culture | –Oversaw the Group’s refreshed ambition to become the most trusted bank globally, putting customers at the heart of<br><br>everything we do, and the development of our six new Leadership Principles and the How We Lead framework.<br><br>–Received results of the employee Snapshot survey and employee Pulse surveys.<br><br>–Participated in deep-dive sessions on people matters including on the future state of the workforce.<br><br>–Participated in various workforce engagement activities and updates. | |||||
| External | –External insights gained through presentations and talks by external parties, for example government officials and regulators. | |||||
| Governance | –Oversaw development of our refreshed governance framework and operating rhythm.<br><br>–Approved the appointments of a new Group Chairman, independent non-executive Director and Group Company Secretary.<br><br>–Reviewed and approved Group policies, terms of reference and delegations of authority.<br><br>–Undertook an internal Board and committee performance effectiveness review.<br><br>–Participated in stakeholder engagement activities.<br><br>–Made recommendations to shareholders for approval at the 2025 AGM.<br><br>–Continued oversight of Director independence, external appointments and conflicts of interest. |
Cultural oversight
The Board has responsibility for ensuring that HSBC’s culture is aligned
with the Group’s purpose, values and strategy, and for assessing and
monitoring how the desired culture has been embedded and is being
sustained. Our culture is an enabler of our ambition and strategy, and
we are committed to a high performance culture, where talented
people can thrive, raising the standards of what we do every day for the
benefit of our customers, colleagues, shareholders and communities.
During 2025, the Board oversaw the development and implementation
of our new Leadership Principles and the launch of our new, Group-
wide leadership framework, How We Lead. The Leadership Principles
set out our expectations for leaders across HSBC, and How We Lead
provides the common leadership language, behaviours and tools to
enable us to deliver better outcomes for our customers, colleagues and
other stakeholders. A number of Board members supported the launch
of How We Lead at our senior leadership event in June 2025 and the
Board received regular updates on the roll out and further development
of the How We Lead framework.
A Board Culture Health Check has been developed and implemented to
support the Board in assessing how leaders across the Group are
embracing the Leadership Principles, and embedding the How We
Lead tools and language in authentic ways to improve outcomes. The
Board also received updates during the year from employee Pulse
surveys designed to gauge employee awareness, sentiment, and
understanding of organisational changes.
A management Advisory Group, led by the Group Chief People &
Governance Officer and the Group Customer and Culture Director, and
consisting of representatives from across our business areas and
functions, has been established to support and advise on the delivery
and implementation of How We Lead. Non-executive Directors attend
Advisory Group meetings on a rotating basis which provides them with
greater insight into the Group’s cultural transformation and ensures
there is alignment between the Board’s expectations on culture and
management’s delivery and implementation.
The Group Customer and Culture Director role, reporting directly to the
Group CEO, was newly created during the year and has responsibility
for ensuring that the customer’s voice is embedded at the heart of our
strategy. Working closely with the Group OpCo, the Group Customer
and Culture Director ensures that colleagues across the Group are
equipped with the right skills and tools to support our customers and
we can meet customers' needs through the development of market-
leading products and propositions.
The Group Chief People & Governance Officer provides a regular paper
to the Board covering key priorities, updates and emerging areas of
focus in people matters. Each scheduled Board meeting begins with a
’customer and culture moment’, at which examples of recent
customer, employee or other stakeholder activities and interactions
which demonstrate ways of working, perspectives and other insights
into culture across the Group are presented.
The Board receives further cultural insights from the results of our all-
employee Snapshot survey and broader management reporting, which
provides key data indicators, including on peoples' behaviours,
sentiment and business outcomes.
The governance structure supporting the Board further facilitates
effective oversight of key people and culture matters. Through the
work of the Group Audit Committee, the Board monitors the nature of
risk and control culture across the Group and sees the impact of its
policies and practices and how they are embedded, through reports on
matters such as whistleblowing, code of conduct breaches and
investigations (for further information see the Group Audit Committee
Report on page 236).
For information about the Board's engagement with our workforce and
other stakeholders see pages 29 and 229.
Governance framework
The governance framework and operating rhythm at HSBC has been
reviewed and reshaped during the year to support the creation of a
simpler, more dynamic organisation. By meaningfully simplifying
governance processes we aim to promote greater clarity and individual
accountability, and thereby enable more efficient decision-making. The
Group-level formal governance structure has been streamlined to
increase focus on individual accountability of decision-makers and their
delegates, and this approach has been cascaded throughout the
organisation.
In some instances, governance committees and forums have been
combined or demised to create more focused and strategic governance
pathways. The ESG Committee, Group People Committee and the
Change Prioritisation & Oversight Committee were demised. The
Holdings Asset & Liabilities Committee became a management
committee, reporting to the Group Finance Management Meeting. A
summary of the Group governance framework as at the date of this
report is set out on page 226.
The Board’s engagement with the
workforce
The Board acknowledges the importance of engaging with the Group's
workforce through various forums. Such interactions enable the Board
to gain insights that inform their discussions and decision making. They
also offer colleagues a platform to share ideas and feedback on matters
important to them. While all Directors are responsible for engaging with
the workforce, José Meade serves as the Board's dedicated non-
executive Director for workforce engagement. He provides oversight of
the Group's workforce engagement programme and acts as a central
point for workforce interactions. This role facilitates meaningful,
inclusive dialogues and ensures that employees' voices are considered
in Board decisions where appropriate.
| 97 | 20,300 | |||||
|---|---|---|---|---|---|---|
| Virtual/physical sessions<br><br>attended by non-executive<br><br>Directors | Number of employees engaged<br><br>physically/virtually | |||||
| 8 | 56 | |||||
| Countries where in-person<br><br>engagement took place and<br><br>many more virtually | Virtual/physical sessions<br><br>attended by workforce<br><br>engagement non-executive<br><br>Director | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 230 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed |
Workforce engagement programme and activities during 2025
The Board agreed an annual workforce engagement programme to
support the Directors’ understanding of the views of the wider
workforce. This was developed with input from the dedicated non-
executive Director for workforce engagement and the Group Chief
People & Governance Officer, and was designed to provide Directors
with opportunities to engage with colleagues across the Group. In
keeping with previous years, two primary mechanisms were used for
this engagement: organising events for Board members during Board
travel or as individual Director location allowed; and offering Board
members opportunities to attend pre-existing Group employee events
scheduled during the year. Structuring the programme this way allowed
the Board to meet a diverse group of colleagues and participate in a
broad range of engagements globally. By utilising pre-existing
employee events, the Board was able to gain organic insights into
employee and management interactions. Employee engagements
were held in various formats: in-person meetings and larger-scale
events, including town halls and virtual formats.
Given the organisational changes during the year, the programme for
2025 was anchored to our Group purpose, strategy, values and
ambition which complemented the cultural transformation taking place
through the Group. Further details of the cultural transformation are set
out on page 229.
A key component of the 2024 workforce engagement programme was
visits to Global Service and Technology Centres, given the critical role
they play in supporting the wider HSBC business to deliver its strategy.
This remained a priority during 2025 and visits were scheduled to
Mexico City and Pune, and through discussions, floor walks, fireside
chats and town halls, the Board gained deeper insights into the work of
these centres.
José Meade provided regular reports to the Board on the outputs and
key themes arising from engagements, which aided Board discussions
and decision making. During the year, José Meade also attended the
Group OpCo and the Chairman’s Forum to share key insights and
issues raised during employee engagements. This enabled open
dialogue with senior executives and other Group subsidiary chairs and
ensured management considered and took timely action in response to
colleague feedback. In addition, this provided the opportunity for the
executives to provide input and share feedback with José Meade to
take forward when considering future engagements.
Key themes included the impact of organisational changes, talent
development and inclusion in the workplace. These themes shaped
conversations between colleagues and Board members and have
informed planning for the 2026 workforce engagement programme,
ensuring events are targeted to reflect these key topic areas.
Each of the Board members continued to sponsor at least one of our
Global Employee Resource Groups (’ERGs’). During 2025, the Directors
met with their respective ERGs to discuss the ERGs’ strategy for the
year and upcoming priorities. Directors were also invited to take part in
other ERG events where possible, and every effort was made to
facilitate local ERG members meeting their aligned Director during
planned Board travel.
Set out below is a selection of workforce engagement events that
were held in 2025, attended by José Meade and other Board members.
| Strategy | ||||||
|---|---|---|---|---|---|---|
| –Directors met with colleagues in branch to experience how customers are<br><br>supported through the UK branch network.<br><br>–Attended a listening session with a small group of UK-based managers to<br><br>gain insights into experiences on performance and reward matters.<br><br>–Directors completed a floor walk of the Hang Seng Bank flagship branch to<br><br>engage with colleagues.<br><br>–Met with wealth management Hong Kong colleagues to gain a deeper<br><br>understanding of wealth management and digital capabilities in Hong Kong.<br><br>–Visited the Pune HSBC Technology Centre.<br><br>–José Meade visited the HSBC Korea office and met with colleagues to gain<br><br>a better understanding of the region.<br><br>–Directors attended various exchange sessions in London to hear the<br><br>employee voice on the business reorganisation and cultural transformation. | ||||||
| Inclusion | ||||||
| –An engagement session was held with colleagues who were part of the<br><br>EmpowHER and Solaris networks to discuss inclusion and development.<br><br>–Directors attended an interactive session to trial the UK Wellbeing initiative,<br><br>Empathy Box, an immersive learning experience designed to help<br><br>colleagues better understand vulnerabilities through emotive experiences.<br><br>–An engagement session was held with a small group of Pride ERG<br><br>members during Pride Month.<br><br>–Attended a virtual event to celebrate 15 years of Balance ERG.<br><br>–José Meade engaged with US-based ERG leaders to discuss business<br><br>topics, employee sentiment and ERG contribution in the US. | ||||||
| Talent development | ||||||
| –A number of Directors attended the Senior Leaders Event in Nansha which<br><br>launched the How We Lead framework.<br><br>–An engagement session was held with HSBC India leadership.<br><br>–Attended exchange sessions with UK-based graduates and degree<br><br>apprentices to hear about their experiences with HSBC.<br><br>–Attended an exchange session with Hong Kong-based graduates to hear about<br><br>their experiences with HSBC.<br><br>–Met with a small group of AI Ambassadors to discuss the education<br><br>opportunities in technology across the business.<br><br>–José Meade joined a How We Lead event held in Mexico City as part of the<br><br>roll out of the new How We Lead framework to senior leaders. | ||||||
| “Given the organisational changes during<br><br>the year, the programme for 2025 was<br><br>anchored to our Group purpose, strategy,<br><br>values and ambition, which<br><br>complemented the cultural transformation<br><br>taking place through the Group.“<br><br>José Meade, Dedicated Workforce Engagement NED | ||||||
| --- | ||||||
 |
 |
|||||
| --- | --- | |||||
| José Meade, Geraldine Buckingham and Kalpana Morparia<br><br>at an exchange session with UK-based degree apprentices<br><br>London, April 2025 | Fireside chat with Kalpana Morparia and the EmpowHER<br><br>and Solaris networks<br><br>London, April 2025 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 231 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed |
Board induction and training
The Board recognises the importance of induction and training for its
Directors. To ensure Directors’ contributions to the Board remain
informed and relevant, all Board members receive appropriate training,
both individually and collectively, throughout their tenure.
The Group Company Secretary works with the Group Chairman to
ensure that, on appointment, new Directors are provided with tailored
and comprehensive induction programmes appropriate to their
individual experiences and needs, including the process for managing
actual and potential conflicts of interest. Board induction programmes
are conducted through formal briefings and introductory sessions with
other Board members, senior management, legal counsel, auditors, tax
advisers and regulators, as appropriate. Topics covered in the induction
programme include but are not limited to: purpose and values; culture
and leadership; governance and stakeholder management; Directors’
legal and regulatory duties; recovery and resolution planning; anti-
money laundering and anti-bribery; technical and business briefings;
and strategy.
The induction process is often initiated before appointment to allow
each new Board member to contribute meaningfully from appointment.
The structure of the induction supports good information flows
between the Board and its committees, as well as between senior
management and non-executive Directors, providing a clear
understanding of our culture and way of operating.
As part of the transition to Group CFO, Pam Kaur completed an
induction and development plan which was overseen by the
Nomination & Corporate Governance Committee.
Prior to her appointment as a non-executive Director, Wei Sun
Christianson received relevant training and legal advice from a firm of
solicitors on 8 December 2025. Following this training, Wei Sun
Christianson confirmed her understanding of her obligations
as a director of a listed issuer pursuant to Rule 3.09D of the Hong Kong
Listing Rules. As part of her continued onboarding, Wei Sun
Christianson will be provided with a tailored induction, which takes into
account her listed directorship experience.
The approach to Director training is agreed annually by the Nomination
& Corporate Governance Committee. Training sessions are facilitated
by both internal subject matter experts and by external presenters.
During the year Board training sessions included the following key
topics; financial crime, recovery and resolution, and internal controls.
Members of Board committees receive relevant training, as
appropriate. Further details on any specific training commissioned by
Board committees can be found in the respective committee reports
from page 233 onward. Directors may take independent professional
advice at HSBC’s expense.
Directors were issued with training modules, which mirrored the
mandatory training undertaken by employees. During 2025, this training
covered topics including risk management, operational resilience,
health and safety, well-being, cyber-security, financial crime, AI and
data protection.
During the year, non-executive Directors discussed individual
development areas with the Group Chairman as part of their
performance discussions. The Group Company Secretary makes
appropriate arrangements for any additional training needs identified
using internal resources, or otherwise, at HSBC’s expense.
Board Directors who serve on principal subsidiary boards receive
training that is pertinent to circumstances and context relevant to those
boards. For further information, see ’The role of principal subsidiaries’
on page 232.
| Directors’ induction and ongoing development in 2025 | |||
|---|---|---|---|
| Director | Strategy and<br><br>performance1 | Risk management<br><br>and<br><br>controls2 | Corporate<br><br>governance, ESG<br><br>and other reporting<br><br>matters3 |
| Geraldine Buckingham | u | u | u |
| Rachel Duan | u | u | u |
| Georges Elhedery | u | u | u |
| Dame Carolyn Fairbairn | u | u | u |
| James Forese | u | u | u |
| Ann Godbehere | u | u | u |
| Steven Guggenheimer | u | u | u |
| Pam Kaur | u | u | u |
| José Antonio Meade Kuribreña | u | u | u |
| Kalpana Morparia | u | u | u |
| Eileen Murray | u | u | u |
| Brendan Nelson | u | u | u |
| Swee Lian Teo | u | u | u |
| u | Matter considered | u | Matter not considered |
| --- | --- | --- | --- |
1Directors received weekly updates on key business updates, performance metrics, investor relations and regulatory matters. Directors also had the opportunity
to attend town halls and business function events regionally.
2 Directors received risk and control training and briefings. Examples of specific sessions held in 2025 included: ’Recovery and Resolution’, ‘Internal Controls’ and
‘Financial Crime’.
3 Directors received development updates at Board meetings on: ’Board stakeholder engagement’ and ESG matters including regulatory changes. Directors
received additional training through their attendance at forums such as the Chairman’s Forum, Remuneration Committee Chairs’ Forum and the Global Non-
Executive Director Update.
Board and committee performance review
Performance reviews are an important part of effective governance and
support the operation of the Board and its committees.
The 2025 Board and committee performance review was facilitated
internally by the Group Chief People & Governance Officer and Group
Governance. This followed two externally facilitated reviews in 2023
and 2024.
The 2025 review, which consisted of a questionnaire, supplemented by
interviews with each Director and relevant senior management and
advisers, focused on three key themes:
–Progress against findings from the 2023 and 2024 reviews: all
actions arising from these reviews were considered to have been
effectively delivered.
–Oversight of the organisational changes: reporting to the Board was
considered to have been thorough and transparent, allowing
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 232 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| How we are governed |
Directors to effectively oversee and challenge management on
progress against commitments.
–Oversight of the work to implement a high performance culture and
the How We Lead framework: the Board’s oversight of and
engagement with How We Lead was valued, and the introduction of
a Board culture health-check was agreed, which will support the
Board in discharging its oversight responsibilities.
The outputs from the review were presented to the Board and its
committees in December 2025. Overall, the review concluded that the
Board and its committees continued to operate effectively. The review
did not identify any material notable areas for improvement, however,
the Board have agreed to focus on three areas of potential
enhancement to help further improve effectiveness and performance:
–Board reporting: the Group Company Secretary has been tasked
with exploring the use of AI tools to help with report preparation, as
well as to enable Directors to review and analyse information within
meeting packs, to improve the consistency and impact of reports
across the Board and its committees.
–Stakeholder engagement: the Board agreed to review its approach
to stakeholder engagement, to ensure that this continues to be
valuable and to provide insights that inform oversight, challenge and
decision-making by the Board. Opportunities to further enhance the
Board’s alignment and connectivity with Principal Subsidiary boards
will also be considered.
–Board and Board committee composition: the Nomination &
Corporate Governance Committee will lead a refreshment of longer-
term succession planning for key Board roles, which will consider
the technical and experiential capabilities required to ensure that the
Board and its committees continue to function effectively in both
the short and longer term.
The former Group Chairman and his interim successor met with each
Director individually during September 2025 in relation to their individual
performance and development. No performance review was conducted
for the Group Chairman owing to the retirement of Sir Mark Tucker,
and the process to identify a permanent successor for the Group
Chairman role, which was ongoing at the time of the review.
The Group Company Secretary will work with the Board and Board
committee Chairs to implement the agreed areas for enhancement
over the course of 2026.
Subsidiary governance
We are committed to maintaining high standards of corporate
governance throughout the Group. All subsidiary boards and their
respective businesses are required to have in place effective
governance arrangements which have regard to the businesses’
nature, size, location and the sectors in which they operate.
The subsidiary accountability framework
The subsidiary accountability framework aims to balance appropriate
governance oversight by the Group with each subsidiary’s local legal and
regulatory requirements. The framework supports the Group in promoting
effective governance arrangements across its subsidiaries by:
–setting out high-level principles and expectations which emphasise
best practice governance;
–ensuring a consistent and proportionate approach to corporate
governance arrangements; and
–ensuring a shared and consistent understanding of the Group’s
strategic objectives, culture and values.
Group subsidiary board composition is kept under review as part of
succession planning. See the Nomination & Corporate Governance
Committee report on page 233 for information regarding the
succession plans of principal subsidiaries.
The role of principal subsidiaries
Certain subsidiaries are designated formally by the Board as principal
subsidiaries. In addition to their obligations under their respective local
laws and regulations, principal subsidiaries, supported by regional
company secretaries, perform a critical role in ensuring effective and
high standards of governance across the Group and in overseeing the
implementation of the subsidiary accountability framework in the
regions for which they are responsible.
Representatives from principal subsidiaries attend the Board and its
committee meetings for relevant topics, including when the Board
holds meetings outside of the UK. The Chairs of principal subsidiary risk
and audit committees are invited to attend relevant Group committee
meetings. Attendance and participation at these meetings supports
subsidiary directors’ understanding of the challenges facing the Group
and helps to identify common challenges and facilitate the sharing of
lessons learned.
The Group Chairman interacts regularly with the chairs of the principal
subsidiaries, including through the Chairman’s Forum. The Chairman’s
Forum comprises the chairs of each of the principal subsidiaries, the
Group’s Senior Independent Director, the chairs of the Group’s audit,
risk and remuneration committees, and where relevant, the Group
CEO, other non-executive Directors and members of executive
management, advisers and/or external experts.
In 2025, the Chairman’s Forum covered topics such as strategic
planning and reporting, geopolitical issues and macroeconomic outlook,
shareholder engagements, Group-wide connectivity of non-executive
Directors, technology and innovation developments, How We Lead,
workforce engagement and financial performance. The principal
subsidiaries are:
| Principal subsidiary | Oversight responsibility |
|---|---|
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | Asia-Pacific |
| HSBC Bank plc | Europe and Bermuda (excluding<br><br>UK ring-fenced activities) |
| HSBC UK Bank plc | UK ring-fenced bank and its<br><br>subsidiaries |
| HSBC Middle East Holdings BV | Middle East, North Africa and<br><br>Türkiye |
| HSBC North America Holdings Inc. | US |
| HSBC Latin America Holdings (UK) Limited | Mexico and Latin America |
Subsidiary director development
The Group is dedicated to supporting the continuing professional
development of its subsidiary directors.
The Bank Director Programme, launched in 2022, is designed to
prepare HSBC executives and senior managers to assume roles as
internal non-executive directors on our subsidiary boards. Over 40
delegates have completed the programme and many have now served
as internal non-executive directors on Group subsidiary boards.
Our Bank Chair Programme took place in late 2024 and early 2025 with
attendees comprising subsidiary board and committee chairs from
across the Group. The programme focused on developing our ‘chairs of
the future‘ and equipping them to lead ‘best-in-class’ subsidiary boards
and committees at HSBC. The programme covered a range of topics
with a future focus including regulation, subsidiary governance, culture,
customers, building a future-focused board, climate, transformation, AI
and geopolitics.
Our annual Global Non-executive Director Update is another way we
engage and connect with subsidiary directors to provide updates and
share knowledge. Over 160 attendees joined our 2025 session where
topics included strategy and performance, the external environment
and culture.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 233 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Nomination & Corporate Governance
Committee
 |
“Continuing to strengthen the<br><br>succession plans for key roles, in line<br><br>with the short- and long-term needs<br><br>of the Board and wider Group,<br><br>remains a key priority for me and the<br><br>Committee this year.“ | |
|---|---|---|
| Brendan Nelson<br><br>Chair<br><br>Nomination & Corporate Governance<br><br>Committee | ||
| For Board committee membership, see Board biographies on<br><br>pages 220 to 223 and for meeting attendance in 2025 see page<br><br>228. | ||
| Key responsibilities | ||
| The Committee’s key responsibilities include:<br><br>–overseeing succession planning and leading the process for<br><br>identifying and nominating candidates for appointment to the<br><br>Board and its committees;<br><br>–overseeing succession planning and development of senior<br><br>leadership;<br><br>–overseeing and monitoring the corporate governance<br><br>framework of the Company and its subsidiaries; and<br><br>–ensuring that the corporate governance framework is consistent<br><br>with relevant standards and best practices. |
I am pleased to present the Nomination & Corporate Governance
Committee report, my first since succeeding Sir Mark Tucker as Group
Chairman.
The Committee’s immediate priority is to identify successors for Ann
Godbehere as Senior Independent Director, as well as my successor as
Chair of the Group Audit Committee.
As previously announced, following the successful completion of the
Group Chairman succession process, Ann Godbehere, who led the
process as Senior Independent Director, informed the Board of her
decision to step down from the Board at the conclusion of our 2026
AGM. Ann leaves with our very best wishes and thanks for the
considerable commitment she made over her time on the Board.
While we have made good progress over the past two months and
considered both internal and external candidates for the Group Audit
Committee Chair and Senior Independent Director roles, we are not yet
in a position to confirm the outcome of these processes. We continue
to work at pace and will provide an update in due course. We expect to
announce the appointments – and for them to take effect – following
the conclusion of our 2026 AGM on 8 May 2026, subject to completion
of the regulatory approval process.
This means that I will continue to hold the role of Chair of the Group
Audit Committee for a further period. While this has not been and is not
in accordance with Provision 24 of the UK Corporate Governance Code,
the Board has determined at all relevant times that it was in the best
interests of the Group and its stakeholders that I maintain my role as
Group Audit Committee Chair to allow for a permanent successor to be
appointed and to provide continuity of oversight.
During the year, we also welcomed Wei Sun Christianson to the Board
from 1 January 2026. Her appointment enhances the Board’s collective
experience of the business, cultural and regulatory context of key
markets, specifically Hong Kong and mainland China. We look forward
to benefiting from the insights and perspectives Wei will bring to the
Board’s deliberations.
I am pleased to confirm that the 2025 Performance Review concluded
that the Committee continued to discharge its duties effectively.
Additional details on the annual review of the Board and the
Committee’s effectiveness can be found from page 231.
Finally, there was significant change to senior leadership as part of the
reorganisation of the Group around its four core businesses in line with
our strategy. The focus throughout 2025 has been on overseeing the
rebuild of succession plans for key roles, which has been led by
Georges Elhedery and Aileen Taylor.
My thanks to my fellow Directors for their commitment to our efforts to
develop talent and future leaders, as evidenced through their mentoring
relationships with senior talent. This has provided excellent exposure to
our senior talent, and has contributed to more informed discussions on
the strength of our succession bench.
Brendan Nelson
Chair of the Nomination & Corporate Governance Committee
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 234 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Nomination & Corporate Governance Committee |
Committee governance
The Group Chief People & Governance Officer attended all Committee
meetings during the year. She supported the Group Chairman in
ensuring that the Committee fulfilled its responsibilities under its Terms
of Reference and in line with corporate governance best practice, and
also presented on succession and development activity for the Group
OpCo and other key senior management roles. The Group CEO also
regularly attended Committee meetings throughout the year.
The Committee retains the support of various executive search firms to
assist with its objectives in relation to Board succession planning and
appointments. Russell Reynolds Associates (‘RRA’), provided support
to management on senior management succession and recruitment. In
addition, RRA, Christoph Zeiss Partners (‘CZ Partners’) and MWM
Consulting (‘MWM’) provided support to the Committee on Board
succession and recruitment. RRA, CZ Partners and MWM have no
other connection to the Group or with members of the Board other
than to support on the Board and senior management succession and
recruitment.
Board composition and succession
Following the appointments during 2024 of Georges Elhedery as Group
CEO and Pam Kaur as Group CFO, the Committee’s primary focus
during the year was on succession planning for the Group Chairman
role.
Sir Mark Tucker joined the Board on 1 September 2017 and assumed
the role of Group Chairman on 1 October 2017. The Committee
commenced active succession planning for the Chairman role in Q4
2024 after Sir Mark had served for seven years. On 1 May 2025, the
Group provided an update on the succession process the Committee
was undertaking. On 6 June 2025, the Group announced that Brendan
Nelson would assume the role of Interim Group Chairman upon Sir
Mark’s retirement from the Board on 30 September 2025. Brendan
joined the Board in September 2023.
The PRA and FCA granted regulatory approval for Brendan Nelson as
Group Chairman in advance of his appointment as Group Chairman on
an interim basis effective 1 October 2025. A thorough handover
process, in accordance with regulatory expectations, was undertaken
with Sir Mark in advance of Brendan’s assumption of the role. He also
underwent a tailored induction plan to ensure he was equipped to fulfil
the role. This focused on refreshing and developing new relationships
with key external stakeholders, particularly investors in Asia.
On 3 December 2025, Brendan was appointed Group Chairman having
held the role on an interim basis since 1 October 2025. This decision
followed a robust process that considered both internal and external
candidates and regulatory approval.
Group Chairman succession
In preparation for Sir Mark Tucker’s retirement, the Committee, led by
the Senior Independent Director, proactively commenced the process
to identify his successor in Q4 2024. Key steps in the Group Chairman
succession process included:
| Appointment of external<br><br>search adviser | Establishment of a sub-<br><br>group of the Committee |
|---|---|
| Candidate interviews<br><br>with Committee<br><br>members | Agreement of the role<br><br>profile and success<br><br>criteria |
| Presentations to<br><br>Committee and Q&A | Feedback collated and<br><br>discussed by the<br><br>Committee |
| Consideration of<br><br>implications on existing<br><br>HSBC responsibilities | Decision on preferred<br><br>candidate |
| Regulatory engagement<br><br>and application | Announcement of<br><br>appointment of Brendan<br><br>Nelson as Group<br><br>Chairman |
The Committee (other than Brendan Nelson who was recused)
selected Brendan Nelson as the preferred candidate, subject to
regulatory confirmation. Following engagement with the PRA and FCA,
the Board approved Brendan Nelson’s appointment as permanent
Group Chairman effective immediately, as announced on 3 December
2025.
The Board determined at all relevant times that it was in the best
interests of the Group for Brendan to continue in role as Chair of the
Group Audit Committee and that for all applicable purposes he satisfied
the requisite tests of independence.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 235 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Nomination & Corporate Governance Committee |
Other key board succession decisions
The Committee continued to keep the composition of the Board and of
its committees under review, with assessments focused on the skills,
knowledge, and experience necessary to oversee, challenge and
support management, in the achievement of the Group’s strategic and
business objectives.
Following a recruitment process for a new Director, which prioritised
further strengthening the Board’s banking experience and deep
business and cultural expertise across Asia, Wei Sun Christianson was
appointed to the Board with effect from 1 January 2026. Wei met with
members of the Board, including the Group CEO and the feedback
from these meetings then informed the Committee’s recommendation
to the Board for her appointment. Wei brings extensive banking and
regulatory experience gained over a 30-year international career. Her
biography can be found on page 221.
The Committee remains focused on identifying successors for the
Senior Independent Director and Chair of the Group Audit Committee
roles. Good progress has been made in considering and assessing both
internal and external candidates. The Committee will continue to
engage with regulators in relation to the necessary regulatory approvals
and has full confidence that an announcement will be made in time to
allow for the appointments to take effect from the conclusion of the
2026 AGM.
As set out in last year’s report, the appointment term of José Meade,
Workforce Engagement non-executive Director, was extended to the
2026 AGM. During 2025, the Committee considered the future needs
of the Board, and the performance and contributions of José, and
agreed a further extension to the 2027 AGM, subject to his re-election
by shareholders. This reflects José’s contributions, and leadership in
enhancing the Board’s understanding of the views of the workforce. It
is the Board’s strong belief that this extension of José’s appointment,
given his performance and contributions to the Board, is in the best
interests of the Group and its stakeholders.
During 2026, the Committee will conduct a thorough review of the size
and composition of the Board committees. This review will look to
undertake the effective use of the skills and expertise of the Directors,
and to continue to enable effective support and challenge by the
respective committees.
Board diversity
The Board recognises the importance of gender, social and ethnic
diversity, and the benefits that diverse identities and backgrounds bring
to Board effectiveness. Representation is a consideration in succession
plans and appointments at both Board and senior management level, as
well as more broadly across the Group. The Committee also considers
representation on Board committees when reviewing their
composition.
The Board’s diversity and inclusion policy was updated in December
2025, and is available at https://www.hsbc.com/who-we-are/our-
people/board-of-directors/board-responsibilities. Further details on the
Board’s diversity data can be found on page 225.
Senior executive succession and
development
Following Georges Elhedery’s appointment as Group CEO and Pam
Kaur’s appointment as Group CFO the Committee monitored and
received updates on their induction and development plans.
Given the new, simpler organisational structure, the Committee
approved updated succession plans for the Group Operating
Committee members. These reflected continued efforts to support the
development and progression of diverse talent and promote the long-
term success of the Group. This included future internal and external
succession options for the Group CEO, to ensure that the Committee
has a robust and actionable succession plan when required.
When considering internal succession plans, the Committee received
updates on individual development plans that supported alignment to
key priorities and career trajectory, as well as exposure to Board and
Group Operating Committee members.
Since the last report, the Committee oversaw and approved several
changes to the senior leadership team. These included the
appointment of the permanent Group Chief Risk and Compliance
Officer, the Group Head of Internal Audit and the CEO of HSBC UK
Bank plc. These appointments completed the work on building a Group
senior leadership team that will drive the Group’s strategy into the
future.
Subsidiary governance
In line with the subsidiary accountability framework, the Committee
continued to oversee the corporate governance and succession
arrangements across the principal subsidiary portfolio. Additional details
on the subsidiary accountability framework are set out on page 232.
The Committee continued to oversee principal subsidiary composition
and succession planning through the annual review of Board
succession plans.
In order to further strengthen connectivity between the Board and the
most significant subsidiary boards in the Group, the Committee
recommended that José Meade be appointed to the Grupo Financiero
HSBC, S. A. de C. V., HSBC Latin America Holdings Limited and HSBC
Mexico, S.A., Institucion de Banca Multiple, Grupo Financiero HSBC.,
boards. The Committee is confident that these appointments will
further enhance governance arrangements and connectivity.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 236 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Group Audit Committee
|
“As Chair, I’m pleased with the<br><br>Committee’s commitment to robust<br><br>oversight and transparent reporting.<br><br>Together, we’ve strengthened<br><br>internal controls and deepened<br><br>collaboration across the Group.“ | |
|---|---|---|
| Brendan Nelson<br><br>Chair<br><br>Group Audit Committee | ||
| For Committee membership, see Board biographies on pages 220<br><br>to 223 and for meeting attendance in 2025, see page 228. | ||
| Key responsibilities | ||
| The Group Audit Committee (’GAC’) has non-executive<br><br>responsibility for the oversight of matters relating to financial<br><br>reporting and internal controls. The GAC’s key responsibilities<br><br>include:<br><br>–monitoring the integrity of financial statements;<br><br>–reviewing the Group’s financial and accounting policies and<br><br>practices;<br><br>–monitoring the effectiveness of the internal control<br><br>environment;<br><br>–monitoring and reviewing the effectiveness of the Global<br><br>Internal Audit function; and<br><br>–oversight and remuneration of the external auditor and making<br><br>recommendations to the Board on the appointment of the<br><br>external auditor. |
I am pleased to introduce the GAC report, my second as Chair, and
thank the Committee members for their contribution and support
during 2025. The key matters considered by the Committee are set out
below.
Financial and regulatory reporting
The GAC received regular updates from the Group CFO and Global
Financial Controller on key financial reporting issues and the related
management judgements. These included spending significant time on
the appropriateness and clarity of the Group’s market guidance,
including in relation to returns, costs and expected credit losses (‘ECL’).
Given the uncertain global macroeconomic environment, the GAC
carefully considered its disclosures on ECL, in particular those relating
to the Group’s exposure to the mainland China and Hong Kong
corporate real estate sectors. The GAC also provided close oversight of
the disclosure risks associated with sustainability and climate reporting,
and related controls. This included its review of the Net Zero Transition
Plan which was published in November 2025.
The GAC focused on monitoring the programme of work designed to
enhance the quality and reliability of regulatory reporting and align with
HSBC's internal standards and external regulatory expectations. This
included regular updates from management, focused review meetings
to guide short- and medium-term delivery plans, and meetings with
external parties.
The Financial Reporting Council ('FRC') undertook a Corporate
Reporting Review of HSBC’s Annual Report and Accounts 2024, and
we are pleased to report that no formal matters were raised.
Internal controls
The GAC has an important role in monitoring and overseeing the
control environment, taking into account the external operating
environment and following the Group's recent reorganisation.
Enhancing the control environment for the Group’s regulatory reporting
obligations remains a central focus and ongoing priority for both
management and our regulators globally.
Throughout the year the GAC oversaw ongoing enhancements in this
area, supported by the Group Chief Control Oversight Office. This
included work to support preparations for the Board's declaration on
the effectiveness of material controls, which HSBC will be required to
include in the Annual Report and Accounts 2026, under the UK and
Hong Kong Corporate Governance Codes.
Connectivity within the Group
Ensuring strong connectivity between the Group and its subsidiaries is
an important aspect of the GAC’s oversight model, and has been a key
feature over the past few years. I have spent time with several of the
subsidiary audit committee chairs, both individually and as part of
plenary sessions, encouraging their participation in Group-wide
discussions including in relation to regulatory reporting. Ongoing,
regular engagement with our subsidiary audit chairs will continue to be
an important part of the GAC’s governance practices.
Global Internal Audit
We welcomed Russell Jackson as the new Group Head of Internal
Audit, effective 3 June 2025. The handover was supported by myself
and the other GAC members, and we extend our gratitude to Jonathan
Calvert-Davies for his dedication to the role since 2019.
Engagement with the Global Internal Audit function continued
throughout the year, with the GAC receiving regular updates. Following
the positive outcome of the External Quality Review of the Global
Internal Audit function conducted in 2024 by Deloitte, an internal
review under the Global Professional Practices Quality Assurance and
Improvement Programme in 2025 confirmed Global Internal Audit’s
ongoing general conformance with the Institute of Internal Auditors
Standards.
Committee performance
Finally, I was pleased that the annual review of the GAC’s performance
concluded that the Committee continued to operate effectively. Further
details of the review can be found in the 'Board and committee
performance review' section on page 231.
Brendan Nelson
Chair of the Group Audit Committee
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 237 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Audit Committee |
How the Committee discharged its responsibilities
Financial reporting
The GAC is responsible for reviewing the Group’s financial reporting
disclosures, including the Annual Report and Accounts, Interim Report,
quarterly earnings releases, analyst presentations and Pillar 3
disclosures.
Furthermore, as an area of expanded assurance, the GAC, supported by
the Group Disclosure Committee, provided close oversight of disclosure
risks in relation to sustainability and climate reporting, and related
controls.
As part of its review, the GAC:
–challenged and evaluated management’s application of accounting
policies subject to critical estimates and judgements and material
areas in which significant accounting judgements were applied;
–reviewed and challenged management’s judgements and
disclosures in relation to impairment reviews of HSBC’s investment
in Bank of Communications Co., Limited, performed using a value-in-
use methodology;
–gave particular regard to the analysis and measurement of IFRS 9
ECL, including the key judgements and management adjustments
made in relation to the forward economic guidance, underlying
economic scenarios and reasonableness of the weightings, as well
as modelling and adjustments;
–focused on preparation of disclosures to ensure these were
consistent, appropriate and could be validated under the relevant
financial and governance reporting requirements;
–reviewed analysis and assurance work by external financial advisers
in connection with (i) the Group’s reorganisation plans; and (ii) the
privatisation of HASE;
–tracked and monitored delivery against the external audit plan; and
–provided advice to the Board on the form and basis underlying the
long-term viability statement.
We also received limited assurance from an independent third-party on
certain elements of the Group’s climate reporting.
In conjunction with the Group Risk Committee, the GAC considered
the current position of the Group, along with the emerging and
principal risks, and carried out a robust assessment of the Group’s
prospects. This assessment informed the GAC’s recommendation to
the Board on the Group’s long-term viability. The GAC also undertook a
detailed review before recommending to the Board that the Group
should continue to prepare its annual and interim financial statements
on a going concern basis.
Financial planning
The GAC reviewed and debated the robustness of the financial plan for
the financial years 2026 to 2030. The GAC considered the risks and
challenges, and ensured that the process to develop the financial
resource plan was robust and that the assumptions driving the financial
performance of the Group were appropriate and subject to appropriate
challenge. Specifically, the Committee reviewed revenue assumptions
against economic and market growth rates in the countries and territories
in which HSBC operates, and considered various downside planning
scenarios against available resources and risk appetite capacity.
Fair, balanced and understandable
The Committee reviewed the draft Annual Report and Accounts 2025
and results announcements and provided feedback and challenge to
management. It was supported by the work of the Group Disclosure
Committee. Following review and challenge of the disclosures, the
Committee recommended to the Board that the Annual Report and
Accounts 2025, taken as a whole, were fair, balanced and
understandable. These provided shareholders with the necessary
information to assess the Company and the Group’s position and
performance, business model, strategy and risks facing the business.
Internal controls
The GAC is responsible for overseeing the effectiveness of all internal
controls. During the year, the GAC provided oversight of the ongoing
enhancement of the operation and monitoring of the Group’s internal
control environment, informed by reports from the Group Chief Control
Oversight Office.
This included an assessment of the Group's work on material controls
to support the Board’s forthcoming declaration of their effectiveness in
the Annual Report and Accounts 2026, under the requirements of the
UK and Hong Kong Corporate Governance Codes. This comprised
evaluating controls with the potential to materially impact the Group, our
customers or the stability of the market, in line with FRC and Hong
Kong Exchanges and Clearing guidance.
Regular updates and confirmations are provided to the GAC on the
actions management take to remediate any failings or weaknesses
identified through the operation of the Group’s framework of internal
controls. This is supplemented by reviews of these controls by the Group
Chief Control Oversight Office, the second line of defence, internal audit,
and the external auditors, who provided additional assurance to the
Committee on the effectiveness of these controls.
These updates included the Group’s work on compliance with section
404 of the US Sarbanes-Oxley Act, which requires publicly-traded
companies such as HSBC to establish, maintain and assess an
adequate internal controls structure and procedures for financial
reporting. Based on this work, the GAC recommended that the Board
support its assessment of the internal controls over financial reporting.
ÑFor further details of how the Board reviewed the effectiveness of key
aspects of internal control, see page 280.
Regulatory reporting
Regulatory reporting continues to be a key priority. The Committee
oversaw initiatives to enhance the quality and reliability of regulatory
reporting, to align with both HSBC's internal standards and regulatory
reporting expectations.
During 2025, the GAC reviewed progress updates on HSBC-specific
external reviews, examined root causes and emerging themes
identified from assurance activities, and challenged management to
demonstrate sustainable improvements. The GAC also assessed the
management of dependencies with other key programmes, and
discussed programme resourcing.
ÑFurther details can be found in the ‘Principal activities and significant issues
considered during 2025’ table on page 244.
FRC's Corporate Reporting Review
The FRC conducts routine reviews of the annual reports and accounts
of FTSE 350 companies. The outcome of the FRC's review of HSBC's
Annual Report and Accounts 2024 raised no formal matters for our
attention. This review was based solely on HSBC's Annual Report and
Accounts 2024 and did not include detailed knowledge of HSBC's
business. The scope of such reviews by the FRC does not include
verification of the information set out in those documents or any
related assurance; it is limited to a consideration of compliance with
reporting requirements.
Adequacy of resources
The Committee is responsible, under the Hong Kong Listing Rules, to
annually assess the adequacy of resources of the accounting, internal
audit, financial reporting and ESG performance and reporting functions. It
also monitored the legal and regulatory environment relevant to its
responsibilities.
The Committee determined that each of the functions provided thorough
information with regards to people capacity and capability. This
determination was aided by specific reports from and engagement
meetings with the senior leaders of these functions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 238 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Audit Committee |
Connectivity with principal subsidiary audit
committees
The Committee recognises the importance of strong connectivity and
alignment with principal subsidiary audit committees. The mechanisms
to support this are well established and continued to operate
effectively during the year. This included information sharing and
targeted collaboration between audit committee chairs and
management to ensure there was appropriate focus on the local
implementation of programmes. During 2025, this included dedicated
sessions on regulatory reporting, with the principal subsidiary audit
committee chairs, chief executive officers and chief financial officers of
the Europe, Asia-Pacific, Middle East and Americas regions attending
committee meetings to provide updates on progress, discuss local
challenges, and highlight key areas of focus to the Committee.
In addition to the Chair‘s regular meetings with the audit chairs of the
Group’s principal subsidiaries, and their attendance at GAC meetings
for relevant items, they provided quarterly reports on their local audit
committee activities. This included updates on internal control, and
financial and regulatory reporting matters that are significant from a
local or enterprise-wide perspective. On a half-yearly basis, the audit
committees of the principal subsidiaries certify to the GAC that their
financial statements have been prepared appropriately, Group policies
have been followed, and any matters requiring the Committee's
attention have been escalated.
Interaction with regulators
The Committee Chair continued to engage with various key
stakeholders, including regulators to understand their views, key
themes and areas of focus within the broader financial services sector
on matters relevant to the work of the Committee. This included
periodic trilateral meetings involving the Group’s external auditor, PwC,
and the PRA.
External auditor
The GAC has primary responsibility for overseeing the relationship with
the Group’s external auditor, PwC. PwC completed this year’s audit, its
eleventh, providing robust challenge to management and sound
independent advice to the Committee on specific financial reporting
judgements, sustainability reporting and the overall control
environment. Key audit matters discussed with PwC are set out in its
report on page 286. The Committee reviewed, and concluded that, all
requirements of the FRC's Audit Committees and the External Audit:
Minimum Standard (’the Standard’), where relevant, were met during
- The GAC reviewed the PwC external audit approach, including
the materiality, risk assessment and scope of the audit.
The GAC assessed the effectiveness of PwC as the Group’s external
auditor, focusing on the overall audit process, its effectiveness and the
quality of output, informed in part by the FRC's audit quality indicators.
Key strengths highlighted in the review include strong independent
challenge, deep audit team experience, a thorough understanding of
the Group‘s businesses and associated risks, and strong technical
accounting and industry knowledge. The review also identified some
areas for improvement, focused on communication of testing status,
planning, timeliness of testing and coordination.
The GAC receives regular updates from PwC and management on
external auditor performance, providing wider visibility of ongoing and
emerging issues. There were no breaches of the policy on hiring
employees or former employees of the external auditor during the
year. The lead audit partner attends all Committee meetings and the
GAC Chair maintains regular contact with the senior audit partner and
his team throughout the year.
The Committee assessed any potential threats to independence that
were self-identified or reported by PwC. Based on the reporting
received, PwC are deemed to be independent. PwC, in accordance
with professional ethical standards and applicable rules and regulations,
provided the GAC with written confirmation of its independence for the
duration of 2025.
The Committee confirms it has complied with the provisions of The
Statutory Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014 for the financial statements.
Following the Committee‘s recommendation to reappoint PwC as the
auditor, shareholders passed the associated resolution at the 2025
AGM. At the same time, shareholders authorised the Committee to
determine PwC‘s audit fee for the financial year ended 31 December
2025, which was approved by the Committee at its June 2025
meeting.
The Committee is responsible for setting, reviewing and monitoring the
appropriateness of the provision of non-audit services by the external
auditor. It also applies the Group’s policy on the award of non-audit
services to the external auditor. The non-audit services are carried out
in accordance with the external auditor independence policy to ensure
that services do not create a conflict of interest. All non-audit services
are either approved by the GAC Chair, or by Group Finance when
acting within delegated limits and criteria set by the GAC. All non-audit
services where fees exceeded $1m were subject to approval by the
GAC Chair. For all non-audit services provided during 2025, it was
considered to be in the best interests of the Group to use PwC for
these services because they were:
–audit-related assurance services, with the work closely related to
work performed in the audit and in some instances required by local
regulators to be performed by the external auditor; or
–other assurance services that involve obtaining appropriate audit
evidence to express a conclusion designed to enhance the degree
of confidence of the intended users other than the responsible party
about the subject matter information, including attestation reports
on internal controls of a service organisation primarily prepared for
and used by third-party end users.
| 2025 | 2024 | |
|---|---|---|
| Auditors‘ remuneration | $m | $m |
| Total fees payable1 | 159.1 | 146.6 |
| of which fees for non-audit services | 50.2 | 43.8 |
| Ratio of non-audit fees to audit fees2 | 46.1% | 43.0% |
1 In addition, $2.1m in expenses were reimbursed to PwC in 2025.
2 The calculation is on a simple ratio and is not based on FRC guidance on
non-audit fees ratio thresholds.
Following the conclusion of a formal competitive audit tender process,
in 2023 the Board approved the re-appointment of PwC as external
auditor for the next 10-year cycle beginning with the financial year
ending 31 December 2025. As a UK public interest entity, HSBC is
required to tender its audit every 10 years and rotate every 20 years.
PwC is a registered public interest entity auditor in Hong Kong.
Whistleblowing and speak-up culture
Speaking up when something does not feel right is integral to HSBC's
values. HSBC remains committed to empowering colleagues to raise
concerns confidently, and to taking appropriate action in response. A
range of channels are available for colleagues to raise concerns,
including the Group’s whistleblowing channel, HSBC Confidential (see
page 61 for further information).
The Board has delegated responsibility to the GAC to oversee the
effectiveness of HSBC’s whistleblowing arrangements. The Chair of
the GAC is a Group Senior Manager under the FCA's Senior Managers
and Certification Regime, and has a prescribed responsibility as the
Whistleblowers’ Champion to ensure the integrity of HSBC’s policy and
procedure on whistleblowing and protecting those who report
concerns. The GAC Chair reports to the Board on the GAC’s oversight
of whistleblowing as part of his regular reporting updates.
The Committee is also briefed on culture and conduct risks from
whistleblowing cases and actions taken. The Group Head of Regulatory
Compliance updates the GAC annually on whistleblowing
effectiveness, including controls assessments and internal audit
findings.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 239 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Audit Committee |
Global Internal Audit
The primary role of the Global Internal Audit function is to help the
Board and management strengthen the Group’s ability to create,
protect and sustain value. Global Internal Audit does this by providing
independent, risk based and objective assurance and advisory services
on the design and operating effectiveness of the Group’s framework of
risk management, control, and governance processes, prioritising the
greatest areas of risk. The independence of Global Internal Audit from
day-to-day line management responsibility is fundamental to its ability
to deliver objective audit coverage of all parts of the Group. Global
Internal Audit is free from interference by any element in the
organisation, including on matters of audit selection, scope,
procedures, frequency, timing, or internal audit report content. The
Group Head of Internal Audit reports to, and meets frequently with, the
Chair of the GAC. Global Internal Audit adheres to The Institute of
Internal Auditors' mandatory guidance.
Global Internal Audit may also perform advisory work at the request of
the Board or management. The nature and scope of advisory services
are subject to agreement with the Group Head of Internal Audit. When
performing advisory services, Global Internal Audit maintains objectivity
and does not assume management responsibility.
Consistent with previous years, the 2026 audit planning process
included assessment of the inherent risks and strength of the control
environment across the audit entities representing the Group. Results
of this assessment were combined with a top-down analysis of risk
themes by risk category to ensure that themes identified were
addressed in the annual plan. Audit coverage is achieved using a
combination of business and functional audits of processes and
controls, risk management frameworks and major change initiatives, as
well as regulatory audits, investigations and special reviews. The
annual audit plan was approved by the GAC.
The results of audit work, together with an assessment of the Group’s
framework of risk management, control and governance processes are
reported to the GAC, GRC and local audit and risk committees, as
appropriate. This reporting includes business and regulatory
developments and an independent view of emerging and horizon risk,
together with details of audit coverage and any required changes to the
annual audit plan. Based on regular internal audit reporting to the GAC,
private sessions with the Group Head of Internal Audit, the Global
Professional Practices annual assessment and quarterly quality
assurance updates, the GAC is satisfied with the effectiveness of the
Global Internal Audit function and the appropriateness of its resources.
Management is accountable for addressing the matters raised by
Global Internal Audit, which must be addressed within an appropriate
and agreed timetable.
Global Internal Audit maintains a close working relationship with
HSBC’s external auditor, PwC. The external auditor is kept informed of
Global Internal Audit’s activities and results, and is afforded free access
to all internal audit reports and supporting records.
Committee member independence
The Nomination & Corporate Governance Committee has confirmed
that each member of the Committee is independent according to the
criteria of the US Securities and Exchange Commission, and the
Committee and individual members continue to possess competence
relevant to the banking and broader financial services sector in which
the Group operates. The Board has determined that Brendan Nelson
and Ann Godbehere are the Committee's ‘financial experts’ for the
purposes of section 407 of the Sarbanes-Oxley Act and have recent
and relevant financial experience for the purposes of the UK and Hong
Kong Corporate Governance Codes.
| Principal activities and significant issues considered during 2025 | ||||||
|---|---|---|---|---|---|---|
| Areas of focus | Key issues | Conclusions and actions | ||||
| Accounting<br><br>policies subject<br><br>to critical<br><br>estimates and<br><br>judgements | Expected credit losses<br><br>The measurement of ECL involves significant<br><br>judgements, particularly under current economic<br><br>conditions. There remains uncertainty over ECL<br><br>estimation due to high inflation, interest rate volatility,<br><br>economic and tariff policy changes and weaker<br><br>economic growth in the Group’s key operating<br><br>markets. | –The Committee reviewed economic scenarios for the key countries and territories in<br><br>which the Group operates and challenged management’s judgements on the<br><br>weightings assigned to the scenarios. The Committee also challenged<br><br>management’s judgement-based adjustments for uncertainty across specific sectors<br><br>and geographies, including the controls underpinning the adjustments process and<br><br>conditions under which the adjustments would be reduced or removed.<br><br>–The Committee continued to monitor management’s updates on areas of particular<br><br>focus, including downside risk in mainland China and Hong Kong commercial real<br><br>estate sectors. | ||||
| Valuation of financial instruments<br><br>Management continues to review its methodologies<br><br>and approaches to valuing the Group’s portfolio in<br><br>relation to investments, trading assets and liabilities<br><br>and derivatives. | –The Committee received periodic updates on the key valuation metrics and<br><br>judgements involved in the determination of the fair value of financial instruments.<br><br>–The Committee agreed with the judgements applied by management, which were<br><br>validated through appropriate governance and control forums. | |||||
| Investment in subsidiaries<br><br>Management has reviewed investments in<br><br>subsidiaries for indicators of impairment and<br><br>reversals, and conducted impairment reviews where<br><br>relevant. These involve exercising significant<br><br>judgement to assess the recoverable amounts of<br><br>subsidiaries, by reference to projected future cash<br><br>flows, discount rates and regulatory capital<br><br>assumptions. | –The Committee reviewed the judgements applied in the impairment review of HSBC<br><br>Overseas Holdings (UK) Limited, including key inputs such as projected profits that<br><br>support the recoverable amounts of its subsidiaries. | |||||
| Valuation of defined benefit pension obligations<br><br>The valuation of defined benefit pension obligations<br><br>involves highly judgemental inputs and actuarial<br><br>assumptions which include interest rate, inflation rate,<br><br>mortality rates and other demographic assumptions.<br><br>Management considered these assumptions in<br><br>consultation with actuarial experts to determine the<br><br>valuation of the defined benefit obligations. | –The Committee has considered the effect of changes in key assumptions on the<br><br>HSBC UK Bank plc section of the HSBC Bank (UK) Pensions Scheme, which is the<br><br>principal plan of HSBC Group. Details of key assumptions can be found on page 324<br><br>of the ’Notes on the financial statements’. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 240 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Audit Committee | ||||||
| Principal activities and significant issues considered during 2025 (continued) | ||||||
| --- | --- | --- | ||||
| Areas of focus | Key issues | Conclusions and actions | ||||
| Accounting<br><br>policies subject<br><br>to critical<br><br>estimates and<br><br>judgements | Investment in an associate – Bank of<br><br>Communications Co., Limited<br><br>During the year, management performed impairment<br><br>reviews of HSBC’s investment in Bank of<br><br>Communications Co., Ltd (‘BoCom’), and considered<br><br>the financial impact of BoCom’s capital issuance in<br><br>June 2025. The impairment assessments considered<br><br>whether there is indication of further impairment, or if<br><br>previously recognised impairment may no longer exist<br><br>or may have decreased. The impairment reviews are<br><br>complex and require significant judgements, such as<br><br>the appropriateness of projected future cash flows,<br><br>discount rate, and regulatory capital assumptions. | –The Committee reviewed and challenged management’s judgements and<br><br>disclosures in relation to impairment reviews of HSBC’s investment in BoCom,<br><br>performed using a value-in-use methodology.<br><br>–The Committee reviewed the appropriateness of key assumptions such as projected<br><br>future cash flows, and assessed management’s procedures to ensure that the latest<br><br>available information was reflected at the 31 December 2025 reporting.<br><br>–The Committee discussed the impact of BoCom’s capital issuance, and resulting<br><br>dilution of HSBC’s investment, on the Group’s accounts and challenged<br><br>management on the related accounting treatment analysis. | ||||
| Impairment of goodwill and non-financial assets<br><br>During the year, management tested for impairment<br><br>of goodwill and non-financial assets, including<br><br>additional consideration for the future impacts<br><br>resulting from the announced organisational<br><br>restructure. Key judgements in this area relate to<br><br>long-term growth rates, discount rates and projected<br><br>future cash flows to include for each cash-generating<br><br>unit tested, both in terms of compliance with the<br><br>accounting standards and reasonableness of the<br><br>forecasts. | –The Committee reviewed and challenged management’s approach and methodology<br><br>used for the impairment testing of goodwill and non-financial assets, with a key<br><br>focus on the projected cash flows included in the forecasts and discount rates used.<br><br>–The Committee also challenged management’s key judgements and considered the<br><br>reasonableness of the outcomes against business forecasts and the strategic<br><br>objectives of the Group. | |||||
| Legal proceedings and regulatory matters<br><br>Management has used judgement in relation to the<br><br>recognition and measurement of provisions, as well<br><br>as the existence of contingent liabilities for legal and<br><br>regulatory matters. | –The Committee reviewed reports from management on legal proceedings and<br><br>regulatory matters, and challenged related accounting judgements and disclosures.<br><br>Notably, this included the review of management's judgements in relation to a legal<br><br>provision following developments in a claim in Luxembourg relating to the Bernard<br><br>L. Madoff Investment Securities LLC fraud. | |||||
| Deferred tax-related judgements<br><br>HSBC has recognised deferred tax assets to the<br><br>extent that they are recoverable through expected<br><br>future taxable profits. Significant judgement continues<br><br>to be exercised in assessing the probability and<br><br>sufficiency of future taxable profits, future reversals of<br><br>existing taxable temporary differences and expected<br><br>outcomes relating to uncertain tax treatments. | –The Committee considered the recoverability of deferred tax assets and<br><br>management’s judgements relating to uncertain tax treatments. | |||||
| Financial and<br><br>regulatory<br><br>reporting | Environmental, social and governance (‘ESG’)<br><br>reporting<br><br>The Committee considered on a periodic basis<br><br>management’s efforts to enhance ESG disclosures<br><br>and associated verification and assurance activities,<br><br>with a specific focus on the Net Zero Transition Plan<br><br>(published in November 2025) and climate-related<br><br>disclosures made in the Annual Report and Accounts<br><br>2025. | –The Committee conducted a review of ESG disclosures to ensure they were fair,<br><br>balanced and transparent regarding the challenges faced while also reflecting the<br><br>Group’s ongoing embedding of sustainability risk policies across the business. | ||||
| Regulatory reporting<br><br>The Committee monitored progress by management<br><br>in delivering a sustainable control environment for<br><br>regulatory reporting across the Group. | –The Committee reflected on the continued focus on the quality and reliability of<br><br>regulatory reporting by the PRA and other regulators globally.<br><br>–The Committee oversaw management’s execution against the agreed remediation<br><br>plans, and challenged management on the approach and timeframes to deliver<br><br>accurate reporting submissions to the Group’s global regulators. Discussions<br><br>included a focus on shared dependencies across various Group-wide programmes,<br><br>for example on data and subject matter expertise.<br><br>–Periodic reports were presented by certain of the Group’s principal subsidiaries, to<br><br>allow a holistic review of management’s remediation activities and to discuss<br><br>consistency of approach across the Group.<br><br>–The Committee actively participated in specific meetings on matters relating to<br><br>regulatory reporting, to allow greater challenge and depth of oversight of targeted<br><br>milestones and deliverables. | |||||
| Impact of acquisitions and disposals<br><br>HSBC engaged in a number of corporate activities<br><br>throughout the year. Judgement was involved in<br><br>determining the timing of recognition of assets held-<br><br>for-sale, gains or losses, and the measurement of<br><br>assets and liabilities on acquisition or disposal. | –The Committee reviewed management’s judgements related to transactions during<br><br>the year, including the sale of French home and certain other loans and life<br><br>insurance assets, the planned sale of HSBC Malta, and the privatisation of HASE.<br><br>Considerations included the timing of classification as held-for-sale and the<br><br>accounting impacts of the transactions. | |||||
| Capital | Distributable reserves<br><br>On 24 June 2025, the High Court of England and<br><br>Wales confirmed the cancellation of a combined<br><br>$16.6bn standing to the credit of HSBC Holdings plc<br><br>share premium account and capital redemption<br><br>reserve, which became effective upon registration by<br><br>the Registrar of Companies on 10 July 2025 ("Capital<br><br>Reduction"). The effect of this Capital Reduction was<br><br>to increase distributable reserves, giving the Company<br><br>further flexibility to deliver shareholder returns over<br><br>the coming years. | –The Committee received regular management updates on the progress of the Capital<br><br>Reduction and reviewed the Interim condensed financial statements of HSBC<br><br>Holdings plc for the period ended 31 July 2025, which reflected the reclassification of<br><br>cancelled reserves to retained earnings. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 241 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Audit Committee | ||||||
| Principal activities and significant issues considered during 2025 (continued) | ||||||
| --- | --- | --- | ||||
| Areas of focus | Key issues | Conclusions and actions | ||||
| Going concern | Long-term viability and going concern statement<br><br>The Committee has considered a wide range of<br><br>information relating to present and future projections<br><br>of profitability, cash flows, capital requirements and<br><br>capital resources. These considerations include<br><br>stressed scenarios and the implications of:<br><br>–geopolitical tensions including the ongoing Russia-<br><br>Ukraine war and Middle East conflicts, US-China<br><br>tensions and the consequential impacts on supply<br><br>chains globally;<br><br>–macroeconomic risks including inflationary risks,<br><br>mainland China and Hong Kong real estate sector<br><br>risks and economic policy uncertainty; and<br><br>–climate risk, operational resilience, and other top<br><br>and emerging risks, and the related impact on<br><br>profitability, capital and liquidity. | –In accordance with the UK and Hong Kong Corporate Governance Codes, the<br><br>Directors carried out a robust assessment of the principal and emerging risks of the<br><br>Group and parent company. The Committee considered the statement to be made<br><br>by the Directors and concluded that the Group and parent company will be able to<br><br>continue in operation and meet liabilities as they fall due, and that it is appropriate<br><br>that the long-term viability statement covers a period of three years. | ||||
| Control<br><br>environment | Sustainable control environment<br><br>The Committee oversaw the effectiveness of the<br><br>internal control environment of the Group, including<br><br>with regards to the requirements of the US Sarbanes-<br><br>Oxley Act. | –The Committee received regular updates on the control environment, and broader<br><br>change framework, to review the impact on financial reporting and tax risk within<br><br>the Group.<br><br>–In these updates the Committee monitored the assessment of the financial<br><br>reporting risk, tax risk and progress made on remediation of US Sarbanes-Oxley Act-<br><br>related deficiencies. This oversight enabled the Committee to assess<br><br>management's progress in implementing strategic actions to remediate identified<br><br>issues and strengthen the control environment, supporting a sustainable reduction<br><br>in risk.<br><br>–The Committee oversaw the work to support the Group’s oversight of all internal<br><br>controls, supported by the Group Controls Oversight Office. | ||||
| Regulatory<br><br>change | Basel 3.1 Reform<br><br>The Committee considered the implementation of the<br><br>Basel 3.1 Reform and the impact on the capital<br><br>requirements and RWA assurance. This was<br><br>considered in the context of the strategy and<br><br>structure of the balance sheet. | –The Committee received updates on the progress and impact of the Basel 3.1<br><br>programme on the Group.<br><br>–Management discussed the delayed implementation dates, ongoing uncertainty<br><br>over the final definition of the rules by regulators, and the work undertaken to<br><br>mitigate delivery risks.<br><br>–The Committee reviewed the ongoing management of risks, issues and<br><br>dependencies and challenged management to prioritise deliverables in line with<br><br>regulatory timelines. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 242 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Group Risk Committee
 |
“In today’s rapidly shifting<br><br>environment, effective risk<br><br>management, strategic agility, and<br><br>disciplined capital deployment are<br><br>essential for navigating evolving<br><br>market dynamics and securing long-<br><br>term success.“ | |
|---|---|---|
| James Forese<br><br>Chair | ||
| For Committee membership, see Board biographies on pages 220<br><br>to 223 and for meeting attendance in 2025 see page 228. | ||
| Key responsibilities | ||
| The Group Risk Committee (’GRC’) has overall non-executive<br><br>responsibility for the oversight of risk-related matters and the risks<br><br>impacting the Group. The GRC’s key responsibilities include:<br><br>–overseeing and advising the Board on all risk-related matters,<br><br>including financial and non-financial risks;<br><br>–advising the Board on risk appetite-related matters, and key<br><br>regulatory submissions;<br><br>–reviewing the effectiveness of the Group’s risk management<br><br>framework and how effectively management is embedding and<br><br>maintaining an effective risk management control system;<br><br>–reviewing and challenging the Group’s stress testing exercises;<br><br>and<br><br>–overseeing the Group’s approach to conduct, fairness and the<br><br>prevention of financial crime. |
I am pleased to present the GRC report, which reflects a year of
change, both internally and externally.
The GRC membership remained the same this year, providing the
Committee with a period of stability given the extensive organisational
change that took place in H1 2025. The mix of skills and experience of
the current membership remains appropriate to the needs of the
business and our strategy, and has been further enhanced by the
appointment of Wei Sun Christianson in January 2026. The Committee
was pleased to support the appointment of Richard Blackburn as
Group Chief Risk and Compliance Officer in April 2025. Richard has
worked closely with the Committee to ensure robust oversight of the
Group's risk management and compliance frameworks. I am grateful to
my fellow Committee members for their contributions last year, and
look forward to continuing to work together in 2026.
Macroeconomic environment
The macroeconomic environment in 2025 was characterised by
moderate growth amid persistent uncertainty. Inflationary pressures
have continued to ease across most major economies, allowing several
central banks to begin a gradual shift towards more neutral monetary
policy. However, regional divergences remain, with ongoing
geopolitical tensions influencing trade flows and investor sentiment.
The Committee has ensured consistent focus on the impact of trade
tariffs as announced in April, both from a financial and operational
perspective, as well as focusing on how we can support our customers
through this period. Financial markets have adjusted to a higher-for-
longer interest rate outlook, prompting recalibration of capital allocation
and risk appetite across sectors. The overall environment underscores
the importance of prudent risk management, strategic agility, and
disciplined capital deployment to navigate evolving market dynamics.
The Group’s wholesale credit risk and retail credit risk portfolios have
remained within risk appetite, and overall capital and liquidity positions
remained stable throughout 2025.
Financial risks
Financial risks remained well managed in 2025, with a continued focus on
treasury, capital and liquidity risk management activities. The Committee
readily responded to the PRA’s request to assess the potential business
model, credit and funding impacts from global economic uncertainty,
utilising our stress-testing capabilities to understand the potential
consequences to our strategy and financial resources. The Committee
held four additional sessions in 2025 to specifically consider our Treasury-
related responsibilities, which included dedicated time to the assessment
of the internal capital adequacy assessment process (‘ICAAP’) and
internal liquidity adequacy assessment process (‘ILAAP’), as well as our
Group Recovery Plan, Bank Capital Stress Test and a deep dive into our
Resolvability Assessment Framework.
Non-financial risks
Non-financial risk continues to attract considerable focus of the GRC, in
an environment of fast-developing regulatory expectations, an uncertain
political backdrop and ever-increasing sophistication of cyber criminals
and fraud. Third-party risk management has been a key discussion point,
along with our preparedness for all eventualities, and how resilient we
would be as an organisation to those potential scenarios. We have
considered business continuity planning, operational resilience and
payments controls during these discussions. A deep dive session was
held in October to specifically consider payments and enhance
Committee knowledge of this topic.
Empowered by the Committee, the Group Money Laundering Reporting
Officer directed improvements at the beginning of 2025 to three key
areas of control within HSBC’s financial crime framework - customer due
diligence, financial crime investigations and the customer selection and
exit management process. This work has ensured that the policies,
controls and procedures relating to anti-money laundering, sanctions,
terrorist financing and proliferation financing are robust, adequate and
effective.
The Group has been through a year of transformation and change to its
organisational structure, and this has necessitated increased focus on our
culture and our people. The GRC is fully supportive of the Group's cultural
transformation with the introduction of the new Leadership Principles and
How We Lead, our new Group-wide leadership framework, and will
continue to monitor the impact of this on our people and our leaders.
Alongside the Group Technology and Operations Committee ('GTO'), we
have explored the exciting developments in our ventures into AI and have
expanded our risk appetite for digital assets and currencies to respond to
customer demand. We are committed to supporting our customers with
this new technology, while maintaining discipline and rigour with the
associated risks. Other areas of focus and challenge include the Group’s
data enhancement programme, global regulatory engagement,
technology risk, and together with the GAC, the adequacy of the wider
control environment.
Committee performance
Finally, I was pleased that the annual review of the GRC’s performance
concluded that the GRC continued to operate effectively. Further
details of the review can be found in the 'Board and committee
performance review' section on page 231.
Reflections
I am privileged to have led the Committee through a year of external
uncertainty and internal transformation, and have full confidence in the
GRC’s ability to support the Group’s strategic ambitions in 2026 and
beyond.
James Forese
Chair
Group Risk Committee
25 February 2026
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 243 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Risk Committee |
How the Committee discharged its
responsibilities
The GRC held a number of meetings outside its regular schedule to
facilitate deeper and more effective oversight of the risks impacting the
Group. Four sessions dedicated to Treasury topics took place throughout
the year to provide additional time for complex subjects such as Hold To
Collect Guardrails, Interest Rate Risk in the Banking Book (‘IRRBB’) and
Interest Rate Risk Assessment (‘IRRA’). The sessions were also utilised
for ICAAP and ILAAP preparations, and prior to the presentation of the
Bank Capital Stress Test. An additional session was also held to prepare
the Committee for its consideration of the Group Level Operational
Resilience Self Assessment, an educational session on payments risk,
and the HSBC UK Separation Playbook.
During 2025, the GRC continued to actively engage with principal
subsidiary risk committees through the scheduled participation of
principal subsidiary risk committee chairs at relevant GRC meetings,
and through regular connectivity meetings with the principal subsidiary
risk committee chairs. These meetings were also attended by the
Group Chief Risk and Compliance Officer. This participation and
connectivity promoted the sharing of information and best practices, as
well as encouraging director relationships.
The GRC also received certifications from the principal subsidiary risk
committees, confirming that management had been challenged on the
quality of the information provided, the committees had reviewed the
actions proposed by management to address any emerging issues and
that risk management and internal control systems had been operating
effectively.
These interactions furthered the GRC’s understanding of the risk
profile of the principal subsidiaries, leading to more comprehensive
review and challenge by the GRC.
Focus of future activities
The GRC’s focus for 2026 will include the following activities:
–to support the continued enhancement of the Group's risk appetite
and risk management frameworks, particularly in light of continued
geopolitical and macroeconomic headwinds;
–to challenge the Group's resilience and our capabilities to recover
from incidents that are both in and out of our control, to drive
improved standards from our third-party suppliers and to always
derive benefit from the lessons learned;
–to monitor the technology risk and control environment, with a
specific focus on cybersecurity given the heightened external threat
environment and the increased sophistication of attacks;
–to oversee the Group’s wholesale and retail credit risk portfolios,
particularly the implementation of the Single Name Concentration
Framework and seek to understand the first line ownership of the
framework;
–to continue to closely monitor the enhancement of our Model Risk
Management capabilities in line with regulatory requirements, as
well as track progress on strengthening our wholesale internal
ratings-based models;
–to continue to oversee financial crime risk and fraud, the
improvements being made to the financial crime control framework,
specifically customer due diligence, investigations and customer
exits;
–to continue to oversee treasury risk to strengthen our capital and
liquidity management capabilities;
–to continue the oversight of recovery and resolution planning
activities to assess our capabilities if such a situation arises, with
particular focus on the development of our Trading Activity Wind
Down capabilities.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 244 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Risk Committee | ||||||
| Principal activities and significant issues considered during 2025 | ||||||
| --- | --- | --- | ||||
| Risk areas | Key issues | Conclusions and actions | ||||
| Holistic<br><br>enterprise risk<br><br>monitoring,<br><br>including the<br><br>Group's risk<br><br>profile | Macroeconomic, geopolitical and other emerging<br><br>risks have the potential to present significant<br><br>challenges to revenue growth, operational resilience<br><br>and our commitment to serve customers and local<br><br>markets. | –The GRC closely monitored geopolitical and macroeconomic risks that could impact<br><br>the Group’s strategy, performance and/or operations. Dedicated agenda time was<br><br>allocated to the discussion of trade tariffs, sanctions and ongoing global conflict to<br><br>ensure thorough consideration of the impact of these events on the Group risk<br><br>profile. In response to the increase in global conflict, the Committee was provided<br><br>with an overview of the HSBC Defence Equipment Policy, with a particular focus on<br><br>dual-use items, to confirm that it continued to be fit for purpose.<br><br>–The GRC continued to track top and emerging risks, our risk appetite and other<br><br>management information metrics, as well as other early warning measures to<br><br>understand sensitivities and the likelihood of the potential impact to our operations,<br><br>customers and stakeholders. The Committee’s consideration of the newly emerging<br><br>private credit market and review and challenge of Group activities in this market is an<br><br>example of active risk management. The Group’s exposure to private credit was<br><br>closely managed throughout the year and remains a relatively small portion of the<br><br>overall lending and investment portfolio.<br><br>–The GRC requested reports on the risk profile of key business areas in local<br><br>geographies and invited principal subsidiary chairs and relevant management to<br><br>attend and participate in discussions at meetings.<br><br>–The GRC has spent time on risk culture as part of the Group’s wider 'How We<br><br>Succeed' ambitions in promoting a high-performance culture. The Committee has<br><br>overseen the implementation of the Risk Culture Framework, a core component of<br><br>the overall organisational culture, and the introduction of risk culture self-<br><br>assessments.<br><br>–The GRC spent time discussing climate risk, as rapidly-evolving macroeconomic and<br><br>geopolitical forces continued to drive the climate risk context in 2025. | ||||
| Risk framework<br><br>and policies | Effective risk management policies, frameworks,<br><br>appetites and thresholds, and oversight of these, are<br><br>essential for HSBC to safely, consistently and<br><br>sustainably support customers, manage risk and<br><br>deliver strategic aims. | –Amendments were made to the risk management framework to enable an improved<br><br>understanding of how the Group’s approach to risk management works in practice<br><br>and to support delivery of the Group strategy. The document has been restructured<br><br>and rewritten to facilitate a synergised and integrated approach to risk management,<br><br>as well as making it more accessible and relatable.<br><br>–After a significant review of the Group risk appetite framework (GRAF) in 2024, the<br><br>2025 risk appetite refresh proposed a small number of changes to the qualitative<br><br>statements and quantitative metrics. At the request of the Committee, Oliver<br><br>Wyman LLC performed an embeddedness review of the GRAF and concluded that<br><br>HSBC is now meeting, or exceeding, industry good practice in the majority of GRAF<br><br>dimensions. The output of the Group risk appetite refresh informs the Financial<br><br>Resource Plan constraints assessment and helps to identify where the risk appetite<br><br>statement is being partially or fully utilised to meet strategic objectives.<br><br>–The Group has a risk appetite statement to define risk appetite and tolerance<br><br>thresholds, which forms the basis of the risk management procedures for the first<br><br>and second lines of defence, the Group’s capacity and capabilities to support<br><br>customers, and the achievement of strategic goals. The GRC maintained oversight of<br><br>the Group’s risk appetite framework, reviewing enhancements to the Group’s risk<br><br>appetite statements and recommending these to the Board for approval.<br><br>–The Committee has monitored the Group’s control processes and escalation<br><br>protocols through various reports, and has considered risk acceptance, rapid<br><br>escalation processes, the adequacy of internal reporting tools and reporting on<br><br>various issues. | ||||
| Treasury risk | It is essential that capital and liquidity risk is<br><br>monitored effectively, and the Group takes active<br><br>steps to maintain its capital and liquidity positions.<br><br>Regular stress testing is undertaken to ascertain the<br><br>Group’s operation when under stress. Developing<br><br>action plans and guardrails to cover scenarios of<br><br>recovery or resolution at subsidiary or Group level is<br><br>a vital part of HSBC’s prudential risk management. | –The Group proactively tracks and maintains safeguarding of its capital and liquidity<br><br>positions, utilising early warning indicators, sensitivity analysis, capital and liquidity<br><br>reporting and adequacy. It performs internal and regulatory stress tests to measure<br><br>resilience and performance against a range of stress scenarios, and to challenge the<br><br>strategic management actions that could be applied against anticipated stress events<br><br>and headwinds. This capability has been critical this year to allow us to consider<br><br>numerous scenarios relating to the uncertainty in the external environment and to<br><br>reposition portfolios accordingly.<br><br>–The GRC conducted its annual review and challenge of the Group’s ICAAP and ILAAP,<br><br>and provided its recommendations to the Board for approval. In relation to stress<br><br>testing exercises, the GRC reviewed the Group Recovery Plan stress scenarios and<br><br>results, and an internal climate scenario analysis was also undertaken. The Committee<br><br>reviewed and approved the Group-wide internal stress test, scenarios and outputs,<br><br>which contributes to the Group’s commitment to regularly test the resilience of the<br><br>balance sheet and profit and loss under multiple scenarios of varying severity. In<br><br>response to the Bank of England’s updated approach to stress testing the UK financial<br><br>system, the Bank Capital Stress Test (‘BCST’) scenario was considered, and results<br><br>approved.<br><br>–As part of its regulatory obligations, the Group is required to show how its recovery<br><br>and resolution strategies could be executed effectively and identify any risks to<br><br>successful implementation. The GRC continued its oversight of the Group’s progress in<br><br>maintaining and developing its capabilities under the Bank of England’s requirements<br><br>for resolvability. Further to the March 2025 deadline for meeting the PRA’s Trading<br><br>Activity Wind Down requirements, the Group confirmed that it is able to perform an<br><br>orderly 24-month wind down of trading activities. The GRC will continue to monitor the<br><br>development of our Trading Activity Wind Down capabilities in order to meet regulatory<br><br>policy expectations.<br><br>–To provide sufficient time and focus on Treasury-related topics, four separate briefings<br><br>were held throughout the year, which were well attended by members of the<br><br>Committee and the Board. Topics included: ICAAP, ILAAP, restructuring planning,<br><br>Interest Rate Risk Assessment, Group Recovery Plan, BCST, Interest Rate Risk in the<br><br>Banking Book (’IRRBB’), Hold To Collect Guardrails, and a deep dive into the<br><br>Resolvability Assessment Framework. The format was well received by Directors and<br><br>will continue in 2026. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 245 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Risk Committee | ||||||
| Principal activities and significant issues considered during 2025 (continued) | ||||||
| --- | --- | --- | ||||
| Risk areas | Key issues | Conclusions and actions | ||||
| Model risk | HSBC can face risks from inappropriate or incorrect<br><br>business decisions arising from the use of models<br><br>that have been inadequately designed, implemented<br><br>or used, or do not perform in line with expectations<br><br>and predictions. | –The GRC continued to receive regular updates on model risk management, focusing<br><br>on two key items: i) the implementation of Supervisory Statement (SS) 1/23 – ‘Model<br><br>risk management principles for banks’; and ii) progress in strengthening wholesale<br><br>internal ratings- based models. The GRC has overseen the regulatory engagement<br><br>with the PRA and their subsequent feedback on implementation, updated action<br><br>plans and resourcing required to address the increased validation requirements. | ||||
| Resilience/<br><br>Operational risk | A failure in resilience could lead to a situation where<br><br>HSBC customers might suffer significant disruption<br><br>to services or loss of data.<br><br>Technology risks (including cybersecurity) could<br><br>cause unmanaged disruption to any technology<br><br>system within HSBC, as a result of malicious acts,<br><br>accidental actions, poor technology practice, or<br><br>technology system failure. | –The GRC continued its oversight of the Group’s implementation of operational<br><br>resilience capabilities in line with PRA and FCA policies. The Operational Resilience<br><br>Group Level Self Assessment was recommended by the Committee to the Holdings<br><br>Board for approval in March 2025, with the material completion of the<br><br>implementation of the Operational Resilience (SS1/21 and the PRA rulebook) for UK<br><br>Important Business Services (IBS) and Important Group Business Services (IGBS).<br><br>This has resulted in overall improvements to resilience, with fewer disruptions across<br><br>our UK entities in particular. An additional briefing session on operational resilience<br><br>was held in March to prepare the Committee for recommendation of the self-<br><br>assessment.<br><br>–The GRC regularly reviewed reports on the Group’s technology risk profile, as well as<br><br>receiving updates on cybersecurity risk. Reports have focused on the technology risk<br><br>and control environment, and the Committee has supported the drive for continuous<br><br>risk reduction, progress with our strategic future state through the Digital<br><br>Acceleration Programme, and the heightened external cyber threat environment. The<br><br>GRC continued with its strong focus on understanding the Group’s data risk<br><br>landscape and the mobilisation of the Group Data Execution Programme. This has<br><br>included the tracking of progress made and close monitoring of timelines.<br><br>–The Committee has been specifically briefed on external events that have either<br><br>impacted peers in the market or third parties. Read across exercises were conducted<br><br>and lessons learned taken forward to enhance our own operations and resilience.<br><br>The Committee has also spent additional time on payments risk this year, which has<br><br>been elevated as a key risk within the risk taxonomy.<br><br>–The GRC will continue to work with the GTO to consider the risks and opportunities<br><br>in the use of AI (generative and advanced) and digital assets and currencies in 2026. | ||||
| Wholesale/<br><br>retail credit risk | HSBC faces risk from the possibility of losses<br><br>resulting from the failure of a counterparty to meet<br><br>its agreed obligations to pay the Group. | –The GRC received regular updates on the macroeconomic and policy landscape<br><br>impacting credit risk, both retail and commercial, and reviewed updates on the<br><br>strategy and approach to managing credit risk and credit risk capabilities. The GRC<br><br>received regular updates on the Group’s ECLs and provisions, and the credit risk<br><br>arising from the wholesale and retail portfolios. The Committee tracked<br><br>enhancements made to the Country and Industry components of the Credit Risk<br><br>Appetite Framework, and the related data quality dependencies. The Committee was<br><br>updated on the implementation of the Single Name Concentration Framework and<br><br>actions being taken to enhance. | ||||
| Financial<br><br>reporting risk | HSBC is exposed to risks where controls supporting<br><br>the reporting of its financial statements are not<br><br>effective, resulting in material error or misstatement. | –While the GAC has primary responsibility in relation to internal control systems<br><br>(including financial controls), with further detail on page 236, the GRC receives<br><br>reports on entity level control assessments to enable the oversight of the<br><br>effectiveness of such controls in support of the Group’s financial reporting. | ||||
| Financial crime<br><br>risk | There is a risk that HSBC’s products and services<br><br>could be exploited for criminal activity, including<br><br>fraud, bribery and corruption, tax evasion, sanctions<br><br>and export control violations, money laundering,<br><br>terrorist financing and proliferation financing.<br><br>Insider threat also presents the risk that an individual<br><br>with access to bank data, systems, infrastructure or<br><br>finances could use that access to intentionally cause<br><br>harm to the bank and its customers. | –The GRC was updated regularly on the operation and effectiveness of the systems<br><br>and controls pertaining to financial crime risk across geographies and businesses. In<br><br>February, the Committee supported a direction from the Group Head of Financial<br><br>Crime and Group Money Laundering Reporting Officer for improvements to be made<br><br>to three key areas: i) customer due diligence; ii) financial crime investigations; and iii)<br><br>customer selection and exit management process. The Committee will continue to<br><br>monitor progress of these improvements in 2026.<br><br>–Sanctions was a key area of focus for the Committee in 2025, with reporting<br><br>providing detail on how changes to sanctions translated into our business and<br><br>activities. The Committee was fully informed of our potential exposure to primary<br><br>and secondary sanctions and how our capabilities are being utilised to detect<br><br>problematic activity.<br><br>–The risk of insider threat remained elevated in 2025 due to several factors, including<br><br>cost-of-living challenges, the potential impact of Group restructuring on staff morale,<br><br>the inherent risks associated with growth, and the potential for insiders to use new<br><br>tools, such as AI, to attack the bank. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 246 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Group Technology and Operations
Committee
 |
“In 2025, the Committee provided<br><br>oversight of the Group’s technology<br><br>and operations strategies and<br><br>supported their sustainability and<br><br>safe growth-oriented execution,<br><br>amid rapid technological change and<br><br>rising external complexity.” | |
|---|---|---|
| Eileen Murray<br><br>Chair<br><br>Group Technology and Operations Committee | ||
| For Committee membership, see Board biographies on pages 220<br><br>to 223 and for meeting attendance in 2025 see page 228. | ||
| Key responsibilities | ||
| The Committee’s key responsibilities include:<br><br>– reviewing, challenging, and making recommendations to the<br><br>Board on technology strategy and related matters;<br><br>– overseeing HSBC’s data strategy and framework;<br><br>– overseeing HSBC’s cybersecurity strategy and framework; and<br><br>– overseeing HSBC’s global operations (including payments, third<br><br>party management, corporate real estate, and operational<br><br>resilience). |
I am pleased to introduce the Group Technology and Operations
Committee (‘GTO’) report and to provide an overview of the key
matters considered in 2025. As highlighted in last year’s report, we
expanded the scope of the GTO to include oversight of the Group Chief
Operating Officer’s ('GCOO') remit. We have detailed the key areas of
Committee focus across both the GCOO and Group Chief Information
Officer ('GCIO') accountabilities below.
Areas of significant focus during 2025
During the second year of operation of the GTO, we continued to
provide close oversight of the GCIO priorities, including execution of
the technology strategy and enhancement of technology controls. We
challenged management on prioritisation of deliverables and the
feasibility of achieving these within the proposed timescales.
We dedicated significant time to understanding management’s
progress to evolve the holistic data strategy. This included the review
of detailed execution plans, proposed changes to the operating model
for data resources and discussion of how accountability for delivery of
the plan is being supported by regular metrics, allowing progress to be
measured.
We considered the ambitions and strategic plans relating to AI and
digital assets and currencies, with particular focus on understanding
areas of opportunity, peer activity in these areas, the regulatory
landscape and the maturity of supporting risk frameworks and controls.
From a cybersecurity perspective, we discussed the strategic priorities
including ongoing control enhancements to keep pace with the ever-
evolving threat landscape. The GTO received regular updates on the
cybersecurity exposure across all third parties, their adherence to
HSBC’s enhanced control standards and implementation progress.
We provided feedback on the GCOO strategy, which will continue to
evolve into 2026. The Group’s third party strategy, including how we
oversee the risks posed by material suppliers, was regularly discussed.
Given the increasing volume of external incidents impacting the
financial services and other industries, with root causes related to third
and fourth parties, this is a significant concern and all aspects of third
party management will be a continued focus in 2026.
The global operational resilience programme was discussed several
times, including updates on the status of control and process
improvements being implemented to make the programme more
sustainable, and the risks and challenges relating to regulatory
expectations regarding resilience in a number of jurisdictions.
We also reviewed the ongoing development of a strategic framework
to support Group-wide location strategy decisions, incorporating key
factors such as future state workforce and skills, corporate real estate
portfolio, geopolitical considerations and the macroeconomic
environment.
Enhancing accountability
The GTO has continued to work closely with management, to oversee
actions being taken to reinforce and embed enhanced accountability for
the most critical transformation programmes. We received several
updates on how relevant lessons learned, in respect of complex
transformation programmes, were being considered and applied to
other transformation initiatives. We reviewed a number of strategic
programmes with significant technology components, including global
foreign exchange, wholesale credit and lending, foreign exchange, and
payments.
The GTO also received regular updates on management’s programmes
to meet regulatory deliverables and address technology and operations-
related risk and control matters, commensurate with the Group’s risk
profile. We continued to challenge the approach to prioritisation and
delivery timelines, while remaining cognisant of the complexity of the
estate. Assurance from Risk and Global Internal Audit on the
robustness of their approaches was also obtained.
Connectivity within the Group
We continue to invite observers from the principal subsidiaries to our
meetings. We held three subsidiary-focused meetings during 2025,
with a focus on operational resilience, and other key risk and control
themes. We discussed regulatory regimes across the different
markets, progress against agreed timelines, challenges to meet
expectations, metrics reporting and dependencies on Group-level
programmes and deliverables.
Board education
The GTO hosted three training sessions in 2025 to which all Board
members were invited. These sessions provided an opportunity for
directors to engage with external subject matter experts and to discuss
external insights and regulatory developments relating to critical topics:
data and third-party risk management, and cybersecurity.
Additionally, in January 2025 there was a three-day visit to Mexico City
that included visits to a retail branch, call centre and the Global Service
Centre. This enabled in-person interactions with several teams across
technology and operations, and enhanced our understanding of key
areas of focus and progress in the region.
I would like to thank my fellow members for their contribution
throughout 2025.
Committee performance
Finally, I was pleased that the annual review of the GTO’s
performance concluded that the GTO continued to operate
effectively. Further details of the review can be found in the 'Board and
committee performance review' section on page 231.
Eileen Murray
Chair Group Technology and Operations Committee
25 February 2026
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 247 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Technology & Operations Committee |
Committee governance
The GTO operates under delegated authority from the Board and
advises the Board on matters concerning the Group’s technology and
operations strategies and related matters. The Chair reports on the key
matters and discussions at the subsequent Board meeting, and the
Board also has access to the GTO papers and receives copies of
meeting agendas and minutes.
The GCIO, GCOO, Group CEO, Group Chief Risk and Compliance
Officer, Group Head of Resilience Risk, Group CFO, Group Head of
Internal Audit, and the external auditor are standing attendees at GTO
meetings.
The Chair and members of the GTO also hold private meetings with the
GCIO, GCOO, Group Chief Risk and Compliance Officer, and Group
Head of Internal Audit, as required.
The Chair meets regularly with the GCIO and GCOO and other
members of senior management, to discuss priorities and track
progress on key actions. The Chair also meets regularly with the GTO
secretary to ensure the GTO addresses its governance responsibilities.
How the Committee discharged its
responsibilities
Engagement outside formal meetings
The Chair engaged with a variety of stakeholders outside of regular
meetings to enable deeper and more effective oversight of all key
topics under the GTO’s remit.
Inter-committee communication
The GTO worked closely with the GRC and the GAC to address any
areas of significant overlap, and to oversee technology and operations
more comprehensively through inter-committee communications.
The committees worked closely to ensure appropriate alignment in the
review, discussion, challenge, and conclusions on topics including
technology, cybersecurity, data, operational resilience, third party
management and innovation. This ensured that the committees
benefited from each other’s expertise and challenge.
Coordination between the GTO, GRC and the GAC is supported by
cross-membership. The GTO Chair attends the GRC, the GRC Chair
attends the GAC, and the GAC Chair attends both the GTO and GRC,
strengthening connectivity and the flow of information between the
committees.
Connectivity with principal subsidiaries
Non-executive directors from the principal subsidiaries are invited to
attend all regular GTO meetings.
In addition, three additional ‘GTO – Principal Subsidiaries’ meetings
were held to discuss Operational Resilience and other key risk and
control themes.
Specific areas of focus included discussion of market-specific
challenges, including differences in regulatory regimes, progress
against agreed timelines, challenges to meet expectations, and
dependencies on Group-level programmes and deliverables. There was
also sharing of learnings from the UK Operational Resilience
Programme and other relevant regulatory initiatives.
Education sessions facilitated by third parties
The Chair organised three education sessions presented by
independent third parties, to which all Board members were invited.
For each topic, the third parties also provided peer/industry insights,
and suggested key questions that the Board should ask management.
In March 2025, a detailed session was presented on data opportunities
and challenges. This covered the role of data in the wider digital
ecosystem, different value drivers, perspectives on a good data
strategy, industry view and key Board considerations.
In June 2025, the focus was on third-party risk management including
the global regulatory landscape, various thematic deep dives for
example, fourth parties and concentration risk and vision for the future.
In September 2025, cybersecurity was covered, including an overview
of the threat landscape, attacks and response, regulatory landscape and
the role of the Board in response to a cyber incident.
| Principal activities and significant issues considered during 2025 | ||||||
|---|---|---|---|---|---|---|
| Area of focus | Key issues | Conclusions and actions | ||||
| Technology<br><br>strategy | Group-wide focus, including alignment<br><br>with each of the businesses, to<br><br>implement the technology strategy. | –The GTO regularly reviewed and challenged updates, including supporting metrics, in relation to the<br><br>technology strategy and the various programmes in place to deliver control improvements.<br><br>–The GTO challenged whether funding and resource was appropriate to support execution timelines.<br><br>–The GTO considered opinions provided by Risk and Global Internal Audit on the robustness of the<br><br>approach and progress being made.<br><br>–The GTO met with CIOs, COOs, and board members from the principal subsidiaries to discuss<br><br>progress, dependencies, and challenges regarding Group-wide implementation of technology<br><br>programmes and management of risk and control issues. | ||||
| Investment and<br><br>transformation | A number of significant programmes<br><br>with material technology and<br><br>operations components have been<br><br>subject to replanning and/or did not<br><br>deliver the benefits expected. | –The GTO oversaw the ongoing implementation of improvements to drive individual accountability for<br><br>significant investment and transformation activities.<br><br>–The GTO discussed the root causes for the replanning of specific programmes and requested the<br><br>outputs of lessons learned activities and evidence of read across.<br><br>–Following the Group-wide reorganisation, a key focus was on change and execution risks and on<br><br>managing and simplifying the volume of change-related activity. | ||||
| Investment and<br><br>transformation:<br><br>Global FX | Global FX is a significant proposition<br><br>for HSBC and is subject to an ongoing<br><br>investment programme. | –The GTO reviewed the Global FX strategy and investment case, including the business context,<br><br>competitive landscape, alignment to the desired future state architecture, required capabilities and<br><br>key opportunities and challenges. | ||||
| Investment and<br><br>transformation:<br><br>Wholesale<br><br>Credit and<br><br>Lending | Wholesale credit and lending is a<br><br>significant proposition for HSBC and is<br><br>subject to an ongoing investment<br><br>programme. | –The GTO reviewed the wholesale credit and lending strategy and investment case, including the<br><br>business context, competitive landscape priority, alignment to the desired future state architecture,<br><br>transformation initiatives, risks and dependencies. | ||||
| Operational<br><br>resilience | Operational resilience remains a key<br><br>priority for HSBC. | –The GTO regularly discussed progress of work to improve resiliency of services to customers<br><br>including ongoing efforts to simplify the technology estate and to reduce service interruptions<br><br>impacting customers.<br><br>–The GTO reviewed plans to further embed the operational resilience framework, implementation of<br><br>strategic tooling, automation of manual controls and meeting regulatory requirements.<br><br>–The GTO discussed challenges being encountered by the principal subsidiaries to meet market-<br><br>specific regulatory requirements. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 248 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Group Technology & Operations Committee | ||||||
| Principal activities and significant issues considered during 2025 (continued) | ||||||
| --- | --- | --- | ||||
| Area of focus | Key issues | Conclusions and actions | ||||
| Generative AI<br><br>strategy | While GenAI will provide operational<br><br>efficiency, none of the use cases in<br><br>production will deliver significant<br><br>financial impact. | –The GTO reviewed and challenged strategies to leverage the opportunities presented by innovation and<br><br>new technologies, including in relation to GenAI.<br><br>–The GTO discussed the recent streamlining of governance and approval processes, enhancement of<br><br>tooling and upskilling of talent, approach to risk management, the fast-evolving regulatory landscape, and<br><br>key next steps to be taken by management to further enable the opportunities presented by GenAI. | ||||
| Digital assets<br><br>and currencies<br><br>strategy | Digital assets and currencies are a<br><br>fast-changing market with significant<br><br>regulatory developments and<br><br>geopolitical risks. HSBC must provide<br><br>clients with access to these products<br><br>in order to maintain market position. | –The GTO reviewed and challenged the Group's digital assets and currencies strategy.<br><br>–The GTO discussed the opportunities presented by digital assets, as well as the regulatory and<br><br>competitive environments, the risks, controls, technology architecture and the importance of innovation<br><br>to empower our customers. | ||||
| Cybersecurity | Cybersecurity remains one of the<br><br>most significant risks faced by the<br><br>financial services industry. | –The GTO received updates from the GCIO and Global CISO on all key components of the cybersecurity<br><br>programme, including:<br><br>–ongoing work to enhance the risk and control framework and to improve resilience;<br><br>–the external threat environment including incidents;<br><br>–talent acquisition and competition;<br><br>–incident readiness and playbook testing; and<br><br>–cybersecurity exposure across third parties and actions being taken to resolve.<br><br>–The GTO challenged management on capacity and capability to deliver its strategy and discussed<br><br>continued focus on prioritisation. | ||||
| Data | A holistic Group data strategy is<br><br>required to drive long term sustainable<br><br>benefits and enable AI at scale. | –The GTO requested specific updates on the holistic Group data strategy and operating model and<br><br>reviewed detailed business cases relating to data as well as key milestones and accountable executives.<br><br>–A newly-defined suite of metrics will be used to demonstrate progress and business outcomes.<br><br>–Activities to implement improvements to data risks and regulatory reporting continues in parallel to the<br><br>data strategy, the latter acting as a sustainable and critical complement to drive data quality at scale. The<br><br>Committee continued to have visibility of updates being presented to the GRC on this topic. | ||||
| GCOO strategy | Development of a holistic strategy<br><br>across all components of the GCOO<br><br>portfolio. | –The GTO regularly reviewed and challenged the GCOO strategic priorities, including specific key<br><br>outcomes, proposed timelines, known dependencies and development of metrics to track and measure<br><br>success. | ||||
| Location<br><br>strategy | Significant focus to develop a holistic<br><br>Group-wide location strategy to<br><br>progress from previously locally<br><br>driven, reactive and focused on cost. | –The GTO regularly discussed and oversaw the development of a holistic Group-wide location strategy<br><br>and operating model. Key components included business growth priorities, workforce needs, customer<br><br>proximity, risks, financials, regulatory compliance, and macroeconomic conditions.<br><br>–The GTO received and discussed an independent assessment from a third party on the strategy,<br><br>progress made and next steps.<br><br>–The GTO will continue to provide oversight in 2026 on implementation of the new framework and<br><br>governance model for all location and real estate related decisions. | ||||
| Third party<br><br>management | Reliance on third parties is one of the<br><br>most significant risks faced by the<br><br>financial services industry given<br><br>potential impacts on resilience. | –The GTO regularly reviewed and challenged the strategy and updates in relation to third party<br><br>management, including progress on implementing control and risk assessment standards uplifts,<br><br>enhancements to continuous risk monitoring, review of risk acceptances and implementation of new<br><br>systems and technology to drive operational efficiency.<br><br>–The GTO also considered evolving regulatory expectations in relation to suppliers (including broader<br><br>consideration of fourth and fifth parties) and other relevant industry activity in relation to third parties.<br><br>–The GTO will maintain focus on all aspects of third-party management during 2026. | ||||
| Resource and<br><br>capability | Having the right skills and resources is<br><br>critical to achieving our strategic<br><br>ambitions. | –The GTO reviewed the GCIO and GCOO people and capability plans.<br><br>–Key resources, dependencies on subject matter experts, and future skills needs were also considered in<br><br>respect of all programme updates and strategies and will continue to be considered during 2026. |
Focus of future activities
The GTO’s focus for 2026 aligns broadly with our priorities in 2025,
with continued oversight of the following:
–execution of the technology and GCOO strategies and how they are
aligned with and enabling the business strategies;
–execution of the cybersecurity strategy and progression of the
actions being taken to manage the risks and implications of the
evolving geopolitical environment and to mitigate the increasing
sophistication of threats;
–priority innovation initiatives, including AI and digital assets, given
the rapidly evolving market;
–execution of the holistic data strategy with a focus on future
opportunities, including those enabled by AI;
–execution of the GCOO strategy and its key components, including
metrics to measure performance and alignment with the business
and technology strategies;
–the Group-wide location strategy and framework and the interplay
with real estate and workforce plans;
–all aspects of third-party management, including strategy, risk
management and opportunities to leverage new technology and
tools to simplify processes; and
–embedding of operational resilience across the organisation,
including further automation of manual controls.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 249 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Directors’ remuneration report
 |
“Our remuneration approach is<br><br>driving a high-performance culture,<br><br>supporting HSBC’s growth as a<br><br>simpler, more agile, and customer-<br><br>focused bank.“ | |
|---|---|---|
| Dame Carolyn Fairbairn<br><br>Chair<br><br>Group Remuneration Committee | ||
| For committee membership see Board biographies on pages 220<br><br>to 223. | ||
| Key responsibilities | ||
| The Committee’s key responsibilities include:<br><br>–making recommendations to the Board, for approval by<br><br>shareholders, on the Directors' remuneration policy;<br><br>–setting the overarching principles, parameters and governance<br><br>framework of the Group’s remuneration policy;<br><br>–approving the scorecard measures, targets and remuneration of<br><br>executive Directors and other senior Group employees; and<br><br>–regularly reviewing the effectiveness of the remuneration policy<br><br>of the Group and its subsidiaries in the context of strategy,<br><br>culture, conduct and effective risk management. | ||
| All disclosures in the Directors’ remuneration report are unaudited<br><br>unless otherwise stated. Disclosures marked as audited should be<br><br>considered audited in the context of the financial statements taken<br><br>as a whole. |
Dear shareholders,
I am pleased to present our 2025 Directors’ remuneration report on
behalf of members of the Group Remuneration Committee (the
’Committee’). This report includes details of our Directors'
remuneration arrangements in respect of the year to 31 December
2025 and a summary of how we intend to apply the Directors'
Remuneration Policy in the forthcoming year.
I would like to thank shareholders for their support of our new
Directors' Remuneration Policy with a 96.10% vote in favour at the
2025 Annual General Meeting.
I have set out below a summary of our 2025 performance, key
decisions made by the Committee and how the Committee has applied
the new policy.
Performance in 2025
Financial performance
Our financial performance in 2025 demonstrates the intent and
discipline with which we are executing our strategy.
We reported profit before tax of $29.9bn, down $2.4bn compared with
2024, primarily due to a $4.9bn year-on-year net impact from notable
items. In 2025, notable items included the recognition of dilution and
impairment losses of $2.1bn related to our associate BoCom, reserve
recycling losses of $1.5bn following the completion of the sale of our
French retained portfolio of home and certain other loans, legal
provisions of $1.4bn and restructuring and other related costs
associated with our organisational simplification of $1.0bn. Constant
currency profit before tax excluding notable items increased by $2.4bn
to $36.6bn.
Reported revenue of $68.3bn increased by $2.4bn compared with
2024, mainly due to fee and other income growth in Wealth and in
Wholesale Transaction Banking, particularly in Foreign Exchange in CIB.
In 2025, target basis operating expenses grew by 3%, in line with our
targeted growth commitment. This reflected higher planned spend and
investment in technology and included the impact of simplification-
related saves associated with our announced reorganisation.
Our RoTE for 2025 was 13.3%, compared with 14.6% in 2024.
Excluding notable items, RoTE was 17.2%, a 1.6 percentage point
increase on 2024.
The Board approved a fourth quarterly dividend of $0.45 per share,
bringing the total dividend announced for 2025 to $0.75 per share.
Furthermore, in respect of 2025 we announced two share buy-backs
worth a total of $6bn.
Strategic performance
We continued to make progress in reshaping the Group. In 2025 we
announced 11 transactions and have commenced strategic reviews of
our retail businesses in Australia, Indonesia and Egypt, and also of
HSBC Life Singapore. We completed the privatisation of Hang Seng
Bank on 26 January 2026, which will deepen our presence in one of our
home markets and position us to outpace market growth.
Our UK and Hong Kong businesses hold leading market positions and
have seen good financial performance in 2025. Our focus on customers
has seen improved net promoter scores ('NPS') in the UK across both
RBW and CMB. Hong Kong RBW recorded its highest ever NPS, up 9
points from 2024. We have also seen improvements in NPS in strategic
IWPB markets and in CIB versus 2024.
I am pleased that our employee engagement index remains strong
despite the significant changes to our businesses. Over 87% of
colleagues participated in our 2025 employee Snapshot survey. Though
falling by two percentage points compared with 2024, employee
engagement measured through the survey remains high at 78%, four
percentage points above the global financial services benchmark.
Key remuneration decisions for executive
Directors
Annual incentive for 2025 performance
Scorecards were set at the start of the year to align with our reported
financial performance, excluding the impact of strategic transactions
and one-offs on the Group's financial performance in 2025, consistent
with the approach taken in previous years.
Based on the strong underlying financial performance delivered during
2025 and good progress made on execution of our strategic objectives,
the 2025 scorecard outcome for Georges Elhedery of 80.13% results in
an annual incentive of £3,605,000. This compares with a 2024
scorecard outcome of 78.79% and annual incentive of £1,677,000
when Georges was assessed against both Group CFO and Group CEO
scorecards and pay outcomes were pro-rated accordingly.
Pam Kaur was appointed as an executive Director on 1 January 2025.
Pam's 2025 scorecard outcome of 80.03% results in an annual
incentive of £2,100,000.
2023–2025 long-term incentive ('LTI') vesting
Georges Elhedery and Pam Kaur participated in the 2023–2025 LTI that
will vest in March 2026.
The Group exceeded its maximum relative total shareholder return
('TSR') and carbon reduction targets, demonstrating the
outperformance of the Group versus our peers over the period and
progress on sustainability. Group RoTE was above threshold
performance and was assessed at 30.8% of maximum. Targets for
sustainable finance and investment and capital reallocation to Asia
measures were not met. Overall, 45.19% of the original award will vest
and be released on a pro-rata basis over the next five years.
The Committee is comfortable that the pay outcomes for both
executive Directors are appropriate in the context of company and
individual performance for 2025.
2026 fixed pay
The Committee considered making a salary increase for the Group CEO
and Group CFO, aligned with the overall increase being considered for
our Group colleagues, noting the strong 2025 performance delivered.
However, taking into account that 2025 has been a significant year of
transformation and to align with our more targeted approach to
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 250 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
awarding fixed pay increases for the wider workforce, there will be no
salary increase for either the Group CEO or Group CFO in 2026.
Therefore, Georges Elhedery's base salary for 2026 will be £1,500,000
and Pam Kaur's base salary will be £875,000.
2026–2028 LTI awards
The Committee intends to grant both Georges Elhedery and Pam Kaur
the maximum 2026-2028 LTI award of 600% of base salary (Georges
Elhedery: £9,000,000, Pam Kaur: £5,250,000).
The value realised from the award is subject to performance over the
next three years. The award will vest in five equal annual instalments
after the end of the performance period and shares delivered are
subject to a one-year retention period on vesting.
Performance measures and targets
The Committee has reviewed the performance measures used for our
incentive arrangements to ensure that these are aligned to the Group's
priorities and balance delivery of financial and strategic performance.
For the 2026 annual incentive scorecard, we will retain the same
financial measures as 2025, aligned to the Group's priorities, including
our core measures of profit before tax ('PBT'), Group RoTE and costs,
plus a measure on fee income growth (all excluding notable items). We
will assign equal weighting of 15% to all four measures to better
incentivise growth and maintain discipline on costs, while retaining
focus on delivery of RoTE of 17% or better for our shareholders,
excluding notable items.
2026 non-financial measures will consist of our strategic objectives
(10% weighting), customer measures (15% weighting), people &
culture measures (5% weighting) and personal objectives (10%
weighting).
For the 2026-2028 LTI, we will retain Group RoTE and relative TSR and
increase the weighting for each to 42.5% from 40%.
Based on shareholder feedback, we have removed our own emissions
measure, reflecting that this activity is now largely considered business
as usual, and introduced a financed emissions metric, weighted at 5%.
This will assess whether financed emissions for our most carbon-
intensive sectors - Oil & Gas and Power & Utilities - remain within our
defined risk limits to enable the Group to progress towards its 2030
targets. In addition, the sustainable finance and investment measure,
which is a material metric in support of our ESG ambitions, will have a
10% weighting.
Though the overall weighting of the environment measure will reduce
to 15%, this continues to represent a significant proportion of the
increased total LTI opportunity. It also represents the potential for
higher absolute reward than in previous years because of the new
policy. We will keep the weighting under review as we broaden the
scope of the financed emissions to cover other sectors.
Performance targets and ranges continue to balance achievability with
stretch, ensuring they act as an effective incentive for management,
while reflecting the increased pay opportunities of our new policy.
We will continue to utilise a risk modifier and operate a judgement-
based approach to adjustments for all risk and compliance matters.
ÑFor further details, see ‘Implementation for 2026‘ on page 257.
Rewarding our colleagues
In 2025, we continued to embed our new performance and pay
approach to deliver high performance and increase transparency.
In our Snapshot survey, 86% of colleagues reported a clear
understanding of what is expected of them, and 81% of colleagues
agreed they received feedback that helps improve their performance.
Pay sentiment continues to increase year-on-year in most areas
because of actions taken through 2024.
ÑFor further details, see ‘Our approach to workforce reward‘ on page 259.
Fixed pay
Fixed pay remains the largest part of most colleagues' reward so we
are pleased to be accredited as a global living wage employer for the
third consecutive year. This means we meet or exceed living wage
benchmarks in all our markets. This gives confidence that we provide
core financial security to colleagues through fixed pay.
Fixed pay is primarily reviewed through our annual pay cycle. Effective
in 2026, we have awarded an overall fixed pay increase of 3.2%. The
level of increases vary by market, depending on the economic outlook
and individual roles. The highest increases were made to lower paid
colleagues relative to relevant market benchmarks.
Variable pay
The Committee determined total variable pay of $3,930m, up 10%
compared with the $3,570m awarded in 2024 after adjusting for
disposals and organisational changes. This was determined based on a
review of our performance against financial and non-financial metrics.
We considered the strength of our financial performance in 2025 and
the ratio between variable pay and pre-variable pay profit before tax, the
Group’s performance against key risk and compliance metrics, and our
total compensation market position and the broader economic outlook.
Total compensation across all our businesses increased relative to
2024, rewarding colleagues for their contribution to our performance.
We strongly differentiated to ensure our highest performers had the
strongest variable pay outcomes compared to prior year. The
Committee extends its appreciation to colleagues across HSBC who
have worked so hard and effectively to deliver our 2025 results.
Other remuneration matters
We welcome the October 2025 changes to the PRA remuneration
rules, which are now simpler and more proportionate compared with
other financial markets. Notably, the reduction in deferral length, the
removal of the post-vesting retention period for deferred awards, and
the removal of the variable-to-fixed pay ratio cap implemented in 2023
present an opportunity to simplify our remuneration structure. These
changes can help enhance our pay competitiveness and allow for a
greater proportion of total compensation to be delivered as variable pay.
During 2025, the Committee undertook a review of the pay structure
for senior employees in light of these changes. It was determined that
no amendments would be made to the deferral or post-vesting
retention periods for executive Directors. In accordance with the
current shareholder-approved policy, executive Directors will continue
to receive LTI awards with a seven-year deferral period, and any shares
awarded as part of variable pay will remain subject to a one-year post-
vesting retention period. The Committee will continue to keep this
matter under review and will engage with major shareholders on any
potential material changes to the deferral structure for our executive
Directors based on the revised PRA remuneration rules.
For Group colleagues subject to the PRA remuneration rules, the
deferral period for variable pay awards relating to the 2025 performance
year has been reduced to four years, the one-year post-vesting
retention period for deferred shares has been removed and the
threshold for the 60% deferral rate has increased from £500,000 to
£660,000. We are also recommencing the payment of dividend
equivalents on deferred share awards for all colleagues where
regulations permit. This includes executive Directors, in alignment with
our shareholder-approved remuneration policy.
Looking ahead to 2026, a key priority will be to review the pay structure
for our senior executives. This review will ensure that our remuneration
approach continues to support a high-performance culture, incentivises
the achievement of our financial and strategic objectives, and promotes
robust risk management and exemplary conduct standards.
Conclusion
On behalf of the Committee, I would like to thank our shareholders
once again for their support of our new policy and their valuable
feedback. We are committed to regular engagement and I look forward
to further dialogue in the year ahead.
As Chair of the Committee, I hope you will support the 2025 Directors’
remuneration report at the 2026 AGM.
Dame Carolyn Fairbairn
Chair
Group Remuneration Committee
25 February 2026
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 251 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Remuneration at a glance
Our Directors’ remuneration policy was approved at the AGM on 2 May 2025. The full policy can be found on pages 285 to 293 of our Annual
Report and Accounts 2024 and in the Directors’ Remuneration Policy Supplement, which is available under Group results and reporting in the
‘Investors‘ section of www.hsbc.com.
Remuneration policy summary – executive Directors
| Fixed pay | Base salary | –Base salary is paid in cash on a monthly basis.<br><br>–From 1 March 2026 (unchanged from prior year):<br><br>–Georges Elhedery: £1,500,000<br><br>–Pam Kaur: £875,000 | ||||
|---|---|---|---|---|---|---|
| Benefits | –Taxable benefits include the provision of medical insurance, accommodation, car, club membership,<br><br>independent legal advice in relation to matters arising out of the performance of employment duties for<br><br>HSBC, tax return assistance or preparation, and travel assistance.<br><br>–Non-taxable benefits include the provision of a health assessment, life assurance and other insurance<br><br>coverage. | |||||
| Cash in lieu of pension | –10% of base salary is paid on a monthly basis.<br><br>–This allowance, as a percentage of salary, is aligned with the maximum contribution rate that HSBC could<br><br>make for the majority of employees who are defined contribution members of the HSBC Bank (UK)<br><br>Pension Scheme. | |||||
| Variable pay | Annual incentive | Maximum | –300% of base salary. | |||
| Performance measures | –Performance is measured against an annual scorecard of financial and non-<br><br>financial measures.<br><br>–Performance measures for the 2026 Group CEO and Group CFO annual<br><br>scorecards are set out on page 257. | |||||
| Operation | –Payout ranges between 25% and 100% for minimum to maximum<br><br>performance. Performance below minimum target will result in 0% payout.<br><br>–Awards can be delivered in any combination of cash and shares, with shares<br><br>normally representing no less than 50% of the award. Shares are normally<br><br>immediately vested. | |||||
| Long-term incentive (‘LTI’) | Maximum | –600% of base salary. | ||||
| Performance measures | –Prior year performance is taken into consideration when assessing the value<br><br>of the LTI grant.<br><br>–Award granted is subject to a forward-looking three-year performance period<br><br>from the start of the financial year in which the awards are granted. Financial<br><br>measures will generally have a weighting of 60% or more.<br><br>–Performance measures for the 2026-28 LTI award are set out on page 258. | |||||
| Operation | –At the end of the performance period, the performance outcome will be used<br><br>to assess the percentage of the awards that will vest.<br><br>–Awards will vest in five equal instalments, with the first vesting on or around<br><br>the third anniversary of the grant date and the last instalment vesting on or<br><br>around the seventh anniversary of the grant date. | |||||
| Other policies applicable to<br><br>variable pay | Retention | –On vesting, the net number of shares that have vested will normally be held<br><br>for a retention period of up to one year. | ||||
| Malus | –Unvested awards are subject to malus (i.e. reduction and/or cancellation)<br><br>during any applicable deferral period. | |||||
| Clawback | –Paid or vested awards are subject to clawback (i.e. repayment or recoupment)<br><br>for a period of seven years from the date of award, extending to 10 years in<br><br>the event of an ongoing internal/regulatory investigation at the end of the<br><br>seven-year period. | |||||
| Shareholding guidelines | In-employment | –600% of base salary within five years of appointment. | ||||
| Post-employment | –600% of base salary to be held for two years. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 252 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
2025 executive remuneration outcomes
Further details are set out in our annual report on Directors‘ remuneration on pages 253 to 256.
| Georges Elhedery | Pam Kaur |
|---|---|
| Group CFO until 1 September 2024; Group CEO from 2 September 2024 | Group CFO from 1 January 2025 |
| Single total figure of remuneration (£000) | Single total figure of remuneration (£000) |
2025
2025
2024
Not an executive Director in 2024
| Annual incentive outcome (£000) |
|---|
Georges Elhedery
Maximum opportunity
Maximum opportunity
2025 annual incentive
2025 annual incentive
Pam Kaur
| 2023-2025 long-term incentive (LTI) outcome (£000) |
|---|
Georges Elhedery (received in prior role as Co-CEO, GBM)
Maximum opportunity
Maximum opportunity
2023-25 LTI
2023-25 LTI
Pam Kaur (received in prior role as Group Chief Risk & Compliance Officer)
| Executive Directors’ shareholding (% of salary) |
|---|
Georges Elhedery
Pam Kaur
Requirement
Requirement
Actual
Actual
| 2026 target opportunities versus peers (£000) | ||
|---|---|---|
| (Stock ticker and ranking by market capitalisation) | Group CEO | Group CFO |
Data source: Deloitte. 2025 total compensation
based on 2024 year-end disclosures. 'Target' value
of total compensation based on 50% of the
maximum value for the annual incentive, or target
value if disclosed; 50% of the maximum value for
performance-based LTI; the maximum value of
restricted shares; and one third of face value for
share options. Market capitalisation ranking shown
in brackets based on 3-month average as at
31 December 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 253 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Annual report on Directors’ remuneration
This section sets out how our approved Directors’ remuneration policy was implemented during 2025.
Single total figure of remuneration
(Audited)
The following table shows the single total figure of remuneration of each executive Director for 2025, together with comparative figures. Georges
Elhedery was appointed Group CFO effective from 1 January 2023 and succeeded Sir Noel Quinn as Group CEO on 2 September 2024. Pam Kaur
was appointed Group CFO and executive Director of the Board on 1 January 2025.
| Single total figure of remuneration | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (£000) | Base<br><br>salary | Fixed pay<br><br>allowance<br><br>('FPA') | Taxable<br><br>benefits | Non-<br><br>taxable<br><br>benefits | Cash in<br><br>lieu of<br><br>pension | Total<br><br>fixed | Annual<br><br>incentive | Notional<br><br>returns1 | Long-term<br><br>incentive2,3 | Total<br><br>variable4 | Total<br><br>fixed and<br><br>variable | |
| Georges Elhedery | 2025 | 1,479 | — | 61 | 108 | 148 | 1,796 | 3,605 | 5 | 1,217 | 4,827 | 6,623 |
| 2024 | 989 | 1,288 | 39 | 58 | 99 | 2,473 | 1,677 | 8 | 1,418 | 3,103 | 5,576 | |
| Pam Kaur | 2025 | 863 | — | 71 | 66 | 86 | 1,086 | 2,100 | 11 | 708 | 2,819 | 3,905 |
1Deferred cash awards granted in prior years include a right to receive notional returns for the period between the grant and vesting date. This is determined by
reference to a rate of return specified at the time of grant and paid annually, with the amount disclosed on a paid basis.
2LTI awards were made in February 2023 at a share price of £6.357 for which the performance period ended on 31 December 2025. The value of the awards has been
computed based on a share price of £10.708, the average share price during the three-month period to 31 December 2025. The LTI granted to Georges Elhedery was
in respect of 2022 performance in his role as Co-CEO, Global Banking and Markets ('GBM'), and for Pam Kaur in her role as Group Chief Risk and Compliance Officer.
See the following section for details of the performance assessment, which resulted in 45.19% vesting, and the award value attributable to share price appreciation.
3The value of the 2022-2024 LTI for Georges Elhedery has been restated based on a share price of £8.442 to reflect the value of the award on 11 March 2025,
when the first tranche of the award vested. In 2024, the value was based on the average share price during the three-month period to 31 December 2024 of
£7.184.
4No malus or clawback was applied to executive Directors' 2025 variable pay awards or outstanding deferred awards from prior years.
Fixed pay
(Audited)
Base pay
As set out in the 2024 report, Group CEO base salary was £1,500,000 and Group CFO base salary was £875,000, effective 1 March 2025.
Benefits
Taxable benefits include the provision of medical insurance, car benefit
and tax support. Non-taxable benefits include the provision of life
assurance and other insurance cover.
The values of the significant benefits in the single total figure table are
set out in the following table.
| Significant benefits | Total<br><br>taxable<br><br>and non-<br><br>taxable<br><br>benefits | |||||
|---|---|---|---|---|---|---|
| (£000) | Group<br><br>income<br><br>protection<br><br>(non-taxable) | Medical<br><br>insurance<br><br>(taxable) | Car and<br><br>driver<br><br>(taxable) | Other<br><br>benefits | ||
| Georges<br><br>Elhedery | 2025 | 102 | 25 | 18 | 24 | 169 |
| 2024 | 49 | 20 | 6 | 22 | 97 | |
| Pam Kaur | 2025 | 62 | 10 | 38 | 27 | 137 |
Pensions
As per the approved policy, each executive Director receives a payment of 10% of base salary in lieu of pension contributions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 254 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Annual incentive
(Audited)
Both executive Directors met the minimum standard of conduct and
behaviour for an annual incentive award to be made.
The annual incentive award is awarded 50% in cash and 50% in shares.
The shares portion of the award vests immediately at grant and is
subject to a retention period of one year and clawback provisions.
The award is determined by applying the outcome of their annual
scorecard to the maximum opportunity, set at 300% of base salary.
In assessing performance, the Committee considered, and made no
adjustment for, the impact of interest rates, re-confirming that
variations in the macroeconomic environment and their impact on
business outcomes remain for our executives to manage.
The Committee considered carefully the wider context in which
performance was delivered in 2025, including the strong total return
delivered to shareholders over the year. They judged that the overall
scorecard outcomes for both Georges Elhedery and Pam Kaur were
appropriate against the targets set at the start of the year for financial,
strategic and personal measures, and that the application of the risk
and compliance modifier was not required.
| Executive Director 2025 annual incentive award value | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (£000) | Base salary<br><br>£000 | Maximum<br><br>opportunity<br><br>(% of salary) | Scorecard<br><br>outcome | Risk & compliance<br><br>modifier | Annual incentive<br><br>£000 | ||||
| Georges Elhedery | 2025 | 1,500 | 300% | 80.13% | Nil | 3,605 | |||
| Pam Kaur | 2025 | 875 | 300% | 80.03% | Nil | 2,100 | |||
| Annual incentive scorecard assessment | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Weighting<br><br>(%) | Minimum<br><br>(25% payout) | Maximum<br><br>(100% payout) | Performance | Assessment<br><br>(%) | Outcome (%) | ||||
| Financial (60%)1 | Group RoTE2 | 25 | 13.0% | 16.0% | 17.2% | 100.00 | 25.00 | ||
| Target basis operating expenses2 | 15 | 3.5% | 1.5% | 3.0% | 43.75 | 6.56 | |||
| Profit before tax ($bn)2 | 10 | $28.3 | $34.6 | $36.6 | 100.00 | 10.00 | |||
| Fee income growth relative to<br><br>balance sheet growth3 | 10 | 2.0% | 6.0% | 8.1% | 100.00 | 10.00 | |||
| Strategic (30%) | Customer satisfaction | 15 | See strategic measures table for commentary | 76.00 | 11.40 | ||||
| Deliver benefits of announced<br><br>organisational changes | 8 | 87.50 | 7.00 | ||||||
| People and culture | 7 | 50.00 | 3.50 | ||||||
| Personal (10%) | 10 | See personal measures table for commentary | Georges<br><br>Elhedery | Pam<br><br>Kaur | |||||
| 6.67 | 6.57 | ||||||||
| Formulaic scorecard outcome (%) | 80.13 | 80.03 | |||||||
| Risk adjustment (%) | — | — | |||||||
| Scorecard outcome after risk adjustment (%) | 80.13 | 80.03 | |||||||
| Maximum opportunity (£000) | 4,500 | 2,625 | |||||||
| Annual incentive awarded (£000) | 3,605 | 2,100 |
1The CET1 capital ratio of 14.9% exceeded the tolerance level in the risk appetite statement as required by the underpin.
2Excluding notable items.
3FY24 excludes net fee income and net loans and advances to customers from our banking business in Canada and our business in Argentina prior to disposal.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 255 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report | ||||||
| Strategic measures | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Measures | Weighting | Performance achievement | Assessment | Outcome | ||
| Customer<br><br>satisfaction | Maintain and<br><br>improve NPS<br><br>scores/rank | 15.0% | –Performance is assessed against NPS data from external providers, including<br><br>InMoment sNPS survey for RBW and IWPB, Coalition Greenwich LC and Mid-<br><br>market study and Savanta MarketVue Business Banking survey for CMB, and<br><br>Coalition Greenwich Global Corporates Study for CIB.<br><br>–We maintained market leadership in both RBW and CMB in Hong Kong,<br><br>reaching a record NPS in RBW.<br><br>–In the UK we ranked second for mid-market enterprises, improved our SME<br><br>Business Banking ranking to fifth, and improved RBW NPS by 5 points<br><br>compared to 2024.<br><br>–We rose to first place in IWPB in mainland China and Singapore, and our score<br><br>increased in the UAE. NPS declined slightly in India.<br><br>–Amongst Corporates, CIB continues to rank first in Hong Kong, and scores rose<br><br>in the UK, mainland China, Singapore and UAE. | 76.00% | 11.40% | |
| Deliver benefits<br><br>of announced<br><br>organisational<br><br>changes | Benefits<br><br>realised and<br><br>reorganisation<br><br>programme<br><br>health | 8.0% | –We identified and achieved $1.2bn annualised savings against a 2025 baseline of<br><br>$1.0bn. We are on track to have taken actions to deliver our $1.5bn annualised<br><br>cost reduction by the end of June 2026, which is six months earlier than<br><br>planned.<br><br>–Execution is on track with the majority of programme milestones tracking green<br><br>throughout 2025 with identified gaps quickly remediated. | 87.50% | 7.00% | |
| People and<br><br>culture | Inclusion and<br><br>retention of<br><br>high<br><br>performers | 7.0% | –Senior leadership representation for women increased by 0.1 percentage points<br><br>year-on-year to 34.7%, for Asian heritage colleagues it increased by 1.6<br><br>percentage points to 40.9%, and for Black heritage colleagues it remained flat at<br><br>3.0%. These are above the minimum performance thresholds set, partly<br><br>meeting the targets.<br><br>–High performer attrition increased by 0.4 percentage points to 4.1%, and was<br><br>assessed as partly met given the outcome fell within the performance range.<br><br>–The Inclusion index in our employee Snapshot survey improved by 0.1<br><br>percentage points to 78.3%, above the minimum target set and was assessed<br><br>as partly met. | 50.00% | 3.50% | |
| Personal measures | ||||||
| --- | --- | --- | --- | --- | --- | |
| Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators. | ||||||
| Georges Elhedery | Weighting | Performance achievement | Assessment | Outcome | ||
| Regulatory<br><br>excellence,<br><br>wealth<br><br>acceleration<br><br>and strategic<br><br>investments,<br><br>Group<br><br>technology<br><br>strategy | 10.0% | –Wealth fees and other operating income of $9.39bn exceeded our maximum target of $8.8bn,<br><br>driven by Hong Kong and IWPB segments. Net New Invested Assets at $80.0bn is below our<br><br>threshold performance level of $87.6bn. Overall, performance for this measure was assessed as<br><br>partly achieving our targets.<br><br>–Strong performance on Net App Demise with over 700 net reductions across the organisation,<br><br>surpassing the maximum target set.<br><br>–Good progress has been made on the most material issues on regulatory excellence. However,<br><br>more could have been done by the Group to improve the pace of progress on long-standing<br><br>regulatory deliverables and programmes for which Georges had an oversight role. | 66.70% | 6.67% | ||
| Pam Kaur | Weighting | Performance achievement | Assessment | Outcome | ||
| Regulatory<br><br>excellence,<br><br>Group<br><br>Sustainability<br><br>priorities,<br><br>robust liquidity<br><br>and capital<br><br>management | 10.0% | –Reviewed and reset the Group’s Sustainability strategy, related policies and financed emissions<br><br>targets and published the revised Net Zero Transition Plan; continued enhancement on ESG<br><br>disclosures in areas such as financed emissions and climate risk.<br><br>–Delivered strong capital position throughout the year, with CET1 consistently above target<br><br>operating range.<br><br>–Delivered a robust liquidity position with no breaches throughout the year; enhancements were<br><br>implemented to further strengthen liquidity management.<br><br>–Good progress has been made on the most material issues on regulatory excellence. However,<br><br>more could have been done by the Group to improve the pace of progress on long-standing<br><br>regulatory deliverables and programmes for which Pam had an oversight role. | 65.70% | 6.57% | ||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 256 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Long-term incentive (’LTI’) awards
LTI awards over 2023 to 2025 performance period
(Audited)
Georges Elhedery and Pam Kaur were each granted a 2023–2025 LTI
award in February 2023 in their capacity as Co-CEO GBM and Group
Chief Risk and Compliance Officer respectively, prior to their
appointment as executive Directors. Sir Noel Quinn was also granted a
2023–2025 LTI award in February 2023 in his capacity as Group CEO.
At the time of grant, the Committee determined that there were no
windfall gains to consider for this award given the share price at grant
(£6.36) was above the share price at the previous LTI grant (£5.38).
The scorecard delivered an outcome of 45.19%, reflecting strong
shareholder returns across the performance period. The Committee
received input from the GRC who assessed that the performance
targets were delivered with appropriate risk management. On this
basis, the Committee considered that no adjustment for risk matters
should be made.
The value of the 2023–2025 LTI shown below is based on the average
share price during the three-month period to 31 December 2025 of
£10.708. The awards will vest in five equal annual instalments
commencing in March 2026. On vesting, shares equivalent to the net
number of shares that have vested (after those sold to cover any
income tax and social security payable) will be held for a retention
period of one year.
| Executive Director 2025 LTI values | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (£000) | Award | Ordinary<br><br>shares<br><br>granted | Prorated for<br><br>time in<br><br>employment | Performance<br><br>outcome | Risk &<br><br>compliance<br><br>modifier | Shares to<br><br>vest | Value of<br><br>shares to vest<br><br>£000 | Of which:<br><br>face value<br><br>£000 | Of which: share<br><br>appreciation<br><br>£000 | |
| Georges Elhedery | 2025 | 2023-25 LTI | 251,474 | 251,474 | 45.19% | — | 113,641 | 1,217 | 722 | 495 |
| Pam Kaur | 2025 | 2023-25 LTI | 146,393 | 146,393 | 45.19% | — | 66,154 | 708 | 420 | 288 |
| Former director | ||||||||||
| Sir Noel Quinn | 2025 | 2023-25 LTI | 861,422 | 669,995 | 45.19% | — | 302,770 | 3,242 | 1,925 | 1,317 |
| Assessment of the 2023–2025 LTI awards | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Measures (weighting)1 | Minimum<br><br>(25% payout) | Target<br><br>(50% payout) | Maximum<br><br>(100% payout) | Actual | Assessment | Outcome | ||||
| RoTE with CET1 capital ratio underpin2 (25%) | 13.0% | 14.3% | 15.5% | 13.3% | 30.8% | 7.69% | ||||
| Capital reallocation to Asia with CET1 capital ratio<br><br>underpin3 (25%) | 49.0% | 50.5% | 52.0% | 44.8% | 0.0% | 0.00% | ||||
| Transition to net<br><br>zero4 (25%) | Carbon reduction (own<br><br>emissions) | 64.0% | 68.0% | 72.0% | 84.9% | 100.0% | 12.50% | |||
| Sustainable finance and<br><br>investment | $588bn | $700bn | $756bn | $496bn | 0.0% | 0.00% | ||||
| Relative TSR5 (25%) | At median of the<br><br>peer group | Straight-line vesting<br><br>between minimum<br><br>and maximum | At upper quartile of<br><br>the peer group | Above upper<br><br>quartile | 100.0% | 25.00% | ||||
| Total | 45.19% |
1Awards vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set out in this table.
2Assessed based on RoTE in the 2025 financial year. The CET1 capital ratio of 14.9% exceeded the level required by the underpin.
3Assessed based on share of Group tangible equity (on a constant currency basis and excluding associates) allocated to Asia by 31 December 2025.
4Carbon reduction assessed on percentage reduction in total energy and travel emissions achieved by 31 December 2025 using 2019 as the baseline. Sustainable
finance and investment assessed on cumulative financing provided over the performance period.
5The peer group was: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P. Morgan Chase & Co.,
Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group. Credit Suisse Group was removed following its acquisition by UBS Group in June 2023.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 257 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Implementation for 2026
Fixed pay for 2026
There are no changes to the salary with respect to 2026. Taxable
benefits for 2026 will be in line with 2025. Pensions will continue to
be a cash allowance of 10% of base pay.
| (£000) | Annual base<br><br>salary at<br><br>1 January 2026 | Increase | Annual base<br><br>salary at<br><br>1 March 2026 |
|---|---|---|---|
| Georges Elhedery | 1,500 | —% | 1,500 |
| Pam Kaur | 875 | —% | 875 |
Annual incentive measures for 2026
The 2026 annual incentive scorecard measures for our executive
Directors have been set to support the achievement of our strategic
objectives.
Financial measures comprise our core metrics of PBT, Group RoTE and
costs, alongside a measure on fee income growth. Each will be
assessed excluding notable items so that outcomes reflect
performance in the control of management. Each measure will be
equally weighted at 15% to better incentivise growth while retaining
focus on investor commitments. The overall weighting of 60% for
financial measures balances alignment with shareholder performance
and regulatory expectations.
Customer NPS has been retained to reflect our ambition to be the most
trusted bank globally, putting customers at the heart of everything we
do.
We have retained a measure focused on delivery of benefits from the
organisational change as we reshape the Group for growth. This will
include a measure focusing on synergies following the privatisation of
Hang Seng Bank.
Our people and culture measures support our strategy to enable a
culture of high performance. The Committee intends to assess this by
considering our 'How We Lead' index score from our all-employee
survey and the retention of high performers.
Personal measures have been set to ensure meaningful weighting for
the most critical goals for each executive Director.
The Committee will continue to retain discretion to adjust the formulaic
outcomes of scorecards, taking into account factors such as Group
profits, wider business performance and stakeholder experience, to
ensure executive reward is aligned with underlying Group performance
and the broader stakeholder experience.
Performance targets have been set to reflect the Group’s 2026 plan,
external commitments, scenario testing of upside and downside risks
in the plan while considering macroeconomic uncertainty, including the
interest rate environment and analyst consensus where available. The
Committee is mindful that targets are suitably stretching in this context.
The performance targets are commercially sensitive, and it would be
detrimental to the Group’s interests to disclose them at the start of the
financial year. Subject to commercial sensitivity, we will disclose the
targets in the 2026 Directors’ remuneration report.
| 2026 annual incentive performance measures1 | Weighting | ||
|---|---|---|---|
| Financial<br><br>measures<br><br>(60%) | Group RoTE (excluding notable items) | 15% | |
| Profit before tax (excluding notable items) | 15% | ||
| Fee income growth (excluding notable items) | 15% | ||
| Target basis operating expenses (excluding<br><br>notable items) | 15% | ||
| Strategic<br><br>measures<br><br>(30%) | Customer satisfaction:<br><br>Improvement in NPS scores/rank | 15% | |
| Deliver benefits of announced organisational<br><br>changes | 10% | ||
| People and culture:<br><br>How We Lead index score and retention of<br><br>high performers | 5% | ||
| Personal<br><br>measures<br><br>(10%) | –Group CEO: Deliver enterprise-wide<br><br>foundational priorities including regulatory<br><br>excellence and the Group’s technology<br><br>strategy.<br><br>–Group CFO: Deliver activities relating to<br><br>regulatory excellence priorities, Group<br><br>Sustainability priorities, and robust liquidity<br><br>and capital management. | 10% | |
| Subject to risk and compliance modifier<br><br>The Group Remuneration Committee retains the discretion to revise down<br><br>the formulaic outcome taking into account performance against risk and<br><br>compliance factors during the performance period. |
1All measures subject to CET1 capital ratio underpin.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 258 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
LTI awards over 2026 to 2028 performance period
After taking into account performance for 2025, the Committee
decided to grant Georges Elhedery an LTI award of £9,000,000 and
Pam Kaur an LTI award of £5,250,000 (both 600% of base salary).
The awards will have a three-year performance period starting on
1 January 2026.
The Committee has reviewed the performance measures considering
feedback from shareholders and the Group's strategic priorities.
For the 2026-2028 LTI, we will retain Group RoTE and relative TSR
measures but increase their weighting to 42.5% to increase focus on
our financial and shareholder return measures.
Group RoTE will be assessed excluding notable items on an average
basis over the performance period and represents a change from our
previous approach of assessing performance only in the final year. Our
new approach better reflects consistent, sustainable performance over
the measurement period, minimises the impact of short-term
fluctuations in the last year of assessment and addresses investor
feedback received in prior years.
The RoTE measure is subject to a CET1 capital ratio underpin. If the
CET1 capital ratio at the end of the performance period is below the
CET1 risk tolerance level set in the risk appetite statement, then the
assessment for this measure will be reduced to nil.
No changes have been made to our relative TSR peer group, which
was revised in 2023 to include more Asian peers to better reflect our
growth and investment focus.
The Committee has also reviewed the environment measures following
shareholder feedback and has made the following changes for the
2026-2028 awards:
–Removed the measure on carbon reduction in our own emissions to
reflect the views of our shareholders that this is now largely
considered business as usual.
–Introduced a financed emissions measure, weighted at 5%. The
performance of this measure will be assessed on the basis of
financed emissions for our Oil & Gas and Power & Utilities sectors,
remaining within our internally defined risk limits, which have been
set to enable the Group to progress towards our 2030 targets.
These two sectors cover most of our reported emissions. We will
keep the weighting of this measure under review in future years as
we bring in other sectors within its scope.
–Retained the sustainable finance and investment measure, which is
a material metric in support of our ESG ambitions, but have reduced
the weighting from 15% to 10%.
The overall weighting for the environment measure will be 15%,
representing a significant proportion of the overall LTI opportunity.
Performance targets have been set to balance stretch and achievability
so that awards act as an effective incentive for management, and
incentivise outperformance. Target ranges continue to be calibrated to
deliver maximum payouts only for outperformance compared to
consensus and our plan.
For 2026-2028 awards:
–RoTE targets have been set taking into account our plan, with the
maximum target reflecting a stretch above plan.
–The minimum target for relative TSR is set ‘at the median of our
peer group’, which ensures no payout for below median
performance aligned to investor expectations. The maximum is set
‘at the upper quartile of our peer group’.
–For the sustainable finance and investment measure, we have set
performance targets to support our ambition announced in 2020 to
provide $750bn to $1tn of sustainable financing and investment by
- We reflected on sustainable financing forecasts, market
demand, and regulation in setting the target range.
–The financed emissions measure will track the reduction of on-
balance sheet financed emissions and be assessed on the extent
that target metrics remain within internally defined risk limits.
These limits have been informed by our risk appetite, have been
set in line with our Financed Emissions Metric Pathway and
converge to our 2030 target.
The LTI is subject to a risk and compliance modifier, which gives the
Committee the discretion to ensure performance targets are delivered
with appropriate risk management.
Following changes to the PRA remuneration rules, awards are entitled
to dividend equivalents, in line with our shareholder-approved policy.
To the extent performance conditions are satisfied at the end of the
three-year performance period, the awards will vest in five equal annual
instalments commencing from around the third anniversary of the grant
date. On vesting, shares equivalent to the net number of shares that
have vested (after those sold to cover any income tax and social
security payable) will be held for a retention period of one year.
| Performance conditions for the 2026–2028 LTI awards | |||||
|---|---|---|---|---|---|
| Measures (weighting) | Minimum<br><br>(25% payout) | Target<br><br>(50% payout) | Maximum<br><br>(100% payout) | ||
| Average RoTE (excluding notable items) with CET1 capital<br><br>ratio underpin1,2 (42.5%) | 16.5% | 17.5% | 18.0% | ||
| Relative TSR1,3 (42.5%) | At the median of the<br><br>peer group | Straight-line vesting between<br><br>minimum and maximum | At the upper quartile of the<br><br>peer group | ||
| Environment (15%) | Sustainable finance and<br><br>investment1,4 (10%) | $733bn | $814bn | $896bn | |
| Financed emissions5 (5%) | On-balance sheet financed<br><br>emissions within the Oil & Gas<br><br>and Power & Utilities sectors<br><br>remain within the established<br><br>risk tolerance for at least 80% of<br><br>the performance period | On-balance sheet financed<br><br>emissions within the Oil & Gas<br><br>and Power & Utilities sectors<br><br>remain within the established<br><br>risk tolerance for at least 90% of<br><br>the performance period | On-balance sheet financed<br><br>emissions within the Oil & Gas<br><br>and Power & Utilities sectors<br><br>remain within the established<br><br>risk tolerance for 100% of the<br><br>performance period | ||
| Subject to risk and compliance modifier<br><br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br><br>factors during the performance period. |
1Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.
2To be assessed based on average RoTE excluding notable items over the performance period, subject to the CET1 capital ratio underpin.
3The peer group for the 2025 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P. Morgan
Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.
4The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the performance period starting from 1 January
2020 and ending 31 December 2028.
5Performance against risk tolerance will be assessed on a rolling two consecutive calendar quarter basis due to volatility and measurement lags. In addition, given
inherent uncertainty with financed emissions measurement, mitigating factors for breaches will be considered by the Committee in assessing performance.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 259 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Our approach to workforce reward
Our approach to workforce reward enables a high-performance culture
where colleagues are at their best and focused on excellent customer
outcomes.
Our workforce reward principles and commitments guide our approach,
strengthen our ability to attract, retain and motivate the people we
need and energise colleagues to perform at their best:
–We reward our colleagues responsibly through fixed pay security
and protection through core benefits, a competitive total
compensation opportunity, pay equity, and a more inclusive and
sustainable benefits proposition over time.
–We recognise colleagues' success through our performance
routines, including feedback and recognition, pay for performance,
and all employee share ownership opportunities.
–We support our colleagues to grow through our proposition beyond
pay, with a focus on future skills and development, support for well-
being, and flexibility.
In 2024, we made significant changes to our approach to improve
colleague experience and unlock our performance edge. We introduced
performance routines to support more frequent exchange of feedback
and implemented a ’Target Variable Pay’ plan to help improve
transparency on how we make pay decisions. The year-end
performance assessment was simplified to focus less on ratings and
more on dialogue between managers and colleagues.
In 2025, we continued to evolve our approach and made
enhancements based on the lessons learned from the first year of
implementation. We continued to improve our well-being and
recognition offering, which help motivate employees to perform at their
best.
The Committee tracks various metrics to assess how we are doing and
prioritise our action plans. Our approach overall is working. Employee
engagement measured through our employee Snapshot survey
remained high at 78%. While this fell by two percentage points
compared with 2024, it was four percentage points above the financial
services benchmark. This is a notable achievement in the context of
ongoing activities related to our organisational simplification. Further
highlights for our areas of focus in 2025 are outlined below.
Our approach to workforce reward forms part of our broader employee
value proposition and helps us retain and engage the leaders and
people we need to execute our strategy.
In 2026, a key priority will be to review the pay structure for our senior
executives following changes to the PRA remuneration rules
announced in October 2025. This review will ensure that our
remuneration approach continues to support a high-performance
culture, incentivises the achievement of our financial and strategic
objectives, and promotes robust risk management and exemplary
conduct standards.
| We will reward<br><br>you responsibly | Living wage | Fixed pay | Benefits | |||
|---|---|---|---|---|---|---|
| Global living wage<br><br>employer | 3.2% (2025: 3.6%) | 5 | percentage<br><br>points | p | ||
| Since 2024, we have continued to work<br><br>with the Fair Wage Network which<br><br>provides an independent source of wage<br><br>levels and HSBC has maintained its<br><br>accreditation as a global living wage<br><br>employer. We continue to review all<br><br>wages against local living wage<br><br>benchmarks. | increase to fixed pay for 2026, targeted<br><br>towards lower paid colleagues relative to<br><br>relevant market benchmarks. | increase in the number of colleagues who<br><br>say their benefits meet their and their<br><br>family's needs well. | ||||
| We will recognise<br><br>your success | Feedback | Recognition | ||||
| 81% (2024: 78%) | 78% (2024: 78%) | 1.4m | ||||
| of colleagues say their manager<br><br>proactively gave them timely and<br><br>effective feedback on their performance<br><br>and behaviours. | of colleagues say they are recognised<br><br>when they do a good job. | recognitions of colleagues by their peers<br><br>through our recognition platform 'At Our<br><br>Best' for demonstrating role model<br><br>behaviours that are linked to our values. | ||||
| We will support<br><br>you to grow | Mental health | Physical well-being | Well-being | |||
| #1 (2024: #1) | #1 | 66% (2024: 65%) | ||||
| in the Global CCLA Corporate Mental<br><br>Health Benchmark for the fourth year<br><br>running. | Over 11,400 colleagues participated in the<br><br>HSBC Global Activity Challenge in<br><br>September, an increase of 150% in<br><br>participation from 2024. We set a new<br><br>Guinness World Record for the most<br><br>participants in a 10,000 step challenge in<br><br>24 hours. | Our Well-being Index, which measures<br><br>satisfaction, purpose, happiness and<br><br>stress, increased compared with 2024<br><br>and is five percentage points higher than<br><br>the financial services benchmark. | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 260 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Remuneration structure for colleagues
We set out below the key features of our remuneration framework, which applies on a Group-wide basis (excluding executive Directors), subject to
compliance with local laws. Our remuneration framework for the wider workforce is similar to that of the executive Directors given the inclusion of
fixed and variable pay elements, and the application of deferral, retention, malus and clawback policies to variable pay. A summary of the
remuneration policy for executive Directors is provided on page 251.
| Remuneration components<br><br>and objectives | Application for Group employees | |||||
|---|---|---|---|---|---|---|
| Fixed pay | Salary and allowances | –We provide market competitive pay for the role, skills and experience required.<br><br>–In addition to base salary, fixed pay may also include fixed pay allowances, cash in lieu of pension and other cash<br><br>allowances in accordance with local market practice.<br><br>–Fixed pay may change to reflect an individual’s position, role or grade, cost of living in the country, individual skills,<br><br>capabilities and experience. | ||||
| Benefits and pension | –Benefits may include, but are not limited to, the provision of a pension, medical insurance, life insurance and<br><br>health assessment in accordance with local market practice. | |||||
| Variable pay | Annual incentive | –All colleagues are eligible to be considered for a discretionary variable pay award. Individual awards are<br><br>determined against performance goals set at the start of the year.<br><br>–Variable pay represents a higher proportion of total compensation for more senior colleagues to strengthen<br><br>alignment between total compensation and business performance.<br><br>–Variable pay for employees is limited to 10 times fixed pay, except where local regulations require otherwise.<br><br>–Awards are generally paid in cash and shares. For material risk takers ('MRTs'), at least 50% of the awards are in<br><br>shares and/or where required by regulations, in units linked to asset management funds. | ||||
| Long-term incentive | –Members of the Group Operating Committee and other senior Group employees are also eligible to be considered<br><br>for a long-term incentive award. This is subject to three-year forward-looking performance measures, similar to<br><br>the executive Directors. | |||||
| Policies<br><br>applicable to<br><br>variable pay | Deferral | –A Group-wide deferral approach is applicable to all employees. A portion of annual incentive awards above a specified<br><br>threshold is deferred in shares vesting annually over a three-year period (33% vesting on the first and second<br><br>anniversaries of grant and 34% on the third).<br><br>–Awards for MRTs are paid in line with the PRA and FCA remuneration rules, and in compliance with local regulations.<br><br>Variable pay for MRTs under the PRA remuneration rules ('Group MRTs'), are subject to a four-year deferral period.<br><br>–For all Group MRTs and the majority of local MRTs, a minimum 50% of the deferred awards is in HSBC shares with the<br><br>remaining portion in deferred cash. Local regulatory requirements apply where necessary.<br><br>–For some employees in our asset management business, where required by the relevant regulations, at least 50% of<br><br>the deferred award is linked to fund units reflective of funds managed by those entities, with the remaining portion in<br><br>deferred cash awards.<br><br>–Variable pay awards made in HSBC shares or linked to relevant fund units granted to MRTs that are immediately vested<br><br>are generally subject to a one-year retention period post-vesting. | ||||
| Anti-hedging | –All employees are subject to an anti-hedging policy, which prohibits employees from entering into any personal<br><br>hedging strategies in respect of HSBC securities. | |||||
| Malus and clawback | –All deferred awards are subject to malus provisions, subject to compliance with local laws.<br><br>–All awards granted are subject to clawback. | |||||
| Recruitment<br><br>remuneration | Buy-out awards | –Buy-out awards may be offered if an individual holds any outstanding unvested awards that are forfeited on<br><br>resignation from the previous employer.<br><br>–The terms of the buy-out awards will not be more generous than the terms attached to the awards forfeited on<br><br>cessation of employment with the previous employer. | ||||
| New hire indicative<br><br>variable pay | –New hire indicative variable pay is awarded in exceptional circumstances, typically involving a critical senior new<br><br>hire, and is limited to an individual’s first year of employment only. The award is subject to a number of factors<br><br>(such as the respective performance of the Group, business / infrastructure area and individual), and the final value<br><br>paid remains at the full discretion of HSBC. | |||||
| Policy for loss<br><br>of office | Severance payments | –Where an individual’s employment is terminated involuntarily for gross misconduct then, subject to compliance<br><br>with local laws, the Group’s policy is not to make any severance payment and all outstanding unvested awards<br><br>are forfeited.<br><br>–For other cases of involuntary termination of employment, the determination of any severance will take into<br><br>consideration the contractual notice period, applicable local laws and circumstances of the case.<br><br>–Severance amounts awarded to MRTs are not considered as variable pay for the purpose of application of the<br><br>deferral and variable pay cap rules under the PRA and FCA remuneration rules. | ||||
| Unvested awards | –Generally, for good leavers, all outstanding unvested awards will normally continue to vest in line with<br><br>applicable vesting dates. Where relevant, any performance conditions attached to the awards, and malus and<br><br>clawback provisions, will remain applicable to those awards. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 261 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Payments on loss of office
The table below sets out the basis on which payments on loss of office may be made. Other than as set out in the table, there are no further
obligations which could give rise to remuneration payments or payments for loss of office.
| Payments on loss of office | ||||||
|---|---|---|---|---|---|---|
| Component of remuneration | Approach taken | |||||
| Fixed pay and benefits | Executive Directors may be entitled to payments in lieu of:<br><br>–notice, which may consist of base salary, FPA, pension entitlements and other contractual benefits, or an amount in lieu<br><br>of; and/or<br><br>–accrued but untaken holiday entitlement.<br><br>Payments may be made in instalments or a lump sum, and may be subject to mitigation, and subject to applicable tax and<br><br>social security deductions. | |||||
| Annual incentive and LTI | In exceptional circumstances, as determined by the Committee, an executive Director may be eligible for the grant of annual<br><br>and/or long-term incentives under the HSBC Share Plan based on the time worked in the performance year and on the<br><br>individual’s contribution. | |||||
| Unvested awards | All unvested awards will be forfeited when an executive Director ceases employment voluntarily and is not deemed a good<br><br>leaver. An executive Director may be considered a good leaver, under the HSBC Share Plan, if their employment ceases in<br><br>specified circumstances which includes:<br><br>–ill health, injury or disability, as established to the satisfaction of the Committee;<br><br>–retirement with the agreement and approval of the Committee;<br><br>–the employee’s employer ceasing to be a member of the Group;<br><br>–redundancy with the agreement and approval of the Committee; or<br><br>–any other reason at the discretion of the Committee.<br><br>If an executive Director is considered a good leaver, unvested awards will normally continue to vest in line with the applicable<br><br>vesting dates, subject to performance conditions, the share plan rules, and malus and clawback provisions.<br><br>In the event of death, unvested awards will vest and will be released to the executive Director’s estate as soon as<br><br>practicable.<br><br>In respect of outstanding unvested awards, the Committee may determine that good leaver status is contingent upon the<br><br>Committee being satisfied that the executive has no current or future intention at the date of leaving HSBC of being<br><br>employed by any competitor financial services firm. The Committee determines the list of competitor firms from time to<br><br>time, and the length of time for which this restriction applies. If the Committee becomes aware of any evidence to the<br><br>contrary before vesting, the award will lapse. | |||||
| Post-departure benefits | Executive Directors can be provided certain benefits for up to a maximum of seven years from date of departure for those<br><br>who depart under good leaver provisions under the HSBC Share Plan, in accordance with the terms of the policy. Benefits<br><br>may include, but are not limited to, medical coverage, tax return preparation assistance and legal expenses.<br><br>The Committee also has the discretion to extend the post-departure benefit of medical coverage to former executive<br><br>Directors, up to a maximum of seven years from their date of departure. | |||||
| Other | Where an executive Director has been relocated as part of their employment, the Committee retains the discretion to pay the<br><br>repatriation costs. This may include, but is not restricted to, airfare, accommodation, shipment, storage, utilities, and any tax<br><br>and social security that may be due in respect of such benefits.<br><br>Except in the case of gross misconduct or resignation, an executive Director may also receive retirement gifts. | |||||
| Legal claims | The Committee retains the discretion to make payments (including professional and outplacement fees) to mitigate against<br><br>legal claims, subject to any such payments being made in accordance with the terms of an appropriate settlement agreement<br><br>waiving all claims against the Group. | |||||
| Change of control | In the event of a change of control, outstanding awards will be treated in line with the provisions set out in the respective<br><br>plan rules. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 262 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Committee governance
The Group Chairman, Chair of the Group Risk Committee, Group CEO,
Group Chief Risk and Compliance Officer, Group Chief People &
Governance Officer, Group Chief Legal Officer, and Group Head of
Performance and Reward, routinely and selectively attend Committee
meetings.
No Director is present at Committee meetings when their own
remuneration is discussed.
The Chair and members of the Committee hold private meetings with
the Committee's independent adviser, following scheduled Committee
meetings. Outside of formal meetings, the Chair meets regularly with
key stakeholders, including senior management, investors, proxy
advisers and regulators to help inform the broader decision making of
the Committee.
The Chair also meets regularly with the Committee Secretary to ensure
the Committee fulfils its governance responsibilities, to consider input
from stakeholders when finalising meeting agendas and track progress
on actions and priorities.
The Chair hosted the biannual Remuneration Committee Chairs Forum
in October and November 2025, bringing together Committee
members and Chairs of the principal subsidiary remuneration
committees. The forum provided the opportunity for members to
discuss key priorities and challenges in relation to people, performance
and pay matters across the Group.
The Committee received certifications from the principal subsidiary
remuneration committees, confirming that the relevant committee had
discharged its obligations overseeing the implementation and operation
of HSBC’s Group Remuneration Framework and escalated all relevant
concerns to the Committee. A regular report is presented to the
Committee highlighting significant remuneration matters from the
Group’s subsidiaries.
A copy of the Committee’s terms of reference can be found on our
website at www.hsbc.com/who-we-are/our-people/board-of-directors/
board-committees
Advisers
The Committee received input and advice from different advisers on
specific topics during 2025. Deloitte was retained as independent
adviser to the Committee in 2025 having been reappointed in 2022
following a formal tender process. Deloitte also provided tax
compliance and other advisory services to the Group in 2025. Deloitte
is a founding member of the Remuneration Consultants Group and
voluntarily operates under the code of conduct in relation to executive
remuneration consulting in the UK.
The Committee also received advice from Willis Towers Watson and
AON on market data and remuneration trends. Willis Towers Watson
also provides actuarial support to Global Finance, benchmarking data for
the wider workforce and services related to benefits administration for
our Group employees.
The Committee was satisfied the advice provided by Deloitte, Willis
Towers Watson and AON was objective and independent in 2025.
For 2025, total fees of £161,500, £36,437 and £17,080 were incurred in
relation to remuneration advice provided by Deloitte, Willis Towers
Watson and AON, respectively. This was based on pre-agreed fees and
a time-and-materials basis.
Following a full tender process in 2025, Willis Towers Watson will
become the Committee's lead independent adviser from March 2026.
Committee performance review
In 2025, the annual review of the performance of the Committee
concluded that the Committee continued to operate effectively.
The outcomes of the performance review have been reported to the
Board, and the Committee will progress and track those areas identified
for enhancement through 2026.
ÑFurther details of the annual review of the Board and committee
performance can be found on page 231.
Share plan matters considered by the
Committee
The Committee and its delegates considered various matters relating to
the HSBC share plans during the financial year.
The HSBC International Employee Share Purchase Plan (‘ShareMatch’)
and The HSBC Holdings Savings-Related Share Option Plan (UK)
(‘Sharesave’) were offered in 2025. The HSBC variable pay deferral
approach for the 2025 performance year was approved, for which
certain updates were made following changes to legal and regulatory
requirements. Other awards with performance conditions were
approved for certain strategically important projects during 2025.
Immediate share awards were granted to executive Directors and
senior managers in compliance with our regulatory requirements to
deliver a portion of non-deferred variable pay in instruments. These
awards vest immediately, and are subject to a retention period and
clawback provisions.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 263 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Additional remuneration disclosures
This section provides further information in relation to executive Director and wider workforce remuneration as required by the UK, Hong Kong, and
Pillar 3 remuneration disclosure requirements. For the purpose of the Pillar 3 remuneration disclosures, executive Directors and non-executive
Directors are considered to be members of the management body. Members of the Group Operating Committee other than the executive
Directors are considered as senior management.
Link between risk, performance and reward
Our remuneration practices promote sound and effective risk management to support our business objectives and the delivery of our strategy. We
set out below the key features of our framework, which enable us to align between risk, performance and reward, subject to compliance with local
laws and regulations:
| Framework<br><br>elements | Application | |||||
|---|---|---|---|---|---|---|
| Variable pay | –Group variable pay is expected to reflect Group performance, based on a range of financial and non-financial factors. We use a countercyclical<br><br>funding methodology with a structured payout range for different levels of profitability and guided by a floor and a ceiling. The payout ratio<br><br>generally reduces as performance increases to avoid pro-cyclicality. The floor recognises that even in challenging times, remaining competitive<br><br>is important. The ceiling recognises that at higher levels of performance it is not always necessary to continue to increase variable pay, thereby<br><br>limiting the risk of inappropriate behaviour to drive financial performance.<br><br>–The main quantitative and qualitative performance and risk metrics used for assessment of performance include:<br><br>–Group and business unit financial performance, considering contextual factors driving performance, and capital requirements;<br><br>–current and future risks, taking into consideration performance against the risk appetite, financial resourcing plan and global conduct<br><br>outcomes; and<br><br>–fines, penalties and provisions for customer redress, which are automatically included in the Committee’s definition of profit for<br><br>determining the pool.<br><br>–In the event that the Group was unable to distribute dividends to shareholders for reasons such as capital adequacy, then the Group may<br><br>determine that as a year of weak performance. In such a year, the Group may withhold some, or all, variable pay for employees including<br><br>unvested share awards, using the metrics outlined above as a basis for that determination.<br><br>–The Committee also applies its discretion to adjust the pool either upwards or downwards based on a recommendation by the GRC which<br><br>takes into account a full assessment of risk performance. | |||||
| Individual<br><br>performance | –Assessment of individual performance is made with reference to clear and relevant financial and non-financial goals. Group Operating<br><br>Committee members have a goal on effective management of enterprise risk, regulatory compliance and financial crime risk responsibilities as<br><br>well as financial risks. The goal is independently assessed by Risk and Compliance and a risk and compliance rating and assessment is shared<br><br>with the individual and the Group CEO to consider as part of the year-end review. Direct reports of Group Operating Committee members and<br><br>other senior executives are assessed on risk, regulatory and financial crime goals identified for their roles. All other employees have a<br><br>mandatory risk and compliance goal.<br><br>–Performance assessment for all employees includes a behaviour gateway (if permissible under local laws), and a full assessment of<br><br>achievement against goals and demonstration of HSBC values aligned behaviours. This ensures that performance is assessed not only on what<br><br>is achieved but also on how it is achieved. | |||||
| Control<br><br>function staff | –Group policy is for control staff to report into their respective infrastructure area. Remuneration decisions for senior infrastructure roles are<br><br>made by the global infrastructure head.<br><br>–The performance and reward of individuals in control functions, including risk and compliance colleagues, are assessed according to a balanced<br><br>scorecard of goals specific to the functional role they undertake.<br><br>–Their remuneration is determined independent of the performance of the business areas they support.<br><br>–Remuneration is carefully benchmarked with the market and internally to ensure it is set at an appropriate level.<br><br>–The Committee is responsible for approving remuneration for the Group Chief Risk and Compliance Officer and Group Head of Internal Audit. | |||||
| Variable pay<br><br>adjustments<br><br>and conduct<br><br>recognition | –Variable pay awards may be adjusted upwards or downwards to reflect positive or negative conduct in adherence with the Code of Conduct.<br><br>Downward adjustments can be made in circumstances including:<br><br>–detrimental conduct, including conduct that brings HSBC into disrepute;<br><br>–involvement in events resulting in significant operational losses, or events that have caused or have the potential to cause significant harm<br><br>to HSBC; and<br><br>–non-compliance with the values-aligned behaviours and other mandatory requirements or policies.<br><br>–Rewarding positive conduct can be through use of our global recognition platform, At Our Best, or positive adjustments to variable pay awards. | |||||
| Malus | –Malus can be applied to unvested deferred awards (up to 100% of awards) granted in prior years in circumstances including:<br><br>–detrimental conduct, including conduct that brings the business into disrepute;<br><br>–past performance being materially worse than originally reported;<br><br>–restatement, correction or amendment of any financial statements; and<br><br>–improper or inadequate risk management. | |||||
| Clawback | –Clawback can be applied to vested or paid awards granted to MRTs for a period of seven years, extended to 10 years for employees in PRA<br><br>and FCA designated senior management functions in the event of ongoing internal/regulatory investigation at the end of the seven-year period.<br><br>Clawback can also be applied to non-MRTs. Clawback may be applied in circumstances including:<br><br>–participation in, or responsibility for, conduct that results in significant losses;<br><br>–failing to meet appropriate standards and propriety;<br><br>–reasonable evidence of misconduct or material error that would justify, or would have justified, summary termination of a contract of<br><br>employment; and<br><br>–a material failure of risk management suffered by HSBC or a business unit in the context of Group risk-management standards, policies and<br><br>procedures.<br><br>–Clawback can also be applied to vested or paid awards granted to designated Executive Officers as defined by the US Securities and Exchange<br><br>Commission (’SEC’) for a period of three years in the event of an accounting restatement due to material non-compliance with any financial<br><br>reporting requirement under the US securities laws. | |||||
| Sales<br><br>incentives | –We generally do not operate commission-based sales plans, unless aligned with local market practice and with appropriate safeguards to avoid<br><br>incentivising inappropriate sales behaviours. | |||||
| Identification<br><br>of MRTs | –We identify individuals as MRTs based on qualitative and quantitative criteria set out in the PRA’s and FCA’s remuneration rules. Our<br><br>identification process is underpinned by the following key principles:<br><br>–MRTs are identified at Group, HSBC Bank plc (consolidated) and HSBC UK level.<br><br>–MRTs are also identified at other solo regulated entity level as required by the regulations.<br><br>–When identifying an MRT, HSBC considers a colleague’s role within its matrix management structure. The business and infrastructure area<br><br>that an individual works within takes precedence, followed by the geographical location in which they work.<br><br>–We also identify additional MRTs based on our own internal criteria, which include individuals in certain roles and grades who otherwise would<br><br>not be identified as MRTs under the remuneration rules. | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 264 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Summary of shareholder return and Group CEO remuneration
The graph shows HSBC TSR performance (based on the daily spot
Return Index in sterling) against the FTSE 100 Total Return Index for
the 10-year period ended 31 December 2025.
The FTSE 100 Total Return Index has been chosen as a recognised
broad equity market index of which HSBC Holdings is a member.
The single total figure of remuneration for the Group CEO over the past
10 years, together with the outcomes of the respective
annual incentive and LTI awards, are presented in the following table.
| HSBC TSR and FTSE 100 Total Return Index |
|---|
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group CEO | Stuart<br><br>Gulliver | Stuart<br><br>Gulliver | Stuart<br><br>Gulliver | John<br><br>Flint | John<br><br>Flint | Sir Noel<br><br>Quinn | Sir Noel<br><br>Quinn | Sir Noel<br><br>Quinn | Sir Noel<br><br>Quinn | Sir Noel<br><br>Quinn | Sir Noel<br><br>Quinn1,2 | Georges<br><br>Elhedery2,3 | Georges<br><br>Elhedery |
| Single total figure £000 | 5,675 | 6,086 | 2,387 | 4,582 | 2,922 | 1,977 | 4,154 | 4,895 | 5,562 | 10,396 | 10,091 | 1,867 | 6,623 |
| Annual incentive (% of<br><br>maximum) | 64% | 80% | 76% | 76% | 61% | 66% | 32% | 57% | 75% | 70% | 78% | 78% | 80% |
| Long-term incentive (%<br><br>of maximum) | —% | —% | 100% | —% | —% | —% | —% | —% | —% | 75% | 75% | —% | 45.19% |
1Sir Noel Quinn’s 2024 single total figure reflects his total fixed pay, benefits and annual incentive up to and including 1 September 2024 when he stepped down
as Group CEO, plus his vesting 2022-2024 LTI. This single total figure has been restated to reflect the value of the 2022-2024 LTI on 11 March 2025, when the
first tranche of the award vested.
2The 2024 annual incentive figures for Sir Noel Quinn and Georges Elhedery reflect their assessment against the Group CEO scorecard for their periods as Group
CEO.
3Georges Elhedery’s 2024 single total figure reflects his total fixed pay, benefits and annual incentive in respect of his period as Group CEO (for the period 2
September 2024 to 31 December 2024). Georges Elhedery’s vesting 2022-2024 LTI was granted before his appointment as Group CEO and has been excluded.
Voting results from Annual General Meeting
| 2025 Annual General Meeting voting results | ||||||
|---|---|---|---|---|---|---|
| For | Against | Withheld | ||||
| Directors' Remuneration Report (votes cast) | 98.34% | 1.66% | –– | |||
| 8,807,418,532 | 148,870,299 | 11,202,665 | ||||
| Directors' Remuneration Policy (votes cast) | 96.10% | 3.90% | –– | |||
| 8,609,641,462 | 349,032,069 | 8,780,440 | ||||
| Amend rules of the HSBC Share Plan 2011 (votes cast) | 97.33% | 2.67% | –– | |||
| 8,716,852,849 | 239,261,675 | 10,286,595 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 265 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Pay ratio
The following table shows the ratio between the total pay of the Group
CEO and the lower quartile, median and upper quartile pay of our UK
employees.
The median ratio is lower year on year, reflecting the lower value of the
2023-25 LTI for Georges Elhedery, which was granted for his prior role
as Co-CEO, GBM, compared with the value of the 2022-24 LTI for Sir
Noel Quinn, which was received in his capacity as Group CEO.
| Total pay ratio | |||||||
|---|---|---|---|---|---|---|---|
| Method | Lower quartile | Median | Upper quartile | ||||
| 2025 | A | 167:1 | 96:1 | 51:1 | |||
| 20241 | A | 307:1 | 179:1 | 94:1 | |||
| 2023 | A | 285:1 | 165:1 | 86:1 | |||
| 2022 | A | 167:1 | 95:1 | 49:1 | |||
| 2021 | A | 154:1 | 90:1 | 46:1 | |||
| 2020 | A | 139:1 | 85:1 | 43:1 | |||
| 2019 | A | 169:1 | 105:1 | 52:1 | |||
| Total pay and benefits amounts used to calculate the ratio | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| (£) | Method | Lower quartile | Median | Upper quartile | |||
| Total pay<br><br>and<br><br>benefits | Total<br><br>salary | Total pay<br><br>and<br><br>benefits | Total<br><br>salary | Total pay<br><br>and<br><br>benefits | Total<br><br>salary | ||
| 2025 | A | 39,601 | 30,750 | 69,207 | 57,500 | 130,262 | 95,078 |
| 2024 | A | 38,995 | 31,962 | 66,672 | 53,945 | 127,050 | 91,664 |
| 2023 | A | 36,528 | 27,680 | 63,000 | 45,536 | 121,223 | 89,506 |
| 2022 | A | 33,284 | 24,615 | 58,257 | 41,000 | 113,778 | 95,000 |
| 2021 | A | 31,727 | 27,666 | 54,678 | 41,500 | 106,951 | 84,000 |
| 2020 | A | 29,833 | 23,264 | 48,703 | 36,972 | 96,386 | 75,000 |
| 2019 | A | 28,920 | 24,235 | 46,593 | 41,905 | 93,365 | 72,840 |
1The 2024 pay ratios have been restated to reflect the revised 2024 LTI value
for Sir Noel Quinn.
The total pay and benefits for the median employee for 2025 was
69,207, a 3.8% increase compared with 2024.
Our UK workforce comprises a diverse mix of colleagues across
different businesses and levels of seniority, from junior cashiers in our
retail branches to senior executives managing our global business units.
We aim to deliver market-competitive pay for each role, taking into
consideration the skills and experience required for the business.
Pay structure varies across roles in order to deliver an appropriate mix
of fixed and variable pay. Junior colleagues have a greater portion of
their pay delivered in a fixed component, which does not vary with
performance and allows them to predictably meet their day-to-day
needs. Our senior management, including executive Directors,
generally have a higher portion of their total remuneration opportunity
structured as variable pay and linked to the performance of the Group,
given their role and ability to influence the strategy and performance of
the Group. Executive Directors also have a higher proportion of their
variable pay delivered in shares, which vest over a period of seven
years with a post-vesting retention period of one year. During this
deferral and retention period, the awards are linked to the share price
so the value of award realised by them after the vesting and retention
period will be aligned to the performance of the Group.
We are satisfied that the median pay ratio is consistent with the pay
and progression policies for our UK workforce, taking into account the
diverse mix of our UK employees, the pay mix applicable to each role
and our objective of delivering market competitive pay for each role
subject to Group, business and individual performance.
Our ratios have been calculated using the option ‘A’ methodology
prescribed under the UK Companies (Miscellaneous Reporting)
Regulations 2018. Under this option, the ratios are calculated using full-
time equivalent pay and benefits of all employees providing services in
the UK at 31 December 2025. We believe this approach provides
accurate information and representation of the ratios. The ratio has
been computed taking into account the pay and benefits of over 33,000
UK employees, other than the Group CEOs. We calculated our pay
quartiles and benefits information for our UK employees using:
–full-time equivalent annualised fixed pay, which includes base salary
and allowances, at 31 December 2025;
–variable pay awards for 2025;
–return on deferred cash awards granted in prior years. The deferred
cash portion of the annual incentive granted in prior years includes a
right to receive notional returns for the period between the grant
date and vesting date, which is determined by reference to a rate of
return specified at the time of grant. A payment of notional return is
made annually and the amount is disclosed on a paid basis in the
year in which the payment is made;
–gains realised from exercising awards from taxable employee share
plans; and
–full-time equivalent value of taxable benefits and pension
contributions.
Full-time equivalent fixed pay and benefits for each employee have
been calculated by using each employee’s data as at 31 December
- Where an employee works part-time, fixed pay and benefits are
grossed up, where appropriate, to full-time equivalent. One-off benefits
have not been included in calculating the ratios as these are not
permanent in nature and in some cases, depending on individual
circumstances, may not truly reflect a benefit to the employee.
The reported ratios may not be comparable to our international and
listed peers on the FTSE 100, given differences in business mix and
size, employment and compensation practices, methodologies for
computing pay ratios and assumptions used by companies.
Relative importance of spend on pay
The following chart shows the change in:
–total employee pay between 2024 and 2025; and
–dividends and share buy-backs in respect of 2024 and 2025.
In 2025, total spend on pay was up 6% compared with 2024. The
return to shareholders by way of dividends and share buy-backs fell by
22% compared with 2024. In 2024, dividends included the special
dividend of $0.21 per share that was paid following the completion of
the sale of our banking business in Canada. In 2025, we provided $8bn
of capital return to shareholders through share buy-backs, which
included the up to $2bn buy-back announced at our 2024 annual results
in February 2025. Following our announcement to privatise Hang Seng
Bank in October 2025, we announced our intention not to initiate share
buy-backs temporarily. A decision to recommence buy-backs will be
subject to our normal buy-back considerations and process on a
quarterly basis. Dividends include an approximation of the amount
payable in April 2026 in relation to the fourth interim dividend of $0.45
per ordinary share.
Relative importance of spend on pay
$12.9bn
$8.0bn
| Distributions<br><br>to ordinary<br><br>shareholders | 2025 | q 22% |
|---|---|---|
| 2024 | ||
| Employee<br><br>pay | 2025 | ▲ 6% |
| 2024 |
$11.0bn
$15.9bn
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 266 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Comparison of Directors’ and employees’ pay
The following table compares the changes in each Director’s base salary, taxable benefits and annual incentive between 2021 and 2025 with those
for UK-based employees of HSBC Group Management Services Limited, the employing entity of the executive Directors. The underlying single
figures of remuneration used to calculate these figures are on page 253 for executive Directors, and page 270 for non-executive Directors.
| Annual percentage change in remuneration | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Base salary/fees | Benefits | Annual incentive | |||||||||||||
| Director/employees | 2025 | 2024 | 2023 | 2022 | 2021 | 2025 | 2024 | 2023 | 2022 | 2021 | 2025 | 2024 | 2023 | 2022 | 2021 |
| Executive Directors | |||||||||||||||
| Georges Elhedery | 49.5 | 26.7 | — | — | — | 56.4 | 866.0 | — | — | — | 115.0 | 30.3 | — | — | — |
| Pam Kaur | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Non-executive<br><br>Directors | |||||||||||||||
| Geraldine Buckingham | 4.8 | 10.7 | 57.4 | — | — | 366.7 | (40.0) | — | — | — | — | — | — | — | — |
| Rachel Duan | 5.1 | 4.5 | 8.4 | 235.8 | — | 333.3 | — | (100.0) | — | — | — | — | — | — | — |
| Dame Carolyn Fairbairn | 15.4 | 4.7 | 5.3 | 231.1 | — | 200.0 | — | (100.0) | — | — | — | — | — | — | — |
| James Forese | 2.0 | 5.5 | 10.2 | 20.5 | 257.5 | 750.0 | 300.0 | — | — | — | — | — | — | — | — |
| Ann Godbehere | 89.5 | 472.1 | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Steven Guggenheimer | 3.5 | (1.9) | 0.8 | 4.8 | 86.6 | 450.0 | 300.0 | (90.0) | — | — | — | — | — | — | — |
| José Antonio Meade<br><br>Kuribreña | 5.9 | 3.7 | 0.8 | 8.5 | 10.4 | 628.6 | 75.0 | (71.4) | — | (100.0) | — | — | — | — | — |
| Kalpana Morparia | 8.1 | 45.9 | — | — | — | 2,000.0 | — | — | — | — | — | — | — | — | — |
| Eileen Murray | 16.6 | 14.1 | 10.7 | (1.5) | 121.7 | — | (100.0) | — | — | — | — | — | — | — | — |
| Brendan Nelson | 138.0 | 306.2 | — | — | — | 110.5 | 216.7 | — | — | — | — | — | — | — | — |
| Swee Lian Teo | 16.4 | 402.0 | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Sir Mark Tucker | (25.0) | — | — | — | — | (57.2) | 184.3 | (54.9) | 242.4 | (36.5) | — | — | — | — | — |
| Employee group1 | 3.2 | 3.3 | 5.0 | 3.1 | 1.0 | 5.0 | 4.1 | 5.7 | 7.0 | 1.3 | 7.2 | 2.4 | 11.7 | 3.7 | 25.2 |
1Employee group consists of individuals employed by HSBC Group Management Services Ltd, the employing entity of the executive Directors. No individuals are
employed directly by HSBC Holdings.
Scheme interests awarded during 2025
(Audited)
The table below sets out scheme interests granted to executive Directors during 2025 in respect of the 2024 performance year, as disclosed in
the 2024 Directors’ remuneration report. No non-executive Directors received scheme interests during the financial year. Details of immediate
shares are disclosed in compliance with Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
| Scheme awards in 2025 | |||||||
|---|---|---|---|---|---|---|---|
| (Audited) | |||||||
| Type of interest<br><br>awarded | Basis on which<br><br>award made | Date of award | Face value<br><br>awarded<br><br>£000 | Percentage<br><br>receivable for<br><br>minimum<br><br>performance | Number of<br><br>shares<br><br>awarded | End of<br><br>performance<br><br>period | |
| Georges Elhedery | LTI deferred shares1 | % of base salary | 7 May 2025 | 12,407 | 25 | 1,367,880 | 31 December 2027 |
| Immediate shares2 | % of base salary | 4 March 2025 | 838 | N/A | 92,447 | 31 December 2024 | |
| Pam Kaur | LTI deferred shares1 | % of base salary | 7 May 2025 | 7,237 | 25 | 797,930 | 31 December 2027 |
| Immediate shares2 | % of base salary | 4 March 2025 | 1,687 | N/A | 186,052 | 31 December 2024 |
1In accordance with the remuneration policy approved at the 2025 AGM, the LTI award was determined at 600% of base salary for Pam Kaur and 600% of base
salary for Georges Elhedery. The number of shares was determined by taking the average closing price of the week commencing 24 February 2025 (£9.070),
being the same price used for other awards granted in respect of the 2024 performance year, and discounting based on HSBC’s expected dividend yield of 6.5%
per annum for the vesting period (£6.580). The fair value of the awards was £3.185 based on IFRS 2 accounting standards. LTI awards are conditional share
awards subject to a three-year forward-looking performance period and vest in five equal annual instalments, between the third and seventh anniversary of the
award date, subject to performance achieved. Awards are subject to clawback for up to 10 years from award date and are not eligible for dividend equivalents.
2Immediate share awards are granted based on previous years’ performance as part of the annual incentive and are not subject to forward-looking performance
conditions. On vesting, a one-year retention period applies. The face values of the awards was computed using the average closing price of the week
commencing 24 February 2025, £9.070. The fair value of the awards was £9.163 based on IFRS 2 accounting standards. Awards are subject to clawback for up
to 10 years from the award.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 267 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report | ||||||
| Performance conditions for the 2025–2027 LTI awards<br><br>(Audited) | ||||||
| --- | --- | --- | --- | --- | ||
| Measures (weighting)1 | Minimum<br><br>(25% payout) | Target<br><br>(50% payout) | Maximum<br><br>(100% payout) | |||
| RoTE (excluding notable items) with CET1 capital ratio<br><br>underpin2 (40%) | 14.0% | 16.0% | 18.0% | |||
| Environment and<br><br>sustainability3 (20%) | Carbon reduction<br><br>(own emissions) (5%) | 71.0% | 73.0% | 78.0% | ||
| Sustainable finance and<br><br>investment (15%) | $648.0bn | $720.0bn | $792.0bn | |||
| Relative TSR4 (40%) | At median of the<br><br>peer group | Straight-line vesting between<br><br>minimum and maximum | At upper quartile of<br><br>peer group | |||
| Subject to risk and compliance modifier<br><br>The Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance<br><br>factors during the performance period. |
1Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table.
2To be assessed based on RoTE at the end of the performance period, subject to the CET1 capital ratio underpin.
3Carbon reduction will be measured based on percentage reduction in total energy and travel emissions achieved by 31 December 2027 using 2019 as the
baseline. The sustainable finance and investment measure will assess the cumulative amount provided and facilitated over the period ending 31 December 2027.
4The peer group for the 2025–2027 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings,
J.P. Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.
Other scheme interests held during 2025
The table below details scheme interests held by executive Directors during 2025, in respect of prior performance years. Vesting of deferred share
awards is normally subject to the Director remaining an employee on the vesting date. The awards may vest at an earlier date in some
circumstances. Under the Securities and Futures Ordinance of Hong Kong, interests in conditional share awards are categorised as the interests of
the beneficial owner.
| Other scheme interests in 2025 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Audited) | |||||||||||||
| HSBC Holdings ordinary shares | |||||||||||||
| Type of<br><br>interest held | Dates of<br><br>award | Award<br><br>price<br><br>(£)1 | Usually vesting | Vested<br><br>Tranche | Tranche<br><br>vested on | Market<br><br>price at<br><br>vest (£) | Closing<br><br>price<br><br>before<br><br>vest date<br><br>(£) | At<br><br>1 Jan 25 | Vested<br><br>in<br><br>period | Lapsed<br><br>in<br><br>period | Cancelled<br><br>in<br><br>period | At<br><br>31 Dec 25 | |
| from | to | ||||||||||||
| Georges Elhedery | |||||||||||||
| LTI<br><br>Deferred<br><br>shares | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | 1 | 11 Mar 252 | 8.4415 | 8.5480 | 223,989 | 33,597 | 55,998 | — | 134,394 |
| 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | — | — | — | — | 251,474 | — | — | — | 251,474 | |
| 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | — | — | — | — | 569,177 | — | — | — | 569,177 | |
| Deferred<br><br>shares3 | 24 Feb 20 | 5.622 | 1 Mar 23 | 31 Mar 27 | 3 | 10 Mar 25 | 8.6138 | 8.7640 | 88,597 | 29,532 | — | — | 59,065 |
| 1 Mar 21 | 4.262 | 1 Mar 24 | 31 Mar 28 | 2 | 10 Mar 25 | 8.6138 | 8.7640 | 244,419 | 61,104 | — | — | 183,315 | |
| 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | 1 | 11 Mar 25 | 8.4415 | 8.5480 | 273,163 | 54,632 | — | — | 218,531 | |
| Pam Kaur | |||||||||||||
| LTI<br><br>Deferred<br><br>shares | 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | 1 | 11 Mar 252 | 8.4415 | 8.5480 | 168,077 | 25,211 | 42,020 | — | 100,846 |
| 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | — | — | — | — | 146,393 | — | — | — | 146,393 | |
| 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | — | — | — | — | 185,889 | — | — | — | 185,889 | |
| Deferred<br><br>shares3 | 26 Feb 18 | 7.234 | 1 Mar 21 | 31 Mar 25 | 5 | 10 Mar 25 | 8.6138 | 8.7640 | 15,633 | 15,633 | — | — | — |
| 25 Feb 19 | 6.235 | 1 Mar 22 | 31 Mar 26 | 4 | 10 Mar 25 | 8.6138 | 8.7640 | 37,310 | 18,655 | — | — | 18,655 | |
| 24 Feb 20 | 5.622 | 1 Mar 23 | 31 Mar 27 | 3 | 10 Mar 25 | 8.6138 | 8.7640 | 58,909 | 19,635 | — | — | 39,274 | |
| 1 Mar 21 | 4.262 | 1 Mar 24 | 31 Mar 28 | 2 | 10 Mar 25 | 8.6138 | 8.7640 | 169,555 | 42,388 | — | — | 127,167 | |
| 28 Feb 22 | 5.380 | 1 Mar 25 | 31 Mar 29 | 1 | 11 Mar 25 | 8.4415 | 8.5480 | 210,542 | 42,108 | — | — | 168,434 | |
| 27 Feb 23 | 6.357 | 1 Mar 26 | 31 Mar 30 | — | — | — | — | 65,843 | — | — | — | 65,843 | |
| 26 Feb 24 | 5.972 | 1 Mar 27 | 31 Mar 31 | — | — | — | — | 100,798 | — | — | — | 100,798 |
1The award price is the closing price on the day before the grant date for awards made in 2024 and prior years. In all cases the purchase price is nil.
2The performance conditions were assessed and confirmed at 75%. The remaining 25% of the award was forfeited. Shares equivalent in number to those that
vest under the award (net of tax liabilities) must be retained for one year from the vesting date. The award vests in five equal tranches.
3Shares equivalent in number to those that vest under the award (net of tax liabilities) must be retained for one year from vesting. The awards vest in five equal
tranches.
No Directors held any short position (as defined in the Securities and
Futures Ordinance of Hong Kong) in the shares or debentures of HSBC
Holdings and its associated corporations. Save as stated in the tables
above, none of the Directors had an interest in any shares or
debentures of HSBC Holdings or any associates at the beginning or at
the end of the period, and none of the Directors or members of their
immediate families were awarded or exercised any right to subscribe
for any shares or debentures in any HSBC corporation during the
period.
There have been no changes in the shares or debentures of the
Directors from 31 December 2025 to the date of this report.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 268 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Executive Directors’ interests in shares
(Audited)
The shareholdings of executive Directors in 2025, including the
shareholdings of their connected persons, are shown in the table below
at 31 December 2025, alongside their shareholding requirement. There
have been no changes in the shareholdings of the executive Directors
from 31 December 2025 to the date of this report.
Executive Directors have five years from their appointment to build up
the required level of shareholding. In line with investor guidance,
unvested shares that are not subject to forward-looking performance
conditions (on a net of tax basis) can count towards their shareholding
requirement.
The Committee reviews compliance with the shareholding
requirement, taking into account shareholder expectations and
guidelines. The Committee also has full discretion in determining any
penalties for non-compliance.
The weighted average holding period of an LTI award within HSBC is
six years, in excess of the five-year holding period typically
implemented by FTSE-listed companies.
HSBC operates a policy under which individuals are not permitted to
enter into any personal hedging strategies in relation to shares subject
to a vesting and/or retention period.
| Shares | ||||||
|---|---|---|---|---|---|---|
| (Audited) | ||||||
| Shareholding<br><br>guidelines<br><br>(% of salary) | Shareholding at<br><br>31 Dec 20252<br><br>(% of salary) | At 31 Dec 2025 | ||||
| Scheme interests | ||||||
| Share interests<br><br>(number<br><br>of shares) | Share options3 | Shares awarded subject to deferral1 | ||||
| without<br><br>performance<br><br>conditions | with<br><br>performance<br><br>conditions4 | |||||
| Executive Directors | ||||||
| Georges Elhedery5 | 600% | 792% | 1,109,810 | — | 595,305 | 2,188,531 |
| Pam Kaur5 | 600% | 1,207% | 986,625 | — | 621,017 | 1,130,212 |
1The gross number of shares is disclosed. A portion will be sold at vesting to cover any income tax and social security that falls due at the time of vesting.
2The value of the shareholding is calculated using an average of the daily closing share prices in the three months to 31 December 2025, £10.708, and does not
include any unvested interests.
3At 31 December 2025, Georges Elhedery and Pam Kaur did not hold any options under the HSBC Holdings Savings-Related Share Option Plan (UK).
4LTI awards are subject to performance measures as set out in the relevant Annual Report and Accounts.
5Executive Directors are expected to meet their shareholding guidelines within five years of the date of their appointment.
Service contracts
The service contracts of executive Directors do not have a fixed term.
The notice periods of executive Directors are set at the discretion of
the Committee, taking into account market practice, governance
considerations, and the skills and experience of the particular candidate
at that time.
Service agreements for each executive Director are available for
inspection at HSBC Holdings’ registered office. Consistent with the
best interests of the Group, the Committee will seek to minimise
termination payments. Directors may be eligible for a payment in
relation to statutory rights.
| Contract date (rolling) | Notice period<br><br>(Director and HSBC) | |
|---|---|---|
| Georges Elhedery | 2 September 2024 | 12 months |
| Pam Kaur | 1 January 2025 | 12 months |
External appointments
During 2025, Georges Elhedery did not receive any fees from external
appointments. Pam Kaur received £38,633 as an independent non-
executive Director for Aberdeen Group plc for the period 1 January
2025 to 8 May 2025.
Total pension entitlements
(Audited)
No employees who served as executive Directors during the year have
a right to amounts under any HSBC final salary pension scheme for
their services as executive Directors or are entitled to additional
benefits in the event of early retirement. There is no retirement age set
for Directors, but the normal retirement age for colleagues is 65.
Payments to past Directors
(Audited)
In line with the terms of his departure disclosed in our Annual Report
and Accounts 2024, Sir Noel Quinn was granted good leaver status. Sir
Noel Quinn is eligible to receive vesting of the 2023–2025 LTI award,
pro-rated for time in employment subject to satisfaction of non-
compete provisions under which he cannot undertake a role with a
defined list of competitor financial services firms for 12 months after
his employment ceases with HSBC. Details of the 2023–2025 LTI
outcome are outlined on page 256.
No other payments in scope of the remuneration disclosure
requirements were made to, or in respect of, former Directors in the
year in excess of the minimum threshold of £50,000 set for this
purpose.
Payments for loss of office
(Audited)
Sir Noel Quinn left the Group on 30 April 2025.
In accordance with the approved Directors' remuneration policy and
contractual terms agreed for the period between 1 January 2025 and
30 April 2025, Noel received payments totalling £1,232,072. This
included a salary of £458,667, a pension allowance of £45,867 and a
fixed pay allowance of £566,658. The fixed pay allowance was awarded
in immediately vested shares, which are subject to a retention period
and released on a pro-rata basis over five years. In accordance with the
approved Directors' remuneration policy, Noel also received cash in lieu
of unused holiday totalling £123,600 on expiry of his notice period, and
taxable and non-taxable benefits with an aggregate value of £37,280.
Noel's full departure terms were disclosed in the Annual Report and
Accounts 2024. No other payments for loss of office were made to
former or current Directors in the year.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 269 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Directors’ emoluments
The details of compensation paid to executive and non-executive Directors for the year ended 31 December 2025 are set out below:
| Emoluments | ||||||
|---|---|---|---|---|---|---|
| Georges Elhedery | Pam Kaur1 | Non-executive Directors2 | ||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Directors' base salary, allowances and benefits in kind | 1,796 | 2,473 | 1,086 | — | ||
| Non-executive Directors' fees and benefits in kind | 6,252 | 5,393 | ||||
| Pension contributions | — | — | — | — | — | — |
| Performance-related pay paid or receivable3 | 12,605 | 10,677 | 7,350 | — | — | — |
| Inducements to join paid or receivable | — | — | — | — | — | — |
| Compensation for loss of office | — | — | — | — | — | — |
| Notional return on deferred cash | 5 | 8 | 11 | — | — | — |
| Total | 14,406 | 13,158 | 8,447 | — | 6,252 | 5,393 |
| Total ($000) | 18,977 | 17,333 | 11,127 | — | 8,236 | 7,104 |
1Pam Kaur was appointed executive Director and Group CFO effective 1 January 2025.
2Fees and benefits in kind for 2025 reflects the population as per the single total figure table for non-executive Directors.
3Includes the value of the deferred and LTI awards at grant.
The aggregate amount of Directors’ emoluments (including both executive Directors and non-executive Directors) for the year ended 31 December
2025 was $38,340,912. The aggregate value of Director retirement benefits for current Directors is nil.
As per our policy, benefits in kind may include, but are not limited to, the provision of medical insurance, income protection insurance, health
assessment, life assurance, club membership, tax assistance, car benefit, travel assistance, provision of company owned-accommodation and
relocation costs (including any tax due, where applicable).
The details of compensation paid to former executive Directors for the year ended 31 December 2025 are set out below:
| Emoluments to former executive Directors | ||||||||
|---|---|---|---|---|---|---|---|---|
| Stuart Gulliver | John Flint | Marc Moses | Sir Noel Quinn | |||||
| £ | $ | £ | $ | £ | $ | £ | $ | |
| Post-employment medical insurance benefits1 | 7,823 | 10,305 | 12,338 | 16,253 | 24,262 | 31,961 | 7,287 | 9,599 |
| Tax return support1 | — | — | — | — | — | — | 1,750 | 2,305 |
1Amounts are converted into US dollars based on the average exchange rates for the year.
The total aggregate value of benefits provided to former executive Directors in 2025 was £53,460 ($70,423). There were payments under
retirement benefit arrangements to four former Directors of £2,484,882.
The provision at 31 December 2025 in respect of unfunded pension obligations to two former Directors amounted to £345,538. This relates to
unfunded unapproved retirement benefits schemes.
Emoluments of senior management and five highest paid employees
The following tables set out the emoluments paid to senior management, comprising executive Directors and members of the Group Operating
Committee, for the year ended 31 December 2025, or for the period of appointment in 2025 as a Director or member of the Group Operating
Committee. The tables also detail the remuneration paid and share awards granted to the five highest paid employees, comprising Georges
Elhedery, Pam Kaur and three other members of the Group Operating Committee for the year ended 31 December 2025.
| Five highest paid employees – share awards (HSBC Share Plan 2011) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dates of<br><br>award | Award<br><br>price<br><br>(£)1 | HSBC Holdings ordinary share awards | ||||||||
| Usually vesting | At<br><br>1 Jan 2025 | Granted in<br><br>period | Vested in<br><br>period2 | Fair value(s) (£) | Lapsed<br><br>in period | Cancelled in<br><br>period | At<br><br>31 Dec 2025 | |||
| from | to | |||||||||
| 2015 to 2024 | — | 1 Mar 25 | 30 Mar 31 | 5,569,957 | — | 960,545 | — | 176,633 | — | 4,432,779 |
| 4 Mar 253 | 9.070 | 4 Mar 25 | 30 Mar 32 | — | 1,262,453 | 603,212 | 3.461 and 9.163 | — | — | 659,241 |
| 7 May 253 | 9.070 | 1 Mar 28 | 30 Mar 32 | — | 2,165,810 | — | 3.185 | — | — | 2,165,810 |
| 5,569,957 | 3,428,263 | 1,563,757 | — | 176,633 | — | 7,257,830 |
1The price for awards made in 2025 is the average closing price of the week commencing 24 February 2025. In all cases the purchase price is nil.
2The weighted average closing price of the shares immediately before the dates on which the awards were vested was £8.965.
3The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair values vary based on the length of the vesting period. These
awards include LTI awards which are subject to satisfaction of performance conditions. LTI awards are subject to a combination of financial and non-financial
metrics that are in this report.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 270 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report | ||||||
| Emoluments | ||||||
| --- | --- | --- | ||||
| £000s | Five highest paid employees | Senior management | ||||
| Basic salaries, allowances and benefits in kind | 11,005 | 25,839 | ||||
| Pension contributions | 124 | 492 | ||||
| Performance-related pay paid or receivable1 | 36,685 | 59,240 | ||||
| Inducements to join paid or receivable | — | — | ||||
| Compensation for loss of office2 | — | 348 | ||||
| Total | 47,814 | 85,919 | ||||
| Total ($000) | 62,987 | 113,184 |
1Includes the value of deferred share awards at grant.
2Excludes expected payments in 2026 in connection with loss of office for senior management in 2025.
| Emoluments by bands | |||
|---|---|---|---|
| Hong Kong dollars | US dollars | Number of highest paid employees | Number of senior management |
| $1,000,001 – $1,500,000 | $128,267 – $192,400 | — | 1 |
| $10,000,001 – $10,500,000 | $1,282,664 – $1,346,797 | — | 1 |
| $13,500,001 – $14,000,000 | $1,731,597 – $1,795,730 | — | 1 |
| $41,000,001 – $41,500,000 | $5,258,923 – $5,323,056 | — | 1 |
| $42,000,001 – $42,500,000 | $5,387,190 – $5,451,323 | — | 1 |
| $45,500,001 – $46,000,000 | $5,836,122 – $5,900,255 | — | 1 |
| $57,000,001 – $57,500,000 | $7,311,186 – $7,375,319 | — | 1 |
| $57,500,001 – $58,000,000 | $7,375,319 – $7,439,452 | — | 1 |
| $60,500,001 – $61,000,000 | $7,760,118 – $7,824,251 | — | 1 |
| $61,000,001 – $61,500,000 | $7,824,251 – $7,888,384 | — | 1 |
| $66,500,001 – $67,000,000 | $8,529,717 – $8,593,850 | 1 | 1 |
| $86,500,001 – $87,000,000 | $11,095,045 – $11,159,178 | 1 | 1 |
| $91,500,001 – $92,000,000 | $11,736,377 – $11,800,510 | 1 | 1 |
| $97,500,001 – $98,000,000 | $12,505,976 – $12,570,109 | 1 | 1 |
| $147,500,001 – $148,000,000 | $18,919,296 – $18,983,429 | 1 | 1 |
Non-executive Directors
(Audited)
The following table shows the total fees and benefits of non-executive Directors for 2025, together with comparative figures for 2024.
| Fees and benefits | ||||||
|---|---|---|---|---|---|---|
| (Audited) | Fees1 | Benefits2 | Total | |||
| (£000) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
| Geraldine Buckingham3 | 283 | 270 | 14 | 3 | 297 | 273 |
| Rachel Duan | 268 | 255 | 13 | 3 | 281 | 258 |
| Dame Carolyn Fairbairn | 337 | 292 | 15 | 5 | 352 | 297 |
| James Forese4 | 817 | 801 | 34 | 4 | 851 | 805 |
| Ann Godbehere5 | 737 | 389 | 44 | — | 781 | 389 |
| Steven Guggenheimer | 268 | 259 | 22 | 4 | 290 | 263 |
| José Antonio Meade Kuribreña | 268 | 253 | 51 | 7 | 319 | 260 |
| Kalpana Morparia | 268 | 248 | 21 | 1 | 289 | 249 |
| Eileen Murray | 386 | 331 | 30 | — | 416 | 331 |
| Brendan Nelson6 | 783 | 329 | 80 | 38 | 863 | 367 |
| Swee Lian Teo | 298 | 256 | 28 | — | 326 | 256 |
| Sir Mark Tucker7 | 1,125 | 1,500 | 62 | 145 | 1,187 | 1,645 |
| Total (£000) | 5,838 | 5,183 | 414 | 210 | 6,252 | 5,393 |
| Total ($000) | 7,691 | 6,828 | 545 | 277 | 8,236 | 7,104 |
1Fees are in line with the Directors' remuneration policy approved by the shareholders at the 2025 AGM.
2Benefits include taxable expenses such as accommodation, travel and subsistence relating to attendance at Board and other meetings at HSBC Holdings'
registered offices.
3Stepped down as a member of the Group Remuneration Committee on 31 January 2025.
4Includes fee of £418,000 (2024: £430,000) in relation to his role as Chair of HSBC North America Holdings, Inc.
5Appointed as a non-executive Director of HSBC Bank plc on 1 January 2025 and received a pro rata annual fee of £105,000 until 24 April 2025. Ann was
appointed as Chair of HSBC Bank plc Board and the Nomination, Remuneration and Governance Committee on 25 April 2025 and received a pro rata annual fee
of £300,000.
6Appointed as a non-executive Director of HSBC UK Bank plc on 9 January 2025 and received an annual fee for this appointment of £135,000 pro rata for the
period 9 January 2025 to 30 September 2025. Following his appointment as Group Chairman on 1 October 2025, Brendan received a single total annual fee of
£1.5m pro rata and no other fees were paid in relation to any of his other Group or HSBC UK Bank plc roles from 1 October 2025.
7Stepped down as Group Chairman on 30 September 2025.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 271 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
Non-executive Directors’ interests in shares
(Audited)
The shareholdings of persons who were non-executive Directors in
2025, including the shareholdings of their connected persons, at
31 December 2025, or date of cessation as a Director if earlier, are set
out below. There have been no changes in the shareholdings of the
non-executive Directors from 31 December 2025 to the date of this
report. Non-executive Directors are expected to meet the shareholding
guidelines of 15,000 shares within five years of the date of their
appointment. All non-executive Directors who had been appointed for
five years or more at 31 December 2025 met the guidelines.
| Shares | ||
|---|---|---|
| Shareholding<br><br>guidelines (number of<br><br>shares) | Share interests<br><br>(number of shares) | |
| Geraldine Buckingham | 15,000 | 15,000 |
| Rachel Duan | 15,000 | 15,000 |
| Dame Carolyn Fairbairn | 15,000 | 15,000 |
| James Forese | 15,000 | 115,000 |
| Ann Godbehere | 15,000 | 15,000 |
| Steven Guggenheimer | 15,000 | 15,000 |
| José Antonio Meade Kuribreña | 15,000 | 15,000 |
| Kalpana Morparia | 15,000 | 15,000 |
| Eileen Murray | 15,000 | 75,000 |
| Brendan Nelson | 15,000 | 15,000 |
| Swee Lian Teo | 15,000 | 15,200 |
| Sir Mark Tucker (retired on 30 September 2025) | 15,000 | 307,352 |
2026 fees for non-executive Directors
The table below sets out the 2026 fees for non-executive Directors. The fees paid to non-executive Directors who are standing for election or re-
election as members of Board committees are set out in the table below (these Board committees’ fees and Board fees are pro-rated for part year
service where relevant).
| 2026 fees | ||
|---|---|---|
| Position | £ | |
| Non-executive Group Chairman1 | 1,500,000 | |
| Non-executive Director (base fee) | 136,500 | |
| Senior Independent Director | 200,000 | |
| Group Audit Committee, Group Risk Committee, Group Remuneration Committee and Group Technology &<br><br>Operations Committee | Chair | 150,000 |
| Member | 50,000 | |
| Nomination & Corporate Governance Committee | Chair | –– |
| Member | 34,650 | |
| Sustainability Working Group | Chair | 60,000 |
| Member | 30,000 | |
| Designated workforce engagement non-executive Director | 50,000 |
1The Group Chairman does not receive a base fee or any other fee in respect of chairing of the Nomination & Corporate Governance Committee.
As signalled in the Annual Reports and Accounts 2024 and the 2025 Notice of AGM, as part of the 2024 review of fees payable to non-executive
Directors, the Board agreed to align the fees for the role of Board committee chair (excluding the Nomination & Corporate Governance Committee)
to £150,000 per annum in two phases: an initial increase to £125,000 per annum effective 1 January 2025, with a further increase with effect from
1 January 2026.
No further changes have been made to the non-executive Director fees for 2026.
Non-executive Director appointment and re-election
Non-executive Directors and the Group Chairman are appointed for
fixed terms not exceeding three years, which may be renewed subject
to their re-election by shareholders at AGMs. Non-executive Directors
and the Group Chairman do not have service contracts, but are bound
by letters of appointment issued for and on behalf of HSBC Holdings,
which are available for inspection at HSBC Holdings’ registered office.
There are no obligations in the non-executive Directors’ or Group
Chairman's letters of appointment that could give rise to remuneration
payments or payments for loss of office.
| 2026 AGM | 2027 AGM | 2028 AGM |
|---|---|---|
| José Antonio Meade Kuribreña | James Forese | Rachel Duan |
| Geraldine Buckingham | Steven Guggenheimer | Dame Carolyn Fairbairn |
| Kalpana Morparia | Eileen Murray | |
| Wei Sun Christianson1 | Brendan Nelson | |
| Swee Lian Teo |
1Wei Sun Christianson was appointed following the 2025 AGM and therefore her initial three-year appointment terms are subject to approval of her election by
shareholders at the 2026 AGM. Her initial three-year term of appointment will end at the conclusion of the 2029 AGM, subject to annual re-election by
shareholders at the relevant AGMs.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 272 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Directors' remuneration report |
MRT remuneration disclosures
The following tables set out the remuneration disclosures for
individuals identified as MRTs for HSBC Holdings.
Remuneration information for individuals who are only identified as
MRTs at HSBC Bank plc, HSBC UK Bank plc or other solo-regulated
entity levels is included, where relevant, in those entities’ disclosures.
The 2025 variable pay information included in the following tables is
based on the market value of awards. For share awards, the market
value is based on HSBC Holdings’ share price at the date of grant
(unless indicated otherwise). For cash awards, it is the value of awards
expected to be paid to the individual over the deferral period.
| Remuneration awarded for the financial year (REM1) | |||||
|---|---|---|---|---|---|
| Supervisory<br><br>function | Management<br><br>function | Other senior<br><br>management | Other<br><br>identified<br><br>staff | ||
| Fixed<br><br>remuneration | Number of identified staff | 12.0 | 2.0 | 13.0 | 1,230.1 |
| Total fixed pay ($m) | 8.4 | 3.8 | 27.5 | 685.3 | |
| – of which: cash-based ($m)1 | 8.4 | 3.8 | 27.5 | 685.3 | |
| – of which: shares or equivalent ownership interests ($m) | — | — | — | — | |
| – of which: share-linked instruments or equivalent non-cash instruments ($m) | — | — | — | — | |
| – of which: other instruments ($m) | — | — | — | — | |
| – of which: other forms ($m) | — | — | — | — | |
| Variable<br><br>remuneration3 | Number of identified staff | 12.0 | 2.0 | 13.0 | 1,230.1 |
| Total variable remuneration ($m)4 | — | 26.3 | 53.2 | 810.3 | |
| – of which: cash-based ($m) | — | 3.8 | 26.9 | 429.9 | |
| – of which: deferred ($m) | — | — | 15.7 | 176.3 | |
| – of which: shares or equivalent ownership interests ($m)2 | — | 22.5 | 26.3 | 364.9 | |
| – of which: deferred ($m) | — | 18.8 | 15.7 | 198.9 | |
| – of which: share-linked instruments or equivalent non-cash instruments ($m) | — | — | — | 9.1 | |
| – of which: deferred ($m) | — | — | — | 4.5 | |
| – of which: other instruments ($m) | — | — | — | — | |
| – of which: deferred ($m) | — | — | — | — | |
| – of which: other forms ($m) | — | — | — | 6.4 | |
| – of which: deferred ($m) | — | — | — | 3.9 | |
| Total remuneration ($m) | 8.4 | 30.1 | 80.7 | 1,495.6 |
1Cash-based fixed remuneration is paid immediately.
2Paid in HSBC shares. Vested shares are subject to a retention period of up to one year for executive Directors and where required by regulation.
3Variable pay awarded in respect of 2025. In accordance with shareholder approval received on 3 May 2024 (99% in favour), and where regulations permit, for
each MRT the variable component of remuneration for any one year is limited to 10 times the fixed component of total remuneration, in line with the maximum
pay ratio approved by the Group Remuneration Committee. HSBC Holdings plc continues to provide approval for entities regulated by the European Banking
Authority to operate a maximum variable pay ratio of 200% of the fixed component of total remuneration for each MRT, where permitted to do so.
428 identified staff members were exempt from the application of the remuneration structure requirements for MRTs under the PRA and FCA remuneration rules.
Their total remuneration is $9.3m, of which $8.0m is fixed pay and $1.3m is variable remuneration.
| Special payments to staff whose professional activities have a material impact on institutions’ risk profile (REM2) | ||||
|---|---|---|---|---|
| Supervisory<br><br>function | Management<br><br>function | Other senior<br><br>management | Other<br><br>identified<br><br>staff | |
| Guaranteed variable remuneration awards1 | ||||
| Number of identified staff | — | — | — | — |
| Total amount ($m) | — | — | — | — |
| – of which guaranteed variable remuneration awards paid during the financial year, that are not<br><br>taken into account in the bonus cap ($m) | — | — | — | — |
| Severance payments awarded in previous periods, that have been paid out during the financial year2 | ||||
| Number of identified staff | — | — | — | 9.9 |
| Total amount ($m) | — | — | — | 11.3 |
| Severance payments awarded during the financial year2 | ||||
| Number of identified staff | — | — | 1.0 | 134.0 |
| Total amount ($m) | — | — | 0.5 | 67.5 |
| – of which paid during the financial year ($m) | — | — | — | 60.2 |
| – of which deferred ($m) | — | — | — | — |
| – of which severance payments paid during the financial year, that are not taken into account in<br><br>the bonus cap ($m) | — | — | 0.5 | 67.5 |
| – of which highest payment that has been awarded to a single person ($m) | — | — | 0.5 | 1.8 |
1No guaranteed variable remuneration was awarded in 2025. HSBC would offer a guaranteed variable remuneration award in exceptional circumstances for new
hires, and for the first year of employment only. It would typically involve a critical new hire, and would also depend on factors such as the seniority of the
individual, whether the new hire candidate has any competing offers and the timing of the hire during the performance year.
2Includes payments such as payment in lieu of notice, statutory severance, outplacement service, legal fees, ex-gratia payments and settlements (excludes pre-
existing benefit entitlements triggered on terminations).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 273 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Directors' remuneration report | ||||||||
| Deferred remuneration at 31 December1 (REM3) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| $m | Total amount<br><br>of deferred<br><br>remuneration<br><br>awarded for<br><br>previous<br><br>performance<br><br>periods | of which:<br><br>due to<br><br>vest in<br><br>the<br><br>financial<br><br>year | of which:<br><br>vesting in<br><br>subsequent<br><br>financial<br><br>years | Amount of<br><br>performance<br><br>adjustment<br><br>made in the<br><br>financial year<br><br>to deferred<br><br>remuneration<br><br>that was due<br><br>to vest in the<br><br>financial year | Amount of<br><br>performance<br><br>adjustment<br><br>made in the<br><br>financial year<br><br>to deferred<br><br>remuneration<br><br>that was due<br><br>to vest in<br><br>future<br><br>performance<br><br>years | Total<br><br>amount of<br><br>adjustment<br><br>during the<br><br>financial year<br><br>due to ex<br><br>post implicit<br><br>adjustments | Total amount<br><br>of deferred<br><br>remuneration<br><br>awarded<br><br>before the<br><br>financial year<br><br>actually paid<br><br>out in the<br><br>financial year | Total amount<br><br>of deferred<br><br>remuneration<br><br>awarded for<br><br>previous<br><br>performance<br><br>period that<br><br>has vested but<br><br>is subject to<br><br>retention<br><br>periods |
| Supervisory function | — | — | — | — | — | — | — | — |
| Cash-based | — | — | — | — | — | — | — | — |
| Shares | — | — | — | — | — | — | — | — |
| Share-linked instruments | — | — | — | — | — | — | — | — |
| Other instruments | — | — | — | — | — | — | — | — |
| Other forms | — | — | — | — | — | — | — | — |
| Management function | 82.0 | 5.5 | 76.5 | (3.4) | — | 21.7 | 5.4 | 6.0 |
| Cash-based | 10.1 | 1.6 | 8.5 | — | — | — | 1.5 | — |
| Shares | 71.9 | 3.9 | 68.0 | (3.4) | — | 21.7 | 3.9 | 6.0 |
| Share-linked instruments | — | — | — | — | — | — | — | — |
| Other instruments | — | — | — | — | — | — | — | — |
| Other forms | — | — | — | — | — | — | — | — |
| Other senior management | 147.3 | 20.3 | 127.0 | (7.9) | — | 32.9 | 20.1 | 9.2 |
| Cash-based | 43.0 | 7.0 | 36.0 | — | — | — | 7.0 | — |
| Shares | 104.3 | 13.3 | 91.0 | (7.9) | — | 32.9 | 13.1 | 9.2 |
| Share-linked instruments | — | — | — | — | — | — | — | — |
| Other instruments | — | — | — | — | — | — | — | — |
| Other forms | — | — | — | — | — | — | — | — |
| Other identified staff | 1,819.6 | 358.4 | 1,461.2 | (12.6) | — | 344.4 | 351.4 | 104.6 |
| Cash-based | 553.2 | 109.7 | 443.5 | — | — | — | 108.3 | — |
| Shares | 1,226.4 | 240.1 | 986.3 | (12.6) | — | 334.6 | 234.7 | 98.7 |
| Share-linked instruments | 28.8 | 6.6 | 22.2 | — | — | 8.2 | 6.5 | 4.2 |
| Other instruments | — | — | — | — | — | — | — | — |
| Other forms | 11.2 | 2.0 | 9.2 | — | — | 1.6 | 1.9 | 1.7 |
| Total amount | 2,048.9 | 384.2 | 1,664.7 | (23.9) | — | 399.0 | 376.9 | 119.8 |
1This table provides details of balances and movements during performance year 2025. For details of variable pay awards granted for 2025, refer to the
’Remuneration awarded for the financial year’ table. Deferred remuneration is made in cash and/or shares. Share-based awards are made in HSBC shares.
| Identified staff - remuneration by band1 (REM4) | |
|---|---|
| Identified staff that are high<br><br>earners as set out in Article<br><br>450(i) CRR | |
| €1,000,000 – 1,500,000 | 274 |
| €1,500,000 – 2,000,000 | 96 |
| €2,000,000 – 2,500,000 | 43 |
| €2,500,000 – 3,000,000 | 30 |
| €3,000,000 – 3,500,000 | 12 |
| €3,500,000 – 4,000,000 | 7 |
| €4,000,000 – 4,500,000 | 8 |
| €4,500,000 – 5,000,000 | 5 |
| €5,000,000 – 6,000,000 | 3 |
| €6,000,000 – 7,000,000 | 7 |
| €7,000,000 – 8,000,000 | 1 |
| €8,000,000 – 9,000,000 | — |
| €9,000,000 – 10,000,000 | 2 |
| €10,000,000 – 11,000,000 | 1 |
| €11,000,000 – 12,000,000 | — |
| €12,000,000 – 13,000,000 | — |
| €13,000,000 – 14,000,000 | — |
| €14,000,000 – 15,000,000 | — |
| €15,000,000 – 16,000,000 | — |
| €16,000,000 – 17,000,000 | 1 |
1Table prepared in euros in accordance with Article 450 of the European Union Capital Requirements Regulation, using the exchange rates published by the
European Commission for financial programming and budget for December of the reported year as published on its website.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 274 | ||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| Directors' remuneration report | ||||||||||
| Information on remuneration of staff whose professional activities have a material impact on institutions’ risk profile (REM5) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Management body | Business areas | Total | ||||||||
| Supervisory<br><br>function | Management<br><br>function | Total | Investment<br><br>banking | Retail<br><br>banking | Asset<br><br>management | Corporate<br><br>function | Independent<br><br>internal<br><br>control<br><br>function | All<br><br>other | ||
| Total number of<br><br>identified staff | 1,257.1 | |||||||||
| –of which members of<br><br>the Board | 12.0 | 2.0 | 14.0 | |||||||
| –of which senior<br><br>management | — | 1.0 | — | 4.0 | 3.0 | 5.0 | ||||
| –of which other<br><br>identified staff | 510.9 | 276.4 | 35.9 | 160.8 | 174.5 | 71.6 | ||||
| Total remuneration of<br><br>identified staff ($m) | 8.4 | 30.1 | 38.5 | 717.1 | 311.4 | 47.1 | 220.6 | 136.7 | 143.4 | |
| –of which variable<br><br>remuneration ($m)1 | — | 26.3 | 26.3 | 418.6 | 166.1 | 25.3 | 117.2 | 57.1 | 79.2 | |
| –of which fixed<br><br>remuneration ($m) | 8.4 | 3.8 | 12.2 | 298.5 | 145.3 | 21.8 | 103.4 | 79.6 | 64.2 |
1Variable pay awarded in respect of 2025. In accordance with shareholder approval received on 3 May 2024 (99% in favour), and where regulations permit, for
each MRT the variable component of remuneration for any one year is limited to 10 times the fixed component of total remuneration, in line with the maximum
pay ratio approved by the Group Remuneration Committee. HSBC Holdings plc continues to provide approval for entities regulated by the European Banking
Authority to operate a maximum variable pay ratio of 200% of the fixed component of total remuneration for each MRT, where permitted to do so.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 275 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Share capital and other governance
disclosures
Share buy-backs
On 31 October 2024, HSBC Holdings commenced a share buy-back of
its ordinary shares of up to a maximum consideration of $3.0bn. The
share buy-back continued in 2025 and was concluded on 11 February
2025, with 53,412,510 ordinary shares repurchased for cancellation on
UK trading venues and 48,119,200 ordinary shares repurchased for
cancellation on HKEx from 1 January to 11 February 2025.
On 21 February 2025, HSBC Holdings commenced a further share buy-
back of its ordinary shares of up to a maximum consideration of $2.0bn.
This share buy-back concluded on 25 April 2025 with 90,226,199
ordinary shares repurchased for cancellation on UK trading venues and
89,362,400 ordinary shares repurchased for cancellation on HKEx.
On 7 May 2025, HSBC Holdings commenced a further share buy-back
of its ordinary shares of up to a maximum consideration of $3.0bn. This
share buy-back concluded on 25 July 2025 with 151,454,350 ordinary
shares repurchased for cancellation on UK trading venues and
101,298,000 ordinary shares repurchased for cancellation on HKEx.
On 1 August 2025, HSBC Holdings commenced a further share buy-
back of its ordinary shares of up to a maximum consideration of $3.0bn.
This share buy-back concluded on 24 October 2025 with 136,301,568
ordinary shares repurchased for cancellation on UK trading venues and
91,040,400 ordinary shares repurchased for cancellation on HKEx.
The purpose of the share buy-backs was to reduce HSBC’s number of
outstanding ordinary shares.
As at 31 December 2025, the total number of ordinary shares
repurchased during the year was 761,214,627, representing a nominal
value of $380,607,313.50 and an aggregate consideration paid by HSBC
of £3,875,910,163 on UK trading venues and HK$30,257,041,599 on
HKEx. The ordinary shares repurchased represent 4.43% of the
ordinary shares in issue as at 31 December 2025.
The table that follows outlines details of the ordinary shares purchased
and cancelled on a monthly basis during 2025.
| Share buy-back – UK venues | ||||||
|---|---|---|---|---|---|---|
| Number of shares<br><br>repurchased | Highest price<br><br>paid per share | Lowest price<br><br>paid per share | Average price<br><br>paid per share | Aggregate<br><br>price paid | ||
| £ | £ | £ | £ | |||
| Jan 2025 | 53,412,510 | 8.2800 | 7.6770 | 7.9835 | 426,418,493 | |
| Feb 2025 | 17,354,614 | 9.2790 | 8.7210 | 8.9940 | 156,088,219 | |
| Mar 2025 | 48,866,970 | 9.4300 | 8.3510 | 8.8567 | 432,798,143 | |
| Apr 2025 | 24,004,615 | 8.8940 | 6.9890 | 7.8260 | 187,859,442 | |
| May 2025 | 68,401,165 | 8.9150 | 8.3530 | 8.6873 | 594,221,858 | |
| Jun 2025 | 50,911,911 | 8.8730 | 8.6010 | 8.7091 | 443,397,460 | |
| Jul 2025 | 32,141,274 | 9.6800 | 8.6750 | 9.2982 | 298,856,687 | |
| Aug 2025 | 48,028,511 | 9.7220 | 9.0880 | 9.4473 | 453,738,250 | |
| Sep 2025 | 48,365,181 | 10.5080 | 9.4670 | 10.0103 | 484,152,048 | |
| Oct 2025 | 39,907,876 | 10.6740 | 9.6410 | 9.9825 | 398,379,563 | |
| Total | 431,394,627 | 3,875,910,163 | ||||
| Share buy-back – Hong Kong venues | ||||||
| Number of shares<br><br>repurchased | Highest price<br><br>paid per share | Lowest price<br><br>paid per share | Average price<br><br>paid per share | Aggregate<br><br>price paid | ||
| (HK$) | (HK$) | (HK$) | (HK$) | |||
| Jan 2025 | 29,455,200 | 79.9500 | 74.8000 | 76.9614 | 2,266,914,703 | |
| Feb 2025 | 33,403,600 | 89.8000 | 79.4500 | 84.2625 | 2,814,671,080 | |
| Mar 2025 | 54,995,200 | 92.5500 | 83.9500 | 88.6511 | 4,875,383,400 | |
| Apr 2025 | 19,627,600 | 89.1000 | 70.0500 | 79.7185 | 1,564,683,760 | |
| May 2025 | 48,790,000 | 93.6500 | 86.2500 | 90.6985 | 4,425,181,117 | |
| Jun 2025 | 29,848,800 | 93.9000 | 90.9000 | 92.1917 | 2,751,810,520 | |
| Jul 2025 | 22,659,200 | 102.1000 | 94.4500 | 98.0061 | 2,220,738,939 | |
| Aug 2025 | 32,520,800 | 102.2000 | 95.0500 | 99.1969 | 3,225,963,440 | |
| Sep 2025 | 31,736,800 | 109.2000 | 98.7500 | 104.7238 | 3,323,597,720 | |
| Oct 2025 | 26,782,800 | 112.0000 | 100.6000 | 104.1003 | 2,788,096,920 | |
| Total | 329,820,000 | 30,257,041,599 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 276 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Dividends
Dividends for 2025
First, second and third interim dividends for 2025, each of $0.10 per
ordinary share, were paid on 20 June 2025, 26 September 2025 and
18 December 2025. For further details of the dividends approved in
2025, see Note 8 on the financial statements.
On 25 February 2026, the Directors approved a fourth interim dividend
for 2025 of $0.45 per ordinary share, making a total of $0.75 for the
2025 full-year. The fourth interim dividend for 2025 will be payable on
30 April 2026 in cash in US dollars, or in sterling or Hong Kong dollars at
exchange rates to be determined on 20 April 2026. The fourth interim
dividend for 2025 of $2.25 per American Depositary Share, each of
which represents five ordinary shares, will be payable by the depositary
in US dollars. No liability was recorded in the financial statements in
respect of the fourth interim dividend for 2025.
A quarterly dividend of £0.01 per non-cumulative preference share of
£0.01 each was paid on 17 March, 16 June, 15 September and
15 December 2025.
Dividends for 2026
The Group intends to pay quarterly dividends on its ordinary shares
during 2026.
A quarterly dividend of £0.01 per non-cumulative preference share of
£0.01 each is payable on 16 March, 15 June, 15 September and
15 December 2026 for the quarter then ended at the sole and absolute
discretion of the Board of HSBC Holdings plc. Accordingly, the Board of
HSBC Holdings plc has approved a quarterly dividend to be payable on
the non-cumulative preference share on 16 March 2026 to holders of
record on 27 February 2026.
Distributable reserves
The distributable reserves of HSBC Holdings at 31 December 2025
were $46.2bn, a $17.9bn increase since 31 December 2024, primarily
driven by $22.1bn in profits and other reserves movements generated
in 2025, cancellation of $16.6bn standing to the credit of its share
premium and capital redemption reserves pursuant to the Court
approval obtained by HSBC Holdings on 24 June 2025, offset by
$20.8bn dividends on ordinary shares, additional tier 1 coupon and
share buy-back payments.
Share capital
Issued share capital
The nominal value of HSBC Holdings’ issued share capital paid up at
31 December 2025 was $8,587,619,931 divided into 17,175,239,862
ordinary shares of $0.50 each and one non-cumulative preference share
of £0.01, representing approximately 100.00% and 0.00% respectively
of the nominal value of HSBC Holdings’ total issued share capital paid
up at 31 December 2025.
Rights, obligations and restrictions
attaching to shares
The rights and obligations attaching to each class of ordinary and non-
cumulative preference shares in our share capital are set out in full in
our Articles of Association. The Articles of Association may be
amended by special resolution of the shareholders and can be found on
our website at www.hsbc.com/who-we-are/our-people/board-of-
directors/board-responsibilities.
Ordinary shares
HSBC Holdings has one class of ordinary share, which carries no right
to fixed income. There are no voting restrictions on the issued ordinary
shares, all of which are fully paid. On a show of hands, each member
present has the right to one vote at general meetings. On a poll, each
member present or voting by proxy is entitled to one vote for every
$0.50 nominal value of share capital held.
There are no specific restrictions on transfers of ordinary shares, which
are governed by the general provisions of the Articles of Association
and prevailing legislation.
ÑInformation on the policy adopted by the Board for paying interim dividends
on the ordinary shares may be found in the ’Shareholder information’
section on page 382.
Dividend waivers
The Group’s employee benefit trusts, which hold shares in HSBC
Holdings in connection with the operation of its share plans, have
lodged standing instructions to waive dividends on shares held by them
that have not been allocated to employees. Shares held by custodians
in connection with the vesting of employee share awards also lodged
instructions to waive dividends. The total amount of dividends waived
during 2025 was $53.7m.
Preference shares
The preference shares, which have preferential rights to income and
capital, do not, in general, confer a right to attend and vote at general
meetings.
There are three classes of preference shares in the share capital of
HSBC Holdings: non-cumulative US dollar preference shares of $0.01
each (‘dollar preference shares’); non-cumulative preference shares of
£0.01 each (‘sterling preference shares’); and non-cumulative
preference shares of €0.01 (‘euro preference shares’).
The sterling preference share in issue is a Series A sterling preference
share. There are no dollar preference shares or euro preference shares
in issue.
ÑInformation on dividends approved for 2023 and 2024 may be found in
Note 8 on the financial statements.
ÑFurther details of the rights and obligations attaching to the HSBC Holdings’
issued share capital may be found in Note 32 on the financial statements.
Compliance with Hong Kong Listing Rule
13.25A(2)
HSBC Holdings has been granted a waiver from strict compliance with
Rule 13.25A(2) of the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited.
Under this waiver, HSBC’s obligation to file a Next Day Return
following the issue of new shares, pursuant to the vesting of share
awards granted under its share plans to persons who are not Directors,
would only be triggered where it falls within one of the circumstances
set out under Rule 13.25A(3).
Share capital changes in 2025
HSBC Holdings does not hold any ordinary shares in treasury, and there
were no scrip dividends issued during the year.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 277 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
In addition to the share buy-backs, the following events occurred during the year in relation to the ordinary share capital of HSBC Holdings:
| All-employee share plans1 | ||||
|---|---|---|---|---|
| HSBC Holdings<br><br>ordinary shares issued | Aggregate<br><br>nominal value | Market value per share | ||
| from | to | |||
| $ | £ | £ | ||
| HSBC International Employee Share Purchase Plan | 118,316 | 59,158 | 10.368 | 10.368 |
1In respect of the HSBC Holdings Savings Related Share Option Plan (UK), no new shares were issued under this plan. All exercises were satisfied by market
purchased shares. See page 283 for details of options granted, exercised and lapsed.
| HSBC share plans | ||||
|---|---|---|---|---|
| HSBC Holdings<br><br>ordinary shares issued | Aggregate<br><br>nominal value | Market value per share | ||
| from | to | |||
| $ | £ | £ | ||
| Vesting of awards under the HSBC Share Plan 2011 | 9,819,050 | 4,909,525 | 8.465 | 10.69 |
Authorities to allot and to purchase
shares and pre-emption rights
At the AGM in 2025, shareholders renewed the general authority for
the Directors to allot new shares up to 11,869,935,002 ordinary shares,
15,000,000 non-cumulative preference shares of £0.01 each,
15,000,000 non-cumulative preference shares of $0.01 each,
15,000,000 non-cumulative preference shares of €0.01 each.
Shareholders also renewed the authority for the Directors to make
market/off-market purchases of up to 1,780,490,250 ordinary shares.
The Directors exercised their market/off-market purchase authority
from both the 2024 AGM and the 2025 AGM and repurchased
761,214,627 ordinary shares during 2025.
In addition, shareholders gave authority for the Directors to grant rights
to subscribe for, or to convert any security into, no more than
3,560,980,500 ordinary shares in relation to any issue by HSBC
Holdings, or any member of the Group, of contingent convertible
securities that automatically convert into or are exchanged for ordinary
shares in HSBC Holdings in prescribed circumstances. For further
details on the issue of contingent convertible securities, see Note 32 on
the financial statements.
Other than as disclosed in the tables above headed ‘Share capital
changes in 2025’, the Directors did not allot any shares during 2025.
Debt securities
In 2025, HSBC Holdings issued the equivalent of $33.8bn of debt
securities in the public capital markets in a range of currencies and
maturities, of which $25.7bn were in the form of senior securities to
ensure it meets the current and proposed regulatory rules, including
those relating to the availability of adequate total loss-absorbing
capacity. For details of capital instruments and subordinated bail-inable
debt, see Notes 29 and 32 on pages 359 and 366.
Treasury shares
HSBC Holdings does not hold any ordinary shares in treasury.
Notifiable interests in share capital
During 2025, HSBC Holdings did not receive any notification of major
holdings of voting rights pursuant to the requirements of Rule 5 of the
Disclosure Guidance and Transparency Rules (’Rule 5 of the DTRs’).
No notifications had been received between 31 December 2025 and
19 February 2026. Previous notifications received are as follows:
–BlackRock, Inc. gave notice on 3 March 2020 that on 2 March 2020
it had the following: an indirect interest in HSBC Holdings ordinary
shares of 1,235,558,490; qualifying financial instruments with
7,294,459 voting rights that may be acquired if the instruments are
exercised or converted; and financial instruments with a similar
economic effect to qualifying financial instruments, which refer to
2,441,397 voting rights, representing 6.07%, 0.03% and 0.01%,
respectively, of the total voting rights at 2 March 2020.
–Ping An Asset Management Co., Ltd. gave notice on 6 December
2017 that on 4 December 2017 it had an indirect interest in HSBC
Holdings ordinary shares of 1,007,946,172, representing 5.04% of
the total voting rights at that date.
At 31 December 2025, according to the register maintained by HSBC
Holdings pursuant to section 336 of the Securities and Futures
Ordinance of Hong Kong:
–BlackRock, Inc. gave notice on 16 July 2025 that on 11 July 2025 it
had the following interests in HSBC Holdings ordinary shares: a long
position of 1,586,341,122 shares and a short position of 6,856,029
shares, representing 9.09% and 0.04%, respectively, of the ordinary
shares in issue 11 July 2025.
–Ping An Asset Management Co., Ltd. gave notice on 10 May 2024
that on 7 May 2024 it had a long position of 1,502,584,731 in HSBC
Holdings ordinary shares, representing 7.98% of the ordinary shares
in issue at 7 May 2024.
–The Bank of New York Mellon Corporation gave notice on
17 October 2025 that on 15 October 2025 it had the following
interests in HSBC Holdings ordinary shares: a long position of
1,035,915,129 shares, a short position of 551,070,412 shares and a
lending pool of 449,036,061 shares representing 6.01%, 3.20% and
2.61%, respectively, of the ordinary shares in issue at 15 October
- The Bank of New York Mellon Corporation is the Depositary
for the HSBC ADSs. Under the SFO, they are required to report the
HSBC ADSs position as both a long and a short position.
No notifications had been received between 31 December 2025 and
19 February 2026.
Sufficiency of float
In compliance with the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, at least 25% of the total issued
share capital has been held by the public at all times during 2025 and
up to the date of this report.
Dealings in HSBC Holdings 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-
backs, 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 2025.
Directors’ interests
Pursuant to the requirements of the UK Listing Rules and according to
the register of Directors’ interests maintained by HSBC Holdings
pursuant to section 352 of the Securities and Futures Ordinance of
Hong Kong, the Directors of HSBC Holdings at 31 December 2025 had
certain interests, all beneficial unless otherwise stated, in the shares or
debentures of HSBC Holdings and its associated corporations.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 278 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Save as stated in the following table, no further interests were held by
Directors, and no Directors or their connected persons were awarded
or exercised any right to subscribe for any shares or debentures in any
HSBC corporation during the year.
No Directors held any short position as defined in the Securities and
Futures Ordinance of Hong Kong in the shares or debentures of HSBC
Holdings and its associated corporations.
| Directors’ interests – shares and debentures | ||||||
|---|---|---|---|---|---|---|
| At 31 Dec 2025 or date of cessation, if earlier | ||||||
| At 1 Jan 2025, or<br><br>date of<br><br>appointment,<br><br>if later | Beneficial<br><br>owner | Child<br><br>under 18<br><br>or spouse | Jointly<br><br>with<br><br>spouse/<br><br>other | Trustee | Total<br><br>interests | |
| HSBC Holdings ordinary shares | ||||||
| Geraldine Buckingham1 | 15,000 | 15,000 | 15,000 | |||
| Rachel Duan1 | 15,000 | 15,000 | 15,000 | |||
| Georges Elhedery2 | 966,017 | 1,109,810 | 1,109,810 | |||
| Dame Carolyn Fairbairn | 15,000 | 15,000 | 15,000 | |||
| James Forese1 | 115,000 | 115,000 | 115,000 | |||
| Ann Godbehere1 | 15,000 | 15,000 | 15,000 | |||
| Steven Guggenheimer1 | 15,000 | 15,000 | 15,000 | |||
| Manveen (Pam) Kaur2 | 801,296 | 986,625 | 986,625 | |||
| José Antonio Meade Kuribreña1 | 15,000 | 15,000 | 15,000 | |||
| Kalpana Morparia1 | 15,000 | 15,000 | 15,000 | |||
| Eileen Murray1 | 75,000 | 75,000 | 75,000 | |||
| Brendan Nelson | — | 15,000 | 15,000 | |||
| Swee Lian Teo | 15,200 | 15,200 | 15,200 | |||
| Sir Mark Tucker (retired on 30 September 2025) | 307,352 | 307,352 | 307,352 |
1Geraldine Buckingham has an interest in 3,000, Rachel Duan in 3,000, James Forese in 23,000, Ann Godbehere in 3,000, Steven Guggenheimer in 3,000, José
Antonio Meade Kuribreña in 3,000, Kalpana Morparia in 3,000 and Eileen Murray in 15,000 listed American Depositary Shares (’ADS’), which are categorised as
equity derivatives under Part XV of the Securities and Futures Ordinance of Hong Kong. Each ADS represents five HSBC Holdings ordinary shares.
2Executive Directors’ other interests in HSBC Holdings ordinary shares arising from the HSBC Holdings Savings-Related Share Option Plan (UK) and the HSBC
Share Plan 2011 are set out in the Scheme interests in the Directors’ remuneration report on page 249. At 31 December 2025, or date of cessation if earlier, the
aggregate interests under the Securities and Futures Ordinance of Hong Kong in HSBC Holdings ordinary shares, including interests arising through employee
share plans and the interests above were: Georges Elhedery – 3,938,444; and Pam Kaur – 2,771,470, representing approximately 0.02% and 0.02% of the
shares in issue respectively.
There have been no changes in the shares or debentures of the current Directors from 31 December 2024 to the date of this report.
UK Listing Rule 6.6.1
The disclosures required by UKLR 6.6.1 are set out on the following
pages, and other regulatory requirements are incorporated by reference
into this Directors' report:
| Content | Page references |
|---|---|
| Dividends and dividend waiver | 276, 382 |
| Share buy-back | 275 |
| Emissions | 39-46 |
| Energy efficiency | 40, 35-36 |
| Principal activities of HSBC | 7, 12-14, 349 |
| Business review and future developments | 4-31 |
| Risk Review | 30-31, 119-218 |
| Engagement with suppliers, customers and<br><br>others | 29-29, 33-63 |
Board governance
Appointment and re-election of Directors
A rigorous selection process is followed for the appointment of
Directors. Appointments are made on merit and candidates are
considered against objective criteria, and with regard to the benefits of
a diverse Board. Appointments are made in accordance with HSBC
Holdings plc's Articles of Association.
The Board may at any time appoint any person as a Director or
secretary, either to fill a vacancy or as an additional officer. The Board
may appoint any Director or secretary to hold any employment or
executive office and may revoke or terminate any such appointment.
Non-executive Directors are appointed for an initial three-year term and,
subject to continued satisfactory performance based upon an
assessment by the Group Chairman and the Nomination & Corporate
Governance Committee, are proposed for re-election by shareholders
at each AGM. They typically serve two three-year terms, with any
individual’s appointment beyond six years to be for a rolling one-year
term and subject to thorough review and challenge with reference to
the needs of the Board. Where non-executive Directors are appointed
beyond six years, an explanation will be provided in the Annual Report
and Accounts.
Shareholders vote at each AGM on whether to elect and re-elect
individual Directors. All Directors that stood for election and re-election
at the 2025 AGM were elected and re-elected by shareholders.
Joint Company Secretary
Hannah Ashdown (48) was appointed as Deputy Group Secretary in
December 2021 and for administrative purposes, in October 2022, was
appointed as Joint Company Secretary. Hannah Ashdown stepped
down from her role as Joint Company Secretary with effect from
31 December 2025 and no Joint Company Secretary was appointed in
her place.
Independence
Independence is a critical component of good corporate governance, and
a principle that is applied consistently at both the HSBC Holdings and
subsidiary level. The Nomination & Corporate Governance Committee has
delegated authority from the Board in relation to the assessment of the
independence of non-executive Directors. In accordance with the UK and
Hong Kong Corporate Governance Codes, as applicable, the Nomination
& Corporate Governance Committee has reviewed and confirmed that all
non-executive Directors, and the Group Chairman, who have submitted
themselves for election and re-election at the AGM are considered to be
independent. This conclusion was reached after consideration of all
relevant circumstances that are likely to impair, or could appear to impair,
independence.
In line with the requirements of the Hong Kong Corporate Governance
Code, the Nomination & Corporate Governance Committee also reviewed
and considered the mechanisms in place to ensure independent views
and inputs are available to the Board. These mechanisms include:
–having the appropriate Board and committee structure in place,
including rules on the appointment and tenure of non-executive
Directors;
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 279 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
–facilitating the option of having brokers and external industry experts
in attendance at Board meetings during 2025, as well as having
representatives from the Group’s key regulators attend Board
meetings in relation to specific regulatory items;
–ensuring non-executive Directors are entitled to obtain independent
professional advice relating to their personal responsibilities as a
Director at the Group’s expense;
–having terms of reference for each committee and the Board that
provide authority to engage independent professional advisers; and
–holding annual Board and committee performance reviews, with
feedback sought from members on the quality of, and access to,
independent external advice.
Conflicts of interest
The Board has an established policy and set of procedures, which are
reviewed annually, to ensure that the Board’s management of Directors’
conflicts of interest is effective. The Board has the power to authorise
conflicts where they arise, in accordance with the Companies Act 2006
and HSBC Holdings’ Articles of Association. Details of all Directors’
conflicts of interest are recorded in the register of conflicts. Upon
appointment, new Directors are advised of the policy and procedures for
managing conflicts. Directors are required to notify the Board of any actual
or potential conflicts of interest and to update the Board with any changes
to the facts and circumstances surrounding such conflicts. Directors are
requested to review and confirm their own and their respective closely
associated persons’ outside interests and appointments twice each year.
The Board has considered, and authorised (with or without conditions)
where appropriate, potential conflicts as they have arisen during the year
in accordance with its conflicts policy and procedures. All non-executive
Directors are subject to re-vetting by the Group’s compliance team on a
triennial basis following appointment. As part of this re-vetting process, all
conflict checks are refreshed.
Non-executive Director commitments
The terms and conditions of the appointments of non-executive
Directors are set out in a letter of appointment, which includes the
expectations of them, and the estimated time required to perform their
role. Letters of appointment of each non-executive Director are
available for inspection at the registered office of HSBC Holdings.
Non-executive Directors serving on the Board and as a member of any
committees are expected to serve up to 75 days per annum. The Senior
Independent Director is expected to serve an additional 30 days per
annum. Those Directors who also chair a large committee are expected to
commit up to 100 days per annum, with the Group Risk Committee Chair
expected to commit up to 150 days per annum. Any additional time
commitment required of non-executive Directors in connection with
Board and committee activities is confirmed to them separately.
Board approval is required for any non-executive Director’s external
commitments. When assessing these, consideration is given to the
expected time commitment of the role, their total time commitment,
potential conflicts of interest, the complexity and size of the organisation,
the expectations of the role, and regulatory and investor expectations.
Directors’ indemnities
The Articles of Association of HSBC Holdings contain a qualifying third-
party indemnity provision, which entitles Directors and other officers to
be indemnified out of the assets of HSBC Holdings against claims from
third parties in respect of certain liabilities.
HSBC Holdings has granted, by way of deed poll, indemnities to the
Directors, including former Directors, against certain liabilities arising in
connection with their position as a Director of HSBC Holdings or of any
Group company. Directors are indemnified to the maximum extent
permitted by law.
The indemnities that constitute a ’qualifying third-party indemnity
provision’, as defined by section 234 of the Companies Act 2006,
remained in force for the whole of the financial year (or, in the case of
Directors appointed during 2025, from the date of their appointment). The
deed poll is available for inspection at the registered office of HSBC
Holdings.
Additionally, Directors and pension trustees have the benefit of both
Directors’ and officers’ liability insurance and pension trustees’ liability
insurance. Qualifying pension scheme indemnities have also been granted
to the trustees of the Group’s pension schemes, which were in force for
the whole of the financial year and remain in force as at the date of this
report.
Contracts of significance
During 2025, none of the Directors had a material interest, directly or
indirectly, in any contract of significance with any HSBC company. During
the year, all Directors were reminded of their obligations in respect of
transacting in HSBC securities and, following specific enquiry, all Directors
have confirmed that they have complied with their obligations.
Shareholder engagement and
communication
The Board is directly accountable to, and gives high priority to
communicating with, HSBC’s shareholders. Information about HSBC and
its activities is provided to shareholders in its Interim Reports and the
Annual Report and Accounts as well as on www.hsbc.com.
The Board seeks to understand investor needs through ongoing dialogue
between members of the Board and institutional investors throughout the
year, and Committee Chairs seek to engage with major shareholders on
matters within their area of responsibility, where practicable and
appropriate. For examples of such engagements, see the 'Group
Remuneration Committee Chair’s letter' on page 249. During 2025,
approximately 612 meetings were held with institutional investors and
analysts globally.
Our shareholder communications policy summarises how we
communicate with our shareholders, including through financial reporting,
general shareholder meetings, investor and analyst meetings and our
website. The policy is reviewed annually, and in 2025 the Board confirmed
that it was satisfied with its implementation and effectiveness. The policy
can be found at www.hsbc.com/who-we-are/our-people/board-of-
directors/board-responsibilities.
We also publish our current and past financial results, investor
presentations and shareholder information such as dividend payments
and shareholder meeting details. Stock exchange announcements are
also accessible on our website along with information for fixed income
investors. For further details, see www.hsbc.com/investors.
Directors are encouraged to develop an understanding of the views of
shareholders. Enquiries from individuals on matters relating to their
shareholdings and HSBC’s business are welcomed. Any individual or
institutional investor can make an enquiry by contacting the investor
relations team, Group Chairman, Group CEO, Group CFO and Group
Company Secretary. Our Senior Independent Director is also available to
shareholders if they have concerns that cannot be resolved or for which
the normal channels would not be appropriate. They can be contacted via
the Group Company Secretary at 8 Canada Square, London E14 5HQ.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
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| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Annual General Meeting
The AGM in 2026 is planned to be held in London, UK at 10:00am on
Friday, 8 May 2026. Information on how to vote and participate, online
or in person, both in advance and on the day, can be found in the
Notice of the 2026 AGM, which will be sent to shareholders on
27 March 2026 and be available on www.hsbc.com/agm. Shareholders
can watch a live webcast of the AGM and access a recording of the
proceedings shortly after the event at www.hsbc.com/agm.
Shareholders should monitor our website and announcements for any
changes to these arrangements. Shareholders may send enquiries to
the Board in writing via the Group Company Secretary, at HSBC
Holdings plc, 8 Canada Square, London E14 5HQ or by sending an
email to [email protected].
General meetings and resolutions
Shareholders may require the Directors to call a general meeting other
than an AGM, as provided by the UK Companies Act 2006. A valid
request to call a general meeting may be made by members
representing at least 5% of the paid-up capital of HSBC Holdings as
carries the right of voting at its general meetings (excluding any paid-up
capital held as treasury shares). A request must state the general
nature of the business to be dealt with at the meeting and may include
the text of a resolution that may properly be moved and is intended to
be moved at the meeting. At any general meeting convened on such
request, no business may be transacted except that stated by the
requisition or proposed by the Board.
Shareholders may request the Directors to send a resolution to
shareholders for consideration at an AGM, as provided by the UK
Companies Act 2006. A valid request must be made by
(i) members representing at least 5% of the paid-up capital of HSBC
Holdings as carries the right of voting at its general meetings (excluding
any paid-up capital held as treasury shares), or (ii) at least 100 members
who have a right to vote on the resolution at the AGM in question and
hold shares in HSBC Holdings on which there has been paid up an
average sum, per member, of at least £100.
The request must be received by HSBC Holdings not later than (i) six
weeks before the AGM in question; or (ii) if later, the time at which the
notice of AGM is published.
A request may be in hard copy form or in electronic form, and must be
authenticated by the person or persons making it. A request may be
made in writing to HSBC Holdings at its UK address, referred to in the
paragraph above or by sending an email to
Articles of Association
The Articles of Association were last approved at the 2022 AGM. The
Articles of Association can be found at www.hsbc.com/who-we-are/
our-people/board-of-directors/board-responsibilities.
Events after the balance sheet date
For details of events after the balance sheet date, see Note 37 on the
financial statements.
Change of control
The Group is not party to any significant agreements that take effect,
alter or terminate following a change of control of the Group. The Group
does not have agreements with any Director or employee that would
provide compensation for loss of office or employment resulting from a
takeover bid.
Branches
The Group provides a wide range of banking and financial services
through branches and offices in the UK and overseas.
Research and development activities
During the ordinary course of business, the Group develops new
products and services within the global businesses.
Political donations
HSBC does not make any political donations or incur political
expenditure within the ordinary meaning of those words. We have no
intention of altering this policy. However, the definitions of political
donations, political parties, political organisations and political
expenditure used in the UK Companies Act 2006 are very wide. As a
result, they may cover routine activities that form part of the normal
business activities of the Group and are an accepted part of engaging
with stakeholders. To ensure that neither the Group nor any of its
subsidiaries inadvertently breaches the UK Companies Act 2006,
authority is sought from shareholders at the AGM to make political
donations.
HSBC provides administrative support to two political action
committees (’PACs’) in the US funded by voluntary political
contributions by eligible employees. We do not control the PACs, and
all decisions regarding the amounts and recipients of contributions are
directed by a voluntary Board Finance Committee, which consists of
contributing eligible employees. The PACs recorded combined political
donations of $134,750 during 2025 (2024: $124,450).
Charitable contributions
For details of charitable contributions, see page 56.
Internal control
The Board is responsible for monitoring the Group’s risk management
and internal control systems, determining the level and type of risks the
Group is willing to take in achieving its strategic objectives, and
reviewing the effectiveness of relevant procedures on an annual basis.
Global Internal Audit provides independent and objective assurance to
the Board and assesses whether the design and operational
effectiveness of the Group's risk management, governance and internal
control processes are adequate and effective.
To meet this requirement and to discharge its obligations under the
FCA Handbook and the PRA Rulebook, procedures have been designed
to provide reasonable assurance against material misstatement, errors,
losses or fraud. They are designed to provide effective internal control
within the Group and accord with the Financial Reporting Council‘s
guidance for Directors, issued in 2014, on risk management, internal
control and related financial and business reporting. The procedures
have been in place throughout the year and up to 25 February 2026, the
date of publication of the Annual Report and Accounts 2025.
The Board, the GRC and the GAC monitor the effectiveness of the
Group’s system of risk management and internal control through
regular updates on the operation of the Group’s internal controls,
supplemented by reviews of these controls by the Group Chief Control
Oversight Office, second line of defence, internal audit, and the
external auditors.
These reviews enable the Board to perform an annual review of
effectiveness, identifying no material weaknesses as at the year-end.
Areas identified for improvement internally or by the Group's regulators
are prioritised appropriately, with necessary actions taken to remedy
any shortcomings identified.
At a granular level, the risk management and internal control systems
of the Group are continuously monitored and challenged to ensure that
they are designed and operating effectively.
In 2026, continued focus will be placed on control environments
relating to regulatory reporting and technology risk. This will include
work by the GAC to support preparations for the Board's declaration on
the effectiveness of material controls, which HSBC will be required to
include in the Annual Report and Accounts 2026 under the UK and
Hong Kong Corporate Governance Codes.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 281 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Delegation of authority within limits set
by the Board
Subject to certain matters reserved for the Board, the Group CEO has
been delegated authority to manage the day-to-day affairs of the Group.
A delegation of authority framework is in place providing a Group
structure within which the Board and its subsidiaries can manage their
delegated powers related to external commitments. These delegated
authorities can be used for the approval, signing and execution of
specific written agreements and documents such as procurement
contracts.
The delegation of authority framework is adopted on a legal entity basis
via a board resolution which is reviewed annually. Matters not covered
by the delegation of authority framework can be set out in a separate
board resolution, powers of attorney or the relevant Group policy with
clear systems of control that are appropriate to the business or
function. Authorities to enter into credit and market risk exposures are
delegated with limits to line management of Group companies in line
with Group policy. Credit and market risks are measured and reported
at subsidiary company level and aggregated for risk concentration
analysis on a Group-wide basis.
Risk Management
Risk management framework
The Risk Management Framework ('RMF') sets out how we manage
the risks in our ability to operate, grow and meet expectations. It
translates our strategy, values and commitments into practical actions
and risk-aware decisions. It covers all risk types across the organisation
and is underpinned by our culture and values.
Our RMF foundations provide consistency across the Group in
identifying, evaluating and managing significant risks. They are
interconnected and help form an enterprise-wide view of risk which
reflects the relationship between the risks we take in delivering our
strategy and the resources available to manage them. It enables us to
make considered, forward-looking decisions that align with our capacity
and strategic objectives.
Risk identification and monitoring
There are comprehensive systems and procedures to identify,
measure, assess, control and monitor risks. Our risk taxonomy
categorises risks covering all material risks to which the Group is
exposed. It is a multi-level structure that helps organise, assess and
respond to risk in a targeted way. It supports clearer identification of
risks, tailored control design and mitigation and risk-type specific
assessment approaches.
The residual risk which remains after considering our control
environment and the resources available to manage the risks is then
assessed against our risk appetite, which sets out the level of risk the
Group is willing to take in pursuit of its strategy.
Enterprise risk reporting provides a consolidated view of material risks
across the Group, assessed through the risk taxonomy and in relation
to risk appetite. It enables decision-makers to monitor key exposures,
identify emerging themes, and assess whether risks remain aligned
with the Group’s strategic objectives. This includes insights from risk-
type reports, thematic reviews, and emerging risks.
The Group employs a top and emerging risks process to provide
forward-looking views of issues with the potential to threaten the
execution of our strategy or operations over the medium to long term.
All employees are responsible for identifying and managing risk within
the scope of their role as part of our three lines of defence model,
which defines clear accountabilities and responsibilities across risk
ownership, oversight and independent assurance. The first line owns
and manages the risks, the second line provides risk oversight and
challenge and the third line delivers independent assurance.
The Board delegates authority to the GAC to annually review the
independence, autonomy and effectiveness of the Group’s policies and
procedures on whistleblowing, including the procedures for the
protection of staff who raise concerns of detrimental treatment.
Strategic plans
Strategic plans are prepared for global businesses, global functions and
geographical regions within the framework of the Group’s overall
strategy. Financial resource plans, informed by risk appetite are
prepared and adopted by all major Group operating companies and set
out the key business initiatives and the likely financial effects of those
initiatives.
Internal control over financial
reporting
HSBC is required to comply with section 404 of the US Sarbanes-Oxley
Act of 2002 and assess its effectiveness of internal control over
financial reporting at 31 December 2025. In 2014, the GAC endorsed
the adoption of the principles of the Committee of Sponsoring
Organizations of the Treadway Commission (’COSO’) 2013 framework
for the monitoring of risk management and internal control systems to
satisfy the requirements of section 404 of the Sarbanes-Oxley Act.
The primary mechanism through which comfort over risk management
and internal control systems is achieved is through annual assessments
of the effectiveness of controls to manage risk, and the reporting of
issues on a regular basis through the various risk management and risk
governance forums, including regular updates to the GAC.
The key risk management and internal control procedures over financial
reporting include the following:
Entity level controls
Entity level controls are a defined suite of internal controls that have a
pervasive influence over the entity as a whole and meet the principles
of the COSO framework. They include controls related to the control
environment, such as the Group’s values and ethics, the promotion of
effective risk management and the overarching governance exercised
by the Board and its non-executive committees. The design and
operational effectiveness of entity level controls are assessed on an
ongoing basis. If issues are significant to the Group, they are escalated
to the GRC and/or the GAC.
Process level transactional controls
Key process level controls that mitigate the risk of financial
misstatement are identified, recorded and monitored in accordance
with the risk framework. This includes the identification and
assessment of relevant control issues against which action plans are
tracked through to remediation. Further details of HSBC’s approach to
risk management can be found on page 119.
Financial reporting controls
The Group’s financial reporting process is controlled using documented
accounting policies and reporting formats, supported by detailed
instructions and guidance on reporting requirements, issued to all
reporting entities within the Group in advance of each reporting period
end. The submission of financial information from each reporting entity
is supported by a certification by the responsible financial officer and
analytical review procedures at reporting entity and Group levels.
Group Disclosure Committee
Chaired by the Group CFO, the Group Disclosure Committee supports
the discharge of the Group’s obligations under applicable legislation and
regulation including the UK and Hong Kong Listing Rules, UK Market
Abuse Regulation and US Securities and Exchange Commission rules.
In so doing, the Group Disclosure Committee is empowered to
determine whether a new event or circumstance should be disclosed,
including the form and timing of such disclosure, and review and
endorse certain material disclosures made or to be made by the Group.
The membership of the Group Disclosure Committee consists of senior
management, including the Group CFO, Group Chief Risk and
Compliance Officer, Group Chief Legal Officer and Group Company
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 282 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Secretary. The Group’s external auditors are standing attendees, while
the Group's brokers and external legal counsel are consulted on
relevant matters and attend as required. The integrity of disclosures is
underpinned by structures and processes within the Global Finance and
Group Risk and Compliance functions that support rigorous analytical
review of financial reporting and the maintenance of proper accounting
records. As required by the Sarbanes-Oxley Act, the Group CEO and
the Group CFO have certified that the Group’s disclosure controls and
procedures were effective as at the end of the period covered by the
Annual Report and Accounts 2025.
The annual review of the effectiveness of the Group’s system of risk
management and internal control over financial reporting was
conducted with reference to the COSO 2013 framework. Based on the
assessment performed, the Directors concluded that for the year
ended 31 December 2025, the Group’s internal control over financial
reporting was effective.
PwC has audited the effectiveness of HSBC’s internal control over
financial reporting and has given an unqualified opinion.
Going concern
The Directors considered it appropriate to prepare the financial
statements on a going concern basis.
In making the going concern assessment, the Directors have
considered a wide range of detailed information relating to present and
future conditions, including future projections for profitability, liquidity,
capital requirements and capital resources.
In carrying out their assessment of the principal risks (as detailed on
page 121 of this annual report on Form 20-F), the Directors considered
a wide range of information including:
–details of the Group’s business and operating models, and strategy
(see page 12 in this annual report on Form 20-F);
–details of the Group’s approach to managing risk and allocating
capital;
–a summary of the Group’s financial position considering
performance, its ability to maintain minimum levels of regulatory
capital, liquidity funding and the minimum requirements for own
funds and eligible liabilities over the period of the assessment.
Notable are the risks which the Directors believe could adversely
impact the Group’s future results or operations;
–enterprise risk reports, including the Group’s risk appetite profile
(see page 119 of this annual report on Form 20-F) and top and
emerging risks (see page 121 of this annual report on Form 20-F);
–the impact on the Group due to the Russia-Ukraine war and further
conflict or military action in the Middle East, Venezuela or
elsewhere; uncertainty around Hong Kong and mainland China’s
CRE sectors; ongoing and potential trade restrictions; cross-border
investment restrictions; changes to tariff rates; and heightened
strategic competition between the US and China;
–reports and updates regarding regulatory and internal stress testing.
On 24 March 2025, the Bank of England (‘BoE’) launched the Bank
Capital Stress Test (‘BCST’) exercise to assess the resilience of the
UK banking system to a range of adverse shocks. The exercise
involved determining projected capital and liquidity metrics under a
severe but plausible stress scenario. The BoE published the results
of the 2025 BCST as part of the Financial Stability Report on 2
December 2025. HSBC demonstrated a strong CET1 performance,
highlighting its resilience in stress. Internal stress tests, including
the 2026 Group-wide internal stress test performed in December
2025, together with additional scenario analysis examining the
potential outcomes from ongoing geopolitical uncertainty, supported
adequate capitalisation. We also conduct reverse stress tests each
year at Group level and, where required at subsidiary entity level, to
understand potential extreme conditions that would make our
business model non-viable. Reverse stress testing identifies
potential stresses and vulnerabilities we might face, and helps
inform early warning triggers, management actions and contingency
plans designed to mitigate risks
–we conduct internal climate scenario analysis to evaluate our
resilience to climate change, with a particular focus on both climate-
related physical and transition risks. The findings indicate that the
Group does not anticipate any material impacts arising from climate
change, at least for the next three years. Furthermore, our capital
position is robust enough to absorb severe climate-related stresses.
Nonetheless, it is recognised that climate-related risks are likely to
increase beyond this timeframe. Further details of our modelling
approach, modelling limitations and insights from our 2025 climate
scenario analysis are explained from page 206 of this annual report
on Form 20-F;
–reports and updates from management on risk-related issues
selected for in-depth consideration;
–reports and updates on regulatory developments;
–legal proceedings and regulatory matters set out in Note 35 of the
financial statements in this annual report on Form 20-F; and
–reports and updates from management on the operational resilience
of the Group.
Employees
At 31 December 2025, HSBC had a total workforce equivalent to
209,000 full-time employees compared with 211,000 at the end of
- Our main centres of employment were India with approximately
47,000 employees, the UK with 33,000, mainland China with 33,000,
Hong Kong with 26,000, and Mexico with 16,000.
Our business spans many cultures, communities and continents. We
aspire to provide a high-performing environment where our colleagues
can fulfil their potential by building their skills and capabilities while
focusing on the development of a diverse and inclusive culture. We use
employee surveys to assess progress and make changes. We want our
colleagues to feel connected and supported to speak up, and our
leaders to encourage and use feedback. Where we make organisational
changes, we support our colleagues, particularly where jobs are
impacted.
Employee relations
We consult with and, where appropriate, negotiate with employee
representative bodies where we have them. It is our policy to maintain
well-developed communications and consultation programmes with all
employee representative bodies. There have been no material
disruptions to our operations from labour disputes during the past five
years.
We are committed to complying with the applicable employment laws
and regulations in the jurisdictions in which we operate, including in
relation to working hours and rest periods. HSBC’s employment
practices and relations policy provides the framework and controls
through which we seek to uphold that commitment.
Inclusion
Our customers, colleagues and communities span many cultures and
continents. We value difference and believe that an inclusive culture
makes us stronger. We are dedicated to building a connected
workforce where everyone feels a sense of belonging.
We expect all colleagues at HSBC to treat each other with dignity and
respect to ensure an inclusive environment. Our policies make it clear
that we do not tolerate unlawful discrimination, bullying or harassment
on any grounds. We are transparent in sharing our data through
external disclosures and we participate in benchmarking to measure
our progress across the industry.
Our approach to inclusion is set out on page 51 alongside our ambitions
and progress.
ÑFor further details of our representation data, pay gap data, and actions, see
www.hsbc.com/who-we-are/our-people/inclusion-at-hsbc and the ESG Data
Pack at www.hsbc.com/esg.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 283 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Share capital & other disclosures |
Employment of people with a
disability
We strongly believe in providing equal opportunities for our employees.
The employment of people with a disability is included in this
commitment. We are committed to retaining disabled employees in the
workplace and to providing reasonable adjustments to enable this.
Employee development
Employee development energises our colleagues for growth and helps
to equip them with the skills they need today whilst also preparing
them to meet future challenges. We remain committed to delivering a
high-quality learning experience by adopting a data-driven approach that
targets our learning investment to meet the most critical skill needs.
By leveraging our strategic workforce blueprints, we have focused our
efforts on critical skill shifts, including digitally enabling our frontline
colleagues and developing the sustainability and wealth expertise of our
relationship managers, providing a variety of learning opportunities
through our Enterprise Skills Academies.
We have launched our new AI Academy to support advanced skills
development aligned with HSBC’s AI strategy, expanded our ’Doing
Business in India and China’ programmes to include Saudi Arabia, and
increased our focus on building capabilities beyond foundational skills
through our Sustainability Academy. In our global Wealth and Personal
Banking business we have focused our attention on developing
customer centricity and product expertise, and we have created
opportunities for colleagues to develop new skills and collaborate more
broadly through our transition to a value stream delivery model as part
of our bank wide Digital Acceleration Programme.
We remain committed to our global mandatory training being
completed annually, as it is essential for shaping our culture and
maintaining a focus on critical issues, such as sustainability and
financial crime risk. In line with this commitment, we have maintained
our focus on senior leaders by launching new programmes centred on
Enterprise Risk Leadership, which are designed to equip them with the
skills necessary to navigate an evolving risk environment.
Health and safety
We are dedicated to maintaining a safe and healthy working
environment for all. Our global policies, mandatory procedures, and
incident reporting systems across the organisation reflect our core
values and comply with international standards. Chief Operating
Officers are responsible for local implementation of all legal
requirements and ensuring ongoing adherence. We continuously
monitor and assure our health and safety performance to remain
compliant with relevant regulations.
In 2025, we advanced our Health & Safety agenda through several
key initiatives:
–Achieved the WELL Health and Safety Rating at 100 global offices,
demonstrating our commitment to safe workplaces for
employees, customers, and stakeholders.
–Delivered mandatory health and safety training globally, increasing
awareness of roles and responsibilities among employees and
contractors.
–Conducted annual safety inspections across all buildings
worldwide, identifying opportunities for improvement and
enhancing safety standards.
–Expanded our Workplace Adjustments programme to eight
markets, to provide additional tailored support to employees with
disabilities, long-term health conditions, or neurodiversity. Further
expansion is planned.
–Held our 2025 Global Health and Safety Campaign, combining
education and interactive experiences on slips and trips, moving
objects, ergonomics, and emergency arrangements.
–Provided targeted guidance and training for construction partners,
with over 6,300 workers receiving safety passport training across
nine countries.
–Implemented robust controls to protect colleagues and operations
from natural disasters; in 2025, 33 named storms affected 2,222
buildings, with no injuries or impact reported.
These actions reinforce our commitment to safeguarding our people
and operations, while continuously improving our health and safety
standards.
| Employee health and safety | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| Rate of workplace fatalities per 100,000 employees | — | — | — |
| Number of major injuries to employees1 | 10 | 14 | 12 |
| All injury rate per 100,000 employees | 96 | 91 | 110 |
| Lost days due to work injury | 331 | 335 | 594 |
1Fractures, dislocation, concussion, loss of consciousness, overnight
admission to hospital.
Remuneration
HSBC’s pay and performance strategy is designed to reward
competitively the achievement of long-term sustainable performance
and attract and motivate the very best people, regardless of gender,
ethnicity, age, disability or any other factor unrelated to performance or
experience with the Group, while performing their role in the long-term
interests of our stakeholders.
ÑFor further details of the Group’s approach to remuneration, see page 259.
Employee share plans
Summaries of the share options and share awards granted, exercised/
vested or lapsed during the year and other details required to be
disclosed pursuant to Chapter 17 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited, including
detailed summaries of the HSBC share plans, are available on our
website at www.hsbc.com/investors/results-and-announcements and
on the website of The Stock Exchange of Hong Kong Limited at
www.hkex.com.hk, or can be obtained upon request from the Group
Company Secretary, 8 Canada Square, London E14 5HQ.
ÑParticulars of options held by Directors of HSBC Holdings are set out on
page 268.
ÑNote 5 on the financial statements gives details of share-based payments,
including discretionary awards of shares granted under HSBC share plans.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 284 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Statement of compliance
The statement of corporate governance practices set out on pages 219
to 284 and the information referred to therein constitutes the Corporate
governance report and Directors’ report of HSBC Holdings plc for 2025.
Further details of the relevant corporate governance codes, role profiles
and policies can be obtained from the websites referenced in the table
below. The websites referenced here do not form part of this report.
| Relevant corporate governance codes, role profiles and policies | |
|---|---|
| UK Corporate Governance Code | www.frc.org.uk |
| Hong Kong Corporate Governance<br><br>Code (set out in Appendix C1 to<br><br>the Rules Governing the Listing of<br><br>Securities on the Stock Exchange<br><br>of Hong Kong Limited (’HKEx’)) | www.hkex.com.hk |
| Descriptions of the roles and<br><br>responsibilities of the:<br><br>– Group Chairman<br><br>– Group Chief Executive Officer<br><br>– Senior Independent Director<br><br>– Board | www.hsbc.com/who-we-are/our-<br><br>people/board-of-directors/board-<br><br>responsibilities |
| Board and senior management | www.hsbc.com/who-we-are/our-<br><br>people |
| Roles and responsibilities of the<br><br>Board’s committees | www.hsbc.com/who-we-are/our-<br><br>people/board-of-directors/board-<br><br>committees |
| Board’s policies on:<br><br>– diversity and inclusion<br><br>– shareholder communication<br><br>– human rights<br><br>– remuneration practices and<br><br>governance | www.hsbc.com/who-we-are/our-<br><br>people/board-of-directors/board-<br><br>responsibilities |
| Global Internal Audit Charter | www.hsbc.com/who-we-are/esg-and-<br><br>responsible-business/governance/<br><br>internal-control |
The Board considers that, during 2025, HSBC fully complied with both
the UK and Hong Kong Corporate Governance Codes, with the
exception of Provision 24 of the UK Corporate Governance Code in
relation to the Group Chairman being a member of the Group Audit
Committee.
Brendan Nelson has served as the Chair of the Group Audit Committee
since February 2024, and on 1 October 2025, was appointed as Group
Chairman on an interim basis. Due to the interim nature of this
appointment, and to provide continuity, the Board determined that
Brendan should continue to Chair the Group Audit Committee until a
permanent Group Chairman was appointed.
The Board subsequently took the decision to appoint Brendan as a
permanent successor to the role of Group Chairman on 3 December
2025, and determined that it was in the best interests of the Group for
Brendan to continue in his role as Chair of the Group Audit Committee
to provide continuity of oversight for the 2025 audit process and until a
permanent successor had been identified and appointed.
These decisions reflect Brendan’s extensive experience on UK-listed
boards and his previous roles as an auditor and audit committee chair. It
was also agreed that Brendan had sufficient capacity to fulfil these
roles given that HSBC is Brendan's only significant board commitment.
Under the Hong Kong Corporate Governance Code, the audit
committee should be responsible for the oversight of all risk
management and internal control systems. The Group Audit
Committee’s responsibilities cover oversight of the effectiveness of all
internal controls. The Group Risk Committee has responsibility for
oversight of internal controls relating to risk management and risk
management systems and provides input to the Group Audit
Committee on these.
HSBC Holdings plc 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 the 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
support the HSBC Holdings Board’s approval and publication of the
Annual Report and Accounts 2025.
On behalf of the Board
Brendan Nelson
Group Chairman
HSBC Holdings plc
Registered number 617987
25 February 2026
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 285 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial
statements
The financial statements provide detailed
information and notes on our income, balance
sheet, cash flows and changes in equity,
alongside a report from our independent auditors.
| 286 | Report of Independent Registered Public<br><br>Accounting Firm |
|---|---|
| 288 | Financial statements |
| 288 | – Consolidated income statement |
| 289 | – Consolidated statement of comprehensive income |
| 290 | – Consolidated balance sheet |
| 291 | – Consolidated statement of changes in equity |
| 294 | – Consolidated statement of cash flows |
| 296 | – HSBC Holdings financial statements |
| 300 | Notes on the financial statements |
6
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 286 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Independent auditors report |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of HSBC Holdings plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of HSBC Holdings plc and its subsidiaries (the “Group”) as of 31 December 2025
and 2024, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for each of the three years in the period ended 31 December 2025, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the Group’s internal control over financial reporting as of
31 December 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as
of 31 December 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended 31 December
2025 in conformity with (i) International Financial Reporting Standards as issued by the International Accounting Standards Board, (ii) UK-adopted
International Accounting Standards and (iii) International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial reporting
as of 31 December 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Group's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
assessment of internal controls over financial reporting on page 111 of this Form 20-F. Our responsibility is to express opinions on the Group’s
consolidated financial statements and on the Group's internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the
consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Measurement of expected credit losses
As described in Note 1.2 (j) to the consolidated financial statements, expected credit losses (‘ECL’) are recognised for loans and advances to banks
and customers, non-trading reverse repurchase agreements, other financial assets held at amortised cost, debt instruments measured at fair value
through other comprehensive income and certain loan commitments and financial guarantee contracts. As disclosed by management, the Group's
allowance for ECL was $11.2bn at 31 December 2025. The assessment of credit risk and the estimation of ECL are probability-weighted and
incorporate information about past events, current conditions and forecasts of future economic conditions at the reporting date. Management
calculates ECL using three main components: a probability of default (‘PD’), a loss given default (‘LGD’) and the exposure at default (‘EAD’). As
disclosed by management, the recognition and measurement of ECL involves the use of significant judgement and estimation. Management form
multiple economic scenarios based on economic forecasts, apply these to credit risk models to estimate future credit losses, and probability
weight the results to determine an ECL estimate.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 287 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Report of Independent Registered Public<br><br>Accounting Firm |
The principal considerations for our determination that performing procedures relating to the measurement of ECL is a critical audit matter are: (i)
the significant judgement by management in developing the assumptions for multiple economic scenarios and the weighting of those scenarios;
(ii) a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence obtained; and (iii) the audit
effort involved the use of professionals with specialised skills and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the measurement of ECL. These
procedures also included, amongst others, testing management’s process for estimating ECL through: (i) evaluating the appropriateness of the
ECL model methodologies applied by management; (ii) evaluating the reasonableness of certain economic scenarios and weightings used; (iii)
evaluating the reasonableness of discounted cash flow projections for a sample of credit impaired exposures; (iv) testing the completeness and
accuracy of critical input data that is used by management to determine ECL; and (v) evaluating the disclosures made in the consolidated financial
statements in relation to the measurement of ECL. Professionals with specialised skills and knowledge assisted in testing the appropriateness of
model methodologies and assessing the reasonableness of the selection and weighting of economic scenarios.
Impairment assessment of investment in Bank of Communications co., Limited (‘BoCom’)
As described in Note 1.2(a) and 18 to the consolidated financial statements, the carrying value of the Group's investment in BoCom is $22.5bn at
31 December 2025. At 30 June 2025, management performed an impairment test on the carrying amount, which resulted in an impairment of
$1.0bn, as the recoverable amount as determined by a value-in-use (‘VIU’) calculation was lower than the carrying amount. No further impairment
(or reversal) was required for the period from 1 July 2025 to 31 December 2025 based on results of the quarterly impairment tests performed.
The VIU calculation uses discounted cash flow projections based on management’s best estimates of future earnings available to ordinary
shareholders. As disclosed by management, there is significant judgement in determining the VIU, particularly in estimating the present value of
cash flows expected to arise from continuing to hold the investment, based on a number of assumptions. The significant assumptions used were
discount rate, operating income growth rate, cost-income ratio, expected credit losses as a percentage of loans and advances to customers, risk-
weighted assets as a percentage of total assets, loans and advances to customers growth rate, capital adequacy ratio and tier 1 capital adequacy
ratio, and long-term effective tax rate, long-term profit growth rate and long-term asset growth rate.
The principal considerations for our determination that performing procedures relating to the impairment assessment of investment in BoCom is a
critical audit matter are: (i) the significant judgement by management when determining significant assumptions for discount rate, operating
income growth rate, cost-income ratio, expected credit losses as a percentage of loans and advances to customers, risk-weighted assets as a
percentage of total assets, loans and advances to customers growth rate, capital adequacy ratio and tier 1 capital adequacy ratio, and long-term
effective tax rate, long-term profit growth rate and long-term asset growth rate ; (ii) a high degree of auditor judgement, subjectivity and effort in
performing procedures and evaluating management's estimate of the VIU and evaluating audit evidence; and (iii) the audit effort involved the use
of professionals with specialised skills and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment
assessment of the investment in BoCom. These procedures also included, amongst others: (i) evaluating management’s VIU determination and
aforementioned underlying significant assumptions; (ii) developing an independent range for discount rate; (iii) evaluating the appropriateness of
the methodology used to estimate the VIU; (iv) testing inputs used in the determination of the significant assumptions; and (v) evaluating the
disclosures made in the consolidated financial statements in relation to BoCom. Professionals with specialised skill and knowledge were used to
assist in assessing the VIU methodology and developing an independent range for discount rate.
/s/ PricewaterhouseCoopers LLP
London, United Kingdom
26 February 2026
We have served as the Group's auditor since 2015.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 288 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Financial statements
| Consolidated income statement | ||||
|---|---|---|---|---|
| for the year ended 31 December 2025 | ||||
| 2025 | 2024 | 2023 | ||
| Notes* | $m | $m | $m | |
| Net interest income | 34,794 | 32,733 | 35,796 | |
| – interest income1,2 | 97,872 | 108,631 | 100,868 | |
| – interest expense3 | (63,078) | (75,898) | (65,072) | |
| Net fee income | 2 | 13,343 | 12,301 | 11,845 |
| – fee income | 17,608 | 16,266 | 15,616 | |
| – fee expense | (4,265) | (3,965) | (3,771) | |
| Net income from financial instruments held for trading or managed on a fair value basis4 | 3 | 19,682 | 21,116 | 16,661 |
| Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,<br><br>measured at fair value through profit or loss | 3 | 11,175 | 5,901 | 7,887 |
| Insurance finance expense | 4 | (11,197) | (5,978) | (7,809) |
| Insurance service result | 4 | 1,825 | 1,310 | 1,078 |
| – insurance service revenue | 3,228 | 2,752 | 2,259 | |
| – insurance service expense | (1,403) | (1,442) | (1,181) | |
| Gain on acquisition5 | — | — | 1,591 | |
| Losses recognised on sale of business operations6 | (47) | (1,752) | (61) | |
| Other operating income/(expense)7,8 | (1,301) | 223 | (930) | |
| Net operating income before change in expected credit losses and other credit impairment charges9 | 68,274 | 65,854 | 66,058 | |
| Change in expected credit losses and other credit impairment charges | (3,850) | (3,414) | (3,447) | |
| Net operating income | 64,424 | 62,440 | 62,611 | |
| Employee compensation and benefits | 5 | (19,553) | (18,465) | (18,220) |
| General and administrative expenses | (11,959) | (10,498) | (10,383) | |
| Depreciation and impairment of property, plant and equipment and right-of-use assets10 | (1,971) | (1,845) | (1,640) | |
| Amortisation and impairment of intangible assets | (2,945) | (2,235) | (1,827) | |
| Total operating expenses | (36,428) | (33,043) | (32,070) | |
| Operating profit | 27,996 | 29,397 | 30,541 | |
| Share of profit in associates and joint ventures | 18 | 2,911 | 2,912 | 2,807 |
| Impairment of interest in associate8 | 18 | (1,000) | — | (3,000) |
| Profit before tax | 29,907 | 32,309 | 30,348 | |
| Tax expense | 7 | (6,776) | (7,310) | (5,789) |
| Profit for the year | 23,131 | 24,999 | 24,559 | |
| Attributable to: | ||||
| – ordinary shareholders of the parent company | 21,102 | 22,917 | 22,432 | |
| – other equity holders | 1,183 | 1,062 | 1,101 | |
| – non-controlling interests | 846 | 1,020 | 1,026 | |
| Profit for the year | 23,131 | 24,999 | 24,559 | |
| $ | $ | $ | ||
| Basic earnings per ordinary share | 9 | 1.21 | 1.25 | 1.15 |
| Diluted earnings per ordinary share | 9 | 1.20 | 1.24 | 1.14 |
For Notes on the financial statements, see page 300.
1Includes $83.3bn (2024: $93.4bn; 2023: $88.7bn) of interest recognised on financial assets measured at amortised cost and $14.5bn (2024: $15.3bn; 2023:
$12.1bn) of interest recognised on financial assets measured at fair value through other comprehensive income. In 2024, it also includes a net $0.2bn loss
related to the early redemption of legacy securities.
2Interest income is calculated using the effective interest method and comprises interest recognised on financial assets measured at either amortised cost or fair
value through other comprehensive income.
3Interest expense includes $60.1bn (2024: $72.6bn; 2023: $62.1bn) 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.
4In 2025, the amounts include a $0.1bn (2024: $0.1bn gain) mark-to-market gain on interest rate hedging of the portfolio of retained loans post sale of our retail banking
operations in France and a $0.1bn fair value loss on Grupo Financiero Galicia‘s (‘Galicia‘) American Depositary Receipts (‘ADRs‘) received as purchase consideration
from the sale of our business in Argentina. In 2024, the amounts include a $0.3bn gain (2023: $0.3bn loss) on the foreign exchange hedging of the proceeds from the
sale of our banking business in Canada.
5Gain recognised in respect of the acquisition of SVB UK.
6 In 2024, the amount includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves
arising on sale of our business in Argentina. This was partly offset by a gain of $4.6bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves losses but excluding the $0.3bn gain on the foreign exchange hedging (see footnote 4 above) on the sale of our banking
business in Canada. The amount in 2023 primarily reflected losses due to restrictions impacting the recoverability of assets in Russia, partly offset by a gain on
sale of our retail banking operations in France.
7Includes a loss on net monetary positions of $0.2bn (2024: $1.2bn; 2023: $1.7bn) as a result of applying IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
8 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans
following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the
dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment loss following an impairment test on the carrying value of the Group’s
investment in BoCom in ‘Impairment of interest in associate’. See Note 18 on pages 345 to 348.
9Also referred to as revenue.
10Includes depreciation of the right-of-use assets of $0.7bn (2024: $0.7bn, 2023: $0.7bn).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 289 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Consolidated statement of comprehensive income | ||||||
| --- | --- | --- | --- | |||
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Profit for the year | 23,131 | 24,999 | 24,559 | |||
| 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 | 3,036 | 163 | 2,599 | |||
| – fair value gains/(losses) | 1,525 | 41 | 2,381 | |||
| – fair value losses/(gains) transferred to the income statement on disposal | 1,328 | 69 | 905 | |||
| – expected credit (recoveries)/losses recognised in the income statement | (19) | (6) | 59 | |||
| – disposal of subsidiary | 745 | 85 | — | |||
| – income taxes | (543) | (26) | (746) | |||
| Cash flow hedges | 1,773 | (52) | 2,953 | |||
| – fair value gains/(losses) | 749 | (282) | 2,534 | |||
| – fair value (gains)/losses reclassified to the income statement | 1,611 | (135) | 1,463 | |||
| – disposal of subsidiary | — | 262 | — | |||
| – income taxes | (587) | 103 | (1,044) | |||
| Share of other comprehensive income/(expense) of associates and joint ventures | 54 | 462 | 47 | |||
| – share for the year | 110 | 462 | 47 | |||
| – fair value gains transferred to the income statement on disposal | — | — | — | |||
| – other comprehensive income reclassified to the income statement on disposal of interest in an associate | (56) | — | — | |||
| Net finance income/(expenses) from insurance contracts | (682) | (142) | (364) | |||
| – net finance expenses | 7 | (191) | (491) | |||
| – disposal of subsidiary | (687) | — | — | |||
| – income taxes | (2) | 49 | 127 | |||
| Exchange differences | 6,771 | 833 | (204) | |||
| – foreign exchange losses reclassified to the income statement on disposal or dilution of a foreign operation | 208 | 5,816 | — | |||
| – other exchange differences | 6,563 | (4,983) | (204) | |||
| Items that will not be reclassified subsequently to profit or loss: | ||||||
| Fair value gains on property revaluation | 14 | 5 | 1 | |||
| – fair value gains | 14 | 5 | 1 | |||
| – income taxes | — | — | — | |||
| Remeasurement of defined benefit asset/(liability) | (184) | (228) | (314) | |||
| – before income taxes | (190) | (342) | (413) | |||
| – income taxes | 6 | 114 | 99 | |||
| Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in<br><br>own credit risk | (479) | (439) | (1,219) | |||
| – before income taxes | (642) | (579) | (1,617) | |||
| – income taxes | 163 | 140 | 398 | |||
| Equity instruments designated at fair value through other comprehensive income | 98 | 99 | (120) | |||
| – fair value gains/(losses) | 127 | 141 | (120) | |||
| – income taxes | (29) | (42) | — | |||
| Effects of hyperinflation | 140 | 1,239 | 1,604 | |||
| Other comprehensive income/(expense) for the year, net of tax | 10,541 | 1,940 | 4,983 | |||
| Total comprehensive income/(expense) for the year | 33,672 | 26,939 | 29,542 | |||
| Attributable to: | ||||||
| – ordinary shareholders of the parent company | 31,478 | 24,833 | 27,397 | |||
| – other equity holders | 1,183 | 1,062 | 1,101 | |||
| – non-controlling interests | 1,011 | 1,044 | 1,044 | |||
| Total comprehensive income/(expense) for the year | 33,672 | 26,939 | 29,542 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 290 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Consolidated balance sheet | ||||||
| --- | --- | --- | --- | |||
| at 31 December 2025 | ||||||
| At | ||||||
| 31 Dec 2025 | 31 Dec 2024 | |||||
| Notes* | $m | $m | ||||
| Assets | ||||||
| Cash and balances at central banks | 242,859 | 267,674 | ||||
| Hong Kong Government certificates of indebtedness | 44,063 | 42,293 | ||||
| Trading assets | 11 | 366,153 | 314,842 | |||
| Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 14 | 133,063 | 115,769 | |||
| Derivatives | 15 | 237,740 | 268,637 | |||
| Loans and advances to banks | 108,462 | 102,039 | ||||
| Loans and advances to customers | 988,399 | 930,658 | ||||
| Reverse repurchase agreements – non-trading | 298,392 | 252,549 | ||||
| Financial investments | 16 | 567,211 | 493,166 | |||
| Assets held for sale | 23 | 11,115 | 27,234 | |||
| Prepayments, accrued income and other assets | 22 | 184,794 | 152,740 | |||
| Current tax assets | 864 | 1,313 | ||||
| Interests in associates and joint ventures | 18 | 29,577 | 28,909 | |||
| Goodwill and intangible assets | 21 | 13,107 | 12,384 | |||
| Deferred tax assets | 7 | 7,235 | 6,841 | |||
| Total assets | 3,233,034 | 3,017,048 | ||||
| Liabilities | ||||||
| Hong Kong currency notes in circulation | 44,063 | 42,293 | ||||
| Deposits by banks | 97,952 | 73,997 | ||||
| Customer accounts | 1,786,828 | 1,654,955 | ||||
| Repurchase agreements – non-trading | 204,974 | 180,880 | ||||
| Trading liabilities | 24 | 72,122 | 65,982 | |||
| Financial liabilities designated at fair value | 25 | 158,456 | 138,727 | |||
| Derivatives | 15 | 237,854 | 264,448 | |||
| Debt securities in issue | 26 | 99,675 | 105,785 | |||
| Liabilities of disposal groups held for sale | 23 | 23,382 | 29,011 | |||
| Accruals, deferred income and other liabilities | 27 | 142,123 | 130,340 | |||
| Current tax liabilities | 3,037 | 1,729 | ||||
| Insurance contract liabilities | 4 | 122,955 | 107,629 | |||
| Provisions | 28 | 3,441 | 1,724 | |||
| Deferred tax liabilities | 7 | 2,100 | 1,317 | |||
| Subordinated liabilities | 29 | 28,406 | 25,958 | |||
| Total liabilities | 3,027,368 | 2,824,775 | ||||
| Equity | ||||||
| Called up share capital | 32 | 8,588 | 8,973 | |||
| Share premium account | 32 | 111 | 14,810 | |||
| Other equity instruments | 20,716 | 19,070 | ||||
| Other reserves | (795) | (10,282) | ||||
| Retained earnings | 169,605 | 152,402 | ||||
| Total shareholders’ equity | 198,225 | 184,973 | ||||
| Non-controlling interests | 19 | 7,441 | 7,300 | |||
| Total equity | 205,666 | 192,273 | ||||
| Total liabilities and equity | 3,233,034 | 3,017,048 |
*For Notes on the financial statements, see page 300.
The accompanying notes on pages 300 to 381 and the audited sections in the Risk review on pages 118 to 218 and ‘Directors’ remuneration
report’ on pages 249 to 274 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 25 February 2026 and signed on its behalf by:
| Brendan Nelson | Pam Kaur | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Group Chairman | Group Chief Financial Officer | ||||||||||
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||
| --- | |||||||||||
| 291 | |||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| Consolidated statement of changes in equity | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| for the year ended 31 December 2025 | |||||||||||
| Other reserves | |||||||||||
| Called up<br><br>share<br><br>capital<br><br>and share<br><br>premium | Other<br><br>equity<br><br>instru-<br><br>ments | Financial<br><br>assets at<br><br>FVOCI<br><br>reserve | Cash<br><br>flow<br><br>hedging<br><br>reserve | Foreign<br><br>exchange<br><br>reserve | Merger<br><br>and other<br><br>reserves | Insurance<br><br>finance<br><br>reserve1 | Retained<br><br>earnings | Total<br><br>share-<br><br>holders’<br><br>equity | Non-<br><br>controlling<br><br>interests | Total<br><br>equity | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 23,783 | 19,070 | (3,246) | (1,079) | (32,887) | 26,328 | 602 | 152,402 | 184,973 | 7,300 | 192,273 |
| Profit for the year | — | — | — | — | — | — | — | 22,285 | 22,285 | 846 | 23,131 |
| Other comprehensive income<br><br>(net of tax) | — | — | 2,926 | 1,649 | 6,863 | 14 | (602) | (474) | 10,376 | 165 | 10,541 |
| – debt instruments at fair value<br><br>through other<br><br>comprehensive income2 | — | — | 2,267 | — | — | — | — | — | 2,267 | 24 | 2,291 |
| – equity instruments<br><br>designated at fair value<br><br>through other<br><br>comprehensive income | — | — | 84 | — | — | — | — | — | 84 | 14 | 98 |
| – cash flow hedges | — | — | — | 1,700 | — | — | — | — | 1,700 | 73 | 1,773 |
| – changes in fair value of<br><br>financial liabilities designated<br><br>at fair value upon initial<br><br>recognition arising from<br><br>changes in own credit risk | — | — | — | — | — | — | — | (479) | (479) | — | (479) |
| – property revaluation | — | — | — | — | — | 14 | — | — | 14 | — | 14 |
| – remeasurement of defined<br><br>benefit asset/liability | — | — | — | — | — | — | — | (189) | (189) | 5 | (184) |
| – share of other<br><br>comprehensive income of<br><br>associates and joint ventures | — | — | — | — | — | — | — | 110 | 110 | — | 110 |
| – effects of hyperinflation | — | — | — | — | — | — | — | 140 | 140 | — | 140 |
| – foreign exchange reclassified<br><br>to income statement on<br><br>disposal or dilution of a<br><br>foreign operation3 | — | — | — | — | 208 | — | — | — | 208 | — | 208 |
| – other reserves reclassified to<br><br>income statement on<br><br>disposal or dilution of a<br><br>foreign operation4 | — | — | 745 | — | — | — | (687) | (56) | 2 | — | 2 |
| – insurance finance income/<br><br>(expense) recognised in<br><br>other comprehensive income | — | — | — | — | — | — | 5 | — | 5 | — | 5 |
| – exchange differences | — | — | (170) | (51) | 6,655 | — | 80 | — | 6,514 | 49 | 6,563 |
| Total comprehensive income<br><br>for the year | — | — | 2,926 | 1,649 | 6,863 | 14 | (602) | 21,811 | 32,661 | 1,011 | 33,672 |
| Shares issued under employee<br><br>remuneration and share plans | 116 | — | — | — | — | — | — | (116) | — | — | — |
| Share premium reclassification<br><br>to retained earnings5 | (14,810) | — | — | — | — | — | — | 14,810 | — | — | — |
| Capital redemption reserves<br><br>reclassification to retained<br><br>earnings5 | — | — | — | — | — | (1,755) | — | 1,755 | — | — | — |
| Capital securities issued6 | — | 4,096 | — | — | — | — | — | — | 4,096 | — | 4,096 |
| Dividends to shareholders | — | — | — | — | — | — | — | (12,764) | (12,764) | (718) | (13,482) |
| Redemption of securities7 | — | (2,450) | — | — | — | — | — | — | (2,450) | — | (2,450) |
| Cost of share-based payment<br><br>arrangements | — | — | — | — | — | — | — | 621 | 621 | — | 621 |
| Transfers | — | — | — | — | — | — | — | — | — | — | — |
| Share buy-back9 | — | — | — | — | — | — | — | (8,039) | (8,039) | — | (8,039) |
| Cancellation of shares | (390) | — | — | — | — | 390 | — | — | — | — | — |
| Other movements10 | — | — | 1 | — | — | 1 | — | (875) | (873) | (152) | (1,025) |
| At 31 Dec 2025 | 8,699 | 20,716 | (319) | 570 | (26,024) | 24,978 | — | 169,605 | 198,225 | 7,441 | 205,666 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||
| --- | |||||||||||
| 292 | |||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| Consolidated statement of changes in equity (continued) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| for the year ended 31 December 2024 | |||||||||||
| Other reserves | |||||||||||
| Called up<br><br>share<br><br>capital<br><br>and share<br><br>premium | Other<br><br>equity<br><br>instru-<br><br>ments | Financial<br><br>assets at<br><br>FVOCI<br><br>reserve | Cash<br><br>flow<br><br>hedging<br><br>reserve | Foreign<br><br>exchange<br><br>reserve | Merger<br><br>and other<br><br>reserves | Insurance<br><br>finance<br><br>reserve1 | Retained<br><br>earnings | Total<br><br>share-<br><br>holders’<br><br>equity | Non-<br><br>controlling<br><br>interests | Total<br><br>equity | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 24,369 | 17,719 | (3,507) | (1,033) | (33,753) | 28,601 | 785 | 152,148 | 185,329 | 7,281 | 192,610 |
| Profit for the year | — | — | — | — | — | — | — | 23,979 | 23,979 | 1,020 | 24,999 |
| Other comprehensive income<br><br>(net of tax) | — | — | 259 | (46) | 863 | 5 | (183) | 1,018 | 1,916 | 24 | 1,940 |
| – debt instruments at fair value<br><br>through other<br><br>comprehensive income | — | — | 62 | — | — | — | — | — | 62 | 16 | 78 |
| – equity instruments<br><br>designated at fair value<br><br>through other<br><br>comprehensive income | — | — | 75 | — | — | — | — | — | 75 | 24 | 99 |
| – cash flow hedges | — | — | — | (312) | — | — | — | — | (312) | (2) | (314) |
| – changes in fair value of<br><br>financial liabilities designated<br><br>at fair value upon initial<br><br>recognition arising from<br><br>changes in own credit risk | — | — | — | — | — | — | — | (439) | (439) | — | (439) |
| – property revaluation | — | — | — | — | — | 5 | — | — | 5 | — | 5 |
| – remeasurement of defined<br><br>benefit asset/liability | — | — | — | — | — | — | — | (244) | (244) | 16 | (228) |
| – share of other<br><br>comprehensive income of<br><br>associates and joint ventures | — | — | — | — | — | — | — | 462 | 462 | — | 462 |
| – effects of hyperinflation | — | — | — | — | — | — | — | 1,239 | 1,239 | — | 1,239 |
| – foreign exchange reclassified<br><br>to income statement on<br><br>disposal or dilution of a<br><br>foreign operation | — | — | — | — | 5,816 | — | — | — | 5,816 | — | 5,816 |
| – other reserves reclassified to<br><br>income statement on<br><br>disposal or dilution of a<br><br>foreign operation | — | — | 85 | 262 | — | — | — | — | 347 | — | 347 |
| – insurance finance income/<br><br>(expense) recognised in<br><br>other comprehensive income | — | — | — | — | — | — | (142) | — | (142) | — | (142) |
| – exchange differences | — | — | 37 | 4 | (4,953) | — | (41) | — | (4,953) | (30) | (4,983) |
| Total comprehensive income<br><br>for the year | — | — | 259 | (46) | 863 | 5 | (183) | 24,997 | 25,895 | 1,044 | 26,939 |
| Shares issued under employee<br><br>remuneration and share plans | 77 | — | — | — | — | — | — | (77) | — | — | — |
| Share premium reclassification<br><br>to retained earnings | — | — | — | — | — | — | — | — | — | — | — |
| Capital redemption reserves<br><br>reclassification to retained<br><br>earnings | — | — | — | — | — | — | — | — | — | — | — |
| Capital securities issued | — | 3,601 | — | — | — | — | — | — | 3,601 | — | 3,601 |
| Dividends to shareholders | — | — | — | — | — | — | — | (16,410) | (16,410) | (690) | (17,100) |
| Redemption of securities | — | (2,250) | — | — | — | — | — | — | (2,250) | — | (2,250) |
| Transfers8 | — | — | — | — | — | (2,945) | — | 2,945 | — | — | — |
| Cost of share-based payment<br><br>arrangements | — | — | — | — | — | — | — | 529 | 529 | — | 529 |
| Share buy-back | — | — | — | — | — | — | — | (11,043) | (11,043) | — | (11,043) |
| Cancellation of shares | (663) | — | — | — | — | 663 | — | — | — | — | — |
| Other movements | — | — | 2 | — | 3 | 4 | — | (687) | (678) | (335) | (1,013) |
| At 31 Dec 2024 | 23,783 | 19,070 | (3,246) | (1,079) | (32,887) | 26,328 | 602 | 152,402 | 184,973 | 7,300 | 192,273 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||
| --- | |||||||||||
| 293 | |||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| Consolidated statement of changes in equity (continued) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| for the year ended 31 December 2023 | |||||||||||
| Other reserves | |||||||||||
| Called up<br><br>share<br><br>capital<br><br>and share<br><br>premium | Other<br><br>equity<br><br>instru-<br><br>ments | Financial<br><br>assets at<br><br>FVOCI<br><br>reserve | Cash<br><br>flow<br><br>hedging<br><br>reserve | Foreign<br><br>exchange<br><br>reserve | Merger<br><br>and other<br><br>reserves | Insurance<br><br>finance<br><br>reserve1 | Retained<br><br>earnings | Total<br><br>share-<br><br>holders’<br><br>equity | Non-<br><br>controlling<br><br>interests | Total<br><br>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<br><br>(net of tax) | — | — | 2,402 | 3,030 | (211) | 1 | (371) | 114 | 4,965 | 18 | 4,983 |
| – debt instruments at fair value<br><br>through other<br><br>comprehensive income | — | — | 2,574 | — | — | — | — | — | 2,574 | 25 | 2,599 |
| – equity instruments<br><br>designated at fair value<br><br>through other<br><br>comprehensive income | — | — | (93) | — | — | — | — | — | (93) | (27) | (120) |
| – cash flow hedges | — | — | — | 2,919 | — | — | — | — | 2,919 | 34 | 2,953 |
| – changes in fair value of<br><br>financial liabilities designated<br><br>at fair value upon initial<br><br>recognition arising from<br><br>changes in own credit risk | — | — | — | — | — | — | — | (1,220) | (1,220) | 1 | (1,219) |
| – property revaluation | — | — | — | — | — | 1 | — | — | 1 | — | 1 |
| – remeasurement of defined<br><br>benefit asset/liability | — | — | — | — | — | — | — | (317) | (317) | 3 | (314) |
| – share of other<br><br>comprehensive income of<br><br>associates and joint ventures | — | — | — | — | — | — | 47 | 47 | — | 47 | |
| – effects of hyperinflation | — | — | — | — | — | — | — | 1,604 | 1,604 | — | 1,604 |
| – insurance finance income/<br><br>(expense) recognised in<br><br>other comprehensive income | — | — | — | — | — | — | (364) | — | (364) | — | (364) |
| – exchange differences | — | — | (79) | 111 | (211) | — | (7) | — | (186) | (18) | (204) |
| Total comprehensive income<br><br>for the year | — | — | 2,402 | 3,030 | (211) | 1 | (371) | 23,647 | 28,498 | 1,044 | 29,542 |
| Shares issued under employee<br><br>remuneration and share plans | 79 | — | — | — | — | — | — | (79) | — | — | — |
| Share premium reclassification<br><br>to retained earnings | — | — | — | — | — | — | — | — | — | — | — |
| Capital redemption reserves<br><br>reclassification to retained<br><br>earnings | — | — | — | — | — | — | — | — | — | — | — |
| Capital securities issued | — | 1,996 | — | — | — | — | — | — | 1,996 | — | 1,996 |
| Dividends to shareholders | — | — | — | — | — | — | — | (11,593) | (11,593) | (603) | (12,196) |
| Redemption of securities | — | (4,023) | — | — | — | — | — | 20 | (4,003) | — | (4,003) |
| Transfers8 | — | — | — | — | — | (5,130) | — | 5,130 | — | — | — |
| Cost of share-based payment<br><br>arrangements | — | — | — | — | — | — | — | 482 | 482 | — | 482 |
| Share buy-back | — | — | — | — | — | — | — | (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 |
1The 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’). At
31 December 2025, the entire balance was reclassified to income statement following completion of the sale of the insurance business in France.
2Includes recycling of fair value losses of $1.5bn following completion of the sale of our retail banking operations in France.
3Includes the recycling of a $0.2bn foreign currency translation reserves loss as a result of the dilution of our shareholding in BoCom.
4Includes insurance finance income reclassification of $0.7bn and $0.7bn fair value losses reclassification following completion of the sale of our insurance business in
France.
5On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings' share
premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings' Annual General Meeting held on
2 May 2025 (the ‘Capital Reduction’). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting
in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.
6HSBC Holdings issued $1.5bn 6.950% contingent convertible securities in February 2025, SGD0.8bn 5.000% contingent convertible securities in March 2025
and $2.0bn 7.050% contingent convertible securities in June 2025. All instruments were recorded net of issuance costs.
7In March 2025, HSBC Holdings redeemed its $2.45bn 6.375% contingent convertible securities.
8At 31 December 2024, an impairment of $11.4bn (2023: $5.5bn) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of
$2.9bn (2023: $5.1bn) from the remaining historical associated merger reserve to retained earnings.
9HSBC Holdings announced the following share buy-backs during the year: a share buy-back of up to $2.0bn in February 2025, which was completed in April
2025; a share buy-back of up to $3.0bn in May 2025, which was completed in July 2025 and a share buy-back of up to $3.0bn in July 2025, which was
completed in October 2025.
10Includes $1.1bn (2024: $0.5bn; 2023: $0.6bn) of shares bought by HSBC Holdings Employee Benefit Trust to satisfy obligation to deliver shares under employee
share plans.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 294 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Consolidated statement of cash flows | ||||||
| --- | --- | --- | --- | |||
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Profit before tax | 29,907 | 32,309 | 30,348 | |||
| Adjustments for non-cash items: | ||||||
| Depreciation, amortisation and impairment | 4,916 | 4,080 | 3,466 | |||
| Net loss from investing activities | 2,614 | 180 | 1,213 | |||
| Share of profit in associates and joint ventures | (2,911) | (2,912) | (2,807) | |||
| Impairment of interest in associate | 1,000 | — | 3,000 | |||
| (Gain)/loss on acquisition/disposal of subsidiaries, businesses, associates and joint ventures | 93 | 1,704 | (1,775) | |||
| Change in expected credit losses gross of recoveries and other credit impairment charges | 4,170 | 3,674 | 3,717 | |||
| Provisions including pensions | 2,103 | 299 | 266 | |||
| Share-based payment expense | 621 | 529 | 482 | |||
| Other non-cash items included in profit before tax | (4,690) | (5,290) | (4,299) | |||
| Elimination of exchange differences1 | (34,682) | 26,734 | (10,678) | |||
| Changes in operating assets and liabilities | ||||||
| Change in net trading securities and derivatives | (38,630) | (41,385) | (63,247) | |||
| Change in loans and advances to banks and customers | (74,071) | 7,275 | (14,145) | |||
| Change in reverse repurchase agreements – non-trading | (32,342) | (4,227) | (2,095) | |||
| Change in financial assets designated and otherwise mandatorily measured at fair value | (23,393) | (20,662) | (9,994) | |||
| Change in other assets | (38,389) | 7,685 | (10,254) | |||
| Change in deposits by banks and customer accounts | 168,907 | 44,237 | 45,021 | |||
| Change in repurchase agreements – non-trading | 24,094 | 8,700 | 43,366 | |||
| Change in debt securities in issue | (5,613) | 11,942 | 11,945 | |||
| Change in financial liabilities designated at fair value | 46,129 | (2,248) | 10,097 | |||
| Change in other liabilities | 4,098 | (1,603) | 8,742 | |||
| Dividends received from associates | 1,040 | 1,062 | 1,067 | |||
| Contributions paid to defined benefit plans | (147) | (167) | (208) | |||
| Tax paid | (5,058) | (6,611) | (4,117) | |||
| Net cash from operating activities | 29,766 | 65,305 | 39,111 | |||
| Purchase of financial investments | (502,391) | (523,454) | (563,561) | |||
| Proceeds from the sale and maturity of financial investments2 | 470,309 | 453,502 | 504,174 | |||
| Net cash flows from the purchase and sale of property, plant and equipment | (1,447) | (1,344) | (1,145) | |||
| Net cash flows from disposal of loan portfolio and customer accounts | — | — | 623 | |||
| Net investment in intangible assets | (3,214) | (2,542) | (2,550) | |||
| Net cash inflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures3 | 1,126 | 9,891 | 1,239 | |||
| Net cash outflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures4 | (1,451) | (12,617) | (1,692) | |||
| Net cash from investing activities | (37,068) | (76,564) | (62,912) | |||
| Issue of ordinary share capital and other equity instruments | 4,096 | 3,602 | 1,996 | |||
| Share buy-back | (9,091) | (11,348) | (5,812) | |||
| Net purchases of own shares for market-making and investment purposes | (1,123) | (541) | (614) | |||
| Net cash flow from change in stake of subsidiaries | (154) | — | (19) | |||
| Redemption of preference shares and other equity instruments | (2,450) | (3,433) | (4,003) | |||
| Subordinated loan capital issued | 3,834 | 4,361 | 5,237 | |||
| Subordinated loan capital repaid5 | (3,591) | (2,000) | (2,147) | |||
| Dividends paid to shareholders of the parent company and non-controlling interests | (13,482) | (17,100) | (12,196) | |||
| Net cash from financing activities | (21,961) | (26,459) | (17,558) | |||
| Net decrease in cash and cash equivalents | (29,263) | (37,718) | (41,359) | |||
| Cash and cash equivalents at 1 Jan | 434,940 | 490,933 | 521,671 | |||
| Exchange differences in respect of cash and cash equivalents | 27,210 | (18,275) | 10,621 | |||
| Cash and cash equivalents at 31 Dec6 | 432,887 | 434,940 | 490,933 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 295 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Consolidated statement of cash flows (continued) | ||||||
| --- | --- | --- | --- | |||
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Cash and cash equivalents comprise: | ||||||
| – cash and balances at central banks | 242,859 | 267,674 | 285,868 | |||
| – loans and advances to banks of one month or less9 | 74,404 | 69,803 | 76,620 | |||
| – reverse repurchase agreements with banks of one month or less | 71,790 | 58,290 | 64,341 | |||
| – treasury bills, other bills and certificates of deposit less than three months8 | 41,232 | 27,307 | 33,303 | |||
| – cash collateral, net settlement accounts and items in course of collection from/transmission to other banks | 2,214 | 9,827 | 14,866 | |||
| – cash and cash equivalents held for sale7 | 387 | 2,039 | 15,935 | |||
| Cash and cash equivalents at 31 Dec6 | 432,887 | 434,940 | 490,933 |
Interest received was $99.6bn (2024: $110.1bn; 2023: $98.9bn), interest paid was $68.8bn (2024: $81.7bn; 2023: $66.0bn) and dividends received
(excluding dividends received from associates, which are presented separately above) were $2.7bn (2024: $2.8bn; 2023: $1.9bn).
1Adjustment 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.
2This includes $5.8bn from the sale of our retained portfolio of home and certain other loans in France.
3In 2025, this includes $1bn from the sale of our French life insurance business, and in 2024 this includes $9.3bn from the sale of our banking business in
Canada.
4In 2025, this includes $1bn from sale of our private banking business in Germany and $0.4bn from sale of our retail banking operations in Bahrain and in 2024,
this includes $10.6bn from the sale of our retail banking operations in France and $1.8bn from the sale of our business in Argentina.
5Subordinated liabilities changes during the year are attributable to repayments of $(3.6)bn (2024: $(2.0)bn; 2023: $(2.1)bn) of securities. Non-cash changes
during the year included foreign exchange gains/losses of $1.4bn gain (2024: $1.6bn gain; 2023: $0.6bn loss) and fair value gains/losses of $0.7bn gain (2024:
$1.0bn gain; 2023: $0.8bn loss).
6At 31 December 2025, $66.6bn (2024: $50.4bn; 2023: $61.8bn) was not available for use by HSBC due to a range of restrictions, including currency exchange.
This includes $9.6bn (2024: Nil; 2023: Nil) segregated for Hang Seng Bank privatisation funding purposes. Refer to Note 37 for more details.
7Includes $0.3bn (2024: $1.9bn, 2023: $5.6bn) of cash and balances at central banks and $0.04bn (2024: $0.1bn, 2023: $10.5bn) of loans and advances to banks
of one month or less. There is nil balance in 2025 for reverse repurchase agreements with banks of one month or less (2024: nil, 2023: $0.2bn) and cash
collateral, net settlement accounts and items in course of collection from/transmission to other banks (2024: nil, 2023: $(0.4)bn).
8The amount in this line is included in the ‘Financial investments’ and ‘Financial assets designated and otherwise mandatorily measured at fair value through
profit or loss’ line items in the Consolidated balance sheet on page 290.
9The amount in this line is included in the ‘Loans and advances to banks’, ‘Financial investments’ and ‘Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss’ line items in the Consolidated balance sheet on page 290.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 296 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Holdings income statement | ||||||
| --- | --- | --- | --- | --- | ||
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| Notes* | $m | $m | $m | |||
| Net interest expense | (5,455) | (5,758) | (5,339) | |||
| – interest income | 2,632 | 3,053 | 2,864 | |||
| – interest expense | (8,087) | (8,811) | (8,203) | |||
| Net fee (expense)/income | (2) | (10) | 2 | |||
| Net income from financial instruments held for trading or managed on a fair value basis | 3 | 182 | 2,899 | 1,063 | ||
| Changes in fair value of designated debt and related derivatives1 | 3 | (1,041) | (125) | (1,468) | ||
| Changes in fair value of other financial instruments mandatorily measured at fair value through<br><br>profit or loss | 3 | 2,835 | 2,086 | 3,692 | ||
| Gains less losses from financial investments | (3) | 2 | 45 | |||
| Dividend income from subsidiaries2 | 23,816 | 33,846 | 16,824 | |||
| Other operating income | 228 | 276 | 332 | |||
| Total operating income | 20,560 | 33,216 | 15,151 | |||
| Employee compensation and benefits | 5 | (31) | (29) | (15) | ||
| General and administrative expenses | (1,277) | (1,148) | (1,327) | |||
| (Impairment) of subsidiaries/reversal of impairment2 | 19 | 2,720 | (11,490) | (5,574) | ||
| Total operating expenses | 1,412 | (12,667) | (6,916) | |||
| Profit before tax | 21,972 | 20,549 | 8,235 | |||
| Tax credit | 639 | 499 | 977 | |||
| Profit for the year | 22,611 | 21,048 | 9,212 |
*For Notes on the financial statements, see page 300.
1The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch.
2The amounts recorded within profit before tax with respect to dividend income from subsidiaries and impairment/reversal of impairment of subsidiaries are not
subject to tax.
| HSBC Holdings statement of comprehensive income | ||||||
|---|---|---|---|---|---|---|
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Profit for the year | 22,611 | 21,048 | 9,212 | |||
| Other comprehensive income/(expense) | ||||||
| Items that will not be reclassified subsequently to profit or loss: | ||||||
| Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes<br><br>in own credit risk | 90 | 21 | (124) | |||
| – before income taxes | 117 | 32 | (166) | |||
| – income taxes | (27) | (11) | 42 | |||
| Other comprehensive income/(expense) for the year, net of tax | 90 | 21 | (124) | |||
| Total comprehensive income for the year | 22,701 | 21,069 | 9,088 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 297 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Holdings balance sheet | ||||||
| --- | --- | --- | --- | |||
| 31 Dec 2025 | 31 Dec 2024 | |||||
| Notes* | $m | $m | ||||
| Assets | ||||||
| Cash and balances with HSBC undertakings | 5,079 | 2,548 | ||||
| Financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value | 67,217 | 61,286 | ||||
| Derivatives | 15 | 1,942 | 3,054 | |||
| Loans and advances to HSBC undertakings | 40,500 | 37,677 | ||||
| Trading Assets | — | 709 | ||||
| Financial investments | 16 | 15,470 | 10,328 | |||
| Prepayments, accrued income and other assets | 3,583 | 4,353 | ||||
| Current tax assets | 419 | 305 | ||||
| Investments in subsidiaries | 19 | 157,728 | 152,337 | |||
| Intangible assets | 140 | 162 | ||||
| Deferred tax assets | 942 | 1,498 | ||||
| Total assets at 31 Dec | 293,020 | 274,257 | ||||
| Liabilities and equity | ||||||
| Liabilities | ||||||
| Amounts owed to HSBC undertakings | 89 | 231 | ||||
| Financial liabilities designated at fair value | 25 | 52,907 | 41,582 | |||
| Derivatives | 15 | 3,451 | 5,340 | |||
| Debt securities in issue | 26 | 69,024 | 64,320 | |||
| Accruals, deferred income and other liabilities | 2,286 | 3,097 | ||||
| Subordinated liabilities | 29 | 26,114 | 23,548 | |||
| Total liabilities | 153,871 | 138,118 | ||||
| Equity | ||||||
| Called up share capital | 32 | 8,588 | 8,973 | |||
| Share premium account | 32 | 111 | 14,810 | |||
| Other equity instruments | 32 | 20,635 | 19,024 | |||
| Merger and other reserves | 32,299 | 33,664 | ||||
| Retained earnings | 77,516 | 59,668 | ||||
| Total equity | 139,149 | 136,139 | ||||
| Total liabilities and equity at 31 Dec | 293,020 | 274,257 |
*For Notes on the financial statements, see page 300.
The accompanying notes on pages 300 to 381, the audited sections in the Risk review on pages 118 to 218 and ‘Directors’ remuneration report’
on pages 249 to 274 form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 25 February 2026 and signed on its behalf by:
| Brendan Nelson | Pam Kaur | |||||
|---|---|---|---|---|---|---|
| Group Chairman | Group Chief Financial Officer | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 298 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Holdings statement of changes in equity | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| for the year ended 31 December 2025 | ||||||
| Called up<br><br>share<br><br>capital | Share<br><br>premium | Other<br><br>equity<br><br>instruments | Retained<br><br>earnings1,2 | Merger and<br><br>other<br><br>reserves | Total<br><br>shareholders’<br><br>equity | |
| $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 8,973 | 14,810 | 19,024 | 59,668 | 33,664 | 136,139 |
| Profit for the year | — | — | — | 22,611 | — | 22,611 |
| Other comprehensive income (net of tax) | — | — | — | 90 | — | 90 |
| – changes in fair value of financial liabilities designated at fair value due to<br><br>movement in own credit risk | — | — | — | 90 | — | 90 |
| Total comprehensive income for the year | — | — | — | 22,701 | — | 22,701 |
| Shares issued and purchased under employee share plans | 5 | 111 | — | (635) | — | (519) |
| Capital securities issued3 | — | — | 4,061 | — | — | 4,061 |
| Purchase and cancellation of shares4 | (390) | — | — | (8,039) | 390 | (8,039) |
| Share premium reclassification to retained earnings5 | — | (14,810) | — | 14,810 | — | — |
| Capital redemption reserves reclassification to retained earnings5 | — | — | — | 1,755 | (1,755) | — |
| Dividends to shareholders | — | — | — | (12,764) | — | (12,764) |
| Redemption of capital securities6 | — | — | (2,450) | — | — | (2,450) |
| Other movements | — | — | — | 20 | — | 20 |
| At 31 Dec 2025 | 8,588 | 111 | 20,635 | 77,516 | 32,299 | 139,149 |
| At 1 Jan 2024 | 9,631 | 14,738 | 17,703 | 63,288 | 35,946 | 141,306 |
| Profit for the year | — | — | — | 21,048 | — | 21,048 |
| Other comprehensive income (net of tax) | — | — | — | 21 | — | 21 |
| – changes in fair value of financial liabilities designated at fair value due to<br><br>movement in own credit risk | — | — | — | 21 | — | 21 |
| Total comprehensive income for the year | — | — | — | 21,069 | — | 21,069 |
| Shares issued and purchased under employee share plans | 5 | 72 | — | (181) | — | (104) |
| Capital securities issued | — | — | 3,571 | — | — | 3,571 |
| Purchase and cancellation of shares | (663) | — | — | (11,043) | 663 | (11,043) |
| Dividends to shareholders | — | — | — | (16,410) | — | (16,410) |
| Redemption of capital securities | — | — | (2,250) | — | — | (2,250) |
| Transfers7 | — | — | — | 2,945 | (2,945) | — |
| Other movements | — | — | — | — | — | — |
| At 31 Dec 2024 | 8,973 | 14,810 | 19,024 | 59,668 | 33,664 | 136,139 |
| At 1 Jan 2023 | 10,147 | 14,664 | 19,746 | 67,996 | 40,555 | 153,108 |
| Profit for the year | — | — | — | 9,212 | — | 9,212 |
| Other comprehensive income (net of tax) | — | — | — | (124) | — | (124) |
| – changes in fair value of financial liabilities designated at fair value due to<br><br>movement in own credit risk | — | — | — | (124) | — | (124) |
| Total comprehensive income for the year | — | — | — | 9,088 | — | 9,088 |
| Shares issued and purchased under employee share plans | 5 | 74 | — | (328) | — | (249) |
| Capital securities issued | — | — | 1,980 | — | — | 1,980 |
| Purchase and cancellation of shares | (521) | — | — | (7,025) | 521 | (7,025) |
| Dividends to shareholders | — | — | — | (11,593) | — | (11,593) |
| Redemption of capital securities | — | — | (4,023) | 20 | — | (4,003) |
| Transfers7 | — | — | — | 5,130 | (5,130) | — |
| Other movements | — | — | — | — | — | — |
| At 31 Dec 2023 | 9,631 | 14,738 | 17,703 | 63,288 | 35,946 | 141,306 |
Dividends per ordinary share at 31 December 2025 were $0.66 (2024: $0.82; 2023: $0.53).
1Retained earnings include unrealised profits from intercompany transactions and share-based payment reserves, which are excluded from distributable
reserves. Distributable reserves include the distributable portions of retained earnings and the merger reserve. Distributable reserves are reduced by ordinary
dividend payments, distributions on additional tier 1 instruments, share buy-backs and impairments in investments in subsidiaries. They are increased by profits
and the realisation of retained earnings or merger reserves upon impairment of an associated investment in subsidiary.
2At 31 December 2025, retained earnings included 35,354,337 own shares held. These include own shares held by HSBC Holdings for the benefit of
beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or bonus plans.
3HSBC Holdings issued $1.5bn 6.950% contingent convertible securities in February 2025, SGD0.8bn 5.000% contingent convertible securities in March 2025
and $2.0bn 7.050% contingent convertible securities in June 2025. All instruments were recorded net of issuance cost.
4HSBC Holdings announced the following share buy-backs during the year: a share buy-back of up to $2.0bn in February 2025, which was completed in April
2025; a share buy-back of up to $3.0bn in May 2025, which was completed in July 2025 and a share buy-back of up to $3.0bn in July 2025, which was
completed in October 2025.
5On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings’ share
premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings’ Annual General Meeting held on
2 May 2025 (the ‘Capital Reduction’). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting
in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.
6In March 2025, HSBC Holdings redeemed its $2.45bn 6.375% contingent convertible securities.
7At 31 December 2024, an impairment of $11.4bn (2023: $5.5bn) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of
$2.9bn (2023: $5.1bn) from the remaining historical associated merger reserve to retained earnings.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 299 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| HSBC Holdings statement of cash flows | ||||||
| --- | --- | --- | --- | |||
| for the year ended 31 December 2025 | ||||||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Profit before tax | 21,972 | 20,549 | 8,235 | |||
| Adjustments for non-cash items | (2,777) | 11,721 | 5,611 | |||
| – depreciation, amortisation and impairment/expected credit losses | (2,669) | 11,552 | 5,629 | |||
| – share-based payment expense | 1 | 1 | — | |||
| – other non-cash items included in profit before tax | (220) | 53 | (38) | |||
| – elimination of exchange differences | 111 | 115 | 20 | |||
| Changes in operating assets and liabilities | ||||||
| Change in loans and advances to HSBC undertakings | (2,927) | (2,753) | (1,267) | |||
| Change in financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value | (4,657) | (1,978) | (7,767) | |||
| Change in net trading securities and net derivatives | 600 | (1,537) | (529) | |||
| Change in other assets | 631 | 603 | 363 | |||
| Change in debt securities in issue | 883 | 469 | 1,964 | |||
| Change in financial liabilities designated at fair value | 1,288 | 292 | 3,096 | |||
| Change in other liabilities | 639 | (1,897) | 1,947 | |||
| Tax received | 1,071 | 1,691 | 577 | |||
| Net cash from operating activities | 16,723 | 27,160 | 12,230 | |||
| Purchase of financial investments | (22,636) | (29,812) | (7,803) | |||
| Proceeds from the sale and maturity of financial investments | 22,638 | 31,779 | 20,074 | |||
| Net cash outflow from acquisition of or increase in stake of subsidiaries | (5,148) | (7,473) | (2,517) | |||
| Repayment of capital from subsidiaries | 2,252 | 2,963 | 4,993 | |||
| Net investment in intangible assets | (29) | (43) | (46) | |||
| Net cash from investing activities | (2,923) | (2,586) | 14,701 | |||
| Issue of ordinary share capital and other equity instruments | 4,177 | 3,648 | 2,059 | |||
| Redemption of preference shares and other equity instruments | (2,450) | (2,250) | (4,003) | |||
| Purchase of own shares | (1,118) | (532) | (855) | |||
| Share buy-backs | (9,091) | (11,204) | (5,812) | |||
| Subordinated loan capital issued | 3,834 | 4,268 | 5,270 | |||
| Subordinated loan capital repaid | (3,284) | (3,994) | — | |||
| Debt securities issued | 25,469 | 16,102 | 17,180 | |||
| Debt securities repaid | (14,349) | (18,179) | (13,047) | |||
| Dividends paid on ordinary shares | (11,581) | (15,348) | (10,492) | |||
| Dividends paid to holders of other equity instruments | (1,183) | (1,062) | (1,101) | |||
| Net cash from financing activities | (9,576) | (28,551) | (10,801) | |||
| Net increase/(decrease) in cash and cash equivalents | 4,224 | (3,977) | 16,130 | |||
| Cash and cash equivalents at 1 January | 18,693 | 22,814 | 6,756 | |||
| Exchange differences in respect of cash and cash equivalents | 99 | (144) | (72) | |||
| Cash and cash equivalents at 31 Dec | 23,016 | 18,693 | 22,814 | |||
| Cash and cash equivalents comprise: | ||||||
| – cash at bank with HSBC undertakings | 5,079 | 2,548 | 7,029 | |||
| – cash collateral and net settlement accounts | 1,702 | 2,544 | 3,422 | |||
| – loans and advances to HSBC undertakings of one month or less | 6,250 | 8,500 | — | |||
| – treasury and other eligible bills | 9,985 | 5,101 | 12,363 |
Interest received was $6,059m (2024: $6,624m; 2023: $5,695m), interest paid was $7,766m (2024: $8,800m; 2023: $7,754m) and dividends
received were $23,816m (2024: $33,846m; 2023: $16,824m).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 300 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Notes on the financial statements
| Contents | ||
|---|---|---|
| 300 | 1 | Basis of preparation and material accounting policies |
| 312 | 2 | Net fee income |
| 313 | 3 | Net income/(expense) from financial instruments measured at<br><br>fair value through profit or loss |
| 313 | 4 | Insurance business |
| 320 | 5 | Employee compensation and benefits |
| 325 | 6 | Auditor’s remuneration |
| 326 | 7 | Tax |
| 328 | 8 | Dividends |
| 329 | 9 | Earnings per share |
| 329 | 10 | Segmental analysis |
| 332 | 11 | Trading assets |
| 332 | 12 | Fair values of financial instruments carried at fair value |
| 337 | 13 | Fair values of financial instruments not carried at fair value |
| 339 | 14 | Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss |
| 339 | 15 | Derivatives |
| 343 | 16 | Financial investments |
| 344 | 17 | Assets pledged, collateral received and assets transferred |
| 345 | 18 | Interests in associates and joint ventures |
| 349 | 19 | Investments in subsidiaries |
| 351 | 20 | Structured entities |
| --- | --- | --- |
| 353 | 21 | Goodwill and intangible assets |
| 355 | 22 | Prepayments, accrued income and other assets |
| 355 | 23 | Assets held for sale, liabilities of disposal groups held for sale<br><br>and business acquisitions |
| 357 | 24 | Trading liabilities |
| 357 | 25 | Financial liabilities designated at fair value |
| 358 | 26 | Debt securities in issue |
| 358 | 27 | Accruals, deferred income and other liabilities |
| 358 | 28 | Provisions |
| 359 | 29 | Subordinated liabilities |
| 360 | 30 | Maturity analysis of assets, liabilities and off-balance sheet<br><br>commitments |
| 365 | 31 | Offsetting of financial assets and financial liabilities |
| 366 | 32 | Called up share capital and other equity instruments |
| 368 | 33 | Contingent liabilities, contractual commitments and guarantees |
| 369 | 34 | Finance lease receivables |
| 369 | 35 | Legal proceedings and regulatory matters |
| 371 | 36 | Related party transactions |
| 373 | 37 | Events after the balance sheet date |
| 373 | 38 | HSBC Holdings’ subsidiaries, joint ventures and associates |
| 1 | Basis of preparation and material accounting policies | |
| --- | --- |
1.1Basis of preparation
(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 2025 affecting these consolidated and
separate financial statements.
IFRS Accounting Standards adopted during the year ended 31 December 2025
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting policies
have been applied consistently.
(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’, include the aggregate of
all disclosures necessary to satisfy IFRS Accounting Standards and Hong Kong Financial Reporting Standards.
(c)Future accounting developments
Minor amendments to IFRS Accounting Standards
The International Accounting Standards Board (‘IASB’) has published a number of minor amendments to IFRS Accounting Standards that are
effective from 1 January 2026. HSBC expects they will have an insignificant effect, when adopted, on the consolidated financial statements of
HSBC and the separate financial statements of HSBC Holdings.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’
In May 2024, the IASB issued amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective for annual
reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed settled when
using an electronic payment system, the amendments also provide further clarification regarding the classification of financial assets that contain
contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related contingencies, and financial
assets with certain non-recourse features. The Group does not expect any material impact from these amendments.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
In April 2024, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’, effective for annual reporting periods beginning on or
after 1 January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable information about
an entity’s financial performance. It will replace IAS 1 ‘Presentation of Financial Statements’ but carries over many requirements from that IFRS
Accounting Standard unchanged. In addition, there are three sets of new requirements relating to the structure of the income statement,
management-defined performance measures and the aggregation and disaggregation of financial information.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 301 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
While IFRS 18 will not change recognition criteria or measurement bases, it will have an impact on presenting information in the financial
statements, in particular the income statement and to a lesser extent the cash flow statement. HSBC are currently evaluating impacts and
ensuring data readiness is adequate in anticipation of implementation.
(d)Foreign currencies
HSBC’s consolidated financial statements are presented in US dollars because the US dollar and currencies linked to it form the major currency
bloc in which HSBC transacts and funds its business. The US dollar is also HSBC Holdings’ functional currency because the US dollar and
currencies linked to it are the most significant currencies relevant to the underlying transactions, events and conditions of its subsidiaries, as well
as representing a significant proportion of its funds generated from financing activities.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in foreign
currencies are translated at the rate of exchange at the balance sheet date, except non-monetary assets and liabilities measured at historical cost,
which are translated using the rate of exchange at the initial transaction date. Exchange differences are recognised in the income statement
except where otherwise required such as exchange components of gains and losses on non-monetary items which are recognised in the income
statement or other comprehensive income depending on where the gain or loss on the underlying item is presented.
Except for subsidiaries operating in hyperinflationary economies, in the consolidated financial statements, the assets and liabilities of branches,
subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group’s presentation currency at the
rate of exchange at the balance sheet date, while their results are translated into US dollars at the average rates of exchange for the reporting
period. Exchange differences arising are recognised in other comprehensive income. On disposal of a foreign operation, exchange differences
previously recognised in other comprehensive income are reclassified to the income statement.
(e)Presentation of information
Certain disclosures required by IFRS Accounting Standards have been included in the sections marked as (‘Audited’) in the Annual Report and
Accounts 2025 as follows:
–Disclosures concerning the nature and extent of risks relating to insurance contracts and financial instruments are included in the ‘Risk review’
on pages 118 to 218.
–The ‘Own funds disclosure’ is included in the ‘Risk review’ on page 192.
HSBC follows the UK Finance Disclosure Code. The UK Finance Disclosure Code aims to increase the quality and comparability of UK banks’
disclosures and sets out five disclosure principles together with supporting guidance agreed in 2010. In line with the principles of the UK Finance
Disclosure Code, HSBC assesses good practice recommendations issued from time to time by relevant regulators and standard setters, and will
assess the applicability and relevance of such guidance, enhancing disclosures where appropriate.
(f)Critical estimates and judgements
The preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent uncertainties
and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the ‘critical estimates and judgements’ in
section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management’s estimates are based.
This could result in materially different estimates and judgements from those reached by management for the purposes of these financial
statements. Management’s selection of HSBC’s accounting policies that contain critical estimates and judgements reflects the materiality of the
items to which the policies are applied and the high degree of judgement and estimation uncertainty involved.
Management has considered the impact of climate-related risks on HSBC’s financial position and performance. While the effects of climate
change are a source of uncertainty, as at 31 December 2025 management did not consider there to be a material impact on our critical judgements
and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular, management has considered
the known and observable potential impacts of climate-related risks of associated judgements and estimates in our value in use calculations.
(g)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, cash flows, capital requirements and capital
resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment, including ongoing supply chain
disruptions, uncertain inflation, rapidly changing interest rates, the impact of the Russia-Ukraine war and further conflict or military action in the
Middle East, Venezuela or elsewhere; uncertainty around Hong Kong and mainland China’s CRE sectors; heightened strategic competition
between the US and China, ongoing and potential cross-border investment and trade restrictions, changes to tariff rates, as well as the potential
impacts from other top and emerging risks, including climate change, as well as the related impacts on profitability, capital and liquidity.
1.2Summary of material accounting policies
(a)Consolidation and related policies
Consolidation
HSBC consolidates entities that it controls as demonstrated by power over the investee, exposure to variable returns, and the ability to use its
power to affect the amount of its returns. Where an entity is governed by voting rights, HSBC generally has power leading to control when it holds
– directly or indirectly – the necessary voting rights to pass resolutions by the governing body. In all other cases, the assessment of control is more
complex and requires judgement of other factors, including contractual arrangements.
Business combinations are accounted for using the acquisition method. 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.
Investments in subsidiaries
HSBC Holdings’ investments in subsidiaries are stated at cost less impairment losses. Where the investment in a subsidiary is designated in a fair
value hedging relationship for foreign currency risk, the carrying value is adjusted for any associated hedge adjustment arising therefrom.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 302 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Impairment testing of investments in subsidiaries is performed where there is an indication of impairment. Indicators of impairment include both
external and internal sources of information. Similarly, assessments are made as to whether an impairment loss recognised in prior periods may no
longer exist or may have decreased. Where this is the case, such an impairment loss is reversed if there has been a change in the estimate used
to determine the relevant recoverable amount since the last impairment loss was recognised.
Critical estimates and judgements
| Investments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves estimations of value in use<br><br>reflecting management’s best estimate of the future cash flows of the investment and the rates used to discount these cash flows, both of which are subject to<br><br>uncertain factors as follows: | |
|---|---|
| Judgements | Estimates |
| –The accuracy of forecast cash flows is subject to a high<br><br>degree of uncertainty in volatile market conditions.<br><br>Where such circumstances are determined to exist,<br><br>management re-tests for impairment or reversal more<br><br>frequently than once a year when indicators exist. This<br><br>ensures that the assumptions on which the cash flow<br><br>forecasts are based continue to reflect current market<br><br>conditions and management’s best estimate of future<br><br>business prospects. | –The future cash flows of each investment are sensitive to the cash flows projected for the periods<br><br>for which detailed forecasts are available and to assumptions regarding the long-term pattern of<br><br>sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable<br><br>economic data, but they reflect management’s view of future business prospects at the time of the<br><br>assessment.<br><br>–The rates used to discount future expected cash flows can have a significant effect on their<br><br>valuation, and are based on the costs of equity assigned to the investment. The cost of equity<br><br>percentage is generally derived from a capital asset pricing model and the market implied cost of<br><br>equity, which incorporates inputs reflecting a number of financial and economic variables, including<br><br>the risk-free interest rate in the country concerned and a premium for the risk of the business being<br><br>evaluated. These variables are subject to fluctuations in external market rates and economic<br><br>conditions beyond management’s control.<br><br>–Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are<br><br>described in Note 19. |
Interests in associates and joint arrangements
Joint arrangements are investments in which HSBC, together with one or more parties, has joint control. Depending on HSBC’s rights and
obligations, the joint arrangement is classified as either a joint operation or a joint venture.
HSBC classifies investments in entities over which it has significant influence but not control or joint control as associates and accounts for them
using the equity method. Under this method, the attributable share of net assets, results and reserves are included in the consolidated financial
statements based on either financial statements made up to 31 December or pro-rated amounts adjusted for any material transactions or events
occurring between the date the financial statements are available and 31 December.
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the
investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisition of
interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the investment.
Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have decreased. Any
reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the extent that it does not
increase the carrying amount above that had no impairment loss been previously recognised.
Critical estimates and judgements
| The most significant critical estimates relate to the assessment of impairment or its reversal of our investment in Bank of Communications Co., Limited<br><br>(‘BoCom’), which involves estimations of value in use: | |
|---|---|
| Judgements | Estimates |
| –The value in use calculation uses discounted cash flow projections based on management’s best<br><br>estimate of future earnings available to ordinary shareholders prepared in accordance with IAS 36<br><br>‘Impairment of Assets’. Those cash flows use estimates based on BoCom’s current condition and<br><br>so do not include estimated cash flows arising from uncommitted future actions that may affect<br><br>the performance of the investment which will be considered at the relevant time should they<br><br>arise.<br><br>–Key assumptions used in estimating BoCom’s value in use and the sensitivity of the value in use<br><br>calculations to different assumptions are described in Note 18. |
(b)Impairment of goodwill and other non-financial assets
Goodwill
Goodwill is allocated to cash-generating units (’CGUs’) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes.
Impairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of a
CGU with its carrying amount.
Goodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a CGU.
The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the portion of
the CGU retained.
Other non-financial assets
Software under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible
assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of
impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition, impairment
is also tested at the CGU level when there is indication of impairment at that level.
Impairment testing compares the carrying amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair
value less costs of disposal or the value in use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities, including
non-financial assets that are directly attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent basis. Non-
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 303 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
financial assets that cannot be allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs. The recoverable
amount of the CGU is the higher of the fair value less costs of disposal of the CGU, which is determined by independent and qualified valuers
where relevant, and the value in use, which is calculated based on appropriate inputs (see Note 21).
When the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognised in the income statement to the extent
that the impairment can be allocated on a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of their
respective individual recoverable amount or nil. Impairment is not allocated to the financial assets in a CGU.
Impairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to
determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would not
exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior
periods.
Critical estimates and judgements
| The review of goodwill and non-financial assets for impairment reflects management’s best estimate of the future cash flows of the CGUs and the rates used to<br><br>discount these cash flows, both of which are subject to uncertain factors as follows: | |
|---|---|
| Judgements | Estimates |
| –The accuracy of forecast cash flows is subject to a<br><br>high degree of uncertainty in volatile market<br><br>conditions. Where such circumstances are<br><br>determined to exist, management re-tests goodwill<br><br>for impairment more frequently than once a year<br><br>when indicators of impairment exist. This ensures<br><br>that the assumptions on which the cash flow<br><br>forecasts are based continue to reflect current<br><br>market conditions and management’s best estimate<br><br>of future business prospects. | –The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which<br><br>detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash<br><br>flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but<br><br>they reflect management’s view of future business prospects at the time of the assessment.<br><br>–The rates used to discount future expected cash flows can have a significant effect on their valuation,<br><br>and are based on the costs of equity assigned to individual CGUs. The cost of equity percentage is<br><br>generally derived from a capital asset pricing model and market implied cost of equity, which<br><br>incorporates inputs reflecting a number of financial and economic variables, including the risk-free<br><br>interest rate in the country concerned and a premium for the risk of the business being evaluated.<br><br>These variables are subject to fluctuations in external market rates and economic conditions beyond<br><br>management’s control.<br><br>–Key assumptions used in estimating goodwill and non-financial asset impairment are described in<br><br>Note 21. |
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but
does consider this to be an area that is inherently judgemental.
(c)Net operating income
Interest income and expense
Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value, is recognised in
‘Interest income’ and ‘Interest expense’ in the income statement using the effective interest method. However, as an exception to this, 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 is included in interest expense.
Interest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount of
the asset less allowance for expected credit losses).
Non-interest income and expense
HSBC generates fee income from services provided over time, such as account service and card fees, or when HSBC delivers a specific
transaction at a point in time, such as broking services and import/export services. Where fees are variable, for example certain fund management
and performance fees, such fees are recognised when the associated uncertainties are resolved and to the extent that it is highly probable that a
significant reversal will not occur.
HSBC acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, HSBC acts
as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.
HSBC recognises fees earned on transaction-based arrangements at a point in time when it has provided the service to the customer. Where the
contract requires services to be provided over time, income is recognised on a systematic basis over the life of the agreement.
Where HSBC offers a package of services that contains multiple non-distinct performance obligations, such as those included in account service
packages, the promised services are treated as a single performance obligation. If a package of services contains distinct performance obligations,
the corresponding transaction price is allocated to each performance obligation based on the estimated stand-alone selling prices.
Dividend income is recognised when the right to receive payment is established.
Gains and losses from financial instruments measured as at fair value through profit or loss includes the following:
–‘Net income from financial instruments held for trading or managed on a fair value basis’: This comprises net trading activities, which includes
all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial instruments
managed on a fair value basis, together with the related interest income, interest expense and dividend income, excluding the effect of
changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair value of
derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss.
–‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or
loss’: This includes all gains and losses from changes in the fair value, together with related interest income, interest expense and dividend
income in respect of financial assets and liabilities measured at fair value through profit or loss, and those derivatives managed in conjunction
with the above that can be separately identifiable from other trading derivatives.
–Other gains and losses from financial instruments measured as at fair value through profit or loss include changes in the fair value of
designated debt instruments under the fair value option and related derivatives where such designation reduces an accounting mismatch.
Interest on such debt instruments and interest cash flows on related derivatives is presented in interest expense. Also included are the
changes in fair value of other financial instruments mandatorily measured as at fair value through profit or loss which includes interest on
instruments that fail the solely payments of principal and interest test, see (e) below.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 304 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Insurance income and expense
Insurance service result
Insurance revenue reflects the consideration to which the Group expects to be entitled in exchange for the provision of coverage and other insurance
contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other incurred insurance
service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such losses.
Insurance finance income and expenses
Insurance finance income and expense comprises the change in the carrying amount of the group of insurance contracts arising from the effects
of the time value of money, financial risk and changes therein. For contracts using the variable fee approach (‘VFA’) measurement model, changes
in the fair value of underlying items (excluding additions and withdrawals) are recognised in insurance finance income or expenses.
(d)Valuation of financial instruments
Financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date and on initial recognition is generally the transaction price. However, if
there is a difference between the transaction price and the fair value of financial instruments whose fair value is based on a quoted price in an active
market or a valuation technique that uses only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception
(a ‘day 1 gain or loss’). In all other cases, the entire day 1 gain or loss is deferred and recognised in the income statement over the life of the
transaction until the transaction matures, is closed out, the valuation inputs become observable or HSBC enters into an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC manages a group of financial
assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial instruments is measured on a net basis
but the underlying financial assets and liabilities are presented separately in the financial statements, unless they satisfy the IFRS offsetting criteria.
Financial instruments are classified into one of three fair value hierarchy levels, described in Note 12, ‘Fair values of financial instruments carried at
fair value‘.
Critical estimates and judgements
| The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of valuation techniques<br><br>that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is more judgemental: | |
|---|---|
| Judgements | Estimates |
| –An instrument in its entirety is classified as valued using significant unobservable<br><br>inputs if, in the opinion of management, greater than 5% of the instrument’s valuation<br><br>is driven by unobservable inputs.<br><br>–‘Unobservable’ in this context means that there is little or no current market data<br><br>available from which to determine the price at which an arm’s length transaction would<br><br>be likely to occur. It generally does not mean that there is no data available at all upon<br><br>which to base a determination of fair value (consensus pricing data may, for example,<br><br>be used). | –Details on the Group’s Level 3 financial instruments and the<br><br>sensitivity of their valuation to the effect of applying reasonably<br><br>possible alternative assumptions in determining their fair value are<br><br>set out in Note 12. |
(e)Financial instruments measured at amortised cost
Financial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash
flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances to
banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. HSBC accounts for regular
way amortised cost financial instruments using trade date accounting. The carrying amount of these financial assets at initial recognition includes
any directly attributable transactions costs.
HSBC may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising from the lending
commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When HSBC intends to hold the
loan, the loan commitment is generally not recognised but is subject to expected credit loss considerations.
Financial assets are reclassified only when the business model for their management changes. Such changes, which are expected to be
infrequent, are determined by senior management as a result of external or internal changes and must be significant to operations and
demonstrable to external parties. Reclassifications are applied prospectively from the first day of the first reporting period following the change of
business model. Where a financial asset is reclassified out of the amortised cost measurement category and into the fair value through other
comprehensive income measurement category its fair value is measured at the date of reclassification. Any gain or loss arising from a difference
between the previous amortised cost and fair value is recognised in other comprehensive income. The effective interest rate and the
measurement of expected credit losses are not adjusted as a result of the reclassification.
Non-trading reverse repurchase, repurchase and similar agreements
When securities are sold subject to a commitment to repurchase them at a predetermined price (‘repos’), they remain on the balance sheet and a
liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (‘reverse repos’) are not recognised
on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos are measured at
amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as interest and
recognised in net interest income over the life of the agreement.
Contracts that are economically equivalent to reverse repo or repo agreements (such as sales or purchases of securities entered into together with
total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse repo or repo agreements.
(f)Financial assets measured at fair value through other comprehensive income
Financial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain
contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at fair value
through other comprehensive income (‘FVOCI’). These comprise primarily debt securities. They are generally recognised on trade date when
HSBC enters into contractual arrangements to purchase and are generally derecognised when they are either sold or redeemed. They are
subsequently remeasured at fair value with changes therein (except for those relating to impairment, interest income and foreign currency
exchange gains and losses) recognised in other comprehensive income until the assets are sold. Upon disposal, the cumulative gains or losses in
other comprehensive income are recognised in the income statement. Financial assets measured at FVOCI are included in impairment calculations
and impairment is recognised in profit or loss.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 305 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
(g)Equity securities measured at fair value with fair value movements presented in other
comprehensive income
Equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar investments
where HSBC holds the investments other than to generate a capital return. Dividends from such investments are recognised in profit or loss.
Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise, equity securities are measured at
fair value through profit or loss.
(h)Financial instruments designated at fair value through profit or loss
Financial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and are
so designated irrevocably at inception:
–The use of the designation removes or significantly reduces an accounting mismatch.
–A group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy.
–A financial liability that contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC enters into contracts with counterparties, which is generally on trade date, and are
normally derecognised when the rights to the cash flows expire or are transferred.
Designated financial liabilities are recognised when HSBC enters into contracts with counterparties, which is generally on settlement date, and are
normally derecognised when extinguished. Subsequent changes in fair values are recognised in the income statement except for the effect of
changes in the liabilities’ credit risk, which is presented in ‘Other comprehensive income’, unless that treatment would create or enlarge an
accounting mismatch in profit or loss.
Under the above criteria, the main classes of financial instruments designated by HSBC are:
–Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange exposure
on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps as part of a
documented risk management strategy.
–Financial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept
significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary
participation features (‘DPF’), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment
contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation
method. The related financial assets and liabilities are managed and reported to management on a fair value basis. Designation at fair value of
the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and presented in the same line.
–Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance evaluated
on a fair value basis.
(i)Derivatives
Derivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices.
Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when
their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities, which are
bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.
Where the derivatives are managed with debt securities issued by HSBC that are designated at fair value where doing so reduces an accounting
mismatch, the contractual interest is shown in ‘Interest expense’ together with the interest payable on the issued debt.
Hedge accounting
When derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge accounting
relationships where the required criteria for documentation and hedge effectiveness are met. HSBC uses these derivatives or, where allowed,
other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in foreign operations as appropriate
to the risk being hedged.
Fair value hedge
Fair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in
recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in
the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued and the
cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income
statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income
statement immediately.
Cash flow hedge
The effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of the
change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the income
statement. The accumulated gains and losses recognised in other comprehensive income are reclassified to the income statement in the same
periods in which the hedged item affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any cumulative gain or
loss recognised in other comprehensive income remains in equity until the forecast transaction is recognised in the income statement. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is
reclassified to the income statement.
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and losses
on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the income
statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the disposal, or
part-disposal, of the foreign operation.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 306 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
(j)Impairment of amortised cost and FVOCI financial assets
Expected credit losses (‘ECL’) are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other
financial assets held at amortised cost, debt instruments measured at FVOCI, and certain loan commitments and financial guarantee contracts. At
initial recognition, an allowance (or provision in the case of some loan commitments and financial guarantees) is recognised for ECL resulting from
possible default events within the next 12 months, or less, where the remaining life is less than 12 months (’12-month ECL’). In the event of a
significant increase in credit risk, an allowance (or provision) is recognised for ECL resulting from all possible default events over the expected life
of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’; financial assets
which are considered to have experienced a significant increase in credit risk are in ‘stage 2’; and financial assets for which there is objective
evidence of impairment, and so are considered to be in default or otherwise credit impaired are in ‘stage 3’. Purchased or originated credit-
impaired financial assets (‘POCI’) are treated differently as set out below.
Unimpaired and without significant increase in credit risk (stage 1)
ECL resulting from default events that are possible within the next 12 months (‘12-month ECL’) are recognised for financial instruments that
remain in stage 1.
Significant increase in credit risk (stage 2)
An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering the
change in the risk of default occurring over the remaining life of the financial instrument.
The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition, taking
into account reasonable and supportable information, including information about past events, current conditions and future economic conditions.
The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that used in the
measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its weight compared
with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the geographical region.
Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant increase in credit risk, and
these criteria will differ for different types of lending, particularly between retail and wholesale. However, unless identified at an earlier stage, all
financial assets are deemed to have suffered a significant increase in credit risk when 30 days past due. In addition, wholesale loans that are
individually assessed, which are typically corporate and commercial customers, and included on a watch or worry list, are included in stage 2.
For wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default (‘PD’), which encompasses a wide
range of information including the obligor’s customer risk rating (‘CRR’), macroeconomic condition forecasts and credit transition probabilities. For
origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term estimated at
origination with the equivalent estimation at the reporting date.
The quantitative measure of significance varies depending on the credit quality at origination as follows:
| Origination CRR | Significance trigger – PD to increase by |
|---|---|
| 0.1–1.2 | 15bps |
| 2.1–3.3 | 30bps |
For CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has
doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to relative
changes in external market rates.
For loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future
macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be
approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument’s underlying modelling
approach and the CRR at origination.
The quantitative comparison is supplemented with additional CRR deterioration-based thresholds, as set out in the table below:
| Origination CRR | Additional significance criteria – number of CRR grade notches<br><br>deterioration required to identify as significant credit deterioration (stage<br><br>2) (> or equal to) |
|---|---|
| 0.1 | 5 notches |
| 1.1–4.2 | 4 notches |
| 4.3–5.1 | 3 notches |
| 5.2–7.1 | 2 notches |
| 7.2–8.2 | 1 notch |
| 8.3 | 0 notches |
For retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available
information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is
considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios, generally
by country, product and brand. Within each portfolio, the stage 2 accounts include accounts with an adjusted 12-month PD greater than the
average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk judgement is that no prior
increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than would be expected from loans
that are performing as originally expected and higher than that which would have been acceptable at origination. It therefore approximates a
comparison of origination to reporting date PDs.
We have implemented in the UK and continue to refine the retail transfer criteria approach to utilise a more relative approach for certain portfolios
as additional data becomes available. These enhancements take advantage of the increase in origination-related data in the assessment of
significant increases in credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on
portfolio-specific origination segments.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 307 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Credit impaired (stage 3)
HSBC determines that a financial instrument is credit impaired and in stage 3 by considering relevant objective evidence, primarily whether
contractual payments of either principal or interest are past due for more than 90 days, there are other indications that the borrower is unlikely to
pay such as that a concession has been granted to the borrower for economic or legal reasons relating to the borrower’s financial condition, or the
loan is otherwise considered to be in default.
If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the
definitions of credit impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or
otherwise credit impaired.
Interest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).
Write-off
Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of
recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security. In circumstances where the net
realisable value of any collateral has been determined and there is no reasonable expectation of further recovery, write-off may be earlier.
Forbearance
Loans are identified as forborne and classified as either performing or non-performing when HSBC modifies the contractual terms due to financial
difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the curing criteria, as
specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default have been present for
at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering forbearance would not be reversed.
The Group applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk policies and our
reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details are provided under
‘Forborne loans and advances’ on page 141.
Performing forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they
continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either stage
1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms) and the risk
of a default occurring at initial recognition (based on the original, unmodified contractual terms).
A forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the
terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that arise
following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as forborne.
Loan modifications other than forborne loans
Loan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results in
a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC’s rights to
the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The rights to
cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related concession has
been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition, having regard to changes in contractual
terms that either individually or in combination are judged to result in a substantially different financial instrument. Mandatory and general offer loan
modifications that are not borrower specific, for example market-wide customer relief programmes, generally do not result in derecognition, but
their stage allocation is determined considering all available and supportable information under our ECL impairment policy.
Purchased or originated credit impaired (‘POCI’)
Financial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This
population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in
lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount of
ECL included in the estimated cash flows on initial recognition.
Movement between stages
Financial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since initial
recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased since initial
recognition based on the assessments described above. In the case of non-performing forborne loans, such financial instruments are transferred
out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.
Measurement of ECL
The assessment of credit risk and the estimation of ECL are unbiased and probability-weighted, and incorporate all available information which is
relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future events
and economic conditions at the reporting date. In addition, the estimation of ECL takes into account the time value of money and considers other
factors such as climate-related risks.
In general, HSBC calculates ECL using three main components: a probability of default (‘PD’), a loss given default (’LGD’) and the exposure at
default (‘EAD’).
The 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated using the lifetime PD instead. The 12-
month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument
respectively.
The EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to
the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the
event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and
the time value of money.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 308 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC makes use of the IRB framework where possible, with recalibration to meet the differing IFRS 9 requirements as set out in the following
table:
| Model | Regulatory capital | IFRS 9 |
|---|---|---|
| PD | –Represents long-run average PD throughout a full economic cycle<br><br>(for mortgage portfolios a hybrid approach, which sits between the<br><br>extremes of point in time and through the cycle, is used for<br><br>calculating long-run averages as required by the PRA)<br><br>–Default backstop of 90+ days past due for all portfolios (includes<br><br>unlikely to pay (‘UTP’) criteria in line with internal policy)<br><br>–May be subject to a sovereign cap | –Represents current portfolio quality and performance, adjusted for<br><br>the impact of multiple forward-looking macroeconomic scenarios<br><br>–Default backstop of 90+ days past due for all portfolios (includes<br><br>UTP criteria in line with internal policy) |
| EAD | –Cannot be lower than current balance | –Amortisation captured for term products<br><br>–Future drawdown captured for revolving products |
| LGD | –Downturn LGD (consistent with losses we would expect to suffer<br><br>during a severe but plausible economic downturn)<br><br>–Regulatory floors may apply to mitigate risk of underestimating<br><br>downturn LGD due to lack of historical data<br><br>–Discounted using appropriate index (minimum 9%)<br><br>–All collection costs included | –LGD based on recent portfolio performance data and includes the<br><br>expected impact of future economic conditions such as change in<br><br>the value of collateral<br><br>–No floors applied, discounted using the original effective interest rate<br><br>–Only costs associated with selling collateral and certain third-party<br><br>costs are included |
| Other | –Discounted back from point of default to balance sheet date |
While 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a
term structure. For the wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the CRR
bands over its life.
The ECL for wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow (‘DCF’) methodology. The expected
future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future
recoveries and expected future receipts of interest.
Collateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its estimated
fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.
The cash flows are discounted at the original effective interest rate. For significant cases, cash flows under up to four different scenarios are
probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by the Group and judgement in
relation to the likelihood of the work-out strategy succeeding or receivership being required. For less significant cases where an individual
assessment is undertaken, the effect of different economic scenarios and work-out strategies results in an ECL calculation based on a most likely
outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For certain less significant cases, the bank may use
an LGD-based modelled approach to ECL assessment, which factors in a range of economic scenarios.
Period over which ECL is measured
Expected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it 12-
month or lifetime ECL) is the maximum contractual period over which HSBC is exposed to credit risk. However, where the financial instrument
includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the undrawn commitment does not
serve to limit HSBC’s exposure to credit risk to the contractual notice period, the contractual period does not determine the maximum period
considered. Instead, ECL is measured over the period HSBC remains exposed to credit risk that is not mitigated by credit risk management
actions. This applies to retail overdrafts and credit cards, where the period is the average time taken to realise the material losses for an account,
determined on a portfolio basis. In addition, for these facilities it is not possible to identify the ECL on the loan commitment component separately
from the financial asset component. As a result, the total ECL is recognised in the loss allowance for the financial asset unless the total ECL
exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision. For wholesale overdraft facilities,
credit risk management actions are taken no less frequently than on an annual basis.
Forward-looking economic inputs
HSBC applies multiple forward-looking global economic scenarios determined with reference to external forecast distributions representative of its
view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected credit losses in most economic
environments. In certain economic environments, additional analysis may be necessary and may result in additional scenarios or adjustments, to
reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed methodology is disclosed in ‘Measurement
uncertainty and sensitivity analysis of ECL estimates’ on page 148.
Critical estimates and judgements
| The calculation of the Group’s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set<br><br>out below: | ||||||
|---|---|---|---|---|---|---|
| Judgements | Estimates | |||||
| –Defining what is considered to be a significant increase in credit risk<br><br>–Determining the lifetime and point of initial recognition of overdrafts and credit cards<br><br>–Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including<br><br>making reasonable and supportable judgements about how models react to current and future<br><br>economic conditions<br><br>–Selecting model inputs and economic forecasts, including determining whether sufficient and<br><br>appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss<br><br>–Making management adjustments to account for late-breaking events, model and data limitations and<br><br>deficiencies, and expert credit judgements<br><br>–Selecting applicable recovery strategies for certain wholesale credit-impaired loans | –The section ‘Measurement uncertainty and<br><br>sensitivity analysis of ECL estimates’, marked as<br><br>audited from page 148, sets out the assumptions<br><br>used in determining ECL, and provides an indication<br><br>of the sensitivity of the result to the application of<br><br>different weightings being applied to different<br><br>economic assumptions | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 309 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
(k)Insurance contracts
A contract is classified as an insurance contract where the Group accepts significant insurance risk from another party by agreeing to compensate
that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but is accounted for
as an insurance contract if the insurance risk is significant. In addition, the Group issues investment contracts with discretionary participation
features ('DPF’), which are also accounted under IFRS 17 ’Insurance Contracts’.
Aggregation of insurance contracts
Individual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed
together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or similar
product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the contract is
used to assess whether the contract features similar risks. Each portfolio is further separated by the contract’s expected profitability. The portfolios
are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant
possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue date, with most
contracts the Group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of contracts, the Group
considers its groups of contracts as being denominated in a single currency.
The measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will include
fulfilment cash flows as well as the contractual service margin (‘CSM’) representing the unearned profit. The Group’s accounting policy is to
update the estimates used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the Group include amounts expected to be collected from premiums and payouts
for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way based on the Group’s
demographic and operating experience along with external mortality data where the Group’s own experience data is not sufficiently large in size to
be credible.
Adjustment for the time value of money and financial risks associated with the future cash flows
The estimates of future cash flows are adjusted to reflect the time value of money (i.e. discounting) and the financial risks to derive an expected
present value. The Group generally makes use of stochastic modelling techniques in the estimation for products with options and guarantees.
A bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash flows. This is derived as the sum
of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market data, where such markets are
considered to be deep, liquid and transparent. When information is not available, management judgement is applied to determine the appropriate
risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance contracts.
Risk adjustment for non-financial risk
The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises
from non-financial risk.
The Group does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance revenue and insurance
service expense) and insurance finance income or expenses. All changes are included in the insurance service result.
Measurement models
The variable fee approach (‘VFA’) measurement model is used for most of the contracts issued by the Group, which is mandatory upon meeting
the following eligibility criteria at inception:
–the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
–the Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The Group considers that a
substantial share is a majority of returns; and
–the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of
the underlying items. The Group considers that a substantial proportion is a majority proportion of change on a present value probability-
weighted average of all scenarios.
For some contracts measured under VFA, the other comprehensive income (‘OCI’) option is used. The OCI option is applied where the underlying
items held by the Group are not accounted for at fair value through profit or loss. 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 for these insurance contracts, and hence
results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts issued
for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets against the instruments that
meet specific requirements.
The remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model (‘GMM’).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the group of contracts is profitable. The
CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (for example, changes in non-
economic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of
contracts become onerous subsequently, losses are recognised in insurance service expense immediately.
For groups of contracts measured using the VFA, changes in the Group’s share of the underlying items, and economic experience and economic
assumption changes adjust the CSM. However, under the risk mitigation option for VFA contracts, the changes in the fulfilment cash flows and
the changes in the Group’s share in the fair value return on underlying items that the instruments mitigate are not adjusted in CSM but recognised
in profit or loss. The risk mitigating instruments are primarily reinsurance contracts held.
For groups of contracts measured using the GMM, changes in economic experience and economic assumption do not adjust the CSM, but are
recognised in profit or loss as they arise.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 310 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
The CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of the
group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The Group identifies the quantity of the benefits provided as follows:
–Insurance coverage: This is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where net
policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value.
–Investment services (including both investment-return service and investment-related service): This is based on a constant measure basis
which reflects the provision of access for the policyholder to the facility.
For contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present value
of the future cash outflows for each service.
(l)Employee compensation and benefits
Share-based payments
HSBC enters into both equity-settled and cash-settled share-based payment arrangements with its employees as compensation for the provision
of their services.
The vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect of
the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are
recognised when the employee starts to render service to which the award relates.
Cancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting
recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the
amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.
Post-employment benefit plans
HSBC operates a number of pension schemes including defined benefit, defined contribution and other post-employment benefit schemes.
Payments to defined contribution schemes are charged as an expense as the employees render service.
Defined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly
comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses.
Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net defined benefit
asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets, after applying the asset ceiling
test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future contributions to the plan.
The costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.
Critical estimates and judgements
| The most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal<br><br>plan. | |
|---|---|
| Judgements | Estimates |
| –A range of assumptions could be applied, and different assumptions could<br><br>significantly alter the defined benefit obligation and the amounts<br><br>recognised in profit or loss or OCI.<br><br>–The calculation of the defined benefit pension obligation includes<br><br>assumptions with regard to the discount rate, inflation rate, pension<br><br>payments and deferred pensions, pay and mortality. Management<br><br>determines these assumptions in consultation with the plan’s actuaries.<br><br>–Key assumptions used in calculating the defined benefit pension<br><br>obligation for the principal plan and the sensitivity of the calculation to<br><br>different assumptions are described in Note 5. |
(m)Tax
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items
recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement as the related item
appears.
Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years.
HSBC provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax authorities.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the amounts
attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods in which the
assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, management considers the availability of evidence to support the recognition of
deferred tax assets, taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers of recent history of
tax losses where applicable. Management also considers the future reversal of existing taxable temporary differences and tax planning strategies,
including corporate reorganisations. The Group has applied the exception available under IAS 12 to recognising and disclosing information about
deferred tax assets and liabilities related to Pillar Two income taxes.
Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 311 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Critical estimates and judgements
| The recognition of deferred tax assets depends on judgements and estimates. | |
|---|---|
| Judgements | Estimates |
| –Specific judgements supporting deferred tax assets are described in Note 7. | –The recognition of deferred tax assets is sensitive to estimates of future<br><br>cash flows projected for periods for which detailed forecasts are available<br><br>and to assumptions regarding the long-term pattern of cash flows<br><br>thereafter, on which forecasts of future taxable profit are based, and<br><br>which affect the expected recovery periods and the pattern of utilisation<br><br>of tax losses and tax credits. See Note 7 for further detail. |
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next
financial year, but does consider this to be an area that is inherently judgemental.
(n)Provisions, contingent liabilities and guarantees
Provisions
Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive
obligation that has arisen as a result of past events and for which a reliable estimate can be made.
Critical estimates and judgements
| The recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out<br><br>below: | |
|---|---|
| Judgements | Estimates |
| –Determining whether a present obligation exists. Professional advice is taken on<br><br>the assessment of litigation and similar obligations.<br><br>–Provisions for legal proceedings and regulatory matters typically require a higher<br><br>degree of judgement than other types of provisions. When matters are at an<br><br>early stage, accounting judgements can be difficult because of the high degree of<br><br>uncertainty associated with determining whether a present obligation exists, and<br><br>estimating the probability and amount of any outflows that may arise. As matters<br><br>progress, management and legal advisers evaluate on an ongoing basis whether<br><br>provisions should be recognised, revising previous estimates as appropriate. At<br><br>more advanced stages, it is typically easier to make estimates around a better<br><br>defined set of possible outcomes. | –Provisions for legal proceedings and regulatory matters remain very<br><br>sensitive to the assumptions used in the estimate. There could be a wider<br><br>range of possible outcomes for any pending legal proceedings,<br><br>investigations or inquiries. As a result it is often not practicable to quantify<br><br>a range of possible outcomes for individual matters. It is also not<br><br>practicable to meaningfully quantify ranges of potential outcomes in<br><br>aggregate for these types of provisions because of the diverse nature and<br><br>circumstances of such matters and the wide range of uncertainties<br><br>involved. |
Contingent liabilities, contractual commitments and guarantees
Contingent liabilities
Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to legal
proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is remote.
Financial guarantee contracts
Liabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is generally
the fee received or present value of the fee receivable. Subsequently, they are measured at the higher of the amount determined in accordance
with IFRS 9 for ECL and the amount initially recognised less, where appropriate, any cumulative income recognised in accordance with IFRS 15.
(o)Non-current assets and disposal groups held for sale
HSBC classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying amounts will be
recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or disposal group
must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or
disposal groups), and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be committed
to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been initiated. Further,
the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale
should be expected to qualify as a completed sale within one year from the date of classification and actions required to complete the plan should
indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Held for sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those
assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset (or
disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write-down of the asset or disposal
group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in scope of
IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group, and then to the other non-current
assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any impairment loss in
excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total assets of the disposal
group.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 312 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
2Net fee income
| Net fee income by global business | ||||||
|---|---|---|---|---|---|---|
| 2025 | ||||||
| Hong Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Funds under management | 122 | 68 | 612 | 2,008 | — | 2,810 |
| Cards | 933 | 812 | 174 | 1,009 | — | 2,928 |
| Credit facilities | 54 | 239 | 1,098 | 62 | — | 1,453 |
| Broking income | 587 | 34 | 674 | 237 | — | 1,532 |
| Account services | 181 | 338 | 732 | 218 | — | 1,469 |
| Unit trusts | 424 | — | 2 | 936 | — | 1,362 |
| Underwriting | — | — | 752 | — | — | 752 |
| Global custody | 104 | — | 823 | 37 | — | 964 |
| Remittances | 214 | 40 | 586 | 41 | — | 881 |
| Imports/exports | 158 | 43 | 374 | — | — | 575 |
| Insurance agency commission | 64 | 18 | 2 | 331 | — | 415 |
| Other | 858 | 699 | 3,469 | 1,093 | (3,652) | 2,467 |
| Fee income | 3,699 | 2,291 | 9,298 | 5,972 | (3,652) | 17,608 |
| Less: fee expense | (923) | (487) | (4,809) | (1,709) | 3,663 | (4,265) |
| Net fee income | 2,776 | 1,804 | 4,489 | 4,263 | 11 | 13,343 |
| 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Funds under management | 108 | 68 | 511 | 1,752 | — | 2,439 |
| Cards | 907 | 754 | 156 | 1,026 | — | 2,843 |
| Credit facilities | 62 | 207 | 1,093 | 66 | — | 1,428 |
| Broking income | 322 | 33 | 723 | 212 | — | 1,290 |
| Account services | 177 | 354 | 721 | 247 | — | 1,499 |
| Unit trusts | 382 | — | 1 | 688 | — | 1,071 |
| Underwriting | — | — | 691 | — | — | 691 |
| Global custody | 90 | — | 707 | 34 | — | 831 |
| Remittances | 196 | 43 | 544 | 42 | — | 825 |
| Imports/exports | 158 | 38 | 449 | — | — | 645 |
| Insurance agency commission | 66 | 20 | 2 | 259 | — | 347 |
| Other | 699 | 728 | 3,199 | 899 | (3,168) | 2,357 |
| Fee income | 3,167 | 2,245 | 8,797 | 5,225 | (3,168) | 16,266 |
| Less: fee expense | (862) | (424) | (4,452) | (1,368) | 3,141 | (3,965) |
| Net fee income | 2,305 | 1,821 | 4,345 | 3,857 | (27) | 12,301 |
| 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Funds under management | 98 | 64 | 551 | 1,660 | — | 2,373 |
| Cards | 888 | 724 | 152 | 1,012 | — | 2,776 |
| Credit facilities | 83 | 182 | 1,240 | 69 | — | 1,574 |
| Broking income | 271 | 34 | 609 | 163 | — | 1,077 |
| Account services | 173 | 337 | 728 | 299 | — | 1,537 |
| Unit trusts | 281 | — | 1 | 456 | — | 738 |
| Underwriting | — | — | 586 | — | — | 586 |
| Global custody | 86 | — | 732 | 46 | — | 864 |
| Remittances | 183 | 40 | 544 | 55 | 1 | 823 |
| Imports/exports | 155 | 35 | 434 | — | — | 624 |
| Insurance agency commission | 76 | 13 | 2 | 207 | — | 298 |
| Other | 555 | 696 | 2,893 | 908 | (2,706) | 2,346 |
| Fee income | 2,849 | 2,125 | 8,472 | 4,875 | (2,705) | 15,616 |
| Less: fee expense | (818) | (353) | (3,988) | (1,325) | 2,713 | (3,771) |
| Net fee income | 2,031 | 1,772 | 4,484 | 3,550 | 8 | 11,845 |
Net fee income included $6.8bn of fees earned on financial assets that were not at fair value through profit or loss, other than amounts included in
determining the effective interest rate (2024: $6.8bn; 2023: $7.0bn), $2.0bn of fees payable on financial liabilities that were not at fair value through
profit or loss, other than amounts included in determining the effective interest rate (2024: $2.0bn; 2023: $1.9bn), $4.0bn of fees earned on trust
and other fiduciary activities (2024: $3.5bn; 2023: $3.5bn) and $0.5bn of fees payable relating to trust and other fiduciary activities (2024: $0.4bn;
2023: $0.3bn).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 313 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
3Net income/(expense) from financial instruments measured at fair value
through profit or loss
| 2025 | 2024 | 2023 | |
|---|---|---|---|
| $m | $m | $m | |
| Net income/(expense) arising on: | |||
| Net trading activities | 24,345 | 23,186 | 20,391 |
| Other instruments managed on a fair value basis | (4,663) | (2,070) | (3,730) |
| Net income from financial instruments held for trading or managed on a fair value basis | 19,682 | 21,116 | 16,661 |
| Financial assets held to meet liabilities under insurance and investment contracts | 11,612 | 6,210 | 8,086 |
| Liabilities to customers under investment contracts | (437) | (309) | (199) |
| Net income/(expense) from assets and liabilities of insurance businesses, including related<br><br>derivatives, measured at fair value through profit or loss | 11,175 | 5,901 | 7,887 |
HSBC Holdings
| 2025 | 2024 | 2023 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| $m | $m | $m | |||||||
| Net income/(expense) arising on: | |||||||||
| Net trading activities | (1,709) | 984 | (546) | ||||||
| Other instruments managed on a fair value basis | 1,891 | 1,915 | 1,609 | ||||||
| Net income from financial instruments held for trading or managed on a fair value basis | 182 | 2,899 | 1,063 | ||||||
| Derivatives managed in conjunction with HSBC Holdings-issued debt securities | 212 | 93 | 426 | ||||||
| Other changes in fair value | (1,253) | (218) | (1,894) | ||||||
| Changes in fair value of designated debt and related derivatives | (1,041) | (125) | (1,468) | ||||||
| Changes in fair value of other financial instruments mandatorily measured at fair value through profit<br><br>or loss | 2,835 | 2,086 | 3,692 | ||||||
| Year ended 31 Dec | 1,976 | 4,860 | 3,287 | ||||||
| 4 | Insurance business | ||||||||
| --- | --- | ||||||||
| Insurance service result | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |||||||
| Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts1 | Life other<br><br>contracts2 | Total | Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts1 | Life other<br><br>contracts2 | Total | Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts1 | Life other<br><br>contracts2 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Insurance revenue | |||||||||
| Amounts relating to changes in<br><br>liabilities for remaining coverage | 2,212 | 619 | 2,831 | 1,890 | 566 | 2,456 | 1,626 | 470 | 2,096 |
| – Contractual service margin<br><br>recognised for services provided | 1,428 | 165 | 1,593 | 1,143 | 188 | 1,331 | 975 | 151 | 1,126 |
| – Change in risk adjustment for<br><br>non-financial risk for risk expired | 46 | 19 | 65 | 46 | 20 | 66 | 21 | 15 | 36 |
| – Expected incurred claims and<br><br>other insurance service expenses | 734 | 435 | 1,169 | 698 | 358 | 1,056 | 594 | 304 | 898 |
| – Other | 4 | — | 4 | 3 | — | 3 | 36 | — | 36 |
| Recovery of insurance acquisition<br><br>cash flows | 285 | 112 | 397 | 195 | 101 | 296 | 109 | 54 | 163 |
| Total insurance revenue | 2,497 | 731 | 3,228 | 2,085 | 667 | 2,752 | 1,735 | 524 | 2,259 |
| Insurance service expenses | |||||||||
| Incurred claims and other insurance<br><br>service expenses | (488) | (418) | (906) | (616) | (428) | (1,044) | (615) | (292) | (907) |
| Losses and reversal of losses on<br><br>onerous contracts | (36) | (51) | (87) | (50) | (73) | (123) | (32) | (77) | (109) |
| Amortisation of insurance<br><br>acquisition cash flows | (285) | (112) | (397) | (195) | (101) | (296) | (109) | (54) | (163) |
| Adjustments to liabilities for incurred<br><br>claims | (7) | (6) | (13) | (6) | 27 | 21 | (1) | (1) | (2) |
| Total insurance service expenses | (816) | (587) | (1,403) | (867) | (575) | (1,442) | (757) | (424) | (1,181) |
| Total insurance service result3 | 1,681 | 144 | 1,825 | 1,218 | 92 | 1,310 | 978 | 100 | 1,078 |
1‘Life direct participating and investment DPF contracts’ are substantially measured under the variable fee approach measurement model.
2‘Life other contracts’ are measured under the general measurement model.
3‘Total insurance service result’ includes $0.2bn (2024: nil; 2023: nil) earned by HSBC Life (UK) Limited and HSBC Assurances Vie (France) while they were
classified as held for sale. For further details, see Note 23.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 314 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements | |||||||||
| Net investment return | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |||||||
| Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts | Life other<br><br>contracts | Total | Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts | Life other<br><br>contracts | Total | Life direct<br><br>participating<br><br>and<br><br>investment<br><br>DPF contracts | Life other<br><br>contracts | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Investment return | |||||||||
| Amounts recognised in profit or loss1 | 11,097 | 79 | 11,176 | 5,644 | 273 | 5,917 | 7,663 | 214 | 7,877 |
| Amounts recognised in OCI | (7) | — | (7) | 185 | — | 185 | 493 | — | 493 |
| Total investment return<br><br>(memorandum) | 11,090 | 79 | 11,169 | 5,829 | 273 | 6,102 | 8,156 | 214 | 8,370 |
| Net finance expense | |||||||||
| Changes in fair value of underlying<br><br>items of direct participating contracts | (11,020) | — | (11,020) | (5,805) | — | (5,805) | (7,995) | — | (7,995) |
| Effect of risk mitigation option | (175) | — | (175) | 44 | — | 44 | (35) | — | (35) |
| Interest accreted | — | (112) | (112) | — | (110) | (110) | — | (127) | (127) |
| Effect of changes in interest rates and<br><br>other financial assumptions | — | 124 | 124 | — | (298) | (298) | (12) | (121) | (133) |
| Effect of measuring changes in<br><br>estimates at current rates and adjusting<br><br>the CSM at rates on initial recognition | — | (7) | (7) | — | — | — | — | (10) | (10) |
| Total net finance expense from<br><br>insurance contracts2 | (11,195) | 5 | (11,190) | (5,761) | (408) | (6,169) | (8,042) | (258) | (8,300) |
| Represented by: | |||||||||
| Amounts recognised in profit or loss | (11,202) | 5 | (11,197) | (5,570) | (408) | (5,978) | (7,551) | (258) | (7,809) |
| Amounts recognised in OCI | 7 | — | 7 | (191) | — | (191) | (491) | — | (491) |
| Total net investment return | (105) | 84 | (21) | 68 | (135) | (67) | 114 | (44) | 70 |
| Represented by: | |||||||||
| Amounts recognised in profit or loss | (105) | 84 | (21) | 74 | (135) | (61) | 112 | (44) | 68 |
| Amounts recognised in OCI | — | — | — | (6) | — | (6) | 2 | — | 2 |
1Total Group ‘Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss’ of
$11.2bn gain (2024: $5.9bn gain; 2023: $7.9bn gain) includes returns on assets and liabilities supporting insurance policies of $11.0bn (2024: $5.7bn gain; 2023:
$7.6bn gain) and on shareholder assets of $0.2bn (2024: $0.2bn gain; 2023: $0.3bn gain).
2‘Total net finance expense from insurance contracts’ includes $1.4bn (2024: nil; 2023: nil) incurred by HSBC Life (UK) Limited and HSBC Assurances Vie (France)
while they were classified as held for sale. For further details, see Note 23.
| Reconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive<br><br>income – assets supporting contracts measured under the modified retrospective approach | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Balance at 1 Jan | (736) | (670) |
| Net change in fair value | (13) | (153) |
| Net amount reclassified to profit or loss | — | 3 |
| Related income tax | 4 | 39 |
| Disposal of subsidiary1 | 592 | — |
| Foreign exchange and other | 153 | 45 |
| Balance at 31 Dec | — | (736) |
1HSBC Assurances Vie (France) was sold on 31 October 2025. For further details, see Note 23.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 315 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements | |||||||||
| Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | |||||||||
| Life direct participating and investment DPF<br><br>contracts | Life other contracts | ||||||||
| Liabilities for remaining<br><br>coverage: | Liabilities for remaining<br><br>coverage: | ||||||||
| Excluding<br><br>loss<br><br>component | Loss<br><br>component | Incurred<br><br>claims | Total | Excluding<br><br>loss<br><br>component | Loss<br><br>component | Incurred<br><br>claims | Total | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Opening assets | (16) | 1 | 1 | (14) | (177) | (13) | 72 | (118) | (132) |
| Opening liabilities | 103,045 | 146 | 223 | 103,414 | 3,748 | 224 | 243 | 4,215 | 107,629 |
| Net opening balance at 1 Jan | 103,029 | 147 | 224 | 103,400 | 3,571 | 211 | 315 | 4,097 | 107,497 |
| Changes in the consolidated income<br><br>statement and statement of<br><br>comprehensive income1 | |||||||||
| Insurance revenue | |||||||||
| Contracts under the fair value approach2 | (668) | — | — | (668) | (153) | — | — | (153) | (821) |
| Contracts under the modified<br><br>retrospective approach | — | — | — | — | — | — | — | — | — |
| Other contracts3 | (1,573) | — | — | (1,573) | (478) | — | — | (478) | (2,051) |
| Total insurance revenue | (2,241) | — | — | (2,241) | (631) | — | — | (631) | (2,872) |
| Insurance service expenses | |||||||||
| Incurred claims and other insurance<br><br>service expenses | — | (8) | 413 | 405 | — | (34) | 377 | 343 | 748 |
| Amortisation of insurance acquisition<br><br>cash flows | 281 | — | — | 281 | 103 | — | — | 103 | 384 |
| Losses and reversal of losses on<br><br>onerous contracts | — | 39 | — | 39 | — | 41 | — | 41 | 80 |
| Adjustments to liabilities for incurred<br><br>claims | — | — | 7 | 7 | — | — | 18 | 18 | 25 |
| Total insurance service expenses | 281 | 31 | 420 | 732 | 103 | 7 | 395 | 505 | 1,237 |
| Investment components | (7,864) | — | 7,864 | — | (893) | — | 893 | — | — |
| Insurance service result | (9,824) | 31 | 8,284 | (1,509) | (1,421) | 7 | 1,288 | (126) | (1,635) |
| Net finance expense from insurance<br><br>contracts4 | 9,812 | — | — | 9,812 | (7) | 2 | — | (5) | 9,807 |
| Effect of movements in exchange rates | 999 | 10 | 8 | 1,017 | 115 | 10 | 27 | 152 | 1,169 |
| Total changes in the consolidated<br><br>income statement and statement of<br><br>comprehensive income | 987 | 41 | 8,292 | 9,320 | (1,313) | 19 | 1,315 | 21 | 9,341 |
| Cash flows | |||||||||
| Premiums received | 19,125 | — | — | 19,125 | 2,001 | — | — | 2,001 | 21,126 |
| Claims, other insurance service<br><br>expenses paid and other cash flows | 53 | — | (8,430) | (8,377) | 3 | — | (1,278) | (1,275) | (9,652) |
| Insurance acquisition cash flows | (1,109) | — | — | (1,109) | (106) | — | — | (106) | (1,215) |
| Total cash flows | 18,069 | — | (8,430) | 9,639 | 1,898 | — | (1,278) | 620 | 10,259 |
| Other movements5 | (4,128) | (13) | 4 | (4,137) | (48) | (3) | (72) | (123) | (4,260) |
| Net closing balance at 31 Dec | 117,957 | 175 | 90 | 118,222 | 4,108 | 227 | 280 | 4,615 | 122,837 |
| Closing assets | (12) | — | — | (12) | (193) | 47 | 40 | (106) | (118) |
| Closing liabilities | 117,969 | 175 | 90 | 118,234 | 4,301 | 180 | 240 | 4,721 | 122,955 |
| Net closing balance at 31 Dec | 117,957 | 175 | 90 | 118,222 | 4,108 | 227 | 280 | 4,615 | 122,837 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
| --- | |||||||||
| 316 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements | |||||||||
| Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | |||||||||
| Life direct participating and investment DPF<br><br>contracts | Life other contracts | ||||||||
| Liabilities for remaining<br><br>coverage: | Liabilities for remaining<br><br>coverage: | ||||||||
| Excluding<br><br>loss<br><br>component | Loss<br><br>component | Incurred<br><br>claims | Total | Excluding<br><br>loss<br><br>component | Loss<br><br>component | Incurred<br><br>claims | Total | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Opening assets | (15) | 1 | 1 | (13) | (279) | (16) | 56 | (239) | (252) |
| Opening liabilities | 116,546 | 121 | 370 | 117,037 | 3,400 | 191 | 223 | 3,814 | 120,851 |
| Net opening balance at 1 Jan | 116,531 | 122 | 371 | 117,024 | 3,121 | 175 | 279 | 3,575 | 120,599 |
| Changes in the consolidated income<br><br>statement and statement of comprehensive<br><br>income1 | |||||||||
| Insurance revenue | |||||||||
| Contracts under the fair value approach2 | (715) | — | — | (715) | (217) | — | — | (217) | (932) |
| Contracts under the modified retrospective<br><br>approach | (141) | — | — | (141) | (18) | — | — | (18) | (159) |
| Other contracts3 | (1,229) | — | — | (1,229) | (432) | — | — | (432) | (1,661) |
| Total insurance revenue | (2,085) | — | — | (2,085) | (667) | — | — | (667) | (2,752) |
| Insurance service expenses | |||||||||
| Incurred claims and other insurance service<br><br>expenses | — | (7) | 623 | 616 | — | (49) | 477 | 428 | 1,044 |
| Amortisation of insurance acquisition cash<br><br>flows | 195 | — | — | 195 | 101 | — | — | 101 | 296 |
| Losses and reversal of losses on onerous<br><br>contracts | — | 50 | — | 50 | — | 73 | — | 73 | 123 |
| Adjustments to liabilities for incurred claims | — | — | 6 | 6 | — | — | (27) | (27) | (21) |
| Total insurance service expenses | 195 | 43 | 629 | 867 | 101 | 24 | 450 | 575 | 1,442 |
| Investment components | (8,284) | — | 8,284 | — | (1,058) | — | 1,058 | — | — |
| Insurance service result | (10,174) | 43 | 8,913 | (1,218) | (1,624) | 24 | 1,508 | (92) | (1,310) |
| Net finance expense from insurance<br><br>contracts4 | 5,720 | 41 | — | 5,761 | 405 | 3 | — | 408 | 6,169 |
| Effect of movements in exchange rates | (1,162) | (5) | (9) | (1,176) | (76) | 1 | (24) | (99) | (1,275) |
| Total changes in the consolidated income<br><br>statement and statement of comprehensive<br><br>income | (5,616) | 79 | 8,904 | 3,367 | (1,295) | 28 | 1,484 | 217 | 3,584 |
| Cash flows | |||||||||
| Premiums received | 16,442 | — | — | 16,442 | 1,950 | — | — | 1,950 | 18,392 |
| Claims, other insurance service expenses<br><br>paid and other cash flows | 2 | — | (9,020) | (9,018) | 2 | — | (1,508) | (1,506) | (10,524) |
| Insurance acquisition cash flows | (835) | — | — | (835) | (260) | — | — | (260) | (1,095) |
| Total cash flows | 15,609 | — | (9,020) | 6,589 | 1,692 | — | (1,508) | 184 | 6,773 |
| Other movements5 | (23,495) | (54) | (31) | (23,580) | 53 | 8 | 60 | 121 | (23,459) |
| Net closing balance at 31 Dec | 103,029 | 147 | 224 | 103,400 | 3,571 | 211 | 315 | 4,097 | 107,497 |
| Closing assets | (16) | 1 | 1 | (14) | (177) | (13) | 72 | (118) | (132) |
| Closing liabilities | 103,045 | 146 | 223 | 103,414 | 3,748 | 224 | 243 | 4,215 | 107,629 |
| Net closing balance at 31 Dec | 103,029 | 147 | 224 | 103,400 | 3,571 | 211 | 315 | 4,097 | 107,497 |
1‘Changes in the consolidated income statement and statement of comprehensive income’ excludes ‘insurance service result’ gains of $0.2bn (2024: nil) and ‘net
insurance finance expense’ losses of $1.4bn (2024: nil) reported in the consolidated income statement and statement of comprehensive income in respect of
businesses classified as held for sale.
2On transition to IFRS 17 the Group applied the full retrospective approach to new business written from 2018 at the earliest. Where applying the full
retrospective approach was impracticable, the Group primarily applied the fair value approach.
3‘Other contracts’ are those contracts measured by applying IFRS 17 from inception of the contracts. These include contracts measured under the full
retrospective approach at transition and contracts incepted after transition.
4‘Net finance expense from insurance contracts’ expense of $9.8bn (2024: $6.2bn expense) comprises expense of $9.8bn (2024: $6.0bn expense) recognised in
the income statement and expense of nil (2024: $0.2bn expense) recognised in other comprehensive income.
5The ‘Other movements‘ reduction of $4.3bn (2024: $23.5bn reduction) in insurance contracts includes $4.4bn in respect of HSBC Life (UK) Limited which was
classified as held for sale in 2025 (2024: $21.8bn in respect of HSBC Assurances Vie (France), which was classified as held for sale in 2024 with the sale
completing on 31 October 2025). For further details, see Note 23.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 317 | |||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| Notes on the financial statements | |||||||||||
| Movements in carrying amounts of insurance contracts – analysis by measurement component | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | |||||||||||
| Life direct participating and investment DPF contracts | Life other contracts | ||||||||||
| Estimates of<br><br>present<br><br>value of<br><br>future cash<br><br>flows and<br><br>risk<br><br>adjustment | Contractual service margin | Estimates of<br><br>present<br><br>value of<br><br>future cash<br><br>flows and<br><br>risk<br><br>adjustment | Contractual service margin | ||||||||
| Contracts<br><br>under the<br><br>fair value<br><br>approach | Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach | Other<br><br>contracts | Total | Contracts<br><br>under the<br><br>fair value<br><br>approach | Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach | Other<br><br>contracts | Total | Total | |||
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Opening assets | (27) | 3 | — | 10 | (14) | (359) | 73 | — | 168 | (118) | (132) |
| Opening liabilities | 91,498 | 4,500 | — | 7,416 | 103,414 | 3,669 | 280 | — | 266 | 4,215 | 107,629 |
| Net opening balance at<br><br>1 Jan | 91,471 | 4,503 | — | 7,426 | 103,400 | 3,310 | 353 | — | 434 | 4,097 | 107,497 |
| Changes in the<br><br>consolidated income<br><br>statement and statement<br><br>of comprehensive income | |||||||||||
| Changes that relate to<br><br>current services | |||||||||||
| Contractual service margin<br><br>recognised for services<br><br>provided | — | (502) | — | (846) | (1,348) | — | (38) | — | (106) | (144) | (1,492) |
| Change in risk adjustment for<br><br>non-financial risk expired | (36) | — | — | — | (36) | (17) | — | — | — | (17) | (53) |
| Experience adjustments | (167) | — | — | — | (167) | (24) | — | — | — | (24) | (191) |
| Other movements<br><br>recognised in insurance<br><br>service result | — | 17 | — | (21) | (4) | — | — | — | — | — | (4) |
| Changes that relate to<br><br>future services | — | — | |||||||||
| Contracts initially recognised<br><br>in the year | (3,556) | — | — | 3,564 | 8 | (183) | — | — | 189 | 6 | 14 |
| Changes in estimates that<br><br>adjust the contractual service<br><br>margin1 | (578) | 285 | — | 293 | — | (31) | (20) | — | 51 | — | — |
| Changes in estimates that<br><br>result in losses and reversal<br><br>of losses on onerous<br><br>contracts | 31 | — | — | — | 31 | 35 | — | — | — | 35 | 66 |
| Changes that relate to past<br><br>services | |||||||||||
| Adjustments to liabilities for<br><br>incurred claims | 7 | — | — | — | 7 | 18 | — | — | — | 18 | 25 |
| Insurance service result | (4,299) | (200) | — | 2,990 | (1,509) | (202) | (58) | — | 134 | (126) | (1,635) |
| Net finance expense from<br><br>insurance contracts | 9,812 | — | — | — | 9,812 | (35) | 6 | — | 24 | (5) | 9,807 |
| Other movements<br><br>recognised in the statement<br><br>of profit or loss | — | — | — | — | — | — | — | — | — | — | — |
| Effect of movements in<br><br>exchange rates | 934 | 43 | — | 40 | 1,017 | 106 | 17 | — | 29 | 152 | 1,169 |
| Total changes in the<br><br>consolidated income<br><br>statement and statement<br><br>of comprehensive income | 6,447 | (157) | — | 3,030 | 9,320 | (131) | (35) | — | 187 | 21 | 9,341 |
| Cash flows | |||||||||||
| Premiums received | 19,125 | — | — | — | 19,125 | 2,001 | — | — | — | 2,001 | 21,126 |
| Claims, other insurance<br><br>service expenses paid and<br><br>other cash flows | (8,377) | — | — | — | (8,377) | (1,275) | — | — | — | (1,275) | (9,652) |
| Insurance acquisition cash<br><br>flows | (1,109) | — | — | — | (1,109) | (106) | — | — | — | (106) | (1,215) |
| Total cash flows | 9,639 | — | — | — | 9,639 | 620 | — | — | — | 620 | 10,259 |
| Other movements | (4,058) | 4 | — | (83) | (4,137) | (1) | (71) | — | (51) | (123) | (4,260) |
| Net closing balance at<br><br>31 Dec | 103,499 | 4,350 | — | 10,373 | 118,222 | 3,798 | 247 | — | 570 | 4,615 | 122,837 |
| Closing assets | (21) | 2 | — | 7 | (12) | (253) | 27 | — | 120 | (106) | (118) |
| Closing liabilities | 103,520 | 4,348 | — | 10,366 | 118,234 | 4,051 | 220 | — | 450 | 4,721 | 122,955 |
| Net closing balance at<br><br>31 Dec | 103,499 | 4,350 | — | 10,373 | 118,222 | 3,798 | 247 | — | 570 | 4,615 | 122,837 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||||
| --- | |||||||||||
| 318 | |||||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||||
| --- | --- | --- | --- | --- | --- | --- | |||||
| Notes on the financial statements | |||||||||||
| Movements in carrying amounts of insurance contracts – analysis by measurement component (continued) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | |||||||||||
| Life direct participating and investment DPF contracts | Life other contracts | ||||||||||
| Estimates<br><br>of present<br><br>value of<br><br>future cash<br><br>flows and<br><br>risk<br><br>adjustment | Contractual service margin | Estimates<br><br>of present<br><br>value of<br><br>future cash<br><br>flows and<br><br>risk<br><br>adjustment | Contractual service margin | ||||||||
| Contracts<br><br>under the<br><br>fair value<br><br>approach | Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach | Other<br><br>contracts | Total | Contracts<br><br>under the<br><br>fair value<br><br>approach | Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach | Other<br><br>contracts | Total | Total | |||
| $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Opening assets | (30) | 3 | — | 14 | (13) | (339) | 36 | — | 64 | (239) | (252) |
| Opening liabilities | 106,440 | 4,679 | 715 | 5,203 | 117,037 | 3,113 | 361 | 19 | 321 | 3,814 | 120,851 |
| Net opening balance at 1 Jan | 106,410 | 4,682 | 715 | 5,217 | 117,024 | 2,774 | 397 | 19 | 385 | 3,575 | 120,599 |
| Changes in the consolidated income<br><br>statement and statement of<br><br>comprehensive income | |||||||||||
| Changes that relate to current<br><br>services | |||||||||||
| Contractual service margin<br><br>recognised for services provided | — | (488) | (59) | (596) | (1,143) | — | (77) | (6) | (105) | (188) | (1,331) |
| Change in risk adjustment for non-<br><br>financial risk expired | (46) | — | — | — | (46) | (20) | — | — | — | (20) | (66) |
| Experience adjustments | (82) | — | — | — | (82) | 70 | — | — | — | 70 | (12) |
| Other movements recognised in<br><br>insurance service result | — | 52 | — | (55) | (3) | — | — | — | — | — | (3) |
| Changes that relate to future<br><br>services | — | — | |||||||||
| Contracts initially recognised in the<br><br>year | (2,384) | — | — | 2,400 | 16 | (201) | — | — | 220 | 19 | 35 |
| Changes in estimates that adjust<br><br>contractual service margin1 | (914) | 229 | (6) | 691 | — | (7) | 30 | 7 | (30) | — | — |
| Changes in estimates that result in<br><br>losses and reversal of losses on<br><br>onerous contracts | 34 | — | — | — | 34 | 54 | — | — | — | 54 | 88 |
| Changes that relate to past services | |||||||||||
| Adjustments to liabilities for incurred<br><br>claims | 6 | — | — | — | 6 | (27) | — | — | — | (27) | (21) |
| Insurance service result | (3,386) | (207) | (65) | 2,440 | (1,218) | (131) | (47) | 1 | 85 | (92) | (1,310) |
| Net finance expense from insurance<br><br>contracts | 5,761 | — | — | — | 5,761 | 380 | 12 | — | 16 | 408 | 6,169 |
| Other movements recognised in the<br><br>statement of profit or loss | — | — | — | — | — | — | — | — | — | — | — |
| Effect of movements in exchange<br><br>rates | (1,167) | 51 | (24) | (36) | (1,176) | (50) | (11) | — | (38) | (99) | (1,275) |
| Total changes in the consolidated<br><br>income statement and statement of<br><br>comprehensive income | 1,208 | (156) | (89) | 2,404 | 3,367 | 199 | (46) | 1 | 63 | 217 | 3,584 |
| Cash flows | |||||||||||
| Premiums received | 16,442 | — | — | — | 16,442 | 1,950 | — | — | — | 1,950 | 18,392 |
| Claims, other insurance service<br><br>expenses paid and other cash flows | (9,018) | — | — | — | (9,018) | (1,506) | — | — | — | (1,506) | (10,524) |
| Insurance acquisition cash flows | (835) | — | — | — | (835) | (260) | — | — | — | (260) | (1,095) |
| Total cash flows | 6,589 | — | — | — | 6,589 | 184 | — | — | — | 184 | 6,773 |
| Other movements | (22,736) | (23) | (626) | (195) | (23,580) | 153 | 2 | (20) | (14) | 121 | (23,459) |
| Net closing balance at 31 Dec | 91,471 | 4,503 | — | 7,426 | 103,400 | 3,310 | 353 | — | 434 | 4,097 | 107,497 |
| Closing assets | (27) | 3 | — | 10 | (14) | (359) | 73 | — | 168 | (118) | (132) |
| Closing liabilities | 91,498 | 4,500 | — | 7,416 | 103,414 | 3,669 | 280 | — | 266 | 4,215 | 107,629 |
| Net closing balance at 31 Dec | 91,471 | 4,503 | — | 7,426 | 103,400 | 3,310 | 353 | — | 434 | 4,097 | 107,497 |
1‘Changes in estimates that adjust contractual service margin’ increase of $0.6bn (2024: $0.9bn increase) includes an increase of $1.0bn (2024: $0.7bn increase)
from economic factors and a decrease of $0.4bn (2024: $0.3bn increase) from non-economic factors.
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 319 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements | |||||||||
| Effect of insurance contracts initially recognised in the year | |||||||||
| --- | --- | --- | --- | --- | --- | --- | |||
| 2025 | 2024 | ||||||||
| Profitable<br><br>contracts<br><br>issued | Onerous<br><br>contracts<br><br>issued | Total | Profitable<br><br>contracts<br><br>issued | Onerous<br><br>contracts<br><br>issued | Total | ||||
| $m | $m | $m | $m | $m | $m | ||||
| Life direct participating and investment DPF contracts | |||||||||
| Estimates of present value of cash outflows | 19,675 | 295 | 19,970 | 16,878 | 495 | 17,373 | |||
| – insurance acquisition cash flows | 984 | 29 | 1,013 | 805 | 38 | 843 | |||
| – claims and other insurance service expenses payable | 18,691 | 266 | 18,957 | 16,073 | 457 | 16,530 | |||
| Estimates of present value of cash inflows | (23,290) | (288) | (23,578) | (19,326) | (481) | (19,807) | |||
| Risk adjustment for non-financial risk | 51 | 1 | 52 | 48 | 2 | 50 | |||
| Contractual service margin | 3,564 | — | 3,564 | 2,400 | — | 2,400 | |||
| Losses recognised on initial recognition | — | (8) | (8) | — | (16) | (16) | |||
| Life other contracts | |||||||||
| Estimates of present value of cash outflows | 1,465 | 183 | 1,648 | 1,484 | 476 | 1,960 | |||
| – insurance acquisition cash flows | 48 | 19 | 67 | 125 | 65 | 190 | |||
| – claims and other insurance service expenses payable | 1,417 | 164 | 1,581 | 1,359 | 411 | 1,770 | |||
| Estimates of present value of cash inflows | (1,669) | (180) | (1,849) | (1,731) | (460) | (2,191) | |||
| Risk adjustment for non-financial risk | 15 | 3 | 18 | 27 | 3 | 30 | |||
| Contractual service margin | 189 | — | 189 | 220 | — | 220 | |||
| Losses recognised on initial recognition | — | (6) | (6) | — | (19) | (19) | |||
| Present value of expected future cash flows of insurance contract liabilities and contractual service margin | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Less than<br><br>1 year | 1–2<br><br>years | 2–3<br><br>years | 3–4<br><br>years | 4–5<br><br>years | 5–10<br><br>years | 10–20<br><br>years | Over 20<br><br>years | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| 2025 | |||||||||
| Insurance liability future cash flows1 | |||||||||
| Life direct participating and investment DPF contracts | (3,766) | (197) | 3,701 | 3,086 | 3,567 | 12,420 | 17,439 | 66,799 | 103,049 |
| Life other contracts | 70 | 164 | 252 | 45 | 680 | 184 | 103 | 2,476 | 3,974 |
| Insurance liability future cash flows at 31 Dec 2025 | (3,696) | (33) | 3,953 | 3,131 | 4,247 | 12,604 | 17,542 | 69,275 | 107,023 |
| Remaining contractual service margin1 | |||||||||
| Life direct participating and investment DPF contracts | 1,312 | 1,205 | 1,112 | 1,024 | 941 | 3,631 | 3,602 | 1,896 | 14,723 |
| Life other contracts | 121 | 94 | 77 | 65 | 54 | 173 | 150 | 83 | 817 |
| Remaining contractual service margin at 31 Dec 2025 | 1,433 | 1,299 | 1,189 | 1,089 | 995 | 3,804 | 3,752 | 1,979 | 15,540 |
| 2024 | |||||||||
| Insurance liability future cash flows | |||||||||
| Life direct participating and investment DPF contracts | (3,526) | (455) | 2,464 | 2,968 | 3,219 | 11,332 | 22,005 | 53,120 | 91,127 |
| Life other contracts | 971 | (96) | (101) | (53) | 7 | 63 | 279 | 2,529 | 3,599 |
| Insurance liability future cash flows at 31 Dec 2024 | (2,555) | (551) | 2,363 | 2,915 | 3,226 | 11,395 | 22,284 | 55,649 | 94,726 |
| Remaining contractual service margin | |||||||||
| Life direct participating and investment DPF contracts | 1,052 | 961 | 880 | 810 | 746 | 2,892 | 2,954 | 1,634 | 11,929 |
| Life other contracts | 128 | 104 | 85 | 69 | 53 | 159 | 127 | 62 | 787 |
| Remaining contractual service margin at 31 Dec 2024 | 1,180 | 1,065 | 965 | 879 | 799 | 3,051 | 3,081 | 1,696 | 12,716 |
1‘Insurance liability future cash flows’ and ‘Remaining contractual service margin’ exclude insurance businesses classified as held for sale (2025: HSBC Life (UK)
Limited; 2024: HSBC Assurances Vie (France)). For further details, see Note 23.
Discount rates
The discount rates applied to expected future cash flows are determined through a bottom-up approach as set out in Note 1.2(k) ‘Summary of
material accounting policies – Insurance contracts’ on page 301. The blended average of discount rates used within our most material
manufacturing entities are as follows:
| HSBC Life (International) Ltd | Hang Seng Insurance Co Ltd | |||
|---|---|---|---|---|
| HK$ | $ | HK$ | $ | |
| At 31 Dec 2025 | ||||
| 10-year discount rate (%) | 3.74 | 4.78 | 3.85 | 4.82 |
| 20-year discount rate (%) | 4.09 | 5.54 | 4.20 | 5.59 |
| At 31 Dec 2024 | ||||
| 10-year discount rate (%) | 4.32 | 5.16 | 4.43 | 5.25 |
| 20-year discount rate (%) | 4.42 | 5.51 | 4.53 | 5.60 |
Risk adjustment for non-financial risk
The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arise
from non-financial risk. It is calculated as a 75th percentile level of stress over a one-year period. The level of the stress is determined with
reference to external regulatory stresses and internal economic capital stresses.
For the main insurance manufacturing entity in these locations, the one-year 75th percentile level of stress corresponds to the following
percentiles based on an ultimate view of risk over all future years:
–Asia-Pacific (Hong Kong): 59th percentile (2024: 60th percentile).
–Europe (UK): 64th percentile (2024: 60th percentile, for HSBC Assurances Vie (France) that was sold during 2025).
–Latin America (Mexico): 63rd percentile (2024: 64th percentile).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 320 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
5Employee compensation and benefits
| 2025 | 2024 | 2023 | |
|---|---|---|---|
| $m | $m | $m | |
| Employee compensation and benefits1 | 19,553 | 18,465 | 18,220 |
| Capitalised wages and salaries2 | 1,959 | 1,688 | 1,403 |
| Gross employee compensation and benefits for the year ended 31 Dec | 21,512 | 20,153 | 19,623 |
| Consists of: | |||
| Wages and salaries | 19,048 | 17,815 | 17,359 |
| Social security costs | 1,638 | 1,487 | 1,507 |
| Post-employment benefits | 826 | 851 | 757 |
| Year ended 31 Dec | 21,512 | 20,153 | 19,623 |
1Employee compensation and benefits are presented in the income statement net of software capitalisation costs and costs included in the insurance contract
fulfilment cash flow liabilities under IFRS 17.
2Comprises $1.4bn (2024: $1.1bn; 2023: $1.0bn) software capitalisation costs and $0.6bn (2024: $0.6bn; 2023: $0.4bn) costs included in the insurance contract
fulfilment cash flow liabilities under IFRS 17.
| Average number of persons employed by HSBC during the year by business segment1 | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| Hong Kong | 33,111 | 33,820 | 34,818 |
| UK | 32,177 | 32,791 | 32,391 |
| Corporate and Institutional Banking | 81,940 | 75,327 | 75,141 |
| International Wealth and Premier Banking | 70,674 | 78,616 | 84,855 |
| Corporate Centre | 369 | 374 | 347 |
| Year ended 31 Dec | 218,271 | 220,928 | 227,552 |
| Average number of persons employed by HSBC during the year by legal entity1 | |||
| --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |
| HSBC UK Bank plc | 19,841 | 20,034 | 20,415 |
| HSBC Bank plc | 10,210 | 11,456 | 14,809 |
| The Hongkong and Shanghai Banking Corporation Limited | 52,756 | 54,478 | 54,321 |
| HSBC Bank Middle East Limited | 3,424 | 3,344 | 3,316 |
| HSBC North America Holdings Inc. | 5,680 | 5,928 | 6,046 |
| HSBC Bank Canada | — | 758 | 4,354 |
| Grupo Financiero HSBC, S.A. de C.V. | 13,382 | 13,928 | 14,412 |
| Other trading entities2 | 5,419 | 8,393 | 9,247 |
| Holding companies, shared service centres and intra-Group eliminations | 107,559 | 102,609 | 100,632 |
| Year ended 31 Dec | 218,271 | 220,928 | 227,552 |
1Average number of persons employed represents the number of persons with contracts of service with the Group. This includes an average number of
temporary persons employed of 6,147 (2024: 6,390; 2023: 7,207). Persons employed comprises individuals in front-line roles, those providing dedicated support
services managed by business segments and an allocation of Corporate Centre individuals in proportion to business usage of shared support services and global
infrastructure. During 2025, certain Operations individuals were transferred from Corporate Centre to business segments for which they provide dedicated
services.
2Other trading entities includes entities located in Türkiye, Egypt and Saudi Arabia.
| Reconciliation of total incentive awards granted to income statement charge | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Total incentive awards approved for the current year | 3,930 | 3,800 | 3,774 |
| Less: deferred bonuses awarded, expected to be recognised in future periods | (430) | (381) | (353) |
| Total incentives awarded and recognised in the current year | 3,500 | 3,419 | 3,421 |
| Add: current year charges for deferred bonuses from previous years | 478 | 439 | 375 |
| Other | (11) | (97) | (56) |
| Income statement charge for incentive awards | 3,967 | 3,761 | 3,740 |
Share-based payments
‘Wages and salaries’ includes the effect of share-based payments arrangements, of which $608m (2024: $529m; 2023: $482m) was equity
settled, as follows:
| 2025 | 2024 | 2023 | ||||
|---|---|---|---|---|---|---|
| $m | $m | $m | ||||
| Conditional share awards | 650 | 551 | 499 | |||
| Savings-related and other share award option plans | 18 | 27 | 23 | |||
| Year ended 31 Dec | 668 | 578 | 522 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 321 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| HSBC share awards | ||||||
| --- | --- | |||||
| Award | Policy | |||||
| Deferred share awards<br><br>(including annual incentive<br><br>awards, long-term incentive<br><br>(‘LTI’) awards delivered in<br><br>shares) | An assessment of performance over the relevant period ending on 31 December is used to determine the amount of the award<br><br>to be granted.<br><br>–Deferred awards generally require employees to remain in employment over the vesting period and are generally not subject<br><br>to performance conditions after the grant date. An exception to these are LTI awards, which are subject to performance<br><br>conditions.<br><br>–Deferred share awards generally vest over a period of three, four, five or seven years.<br><br>–Vested shares may be subject to a retention requirement post-vesting.<br><br>–Awards are generally subject to malus and clawback provisions.<br><br>–LTI is subject to performance conditions. | |||||
| International Employee Share<br><br>Purchase Plan (‘ShareMatch’) | The plan was first introduced in Hong Kong in 2013 and now includes employees based in 30 jurisdictions.<br><br>–Shares are purchased in the market each quarter up to a maximum value of £750, or the equivalent in local currency.<br><br>–Matching awards are added at a ratio of one free share for every three purchased. In mainland China, matching awards are<br><br>settled in cash.<br><br>–Matching awards vest subject to continued employment and the retention of the purchased shares for a maximum period of<br><br>two years and nine months. | |||||
| Movement on HSBC share awards | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| Number | Number | |||||
| (000s) | (000s) | |||||
| Conditional share awards outstanding at 1 Jan | 133,643 | 125,023 | ||||
| Additions during the year | 55,411 | 84,930 | ||||
| Released in the year | (63,652) | (71,849) | ||||
| Forfeited in the year | (5,756) | (4,461) | ||||
| Conditional share awards outstanding at 31 Dec | 119,646 | 133,643 | ||||
| Weighted average fair value of awards granted ($) | 7.11 | 6.08 | ||||
| HSBC share option plans | ||||||
| --- | --- | |||||
| Main plans | Policy | |||||
| Savings-related share option<br><br>plans (‘Sharesave’) | –From 2014, employees eligible for the UK plan could save up to £500 per month with the option to use the savings to acquire<br><br>shares.<br><br>–These are generally exercisable within six months following either the third or fifth anniversary of the commencement of a<br><br>three-year or five-year contract, respectively.<br><br>–The exercise price is set at a 20% (2024: 20%) discount to the market value immediately preceding the date of invitation. |
Calculation of fair values
The fair value of a share award is based on the share price at the grant date, adjusted for expected dividend yield (2025: 6.5%; 2024: 6.25%), risk-
free rate (2025: 4.2% p.a.; 2024: 4.2% p.a.) and a simulated market condition factor. The fair values of share options are calculated using a Black-
Scholes model.
| Movement on HSBC share option plans | ||
|---|---|---|
| Savings-related<br><br>share option plans | ||
| Number | WAEP1 | |
| (000s) | £ | |
| Outstanding at 1 Jan 2025 | 75,335 | 3.81 |
| Granted during the year2 | 11,901 | 7.61 |
| Exercised during the year3 | (25,388) | 3.00 |
| Expired during the year | (1,633) | 4.85 |
| Forfeited during the year | (1,313) | 4.37 |
| Outstanding at 31 Dec 2025 | 58,902 | 4.84 |
| – of which exercisable | 13,352 | 2.90 |
| Weighted average remaining contractual life (years) | 1.93 | |
| Outstanding at 1 Jan 2024 | 83,994 | 3.42 |
| Granted during the year2 | 11,845 | 5.30 |
| Exercised during the year3 | (16,776) | 2.94 |
| Expired during the year | (2,454) | 4.20 |
| Forfeited during the year | (1,274) | 3.48 |
| Outstanding at 31 Dec 2024 | 75,335 | 3.81 |
| – of which exercisable | 1,446 | 3.34 |
| Weighted average remaining contractual life (years) | 2.10 |
1Weighted average exercise price.
2The weighted average fair value of options granted during the year was $1.90 (2024: $1.66).
3The weighted average share price at the date the options were exercised was $13.88 (2024: $8.54).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 322 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Post-employment benefit plans
The Group operates pension plans throughout the world for its employees. ‘Pension risk management processes’ on page 191 contains details of
the policies and practices associated with these pension plans, some of which are defined benefit plans. The largest defined benefit plan is the
HSBC UK section of the HSBC Bank (UK) Pension Scheme (‘the principal plan’), created as a result of the HSBC Bank (UK) Pension Scheme being
fully sectionalised in 2018 to meet the requirements of the Banking Reform Act. For further details of how the trustee of the HSBC Bank (UK)
Pension Scheme manages climate risk, see ’Managing climate risk’ on page 49.
HSBC holds on its balance sheet the net surplus or deficit, which is the difference between the fair value of plan assets and the discounted value
of scheme liabilities at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable through reduced
contributions in the future or through potential future refunds from the schemes. In assessing whether a surplus is recoverable, HSBC has
considered its current right to obtain a future refund or a reduction in future contributions together with the rights of third parties such as trustees.
The principal plan
The principal plan has a defined benefit section and a defined contribution section. The defined benefit section was closed to future benefit accrual
in 2015, with defined benefits earned by employees at that date continuing to be linked to their salary while they remain employed by HSBC. The
plan is overseen by an independent corporate trustee, who has a fiduciary responsibility for the operation of the plan. Its assets are held separately
from the assets of the Group.
The investment strategy of the plan is to hold the majority of assets in bonds, with the remainder in a diverse range of investments. It also
includes some interest rate swaps to reduce interest rate risk, inflation swaps to reduce inflation risk and longevity swaps to reduce the impact of
longer life expectancy.
The principal plan is subject to the statutory funding objective requirements of the UK Pensions Act 2004, which requires that it be funded to at
least the level of technical provisions (an actuarial estimate of the assets needed to provide for the benefits already built up under the plan). Where
a funding valuation is carried out and identifies a deficit, the employer and trustee are required to agree to a deficit recovery plan.
The latest funding valuation of the plan at 31 December 2022 was carried out by Towers Watson Limited, using the projected unit credit method.
At that date, the market value of the plan’s assets was £23.9bn ($28.8bn) and this exceeded the value placed on its liabilities on an ongoing basis
by £3.7bn ($4.4bn), giving a funding level of 118%. These figures include defined contribution assets amounting to £3.0bn ($3.6bn). The main
differences between the assumptions used for assessing the defined benefit liabilities for this funding valuation and those used for IAS 19 are that
an element of prudence is contained in the funding valuation assumptions for discount rate, inflation rate and life expectancy. The funding valuation
is used to judge the amount of cash contributions the Group needs to put into the pension scheme. It will always be different to the IAS 19
accounting surplus, which is an accounting rule concerning employee benefits and shown on the balance sheet of our financial statements. The
next funding valuation will be performed in 2026, with an effective date of 31 December 2025.
The actuary also assessed the value of the liabilities if the plan were to have been stopped and an insurance company asked to secure all future
pension payments. This is generally larger than the amount needed on the ongoing basis described above because an insurance company would
use more prudent assumptions, which would allow for reserves and include an explicit allowance for the future administrative expenses of the
plan. Under this approach, the amount of assets needed was estimated to be £21.3bn ($25.7bn) at 31 December 2022.
The trust deed gives the ability for HSBC UK to take a refund of surplus assets after the plan has been run down such that no further beneficiaries
remain. In assessing whether a surplus is recoverable, HSBC UK has considered its right to obtain a future refund together with the rights of third
parties such as trustees. On this basis, any net surplus in the HSBC UK section of the plan is recognised in HSBC UK’s financial statements and
the Group’s financial statements.
| Income statement charge/(credit) | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Defined benefit pension plans | (227) | (116) | (151) | |||
| Defined contribution pension plans | 1,015 | 933 | 874 | |||
| Pension plans | 788 | 817 | 723 | |||
| Defined benefit and contribution healthcare plans | 38 | 34 | 34 | |||
| Year ended 31 Dec | 826 | 851 | 757 | |||
| Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans | ||||||
| --- | --- | --- | --- | --- | ||
| Fair value of<br><br>plan assets | Present value of defined<br><br>benefit obligations | Effect of limit on plan<br><br>surpluses | Total | |||
| $m | $m | $m | $m | |||
| Defined benefit pension plans | 32,352 | (24,858) | — | 7,494 | ||
| Defined benefit healthcare plans | 120 | (439) | — | (319) | ||
| At 31 Dec 2025 | 32,472 | (25,297) | — | 7,175 | ||
| Total employee benefit liabilities (within Note 27 ‘Accruals, deferred<br><br>income and other liabilities’) | (1,071) | |||||
| Total employee benefit assets (within Note 22 ‘Prepayments,<br><br>accrued income and other assets’) | 8,246 | |||||
| Defined benefit pension plans | 30,758 | (23,959) | — | 6,799 | ||
| Defined benefit healthcare plans | 80 | (348) | — | (268) | ||
| At 31 Dec 2024 | 30,838 | (24,307) | — | 6,531 | ||
| Total employee benefit liabilities (within Note 27 ‘Accruals, deferred<br><br>income and other liabilities’) | (1,017) | |||||
| Total employee benefit assets (within Note 22 ‘Prepayments,<br><br>accrued income and other assets’) | 7,548 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 323 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC Holdings
Employee compensation and benefit expense in respect of HSBC Holdings’ employees in 2025 amounted to $31m (2024: $29m; 2023: $15m). The
average number of persons employed during 2025 was 23 (2024: 28; 2023: 29). One employee is a member of a defined benefit pension plan. This
employee is a member of the HSBC Bank (UK) Pension Scheme. HSBC Holdings pays contributions to this plan for its own employee in accordance
with the schedules of contributions determined by the trustees of the plan and recognises these contributions as an expense as they fall due.
Defined benefit pension plans
| Net asset/(liability) under defined benefit pension plans | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair value of plan<br><br>assets | Present value of<br><br>defined benefit<br><br>obligations | Effect of the asset<br><br>ceiling | Net defined benefit<br><br>asset/(liability) | |||||
| Principal1<br><br>plan | Other<br><br>plans | Principal1<br><br>plan | Other<br><br>plans | Principal1<br><br>plan | Other<br><br>plans | Principal1<br><br>plan | Other<br><br>plans | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 23,652 | 7,106 | (17,223) | (6,736) | — | — | 6,429 | 370 |
| Service cost | — | — | (12) | (127) | — | — | (12) | (127) |
| – current service cost | — | — | (11) | (112) | — | — | (11) | (112) |
| – past service cost and gains/(losses) from settlements | — | — | (1) | (15) | — | — | (1) | (15) |
| Net interest income/(cost) on the net defined benefit asset/<br><br>(liability) | 1,344 | 312 | (970) | (281) | — | — | 374 | 31 |
| Remeasurement effects recognised in other<br><br>comprehensive income | (469) | 75 | 324 | (65) | — | — | (145) | 10 |
| – return on plan assets (excluding interest income) | (469) | 75 | — | — | — | — | (469) | 75 |
| – actuarial gains/(losses) financial assumptions | — | — | 464 | (57) | — | — | 464 | (57) |
| – actuarial gains/(losses) demographic assumptions | — | — | 22 | 3 | — | — | 22 | 3 |
| – actuarial gains/(losses) experience adjustments | — | — | (162) | (11) | — | — | (162) | (11) |
| – other changes | — | — | — | — | — | — | — | — |
| Exchange differences | 1,631 | 241 | (1,183) | (218) | — | — | 448 | 23 |
| Benefits paid | (1,116) | (530) | 1,116 | 608 | — | — | — | 78 |
| Other movements2 | (19) | 125 | (20) | (71) | — | — | (39) | 54 |
| At 31 Dec 2025 | 25,023 | 7,329 | (17,968) | (6,890) | — | — | 7,055 | 439 |
| At 1 Jan 2024 | 26,590 | 7,307 | (19,782) | (7,229) | — | — | 6,808 | 78 |
| Service cost | — | (1) | (35) | (144) | — | — | (35) | (145) |
| – current service cost | — | — | (9) | (140) | — | — | (9) | (140) |
| – past service cost and losses from settlements | — | (1) | (26) | (4) | — | — | (26) | (5) |
| Net interest income/(cost) on the net defined benefit asset/<br><br>(liability) | 1,213 | 277 | (896) | (265) | — | — | 317 | 12 |
| Remeasurement effects recognised in other<br><br>comprehensive income | (2,665) | (6) | 2,156 | 186 | — | — | (509) | 180 |
| – return on plan assets (excluding interest income) | (2,665) | (6) | — | — | — | — | (2,665) | (6) |
| – actuarial gains/(losses) financial assumptions | — | — | 1,771 | 204 | — | — | 1,771 | 204 |
| – actuarial gains/(losses) demographic assumptions | — | — | 161 | (5) | — | — | 161 | (5) |
| – actuarial gains/(losses) experience adjustments | — | — | 224 | (13) | — | — | 224 | (13) |
| – other changes | — | — | — | — | — | — | — | — |
| Exchange differences | (387) | (145) | 281 | 191 | — | — | (106) | 46 |
| Benefits paid | (1,082) | (496) | 1,082 | 561 | — | — | — | 65 |
| Other movements2 | (17) | 170 | (29) | (36) | — | — | (46) | 134 |
| At 31 Dec 2024 | 23,652 | 7,106 | (17,223) | (6,736) | — | — | 6,429 | 370 |
1For further details of the principal plan, see page 322.
2Other movements include contributions by HSBC, contributions by employees, administrative costs and taxes paid by plan.
HSBC expects to make $109m of contributions to defined benefit pension plans during 2026, consisting of $nil for the principal plan and $109m for
other plans. Benefits expected to be paid from the plans to retirees over each of the next five years, and in aggregate for the five years thereafter,
are as follows:
| Benefits expected to be paid from plans | ||||||
|---|---|---|---|---|---|---|
| 2026 | 2027 | 2028 | 2029 | 2030 | 2031-2035 | |
| $m | $m | $m | $m | $m | $m | |
| The principal plan1,2 | 1,170 | 1,203 | 1,239 | 1,275 | 1,313 | 7,175 |
| Other plans1 | 436 | 436 | 437 | 433 | 437 | 2,259 |
1The duration of the defined benefit obligation is 11.4 years for the principal plan under the disclosure assumptions adopted (2024: 11.8 years) and 9.7 years for
all other plans combined (2024: 9.8 years).
2For further details of the principal plan, see page 322.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 324 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements | ||||||||
| Fair value of plan assets by asset classes | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 31 Dec 2025 | 31 Dec 2024 | |||||||
| Value | Quoted<br><br>market price<br><br>in active<br><br>market | No quoted<br><br>market price<br><br>in active<br><br>market | Thereof<br><br>HSBC1 | Value | Quoted<br><br>market price<br><br>in active<br><br>market | No quoted<br><br>market price<br><br>in active<br><br>market | Thereof<br><br>HSBC1 | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| The principal plan2 | ||||||||
| Fair value of plan assets | 25,023 | 13,768 | 11,255 | 350 | 23,652 | 13,903 | 9,749 | 421 |
| – equities | 58 | — | 58 | — | 65 | — | 65 | — |
| – bonds fixed income | 5,964 | 5,471 | 493 | — | 5,864 | 5,372 | 492 | — |
| – bonds index-linked | 7,863 | 7,863 | — | — | 8,253 | 8,253 | — | — |
| – bonds other | — | — | — | — | — | — | — | — |
| – derivatives | 300 | — | 300 | 350 | 295 | — | 295 | 421 |
| – property | 855 | — | 855 | — | 833 | — | 833 | — |
| – pooled investment vehicles | 9,549 | — | 9,549 | — | 8,064 | — | 8,064 | — |
| – other | 434 | 434 | — | — | 278 | 278 | — | — |
| Other plans | ||||||||
| Fair value of plan assets | 7,329 | 5,717 | 1,612 | 16 | 7,106 | 6,407 | 699 | 19 |
| – equities | 608 | 608 | — | 4 | 587 | 587 | — | 4 |
| – bonds fixed income | 3,742 | 3,741 | 1 | 3 | 3,671 | 3,671 | — | 4 |
| – bonds index-linked | 47 | 47 | — | — | 33 | 33 | — | — |
| – bonds other | 561 | 534 | 27 | — | 473 | 473 | — | — |
| – derivatives | (61) | — | (61) | — | 2 | (3) | 5 | — |
| – property | 140 | 135 | 5 | — | 103 | 98 | 5 | — |
| – other | 2,292 | 652 | 1,640 | 9 | 2,237 | 1,548 | 689 | 11 |
1The fair value of plan assets includes derivatives entered into with HSBC Bank plc as detailed in Note 36.
2For further details of the principal plan, see page 322.
Post-employment defined benefit plans’ principal actuarial financial assumptions
HSBC determines the discount rates to be applied to its obligations in consultation with the plans’ local actuaries, on the basis of current average
yields of high-quality (AA-rated or equivalent) debt instruments with maturities consistent with those of the defined benefit obligations.
| Key actuarial assumptions for the principal plan1 | |||||
|---|---|---|---|---|---|
| Discount<br><br>rate | Inflation<br><br>rate (RPI) | Inflation<br><br>rate (CPI) | Rate of increase<br><br>for pensions | Rate of pay<br><br>increase | |
| % | % | % | % | % | |
| UK | |||||
| At 31 Dec 2025 | 5.51 | 3.02 | 2.34 | 2.96 | 3.09 |
| At 31 Dec 2024 | 5.54 | 3.33 | 2.88 | 3.22 | 3.63 |
1For further details of the principal plan, see page 322.
| Mortality tables and average life expectancy at age 60 for the principal plan1 | |||||
|---|---|---|---|---|---|
| Mortality<br><br>table | Life expectancy at age 60 for<br><br>a male member currently: | Life expectancy at age 60 for<br><br>a female member currently: | |||
| Aged 60 | Aged 40 | Aged 60 | Aged 40 | ||
| UK | |||||
| At 31 Dec 2025 | SAPS S32 | 26.4 | 28.0 | 28.4 | 30.0 |
| At 31 Dec 2024 | SAPS S33 | 26.1 | 27.7 | 28.3 | 29.9 |
1For further details of the principal plan, see page 322.
2 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 2024 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, with other parameters
set in line with the model default values.
3 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 2023 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 with a 0%
weighting to 2020 and 2021, mortality experience and a 15% weighting to 2022 and 2023, reflecting long-term view on mortality improvements post-pandemic.
| The effect of changes in key assumptions on the principal plan1 | ||||
|---|---|---|---|---|
| Impact on HSBC UK section of the<br><br>HSBC Bank (UK) Pension Scheme obligation | ||||
| Financial impact of increase | Financial impact of decrease | |||
| 2025 | 2024 | 2025 | 2024 | |
| $m | $m | $m | $m | |
| Discount rate – increase/decrease of 0.25% | (477) | (473) | 496 | 496 |
| Inflation rate (RPI and CPI) – increase/decrease of 0.25% | 408 | 389 | (391) | (391) |
| Pension payments and deferred pensions – increase/decrease of 0.25% | 504 | 487 | (478) | (478) |
| Pay – increase/decrease of 0.25% | 7 | 6 | (6) | (6) |
| Change in mortality – increase/decrease of 1 year | 486 | 483 | (464) | (464) |
1For further details of the principal plan, see page 322.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 325 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to
occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant
actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end
of the reporting period) has been applied as when calculating the defined benefit asset recognised in the balance sheet. The methods and types of
assumptions used in preparing the sensitivity analysis did not change compared with the prior period.
Directors’ emoluments
Details of Directors’ emoluments, pensions and their interests are disclosed in the Directors’ remuneration report on page 249.
| 6 | Auditor’s remuneration | ||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| --- | --- | --- | --- |
| $m | $m | $m | |
| Audit fees payable to PwC1 | 108.9 | 102.8 | 109.8 |
| Other audit fees payable | 2.8 | 1.6 | 2.2 |
| Year ended 31 Dec | 111.7 | 104.4 | 112.0 |
| Fees payable by HSBC to PwC | |||
| --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |
| $m | $m | $m | |
| Fees for HSBC Holdings’ statutory audit2 | 25.1 | 22.0 | 24.1 |
| Fees for other services provided to HSBC | 134.0 | 124.6 | 131.8 |
| – audit of HSBC’s subsidiaries | 83.8 | 80.8 | 85.7 |
| – audit-related assurance services3 | 28.2 | 25.0 | 26.0 |
| – other assurance services4,5 | 22.0 | 18.8 | 20.1 |
| Year ended 31 Dec | 159.1 | 146.6 | 155.9 |
1Audit fees payable to PwC in 2025 included adjustments made to the prior year audit fee after finalisation of the 2024 financial statements. In addition, $2.1m in
expenses were reimbursed to PwC in 2025.
2Fees payable to PwC for the statutory audit of the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings. They
include amounts payable for services relating to the consolidation returns of HSBC Holdings’ subsidiaries, which are clearly identifiable as being in support of the
Group audit opinion.
3Including services for assurance and other services that relate to statutory and regulatory filings, including interim reviews.
4Including permitted services relating to attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users,
including comfort letters.
5Includes reviews of PRA regulatory reporting returns.
No fees were payable by HSBC to PwC as principal auditor for the following types of services: internal audit services and services related to
litigation, recruitment and remuneration.
| Fees payable by HSBC’s associated pension schemes to PwC | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| $000 | $000 | $000 | |
| Audit of HSBC’s associated pension schemes | 256 | 320 | 297 |
| Year ended 31 Dec | 256 | 320 | 297 |
No fees were payable by HSBC’s associated pension schemes to PwC as principal auditor for the following types of services: internal audit
services, other assurance services, services related to corporate finance transactions, valuation and actuarial services, litigation, recruitment and
remuneration, and information technology.
In addition to the above, the estimated fees paid to PwC by third parties associated with HSBC amounted to $7.1m (2024: $9.9m; 2023: $12.3m).
In these cases, HSBC was connected with the contracting party and may therefore have been involved in appointing PwC. These fees arose from
services such as auditing mutual funds managed by HSBC and reviewing the financial position of corporate concerns that borrow from HSBC.
Fees payable for non-audit services for HSBC Holdings are not disclosed separately because such fees are disclosed on a consolidated basis for
the Group.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 326 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| 7 | Tax | |||||
| --- | --- | |||||
| Tax expense | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Current tax1 | 6,978 | 6,115 | 5,718 | |||
| – for this year | 6,606 | 5,863 | 5,737 | |||
| – adjustments in respect of prior periods3 | 324 | 31 | (19) | |||
| – Pillar 2 and qualifying domestic top-up taxes | 48 | 221 | — | |||
| Deferred tax | (202) | 1,195 | 71 | |||
| – origination and reversal of temporary differences | 173 | 1,288 | 19 | |||
| – effect of changes in tax rates | 35 | (2) | 17 | |||
| – adjustments in respect of prior periods3 | (410) | (91) | 35 | |||
| Year ended 31 Dec2 | 6,776 | 7,310 | 5,789 |
1Current tax included Hong Kong profits tax of $2,351m (2024: $1,615m; 2023: $1,328m). The Hong Kong tax rate applying to the profits of subsidiaries
assessable in Hong Kong was 16.5% (2024: 16.5%; 2023: 16.5%).
2In addition to amounts recorded in the income statement, a tax charge of $136m (2024: credit of $12m) was recorded directly to equity.
3Adjustments in respect of prior periods includes deferred tax credits in Hong Kong arising on temporary differences between IFRS and the regulatory basis of
accounting on which the tax returns are prepared, and in the UK on tax losses, both of which arise from the finalisation of 2024 tax returns and are offset by
corresponding charges in current tax.
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:
| 2025 | 2024 | 2023 | ||||
|---|---|---|---|---|---|---|
| $m | % | $m | % | $m | % | |
| Profit before tax | 29,907 | 32,309 | 30,348 | |||
| Tax expense | ||||||
| Taxation at UK corporation tax rate of 25.0% (2024: 25.0%, 2023: 23.5%) | 7,477 | 25.0 | 8,077 | 25.0 | 7,132 | 23.5 |
| Impact of differently taxed overseas profits in overseas locations | (1,316) | (4.4) | (1,351) | (4.2) | (612) | (2.0) |
| UK banking surcharge | 179 | 0.6 | 215 | 0.7 | 350 | 1.2 |
| Items increasing tax charge in 2025: | ||||||
| – local taxes and overseas withholding taxes | 692 | 2.3 | 584 | 1.8 | 419 | 1.4 |
| – movements in unrecognised deferred tax | 314 | 1.0 | 259 | 0.7 | (22) | (0.1) |
| – fines and provisions for legal settlements | 294 | 1.0 | — | — | — | — |
| – impairment of investment in BoCom | 250 | 0.8 | — | — | 705 | 2.3 |
| – other permanent disallowables | 237 | 0.8 | 344 | 1.0 | 227 | 0.7 |
| – dilution loss on the Group’s investment in BoCom | 128 | 0.4 | — | — | — | — |
| – movements in provisions for uncertain tax positions | 118 | 0.4 | 38 | 0.1 | (472) | (1.6) |
| – impact of business disposals | 100 | 0.3 | — | — | — | — |
| – non-deductible bank levy expense | 75 | 0.3 | 73 | 0.2 | 112 | 0.4 |
| – impact of global and domestic minimum taxes | 48 | 0.2 | 221 | 0.7 | — | — |
| – impact of changes in tax rates | 35 | 0.1 | 6 | — | 17 | 0.1 |
| – impact of hyperinflation | 32 | 0.1 | 327 | 1.0 | 348 | 1.1 |
| – tax impact of sale of HSBC Argentina | — | — | 1,536 | 4.8 | — | — |
| Items reducing tax charge in 2025: | ||||||
| – non-taxable income and gains | (970) | (3.2) | (1,079) | (3.3) | (1,189) | (3.9) |
| – effect of profits in associates and joint ventures | (582) | (1.9) | (456) | (1.4) | (571) | (1.9) |
| – deductions for AT1 coupon payments | (249) | (0.8) | (249) | (0.8) | (229) | (0.7) |
| – adjustments in respect of prior periods | (86) | (0.3) | (46) | (0.1) | 16 | 0.1 |
| – non-taxable gain on disposal of HSBC Canada | — | — | (1,174) | (3.6) | — | — |
| – impact of sale of French retail banking business | — | — | (15) | — | — | — |
| – accounting gain on acquisition of SVB UK | — | — | — | — | (442) | (1.5) |
| Year ended 31 Dec | 6,776 | 22.7 | 7,310 | 22.6 | 5,789 | 19.1 |
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 2025
include Hong Kong (16.5%), the US (21.0%) and the UK (25.0%). 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 21.2% (2024: 21.4%).
The effective tax rate for the year of 22.7% was higher than in the previous year (2024: 22.6%). The effective tax rate for the year was increased
by 1.2% by the dilution loss and non-deductible impairment of the Group’s investment in BoCom, increased by 1.0% by movements in
unrecognised deferred tax, primarily relating to French tax losses, and increased by 1.0% by the impact of fines and provisions for legal
settlements on which no tax benefit is recorded. The effective tax rate for the year was reduced by 0.3% by adjustments in respect of prior
periods, mainly arising from the finalisation of prior year tax returns in India and Hong Kong. The effective tax rate for 2024 was reduced by 3.6%
by the non-taxable gain arising on the disposal of HSBC Canada, increased by 4.8% by the non-deductible loss arising on the disposal of HSBC
Argentina, increased by 0.7% by movements in unrecognised deferred tax, primarily relating to French tax losses, and increased by 0.7% by the
Group’s Pillar 2 global minimum tax charge.
The UK adopted the ‘Pillar Two’ global minimum tax model rules of the OECD’s Inclusive Framework on Base Erosion and Profit-Shifting (‘BEPS’)
with effect from 1 January 2024. Many jurisdictions adopted similar rules, as well as domestic minimum tax regimes, from 1 January 2025 and
some jurisdictions, such as Bermuda, introduced new or amended corporate income tax regimes effective from that date. These changes have the
effect of increasing local overseas tax liabilities in 2025 and reducing the UK top-up tax liability.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 327 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
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 to additional tax liabilities arising from uncertain tax positions were reassessed during 2025, resulting in a charge of $118m 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<br><br>impairment<br><br>provisions | Unused tax<br><br>losses and<br><br>tax credits | Financial<br><br>assets at<br><br>FVOCI | Cash flow<br><br>hedges | Retirement<br><br>obligations | Other | Total | |
| $m | $m | $m | $m | $m | $m | $m | |
| Assets | 1,070 | 3,864 | 616 | 442 | — | 2,906 | 8,898 |
| Liabilities | — | — | — | — | (1,767) | (1,607) | (3,374) |
| At 1 Jan 2025 | 1,070 | 3,864 | 616 | 442 | (1,767) | 1,299 | 5,524 |
| Income statement | 11 | (466) | 226 | 10 | (96) | 517 | 202 |
| Other comprehensive income | — | — | (564) | (587) | 6 | 161 | (984) |
| Foreign exchange and other adjustments | (25) | 74 | 221 | 23 | (100) | 200 | 393 |
| At 31 Dec 2025 | 1,056 | 3,472 | 499 | (112) | (1,957) | 2,177 | 5,135 |
| Assets1 | 1,056 | 3,472 | 499 | — | — | 3,503 | 8,530 |
| Liabilities1 | — | — | — | (112) | (1,957) | (1,326) | (3,395) |
| Assets | 1,158 | 4,544 | 876 | 419 | — | 2,933 | 9,930 |
| Liabilities | — | — | — | — | (1,814) | (1,600) | (3,414) |
| At 1 Jan 2024 | 1,158 | 4,544 | 876 | 419 | (1,814) | 1,333 | 6,516 |
| Income statement | (74) | (640) | 100 | — | (85) | (431) | (1,130) |
| Other comprehensive income | — | — | (49) | 84 | 114 | 189 | 338 |
| Foreign exchange and other adjustments | (14) | (40) | (311) | (61) | 18 | 208 | (200) |
| At 31 Dec 2024 | 1,070 | 3,864 | 616 | 442 | (1,767) | 1,299 | 5,524 |
| Assets1 | 1,070 | 3,864 | 616 | 442 | — | 2,906 | 8,898 |
| Liabilities1 | — | — | — | — | (1,767) | (1,607) | (3,374) |
1After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets of $7,235m (2024: $6,841m) and
deferred tax liabilities of $2,100m (2024: $1,317m).
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 $5.1bn (2024: $5.5bn) included $1.5bn (2024: $2.6bn) of deferred tax assets relating to the UK, $2.8bn
(2024: $3.0bn) of deferred tax assets relating to the US and a net deferred asset of $0.8bn (2024: $0.5bn) in France.
The UK deferred tax asset of $1.5bn excluded a $2.0bn deferred tax liability arising on the UK pension scheme surplus, the reversal of which is not
taken into account when estimating future taxable profit due to the level of uncertainty as to the timing and manner of its reversal. 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 two years and as such
are less sensitive to changes in long-term profit forecasts.
The net US deferred tax asset of $2.8bn included $1.0bn related to US tax losses, of which $0.7bn expire in 9 to 12 years. Management expects
the US deferred tax asset to be substantially recovered within 13 years, with the majority recovered in the first five years.
The net deferred tax asset in France of $0.8bn included $0.7bn related to tax losses, which are expected to be substantially recovered within 10
years. An additional $0.1bn of deferred tax asset relating to French tax losses was recognised during the year, supported by the business’s
improved performance and outlook. Unused tax losses with a tax value of $0.3bn have not been recognised due to the absence of convincing
evidence regarding the availability of sufficient future taxable profits against which to recover them.
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 $13.8bn (2024: $11.0bn). This amount included unused US state tax losses of $3.8bn (2024: $3.8bn) which are forecast to expire before they
are recovered, unused French tax losses of $1.4bn (2024: $0.7bn) for which there is insufficient evidence of future taxable profits to support
recognition, and unused UK tax losses of $3.4bn (2024: $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 on which deferred tax was not recognised, $7.6bn (2024: $6.0bn) had no expiry date, $1.3bn (2024:
$1.0bn) 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 $15.9bn (2024: $15.2bn) and the
corresponding unrecognised deferred tax liability was $0.8bn (2024: $0.7bn).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 328 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| 8 | Dividends | |||||
| --- | --- | |||||
| Dividends to shareholders of the parent company | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | ||||
| Per<br><br>share | Total | Per<br><br>share | Total | Per<br><br>share | Total | |
| $ | $m | $ | $m | $ | $m | |
| Dividends paid on ordinary shares | ||||||
| In respect of previous year: | ||||||
| – second interim dividend | — | — | — | — | 0.23 | 4,589 |
| – fourth interim dividend | 0.36 | 6,397 | 0.31 | 5,872 | — | — |
| In respect of current year: | ||||||
| – first interim dividend | 0.10 | 1,750 | 0.10 | 1,877 | 0.10 | 2,001 |
| – special dividend | — | — | 0.21 | 3,942 | — | — |
| – second interim dividend | 0.10 | 1,717 | 0.10 | 1,852 | 0.10 | 1,956 |
| – third interim dividend | 0.10 | 1,717 | 0.10 | 1,805 | 0.10 | 1,946 |
| Total | 0.66 | 11,581 | 0.82 | 15,348 | 0.53 | 10,492 |
| Total coupons on capital securities classified as equity | 1,183 | 1,062 | 1,101 | |||
| Dividends to shareholders | 12,764 | 16,410 | 11,593 | |||
| Total coupons on capital securities classified as equity | ||||||
| --- | --- | --- | --- | --- | --- | |
| 2025 | 2024 | 2023 | ||||
| Per<br><br>security | Total | Total | Total | |||
| First call date | $m | $m | $m | |||
| Perpetual subordinated contingent convertible securities1 | ||||||
| $2,250m issued at 6.375%2 | Sep 2024 | $63.750 | — | 122 | 143 | |
| $2,450m issued at 6.375%3 | Mar 2025 | $63.750 | 55 | 156 | 156 | |
| $3,000m issued at 6.000% | May 2027 | $60.000 | 180 | 180 | 180 | |
| $2,350m issued at 6.250%4 | Mar 2023 | $62.500 | — | — | 52 | |
| $1,800m issued at 6.500% | Mar 2028 | $65.000 | 117 | 117 | 117 | |
| $1,500m issued at 4.600% | Dec 2030 | $46.000 | 69 | 69 | 69 | |
| $1,000m issued at 4.000% | Mar 2026 | $40.000 | 40 | 40 | 40 | |
| $1,000m issued at 4.700% | Mar 2031 | $47.000 | 47 | 47 | 47 | |
| $2,000m issued at 8.000%5 | Mar 2028 | $80.000 | 160 | 160 | 80 | |
| $1,350m issued at 6.875%6 | Sep 2029 | $68.750 | 93 | — | — | |
| $1,150m issued at 6.950%7 | Mar 2034 | $69.500 | 80 | — | — | |
| $1,500m issued at 6.950%8 | Aug 2031 | $69.500 | 52 | — | — | |
| $2,000m issued at 7.050%9 | Jun 2030 | $70.500 | 71 | — | — | |
| €1,000m issued at 6.000%10 | Sep 2023 | €60.000 | — | — | 56 | |
| €1,250m issued at 4.750% | Jul 2029 | €47.500 | 65 | 65 | 64 | |
| £1,000m issued at 5.875% | Sep 2026 | £58.750 | 77 | 77 | 72 | |
| SGD750m issued at 5.000%11 | Sep 2023 | SGD50.000 | — | — | 25 | |
| SGD1,500m issued at 5.250%12 | Jun 2029 | SGD52.500 | 61 | 29 | — | |
| SGD800m issued at 5.000%13 | Mar 2030 | SGD50.000 | 16 | — | — | |
| Total | 1,183 | 1,062 | 1,101 |
1Discretionary coupons are paid semi-annually, based on the denominations of each security.
2This security was called by HSBC Holdings on 23 July 2024 and was redeemed and cancelled on 17 September 2024.
3This security was called by HSBC Holdings on 7 February 2025 and was redeemed and cancelled on 31 March 2025.
4This security was called by HSBC Holdings on 30 January 2023 and was redeemed and cancelled on 23 March 2023.
5This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six calendar months prior to the reset date of 7 September 2028.
6This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of
11 March 2030.
7This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six calendar months prior to the reset date of
11 September 2034.
8This security was issued by HSBC Holdings on 27 February 2025. The first call period commences six calendar months prior to the reset date of
27 February 2032.
9This security was issued by HSBC Holdings on 5 June 2025. The first call period commences six calendar months prior to the reset date of 5 December 2030.
10This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 29 September 2023.
11This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 25 September 2023.
12This security was issued by HSBC Holdings on 14 June 2024. The first call period commences six calendar months prior to the reset date of 14 December 2029.
13This security was issued by HSBC Holdings on 24 March 2025. The first call period commences six calendar months prior to the reset date of 24 September
2030.
On 25 February 2026, the Directors approved a fourth interim dividend in respect of the financial year ended 31 December 2025 of $0.45 per
ordinary share (the ‘dividend’), an expected distribution of approximately $7.71bn. The dividend will be payable on 30 April 2026 to holders of
record on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on
13 March 2026. No liability was recorded in the financial statements in respect of the fourth interim dividend for 2025.
On 5 January 2026, HSBC paid a coupon on its €1,250m subordinated capital securities, representing a total distribution of €30m ($35m). No
liability was recorded on the balance sheet at 31 December 2025 in respect of this coupon payment.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 329 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
9Earnings per share
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, after deducting 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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | |||||||
| Profit | Number<br><br>of shares | Per<br><br>share | Profit | Number<br><br>of shares | Per<br><br>share | Profit | Number<br><br>of shares | Per<br><br>share | |
| $m | (millions) | $ | $m | (millions) | $ | $m | (millions) | $ | |
| Basic1 | 21,102 | 17,427 | 1.21 | 22,917 | 18,357 | 1.25 | 22,432 | 19,478 | 1.15 |
| Effect of dilutive potential<br><br>ordinary shares | 120 | 128 | 122 | ||||||
| Diluted1 | 21,102 | 17,547 | 1.20 | 22,917 | 18,485 | 1.24 | 22,432 | 19,600 | 1.14 |
1Weighted average number of ordinary shares outstanding (basic) or assuming dilution (diluted) after deducting own shares held.
The number of anti-dilutive employee share options excluded from the weighted average number of dilutive potential ordinary shares was
12 million (2024: Nil; 2023: 23 million).
| 10 | Segmental analysis |
|---|
The Group Operating Committee is considered to be the Chief Operating Decision Maker (‘CODM’) for the purposes of identifying the Group’s
reportable segments. Business segments results were assessed by the CODM on the basis of constant currency performance that removes the
effects of currency translation from reported results. Therefore, we disclose these results on a constant currency basis as required by IFRS
Accounting Standards. The 2024 and 2023 income statements are converted at the average rates of exchange for 2025, and the balance sheets at
31 December 2024 and 31 December 2023 at the prevailing rates of exchange on 31 December 2025.
Our operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and
expense. These allocations include the costs of certain support services and global infrastructures to the extent that they can be meaningfully
attributed to business segments. While such allocations have been made on a systematic and consistent basis, they involve a certain degree of
subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.
Interest income is reported net as the CODM primarily relies on the net amount as a performance measure. Where relevant, income and expense
amounts presented include the results of inter-segment funding along with inter-company and inter-business line transactions. All such
transactions are undertaken on arm’s length terms. Measurement of segmental assets, liabilities, income and expenses is in accordance with the
Group’s accounting policies. Shared costs are included in segments on the basis of actual recharges. The intra-group elimination items for the
business segments are presented in Corporate Centre.
Our business segments
Following our organisational announcement in October 2024, effective from 1 January 2025, the Group’s reportable segments under IFRS 8
‘Operating Segments’ comprise four business along with Corporate Centre. These replace our previously reported operating segments up to
31 December 2024. All segmental comparative data have been re-presented to reflect the Group’s revised segment structure.
–Hong Kong: The Hong Kong business comprises Retail Banking and Wealth and Commercial Banking of HSBC Hong Kong and Hang Seng
Bank.
–UK: The UK business comprises UK Personal Banking (including first direct and M&S Bank) and UK Commercial Banking including HSBC
Innovation Bank.
–Corporate and Institutional Banking (‘CIB’): CIB is formed from the integration of our Commercial Banking business (outside the UK and Hong
Kong) with our Global Banking and Markets business.
–International Wealth and Premier Banking (‘IWPB’): IWPB comprises Premier banking outside of Hong Kong and the UK, our Private Bank, and
our wealth manufacturing businesses of Asset Management and Insurance.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 330 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| HSBC constant currency profit before tax and balance sheet data | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2025 | ||||||
| Hong Kong | UK | CIB | IWPB | Corporate<br><br>Centre | Total | |
| $m | $m | $m | $m | $m | $m | |
| Net operating income/(expense) before change in expected<br><br>credit losses and other credit impairment charges1 | 15,878 | 12,938 | 27,637 | 14,520 | (2,699) | 68,274 |
| – external | 10,157 | 13,856 | 39,098 | 12,458 | (7,295) | 68,274 |
| – inter-segment | 5,721 | (918) | (11,461) | 2,062 | 4,596 | — |
| – of which: net interest income/(expense)2 | 12,082 | 11,096 | 14,532 | 7,397 | (10,313) | 34,794 |
| Change in expected credit losses and other credit impairment<br><br>charges | (1,476) | (696) | (696) | (892) | (90) | (3,850) |
| Net operating income/(expense) | 14,402 | 12,242 | 26,941 | 13,628 | (2,789) | 64,424 |
| Total operating expenses | (4,826) | (5,537) | (15,556) | (9,285) | (1,224) | (36,428) |
| Operating profit/(loss) | 9,576 | 6,705 | 11,385 | 4,343 | (4,013) | 27,996 |
| Share of profit in associates and joint ventures less impairment3 | — | — | 1 | 24 | 1,886 | 1,911 |
| Constant currency profit before tax | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
| % | % | % | % | % | % | |
| Share of HSBC’s constant currency profit before tax | 32.0 | 22.4 | 38.1 | 14.6 | (7.1) | 100.0 |
| Constant currency cost efficiency ratio | 30.4 | 42.8 | 56.3 | 63.9 | (45.4) | 53.4 |
| Constant currency balance sheet data | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | 229,491 | 303,698 | 305,022 | 150,047 | 141 | 988,399 |
| Interests in associates and joint ventures | — | — | 83 | 522 | 28,972 | 29,577 |
| Total external assets | 437,933 | 451,492 | 1,793,162 | 416,332 | 134,115 | 3,233,034 |
| Customer accounts | 543,381 | 364,323 | 597,719 | 281,058 | 347 | 1,786,828 |
| 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Net operating income/(expense) before change in expected<br><br>credit losses and other credit impairment charges | 15,047 | 12,342 | 26,772 | 13,817 | (1,969) | 66,009 |
| – external | 9,704 | 13,060 | 39,012 | 11,175 | (6,942) | 66,009 |
| – inter-segment | 5,343 | (718) | (12,240) | 2,642 | 4,973 | — |
| – of which: net interest income/(expense)2 | 11,997 | 10,355 | 14,519 | 8,081 | (12,497) | 32,455 |
| Change in expected credit losses and other credit impairment<br><br>charges | (1,077) | (415) | (878) | (993) | (29) | (3,392) |
| Net operating income/(expense) | 13,970 | 11,927 | 25,894 | 12,824 | (1,998) | 62,617 |
| Total operating expenses | (4,841) | (5,104) | (14,612) | (8,900) | 311 | (33,146) |
| Operating profit/(loss) | 9,129 | 6,823 | 11,282 | 3,924 | (1,687) | 29,471 |
| Share of profit/(loss) in associates and joint ventures | — | — | 1 | 45 | 2,867 | 2,913 |
| Constant currency profit/(loss) before tax | 9,129 | 6,823 | 11,283 | 3,969 | 1,180 | 32,384 |
| % | % | % | % | % | % | |
| Share of HSBC’s constant currency profit before tax | 28.2 | 21.1 | 34.8 | 12.3 | 3.6 | 100.0 |
| Constant currency cost efficiency ratio | 32.2 | 41.4 | 54.6 | 64.4 | 15.8 | 50.2 |
| Constant currency balance sheet data | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | 235,053 | 285,778 | 297,877 | 144,027 | 8,043 | 970,778 |
| Interests in associates and joint ventures | — | — | 132 | 557 | 29,039 | 29,728 |
| Total external assets | 433,588 | 432,683 | 1,729,531 | 414,734 | 129,265 | 3,139,801 |
| Customer accounts | 506,557 | 352,833 | 587,926 | 271,588 | 336 | 1,719,240 |
| 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Net operating income/(expense) before change in expected<br><br>credit losses and other credit impairment charges | 14,532 | 13,439 | 24,723 | 12,385 | (39) | 65,040 |
| – external | 10,093 | 13,749 | 36,111 | 10,112 | (5,025) | 65,040 |
| – inter-segment | 4,439 | (310) | (11,388) | 2,273 | 4,986 | — |
| – of which: net interest income/(expense)2 | 12,108 | 9,903 | 13,399 | 7,753 | (8,951) | 34,212 |
| Change in expected credit losses and other credit impairment<br><br>charges | (1,494) | (545) | (524) | (686) | (1) | (3,250) |
| Net operating income/(expense) | 13,038 | 12,894 | 24,199 | 11,699 | (40) | 61,790 |
| Total operating expenses | (4,514) | (4,829) | (13,755) | (8,549) | (44) | (31,691) |
| Operating profit/(loss) | 8,524 | 8,065 | 10,444 | 3,150 | (84) | 30,099 |
| Share of profit/(loss) in associates and joint ventures4 | — | — | (1) | 62 | (358) | (297) |
| Constant currency profit/(loss) before tax | 8,524 | 8,065 | 10,443 | 3,212 | (442) | 29,802 |
| % | % | % | % | % | % | |
| Share of HSBC’s constant currency profit before tax | 28.6 | 27.1 | 35.0 | 10.8 | (1.5) | 100.0 |
| Constant currency cost efficiency ratio | 31.1 | 35.9 | 55.6 | 69.0 | (112.8) | 48.7 |
| Constant currency balance sheet data | $m | $m | $m | $m | $m | $m |
| Loans and advances to customers (net) | 240,173 | 278,225 | 290,227 | 146,805 | 276 | 955,706 |
| Interests in associates and joint ventures | — | — | 128 | 539 | 26,965 | 27,632 |
| Total external assets | 419,890 | 423,648 | 1,648,421 | 460,545 | 142,628 | 3,095,132 |
| Customer accounts | 486,873 | 347,570 | 548,275 | 257,664 | 618 | 1,641,000 |
1Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. See Note 18 on pages 345 to 348.
2Includes $9.7bn (2024: $11.4bn; 2023: $8.7bn) of interest expense in Corporate Centre for the internal cost to fund our Markets Treasury function.
3Includes an impairment loss of $1.0bn recognised in respect of the Group’s investment in BoCom. See Note 18 on pages 345 to 348.
4Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 331 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Reported external net operating income is attributed to countries and territories on the basis of the location of the branch responsible for reporting
the results or advancing the funds:
| 2025 | 2024 | 2023 | |
|---|---|---|---|
| $m | $m | $m | |
| Reported external net operating income by country/territory | 68,274 | 65,854 | 66,058 |
| – UK1 | 13,677 | 12,307 | 11,027 |
| – Hong Kong | 22,527 | 20,811 | 20,185 |
| – US | 4,797 | 4,233 | 3,816 |
| – France | 1,839 | 3,804 | 4,208 |
| – other countries/territories | 25,434 | 24,699 | 26,822 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately
incorporated group of service companies (‘ServCo Group’).
| Constant currency results reconciliation | |||||||
|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | |||||
| Reported and<br><br>constant currency | Constant<br><br>currency | Currency<br><br>translation | Reported | Constant<br><br>currency | Currency<br><br>translation | Reported | |
| $m | $m | $m | $m | $m | $m | $m | |
| Revenue | 68,274 | 66,009 | 155 | 65,854 | 65,040 | (1,018) | 66,058 |
| ECL | (3,850) | (3,392) | 22 | (3,414) | (3,250) | 197 | (3,447) |
| Operating expenses | (36,428) | (33,146) | (103) | (33,043) | (31,691) | 379 | (32,070) |
| Share of profit/(loss) in associates and<br><br>joint ventures less impairment | 1,911 | 2,913 | 1 | 2,912 | (297) | (104) | (193) |
| Profit before tax | 29,907 | 32,384 | 75 | 32,309 | 29,802 | (546) | 30,348 |
| Constant currency balance sheet reconciliation | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2023 | |||||
| Reported and<br><br>constant currency | Constant<br><br>currency | Currency<br><br>translation | Reported | Constant<br><br>currency | Currency<br><br>translation | Reported | |
| $m | $m | $m | $m | $m | $m | $m | |
| Loans and advances to customers (net) | 988,399 | 970,778 | 40,120 | 930,658 | 955,706 | 17,171 | 938,535 |
| Interests in associates and joint ventures | 29,577 | 29,728 | 819 | 28,909 | 27,632 | 288 | 27,344 |
| Total external assets | 3,233,034 | 3,139,801 | 122,753 | 3,017,048 | 3,095,132 | 56,455 | 3,038,677 |
| Customer accounts | 1,786,828 | 1,719,240 | 64,285 | 1,654,955 | 1,641,000 | 29,353 | 1,611,647 |
| Notable items | |||||||
| --- | --- | --- | --- | ||||
| 2025 | 2024 | 2023 | |||||
| $m | $m | $m | |||||
| Year ended 31 Dec | |||||||
| Notable items | |||||||
| Revenue | |||||||
| Disposals, wind-downs, acquisitions and related costs1,2,3 | (1,642) | (1,343) | 1,298 | ||||
| Dilution loss of interest in BoCom associate4 | (1,104) | — | — | ||||
| Fair value movements on financial instruments5 | — | — | 14 | ||||
| Disposal losses on Markets Treasury repositioning | — | — | (977) | ||||
| Early redemption of legacy securities | — | (237) | — | ||||
| Operating expenses | |||||||
| Disposals, wind-downs, acquisitions and related costs | (502) | (199) | (321) | ||||
| Restructuring and other related costs6 | (1,030) | (34) | 136 | ||||
| Legal provision7 | (1,432) | — | — | ||||
| Impairment losses of interest in BoCom associate4 | (1,000) | — | (3,000) |
1Includes recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of its sale
to a consortium comprising Rothesay Life plc and CCF.
2Amounts in 2024 include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on
sale of our business in Argentina. This was partly offset by a $4.8bn gain on disposal of our banking business in Canada, inclusive of foreign exchange hedging
of the sales proceeds and the recycling of reserves losses.
3Amounts in 2023 include the gain of $1.6bn recognised in respect of the acquisition of SVB UK, and the impact of the sale of our retail banking operations in
France.
4Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment
loss following an impairment test on the carrying value of the Group’s investment in BoCom in ‘Impairment losses of interest in BoCom associate’. See Note 18
on pages 345 to 348.
5Fair value movements on non-qualifying hedges in HSBC Holdings.
6Amounts in 2025 include restructuring provisions recognised in 2025. Amounts in 2024 relate to restructuring provisions recognised in 2024 and reversals of
restructuring provisions recognised during 2022. Amounts in 2023 relate to reversals of restructuring provisions recognised during 2022.
7Includes a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff
Investment Securities LLC fraud and a $0.3bn provision in connection with certain historical trading activities in HSBC Bank plc.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 332 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
11Trading assets
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Treasury and other eligible bills | 34,433 | 32,022 |
| Debt securities | 116,837 | 97,275 |
| Equity securities | 176,312 | 155,194 |
| Trading securities | 327,582 | 284,491 |
| Loans and advances to banks1 | 10,913 | 6,123 |
| Loans and advances to customers1 | 27,658 | 24,228 |
| At 31 Dec | 366,153 | 314,842 |
1Loans and advances to banks and customers include reverse repos, stock borrowing and other accounts.
12Fair values of financial instruments carried at fair value
Control framework
Fair values are subject to a control framework designed to ensure that they are either determined or validated by a function independent of the risk
taker.
Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination
or validation is used. For inactive markets, HSBC sources alternative market information, with greater weight given to information that is
considered to be more relevant and reliable. Examples of the factors considered are price observability, instrument comparability, consistency of
data sources, underlying data accuracy and timing of prices.
For fair values determined using valuation models, the control framework includes development or validation by independent support functions of
the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming operational
and are calibrated against external market data on an ongoing basis. Fair value adjustments are applied where additional factors are not
incorporated into the primary product valuation model.
The majority of financial instruments measured at fair value are in MSS. MSS’s fair value governance structure comprises its Finance function and
Valuation Committees. Finance is responsible for establishing procedures governing valuation and ensuring fair values are in compliance with
accounting standards. The fair values are reviewed by the Valuation Committees, which consist of independent support functions.
Financial liabilities measured at fair value
In certain circumstances, HSBC records its own debt in issue at fair value, based on quoted prices in an active market for the specific instrument.
When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for which are either based on
quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active market for similar
instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to HSBC’s liabilities. The change in fair
value of issued debt securities attributable to the Group’s own credit spread is computed as follows: for each security at each reporting date, an
externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer. Then, using discounted
cash flow, each security is valued using an appropriate market discount curve. The difference in the valuations is attributable to the Group’s own
credit spread. This methodology is applied consistently across all securities.
Structured notes issued and certain other hybrid instruments are reported as financial liabilities designated at fair value. The credit spread applied
to these instruments is derived from the spreads at which HSBC issues structured notes.
Gains and losses arising from changes in the credit spread of liabilities issued by HSBC, recorded in other comprehensive income, reverse over the
contractual life of the debt, provided that the debt is not repaid at a premium or a discount.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
–Level 1 – valuation technique using quoted market price. These are financial instruments with quoted prices for identical instruments in active
markets that HSBC can access at the measurement date.
–Level 2 – valuation technique using observable inputs. These are financial instruments with quoted prices for similar instruments in active
markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all
significant inputs are observable.
–Level 3 – valuation technique with significant unobservable inputs. These are financial instruments valued using valuation techniques where
one or more significant inputs are unobservable.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 333 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements | ||||||||
| Financial instruments carried at fair value and bases of valuation | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | |||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Recurring fair value measurements at 31 Dec | ||||||||
| Assets | ||||||||
| Trading assets | 267,638 | 92,418 | 6,097 | 366,153 | 236,593 | 71,574 | 6,675 | 314,842 |
| Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | 46,436 | 61,267 | 25,360 | 133,063 | 39,331 | 56,694 | 19,744 | 115,769 |
| Derivatives | 1,798 | 233,759 | 2,183 | 237,740 | 1,859 | 264,629 | 2,149 | 268,637 |
| Financial investments | 300,795 | 81,522 | 2,805 | 385,122 | 258,371 | 78,088 | 2,734 | 339,193 |
| Liabilities | ||||||||
| Trading liabilities | 46,579 | 25,476 | 67 | 72,122 | 42,038 | 23,160 | 784 | 65,982 |
| Financial liabilities designated at fair value | 1,370 | 146,353 | 10,733 | 158,456 | 2,152 | 127,458 | 9,117 | 138,727 |
| Derivatives | 1,853 | 232,559 | 3,442 | 237,854 | 1,088 | 260,518 | 2,842 | 264,448 |
There were no material transfers between Level 1 and Level 2 during the reporting period.
The table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale in
accordance with IFRS 5. For further details, see Note 23.
| Financial instruments carried at fair value and bases of valuation – assets and liabilities held for sale | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Recurring fair value measurements at 31 Dec | ||||||||
| Assets | ||||||||
| Trading assets | 26 | 87 | — | 113 | — | — | — | — |
| Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | 6,327 | 24 | — | 6,351 | 2,967 | 9,018 | 2,575 | 14,560 |
| Derivatives | — | 9 | 5 | 14 | — | 36 | — | 36 |
| Financial investments | 157 | 44 | — | 201 | 2,651 | 5,345 | 504 | 8,500 |
| Liabilities | ||||||||
| Trading liabilities | — | — | — | — | — | — | — | — |
| Financial liabilities designated at fair value | 1,345 | — | — | 1,345 | — | 130 | — | 130 |
| Derivatives | — | 13 | 3 | 16 | — | 19 | — | 19 |
Fair value valuation bases
| Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets | Liabilities | ||||||||
| Financial<br><br>investments | Trading<br><br>assets | Designated and<br><br>otherwise mandatorily<br><br>measured at fair value<br><br>through profit or loss | Derivatives | Total | Trading<br><br>liabilities | Designated<br><br>at fair value | Derivatives | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Private equity including<br><br>strategic investments | 595 | 1 | 20,364 | — | 20,960 | — | 1 | — | 1 |
| Structured notes | — | — | — | — | — | — | 10,617 | — | 10,617 |
| Other derivatives | — | — | — | 2,183 | 2,183 | — | — | 3,442 | 3,442 |
| Bonds | 2,111 | 3,356 | 2,008 | — | 7,475 | 41 | — | — | 41 |
| Loans | 21 | 1,667 | 1,565 | — | 3,253 | 11 | — | — | 11 |
| Other portfolios | 78 | 1,073 | 1,423 | — | 2,574 | 15 | 115 | — | 130 |
| At 31 Dec 2025 | 2,805 | 6,097 | 25,360 | 2,183 | 36,445 | 67 | 10,733 | 3,442 | 14,242 |
| Private equity including<br><br>strategic investments | 552 | 1 | 17,705 | — | 18,258 | — | 1 | — | 1 |
| Structured notes | — | — | 3 | — | 3 | — | 9,113 | — | 9,113 |
| Other derivatives | — | — | — | 2,149 | 2,149 | — | — | 2,842 | 2,842 |
| Bonds | 1,978 | 2,173 | 758 | — | 4,909 | 27 | — | — | 27 |
| Loans | 22 | 2,383 | 1,277 | — | 3,682 | 3 | — | — | 3 |
| Other portfolios | 182 | 2,118 | 1 | — | 2,301 | 754 | 3 | — | 757 |
| At 31 Dec 2024 | 2,734 | 6,675 | 19,744 | 2,149 | 31,302 | 784 | 9,117 | 2,842 | 12,743 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
| --- | |||||||||
| 334 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements |
Private equity including strategic investments
The fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee’s financial
position and results, risk profile, prospects and other factors; by reference to market valuations for similar entities quoted in an active market; the
price at which similar companies have changed ownership; or from published net asset values (‘NAV’) received. If necessary, adjustments are
made to the NAV of funds to obtain the best estimate of fair value.
Structured notes
The fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded derivative is
determined as described in the paragraph below on derivatives. These structured notes comprise principally equity-linked notes issued by HSBC,
which provide the counterparty with a return linked to the performance of equity securities and other portfolios. Examples of the unobservable
parameters include long-dated equity volatilities and correlations between equity prices, and interest and foreign exchange rates.
Derivatives
OTC derivative valuation models calculate the present value of expected future cash flows, based upon ‘no arbitrage’ principles. For many vanilla
derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may be some
differences in market practice. Inputs to valuation models are determined from observable market data wherever possible, including prices
available from exchanges, dealers, brokers or providers of consensus pricing. Certain inputs may not be observable in the market directly, but can
be determined from observable prices via model calibration procedures or estimated from historical data or other sources.
Bonds and loans
The fair value input for bonds and secondary market loans is price, determined utilising market standard valuation techniques such as price-based,
discounted cash flows, and internal models. Where uncertainty of inputs and assumptions exist in the determination of a fair value price and are
significant, the position will be considered Level 3. Examples of such inputs are credit spreads, interest rate spreads, choice of comparables,
earning projections and liquidity/observability of the underlying currency.
Reconciliation of fair value measurements in Level 3 of the fair value hierarchy
| Movement in Level 3 financial instruments | |||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | ||||||
| Financial<br><br>investments | Trading<br><br>assets | Designated and<br><br>otherwise<br><br>mandatorily<br><br>measured at fair<br><br>value through<br><br>profit or loss | Derivatives | Trading<br><br>liabilities | Designated<br><br>at fair value | Derivatives | |
| $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2025 | 2,734 | 6,675 | 19,744 | 2,149 | 784 | 9,117 | 2,842 |
| Total gains/(losses) recognised in profit or loss | 4 | 154 | 1,487 | 1,291 | (4) | 919 | 2,210 |
| – net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis | — | 154 | — | 1,291 | (4) | 919 | 2,210 |
| – net income from assets and liabilities of insurance<br><br>businesses, including related derivatives,<br><br>measured at fair value through profit or loss | — | — | 1,478 | — | — | — | — |
| – other income/(losses) | 4 | — | 9 | — | — | — | — |
| Total gains/(losses) recognised in other<br><br>comprehensive income (‘OCI’)1 | 255 | 236 | 84 | 150 | 21 | 608 | 174 |
| Purchases2 | 2,100 | 4,151 | 4,673 | — | 83 | — | — |
| New issuances | — | 181 | — | — | — | 8,542 | — |
| Sales | (195) | (2,679) | (389) | — | (19) | — | — |
| Settlements | (347) | (1,814) | (1,727) | (1,073) | (331) | (5,352) | (1,632) |
| Transfers out | (2,008) | (2,018) | (1,312) | (901) | (498) | (5,282) | (831) |
| Transfers in3 | 262 | 1,211 | 2,800 | 567 | 31 | 2,181 | 679 |
| At 31 Dec 2025 | 2,805 | 6,097 | 25,360 | 2,183 | 67 | 10,733 | 3,442 |
| Unrealised gains/(losses) recognised in profit or loss<br><br>relating to assets and liabilities held at 31 Dec 2025 | — | 309 | 309 | 1,320 | (19) | (1,034) | (2,304) |
| – net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis | — | 309 | — | 1,320 | (19) | — | (2,304) |
| – net income from assets and liabilities of insurance<br><br>businesses, including related derivatives,<br><br>measured at fair value through profit or loss | — | — | 302 | — | — | — | — |
| – other income/(losses) | — | — | 7 | — | — | (1,034) | — |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
| --- | |||||||
| 335 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Notes on the financial statements | |||||||
| Movement in Level 3 financial instruments (continued) | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Assets | Liabilities | ||||||
| Financial<br><br>investments | Trading<br><br>assets | Designated and<br><br>otherwise<br><br>mandatorily<br><br>measured at fair<br><br>value through<br><br>profit or loss | Derivatives | Trading<br><br>liabilities | Designated<br><br>at fair value | Derivatives | |
| $m | $m | $m | $m | $m | $m | $m | |
| At 1 Jan 2024 | 2,618 | 4,306 | 19,788 | 2,069 | 478 | 10,928 | 2,569 |
| Total gains/(losses) recognised in profit or loss | (9) | 280 | 896 | 1,037 | 18 | 496 | 1,268 |
| – net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis | — | 280 | — | 1,037 | 18 | 496 | 1,268 |
| – net income from assets and liabilities of insurance<br><br>businesses, including related derivatives,<br><br>measured at fair value through profit or loss | — | — | 684 | — | — | — | — |
| – other income/(losses) | (9) | — | 212 | — | — | — | — |
| Total gains/(losses) recognised in other<br><br>comprehensive income (‘OCI’)1 | (78) | (115) | (39) | (36) | (18) | (45) | (53) |
| Purchases | 1,670 | 4,170 | 6,261 | — | 924 | — | — |
| New issuances | — | — | — | — | — | 6,521 | — |
| Sales | (97) | (1,477) | (649) | — | (295) | — | — |
| Settlements | (1,011) | (967) | (6,476) | (897) | (307) | (4,750) | (568) |
| Transfers out | (438) | (429) | (278) | (777) | (29) | (6,048) | (1,346) |
| Transfers in | 79 | 907 | 241 | 753 | 13 | 2,015 | 972 |
| At 31 Dec 2024 | 2,734 | 6,675 | 19,744 | 2,149 | 784 | 9,117 | 2,842 |
| Unrealised gains/(losses) recognised in profit or loss<br><br>relating to assets and liabilities held at 31 Dec 2024 | — | (150) | 11 | (1,377) | (6) | (94) | (1,343) |
| – net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis | — | (150) | — | (1,377) | (6) | — | (1,343) |
| – net income from assets and liabilities of insurance<br><br>businesses, including related derivatives,<br><br>measured at fair value through profit or loss | — | — | (38) | — | — | — | — |
| – other income/(losses) | — | — | 49 | — | — | (94) | — |
1Included in ‘financial investments: fair value gains/(losses)’ in the year and ‘exchange differences’ in the consolidated statement of comprehensive income.
2Purchases were predominantly due to the growth of the Insurance business over the period.
3Includes $2.3bn of transfers in representing enhancements to the application of the levelling methodology, primarily impacting the Insurance business.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers are primarily
attributable to changes in price transparency and in the assessment of observability.
Effect of changes in significant unobservable assumptions to reasonably possible
alternatives
| Sensitivity of fair values to reasonably possible alternative assumptions | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||
| Reflected in profit or loss | Reflected in OCI | Reflected in profit or loss | Reflected in OCI | |||||
| Favourable<br><br>changes | Un-<br><br>favourable<br><br>changes | Favourable<br><br>changes | Un-<br><br>favourable<br><br>changes | Favourable<br><br>changes | Un-<br><br>favourable<br><br>changes | Favourable<br><br>changes | Un-<br><br>favourable<br><br>changes | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Derivatives, trading assets and trading<br><br>liabilities1 | 483 | (295) | — | — | 481 | (313) | — | — |
| Financial assets and liabilities designated<br><br>and otherwise mandatorily measured at<br><br>fair value through profit or loss | 1,750 | (1,434) | — | — | 1,434 | (1,141) | — | — |
| Financial investments | — | — | 49 | (49) | 21 | (21) | 47 | (50) |
| At 31 Dec | 2,233 | (1,729) | 49 | (49) | 1,936 | (1,475) | 47 | (50) |
1‘Derivatives, trading assets and trading liabilities’ are presented as one category to reflect the manner in which these instruments are risk-managed.
The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95% confidence interval. Methodologies take
account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and historical data.
When the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most favourable
or the most unfavourable change from varying the assumptions individually.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 336 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Key unobservable inputs to Level 3 financial instruments
The following table lists key unobservable inputs to Level 3 financial instruments and provides the range of those inputs at 31 December 2025.
| Quantitative information about significant unobservable inputs in Level 3 valuations | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fair value | 2025 | 2024 | ||||||
| Assets | Liabilities | Key valuation<br><br>techniques | Key unobservable<br><br>inputs | Full range<br><br>of inputs | Full range<br><br>of inputs | |||
| $m | $m | Lower | Higher | Lower | Higher | |||
| Private equity including strategic<br><br>investments1 | 20,960 | 1 | Price – Net asset value | Current Value/Cost | 0 | 75 | 0 | 291 |
| Structured notes | — | 10,617 | ||||||
| – equity-linked notes | — | 7,773 | Model – Option model | Equity volatility | 5% | 132% | 6% | 70% |
| Model – Option model | Equity correlation | 10% | 100% | 15% | 100% | |||
| – Foreign exchange-linked notes | — | 862 | Model – Option model | Foreign exchange<br><br>volatility | 3% | 56% | 3% | 35% |
| – other structured notes | — | 1,982 | ||||||
| Derivatives | 2,183 | 3,442 | ||||||
| – interest rate derivatives | 745 | 966 | ||||||
| securitisation swaps | 98 | 358 | Model - Discounted cash flow | Prepayment rate | 5% | 10% | 5% | 10% |
| long-dated swaptions | 4 | 3 | Model – Option model | Interest rate<br><br>volatility | 5% | 20% | 9% | 30% |
| other interest rate derivatives | 643 | 605 | ||||||
| – Foreign exchange derivatives | 678 | 640 | ||||||
| Foreign exchange options | 320 | 299 | Model – Option model | Foreign exchange<br><br>volatility | 0% | 22% | 1% | 26% |
| other foreign exchange derivatives | 358 | 341 | ||||||
| – equity derivatives | 584 | 1,315 | ||||||
| long-dated single stock options | 110 | 476 | Model – Option model | Equity volatility | 5% | 100% | 6% | 118% |
| other equity derivatives | 474 | 839 | ||||||
| – credit derivatives | 146 | 498 | ||||||
| total return swaps | 56 | 345 | Market proxy | Price | 68 | 102 | 0 | 104 |
| other credit derivatives | 90 | 153 | ||||||
| – other derivatives | 30 | 23 | ||||||
| Bonds | 7,475 | 41 | Market proxy | Price | 0 | 3,342 | 0 | 140 |
| Loans | 3,253 | 11 | Market proxy | Price | 0 | 112 | 0 | 103 |
| Other portfolios2 | 2,574 | 130 | ||||||
| At 31 Dec 2025 | 36,445 | 14,242 |
1‘Private equity including strategic investments’ includes private equity, private credit and private equity fund, primarily held as part of our Insurance business and
for strategic investments.
2‘Other portfolios’ includes a range of smaller asset holdings.
The range of values above shows the highest and lowest unobservable inputs that have been used to value significant Level 3 exposures and
reflects the diversity of the underlying financial instruments in scope and subsequent differentiation in pricing.
Private equity including strategic investments
The ‘private equity’ holdings include private equity investments and private equity funds held as limited partners. The key unobservable input is the
current value of the underlying positions, determined using valuation techniques in line with the International Private Equity and Venture Capital
Valuation Guidelines. The inputs represented are an appropriate range of inputs normalised across different exposure types.
Prepayment rates
Prepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary
according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence, such
as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.
Market proxy
Market proxy pricing may be used for an instrument when specific market pricing is not available but there is evidence from instruments with
common characteristics. In some cases it might be possible to identify a specific proxy, but more generally evidence across a wider range of
instruments will be used to understand the factors that influence current market pricing and the manner of that influence.
Volatility
Volatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and
maturity of the option. Certain volatilities, typically those of a longer-dated nature, are unobservable and are estimated from observable data. The
range of unobservable volatilities reflects the wide variation in volatility inputs by reference market price.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 337 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Correlation
Correlation is a measure of the inter-relationship between two market variables and is expressed as a number between minus one and one. It is
used to value more complex instruments where the payout is dependent upon more than one market variable. There is a wide range of
instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is used.
In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations.
Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC trade prices, proxy
correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table reflects the wide variation
in correlation inputs by market variable pair.
Inter-relationships between key unobservable inputs
Key unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be
correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events. Furthermore,
the effect of changing market variables on the HSBC portfolio will depend on HSBC’s net risk position in respect of each variable.
HSBC Holdings
| Basis of valuing HSBC Holdings’ financial assets and liabilities measured at fair value | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |
| $m | $m | $m | $m | $m | $m | |
| Recurring fair value measurement | ||||||
| Assets at 31 Dec | ||||||
| Trading assets | — | — | — | 709 | — | 709 |
| Financial assets with HSBC undertakings designated and<br><br>otherwise mandatorily measured at fair value | — | 67,217 | 67,217 | — | 61,286 | 61,286 |
| Derivatives | — | 1,942 | 1,942 | — | 3,054 | 3,054 |
| Liabilities at 31 Dec | ||||||
| Financial liabilities designated at fair value | — | 52,907 | 52,907 | — | 41,582 | 41,582 |
| Derivatives | — | 3,451 | 3,451 | — | 5,340 | 5,340 |
| 13 | Fair values of financial instruments not carried at fair value | |||||
| --- | --- | |||||
| Fair values of financial instruments not carried at fair value and bases of valuation | ||||||
| --- | --- | --- | --- | --- | --- | |
| Fair value | ||||||
| Carrying<br><br>amount | Quoted market<br><br>price Level 1 | Observable<br><br>inputs Level 2 | Significant<br><br>unobservable<br><br>inputs Level 3 | Total | ||
| $m | $m | $m | $m | $m | ||
| At 31 Dec 2025 | ||||||
| Assets | ||||||
| Loans and advances to banks | 108,462 | — | 107,906 | 546 | 108,452 | |
| Loans and advances to customers1 | 988,399 | — | 14,363 | 966,429 | 980,792 | |
| Reverse repurchase agreements – non-trading | 298,392 | — | 298,545 | — | 298,545 | |
| Financial investments – at amortised cost | 182,089 | 148,925 | 31,475 | 1,283 | 181,683 | |
| Liabilities | ||||||
| Deposits by banks | 97,952 | — | 97,981 | — | 97,981 | |
| Customer accounts | 1,786,828 | — | 1,787,070 | — | 1,787,070 | |
| Repurchase agreements – non-trading | 204,974 | — | 204,966 | — | 204,966 | |
| Debt securities in issue | 99,675 | — | 99,530 | 1,490 | 101,020 | |
| Subordinated liabilities | 28,406 | — | 31,617 | — | 31,617 | |
| At 31 Dec 2024 | ||||||
| Assets | ||||||
| Loans and advances to banks | 102,039 | — | 101,007 | 1,048 | 102,055 | |
| Loans and advances to customers | 930,658 | — | 11,435 | 906,208 | 917,643 | |
| Reverse repurchase agreements – non-trading | 252,549 | — | 252,598 | — | 252,598 | |
| Financial investments – at amortised cost | 153,973 | 120,843 | 29,493 | 724 | 151,060 | |
| Liabilities | ||||||
| Deposits by banks | 73,997 | — | 74,025 | — | 74,025 | |
| Customer accounts | 1,654,955 | — | 1,655,151 | — | 1,655,151 | |
| Repurchase agreements – non-trading | 180,880 | — | 180,873 | — | 180,873 | |
| Debt securities in issue | 105,785 | — | 105,689 | 954 | 106,643 | |
| Subordinated liabilities | 25,958 | — | 28,262 | — | 28,262 |
1Includes loans and advances to customers with observable inputs and short maturities.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 338 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Fair values of financial instruments not carried at fair value and bases of valuation – assets and disposal groups held for sale | ||||||
| --- | --- | --- | --- | --- | --- | |
| Fair value | ||||||
| Carrying<br><br>amount | Quoted market<br><br>price Level 1 | Observable<br><br>inputs Level 2 | Significant<br><br>unobservable<br><br>inputs Level 3 | Total | ||
| $m | $m | $m | $m | $m | ||
| At 31 Dec 2025 | ||||||
| Assets | ||||||
| Loans and advances to banks | 45 | — | 45 | — | 45 | |
| Loans and advances to customers | 3,493 | — | 1,303 | 2,190 | 3,493 | |
| Reverse repurchase agreements – non-trading | — | — | — | — | — | |
| Financial investments – at amortised cost | 93 | 84 | 9 | — | 93 | |
| Liabilities | ||||||
| Deposits by banks | 131 | — | 131 | — | 131 | |
| Customer accounts | 16,173 | — | 16,173 | — | 16,173 | |
| Repurchase agreements – non-trading | — | — | — | — | — | |
| Debt securities in issue | 495 | — | 495 | — | 495 | |
| Subordinated liabilities | — | — | — | — | — | |
| At 31 Dec 2024 | ||||||
| Assets | ||||||
| Loans and advances to banks | 144 | — | 144 | — | 144 | |
| Loans and advances to customers | 977 | — | 11 | 966 | 977 | |
| Reverse repurchase agreements – non-trading | — | — | — | — | — | |
| Financial investments – at amortised cost | — | — | — | — | — | |
| Liabilities | ||||||
| Deposits by banks | — | — | — | — | — | |
| Customer accounts | 5,399 | — | 5,399 | — | 5,399 | |
| Repurchase agreements – non-trading | — | — | — | — | — | |
| Debt securities in issue | — | — | — | — | — | |
| Subordinated liabilities | — | — | — | — | — |
Other financial instruments not carried at fair value are typically short term in nature and reprice to current market rates frequently. Accordingly,
their carrying amount is a reasonable approximation of fair value. They include cash and balances at central banks, Hong Kong Government
certificates of indebtedness and Hong Kong currency notes in circulation, all of which are measured at amortised cost.
Valuation
Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. This may be different from the theoretical economic value attributed from an instrument’s cash flows over
its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market prices are
available may differ from those of other companies.
Loans and advances to banks and customers
To determine the fair value of loans and advances to banks and customers, loans are segregated into portfolios of similar characteristics. Fair
values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation models
incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting over-the-counter
trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using assumptions that
HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination pricing for similar
loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time, we may engage a
third-party valuation specialist to measure the fair value of a pool of loans.
The fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants’ expectations of credit losses
over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit-impaired loans, fair value
is estimated by discounting the future cash flows over the time period they are expected to be recovered.
Financial investments
The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are
determined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.
Deposits by banks and customer accounts
The fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are
estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.
Debt securities in issue and subordinated liabilities
Fair values in debt securities in issue and subordinated liabilities are determined using quoted market prices at the balance sheet date where
available, or by reference to quoted market prices for similar instruments.
Repurchase and reverse repurchase agreements – non-trading
Carrying amounts of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate fair values. This is
due to the fact that balances are generally short dated.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 339 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC Holdings
The methods used by HSBC Holdings to determine fair values of financial instruments for the purposes of measurement and disclosure are
described above.
| Fair values of HSBC Holdings’ financial instruments not carried at fair value on the balance sheet | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Carrying amount | Fair value1 | Carrying amount | Fair value1 | |
| $m | $m | $m | $m | |
| Assets at 31 Dec | ||||
| Loans and advances to HSBC undertakings | 40,500 | 41,288 | 37,677 | 38,359 |
| Financial investments – at amortised cost | 15,470 | 15,470 | 10,328 | 10,335 |
| Liabilities at 31 Dec | ||||
| Debt securities in issue | 69,024 | 70,533 | 64,320 | 65,123 |
| Subordinated liabilities | 26,114 | 29,073 | 23,548 | 25,911 |
1Fair values (other than Financial investments which are Level 1) were determined using valuation techniques with observable inputs (Level 2).
14Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss
| 2025 | 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| Designated at<br><br>fair value | Mandatorily<br><br>measured at<br><br>fair value | Total | Designated<br><br>at fair value | Mandatorily<br><br>measured at<br><br>fair value | Total | |||
| $m | $m | $m | $m | $m | $m | |||
| Securities | 2,820 | 119,381 | 122,201 | 2,406 | 104,093 | 106,499 | ||
| – treasury and other eligible bills | 778 | 212 | 990 | 732 | 393 | 1,125 | ||
| – debt securities | 2,042 | 68,728 | 70,770 | 1,674 | 59,904 | 61,578 | ||
| – equity securities | — | 50,441 | 50,441 | — | 43,796 | 43,796 | ||
| Loans and advances to banks and customers | 1,122 | 7,047 | 8,169 | 951 | 6,120 | 7,071 | ||
| Other | — | 2,693 | 2,693 | — | 2,199 | 2,199 | ||
| At 31 Dec | 3,942 | 129,121 | 133,063 | 3,357 | 112,412 | 115,769 | ||
| 15 | Derivatives | |||||||
| --- | --- | |||||||
| Notional contract amounts and fair values of derivatives by product contract type held by HSBC | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Notional contract amount | Fair value – Assets | Fair value – Liabilities | ||||||
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Foreign exchange | 13,639,520 | 108,585 | 111,012 | 1,233 | 112,245 | 110,786 | 662 | 111,448 |
| Interest rate | 17,272,408 | 423,761 | 190,296 | 4,946 | 195,242 | 182,569 | 4,565 | 187,134 |
| Equities | 908,649 | — | 15,660 | — | 15,660 | 21,311 | — | 21,311 |
| Credit | 164,160 | — | 1,294 | — | 1,294 | 2,212 | — | 2,212 |
| Commodity and other | 191,761 | — | 10,542 | — | 10,542 | 12,992 | — | 12,992 |
| Gross total fair values | 32,176,498 | 532,346 | 328,804 | 6,179 | 334,983 | 329,870 | 5,227 | 335,097 |
| Offset (Note 31) | (97,243) | (97,243) | ||||||
| At 31 Dec 2025 | 32,176,498 | 532,346 | 328,804 | 6,179 | 237,740 | 329,870 | 5,227 | 237,854 |
| Foreign exchange | 11,706,591 | 82,161 | 142,055 | 2,738 | 144,793 | 133,910 | 75 | 133,985 |
| Interest rate | 17,316,173 | 406,109 | 209,794 | 4,790 | 214,584 | 212,980 | 4,930 | 217,910 |
| Equities | 768,732 | — | 17,116 | — | 17,116 | 20,643 | — | 20,643 |
| Credit | 143,136 | — | 1,756 | — | 1,756 | 1,769 | — | 1,769 |
| Commodity and other | 118,180 | — | 3,134 | — | 3,134 | 2,887 | — | 2,887 |
| Gross total fair values | 30,052,812 | 488,270 | 373,855 | 7,528 | 381,383 | 372,189 | 5,005 | 377,194 |
| Offset (Note 31) | (112,746) | (112,746) | ||||||
| At 31 Dec 2024 | 30,052,812 | 488,270 | 373,855 | 7,528 | 268,637 | 372,189 | 5,005 | 264,448 |
The notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the
nominal value of transactions outstanding at the balance sheet date. They do not represent amounts at risk.
| Notional contract amounts and fair values of derivatives by product contract type held by HSBC Holdings with subsidiaries | ||||||||
|---|---|---|---|---|---|---|---|---|
| Notional contract amount | Assets | Liabilities | ||||||
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Foreign exchange | 48,660 | 681 | 570 | 10 | 580 | 941 | — | 941 |
| Interest rate | 21,304 | 91,600 | 801 | 561 | 1,362 | 358 | 2,152 | 2,510 |
| At 31 Dec 2025 | 69,964 | 92,281 | 1,371 | 571 | 1,942 | 1,299 | 2,152 | 3,451 |
| Foreign exchange | 51,437 | — | 796 | — | 796 | 1,015 | — | 1,015 |
| Interest rate | 30,535 | 90,074 | 1,544 | 714 | 2,258 | 487 | 3,838 | 4,325 |
| At 31 Dec 2024 | 81,972 | 90,074 | 2,340 | 714 | 3,054 | 1,502 | 3,838 | 5,340 |
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
| --- | ||||||||
| 340 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements |
Use of derivatives
For details regarding the use of derivatives, see page 202 under ‘Market risk’.
Trading derivatives
Most of HSBC’s derivative transactions relate to sales and trading activities. Sales activities include the structuring and marketing of derivative
products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities include market-making and
risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of generating revenue based on
spread and volume. Risk management activity is undertaken to manage the risk arising from client transactions, with the principal purpose of
retaining client margin. Other derivatives classified as held for trading include non-qualifying hedging derivatives.
Substantially all of HSBC Holdings’ derivatives entered into with subsidiaries are managed in conjunction with financial liabilities.
Hedge accounting derivatives
HSBC applies hedge accounting to manage the following risks: interest rate and foreign exchange risks. Further details of how these risks arise
and how they are managed by the Group can be found in the ‘Risk review’.
Hedged risk components
HSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign currency
risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise separately
identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are regarded as
being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition where HSBC
designates alternative benchmark rates as the hedged risk which may not have been separately identifiable upon initial designation, provided
HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated risk components account
for a significant portion of the overall changes in fair value or cash flows of the hedged items.
HSBC uses net investment hedges to hedge the structural foreign exchange risk related to net investments in foreign operations including
subsidiaries and branches whose functional currencies are different from that of the parent. When hedging with foreign exchange forward
contracts, the spot rate component of the foreign exchange risk is designated for an amount of net assets as the hedged risk.
Sources of hedge ineffectiveness may arise from basis risk, including but not limited to the discount rates used for calculating the fair value of
derivatives, hedges using instruments with a non-zero fair value, and notional and timing differences between the hedged items and hedging
instruments.
Fair value hedges
HSBC enters into fixed-for-floating interest rate swaps to manage the exposure to changes in fair value caused by movements in market interest
rates on certain fixed-rate financial instruments that are not measured at fair value through profit or loss, including debt securities held and issued.
| HSBC hedging instrument by hedged risk | |||||
|---|---|---|---|---|---|
| Hedging instrument | |||||
| Carrying amount | |||||
| Notional amount1,2 | Assets | Liabilities | Balance sheet<br><br>presentation | Change in fair value3 | |
| Hedged risk | $m | $m | $m | $m | |
| Interest rate4 | 233,741 | 3,851 | 4,283 | Derivatives | (661) |
| At 31 Dec 2025 | 233,741 | 3,851 | 4,283 | (661) | |
| Interest rate4 | 190,332 | 4,180 | 4,411 | Derivatives | (449) |
| --- | --- | --- | --- | --- | --- |
| At 31 Dec 2024 | 190,332 | 4,180 | 4,411 | (449) |
1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at
the balance sheet date. They do not represent amounts at risk.
2The notional amount of non-dynamic fair value hedges is equal to $76,349m (2024: $71,916m), of which the weighted-average maturity date is April 2032 and
the weighted-average swap rate is 3.15% (2024: 3.24%).
3Used in effectiveness testing, which uses the full fair value change of the hedging instrument not excluding any component.
4The hedged risk ‘interest rate’ includes inflation risk.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 341 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements | ||||||||
| HSBC hedged item by hedged risk | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Hedged item | Ineffectiveness | |||||||
| Carrying amount | Accumulated fair value<br><br>hedge adjustments included<br><br>in carrying amount1 | Change in fair<br><br>value2 | Recognised<br><br>in profit and<br><br>loss | |||||
| Assets | Liabilities | Assets | Liabilities | Balance sheet<br><br>presentation | Profit and loss<br><br>presentation | |||
| Hedged risk | $m | $m | $m | $m | $m | $m | ||
| Interest rate3 | 115,156 | (1,091) | Financial investments -<br><br>measured at fair value<br><br>through other<br><br>comprehensive income | 1,513 | (2) | Net income from<br><br>financial instruments<br><br>held for trading or<br><br>managed on a fair<br><br>value basis | ||
| 2,845 | 31 | Financial investments -<br><br>measured at amortised<br><br>cost | 18 | |||||
| 26,052 | 62 | — | Loans and advances to<br><br>customers | 157 | ||||
| — | — | Reverse repurchase<br><br>agreements – non-<br><br>trading | — | |||||
| 53,482 | (370) | Debt securities in issue | (586) | |||||
| 201 | — | Deposits by banks | 2 | |||||
| 2,237 | — | Customer accounts | 1 | |||||
| 25,818 | (610) | Subordinated liabilities4 | (446) | |||||
| At 31 Dec 2025 | 144,053 | 81,738 | (998) | (980) | 659 | (2) | ||
| Interest rate3 | 93,055 | (2,701) | Financial investments -<br><br>measured at fair value<br><br>through other<br><br>comprehensive income | (728) | (8) | Net income from<br><br>financial instruments<br><br>held for trading or<br><br>managed on a fair<br><br>value basis | ||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 492 | 11 | Financial investments -<br><br>measured at amortised<br><br>cost | (14) | |||||
| 13,915 | (104) | Loans and advances to<br><br>customers | 16 | |||||
| — | — | Reverse repurchase<br><br>agreements – non-<br><br>trading | — | |||||
| 72,576 | (1,800) | Debt securities in issue | 1,110 | |||||
| 207 | — | Customer accounts | — | |||||
| 1,205 | (266) | Subordinated liabilities | 57 | |||||
| At 31 Dec 2024 | 107,462 | 73,988 | (2,794) | (2,066) | 441 | (8) |
1The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were liabilities of $257m (2024: $311m) for FVOCI assets and assets of $733m (2024: $745m) for debt issued.
2Used in effectiveness testing, which comprise an amount attributable to the designated hedged risk that can be a risk component.
3The hedged risk ‘interest rate’ includes inflation risk.
4From 2025, HSBC Holdings is presenting separately the carrying amount of 'Subordinated liabilities' hedged items from 'Debt securities in issue'.
| HSBC Holdings hedging instrument by hedged risk | |||||
|---|---|---|---|---|---|
| Hedging instrument | |||||
| Carrying amount | |||||
| Notional amount1,2 | Assets | Liabilities | Balance sheet<br><br>presentation | Change in fair value3 | |
| Hedged risk | $m | $m | $m | $m | |
| Foreign currency | 681 | 10 | — | Derivatives | 9 |
| Interest rate | 91,600 | 561 | 2,152 | Derivatives | 1,128 |
| At 31 Dec 2025 | 92,281 | 571 | 2,152 | 1,137 | |
| Foreign currency | — | — | — | Derivatives | — |
| Interest rate | 90,074 | 714 | 3,838 | Derivatives | (1,103) |
| At 31 Dec 2024 | 90,074 | 714 | 3,838 | (1,103) |
1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at
the balance sheet date. They do not represent amounts at risk.
2The notional amount of non-dynamic fair value hedges is equal to $92,281m (2024: $90,074m), of which the weighted-average maturity date is July 2031 and
the weighted-average swap rate is 2.76% (2024: 2.78%). The majority of these hedges are internal to the Group.
3Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 342 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements | ||||||||
| HSBC Holdings hedged item by hedged risk | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Hedged item | Ineffectiveness | |||||||
| Carrying amount | Accumulated fair value<br><br>hedge adjustments included<br><br>in carrying amount1 | Change in<br><br>fair value2 | Recognised in<br><br>profit<br><br>and loss | |||||
| Assets | Liabilities | Assets | Liabilities | Balance sheet<br><br>presentation | Profit and loss<br><br>presentation | |||
| Hedged risk | $m | $m | $m | $m | $m | $m | ||
| Foreign currency | 666 | — | (9) | — | Investment in<br><br>subsidiaries | (9) | ||
| Interest rate | — | 55,770 | — | (710) | Debt securities in<br><br>issue | (870) | (7) | Net income from<br><br>financial instruments<br><br>held for trading or<br><br>managed on a fair<br><br>value basis |
| — | 24,488 | — | (361) | Subordinated<br><br>liabilities3 | (447) | |||
| 9,225 | — | (39) | — | Loans and<br><br>advances to banks | 183 | |||
| At 31 Dec 2025 | 9,891 | 80,258 | (48) | (1,072) | (1,144) | (7) | ||
| Foreign currency | — | — | — | — | Investment in<br><br>subsidiaries | — | ||
| Interest rate | — | 78,402 | — | (2,423) | Debt securities<br><br>in issue | 861 | (9) | Net income from<br><br>financial instruments<br><br>held for trading or<br><br>managed on a fair<br><br>value basis |
| 7,769 | — | (244) | — | Loans and<br><br>advances to banks | 233 | |||
| At 31 Dec 2024 | 7,769 | 78,402 | (244) | (2,423) | 1,094 | (9) |
1The accumulated amount of fair value hedge adjustments remaining in the statement of financial position for hedged items that have ceased to be adjusted for
hedging gains and losses were assets of $1,142m (2024: $1,216m) for debt issued.
2Used in effectiveness testing, comprising amount attributable to the designated hedged risk that can be a risk component.
3From 2025, HSBC Holdings is presenting separately the carrying amount of 'Subordinated liabilities' hedged items from 'Debt securities in issue'.
For some debt securities held, HSBC manages interest rate risk in a dynamic risk management strategy. The assets in scope of this strategy are
high-quality fixed-rate debt securities, which may be sold to meet liquidity and funding requirements.
The interest rate risk of the HSBC fixed-rate debt securities issued is managed in a non-dynamic risk management strategy.
Cash flow hedges
HSBC’s cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to manage the variability
in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates and foreign-currency basis.
HSBC applies macro cash flow hedging for interest rate risk exposures on portfolios of replenishing current and forecasted issuances of non-
trading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of future cash flows,
representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of their contractual
terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing both principal balances
and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash flow hedges are considered
to be dynamic hedges.
HSBC also hedges the variability in future cash flows on foreign-denominated financial assets and liabilities arising due to changes in foreign
exchange market rates with cross-currency swaps, which are considered dynamic hedges.
| Hedging instrument by hedged risk | ||||||||
|---|---|---|---|---|---|---|---|---|
| Hedging instrument | Hedged item | Ineffectiveness | ||||||
| Carrying amount | Change in<br><br>fair value2 | Change in fair<br><br>value3 | Recognised in<br><br>profit<br><br>and loss | Profit and loss<br><br>presentation | ||||
| Notional<br><br>amount1 | Assets | Liabilities | Balance sheet<br><br>presentation | |||||
| Hedged risk | $m | $m | $m | $m | $m | $m | ||
| Foreign currency | 62,334 | 1,138 | 278 | Derivatives | (376) | (376) | — | Net income from<br><br>financial<br><br>instruments held for<br><br>trading or managed<br><br>on a fair value basis |
| Interest rate | 190,020 | 1,095 | 282 | Derivatives | 1,256 | 1,267 | (11) | |
| At 31 Dec 2025 | 252,354 | 2,233 | 560 | 880 | 891 | (11) | ||
| Foreign currency | 47,194 | 2,088 | 68 | Derivatives | 2,451 | 2,451 | — | Net income from<br><br>financial instruments<br><br>held for trading or<br><br>managed on a fair<br><br>value basis |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Interest rate | 215,777 | 619 | 519 | Derivatives | (2,954) | (2,964) | 10 | |
| At 31 Dec 2024 | 262,971 | 2,707 | 587 | (503) | (513) | 10 |
1The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at
the balance sheet date. They do not represent amounts at risk.
2Used in effectiveness testing, comprising the full fair value change of the hedging instrument not excluding any component.
3Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 343 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Reconciliation of equity and analysis of other comprehensive income by risk type | ||||||
| --- | --- | --- | ||||
| Interest<br><br>rate | Foreign<br><br>currency | |||||
| $m | $m | |||||
| Cash flow hedging reserve at 1 Jan 2025 | (1,056) | (23) | ||||
| Fair value gains/(losses) | 1,267 | (376) | ||||
| Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of: | ||||||
| Hedged items that have affected profit or loss1 | 807 | 574 | ||||
| Income taxes | (541) | (31) | ||||
| Others | (49) | (2) | ||||
| Cash flow hedging reserve at 31 Dec 2025 | 428 | 142 | ||||
| Cash flow hedging reserve at 1 Jan 2024 | (901) | (132) | ||||
| --- | --- | --- | ||||
| Fair value gains/(losses) | (2,964) | 2,451 | ||||
| Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of: | ||||||
| Hedged items that have affected profit or loss1 | 2,529 | (2,430) | ||||
| Income taxes | 81 | 1 | ||||
| Others | 199 | 87 | ||||
| Cash flow hedging reserve at 31 Dec 2024 | (1,056) | (23) |
1Hedged items that have affected profit or loss are primarily recorded within interest income.
Net investment hedges
The Group applies hedge accounting in respect of certain net investments in non-US dollar functional currency foreign operations for changes in
spot exchange rates only. Hedging could be undertaken for Group structural exposure to changes in the US dollar to foreign currency exchange
rates using forward foreign exchange contracts or by financing with foreign currency borrowings. An economic relationship exists between the
hedged net investment and hedging instrument due to the shared foreign currency risk exposure. For further details of our structural foreign
exchange exposures, see page .
The aggregate positions at the reporting date and the performance indicators of both live and de-designated hedges are summarised below.
| Hedges of net investment in foreign operations | ||||||
|---|---|---|---|---|---|---|
| Carrying amount | Nominal<br><br>amount | Amounts<br><br>recognised<br><br>in OCI1 | Change in<br><br>fair value2 | Hedge ineffectiveness<br><br>recognised in income<br><br>statement | ||
| Derivative<br><br>assets | Derivative<br><br>liabilities | |||||
| Description of hedged risk | $m | $m | $m | $m | $m | $m |
| 2025 | ||||||
| Pound sterling-denominated structural foreign exchange | 58 | (188) | 17,114 | (291) | (1,124) | — |
| Swiss franc-denominated structural foreign exchange | — | (7) | 615 | 13 | (76) | — |
| Hong Kong dollar-denominated structural foreign exchange | 7 | — | 5,761 | (29) | (2) | — |
| Other structural foreign exchange3 | 30 | (189) | 22,761 | 116 | (791) | — |
| Total | 95 | (384) | 46,251 | (191) | (1,993) | — |
| 2024 | ||||||
| Pound sterling-denominated structural foreign exchange | 397 | (1) | 15,407 | 833 | 229 | — |
| Swiss franc-denominated structural foreign exchange | 10 | — | 556 | 89 | 40 | — |
| Hong Kong dollar-denominated structural foreign exchange | 1 | (3) | 5,844 | (27) | (26) | — |
| Other structural foreign exchange3 | 242 | (3) | 13,160 | 907 | 499 | — |
| Total | 650 | (7) | 34,967 | 1,803 | 742 | — |
1Amount recognised in OCI for Swiss franc includes $110m (2024: $110m) related to de-designated hedge.
2Used in effectiveness assessment, comprising amount attributable to the designated hedged risk that can be a risk component.
3Other currencies include Euro, New Taiwan dollar, Singapore dollar, Polish zloty, South Korean won, UAE dirham, Indian rupee, Chinese renminbi, Kuwaiti dinar,
Qatari riyal, Indonesian rupiah, Thai baht, Malaysian ringgit and Philippine peso.
16Financial investments
| Carrying amount of financial investments | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| $m | $m | |||||
| Financial investments measured at fair value through other comprehensive income | 385,122 | 339,193 | ||||
| – treasury and other eligible bills | 105,075 | 112,705 | ||||
| – debt securities | 277,867 | 224,496 | ||||
| – equity securities | 1,755 | 1,569 | ||||
| – other instruments | 425 | 423 | ||||
| Debt instruments measured at amortised cost | 182,089 | 153,973 | ||||
| – treasury and other eligible bills | 23,445 | 22,148 | ||||
| – debt securities | 158,644 | 131,825 | ||||
| At 31 Dec | 567,211 | 493,166 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 344 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Equity instruments measured at fair value through other comprehensive income | ||||||
| --- | --- | --- | ||||
| Fair value | Dividends<br><br>recognised | |||||
| Type of equity instruments | $m | $m | ||||
| Investments required by central institutions | 634 | 27 | ||||
| Business facilitation | 1,045 | 28 | ||||
| Others | 76 | 2 | ||||
| At 31 Dec 2025 | 1,755 | 57 | ||||
| Investments required by central institutions | 620 | 29 | ||||
| Business facilitation | 886 | 29 | ||||
| Others | 63 | 2 | ||||
| At 31 Dec 2024 | 1,569 | 60 | ||||
| Weighted average yields of investment debt securities | ||||||
| --- | --- | --- | --- | --- | ||
| Up to 1<br><br>year | 1 to 5<br><br>years | 5 to 10<br><br>years | Over 10<br><br>years | |||
| Yield | Yield | Yield | Yield | |||
| % | % | % | % | |||
| Debt securities measured at fair value through other comprehensive income | ||||||
| US Treasury | 2.9 | 3.7 | 2.3 | 2.3 | ||
| US Government agencies | — | 3.0 | 4.4 | 3.5 | ||
| US Government-sponsored agencies | 1.8 | 1.6 | 4.1 | 1.8 | ||
| UK Government | — | 3.8 | 2.6 | 1.9 | ||
| Hong Kong Government | 1.4 | 2.5 | 2.7 | — | ||
| Other governments | 2.8 | 4.2 | 4.3 | 2.2 | ||
| Asset-backed securities | — | 4.4 | 3.9 | 3.3 | ||
| Corporate debt and other securities | 3.2 | 3.9 | 4.2 | 1.3 | ||
| Debt securities measured at amortised cost | ||||||
| US Treasury | 3.2 | 3.8 | 3.7 | 2.0 | ||
| US Government agencies | 4.5 | 4.3 | 4.0 | 4.7 | ||
| US Government-sponsored agencies | — | 2.9 | 3.7 | 2.9 | ||
| UK Government | — | 3.3 | 3.0 | — | ||
| Hong Kong Government | 2.5 | 2.7 | — | — | ||
| Other governments | 3.2 | 3.1 | 2.5 | 8.0 | ||
| Asset-backed securities | — | — | 7.3 | — | ||
| Corporate debt and other securities | 3.2 | 3.4 | 3.8 | 4.8 |
The maturity distributions of ABSs are presented in the above table on the basis of contractual maturity dates. The weighted average yield for each
range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2025 by the book amount of debt
securities at that date. The yields do not include the effect of related derivatives.
HSBC Holdings
| HSBC Holdings carrying amount of financial investments | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Debt instruments measured at amortised cost | ||
| Treasury and other eligible bills | 15,470 | 9,556 |
| Debt securities | — | 772 |
| At 31 Dec | 15,470 | 10,328 |
| 17 | Assets pledged, collateral received and assets transferred | |
| --- | --- |
Assets pledged1
| Financial assets pledged as collateral | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Treasury bills and other eligible securities | 23,482 | 17,713 |
| Loans and advances to banks | 16,452 | 14,880 |
| Loans and advances to customers | 20,416 | 24,524 |
| Debt securities | 124,971 | 91,975 |
| Equity securities | 51,213 | 51,642 |
| Other | 61,594 | 63,386 |
| Assets pledged at 31 Dec | 298,128 | 264,120 |
The value of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case of
securitisations and covered bonds, the amount of liabilities issued plus mandatory over-collateralisation is less than the book value of the pool of
assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a floating charge
over all the assets placed to secure any liabilities under settlement accounts.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 345 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
These transactions are conducted under terms that are usual and customary for collateralised transactions including, where relevant, standard
securities lending and borrowing, repurchase agreements and derivative margining. HSBC places both cash and non-cash collateral in relation to
derivative transactions.
Hong Kong currency notes in circulation are secured by the deposit of funds in respect of which the Hong Kong Government certificates of
indebtedness are held.
| Financial assets pledged as collateral which the counterparty has the right to sell or repledge | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Trading assets | 95,938 | 84,863 |
| Financial investments | 64,163 | 47,248 |
| At 31 Dec | 160,101 | 132,111 |
Collateral received1
The fair value of assets accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements, swaps of securities
and derivative margining that HSBC is permitted to sell or repledge in the absence of default was $647.7bn (2024: $515.3bn). The fair value of any
such collateral sold or repledged was $378.8bn (2024: $293.5bn).
HSBC is obliged to return equivalent securities. These transactions are conducted under terms that are usual and customary to standard securities
lending, reverse repurchase agreements and derivative margining.
Assets transferred1
The assets pledged include transfers to third parties that do not qualify for derecognition, including secured borrowings such as debt securities
held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as swaps
of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full while a related liability,
reflecting the Group’s obligation to repurchase the assets for a fixed price at a future date, is also recognised on the balance sheet.
Where securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the non-cash collateral
received is not recognised on the balance sheet. The Group is unable to use, sell or pledge the transferred assets for the duration of the
transaction, and remains exposed to interest rate risk and credit risk on these pledged assets.
| Transferred financial assets not qualifying for full derecognition and associated financial liabilities | ||
|---|---|---|
| Carrying amount of: | ||
| Transferred<br><br>assets | Associated<br><br>liabilities | |
| $m | $m | |
| At 31 Dec 2025 | ||
| Repurchase agreements | 109,524 | 96,980 |
| Securities lending agreements | 62,679 | 2,005 |
| At 31 Dec 2024 | ||
| Repurchase agreements | 83,585 | 75,625 |
| Securities lending agreements | 58,232 | 4,361 |
1Excludes assets classified as held for sale.
| 18 | Interests in associates and joint ventures | |||
|---|---|---|---|---|
| Carrying amount of HSBC’s interests in associates and joint ventures | ||||
| --- | --- | --- | ||
| 2025 | 2024 | |||
| $m | $m | |||
| Interests in associates | 29,469 | 28,777 | ||
| Interests in joint ventures | 108 | 132 | ||
| Interests in associates and joint ventures | 29,577 | 28,909 | ||
| Principal associates of HSBC | ||||
| --- | --- | --- | --- | --- |
| 2025 | 2024 | |||
| Carrying amount | Fair value1 | Carrying amount | Fair value1 | |
| $m | $m | $m | $m | |
| Bank of Communications Co., Limited | 22,456 | 11,713 | 22,367 | 11,631 |
| Saudi Awwal Bank | 5,511 | 5,499 | 5,027 | 5,705 |
1Principal associates are listed on recognised stock exchanges. The fair values are based on the quoted market prices of the shares held (Level 1 in the fair value
hierarchy).
| Principal associates of HSBC (continued) | |||
|---|---|---|---|
| At 31 Dec 2025 | |||
| Jurisdiction of incorporation<br><br>and principal place of business | Principal activity | HSBC’s interest1<br><br>% | |
| Bank of Communications Co., Limited | Mainland China | Banking services | 16.00 |
| Saudi Awwal Bank | Saudi Arabia | Banking services | 31.00 |
1The Group’s interest in Bank of Communications Co., Limited (‘BoCom’) reduced from 19.03% to 16.00% following the completion of a capital issuance by
BoCom on 17 June 2025. There has been no percentage change in HSBC’s shareholding interest in the Saudi Awwal Bank when compared with 2024.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 346 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Share of profit in associates and joint ventures | ||||||
| --- | --- | --- | --- | |||
| 2025 | 2024 | 2023 | ||||
| $m | $m | $m | ||||
| Bank of Communications Co., Limited | 2,132 | 2,241 | 2,250 | |||
| Saudi Awwal Bank | 665 | 596 | 538 | |||
| Other associates and joint ventures | 114 | 75 | 19 | |||
| Share of profit in associates and joint ventures | 2,911 | 2,912 | 2,807 | |||
| Less: Impairment of interest in BoCom | (1,000) | — | (3,000) |
A list of all associates and joint ventures is set out in Note 38.
Bank of Communications Co., Limited
The results for the period ended 31 December 2025 included a $1.1bn loss from the dilution of our shareholding and a $1.0bn impairment to
the carrying amount of the Group’s interest in BoCom.
The Group’s interest in BoCom reduced from 19.03% to 16.00% following the completion of a capital issuance by BoCom on 17 June 2025. The
dilution of the Group’s interest resulted in a pre-tax loss of $1.1bn, recognised in 'Other operating income/(expense)' in the Group’s consolidated
income statement. The loss is not deductible for tax purposes as a consequence of our shareholding in BoCom being held for long-term
investment purposes.
In addition, the Group’s impairment test on the carrying amount at 30 June 2025 resulted in an impairment of $1.0bn, as the recoverable amount
as determined by a value-in-use calculation was lower than the carrying amount. The impairment was recognised within 'Impairment of interest in
associate'. Consistent with prior periods, our value-in-use (‘VIU’) calculation uses both historical experience and market participant views to
estimate future cash flows, relevant discount rates and associated capital assumptions. No further impairment (or reversal) was required for the
period from 1 July 2025 to 31 December 2025 based on results of the quarterly impairment tests performed.
The impacts of the capital issuance have been incorporated in both the carrying amount and the VIU. The VIU assumptions incorporate updated
expectations, taking into account both the impact of the capital issuance on BoCom’s financial position, and the latest macroeconomic, policy
and industry factors in mainland China.
We remain strategically committed to mainland China and continue our valued, strategic partnership with BoCom.
HSBC’s Interest
The Group’s investment in BoCom continues to be classified as an associate. Significant influence in BoCom was established with consideration of
all relevant factors, including the Group’s latest shareholding, representation on BoCom’s Board of Directors, and participation in a resource and
experience sharing agreement (‘RES’). Under the RES, HSBC staff have been seconded to assist in the maintenance of BoCom’s financial and
operating policies. Investments in associates are recognised using the equity method of accounting in accordance with IAS 28 ‘Investments in
Associates and Joint Ventures’, whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the
Group’s share of associate’s net assets. An impairment test is required if there is any indication of impairment or reversal.
The fair value of the Group’s investment in BoCom had been below its carrying amount. No impairment (or reversal) was required for the year
ended 31 December 2024.
If the Group did not have significant influence in BoCom, the investment would be carried at fair value rather than the current carrying amount.
Impairment testing
The Group’s impairment test at 30 June 2025 concluded that there were indications of impairment. As part of this assessment, an impairment test
on the carrying amount with an updated VIU calculation was performed which resulted in an impairment of $1.0bn, as the recoverable amount as
determined by the VIU calculation was lower than the carrying amount. The impairment was recognised within 'Impairment of interest in
associate'. The impairment loss is not deductible for tax purposes.
At 31 December 2025, no further impairment (or reversal) was required and the investment had a carrying amount of $22.5bn (2024: $22.4bn) and
a fair value of $11.7bn (2024: $11.6bn).
Basis of recoverable amount
The VIU calculation uses discounted cash flow projections based on management’s best estimates of future earnings available to ordinary
shareholders prepared in accordance with IAS 36 ’Impairment of Assets’. Those cash flows used estimates based on BoCom’s current condition
and so do not include estimated cash flows arising from uncommitted future actions that may affect the performance of the investment which will
be considered at the relevant time should they arise. Significant management judgement is required in arriving at the best estimate.
The VIU may increase or decrease depending on the effect of changes to model inputs. The main model inputs are described below and are based
on factors observed at period-end. The factors that could result in increases or reductions in the VIU include changes in BoCom’s short-term
performance, a change in regulatory capital requirements or revisions to the forecast of BoCom’s future profitability.
There are two main components to the VIU calculation. The first component is management’s best estimate of BoCom’s earnings. Forecast
earnings growth over the short to medium term continues to be lower than recent (within the last five years) actual growth, and reflects the impact
of recent macroeconomic, policy and industry factors in mainland China. As a result of management‘s intent to continue to retain its investment for
the long term, earnings beyond the short to medium term are extrapolated into perpetuity using a long-term growth rate to derive a terminal value,
which comprises the majority of the VIU. The second component is the capital maintenance charge (‘CMC’), which is management’s forecast of
the earnings that need to be withheld in order for BoCom to meet capital requirements over the forecast period, meaning that CMC is deducted
when arriving at management’s estimate of future earnings available to ordinary shareholders. The CMC reflects the revised capital requirements
arising from revisions of the ratio of risk-weighted assets to total assets assumption. The principal inputs to the CMC calculation include estimates
of asset growth, the ratio of risk-weighted assets to total assets and the expected capital requirements. An increase in the CMC as a result of a
change to these principal inputs would reduce VIU. Additionally, management considers other qualitative factors, to ensure that the inputs to the
VIU calculation remain appropriate.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 347 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Key assumptions in value in use calculation
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
–Long-term profit growth rate: 3.00% (2024: 3.00%) for periods after 2029, which does not exceed forecast GDP growth in mainland China and
is similar to forecasts by external analysts.
–Long-term asset growth rate: 3.25% (2024: 3.25%) for periods after 2029, which is the rate that assets are expected to grow to achieve long-
term profit growth of 3.00%.
–Discount rate: 8.08% (2024: 8.53%), which is based on a capital asset pricing model (‘CAPM’), using market data. The discount rate used is
within the range of 7.1% to 8.7% (2024: 7.1% to 8.8%) indicated by the CAPM, and decreased primarily as a consequence of a market-driven
reduction in the risk-free rate.
–Expected credit losses (‘ECL’) as a percentage of loans and advances to customers: ranges from 0.67% to 0.87% (2024: 0.74% to 0.93%) in
the short to medium term, reflecting reported credit experience in mainland China. For periods after 2029, the ratio is 0.87% (2024: 0.97%),
reflecting the anticipated continuation of BoCom’s lower average ECL as a percentage of loans and advances to customers experienced in
recent years.
–Risk-weighted assets as a percentage of total assets: ranges from 62.0% to 64.2% (2024: 62.0% to 62.5%) in the short to medium term,
reflecting higher risk-weights in the short term followed by an expected reversion to recent historical levels. For periods after 2029, the ratio is
62.0% (2024: 62.0%), which continues to be similar to BoCom’s actual results in recent years.
–Loans and advances to customers growth rate: ranges from 7.5% to 8.0% (2024: 7.5% to 9.5%) in the short to medium term, which is similar
to BoCom’s actual results in recent years. Decreases in the forecast growth rate of loans and advances to customers result in lower forecast
ECL.
–Operating income growth rate: ranges from 0.5% to 7.4% (2024: 0.1% to 9.9%) in the short to medium term, which is similar to BoCom’s
actual results in recent years. The projected net interest income over the short to medium term reduced to reflect expected pressure on net
interest margin compared with the prior period, which led to a net reduction in the VIU.
–Cost-income ratio: ranges from 34.8% to 40.0% (2024: 34.6% to 39.8%) in the short to medium term. These ratios are similar to BoCom’s
actual results in recent years.
–Long-term effective tax rate: 15.0% (2024: 15.0%) for periods after 2029, which is higher than the recent historical average, and aligned to the
minimum tax rate as proposed by the OECD/Group of 20 (‘G20’) Inclusive Framework on Base Erosion and Profit Shifting.
–Capital requirements: capital adequacy ratio of 12.5% (2024: 12.5%) and tier 1 capital adequacy ratio of 9.5% (2024: 9.5%), based on BoCom’s
capital risk appetite and capital requirements respectively.
The following table illustrates the impact on the carrying amount of reasonably possible changes to key assumptions used in the VIU calculation.
This reflects the sensitivity of each key assumption on its own and it is possible that more than one favourable and/or unfavourable change may
occur at the same time. The selected rates of reasonably possible changes to key assumptions are based on external analysts’ forecasts, statutory
requirements and other relevant external data sources, which can change period to period. Unless specified, favourable and unfavourable changes
are consistently applied throughout short-to-medium and long-term forecast years, based on a straight-line average of the base case assumption.
| Sensitivity of the carrying amount to the key VIU assumptions | ||||
|---|---|---|---|---|
| Favourable change | Unfavourable change | |||
| Reversal of impairment/<br><br>VIU headroom | Impairment | |||
| bps | $bn | bps | $bn | |
| At 31 Dec 2025 | ||||
| Long-term profit growth rate | 30 | 2.1 | (104) | (6.0) |
| Long-term asset growth rate | (129) | 9.1 | 5 | (0.5) |
| Discount rate | (98) | 4.6 | 232 | (5.5) |
| Expected credit losses as a percentage of loans and advances to<br><br>customers1 | 2025 to 2029: 64<br><br>2030 onwards: 84 | 1.8 | 2025 to 2029: 90<br><br>2030 onwards: 98 | (4.7) |
| Risk-weighted assets as a percentage of total assets | (184) | 0.8 | 182 | (1.7) |
| Loans and advances to customers growth rate | (138) | 1.8 | 455 | (7.1) |
| Operating income growth rate | 101 | 3.7 | (100) | (3.8) |
| Cost-income ratio | (281) | 0.4 | 292 | (6.4) |
| Long-term effective tax rate | (426) | 1.7 | 1,000 | (4.0) |
| Capital requirements – capital adequacy ratio | — | — | 363 | (13.0) |
| Capital requirements – tier 1 capital adequacy ratio | — | — | 333 | (6.9) |
| At 31 Dec 2024 | ||||
| Long-term profit growth rate | 55 | 4.0 | (96) | (5.4) |
| Long-term asset growth rate | (121) | 8.6 | 30 | (2.8) |
| Discount rate | (143) | 5.4 | 287 | (6.4) |
| Expected credit losses as a percentage of loans and advances to<br><br>customers1 | 2024 to 2028: 66<br><br>2029 onwards: 91 | 4.0 | 2024 to 2028: 108<br><br>2029 onwards: 104 | (4.3) |
| Risk-weighted assets as a percentage of total assets | (132) | 0.8 | 234 | (1.7) |
| Loans and advances to customers growth rate | (217) | 3.4 | 340 | (6.1) |
| Operating income growth rate | 76 | 2.7 | (81) | (3.3) |
| Cost-income ratio | (190) | 0.2 | 380 | (7.1) |
| Long-term effective tax rate | (426) | 1.6 | 1,000 | (4.0) |
| Capital requirements – capital adequacy ratio | — | — | 372 | (14.3) |
| Capital requirements – tier 1 capital adequacy ratio | — | — | 270 | (6.7) |
1The expected credit losses as a percentage of loans and advances to customers reflect selected favourable and unfavourable rates.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 348 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Considering the interrelationship of the changes set out in the table above, management estimates that the reasonably possible range of VIU is
$13.4bn to $31.0bn (2024: $13.5bn to $30.8bn), acknowledging that the fair value of the Group’s investment has ranged from $7.5bn to $13.1bn
over the last five years as at the date of the impairment tests. The possible range of VIU is based on impacts set out in the table above arising
from the favourable/unfavourable change in the operating income in the short to medium term, the expected credit losses as a percentage of loans
and advances to customers, and a 50bps increase/decrease in the discount rate. All other long-term assumptions, and the basis of the CMC have
been kept unchanged when determining the reasonably possible range of the VIU.
Selected financial information of BoCom
The statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2025, HSBC included the associate’s results
on the basis of the financial statements for the 12 months ended 30 September 2025, taking into account any known changes in the subsequent
period from 1 October 2025 to 31 December 2025 that would have materially affected the results.
| Selected balance sheet information of BoCom | ||
|---|---|---|
| At 30 Sep | ||
| 2025 | 2024 | |
| $m | $m | |
| Cash and balances at central banks | 104,220 | 99,663 |
| Due from and placements with banks and other financial institutions | 123,034 | 122,607 |
| Loans and advances to customers | 1,265,800 | 1,128,603 |
| Other financial assets | 657,196 | 587,721 |
| Other assets | 66,665 | 61,086 |
| Total assets | 2,216,915 | 1,999,680 |
| Due to and placements from banks and other financial institutions | 346,808 | 326,742 |
| Deposits from customers | 1,324,734 | 1,195,590 |
| Other financial liabilities | 320,154 | 282,894 |
| Other liabilities | 40,284 | 38,082 |
| Total liabilities | 2,031,980 | 1,843,308 |
| Total equity | 184,935 | 156,372 |
| Reconciliation of BoCom’s total shareholders’ equity to the carrying amount in HSBC’s consolidated financial statements | ||
| --- | --- | --- |
| At 30 Sep | ||
| 2025 | 2024 | |
| $m | $m | |
| Equity attributable to shareholders | 183,347 | 154,748 |
| Other equity instruments | (20,708) | (23,946) |
| Equity attributable to shareholders less other equity instruments | 162,639 | 130,802 |
| The Group's share of equity1 | 26,595 | 25,284 |
| Impairment2 | (4,139) | (2,917) |
| Carrying amount | 22,456 | 22,367 |
1This balance includes goodwill originally arising on acquisition and reflects the impacts from the dilution of our shareholding in BoCom as well as BoCom's
interim dividend for the six months ended 30 June 2025.
2This balance includes the impact of foreign exchange movements.
| Selected income statement information of BoCom | ||
|---|---|---|
| For the 12 months ended 30 Sep | ||
| 2025 | 2024 | |
| $m | $m | |
| Net interest income | 23,886 | 23,180 |
| Net fee and commission income | 5,142 | 5,315 |
| Credit and impairment losses | (7,056) | (7,410) |
| Depreciation and amortisation | (2,772) | (2,589) |
| Tax expense | (1,402) | (835) |
| Profit for the year | 13,319 | 12,922 |
| Other comprehensive income | 292 | 1,361 |
| Total comprehensive income | 13,611 | 14,283 |
| Dividends received from BoCom | 744 | 745 |
Saudi Awwal Bank
The Group’s investment in Saudi Awwal Bank (‘SAB’) is classified as an associate. HSBC is the largest shareholder in SAB with a shareholding of
31%. Significant influence in SAB is established via representation on the Board of Directors. Investments in associates are recognised using the
equity method of accounting in accordance with IAS 28, as described previously for BoCom.
Impairment testing
The fair value of the Group’s investment in SAB was marginally below the carrying amount as at 31 December 2025. An impairment test on the
carrying amount with a VIU calculation was performed. The recoverable amount as determined by the VIU calculation was higher than the carrying
amount using discounted cash flow projections. SAB has also had increasing profits each year. On that basis, the Group has concluded there is no
indication of impairment.
The VIU calculation was based on management’s best estimates of future earnings available to ordinary shareholders prepared in accordance with
IAS 36 ‘Impairment of Assets’. Those cash flows used estimates based on SAB’s current condition and so do not include estimated cash flows
arising from uncommitted future actions that may affect the performance of the investment, which will be considered at the relevant time should
they arise.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 349 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| 19 | Investments in subsidiaries | |||||
| --- | --- | |||||
| Main subsidiaries of HSBC Holdings1 | ||||||
| --- | --- | --- | --- | |||
| At 31 Dec 2025 | ||||||
| Place of<br><br>incorporation or<br><br>registration | HSBC’s<br><br>interest % | |||||
| Share class | ||||||
| Europe | ||||||
| HSBC Bank plc | England and Wales | 100 | £1 Ordinary, $0.01 Non-Cumulative Third Dollar<br><br>Preference | |||
| HSBC UK Bank plc | England and Wales | 100 | £1 Ordinary | |||
| HSBC Continental Europe | France | 99.99 | €5 Actions | |||
| Asia | ||||||
| Hang Seng Bank Limited2,3 | Hong Kong | 63.43 | HK$5 Ordinary | |||
| HSBC Bank (China) Company Limited4 | People’s Republic of<br><br>China | 100 | CNY1 Ordinary | |||
| HSBC Bank Malaysia Berhad | Malaysia | 100 | Ordinary no par value | |||
| HSBC Life (International) Limited | Bermuda | 100 | HK$1 Ordinary | |||
| The Hongkong and Shanghai Banking Corporation Limited | Hong Kong | 100 | Ordinary no par value | |||
| Middle East, North Africa and Türkiye | ||||||
| HSBC Bank Middle East Limited | United Arab Emirates | 100 | $1 Ordinary and $1 Preference shares | |||
| North America | ||||||
| HSBC Bank USA, N.A. | US | 100 | $100 Common and $0.01 Preference | |||
| Latin America | ||||||
| HSBC Mexico, S.A., Institución de Banca Múltiple,<br><br>Grupo Financiero HSBC | Mexico | 99.99 | MXN2 Ordinary |
1Main subsidiaries are either held directly or indirectly via intermediate holding companies. There has been no material percentage change in HSBC’s
shareholding for its existing main subsidiaries since 2024.
2In addition to the strategic holding disclosed above, the Group held 0.07% (2024: 0.06%) shareholding as part of its trading books.
3Based on the latest corporate substantial shareholding notice filed with Hong Kong Exchange and Clearing Limited on 21 June 2024, the Group’s shareholding in
Hang Seng Bank on 18 June 2024 was 63.04%. Movements in our shareholding since 18 June 2024 are reflected in the above table. Hang Seng Bank became a
wholly owned subsidiary of the Group following the completion of the privatisation on 26 January 2026. See Note 37 for further details.
4Represents a wholly foreign owned limited liability company registered under the laws of People’s Republic of China.
Details of the debt, subordinated debt and preference shares issued by the main subsidiaries to parties external to the Group are included in Note
26 ‘Debt securities in issue’ and Note 29 ‘Subordinated liabilities’, respectively.
A list of all related undertakings is set out in Note 38. The principal countries and territories of operation are the same as the countries and
territories of incorporation except for HSBC Life (International) Limited, which operates mainly in Hong Kong.
HSBC is structured as a network of regional banks and locally incorporated regulated banking entities. Each bank is separately capitalised in
accordance with applicable prudential requirements and maintains a capital buffer consistent with the Group’s risk appetite for the relevant country
or region. HSBC’s capital management process is incorporated in the financial resource plan, which is approved by the Board.
HSBC Holdings is the primary provider of equity capital to its subsidiaries and also provides them with non-equity capital where necessary. These
investments are substantially funded by HSBC Holdings’ issuance of equity and non-equity capital, and by profit retention.
As part of its capital management process, HSBC Holdings seeks to maintain a balance between the composition of its capital and its investment
in subsidiaries. Subject to this, there is no current or foreseen impediment to HSBC Holdings’ ability to provide funding for such investments.
During 2025, consistent with the Group’s capital plan, the Group’s material subsidiaries did not experience any significant restrictions on paying
dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from
material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things,
their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.
The amount of guarantees by HSBC Holdings in favour of other Group entities is set out in Note 33.
Information on structured entities consolidated by HSBC where HSBC owns less than 50% of the voting rights is included in Note 20 ‘Structured
entities’. In each of these cases, HSBC controls and consolidates an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
Impairment testing of investments in subsidiaries
At each reporting period end, HSBC Holdings reviews investments in subsidiaries for indicators of impairment. An impairment is recognised when
the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment’s fair value less
costs of disposal and its VIU, in accordance with the requirements of IAS 36. The VIU is calculated by discounting management’s cash flow
projections for the investment. The cash flows represent the free cash flows based on the subsidiary’s binding capital requirements.
We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:
–Management’s judgement in estimating future cash flows: The cash flow projections for each investment are based on the latest approved
plans, which include forecast capital available for distribution based on the capital requirements of the subsidiary, taking into account minimum
and core capital requirements and factoring in reasonably possible uncertainties. For the impairment test as at 31 December 2025, cash flow
projections until the end of 2030 were considered in line with our internal planning horizon. Our cash flow projections include known and
observable climate-related opportunities and costs associated with our sustainable products and operating model.
–Long-term growth rates: The long-term growth rate is used to extrapolate the free cash flows in perpetuity because of the long-term
perspective of the legal entity. The growth rate reflects long-term inflation for the country or territory within which the investment operates.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 350 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
–Discount rates: The rate used to discount the cash flows is based on the cost of capital assigned to each investment, which is derived using a
CAPM and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-
free rate and a premium to reflect the inherent risk of the business being evaluated as well as leverage. These variables are based on the
market’s assessment of the economic variables and management’s judgement. The discount rates for each investment are refined to reflect
the rates of inflation for the countries or territories within which the investment operates. In addition, for the purposes of testing investments
for impairment, management supplements this process by comparing the discount rates derived using the internally generated CAPM, with
cost of capital rates produced by external sources for businesses operating in similar markets. The impacts from climate risk are included to the
extent that they are observable in discount rates and asset prices.
The carrying amount of HSBC Holdings’ investments in subsidiaries was $157.7bn at 31 December 2025 (2024: $152.3bn), an increase of $5.4bn
during the year, primarily reflecting additional capital contributions of $1.9bn to HSBC Asia Holdings Limited and $0.7bn to HSBC UK Bank plc,
together with a $2.8bn impairment reversal relating to HSBC Overseas Holdings (UK) Limited. The impairment reversal was driven by improved
business performance, revenue growth and continued cost discipline, which strengthened the outlook of its principal subsidiary HSBC North
America Holdings Inc. Cumulative impairment losses recognised for HSBC Overseas Holdings (UK) Limited were $18.8bn (2024: $21.6bn), with
the carrying amount increasing to $16.8bn (2024: $14bn).
| Impairment test results | |||
|---|---|---|---|
| Investments | Recoverable<br><br>amount | Discount<br><br>rate | Long-term<br><br>growth rate |
| $m | % | % | |
| HSBC North America Holdings Inc. | |||
| At 31 Dec 2025 | 16,016 | 10.91 | 2.30 |
| At 31 Dec 2024 | 13,264 | 11.00 | 2.25 |
Sensitivities of key assumptions in calculating VIU
At 31 December 2025, the recoverable amount of HSBC Overseas Holdings (UK) Limited remained sensitive to reasonably possible changes in
key assumptions impacting its principal subsidiary, HSBC North America Holdings Inc.
In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to
the model. These include the external range of observable discount rates, historical performance against forecast, and risks attached to the key
assumptions underlying cash flow.
The following table presents a summary of the key assumptions underlying the most sensitive inputs to the model for HSBC North America
Holdings Inc., the key risks attached to each, and details of a reasonably possible change to assumptions where, in the opinion of management,
these could result in a change in VIU.
| Reasonably possible changes in key assumptions | ||||
|---|---|---|---|---|
| Input | Key assumptions | Associated risks | Reasonably possible<br><br>change | |
| Investment | ||||
| HSBC North America Holdings Inc.<br><br>(subsidiary of HSBC Overseas<br><br>Holdings (UK) Limited) | Free cash flows projections | –Level of interest rates and<br><br>yield curves.<br><br>–Competitors’ positions<br><br>within the market. | –Strategic actions<br><br>relating to revenue and<br><br>costs are not achieved. | –Free cash flow<br><br>projections decrease<br><br>by 10%. |
| Discount rate | –Discount rate used is a<br><br>reasonable estimate of a<br><br>suitable market rate for<br><br>the profile of the<br><br>business. | –External evidence arises<br><br>to suggest that the rate<br><br>used is not appropriate<br><br>to the business. | –Discount rate<br><br>decreases by 1%. | |
| Sensitivity of VIU to reasonably possible changes in key assumptions | ||||
| --- | --- | --- | ||
| In $bn (unless otherwise stated) | At 31 Dec 2025 | At 31 Dec 2024 | ||
| HSBC North America Holdings Inc. | ||||
| VIU | 16.0 | 13.3 | ||
| Impact on VIU | ||||
| 100bps decrease in the discount rate – single variable1 | 1.8 | 1.5 | ||
| 10% decrease in forecast profitability – single variable1 | (1.6) | (1.3) |
1The recoverable amount of HSBC Overseas Holdings (UK) Limited represents the aggregate of recoverable amounts of the underlying subsidiaries. Single
variable sensitivity analysis on a single subsidiary may therefore not be representative of the aggregate impact of the change in the variable.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 351 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Subsidiaries with significant non-controlling interests | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| Hang Seng Bank Limited | ||||||
| Proportion of ownership interests and voting rights held by non-controlling interests (%)1 | 36.57 | 36.88 | ||||
| Place of business | Hong Kong | Hong Kong | ||||
| $m | $m | |||||
| Profit attributable to non-controlling interests | 770 | 905 | ||||
| Accumulated non-controlling interests of the subsidiary | 7,001 | 6,879 | ||||
| Dividends paid to non-controlling interests | 627 | 620 | ||||
| Summarised financial information: | ||||||
| – total assets | 231,786 | 229,069 | ||||
| – total liabilities | 211,124 | 208,908 | ||||
| – net operating income before changes in expected credit losses and other credit impairment charges | 5,336 | 5,249 | ||||
| – profit for the year | 2,097 | 2,434 | ||||
| – total comprehensive income for the year | 2,509 | 2,482 |
1This includes the Group’s shareholding held under trading books 0.07% (2024: 0.06%).
20Structured entities
HSBC is mainly involved with both consolidated and unconsolidated structured entities through the securitisation of financial assets, conduits and
investment funds, established either by HSBC or a third party.
Consolidated structured entities
| Total assets of HSBC’s consolidated structured entities, split by entity type | |||||
|---|---|---|---|---|---|
| Conduits | Securitisations | HSBC managed<br><br>funds | Other | Total | |
| $bn | $bn | $bn | $bn | $bn | |
| At 31 Dec 2025 | 1.8 | 8.6 | 3.5 | 5.9 | 19.8 |
| At 31 Dec 2024 | 2.4 | 7.0 | 7.2 | 1.8 | 18.4 |
Conduits
HSBC has established and manages two types of conduits: securities investment conduits (‘SICs’) and multi-seller conduits.
Securities investment conduits
The SICs purchase highly rated ABSs to facilitate tailored investment opportunities. At 31 December 2025, HSBC’s principal SIC, Solitaire, did not
hold any ABSs (2024: $0.7bn). Solitaire was previously funded entirely by commercial paper (‘CP’) issued to HSBC. At 31 December 2025, no CP
was held by HSBC (2024: $1.0bn).
Multi-seller conduit
HSBC’s multi-seller conduit was established to provide access to flexible market-based sources of finance for its clients. Currently, HSBC bears
risk equal to the transaction-specific facility offered to the multi-seller conduit, amounting to $6.4bn at 31 December 2025 (2024: $5.2bn). First loss
protection is provided by the originator of the assets, and not by HSBC, through transaction-specific credit enhancements. A layer of loss
protection is provided by HSBC in the form of a programme-wide enhancement facility.
Securitisations
HSBC uses structured entities to securitise customer loans and advances it originates in order to diversify its sources of funding for asset
origination and capital efficiency purposes. The loans and advances are transferred by HSBC to the structured entities for cash or synthetically, and
the structured entities issue debt securities to investors. Where synthetic securitisations are used, the credit risk associated with the loan portfolio
of assets is transferred to the structured entities through loan portfolio financial guarantees.
HSBC managed funds
HSBC has established a number of money market and non-money market funds. Where it is deemed to be acting as principal rather than agent in
its role as investment manager, HSBC controls these funds.
Other
HSBC has entered into a number of transactions in the normal course of business, which include asset and structured finance transactions where
it has control of the structured entity. In addition, HSBC is deemed to control a number of third-party managed funds through its involvement as a
principal in the funds.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 352 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Unconsolidated structured entities
The term ‘unconsolidated structured entities’ refers to all structured entities not controlled by HSBC. The Group enters into transactions with
unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.
| Nature and risks associated with HSBC interests in unconsolidated structured entities | |||||
|---|---|---|---|---|---|
| Total asset values of the entities ($m) | Securitisations | HSBC managed<br><br>funds | Non-HSBC<br><br>managed funds | Other | Total |
| 0–500 | 207 | 323 | 1,062 | 57 | 1,649 |
| 500–2,000 | 2 | 71 | 910 | 1 | 984 |
| 2,000–5,000 | — | 35 | 403 | 1 | 439 |
| 5,000–25,000 | — | 24 | 237 | — | 261 |
| 25,000+ | — | 6 | 41 | — | 47 |
| Number of entities at 31 Dec 2025 | 209 | 459 | 2,653 | 59 | 3,380 |
| $bn | $bn | $bn | $bn | $bn | |
| Total assets in relation to HSBC’s interests in the unconsolidated<br><br>structured entities | 9.4 | 12.4 | 21.8 | 2.8 | 46.4 |
| – trading assets | — | 0.2 | — | — | 0.2 |
| – financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | — | 7.9 | 19.5 | — | 27.4 |
| – loans and advances to customers | 9.4 | — | — | 1.5 | 10.9 |
| – financial investments | — | — | 0.4 | — | 0.4 |
| – assets held for sale | — | 4.3 | 1.9 | — | 6.2 |
| – other assets | — | — | — | 1.3 | 1.3 |
| Total liabilities in relation to HSBC’s interests in the<br><br>unconsolidated structured entities | — | — | — | 0.7 | 0.7 |
| – other liabilities | — | — | — | 0.7 | 0.7 |
| Other off-balance sheet commitments | — | 0.3 | 6.5 | 1.3 | 8.1 |
| HSBC’s maximum exposure at 31 Dec 2025 | 9.4 | 12.7 | 28.3 | 3.4 | 53.8 |
| Total asset values of the entities ($m) | |||||
| 0–500 | 167 | 344 | 1,215 | 46 | 1,772 |
| 500–2,000 | 2 | 75 | 911 | 2 | 990 |
| 2,000–5,000 | — | 30 | 348 | 1 | 379 |
| 5,000–25,000 | — | 21 | 212 | — | 233 |
| 25,000+ | — | 2 | 33 | — | 35 |
| Number of entities at 31 Dec 2024 | 169 | 472 | 2,719 | 49 | 3,409 |
| $bn | $bn | $bn | $bn | $bn | |
| Total assets in relation to HSBC’s interests in the unconsolidated<br><br>structured entities | 5.4 | 12.1 | 25.4 | 2.4 | 45.3 |
| – trading assets | — | 0.1 | — | — | 0.1 |
| – financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | — | 7.8 | 22.2 | — | 30.0 |
| – loans and advances to customers | 5.4 | — | 0.7 | 1.5 | 7.6 |
| – financial investments | — | 0.2 | 0.4 | — | 0.6 |
| – assets held for sale | — | 4.0 | 2.1 | — | 6.1 |
| – other assets | — | — | — | 0.9 | 0.9 |
| Total liabilities in relation to HSBC’s interests in the<br><br>unconsolidated structured entities | — | — | — | 0.4 | 0.4 |
| – other liabilities | — | — | — | 0.4 | 0.4 |
| Other off-balance sheet commitments | — | 1.0 | 8.1 | 1.3 | 10.4 |
| HSBC’s maximum exposure at 31 Dec 2024 | 5.4 | 13.1 | 33.5 | 3.3 | 55.3 |
The maximum exposure to loss from HSBC’s interests in unconsolidated structured entities represents the maximum loss it could incur as a result
of its involvement with these entities regardless of the probability of the loss being incurred.
–For commitments, guarantees and written credit default swaps, the maximum exposure to loss is the notional amount of potential future
losses.
–For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying amount
of these interests at the balance sheet reporting date.
The maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements that HSBC has entered into in order to
mitigate the Group’s exposure to loss.
Securitisations
HSBC has interests in unconsolidated securitisation vehicles through holding notes issued by these entities. In addition, HSBC has investments in
ABSs issued by third-party structured entities.
HSBC managed funds
HSBC establishes and manages money market funds and non-money market investment funds to provide customers with investment
opportunities. Further information on funds under management is provided on page 94.
HSBC, as fund manager, may be entitled to receive management and performance fees based on the assets under management. HSBC may also
retain units in these funds.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 353 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Non-HSBC managed funds
HSBC purchases and holds units of third-party managed funds in order to facilitate business and meet customer needs.
Other
HSBC has established structured entities in the normal course of business, such as structured credit transactions for customers, to provide finance
to public and private sector infrastructure projects, and for asset and structured finance transactions.
In addition to the interests disclosed above, HSBC enters into derivative contracts, reverse repos and stock borrowing transactions with structured
entities. These interests arise in the normal course of business for the facilitation of third-party transactions and risk management solutions.
HSBC sponsored structured entities
The amount of assets transferred to and income received from such sponsored structured entities during 2025 and 2024 was not significant.
21Goodwill and intangible assets
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Goodwill | 4,419 | 4,118 |
| Other intangible assets1 | 8,688 | 8,266 |
| At 31 Dec | 13,107 | 12,384 |
1Included within other intangible assets is internally generated software with a net carrying amount of $7.5bn (2024: $7.1bn). During the year, capitalisation of
internally generated software was $3.0bn (2024: $2.5bn), impairment was $0.4bn (2024: impairment of $67m) and amortisation was $2.4bn (2024: $2.0bn).
| Movement analysis of goodwill | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Gross amount | ||
| At 1 Jan | 18,626 | 19,560 |
| Exchange differences | 1,438 | (962) |
| Reclassified to held for sale and additions1 | (78) | 28 |
| At 31 Dec | 19,986 | 18,626 |
| Accumulated impairment losses | ||
| At 1 Jan | (14,508) | (15,237) |
| Exchange differences | (1,059) | 716 |
| Reclassified to held for sale1 | — | 13 |
| At 31 Dec | (15,567) | (14,508) |
| Net carrying amount at 31 Dec | 4,419 | 4,118 |
1For the year ended 31 December 2025, this includes goodwill reclassified to held for sale associated with the sale of HSBC Life (UK) Limited, the sale of HSBC
Assurance Vie (France), the sale of the retail banking business of The Hongkong and Shanghai Banking Corporation Limited, Sri Lanka branch, and the sale of
the custody business and private banking business in Germany. For the year ended 31 December 2024, this includes goodwill arising from the acquisition of
Silkroad, offset by goodwill reclassified to held for sale associated with the sales of HSBC Bank Armenia, the private banking business in Germany, and the
planned sale of HSBC Assurances Vie (France). For further details, see Note 23.
Goodwill
Impairment testing
The Group’s impairment test in respect of goodwill allocated to each cash-generating unit (‘CGU’) is performed at 1 October each year. A review
for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2025. No indicators of impairment were identified
as part of these reviews.
Basis of the recoverable amount
The recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use (‘VIU’) at each respective testing date. The
VIU is calculated by discounting management’s cash flow projections for the CGU. The key assumptions used in the VIU calculation for each
individually significant CGU that is not impaired are discussed below.
| Key assumptions in VIU calculation – significant CGUs at 1 October 20251 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Carrying<br><br>amount at<br><br>1 Oct 2025 | of which<br><br>goodwill | Value in<br><br>use at 1 Oct<br><br>2025 | Discount<br><br>rate | Growth<br><br>rate beyond<br><br>initial<br><br>cash flow | Carrying<br><br>amount at<br><br>1 Oct 2024 | of which<br><br>goodwill | Value in<br><br>use at 1 Oct<br><br>2024 | Discount<br><br>rate | Growth<br><br>rate beyond<br><br>initial cash flow<br><br>projections | |
| $m | $m | $m | % | % | $m | $m | $m | % | % | |
| HSBC UK<br><br>Bank plc – UK | 29,022 | 2,639 | 82,529 | 9.3 | 2.1 | N/A | N/A | N/A | N/A | N/A |
| HSBC UK<br><br>Bank plc –<br><br>WPB | N/A | N/A | N/A | N/A | N/A | 12,785 | 2,843 | 27,118 | 10.6 | 2.0 |
1Following change in the Group’s reportable segments effective from 1 January 2025 the Group’s CGUs are the Group’s reportable segments subdivided by
main legal entities.
At 1 October 2025, aggregate goodwill of $1.8bn (1 October 2024: $1.5bn) had been allocated to CGUs that were not considered individually
significant. The Group’s CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other than goodwill.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 354 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Management’s judgement in estimating the cash flows of a CGU
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but
does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability plans
approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and endorses
planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and
macroeconomic outlook. For the 1 October 2025 impairment test, cash flow projections until the end of 2030 were considered, in line with our
internal planning horizon. Key assumptions underlying cash flow projections reflect management’s outlook on interest rates and inflation, as well
as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and observable
climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS Accounting Standards,
estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity
has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring costs.
Discount rate
The rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing model
(‘CAPM’) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-
free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market’s assessment of the
economic variables and management’s judgement. The discount rates for each CGU are refined to reflect the rates of inflation for the countries
within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management supplements this process by
comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced by external sources for
businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable in discount rates and asset
prices.
Long-term growth rate
The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of business
units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it derives revenue.
Sensitivities of key assumptions in calculating VIU
At 1 October 2025, given the extent by which VIU exceeds carrying amount, HSBC UK Bank plc CGU was not sensitive to reasonably possible
adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to assumptions,
management considers the available evidence in respect of each input to the VIU calculation, such as the external range of discount rates
observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections. None of the
remaining CGUs are individually significant.
Other intangible assets
Impairment testing
Impairment of other intangible assets is assessed in accordance with our policy explained in Note 1.2(b) by comparing the net carrying amount of
CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or fair
value, as appropriate, for each CGU. No significant impairment was recognised during the year.
Key assumptions in VIU calculation
The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next
financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in
accordance with the requirements of IAS 36:
–Management’s judgement in estimating future cash flows: We considered past business performance, current market conditions and our
macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude
estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to carry
out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the benefit of
certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections include
known and observable climate-related opportunities and costs associated with our sustainable products and operating model.
–Long-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective of
the businesses within the Group.
–Discount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and
geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates and
asset prices.
Sensitivity of estimates relating to non-financial assets
As explained in Note 1.2(b), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for impairment.
Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use assets (see Note 22).
The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are no non-financial asset
balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in a material adjustment to
the results and financial position of the Group within the next financial year.
Non-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be
allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned
property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant. At
31 December 2025 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the recoverable
amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each
input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast and risks attaching to
the key assumptions underlying cash flow projections.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 355 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
22Prepayments, accrued income and other assets
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Prepayments and accrued income | 15,778 | 13,781 |
| Settlement accounts and items in course of collection from other banks | 29,961 | 19,050 |
| Cash collateral and margin receivables | 57,706 | 59,488 |
| Bullion | 34,917 | 16,841 |
| Endorsements and acceptances | 8,695 | 8,093 |
| Insurance contract assets (Note 4) | 118 | 132 |
| Reinsurance contract assets | 5,886 | 4,798 |
| Employee benefit assets (Note 5) | 8,246 | 7,548 |
| Right-of-use assets | 2,991 | 2,205 |
| Owned property, plant and equipment | 9,615 | 9,407 |
| Other accounts | 10,881 | 11,397 |
| At 31 Dec1 | 184,794 | 152,740 |
1Prepayments, accrued income and other assets include $120.0bn (2024: $109.3bn) of financial assets, the majority of which are measured at amortised cost.
23Assets held for sale, liabilities of disposal groups held for sale and
business acquisitions
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Held for sale at 31 Dec | ||
| Disposal groups | 9,713 | 27,126 |
| Unallocated impairment losses1 | (93) | (31) |
| Non-current assets held for sale | 1,495 | 139 |
| Assets held for sale | 11,115 | 27,234 |
| Liabilities of disposal groups held for sale | 23,382 | 29,011 |
1This represents impairment losses in excess of the carrying value of the non-current assets in scope of IFRS 5 for measurement, recognised against the total
assets of the disposal group.
Disposal groups
Retained portfolio of home and certain other loans in France
Following the sale of our French retail banking operations on 1 January 2024, HSBC Continental Europe retained a portfolio of home and certain
other loans, with a carrying value of €7.1bn ($8.3bn) at the time of sale. On 31 October 2025, HSBC Continental Europe completed the sale of its
retained portfolio to a consortium comprising Rothesay Life plc and CCF. Prior to their derecognition at completion, as at 30 September 2025,
related balances stood at $6.0bn in loans. The completion of the transaction resulted in the recycling of cumulative fair value losses of $1.5bn to
the income statement that were previously recognised through other comprehensive income. For the year ended 31 December 2025, we
additionally recognised a $0.1bn mark-to-market gain in ‘net income from financial instruments held for trading or managed on a fair value basis’
arising on certain non-qualifying economic hedges that were used to hedge interest rate risk on the portfolio. These non-qualifying economic
hedges were derecognised following completion of the transaction.
Other disposals
On 30 January 2026, HSBC Bank plc completed the sale of its UK life insurance entity, HSBC Life (UK) Limited, to Chesnara plc. Prior to
completion, as at 31 December 2025, the balances that remained classified as held for sale were $6.6bn in assets and $6.4bn in liabilities. For the
year ended 31 December 2025, we recognised a loss on disposal of $0.1bn. In the first quarter of 2026, we will recycle foreign currency translation
reserves to the income statement. These stood at a cumulative $0.2bn loss as at 31 December 2025.
On 27 November 2025, HSBC Bank Middle East Limited, Bahrain branch, completed the sale of its retail banking operations in Bahrain to Bank of
Bahrain and Kuwait B.S.C., recognising a pre-tax gain on disposal of $0.1bn.
On 31 October 2025, HSBC Continental Europe completed the sale of its French life insurance business, HSBC Assurances Vie (France), to
Matmut Société d’Assurance Mutuelle. Prior to their derecognition at completion, as at 30 September 2025, related balances stood at $28.2bn in
assets and $27.2bn in liabilities. For the year ended 31 December 2025, we recognised a $0.2bn pre-tax loss inclusive of migration costs and the
recycling of related reserves.
On 3 October 2025, HSBC Continental Europe completed the sale of its private banking business in Germany to BNP Paribas at which point we
recognised a pre-tax gain on disposal of $0.2bn. Prior to their derecognition at completion, as at 30 September 2025, related balances stood at
$1.5bn in assets and $1.5bn in liabilities.
On 24 September 2025, The Hongkong and Shanghai Banking Corporation Limited, Sri Lanka branch, entered into a binding agreement to sell its
retail banking business to Nations Trust Bank PLC. Regulatory approvals for the transaction have now been received, and completion is expected
in the first half 2026, at which point an estimated immaterial pre-tax gain on disposal will be recognised.
On 16 September 2025, HSBC Continental Europe signed a put option agreement with CrediaBank S.A. regarding the potential sale of its majority
shareholding of 70.03% in HSBC Bank Malta plc. On 22 December 2025, pursuant to the terms of the put option agreement and following
completion of HSBC Continental Europe's employee information and consultation process in France, a Sale and Purchase Agreement for the
transaction was signed. The transaction, which remains subject to regulatory approvals, did not meet the criteria for held for sale in the fourth
quarter of 2025, given completion is now expected in the first half of 2027. The sale is expected to generate an estimated pre-tax loss of $0.4bn,
inclusive of migration costs, which we expect to recognise largely in the first half of 2026 upon classification of the disposal group as held for sale.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 356 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
On 27 July 2025, HSBC Latin America Holdings (UK) Limited entered into a binding agreement to sell HSBC Bank (Uruguay) S.A. to a subsidiary of
BTG Pactual Holding SA. The disposal group met the held for sale criteria and an immaterial loss on disposal was recognised in the third quarter of
2025, with balances remaining classified as held for sale at 31 December 2025 of $2.1bn in assets and $2.0bn in liabilities. The transaction, which
is subject to regulatory approvals, is expected to complete in the second half of 2026.
On 11 July 2025, HSBC Continental Europe, a wholly-owned subsidiary of HSBC Bank plc, reached an agreement to sell its fund administration
business, Internationale Kapitalanlagegesellschaft mbH, to BlackFin Capital Partners S.A.S. The disposal group met the held for sale criteria in the
third quarter of 2025, with immaterial balances remaining classified as held for sale at 31 December 2025. This transaction, which remains subject
to regulatory approval, is expected to complete in the second half of 2026, at which point an immaterial gain on disposal will be recognised.
On 27 June 2025, HSBC Continental Europe reached an agreement to sell its custody business in Germany to BNP Paribas. This transaction is
anticipated to be completed in a phased manner, starting in the first quarter of 2026. While client consent and related operational requirements
may extend the timing for completion of all client transfers, given the signing of a sale and purchase agreement, the disposal group met the held
for sale criteria in the second quarter of 2025, with balances remaining classified as held for sale at 31 December 2025 of $0.4bn in assets and
$12.5bn in liabilities. The sale is expected to generate an estimated pre-tax gain on disposal of $0.1bn, which will be recognised in line with
completion of client transfers.
On 25 September 2024, HSBC Bank plc reached an agreement to transfer its business in South Africa to local lender FirstRand Bank Ltd. The
disposal group met held for sale criteria in the fourth quarter of 2024, with balances remaining classified as held for sale at 31 December 2025 of
$0.4bn in assets and $2.1bn in liabilities. The transaction is expected to complete in the first quarter of 2026. Upon subsequent wind-down of the
entity, expected in the second half of 2026, cumulative foreign currency translation reserves and other reserves will recycle to the income
statement. At 31 December 2025, foreign currency translation reserve and other reserve losses stood at $0.1bn.
At 31 December 2025, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment losses,
were as follows:
| South<br><br>Africa1 | German<br><br>custody<br><br>business2 | Uruguay | UK life<br><br>insurance<br><br>business | Sri Lanka<br><br>retail<br><br>banking<br><br>business | Other | Total | |
|---|---|---|---|---|---|---|---|
| $m | $m | $m | $m | $m | $m | $m | |
| Assets of disposal groups held for sale | |||||||
| Cash and balances at central banks | — | — | 335 | — | 2 | — | 337 |
| Trading assets | — | — | 113 | — | — | — | 113 |
| Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | — | — | — | 6,351 | — | — | 6,351 |
| Derivatives | 8 | — | 6 | — | — | — | 14 |
| Loans and advances to banks | — | 16 | 29 | — | — | — | 45 |
| Loans and advances to customers | 431 | 323 | 1,314 | — | 101 | 21 | 2,190 |
| Financial investments | — | — | 294 | — | — | — | 294 |
| Goodwill | — | — | — | — | 3 | — | 3 |
| Prepayments, accrued income and other assets | 3 | 17 | 51 | 273 | 15 | 7 | 366 |
| Total assets at 31 Dec 2025 | 442 | 356 | 2,142 | 6,624 | 121 | 28 | 9,713 |
| Liabilities of disposal groups held for sale | |||||||
| Deposits by banks | — | 116 | 15 | — | — | — | 131 |
| Customer accounts | 2,056 | 12,316 | 1,369 | — | 430 | 2 | 16,173 |
| Financial liabilities designated at fair value | — | — | — | 1,345 | — | — | 1,345 |
| Derivatives | 13 | — | 3 | — | — | — | 16 |
| Debt securities in issue | — | — | 495 | — | — | — | 495 |
| Insurance contract liabilities | — | — | — | 4,925 | — | — | 4,925 |
| Accruals, deferred income and other liabilities | 13 | 33 | 77 | 116 | 40 | 18 | 297 |
| Total liabilities at 31 Dec 2025 | 2,082 | 12,465 | 1,959 | 6,386 | 470 | 20 | 23,382 |
| Expected date of completion | First quarter<br><br>of 2026 | First half of<br><br>2027 | Second half<br><br>of 2026 | First quarter<br><br>of 2026 | First half of<br><br>2026 | ||
| Operating segment | CIB and<br><br>Corporate<br><br>Centre | CIB | Corporate<br><br>Centre | IWPB | IWPB | ||
| HSBC Holdings plc Annual Report on Form 20-F | |||||||
| --- | |||||||
| 357 | |||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |
| --- | --- | --- | --- | --- | --- | --- | |
| Notes on the financial statements |
At 31 December 2024, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment losses,
were as follows:
| French life<br><br>insurance business | Germany private<br><br>banking business | South Africa1 | Other | Total | |
|---|---|---|---|---|---|
| $m | $m | $m | $m | $m | |
| Assets of disposal groups held for sale | |||||
| Cash and balances at central banks | — | 1,896 | — | — | 1,896 |
| Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss | 14,560 | — | — | — | 14,560 |
| Derivatives | 26 | — | 10 | — | 36 |
| Loans and advances to banks | 144 | — | — | — | 144 |
| Loans and advances to customers | — | 309 | 656 | — | 965 |
| Financial investments | 8,500 | — | — | — | 8,500 |
| Goodwill | — | 5 | — | — | 5 |
| Prepayments, accrued income and other assets | 992 | 21 | 7 | — | 1,020 |
| Total assets at 31 Dec 2024 | 24,222 | 2,231 | 673 | — | 27,126 |
| Liabilities of disposal groups held for sale | |||||
| Customer accounts | — | 2,085 | 3,294 | 20 | 5,399 |
| Financial liabilities designated at fair value | 11 | 119 | — | — | 130 |
| Derivatives | — | — | 19 | — | 19 |
| Insurance contract liabilities | 21,811 | — | — | — | 21,811 |
| Accruals, deferred income and other liabilities | 1,598 | 22 | 32 | — | 1,652 |
| Total liabilities at 31 Dec 2024 | 23,420 | 2,226 | 3,345 | 20 | 29,011 |
| Date of completion | 31 October 2025 | 31 October 2025 | First quarter<br><br>of 2026 | ||
| Operating segment | IWPB | IWPB | CIB and<br><br>Corporate<br><br>Centre |
1Under the financial terms of the sale of our South Africa business, HSBC Bank plc will transfer the business with a net nil asset value at book value less any
provisions. The purchase price for the asset value of $0.4bn will be satisfied by the transfer of agreed liabilities of $2.1bn. Any required increase to the net asset
value of the business to achieve this will be satisfied by the inclusion of additional cash. Based upon the net liabilities of the disposal group at 31 December
2025, HSBC Bank plc would be expected to include a cash contribution of $1.7bn.
2 Under the financial terms of the sale of our German custody business, HSBC Continental Europe will transfer a nil net asset value for each client transferred, by
way of inclusion of additional cash.
24Trading liabilities
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Deposits by banks1 | 9,353 | 7,671 |
| Customer accounts1 | 10,089 | 10,709 |
| Other debt securities in issue (Note 26) | 40 | 73 |
| Other liabilities – net short positions in securities | 52,640 | 47,529 |
| At 31 Dec | 72,122 | 65,982 |
1‘Deposits by banks’ and ‘Customer accounts’ include repos, stock lending and other amounts.
25Financial liabilities designated at fair value
| HSBC | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Deposits by banks and customer accounts1 | 27,491 | 23,773 |
| Liabilities to customers under investment contracts | 5,288 | 5,931 |
| Debt securities in issue (Note 26) | 116,502 | 99,706 |
| Subordinated liabilities (Note 29) | 9,175 | 9,317 |
| At 31 Dec | 158,456 | 138,727 |
1Structured deposits placed at HSBC Bank USA are insured by the Federal Deposit Insurance Corporation, a US government agency, up to $250,000 per
depositor.
The carrying amount of financial liabilities designated at fair value was $2,691m less than the contractual amount at maturity (2024: $4,365m less).
The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $2,252m (2024: loss of $1,655m).
| HSBC Holdings | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Debt securities in issue (Note 26) | 44,687 | 33,268 |
| Subordinated liabilities (Note 29) | 8,220 | 8,314 |
| At 31 Dec | 52,907 | 41,582 |
The carrying amount of financial liabilities designated at fair value was $1,161m more than the contractual amount at maturity (2024: $17m less).
The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $430m (2024: $540m).
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 358 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
26Debt securities in issue
| HSBC | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| Bonds and medium-term notes | 185,974 | 163,903 |
| Other debt securities in issue | 30,243 | 41,661 |
| Total debt securities in issue | 216,217 | 205,564 |
| Included within: | ||
| – trading liabilities (Note 24) | (40) | (73) |
| – financial liabilities designated at fair value (Note 25) | (116,502) | (99,706) |
| At 31 Dec | 99,675 | 105,785 |
| HSBC Holdings | ||
| --- | --- | --- |
| 2025 | 2024 | |
| $m | $m | |
| Debt securities | 113,711 | 97,588 |
| Included within: | ||
| – financial liabilities designated at fair value (Note 25) | (44,687) | (33,268) |
| At 31 Dec | 69,024 | 64,320 |
27Accruals, deferred income and other liabilities
| 2025 | 2024 | |
|---|---|---|
| $m | $m | |
| Accruals and deferred income | 16,143 | 16,277 |
| Settlement accounts and items in course of transmission to other banks | 30,246 | 24,692 |
| Cash collateral and margin payables | 60,841 | 58,040 |
| Endorsements and acceptances | 8,708 | 8,102 |
| Employee benefit liabilities (Note 5) | 1,071 | 1,017 |
| Reinsurance contract liabilities | 682 | 701 |
| Lease liabilities | 3,320 | 2,459 |
| Other liabilities | 21,112 | 19,052 |
| At 31 Dec1 | 142,123 | 130,340 |
1Accruals, deferred income and other liabilities include $133.5bn (2024: $122.1bn) of financial liabilities, the majority of which are measured at amortised cost.
28 Provisions
| Restructuring<br><br>costs | Legal proceedings<br><br>and regulatory<br><br>matters | Customer<br><br>remediation | Other<br><br>provisions | Total | |
|---|---|---|---|---|---|
| $m | $m | $m | $m | $m | |
| Provisions (excluding contractual commitments) | |||||
| At 1 Jan 2025 | 199 | 295 | 85 | 457 | 1,036 |
| Additions | 991 | 1,580 | 39 | 174 | 2,784 |
| Amounts utilised | (525) | (194) | (25) | (64) | (808) |
| Unused amounts reversed | (108) | (47) | (34) | (68) | (257) |
| Exchange and other movements | 21 | 28 | 4 | (2) | 51 |
| At 31 Dec 2025 | 578 | 1,662 | 69 | 497 | 2,806 |
| Contractual commitments1 | |||||
| At 1 Jan 2025 | 688 | ||||
| Net change in expected credit loss provision and other movements | (53) | ||||
| At 31 Dec 2025 | 635 | ||||
| Total provisions | |||||
| At 31 Dec 2024 | 1,724 | ||||
| At 31 Dec 2025 | 3,441 | ||||
| Provisions (excluding contractual commitments) | |||||
| --- | --- | --- | --- | --- | --- |
| At 1 Jan 2024 | 284 | 380 | 130 | 420 | 1,214 |
| Additions | 181 | 205 | 36 | 203 | 625 |
| Amounts utilised | (193) | (228) | (48) | (105) | (574) |
| Unused amounts reversed | (63) | (63) | (35) | (82) | (243) |
| Exchange and other movements | (10) | 1 | 2 | 21 | 14 |
| At 31 Dec 2024 | 199 | 295 | 85 | 457 | 1,036 |
| Contractual commitments1 | |||||
| At 1 Jan 2024 | 527 | ||||
| Net change in expected credit loss provision and other movements | 161 | ||||
| At 31 Dec 2024 | 688 | ||||
| Total provisions | |||||
| At 31 Dec 2023 | 1,741 | ||||
| At 31 Dec 2024 | 1,724 |
1Contractual commitments include the expected credit loss provision in relation to off-balance sheet financial guarantee contracts and commitments to which the
impairment requirements in IFRS 9 are applied; and provisions for performance and other guarantee contracts.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 359 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Further details of ‘Legal proceedings and regulatory matters’ are set out in Note 35. Legal proceedings include civil court, arbitration or tribunal
proceedings brought against HSBC companies (whether by way of claim or counterclaim); or civil disputes that may, if not settled, result in court,
arbitration or tribunal proceedings. ‘Regulatory matters’ refers to investigations, reviews and other actions carried out by, or in response to, the
actions of regulators or law enforcement agencies in connection with alleged wrongdoing by HSBC.
Customer remediation refers to HSBC’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 in response to customer complaints and/or industry
developments in sales practices, and is not necessarily initiated by regulatory action.
For further details of the impact of IFRS 9 on undrawn loan commitments and financial guarantees, presented in ‘Contractual commitments’, see
Note 33. Further analysis of the movement in the expected credit loss provision is disclosed within the ‘Reconciliation of changes in gross carrying/
nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees‘ table on
page 158.
Brazil PIS and COFINS tax matters
Beginning in the late 1990s, HSBC Bank Brasil S.A. – Banco Múltiplo (‘HSBC Brazil’) and other financial services firms brought legal proceedings in
Brazil challenging the assessment of Contribution to the Social Integration Programme (‘PIS’) and Contribution for the Financing of Social Security
(‘COFINS’) taxes, which are federal taxes imposed on gross revenues earned by legal entities in Brazil. The Supreme Court of Brazil selected three
cases – one involving an insurer, in 2007, and two involving other banks, in 2011 – to set standards that would apply to all of these proceedings. In
June 2023, the court ruled against the financial services firms in all three cases. The standards set by the court in this ruling have not yet been
applied to HSBC Brazil’s legacy cases, liability for which remained with HSBC after the sale of HSBC’s operations in Brazil to Bradesco in 2016. In
May 2025, the first instance judicial court delivered a favourable judgment in HSBC Brazil’s second largest legacy PIS and COFINS case, which has
been appealed by the Brazilian Tax Authority. There are many factors that may affect the range of outcomes and any resulting financial impact for
HSBC. Based upon the information currently available, a provision was recognised in respect of one legacy case. The remaining additional tax
liability subject to challenge on all legacy PIS and COFINS cases is up to $0.4bn. As at 31 December 2025, no provision has been booked for this
amount.
Bernard L. Madoff Investment Securities LLC
In a 2009 lawsuit in Luxembourg relating to the Bernard L. Madoff Investment Securities LLC fraud, HSBC Securities Services Luxembourg
(‘HSSL’) is defending a claim brought by Herald Fund SPC (‘Herald’) for restitution of securities and $521m in cash (plus interest) or, alternatively
damages in the amount of $5.6bn (plus interest). On 24 October 2025, the Luxembourg Court of Cassation denied HSSL’s appeal in respect of
Herald’s securities restitution claim, but accepted HSSL’s appeal in respect of Herald’s cash restitution claim. HSSL will now pursue a second
appeal before the Luxembourg Court of Appeal. If HSSL is unsuccessful in that second appeal, it will contest the amount HSSL is required to pay
in subsequent proceedings before the Court of Appeal. Following this development, we recognised a $1.1bn provision. Given the pendency of the
second appeal and the complexities and uncertainties associated with determining the quantum of restitution, the eventual financial impact could
be significantly different.
Tax-related investigations
Since 2023 the French National Financial Prosecutor (‘PNF’) had been investigating HSBC Continental Europe and the Paris branch of HSBC Bank
plc in connection with the dividend withholding tax treatment of certain historical trading activities. During the year a provision of $0.3bn was
recognised, and in January 2026 HSBC Bank plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of
€302m and the matter is now closed.
29Subordinated liabilities
| HSBC’s subordinated liabilities | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| At amortised cost | 28,406 | 25,958 |
| – subordinated liabilities | 27,467 | 25,080 |
| – preferred securities | 939 | 878 |
| Designated at fair value (Note 25) | 9,175 | 9,317 |
| – subordinated liabilities | 9,175 | 9,317 |
| At 31 Dec | 37,581 | 35,275 |
| Issued by HSBC subsidiaries | 2,978 | 3,144 |
| Issued by HSBC Holdings | 34,603 | 32,131 |
Subordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called and
redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed at the
first call date, coupons payable may reset or become floating rate based on relevant market rates. On subordinated liabilities other than floating
rate notes, interest is payable at fixed rates of up to 8.201%.
The balance sheet amounts disclosed in the following table are presented on an IFRS basis and do not reflect the amount that the instruments
contribute to regulatory capital, principally due to regulatory amortisation and regulatory eligibility limits.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 360 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| HSBC’s subordinated liabilities: subsidiaries | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| Additional tier 1 capital securities issued by HSBC subsidiaries | 819 | 732 | ||||
| Tier 2 securities issued by HSBC subsidiaries | ||||||
| – Tier 2 securities issued by HSBC Bank plc | 497 | 715 | ||||
| – Tier 2 securities issued by HSBC Bank USA Inc | 224 | 223 | ||||
| – Tier 2 securities issued by HSBC Bank USA N.A. | 1,438 | 1,431 | ||||
| Securities issued by other HSBC subsidiaries | — | 43 | ||||
| Subordinated liabilities issued by HSBC subsidiaries at 31 Dec | 2,978 | 3,144 | ||||
| HSBC Holdings’ subordinated liabilities | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| At amortised cost | 26,114 | 23,548 | ||||
| Designated at fair value (Note 25) | 8,220 | 8,314 | ||||
| At 31 Dec1 | 34,334 | 31,862 |
1This includes Tier 2 securities.
Guaranteed by HSBC Bank plc
Capital securities guaranteed by HSBC Bank plc were issued by a Jersey limited partnership. The proceeds of these were lent to the guarantor by
the limited partnership in the form of subordinated notes. These capital securities qualified as additional tier 1 capital for HSBC and HSBC Bank plc
(on a solo and a consolidated basis) under CRR II until 31 December 2021 by virtue of the grandfathering provision. Since 31 December 2021,
these securities have no longer qualified as regulatory capital for HSBC or HSBC Bank plc.
As at 31 December 2025 the preferred securities are intended to provide investors with rights to income and capital distributions, as well as
distributions upon liquidation of the issuer that are equivalent to the rights that they would have had if they had purchased non-cumulative
perpetual preference shares of the issuer. There are limitations on the payment of distributions if such payments are prohibited under UK banking
regulations or other requirements, if a payment would cause a breach of HSBC Bank plc’s capital adequacy requirements, or if HSBC Bank plc has
insufficient distributable reserves (as defined).
HSBC Bank plc have covenanted that, if prevented under certain circumstances from paying distributions on the preferred securities in full, they
will not pay dividends or other distributions in respect of their ordinary shares, or repurchase or redeem their ordinary shares, until the distribution
on the preferred securities has been paid in full.
If the preferred securities are outstanding in November 2048, or if the total capital ratio of HSBC Bank plc (on a solo or consolidated basis) falls
below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that proceedings have not been
commenced for the liquidation, dissolution or winding up of HSBC Bank plc, the holders’ interests in the preferred security will be exchanged for
interests in preference shares issued by HSBC Bank plc that have economic terms which are in all material respects equivalent to the preferred
security and its guarantee.
Tier 2 securities
Tier 2 capital securities are dated subordinated securities on which there is an obligation to pay coupons. These capital securities are included
within HSBC’s regulatory capital base as tier 2 capital under CRR II. CRR II grandfathering provisions expired on 26 June 2025 and previously
grandfathered securities are now ineligible as regulatory capital for HSBC. In accordance with CRR II, the capital contribution of all tier 2 securities
is amortised for regulatory purposes in their final five years before maturity.
30Maturity analysis of assets, liabilities and off-balance sheet commitments
The table on page 361 provides an analysis of consolidated total assets, liabilities and off-balance sheet commitments by residual contractual
maturity at the balance sheet date. These balances are included in the maturity analysis as follows:
–Trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the
‘Due not more than 1 month’ time bucket because trading balances are typically held for short periods of time.
–Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the ‘Due over 5 years’ time bucket.
Undated or perpetual instruments are classified based on the contractual notice period, which the counterparty of the instrument is entitled to
give. Where there is no contractual notice period, undated or perpetual contracts are included in the ‘Due over 5 years’ time bucket.
–Non-financial assets and liabilities with no contractual maturity are included in the ‘Due over 5 years’ time bucket.
–Financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual maturity
of the underlying instruments and not on the basis of the disposal transaction.
–Liabilities under insurance contracts included in ‘non-financial liabilities’ are irrespective of contractual maturity included in the ‘Due over 5
years’ time bucket in the maturity table provided below. An analysis of the present value of expected future cash flows of insurance contract
liabilities and contractual service margin is provided on page 319. Liabilities under investment contracts are classified in accordance with their
contractual maturity. Undated investment contracts are included in the ‘Due over 5 years’ time bucket, although such contracts are subject to
surrender and transfer options by the policyholders.
–Loan and other credit-related commitments are classified on the basis of the earliest date they can be drawn down.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 361 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC
| Maturity analysis of assets, liabilities and off-balance sheet commitments | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Due not<br><br>more<br><br>than<br><br>1 month | Due over<br><br>1 month<br><br>but not<br><br>more<br><br>than<br><br>3 months | Due over<br><br>3 months<br><br>but not<br><br>more<br><br>than<br><br>6 months | Due over<br><br>6 months<br><br>but not<br><br>more<br><br>than<br><br>9 months | Due over<br><br>9 months<br><br>but not<br><br>more<br><br>than<br><br>1 year | Due over<br><br>1 year<br><br>but not<br><br>more<br><br>than<br><br>2 years | Due over<br><br>2 years<br><br>but not<br><br>more<br><br>than<br><br>5 years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Financial assets | |||||||||
| Cash and balances at central banks | 242,859 | — | — | — | — | — | — | — | 242,859 |
| Hong Kong Government certificates of<br><br>indebtedness | 44,063 | — | — | — | — | — | — | — | 44,063 |
| Trading assets | 358,864 | 4,209 | 1,551 | 646 | 349 | 534 | — | — | 366,153 |
| Financial assets designated and otherwise<br><br>mandatorily measured at fair value through profit<br><br>or loss | 7,659 | 1,002 | 2,061 | 1,273 | 1,041 | 6,097 | 10,937 | 102,993 | 133,063 |
| Derivatives | 234,390 | 149 | 176 | 151 | 79 | 287 | 2,339 | 169 | 237,740 |
| Loans and advances to banks | 74,341 | 13,842 | 5,664 | 4,899 | 3,056 | 2,675 | 3,293 | 692 | 108,462 |
| Loans and advances to customers | 150,457 | 70,926 | 59,646 | 36,257 | 36,897 | 96,320 | 186,262 | 351,634 | 988,399 |
| – personal | 50,268 | 11,938 | 8,704 | 7,160 | 6,295 | 21,281 | 55,491 | 310,594 | 471,731 |
| – corporate and commercial | 86,383 | 50,794 | 41,517 | 19,824 | 23,073 | 54,426 | 108,282 | 32,680 | 416,979 |
| – financial | 13,806 | 8,194 | 9,425 | 9,273 | 7,529 | 20,613 | 22,489 | 8,360 | 99,689 |
| Reverse repurchase agreements – non-trading | 199,154 | 41,434 | 20,115 | 9,474 | 5,575 | 12,837 | 9,803 | — | 298,392 |
| Financial investments | 41,092 | 75,509 | 44,525 | 20,166 | 17,973 | 62,079 | 199,798 | 106,069 | 567,211 |
| Assets held for sale1 | 1,279 | 559 | 418 | 246 | 737 | 365 | 904 | 6,303 | 10,811 |
| Accrued income and other financial assets | 103,776 | 7,104 | 4,989 | 817 | 715 | 350 | 593 | 1,664 | 120,008 |
| Financial assets at 31 Dec 2025 | 1,457,934 | 214,734 | 139,145 | 73,929 | 66,422 | 181,544 | 413,929 | 569,524 | 3,117,161 |
| Non-financial assets | — | — | — | — | — | — | — | 115,873 | 115,873 |
| Total assets at 31 Dec 2025 | 1,457,934 | 214,734 | 139,145 | 73,929 | 66,422 | 181,544 | 413,929 | 685,397 | 3,233,034 |
| Off-balance sheet commitments received | |||||||||
| Loan and other credit-related commitments | 52,535 | — | — | — | — | — | — | — | 52,535 |
| Financial liabilities | |||||||||
| Hong Kong currency notes in circulation | 44,063 | — | — | — | — | — | — | — | 44,063 |
| Deposits by banks | 81,954 | 2,433 | 972 | 104 | 83 | 6,518 | 1,653 | 4,235 | 97,952 |
| Customer accounts | 1,518,208 | 162,033 | 62,389 | 19,424 | 17,348 | 5,042 | 2,249 | 135 | 1,786,828 |
| – personal | 697,222 | 110,013 | 47,005 | 14,460 | 12,118 | 4,128 | 2,108 | — | 887,054 |
| – corporate and commercial | 623,088 | 38,493 | 13,242 | 3,597 | 3,146 | 686 | 88 | 134 | 682,474 |
| – financial | 197,898 | 13,527 | 2,142 | 1,367 | 2,084 | 228 | 53 | 1 | 217,300 |
| Repurchase agreements – non-trading | 180,780 | 12,964 | 10,257 | 619 | 174 | 180 | — | — | 204,974 |
| Trading liabilities | 68,054 | 2,093 | 1,975 | — | — | — | — | — | 72,122 |
| Financial liabilities designated at fair value | 23,306 | 12,208 | 8,709 | 4,775 | 5,877 | 21,508 | 39,904 | 42,169 | 158,456 |
| – debt securities in issue: unsecured | 8,380 | 7,958 | 7,169 | 3,608 | 3,854 | 18,928 | 35,405 | 30,671 | 115,973 |
| – subordinated liabilities and preferred<br><br>securities | 1 | — | — | — | 895 | 892 | 1,185 | 6,202 | 9,175 |
| – other | 14,925 | 4,250 | 1,540 | 1,167 | 1,128 | 1,688 | 3,314 | 5,296 | 33,308 |
| Derivatives | 235,555 | 97 | 89 | 13 | 39 | 128 | 245 | 1,688 | 237,854 |
| Debt securities in issue | 5,912 | 4,399 | 6,892 | 3,999 | 4,955 | 8,039 | 32,934 | 32,545 | 99,675 |
| – covered bonds | — | — | — | — | — | 670 | 1,537 | — | 2,207 |
| – otherwise secured | 507 | 43 | 62 | 58 | 338 | 201 | 691 | 2,401 | 4,301 |
| – unsecured | 5,405 | 4,356 | 6,830 | 3,941 | 4,617 | 7,168 | 30,706 | 30,144 | 93,167 |
| Liabilities of disposal groups held for sale2 | 15,901 | 404 | 145 | 32 | 98 | 10 | 118 | 1,626 | 18,334 |
| Accruals and other financial liabilities | 110,867 | 11,030 | 5,050 | 1,019 | 1,037 | 820 | 2,230 | 1,470 | 133,523 |
| Subordinated liabilities | — | — | — | — | — | 2 | 906 | 27,498 | 28,406 |
| Total financial liabilities at 31 Dec 2025 | 2,284,600 | 207,661 | 96,478 | 29,985 | 29,611 | 42,247 | 80,239 | 111,366 | 2,882,187 |
| Non-financial liabilities | — | — | — | — | — | — | — | 145,181 | 145,181 |
| Total liabilities at 31 Dec 2025 | 2,284,600 | 207,661 | 96,478 | 29,985 | 29,611 | 42,247 | 80,239 | 256,547 | 3,027,368 |
| Off-balance sheet commitments given | |||||||||
| Loan and other credit-related commitments | 948,261 | 67 | 20 | 30 | 43 | 10 | 190 | 16 | 948,637 |
| – personal | 272,532 | — | — | — | — | — | — | — | 272,532 |
| – corporate and commercial | 516,435 | 67 | 20 | 30 | 43 | 10 | 190 | 16 | 516,811 |
| – financial | 159,294 | — | — | — | — | — | — | — | 159,294 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
| --- | |||||||||
| 362 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements | |||||||||
| Maturity analysis of assets, liabilities and off-balance sheet commitments (continued) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Due not<br><br>more than<br><br>1 month | Due over<br><br>1 month<br><br>but not<br><br>more than<br><br>3 months | Due over<br><br>3 months<br><br>but not<br><br>more than<br><br>6 months | Due over<br><br>6 months<br><br>but not<br><br>more than<br><br>9 months | Due over<br><br>9 months<br><br>but not<br><br>more than<br><br>1 year | Due over<br><br>1 year<br><br>but not<br><br>more than<br><br>2 years | Due over<br><br>2 years<br><br>but not<br><br>more than<br><br>5 years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Financial assets | |||||||||
| Cash and balances at central banks | 267,674 | — | — | — | — | — | — | — | 267,674 |
| Hong Kong Government certificates of<br><br>indebtedness | 42,293 | — | — | — | — | — | — | — | 42,293 |
| Trading assets | 311,277 | 1,374 | 679 | 337 | 774 | 401 | — | — | 314,842 |
| Financial assets designated and otherwise<br><br>mandatorily measured at fair value through profit<br><br>or loss | 6,329 | 1,497 | 1,218 | 810 | 1,570 | 4,010 | 11,503 | 88,832 | 115,769 |
| Derivatives | 264,689 | 401 | 709 | 377 | 164 | 364 | 524 | 1,409 | 268,637 |
| Loans and advances to banks | 69,778 | 16,300 | 3,871 | 4,264 | 2,922 | 2,276 | 2,236 | 392 | 102,039 |
| Loans and advances to customers | 135,250 | 69,955 | 53,557 | 36,945 | 38,985 | 89,061 | 176,645 | 330,260 | 930,658 |
| – personal | 45,221 | 10,236 | 7,634 | 6,705 | 6,197 | 19,683 | 53,434 | 295,588 | 444,698 |
| – corporate and commercial | 78,170 | 52,618 | 38,440 | 22,858 | 25,292 | 54,832 | 102,637 | 29,102 | 403,949 |
| – financial | 11,859 | 7,101 | 7,483 | 7,382 | 7,496 | 14,546 | 20,574 | 5,570 | 82,011 |
| Reverse repurchase agreements – non-trading | 179,590 | 36,552 | 15,054 | 3,715 | 6,659 | 7,400 | 3,579 | — | 252,549 |
| Financial investments | 35,780 | 74,850 | 50,650 | 15,907 | 20,465 | 54,125 | 143,870 | 97,519 | 493,166 |
| Assets held for sale1 | 2,711 | 170 | 215 | 401 | 711 | 513 | 2,465 | 19,170 | 26,356 |
| Accrued income and other financial assets | 94,803 | 6,831 | 4,127 | 648 | 579 | 498 | 346 | 1,504 | 109,336 |
| Financial assets at 31 Dec 2024 | 1,410,174 | 207,930 | 130,080 | 63,404 | 72,829 | 158,648 | 341,168 | 539,086 | 2,923,319 |
| Non-financial assets | — | — | — | — | — | — | — | 93,729 | 93,729 |
| Total assets at 31 Dec 2024 | 1,410,174 | 207,930 | 130,080 | 63,404 | 72,829 | 158,648 | 341,168 | 632,815 | 3,017,048 |
| Off-balance sheet commitments received | |||||||||
| Loan and other credit-related commitments | 41,875 | — | — | — | — | — | — | — | 41,875 |
| Financial liabilities | |||||||||
| Hong Kong currency notes in circulation | 42,293 | — | — | — | — | — | — | — | 42,293 |
| Deposits by banks | 54,714 | 1,595 | 2,227 | 653 | 3,924 | 507 | 9,919 | 458 | 73,997 |
| Customer accounts | 1,382,204 | 168,423 | 58,928 | 19,062 | 17,389 | 6,482 | 2,353 | 114 | 1,654,955 |
| – personal | 640,031 | 111,341 | 41,429 | 13,429 | 11,109 | 3,983 | 1,981 | — | 823,303 |
| – corporate and commercial | 564,693 | 45,047 | 14,708 | 3,991 | 4,748 | 1,968 | 332 | 106 | 635,593 |
| – financial | 177,480 | 12,035 | 2,791 | 1,642 | 1,532 | 531 | 40 | 8 | 196,059 |
| Repurchase agreements – non-trading | 168,075 | 10,340 | 1,176 | 450 | 473 | 171 | — | 195 | 180,880 |
| Trading liabilities | 58,069 | 4,933 | 2,873 | 7 | 100 | — | — | — | 65,982 |
| Financial liabilities designated at fair value | 19,037 | 8,732 | 5,890 | 4,765 | 5,600 | 17,013 | 43,274 | 34,416 | 138,727 |
| – debt securities in issue: unsecured | 8,431 | 4,148 | 3,557 | 2,885 | 4,362 | 14,660 | 38,259 | 22,866 | 99,168 |
| – subordinated liabilities and preferred<br><br>securities | — | — | — | 1,011 | — | 886 | 1,871 | 5,548 | 9,316 |
| – other | 10,606 | 4,584 | 2,333 | 869 | 1,238 | 1,467 | 3,144 | 6,002 | 30,243 |
| Derivatives | 262,928 | 2 | 6 | 3 | 1 | 43 | 192 | 1,273 | 264,448 |
| Debt securities in issue | 5,761 | 10,915 | 10,330 | 7,332 | 7,239 | 14,724 | 22,311 | 27,173 | 105,785 |
| – covered bonds | — | — | — | — | — | — | 1,253 | — | 1,253 |
| – otherwise secured | 511 | 47 | 67 | 64 | 61 | 664 | 520 | 2,236 | 4,170 |
| – unsecured | 5,250 | 10,868 | 10,263 | 7,268 | 7,178 | 14,060 | 20,538 | 24,937 | 100,362 |
| Liabilities of disposal groups held for sale2 | 5,356 | 223 | 42 | 2 | 107 | — | — | 1,448 | 7,178 |
| Accruals and other financial liabilities | 99,424 | 11,827 | 5,415 | 1,013 | 1,241 | 902 | 1,489 | 738 | 122,049 |
| Subordinated liabilities | — | — | 1,719 | 16 | — | — | 861 | 23,362 | 25,958 |
| Total financial liabilities at 31 Dec 2024 | 2,097,861 | 216,990 | 88,606 | 33,303 | 36,074 | 39,842 | 80,399 | 89,177 | 2,682,252 |
| Non-financial liabilities | — | — | — | — | — | — | — | 142,523 | 142,523 |
| Total liabilities at 31 Dec 2024 | 2,097,861 | 216,990 | 88,606 | 33,303 | 36,074 | 39,842 | 80,399 | 231,700 | 2,824,775 |
| Off-balance sheet commitments given | |||||||||
| Loan and other credit-related commitments | 861,181 | 74 | 12 | 85 | 49 | 6 | 57 | 114 | 861,578 |
| – personal | 253,522 | — | — | — | — | — | — | — | 253,522 |
| – corporate and commercial | 460,762 | 74 | 12 | 85 | 49 | 6 | 57 | 114 | 461,159 |
| – financial | 146,897 | — | — | — | — | — | — | — | 146,897 |
1Unallocated impairment losses in relation to disposal groups of $0.09bn (2024: $0.03bn) and non-financial assets of $0.26bn (2024: $0.92bn) that are presented
within assets held for sale on the balance sheet have been included within non-financial assets in the table above.
2A total of $5.00bn (2024: $21.83bn) of non-financial liabilities that are presented within liabilities of disposal groups held for sale on the balance sheet have been
included within non-financial liabilities in the table above.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 363 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC Holdings
| Maturity analysis of assets, liabilities and off-balance sheet commitments | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Due not<br><br>more<br><br>than<br><br>1 month | Due over<br><br>1 month<br><br>but not<br><br>more<br><br>than<br><br>3 months | Due over<br><br>3 months<br><br>but not<br><br>more<br><br>than<br><br>6 months | Due over<br><br>6 months<br><br>but not<br><br>more<br><br>than<br><br>9 months | Due over<br><br>9 months<br><br>but not<br><br>more<br><br>than<br><br>1 year | Due over<br><br>1 year<br><br>but not<br><br>more<br><br>than<br><br>2 years | Due over<br><br>2 years<br><br>but not<br><br>more<br><br>than<br><br>5 years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | $m | $m | $m | |
| Financial assets | |||||||||
| Cash at bank and in hand: | |||||||||
| – balances with HSBC undertakings | 5,079 | — | — | — | — | — | — | — | 5,079 |
| Financial assets with HSBC undertakings<br><br>designated and otherwise mandatorily<br><br>measured at fair value | — | — | — | — | — | 4,863 | 31,702 | 30,652 | 67,217 |
| Derivatives | 1,371 | 26 | 10 | — | — | 114 | 118 | 303 | 1,942 |
| Loans and advances to HSBC undertakings | 6,250 | — | 1,760 | — | — | 2,049 | 7,331 | 23,110 | 40,500 |
| Trading assets | — | — | — | — | — | — | — | — | — |
| Financial investments | 11,736 | 3,734 | — | — | — | — | — | — | 15,470 |
| Accrued income and other financial assets | 1,864 | 803 | 404 | 209 | 5 | — | — | — | 3,285 |
| Total financial assets at 31 Dec 2025 | 26,300 | 4,563 | 2,174 | 209 | 5 | 7,026 | 39,151 | 54,065 | 133,493 |
| Non-financial assets | — | — | — | — | — | — | — | 159,527 | 159,527 |
| Total assets at 31 Dec 2025 | 26,300 | 4,563 | 2,174 | 209 | 5 | 7,026 | 39,151 | 213,592 | 293,020 |
| Financial liabilities | |||||||||
| Amounts owed to HSBC undertakings | — | 89 | — | — | — | — | — | — | 89 |
| Financial liabilities designated at fair value | — | 1,760 | — | — | 895 | 8,750 | 15,138 | 26,364 | 52,907 |
| – debt securities in issue | — | 1,760 | — | — | — | 7,858 | 13,953 | 21,117 | 44,688 |
| – subordinated liabilities and preferred<br><br>securities | — | — | — | — | 895 | 892 | 1,185 | 5,247 | 8,219 |
| Derivatives | 1,299 | 1 | 86 | 3 | 22 | 175 | 519 | 1,346 | 3,451 |
| Debt securities in issue | — | — | 1,535 | 408 | — | 2,711 | 33,550 | 30,820 | 69,024 |
| Accruals and other financial liabilities | 294 | 1,109 | 676 | 140 | 34 | — | — | 21 | 2,274 |
| Subordinated liabilities | — | — | — | — | — | — | 901 | 25,213 | 26,114 |
| Total financial liabilities at 31 Dec 2025 | 1,593 | 2,959 | 2,297 | 551 | 951 | 11,636 | 50,108 | 83,764 | 153,859 |
| Non-financial liabilities | — | — | — | — | — | — | — | 12 | 12 |
| Total liabilities at 31 Dec 2025 | 1,593 | 2,959 | 2,297 | 551 | 951 | 11,636 | 50,108 | 83,776 | 153,871 |
| Financial assets | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cash at bank and in hand: | |||||||||
| – balances with HSBC undertakings | 2,548 | — | — | — | — | — | — | — | 2,548 |
| Financial assets with HSBC undertakings<br><br>designated and otherwise mandatorily<br><br>measured at fair value | — | — | — | — | — | 5,835 | 31,547 | 23,904 | 61,286 |
| Derivatives | 2,339 | — | 24 | — | — | 243 | 162 | 286 | 3,054 |
| Loans and advances to HSBC undertakings | 8,500 | — | 120 | — | 13 | 1,640 | 6,739 | 20,665 | 37,677 |
| Trading assets | 709 | — | — | — | — | — | — | — | 709 |
| Financial investments | 6,141 | 4,187 | — | — | — | — | — | — | 10,328 |
| Accrued income and other financial assets | 2,719 | 856 | 292 | 203 | 11 | — | — | — | 4,081 |
| Total financial assets at 31 Dec 2024 | 22,956 | 5,043 | 436 | 203 | 24 | 7,718 | 38,448 | 44,855 | 119,683 |
| Non-financial assets | — | — | — | — | — | — | — | 154,574 | 154,574 |
| Total assets at 31 Dec 2024 | 22,956 | 5,043 | 436 | 203 | 24 | 7,718 | 38,448 | 199,429 | 274,257 |
| Financial liabilities | |||||||||
| Amounts owed to HSBC undertakings | — | 231 | — | — | — | — | — | — | 231 |
| Financial liabilities designated at fair value | — | — | — | 1,012 | — | 3,641 | 16,907 | 20,022 | 41,582 |
| – debt securities in issue | — | — | — | — | — | 2,755 | 15,036 | 15,476 | 33,267 |
| – subordinated liabilities and preferred<br><br>securities | — | — | — | 1,012 | — | 886 | 1,871 | 4,546 | 8,315 |
| Derivatives | 1,502 | 89 | 144 | 44 | 45 | 209 | 794 | 2,513 | 5,340 |
| Debt securities in issue | — | — | — | — | — | 14,897 | 24,395 | 25,028 | 64,320 |
| Accruals and other financial liabilities | 351 | 1,713 | 831 | 129 | 31 | — | — | 20 | 3,075 |
| Subordinated liabilities | — | — | 1,541 | — | — | — | 836 | 21,171 | 23,548 |
| Total financial liabilities at 31 Dec 2024 | 1,853 | 2,033 | 2,516 | 1,185 | 76 | 18,747 | 42,932 | 68,754 | 138,096 |
| Non-financial liabilities | — | — | — | — | — | — | — | 22 | 22 |
| Total liabilities at 31 Dec 2024 | 1,853 | 2,033 | 2,516 | 1,185 | 76 | 18,747 | 42,932 | 68,776 | 138,118 |
| HSBC Holdings plc Annual Report on Form 20-F | |||||||||
| --- | |||||||||
| 364 | |||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | |||
| --- | --- | --- | --- | --- | --- | --- | |||
| Notes on the financial statements |
Contractual maturity of financial liabilities
The following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities
and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in our
consolidated balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual
maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the ‘Due not more than 1 month’ time bucket and
not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis
of the earliest date they can be called.
| Cash flows payable by HSBC under financial liabilities by remaining contractual maturities | ||||||
|---|---|---|---|---|---|---|
| Due not<br><br>more<br><br>than 1<br><br>month | Due over<br><br>1 month but<br><br>not more<br><br>than<br><br>3 months | Due over<br><br>3 months but<br><br>not more than<br><br>1 year | Due over<br><br>1 year but<br><br>not<br><br>more than<br><br>5 years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | |
| Deposits by banks | 81,989 | 2,617 | 1,582 | 9,192 | 4,334 | 99,714 |
| Customer accounts | 1,518,669 | 164,800 | 100,734 | 8,079 | 135 | 1,792,417 |
| Repurchase agreements – non-trading | 180,768 | 13,771 | 11,169 | 180 | — | 205,888 |
| Trading liabilities | 72,122 | — | — | — | — | 72,122 |
| Financial liabilities designated at fair value | 23,595 | 12,871 | 21,954 | 72,552 | 52,326 | 183,298 |
| Derivatives | 235,317 | 246 | 395 | 1,870 | 2,885 | 240,713 |
| Debt securities in issue | 5,928 | 5,312 | 18,421 | 51,297 | 38,047 | 119,005 |
| Subordinated liabilities | 39 | 368 | 1,424 | 8,085 | 38,878 | 48,794 |
| Other financial liabilities1 | 153,469 | 8,753 | 5,312 | 2,881 | 1,838 | 172,253 |
| 2,271,896 | 208,738 | 160,991 | 154,136 | 138,443 | 2,934,204 | |
| Loan and other credit-related commitments | 948,277 | 66 | 94 | 200 | — | 948,637 |
| Financial guarantees2 | 17,476 | — | — | — | — | 17,476 |
| At 31 Dec 2025 | 3,237,649 | 208,804 | 161,085 | 154,336 | 138,443 | 3,900,317 |
| Proportion of cash flows payable in period | 83% | 5% | 4% | 4% | 4% | |
| Deposits by banks | 54,819 | 1,759 | 7,381 | 11,242 | 511 | 75,712 |
| Customer accounts | 1,382,666 | 171,917 | 97,667 | 10,089 | 113 | 1,662,452 |
| Repurchase agreements – non-trading | 168,633 | 10,425 | 2,195 | 188 | 196 | 181,637 |
| Trading liabilities | 65,982 | — | — | — | — | 65,982 |
| Financial liabilities designated at fair value | 19,139 | 9,042 | 18,462 | 70,587 | 45,767 | 162,997 |
| Derivatives | 262,014 | 531 | 1,008 | 2,034 | 2,765 | 268,352 |
| Debt securities in issue | 5,780 | 11,309 | 27,103 | 45,725 | 32,129 | 122,046 |
| Subordinated liabilities | 39 | 120 | 2,959 | 7,373 | 35,512 | 46,003 |
| Other financial liabilities1 | 138,319 | 9,754 | 5,421 | 2,206 | 608 | 156,308 |
| 2,097,391 | 214,857 | 162,196 | 149,444 | 117,601 | 2,741,489 | |
| Loan and other credit-related commitments | 861,193 | 78 | 146 | 63 | 98 | 861,578 |
| Financial guarantees2 | 16,998 | — | — | — | — | 16,998 |
| At 31 Dec 2024 | 2,975,582 | 214,935 | 162,342 | 149,507 | 117,699 | 3,620,065 |
| Proportion of cash flows payable in period | 83% | 6% | 4% | 4% | 3% |
1Excludes financial liabilities of disposal groups.
2Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
HSBC Holdings
HSBC Holdings’ primary sources of liquidity are dividends received from subsidiaries, interest on and repayment of intra-Group loans and
securities, and interest earned on its own liquid funds. HSBC Holdings also raises funds in the debt capital markets to meet the Group’s minimum
requirement for own funds and eligible liabilities and maintain an appropriate liquidity buffer. HSBC Holdings uses this liquidity to meet its
obligations, including interest and principal repayments on external debt liabilities, operating expenses and collateral on derivative transactions.
HSBC Holdings is also subject to contingent liquidity risk by virtue of credit-related commitments and guarantees and similar contracts issued
relating to its subsidiaries. Such commitments and guarantees are only issued after due consideration of HSBC Holdings’ ability to finance the
commitments and guarantees and the likelihood of the need arising.
HSBC Holdings actively manages the cash flows from its subsidiaries to optimise the amount of cash held at the holding company level. During
2025, consistent with the Group’s capital plan, the Group’s material subsidiaries did not experience any significant restrictions on paying dividends
or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from material
subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things, their
respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.
HSBC Holdings currently has sufficient liquidity to meet its present and forecast requirements.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 365 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
The following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities
and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in HSBC
Holdings balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual
maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the ‘Due not more than 1 month’ time bucket and
not by contractual maturity.
In addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The
undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis
of the earliest date they can be called.
| Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities | ||||||
|---|---|---|---|---|---|---|
| Due not<br><br>more<br><br>than 1<br><br>month | Due over 1<br><br>month but<br><br>not<br><br>more than 3<br><br>months | Due over 3<br><br>months but<br><br>not more<br><br>than<br><br>1 year | Due over 1<br><br>year but not<br><br>more than 5<br><br>years | Due over<br><br>5 years | Total | |
| $m | $m | $m | $m | $m | $m | |
| Amounts owed to HSBC undertakings | — | 89 | — | — | — | 89 |
| Financial liabilities designated at fair value | 23 | 2,230 | 2,786 | 30,944 | 32,214 | 68,197 |
| Derivatives | 796 | 47 | 608 | 857 | 1,614 | 3,922 |
| Debt securities in issue | — | 796 | 4,080 | 45,834 | 36,373 | 87,083 |
| Subordinated liabilities | — | 353 | 1,336 | 7,508 | 35,087 | 44,284 |
| Other financial liabilities | 274 | 40 | — | — | 21 | 335 |
| At 31 Dec 2025 | 1,093 | 3,555 | 8,810 | 85,143 | 105,309 | 203,910 |
| Amounts owed to HSBC undertakings | — | 231 | — | — | — | 231 |
| Financial liabilities designated at fair value | 2 | 133 | 2,254 | 26,335 | 26,788 | 55,512 |
| Derivatives | 669 | 202 | 1,344 | 2,591 | 1,658 | 6,464 |
| Debt securities in issue | — | 254 | 1,697 | 47,771 | 29,706 | 79,428 |
| Subordinated liabilities | — | 105 | 2,627 | 6,794 | 31,773 | 41,299 |
| Other financial liabilities | 351 | 1,735 | 991 | — | 20 | 3,097 |
| At 31 Dec 2024 | 1,022 | 2,660 | 8,913 | 83,491 | 89,945 | 186,031 |
31Offsetting of financial assets and financial liabilities
In the offsetting of financial assets and financial liabilities, the net amount is reported in the balance sheet when the offset criteria are met. This is
achieved when there is a legally enforceable right to offset the recognised amounts and there is either an intention to settle on a net basis, or
realise the asset and settle the liability simultaneously.
In the following table, the ‘Amounts not set off in the balance sheet’ include transactions where:
–the counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right to set off only in the
event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and
–cash and non-cash collateral (debt securities and equities) has been received/pledged for derivatives and reverse repurchase/repurchase, stock
borrowing/lending and similar agreements to cover net exposure in the event of a default or other predetermined events.
The effect of over-collateralisation is excluded.
‘Amounts not subject to enforceable netting agreements’ include contracts executed in jurisdictions where the rights of offset may not be upheld
under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have been sought,
or may have been unable to obtain.
For risk management purposes, the net amounts of loans and advances to customers are subject to limits, which are monitored and the relevant
customer agreements are subject to review and updated, as necessary, to ensure the legal right to set off remains appropriate.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||||
|---|---|---|---|---|---|---|---|---|
| 366 | ||||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information | ||
| --- | --- | --- | --- | --- | --- | --- | ||
| Notes on the financial statements | ||||||||
| Offsetting of financial assets and financial liabilities | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Amounts subject to enforceable netting arrangements | Amounts not<br><br>subject to<br><br>enforceable<br><br>netting<br><br>arrangements1 | Total | ||||||
| Amounts not set off in the<br><br>balance sheet | ||||||||
| Gross<br><br>amounts | Amounts<br><br>offset | Net<br><br>amounts<br><br>in the<br><br>balance<br><br>sheet | Financial<br><br>instruments,<br><br>including non-<br><br>cash collateral | Cash<br><br>collateral | Net<br><br>amount | |||
| $m | $m | $m | $m | $m | $m | $m | $m | |
| Financial assets | ||||||||
| Derivatives (Note 15)2 | 330,338 | (97,243) | 233,095 | (202,744) | (26,074) | 4,277 | 4,645 | 237,740 |
| Reverse repos, stock borrowing and<br><br>similar agreements classified as:3 | ||||||||
| – trading assets | 31,450 | (610) | 30,840 | (30,839) | (1) | — | 2,556 | 33,396 |
| – non-trading assets | 504,986 | (224,173) | 280,813 | (279,149) | (207) | 1,457 | 17,640 | 298,453 |
| Loans and advances to customers4 | 39,273 | (18,826) | 20,447 | (17,395) | (81) | 2,971 | 2 | 20,449 |
| At 31 Dec 2025 | 906,047 | (340,852) | 565,195 | (530,127) | (26,363) | 8,705 | 24,843 | 590,038 |
| Derivatives (Note 15)2 | 372,699 | (112,746) | 259,953 | (230,133) | (22,730) | 7,090 | 8,684 | 268,637 |
| Reverse repos, stock borrowing and<br><br>similar agreements classified as:3 | ||||||||
| – trading assets | 25,077 | (637) | 24,440 | (24,428) | (10) | 2 | 757 | 25,197 |
| – non-trading assets | 386,124 | (154,133) | 231,991 | (230,584) | (332) | 1,075 | 20,602 | 252,593 |
| Loans and advances to customers4 | 34,582 | (16,540) | 18,042 | (15,313) | (75) | 2,654 | 4 | 18,046 |
| At 31 Dec 2024 | 818,482 | (284,056) | 534,426 | (500,458) | (23,147) | 10,821 | 30,047 | 564,473 |
| Financial liabilities | ||||||||
| Derivatives (Note 15)2 | 329,387 | (97,243) | 232,144 | (201,311) | (28,038) | 2,795 | 5,710 | 237,854 |
| Repos, stock lending and similar<br><br>agreements classified as:3 | ||||||||
| – trading liabilities | 19,691 | (329) | 19,362 | (19,362) | — | — | 1 | 19,363 |
| – non-trading liabilities | 375,173 | (224,454) | 150,719 | (145,206) | (224) | 5,289 | 54,255 | 204,974 |
| Customer accounts5 | 46,444 | (18,826) | 27,618 | (17,395) | (81) | 10,142 | 12 | 27,630 |
| At 31 Dec 2025 | 770,695 | (340,852) | 429,843 | (383,274) | (28,343) | 18,226 | 59,978 | 489,821 |
| Derivatives (Note 15)2 | 369,287 | (112,746) | 256,541 | (221,232) | (30,334) | 4,975 | 7,907 | 264,448 |
| Repos, stock lending and similar<br><br>agreements classified as:3 | ||||||||
| – trading liabilities | 18,482 | (157) | 18,325 | (18,326) | — | (1) | 6 | 18,331 |
| – non-trading liabilities | 287,648 | (154,613) | 133,035 | (131,719) | (164) | 1,152 | 47,845 | 180,880 |
| Customer accounts5 | 41,409 | (16,540) | 24,869 | (15,313) | (75) | 9,481 | 17 | 24,886 |
| At 31 Dec 2024 | 716,826 | (284,056) | 432,770 | (386,590) | (30,573) | 15,607 | 55,775 | 488,545 |
1These exposures continue to be secured by financial collateral, but we may not have sought or been able to obtain a legal opinion evidencing enforceability of
the right of offset.
2At 31 December 2025, the amount of cash margin received that had been offset against the gross derivatives assets was $3.8bn (2024: $5.3bn). The amount of
cash margin paid that had been offset against the gross derivatives liabilities was $11.5bn (2024: $5.6bn).
3For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within ‘Trading assets’ of
$33.4bn (2024: $25.2bn) and ‘Trading liabilities’ of $19.4bn (2024: $18.3bn), see the ‘Funding sources and uses’ table on page 195.
4At 31 December 2025, the total amount of ‘Loans and advances to customers’ was $988.4bn (2024: $930.7bn), of which $20.4bn (2024: $18.0bn) was subject
to offsetting.
5At 31 December 2025, the total amount of ‘Customer accounts’ was $1,786.8bn (2024: $1,655.0bn), of which $27.6bn (2024: $24.9bn) was subject to
offsetting.
| 32 | Called up share capital and other equity instruments |
|---|
Called up share capital and share premium
| HSBC Holdings ordinary shares of $0.50 each, issued and fully paid | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Number | $m | Number | $m | |
| At 1 Jan | 17,946,950,582 | 8,973 | 19,262,728,193 | 9,631 |
| Shares issued under HSBC employee share plans | 9,937,366 | 5 | 10,283,430 | 5 |
| Less: shares repurchased and cancelled | 781,648,086 | 390 | 1,326,061,041 | 663 |
| At 31 Dec1 | 17,175,239,862 | 8,588 | 17,946,950,582 | 8,973 |
1All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 367 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| HSBC Holdings share premium | ||||||
| --- | --- | --- | ||||
| 2025 | 2024 | |||||
| $m | $m | |||||
| At 31 Dec1 | 111 | 14,810 |
1On 24 June 2025, the High Court of Justice in England and Wales confirmed the cancellation of $14.8bn standing to the credit of the HSBC Holdings’ share
premium account and $1.8bn standing to the credit of its capital redemption reserve, following approval at HSBC Holdings’ Annual General Meeting held on
2 May 2025 (the ‘Capital Reduction’). The Court Order confirming the Capital Reduction was registered by the Registrar of Companies on 10 July 2025, resulting
in a combined total of $16.6bn being reclassified to retained earnings with no impact on total equity.
| Total called up share capital and share premium | ||
|---|---|---|
| 2025 | 2024 | |
| $m | $m | |
| At 31 Dec | 8,699 | 23,783 |
HSBC Holdings non-cumulative preference share of £0.01
The one non-cumulative sterling preference share of £0.01 (‘sterling preference share’) has been in issue since 29 December 2010 and is held by a
subsidiary of HSBC Holdings. Dividends are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share carries no
rights of conversion into ordinary shares of HSBC Holdings and no right to attend or vote at shareholder meetings of HSBC Holdings. These
securities can be redeemed by HSBC Holdings at any time, subject to prior approval by the PRA.
Other equity instruments
HSBC Holdings’ contingent convertible securities are described below. These are accounted for as equity because HSBC does not have an
obligation to transfer cash or a variable number of its own ordinary shares to holders under any circumstances outside its control.
Additional tier 1 capital – contingent convertible securities
HSBC Holdings continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1
capital securities. These securities are marketed principally and subsequently allotted to corporate investors and fund managers. The net proceeds
of the issuances are typically used for HSBC Holdings’ general corporate purposes and to maintain or further strengthen its capital base to meet
requirements under CRR II. These securities bear a fixed rate of interest until their initial reset dates (unless previously redeemed in accordance
with their terms). If not redeemed, the securities will bear interest at a rate fixed on each reset date for the subsequent five-year period, equal to
the sum of the applicable reference rate at the time of reset and a credit spread set at issuance. Interest on the contingent convertible securities
will be due and payable only at the sole discretion of HSBC Holdings, and HSBC Holdings has sole and absolute discretion at all times to cancel for
any reason (in whole or part) any interest payment that would otherwise be payable on any payment date. Distributions will not be paid if they are
prohibited under UK banking regulations or if the Group has insufficient reserves or fails to meet the solvency conditions defined in the securities’
terms.
The contingent convertible securities are undated and are repayable at the option of HSBC Holdings in whole typically at the initial call date or on
any fifth anniversary after this date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons.
Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC Holdings’ sterling preference shares and
therefore rank ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of HSBC Holdings at
a predetermined price, should HSBC’s consolidated CET1 ratio fall below 7.0%. Therefore, in accordance with the terms of the securities, if
HSBC’s consolidated CET1 ratio breaches the 7.0% trigger, the securities will convert into ordinary shares at fixed contractual conversion prices in
the currency of the relevant securities, subject to anti-dilution adjustments.
| Original nominal<br><br>amount (LCY) | Description of security | Issue<br><br>Date | First call<br><br>date | Reset Date | 2025 | 2024 |
|---|---|---|---|---|---|---|
| $m | $m | |||||
| $2,450m | 6.375% Perpetual Subordinated Contingent Convertible Securities1 | Mar 2015 | Mar 2025 | Mar 2025 | — | 2,450 |
| $3,000m | 6.000% Perpetual Subordinated Contingent Convertible Securities | May 2017 | May 2027 | May 2027 | 3,000 | 3,000 |
| €1,250m | 4.750% Perpetual Subordinated Contingent Convertible Securities | Jul 2017 | Jul 2029 | Jul 2029 | 1,421 | 1,422 |
| $1,800m | 6.500% Perpetual Subordinated Contingent Convertible Securities | Mar 2018 | Mar 2028 | Mar 2028 | 1,800 | 1,800 |
| £1,000m | 5.875% Perpetual Subordinated Contingent Convertible Securities | Sep 2018 | Sep 2026 | Sep 2026 | 1,301 | 1,301 |
| $1,500m | 4.600% Perpetual Subordinated Contingent Convertible Securities | Dec 2020 | Dec 2030 | Jun 2031 | 1,500 | 1,500 |
| $1,000m | 4.000% Perpetual Subordinated Contingent Convertible Securities | Mar 2021 | Mar 2026 | Sep 2026 | 1,000 | 1,000 |
| $1,000m | 4.700% Perpetual Subordinated Contingent Convertible Securities | Mar 2021 | Mar 2031 | Sep 2031 | 1,000 | 1,000 |
| $2,000m | 8.000% Perpetual Subordinated Contingent Convertible Securities2 | Mar 2023 | Mar 2028 | Sep 2028 | 1,980 | 1,980 |
| SGD1,500m | 5.250% Perpetual Subordinated Contingent Convertible Securities2 | Jun 2024 | Jun 2029 | Dec 2029 | 1,096 | 1,096 |
| $1,350m | 6.875% Perpetual Subordinated Contingent Convertible Securities2 | Sep 2024 | Sep 2029 | Mar 2030 | 1,337 | 1,337 |
| $1,150m | 6.950% Perpetual Subordinated Contingent Convertible Securities2 | Sep 2024 | Mar 2034 | Sep 2034 | 1,139 | 1,138 |
| $1,500m | 6.950% Perpetual Subordinated Contingent Convertible Securities2 | Feb 2025 | Aug 2031 | Feb 2032 | 1,485 | — |
| SGD800m | 5.000% Perpetual Subordinated Contingent Convertible Securities2 | Mar 2025 | Mar 2030 | Sep 2030 | 596 | — |
| $2,000m | 7.050% Perpetual Subordinated Contingent Convertible Securities2 | Jun 2025 | Jun 2030 | Dec 2030 | 1,980 | — |
| At 31 Dec | 20,635 | 19,024 |
1This security was called by HSBC Holdings on 7 February 2025 and was redeemed and cancelled on 31 March 2025.
2These securities have been accounted for net of directly attributable transaction costs.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 368 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Shares under option
For details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Savings-Related Share Option
Plan (UK), see Note 5.
| Aggregate options outstanding under these plans | |||||
|---|---|---|---|---|---|
| 31 Dec 2025 | 31 Dec 2024 | ||||
| Number of<br><br>HSBC Holdings<br><br>ordinary shares | Usual period<br><br>of exercise | Exercise price | Number of<br><br>HSBC Holdings<br><br>ordinary shares | Usual period<br><br>of exercise | Exercise price |
| 58,902,349 | 2024 to 2031 | £2.6270–£7.6110 | 75,335,399 | 2023 to 2030 | £2.6270–5.4490 |
Maximum obligation to deliver HSBC Holdings ordinary shares
At 31 December 2025, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements and the
HSBC International Employee Share Purchase Plan, together with long-term incentive awards and deferred share awards granted under the HSBC
Share Plan 2011, was 178,823,734 (2024: 209,683,768). The total number of shares at 31 December 2025 held by employee benefit trusts that
may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 35,354,337 (2024: 9,305,925).
33Contingent liabilities, contractual commitments and guarantees
| HSBC | HSBC Holdings1 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| $m | $m | $m | $m | |
| Guarantees and other contingent liabilities: | ||||
| – financial guarantees | 17,476 | 16,998 | — | — |
| – performance and other guarantees | 102,684 | 92,723 | 6,983 | 7,327 |
| – other contingent liabilities | 164 | 298 | — | — |
| At 31 Dec | 120,324 | 110,019 | 6,983 | 7,327 |
| Commitments:2 | ||||
| – documentary credits and short-term trade-related transactions | 6,959 | 7,096 | — | — |
| – forward asset purchases and forward deposits placed | 84,978 | 61,017 | — | — |
| – standby facilities, credit lines and other commitments to lend | 856,700 | 793,465 | — | — |
| At 31 Dec | 948,637 | 861,578 | — | — |
1Guarantees by HSBC Holdings are in favour of other Group entities. These include contracts that provide protection against credit risk on a specified exposure
but do not meet the definition of financial guarantees.
2Includes $690.8bn of commitments at 31 December 2025 (31 December 2024: $619.4bn), to which the impairment requirements in IFRS 9 are applied.
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.
The majority of the guarantees have a term of less than one year. All guarantees 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 35.
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 $70.9bn at 31 December 2025 (2024:
$74.5bn). No matters arose where HSBC was severally liable.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 369 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
34Finance lease receivables
HSBC leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property and general plant and
machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are calculated to recover the cost of
assets less their residual value, and earn finance income.
The table below excludes finance lease receivables reclassified on the balance sheet to ‘Assets held for sale’ in accordance with IFRS 5. Net
investment in finance leases of $2m was reclassified to ‘Assets held for sale’ in 2025 as a result of the planned sale of HSBC Bank (Uruguay) S.A.
There was no net investment in finance leases classified as held-for-sale at 31 December 2024.
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| Total future<br><br>minimum<br><br>payments | Unearned<br><br>finance<br><br>income | Present<br><br>value | Total future<br><br>minimum<br><br>payments | Unearned<br><br>finance<br><br>income | Present<br><br>value | |
| $m | $m | $m | $m | $m | $m | |
| Lease receivables: | ||||||
| No later than one year | 2,507 | (293) | 2,214 | 2,331 | (295) | 2,036 |
| One to two years | 1,830 | (224) | 1,606 | 1,787 | (226) | 1,561 |
| Two to three years | 1,335 | (167) | 1,168 | 1,290 | (171) | 1,119 |
| Three to four years | 884 | (127) | 757 | 839 | (134) | 705 |
| Four to five years | 629 | (102) | 527 | 766 | (147) | 619 |
| Later than one year and no later than five years | 4,678 | (620) | 4,058 | 4,682 | (678) | 4,004 |
| Later than five years | 3,553 | (578) | 2,975 | 3,518 | (639) | 2,879 |
| At 31 Dec | 10,738 | (1,491) | 9,247 | 10,531 | (1,612) | 8,919 |
35Legal 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. 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 2025
(see Note 28). 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 HSBC companies that provided custodial, administration and similar services to a number of funds whose assets were invested with
Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’) have been named as defendants in lawsuits arising out of Madoff Securities’
fraud.
Trustee litigation: The Madoff Securities trustee (the ‘Trustee’) has brought lawsuits in the US against various HSBC companies and others
seeking recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $508m (plus interest). In September 2025,
the US Bankruptcy Court for the Southern District of New York dismissed all claims against HSBC Private Bank (Suisse) SA in the amount of
$292m and certain claims against HSBC Bank USA N.A. (‘HSBC Bank USA’) in the amount of $32m. The Trustee has appealed. The Trustee’s
remaining claims, which amount to $184m, are pending.
The Trustee has filed a claim against various HSBC companies in the High Court of England and Wales seeking recovery of alleged transfers from
Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been specified.
Fairfield Funds litigation: Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (each in liquidation and together, the
‘Fairfield Funds’) have brought lawsuits in the US against various HSBC companies and others seeking recovery of alleged transfers from the
Fairfield Funds to the HSBC companies (that acted as nominees for clients) in the amount of $382m (plus interest). In August 2025, the US Court
of Appeals for the Second Circuit confirmed the dismissal of Fairfield Funds’ claims against all HSBC companies. Fairfield Funds may appeal.
Herald Fund SPC (‘Herald’) litigation: HSBC Securities Services Luxembourg (‘HSSL’) and HSBC Bank plc are defending an action brought by
Herald (in liquidation) before the Luxembourg District Court seeking restitution of securities (the amount of which would be determined by further
proceedings, if Herald is successful in its claim) and $521m in cash (plus interest) or, alternatively, damages in the amount of $5.6bn (plus interest).
Herald’s damages claim against HSSL and HSBC Bank plc has been stayed. In December 2024, the Luxembourg Court of Appeal determined that
Herald’s claims for restitution of securities and cash against HSSL were founded in principle. HSSL appealed this decision and, in October 2025,
the Luxembourg Court of Cassation denied HSSL’s appeal in respect of Herald’s securities restitution claim, but accepted HSSL’s appeal in
respect of Herald’s cash restitution claim, which has been returned to the Luxembourg District Court for determination. HSSL is pursuing a second
appeal on the securities restitution claim before the Luxembourg Court of Appeal. Following the Court of Cassation’s decision, HSSL has
recognised a $1.1bn provision in connection with this matter. Given the pendency of the second appeal and the complexities and uncertainties
associated with determining the quantum of restitution, the eventual financial impact could be significantly different.
Alpha Prime Fund Limited (‘Alpha Prime’) litigation: Various HSBC companies are defending an action brought by Alpha Prime in the
Luxembourg District Court seeking restitution of securities and $1bn (plus interest) in supplementary damages or, alternatively, damages in the
amount of $3.3bn (plus interest). This matter is currently pending before the Luxembourg District Court.
In November 2024, Alpha Prime served various HSBC companies with a lawsuit filed in the Bermuda Supreme Court seeking damages for
unspecified amounts for alleged breach of contract and negligence. This claim is currently stayed.
Senator Fund SPC (‘Senator’) litigation: HSSL and the Luxembourg branch of HSBC Bank plc are defending an action brought by Senator before
the Luxembourg District Court seeking restitution of securities or, alternatively, damages in the amount of $1.4bn (plus interest). This matter is
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 these matters, including the timing or any
possible impact on HSBC, which could be significant.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 370 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
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. Six actions, which seek damages for unspecified amounts, remain pending. One of these
actions has been dismissed but may be appealed. The other five actions remain at an early procedural 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.
US dollar Libor litigation
Various HSBC companies are defending two individual actions which allege that the HSBC defendants violated various US federal and state laws,
including antitrust laws, related to the setting of US dollar Libor, and seek damages for unspecified amounts. In September 2025, the US District
Court for the Southern District of New York granted the defendants’ joint motion for summary judgment and dismissed these actions. The
plaintiffs have appealed.
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.
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. This investigation is ongoing. Lawsuits alleging foreign exchange-
related misconduct remain pending against HSBC and other banks in courts in Brazil.
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 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. Both the Competition Commission and
HSBC Bank plc have appealed to the Constitutional Court of South Africa.
HSBC Bank plc and HSBC Holdings have reached a settlement with plaintiffs in Israel to resolve a class action filed in the local courts alleging
foreign exchange-related misconduct. The settlement, the impact of which is not significant and is fully provisioned, remains subject to court
approval.
In February 2024, HSBC Bank plc and HSBC Holdings were joined to an existing claim brought in the UK Competition Appeals Tribunal (‘UK CAT’)
against various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking approximately £3bn in
damages from all the defendants. In December 2025, the UK Supreme Court upheld an earlier ruling of the UK CAT refusing certification as an opt-
out claim. This matter remains pending before the UK CAT.
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.
Precious metals fix-related litigation
US litigation: Various HSBC companies 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 Commodity Exchange Act
and New York state law. In May 2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.
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.
Canada litigation: Various HSBC companies and other financial institutions have been 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. The HSBC
defendants have reached a settlement with the plaintiffs to resolve these matters. The settlement, the impact of which is not significant and is
fully provisioned, is subject to court approval.
Tax-related investigations
Since 2023, the French National Financial Prosecutor (‘PNF’) had been investigating 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. In January 2026, HSBC Bank
plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of €302m and this matter is now closed. The
investigation into HSBC Continental Europe was closed with no further action.
HSBC Bank plc and the German branch of HSBC Continental Europe 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 this matter, including the timing or any
possible impact on HSBC, which could be significant.
Gilts trading litigation
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. Certain of the defendants, including HSBC Bank plc and HSBC Securities (USA) Inc., have reached a settlement with the
plaintiffs to resolve this matter. The settlement, the impact of which is not significant and has been paid, remains subject to final court approval.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 371 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Korean short selling indictment
In March 2024, the Korean Prosecutors’ Office issued a criminal indictment against The Hongkong and Shanghai Banking Corporation Limited
(‘HBAP’) and three current and former employees for breaching short selling rules under the Financial Investment Services and Capital Markets Act
in connection with trades carried out between August 2021 and December 2021. In September 2025, the Korean appellate court confirmed the
acquittal of HBAP of all charges. The Korean Prosecutors’ Office has further appealed to the Korean Supreme Court.
Investigations involving HSBC Private Bank (Suisse) SA
Law enforcement authorities in Switzerland and France are conducting criminal investigations into HSBC Private Bank (Suisse) SA in connection
with alleged money laundering offences in respect of two historical banking relationships. These investigations 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.
First Citizens 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 Silicon Valley Bank (‘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
2026, First Citizens amended its complaint to add claims purportedly assigned by the Federal Deposit Insurance Corporation (‘FDIC’). These
include claims concerning the period between SVB’s entry into FDIC receivership and First Citizens’ purchase of SVB’s US assets. First Citizens
also seeks to bring certain claims and defendants dismissed by the court in July 2024 back into the litigation. The defendants have filed a motion to
dismiss the amended complaint.
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.
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. Nearly all of these
lawsuits have either been settled or dismissed; one action remains pending in a New York state court.
HSBC Bank USA and certain of its affiliates are named as defendants in a mortgage loan repurchase action brought by the trustee of a mortgage
securitisation trust in New York state court and seeking unspecified damages and specific performance. The plaintiff has appealed the dismissal of
this action, and the appeal is pending.
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.
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 related to Mexican government bond transactions between 2010 and 2014 and
seeking unspecified damages. In January 2025, the court denied the defendants’ motion to dismiss the plaintiffs’ third amended complaint, and
this action 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.
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 tax authorities, regulators, 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 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.
36Related party transactions
Related parties of the Group and HSBC Holdings include subsidiaries, associates, joint ventures, fund-related entities, post-employment benefit
plans for HSBC employees, Key Management Personnel (‘KMP’) as defined by IAS 24, close family members of KMP and entities that are
controlled or jointly controlled by KMP or their close family members. KMP are defined as those persons having authority and responsibility for
planning, directing and controlling the activities of HSBC Holdings. These individuals also constitute ‘senior management’ for the purposes of the
Hong Kong Listing Rules. In applying IAS 24, it was determined that for this financial reporting period KMP included Directors, former Directors and
senior management listed on pages 220 to 224 except for the roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief People
& Governance Officer and Group Company Secretary who do not meet the criteria for KMP as provided for in the standard.
Particulars of transactions with related parties are tabulated below. The disclosure of the year-end balance and the highest amounts outstanding during
the year is considered to be the most meaningful information to represent the amount of the transactions and outstanding balances during the year.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 372 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Key Management Personnel
Details of Directors’ remuneration and interests in shares are disclosed in the ‘Directors’ remuneration report’ on pages 249 to 274.
IAS 24 ‘Related Party Disclosures’ requires the following additional information for key management compensation.
| Compensation of Key Management Personnel | ||||
|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||
| $m | $m | $m | ||
| Short-term employee benefits | 47 | 53 | 51 | |
| Post-employment benefits | 1 | 1 | 1 | |
| Other long-term employee benefits | 14 | 12 | 10 | |
| Share-based payments | 30 | 29 | 29 | |
| Year ended 31 Dec | 92 | 95 | 91 | |
| Shareholdings, options and other securities of Key Management Personnel | ||||
| --- | --- | --- | ||
| 2025 | 2024 | |||
| (000s) | (000s) | |||
| Number of options held over HSBC Holdings ordinary shares under employee share plans | — | 20 | ||
| Number of HSBC Holdings ordinary shares held beneficially and non-beneficially | 14,817 | 17,455 | ||
| Number of other HSBC securities held | — | 228 | ||
| At 31 Dec | 14,817 | 17,703 | ||
| Advances and credits, guarantees and deposit balances during the year with Key Management Personnel | ||||
| --- | --- | --- | --- | --- |
| 2025 | 2024 | |||
| Balance at<br><br>31 Dec | Highest amounts<br><br>outstanding<br><br>during year | Balance at<br><br>31 Dec | Highest amounts<br><br>outstanding<br><br>during year | |
| $m | $m | $m | $m | |
| Key Management Personnel | ||||
| Advances and credits1 | 11 | 12 | 9 | 12 |
| Guarantees | — | — | — | — |
| Deposits | 67 | 144 | 78 | 191 |
1Advances and credits entered into by subsidiaries of HSBC Holdings plc during 2025 with Directors and former Directors, disclosed pursuant to section 413 of
the Companies Act 2006, totalled $0.1m (2024: $1.3m) and the total value of guarantees entered into on behalf of the Directors and former Directors was nil
(2024: nil).
Unless previously disclosed, there were no connected transactions during the reporting period that fell outside the exemptions provided by the
Companies Act 2006, the UK Financial Conduct Authority’s Listing Rules and the Rules Governing The Listing of Securities on The Stock Exchange
of Hong Kong Limited. The transactions conducted were in the ordinary course of business and on substantially the same terms, including interest
rates and security, as for comparable transactions with parties of a similar standing or, where applicable, with other employees. These transactions
did not involve more than the normal risk of repayment or present other unfavourable features.
Associates and joint ventures
The Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest
bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.
| Transactions and balances during the year with associates and joint ventures | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Highest balance<br><br>during the year | Balance at<br><br>31 Dec | Highest balance<br><br>during the year | Balance at<br><br>31 Dec | |
| $m | $m | $m | $m | |
| Unsubordinated amounts due from joint ventures | 253 | 229 | 104 | 72 |
| Unsubordinated amounts due from associates | 9,945 | 4,760 | 8,097 | 5,011 |
| Amounts due to associates | 2,990 | 1,344 | 2,992 | 1,844 |
| Amounts due to joint ventures | 212 | 153 | 101 | 85 |
| Fair value of derivative assets with associates | 902 | 673 | 919 | 763 |
| Fair value of derivative liabilities with associates | 2,660 | 1,480 | 3,718 | 2,641 |
| Guarantees and commitments | 992 | 777 | 569 | 577 |
The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security,
as for comparable transactions with third-party counterparties.
Post-employment benefit plans
At 31 December 2025, $3.8bn (2024: $3.4bn) of HSBC post-employment benefit plan assets were under management by HSBC companies,
earning management fees of $15m in 2025 (2024: $14m). At 31 December 2025, HSBC’s post-employment benefit plans had placed deposits of
$0.4bn (2024: $0.4bn) with its banking subsidiaries, earning interest payable to the schemes of $5m (2024: $2m). The above outstanding balances
arose from the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable
transactions with third-party counterparties.
The combined HSBC Bank (UK) Pension Scheme enters into swap transactions with HSBC to manage inflation and interest rate sensitivity of its
liabilities and selected assets. At 31 December 2025, the gross notional value of the swaps was $6.6bn (2024: $6.4bn). These swaps had a
positive fair value to the scheme of $0.4bn (2024: $0.4bn); and HSBC had delivered collateral of $0.3bn (2024: $0.4bn) to the scheme in respect of
these arrangements. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 373 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
HSBC Holdings
Details of HSBC Holdings’ subsidiaries are shown in Note 38.
| Transactions and balances during the year with subsidiaries | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Highest balance<br><br>during the year | Balance at<br><br>31 Dec | Highest balance<br><br>during the year | Balance at<br><br>31 Dec | |
| $m | $m | $m | $m | |
| Assets | ||||
| Cash and balances with HSBC undertakings | 7,613 | 5,079 | 9,342 | 2,548 |
| Financial assets with HSBC undertakings designated and otherwise mandatorily<br><br>measured at fair value | 70,015 | 67,217 | 66,030 | 61,286 |
| Derivatives | 3,102 | 1,942 | 3,391 | 3,054 |
| Loans and advances to HSBC undertakings | 40,500 | 40,500 | 37,677 | 37,677 |
| Prepayments, accrued income and other assets | 6,126 | 3,416 | 7,108 | 4,216 |
| Investments in subsidiaries | 157,728 | 157,728 | 160,805 | 152,337 |
| Total related party assets at 31 Dec | 285,084 | 275,882 | 284,353 | 261,118 |
| Liabilities | ||||
| Amounts owed to HSBC undertakings | 192 | 89 | 231 | 231 |
| Derivatives | 5,412 | 3,451 | 7,944 | 5,340 |
| Accruals, deferred income and other liabilities | 2,184 | 53 | 399 | 194 |
| Subordinated liabilities | — | — | 1,202 | — |
| Total related party liabilities at 31 Dec | 7,788 | 3,593 | 9,776 | 5,765 |
| Guarantees and commitments | 7,318 | 6,983 | 7,440 | 7,327 |
The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security,
as for comparable transactions with third-party counterparties.
One employee of HSBC Holdings is a member of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company. HSBC
Holdings incurs a charge for this employee, equal to the contributions paid into the scheme on his behalf. Disclosure in relation to the scheme is
made in Note 5.
37Events after the balance sheet date
On 8 January 2026, the proposal to privatise Hang Seng Bank Limited (‘Hang Seng Bank’) through a scheme of arrangement was approved by
Hang Seng Bank shareholders. On approval, a financial liability was recognised in the Group’s consolidated financial statements for the present
value of the proposed HK$106bn ($13.7bn) purchase consideration. A corresponding adjustment to equity, net of derecognising the non-controlling
interest, which stood at $7.0bn as at 31 December 2025, was also recognised. On 26 January 2026, the scheme of arrangement became effective
and Hang Seng Bank was subsequently delisted from The Stock Exchange of Hong Kong Limited on 27 January 2026. To demonstrate funding
availability for the proposal, securities of HK$129.3bn ($16.6bn) were segregated and reported as encumbered on the balance sheet as at 31
December 2025. These assets were designated to demonstrate that sufficient resources were available at all times to settle the acquisition
consideration and to provide a buffer against potential mark-to-market movements. The transaction was settled on 4 February 2026. At that point,
all payment obligations under the scheme of arrangement were met, and the segregation of assets ceased.
On 30 January 2026, HSBC Bank plc completed the sale of its UK life insurance entity, HSBC Life (UK) Limited, to Chesnara plc. Prior to
completion, as at 31 December 2025, the balances that were classified as held for sale were $6.6bn in assets and $6.4bn in liabilities. For the year
ended 31 December 2025, we recognised a loss on disposal of $0.1bn. In the first quarter of 2026, we will recycle foreign currency translation
reserves to the income statement. These stood at a cumulative $0.2bn loss as at 31 December 2025.
A fourth interim dividend for 2025 of $0.45 per ordinary share (a distribution of approximately $7.71bn) was approved by the Directors after
31 December 2025. On 11 February 2026, HSBC Holdings called $1,000m 4.000% perpetual subordinated contingent convertible securities,
which are expected to be redeemed and cancelled on 9 March 2026. The accounts were approved by the Board of Directors on 25 February
2026 and authorised for issue.
38HSBC Holdings’ subsidiaries, funds, joint ventures and associates
In accordance with section 409 of the Companies Act 2006 a list of HSBC Holdings plc subsidiaries, funds, joint ventures and associates, the
registered office addresses and the effective percentages of equity owned at 31 December 2025 are disclosed below.
Unless otherwise stated, the share capital comprises ordinary or common shares that are held by Group subsidiaries. The ownership percentage is
provided for each undertaking. The undertakings below are consolidated by HSBC unless otherwise indicated.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 374 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements |
Subsidiaries
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
|---|---|---|---|---|---|---|
| AI Nominees (UK) One Limited | 100.00 | 11 | ||||
| AI Nominees (UK) Two Limited | 100.00 | 11 | ||||
| Almacenadora Banpacifico S.A. (In<br><br>Liquidation) | N/A | 1, 12 | ||||
| Assetfinance December (F) Limited | 100.00 | 13 | ||||
| Assetfinance December (H) Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| Assetfinance December (P) Limited | 100.00 | 11 | ||||
| Assetfinance December (R) Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| Assetfinance June (A) Limited | 100.00 | 11 | ||||
| Assetfinance June (D) Limited (In Liquidation) | 100.00 | 14 | ||||
| Assetfinance March (B) Limited | 100.00 | 15 | ||||
| Assetfinance March (D) Limited | 100.00 | 13 | ||||
| Assetfinance March (F) Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| Assetfinance September (F) Limited | 100.00 | 11 | ||||
| Assetfinance September (G) Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| B&Q Financial Services Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| Banco HSBC S.A. | 100.00 | 16 | ||||
| Banco Nominees (Guernsey) Limited | 100.00 | 17 | ||||
| Banco Nominees 2 (Guernsey) Limited | 100.00 | 17 | ||||
| Banco Nominees Limited | 100.00 | 18 | ||||
| Beau Soleil Limited Partnership | N/A | 1, 19 | ||||
| Beijing HSBC Real Estate Leasing Company<br><br>Limited | N/A | 1, 10, 20 | ||||
| Beijing Miyun HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 21 | ||||
| BentallGreenOak China Real Estate<br><br>Investments, L.P. | N/A | 1, 22 | ||||
| Canada Square Nominees (UK) Limited | 100.00 | 11 | ||||
| Capco/Cove, Inc. | 100.00 | 23 | ||||
| Card-Flo #3, Inc. | 100.00 | 24 | ||||
| CCF & Partners Asset Management Limited<br><br>(In Liquidation) | 100.00 | (99.99) | 14 | |||
| CCF Holding (Liban) S.A.L. (In Liquidation) | 74.99 | 2, 25 | ||||
| Charterhouse Administrators (D.T.) Limited | 100.00 | (99.99) | 11 | |||
| Charterhouse Management Services Limited | 100.00 | (99.99) | 11 | |||
| Charterhouse Pensions Limited | 100.00 | 11 | ||||
| Chongqing Dazu HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 26 | ||||
| Chongqing Fengdu HSBC Rural Bank<br><br>Company Limited | N/A | 1, 10, 27 | ||||
| Chongqing Rongchang HSBC Rural Bank<br><br>Company Limited (In Liquidation) | N/A | 1, 10, 28 | ||||
| COIF Nominees (UK) Two Limited | 100.00 | 11 | ||||
| COIF Nominees Limited | N/A | 1, 11 | ||||
| Corsair IV Financial Services Capital Partners -<br><br>B L.P | N/A | 1, 29 | ||||
| Dalian Pulandian HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 30 | ||||
| Decision One Mortgage Company, LLC | N/A | 1, 31 | ||||
| Desarrollo Turistico, S.A. de C.V. (In<br><br>Liquidation) | 100.00 | (99.99) | 12 | |||
| Electronic Data Process México, S.A. de C.V. | 100.00 | 32 | ||||
| Eton Corporate Services Limited | 100.00 | 17 | ||||
| Flandres Contentieux S.A. | 100.00 | (99.99) | 5, 33 | |||
| Foncière Elysées | 100.00 | (99.99) | 5, 33 | |||
| Fujian Yongan HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 34 | ||||
| Fulcher Enterprises Company Limited (In<br><br>Liquidation) | 100.00 | (63.43) | 35 | |||
| Fundacion HSBC, A.C. | 100.00 | (99.99) | 2, 8, 12 | |||
| Giller Ltd. | 100.00 | 23 | ||||
| Griffin International Limited (In Liquidation) | 100.00 | 14 | ||||
| Grupo Financiero HSBC, S. A. de C. V. | 99.99 | 12 | ||||
| Guangdong Enping HSBC Rural Bank<br><br>Company Limited | N/A | 1, 10, 36 | ||||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| Guangzhou HSBC Real Estate Company Ltd | N/A | 1, 10, 37 | ||||
| Hang Seng (Nominee) Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Bank (China) Limited | N/A | 1, 10, 39 | ||||
| Hang Seng Bank (Trustee) Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Bank Limited | 63.43 | 38 | ||||
| Hang Seng Bullion Company Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Credit Limited (In Liquidation) | 100.00 | (63.43) | 35 | |||
| Hang Seng Data Services Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Finance Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Financial Information Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Indexes (Netherlands) B.V. | 100.00 | (63.43) | 40 | |||
| Hang Seng Indexes Company Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Insurance Company Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Investment Management Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Investment Services Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Qianhai Fund Management<br><br>Company Limited | N/A | 1, 10, 41 | ||||
| Hang Seng Real Estate Management Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Securities Limited | 100.00 | (63.43) | 38 | |||
| Hang Seng Security Management Limited | 100.00 | (63.43) | 38 | |||
| HASE Wealth Limited | 100.00 | (63.43) | 38 | |||
| Haseba Investment Company Limited | 100.00 | (63.43) | 38 | |||
| HBPH Corporation (In Liquidation) | 99.99 | 42 | ||||
| HFC Bank Limited (In Liquidation) | 100.00 | 43 | ||||
| High Time Investments Limited | 100.00 | (63.43) | 38 | |||
| HLF | 100.00 | (99.99) | 5, 33 | |||
| Honey Blue Enterprises Limited | 100.00 | 19 | ||||
| Honey Green Enterprises Ltd. | 100.00 | 44 | ||||
| Honey Grey Enterprises Limited | 100.00 | 19 | ||||
| Honey Silver Enterprises Limited | 100.00 | 19 | ||||
| Household International Europe Limited (In<br><br>Liquidation) | 100.00 | 43 | ||||
| Household Pooling Corporation | 100.00 | 45 | ||||
| Housing (USA) Inc. | 100.00 | 24 | ||||
| HSBC (BGF) Investments Limited | 100.00 | 11 | ||||
| HSBC (Kuala Lumpur) Nominees Sdn Bhd | 100.00 | 46 | ||||
| HSBC (Malaysia) Trustee Berhad | 100.00 | 47 | ||||
| HSBC (Singapore) Nominees Pte Ltd | 100.00 | 48 | ||||
| HSBC Agency (India) Private Limited | 100.00 | 49 | ||||
| HSBC Amanah Malaysia Berhad | 100.00 | 46 | ||||
| HSBC Americas Corporation (Delaware) | 100.00 | 24 | ||||
| HSBC Asia Holdings B.V. | 100.00 | 11 | ||||
| HSBC Asia Holdings Limited | 100.00 | 3, 19 | ||||
| HSBC Asia Pacific Holdings (UK) Limited | 100.00 | 6, 11 | ||||
| HSBC Asset Finance (UK) Limited | 100.00 | 11 | ||||
| HSBC Asset Finance M.O.G. Holdings (UK)<br><br>Limited | 100.00 | 11 | ||||
| HSBC Australia Holdings Pty Limited | 100.00 | 4, 6, 52 | ||||
| HSBC BANK (CHILE) | 100.00 | 53 | ||||
| HSBC Bank (China) Company Limited | N/A | 1, 10, 54 | ||||
| HSBC Bank (General Partner) Limited | 100.00 | 55 | ||||
| HSBC Bank (Mauritius) Limited | 100.00 | 56 | ||||
| HSBC Bank (Singapore) Limited | 100.00 | 48 | ||||
| HSBC Bank (Taiwan) Limited | 100.00 | 57 | ||||
| HSBC Bank (Uruguay) S.A. | 100.00 | 58 | ||||
| HSBC Bank (Vietnam) Ltd. | 100.00 | 59 | ||||
| HSBC Bank A.S. | 100.00 | 60 | ||||
| HSBC Bank Australia Limited | 100.00 | 52 | ||||
| HSBC Bank Bermuda Limited | 100.00 | 18 | ||||
| HSBC Bank Capital Funding (Sterling 1) LP | N/A | 1, 55 | ||||
| HSBC Bank Egypt S.A.E | 94.54 | 61 | ||||
| HSBC Bank Malaysia Berhad | 100.00 | 4, 46 | ||||
| HSBC Bank Malta p.l.c. | 70.03 | 62 | ||||
| HSBC Bank Middle East Limited | 100.00 | 4, 63 | ||||
| HSBC Bank Pension Trust (UK) Limited | 100.00 | 11 | ||||
| HSBC Bank plc | 100.00 | 3, 4, 11 | ||||
| HSBC Bank USA, National Association | 100.00 | 4, 64 | ||||
| HSBC Branch Nominee (UK) Limited | 100.00 | 13 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 375 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| HSBC Brasil Holding S.A. | 100.00 | 16 | ||||
| HSBC Broking Forex (Asia) Limited | 100.00 | 19 | ||||
| HSBC Broking Futures (Asia) Limited | 100.00 | 19 | ||||
| HSBC Broking Futures (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Broking Securities (Asia) Limited | 100.00 | 19 | ||||
| HSBC Broking Securities (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Broking Services (Asia) Limited | 100.00 | 19 | ||||
| HSBC Capital (USA), Inc. | 100.00 | 24 | ||||
| HSBC Card Services Inc. | 100.00 | 24 | ||||
| HSBC Casa de Bolsa, S.A. de C.V., Grupo<br><br>Financiero HSBC | 100.00 | (99.99) | 12 | |||
| HSBC Cayman Limited (In Liquidation) | 100.00 | 65 | ||||
| HSBC Cayman Services Limited | 100.00 | 65 | ||||
| HSBC Client Holdings Nominee (UK) Limited | 100.00 | 11 | ||||
| HSBC Client Nominee (Jersey) Limited | 100.00 | 2, 66 | ||||
| HSBC Continental Europe | 99.99 | 5, 33 | ||||
| HSBC Corporate Advisory (Malaysia) Sdn Bhd | 100.00 | 46 | ||||
| HSBC Corporate Finance (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Corporate Secretary (UK) Limited | 100.00 | 3, 11 | ||||
| HSBC Corporate Services (Shanghai) Co., Ltd. | N/A | 1, 10, 67 | ||||
| HSBC Corporate Trustee Company (UK)<br><br>Limited | 100.00 | 11 | ||||
| HSBC Custody Nominees (Australia) Limited | 100.00 | 52 | ||||
| HSBC Custody Services (Guernsey) Limited | 100.00 | 17 | ||||
| HSBC Electronic Data Processing<br><br>(Guangdong) Limited | N/A | 1, 10, 69 | ||||
| HSBC Electronic Data Processing (Malaysia)<br><br>Sdn Bhd | 100.00 | 70 | ||||
| HSBC Electronic Data Processing<br><br>(Philippines), Inc. | 99.99 | 71 | ||||
| HSBC Electronic Data Processing India<br><br>Private Limited | 100.00 | 72 | ||||
| HSBC Electronic Data Processing Lanka<br><br>(Private) Limited | 100.00 | 73 | ||||
| HSBC Electronic Data Service Delivery<br><br>(Egypt) S.A.E | 100.00 | 74 | ||||
| HSBC Equipment Finance (UK) Limited | 100.00 | 13 | ||||
| HSBC Equity (UK) Limited (In Liquidation) | 100.00 | 14 | ||||
| HSBC Europe B.V. | 100.00 | 11 | ||||
| HSBC Express Finance Data Services Limited | 100.00 | 19 | ||||
| HSBC Factoring (France) | 100.00 | (99.99) | 5, 33 | |||
| HSBC Finance (Netherlands) | 100.00 | 3, 11 | ||||
| HSBC Finance Corporation | 100.00 | 24 | ||||
| HSBC Finance Limited (In Liquidation) | 100.00 | 14 | ||||
| HSBC Finance Transformation (UK) Limited | 100.00 | 11 | ||||
| HSBC Financial Advisors Singapore Pte. Ltd. | 100.00 | 2, 48 | ||||
| HSBC Financial Services (Lebanon) S.A.L (In<br><br>Liquidation) | 99.83 | 75 | ||||
| HSBC FinTech Services (Shanghai) Company<br><br>Limited | N/A | 1, 10, 76 | ||||
| HSBC Global Custody Nominee (UK) Limited | 100.00 | 11 | ||||
| HSBC Global Custody Proprietary Nominee<br><br>(UK) Limited | 100.00 | 11 | ||||
| HSBC Global Services (Canada) Limited | 100.00 | 85 | ||||
| HSBC Global Services (China) Holdings<br><br>Limited | 100.00 | 11 | ||||
| HSBC Global Services (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Global Services (UK) Limited | 100.00 | 11 | ||||
| HSBC Global Services Limited | 100.00 | 3, 11 | ||||
| HSBC Group Management Services Limited | 100.00 | 11 | ||||
| HSBC Group Nominees UK Limited | 100.00 | 3, 11 | ||||
| HSBC Holdings B.V. | 100.00 | 11 | ||||
| HSBC Innovation Bank Limited | 100.00 | 87 | ||||
| HSBC Institutional Trust Services (Asia)<br><br>Limited | 100.00 | 19 | ||||
| HSBC Institutional Trust Services (Bermuda)<br><br>Limited | 100.00 | 18 | ||||
| HSBC Institutional Trust Services (Mauritius)<br><br>Limited | 100.00 | 88 | ||||
| HSBC Institutional Trust Services (Singapore)<br><br>Limited | 100.00 | 48 | ||||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| HSBC Insurance (Asia) Limited | 100.00 | 89 | ||||
| HSBC Insurance (Asia-Pacific) Holdings<br><br>Limited | 100.00 | 79 | ||||
| HSBC Insurance (Bermuda) Limited | 100.00 | 18 | ||||
| HSBC Insurance Agency (USA) Inc. | 100.00 | 90 | ||||
| HSBC Insurance Brokerage Company Limited | N/A | 1, 10, 91 | ||||
| HSBC Insurance Brokers Greater China<br><br>Limited | 100.00 | 79 | ||||
| HSBC Insurance SAC 1 (Bermuda) Limited | 100.00 | 18 | ||||
| HSBC Insurance SAC 2 (Bermuda) Limited | 100.00 | 18 | ||||
| HSBC International Finance Corporation<br><br>(Delaware) | 100.00 | 92 | ||||
| HSBC International Trustee (BVI) Limited | 100.00 | 9, 93 | ||||
| HSBC International Trustee (Holdings) Pte.<br><br>Limited | 100.00 | 48 | ||||
| HSBC International Trustee Limited | 100.00 | 94 | ||||
| HSBC Inversiones S.A. | 100.00 | 53 | ||||
| HSBC InvestDirect (India) Private Limited | 99.99 | 50 | ||||
| HSBC InvestDirect Financial Services (India)<br><br>Limited | 99.99 | 50 | ||||
| HSBC InvestDirect Sales & Marketing (India)<br><br>Private Limited | 98.99 | (98.98) | 49 | |||
| HSBC InvestDirect Securities (India) Private<br><br>Limited | 99.99 | 50 | ||||
| HSBC Investment and Insurance Brokerage,<br><br>Philippines Inc. | 99.99 | 95 | ||||
| HSBC Investment Bank Holdings B.V. | 100.00 | 11 | ||||
| HSBC Investment Bank Holdings Limited | 100.00 | 11 | ||||
| HSBC Investment Company Limited | 100.00 | 3, 11 | ||||
| HSBC Invoice Finance (UK) Limited | 100.00 | 13 | ||||
| HSBC Issuer Services Common Depositary<br><br>Nominee (UK) Limited | 100.00 | 11 | ||||
| HSBC Latin America B.V. | 100.00 | 11 | ||||
| HSBC Latin America Holdings (UK) Limited | 100.00 | 3, 11 | ||||
| HSBC Leasing (Asia) Limited | 100.00 | 19 | ||||
| HSBC Life (Bermuda) Limited | 100.00 | 18 | ||||
| HSBC Life (Cornell Centre) Limited | 100.00 | 89 | ||||
| HSBC Life (Edwick Centre) Limited | 100.00 | 89 | ||||
| HSBC Life (International) Limited | 100.00 | 18 | ||||
| HSBC Life (Property) Limited | 100.00 | 89 | ||||
| HSBC Life (Singapore) Pte. Ltd. | 100.00 | 48 | ||||
| HSBC Life (Tsing Yi Industrial) Limited | 100.00 | 89 | ||||
| HSBC Life (UK) Limited | 100.00 | 11 | ||||
| HSBC Life (Workshop) Limited | 100.00 | 89 | ||||
| HSBC Life Assurance (Malta) Ltd. | 100.00 | (70.03) | 80 | |||
| HSBC Life Insurance Company Limited | N/A | 1, 10, 97 | ||||
| HSBC LU Nominees Limited | 100.00 | 11 | ||||
| HSBC Markets (USA) Inc. | 100.00 | 24 | ||||
| HSBC Marking Name Nominee (UK) Limited | 100.00 | 11 | ||||
| HSBC Master Trust Trustee Limited (In<br><br>Liquidation) | 100.00 | 14 | ||||
| HSBC Mexico, S.A., Institucion de Banca<br><br>Multiple, Grupo Financiero HSBC | 99.99 | 12 | ||||
| HSBC Middle East Asset CO. LLC | 100.00 | 100 | ||||
| HSBC Middle East Holdings B.V. | 100.00 | 3, 4, 63 | ||||
| HSBC Middle East Leasing Partnership | N/A | 1, 101 | ||||
| HSBC Middle East Securities L.L.C (In<br><br>Liquidation) | 100.00 | 102 | ||||
| HSBC Mortgage Corporation (USA) | 100.00 | 24 | ||||
| HSBC Nominees (Asing) Sdn Bhd | 100.00 | 46 | ||||
| HSBC Nominees (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Nominees (New Zealand) Limited | 100.00 | 103 | ||||
| HSBC Nominees (Tempatan) Sdn Bhd | 100.00 | 46 | ||||
| HSBC North America Holdings Inc. | 100.00 | 4, 24 | ||||
| HSBC Overseas Holdings (UK) Limited | 100.00 | 3, 11 | ||||
| HSBC Overseas Investments Corporation<br><br>(New York) | 100.00 | 104 | ||||
| HSBC Overseas Nominee (UK) Limited | 100.00 | 11 | ||||
| HSBC PB Corporate Services 1 Limited | 100.00 | 105 | ||||
| HSBC PB Services (Suisse) SA | 100.00 | 106 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 376 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| HSBC Pension Trust (Ireland) DAC (In<br><br>Liquidation) | 100.00 | 107 | ||||
| HSBC Pensiones, S.A. (In Liquidation) | 100.00 | (99.99) | 12 | |||
| HSBC PI Holdings (Mauritius) Limited | 100.00 | 88 | ||||
| HSBC Preferential LP (UK) | 100.00 | 11 | ||||
| HSBC Private Bank (Luxembourg) S.A. | 100.00 | (99.99) | 96 | |||
| HSBC Private Bank (Suisse) SA | 100.00 | 106 | ||||
| HSBC Private Bank (UK) Limited | 100.00 | 11 | ||||
| HSBC Private Banking Holdings (Suisse) SA | 100.00 | 106 | ||||
| HSBC Private Banking Nominee 3 (Jersey)<br><br>Limited | 100.00 | 105 | ||||
| HSBC Private Equity Investments (UK)<br><br>Limited | 100.00 | 11 | ||||
| HSBC Private Markets Management SARL | N/A | 1, 2, 108 | ||||
| HSBC Private Trustee (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Professional Services (India) Private<br><br>Limited | 100.00 | 109 | ||||
| HSBC Property (UK) Limited | 100.00 | 11 | ||||
| HSBC Property Funds (Holding) Limited | 100.00 | 11 | ||||
| HSBC Provident Fund Trustee (Hong Kong)<br><br>Limited | 100.00 | 19 | ||||
| HSBC Qianhai Securities Limited | N/A | 1, 10, 110 | ||||
| HSBC Real Estate Leasing (France) | 100.00 | (99.99) | 5, 33 | |||
| HSBC REGIO Fund General Partner S.à r.l. | 100.00 | 86 | ||||
| HSBC Retirement Benefits Trustee (UK)<br><br>Limited | 100.00 | 3, 11 | ||||
| HSBC Retirement Services Limited (In<br><br>Liquidation) | 100.00 | 2, 14 | ||||
| HSBC Saudi Arabia, Closed Joint Stock<br><br>Company | 100.00 | (66.19) | 111 | |||
| HSBC Securities (Egypt) S.A.E. (In<br><br>Liquidation) | 100.00 | (94.65) | 112 | |||
| HSBC Securities (Japan) Co., Ltd. | 100.00 | 51 | ||||
| HSBC Securities (Singapore) Pte Limited | 100.00 | 48 | ||||
| HSBC Securities (South Africa) (Pty) Limited | 100.00 | 113 | ||||
| HSBC Securities (Taiwan) Corporation Limited | 100.00 | 57 | ||||
| HSBC Securities (USA) Inc. | 100.00 | 24 | ||||
| HSBC Securities and Capital Markets (India)<br><br>Private Limited | 99.99 | 6, 49 | ||||
| HSBC Securities Brokers (Asia) Limited | 100.00 | 19 | ||||
| HSBC Securities Investments (Asia) Limited | 100.00 | 19 | ||||
| HSBC Securities Services (Bermuda) Limited | 100.00 | 18 | ||||
| HSBC Securities Services (Guernsey) Limited | 100.00 | 17 | ||||
| HSBC Securities Services (Ireland) DAC | 100.00 | 107 | ||||
| HSBC Securities Services (Luxembourg) S.A. | 100.00 | 96 | ||||
| HSBC Securities Services Holdings (Ireland)<br><br>DAC | 100.00 | 107 | ||||
| HSBC Securities Services Nominees Limited | 100.00 | 19 | ||||
| HSBC Seguros, S.A de C.V., Grupo Financiero<br><br>HSBC | 100.00 | (99.99) | 12 | |||
| HSBC Semfi Limited | 75.00 | 11 | ||||
| HSBC Service Company Germany GmbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Service Delivery (Polska) Sp. z o.o. | 100.00 | 114 | ||||
| HSBC Services (France) | 100.00 | (99.99) | 5, 33 | |||
| HSBC Services Japan Limited | 100.00 | 84 | ||||
| HSBC Services USA Inc. | 100.00 | 115 | ||||
| HSBC Servicios Financieros, S.A. de C.V | 100.00 | (99.99) | 12 | |||
| HSBC Servicios, S.A. DE C.V., Grupo<br><br>Financiero HSBC | 100.00 | (99.99) | 12 | |||
| HSBC SFT (C.I.) Limited | 100.00 | 17 | ||||
| HSBC Software Development (Guangdong)<br><br>Limited | N/A | 1, 10, 116 | ||||
| HSBC Software Development (India) Private<br><br>Limited | 100.00 | 117 | ||||
| HSBC Software Development (Malaysia) Sdn<br><br>Bhd | 100.00 | 70 | ||||
| HSBC Specialist Investments Limited | 100.00 | 11 | ||||
| HSBC Technology & Services (USA) Inc. | 100.00 | 24 | ||||
| HSBC Transaction Services GmbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Trinkaus & Burkhardt (International)<br><br>S.A. | 100.00 | (99.99) | 96 | |||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| HSBC Trinkaus & Burkhardt Gesellschaft fur<br><br>Bankbeteiligungen mbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Trinkaus & Burkhardt GmbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Trinkaus Real Estate GmbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Trust Company (Delaware), National<br><br>Association | 100.00 | 92 | ||||
| HSBC Trustee (C.I.) Limited | 100.00 | 105 | ||||
| HSBC Trustee (Cayman) Limited | 100.00 | 65 | ||||
| HSBC Trustee (Guernsey) Limited | 100.00 | 17 | ||||
| HSBC Trustee (Hong Kong) Limited | 100.00 | 19 | ||||
| HSBC Trustee (Singapore) Limited | 100.00 | 48 | ||||
| HSBC UK Bank plc | 100.00 | 3, 13 | ||||
| HSBC UK Client Nominee Limited | 100.00 | 13 | ||||
| HSBC UK Covered Bonds LLP | N/A | 1, 13 | ||||
| HSBC UK Societal Projects Limited (In<br><br>Dissolution) | N/A | 1, 13 | ||||
| HSBC USA Inc. | 100.00 | 4, 104 | ||||
| HSBC Ventures USA Inc. | 100.00 | 24 | ||||
| HSBC Violet Investments (Mauritius) Limited | 100.00 | 118 | ||||
| HSBC Wealth Client Nominee Limited | 100.00 | 13 | ||||
| HSBC Yatirim Menkul Degerler A.S. | 100.00 | 60 | ||||
| HSI Asset Securitization Corporation | 100.00 | 24 | ||||
| HSI International Limited | 100.00 | (63.43) | 38 | |||
| HSIL Investments Limited | 100.00 | 11 | ||||
| Hubei Macheng HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 119 | ||||
| Hubei Suizhou Cengdu HSBC Rural Bank<br><br>Company Limited | N/A | 1, 10, 120 | ||||
| Hubei Tianmen HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 121 | ||||
| Hunan Pingjiang HSBC Rural Bank Company<br><br>Limited | N/A | 1, 10, 122 | ||||
| Imenson Limited | 100.00 | (63.43) | 38 | |||
| Inmobiliaria Bisa, S.A. de C.V. | 99.99 | (99.98) | 12 | |||
| Inmobiliaria Grufin, S.A. de C.V. | 100.00 | (99.99) | 12 | |||
| Inmobiliaria Guatusi, S.A. de C.V. | 100.00 | (99.99) | 12 | |||
| Internationale Kapitalanlagegesellschaft mit<br><br>beschränkter Haftung | 100.00 | (99.99) | 7, 77 | |||
| James Capel (Nominees) Limited | 100.00 | 11 | ||||
| James Capel (Taiwan) Nominees Limited | 100.00 | 11 | ||||
| Keyser Ullmann Limited | 100.00 | (99.99) | 11 | |||
| Lion Corporate Services Limited | 100.00 | 19 | ||||
| Lion International Corporate Services Limited | 100.00 | 94 | ||||
| Lion International Management Limited | 100.00 | 94 | ||||
| Lion Management (Hong Kong) Limited | 100.00 | 19 | ||||
| Lyndholme Limited | 100.00 | 19 | ||||
| Marks and Spencer Financial Services plc | 100.00 | 123 | ||||
| Marks and Spencer Unit Trust Management<br><br>Limited | 100.00 | 123 | ||||
| Midcorp Limited (In Liquidation) | 100.00 | 14 | ||||
| Midland Bank (Branch Nominees) Limited | 100.00 | 13 | ||||
| Midland Nominees Limited | 100.00 | 13 | ||||
| MP Payments Group Limited | 100.00 | 11 | ||||
| MP Payments Middle East AE L.L.C. (In<br><br>Liquidation) | 100.00 | 124 | ||||
| MP Payments Operations Limited | 100.00 | 11 | ||||
| MP Payments Singapore Pte. Ltd. (In<br><br>Liquidation) | 100.00 | 48 | ||||
| MP Payments UK Limited | 100.00 | 11 | ||||
| Prudential Client HSBC GIS Nominee (UK)<br><br>Limited | 100.00 | 11 | ||||
| PT Bank HSBC Indonesia | 98.94 | 125 | ||||
| PT HSBC Sekuritas Indonesia | 99.00 | 126 | ||||
| R/CLIP Corp. | 100.00 | 24 | ||||
| Real Estate Collateral Management Company | 100.00 | 24 | ||||
| Republic Nominees Limited | 100.00 | 17 | ||||
| RLUKREF Nominees (UK) One Limited | 100.00 | 11 | ||||
| RLUKREF Nominees (UK) Two Limited | 100.00 | 11 | ||||
| S.A.P.C. - Ufipro Recouvrement | 99.99 | 8, 33 | ||||
| Saf Baiyun | 100.00 | (99.99) | 5, 33 | |||
| Saf Guangzhou | 100.00 | (99.99) | 5, 33 | |||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 377 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Subsidiaries | % of share class<br><br>held by immediate<br><br>parent company (or<br><br>by the Group where<br><br>this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| SFM | 100.00 | (99.99) | 5, 33 | |||
| SFSS Nominees (Pty) Limited | 100.00 | 113 | ||||
| Shandong Rongcheng HSBC Rural Bank<br><br>Company Limited | N/A | 1, 10, 127 | ||||
| Shenzhen HSBC Development Company Ltd | N/A | 1, 10, 128 | ||||
| Sico Limited | 100.00 | 129 | ||||
| SNC Les Oliviers D'Antibes | 60.00 | (59.99) | 8, 78 | |||
| SNCB/M6-2007 A | 100.00 | (99.99) | 2, 5, 33 | |||
| SNCB/M6-2007 B | 100.00 | (99.99) | 2, 5, 33 | |||
| SNCB/M6-2008 A | 100.00 | (99.99) | 2, 5, 33 | |||
| Société Française et Suisse | 100.00 | (99.99) | 5, 33 | |||
| Somers Dublin DAC | 100.00 | (99.99) | 107 | |||
| Somers Nominees (Far East) Limited | 100.00 | 18 | ||||
| Sopingest | 100.00 | (99.99) | 2, 5, 33 | |||
| St Cross Trustees Limited | 100.00 | 13 | ||||
| Sun Hung Kai Development (Lujiazui III)<br><br>Limited | N/A | 1, 10, 134 | ||||
| The Hongkong and Shanghai Banking<br><br>Corporation Limited | 100.00 | 19 | ||||
| Tooley Street View Limited | 100.00 | 3, 11 | ||||
| Trinkaus Europa Immobilien-Fonds Nr.3<br><br>Objekt Utrecht Verwaltungs-GmbH | 100.00 | (99.99) | 7, 77 | |||
| Trinkaus Immobilien-Fonds<br><br>Geschaeftsfuehrungs-GmbH | 100.00 | (99.99) | 7, 77 | |||
| Trinkaus Immobilien-Fonds Verwaltungs-<br><br>GmbH | 100.00 | (99.99) | 7, 77 | |||
| Trinkaus Private Equity Management GmbH | 100.00 | (99.99) | 7, 77 | |||
| Trinkaus Private Equity Verwaltungs GmbH | 100.00 | (99.99) | 7, 77 | |||
| Turnsonic (Nominees) Limited | 100.00 | 13 | ||||
| Valeurs Mobilières Elysées | 100.00 | (99.99) | 5, 33 | |||
| WARDLEY LIMITED | 100.00 | 19 | ||||
| Wayfoong (Asia) Limited | 100.00 | 79 | ||||
| Wayfoong Nominees Limited | 100.00 | 19 | ||||
| Westminster House, LLC | N/A | 1, 24 | ||||
| Woodex Limited | 100.00 | 18 | ||||
| Yan Nin Development Company Limited | 100.00 | (63.43) | 38 |
Funds
The undertakings below are part of our fund management structure.
| Funds | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes | ||||
|---|---|---|---|---|---|---|
| Amber 2022 Direct Lending Fund SCA<br><br>SICAV-RAIF | N/A | 1, 175 | ||||
| AMGB International Long-Term Equity<br><br>Strategy Mandate | N/A | 1, 11 | ||||
| Blackthorn Diversified Credit 2024 LP | N/A | 1, 186 | ||||
| CI 10 LP Inc | N/A | 1, 98 | ||||
| Cinnabar 2021 Direct Lending Cell 1 PC | N/A | 1, 176 | ||||
| Copper Direct Lending L.P. | N/A | 1, 177 | ||||
| D9 LP Inc | N/A | 1, 98 | ||||
| Deerpath Capital VII (Cayman), LP | N/A | 1, 187 | ||||
| Diversified Loan Fund – Direct Lending A<br><br>S.a.r.l | 100.00 | (48.00) | 68 | |||
| Diversified Loan Fund – Direct Lending B<br><br>S.a.r.l | 100.00 | (48.00) | 68 | |||
| Diversified Loan Fund – Syndicated Loan A<br><br>S.a.r.l | 100.00 | (48.00) | 68 | |||
| Diversified Loan Fund – Syndicated Loan C<br><br>S.a.r.l | 100.00 | (48.00) | 68 | |||
| DRC European Real Estate Debt Fund IV<br><br>(EUR) L.P. | N/A | 1, 178 | ||||
| Elysées Grand Large | N/A | 1, 78 | ||||
| ESDLF 2023 Carry L.P | N/A | 1, 98 | ||||
| GTIDF Fund Carry L.P. | N/A | 1, 98 | ||||
| H.I.G. Heliodor 2021 PC | N/A | 1, 179 | ||||
| H5 LP Inc | N/A | 1, 98 | ||||
| Funds | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| H8 LP Inc | N/A | 1, 98 | ||||
| H9 LP Inc | N/A | 1, 98 | ||||
| Hayfin Garnet Feeder Fund S.C.A. SICAV-<br><br>RAIF | N/A | 1, 180 | ||||
| Hayfin Garnet II Feeder Fund S.C.A. SICAV-<br><br>RAIF | N/A | 1, 180 | ||||
| HSBC (Guernsey) Aggregator PCC Limited | 100.00 | 98 | ||||
| HSBC (Guernsey) Focus PCC Limited | 100.00 | 98 | ||||
| HSBC (Guernsey) GP PCC Limited | 100.00 | 17 | ||||
| HSBC Alternative Investments Limited | 100.00 | 11 | ||||
| HSBC ASIA LIVING REAL ESTATE GP S.À<br><br>R.L. | 100.00 | 164 | ||||
| HSBC Asset Management (Fund Services<br><br>UK) Limited | 100.00 | 11 | ||||
| HSBC Asset Management (India) Private<br><br>Limited | 99.99 | 50 | ||||
| HSBC Asset Management (Japan) Limited | 100.00 | 51 | ||||
| HSBC Climate Growth Partners Fund SCSp | N/A | 1, 165 | ||||
| HSBC Climate Growth Partners GP S.à r.l. | 100.00 | 165 | ||||
| HSBC Climate Growth Partners VC Carry<br><br>L.P. | N/A | 1, 98 | ||||
| HSBC Diversified Loan Fund – Master S.a.r.l. | 100.00 | (48.00) | 68 | |||
| HSBC Diversified Loan Fund General Partner<br><br>S.à r.l. | 100.00 | 68 | ||||
| HSBC Diversified Loan Fund SCSp-RAIF | N/A | 1, 68 | ||||
| HSBC Equity Partners USA, LP | N/A | 1, 83 | ||||
| HSBC European Senior Direct Lending 2023<br><br>HoldCo S.à r.l. | 100.00 | (99.60) | 86 | |||
| HSBC EUROPEAN SENIOR DIRECT<br><br>LENDING AIF OFS | N/A | 1, 165 | ||||
| HSBC European Senior Direct Lending Fund<br><br>2023 RAIF SICAV-S.A. | 99.60 | 86 | ||||
| HSBC Financial Technology Venture Capital<br><br>Fund SCSp | N/A | 1, 165 | ||||
| HSBC Financial Technology Venture Capital<br><br>GP S.à r.l. | 100.00 | 165 | ||||
| HSBC Fintech VC Carry L.P. | N/A | 1, 98 | ||||
| HSBC GH Luxembourg Fund | N/A | 1, 165 | ||||
| HSBC Global Asset Management (Bermuda)<br><br>Limited | 100.00 | 4, 18 | ||||
| HSBC Global Asset Management<br><br>(Deutschland) GmbH | 100.00 | (99.99) | 7, 77 | |||
| HSBC Global Asset Management (France) | 100.00 | (99.99) | 5, 78 | |||
| HSBC Global Asset Management (Hong<br><br>Kong) Limited | 100.00 | 79 | ||||
| HSBC Global Asset Management (Malta)<br><br>Limited | 100.00 | (70.03) | 80 | |||
| HSBC Global Asset Management (México),<br><br>S.A. de C.V., Sociedad Operadora de Fondos<br><br>de Inversión, Grupo Financiero HSBC | 100.00 | (99.99) | 12 | |||
| HSBC Global Asset Management<br><br>(Singapore) Limited | 100.00 | 48 | ||||
| HSBC Global Asset Management<br><br>(Switzerland) AG | 100.00 | 5, 81 | ||||
| HSBC Global Asset Management (Taiwan)<br><br>Limited | 100.00 | 82 | ||||
| HSBC Global Asset Management (UK)<br><br>Limited | 100.00 | 11 | ||||
| HSBC Global Asset Management (USA) Inc. | 100.00 | 83 | ||||
| HSBC Global Asset Management Holdings<br><br>(Bahamas) Limited | 100.00 | 84 | ||||
| HSBC Global Asset Management Limited | 100.00 | 3, 11 | ||||
| HSBC Global Infrastucture Debt Fund SCSp | N/A | 1, 86 | ||||
| HSBC Global Transition Infrastructure Debt<br><br>Fund RAIF SICAV-S.A. | N/A | 1, 86 | ||||
| HSBC Infrastructure Debt GP 1 S.à r.l. | N/A | 1, 86 | ||||
| HSBC Infrastructure Debt GP 2 S.à r.l. | N/A | 1, 86 | ||||
| HSBC Investment Funds (Hong Kong)<br><br>Limited | 100.00 | 79 | ||||
| HSBC Investment Funds (Luxembourg) SA | 100.00 | 96 | ||||
| HSBC Latin America Coinvestments<br><br>Partners, LP | N/A | 1, 83 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 378 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Funds | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| HSBC Management (Guernsey) Limited | 100.00 | 98 | ||||
| HSBC Management Consultancy (Shanghai)<br><br>Company Limited | N/A | 1, 10, 99 | ||||
| HSBC Portfoy Yonetimi A.S. | 100.00 | 60 | ||||
| HSBC Private Markets GP S.à r.l. | 100.00 | 165 | ||||
| HSBC RCF HoldCo S.à r.l. | 100.00 | 86 | ||||
| HSBC RCF Partnership Fund RAIF SICAV-<br><br>S.A. | N/A | 1, 86 | ||||
| HSBC RCF SPV S.à r.l. | 100.00 | 86 | ||||
| HSBC REIM (France) | 100.00 | (99.99) | 5, 78 | |||
| HSBC SDL UK 2020 HoldCo S.à r.l | 100.00 | (32.60) | 96 | |||
| HSBC SDL UK 2020 LendCo S.à r.l.B137 | 100.00 | (32.60) | 96 | |||
| HSBC SDL UK II HoldCo S.à r.l. | 100.00 | (48.90) | 86 | |||
| HSBC SDLF II Carry L.P. | N/A | 1, 98 | ||||
| HSBC Senior UK Direct Lending 2020 RAIF<br><br>SICAV-S.A. | N/A | 1, 96 | ||||
| HSBC Senior UK Direct Lending Fund II<br><br>RAIF SICAV-S.A. | N/A | 1, 86 | ||||
| HSBC Trustees (India) Private Limited | 99.99 | 49 | ||||
| HSBC USD Senior Direct Lending Carry L.P. | N/A | 1, 98 | ||||
| HSBC USD Senior Direct Lending GP S.à.r.l | 100.00 | 86 | ||||
| HVDF US LLC | N/A | 1, 24 | ||||
| HVDF US, L.P. | N/A | 1, 2, 24 | ||||
| I3 LP Inc | N/A | 1, 98 | ||||
| ICG Credit Strategies S.C.A SICAV-RAIF -<br><br>ICG Mandate 2023 Direct Lending Fund | N/A | 1, 181 | ||||
| ICG Credit Strategies S.C.A. SICAV-RAIF -<br><br>ICG Mandate 2020 Direct Lending Fund | N/A | 1, 181 | ||||
| Idinvest Growth Secondary Feeder SCA<br><br>SICAV-RAIF | N/A | 1, 182 | ||||
| INHK IE LP Inc | N/A | 1, 98 | ||||
| INHK Orca Carry L.P. | N/A | 1, 98 | ||||
| INHK PC LP Inc | N/A | 1, 98 | ||||
| INHK PE LP Inc | N/A | 1, 98 | ||||
| J6 LP Inc | N/A | 1, 98 | ||||
| KKR-LON Credit Strategies SCA SICAV-RAIF | N/A | 1, 183 | ||||
| Korea Nova Solar 1 Inc | 100.00 | (66.70) | 166 | |||
| Korea Nova Solar 2 Inc | 100.00 | (66.70) | 166 | |||
| L1 LP Inc | N/A | 1, 98 | ||||
| Lohas ECE Brown KK | N/A | 1, 167 | ||||
| NAV Financing Partnership Fund Carry L.P. | N/A | 1, 98 | ||||
| Nova Solar 1 GK | N/A | 1, 168 | ||||
| Nova Solar 2 GK | N/A | 1, 168 | ||||
| Nova Solar 3 GK | N/A | 1, 168 | ||||
| Nova Solar 4 GK | N/A | 1, 168 | ||||
| P2 LP Inc | N/A | 1, 98 | ||||
| PE Opps II Carry L.P | N/A | 1, 98 | ||||
| PE Opps III Carry L.P | N/A | 1, 98 | ||||
| PPDP Peridot 2022 Feeder SCA SICAV-RAIF | N/A | 1, 180 | ||||
| RCF Partnership Fund Carry L.P. | N/A | 1, 98 | ||||
| Red Hexagon Energy Transition Asia Carry<br><br>L.P. | N/A | 1, 98 | ||||
| Red Hexagon Energy Transition Asia Fund<br><br>SCSp | N/A | 1, 86 | ||||
| Red Hexagon Energy Transition Asia GP S.à<br><br>r.l. | 100.00 | 86 | ||||
| Red Hexagon ETA Master HoldCo Limited | 100.00 | 169 | ||||
| Red Hexagon ETA Tekoma Japan Limited | 100.00 | (66.70) | 169 | |||
| Red Hexagon ETA Tekoma Operation<br><br>Limited | 100.00 | (66.70) | 169 | |||
| Red Hexagon ETA Tekoma Taiwan Limited | 100.00 | (66.70) | 169 | |||
| SilkRoad Fund Management S.à.r.l | 100.00 | 130 | ||||
| Silkroad GP II Limited | 100.00 | 2, 131 | ||||
| Silkroad GP II S.a.r.l. | 100.00 | 130 | ||||
| Silkroad GP Limited | 100.00 | 65 | ||||
| Silkroad GP SC S.a r.l | 100.00 | 132 | ||||
| Silkroad Property Partners PTE. LTD. | 100.00 | 133 | ||||
| Solar Field 13 GK | N/A | 1, 168 | ||||
| SSOF IV Overage SMA H, L.P. | N/A | 1, 184 | ||||
| Sunpower Americas Co-Invest I SCS | N/A | 1, 185 | ||||
| Taiwan Nova Solar 1 Limited | 100.00 | (66.70) | 170 | |||
| Funds | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes | ||||
| --- | --- | --- | --- | |||
| Tekoma Energy Group Holdings Limited | 66.70 | 169 | ||||
| Tekoma Energy Holdings Limited | 100.00 | (66.70) | 170 | |||
| Tekoma Energy Inc | 100.00 | (66.70) | 171 | |||
| Tekoma Energy KK | 100.00 | (66.70) | 1, 168 | |||
| Tekoma Energy Korea Inc | 100.00 | (66.70) | 172 | |||
| Tekoma Korea Holdings Limited | 100.00 | (66.70) | 166 | |||
| Tekoma Korea Limited | 100.00 | (66.70) | 169 | |||
| Vision 2023 Carry L.P | N/A | 1, 98 | ||||
| Vision 2024 Carry L.P. | N/A | 1, 98 | ||||
| Vision 2025 Carry L.P. | N/A | 1, 98 | ||||
| Vision Apex 2025 Carry L.P. | N/A | 1, 98 | ||||
| Vision Impact Carry L.P. | N/A | 1, 98 | ||||
| Vision Infrastructure Carry L.P. | N/A | 1, 98 | ||||
| W4 LP Inc | N/A | 1, 98 |
Joint ventures
The undertakings below are joint ventures and equity accounted.
| Joint ventures | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes |
|---|---|---|
| Climate Asset Management Limited | 40.00 | 135 |
| MK HoldCo Limited | 50.32 | 2, 136 |
| Pentagreen Capital Pte. Ltd | 50.00 | 137 |
| ProServe Bermuda Limited | 50.00 | 138 |
| The London Silver Market Fixing Limited | N/A | 1, 2, 139 |
| Vaultex UK Limited | 50.00 | 2, 140 |
Non-Profit Foundation
The undertakings below are Non-Profit Foundation.
| Non-Profit Foundation | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes |
|---|---|---|
| HSBC Philanthropy Foundation Beijing | N/A | 1, 163 |
Associates
The undertakings below are associates and equity accounted.
| Associates | % of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies) | Footnotes | ||||
|---|---|---|---|---|---|---|
| Aiera, Inc. | 2.90 | 4, 173 | ||||
| Bank of Communications Co., Ltd. | 16.00 | 2, 141 | ||||
| Barrowgate Limited | 24.64 | (15.63) | 142 | |||
| BGF Group plc | 24.62 | 143 | ||||
| Bud Financial Limited | 6.20 | 4, 144 | ||||
| CANARA HSBC LIFE INSURANCE<br><br>COMPANY LIMITED | 25.50 | 145 | ||||
| Dowsure Inc. | 10.12 | 2, 4, 147 | ||||
| Episode Six Inc. | 5.68 | 4, 148 | ||||
| EPS Company (Hong Kong) Limited | 42.03 | (38.65) | 19 | |||
| Future Forward Holdings LLC | N/A | 1, 24 | ||||
| HQLAX S.à r.l. | 6.09 | 4, 149 | ||||
| HSBC Jintrust Fund Management Company<br><br>Limited | N/A | 1, 2, 10,<br><br>150 | ||||
| HSBC UK Covered Bonds (LM) Limited | 20.00 | 2, 151 | ||||
| Intelligent Processing Solution Limited | 10.00 | 2, 174 | ||||
| Lightico Ltd | 3.19 | 4, 152 | ||||
| LiquidityMatch LLC | N/A | 1, 153 | ||||
| London Precious Metals Clearing Limited | 30.00 | 2, 154 | ||||
| Marketnode PTE. Ltd. | 12.64 | 4, 155 | ||||
| MENA Infrastructure Fund (GP) Ltd | 33.33 | 156 | ||||
| Quantexa Limited | 8.92 | 4, 157 | ||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 379 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Radiant Global Investors LLC | N/A | 1, 2, 158 | ||||
| --- | --- | --- | ||||
| Saudi Awwal Bank | 31.00 | 159 | ||||
| The London Gold Market Fixing Limited | N/A | 1, 139 | ||||
| Threadneedle Software Holdings Limited | 7.80 | 4, 160 | ||||
| Topaz Consultation LLC | N/A | 1, 24 | ||||
| Trade Information Network Limited (In<br><br>Liquidation) | 12.76 | 161 | ||||
| Trinkaus Europa Immobilien-Fonds Nr. 7<br><br>Frankfurt Mertonviertel KG | N/A | 1, 77 | ||||
| We Trade Innovation Designated Activity<br><br>Company (In Liquidation) | 9.88 | 2, 162 | ||||
| Footnotes for Note 38 | ||||||
| --- | --- | |||||
| Description of shares | ||||||
| 1 | Where an entity is governed by voting rights, HSBC consolidates<br><br>when it holds – directly or indirectly – the necessary voting rights to<br><br>pass resolutions by the governing body. In all other cases, the<br><br>assessment of control is more complex and requires judgement of<br><br>other factors, including having exposure to variability of returns, power<br><br>to direct relevant activities, and whether power is held as an agent or<br><br>principal. HSBC’s consolidation policy is described in Note 1.2(a). | |||||
| 2 | Management has determined that these undertakings are excluded<br><br>from consolidation in the Group accounts as these entities do not<br><br>meet the definition of subsidiaries in accordance with IFRS. HSBC’s<br><br>consolidation policy is described in Note 1.2(a). | |||||
| 3 | Directly held by HSBC Holdings plc | |||||
| 4 | Preference Shares | |||||
| 5 | Actions | |||||
| 6 | Redeemable Preference Shares | |||||
| 7 | GmbH Anteil | |||||
| 8 | Parts | |||||
| 9 | Non-Participating Voting | |||||
| 10 | Registered Capital Shares | |||||
| Registered offices | ||||||
| --- | --- | |||||
| 11 | 8 Canada Square, London, United Kingdom, E14 5HQ | |||||
| 12 | 347 Paseo de la Reforma, Col. Cuauhtémoc, Mexico, 06500 | |||||
| 13 | 1 Centenary Square, Birmingham, United Kingdom, B1 1HQ | |||||
| 14 | c/o Teneo Financial Advisory Limited, The Colmore Building, 20<br><br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT | |||||
| 15 | 5 Donegal Square South, Northern Ireland, Belfast, United Kingdom,<br><br>BT1 5JP | |||||
| 16 | 1909 Avenida Presidente Juscelino Kubitschek, 19° andar, Torre<br><br>Norte, São Paulo Corporate Towers, São Paulo, Brazil, 04551-903 | |||||
| 17 | Arnold House, St Julian's Avenue, St Peter Port, Guernsey, GY1 3NF | |||||
| 18 | 37 Front Street, Harbourview Centre, Ground Floor, Hamilton,<br><br>Pembroke, Bermuda, HM 11 | |||||
| 19 | 1 Queen's Road Central, Hong Kong | |||||
| 20 | Units 2401-55, Floor 24, Tower 2, 1 Jianguomenwai Avenue,<br><br>Chaoyang District, Beijing, China, 100020 | |||||
| 21 | First Floor, Xinhua Bookstore Xindong Road (SE of roundabout),<br><br>Miyun District, Beijing, China | |||||
| 22 | Oak House Hirzel Street, St Peter Port, Guernsey, GY1 2NP | |||||
| 23 | 239 Van Rensselaer Street, Buffalo, New York, United States of<br><br>America, 14210 | |||||
| 24 | c/o The Corporation Trust Company 1209 Orange Street, Wilmington,<br><br>Delaware, United States of America, 19801 | |||||
| 25 | Solidere - Rue Saad Zaghloul Immeuble - 170 Marfaa, P.O. Box 17<br><br>5476 Mar Michael, Beyrouth, Lebanon, 11042040 | |||||
| 26 | No 1, Bei Huan East Road Dazu County, Chongqing, China | |||||
| 27 | No 107 Ping Du Avenue (E), Sanhe Town, Fengdu County,<br><br>Chongqing, China | |||||
| 28 | No. 3, 5, 7, Haitang Erzhi Road Changyuan, Rongchang, Chongqing,<br><br>China, 402460 | |||||
| 29 | c/o Walkers Corporate Services Limited, Walker House, 87 Mary<br><br>Street, George Town, Grand Cayman, Cayman Islands, KY1-9005 | |||||
| 30 | First & Second Floor No.3 Nanshan Road, Pulandian, Dalian, Liaoning,<br><br>China | |||||
| 31 | 160 Mine Lake CT, Ste 200, Raleigh, North Carolina, United States of<br><br>America, 27615-6417 | |||||
| 32 | Avenida de las Granjas 972, Building A, Floor 2, Colonia Santa<br><br>Bárbara, Alcaldía Azcapotzalco, Mexico City, Mexico, 02230 | |||||
| 33 | 38 avenue Kléber, Paris, France, 75116 | |||||
| Registered offices | ||||||
| --- | --- | |||||
| 34 | No. 1 1211 Yanjiang Zhong Road, Yongan, Fujian, China | |||||
| 35 | 8/F, Prince's Building, 10 Chater Road, Central, Hong Kong | |||||
| 36 | No. 44 Xin Ping Road Central, Encheng, Enping, Guangdong, China,<br><br>529400 | |||||
| 37 | Rooms 101, 201-205, 301-305, No. 2 Yong Jin Yi Street, Huangge<br><br>Town, Nansha District, Guangzhou, China | |||||
| 38 | 83 Des Voeux Road Central, Hong Kong | |||||
| 39 | 34/F, 36/F and 46/F, Hang Seng Bank Tower 1000 Lujiazui Ring Road,<br><br>Pilot Free Trade Zone, Shanghai, China, 200120 | |||||
| 40 | Gustav Mahlerplein 2 1082 MA, Amsterdam, Netherlands | |||||
| 41 | 1001, T2 Office Building, Qianhai Kerry Business Center, Qianhai<br><br>Avenue, Nanshan Street, Qianhai Shenzhen-Hong Kong Cooperation<br><br>Zone, Shenzhen, Guangdong, China | |||||
| 42 | Unit 1 GF The Commerical Complex Madrigal Avenue, Ayala Alabang<br><br>Village, Muntinlupa City, Philippines, 1780 | |||||
| 43 | C/O Teneo Financial Advisory Limited The Colmore Building, 20<br><br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT | |||||
| 44 | Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town,<br><br>Tortola, British Virgin Islands, VG1110 | |||||
| 45 | The Corporation Trust Company of Nevada 311 S. Division Street,<br><br>Carson City, Nevada, United States of America, 89703 | |||||
| 46 | Level 21 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala<br><br>Lumpur, Malaysia, 55188 | |||||
| 47 | Level 19 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala<br><br>Lumpur, Malaysia, 55188 | |||||
| 48 | 10 Marina Boulevard #48-01 Marina Bay Financial Centre, Singapore,<br><br>018983 | |||||
| 49 | 52/60 M G Road Fort, Mumbai, India, 400 001 | |||||
| 50 | 9-11 Floors, NESCO IT Park Building No. 3 Western Express<br><br>Highway, Goregaon (East), Mumbai, India, 400063 | |||||
| 51 | HSBC Building 11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan,<br><br>103-0027 | |||||
| 52 | Level 36, Tower 1, International Towers Sydney, 100 Barangaroo<br><br>Avenue, Sydney, New South Wales, Australia, 2000 | |||||
| 53 | Isidora Goyenechea 2800 23rd floor, Las Condes, Santiago, Chile,<br><br>7550647 | |||||
| 54 | HSBC Building Shanghai ifc, 8 Century Avenue, Pudong, Shanghai,<br><br>China, 200120 | |||||
| 55 | HSBC House, Esplanade, St. Helier, Jersey, JE4 8UB | |||||
| 56 | IconEbene, Level 5 Office 1 (West Wing), Rue de L’institut, Ebene,<br><br>Mauritius | |||||
| 57 | 54F, 7 Xinyi Road Sec. 5 Xinyi district, Taipei, Taiwan | |||||
| 58 | 1266 Dr Luis Bonativa 1266 Piso 30 (Torre IV WTC), Montevideo,<br><br>Uruguay, CP 11.000 | |||||
| 59 | Metropolitan Building, 235 Dong Khoi, Sai Gon Ward, Ho Chi Minh<br><br>City, Viet Nam | |||||
| 60 | Esentepe Mah. Büyükdere Caddesi No.128 Şişli, Istanbul, Turkiye,<br><br>34394 | |||||
| 61 | 306 Corniche El Nil Street, Maadi, Cairo, Egypt | |||||
| 62 | 116 Archbishop Street, Valletta, Malta, VLT1444 | |||||
| 63 | Unit 401, Level 4 Gate Precinct Building 2, Dubai International<br><br>Financial Centre, P. O. Box 30444, Dubai, United Arab Emirates | |||||
| 64 | 1800 Tysons Boulevard Suite 50, Tysons, Virginia, United States of<br><br>America, 22102 | |||||
| 65 | P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands,<br><br>KY1-1104 | |||||
| 66 | HSBC House, Esplanade, St. Helier, Jersey, JE1 1HS | |||||
| 67 | Room 2703, 27F, Tower A, No.8 Century Avenue, China (Shanghai)<br><br>Pilot Free Trade Zone, Shanghai, China, 200120 | |||||
| 68 | 49 avenue J.F. Kennedy, Luxembourg, Luxembourg, 1855 | |||||
| 69 | 4-17/F, Office Tower 2 TaiKoo Hui Development, No. 381 Tian He<br><br>Road, Guangzhou, Guangdong, China | |||||
| 70 | Suite 1005, 10th Floor, Wisma Hamzah Kwong, Hing No. 1, Leboh<br><br>Ampang, Kuala Lumpur, Malaysia, 50100 | |||||
| 71 | Building C-1 UP Ayala Technohub, Commonwealth Avenue, Diliman,<br><br>Quezon City, Metro Manila, Philippines | |||||
| 72 | HSBC House Plot No.8 Survey No.64 (Part), Hitec City Layout<br><br>Madhapur, Hyderabad, India, 500081 | |||||
| 73 | Mireka City 324/9 Havelock Road, Colombo 05, Sri Lanka, 00500 | |||||
| 74 | Smart Village 28th Km Cairo- Alexandria Desert Road Building, Cairo,<br><br>Egypt | |||||
| 75 | Centre Ville 1341 Building - 4th Floor Patriarche Howayek Street, PO<br><br>Box Riad El Solh, Lebanon, 9597 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 380 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Registered offices | ||||||
| --- | --- | |||||
| 76 | Room 405 Odd House Number of 859-863, Huanhu West 1st Road,<br><br>Lingang New Area, China (Shanghai) Pilot Free Trade Zone, Shanghai,<br><br>China, 201306 | |||||
| 77 | Hansaallee 3, Düsseldorf, Germany, 40549 | |||||
| 78 | Immeuble Cœur Défense 110 esplanade du Général de Gaulle,<br><br>Courbevoie, France, 92400 | |||||
| 79 | HSBC Main Building 1 Queen's Road Central, Hong Kong | |||||
| 80 | 80 Mill Street, Qormi, Malta, QRM 3101 | |||||
| 81 | 26 Gartenstrasse, Zurich, Switzerland, 8002 | |||||
| 82 | 36F., No. 68 Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City, Taiwan,<br><br>110419 | |||||
| 83 | 66 Hudson Boulevard E, New York, New York, United States of<br><br>America, 10001 | |||||
| 84 | Mareva House 4 George Street, Nassau, Bahamas | |||||
| 85 | 150 King Street West, Suite 200, Toronto, Ontario, Canada, M5H 1J9 | |||||
| 86 | 4, rue Peternelchen, Howald, Grand Duchy of Luxembourg,<br><br>Luxembourg, L-2370 | |||||
| 87 | Alphabeta 14-18 Finsbury Square, London, United Kingdom, EC2A<br><br>1BR | |||||
| 88 | 5th Floor, IconEbene 1 Building, Lot 441, Rue de L’Institut, Ebene,<br><br>Mauritius, 1704-01 | |||||
| 89 | 18th Floor Tower 1, HSBC Centre 1 Sham Mong Road, Kowloon,<br><br>Hong Kong | |||||
| 90 | CT Corporation System 28 Liberty Street, New York, New York,<br><br>United States of America, 10005 | |||||
| 91 | Unit 201, Floor 2, Building 3 No. 12, Anxiang Street, Shunyi District,<br><br>Beijing, Beijing, China | |||||
| 92 | 300 Delaware Avenue Suite 1401, Wilmington, Delaware, United<br><br>States of America, 19801 | |||||
| 93 | Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box<br><br>916 | |||||
| 94 | Craigmuir Chambers, Road Town, Tortola, British Virgin Islands,<br><br>VG1110 | |||||
| 95 | 5/F HSBC Centre 3058 Fifth Ave West, Bonifacio Global City, Taguig<br><br>City, Philippines | |||||
| 96 | 18 Boulevard de Kockelscheuer, Luxembourg, Luxembourg, 1821 | |||||
| 97 | 29/F HSBC Building 8 Century Avenue, China (Shanghai) Pilot Free<br><br>Trade Zone, Shanghai, China, 200120 | |||||
| 98 | Arnold House St Julians Avenue, St Peter Port, Guernsey, GY1 1WA | |||||
| 99 | Unit 2017, Floor 20, Tower 1 No.288, Shimen 1st Road, Jing An<br><br>District, Shanghai, China, 200041 | |||||
| 100 | HSBC Tower, Downtown Dubai, P O Box 66, Dubai, United Arab<br><br>Emirates | |||||
| 101 | Unit 401, Level 4, Gate Precinct Building 2, Dubai International<br><br>Financial Centre, P. O. Box 506553, Dubai, United Arab Emirates | |||||
| 102 | Level 16, HSBC Tower, Downtown Dubai, P.O. Box 66, Dubai, United<br><br>Arab Emirates | |||||
| 103 | HSBC Tower, Level 21, 188 Quay Street, Auckland, New Zealand,<br><br>1010 | |||||
| 104 | The Corporation Trust Incorporated, 2405 York Road, Suite 201,<br><br>Lutherville Timonium, Maryland, United States of America, 21093 | |||||
| 105 | HSBC House, Esplanade, St. Helier, Jersey, JE1 1GT | |||||
| 106 | 9-17 Quai des Bergues, Geneva, Switzerland, 1201 | |||||
| 107 | 1 Grand Canal Square Grand Canal Harbour, Dublin 2, Ireland, D02<br><br>P820 | |||||
| 108 | 5 rue Heienhaff, Senningerberg, Luxembourg, L-1736 | |||||
| 109 | 52/60 M G Road, Fort, Mumbai, India, 400 001 | |||||
| 110 | Unit 2201, 22/F, Qianhai Chow Tai Fook Finance Tower (Phase I) No.<br><br>66 Shu Niu Avenue, Nanshan Subdistrict, the Shenzhen Qianhai<br><br>Shenzhen-Hong Kong Cooperation Zone, the PRC, Shenzhen, China,<br><br>518054 | |||||
| 111 | HSBC Building 7267 Olaya - Al Murrooj, Riyadh, Saudi Arabia, 12283 -<br><br>2255 | |||||
| 112 | 306 Corniche El Nil, HSBC Building, Maadi, Cairo, Egypt | |||||
| 113 | 1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South Africa,<br><br>2196 | |||||
| 114 | Kapelanka 42A, Krakow, Poland, 30-347 | |||||
| 115 | C T Corporation System 820 Bear Tavern Road, West Trenton, New<br><br>Jersey, United States of America, 08628 | |||||
| 116 | 22/F, Tower 2, Taikoo Hui Building, No. 381 Tianhe Road, Tianhe<br><br>District, Guangzhou, China | |||||
| 117 | Business Bay, Wing 2 Tower B, Survey no 103, Hissa no. 2, Airport<br><br>road, Yerwada, Pune, India, 411006 | |||||
| 118 | c/o Rogers Capital St. Louis Business Centre, Cnr Desroches & St<br><br>Louis Streets, Port Louis, Mauritius | |||||
| Registered offices | ||||||
| --- | --- | |||||
| 119 | No. 56 Yu Rong Street, Macheng, China, 438300 | |||||
| 120 | No. 205 Lie Shan Road Suizhou, Hubei, China | |||||
| 121 | Building 3, Yin Zuo Di Jing Wan Tianmen New City, Tianmen, Hubei<br><br>Province, China | |||||
| 122 | RM101, 102 & 106 Sunshine Fairview, Sunshine Garden, Pedestrian<br><br>Walkway, Pingjiang, China | |||||
| 123 | Kings Meadow Chester Business Park, Chester, United Kingdom,<br><br>CH99 9FB | |||||
| 124 | Level 15 HSBC Tower, Downtown Dubai, Dubai, United Arab<br><br>Emirates, PO Box 66 | |||||
| 125 | World Trade Center 3, 9th Floor, Jalan Jendral Sudirman Kaveling<br><br>29-31, Karet, Setiabudi, South Jakarta, DKI Jakarta, Indonesia, 12920 | |||||
| 126 | 5th Floor, World Trade Center 1, Jl. Jend. Sudirman Kav. 29-31,<br><br>Jakarta, Indonesia, 12920 | |||||
| 127 | No.198-2 Chengshan Avenue (E), Rongcheng, China, 264300 | |||||
| 128 | Room 601, 6/F Phase 1 Qianhai Chow Tai Fook Finance Tower, 66<br><br>Shuniu Avenue, Nanshan Community, Qianhai Shenzhen-Hong Kong<br><br>Corporation Zone, Shenzhen, Guangdong, China | |||||
| 129 | Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box<br><br>3162 | |||||
| 130 | 1A Heienhaff, Senningerberg, Luxembourg, 1736 | |||||
| 131 | P.O. Box 3119 Grand Pavilion, Hibiscus Way, 802 West Bay Road,<br><br>Grand Cayman, Cayman Islands, KY1 – 1205 | |||||
| 132 | 17 Boulevard F.W Raiffeisen, Luxembourg, 2411 | |||||
| 133 | 10 Collyer Quay, #10-01 Ocean Financial Centre, Singapore,<br><br>Singapore, 049315 | |||||
| 134 | RM 2112, HSBC Building, Shanghai ifc No. 8 Century Road, Pudong,<br><br>Shanghai, China, 200120 | |||||
| 135 | 43 Whitfield Street, London, United Kingdom, W1T 4HD | |||||
| 136 | 35 Ballards Lane, London, United Kingdom, N3 1XW | |||||
| 137 | 38 Beach Road #19-11 South Beach Tower, Singapore, Singapore,<br><br>189767 | |||||
| 138 | c/o Mayfair Corporate Services Ltd., 26 Burnaby Street, Hamilton,<br><br>Bermuda, HM11 | |||||
| 139 | 27 Old Gloucester Street, London, United Kingdom, WC1N 3AX | |||||
| 140 | All Saints Triangle Caledonian Road, London, United Kingdom, N19UT | |||||
| 141 | 188 Yin Cheng Zhong Lu (Shanghai) Pilot Free Trade Zone, China | |||||
| 142 | 50/F Lee Garden One, 33 Hysan Avenue, Hong Kong | |||||
| 143 | 13-15 York Buildings, London, United Kingdom, WC2N 6JU | |||||
| 144 | 167-169 Great Portland Street, 5th Floor, London, United Kingdom,<br><br>W1W 5PF | |||||
| 145 | 8th Floor Unit No. 808-814, Ambadeep Building, Plot No. 14, Kasturba<br><br>Gandhi Marg, New Delhi, India, 110001 | |||||
| 146 | c/o Interpath Ltd, 10 Fleet Place, London, United Kingdom, EC4M<br><br>7RB | |||||
| 147 | ICS Corporate Services (Cayman) Limited, 3-212 Governors Square 23<br><br>Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand<br><br>Cayman, Cayman Islands, KY1-1203 | |||||
| 148 | 251 Little Falls Drive, New Castle, Wilmington, United States of<br><br>America, 19808 | |||||
| 149 | 9 rue du Laboratoire, Grand Duchy of Luxembourg, Luxembourg,<br><br>L-1911 | |||||
| 150 | 17F, HSBC Building, Shanghai ifc 8 Century Avenue, Pudong,<br><br>Shanghai, China | |||||
| 151 | 10th Floor 5 Churchill Place, London, United Kingdom, E14 5HU | |||||
| 152 | 121 HaHashmonaim St., Tel Aviv, Israel, 6713328 | |||||
| 153 | 111 Town Square Place, Suite 840, Jersey City, New Jersey, United<br><br>States of America, 07310 | |||||
| 154 | 7th Floor, 62 Threadneedle Street, London, United Kingdom, EC2R<br><br>8HP | |||||
| 155 | 1 Harbourfront Avenue, #14-07 Keppel Bay Tower, Singapore, 098632 | |||||
| 156 | Unit 306,307, 308, Gate Village Building 05, Dubai International<br><br>Financial Centre, Dubai, United Arab Emirates | |||||
| 157 | c/o Company Secretarial Department, 280 Bishopsgate, London,<br><br>United Kingdom, EC2M 4AG | |||||
| 158 | 4482 Deer Ridge Road, Danville, CA, Delaware, United States of<br><br>America, 94506 | |||||
| 159 | 7383 King Fahad Branch Rd, 2338 - Al Yasmeen Dist., Riyadh, Saudi<br><br>Arabia, 13325 | |||||
| 160 | 2nd Floor, Regis House, 45 King William Street, London, United<br><br>Kingdom, EC4R 9AN | |||||
| 161 | 45 Gresham Street, C/O Restructuring & Recovery Services (RRS)<br><br>S&W Partners LLP, London, United Kingdom, EC2V 7BG | |||||
| 162 | 10 Earlsfort Terrace, Dublin, Ireland, D02 T380 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 381 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Notes on the financial statements | ||||||
| Registered offices | ||||||
| --- | --- | |||||
| 163 | Meeting Room 18.R005, 18/F Fortune Financial Center No. 5<br><br>Dongsanhuan Zhong Road, Chaoyang District, Beijing, China, 100020 | |||||
| 164 | 20, rue de la Poste, L-2346, Luxembourg, Grand Duchy of<br><br>Luxembourg | |||||
| 165 | 3, rue Jean Piret, L-2350 Luxembourg Grand Duchy of Luxembourg<br><br>R.C.S. Luxembourg: B253299 | |||||
| 166 | 9F, Unit B, Seowang Building, 14-8 Teheran-ro 70-gil, Gangnam-gu,<br><br>Seoul, South Korea (Walk Forest LS8) | |||||
| 167 | 6190-2 Fukushima, Kisomachi, Kiso-gun, Nagano 397-0001 Japan | |||||
| 168 | 2-1-4, Tsukiji, Chuo-ku, Tokyo 104-0045 JAPAN | |||||
| 169 | 89 Nexus Way, Camana Bay, George Town, Grand Cayman,<br><br>KY1-1205, Cayman Islands | |||||
| 170 | 11F, No. 122, Songjiang Rd, Zhongshan Dist., Taipei City | |||||
| 171 | 10F., No. 156, Sec. 3, Minsheng E. Rd., Songshan Dist., Taipei City | |||||
| 172 | 3F and 8F, 136, Sejong-daero, Jung-gu, Seoul | |||||
| 173 | 800 North State Street, Suite 304, Dover, Delaware, United States of<br><br>America, DE 19901 | |||||
| Registered offices | ||||||
| --- | --- | |||||
| 174 | Enigma, Wavendon Business Park, England, United Kingdom, MK17<br><br>8LX | |||||
| 175 | 11-13, Boulevard de la Foire, L-1528 Luxembourg | |||||
| 176 | 2nd Floor, Sir Walter Raleigh House, 48-50 Esplanade, St. Helier,<br><br>Jersey JE2 3QB | |||||
| 177 | 375 Park Avenue New York, NY 10152 | |||||
| 178 | 4th Floor, Ensign House, 29 Seaton Place, St Helier, Jersey JE2 3QL | |||||
| 179 | 3rd Floor, 37 Esplanade, St. Helier JE1 1AD, Jersey | |||||
| 180 | 15, Boulevard F.W Raiffeisen, L-2411 Luxembourg, Grand Duchy of<br><br>Luxembourg | |||||
| 181 | 60, Avenue J.F. Kennedy, L-1855 Luxembourg | |||||
| 182 | 5, Allée Scheffer, L 2520 Luxembourg, Grand Duchy of Luxembourg | |||||
| 183 | 2, rue Edward Steichen, Luxembourg, L-2540, Luxembourg | |||||
| 184 | 450, Lexington Avenue, 31st Floor, New York 10017 | |||||
| 185 | 26A, Boulevard Royal L-2449 Luxembourg | |||||
| 186 | Maples Corporate Services Limited, PO Box 309, Ugland House,<br><br>Grand Cayman, KY1-1104, Cayman Islands | |||||
| 187 | 405 Lexington Avenue, 53rd Floor, New York, New York 10174, USA | |||||
| 39 | Non-statutory accounts | |||||
| --- | --- |
The information set out in these accounts does not constitute the Company’s statutory accounts for the years ended 31 December 2025 or 2024.
Those accounts have been reported on by the Company’s auditors: their reports were unqualified and did not contain a statement under Section
498(2) or (3) of the Companies Act 2006.
The accounts for 2024 have been delivered to the Registrar of Companies and those for 2025 will be delivered in due course.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 382 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Shareholder information
This section gives important information for our shareholders, including contact information. It also includes an overview of key abbreviations and
terminology used throughout this Annual Report and Accounts.
ÑA glossary of terms used in the Annual Report and Accounts can be found in the Investors section of www.hsbc.com.
Fourth interim dividend for 2025
The Directors have approved a fourth interim dividend for 2025 of $0.45 per ordinary share. Information on the currencies in which shareholders
may elect to have the cash dividend paid can be viewed at www.hsbc.com/investors. The interim dividend will be paid in cash. The timetable for
the interim dividend is:
| Announcement | 25 February 2026 |
|---|---|
| Shares quoted ex-dividend in London, Hong Kong and Bermuda | 12 March 2026 |
| American Depositary Shares (‘ADS’) quoted ex-dividend in New York | 13 March 2026 |
| Record date – London, Hong Kong, New York, Bermuda1 | 13 March 2026 |
| Mailing of Annual Report and Accounts 2025 and/or Strategic Report 2025 | 27 March 2026 |
| Final date for dividend election changes including Investor Centre electronic instructions and revocations of standing instructions for dividend elections | 15 April 2026 |
| Exchange rate determined for payment of dividends in pounds sterling and Hong Kong dollars | 20 April 2026 |
| Payment date | 30 April 2026 |
1Removals to and from the Overseas Branch register of shareholders in Hong Kong or Bermuda will not be permitted on this date.
Interim dividends for 2026
We maintain our dividend policy of a target payout ratio of 50% earnings per ordinary share (‘EPS’) for each of 2026, 2027 and 2028, subject to
meeting capital requirements. EPS for this purpose will continue to exclude material notable items and related impacts.
For the financial year 2025, dividends were paid in accordance with our dividend policy. We achieved a dividend payout ratio of 50% of EPS,
excluding material notable items and related impacts. Material notable items in 2025 primarily related to the income statement impacts associated
with actions to exit or wind down non-strategic businesses. They also include a dilution loss and the recognition of an impairment of our investment
in BoCom, a legal provision relating to the Bernard L. Madoff Investment Securities LLC fraud, as well as the impacts of transactions completed in
previous periods, including the sale of our retail banking operations in France, the sale of our banking business in Canada and the disposal of our
business in Argentina.
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.
Other equity instruments
Additional tier 1 capital – contingent convertible securities
HSBC continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1 capital
securities. For further details on these securities, see Note 32 on the financial statements.
HSBC Holdings issued $1,500m 6.950% perpetual subordinated contingent convertible securities on 27 February 2025, SGD800m 5.000%
perpetual subordinated contingent convertible securities on 24 March 2025 and $2,000m 7.050% perpetual subordinated contingent convertible
securities on 5 June 2025.
2025 Annual General Meeting
With the exception of the shareholder requisitioned Resolution 20, which the Board recommended that shareholders vote against, all resolutions
considered at the 2025 AGM held at 10:00am on 2 May 2025 at InterContinental London O2, 1 Waterview Drive, London SE10 0TW, United
Kingdom, were passed on a poll.
Earnings releases and interim results
First and third quarter results for 2026 will be released on 5 May 2026 and 27 October 2026, respectively. The interim results for the six months to
30 June 2026 will be issued on 4 August 2026.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 383 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Shareholder enquiries and communications
Enquiries
Any enquiries relating to shareholdings on the share register (for example: transfers of shares, changes of name or address, lost share certificates
or dividend cheques) should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which
enables shareholders to manage their shareholding electronically.
| Principal Register: | Computershare Investor Services PLC<br><br>The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ,<br><br>United Kingdom | Telephone: +44 (0) 370 702 0137<br><br>www.investorcentre.co.uk/contactus<br><br>Investor Centre: www.investorcentre.co.uk |
|---|---|---|
| Hong Kong Overseas Branch Register: | Computershare Hong Kong Investor Services Limited<br><br>Rooms 1712–1716, 17th Floor Hopewell Centre, 183<br><br>Queen’s Road East, Hong Kong | Telephone: +852 2862 8555<br><br>[email protected]<br><br>Investor Centre: www.investorcentre.com/hk |
| Bermuda Overseas Branch Register: | Investor Relations Team<br><br>HSBC Bank Bermuda Limited, 37 Front Street,<br><br>Hamilton, HM 11, Bermuda | [email protected]<br><br>[email protected]<br><br>Investor Centre: www.investorcentre.com/bm |
| ADS Depositary: | The Bank of New York Mellon<br><br>Shareowner Services, P.O. Box 43006, Providence RI<br><br>02940-3078, USA | Telephone (US): +1 877 283 5786<br><br>Telephone (International): +1 201 680 6825<br><br>[email protected] |
If your shareholding is not recorded directly on the share register, it is important to remember that your main contact for all matters relating to your
investment remains the registered shareholder, or custodian or broker, who administers the investment on your behalf. This is the case even if you
have elected to receive information rights directly from HSBC Holdings. Any changes or queries relating to your personal details and holding
(including any administration of it) should be directed to your existing contact at your investment manager or custodian or broker. HSBC Holdings
cannot guarantee dealing with matters directed to it in error.
Shareholders who wish to receive a hard copy of the Annual Report and Accounts 2025 should contact HSBC’s Registrars. Please visit
www.hsbc.com/investors/investor-contacts for further information. You can also download an online version of the report from www.hsbc.com.
Electronic communications
Shareholders may at any time choose to receive corporate communications in printed form or to receive notifications of their availability on HSBC’s
website. To receive notifications of the availability of a corporate communication on HSBC’s website by email, or revoke or amend an instruction to
receive such notifications by email, go to www.hsbc.com/investors/shareholder-information/manage-your-shareholding. If you received a
notification of the availability of this document on HSBC’s website and would like to receive a printed copy, or if you would like to receive future
corporate communications in printed form, please write or send an email (quoting your shareholder reference number) to the appropriate Registrars
at the address given above. Printed copies will be provided without charge.
Chinese translation
A Chinese translation of the Annual Report and Accounts 2025 will be available upon request after 27 March 2026 from the Registrars (contact
details above). Please also contact the Registrars if you wish to receive Chinese translations of future documents, or if you have received a Chinese
translation of this document and do not wish to receive them in future.
《2025 年報及賬目》備有中譯本，各界人士可於2026年3月27日之後，向上列股份登記處索閱。
閣下如欲於日後收取相關文件的中譯本，或已收到本文件的中譯本但不希望繼續收取有關譯本，均請聯絡股份登記處。
Stock symbols
HSBC Holdings ordinary shares trade under the following stock symbols:
| London Stock Exchange | HSBA* | New York Stock Exchange (ADS) | HSBC |
|---|---|---|---|
| Hong Kong Stock Exchange | 5 | Bermuda Stock Exchange | HSBC.BH |
| ∗ HSBC’s Primary market |
Investor relations
Enquiries relating to HSBC’s strategy or operations may be directed to:
| Alastair Ryan, Global Head of Investor Relations | Yafei Tian, Head of Investor Relations, Asia-Pacific | |||||
|---|---|---|---|---|---|---|
| HSBC Holdings plc | The Hongkong and Shanghai Banking | |||||
| 8 Canada Square | Corporation Limited | |||||
| London E14 5HQ | 1 Queen’s Road Central | |||||
| United Kingdom | Hong Kong | |||||
| Telephone: +44 (0) 7468 703 010 | Telephone: +852 2899 8909 | |||||
| Email: [email protected] | Email: [email protected] | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 384 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Where more information about HSBC
is available
The Annual Report and Accounts 2025 and other information on HSBC
may be downloaded from HSBC’s website: www.hsbc.com.
Reports, statements and information that HSBC Holdings files with the
Securities and Exchange Commission are available at www.sec.gov.
Investors can also request hard copies of these documents upon
payment of a duplicating fee by writing to the SEC at the Office of
Investor Education and Advocacy, 100 F Street N.E., Washington, DC
20549-0213 or by emailing [email protected]. Investors should call
the Commission at (1) 202 551 8090 if they require further assistance.
Investors may also obtain the reports and other information that HSBC
Holdings files at www.nyse.com (telephone number (1) 212 656 3000).
HM Treasury has transposed the requirements set out under CRD IV
and issued the Capital Requirements Country-by-Country Reporting
Regulations 2013. The legislation requires HSBC Holdings to publish
additional information in respect of the year ended 31 December 2025
by 31 December 2026. This information will be available on HSBC’s
website: www.hsbc.com/tax.
Taxation of shares and dividends
Taxation – UK residents
The following is a summary, under current law (unless otherwise
noted) and the current published practice of HM Revenue and Customs
(‘HMRC’), of certain UK tax considerations that are likely to be material
to the ownership and disposition of HSBC Holdings ordinary shares.
The summary does not purport to be a comprehensive description of all
the tax considerations that may be relevant to a holder of shares. In
particular, the summary deals with shareholders who are resident
solely in the UK for UK tax purposes and only with holders who hold
the shares as investments and who are the beneficial owners of the
shares, and does not address the tax treatment of certain classes of
holders such as dealers in securities. Holders and prospective
purchasers should consult their own advisers regarding the tax
consequences of an investment in shares in light of their particular
circumstances, including the effect of any national, state or local laws.
Taxation of dividends
Currently, no tax is withheld from dividends paid by HSBC Holdings.
UK resident individuals
UK resident individuals are generally entitled to a tax-free annual
allowance in respect of dividends received. The amount of the
allowance for the tax year beginning 6 April 2025 is £500. To the extent
that dividend income received by an individual in the relevant tax year
does not exceed the allowance, a nil tax rate will apply. Dividend
income in excess of this allowance will be taxed at 8.75% for basic rate
taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional
rate taxpayers.
UK resident companies
Shareholders that are within the charge to UK corporation tax should
generally be entitled to an exemption from UK corporation tax on any
dividends received from HSBC Holdings. However, the exemptions are
not comprehensive and are subject to anti-avoidance rules.
If the conditions for exemption are not met or cease to be satisfied, or
a shareholder within the charge to UK corporation tax elects for an
otherwise exempt dividend to be taxable, the shareholder will be
subject to UK corporation tax on dividends received from HSBC
Holdings at the rate of corporation tax applicable to that shareholder.
Taxation of capital gains
The computation of the capital gains tax liability arising on disposals of
shares in HSBC Holdings by shareholders subject to UK tax on capital
gains can be complex, partly depending on whether, for example, the
shares were purchased since April 1991, acquired in 1991 in exchange
for shares in The Hongkong and Shanghai Banking Corporation Limited,
or acquired subsequent to 1991 in exchange for shares in other
companies.
For capital gains tax purposes, the acquisition cost for ordinary shares is
adjusted to take account of subsequent rights and capitalisation issues.
Any capital gain arising on a disposal of shares in HSBC Holdings by a
UK company may also be adjusted to take account of indexation
allowance if the shares were acquired before 1 January 2018, although
the level of indexation allowance that is given in calculating the gain
would be frozen at the value that would have been applied to a disposal
of those shares in December 2017. If in doubt, shareholders are
recommended to consult their professional advisers.
Stamp duty and stamp duty reserve tax
Transfers of shares by a written instrument of transfer generally will be
subject to UK stamp duty at the rate of 0.5% of the consideration paid
for the transfer (rounded up to the next £5), and such stamp duty is
generally payable by the transferee. An agreement to transfer shares,
or any interest therein, normally will give rise to a charge to stamp duty
reserve tax at the rate of 0.5% of the consideration. However, provided
an instrument of transfer of the shares is executed pursuant to the
agreement and duly stamped before the date on which the stamp duty
reserve tax becomes payable, under the current published practice of
HMRC it will not be necessary to pay the stamp duty reserve tax, nor to
apply for such tax to be cancelled. Stamp duty reserve tax is generally
payable by the transferee.
Paperless transfers of shares within CREST, the UK’s paperless share
transfer system, are liable to stamp duty reserve tax at the rate of 0.5%
of the consideration. In CREST transactions, the tax is calculated and
payment made automatically. Deposits of shares into CREST generally
will not be subject to stamp duty reserve tax, unless the transfer into
CREST is itself for consideration.
Taxation – US residents
The following is a summary, under current law, of the principal UK tax
and US federal income tax considerations that are likely to be material
to the ownership and disposition of shares or American Depositary
Shares (‘ADSs’) by a holder that is a US holder, as defined below, and
who is not resident in the UK for UK tax purposes.
The summary does not purport to be a comprehensive description of all
of the tax considerations that may be relevant to a holder of shares or
ADSs. In particular, the summary deals only with US holders that hold
shares or ADSs as capital assets, and does not address the tax
treatment of holders that are subject to special tax rules. These include
banks, tax-exempt entities, insurance companies, dealers in securities
or currencies, persons that hold shares or ADSs as part of an integrated
investment (including a ‘straddle’ or ‘hedge’) comprised of a share or
ADS and one or more other positions, and persons that own directly or
indirectly 10% or more (by vote or value) of the stock of HSBC
Holdings. This discussion is based on laws, treaties, judicial decisions
and regulatory interpretations in effect on the date hereof, all of which
are subject to change.
For the purposes of this discussion, a ‘US holder’ is a beneficial holder
that is a citizen or resident of the United States, a US domestic
corporation or otherwise is subject to US federal income taxes on a net
income basis in respect thereof.
Holders and prospective purchasers should consult their own advisers
regarding the tax consequences of an investment in shares or ADSs in
light of their particular circumstances, including the effect of any
national, state or local laws.
Any US federal tax advice included in the Annual Report and Accounts
2025 is for informational purposes only. It was not intended or written
to be used, and cannot be used, for the purpose of avoiding US federal
tax penalties.
Taxation of dividends
Currently, no tax is withheld from dividends paid by HSBC Holdings. For
US tax purposes, a US holder must include cash dividends paid on the
shares or ADSs in ordinary income on the date that such holder or the
ADS depositary receives them, translating dividends paid in UK pounds
sterling into US dollars using the exchange rate in effect on the date of
receipt. A US holder that elects to receive shares in lieu of a cash
dividend must include in ordinary income the fair market value of such
shares on the dividend payment date, and the tax basis of those shares
will equal such fair market value.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 385 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Subject to certain exceptions for positions that are held for less than 61
days, and subject to a foreign corporation being considered a ‘qualified
foreign corporation’ (which includes not being classified for US federal
income tax purposes as a passive foreign investment company), certain
dividends (‘qualified dividends’) received by an individual US holder
generally will be subject to US taxation at preferential rates.
Based on the company’s audited financial statements and relevant
market and shareholder data, HSBC Holdings does not believe that it
was a passive investment company for its 2025 taxable year and does
not anticipate becoming a passive foreign investment company in 2026
or the foreseeable future. Accordingly, dividends paid on the shares or
ADSs generally should be eligible for qualified dividends treatment.
Taxation of capital gains
Gains realised by a US holder on the sale or other disposition of shares
or ADSs normally will not be subject to UK taxation unless at the time
of the sale or other disposition the holder carries on a trade, profession
or vocation in the UK through a branch or agency or permanent
establishment and the shares or ADSs are or have been used, held or
acquired for the purposes of such trade, profession, vocation, branch or
agency or permanent establishment. Such gains will be included in
income for US tax purposes, and will be long-term capital gains if the
shares or ADSs were held for more than one year. A long-term capital
gain realised by an individual US holder generally will be subject to US
tax at preferential rates.
Inheritance tax
Shares or ADSs held by an individual whose domicile is determined to
be the US for the purposes of the United States–United Kingdom
Double Taxation Convention relating to estate and gift taxes (the
‘Estate Tax Treaty’) and who is not for such purposes a national of the
UK will not, provided any US federal estate or gift tax chargeable has
been paid, be subject to UK inheritance tax on the individual’s death or
on a lifetime transfer of shares or ADSs except in certain cases where
the shares or ADSs (i) are comprised in a settlement (unless, at the
time of the settlement, the settlor was domiciled in the US and was not
a national of the UK), (ii) are part of the business property of a UK
permanent establishment of an enterprise, or (iii) pertain to a UK fixed
base of an individual used for the performance of independent personal
services. In such cases, the Estate Tax Treaty generally provides a
credit against US federal tax liability for the amount of any tax paid in
the UK in a case where the shares or ADSs are subject to both UK
inheritance tax and to US federal estate or gift tax.
Stamp duty and stamp duty reserve tax –
ADSs
If shares are transferred to a clearance service or American Depositary
Receipt (‘ADR’) issuer (which will include a transfer of shares to the
depositary) UK stamp duty and/or stamp duty reserve tax will be
payable unless the transfer is, or is treated as being, in the course of a
capital raising arrangement. The stamp duty or stamp duty reserve tax
is generally payable on the consideration for the transfer (or, if there is
no consideration in money or money’s worth, the value of the shares
being transferred) and is payable at the aggregate rate of 1.5%.
The amount of stamp duty reserve tax payable on such a transfer will
be reduced by any stamp duty paid in connection with the same
transfer.
No stamp duty will be payable on the transfer of, or agreement to
transfer, an ADS, provided that the ADR and any separate instrument
of transfer or written agreement to transfer remain at all times outside
the UK, and provided further that any such transfer or written
agreement to transfer is not executed in the UK. No stamp duty
reserve tax will be payable on a transfer of, or agreement to transfer, an
ADS effected by the transfer of an ADR.
US information reporting and backup
withholding tax
Distributions made on shares or ADSs and proceeds from the sale of
shares or ADSs that are paid within the US, or through certain financial
intermediaries to US holders, are subject to US information reporting
and may be subject to a US ‘backup’ withholding tax. General
exceptions to this rule happen when the US holder: establishes that it
is a corporation (other than an S corporation) or other exempt holder; or
provides a correct taxpayer identification number, certifies that no loss
of exemption from backup withholding has occurred and otherwise
complies with the applicable requirements of the backup withholding
rules. Holders that are not US persons (as defined in the US Internal
Revenue Code of 1986, as amended) generally are not subject to US
information reporting or backup withholding tax, but may be required to
comply with applicable certification procedures to establish that they
are not US persons in order to avoid the application of such US
information reporting requirements or backup withholding tax to
payments received within the US or through certain financial
intermediaries.
Approach to ESG reporting
The information set out in the ESG review on pages 32 to 63, taken
together with other information relating to ESG issues included in this
report, aims to provide key ESG information and data for the year
ended 31 December 2025. The data is compiled for the financial year
1 January to 31 December 2025 unless otherwise specified.
Measurement techniques and calculations are explained next to data
tables where necessary. Where we have changes in scope, boundary
or measurement we call these out where relevant in our disclosures.
Additionally, a rationale is provided for any restatement of information
or data that has been previously published.
How we decide what to measure
We listen to our stakeholders in a number of different ways and we
use the information they provide us to identify the issues that are most
important to them and consequently also matter to our own business.
Our relevant governance bodies discuss the new and existing themes
and issues that matter to our stakeholders. Our management team
then uses this insight, alongside the framework of the ESG Code
(which refers to our obligations under the Hong Kong Listing Rules
Appendix C2 ESG Reporting Code Parts C and D) and the UKLR
6.6.6R(8) of the Financial Conduct Authority’s (‘FCA’) Listing Rules,
Sections 414CA and 414CB of the UK Companies Act 2006, and other
applicable laws and regulations to choose what we measure and
publicly report in our ESG review. We will continue to develop and
refine our reporting and disclosures on ESG matters in line with
feedback received from our investors and other stakeholders, and in
view of our obligations under the ESG Code and the FCA’s Listing
Rules.
Under the ESG Code, ’materiality’ is considered to be the threshold at
which ESG issues become sufficiently important to our investors and
other stakeholders that they should be publicly reported. Our approach
to materiality also considers disclosure standards and other applicable
rules and regulations as part of our materiality assessment for specific
ESG topics and relevant disclosures.
Given ongoing developments in the ESG regulatory environment across
various jurisdictions in which we operate, combined with the relative
immaturity of processes, systems, data quality and controls, our focus
remains on supporting a globally consistent set of mandatory
sustainability standards. We aim to continue to evolve our reporting to
recognise market developments, such as the International Sustainability
Standards Board (‘ISSB’), and support the efforts to harmonise the
disclosures. We report against the Hong Kong Exchange (‘HKEx’) ESG
Code metrics, and will continue to review our approach as the
regulatory landscape evolves.
Consistent with the scope of financial information presented in this
report, the ESG review covers the operations of HSBC Holdings plc and
its subsidiaries, unless otherwise specified. Given the relative
immaturity of ESG-related data and methodologies in general, we are
on a journey towards improving completeness and robustness.
ÑFor further details, see ‘Engaging with our stakeholders and our material
ESG topics’ on page 34.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 386 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Our reporting around ESG
We report on ESG matters throughout this report, including the ’ESG
overview’ section of the Strategic Report (pages 28 to 29), ESG review
(pages 32 to 63), and the ‘Climate risk’ sections of the Risk review
(pages 203 to N/A). In addition, we have other supplementary materials,
including our ESG Data Pack, which provides a more granular
breakdown of ESG information.
| Detailed data | Additional reports |
|---|---|
| ESG Data Pack 2025,<br><br>including HKEx ESG<br><br>Code Index | 2025 UK Pay Gap Disclosures<br><br>Modern Slavery and Human Trafficking Statement 2025<br><br>Green Bonds Report 2025<br><br>HSBC UN Sustainable Development - Goals Bond<br><br>Report 2025 |
ÑFor further details of our supplementary materials, see our ESG reporting
centre at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-
reporting-centre.
| TCFD |
|---|
Task Force on Climate-related Financial Disclosures (‘TCFD’)
The table below summarises the TCFD requirements and cross-references to where further information can be found within our Annual Report and
Accounts 2025. We also include cross-references to our ESG Data Pack where relevant.
| TCFD Pillar | CA 2006 requirement | Theme | Disclosure location | |
|---|---|---|---|---|
| Governance | a) | Sections 414CA and 414CB 2A (a) | HSBC Board’s oversight of climate-related risks and opportunities | ÑPages 57, 204, 228 |
| b) | Sections 414CA and 414CB 2A (a) | HSBC management’s role in assessing and managing climate-<br><br>related risks and opportunities | ÑPages 57, 204 | |
| Strategy | a) | Sections 414CA and 414CB 2A (d) | Climate-related risks and opportunities HSBC has identified over<br><br>the short, medium and long term | ÑPages 35 - 38, 203 - 206,<br><br>206 - 212 |
| b) | Sections 414CA and 414CB 2A (e) | Impact of climate-related risks and opportunities on HSBC’s<br><br>businesses, strategy and financial planning | ÑPages 35 - 38, 47 - 48, 203,<br><br>204, 206 - 212 | |
| c) | Sections 414CA and 414CB 2A (f) | Resilience of HSBC’s strategy, taking into consideration different<br><br>climate-related scenarios, including a 2°C or lower scenario | ÑPages 206 - 212<br><br>ÑESG Data Pack | |
| Risk Management | a) | Sections 414CA and 414CB 2A (b) | HSBC’s processes for identifying and assessing climate-related<br><br>risks | ÑPages 49, 203 - 206, 209, 212 |
| b) | Sections 414CA and 414CB 2A (b) | HSBC’s processes for managing climate-related risks | ÑPages 203 - 206 | |
| c) | Sections 414CA and 414CB 2A (c) | HSBC’s processes for integration of climate-related risks into<br><br>overall risk management framework | ÑPages 203 - 204 | |
| Metric & Targets | a) | Sections 414CA and 414CB 2A (h) | Metrics used by HSBC to assess climate-related risk and<br><br>opportunities in line with its strategy and risk management<br><br>process | ÑPages 35 - 38, 41 - 48, 50,<br><br>203 - 212<br><br>ÑESG Data Pack |
| b) | Sections 414CA and 414CB 2A (h) | Disclose scope 1, scope 2 and, if appropriate, scope 3 greenhouse<br><br>gas emissions and the related risks | ÑPages 39 - 49<br><br>ÑESG Data Pack | |
| c) | Sections 414CA and 414CB 2A (g) | Targets used by HSBC to manage climate-related risks and<br><br>opportunities and performance against targets | ÑPages 39 - 46<br><br>ÑESG Data Pack |
Explanatory statements
HKEx and TCFD Explanatory Statements
We have considered our ‘comply or explain’ obligation under both the
UK Financial Conduct Authority’s Listing Rules 6.6.6R(8) (‘UKLR’), and
Sections 414CA and 414CB of the UK Companies Act 2006 (‘CA 2006’),
collectively referred to as the ‘TCFD requirements’, and Hong Kong
Listing Rules Appendix C2 ESG Reporting Code Parts C and D.
The Group has prepared its climate-related disclosures in accordance
with the ESG Reporting Code under Appendix C2 of the Rules
Governing the Listing of Securities on Hong Kong Exchanges and
Clearing Limited. While IFRS S1 principles have been considered to
support the quality and consistency of disclosures, the Group has not
adopted IFRS Sustainability Disclosure Standards as a reporting
framework for the purposes of these disclosures.
We comply with mandatory requirements, including Part B and
disclosure of scope 1 and 2 GHG emissions within the HKEx ESG
Code. We have set out in the HKLR index where these and other
relevant disclosures may be found. We confirm that we have made
disclosures consistent with TCFD Recommendations and
Recommended Disclosures, including its annexes and supplemental
guidance, as well as the HKEx ESG Code, save for certain items as set
out below. Our reporting approach will continue to evolve over time to
reflect regulatory requirements.
ÑOur detailed HKLR Index, including HKLR Part D can be found in our ESG
Data Pack at www.hsbc.com/esg
HKEx A1(b) related to relevant laws/regulations relating to air and
greenhouse gas emissions, discharges into water and land, and
generation of hazardous and non-hazardous waste, and on emissions:
taking into account the nature of our business, we do not believe that
there are relevant laws and regulations in these areas that have significant
impacts on our operations. Nevertheless, we are fully compliant with our
publication of information regarding scope 1 and 2 greenhouse gas
emissions, while we only partially publish information on scope 3
emissions, as the data required for that publication is not yet fully
available.
HKEx A1.3 related to total hazardous waste produced and HKEx A1.4
related to total non-hazardous waste produced: taking into account the
nature of our business, we do not consider hazardous waste to be a
material issue for our stakeholders. As such, we report only on total
waste produced, which includes hazardous and non-hazardous waste.
HKEx A1.6 related to handling hazardous and non-hazardous waste:
taking into account the nature of our business, we do not consider this
to be a material issue for our stakeholders. Notwithstanding this, we
continue to focus on the reduction and recycling of all waste. Building
on the success of our ‘reduce, replace, remove’ environmental
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 387 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
approach, we are continuing to seek to identify key opportunities where
we can lessen our wider environmental impact, including waste
management. For further details, please see our ESG review on page
47.
HKEx A2.4 related to sourcing water issue and water efficiency target:
taking into account the nature of our business, we do not consider this
to be a material issue for our stakeholders. Notwithstanding this, we
have implemented measures to further reduce water consumption
through the installation of water efficient taps, flow restrictors, and
continue to track our water consumption.
HKEx A2.5 related to packaging material, HKEx B6(b) related to issues
about health and safety, advertising and labelling relating to products
and services provided, HKEx B6.1 related to percentage of total
products sold or shipped subject to recalls for safety and health
reasons, HKEx B6.4 in recall procedures: taking into account the nature
of our business, we do not consider these to be material issues for our
stakeholders.
Understanding our climate-related risks and opportunities
HKEx Para 20(a) related to understanding our climate-related risks and
opportunities: we currently do not fully describe climate-related risks
and opportunities that could reasonably be expected to affect our
cash flows, access to finance, or cost of capital over the short,
medium and long term. Our 2025 climate risk assessment utilises
internal risk management processes, external data sources, and
industry guidance. We focus our disclosures on risks and
opportunities that are most relevant to our business model and
strategy. We recognise that the identification of such items is an
evolving process and as our capabilities and data availability mature,
we will continue to review and refine our approach in medium term.
Target-setting and review
TCFD requirements related to metrics and targets (c) on short-term
targets: we do not plan to set short-term targets for financed
emissions, sustainable finance or our own operations as our overall
climate strategy is focused on our ambition to become a net zero bank
by 2050. We have set interim financed emissions 2030 targets and a
sustainable finance and investment ambition by 2030. Further
information can be found on pages 35 and 41.
TCFD requirements related to metrics and targets (c) on climate-related
opportunities: we currently have not set targets for climate-related
opportunities. However, we report progress towards our ambition to
provide and facilitate $750bn–$1tn in sustainable finance and
investment by 2030.
Financial position, financial performance and cash flows
HKEx Para 24(a), 25(b) on financial effects of climate-related
opportunities and TCFD requirements related to metrics and targets (a)
on climate-related opportunities: we currently do not fully disclose the
qualitative or quantitative information about how climate-related
opportunities have affected our financial position (e.g. proportion of
assets), financial performance (e.g. proportion of revenue) or cash flows
or other aligned business activities for the reporting period, as well as
the relevant anticipated financial effects. Therefore we have not
disclosed how such information is reflected in our financial statements.
The relevant metrics are not individually identifiable. It may also involve
disclosing commercially sensitive non-public information. We do
however assess the effect of climate credit risk on IFRS9 ECL. The
output of this assessment is included on page 212. We also disclose
our conclusion that no incremental adjustments were needed to
capture climate impacts in our financial statements on page 34. We
have also disclosed the progress against our ambition of providing and
facilitating $750bn–$1tn of sustainable finance and investment by 2030.
We are exploring ways to enhance our methodologies and data
capabilities to improve granularity of these disclosures in the medium
term.
Capital deployment
HKEx Para 33 related to expenditure for climate-related risks and
opportunities: we currently do not disclose the amount of capital
expenditure, financing or investment specifically allocated to climate-
related risks and opportunities. We integrate climate-risk considerations
into our broader capital planning process. Climate risk is therefore not
individually identifiable. Climate risk considerations are incorporated
across a wide range of initiatives, including investing in resources to
meet forward-looking regulatory requirements, enhancements to data
and modelling capabilities, power purchase arrangements and
engagements with suitable data vendors. The relevant metrics are
therefore not individually identifiable. As part of enhancing our
disclosures for upcoming regulatory requirements we plan to reassess
our approach to these requirements in the medium term.
Internal carbon prices
HKEx Para 34 and TCFD requirements related to metrics and targets (a)
on internal carbon prices: we do not currently use an internal carbon
price, and are still developing the relevant implementation strategy. We
aim to provide further disclosures in the medium term. For details on
the external carbon prices used in our climate scenario analysis, please
refer to page 207.
Financial planning and performance
TCFD requirements related to Strategy (b) and (c) on financial planning
and performance: we have used climate scenario analysis to inform our
organisation’s business, strategy and financial planning. In 2025, we
continued to incorporate certain aspects of sustainable finance within
our financial planning process. Also, we used climate scenario analysis
to assess the impacts of climate-related risks on financial performance
and our financial position, which is largely focused on how expected
credit losses will be impacted under different climate scenarios. We do
not fully disclose impacts from climate-related opportunities on financial
planning and performance, including on revenue, costs and the balance
sheet, detailed climate risk exposures for all sectors and geographies,
or physical risk metrics. This is due to transitional challenges in relation
to data limitations, although nascent work is ongoing in these areas.
However, we have disclosed the progress against our ambition of
providing and facilitating $750bn–$1tn of sustainable finance and
investment by 2030. We expect these data limitations to be addressed
in the medium term as more reliable data becomes available and
technology solutions are implemented.
Transition plan
TCFD requirements related to Strategy (b) on transition plan: in 2020,
we set an ambition to become a net zero bank by 2050. Since then, we
have made good progress and published our updated transition plan
incorporating revised interim 2030 financed emission targets in
November 2025, which reflects the realities of an evolving transition
playing out very differently across the global economy. We currently do
not disclose the planned sources of funding to implement our climate
strategy. Our planned sources of funding take into consideration our
overall bank strategy. Our climate strategy is part of this, and the
specific climate-related sources of funding are not separately
identifiable. The relevant access to capital is therefore not individually
identifiable. We currently partially test achievability of our transition plan
and associated targets by performing feasibility analysis of our financed
emissions targets considering multiple climate-related scenarios. As
part of enhancing our disclosures for upcoming regulatory
requirements, we plan to reassess our approach to these requirements
in the medium term. The reference pathways we consider are global
and we do not currently set GHG targets for individual countries or
entities, unless required by regulation.
Impacts of transition and physical risk
HKEx Para 30 and 31, TCFD requirements related to metrics and
targets (a) on detailed climate-related risk exposure metrics for physical
and transition risks: we do not fully disclose the amount and
percentage of assets or business activities vulnerable to climate-related
physical and transition risks, or the metrics used to assess the impact
of climate-related physical (chronic) and transition (policy and legal,
technology and market) risks on parts of wholesale, retail lending and
other financial intermediary business activities (specifically credit
exposure, equity and debt holdings, or trading positions, broken down
by industry, geography, credit quality and average tenor). We are aiming
to develop the appropriate systems, data and processes to provide
these disclosures in future years. We do, however, disclose the
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 388 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
exposure to six, high-transition risk wholesale sectors and the flood risk
exposure and Energy Performance Certificate (‘EPC’) breakdown for
the UK retail mortgage portfolio.
Scope 3 emissions disclosure
HKEx Para 28(c), 29(d) and TCFD requirements related to metrics and
targets (a) and (b) on scope 3 emissions metrics: we currently partially
disclose scope 3 GHG emissions, and related risks. We currently focus
on disclosing only four out of 15 categories of scope 3 GHG emissions,
including business travel, supply chain and financed emissions,
following our internal materiality assessment. Further details on
reasons for exclusion can be found in our GHG reporting guidance
- To calculate supply chain emissions, as detailed in the GHG
reporting guidance, we use spend data for the 12-month period to 30
September, and the latest data available as at end of 2024 for suppliers’
emissions and revenue. In relation to financed emissions, we partially
comply with scope 3 category 15 – albeit on a lagged basis. We publish
on-balance sheet financed emissions for our in-scope target-sectors,
where the total lending exposures included were approximately 3.5%
of our loans and advances to customers at 31 December 2024, as
detailed on page 46. We also publish facilitated emissions for the oil
and gas, and power and utilities sectors. In relation to related risks, we
currently disclose the exposure to six, high-transition risk wholesale
sectors, please refer to page 204. Data quality of future disclosures on
financed emissions and related risks are reliant on our customers
publicly disclosing their GHG emissions, targets and plans, and related
risks, and the accuracy and completeness of these in third-party data.
We are working to enhance the appropriate systems, data and
processes to enhance our disclosures to align with HKEx requirements
where possible in future years. We recognise the need to provide early
transparency on climate disclosures but balance this with the
recognition that existing data and reporting processes continue to
evolve.
Anticipated financial effects
HKEx Para 25(a)(i) related to investment and disposal plans: due to the
nature of our business, we consider a wide range of factors, including
climate change, in our M&A activities. Our current processes to
manage climate and sustainability-related targets, net zero transition
plans and climate strategy include impact assessments of HSBC
mergers and acquisitions activity. While we perform this assessment
for each planned transaction, the anticipated financial effects of the
transaction as a result of the climate and sustainability impacts, are not
separately identifiable and are a secondary impact of the transaction as
opposed to the primary objective.
HKEx Para 25(a)(ii) related to planned sources of funding to implement
its strategy and TCFD requirements related to Strategy (b) on access to
capital: we do not disclose the changes in financial position over the
short, medium and long term with respect to planned sources of
funding to implement our climate strategy. We have, however,
considered how the implementation of our climate strategy may impact
our businesses, strategy and financial planning. Our access to capital
may be impacted by reputational concerns as a result of climate action
or inaction. In addition, if we are perceived to mislead stakeholders on
our business activities or if we fail to achieve our stated net zero
ambitions, we could potentially face reputational damage, impacting our
revenue-generating ability and our access to capital markets. To
manage these risks, we have integrated climate risk into our existing
risk taxonomy, and incorporated it within the risk management
framework through the policies and controls for the existing risks
where appropriate. The relevant access to capital is therefore not
individually identifiable. As part of enhancing our disclosures for
upcoming regulatory requirements, we plan to reassess our approach
to these requirements in the medium term.
Climate-related opportunities
HKEx Para 32 and TCFD requirements related to metrics and targets (a)
on amount and percentage of assets or business activities, or capital
deployment: we currently do not disclose the proportion of revenue,
amount and percentage of assets or capital deployment aligned with
climate-related opportunities, including revenue from low-carbon
products and forward-looking metrics. This is due to transitional data
and system limitations, and the absence of standardised
methodologies. As part of enhancing our disclosures for upcoming
regulatory requirements, we plan to reassess our approach to these
requirements in the medium term.
Applicability of cross-industry metrics and industry-based
metrics
HKEx Para 36 and 41 requirements are related to applicability of cross-
industry metrics and industry-based metrics: our current disclosures
focus primarily on cross-industry metrics, as our approach, internal
processes and data availability for industry-based metrics are still under
development. We will continue to review and refine our approach to
industry-based metrics in the medium term as our capabilities and data
mature.
Information about the enforceability
of judgments made in the US
HSBC Holdings is a public limited company incorporated in England and
Wales.
Most of the Directors and executive officers live outside the US. As a
result, it may not be possible to serve process on such persons or
HSBC Holdings in the US or to enforce judgments obtained in US
courts against them or HSBC Holdings based on civil liability provisions
of the securities laws of the US.
There is doubt as to whether English courts would enforce:
–civil liabilities under US securities laws in original actions; or
–judgments of US courts based upon these civil liability provisions.
In addition, judgments that contain awards of punitive and/or multiple
damages in actions brought in the US or elsewhere may be
unenforceable in the UK.
The enforceability of any judgment in the UK will depend on the
particular facts of the case as well as the laws and treaties in effect at
the time.
Exchange controls and other
limitations affecting equity security
holders
Other than certain economic sanctions that may be in force from time
to time, there are currently no UK laws, decrees or regulations that
would prevent the import or export of capital or remittance of
distributable profits by way of dividends and other payments to holders
of HSBC Holdings’ equity securities who are not residents of the UK.
There are also no restrictions under the laws of the UK or the terms of
the Memorandum and Articles of Association concerning the right of
non-resident or foreign owners to hold HSBC Holdings’ equity
securities or, when entitled to vote, to do so.
Insider trading policies and
procedures
The Company has adopted insider trading policies and procedures
governing the purchase, sale, and other dispositions of its securities by
directors, senior management and employees that are reasonably
designed to promote compliance with applicable insider trading laws,
rules and regulations, and any listing standards applicable to the
Company.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 389 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Dividends on the ordinary shares of HSBC Holdings
The HSBC Holdings dividends approved, per ordinary share, in respect of each of the last five years were:
| First interim | Second interim | Third interim | Fourth interim1 | Total2 | ||
|---|---|---|---|---|---|---|
| 2025 | $ | 0.100 | 0.100 | 0.100 | 0.450 | 0.75 |
| £ | 0.074 | 0.074 | 0.075 | 0.335 | 0.558 | |
| HK$ | 0.784 | 0.778 | 0.778 | 3.502 | 5.842 | |
| 20243 | $ | 0.310 | 0.100 | 0.100 | 0.360 | 0.870 |
| £ | 0.243 | 0.076 | 0.078 | 0.273 | 0.671 | |
| HK$ | 2.420 | 0.779 | 0.777 | 2.791 | 6.768 | |
| 2023 | $ | 0.100 | 0.100 | 0.100 | 0.310 | 0.610 |
| £ | 0.079 | 0.080 | 0.080 | 0.248 | 0.487 | |
| HK$ | 0.783 | 0.783 | 0.780 | 2.426 | 4.773 | |
| 2022 | $ | 0.090 | 0.230 | 0.320 | ||
| £ | 0.079 | 0.185 | 0.264 | |||
| HK$ | 0.706 | 1.804 | 2.511 | |||
| 2021 | $ | 0.070 | 0.180 | – | – | 0.250 |
| £ | 0.051 | 0.138 | – | – | 0.189 | |
| HK$ | 0.545 | 1.412 | – | – | 1.957 |
1The fourth interim dividend for 2025 of $0.45 per ordinary share will be paid on 30 April 2026. The fourth interim dividend for 2025 has been translated into
pounds sterling and Hong Kong dollars at the closing rate on 31 December 2025.
2The above dividends approved are accounted for as disclosed in Note 8 on the Financial Statements.
3The first interim dividend for 2024 includes a special dividend of $0.21.
4The above dividend amounts for pounds sterling and Hong Kong dollars have been rounded.
American Depositary Shares
A holder of HSBC Holdings’ American Depositary Shares (‘ADSs’) may
have to pay, either directly or indirectly (via the intermediary through
whom their ADSs are held) fees to the Bank of New York Mellon as
depositary.
Fees may be paid or recovered in several ways: by deduction from
amounts distributed; by selling a portion of distributable property; by
deduction from dividend distributions; by directly invoicing the holder;
or by charging the intermediaries who act for them.
Fees for the holders of the HSBC ADSs include:
| For: | HSBC ADS holders must pay: |
|---|---|
| Each issuance of HSBC ADSs, including as a result of a distribution of shares (including<br><br>through a stock dividend, stock split or distribution of rights or other property) | $5.00 (or less) per 100 HSBC ADSs or portion thereof |
| Each cancellation of HSBC ADSs, including if the deposit agreement terminates | $5.00 (or less) per 100 HSBC ADSs or portion thereof |
| Transfer and registration of shares on our share register to/from the holder’s name to/from the<br><br>name of The Bank of New York Mellon or its agent when the holder deposits or withdraws<br><br>shares | Registration or transfer fees (of which there currently are none) |
| Conversion of non-US currency to US dollars | Charges and expenses incurred by The Bank of New York Mellon<br><br>with respect to the conversion |
| Each cash distribution to HSBC ADS holders | $0.02 or less per ADS |
| Transfers of HSBC ordinary shares to the depositary in exchange for HSBC ADSs | Any applicable taxes and/or other governmental charges |
| Distribution of securities by the depository to HSBC ADS holders | A fee equivalent to the fee that would be payable if securities<br><br>distributed to you had been shares and those shares had been<br><br>deposited for issuance of ADSs |
| Any other charges incurred by the depositary or its agents for servicing shares or other<br><br>securities deposited | As applicable |
The depositary may generally refuse to provide fee-attracting services
until its fees for those services are paid.
The depositary has agreed to reimburse us for expenses we incur, and
to pay certain out-of-pocket expenses and waive certain fees, in
connection with the administration, servicing and maintenance of our
ADS programme. There are limits on the amount of expenses for which
the depositary will reimburse us. During the year ended 31 December
2025, the depositary reimbursed, paid and/or waived fees and
expenses totalling $2,025,386.48 in connection with the administration,
servicing and maintenance of the programme.
Nature of trading market
HSBC Holdings ordinary shares are listed or admitted to trading on the
London Stock Exchange (‘LSE’), the Hong Kong Stock Exchange
(‘HKSE’), the Bermuda Stock Exchange and on the New York Stock
Exchange (‘NYSE’) in the form of ADSs. HSBC Holdings maintains its
principal share register in England and overseas branch share registers
in Hong Kong and Bermuda (collectively, the ‘share register’).
As at 31 December 2025, there were a total of 159,073 holders of
record of HSBC Holdings ordinary shares on the share register.
As at 31 December 2025, approximately 15.5m HSBC Holdings
ordinary shares were registered in the HSBC Holdings’ share register in
the name of 13,601 holders of record with addresses in the US. These
shares represented approximately 0.09% of the total HSBC Holdings
ordinary shares in issue.
As at 31 December 2025, there were 4,255 holders of record of ADSs
holding approximately 112.62m ADSs, representing approximately
563.1m HSBC Holdings ordinary shares, 4,188 of these holders had
addresses in the US, holding approximately 112.60m ADSs,
representing approximately 563.0m HSBC Holdings ordinary shares. As
at 31 December 2025, approximately 3.28% of the HSBC Holdings
ordinary shares were represented by ADSs held by holders of record
with addresses in the US.
Memorandum and Articles of
Association
The disclosure under the caption ‘Memorandum and Articles of
Association’ contained in Form 20-F for the years ended 31 December
2000, 2001, 2014, 2018 and 2022 is incorporated by reference herein.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 390 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Differences in HSBC Holdings/New York Stock Exchange corporate
governance practices
Under the NYSE’s corporate governance rules for listed companies and
the applicable rules of the SEC, as a NYSE-listed foreign private issuer,
HSBC Holdings must disclose any significant ways in which its
corporate governance practices differ from those followed by US
companies subject to NYSE listing standards. HSBC Holdings believes
the following to be the significant differences between its corporate
governance practices and NYSE corporate governance rules applicable
to US companies.
US companies listed on the NYSE are required to adopt and disclose
corporate governance guidelines. The UK Listing Rules of the FCA
require each listed company incorporated in the UK to include in its
annual report and accounts a statement of how it has applied the
principles of the UK Corporate Governance Code issued by the
Financial Reporting Council and a statement as to whether or not it has
complied with the code provisions of The UK Corporate Governance
Code throughout the accounting period covered by the annual report
and accounts. A company that has not complied with the code
provisions, or complied with only some of the code provisions or (in the
case of provisions whose requirements are of a continuing nature)
complied for only part of an accounting period covered by the report,
must specify the code provisions with which it has not complied, and
(where relevant) for which part of the reporting period such non-
compliance continued, and give reasons for any non-compliance.
During 2025, HSBC complied with the applicable code provisions of the
UK Corporate Governance Code. The UK Corporate Governance Code
does not require HSBC Holdings to disclose the full range of corporate
governance guidelines with which it complies.
Under NYSE standards, companies are required to have a nominating/
corporate governance committee composed entirely of directors
determined to be independent in accordance with the NYSE’s
corporate governance rules. All of the members of the Nomination &
Corporate Governance Committee (excluding the Group Chairman)
during 2025 were independent non-executive Directors, as determined
in accordance with the UK Corporate Governance Code. The terms of
reference of our Nomination & Corporate Governance Committee,
which comply with the UK Corporate Governance Code, require that
the Committee shall be comprised of the independent non-executive
Directors of the Company and the Group Chairman. In addition to
identifying individuals qualified to become Board members, a
nominating/corporate governance committee must develop and
recommend to the Board a set of corporate governance principles.
The Nomination & Corporate Governance Committee’s terms of
reference do not require it to develop and recommend corporate
governance principles for HSBC Holdings, as HSBC Holdings is subject
to the corporate governance principles of the UK Corporate Governance
Code.
The Board of Directors is responsible under its terms of reference for
the development and review of Group policies and practices on
corporate governance.
Under the NYSE standards, companies are required to have a
compensation committee composed entirely of directors determined to
be independent in accordance with the NYSE’s corporate governance
rules. All of the members of the Group Remuneration Committee
during 2025 were independent non-executive Directors, as determined
in accordance with the UK Corporate Governance Code. The terms of
reference of our Group Remuneration Committee, which comply with
the UK Corporate Governance Code, require the Committee (including
the Chair) to comprise at least three members, all of whom shall be
independent non-executive Directors. A compensation committee must
review and approve corporate goals and objectives relevant to Chief
Executive Officer ('CEO') compensation and evaluate a CEO’s
performance in light of these goals and objectives. The Group
Remuneration Committee’s terms of reference require it to review and
approve performance-based remuneration of the executive Directors by
reference to corporate goals and objectives that are set by the Board of
Directors.
Pursuant to NYSE listing standards, non-management directors must
meet on a regular basis without management present and independent
directors must meet separately at least once per year.
The Group Chairman meets with the independent non-executive
Directors without the executive Directors in attendance after each
scheduled Board meeting and otherwise, as necessary. HSBC
Holdings’ practice, in this regard, complies with the UK Corporate
Governance Code.
In accordance with the requirements of the UK Corporate Governance
Code, HSBC Holdings discloses in its Annual Report and Accounts how
the Board, its committees and the Directors are evaluated (on page
- and provides extensive information regarding Directors’
compensation in the Directors’ remuneration report (on page 249).
The terms of reference of HSBC Holdings’ Group Audit, Nomination &
Corporate Governance and Group Remuneration Committees, as well
as the Group Risk and Group Technology and Operations Committees,
are available at www.hsbc.com/who-we-are/our-people/board-of-
directors/board-committees.
NYSE listing standards require US companies to adopt a code of
business conduct and ethics for directors, officers and employees, and
promptly disclose any waivers of the code for directors or executive
officers.
In 2025, the Board endorsed the Statement of Business Principles and
Code of Conduct, which, pursuant to the requirements of the Sarbanes-
Oxley Act, incorporates the Sarbanes-Oxley code of ethics (the
'Sarbanes-Oxley Principles') applicable to the Group CEO, as the
principal executive officer, and to the Group Chief Financial Officer and
Global Financial Controller. The Statement of Business Principles and
Code of Conduct remains in force and applies to the executive directors
and employees of the HSBC Group. The Statement of Business
Principles and Code of Conduct is available at www.hsbc.com/who-we-
are/purpose-values-and-strategy/our-conduct or from the Group Chief
People & Governance Officer at 8 Canada Square, London E14 5HQ.
During 2025, HSBC Holdings granted no waivers from its code of
ethics.
Under NYSE listing rules applicable to US companies, independent
directors must comprise a majority of the board of directors. Currently,
more than three-quarters of HSBC Holdings’ Directors are independent.
Under the UK Corporate Governance Code, the HSBC Holdings Board
determines whether a Director is independent in character and
judgement and whether there are relationships or circumstances that
are likely to affect, or could appear to affect, the Director’s judgement.
Under the NYSE rules, a director cannot qualify as independent unless
the board affirmatively determines that the director has no material
relationship with the listed company; in addition, the NYSE rules
prescribe a list of circumstances in which a director cannot be
independent. The UK Corporate Governance Code requires a
company’s board to assess director independence by affirmatively
concluding that the director is independent of management and free
from any business or other relationship that could materially interfere
with the exercise of independent judgement. Lastly, a CEO of a US
company listed on the NYSE must annually certify that he or she is not
aware of any violation by the company of NYSE corporate governance
standards. In accordance with NYSE listing rules applicable to foreign
private issuers, HSBC Holdings’ Group CEO is not required to provide
the NYSE with this annual compliance certification. However, in
accordance with rules applicable to both US companies and foreign
private issuers, the Group CEO is required promptly to notify the NYSE
in writing after any executive officer becomes aware of any material
non-compliance with the NYSE corporate governance standards
applicable to HSBC Holdings. HSBC Holdings is required to submit
annual and interim written affirmations of compliance with applicable
NYSE corporate governance standards, similar to the affirmations
required of NYSE-listed US companies.
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
|---|---|---|---|---|---|---|
| 391 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Glossary of accounting terms and US equivalents
| Accounting term | US equivalent or brief description | |||||
|---|---|---|---|---|---|---|
| Accounts | Financial Statements | |||||
| Articles of Association | Articles of incorporation | |||||
| Called up share capital | Shares issued and fully paid | |||||
| Creditors | Payables | |||||
| Debtors | Receivables | |||||
| Deferred tax | Deferred income tax | |||||
| Finance lease | Capital lease | |||||
| Freehold | Ownership with absolute rights in perpetuity | |||||
| Interests in associates and joint<br><br>ventures | Interests in entities over which we have significant influence or joint control, which are accounted for using the equity<br><br>method | |||||
| Loans and advances | Loans | |||||
| Loan capital | Long-term debt | |||||
| Nominal value | Par value | |||||
| One-off | Non-recurring | |||||
| Ordinary shares | Common stock | |||||
| Overdraft | A line of credit, contractually repayable on demand unless a fixed-term has been agreed, established through a customer’s<br><br>current account | |||||
| Preference shares | Preferred stock | |||||
| Premises | Property | |||||
| Provisions | Liabilities of uncertain timing or amount | |||||
| Share premium account | Additional paid-in capital | |||||
| Shares in issue | Shares outstanding | |||||
| Write-offs | Charge-offs | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 392 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Reconciliations | ||||||
| --- | --- | --- | ||||
| Form 20-F Item Number and Caption | Location | Page | ||||
| PART1 | ||||||
| 1. Identity of Directors, Senior Management and Advisers | Not required for Annual Report | — | ||||
| 2. Offer statistics and Expected Timetable | Not required for Annual Report | — | ||||
| 3. Key information | ||||||
| A. [Reserved] | ||||||
| B. Capitalisation and Indebtedness | Not required for Annual Report | — | ||||
| C. Reasons for the Offer and use of Proceeds | Not required for Annual Report | — | ||||
| D. Risk Factors | Risk Review - Risk factors | 126-137 | ||||
| 4. Information on the Company | ||||||
| A. History and Development of the Company | Shareholder information | 382-395 | ||||
| Strategic Report | 4-31 | |||||
| ESG Review | 32-63 | |||||
| Financial Review | 64-110 | |||||
| Risk Review | 118-218 | |||||
| Report of the Directors: Corporate Governance Report | 219-284 | |||||
| Note 16 on the Financial Statements - Financial investments | 343-344 | |||||
| Note 18 on the Financial Statements - Interests in associates and joint ventures | 345-348 | |||||
| Note 19 on the Financial Statements - Investments in subsidiaries | 349-351 | |||||
| B. Business review | Strategic Report | 4-31 | ||||
| Financial Review | 64-110 | |||||
| Note 10 on the Financial Statements - Segmental analysis | 329-331 | |||||
| C. Organisational Structure | Strategic Report | 4-31 | ||||
| Report of the Directors: Corporate Governance Report | 219-284 | |||||
| Report of the Directors: Corporate Governance Report - Subsidiary governance | 232 | |||||
| Note 18 on the Financial Statements - Interests in associates and joint ventures | 345-348 | |||||
| Note 19 on the Financial Statements - Investments in subsidiaries | 349-351 | |||||
| Note 38 on the Financial Statements - HSBC Holdings’ subsidiaries, joint ventures<br><br>and associates | 373-381 | |||||
| D. Property, Plants and Equipment | Note 22 on the Financial Statements - Prepayments, accrued income and other<br><br>assets | 355 | ||||
| 4 A..Unresolved Staff Comments | Not Applicable | — | ||||
| 5. Operating and Financial Review and Prospects | ||||||
| A. Operating Results | Strategic Report | 4-31 | ||||
| Financial Review | 64-110 | |||||
| Risk Review | 118-218 | |||||
| Report of the Directors: Corporate Governance Report | 219-284 | |||||
| Note 15 on the Financial Statements - Derivatives | 339-343 | |||||
| B. Liquidity and Capital Resources | Strategic Report | 4-31 | ||||
| Financial Review - Loan maturity and interest sensitivity analysis | 84 | |||||
| Risk Review - Capital and Liquidity Risk | 191-195 | |||||
| Risk Review - Insurance Manufacturing Operations Risk | 215 | |||||
| Note 1 on the Financial Statements - Basis of preparation and material accounting<br><br>policies | 300-311 | |||||
| Note 12 on the Financial Statements - Fair values of financial instruments carried at<br><br>fair value | 332-337 | |||||
| Note 13 on the Financial Statements - Fair values of financial instruments not carried<br><br>at fair value | 337-339 | |||||
| Note 15 on the Financial Statements - Derivatives | 339-343 | |||||
| Note 30 on the Financial Statements - Maturity analysis of assets, liabilities and off-<br><br>balance sheet commitments | 360-365 | |||||
| Note 33 on the Financial Statements - Contingent liabilities, contractual commitments<br><br>and guarantees | 368-368 | |||||
| C. Research and Development, Patents and Licences, etc. | Not Applicable | — | ||||
| D. Trend Information | Strategic Report | 4-31 | ||||
| Financial Review | 64-110 | |||||
| Risk Review | 118-218 | |||||
| E. Critical Accounting Estimates | Not Applicable | — | ||||
| 6. Directors, Senior Management and Employees | ||||||
| A. Directors and Senior Management | Report of the Directors: Corporate Governance Report | 219-284 | ||||
| B. Compensation | Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report | 249-274 | ||||
| Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 | |||||
| Note 36 on the Financial Statements - Related party transactions | 371-373 | |||||
| C. Board Practices | Report of the Directors: Corporate Governance Report | 219-284 | ||||
| Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report | 249-274 | |||||
| D. Employees | Report of the Directors: Corporate Governance Report | 219-284 | ||||
| Strategic Report | 4-31 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 393 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Form 20-F Item Number and Caption | Location | Page | ||||
| --- | --- | --- | ||||
| ESG Review - Social | 51-56 | |||||
| Financial Review | 64-110 | |||||
| Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 | |||||
| Note 36 on the Financial Statements - Related party transactions | 371-373 | |||||
| E. Share Ownership | Report of the Directors: Corporate Governance Report | 219-284 | ||||
| Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report | 249-274 | |||||
| Note 5 on the Financial Statements - Employee compensation and benefits | 320-325 | |||||
| Note 32 on the Financial Statements - Called up share capital and other equity<br><br>instruments | 366-368 | |||||
| F. Disclosure of a registrant’s action to recover erroneously<br><br>awarded compensation | Not Applicable | — | ||||
| 7. Major Shareholders and Related Party Transactions | ||||||
| --- | --- | --- | ||||
| A. Major Shareholders | Report of the Directors: Corporate Governance Report | 219-284 | ||||
| Shareholder Information | 389 | |||||
| B. Related Party Transactions | Note 36 on the Financial Statements - Related party transactions | 371-373 | ||||
| C. Interests of Experts and Counsel | Not required for Annual Report | — | ||||
| 8. Financial Information | ||||||
| A. Consolidated Statements and Other Financial<br><br>Information | Financial Review | 64-110 | ||||
| Financial Statements | 285-381 | |||||
| Report of Independent Registered Public Accounting Firm to the Board of Directors and<br><br>Shareholders of HSBC Holdings plc | 286-287 | |||||
| Note 1 on the Financial Statements - Basis of preparation and material accounting | 300-311 | |||||
| Note 32 on the Financial Statements - Called up share capital and other equity<br><br>instruments | 366-368 | |||||
| Note 35 on the Financial Statements - Legal proceedings and regulatory matters | 369-371 | |||||
| Shareholder Information | 382-395 | |||||
| B. Significant Changes | Note 37 on the Financial Statements - Events after the Balance Sheet date | 373 | ||||
| 9. The Offer and Listing | ||||||
| A. Offer and Listing Details | Shareholder Information | 383-389 | ||||
| B. Plan of Distribution | Not required for Annual Report | — | ||||
| C. Markets | Shareholder Information | 382-395 | ||||
| D. Exchange Controls | Not required for Annual Report | — | ||||
| E. Taxation | Not required for Annual Report | — | ||||
| F. Dividends and Paying Agents | Not required for Annual Report | — | ||||
| 10. Additional Information | ||||||
| A. Share Capital | Not required for Annual Report | — | ||||
| B. Memorandum and Articles of Association | Shareholder Information | 382-395 | ||||
| C. Material Contracts | Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report | 249-274 | ||||
| Corporate Governance Report - Contracts of significance | 279 | |||||
| Note 35 on the Financial Statements - Legal proceedings and regulatory matters | 369-371 | |||||
| D. Exchange Controls | Shareholder Information | 382-395 | ||||
| E. Taxation | Shareholder Information | 382-395 | ||||
| F. Dividends and Paying Agents | Not required for Annual Report | — | ||||
| G. Statements by Experts | Not required for Annual Report | — | ||||
| H. Documents on Display | Shareholder Information | 382-395 | ||||
| I. Subsidiary Information | Not applicable | — | ||||
| J. Annual Report to Security Holders | Not applicable | — | ||||
| 11. Quantitative and Qualitative Disclosures About Market<br><br>Risk | Risk Review | 118-218 | ||||
| Risk Review - Market risk | 200-202 | |||||
| Note 15 on the Financial Statements - Derivatives | 339-343 | |||||
| Note 16 on the Financial Statements - Financial investments | 343-344 | |||||
| Note 30 on the Financial Statements - Maturity analysis of assets, liabilities and off-<br><br>balance sheet commitments | 360-365 | |||||
| 12. Description of Securities Other than Equity Securities | ||||||
| A. Debt Securities | Not required for Annual Report | — | ||||
| B. Warrants and Rights | Not required for Annual Report | — | ||||
| C. Other Securities | Not required for Annual Report | — | ||||
| D. American Depository Shares | Taxation of shares and dividends | 384 | ||||
| Shareholder information | 382-395 | |||||
| PART II | ||||||
| 13. Defaults, Dividends Arrearages and Delinquencies | Not applicable | — | ||||
| 14. Material Modifications to the Rights of Securities<br><br>Holders and Use of Proceeds | Not applicable | — | ||||
| 15. Controls and Procedures | Report of Independent Registered Public Accounting Firm to the Board of Directors and<br><br>Shareholders of HSBC Holdings plc | 286-287 | ||||
| Financial Review: Other Information | 111-117 | |||||
| Financial Review: Other information - Management's review of internal controls over<br><br>financial reporting | 111-117 | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 394 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Form 20-F Item Number and Caption | Location | Page | ||||
| --- | --- | --- | ||||
| 16A. Audit Committee Financial Expert | Report of the Directors: Corporate Governance | 219-284 | ||||
| 16B. Code of Ethics | Shareholder Information | 382-395 | ||||
| 16C. Principal Accountant Fees and Services | Report of the Directors: Corporate Governance | 219-284 | ||||
| Note 6 on the Financial Statements - Auditors’ remuneration | 325 | |||||
| 16D. Exemptions from the Listing Standards for Audit<br><br>Committees | Not applicable | — | ||||
| 16E. Purchases of Equity Securities by the Issuer and<br><br>Affiliated Purchasers | Report of the Directors: Corporate Governance | 219-284 | ||||
| 16F. Change in Registrant’s Certifying Accountant | Not applicable | — | ||||
| 16G. Corporate Governance | Shareholder Information | 382-395 | ||||
| 16H. Mine Safety Disclosure | Not applicable | — | ||||
| 16I. Disclosure Regarding Foreign Jurisdictions that<br><br>Prevent Inspections | Not applicable | — | ||||
| 16J. Insider Trading Policies | Shareholder information | 388 | ||||
| 16K. Cybersecurity | ESG Review - Cybersecurity | 63 | ||||
| Risk Review - Top and Emerging risks | 31 | |||||
| Risk review - Risk factors | 133-134 | |||||
| Report of the Directors: Corporate Governance Report - Group Risk Committee | 242-243 | |||||
| PART III | ||||||
| 17. Financial Statements | Not applicable | — | ||||
| 18. Financial Statements | Financial Statements | 285-381 | ||||
| 19. Exhibits (including Certifications) | * | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 395 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
Abbreviations
| Currencies | ||||||
|---|---|---|---|---|---|---|
| AUD | Australian dollar | |||||
| £ | British pound sterling | |||||
| CA$ | Canadian dollar | |||||
| € | Euro | |||||
| HK$ | Hong Kong dollar | |||||
| MXN | Mexican peso | |||||
| RMB | Chinese renminbi | |||||
| SGD | Singapore dollar | |||||
| $ | United States dollar | |||||
| Abbreviations | ||||||
| 1H25 | First half of 2025 | |||||
| 1Q25 | First quarter of 2025 | |||||
| 2Q25 | Second quarter of 2025 | |||||
| 3Q25 | Third quarter of 2025 | |||||
| 4Q25 | Fourth quarter of 2025 | |||||
| A | ||||||
| ABS¹ | Asset-backed security | |||||
| ADR | American Depositary Receipt | |||||
| ADS | American Depositary Share | |||||
| AGM | Annual General Meeting | |||||
| AI | Artificial intelligence | |||||
| AIBL | Average interest-bearing liabilities | |||||
| AIEA | Average interest-earning assets | |||||
| ALCO | Asset and Liability Management Committee | |||||
| AML | Anti-money laundering | |||||
| ANP | Annualised new business premium | |||||
| ASEAN | Association of Southeast Asian Nations | |||||
| AT1 | Additional tier 1 | |||||
| AUM | Assets under management | |||||
| B | ||||||
| Banking NII | Banking net interest income | |||||
| Basel<br><br>Committee | Basel Committee on Banking Supervision | |||||
| Basel II¹ | 2006 Basel Capital Accord | |||||
| Basel III¹ | Basel Committee’s reforms to strengthen global capital and<br><br>liquidity rules | |||||
| Basel 3.1 | Outstanding measures to be implemented from the Basel<br><br>III reforms | |||||
| BCST | Bank capital stress test | |||||
| BEPS | Base Erosion and Profit Shifting | |||||
| BGF | Business Growth Fund, an investment firm that provides<br><br>growth capital for small and mid-sized businesses in the UK<br><br>and Ireland | |||||
| BoCom | Bank of Communications Co., Limited, one of China’s<br><br>largest banks | |||||
| BoE | Bank of England | |||||
| Bps¹ | Basis points. One basis point is equal to one-hundredth of a<br><br>percentage point | |||||
| BVI | British Virgin Islands | |||||
| C | ||||||
| CAPM | Capital asset pricing model | |||||
| CDS¹ | Credit default swap | |||||
| CET1¹ | Common equity tier 1 | |||||
| CGUs | Cash-generating units | |||||
| CIB | Corporate and Institutional Banking, a business segment | |||||
| CISO | Chief Information Security Officer | |||||
| CMB | Commercial Banking | |||||
| CMC | Capital maintenance charge | |||||
| CODM | Chief Operating Decision Maker | |||||
| COSO | 2013 Committee of Sponsoring Organizations of the<br><br>Treadway Commission (US) | |||||
| Corporate<br><br>Centre | Corporate Centre comprises Central Treasury, our legacy<br><br>businesses, interests in our associates and joint ventures,<br><br>central stewardship costs and consolidation adjustments | |||||
| CP¹ | Commercial paper | |||||
| CRD IV¹ | Capital Requirements Regulation and Directive | |||||
| CRE | Commercial real estate | |||||
| CRR¹ | Customer risk rating | |||||
| CRR II¹ | The regulatory requirements of the Capital Requirements<br><br>Regulation and Directive, the CRR II regulation and the PRA<br><br>Rulebook | |||||
| --- | --- | |||||
| CSA | Credit support annex | |||||
| CSM | Contractual service margin | |||||
| CVA¹ | Credit valuation adjustment | |||||
| D | ||||||
| DCF | Discounted cash flow | |||||
| DECL | Disclosures about Expected Credit Losses | |||||
| Deferred shares | Awards of deferred shares define the number of HSBC<br><br>Holdings ordinary shares to which the employee will<br><br>become entitled, generally between one and seven years<br><br>from the date of the award, and normally subject to the<br><br>individual remaining in employment | |||||
| DPD | Days past due | |||||
| DPF | Discretionary participation feature of insurance and<br><br>investment contracts | |||||
| E | ||||||
| EAD¹ | Exposure at default | |||||
| EBA | European Banking Authority | |||||
| EC | European Commission | |||||
| ECB | European Central Bank | |||||
| ECL | Expected credit losses. In the income statement, ECL is<br><br>recorded as a change in expected credit losses and other<br><br>credit impairment charges. In the balance sheet, ECL is<br><br>recorded as an allowance for financial instruments to which<br><br>only the impairment requirements in IFRS 9 are applied | |||||
| ECM | Equity capital markets | |||||
| EEA | European Economic Area | |||||
| EPC | Energy performance certificate | |||||
| EPS | Earnings per ordinary share | |||||
| ERG | Employee Resource Group | |||||
| ESG | Environmental, social and governance | |||||
| EU | European Union | |||||
| EV | Electric vehicles | |||||
| EVE | Economic value of equity | |||||
| F | ||||||
| FCA | Financial Conduct Authority (UK) | |||||
| FDIC | Federal Deposit Insurance Corporation | |||||
| FPA | Fixed pay allowance | |||||
| FRB | Federal Reserve Board (US) | |||||
| FRC | Financial Reporting Council | |||||
| FSCS | Financial Services Compensation Scheme | |||||
| FTE | Full-time equivalent staff | |||||
| FTSE | Financial Times Stock Exchange index | |||||
| FVOCI¹ | Fair value through other comprehensive income | |||||
| FX | Foreign exchange | |||||
| G | ||||||
| GAAP | Generally accepted accounting principles | |||||
| GAC | Group Audit Committee | |||||
| Galicia | Grupo Financiero Galicia | |||||
| GBM | Global Banking and Markets, a former global business | |||||
| GDP | Gross domestic product | |||||
| GenAI | Generative AI | |||||
| GHG | Greenhouse Gas | |||||
| GPS | Global Payments Solutions, the business formerly known as<br><br>Global Liquidity and Cash Management | |||||
| GRC | Group Risk Committee | |||||
| Group | HSBC Holdings together with its subsidiary undertakings | |||||
| Group OpCo | Group Operating Committee | |||||
| GTC | Global Technology and Operations Committee | |||||
| GTS | Global Trade Solutions, the business formerly known as<br><br>Global Trade and Receivables Finance | |||||
| H | ||||||
| Hang Seng Bank | Hang Seng Bank Limited, one of Hong Kong’s largest banks | |||||
| Herald | Herald Fund SPC | |||||
| HIBOR | Hong Kong interbank offered rate | |||||
| HKEx | The Stock Exchange of Hong Kong Limited | |||||
| HKMA | Hong Kong Monetary Authority | |||||
| HMRC | HM Revenue and Customs | |||||
| Holdings ALCO | HSBC Holdings Asset and Liability Management Committee | |||||
| HKLR | Hong Kong Listing Rules | |||||
| HSBC Holdings plc Annual Report on Form 20-F | ||||||
| --- | ||||||
| 396 | ||||||
| Strategic report | ESG review | Financial review | Risk review | Corporate<br><br>Governance Report | Financial<br><br>statements | Additional<br><br>information |
| --- | --- | --- | --- | --- | --- | --- |
| Hong Kong | Hong Kong Special Administrative Region of the People’s<br><br>Republic of China | |||||
| --- | --- | |||||
| HQLA | High-quality liquid assets | |||||
| HSBC | HSBC Holdings together with its subsidiary undertakings | |||||
| HSBC Bank plc | HSBC Bank plc, also known as the non-ring-fenced bank | |||||
| HSBC Bank<br><br>USA | HSBC Bank USA, N.A., HSBC’s retail bank in the US | |||||
| HSBC Canada | The sub-group, HSBC Bank Canada, HSBC Trust Company<br><br>Canada, HSBC Mortgage Corporation Canada and HSBC<br><br>Securities Canada, consolidated for liquidity purposes | |||||
| HSBC Finance | HSBC Finance Corporation, the US consumer finance<br><br>company (formerly Household International, Inc.) | |||||
| HSBC Holdings | HSBC Holdings plc, the parent company of HSBC | |||||
| HSBC Private<br><br>Bank (Suisse) | HSBC Private Bank (Suisse) SA, HSBC’s private bank in<br><br>Switzerland | |||||
| HSBC UK | HSBC UK Bank plc, also known as the ring-fenced bank | |||||
| HSBC USA | The sub-group, HSBC USA Inc (the holding company of<br><br>HSBC Bank USA) and HSBC Bank USA, consolidated for<br><br>liquidity purposes | |||||
| HSI | HSBC Securities (USA) Inc. | |||||
| HSSL | HSBC Securities Services (Luxembourg) | |||||
| I | ||||||
| IAS | International Accounting Standards | |||||
| IASB | International Accounting Standards Board | |||||
| IBE | Independent Board Evaluation | |||||
| Ibor | Interbank offered rate | |||||
| ICAAP | Internal capital adequacy assessment process | |||||
| IEA | International Energy Agency | |||||
| IFRS Accounting<br><br>Standards | International Financial Reporting Standards as issued by the<br><br>International Accounting Standards Board | |||||
| ILAAP | Internal liquidity adequacy assessment process | |||||
| IMA | Internal model approach | |||||
| IMM | Internal model method | |||||
| IRB¹ | Internal ratings-based | |||||
| IRRA | Interest rate risk assessment | |||||
| IRRBB | Interest rate risk in the banking book | |||||
| ISDA | International Swaps and Derivatives Association | |||||
| ISSB | International Sustainability Standard Board | |||||
| IWPB | International Wealth and Premier Banking, a business<br><br>segment | |||||
| J | ||||||
| JV | Joint venture | |||||
| K | ||||||
| KMP | Key Management Personnel | |||||
| L | ||||||
| LCR | Liquidity coverage ratio | |||||
| LGBTQ+ | Lesbian, gay, bisexual, transgender and queer. The plus<br><br>sign denotes other non-mainstream groups on the<br><br>spectrums of sexual orientation and gender identity | |||||
| LGD¹ | Loss given default | |||||
| Libor | London interbank offered rate | |||||
| Long term | For our financial targets, we define long term as five to six<br><br>years, commencing 1 January 2026 | |||||
| LTI | Long-term incentive | |||||
| LTV¹ | Loan to value | |||||
| M | ||||||
| M&A | Mergers and acquisitions | |||||
| Mainland China | People’s Republic of China excluding Hong Kong and<br><br>Macau | |||||
| Medium term | For our financial targets, we define medium term as three<br><br>to five years, commencing 1 January 2026 | |||||
| MENAT | Middle East, North Africa and Türkiye | |||||
| MREL | Minimum requirement for own funds and eligible liabilities | |||||
| MRT¹ | Material Risk Taker | |||||
| MRM | Model risk management | |||||
| MSS | Markets and Securities Services, HSBC’s capital markets<br><br>and securities services businesses in Global Banking and<br><br>Markets | |||||
| N | ||||||
| NAV | Net asset value | |||||
| NED | Non-executive Director | |||||
| Net operating<br><br>income | Net operating income before change in expected credit<br><br>losses and other credit impairment charges | |||||
| NGO | Non-governmental organisation | |||||
| NII | Net interest income | |||||
| --- | --- | |||||
| NIM | Net interest margin | |||||
| NNM | Net new money | |||||
| NPS | Net promoter score | |||||
| NSFR | Net stable funding ratio | |||||
| NYSE | New York Stock Exchange | |||||
| O | ||||||
| OCI | Other comprehensive income | |||||
| OECD | Organisation of Economic Co-operation and Development | |||||
| OTC¹ | Over-the-counter | |||||
| P | ||||||
| PBT | Profit before tax | |||||
| PCAF | Partnership for Carbon Accounting Financials | |||||
| PD¹ | Probability of default | |||||
| Performance<br><br>shares¹ | Awards of HSBC Holdings ordinary shares under employee<br><br>share plans that are subject to corporate performance<br><br>conditions | |||||
| Ping An | Ping An Insurance (Group) Company of China, Ltd, the<br><br>second-largest life insurer in the PRC | |||||
| POCI | Purchased or originated credit-impaired financial assets | |||||
| PRA | Prudential Regulation Authority (UK) | |||||
| PRC | People’s Republic of China | |||||
| Principal plan | HSBC Bank (UK) Pension Scheme | |||||
| PwC | The member firms of the PwC network, including<br><br>PricewaterhouseCoopers LLP | |||||
| R | ||||||
| RAS | Risk appetite statement | |||||
| RBW | Retail Banking and Wealth | |||||
| Repo¹ | Sale and repurchase transaction | |||||
| RES | Resource and experience sharing agreement | |||||
| Revenue | Net operating income before ECL | |||||
| Reverse repo | Security purchased under commitments to sell | |||||
| RMF | Risk management framework | |||||
| RNIV | Risk not in VaR | |||||
| RoE | Return on average ordinary shareholders’ equity | |||||
| RoTE | Return on average tangible equity | |||||
| RWA¹ | Risk-weighted asset | |||||
| S | ||||||
| SAB | Saudi Awwal Bank | |||||
| SAPS | Self-administered pension scheme | |||||
| SASB | Sustainability Accounting Standards Board | |||||
| SEC | Securities and Exchange Commission (US) | |||||
| ServCo Group | Separately incorporated group of service companies<br><br>established in response to UK ring-fencing requirements | |||||
| SIC | Securities investment conduit | |||||
| SME | Small and medium-sized enterprise | |||||
| Solitaire | Solitaire Funding Limited, a special purpose entity managed<br><br>by HSBC | |||||
| SVaR | Stressed value at risk | |||||
| SVB UK | Silicon Valley Bank UK Limited, now HSBC Innovation Bank<br><br>Limited | |||||
| T | ||||||
| TCFD¹ | Task Force on Climate-related Financial Disclosures | |||||
| TEQ | Transition engagement questionnaire | |||||
| TSR¹ | Total shareholder return | |||||
| U | ||||||
| UAE | United Arab Emirates | |||||
| UK | United Kingdom | |||||
| UNGPs | UN Guiding Principles on Business and Human Rights | |||||
| UKLR | UK Listing Rules | |||||
| UN | United Nations | |||||
| US | United States of America | |||||
| V | ||||||
| VaR¹ | Value at risk | |||||
| VFA | Variable fee approach | |||||
| VIU | Value in use | |||||
| W | ||||||
| WEF | World Economic Forum |
1A full definition is included in the glossary to the Annual Report and
Accounts 2025 which is available at www.hsbc.com/investors.
HSBC Holdings plc
Incorporated in England and Wales on 1 January 1959 with
limited liability under the UK Companies Act
Registration number 617987
| Registered Office and Group Head Office |
|---|
| 8 Canada Square<br><br>London E14 5HQ<br><br>United Kingdom |
| Telephone: 44 020 7991 8888 |
| Facsimile: 44 020 7992 4880 |
| Web: www.hsbc.com |
| Corporate Brokers |
| --- |
| Morgan Stanley & Co. International plc |
| 25 Cabot Square |
| London E14 4QA |
| United Kingdom |
| Bank of America Securities |
| 2 King Edward Street |
| London EC1A 1HQ |
| United Kingdom |
© Copyright HSBC Holdings plc 2026
All rights reserved
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior
written permission of HSBC Holdings plc
Published by Global Finance, HSBC Holdings plc, London
Designed by Global Finance, HSBC Holdings plc with Design Bridge
and Partners, London
Printed by Park Communications Limited, London, on Nautilus
SuperWhite board and paper using vegetable oil-based inks. Made in
Austria, the stocks comprise 100% de-inked post-consumer waste.
Pulps used are totally chlorine-free.
The FSC® recycled logo identifies a paper that contains 100% post-
consumer recycled fibre certified in accordance with the rules of the
Forest Stewardship Council®.
Item 19. Exhibits
Documents filed as exhibits to this annual report on Form 20-F:
Exhibit NumberDescription
20-F filed with the SEC on February 22, 2023).
8.1 Subsidiaries of HSBC Holdings plc (set forth in Note 38 to the consolidated financial statements included in this annual report on Form
20-F).
11.1 HSBC Holdings plc Insider Trading Policies and Procedures.
15.1 Consent of PricewaterhouseCoopers LLP.
Commission on March 20, 2006).
Commission on February 19, 2020).
Commission on February 22, 2024).
15.6 Consent of Willis Towers Watson Limited.
97 HSBC Holdings plc Policy for the Recovery of Erroneously Awarded Compensation.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.
| HSBC Holdings plc | |
|---|---|
| By: | /s/ Manveen (Pam) Kaur |
| Name: | Manveen (Pam) Kaur |
| Title: | Group Chief Financial Officer |
Date: February 26, 2026
a21_securities
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT This Description of Securities is being provided for informational and reference purposes only and is not intended to be, and must not be, taken as the basis for any investment decision. This Description of Securities does not constitute an offer to sell or a solicitation of an offer to buy any securities. As of December 31, 2025, HSBC Holdings plc (“Holdings,” the “Company,” “we,” “us,” and “our”) had four classes of securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Act”): Ordinary Shares; American Depositary Shares; Senior Debt Securities; and Subordinated Debt Securities. A. Description of Ordinary Shares This summary of the general terms and provisions of our ordinary shares (as defined below) does not purport to be complete and is subject to and qualified in its entirety by reference to our Articles of Association (the “Articles”), which are incorporated herein by reference to Exhibit 1.1 of our annual report on Form 20-F for the year ended December 31, 2025. As of December 31, 2025, Holdings had ordinary shares in issue (the “Ordinary Shares”) which are governed by the laws of England and Wales. As at December 31, 2025, there were 17,175,239,862 Ordinary Shares in issue, each having a nominal value of $0.50 per share. Our Ordinary Shares are admitted to trading on (i) the New York Stock Exchange (in connection with the registration of American Depositary Shares) under the symbol “HSBC”, (ii) the London Stock Exchange under the trading symbol “HSBA”, (iii) the Hong Kong Stock Exchange under the trading symbol “5” and (iv) the Bermuda Stock Exchange under the trading symbol “HSBC.BH”. The holders of Ordinary Shares have statutory pre-emption rights under the UK Companies Act 2006 (the “Companies Act”) on the issuance of new Ordinary Shares or rights to subscribe for, or to convert into, Ordinary Shares. Under the Companies Act, such pre-emption rights may be dis- applied by a special resolution of the shareholders of Holdings. It is market practice in the UK for listed companies to dis-apply pre-emption rights up to an amount that is recommended by investor bodies from time to time and Holdings follows this practice. The shareholders of Holdings passed an ordinary resolution on May 2, 2025, to give directors of Holdings the authority to increase our share capital by the allotment of up to 11,869,935,002 new Ordinary Shares. In addition, shareholders gave the directors of Holdings authority to grant rights to subscribe for, or to convert any security into, no more than 3,560,980,500 new Ordinary Shares in relation to any issue of contingent convertible securities that automatically convert into or are exchanged for Ordinary Shares of Holdings in prescribed circumstances. The authorizations granted by the shareholders expire on the earlier of the end of Holdings’ Annual General Meeting to be held in 2026 and the close of business on June 30, 2026, unless otherwise renewed or passed pursuant to a separate resolution. The shareholders of Holdings passed a special resolution on May 2, 2025 to effect a reduction of Holding’s share premium account and capital redemption reserve in order to create additional distributable reserves. On June 24, 2025, the High Court of England and Wales confirmed the cancellation of US$14,809,888,249 standing to the credit of Holding’s share premium account and US$1,755,360,094 standing to the credit of Holding’s capital redemption reserve. The Ordinary Shares rank pari passu in all respects. Fully paid Ordinary Shares confer identical rights in respect of capital, dividends (save where and to the extent that any such Ordinary Share is issued on terms providing that it will rank for dividend as from a particular date), voting and otherwise. Our Articles contain provisions to the following effect: Form and Transfers
Ordinary Shares may be held in either certificated or uncertificated form. Ordinary Shares may be transferred in writing in any usual or other form approved by the Board and executed by or on behalf of the transferor and the transferee. Transfers of uncertificated Ordinary Shares must be made in accordance with the Companies Act and the UK Uncertificated Securities Regulations 2001, as amended (the “Regulations”). The Board may refuse to register any transfer of Ordinary Shares unless: (a) it is in respect of a share which is fully paid up; (b) it is in respect of a share on which we have no lien; (c) it is in respect of only one class of shares of a particular series; (d) it is in favour of a single transferee or not more than four joint transferees; (e) it is duly stamped (if so required); and (f) it is delivered for registration at the prescribed place and accompanied by the relevant share certificate(s) and with such other evidence as reasonably required by the Board to evidence right to transfer (except in the case of a transfer by a recognised person where a certificate has not been issued or in the case of an uncertificated share). The Board may refuse to register a transfer of uncertificated shares in such other circumstances as may be permitted or required by the Regulations and the relevant clearing system. Dividends Subject to the provisions of the Articles and the Companies Act, Holdings may declare dividends or other distributions in respect of a share on the Ordinary Shares by ordinary resolution. Such dividends may not exceed the amount recommended by the Board. The Board may also pay or declare and pay interim dividends (including any dividend payable at a fixed rate) if it appears to the Board to be justified by the profits of Holdings available for distribution. All dividends unclaimed for 12 months after having become payable may be invested or otherwise made use of by the Board for the benefit of Holdings until claimed. If a dividend is not claimed after 12 years of becoming payable (if the Board so resolves), or if Holdings exercises its power of sale in respect of a share of an untraced member, such unclaimed dividend or any dividend or other sum payable in respect of that share outstanding at the time of the exercise of the power of sale is forfeited and reverts to us. No dividend or other moneys payable by us or in respect of an Ordinary Share will bear interest (unless otherwise provided for in the rights attached to the share). Holdings has in place a Scrip Dividend mandate. The Scrip Dividend mandate must be approved by the shareholders of Holdings every three years. The Board has discretion in relation to any dividend which is approved as to whether to offer the eligible shareholders of Ordinary Shares the right to receive Ordinary Shares instead of a cash dividend pursuant to the Scrip Dividend mandate in respect of that dividend. Voting Every member who is present in person or by proxy or represented at any general meeting of Holdings, and who is entitled to vote, has one vote on a show of hands (or, in the case of a general meeting held partly by means of an electronic facility, one vote cast by such electronic means as the Board deems appropriate). On a poll, every member who is present or represented and who is entitled to vote has one vote for every share held. In the case of joint holders, only the vote of the senior holder (as determined by order in the share register) or their proxy may be counted. Every proxy present has one vote, except that the proxy will have one vote for and one vote against a resolution if he or she has been instructed to vote for and against the resolution by different members or in one direction by a member while another member has permitted the proxy discretion as to how to vote (and the proxy chooses to vote in the other direction). Every proxy who has been appointed by one or more members shall, on a poll, have one vote for each share in respect of which the proxy has been appointed. No member will, unless the Board otherwise determines, be entitled to vote at a general meeting or at any separate meeting of the holders, either in person or by proxy, in respect of any Ordinary Share held by them or to exercise any right as a member unless all calls or other sums presently payable by them in respect of that Ordinary Share in the Company have been paid. Where
any member is, under the rules governing the listing of securities on any stock exchange on which all or any shares of the Company are for the time being listed or traded, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such member in contravention of such requirement or restriction will not be counted. Holdings will send out written notice at least 21 clear days before an annual general meeting and at least 14 clear days before all other general meetings or such longer period as may be required by law from time to time. For general meetings to be valid, at least three shareholders entitled to vote must be present in person or by proxy. The Board shall determine in relation to each general meeting the means of attendance at and participation in the meeting, including whether the persons entitled to attend and participate in the general meeting shall be enabled to do so partly by simultaneous attendance and participation at a physical place anywhere in the world determined by it, and partly by means of an electronic facility or facilities determined by it in accordance with the Articles of Association. The shareholders present in person or by proxy at the satellite meeting places or through an electronic facility will be counted in the quorum for the general meeting. The satellite meeting places and electronic facilities offered by the Board must enable shareholders to participate in the business for which the meeting has been convened. Shareholders must be able to hear all persons who speak at the meeting and be heard by all other persons attending and participating in the meeting if they wish to speak themselves. If any member, or any other person appearing to be interested in any of our shares held by that member, is served with a notice under Section 793 of the Companies Act (a “Section 793 Notice”) and does not supply us with the information required in the notice in respect of such shares (the “Default Shares”, which includes shares issued after the date of such Section 793 Notice in respect of those shares), then (unless the Board otherwise decides, and subject to applicable law) the following sanctions will apply: (a) that member will not be entitled, in respect of such Default Shares, to attend or vote at any meeting of Holdings or on any poll, or to exercise any other right conferred by their membership in relation to any such meeting or poll, and (b) if the Default Shares represent 0.25% or more of the issued shares of their class (excluding any shares of that class held as treasury shares), (i) dividends or other monies payable on those Default Shares will be withheld by us (with no obligation to pay interest) and the member will not be entitled to elect to receive shares instead of that dividend and (ii) no transfer of those Default Shares will be registered (other than certain specified “excepted transfers” under the Articles) unless the member themselves is not in default as regards supplying the information required and the member proves to the satisfaction of the Board that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer. These sanctions cease to have effect (a) if the Default Shares are transferred by means of an “excepted transfer” (but only in respect of the shares transferred) or (b) at the end of the period of one week (or such shorter period as the Board may determine) following receipt by Holdings of the information required by the Section 793 Notice and the Board being fully satisfied that such information is full and complete. All of the directors will retire from office at each annual general meeting and be eligible for re-election and a director who is re-elected at the annual general meeting will be treated as continuing in office without a break. Otherwise, we may at any general meeting by ordinary resolution fill a vacancy of a director who retires by re-appointing the retiring director or some other person who is eligible for appointment and willing to act as a director. If we do not do so, the retiring director will, if willing, be deemed to have been re-appointed unless it is expressly resolved not to fill the vacancy or a resolution for the re-appointment of the director is put to the meeting and lost. If any resolution for the appointment or re-appointment of a director is put to the annual general meeting and is lost and, at the end of that meeting, the number of directors is fewer than the minimum required under the Articles, all retiring directors who stood for re-appointment at that meeting shall be deemed to have been re-appointed and shall remain in office, except that such retiring directors may only act for the purposes of filling vacancies and convening general meetings of Holdings and may only perform limited duties and shall convene a general meeting as soon as
reasonably practical and shall retire from office at that meeting if the number of directors appointed or ratified by Holdings at that meeting meets the minimum number of directors required by the Articles. Redemption and Repurchase Subject to applicable legislation and the rights of the other shareholders, any Ordinary Share may be issued on terms that it is, at our option or the option of the holder of such share, redeemable. The directors are authorized to determine the terms, conditions and manner of redemption of any such Ordinary Shares under the Articles. If agreed by a special resolution of our shareholders, we may repurchase Ordinary Shares upon such terms as the Board determines. Calls on Capital Subject to the terms of allotment of the Ordinary Shares, the Board may make calls upon the members in respect of any monies unpaid on such shares (whether in respect of nominal value or premium) and not payable on a date fixed by or in accordance with the terms of issue. A person upon whom a call is made remains liable even if the shares in respect of which the call is made have subsequently been transferred. Interest will be chargeable on any unpaid amount called at a rate determined by the Board (of not more than 15% per annum), and the person from whom it is due and payable will pay all costs, charges and expenses that we may have incurred by reason of such non- payment. Unless the Board otherwise determines, no member is entitled to receive any dividend, to be present and vote at any general meeting either personally or (save as proxy for another member) by proxy, to be reckoned in a quorum or to exercise any other privilege as a member unless and until they have paid all calls due and payable on their shares, together with interest and expenses (if any) payable to us by such member. If a member fails to pay any call in full (following notice from the Board that such failure will result in forfeiture of the relevant shares), such shares (including any dividends declared (or other moneys payable) but not paid) may be forfeited by a resolution of the Board and will become the property of Holdings. A member whose shares have been forfeited will cease to be a member in respect of them. Forfeiture will not absolve a previous member for amounts payable by them (which may continue to accrue interest). Holdings also has a lien over all of our partly paid shares to the extent permitted by the Companies Act. If any monies which are the subject of the lien remain unpaid after a notice from the Board demanding payment, we may sell such shares. Other Shareholder Rights The Ordinary Shares carry no rights to share in Holdings’ profits or to share in any surplus in the event of liquidation other than as provided by applicable law. Our Articles do not provide for any sinking fund provisions. The provisions of our Articles do not discriminate against any existing or prospective holder of Ordinary Shares as a result of such shareholder owning a substantial number of shares. Variation of Rights The rights attached to our Ordinary Shares may be varied or abrogated either with the consent in writing of the holders of at least 75% in nominal value of the issued Ordinary Shares (excluding any Ordinary Shares held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of Ordinary Shares. The rights attached to the Ordinary Shares may also be varied or abrogated by a special resolution of Holdings without the separate consent or sanction of the holders of any of the Ordinary Shares; provided that the rights attached to all the Ordinary Shares are thereby varied or abrogated in like manner and to like extent, and, accordingly, neither the passing nor the implementation of any such resolution constitutes a variation or abrogation of any of the rights attached to any of the Ordinary Shares.
The rights or privileges attached to the Ordinary Shares will be deemed to be varied or abrogated by the reduction of the capital paid up on such Ordinary Shares but will not be deemed to be varied or abrogated by the creation or issue of any new shares ranking in priority to or pari passu in all respects (save as to the date from which such new shares will rank for dividend) with or subsequent to those Ordinary Shares already issued, or by the purchase or redemption by Holdings of our own shares or the sale of any shares held as treasury shares in accordance with the provisions of the Companies Act and the Articles. Limitations on Share Ownership There are no limitations on the rights of shareholders to own Ordinary Shares. In addition, there are no restrictions imposed by the Articles or (subject to the effect of any economic sanctions that may be in force from time to time) by current UK laws which relate to non-residents or foreign shareholders and which limit the rights of such non-residents or foreign shareholders to hold or (when entitled to do so) exercise voting rights on the Ordinary Shares. The rights of any holder of Ordinary Shares to vote may, however, be restricted in certain circumstances as described above. B. Description of American Depositary Shares This summary of the general terms and provisions of the American Depositary Shares (“ADSs”) representing our Ordinary Shares does not purport to be complete and is subject to and qualified in its entirety by our Form F-6 filed on Aug. 17, 2010 (Commission file No. 333-168882), which are incorporated by reference, including the exhibits thereto. In the following description, a “Holder” is the person registered with the Depositary (as defined below). A “Beneficial Owner,” with respect to a Receipt, means any person who has a beneficial interest in the ADSs evidenced by such Receipt. “Receipts” means American depositary receipts evidencing ADSs. General ADSs are issuable pursuant to an amended and restated deposit agreement dated March 22, 2001, as amended and restated on March 27, 2001 and March 28, 2003, among Holdings, The Bank of New York, as depositary (the “Depositary”), and the Holders and Beneficial Owners from time to time of Receipts issued thereunder (the “Deposit Agreement”). The corporate trust office of the Depositary is 240 Greenwich Street, New York, New York 10286. Each ADS represents the right to receive five Ordinary Shares of Holdings. A Receipt may evidence any number of the related ADSs. Voting Upon receipt by the Depositary of notice of any meeting or solicitation of consents or proxies of holders of Deposited Securities, if requested by Holdings, the Depositary will, as soon as practicable thereafter, mail the information in such notice to the Holders along with instructions for the voting of their respective ADSs. “Deposited Securities” as of any time means Ordinary Shares at such time deposited or deemed to be deposited under the applicable Deposit Agreement and any and all other securities, property and cash received by the Depositary or the custodian in respect or in lieu of such Ordinary Shares deposited or deemed to be deposited and at such time held under such Deposit Agreement. Upon the written request of a Holder, the Depositary will endeavour, insofar as practical, to vote or cause to be voted the amount of Deposited Securities represented by such Holder’s Receipts in accordance with the Holder’s instructions. The Depositary will not vote the Deposited Securities except in accordance with such instructions. Holders will not be entitled to vote Deposited Securities directly. Collecting and Distributing Dividends
The Depositary will distribute all cash dividends or other cash distributions that are received by it or the custodian in respect of Deposited Securities to Holders in proportion to their holdings of ADSs (after payment of any charges and fees provided for in the Deposit Agreement), provided that at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into United States Dollars transferable to the United States. In the event that any of the Deposited Securities are not entitled, by reason of their dates of issuance or otherwise, to receive the full amount of such cash dividend or distribution, the Depositary will make appropriate adjustments in the amounts distributed to the Holders of the Receipts issued in respect of such Deposited Securities. The cash amount distributed will be reduced by any amounts that Holdings or the Depositary must withhold on account of taxes. If Holdings makes a non-cash distribution in respect of any Deposited Securities, the Depositary will distribute the property it receives to Holders (after deduction or upon payment of any taxes, charges and fees provided for in the Deposit Agreement) in proportion to their holdings of ADSs in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution. However, if in the opinion of the Depositary such distribution cannot be made among the Holders entitled thereto in proportion to the number of ADSs held by each of them or if for any other reason the Depositary deems such distribution not to be lawful or feasible, the Depositary may adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property received, or any part thereof. The net proceeds of any such sale (after deduction or upon payment of any taxes, charges and fees provided for in the Deposit Agreement) will be distributed to the Holders entitled thereto as in the case of a distribution received in cash (described above). If a distribution by Holdings in respect of Deposited Securities consists of a dividend in, or free distribution of, Ordinary Shares, the Depositary may (and will, if Holdings requests) distribute to Holders, in proportion to their holdings of ADSs, additional Receipts evidencing an aggregate number of ADSs representing the amount of Ordinary Shares received as such dividend or free distribution (after deduction or withholding of any tax or other governmental charge and the payment of the fees, expenses and charges of the Depositary provided for in the Deposit Agreement). If the Depositary does not distribute additional Receipts, each ADS will from then forward also represent its proportionate interest in the additional Ordinary Shares distributed in respect of the Deposited Securities. In lieu of delivering Receipts for fractional ADSs, the Depositary may, in its discretion, sell the amount of Ordinary Shares represented by the aggregate of such fractions at a public or private sale and distribute the net proceeds of any such sale. In the event that the Depositary determines that any distribution in property (including Ordinary Shares and rights to subscribe therefor) is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the Depositary may, by public or private sale, dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay any such taxes or charges, and the Depositary will distribute the net proceeds of any such sale to the Holders entitled thereto in proportion to the number of ADSs held by them. Procedures for Transmitting Notices, Reports and Proxy Soliciting Material In addition to the procedures for transmitting notices discussed above under “Voting,” the Depositary will make available for inspection by Holders, at its corporate trust office, any notices, reports and communications, including any proxy soliciting material, received from Holdings which may be (i) received by the Depositary or the custodian or the nominee of either of them as the holder of the Deposited Securities and (ii) made generally available by Holdings to the holders of such Deposited Securities. If requested in writing by Holdings, the Depositary will arrange for the mailing to all Holders of such notices, reports and communications made generally available by Holdings to holders of its Deposited Securities or will otherwise make such notices, reports and other communications available to all Holders on a basis similar to that for holders of Deposited Securities
or on such other basis as Holdings may advise the Depositary is required or as the Depositary may be required by any applicable law or regulation. Sale or Exercising of Rights If Holdings offers to Holders rights to subscribe for additional Ordinary Shares or any other rights of any nature, the Depositary will have discretion as to the procedure for making such rights available to Holders or of disposing of such rights and making the net proceeds available to any Holders in accordance with the procedures for distributing cash described above, or, if by the terms of such rights offering or for any other reason it would not be lawful or feasible for the Depositary either to make such rights available to any Holders or to dispose of such rights and make the net proceeds available to such Holders, then the Depositary will allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that it is lawful and feasible to make such rights available to all or certain Holders but not to other Holders, the Depositary will distribute to any Holder to whom it determines the distribution to be lawful and feasible, in proportion to the number of ADSs held by such Holder, warrants or other instruments therefor in such form as it deems appropriate. If the Depositary has distributed rights to all or certain Holders, then upon the instruction of such Holders (and payment of any applicable purchase price, fees, expenses and charges), the Depositary will exercise such rights to purchase Ordinary Shares on behalf of such Holders. Ordinary Shares purchased by the Depositary will be deposited and Receipts will be delivered to such Holders. If the Depositary determines in its discretion that it is not lawful or feasible to make such rights available to all or certain Holders, it may sell the rights, warrants or other instruments in proportion to the number of ADSs held by the Holders to whom it has determined it may not lawfully or feasibly make such rights available, allocate the net proceeds of such sales (net of the fees, expenses and charges of the Depositary and all taxes and other governmental charges payable in connection with such rights) for the account of such Holders otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such Holders on account of exchange restrictions or the date of delivery of any Receipt or otherwise. The Depositary will not offer rights to Holders unless it has received from Holdings evidence to the effect that (i) a registration statement under the Securities Act covering such offering is in effect or (ii) such offering does not require registration under the Securities Act. If a Holder requests the distribution of warrants or other instruments, notwithstanding that there has been no registration under the Securities Act, the Depositary will not effect such distribution unless it has received an opinion from recognized counsel in the United States for Holdings satisfactory to the Depositary upon which the Depositary may rely that such distribution to such Holder is exempt from such registration. The Depositary will not be responsible for any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holder in particular. Deposit or Sale of Securities Resulting from Dividends, Splits or Plans of Reorganization If Holdings makes a non-cash distribution in respect of any Deposited Securities, the Depositary may dispose of all or part of property, including by public or private sale, in the circumstances described under “Collecting and Distributing Dividends” above. In circumstances where the provisions of the Deposit Agreement governing distributions of Ordinary Shares do not apply, upon any change in par or nominal value, sub-division, consolidation, or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger, amalgamation or consolidation, or sale of assets affecting Holdings or to which it is a party, the Depositary may in its discretion, and in such manner as the Depositary may deem equitable, treat any securities which are received by the Depositary or a custodian in exchange for or in conversion of or in respect of Deposited Securities as new Deposited Securities under the Deposit Agreement, and
Receipts then outstanding will thenceforth represent the new Deposited Securities so received in exchange for or on conversion of or in respect of Deposited Securities, unless additional or new Receipts are delivered pursuant to the following sentence. In any such case, the Depositary may, and will at Holdings’ request, execute and deliver additional Receipts as in the case of a dividend in Ordinary Shares, or may call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such new Deposited Securities. Amendment and Termination of the Deposit Agreement The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between Holdings and the Depositary in any respect which they may deem necessary or desirable. Any amendment which will impose or have the effect of increasing any fees or charges payable by the Holders (other than taxes or other governmental charges, registration fees and cable, telex or facsimile transmission and delivery expenses and the fees of the Depositary for the execution and delivery or cancellation of Receipts), or which will otherwise prejudice any substantial existing right of Holders, will not become effective as to outstanding Receipts until the expiration of thirty days after notice of such amendment will have been given to the Holders. Every Holder of an outstanding Receipt at the time any such amendment so becomes effective will be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event will any amendment impair the right of the Holder of any Receipt to surrender such Receipt and receive therefor the Deposited Securities represented thereby except in order to comply with mandatory provisions of applicable law. The Depositary at any time, at the direction of Holdings, will terminate the Deposit Agreement by mailing notice of such termination to the Holders of all Receipts then Outstanding at least ninety days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement by mailing notice of such termination to Holdings and the Holders of all Receipts then outstanding, if at any time ninety days have expired after the Depositary has delivered to Holdings a written notice of its election to resign and a successor depositary has not been appointed and accepted its appointment as provided in the Deposit Agreement. On and after the date of termination, the Holder of a Receipt will, upon (a) surrender of such Receipt at the corporate trust office of the Depositary, (b) payment of the fee of the Depositary for the surrender of Receipts specified in the Deposit Agreement and (c) payment of any applicable taxes or other governmental charges, be entitled to delivery to him or her, or upon his or her order, of the amount of Deposited Securities represented by the ADSs evidenced by such Receipt. If any Receipts remain outstanding after the date of termination, the Depositary will discontinue the registration of transfers of Receipts, suspend the distribution of dividends to the Holders thereof, and will not give any further notices or perform any further acts under the Deposit Agreement, except that the Depositary will continue to collect dividends and other distributions pertaining to Deposited Securities, sell rights as provided in the Deposit Agreement and continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts surrendered to the Depositary (without liability for interest and after deducting, in each case, the fee of the Depositary for the surrender of a Receipt, any expenses for the account of the Holder of such Receipt in accordance with the terms and conditions of the Deposit Agreement and any applicable taxes or other governmental charges). At any time after the expiration of one year from the date of termination, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested and without liability for interest the net proceeds of any such sale, together with any other cash then held by it thereunder, unsegregated and without liability for interest, for the pro rata benefit of the Holders of Receipts which have not been surrendered, such Holders thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary will be discharged from all obligations under the Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of a Receipt, any expenses for the account of the Holder of such Receipt in accordance with
the terms and conditions of the Deposit Agreement and any applicable taxes or other governmental charges). Rights of Holders to Inspect the Transfer Books of the Depositary and the List of Holders The Depositary will keep at its corporate trust office a book or books for the transfer and registration of Receipts which at all reasonable times will be open for inspection by Holders. Such inspection may not be for the purpose of communicating with Holders in the interest of a business or object other than the business of Holdings or a matter related to the Deposit Agreement or the Receipts. Restrictions on the Right to Transfer or Withdraw the Underlying Securities As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any Receipt, the delivery of any distribution thereon, or withdrawal of any Deposited Securities, the Depositary, Holdings, the custodian or registrar may require (a) payment from the depositor of the Deposited Securities or the presenter of the Receipt of a sum sufficient to reimburse it for any applicable tax or other governmental charge and any stock transfer or registration fees in respect of Receipts or registration of transfers of Deposited Securities upon any applicable register and any applicable fees as may be provided in the Deposit Agreement or otherwise; (b) the production of proof satisfactory to it as to the identity and genuineness of any signature and as to any other matter specified in the Deposit Agreement; (c) compliance with the provisions of our Articles and resolutions and regulations of the Board adopted pursuant to our Articles; and (d) compliance with such reasonable regulations as the Depositary and Holdings may establish consistent with the provisions of the Deposit Agreement. The delivery of Receipts against deposits of the Deposited Securities generally or against deposits of particular Deposited Securities may be suspended, or the transfer of Receipts in particular instances may be refused, or the registration of transfer of outstanding Receipts, or the combination or split-up of Receipts, generally may be suspended, during any period when the transfer books of the Depositary or any register for Deposited Securities are closed, or if any such action is deemed necessary or advisable by the Depositary or Holdings at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of the Deposit Agreement or for any other reason. Notwithstanding any other provision of the Deposit Agreement, the surrender of outstanding Receipts and withdrawal of Deposited Securities may be suspended only for (i) temporary delays caused by closing the transfer books of the Depositary or Holdings or the deposit of Ordinary Shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the Receipts or to the withdrawal of the Deposited Securities, or (iv) any other reason that may at any time be specified in paragraph I(A)(1) of the General Instructions to Form F-6, as from time to time in effect, or any successor provision thereto. The Depositary may not knowingly accept for deposit under the Deposit Agreement any Ordinary Shares which are required to be registered under the Securities Act, unless a registration statement is in effect as to such Ordinary Shares. Limitations on the Depositary’s Liability The Depositary will not incur any liability to any Holder or Beneficial Owners, if by reason of any provision of any present or future law or regulation of the United States of America, any state thereof, the United Kingdom or of any other country, or of any other action of any governmental or regulatory authority of the United States, the United Kingdom, or any other country or of any stock exchange, or by reason of any provision, present or future, of our Articles, or by reason of any act of God or war or other circumstances beyond its control, the Depositary is delayed in, prevented or forbidden from or subjected to any civil or criminal penalty on account of doing or performing any act or thing which by the terms of the Deposit Agreement it is provided will be done or performed; nor
will the Depositary incur any liability to any Holder or Beneficial Owner by reason of any non- performance or delay, caused as aforesaid, in the performance of any act or thing which, by the terms of the Deposit Agreement, it is provided will or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. Where, by the terms of a distribution pursuant to the Deposit Agreement, or an offering or distribution pursuant to the Deposit Agreement, such distribution or offering may not be made available to Holders, and the Depositary may not dispose of such distribution or offering, on behalf of such Holder and make the net proceeds available to such Holder, then the Depositary will not make such distribution or offering and will allow any rights, if applicable, to lapse. The Depositary assumes no obligation nor will it be subject to any liability under the Deposit Agreement to any Holders or Beneficial Owners (including, without limitation, liability with respect to the validity or worth of any Deposited Securities), except that it agrees to perform its obligations specifically set forth in the Deposit Agreement without gross negligence or bad faith. The Depositary will not be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the Receipts, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expenses and liabilities will be furnished as often as may be required. The Depositary will not be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Ordinary Shares for deposit, any Holder or Beneficial Owner or any other person believed by it in good faith to be competent to give such advice or information. The Depositary may rely and will be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Depositary will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner or effect of any such vote made either with or without request, or for not exercising any right to vote, as long as any such action or non-action is in good faith and in accordance with the terms of the Deposit Agreement. The Depositary will not be liable for any acts or omissions made by a successor depositary, whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. The Company has agreed to indemnify the Depositary under the Deposit Agreement and its directors, officers, employees, agents and affiliates (each, an “Indemnified Person”) against, and hold each of them harmless from, any liability or expense (including, but not limited to, the reasonable fees and expenses of counsel) which may be based on or arise (a) out of acts performed or omitted in accordance with the provisions of the Deposit Agreement and of the Receipts, as the same may be amended, modified or supplemented from time to time, (i) by an Indemnified Person, except for any liability or expense arising out of the negligence or bad faith of such Indemnified Person, or (ii) by Holdings or any of its directors, officers, employees, agents and affiliates, or (b) out of or in connection with any offer or sale of Receipts, ADSs, Ordinary Shares, other Deposited Securities, proxy statement, prospectus (or placement memorandum) or preliminary prospectus (or preliminary placement memorandum) or any registration statement under the Securities Act in respect thereof, except to the extent such loss, liability or expense arises out of information (or omissions from such information) relating to such Indemnified Person, furnished in writing to Holdings, and not materially changed or altered by Holdings, by such Indemnified Person expressly for use in a registration statement, proxy statement, prospectus (or placement memorandum) or preliminary prospectus (or preliminary placement memorandum) under the Securities Act. No disclaimer of liability under the Securities Act is intended by any provisions of the Deposit Agreement.
The Depositary may own and deal in any class of securities of Holdings and its affiliates and in Receipts.
C. Description of Debt Securities As of December 31, 2025, we had the following series of Debt Securities registered pursuant to Section 12(b) of the Act, which are all listed on the New York Stock Exchange. Capitalized terms used but not defined in the following table (the “Summary of Key Terms”) will have the meanings given to them in the Description of Terms below. Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $487,913,000 7.625% Subordinated Notes due 2032 US404280AF65 Fixed Rate: 7.625% per annum (“p.a.”) Interest Start Date: May 17, 2005 Aug. 30, 2005 to May 17, 2032 May 17 and Nov. 17 each year, beginning Nov. 17, 2005 N/A Tax Redemption Subordinated Events of Default and Defaults Registration Statement dated July 12, 2005 (File no. 333-126531) (the “2005 Base Prospectus”) Prospectus dated July 28, 2005 Subordinated Debt Securities Indenture dated Dec. 10, 2002 (the “2002 Indenture”) Supplemental Indenture dated as of Dec. 3, 2004 $222,042,000 7.35% Subordinated Notes due 2032 US404280AE90 Fixed Rate: 7.35% p.a. Interest Start Date: May 27, 2005 Aug. 30, 2005 to Nov. 27, 2032 May 27 and Nov. 27 each year, beginning Nov. 27 2005 N/A Tax Redemption Subordinated Events of Default and Defaults 2005 Base Prospectus Prospectus dated July 28, 2005 2002 Indenture Supplemental Indenture dated as of Dec. 3, 2004
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 6.5% Subordinated Notes due 2036 US404280AG49 Fixed Rate: 6.5% p.a. May 3, 2006 to May 2, 2036 Add’l Issue Date: Aug. 23, 2006 Add’l Issue Date: Dec. 14, 2006 May 2 and Nov. 2 each year, beginning Nov. 2, 2006 N/A Tax Redemption Subordinated Events of Default and Defaults Registration Statement dated Nov. 26, 2002 (File no. 333-92024) (the “2002 Base Prospectus”) Prospectus Supplement dated April 26, 2006 Registration Statement dated June 14, 2006 (File no. 333-135007) (the “2006 Base Prospectus”) Prospectus Supplement dated Aug. 16, 2006 Prospectus Supplement dated Dec. 7, 2006 2002 Indenture $2,500,000,000 6.5% Subordinated Notes due 2037 US404280AH22 Fixed Rate: 6.5% p.a. Sept. 12, 2007 to Sept. 15, 2037 Add’l Issue Date: Oct. 18, 2007 March 15 and Sept. 15 each year, beginning March 15, 2008 N/A Tax Redemption Subordinated Events of Default and Defaults 2006 Base Prospectus Prospectus Supplement dated Sept. 5, 2007 Prospectus Supplement dated Oct. 11, 2007 2002 Indenture
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 6.8% Subordinated Notes due 2038 US404280AJ87 Fixed Rate: 6.8% p.a. May 27, 2008 to June 1, 2038 June 1 and Dec. 1 each year, beginning on Dec. 1, 2008 N/A Tax Redemption Subordinated Events of Default and Defaults 2006 Base Prospectus Prospectus Supplement dated May 19, 2008 2002 Indenture $750,000,000 6.100% Senior Unsecured Notes due 2042 US404280AM17 Fixed Rate: 6.100% p.a. Nov. 17, 2011 to Jan. 14, 2042 Jan. 14 and July 14 each year, beginning July 14, 2012 N/A Tax Redemption Extended Events of Default and Defaults 2010 Base Prospectus Prospectus Supplement dated Nov. 14, 2011 Senior Indenture dated August 26, 2009 (the “2009 Indenture”) $1,500,000,000 5.250% Subordinated Notes due 2044 US404280AQ21 Fixed Rate: 5.250% p.a. March 12, 2014 to March 14, 2044 March 14 and Sept. 14 each year, beginning Sept. 14, 2014 N/A Tax Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults 2012 Base Prospectus Prospectus Supplement dated March 5, 2014 2014 Indenture First Supplemental Indenture dated March 12, 2014 $3,000,000,000 4.300% Senior Unsecured Notes due 2026 US404280AW98 Fixed Rate: 4.300% p.a. March 8, 2016 to March 8, 2026 March 8 and Sept. 8 each year, beginning Sept. 8, 2016 N/A Tax Redemption Extended Events of Default and Defaults Registration Statement dated Feb. 25, 2016 (File no. 333-202420) (the “2016 Base Prospectus”) Prospectus Supplement dated March 1, 2016 2009 Indenture First Supplemental Indenture dated March 8, 2016
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,500,000,000 3.900% Senior Unsecured Notes due 2026 US404280BB43 Fixed Rate: 3.900% p.a. May 25, 2016 to May 25, 2026 May 25 and Nov. 25 each year, beginning Nov. 25, 2016 N/A Tax Redemption Extended Events of Default and Defaults 2016 Base Prospectus Prospectus Supplement dated May 18, 2016 2009 Indenture Second Supplemental Indenture dated May 25, 2016 $1,500,000,000 4.375% Subordinated Notes due 2026 US404280BH13 Fixed Rate: 4.375% p.a. Nov. 23, 2016 to Nov. 23, 2026 May 23 and Nov. 23 each year, beginning May 23, 2017 N/A Tax Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults 2016 Base Prospectus Prospectus Supplement dated November 16, 2016 2014 Indenture Third Supplemental Indenture dated November 23, 2016 $2,500,000,000 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280BK42 Fixed Rate: 4.041% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.546% p.a. Interest Reset Dates: March 13, 2027, June 13, 2027, Sept. 13, 2027 and Dec. 13, 2027 March 13, 2017 to March 13, 2028 Fixed Rate: March 13 and Sept. 13 each year, beginning Sept. 13, 2017, and ending March 13, 2027 Floating Rate: June 13, 2027, Sept. 13, 2027, Dec. 13, 2027, and March 13, 2028 March 13, 2027 Tax Redemption and Optional Redemption LADE Provisions 2017 Base Prospectus Prospectus Supplement dated March 6, 2017 2009 Indenture Fourth Supplemental Indenture dated March 13, 2017
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280BT50 Fixed Rate: 4.583% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.53455% p.a. Interest Reset Dates: June 19, 2028, Sept. 19, 2028, Dec. 19, 2028, and March 19, 2029 LIBOR Replacement Provisions June 19, 2018 to June 19, 2029 Fixed Rate: June 19 and Dec. 19 each year, beginning Dec. 19, 2018, and ending June 19, 2028 Floating Rate: Sept. 19, 2028, Dec. 19, 2028, March 19, 2029, and June 19, 2029 June 19, 2028 Tax Redemption and Optional Redemption LADE Provisions 2018 Base Prospectus and Prospectus Supplement dated June 12, 2018 2009 Indenture and Seventh Supplemental Indenture dated June 19, 2018 £1,000,000,000 3.000% Resettable Senior Unsecured Notes due 2028 XS1961843171 Fixed Rate: 3.000% p.a. Reset Rate: Mid- Market Swap Rate plus 1.65% p.a. Interest Reset Date: July 22, 2027 LIBOR Replacement Provisions March 12, 2019 to July 22, 2028 July 22 each year, beginning July 22, 2019 (there was a short first coupon for the first interest period; interest in this period was computed on the basis of the actual number of days divided by 365) July 22, 2027 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated March 5, 2019 2009 Indenture and Eleventh Supplemental Indenture dated March 12, 2019
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280CC17 Fixed Rate: 3.973% p.a. Floating Rate: Three- month Term SOFR, plus tenor spread adjustment of 0.26161%, plus 1.61% p.a. Interest Reset Dates: May 22, 2029, Aug. 22, 2029, Nov. 22, 2029, and Feb. 22, 2030 LIBOR Replacement Provisions May 22, 2019 to May 22, 2030 Fixed Rate: May 22 and Nov. 22 each year, beginning Nov. 22, 2019, and ending May 22, 2029 Floating Rate: Aug. 22, 2029, Nov. 22, 2029, Feb. 22, 2030, and May 22, 2030 May 22, 2029 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 15, 2019 2009 Indenture and Twelfth Supplemental Indenture dated May 22, 2019 £750,000,000 3.00% Resettable Senior Unsecured Notes due 2030 XS2003500142 Fixed Rate: 3.000% p.a. Reset Rate: Mid- Market Swap Rate plus 1.77% p.a. Interest Reset Date: May 29, 2029 LIBOR Replacement Provisions May 29, 2019 to May 29, 2030 May 29 each year, beginning May 29, 2020 May 29, 2029 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 21, 2019 2009 Indenture and Thirteenth Supplemental Indenture dated May 29, 2019 $2,500,000,000 4.950% Fixed Rate Senior Unsecured Notes due 2030 US404280CF48 Fixed Rate: 4.950% p.a. March 31, 2020 to March 31, 2030 March 31 and Sept. 30 each year, beginning Sept. 30, 2020 N/A Tax Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated March 25, 2020 2009 Indenture and Fifteenth Supplemental Indenture dated March 31, 2019
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 2.848% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280CH04 Fixed Rate: 2.848% p.a. Floating Rate: Compounded Daily SOFR plus 2.387% p.a. Benchmark Transition Provisions June 4, 2020 to June 4, 2031 Fixed Rate: June 4 and Dec. 4 each year, beginning Dec. 4, 2020 and ending June 4, 2030 Floating Rate: Sept. 4, 2030, Dec. 4, 2030, March 4, 2031 and June 4, 2031 June 4, 2030 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated May 28, 2020 2009 Indenture and Sixteenth Supplemental Indenture dated June 4, 2020 $1,500,000,000 2.357% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280CK33 Fixed Rate: 2.357% p.a. Floating Rate: Compounded Daily SOFR plus 1.947% p.a. Benchmark Transition Provisions Aug.18, 2020 to Aug. 18, 2031 Fixed Rate: Aug. 18 and Feb. 18 each year, beginning Feb. 18, 2021 and ending Aug. 18, 2030 Floating Rate: Nov. 18, 2030, Feb. 18, 2031, May 18, 2031 and Aug. 18, 2031 August 18, 2030 Tax Redemption and Optional Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated August 11, 2020 2009 Indenture and Seventeenth Supplemental Indenture dated August 18, 2020 $2,000,000,000 2.013% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280CL16 Fixed Rate: 2.013% p.a. Floating Rate: Compounded Daily SOFR plus 1.732% p.a. Benchmark Transition Provisions Sept. 22, 2020 to Sept. 22, 2028 Fixed Rate: March 22 and Sept. 22 each year, beginning March 22, 2021 and ending Sept. 22, 2027 Floating Rate: Dec. 22, 2027, March 22, 2028, June 22, 2028 and Sept. 22, 2028 Par Redemption Date: September 22, 2027 Make-Whole Redemption Period: from (and including) March 22, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated September 15, 2020 2009 Indenture and Eighteenth Supplemental Indenture dated September 22, 2020
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280CM98 Fixed Rate: 1.589% p.a. Floating Rate: Compounded Daily SOFR plus 1.290% p.a. Benchmark Transition Provisions Nov. 24, 2020 to May 24, 2027 Fixed Rate: May 24 and Nov. 24 each year, beginning May 24, 2021 and ending May 24, 2026 Floating Rate: Aug. 24, 2026, Nov. 24, 2026, Feb. 24, 2027 and May 24, 2027 Par Redemption Date: May 24, 2026 Make-Whole Redemption Period: from (and including) May 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole and Par Redemption Limited Events of Default and Defaults 2018 Base Prospectus and Prospectus Supplement dated November 17, 2020 2009 Indenture and Nineteenth Supplemental Indenture dated November 24, 2020 £1,000,000,000 1.750% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 XS2322315727 Fixed Rate: 1.750% p.a. Floating Rate: Compounded Daily SONIA plus 1.307% p.a. March 24, 2021 to July 24, 2027 Fixed Rate: July 24 each year, beginning July 24, 2021 and ending July 24, 2026 Floating Rate: October 24, 2026, January 24, 2027, April 24, 2027 and July 24, 2027 Par Redemption Date: July 24, 2026 Make-Whole Redemption Period: from (and including) September 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Registration Statement dated Feb. 26, 2021 (File no. 333-253632) (the “2021 Base Prospectus”) and Prospectus Supplement dated March 17, 2021 2009 Indenture and Twentieth Supplemental Indenture dated March 24, 2021
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $3,000,000,000 2.804% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280CT42 Fixed Rate: 2.804% p.a. Floating Rate: Compounded Daily SOFR plus 1.1870% p.a. Benchmark Transition Provisions May 24, 2021 to May 24, 2032 Fixed Rate: May 24 and November 24 each year, beginning November 24, 2021 and ending May 24, 2031 Floating Rate: August 24, 2031, November 24, 2031, February 24, 2032 and May 24, 2032 Par Redemption Date: May 24, 2031 Make-Whole Redemption Period: from (and including) November 24, 2021 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated May 17, 2021 2009 Indenture and Twenty-First Supplemental Indenture dated May 24, 2021 $2,000,000,000 2.206% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280CV97 Fixed Rate: 2.206% p.a. Floating Rate: Compounded Daily SOFR plus 1.285% p.a. Benchmark Transition Provisions August 17, 2021 to August 17, 2029 Fixed Rate: February 17 and August 17 each year, beginning February 17, 2022 and ending August 17, 2028 Floating Rate: November 17, 2028, February 17, 2029, May 17, 2029 and August 17, 2029 Par Redemption Date: August 17, 2028 Make-Whole Redemption Period: from (and including) February 17, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 10, 2021 2009 Indenture and Twenty-Second Supplemental Indenture dated August 17, 2021
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,500,000,000 2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280CX53 Fixed Rate: 2.251% p.a. Floating Rate: Compounded Daily SOFR plus 1.100% p.a. Benchmark Transition Provisions November 22, 2021 to November 22, 2027 Fixed Rate: May 22 and November 22 each year, beginning May 22, 2022 and ending November 22, 2026 Floating Rate: February 22, 2027, May 22, 2027, August 22, 2027 and November 22, 2027 Par Redemption Date: November 22, 2026 Make-Whole Redemption Period: from (and including) May 22, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 15, 2021 2009 Indenture and Twenty-Third Supplemental Indenture dated November 22, 2021 $1,750,000,000 2.871% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280CY37 Fixed Rate: 2.871% p.a. Floating Rate: Compounded Daily SOFR plus 1.410% p.a. Benchmark Transition Provisions November 22, 2021 to November 22, 2032 Fixed Rate: May 22 and November 22 each year, beginning May 22, 2022 and ending November 22, 2031 Floating Rate: February 22, 2032, May 22, 2032, August 22, 2032 and November 22, 2032 Par Redemption Date: November 22, 2031 Make-Whole Redemption Period: from (and including) May 22, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption and Par Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 15, 2021 2009 Indenture and Twenty-Third Supplemental Indenture dated November 22, 2021
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 4.762% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 US404280DC08 Fixed Rate: 4.762% p.a. Floating Rate: Compounded Daily SOFR plus 2.530% p.a. Benchmark Transition Provisions March 29, 2022 to March 29, 2033 Fixed Rate: March 29 and September 29 of each year, beginning on September 29, 2022 and ending on March 29, 2032 Floating Rate: June 29, 2032, September 29, 2032, December 29, 2032 and March 29, 2033 March 29, 2032 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 22, 2022 2014 Indenture and Fourth Supplemental Indenture dated March 29, 2022 $2,250,000,000 4.755% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DF39 Fixed Rate: 4.755% p.a. Floating Rate: Compounded Daily SOFR plus 2.110 % p.a. Benchmark Transition Provisions June 9, 2022 to June 9, 2028 Fixed Rate: June 9 and December 9 of each year, beginning on December 9, 2022 and ending on June 9, 2027 Floating Rate: September 9, 2027, December 9, 2027, March 9, 2028 and June 9, 2028 Par Redemption Date: June 9, 2027 Make-Whole Redemption Period: from (and including) December 9, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated May 31, 2022 2009 Indenture and Twenty-Fifth Supplemental Indenture dated June 9, 2022
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 5.210% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DG12 Fixed Rate: 5.210% p.a. Floating Rate: Compounded Daily SOFR plus 2.610% p.a. Benchmark Transition Provisions August 11, 2022 to August 11, 2028 Fixed Rate: February 11 and August 11 of each year, beginning on February 11, 2023 and ending on August 11, 2027 Floating Rate: November 11, 2027, February 11, 2028, May 11, 2028 and August 11, 2028 Par Redemption Date: August 11, 2027 Make-Whole Redemption Period: from (and including) February 11, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 4, 2022 2009 Indenture and Twenty-Sixth Supplemental Indenture dated August 11, 2022 $2,500,000,000 5.402% Fixed Rate/Floating Rate Senior Unsecured Notes due 2033 US404280DH94 Fixed Rate: 5.402% p.a. Floating Rate: Compounded Daily SOFR plus 2.870% p.a. Benchmark Transition Provisions August 11, 2022 to August 11, 2033 Fixed Rate: February 11 and August 11 of each year, beginning on February 11, 2023 and ending on August 11, 2032 Floating Rate: November 11, 2032, February 11, 2033, May 11, 2033 and August 11, 2033 Par Redemption Date: August 11, 2032 Make-Whole Redemption Period: from (and including) February 11, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 4, 2022 2009 Indenture and Twenty-Sixth Supplemental Indenture dated August 11, 2022 $96,878,000 7.35% Subordinated Notes due 2032 US404280DJ50 Fixed Rate: 7.35% p.a. September 16, 2022 to November 27, 2032 May 27 and November 27 of each year, beginning on November 27, 2022 and ending on November 27, 2032 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $223,151,000 7.625% Subordinated Notes due 2032 US404280DK24 Fixed Rate: 7.625% p.a. September 16, 2022 to May 17, 2032 May 17 and November 17 of each year, beginning on November 17, 2022 and ending on May 17, 2032 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $569,189,000 6.5% Subordinated Notes Due 2036 US404280DL07 Fixed Rate: 6.5% p.a. September 16, 2022 to May 2, 2036 May 2 and November 2 of each year, beginning on November 2, 2022 and ending on May 2, 2036 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $985,360,000 6.5% Subordinated Notes Due 2037 US404280DM89 Fixed Rate: 6.5% p.a. September 16, 2022 to September 15, 2037 March 15 and September 15 of each year, beginning on March 15, 2023 and ending on September 15, 2037 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022 $538,705,000 6.8% Subordinated Notes Due 2038 US404280DN62 Fixed Rate: 6.8% p.a. September 16, 2022 to June 1, 2038 June 1 and December 1 of each year, beginning on December 1, 2022 and ending on June 1, 2038 N/A Tax Redemption Subordinated Events of Default and Defaults Prospectus dated August 30, 2022 2002 Indenture and Supplemental Indenture dated September 16, 2022
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 7.390% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280DR76 Fixed Rate: 7.390% p.a. Floating Rate: Compounded Daily SOFR plus 3.350% p.a. Benchmark Transition Provisions November 3, 2022 to November 3, 2028 Fixed Rate: May 3 and November 3 of each year, beginning on May 3, 2023 and ending on November 3, 2027 Floating Rate: February 3, 2028, May 3, 2028, August 3, 2028 and November 3, 2028 Par Redemption Date: November 3, 2027 Make-Whole Redemption Period: from (and including) May 3, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated October 26, 2022 2009 Indenture and Twenty-Seventh Supplemental Indenture dated November 3, 2022 $2,000,000,000 8.113% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 US404280DS59 Fixed Rate: 8.113% p.a. Floating Rate: Compounded Daily SOFR plus 4.250% p.a. Benchmark Transition Provisions November 3, 2022 to November 3, 2033 Fixed Rate: May 3 and November 3 of each year, beginning on May 3, 2023 and ending on November 3, 2032 Floating Rate: February 3, 2033, May 3, 2033, August 3, 2033 and November 3, 2033 November 3, 2032 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated October 26, 2022 2014 Indenture and Fifth Supplemental Indenture dated November 3, 2022
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 6.161% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280DU06 Fixed Rate: 6.161% p.a. Floating Rate: Compounded Daily SOFR plus 1.970% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2029 Fixed Rate: March 9 and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2028 Floating Rate: June 9, 2028, September 9, 2028, December 9, 2028 and March 9, 2029 Par Redemption Date: March 9, 2028 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023 $2,250,000,000 6.254% Fixed Rate/Floating Rate Senior Unsecured Notes due 2034 US404280DV88 Fixed Rate: 6.254% p.a. Floating Rate: Compounded Daily SOFR plus 2.390% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2034 Fixed Rate: March 9, and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2033 Floating Rate: June 9 2033, September 9, 2033, December 9, 2033 and March 9, 2034 Par Redemption Date: March 9, 2033 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,750,000,000 6.332% Fixed Rate/Floating Rate Senior Unsecured Notes due 2044 US404280DW61 Fixed Rate: 6.332% p.a. Floating Rate: Compounded Daily SOFR plus 2.650% p.a. Benchmark Transition Provisions March 9, 2023 to March 9, 2044 Fixed Rate: March 9 and September 9 of each year, beginning on September 9, 2023 and ending on March 9, 2043 Floating Rate: June 9, 2043, September 9, 2043, December 9, 2043 and March 9, 2044 Par Redemption Date: March 9, 2043 Make-Whole Redemption Period: from (and including) September 9, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 2, 2023 2009 Indenture and Twenty-Eighth Supplemental Indenture dated March 9, 2023 $2,000,000,000 6.547% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 US404280DX45 Fixed Rate: 6.547% p.a. Floating Rate: Compounded Daily SOFR plus 2.980% p.a. Benchmark Transition Provisions June 20, 2023 to June 20, 2034 Fixed Rate: June 20 and December 20 of each year, beginning on December 20, 2023 and ending on June 20, 2033 Floating Rate: September 20, 2033, December 20, 2033, March 20, 2034 and June 20, 2034 June 20, 2033 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated June 12, 2023 2014 Indenture and Sixth Supplemental Indenture dated June 20, 2023
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,300,000,000 5.887% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 US404280DZ92 Fixed Rate: 5.887% p.a. Floating Rate: Compounded Daily SOFR plus 1.570% p.a. Benchmark Transition Provisions August 14, 2023 to August 14, 2027 Fixed Rate: February 14 and August 14 of each year, beginning on February 14, 2024 and ending on August 14, 2026 Floating Rate: November 14, 2026, February 14, 2027, May 14, 2027 and August 14, 2027 Par Redemption Date: August 14, 2026 Make-Whole Redemption Period: from (and including) February 14, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 7, 2023 2009 Indenture and Twenty-Ninth Supplemental Indenture dated August 14, 2023 $700,000,000 Floating Rate Senior Unsecured Notes due 2027 US404280DY28 Floating Rate: Compounded Daily SOFR plus 1.570% p.a. Benchmark Transition Provisions August 14, 2023 to August 14, 2027 February 14, May 14, August 14 and November 14 of each year, beginning on November 14, 2023 and ending on August 14, 2027 August 14, 2026 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated August 7, 2023 2009 Indenture and Twenty-Ninth Supplemental Indenture dated August 14, 2023 £1,000,000,000 6.800% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 XS2685873908 Fixed Rate: 6.800% p.a. Floating Rate: Compounded Daily SONIA plus 2.124% p.a. September 14, 2023 to September 14, 2031 Fixed Rate: September 14 of each year, beginning on September 14, 2024 and ending on September 14, 2030 Floating Rate: December 14, 2030, March 14, 2031, June 14, 2031, and September 14, 2031 Par Redemption Date: September 14, 2030 Make-Whole Redemption Period: from (and including) March 14, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated September 7, 2023 2009 Indenture and Thirtieth Supplemental Indenture dated September 14, 2023
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,000,000,000 7.399% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 US404280EC98 Fixed Rate: 7.399% p.a. Floating Rate: Compounded Daily SOFR plus 3.020% p.a. Benchmark Transition Provisions November 13, 2023 to November 13, 2034 Fixed Rate: May 13 and November 13 of each year, beginning on May 13, 2024 and ending on November 13, 2033 Floating Rate: February 13, 2034, May 13, 2034, August 13, 2034 and November 13, 2034 November 13, 2033 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated November 6, 2023 2014 Indenture and Seventh Supplemental Indenture dated November 13, 2023 $1,500,000,000 5.546% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280ED71 Fixed Rate: 5.546% p.a. Floating Rate: Compounded Daily SOFR plus 1.460% p.a. March 4, 2024 to March 4, 2030 Fixed Rate: March 4 and September 4 of each year, beginning on September 4, 2024 and ending on March 4, 2029 Floating Rate: June 4, 2029, September 4, 2029, December 4, 2029, March 4, 2030 Par Redemption Date: March 4, 2029 Make-Whole Redemption Period: from (and including) September 4, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2024 2009 Indenture and Thirty-Second Supplemental Indenture dated March 4, 2024 $1,250,000,000 5.719% Fixed Rate/Floating Rate Senior Unsecured Notes due 2035 US404280EE54 Fixed Rate: 5.719% p.a. Floating Rate: Compounded Daily SOFR plus 1.780% p.a. March 4, 2024 to March 4, 2035 Fixed Rate: March 4 and September 4 of each year, beginning on September 4, 2024 and ending on March 4, 2034 Floating Rate: June 4, 2034, September 4, 2034, December 4, 2034, March 4, 2035 March 4, 2034 Make-Whole Redemption Period: from (and including) September 4, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2024 2009 Indenture and Thirty-Second Supplemental Indenture dated March 4, 2024
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,850,000,000 5.597% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280EF20 Fixed Rate: 5.597% p.a. Floating Rate: Compounded Daily SOFR plus 1.060% p.a. May 17, 2024 to May 17, 2028 Fixed Rate: May 17 and November 17 of each year, beginning on November 17, 2024 and ending on May 17, 2027 Floating Rate: August 17, 2027, November 17, 2027, February 17, 2028, May 17, 2028 Par Redemption Date: May 17, 2027 Make-Whole Redemption Period: from (and including) November 17, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2024 2009 Indenture and Thirty-Third Supplemental Indenture dated May 17, 2024 $1,400,000,000 5.733% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 US404280EG03 Fixed Rate: 5.733% p.a. Floating Rate: Compounded Daily SOFR plus 1.520% p.a. May 17, 2024 to May 17, 2032 Fixed Rate: May 17 and November 17 of each year, beginning on November 17, 2024 and ending on May 17, 2031 Floating Rate: August 17, 2031, November 17, 2031, February 17, 2032, May 17, 2032 Par Redemption Date: May 17, 2031 Make-Whole Redemption Period: from (and including) November 17, 2024 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2024 2009 Indenture and Thirty-Third Supplemental Indenture dated May 17, 2024 $1,750,000,000 5.874% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2035 US404280EL97 Fixed Rate: 5.874% p.a. Floating Rate: Compounded Daily SOFR plus 1.90% p.a. November 18, 2024 to November 18, 2035 Fixed Rate: May 18 and November 18 of each year, beginning on May 18, 2025 and ending on November 18, 2034 Floating Rate: February 18, 2035, May 18, 2035, August 18, 2035, November 18, 2035 November 18, 2034 Tax Redemption, Par Redemption and Capital Disqualification Event Redemption Subordinated Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2014 Indenture and Ninth Supplemental Indenture dated November 18, 2024
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,500,000,000 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 US404280EM70 Fixed Rate: 5.130% p.a. Floating Rate: Compounded Daily SOFR plus 1.04% p.a. November 19, 2024 to November 19, 2028 Fixed Rate: May 19 and November 19 of each year, beginning on May 19, 2025 and ending on November 19, 2027 Floating Rate: February 19, 2028, May 19, 2028, August 19, 2028, November 19, 2028 Par Redemption Date: November 19, 2027 Make-Whole Redemption Period: from (and including) May 19, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $2,250,000,000 5.286% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 US404280EN53 Fixed Rate: 5.286% p.a. Floating Rate: Compounded Daily SOFR plus 1.29% p.a. November 19, 2024 to November 19, 2030 Fixed Rate: May 19 and November 19 of each year, beginning on May 19, 2025 and ending on November 19, 2029 Floating Rate: February 19, 2030, May 19, 2030, August 19, 2030, November 19, 2030 Par Redemption Date: November 19, 2029 Make-Whole Redemption Period: from (and including) May 19, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $500,000,000 Floating Rate Senior Unsecured Notes due 2028 US404280EK15 Floating Rate: Compounded Daily SOFR plus 1.04% p.a. November 19, 2024 to November 19, 2028 February 19, May 19, August 19 and November 19 of each year, beginning on February 19, 2025, and ending on November 19, 2028 November 19, 2027 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $500,000,000 Floating Rate Senior Unsecured Notes due 2030 US404280EP02 Floating Rate: Compounded Daily SOFR plus 1.29% p.a. November 19, 2024 to November 19, 2030 February 19, May 19, August 19 and November 19 of each year, beginning on February 19, 2025, and ending on November 19, 2030 November 19, 2029 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 $1,500,000,000 4.899% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 US404280EQ84 Fixed Rate: 4.899% p.a. Floating Rate: Compounded Daily SOFR plus 1.030% p.a. March 3, 2025 to March 3, 2029 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2028 Floating Rate: June 3, 2028, September 3, 2028, December 3, 2028 and March 3, 2029 Par Redemption Date: March 3, 2028 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,750,000,000 5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280ER67 Fixed Rate: 5.130% p.a. Floating Rate: Compounded Daily SOFR plus 1.290% p.a. March 3, 2025 to March 3, 2031 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2030 Floating Rate: June 3, 2030, September 3, 2030, December 3, 2030 and March 3, 2031 Par Redemption Date: March 3, 2030 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025 $2,250,000,000 5.450% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280ES41 Fixed Rate: 5.450% p.a. Floating Rate: Compounded Daily SOFR plus 1.560% p.a. March 3, 2025 to March 3, 2036 Fixed Rate: March 3 and September 3 of each year, beginning on September 3, 2025 and ending on March 3, 2035 Floating Rate: June 3, 2035, September 3, 2035, December 3, 2035 and March 3, 2036 Par Redemption Date: March 3, 2035 Make-Whole Redemption Period: from (and including) September 3, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025 $750,000,000 Floating Rate Senior Unsecured Notes due 2029 US404280ET24 Floating Rate: Compounded Daily SOFR plus 1.030% p.a. March 3, 2025 to March 3, 2029 March 3, June 3, September 3 and December 3 of each year, beginning on June 3, 2025 and ending on March 3, 2029 March 3, 2028 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental indenture, dated March 3, 2025
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $750,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280EU96 Floating Rate: Compounded Daily SOFR plus 1.290% p.a. March 3, 2025 to March 3, 2031 March 3, June 3, September 3 and December 3 of each year, beginning on June 3, 2025 and ending on March 3, 2031 March 3, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated February 26, 2025 2009 Indenture and Thirty-Fifth Supplemental Indenture, dated March 3, 2025 $2,250,000,000 5.240% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280EW52 Fixed Rate: 5.240% p.a. Floating Rate: Compounded Daily SOFR plus 1.570% p.a. May 13, 2025 to May 13, 2031 Fixed Rate: May 13 and November 13 of each year, beginning on November 13, 2025 and ending on May 13, 2030 Floating Rate: August 13, 2030, November 13, 2030, February 13, 2031 and May 13, 2031 Par Redemption Date: May 13, 2030 Make-Whole Redemption Period: from (and including) November 13, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025 $2,000,000,000 5.790% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280EX36 Fixed Rate: 5.790% p.a. Floating Rate: Compounded Daily SOFR plus 1.880% p.a. May 13, 2025 to May 13, 2036 Fixed Rate: May 13 and November 13 of each year, beginning on November 13, 2025 and ending on May 13, 2035 Floating Rate: August 13, 2035, November 13, 2035, February 13, 2036 and May 13, 2036 Par Redemption Date: May 13, 2035 Make-Whole Redemption Period: from (and including) November 13, 2025 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $1,250,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280EZ83 Floating Rate: Compounded Daily SOFR plus 1.570% p.a. May 13, 2025 to May 13, 2031 February 13, May 13, August 13 and November 13 of each year, beginning on August 13, 2025 and ending on May 13, 2031 May 13, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated May 8, 2025 2009 Indenture and Thirty-Sixth Supplemental Indenture, dated May 13, 2025 $1,500,000,000 5.741% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2036 US404280FB07 Fixed Rate: 5.741% p.a. Floating Rate: Compounded Daily SOFR plus 1.960% p.a. September 10, 2025 to September 10, 2036 Fixed Rate: March 10 and September 10 of each year, beginning on March 10, 2026 and ending on September 10, 2035 Floating Rate: December 10, 2035, March 10, 2036, June 10, 2036 and September 10, 2036 September 10, 2035 Tax Redemption, Par Redemption, Capital Disqualification Event Redemption and Residual Call Subordinated Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated September 2, 2025 2014 Indenture and Tenth Supplemental Indenture dated September 10, 2025 $2,250,000,000 4.619% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 US404280FE46 Fixed Rate: 4.619% p.a. Floating Rate: Compounded Daily SOFR plus 1.190% p.a. November 6, 2025 to November 6, 2031 Fixed Rate: May 6 and November 6 of each year, beginning on May 6, 2026 and ending on November 6, 2030 Floating Rate: February 6, 2031, May 6, 2031, August 6, 2031 and November 6, 2031 Par Redemption Date: November 6, 2030 Make-Whole Redemption Period: from (and including) May 6, 2026 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025
Debt Securities (Currency / Original Principal Amount / Class / ISIN)(1)(2) Interest (Interest Rate / Benchmark / Margin / Interest Reset Dates) (3)(4) Term (Issue Date to Maturity Date) Interest Payment Dates (in arrear) Optional Redemption Date Redemption rights(5)(6)(7)(8)(9) (10)(11) Events of Default(12)(13)(14)(15) Offering Documents Indenture $2,250,000,000 5.133% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 US404280FG93 Fixed Rate: 5.133% p.a. Floating Rate: Compounded Daily SOFR plus 1.430% p.a. November 6, 2025 to November 6, 2036 Fixed Rate: May 6 and November 6 of each year, beginning on May 6, 2026 and ending on November 6, 2035 Floating Rate: February 6, 2036, May 6, 2036, August 6, 2036 and November 6, 2036 Par Redemption Date: November 6, 2035 Make-Whole Redemption Period: from (and including) May 6, 2026 to (but excluding) the Par Redemption Date Tax Redemption, Par Redemption, Make-Whole Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025 $500,000,000 Floating Rate Senior Unsecured Notes due 2031 US404280FF11 Floating Rate: Compounded Daily SOFR plus 1.190% p.a. November 6, 2025 to November 6, 2031 February 6, May 6, August 6 and November 6 of each year, beginning on February 6, 2026 and ending on November 6, 2031 November 6, 2030 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated October 30, 2025 2009 Indenture and Thirty-Seventh Supplemental Indenture, dated November 6, 2025 (1) The principal amount of each series of Debt Securities set forth in the table corresponds to the original principal amount of such series on the relevant issue date. (2) Debt Securities denominated in United States dollars ($) are collectively referred to herein as “Dollar-denominated Notes.” Debt Securities denominated in pounds sterling (£) are collectively referred to herein as “Sterling-denominated Notes.” (3) LIBOR Replacement Provisions means the LIBOR or Mid-Market Swap Rate, as applicable, may be replaced by an alternative benchmark if LIBOR is temporarily or permanently unavailable, as described below under “Interest—Replacement of the Reference Rate—LIBOR Replacement Provisions.” Since the relevant USD LIBOR rate in relation to each series of Transitioned Notes which included LIBOR Replacement Provisions in their terms was replaced with Term SOFR, plus a tenor spread adjustment in accordance with the LIBOR Act and related regulations after the Cessation Date (as described below under “Interest–Calculation of Three-Month Term SOFR”), the LIBOR Replacement Provisions are no longer applicable or relevant to such Transitioned Notes. (4) Benchmark Transition Provisions means the benchmark may be replaced by a benchmark replacement if it becomes temporarily or permanently unavailable, as described below under “Interest—Replacement of the Reference Rate—Benchmark Transition Provisions.”
(5) Tax Redemption means that we have the right to redeem the specified series of Debt Securities upon the occurrence of certain Tax Events, as described below under “Redemption—Tax Redemption.” (6) Capital Disqualification Event Redemption means that we have the right to redeem the specified series of Debt Securities upon the occurrence of certain regulatory events, on the terms described below under “Redemption—Capital Disqualification Event Redemption.” (7) Optional Redemption means that we have the right to redeem the specified series of Debt Securities on the specified Optional Redemption Date, as described below under “Redemption—Optional Redemption.” (8) Make-Whole means that we have the right to redeem the specified series of Debt Securities during the Make-Whole Redemption Period, as described below under “Redemption—Make-Whole and Par Redemption.” (9) Par Redemption means that we have the right to redeem the specified series of Debt Securities on the Par Redemption Date, as described below under “Redemption—Make-Whole and Par Redemption.” (10) LADE Redemption means that we have the option to redeem the specified series of Debt Securities following the occurrence of a Loss Absorption Disqualification Event, as described below under “Redemption—LADE Redemption.” (11) Residual Call means that we have the right to redeem the specified series of Debt Securities in connection with a Residual Call, as described below under “Redemption—Residual Call.” (12) Subordinated Events of Default and Defaults means that the events of default described below under “Events of Default and Enforcement Events and Remedies— Subordinated Debt Securities—Subordinated Events of Default and Defaults” are applicable to the relevant series of Debt Securities. (13) Extended Events of Default and Defaults means that the events of default described below under “Events of Default and Enforcement Events and Remedies— Senior Debt Securities—Extended Events of Default and Defaults” are applicable to the relevant series of Debt Securities. (14) LADE Provisions means that the events of default applicable to the relevant series of Debt Securities will change upon the occurrence of a Loss Absorption Disqualification Event, as described below under “Events of Default and Enforcement Events and Remedies—Senior Debt Securities—LADE Provisions.” (15) Limited Events of Default and Defaults means that the events of default described below under “Events of Default and Enforcement Events and Remedies—Senior Debt Securities—Limited Events of Default and Defaults” are applicable to the relevant series of Debt Securities.
The summary set out below of the general terms and provisions of our debt securities (the “Description of Terms”) does not purport to be complete and is strictly subject to and qualified by reference to all of the definitions and provisions of the relevant indenture (as listed in the Summary of Terms above), any supplement to the relevant indenture and the form of the instrument representing each series of debt securities. Certain terms, unless otherwise defined here, have the meaning given to them in the relevant indenture and/or supplemental indenture (as applicable). General The debt securities of any series are either our senior obligations (the “Senior Debt Securities”) or our dated subordinated obligations (the “Subordinated Debt Securities” and, together with the Senior Debt Securities, the “Debt Securities”). The Debt Securities are not secured by any assets or property of Holdings or any of its subsidiaries or affiliates. Each series of Senior Debt Securities was issued under an indenture entered into between us, The Bank of New York Mellon, London Branch as trustee (the “Trustee”) and the other parties thereto (each, a “Senior Debt Securities Indenture”). Each series of Subordinated Debt Securities was issued under an indenture entered into between us, The Bank of New York Mellon, London Branch as Trustee and the other parties thereto (each, a “Subordinated Debt Securities Indenture”). With respect to each series of Debt Securities, the relevant Senior Debt Securities Indenture or Subordinated Debt Securities Indenture (as applicable) and supplements thereto are set forth in the Summary of Key Terms above and are referred to in this Description of Terms (i) in the case of each series of Debt Securities, collectively as the “indenture” and (ii) in the case of all series of Debt Securities, collectively as the “indentures.” The terms of the Debt Securities include those stated in the relevant indenture and those terms made part of the relevant indenture by reference to the U.S. Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). Each series of Debt Securities was issued pursuant to an effective registration statement (including a base prospectus) and a prospectus supplement (or, in the case of Debt Securities issued in connection with an exchange offer, a final prospectus) describing the terms of such series (the “Offering Documents”). The Offering Documents for each series of Debt Securities are set forth in the Summary of Key Terms above. The indentures do not limit the amount of Debt Securities that we may issue; however, such amount may be otherwise limited by applicable law or regulation (including laws and regulations applicable to Holdings’ issuance of regulatory capital securities). Unless otherwise provided in the terms of a series of Debt Securities, a series may be reopened, without notice to or consent of any holder of outstanding Debt Securities, for issuances of additional Debt Securities of that series. Holders of Debt Securities have no voting rights with respect to the Debt Securities except as described below under “Modification and Waiver,” “Events of Default and Enforcement Events and Remedies” and “Limitation on Suits.” The Debt Securities are not subject to any sinking fund. Interest As of December 31, 2025, we had (a) four categories of registered Senior Debt Securities: (i) fixed rate Senior Debt Securities (“Fixed Rate Senior Notes”); (ii) floating rate Senior Debt Securities (“Floating Rate Notes”); (iii) fixed-to-floating rate Senior Debt Securities (“Fixed/Floating Rate Senior Notes”); and (iv) resettable Senior Debt Securities (“Resettable Notes”); (b) two categories of registered Subordinated Debt Securities: (i) fixed rate Subordinated Debt Securities (together with the Fixed Rate Senior Notes, the “Fixed Rate Notes”) and (ii) fixed-to-floating rate Subordinated Debt Securities (“Fixed/Floating Rate Subordinated Notes” and, together with the Fixed/Floating Rate Senior Notes, the “Fixed/Floating Rate Notes”). The relevant interest rates, benchmarks, interest reset dates and interest payment dates are set out in the Summary of Key Terms above.
Interest on the Dollar-denominated Fixed Rate Notes (including the fixed rate interest period of the Fixed/Floating Rate Notes) is computed on the basis of twelve 30-day months (or, in the case of an incomplete month, the actual number of days elapsed), assuming a 360-day year. Interest on the Dollar-denominated Floating Rate Notes (including the floating rate interest period of the Fixed/Floating Rate Notes) is computed on the basis of the actual number of days in each floating rate interest period, assuming a 360-day year. Interest on the Resettable Notes and on the Sterling- denominated Fixed/Floating Rate Notes during the fixed rate interest period is computed on the basis of the actual number of days in the period for which interest is being calculated divided by the actual number of days from and including the last day interest was paid on the notes, to but excluding the next scheduled interest payment date. Interest on the Sterling-denominated Fixed/Floating Rate Notes during the floating rate interest period is computed on the basis of the actual number of days in each floating rate interest period, divided by 365 (or, if any portion of that calculation period falls in a leap year, the sum of (a) the actual number of days in that portion of the calculation period falling in a leap year, divided by 366 and (b) the actual number of days in that portion of the calculation period falling in a non-leap year, divided by 365). Payments So long as the Debt Securities are represented by global securities, payments of principal and interest will be made in immediately available funds. If any scheduled fixed rate or resettable rate interest payment date is not a Business Day (as defined below), we will pay interest on the next succeeding Business Day, but interest on that payment will not accrue during the period from and after the scheduled interest payment date. If any scheduled floating rate interest payment date, other than the maturity date, would fall on a day that is not a Business Day, the floating rate interest payment date will be postponed to the next succeeding Business Day, except that if that Business Day falls in the next succeeding calendar month, the floating rate interest payment date will be the immediately preceding Business Day. The payment of interest due on such postponed or brought- forward floating rate interest payment date will include interest accrued to but excluding such postponed or brought-forward floating rate interest payment date. If the maturity date or date of redemption or repayment of a series of Debt Securities is not a Business Day, we may pay interest and principal on the next succeeding Business Day, but interest on that payment will not accrue during the period from and after the maturity date or date of redemption or repayment. A “Business Day” means any weekday other than one on which banking institutions are closed in London or New York City. Beneficial interests in Dollar-denominated Notes trade in the same-day funds settlement system of DTC, and secondary market trading activity in such interests will therefore settle in same- day funds. Secondary market trading between Clearstream Banking S.A. in Luxembourg (“Clearstream Luxembourg”) customers and/or Euroclear Bank SA/NV (“Euroclear”) participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream Luxembourg and Euroclear and will be settled using the procedures applicable to conventional Eurobonds in immediately available funds. Beneficial interests in Sterling-denominated Notes trade in accordance with the normal rules and operating procedures of Clearstream Luxembourg and/or Euroclear, and secondary market trading activity in such interests will be settled using the procedures applicable to conventional Eurobonds in immediately available funds. Currency and Exchange Payments of principal and interest in respect of Dollar-denominated Notes and the Sterling- denominated Notes are made in the applicable currency to the holders of record at the close of business on the applicable record date. If pounds sterling is unavailable to us due to it ceasing to be used by the United Kingdom and for the settlement of transactions by public institutions of or within the international banking community, then with respect to each payment date in respect of Sterling-denominated Notes occurring after the final date pounds sterling is used, all payments in respect of such Sterling-
denominated Notes will be made in U.S. dollars. We must, after learning of the unavailability or cessation of pounds sterling in the above events, notify the Trustee and paying agent immediately specifying the last date on which pounds sterling was used for the payment of any principal (and premium, if any) or interest in respect of such Sterling-denominated Notes. The paying agent will determine (and promptly notify the Trustee of such determination) the amount to be paid in U.S. dollars as of the applicable record date or the 15th day immediately preceding the maturity of any principal (as the case may be), and the amount will be equal to the sum obtained by converting pounds sterling into U.S. dollars at the Exchange Rate on the last such record date on which pounds sterling was so used in either capacity. “Exchange Rate” means the noon selling rate in New York City for cable transfers of pounds sterling on the applicable record date or the fifteenth day immediately preceding the maturity of any principal, as the case may be, as certified for customs purposes by the Federal Reserve Bank of New York. If for any reason such rates are not available with respect to one or more currencies for which an Exchange Rate is required, the exchange rate agent shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major banks in New York City or in the country of issue of the currency in question, or such other quotations as the exchange rate agent shall deem appropriate. All decisions and determinations of the paying agent regarding conversion of pounds sterling into U.S. dollars pursuant to the above will, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon us and all holders of the affected Debt Securities. Floating Rate Interest The Floating Rate Notes and, during the relevant floating rate interest periods for each series of Fixed/Floating Rate Notes, the Fixed/Floating Rate Notes, will bear interest at a floating rate, reset quarterly on the applicable interest reset dates based on a benchmark plus the margin, each as set forth in the Summary of Key Terms above. The Resettable Notes, during the relevant reset interest period, will bear interest at a floating rate, reset on the applicable interest reset date based on a benchmark plus the margin, each as set forth in the Summary of Key Terms above. HSBC Bank USA, National Association, as calculation agent, determines the floating interest rate for each floating rate interest period (including, in the case of Resettable Notes, the applicable reset period, together the “floating rate interest periods”) by reference to the then-current benchmark rates on the applicable interest determination date (including, in the case of Resettable Notes, the applicable reset determination date, together the “interest determination dates”). In the case of Resettable Notes, the interest determination date for each floating rate interest period is the second London banking day preceding the applicable interest reset date. A “London banking day” is (i) in the case of Dollar-denominated Notes, any day on which dealings in U.S. dollars are transacted in the London interbank market and (ii) in the case of Sterling-denominated Notes, any day on which dealings in pounds sterling are transacted in the London interbank market. In the case of Fixed/Floating Rate Notes and Floating Rate Notes issued on or after March 10, 2022, the interest determination date for each floating rate interest period is the third business day preceding the applicable Interest Payment Date. For the purposes of these notes “business day” means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England, and in the City of New York, United States. In the case of the 4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 issued on March 13, 2017 (US404280BK42 / 404280 BK4), the 4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 issued on June 19, 2018 (US404280BT50 / 404280 BT5), and the 3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 issued on May 22, 2019 (US404280CC17 / 404280 CC1) (the “Transitioned Notes”), the interest determination date for each floating rate interest period is the second U.S government securities business day prior to the applicable interest reset date. For the purposes of the Transitioned Notes, “U.S government securities business day” means any day except for a Saturday, a Sunday or a
day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. Calculation of the Mid-Market Swap Rate With respect to each series of Debt Securities for which the benchmark on the relevant interest determination date is the mid-market swap rate (“Mid-Market Swap Rate Notes”), the “Mid- Market Swap Rate” in respect of such interest determination date is the quotation for GBP LIBOR IRS & Swap Spreads as displayed on the Bloomberg ICAP page (or any similar replacement page) as of approximately 11:00 a.m. (London time) on that interest determination date. If no such rate appears for a one-year term, then the Mid-Market Swap Rate will be determined through the use of straight-line interpolation by reference to two rates, one of which will be determined in accordance with the provisions in the preceding paragraph, but as if the floating rate interest period were the period of time for which rates are available next shorter than the length of the actual floating rate interest period and the other of which will be determined in accordance with the provisions in the preceding paragraph, but as if the floating rate interest period were the period of time for which rates are available next longer than the length of the actual floating rate interest period. If on the interest determination date the Bloomberg ICAP page is not available or the Mid- Market Swap Rate does not appear on it, the calculation agent will request the principal office in London of four major banks in the swap, money, securities or other market most closely connected with the relevant Mid-Market Swap Rate (as selected by us on the advice of an investment bank of international repute) to provide us with its Mid-Market Swap Rate Quotation as of approximately 11:00 a.m. (London time) on the interest determination date. If two or more quotations are provided, the interest rate for the floating rate interest period will be the sum of the margin and arithmetic mean of the quotations. If only one or no quotations are provided, the interest rate will be the initial interest rate. “Mid-Market Swap Rate Quotation” means a quotation (expressed as a percentage rate per annum) for the mean of the bid and offered rates for the fixed leg payable semi-annually (calculated on the basis of the actual number of days in the relevant period from (and including) the date on which interest begins to accrue to (but excluding) the date on which it falls due divided by 365) of a fixed-for-floating interest rate swap transaction in pounds sterling which transaction (i) has a one-year term commencing on the applicable interest reset date, (ii) is in an amount that is representative for a single transaction in the pounds sterling swap rate market at 11:00 a.m. (London time) with an acknowledged dealer of good credit in the swap market and (iii) has a floating leg based on six-month LIBOR (calculated on the basis of the actual number of days in the relevant period from (and including) the date on which interest begins to accrue to (but excluding) the date on which it falls due divided by 365). Calculation of Three-Month Term SOFR Following the announcement by the U.K. Financial Conduct Authority (the “FCA”), U.S. dollar LIBOR (“USD LIBOR”) ceased to be available or representative after June 30, 2023 (the “Cessation Date”). Pursuant to the Company's announcement on USD LIBOR transition dated June 22, 2023, after the Cessation Date, the relevant USD LIBOR rate in relation to each series of Transitioned Notes was replaced with the CME Term SOFR Reference Rate published for a three- month tenor, as administered by CME Group Benchmark Administration, Ltd. (or any successor administrator thereof) (“Term SOFR”), plus a tenor spread adjustment, in accordance with the U.S. Adjustable Interest Rate (LIBOR) Act of 2021 (the “LIBOR Act”) and related regulations. As a result, with respect to the Transitioned Notes, “Three-month Term SOFR” in respect of the relevant interest determination date is Term SOFR as published at 5.00 a.m. (U.S. Central Standard Time) on that interest determination date, plus a tenor spread adjustment of 0.26161%. To the extent that Term SOFR is not available or published on an interest determination date, the most recently available publication of the Term SOFR will apply.
Calculation of Compounded Daily SOFR With respect to each series of Debt Securities for which the benchmark on the relevant interest determination date is Compounded Daily SOFR, “Compounded Daily SOFR” in relation to a floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SOFR as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: � �1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 360 � − 1 𝑑𝑑0 𝑖𝑖=1 � × 360 𝑑𝑑 “d” means, in relation to any Observation Period, the number of calendar days in such Observation Period; “d0” means, in relation to any Observation Period, the number of USGS Business Days in such Observation Period; “i” means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant USGS Business Day in chronological order from (and including) the first USGS Business Day in such Observation Period; “ni” means, in relation to any USGS Business Day “i” in the relevant Observation Period, the number of calendar days from (and including) such USGS Business Day “i” up to (but excluding) the following USGS Business Day. “Observation Period” means, in relation to each floating rate interest period on the Debt Securities, the period from (and including) the last USGS Business Day falling prior to the related interest determination date for the immediately preceding interest payment date to (but excluding) the last USGS Business Day falling prior to the related interest determination date; provided that the first Observation Period shall commence on (and include) the last USGS Business Day falling prior to the day which is two business days prior to (i) with respect to the Fixed/Floating Rate Notes, the Par Redemption Date, (ii) with respect to the Floating Rate Notes, the Issue Date. “SOFR” means, the daily Secured Overnight Financing Rate for trades made on such day available at or around the Reference Time on the NY Federal Reserve’s Website. Where the benchmark is Compounded Daily SOFR, Reference Time means, for each USGS Business Day, 3:00 p.m. (New York time). If no such rate is available at or around the Reference Time for such day (and a Benchmark Transition Event and its related Benchmark Replacement Date have not occurred), the daily Secured Overnight Financing Rate in respect of the last USGS Business Day for which such rate was published on the NY Federal Reserve’s Website. “SOFRi” means, in relation to any USGS Business Day “i” in the relevant Observation Period, SOFR in respect of such USGS Business Day. “USGS Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association or any successor thereto recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. Notwithstanding the definition of “SOFR” above, if Holdings (in consultation, to the extent practicable, with the calculation agent) or Holdings' designee (in consultation with us) determine on or prior to the relevant interest determination date that a Benchmark Transition Event and related Benchmark Replacement Date have occurred with respect to SOFR, then the “Benchmark Transition Provisions” set forth below under Interest - Benchmark Transition Provisions will thereafter apply. Calculation of Compounded Daily SONIA
With respect to each series of Debt Securities issued before September 14, 2023, for which the benchmark on the relevant interest determination date is Compounded Daily SONIA, “Compounded Daily SONIA” in respect of any floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SONIA as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: � �1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 365 � − 1 𝑑𝑑0 𝑖𝑖=1 � × 365 𝑑𝑑 “d” means, in relation to any Observation Period, the number of calendar days in such Observation Period; “d0” means, in relation to any Observation Period, the number of SONIA Business Days in such Observation Period; “i” means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant SONIA Business Day in chronological order from (and including) the first SONIA Business Day in such Observation Period; “ni” means, in relation to any SONIA Business Day “i” in the relevant Observation Period, the number of calendar days from (and including) such SONIA Business Day “i” up to (but excluding) the next following SONIA Business Day. “Observation Period” means, in respect of any floating rate interest period on the Debt Securities, the period from (and including) the date which is the related interest determination date for the immediately preceding interest payment date to (but excluding) the date which is the related interest determination date (or the date falling five SONIA Business Days prior to such earlier date, if any, on which the Debt Securities become due and payable); provided that the first Observation Period shall commence on (and include) the date that is five SONIA Business Days prior to the Par Redemption Date. “SONIA” means, in relation to any SONIA Business Day, the rate determined by the calculation agent in accordance with the following provisions: (1) the daily Sterling Overnight Index Average rate for such SONIA Business Day as provided by the administrator of SONIA to authorized distributors and as then published on the Reuters Screen SONIA Page (or, if the Reuters Screen SONIA Page is unavailable, as otherwise published by such authorized distributors) on the SONIA Business Day immediately following such SONIA Business Day. (2) if, in respect of any SONIA Business Day, the rate specified in (1) above is not available on the Reuters Screen SONIA Page or has not otherwise been published by the relevant authorized distributors in respect of such SONIA Business Day, the sum of (i) the Bank of England’s Bank Rate prevailing at the close of business on such SONIA Business Day, plus (ii) the mean of the spread of SONIA to the Bank Rate over five days preceding such SONIA Business Day on which SONIA has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads). “SONIAi” means, in relation to any SONIA Business Day “i” in the relevant Observation Period, SONIA in respect of such Business Day. If the rate of interest cannot be determined in accordance with the foregoing provisions, the rate of interest shall be the rate determined by the calculation agent as at the last preceding related interest determination date or if there is no such preceding interest determination date, the initial interest rate. With respect to each series of Debt Securities issued on or after September 14, 2023, for which the benchmark on the relevant interest determination date is Compounded Daily SONIA,
“Compounded Daily SONIA” in respect of any floating rate interest period on the Debt Securities, is the rate of return of a daily compound interest investment (with SONIA as reference rate for the calculation of interest) during the related Observation Period and will be calculated by the calculation agent on the related interest determination date as follows: � �1 + 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑖𝑖 × 𝑛𝑛𝑖𝑖 365 � − 1 𝑑𝑑0 𝑖𝑖=1 � × 365 𝑑𝑑 Where: “d” means, in relation to any Observation Period, the number of calendar days in such Observation Period; “d0” means, in relation to any Observation Period, the number of SONIA Business Days in such Observation Period; “i” means, in relation to any Observation Period, a series of whole numbers from one to d0, each representing the relevant SONIA Business Day in chronological order from (and including) the first SONIA Business Day in such Observation Period; “ni” means, in relation to any SONIA Business Day “i” in the relevant Observation Period, the number of calendar days from (and including) such SONIA Business Day “i” up to (but excluding) the next following SONIA Business Day; “Observation Period” means, in respect of each Floating Rate Interest Period, the period from (and including) the date which is the Interest Determination Date for the immediately preceding Interest Payment Date to (but excluding) the date which is the Interest Determination Date for such Floating Rate Interest Period (or the date falling five SONIA Business Days prior to such earlier date, if any, on which the Debt Securities become due and payable); provided that the first Observation Period shall commence on (and include) the date that is five SONIA Business Days prior to the Par Redemption Date; “SONIA” means, in relation to any SONIA Business Day, the rate determined by the calculation agent in accordance with the following provisions: (1) the daily Sterling Overnight Index Average (“SONIA”) rate for trades made on such SONIA Business Day as provided by the administrator of SONIA (or any successor administrator) to authorized distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorized distributors) on the SONIA Business Day immediately following such SONIA Business Day; (2) if, in respect of any SONIA Business Day “i”, the rate specified in (1) above is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorized distributors in respect of such SONIA Business Day “i” and neither (A) an Index Cessation Event and an Index Cessation Effective Date nor (B) an Administrator/Benchmark Event and an Administrator/Benchmark Event Date, in each case with respect to SONIA, have occurred, SONIAi in respect of such SONIA Business Day “i” shall be the SONIA rate in respect of the last SONIA Business Day prior to such SONIA Business Day “i” for which SONIA was available on the Relevant Screen Page or was otherwise so published; or (3) if, in respect of any SONIA Business Day “i”, the rate specified in (1) above is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorized distributors and we (in consultation, to the extent practicable, with the calculation agent) determine either that (A) both an Index Cessation Event and Index Cessation Effective Date have occurred or (B) both an Administrator/Benchmark Event and Administrator/Benchmark Event Date have occurred, in each case in respect of SONIA, then:
(a) SONIAi in respect of each SONIA Business Day “i” falling on or after the Applicable Fallback Effective Date shall be calculated as if references to “SONIA” in the foregoing provisions were to the Recommended Rate; (b) if there is a Recommended Rate before the end of the first SONIA Business Day following the Applicable Fallback Effective Date, but neither the administrator of the Recommended Rate nor authorized distributors provide or publish the Recommended Rate in respect of any SONIA Business Day “i” for which the Recommended Rate is required, then, subject to paragraph (c) below, in respect of any SONIA Business Day “i” for which the Recommended Rate is required, references to the Recommended Rate will be deemed to be references to the last provided or published Recommended Rate prior to such SONIA Business Day “i”. If there is no last provided or published Recommended Rate, then in respect of any SONIA Business Day “i” for which the Recommended Rate is required, references to the Recommended Rate will be deemed to be references to the last provided or published SONIA rate (without taking into account any deemed changes to the term “SONIA” pursuant to provision (3)(a) above prior to such SONIA Business Day “i”); and (c) if: (i) there is no Recommended Rate before the end of the first SONIA Business Day following the Applicable Fallback Effective Date referred to in (a) and (b) above; or (ii) there is a Recommended Rate and we (in consultation, to the extent practicable, with the calculation agent) determine either that (A) both an Index Cessation Event and Index Cessation Effective Date have occurred or (B) both an Administrator/Benchmark Event and Administrator/Benchmark Event Date have occurred, in each case with respect to the Recommended Rate, then SONIAi in respect of each SONIA Business Day “i”, falling on or after the Applicable Fallback Effective Date shall be calculated as if references to SONIA in the foregoing provisions pertaining to the calculation of SONIA were to the Final Fallback Rate. In respect of any day for which the Final Fallback Rate is required, references to the Final Fallback Rate will be deemed to be references to the last provided or published Final Fallback Rate as at close of business in London, England on that day; “SONIAi” means, in relation to any SONIA Business Day “i” in the relevant Observation Period, SONIA in respect of such SONIA Business Day; “SONIA Business Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London; “Administrator/Benchmark Event” means that it has or will prior to the next Interest Determination Date become unlawful for the calculation agent or us to calculate any payments due to be made to any holder using SONIA or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities (including, without limitation, under Regulation (EU) 2016/1011 as it forms part of domestic law in the United Kingdom by virtue of the EUWA, if applicable); “Administrator/Benchmark Event Date” means the date from which it becomes unlawful for the calculation agent or us to calculate any payments due to be made to any holder using SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); “Applicable Fallback Effective Date” means in respect of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) and an Index Cessation Event or an Administrator/Benchmark Event, the Index Cessation Effective Date or the Administrator/Benchmark Event Date, as applicable; “Final Fallback Rate” means, in respect of any relevant day, the official bank rate as determined by the Monetary Policy Committee of the Bank of England and published by the Bank of England from time to time, in effect on that day;
“Index Cessation Event” means, in respect of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), the occurrence of one or more of the following events: (1) a public statement or publication of information by or on behalf of the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) announcing that it has ceased or will cease to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) permanently or indefinitely, provided that, at the time of the statement or publication, there is no successor administrator or provider, as applicable, that will continue to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); (2) a public statement or publication of information by the regulatory supervisor for the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), the central bank for the currency of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), an insolvency official with jurisdiction over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), a resolution authority with jurisdiction over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) or a court or an entity with similar insolvency or resolution authority over the administrator for SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities), which states that the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) has ceased or will cease to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator or provider that will continue to provide SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities); or (3) a public statement or publication of information by the regulatory supervisor for the administrator of SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) announcing that the regulatory supervisor has determined that SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) is no longer, or as of a specified future date will no longer be, representative of the underlying market and economic reality that SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) is intended to measure and that representativeness will not be restored; “Index Cessation Effective Date” means: (1) in the case of clauses (1) or (2) of the definition of “Index Cessation Event”, the first date on which SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) would ordinarily have been published or provided and is no longer published or provided; or (2) in the case of clause (3) of the definition of “Index Cessation Event”, the latest of (i) the date of such statement or publication and (ii) the date, if any, specified in such statement or publication as the date on which SONIA (or, if applicable, any subsequent fallback rate determined in accordance with the provisions of the Debt Securities) will no longer be representative; “Recommended Rate” means, in respect of any relevant day, the rate (inclusive of any spreads or adjustments) recommended as the replacement for SONIA by (i) the administrator of SONIA if the administrator of SONIA is a national central bank, or (ii) if the national central bank administrator of SONIA does not make a recommendation or the administrator of SONIA is not a national central bank, a committee designated for this purpose by one or both of the FCA (or any successor thereto) and the Bank of England and as provided by the then administrator or provider of
that rate, or if that rate is not provided by the then administrator or provider thereof, published by an authorized distributor, in respect of that day; and “Relevant Screen Page” means Reuters Screen SONIA Page or such other page, section or other part as may replace it as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to Compounded Daily SONIA. If the rate of interest cannot be determined in accordance with the foregoing provisions, the rate of interest shall be (A) the rate determined by the calculation agent as at the last preceding Interest Determination Date in relation to a Floating Rate Interest Period or (B) if there is no such preceding Interest Determination Date in relation to a Floating Rate Interest Period, the Initial Interest Rate. In connection with the implementation of any fallback rate determined in accordance with the provisions of the Debt Securities, we (in consultation, to the extent practicable, with the calculation agent) will have the right to make changes to (1) any Interest Determination Date, Floating Rate Period Interest Payment Date, SONIA Business Day, business day convention or Floating Rate Interest Period, (2) the manner, timing and frequency of determining the rate and amounts of interest that are payable on the Debt Securities during any Floating Rate Period and the conventions relating to such determination and calculations with respect to interest, (3) rounding conventions, (4) tenors and (5) any other terms or provisions of the Debt Securities during the Floating Rate Period, in each case that we (in consultation, to the extent practicable, with the calculation agent) determine, from time to time, to be appropriate to reflect the determination and implementation of such fallback rate in a manner substantially consistent with market practice (or, if we (in consultation, to the extent practicable, with the calculation agent) decide that implementation of any portion of such market practice is not administratively feasible or determine that no market practice for use of the relevant fallback rate exists, in such other manner as we (in consultation, to the extent practicable, with the calculation agent) determine is appropriate (acting in good faith)) (the “Fallback Conforming Changes”). Any Fallback Conforming Changes will apply to the Debt Securities for all future Floating Rate Interest Periods. LIBOR Replacement Provisions Following the UK Financial Conduct Authority (“FCA”)’s announcement in July 2017 that it would no longer persuade or compel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021, the terms of certain series of Debt Securities issued from May 2018 (specified in the Summary of Key Terms above) include LIBOR Replacement Provisions addressing the cessation of the publication of LIBOR on the relevant screen page as a result of LIBOR having ceased to be calculated or administered for publication thereon. Since the relevant USD LIBOR rate in relation to each series of Transitioned Notes which included LIBOR Replacement Provisions in their terms was replaced with Term SOFR, plus a tenor spread adjustment in accordance with the LIBOR Act and related regulations after the Cessation Date (as described above under “Calculation of Three-Month Term SOFR”), the LIBOR Replacement Provisions are no longer applicable or relevant to such Transitioned Notes. Under the LIBOR Replacement Provisions, if we (in consultation with the calculation agent) determine, upon the occurrence of certain events or announcements regarding LIBOR, that LIBOR has ceased or will cease to be published as specified in the definition of “Mid-Market Swap Rate” above or otherwise in accordance with the terms of the relevant Debt Securities, we will use reasonable efforts to (i) appoint an independent financial institution of international repute or other independent financial adviser experienced in the international capital markets (an “Independent Financial Adviser”) to determine the Alternative Base Rate and the Alternative Screen Page (each as defined below); or (ii) if we are unable to appoint an Independent Financial Adviser, or if the Independent Financial Adviser fails to determine the Alternative Base Rate and the Alternative Screen Page, we will determine the Alternative Base Rate and the Alternative Screen Page for the affected Debt Securities. If clause (ii) applies and we do not determine the Alternative Base Rate and the Alternative Screen Page, the interest rate for such floating rate interest period will be equal to the
interest rate in effect for the immediately preceding floating rate interest period or, in the case of the interest determination date prior to the first (or only) interest reset date, the initial interest rate in respect of such Debt Securities. In the case of either (i) or (ii), we or the Independent Financial Adviser (as applicable) may also, following consultation with the calculation agent, make changes to terms, as specified in the relevant indenture, such as the day count fraction, the business day convention and definition of Business Day, in each case in order to follow market practice, as well as any other changes (including to the margin) that we, following consultation with the Independent Financial Adviser (if appointed), determine in good faith are reasonably necessary to ensure the proper operation of the Alternative Base Rate, as well as the comparability of the interest rate determined by reference to the Alternative Base Rate to the interest rate determined by reference to LIBOR (the “Calculation Changes”). We or the Independent Financial Adviser (as applicable) will make these determinations without need for prior notice to or further consent from each affected holder. We will give prompt notice to the Trustee, the calculation agent and the relevant holders following a determination of the Alternative Base Rate, the Alternative Screen Page and any Calculation Changes. Failure to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such determination. “Alternative Base Rate” means the rate that has replaced LIBOR in customary market usage for determining floating interest rates in respect of Dollar-denominated Notes or Sterling-denominated Notes (as applicable) or, if the Independent Financial Adviser or we (in consultation with the calculation agent and acting in good faith and a commercially reasonable manner), as applicable, determine that there is no such rate, such other rate as the Independent Financial Adviser or we (in consultation with the calculation agent and acting in good faith and a commercially reasonable manner), as applicable, determine is most comparable to LIBOR. “Alternative Screen Page” means the alternative screen page, information service or source on which the Alternative Base Rate appears (or such other successor page, service or source) as may be nominated by the person providing or sponsoring the information appearing on such page for purposes of displaying comparable rates. Benchmark Transition Provisions Following the release by the Alternative Reference Rates Committee (“ARRC”) convened by the Board of Governors of the Federal Reserve System and the NY Federal Reserve of their recommended model benchmark fallback provisions, the terms of certain series of Debt Securities issued from November 2019 (as specified in the Summary of Key Terms above) provide for the replacement of the benchmark for such Debt Securities upon the occurrence of one or more Benchmark Transition Events. A “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current benchmark: (1) a public statement or publication of information by or on behalf of the administrator of the benchmark announcing that such administrator has ceased or will cease to provide the benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the benchmark; (2) a public statement or publication of information by the regulatory supervisor for the administrator of the benchmark, the central bank for the currency of the benchmark, an insolvency official with jurisdiction over the administrator for the benchmark, a resolution authority with jurisdiction over the administrator for the benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the benchmark, which states that the administrator of the benchmark has ceased or will cease to provide the benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the benchmark; or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the benchmark announcing that the benchmark is no longer representative.
A “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the benchmark permanently or indefinitely ceases to provide the benchmark; or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein. If we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) determine that a Benchmark Transition Event and related Benchmark Replacement Date have occurred with respect to a series of Debt Securities prior to the applicable reference time in respect of any determination of the benchmark on any date, the applicable Benchmark Replacement will replace the then-current benchmark for all purposes relating to such series during the applicable floating rate interest period in respect of such determination and all determinations on all subsequent dates; provided that if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) are unable to or do not determine a Benchmark Replacement prior to the relevant reference time on the relevant interest determination date, the interest rate for such floating rate interest period will be equal to the interest rate in effect for the immediately preceding floating rate interest period or (i) in the case of the interest determination date prior to the first interest reset date, the initial interest rate in respect of such Debt Securities, and (ii) in the case of the interest determination date prior to the first interest payment date on a series of Floating Rate Notes, the initial interest rate which would have been applicable to such Floating Rate Notes for the first interest period, had the Floating Rate Notes been outstanding for a period equal in duration to the scheduled first interest period for such Floating Rate Notes but ending on (and excluding) the issue date of such Floating Rate Notes (and applying the relevant margin). For Debt Securities issued on or after November 7, 2019, but before June 4, 2020, the “Benchmark Replacement” in respect of a series of Debt Securities is the Interpolated Benchmark with respect to the then-current benchmark, plus the Benchmark Replacement Adjustment for such benchmark; provided that if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) cannot determine the Interpolated Benchmark as of the Benchmark Replacement Date, the Benchmark Replacement will be the first alternative in the following waterfall that can be determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us), plus a Benchmark Replacement Adjustment: (a) term SOFR; (b) compounded SOFR; (c) the alternate rate of interest that has been selected or recommended by the relevant governmental body as the replacement for the then current benchmark for the applicable Corresponding Tenor (if any); (d) the fallback rate adopted by the International Swaps and Derivatives Association, Inc. (“ISDA”); and (v) the alternate rate of interest that has been selected by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) as the replacement for the current benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for Dollar-denominated floating rate notes at such time. “Interpolated Benchmark” with respect to the benchmark means the rate determined for the Corresponding Tenor by interpolating on a linear basis between: (1) the benchmark for the longest period (for which the benchmark is available) that is shorter than the Corresponding Tenor and (2) the benchmark for the shortest period (for which the benchmark is available) that is longer than the Corresponding Tenor. If the benchmark with respect to which the Interpolated Benchmark is being determined is LIBOR, then the term “benchmark” as used in clause (1) and (2) of the foregoing definition means the London interbank offered rate for deposits in U.S. dollars for the applicable periods specified in such clauses.
“Corresponding Tenor” with respect to a Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding business day adjustments) as the applicable tenor for the then-current benchmark For Debt Securities issued on or after June 4, 2020, the “Benchmark Replacement” in respect of a series of Debt Securities will be the first alternative in the following waterfall that can be determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us), plus a Benchmark Replacement Adjustment: (a) the alternate rate of interest that has been selected or recommended by the relevant governmental body as the replacement for the then current benchmark for the applicable Corresponding Tenor (if any); (b) the fallback rate adopted by the International Swaps and Derivatives Association, Inc. (“ISDA”); and (c) the alternate rate of interest that has been selected by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) as the replacement for the current benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for Dollar-denominated floating rate notes at such time. “SOFR” with respect to any day means the secured overnight financing rate published for such day by the NY Federal Reserve, as the administrator of the benchmark (or a successor administrator), on the NY Federal Reserve’s website at http://www. newyorkfed.org (or any successor source). The “Benchmark Replacement Adjustment” will be a spread adjustment determined by us (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) in accordance with the following waterfall: (a) the spread adjustment selected, recommended, or calculated according to a model determined by the relevant governmental body; (b) if applicable, the spread adjustment selected by ISDA; or (c) the spread adjustment selected by us or our designee giving due consideration to industry-accepted spread adjustments. In connection with the implementation of a Benchmark Replacement with respect to a series of Debt Securities, we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) will have the right to make changes to terms, as specified in the relevant indenture, such as the manner, timing and frequency of determining the rate and amounts of interest that are payable during the floating rate interest period and the conventions relating to such determination and calculations with respect to interest, in each case in order to follow market practice (or, if we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) decide that implementation of any portion of such market practice is not administratively feasible or determine that no market practice for use of the Benchmark Replacement exists, in such other manner as we (in consultation, to the extent practicable, with the calculation agent) or our designee (in consultation with us) determine is appropriate (acting in good faith)) (the “Benchmark Replacement Conforming Changes”). Any Benchmark Replacement Conforming Changes will apply to the applicable series of Debt Securities for all future floating rate interest periods. We or our designee will make these determinations without need for prior notice to or further consent from each affected holder. Ranking Senior Debt Securities Our Senior Debt Securities constitute our direct, unsecured obligations ranking pari passu with our other senior indebtedness and without any preference among themselves. Senior indebtedness will not include any indebtedness that is expressed to be subordinated to or pari passu with Subordinated Debt Securities. Each series of Senior Debt Securities would be effectively subordinated to any indebtedness or other liabilities of us or our subsidiaries that is secured by property or assets to the extent of the value of the property or assets securing such indebtedness. No such secured indebtedness is currently outstanding.
Subordinated Debt Securities Our Subordinated Debt Securities constitute our direct, unsecured obligations ranking pari passu without any preference among themselves. In the event of our winding-up, the rights of holders will be subordinated and subject in right of payment to the prior payment in full of all claims of our other creditors, other than claims which are by their terms, or are expressed to be, subordinated to or pari passu with the Subordinated Debt Securities. As of December 31, 2025, the aggregate amount of outstanding indebtedness senior to the Subordinated Debt Securities is $119,990,148,874. No Set-off To the fullest extent permitted by law, holders, by their acceptance of the Debt Securities (other than the senior Debt Securities issued in 2011 and 2012 pursuant to the 2009 Indenture and Debt Securities issued on or after March 4, 2024), are deemed to have waived any right of set-off or counterclaim that they might otherwise have in respect of any claims of such holders to payment of any principal, premium or interest in respect of the Debt Securities. In addition, holders of Subordinated Debt Securities issued prior to November 18, 2024, by their acceptance thereof, covenant and agree that, in the event of a winding-up, they will hold any sums they receive by way of set-off on trust for our Ordinary Creditors and will, without undue delay, pay such sums to the liquidator to apply in payment of claims of Ordinary Creditors. “Ordinary Creditors” means creditors of HSBC Holdings except creditors in respect of Subordinated Indebtedness and creditors in respect of debt securities with no maturity issued pursuant to an indenture of even date as the Subordinated Debt Securities Indenture between HSBC Holdings and The Bank of New York Mellon as trustee. Subject to applicable law, claims in respect of Debt Securities issued on or after March 4, 2024, may not be set off, or be the subject of a counterclaim, by any holder or by the trustee in respect of any claims of such holders to payment of any principal, premium or interest in respect of the Debt Securities or the relevant indenture, against or in respect of any of its obligations to the Company, and every holder and the trustee in respect of any claims of such holders waives, and shall be treated for all purposes as if it had waived, any right that it might otherwise have to set-off, or to raise by way of counterclaim any of its claims in respect of the Debt Securities or the relevant indenture, against or in respect of any of its obligations to the Company. Notwithstanding the preceding sentence, if any of the rights and claims of any holder are discharged by set-off, such holder will immediately pay an amount equal to the amount of such discharge to the Company or, if applicable, the liquidator or trustee or receiver in the Company’s bankruptcy and, until such time as payment is made, will hold a sum equal to such amount in trust for the Company or, if applicable, the liquidator or trustee or receiver in the Company’s bankruptcy. Accordingly, such discharge will be deemed not to have taken place. Redemption We may, in the circumstances set out below, redeem the Debt Securities prior to their specified maturity date. Holders of the Debt Securities have no right to require us to redeem the Debt Securities. The Debt Securities of any series to be redeemed will also stop bearing interest on the relevant redemption date. We will give prior notice of any proposed redemption to affected holders of Dollar-denominated Notes via DTC and to affected holders of Sterling-denominated Notes via Clearstream, Luxembourg and/or Euroclear (or, if the relevant Debt Securities are held in definitive form, to the holders at their addresses shown on the register for such Debt Securities). For Debt Securities issued before June 4, 2020 and for the 7.35% Subordinated Notes Due 2032 issued on September 16, 2022, the 7.625% Subordinated Notes due 2032 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2036 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2037 issued on September 16, 2022 and the 6.8% Subordinated Notes due 2038 issued on September
16, 2022, we will provide such notice not less than 30 nor more than 60 days prior to the applicable redemption date. For Debt Securities issued on or after June 4, 2020 except for the 7.35% Subordinated Notes Due 2032 issued on September 16, 2022, the 7.625% Subordinated Notes due 2032 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2036 issued on September 16, 2022, the 6.5% Subordinated Notes Due 2037 issued on September 16, 2022 and the 6.8% Subordinated Notes due 2038 issued on September 16, 2022, we will provide such notice not less than 10 nor more than 60 days prior to the applicable redemption date. Notwithstanding the foregoing, we may redeem the relevant series of Debt Securities only if we have obtained prior relevant supervisory consent for such redemption to the extent that such consent is required by the relevant laws, regulations, requirements, guidelines and policies then in effect in the UK. Relevant supervisory consent is defined in the prospectus supplement for the relevant series of Debt Securities to be redeemed. We may only redeem or purchase the Subordinated Debt Securities prior to their maturity, in each case, if and to the extent required by the relevant rules (i) we have obtained the relevant supervisory consent; (ii) prior to the fifth anniversary of the issue date, (a) we have demonstrated to the satisfaction of the relevant regulator that (x) pursuant to a Capital Disqualification Event Redemption (as described below) the relevant change in the regulatory classification of the Subordinated Debt Securities was not reasonably foreseeable at the issue date or (y) pursuant to a Tax Redemption (as described above) the Tax Event was not reasonably foreseeable at the issue date and such Tax Event is a change in the applicable tax treatment of Subordinated Debt Securities which is material; or (b) in respect of Subordinated Debt Securities issued on or after November 18, 2024, in any relevant circumstances we have (or will have), before or at the same time as such redemption or repurchase, replaced the Subordinated Debt Securities with own funds instruments of equal or higher quality at terms that are sustainable for the Company’s income capacity, and the relevant regulator has permitted such action on the basis of the determination that it would be beneficial from a prudential point of view and justified by exceptional circumstances; and/or (c) (except in the case of Subordinated Debt Securities issued pursuant to the First Supplemental Indenture dated March 12, 2014) we have complied with any alternative or additional conditions to redemption or repurchase, as applicable, set out in the relevant rules. For the avoidance of doubt, the requirements in item (i) and (ii) in the paragraph above will not apply if (a) so long as the relevant rules do not otherwise require, the relevant Debt Securities have (or will have, on the date fixed for redemption or purchase) ceased fully to qualify as part of the HSBC Group’s regulatory capital, (b) the relevant Debt Securities are purchased for market-making purposes in accordance with any permission given by the relevant regulator pursuant to the relevant rules within the limits prescribed in such permission or (c) the relevant Debt Securities are being redeemed or purchased pursuant to any general prior permission granted by the relevant regulator pursuant to the relevant rules within the limits prescribed in such permission. Tax Redemption We have the right to redeem any series of Debt Securities, in whole but not in part, at a redemption price equal to 100% of their principal amount together with any accrued but unpaid interest, if any, upon the occurrence of certain tax events as described in the relevant prospectus supplement. We will be able to redeem the Subordinated Debt Securities issued pursuant to the 2002 Indenture and the Senior Debt Securities at a redemption price equal to the applicable principal amount thereof together with accrued but unpaid interest (if any), if, at any time, we determine that (a) in making payment under such Debt Securities in respect of principal or interest we have become obligated to pay holders any Additional Amounts (as described below under “Payment of Additional Amounts”), provided such obligation to pay Additional Amounts results from a change in or amendment to the tax laws or regulations of the UK (or any political subdivision or any taxing authority thereof or therein having the power to tax) (a “Taxing Jurisdiction”), or any change in the
official application or interpretation of such laws (including a decision of any court or tribunal), or any change in, or in the official application or interpretation of, or execution of, or amendment to, any treaty to which the UK is a party, which change, amendment or execution becomes effective after the date of original issuance of the Debt Securities of such series or (b) the payment of interest in respect of such Debt Securities has become or will or would be treated as a “distribution” within the meaning of the applicable UK tax statute, as a result of any change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws including a decision of any court, which change or amendment becomes effective after the date of original issuance of the Debt Securities of such series; provided, however, that in the case of (a) above, no notice of redemption will be given earlier than 90 days prior to the earliest date on which we would be obliged to pay Additional Amounts were a payment in respect of such Debt Securities then due. We will be able to redeem the Subordinated Debt Securities issued prior to November 18, 2024 pursuant to the 2014 Indenture at a redemption price equal to the applicable principal amount thereof together with accrued but unpaid interest (if any) if a Tax Event has occurred; provided, however, that no notice of redemption will be given earlier than 90 days prior to the earliest date on which we would be obliged to pay Additional Amounts were a payment in respect of such Debt Securities then due. A “Tax Event” will be deemed to have occurred if, at any time, we determine that as a result of a change in, or amendment to, the laws of a Taxing Jurisdiction, including any treaty to which the relevant Taxing Jurisdiction is a party, or a change in an official application or interpretation of those laws on or after the issue date, including a decision of any court or tribunal that becomes effective on or after the issue date on a subsequent date for the payment of interest on the Debt Securities, we would be required to pay any Additional Amounts (or, in the case of the 4.375% Fixed Rate Subordinated Notes due 2026 only, (a) if we were to seek to redeem the Debt Securities on a subsequent date (for which purpose no consideration will be given as to whether or not we would otherwise be entitled to redeem the Debt Securities), we would be required to pay any Additional Amounts, or (b) on a subsequent date for the payment of interest on the Debt Securities, interest payments (or our funding costs as recognized in our accounts) under, or with respect to, the Debt Securities are no longer fully deductible for UK corporation tax purposes). We will be able to redeem the Subordinated Debt Securities issued on or after November 18, 2024, in whole but not in part, at the Company’s sole discretion, on not less than 10 nor more than 60 days’ notice, at any time at a redemption price equal to 100% of the principal amount thereof (and premium, if any), together with accrued but unpaid interest, if any, in respect of such Subordinated Debt Securities to (but excluding) the date fixed for redemption, if, at any time, the Company shall determine that: (i) in making payment under such Subordinated Debt Securities in respect of principal (or premium, if any), interest or missed payment the Company has or will or would become obligated to pay Additional Amounts, provided such obligation to pay Additional Amounts as provided in the relevant indenture results from a change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws (including a decision of any court or tribunal), or any change in, or in the official application or interpretation of, or execution of, or amendment to, any treaty or treaties affecting taxation to which the United Kingdom is a party, which change, amendment or execution becomes effective on or after the issue date; or (ii) the payment of interest in respect of such Subordinated Debt Securities has become or will or would be treated as a “distribution” within the meaning of Section 1000 of the Corporation Tax Act 2010 of the UK (or any statutory modification or reenactment thereof for the time being) as a result of any change in or amendment to the laws of the Taxing Jurisdiction, or any change in the official application or interpretation of such laws including a decision of any court, which change or amendment becomes effective on or after the issue date; provided, however, that in the case of (i) above, no notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obliged to pay Additional Amounts were a payment in respect of such Subordinated Debt Securities then due. Optional Redemption We have the right to redeem certain series of Debt Securities on the applicable Optional Redemption Date (as specified in the Summary of Key Terms above) at our option in whole (but not
in part). The redemption price of the Debt Securities will be equal to 100% of their principal amount plus any accrued and unpaid interest to (but excluding) the Optional Redemption Date. Make-Whole and Par Redemption We have the right to redeem certain series of Debt Securities during the applicable Make- Whole Redemption Period (as specified in the Summary of Key Terms above) in whole at any time during such period or in part from time to time during such period. The redemption price of the Debt Securities will be equal to the greater of: (1) 100% of the principal amount of the Debt Securities to be redeemed; and (2) the sum of the present values of (a) the principal amount of the Debt Securities to be redeemed (discounted from the Par Redemption Date) and (b) (i) for the purposes of Debt Securities issued before March 3, 2025, the remaining payments of interest to be made on any scheduled Interest Payment Date to (and including) the Par Redemption Date for the Debt Securities to be redeemed (not including accrued but unpaid interest to (but excluding) the applicable redemption date, if any, on the principal amount of the Debt Securities), discounted to the applicable redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Reference Treasury Rate plus a margin set out in the relevant prospectus supplement; or (ii) for the purposes of the Debt Securities issued on or after March 3, 2025, the remaining payments of interest to be made on any scheduled Interest Payment Date to (and including) the Par Redemption Date for the Debt Securities to be redeemed, discounted to the applicable redemption date on a semiannual basis (assuming a 360- day year consisting of twelve 30-day months) at the Reference Treasury Rate plus a margin set out in the relevant prospectus supplement, less an amount equal to any accrued and unpaid interest to (but excluding) the applicable redemption date, if any, on the principal amount of relevant Debt Securities to be redeemed, in each case, plus any accrued and unpaid interest on the Debt Securities to be redeemed to (but excluding) the applicable redemption date. For the Debt Securities for which “Make-Whole and Par Redemption” is indicated in the Summary of Key Terms above, on the applicable Par Redemption Date, the relevant Debt Securities can be redeemed in whole (but not in part). This type of redemption is described in the paragraph above under the heading Description of Debt Securities – Redemption – Optional Redemption. Capital Disqualification Event Redemption We have the right to redeem certain series of Subordinated Debt Securities (as specified in the Summary of Key Terms above), in whole but not in part, at a redemption price equal to 100% of the principal amount, if any, if we determine that a Capital Disqualification Event has occurred. With respect to Subordinated Debt Securities issued pursuant to the First Supplemental Indenture dated March 12, 2014, or the Second Supplemental Indenture dated August 18, 2015, a “Capital Disqualification Event” will be deemed to have occurred if we determine, in good faith and after consultation with the relevant regulator, at any time after the issue date, that by reason of the non-compliance with the applicable criteria for Tier 2 capital under the relevant rules, the affected Debt Securities are excluded fully from Holdings’ Tier 2 capital (excluding for these purposes any non-recognition due to any applicable limitations on the amount of such of Holdings’ capital). With respect to Subordinated Debt Securities issued pursuant to the Third Supplemental Indenture dated November 23, 2016 a “Capital Disqualification Event” will be deemed to have occurred if we determine, at any time after the issue date, that there is a change in the regulatory classification of the Debt Securities that results or will result in their exclusion in whole from HSBC Group’s regulatory capital. With respect to Subordinated Debt Securities issued on or after March 29, 2022, a Capital Disqualification Event will be deemed to have occurred if we determine, at any time after the Issue Date, there is a change in the regulatory classification of the relevant Subordinated Debt Securities that results or will result in either their:
(i) exclusion in whole or in part from the regulatory capital for the HSBC Group; or (ii) reclassification in whole or in part as a form of regulatory capital of the HSBC Group that is lower than Tier 2 capital (if any). LADE Redemption We have the option to redeem the Sterling-denominated Notes issued on March 24, 2021 and the Senior Debt Securities issued on or after March 10, 2022, (as specified in the Summary of Key Terms above) in whole, but not in part, at a redemption price equal to 100% of their principal amount, plus any accrued and unpaid interest to (but excluding) the applicable redemption date, following the occurrence of a Loss Absorption Disqualification Event. For the purposes of the Sterling-denominated Notes issued on March 24, 2021, a “Loss Absorption Disqualification Event” shall be deemed to have occurred if such notes become fully or partially ineligible to meet the Company’s or the HSBC Group’s minimum requirements for (A) eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company or the HSBC Group, as a result of any: (a) Loss Absorption Regulation becoming effective after the issue date; or (b) amendment to, or change in, any Loss Absorption Regulation, or any change in the application or official interpretation of any Loss Absorption Regulation, in any such case becoming effective on or after the issue date, provided, however, that a Loss Absorption Disqualification Event shall not occur where the exclusion of the notes from the relevant minimum requirement(s) is due to the remaining maturity of the notes being less than any period prescribed by any applicable eligibility criteria for such minimum requirement(s) under the relevant Loss Absorption Regulations effective with respect to Holdings and/or the HSBC Group on the issue date. A “Loss Absorption Disqualification Event” shall be deemed to have occurred if (A) for the purposes of Senior Debt Securities issued on or after March 10, 2022, such Senior Debt Securities become fully or partially ineligible to meet the Company’s and/or the HSBC Group’s minimum requirements for (i) eligible liabilities and/or (ii) loss absorbing capacity instruments, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company and/or the HSBC Group or (B) for the purposes of Senior Debt Securities issued on or after November 6, 2025, if such Senior Debt Securities become fully or partially ineligible to count towards the Company’s and/or the HSBC Group’s minimum requirements for (i) own funds and eligible liabilities and/or (ii) loss absorbing capacity, in each case as determined in accordance with and pursuant to the relevant Loss Absorption Regulations applicable to the Company and/or the HSBC Group; in each of (A) and (B) as a result of any: (a) Loss Absorption Regulation becoming effective after the issue date; or (b) amendment to, or change in, any Loss Absorption Regulation, or any change in the application or official interpretation of any Loss Absorption Regulation, in any such case becoming effective on or after the issue date, provided, however, that a Loss Absorption Disqualification Event shall not occur where the exclusion of the notes from the relevant minimum requirement(s) is due to the remaining maturity of the notes being less than any period prescribed by any applicable eligibility criteria for such minimum
requirement(s) under the relevant Loss Absorption Regulations effective with respect to Holdings and/or the HSBC Group on the issue date. We may only redeem or purchase the Debt Securities prior to the maturity date if we have obtained any relevant supervisory consent, if and to the extent then required by the loss absorption regulations. Residual Call Redemption We have the option to redeem the Subordinated Debt Securities issued on or after September 10, 2025 (as specified in the Summary of Key Terms above) pursuant to a Residual Call, as defined below. If the outstanding aggregate principal amount of such series of Subordinated Debt Securities is 25% or less of the aggregate principal amount of the Subordinated Debt Securities originally issued (and, for these purposes, any additional Subordinated Debt Securities issued after the original issue date and consolidated with the relevant Subordinated Debt Securities as part of the same series shall be deemed to have been originally issued), we may, at our option in our sole discretion, redeem the remaining outstanding Subordinated Debt Securities of such series in whole (but not in part) at any time at a redemption price equal to 100% of the principal amount of such outstanding Subordinated Debt Securities plus any accrued and unpaid interest to (but excluding) the date of redemption (a “Residual Call”). It will be sufficient for us to deliver to the trustee an officer’s certificate stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the outstanding aggregate principal amount of the relevant series of Subordinated Debt Securities is 25% or less of the aggregate principal amount of the Subordinated Debt Securities of such series originally issued. For these purposes, the trustee and the paying agent will accept such officer’s certificate without further inquiry as sufficient evidence of the existence of such circumstances and such officer’s certificate will be conclusive and binding on the noteholders. Payment of Additional Amounts All payments made under or with respect to any series of Debt Securities will be paid by us without deduction or withholding for, or on account of, any and all present and future taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Taxes”) whatsoever imposed, levied, collected, withheld or assessed by or on behalf of a Taxing Jurisdiction, unless the deduction or withholding is required by law. If at any time a Taxing Jurisdiction requires us to deduct or withhold Taxes, we will pay the additional amounts (“Additional Amounts”) of (i) principal and any interest on the Debt Securities issued before August 18, 2020, and (ii) interest only (and not principal) on Debt Securities issued on or after August 18, 2020, as may be necessary so that the net amounts (including Additional Amounts) paid to the holders, after the deduction or withholding, will equal the respective amounts which would have been payable had no such deduction or withholding been required. However, certain exceptions are set forth in the relevant prospectus and/or prospectus supplement for a particular series of Debt Securities. All payments in respect of the Debt Securities issued after March 2017 will be made subject to any withholding or deduction required pursuant to FATCA, and we will not be required to pay any Additional Amounts on account of any such deduction or withholding required pursuant to FATCA. Modification and Waiver We and the Trustee may make certain modifications and amendments to the indenture applicable to each series of Debt Securities without the consent of the holders of the Debt Securities. We may make other modifications and amendments with the consent of the holder(s) of not less than
a majority in aggregate principal amount of the Debt Securities of the series outstanding under the applicable indenture that are affected by the modification or amendment. However, we may not make any modification or amendment without the consent of the holder of each affected Debt Security that would: • change the terms of any Debt Security to change the stated maturity date of its principal amount, or instalment of interest, or Additional Amounts; • reduce the principal amount of, or any premium, or rate of interest, or related deferred payment, or missed payment, or Additional Amounts payable with respect to any Debt Security; • change our obligation, or any successor’s, to pay Additional Amounts (except as contemplated and permitted under the indentures); • reduce the amount of principal on a discount Debt Security that would be due and payable upon an acceleration of the maturity date of any series of Debt Securities; • change the places at which payments are payable or the currency of payment, or any premium, or interest, or related deferred payment; • impair the right to sue for the enforcement of any payment due and payable; • reduce the percentage in aggregate principal amount of outstanding Debt Securities of the series necessary to modify or amend the relevant indenture or to waive compliance with certain provisions of the relevant indenture and any past events of default or their consequences (in each case, as defined in the relevant indenture); • change our obligation to maintain an office or agency in the place and for the purposes specified in the relevant indenture; • modify the terms and conditions of our obligations in respect of the due and punctual payment of the amounts due and payable on the Debt Securities, or the subordination provisions of the affected Debt Securities in the Subordinated Debt Securities Indentures, in either case in a manner adverse to the holders; or • change or eliminate any covenants or provisions included in the relevant indenture solely for the benefit of one or more series of Debt Securities, or the rights of holders with respect to such covenants or provisions. The holders of not less than a majority in principal amount of the outstanding Debt Securities of a series may, on behalf of all holders of Debt Securities of that series, waive, insofar as that series is concerned, our compliance with certain restrictive provisions of the indenture before the time for such compliance. In addition, material variations in the terms and conditions of Debt Securities of any series, including modifications relating to subordination, redemption and events of default may require the consent of the relevant regulator. Events of Default and Enforcement Events and Remedies Senior Debt Securities Extended Events of Default and Defaults With respect to the Senior Debt Securities for which “Extended Events of Default and Defaults” is indicated in the Summary of Key Terms above, each of the following is an “Event of Default”:
i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); ii. An effective shareholders’ resolution is validly adopted for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); iii. Failure to pay any principal of any Senior Debt Securities of that series at its maturity date, and the default continues for a period of 30 days; or iv. Failure to pay any interest on any Senior Debt Securities of that series when due and payable, and the default continues for a period of 30 days. Limited Events of Default and Defaults With respect to the Senior Debt Securities for which “Limited Events of Default and Defaults” is indicated in the Summary of Key Terms above, each of the following is an “Event of Default”: i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); or ii. An effective shareholders’ resolution is validly adopted for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency). Each of the following is a “Default”: i. Failure to pay any principal of (or premium, if any) any Senior Debt Securities of that series at its maturity date, and the default continues for a period of 30 days; or ii. Failure to pay any interest on any Senior Debt Securities of that series when due and payable, and the default continues for a period of 30 days. Notwithstanding the foregoing, failure to make any payment in respect of the Senior Debt Securities will not be a Default in respect of the affected Debt Securities if such payment is withheld or refused: a) to comply with any fiscal or other law or regulation or with the order of any court of competent jurisdiction, in each case applicable to such payment; or b) in case of doubt as to the validity or applicability of any such law, regulation or order, in accordance with advice given as to such validity or applicability at any time during the said grace period of 30 days by independent legal advisers acceptable to the Trustee. However, the Trustee may, by notice to us, require us to take such action as the Trustee may be advised in an opinion of counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case we will proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such resolution determines that the relevant payment can be made without violating any applicable law, regulation or order then the provisions of the preceding sentence will cease to have effect and the payment will become due and payable on the expiration of the relevant grace period of 30 days after the Trustee gives written notice to us informing us of such resolution. LADE Provisions With respect to the Senior Debt Securities for which “LADE Provisions” is indicated in the Summary of Key Terms above, on the issue date for such series and for so long as no Loss Absorption
Disqualification Event has occurred, the Extended Event of Default and Default provisions apply. On and after the date of a Loss Absorption Disqualification Event, the Limited Events of Default and Default provisions apply. A “Loss Absorption Disqualification Event” is deemed to have occurred if either of the events which constitutes a “Default” for purposes of the Limited Event of Default and Default provisions has caused or is likely to cause the Debt Securities to be fully or partially ineligible to meet Holdings’ minimum requirements for eligible liabilities and/or loss absorption capacity instruments pursuant to the relevant loss absorption regulations, as a result of any: i. loss absorption regulation becoming effective on or after the applicable issue date for such series; or ii. amendment to, or change in, any loss absorption regulation, or any change in the application or official interpretation of any loss absorption regulation, in any case becoming effective on or after the applicable issue date. Subordinated Events of Default and Defaults With respect to the Subordinated Debt Securities, each of the following is an “Event of Default”: i. An English court issues an order which is not successfully appealed within 30 days for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency); or ii. An effective shareholders’ resolution is validly adopted, for our winding-up (other than under or in connection with a scheme of reconstruction or amalgamation not involving bankruptcy or insolvency). Each of the following is a “Default” (whatever the reason for such default and whether it will be voluntary or involuntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): i. Failure to pay any interest on any Subordinated Debt Securities of that series when due and payable, and the default continues for a period of 14 days (or, in relation to Subordinated Debt Securities issued on or after November 18, 2024, 30 days); or ii. Failure to pay any principal (or premium, if any) of any Subordinated Debt Securities of that series at its maturity date, and the default continues for a period of 7 days (or, in relation to Subordinated Debt Securities issued on or after November 18, 2024, 30 days). The Subordinated Debt Securities issued pursuant to the 2002 Indenture provide that if we do not make a payment with respect to any notes on any relevant payment date, our obligations to make such payment will be deferred (and the payment will not be due and payable) until: i. in the case of a payment of interest, the date on which a dividend is paid on any class of our share capital; and ii. in the case of a payment of principal, the first Business Day after the date that falls six months after the original payment date. Failure by us to make any such payment prior to such deferred date will not constitute a default by us or allow any holder to sue us for such payment or take any other action. Any payment so deferred will not be treated as due for any purpose (including, without limitation, for the purpose of ascertaining whether or not a Default has occurred) until the relevant deferred date. Notwithstanding the foregoing, failure to make any payment in respect of the Subordinated Debt Securities will not be a Default in respect of the affected Debt Securities if such payment is withheld or refused to (a) comply with any fiscal or other law or regulation or with the order of any
court of competent jurisdiction, in each case applicable to such payment; or (b) in case of doubt as to the validity or applicability of any such law, regulation or order, in accordance with advice given as to such validity or applicability at any time during the specified grace period by independent legal advisers acceptable to the Trustee. However, the Trustee may, by notice to us, require us to take such action as the Trustee may be advised in an opinion of counsel is appropriate and reasonable in the circumstances to resolve such doubt, in which case we will proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such resolution determines that the relevant payment can be made without violating any applicable law, regulation or order, then the provisions of the preceding sentence will cease to have effect and the payment will become due and payable on the expiration of the specified grace period after the Trustee gives written notice to us informing us of such resolution. Acceleration If a Default occurs in respect of a series of Debt Securities, the Trustee may institute proceedings in England (but not elsewhere) for our winding-up; provided that the Trustee may not, upon the occurrence of a Default, accelerate the maturity of any affected Debt Securities, unless an Event of Default has occurred and is continuing in respect of a series of Debt Securities. If an Event of Default occurs and is continuing, the Trustee may, or if so requested by the holders of at least 25% in outstanding principal amount of the affected series of Debt Securities, will declare by a notice in writing to us (and to the Trustee if given by the holders) such Debt Securities to be due and repayable (and such Debt Securities will become immediately due and repayable) at their outstanding principal amount (or at such other repayment amount as may be specified in or determined in accordance with the relevant indenture) together with accrued but unpaid interest, if any. Subject to the provisions included in the relevant indenture for the indemnification of the Trustee, the holders of a majority in aggregate principal amount of the outstanding Debt Securities of the affected series have the right to direct the Trustee to take enforcement action with respect to that series; provided that such direction does not conflict with any rule of law or the relevant indenture and, if the Trustee, by a responsible officer or responsible officers of the Trustee, determines in good faith that it is not unjustly prejudicial to the holder(s) of any Debt Securities of that series not taking part in the direction. The Trustee may also take any other action, not inconsistent with the direction, that it deems proper. No delay or omission of the Trustee or any holder to exercise any right or remedy accruing upon any Event of Default or Default will impair any such right or remedy or constitute any waiver of any such Event of Default or Default. Every right and remedy given by law or by the relevant indenture to the Trustee or the holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the holders. The Trustee must give notice to each affected holder within 90 days of a Default with respect to the Debt Securities of any series, unless the Default has been cured or waived. However, the Trustee will be entitled to withhold notice if a trust committee of directors and/or responsible officers of the Trustee determine in good faith that withholding of notice is in the interest of the holders. We are required to furnish to the Trustee annually a certificate from our principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of our compliance with all conditions and covenants under the relevant Debt Securities Indenture, whether an Event of Default or Default has occurred with respect to any series of Debt Securities, and, if one has occurred, specifying all such Events of Default or Defaults and the nature thereof of which they may have knowledge. Trust Indenture Act Remedies Notwithstanding the limitation on remedies specified above, (i) the Trustee will have such powers as are required to be authorized to it under the Trust Indenture Act in respect of the rights of the holders of the Debt Securities under the provisions of the relevant indenture and (ii) nothing shall impair the right of a holder of the Debt Securities under the Trust Indenture Act, absent such holder’s
consent, to sue for any payment due but unpaid with respect to the Debt Securities; provided that, in the case of each of (i) and (ii) above, any payments in respect of, or arising from, the Subordinated Debt Securities, including any payments or amounts resulting or arising from the enforcement of any rights under the Trust Indenture Act in respect of the Subordinated Debt Securities, are subject to the subordination provisions set forth in the relevant Subordinated Debt Indenture. Limitation on Suits No holder of Debt Securities will be entitled to proceed directly against us, except as described below. Before a holder of Debt Securities may bypass the Trustee and bring its own lawsuit or other formal legal action or take other steps to enforce its rights or protect its interests relating to the Debt Securities, the following must occur: • The holder must give the Trustee written notice that a Senior or Subordinated Event of Default or Default (as applicable) has occurred and remains uncured. • The holders of at least a majority in aggregate principal amount of all outstanding Debt Securities of the relevant series must make a written request that the Trustee take action because of the default in its own name as Trustee, and the holders must offer to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and other liabilities of taking that action. • The Trustee must not have taken action for 60 days after receipt of the above notice, request and offer of any indemnity (subject to the terms of the relevant indenture), and the Trustee must not have received an inconsistent direction from the majority in principal amount of all outstanding Debt Securities of the relevant series during that period. Notwithstanding any contrary provisions, no holder will have any right to affect, disturb or prejudice the rights of any other such holders, or to obtain priority over any other of such holders in the relevant indenture, or to enforce any right under the relevant indenture except in the manner provided and for the equal and rateable benefit of all such holders. Exercise of UK Bail-in Power The Relevant UK Resolution Authority (which refers to any authority with the ability to exercise a UK Bail-in Power) may exercise the bail-in tool in respect of Holdings, as issuer, and the Debt Securities. Pursuant to the applicable supplemental indenture, each Holder of Debt Securities issued on or after March 12, 2014 (including each beneficial owner and each subsequent Holder and beneficial owner purchasing in the secondary market) is deemed, by its acquisition of such Debt Securities, to acknowledge, agree to be bound by and consent to the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority (as described below). Generally, exercise of any UK Bail-in Power by the Relevant UK Resolution Authority may result in, without limitation, any of the following, or some combination thereof: (i) the reduction of all, or a portion, of the principal amount of, or interest on, the Debt Securities; (ii) the cancellation of the Debt Securities; (iii) the conversion of all, or a portion of, the principal amount of, or interest or Additional Amounts on, the Debt Securities into shares or other securities or other obligations of Holdings or another person, including by means of a variation of the terms of the Debt Securities; or (iv) the amendment or alteration of the maturity or interest payment dates of the Debt Securities, including by suspending payment for a temporary period to give effect to the exercise by the Relevant U.K. Resolution Authority of such U.K. bail-in power. No repayment of the principal amount of, or interest on, the Debt Securities will become due and payable after the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority if and to the extent such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise.
The exercise of the UK Bail-in Power by the Relevant UK Resolution Authority with respect to the Debt Securities will not constitute an Event of Default or Default. Upon the exercise of any UK Bail-in Power by the Relevant UK Resolution Authority with respect to the Debt Securities, the Trustee will not be required to take any further directions from holders of the Debt Securities pursuant to the applicable indenture which authorises holders of a majority in aggregate principal amount of the outstanding Debt Securities of the relevant series of Debt Securities to direct certain actions relating to the relevant Debt Securities and the applicable indentures impose no duties upon the Trustee whatsoever with respect to the exercise of any UK Bail- in Power by the Relevant UK Resolution Authority. Notwithstanding the foregoing, if, following the completion of the exercise of the UK Bail-in Power by the Relevant UK Resolution Authority in respect of the Debt Securities, the Debt Securities remain outstanding (for example, if the exercise of the UK Bail-in Power results in only a partial write-down of the principal of the Debt Securities), then the Trustee’s duties under the relevant Senior Debt Securities Indenture or Subordinated Debt Securities Indenture (as applicable) will apply with respect to the relevant Debt Securities following such completion to the extent agreed by Holdings and the Trustee, pursuant to a supplemental indenture to the applicable indenture, or an amendment thereto. Satisfaction and Discharge We will be discharged from any and all obligations in respect of a series of Debt Securities (with certain exceptions) if, at any time, inter alia, either: • all Debt Securities of such series theretofore authenticated and delivered have been delivered to the Trustee for cancellation; or • all Debt Securities of such series not theretofore delivered to the Trustee for cancellation either (i) have become due and payable, (ii) will become due and payable in accordance with their terms within one year or (iii) are to be called for redemption, exchange or conversion within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and in each case, we have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose (x) US dollars in an amount, (y) US government obligations that through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than the due date of any payment in an amount or (z) any combination of (x) and (y) in an amount sufficient to pay and discharge the entire principal (and premium, if any) and interest on the Debt Securities of such series in accordance with the terms of such Debt Securities of such series. The Trustee and Paying Agent The Bank of New York Mellon, London Branch, 160 Queen Victoria Street, London, EC4V 4LA, United Kingdom, acts as the Trustee under the indentures, and HSBC Bank USA, National Association, 66 Hudson Boulevard East, New York, New York 10001, acts as paying agent and calculation agent for the Debt Securities. Governing Law The Debt Securities, the Senior Debt Securities Indentures and the Subordinated Debt Securities Indentures are governed by and construed in accordance with the laws of the State of New York, except that (a) the provisions relating to consent by holders and beneficial owners to the exercise of the UK Bail-in Power in respect of the 5.25% Fixed Rate Subordinated Notes due 2044, (b) the authorization and execution of the Indentures (in addition to the laws of the State of New York relevant to execution), (c) any applicable subordination provisions of each series of Subordinated Debt Securities, and (d) the waiver of set-off provisions of the Debt Securities issued on or after March 4, 2024 are governed by and construed in accordance with English law.
a45_engagementletter
e) if you commit any serious or persistent breach or non-observance of any of the terms, conditions or stipulations contained in the Terms of Appointment [or the rules of any applicable regulatory authority [including the FCA and/or PRAJ; or f) if you are guilty of any gross misconduct or serious negligence in connection with or affecting the business or affairs of the Company or the wider HSBC group of companies (the "Group"); or g) if you are guilty of conduct which brings or is likely to bring yourself or the Company into disrepute or is materially adverse to the interests of the Company or the Group; or h) if you are convicted of an arrestable criminal offence (other than an offence under road traffic legislation in the United Kingdom or elsewhere for which a non-custodial penalty is imposed); or i) if you are, or become, prohibited by law or the Articles or any regulatory body applicable to the Company from being a director; or j) if you are assessed not to be a fit and proper person to perform your role; or k) if your approval to perform a senior manager function is withdrawn by the FCA. If at any time there are matters which arise to cause you concern about your role, you should discuss them with the Senior Independent Director or the Group Company Secretary. If you have any concerns which cannot be resolved, and you choose to resign for that, or any other reason, you should provide an appropriate written statement to the Senior Independent Director or the Group Company Secretary for circulation to the Board. This letter does not confer any right to hold office for any period, nor give you any right to compensation if you cease to be a Director for any reason. Your appointment with the Company and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England and Wales. Please do not hesitate to contact me should you have any questions. Yours sincerely, Angela McEntee Group Company Secretary /s/Angela McEntee
For and on behalf of HSBC Holdings pie I have read, understood and agree to the above terms regarding my appointment as a non-executive Group Chair of HSBC Holdings pie. Brendan Nelson Date n .... ,.._ 7 ... ,-, /s/ Brendan Nelson February 18, 2026
a111_insiderxtrading
1 CODE FOR HSBC HOLDINGS PLC PDMRS TRANSACTING IN HSBC GROUP SECURITIES 1. Introduction This Code imposes restrictions on transactions in HSBC Group Securities. Its purpose is to ensure that Directors and other Persons Discharging Managerial Responsibilities (PDMRs) and their Closely Associated Persons (CAPs) do not abuse, and do not place themselves under suspicion of abusing, inside information in relation to transactions relating to Group Securities. Nothing in this Code will be deemed to sanction a breach of any market abuse or insider dealing provisions which are beyond the remit of this Code. In this context, PDMR refers to directors and certain senior executives of HSBC Holdings plc, as notified by Corporate Governance & Secretariat (CG&S), who have regular access to inside information and the authority to make managerial decisions impacting HSBC's future. PDMRs should request this pre-approval by contacting [email protected] . Relevant Group Policies apply to PDMRs, including sections of the Regulatory Compliance Mandatory Procedure on Personal Conflicts, Outside Activities, and Personal Account Dealing. Additionally, local legal and regulatory requirements must be met. This Code contains restrictions on dealings in certain prohibited periods including the closed periods before the announcement of HSBC’s annual, interim or quarterly results. An Executive PDMR is also subject to extended closed periods. Schedule 1 sets out the definitions of terms used in this Code. This Code also requires any proposed transaction by PDMRs to be notified as provided in paragraphs 2 and 6, with an indicative list of notifiable transactions being set out in Schedule 2. Failure to observe and comply with the requirements of this Code may result in the Company imposing sanctions against any persons subject to it. Depending on the circumstance, this non-compliance may also be a civil and/or criminal offence. 2. Clearance procedures 2.1 A PDMR or their CAPs must not conduct any transactions on their own account or for the account of a third party on their behalf, directly or indirectly, relating to any Group Securities without obtaining clearance to transact in advance in accordance with this Code. 2.2 A PDMR must not submit an application for clearance if they are in possession of inside information in relation to HSBC. 2.3 A PDMR must notify their (or their CAPs) intention in writing to conduct any transactions on their own account or for the account of a third party on their behalf, which relates directly or indirectly to any Group Securities to CG&S at [email protected] in order that written clearance for the transaction can be sought from a Designated Director;
2 2.4 A response to a request for clearance to transact must be provided to the relevant PDMR within five business days of the request being made. CG&S will maintain a record of responses. Reasons may not be given when clearance is refused and all refusals for clearance must remain confidential. 2.5 Clearance may be given subject to conditions with which the PDMR must comply. 2.6 The Company may choose to apply a different clearance procedure in relation to certain events under employee share or incentive plans or corporate actions where the Company considers it to be appropriate. Where this is the case, relevant PDMRs will be notified of this fact by CG&S. 2.7 If clearance is provided, the PDMR: (a) will be provided with a written dated notification of clearance; (b) must transact as soon as possible and in any event within one business day of clearance being provided; and (c) must not transact if they come into possession of inside information in relation to HSBC after clearance is provided but before a transaction is concluded. 2.8 A PDMR will not be given clearance to, and must not, conduct any transaction on their own account or for the account of a third party on their behalf, directly or indirectly, relating to any Group Securities during a prohibited period other than in the circumstances set out in paragraph 3 below. 3. Exceptional circumstances 3.1 A PDMR who is not in possession of inside information may be given clearance in a prohibited period: (a) in exceptional circumstances, such as severe financial difficulty requiring the immediate sale of shares; or (b) where it is determined by a Designated Director of HSBC to be appropriate at the time and permitted under the MAR and the HKMC, provided, in each case, that the PDMR must be able to demonstrate that the particular transaction cannot be executed at any other time than during the prohibited period. 3.2 The nature of any “exceptional circumstances” will be required to be set out in an announcement published on the websites of the UK and Hong Kong Stock Exchanges. 4. Transactions by CAPs with a PDMR and Investment Managers 4.1 PDMRs must seek to prevent any transaction by any CAP on that person’s own account which directly or indirectly relates to any Group Securities during a closed period or extended closed period, as applicable. In the case of a prohibited period other than a closed period or extended closed period, PDMRs should prevent such a transaction so far as it is consistent with any obligations of confidentiality and any relevant laws or regulations. Accordingly, PDMRs are required to make a notification in writing to CAPs advising them of their obligations during closed periods and extended closed periods; and to keep a copy of these notifications. CG&S will make available draft communications for this purpose.
3 4.2 When a PDMR places funds under management, the PDMR must apply the same restrictions and procedures on the investment manager in its dealings on behalf of the PDMR as apply to the PDMR in relation to Group Securities. Similarly, CAPs should be encouraged to advise their investment managers of their disclosure obligations and restrictions on trading in Group Securities. CG&S will make available draft communications for this purpose. 4.3 PDMRs should advise their CAPs and investment managers that they are obliged to notify the Company in respect of any transactions conducted on their own account or on the account of the PDMRs in Group Securities within one business day of the date of a transaction being concluded. 5. Acting as a trustee 5.1 Where a PDMR is a sole trustee, the provisions of this Code will apply to all transactions conducted by the trust in the same way as if they were transactions conducted on the PDMR’s own account. 5.2 A Director who acts as trustee of a trust must advise the other trustees that they are a Director of HSBC. 5.3 A Director who is a beneficiary, but not a trustee, of a trust which conducts any transactions relating to Group Securities must endeavour to ensure that the trustees notify them immediately after they have conducted any transaction relating to Group Securities on behalf of the trust so that they can notify CG&S without delay. For this purpose, the Director must ensure that the trustees are aware that they are a Director of HSBC. 6. Notification 6.1 PDMRs or their CAPs must notify the Company in respect of any transactions conducted on their own account in Group Securities within one business day of the date of a transaction being concluded. 6.2 HSBC will: (a) make the relevant regulatory notifications in respect of transactions on behalf of the PDMRs and CAPs; and (b) announce the details of the transactions no later than three business days following the date of the relevant transaction. 7. Disclosure of information 7.1 A Director must not make any unauthorised disclosure of confidential information, whether to co-trustees or to any other person (even to those to whom they owe a fiduciary duty) or make any use of such information for the advantage of themselves or others. 7.2 Transactions conducted on the account of a Director relating to any Group Securities will be required to be disclosed in HSBC's annual and interim reports including statements to comply with the requirements of the HKMC. 7.3 Directors, in the course of their duties as Directors of HSBC, may come into possession of, or become aware of, inside information regarding other companies. Directors must not deal in the securities of any listed company (including HSBC) when, by virtue of their
4 position as a director of a listed company, they are in possession of inside information relating to that listed company’s securities (including HSBC).
5 Schedule 1 Code definitions Definitions In this Code the following definitions apply unless the context requires otherwise: “Beneficiary” includes any discretionary object of a discretionary trust (where the Director is aware of the arrangement) and any beneficiary of a non-discretionary trust; “Business day(s)” means any day which is not a Saturday or Sunday, Christmas Day, Good Friday, or a bank holiday in the United Kingdom; “Closed period” means any of the following: (i) Full year and Half year: the longer of the period from the end of the relevant financial period (31 December and 30 June) or the period of 30 calendar days before announcement of HSBC’s results, up to and including 8:30 am (Hong Kong time) on the calendar day following such announcement; and (ii) Quarter 1 and Quarter 3 earnings release: the end of the relevant financial period (31 March and 30 September) up to and including 8:30 am (Hong Kong time) on the calendar day following the announcement of the quarterly earnings release. You will be advised if these periods change. Executive PDMRs are also subject to ‘extended closed periods’. “Closely Associated Person” or “CAP” means: (i) a spouse, or a partner considered to be equivalent to a spouse in accordance with national law; (ii) a dependent child in accordance with national law; (iii) a relative who has shared the same household for at least one year on the date of the transaction concerned; (iv) a legal person (including a corporate body), trust or partnership, the managerial responsibilities of which are discharged by a PDMR (or by a person referred to in points (i), (ii) or (iii) above), or which is directly or indirectly controlled by such a person, or which is set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of such a person; or (v) a discretionary trust which is established by a PDMR (or any of the above) where the trustee would be expected to seek that person’s consent in the exercise of its discretion, or act in accordance with the person’s wishes; “Company” or “HSBC” means HSBC Holdings plc; “Designated Director” means a Director or officer of HSBC who has been designated to provide clearance to a PDMR to transact in terms of this Code and, in relation to PDMRs who are not Directors, may include the Group Company Secretary and Chief Governance Officer; “Director” means a director of HSBC;
6 “Executive PDMR” means an Executive Director or a senior executive of HSBC who falls within clause (ii) of the definition of PDMR; “Extended closed period” means every day except for the following periods of permitted trading in HSBC Group securities (“trading windows”): (i) Full year: the period of approximately five weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of HSBC’s annual results; (ii) Quarter 1 and Quarter 3 earnings release: the period of approximately two weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of the quarterly earnings release; and (iii) Half-year: the period of approximately two weeks from 8:30 am (Hong Kong time) on the calendar day following the announcement of HSBC’s half-yearly results. You will receive advance notification of the specific dates prior to the commencement of each trading window. Only Executive PDMRs are subject to ‘extended closed periods.’ “Group Securities" means: (i) any securities of HSBC and any securities that are convertible or exchangeable into such securities; (ii) any securities of any subsidiary of HSBC and any securities that are convertible or exchangeable into such securities; (iii) any derivatives or other financial instruments (including structured products) linked to any of the securities referred to in (i), or (ii) above; (iv) the securities of any entity whose assets solely or substantially comprise of the securities referred to in (i), (ii) or (iii) above; and, for the avoidance of doubt, “securities” for these purposes means any publicly traded or quoted shares and debt instruments of the Company or of any of the Company’s subsidiaries or subsidiary undertakings. “HKMC” means the Hong Kong Model Code “Inside information” in relation to HSBC means, broadly: (i) Information of a precise or specific nature, which has not been made public, relating, directly or indirectly, to HSBC or to a shareholder or officer of HSBC or to Group Securities which, if it were made public, would be likely to have a significant or material effect on the prices of Group Securities; (ii) Information will be of a precise nature if it indicates a set of circumstances which exists or is reasonably likely to come into existence or an event which has occurred or may reasonably be expected to occur which is specific enough for a conclusion to be drawn as to the possible effect on the prices of Group Securities; (iii) Information likely to have a significant effect on the prices of Group Securities means information a reasonable investor would be likely to use as part of the basis of their investment decisions;
7 (iv) Information is of a specific nature if it contains such particulars as to a transaction, event or matter, or proposed transaction, event or matter, so as to allow that transaction, event or matter to be identified and its nature to be coherently described and understood; Note: As a PDMR of HSBC, the Company will notify you on each occasion that you have been provided with information which is considered to be inside information. The Disclosure Committee (chaired by the Group Chief Financial Officer) determines whether a matter is deemed to constitute inside information in respect of the Company. If you are in possession of inside information, you will be added to an "insider list," which the Company must provide to the FCA upon request. “MAR” means the UK version of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing directives, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018; “Person Discharging Managerial Responsibility” or “PDMR” means: (i) a Director; or (ii) a senior executive of HSBC who: (a) has regular access to inside information relating, directly or indirectly, to HSBC; (b) has power to make managerial decisions affecting the future developments and business prospects of HSBC; and (c) who has been notified by CG&S that they are a PDMR. "Prohibited period" means: (i) any closed period; or (ii) any other period when there exists any matter which constitutes inside information in relation to HSBC; or (iii) for Executive PDMRs only, any extended closed period; “SFO” means the Hong Kong Securities and Futures Ordinance (Cap 571) "Transaction” or “Dealing” (together with corresponding “transact/s” and “deal/s”), interpreted in accordance with MAR (and, where relevant for Directors, the SFO), includes any type of transaction in or relating to Group Securities, including but not limited to purchases, sales, entering into a contract based on fluctuations in the price (CFDs), the exercise of options, stock lending agreements, the receipt of shares under share plans, using Group Securities as security for a loan or other obligation, granting a charge over Group securities, any transaction involving a change of ownership of Group Securities, any other right or obligation, present or future, to acquire or dispose of Group Securities and entering into, amending or terminating any agreement in relation to Group Securities (e.g., a trading plan). Schedule 2 sets out a non-exhaustive list of examples of transactions that are notifiable under MAR and the SFO. Types of transactions are both complex and wide ranging and include, among other things, transactions conducted on behalf of a PDMR by a third party.
8 “Wider Group Securities” as that term is used in Schedule 2, means the types of instruments described in the definition of Group Securities in respect of securities of a corporation in which HSBC has an interest of more than 20% of the issued shares of any class of that corporation’s share capital.
9 Schedule 2 Notifiable transactions under MAR and the SFO For the avoidance of doubt, clearance to transact must always be obtained prior to: entering into or cancelling any savings scheme; varying the terms of your participation in, or conducting sales of Group Securities within, any savings scheme. Clearance in respect of any savings scheme (or the equivalent) involving Group Securities may be given on terms that subsequent transactions under the scheme do not require clearance (although, as mentioned above, amendment to, or cancellation of any such scheme will require clearance). Transactions conducted on own account relating to Group Securities that are notifiable under MAR and the SFO include, among others, the examples to transact set out below. Unless otherwise indicated, a PDMR should always obtain advance clearance in accordance with paragraph 2 of the Code. (i) subscription, exchange, acquisition, disposal, transfer, (or offer to acquire, dispose of or transfer), stock lending or borrowing, short sale, pledging or lending; (ii) transactions undertaken by professionals arranging or executing transactions, including where discretion is exercised; (iii) transactions made under a life insurance policy where the policyholder is a PDMR or a CAP of the PDMR, the investment risk is borne by the policyholder and the policyholder has the power or discretion to make investment decisions regarding specific instruments in that life insurance policy; (iv) grant, acceptance, acquisition, disposal, transfer, exercise or discharge of any option (whether put or call or both and including options granted as part of a remuneration package) or warrant or rights or obligations to acquire, dispose of or transfer or any interest whether or not for consideration; (v) transactions in or related to (including entering into or exercise of) any type of derivatives, including equity swaps, credit default swaps, contracts for difference (or an auction product based thereon) and cash-settled transactions as well as physically settled transactions; (vi) conditional transactions. Notification of such transactions is required under paragraph 6 of the Code at the time of entering into the transaction and again upon the conditions being fulfilled. Clearance will always be required before such transactions are entered into. However, no further clearance is required upon fulfilment of the conditions provided that no further action is required by the PDMR; (vii) conversion of a financial instrument into another financial instrument, including the exchange of convertible bonds to shares;1 (viii) gifts and donations made or received, and inheritance received; (ix) transactions executed in index-related products, baskets and derivatives based on those products, if the financial instrument provides exposure to a portfolio of assets in which 1 An automatic conversion of such financial instruments will not require advance clearance but will need to be notified to HSBC in accordance with paragraph 6.1 of this Code.
10 the exposure to shares or debt instruments of the Group exceeds 20% of the portfolio’s assets;2 (x) transactions executed in shares or units of a collective investment undertaking (including an investment fund), if the exposure to shares or debt instruments of the Group exceeds 20% of the assets held by the collective investment undertaking; Note that, where the manager of the collective investment undertaking does not operate with full discretion (which includes situations where the manager receives any notifications or suggestions on portfolio composition, directly or indirectly, from investors in the collective investment undertaking), transactions executed by the manager directly or indirectly relating to any shares or debt instruments of the Group may also require notification. If you have any influence / discretion whatsoever in relation to the manager or the investments or strategy of the collective investment undertaking you should discuss with CG&S as soon as possible (regardless of whether you are currently proposing to enter into any transaction in the units or shares of the collective investment undertaking) to determine whether any such notification is required; and (xi) transactions executed by a third party under an individual portfolio or asset management mandate on behalf or for the benefit of a PDMR or a person closely associated with such a person. For Directors or their CAPs, in addition to the types of transactions listed above, the term “transaction” for the purpose of disclosures under Part XV of the SFO also includes any event in consequence of which they become, or cease to be, interested in Group Securities or Wider Group Securities (or acquires or ceases to have any short position in respect of such securities), or where the nature of such interest changes. A short position is broadly where a person has a right to require another to take delivery of, or an obligation to deliver, relevant shares at a future time (or equivalent economic exposure). An interest for this purpose is defined very widely and guidance should be sought from CG&S in the event of any doubt. 2 Paragraphs (ix) and (x) will not apply where the PDMR or CAP as applicable does not know, and could not know, the investment composition or exposure of such collective investment undertaking or portfolio of assets in relation to shares or debt instruments of the Group and there is no reason for them to believe that the 20% threshold is exceeded. In this context, if information regarding the investment composition or exposure is available, then the PDMR or CAP as applicable must make all reasonable efforts to avail themselves of that information.
Personal Account Dealing These procedural requirements support the implementation of the following L1 controls: • L1C-00000855: Personal Conflicts of Interest • L1C-00000871: Personal Account Dealing checks Overview You must not transfer, buy or sell (“deal” in) investments that create a Conflict, or in a way that constitutes market abuse. This requirement, and everything in this procedure, extends to dealing by: • You, on your own behalf; • You, with power of attorney and decision-making authority over somebody else’s account; • You, exercising control over somebody else’s account; • Somebody else using your account, for example, a joint account; or • Somebody else whom you influence to deal: Influenced Parties. You must always adhere to these requirements, including: • During system outages; • When on business trips or training courses; • For any absences from work of up to six months. If you neither retain access to HSBC systems nor appear on any Insider or Confidential Register, these requirements expire after six months. Minimum reporting and review requirements for Risk Owners are outlined in section 7. MI Requirements Application This procedure applies to all Workers, also referred to as ‘you’ in this document. Workers means all employees, contractors and consultants of HSBC, as defined in HR Mandatory Procedure ‘Recording the details of and classifying individuals working at HSBC’. Certain Workers are called ‘Covered Workers’. Covered Workers are those Workers who are more likely to come into possession of client non-public information and certain types of HSBC non-public information, or those who must evidence their independence of mind to perform their role properly. Greater oversight is required of their personal account dealing. Please refer to the Glossary for further details, including a table outlining who would be considered a Covered Worker by default. Please note that this procedure applies to certain non-employees. Please see the Appendix for further details around this and how these individuals should be considered in the context of this Procedure, noting that non-employees can be Covered Workers. All requirements in this procedure apply to Covered Workers and also the dealings of their Influenced Parties. Some requirements apply to All Workers (these are marked). EXTRACT FROM MANDATORY PROCEDURE FOR PERSONAL CONFLICTS OF INTEREST IN RELATION TO PERSONAL ACCOUNT DEALING
2 Some jurisdictions/business lines have additional rules which are included in the Geography Specific requirements and the Business Line requirements set out in this procedure. You must additionally read the relevant sections to gain a full understanding of your obligations. For any procedure requirement breaches, including line manager breach handling assessment, refer to Personal Conflicts - Line Manager and Breach Guidance. Requirements for All Workers Personal trading, and reviewing personal investment portfolios, must not interfere with you fulfilling your professional duties or compromise your financial circumstances. HSBC therefore prohibits speculative trading activity by all Workers - this includes a requirement for all Workers, including non- Covered Workers, to follow the 30-day rule for Covered Instruments (see definitions of Speculative Trading and Covered Investment in the glossary). It is also important that your trading does not create an impression of wrongdoing by HSBC or you. The risk of sharing Non-Public Information with unauthorised persons is out of risk appetite for HSBC. You must not participate in an Investment Club, because it could appear that you shared or received information without proper authorisation. You, and by extension your Influenced Parties, must not deal in related investments when: • It could appear to conflict with the interests of a client or HSBC, see Examples of Personal Conflicts; • You are in possession of MNPI about HSBC, a Client or a Third Party, known as “insider dealing”; • You are in possession of relevant Non-Public Information as defined in Compliance FIM Regulatory Compliance B.30 Information Barriers and Need To Know requirements about a Client or a Third Party or certain Non-Public Information about HSBC; or • As advised by Compliance from time to time. Insider dealing, as defined in Compliance FIM Regulatory Compliance B.5 Market Abuse, is a criminal offence. Examples of market abuse include: • Front running – dealing in advance, to capitalise on Non-Public Information; • Tailgating – dealing when you are aware that a customer has placed an order; or • Dealing when you are aware of an unannounced acquisition or disposal of substantial assets. If asked for additional supporting evidence or confirmations about your dealing activity, you must provide this. Workers with ‘super user’ access to the Global Conflict Management System “GCMS” or the Watch List, such as those working in the Global Control Room, must not deal in any Covered Investment, or any asset or instrument covered by Global Research. However, these Workers can: • make elections in relation to HSBC share offerings as normal and/or, • subject to prior approval from the Global Control Room, and where applicable subject to prior approval via My Trades or equivalent, dispose of HSBC shares as normal.
3 Requirements for Covered Workers In addition to the requirements outlined for All Workers, if you are a Covered Worker, you must do the following in relation to your own dealing and that of your Influenced Parties: • Obtain documented pre-approval using My Trades or your local Personal Account Dealing system, to trade any Covered Investment; and • Hold a Covered Investment for at least 30 days before selling the same Covered Investment, and not purchase a Covered Investment for at least 30 days after selling the same Covered Investment, the “30-day rule”. • Pre-approval is not required for the transfer of assets between broker accounts belonging to a Covered Worker where no change in beneficial ownership takes place and no net consideration is paid, including selling and repurchasing the same underlying holding within 24 hours (e.g. to crystallise tax losses). Similarly, pre-approval is not required for the transfer of assets between a Covered Worker and an Influenced Party when no net consideration is paid. You can make a deduction for dealing costs without affecting the status of a sale and repurchase. • Where a Covered Worker’s line manager is not available to provide trade pre-approval, an alternative approver is the line manager’s line manager or equivalent (e.g. a nominated peer of the line manager). The alternative approver must be senior to the individual making the dealing request. My Trades utilises a drop down box with pre-determined alternative approvers to be selected by the Worker. Approval Windows Approvals to trade are valid within the stipulated time scales as stated in your local Personal Account Dealing system/procedure approval notifications. Each trade requires approval. Trades must not take place until approval is given, or after the approval expires. Please note: • HSBC does not permit you as a Covered Worker to place open-ended or good-till-cancelled “GTC” orders, nor provides perpetual approvals. • Certain countries prohibit limit and stop loss orders, see the Geographic requirements outlined in the Appendix for further information. • Monthly investment plans require pre-approval only at the outset or when you make changes to your investment instructions. • For initial public offerings and private investments, instructions (being a completed application form or email to the company) must be sent to the PAD Operations Team to evidence that the instruction was given within the stipulated time scales stated in the trade approval notification.
4 • If after approval you decide not to trade, then you must cancel your request in My Trades or your local Personal Account Dealing system/procedure. Evidence and Attestations To demonstrate that you have submitted a complete record of trades, Covered Workers must: • Disclose any active broker accounts, including Computershare accounts (EquatePlus)*, and in all instances complete the Broker Accounts page – including mobile or electronic trading applications, wallets, or any other platform capable of dealing Covered Investments – held by them or an Influenced Party using My Trades or your local Personal Account Dealing system; • Complete a Mandatory PAD Attestation at least annually and additionally upon becoming a Covered Worker. Where a Covered Worker is absent (e.g. sabbatical, long term sick, maternity leave) then they will complete their attestation upon their return to work. • Ensure that they, their broker, fund manager, fund platform or exchange send independent trade confirmations** evidencing the date and time of execution to the appropriate PAD Operations Team, or upload confirmations via My Trades; • Where execution cannot be evidenced (e.g. by reference to a contract note or Share Purchase Agreement) as having been completed within the stipulated time scales*** stated in the trade approval notification, you must provide other forms of documentation****, by uploading into My Trades or sending to the appropriate PAD Operations Team mailbox, to evidence that the execution was done within the stipulated time scales***; and • For private investments, initial public offerings, unlisted securities, the appropriate documentations to evidence that the request instruction was sent within the stipulated time scales stated in the trade approval notification must be uploaded into My Trades or sent to the appropriate PAD Operations Team; • If after approval you decide not to trade, then you must cancel your request in My Trades or your local Personal Account Dealing system/procedure. * If you have a Computershare account (EquatePlus) for an HSBC employee share scheme, please disclose “Computershare Investor Services PLC” as the broker name and your EquatePlus user ID as the account number in My Trades or your local Personal Account Dealing system. ** Such as contract notes, Share Purchase Agreement, or regular statements. These can take the form of physical, scanned, electronic or photographed documents, emails or screen grabs. *** Refers to the trading window (with specific date and time). **** Such as screen grabs of the online trade request at the time of input (to provide evidence of the trade execution date/time), other physical, scanned, electronic or photographed documents or emails. For the avoidance of doubt, Covered Workers could record in writing to their line manager their rationale for determining that someone who might normally be assumed to be an Influenced Party (e.g. partner or spouse of the Worker, dependants of the Worker or anyone to whom the Worker provides material financial support) are not Influenced Party(ies), so their trading account(s) need not be disclosed.
5 If your trading account only provides regular statements and not individual trade confirmations, you need to submit those statements no later than 30 calendar days after the statement period finishes. You must send any other trade confirmation – such as a contract note – within 14 calendar days of the trade execution. You need not disclose discretionary accounts managed entirely at the discretion of an independent fund manager unless required to do so by any Geography Specific or section Business Line Specific requirements that apply to you. Covered Workers dealing in equities in unlisted companies, via My Trades or your local Personal Account Dealing system, must disclose to the PAD Operations Team the percentage of each company’s issued share capital they will cumulatively own as a consequence of a proposed dealing. Such disclosure is not required for Covered Workers using My Trades. Significant Shareholdings create an Outside Activity. Absence or System Outages If you are not able to submit your dealing request via My Trades or your local Personal Account Dealing system because you are travelling or on leave you must submit pre-approval requests via email instead. This requirement continues for six months after you stopped being able to access HSBC systems, or longer if you are still on an Insider or Confidential Register. You must have secured the necessary pre-approvals from your line manager and the PAD Operations Team. In the case of Asset Management and Global Research you must also obtain relevant local Compliance approval before dealing. You must include relevant information in your approval request email: 1. The name, and price or quantity* of the Covered Investment to be transacted; 2. The code of the security and type of instrument; 3. Whether “buy” or “sell”; 4. Confirmation of compliance with all relevant requirements, including the 30-day rule and that you do not have access to Material Non-Public Information or Non-Public Information about the subject entity; and 5. The relevant broker name and account number. HSBC is not responsible for any losses incurred because you cannot trade due to system failure, we decline your trade request, or there is a delay in processing your request. *Please do not disclose the price or quantity to your line manager, only to the PAD team (they use this information for reconciliation purposes only). Persons Discharging Managerial Responsibilities “PDMRs” In this context, PDMR refers to directors of HSBC Holdings plc and certain senior executives of HSBC – as notified by Corporate Governance and Secretariat – who have regular access to MNPI and the power to take managerial decisions affecting the future developments and business prospects of HSBC. Subsidiaries and affiliates of HSBC that issue securities within the European Economic Area have their own list of PDMRs, which are maintained by the relevant Corporate Governance and Secretariat team.
6 PDMRs must seek additional pre-approval from their relevant company secretary to deal in certain HSBC Group securities in accordance with the share dealing code adopted by their particular HSBC Group company; for themselves, and their closely associated person (as defined in the share dealing code). For HSBC Holdings plc, PDMRs must seek this pre-approval by contacting [email protected]. HSBC Group Securities and Share Schemes Information about who can participate in HSBC employee share plans is available on HR Direct. If you hold MNPI in relation to HSBC, you must not undertake any of the Share Plan Activities listed below. Covered Workers require pre-clearance to undertake certain activities – see the table below. You must not use any personal hedging strategies, or contracts of insurance, to alter the risk alignment between the Bank and your deferred, unvested or retained pay awards of cash or shares. Participating in an Advance Election Facility “AEF” If you participate in any of HSBC’s Group share plans – such as ShareMatch, UK Sharesave, Deferred Share Awards, or MRT Share Awards, Computershare (EquatePlus) can offer you the chance to make an advance election before your shares are released or vest. Unless you have received an email specifically restricting your trading – for example due to a closed period –– or you otherwise hold MNPI in relation to HSBC, you are able to make your election at any time. There is no need for you to obtain pre-approval via My Trades or your local Personal Account Dealing system when making an advance election, since Compliance and HR complete this process on your behalf. If somebody adds you to an Insider Register or Confidential Register after you have made an election, the PAD team will inform you and your election might not be honoured. If you are a Covered Worker and wish to exercise or sell shares from a share plan at any time other than via an AEF, you must obtain pre-approval. Please refer to the below table for details of when pre-approval is required by Covered Workers in relation to all HSBC Group share plans. Share Plan Activities including Closed Periods Compliance notifies selected employees – and others with potential MNPI about HSBC – of “close” or “closed” periods or “trading windows”, and associated dealing restrictions. If you receive an email advising you that you must not trade HSBC shares or securities for a defined period, or otherwise hold MNPI in relation to HSBC, during that period you must not: • Join an HSBC employee share plan, such as UK Share Incentive Plan [UK SIP] or ShareMatch; • Stop, change or restart contributions to an HSBC employee share plan; • Make an advance election for an HSBC employee share plan; • Exercise an option under Sharesave; • Make or change an election to receive dividends in cash or reinvested into HSBC shares; or • Deal in HSBC shares, debt or derivatives. The table below provides details of when Covered Workers need pre-approval for HSBC Group Share Schemes. Covered Workers must declare their Computershare (EquatePlus)* broker account before placing a trade, including where they are exercising the option for the shares to vest.
7 *If you have a Computershare account (EquatePlus) for an HSBC employee share scheme, please disclose “Computershare Investor Services PLC” as the broker name and your EquatePlus user ID as the account number in My Trades or your local Personal Account Dealing system. PLAN Do I need pre- approval before accepting an invitation to take part in the plan or receive a grant? Do I need pre- approval if I wish to stop, restart or change my contributions? Do I need pre- approval to exercise my Sharesave option? or If I sell my shares from any plan via an AEF at maturity, vesting or retention end date? Do I need pre- approval if I exercise my Sharesave option or otherwise sell shares from any plan outside an AEF? *** ALL-EMPLOYEE SHARE PLANS Sharesave/SAYE - UK* No No If you are offered an AEF, then clearance will be requested on your behalf, see above**. Yes UK Share Incentive Plan No, unless subject to closed period restrictions No, unless subject to closed period restrictions N/A Yes ShareMatch No, unless subject to closed period restrictions No, unless subject to closed period restrictions If you are offered an AEF, then clearance will be requested on your behalf, see above**. Yes DISCRETIONARY AWARDS Deferred Share Awards (with or without retention requirements)- including bonus deferral awards, MRT awards, buy-out, Group Performance Shares and FPA Awards (generally granted under No N/A If you are offered an AEF, then clearance will be requested on your behalf, see above**. Yes
8 the HSBC Share Plan 2011 rules) * No pre-approval is required if you withdraw from Sharesave and request the refund of your cash savings. ** However, you must not make an advance election if you are subject to closed period restrictions or otherwise hold MNPI. *** Pre-approval is required before exercising your option e.g. ‘exercise and keep’, ‘exercise and sell’, and also to sell any resulting shares from the ‘exercise and keep’.
9 Glossary Covered Investments An investment is an asset or instrument that you hold with the hope that it will generate income or appreciate in the future. Investing is different from saving because it involves a greater level of risk, and there is no guarantee that the investor will get their money back. Covered Investments are those where the investor has a choice or influence over the underlying assets, and is not at “arms’ length” from the individual investment decisions being taken. This includes debt or equity crowd-funding, because funds transferred with such platforms could be used to choose or influence individual investments. Covered Workers must seek pre-approval to trade Covered Investments. The following table distinguishes between Covered Investments – vehicles and instruments – for which pre-approval is required, and those where pre-approval is not required: Exceptions and Non- Investments. You must also check any Geography and Business Line-Specific Requirements as these can require you to treat certain instruments as Covered / Exceptions / Non-Investments. VEHICLES (subject to any additional requirements in the Geography and Business Line Specific Requirements) Covered Covered Workers require pre-approval to trade; 30-day rule applies Exceptions Pre-approval is not required; 30-day rule does not apply Non-Investments Pre-approval is not required; 30- day rule does not apply Funds: closed-ended[1], non-public, Concentrated, or any self-directed fund in which a Covered Worker or Influenced Parties can influence individual investment decisions. Funds: open-ended, publicly available, and not Concentrated. Discretionary accounts: those where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party Annuities and annuity insurance Exchange Traded Funds “ETFs” that invest in closed- ended or non-public funds, or hold a Concentrated position. All ETFs are Covered Instruments for Covered Workers of AMUS, AMEU, AMGB, HAIL, AMHK, AMSG and AMFR. ETFs are not considered as Covered Investments for Covered workers in other Asset Management entities. ETFs that are open-ended, publicly available and not concentrated. ETFs that invest in funds that are open-ended and publicly available.
10 Insurance policies (including Life Policies) linked to any Covered Investment in which a Covered Worker or Influenced Parties can influence individual investment decisions. Insurance policies either: 1. not linked to a Covered Investment, such as health or general insurance; or 2. which are linked to a Covered Investment through an internally managed fund that is (i) discretionary; (ii) diversified; and (iii) not available exclusively to the Covered Worker or Influenced Parties. Life policies (except when the covered worker or influenced parties can influence individual investment decisions). Pension schemes or 401(k) accounts that invest in any Covered Investment in which a Covered Worker or Influenced Parties can influence individual investment decisions. Pension schemes or 401(k) accounts either: 1. not linked to a Covered Investment; or 2. which are linked to a Covered Investment through an internally managed fund that is (i) discretionary; (ii) diversified; and (iii) not available exclusively to the Covered Worker or Influenced Parties. Final salary, defined benefit or mandatory retirement schemes Crowd-funding: equity or debt lending Crowd-funding: reward or charitable. When a Covered Worker provides a loan directly to a business or individual, and doesn’t hold any equity or formal bonds in return this is not treated as a Covered Investment INSTRUMENTS (subject to any additional requirements in the Geography and Business Line Specific Requirements) Covered Covered Workers require pre-approval to trade; 30-day rule applies Exceptions Pre-approval is not required; 30-day rule does not apply Non-Investments Pre-approval is not required; 30- day rule does not apply
11 Equity and capital: shares of public and private entities, including the sale of scrip dividends or shares received in a Rights, Private, or Initial Public Offering. This includes free shares, for example, incentives for opening a brokerage account, where you have advanced notice of the name of any instrument. Shares traded through discretionary accounts, where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party. Receipt of equity via Corporate Actions or deferred share awards, such as variable pay, share options or bonuses from HSBC or any other employer. Free shares where you had no advanced notice of the name of any instrument. Savings, deposit, or transactional checking or current accounts Depositary Receipts ADR/GDR, structured deposits structured products, structured investments, synthetic products. Certificates of deposit, term deposits, time deposits. Foreign or virtual currency purely for investment purposes, including dual currency deposits or investments, virtual assets, security tokens and exchange tokens. Foreign or virtual currency for household spending – see below.
12 Bonds (corporate or convertible), debentures, debt securities, redeemable preference shares, including public offerings of any such security. Bonds, debentures or redeemable preference shares traded through discretionary accounts, where investments are managed entirely at the discretion of a fund manager who is not an Influenced Party. Sovereign or government bonds. Fixed term savings deposits, including savings schemes unless they are traded in a secondary market. Derivatives related to any Covered Investment in this table, including swaps, futures, forwards, warrants, options, covered calls, excess shares, etc. Derivatives embedded in publicly available funds (i.e., trades as part of the fund portfolio). Exchange traded notes. Exchange traded commodities, such as gold*, precious metals, bullion, carbon offset credits etc. Carbon offset credits purchased as spot contracts for immediate “retirement” Physical commodities in your possession or to which you have access, such as jewellery. Real estate investment trusts: REITs.
13 Venture capital trusts, venture capital funds. *including gold token Currencies – including virtual and crypto-currencies can be used to buy things (e.g. Bitcoin), or as an investment, which also includes Non-Fungible Tokens - NFTs (e.g. Opensea) and Decentralised Finance - DeFi (E.g. Aave and Uniswap). Currency held as an investment is a Covered Investment subject to the “30-day rule” and pre-approval for Covered Workers; currency used for household spending is not, and the latter includes spending done via a Crypto Card (e.g. Crypto.com cashback card). Examples of household spending include: • Holiday money; • Payment for an overseas educational course; • Payment of tax bills; • Use in a mobile wallet payment app; • Maintaining an overseas property; • To make retail savings, or trade investments denominated in other currencies; or • Repatriation of funds by ex-pats. If you use foreign or virtual currencies, the PAD team could ask you to evidence how you have used these to demonstrate compliance with this mandatory procedure. Mining or staking of virtual currencies is not considered to constitute dealing, although dealing in any mined coins or tokens does constitute dealing and is subject to pre-approval rules. The HSBC Personal Account Dealing team will apply enhanced scrutiny to requests to trade all derivatives, caps and swaps, as these are often speculative in nature. The PAD Operations team will only approve derivatives for non-speculative purposes; for example, personal borrowing using a cap. Please refer to your local Compliance department for advice if you are uncertain about whether an investment requires pre-approval. Covered Workers Covered Workers are those Workers who are more likely to come into possession of client non-Public Information or certain types of non-public information about HSBC. Greater oversight is required of their personal account dealing. All requirements that apply to Covered Workers also apply to the dealings of their Influenced Parties. Global Businesses must designate any additional Covered Workers – such as individuals in Global Functions or DBS – who directly support their business processes, and advise these to PAD Operations. The following table shows who is a Covered Worker by default: Key Global Banking and Markets “GBM” Commercial Banking “CMB” Wealth and Personal Banking “WPB”
14 Global Private Banking & Wealth “GPB&W” Digital Business Services “DBS” Business Line, Function or Division MD GCB 3 GCB 4-8 Comments GBM - All business lines and divisions Y Y Y GPS Y Y Y CMB - Corporate Banking: Large Corporates and Middle Market Enterprises Y Y Y CMB - Commercial Real Estate Y Y Y CMB - Originations Office Y Y Y CMB - Business Banking and Commercial Direct Y Y Y* *Shall only include any GCB 4-8 who is a Business Banking Relationship Manager, with Acceptably Publicly Listed Entities (APLEs) within their customer portfolios, and their Team Leaders CMB/GBM - Global Trade Solutions "GTS" Y Y Y* *GTS Services staff from GCB5- 8 are excluded from being “Covered Workers” Wholesale Chief Operating Office Y Y Y CMB - Commercial Insurance and Investment Y Y
15 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments CMB - All other product lines and divisions Y Y Y WPB - Global Asset Management "AM" Y Y Y WPB - GPB&W Country Heads, CEOs, Chief Operating Officers, Executive Assistants to GPB ExCo and Country Heads, Job Families [Client Relationship Management, Advisory, Strategy Management, Trading Services, Trading Operations, Balance Sheet Management, Research, Sales], all staff in Germany, US, Italy, Israel and Singapore. Y Y Y WPB - GPB&W - Markets Treasury GPB Y Y Y WPB - GPB&W HSBC Broking Services (Asia) Ltd., HSBC Qianhai Securities Ltd. Y Y Y WPB - GPB&W All other job families/ countries / entities Y WPB - Retail Banking – Country Heads, Country COOs, Job Families [Advisory (006); Leadership (034); Strategy Management (021); Trading Services (004); Legal and Corporate Secretary (022); Research (007)], Job Sub Families [Trading Operations (027); Media Relations (099); Traded Risk (063)] Y Y Y WPB - Retail Banking – Wealth Management, Job Family [Sales (002)] Y Y WPB - Retail Banking - All other job families Y
16 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments WPB – Insurance – Insurance Investment teams Y Y Y WPB – Insurance – All other roles Y Y Global Functions - Corporate Governance and Secretariat Y Y Y Global Functions - Group Communications and Brand (GCAB) Y Y Global Functions - Finance Y Y Y Global Functions - Global Sustainability: London team Y Y Y Global Functions - Global Sustainability: Outside London Y Y Global Functions - Human Resources Y Y Global Functions - Internal Audit Y Y Y Global Functions - Legal Y Y Y Global Functions - Risk and Compliance Y Y Y Global Functions - Strategy and Planning Y Y Y DBS IT - Cybersecurity, MSS IT Y Y Y DBS IT - Wholesale IT Y Y Y* *Only GCB4 are required to be Covered Workers
17 Business Line, Function or Division MD GCB 3 GCB 4-8 Comments DBS - Innovation and Ventures Y Y Y DBS - Global Transaction Implementation Team Y Y Y DBS - All other divisions Y Y In some cases, additional Workers, not included by default, may be added as Covered Workers. These must be agreed by the respective Business Lines, Global Functions or DBS, and Compliance. This is likely for Workers in DBS or Global Functions that support GBM, or those with incidental access to Non-Public Information - such as personal assistants – or where local requirements dictate. Managers of Service Worker Providers with no access to HSBC systems or Non-Public Information – such as security guards, drivers, office administrators – can request written agreement from their respective LoB, Global Function or DBS, supported by their respective local Compliance, to remove them as Covered Workers where appropriate. If you are not sure which of the lines above applies to you, contact your line manager or local Compliance department. Covered Workers who transition to a new role within HSBC and, as a result, are no longer considered a Covered Worker will not be subject to ongoing monitoring but they must continue to follow the Covered Workers requirements for six months after moving. Correspondingly they remain under a continuing obligation not to trade or act on information obtained while a Covered Worker.
a121_sox302
Exhibit 12.1 Section 302 Certification of Group Chief Executive Officer I, Georges Elhedery, certify that: 1. I have reviewed this annual report on Form 20-F of HSBC Holdings plc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Dated: February 26, 2026 /s/ Georges Elhedery Georges Elhedery Group Chief Executive Officer
a122_sox302
Exhibit 12.2 Section 302 Certification of Group Chief Financial Officer I, Manveen (Pam) Kaur, certify that: 1. I have reviewed this annual report on Form 20-F of HSBC Holdings plc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and 5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. Dated: February 26, 2026 /s/ Manveen (Pam) Kaur Manveen (Pam) Kaur Group Chief Financial Officer
a131_sox906
Exhibit 13.1 Annual Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of HSBC Holdings plc (the “Company”), does hereby certify, to such officer’s knowledge, that: The Annual Report on Form 20-F for the year ended December 31, 2025 of the Company fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934 and information contained in the Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 26, 2026 /s/ Georges Elhedery Georges Elhedery Group Chief Executive Officer Dated: February 26, 2026 /s/ Manveen (Pam) Kaur Manveen (Pam) Kaur Group Chief Financial Officer
a151_pwcxconsent
1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-277306) and Form S-8 (Nos. 333-103887; 333-104203; 333-109288; 333-113427; 333-127327; 333-143639; 333-145859; 333-155338; 333- 162565; 333-170525; 333-176732; 333-183806; 333-197839; 333-220458) of HSBC Holdings plc of our report dated February 26, 2026 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers LLP London, United Kingdom February 26, 2026
a156_actuary
Tim Panter Managing Director, Retirement 3 Temple Quay Temple Back East Bristol BS1 6DZ T +44 117 926 6481 D +44 117 989 7407 M +44 780 817 6449 E [email protected] W wtwco.com Towers Watson Limited is registered in England and Wales Registration number: 5379716, Registered address: Watson House, London Road, Reigate, Surrey RH2 9PQ, UK. Authorised and regulated by the Financial Conduct Authority. Page 1 of 1 26 February 2026 The Board of Directors HSBC Holdings plc CONSENT OF WILLIS TOWERS WATSON Willis Towers Watson consents to be named as valuation actuary of the HSBC Bank (UK) Pension Scheme in the Annual Report on Form 20-F for the year ended December 31, 2025 of HSBC Holdings plc and to the incorporation by reference of references to us in the registration statements (nos. 333-92024, 333-103887, 333-104203, 333-109288, 333-113427, 333-127327, 333-126531, 333-135007, 333-143639, 333-145859, 333-155338, 333-158065, 333-162565, 333-170525, 333-176732, 333-180288, 333-183806, 333-197839, 333-202420, 333-220458, 333-223191, 333-253632 and 333-277306). Yours sincerely Tim Panter Fellow of the Institute and Faculty of Actuaries /s/ Tim Panter
a97_recoverycomp
HSBC HOLDINGS PLC POLICY FOR THE RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION 1. Purpose. The purpose of this Policy is to describe the circumstances in which Executive Officers will be required to repay or return Erroneously Awarded Compensation to the Company in accordance with the Clawback Rules. Each Executive Officer shall be required to sign and return to the Company the Acknowledgement and Acceptance Form attached hereto as Exhibit A pursuant to which such Executive Officer will acknowledge that he or she is bound by the terms of this Policy; provided, however, that] this Policy shall apply to, and be enforceable against, any Executive Officer and his or her successors (as specified in Section 11 of this Policy) [regardless of whether or not such Executive Officer properly signs and returns to the Company such Acknowledgement and Acceptance Form and regardless of whether or not such Executive Officer is aware of his or her status as such. 2. Administration. Except as specifically set forth herein, this Policy shall be administered by the Administrator. Any determinations made by the Administrator shall be final and binding on all affected individuals and need not be uniform with respect to each individual covered by this Policy. Subject to any limitation under applicable law, the Administrator may authorise and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee). 3. Definitions. For the purposes of this Policy, the following capitalised terms shall have the meanings set forth below. (a) “Accounting Restatement” shall mean an accounting restatement: (i) due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R” restatement); or (ii) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement). (b) “Administrator” shall mean the Committee or any other committee designated by the Board to administer the Policy, and in the absence of such designation, the Board. (c) “Board” shall mean the Board of Directors of the Company. (d) “Clawback Eligible Incentive Compensation” shall mean, with respect to each individual who served as an Executive Officer at any time during the applicable performance period for any Incentive-based Compensation (whether or not such individual is serving as an Executive Officer at the time the Erroneously Awarded Compensation is required to be repaid to the Company), all Incentive-based Compensation Received by such individual: (i) on or after the Effective Date; (ii) after beginning service as an Executive Officer; (iii) while the Company has a class of securities listed on the Listing Exchange; and (iv) during the applicable Clawback Period. (e) “Clawback Period” shall mean, with respect to any Accounting Restatement, the three completed fiscal years of the Company immediately preceding the Restatement Date and any transition period (that results from a change in the Company’s fiscal year) of less than nine months within or immediately following those three completed fiscal years. (f) “Clawback Rules” shall mean Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC thereunder (including Rule 10D-1 under the Exchange Act) or the Listing Exchange pursuant to Rule 10D-1 under the Exchange Act (including Section
2 303A.14 of the New York Stock Exchange Listed Company Manual), in each case as may be in effect from time to time. (g) “Committee” shall mean the Group Remuneration Committee of the Board. (h) “Company” shall mean HSBC Holdings plc, together with each of its direct and indirect subsidiaries. (i) “Effective Date” shall mean October 2, 2023. (j) “Erroneously Awarded Compensation” shall mean, with respect to each Executive Officer in connection with an Accounting Restatement, the amount of Clawback Eligible Incentive Compensation that exceeds the amount of Clawback Eligible Incentive Compensation that otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes paid. (k) “Executive Officer” shall mean any individual who is or was an executive officer as determined by the Administrator in accordance with the definition of “executive officer” as set forth in the Clawback Rules and any other senior executive, employee or other personnel of the Company who may from time to time be deemed subject to the Policy by the Administrator. For the avoidance of doubt, the Administrator shall have full discretion to determine which individuals in the Company shall be considered an “Executive Officer” for purposes of this Policy. (l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (m) “Financial Reporting Measures” shall mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return shall for the purposes of this Policy be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC. (n) “Incentive-based Compensation” shall mean any compensation that is granted, earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure. (o) “Impracticable” shall mean, in accordance with the good faith determination of the Committee, or if the Committee does not consist of independent directors, a majority of the independent directors serving on the Board, that either: (i) the direct expenses paid to a third party to assist in enforcing the Policy against an Executive Officer would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Erroneously Awarded Compensation, documented such reasonable attempt(s) and provided such documentation to the Listing Exchange; (ii) recovery would violate English law where that law was adopted prior to November 28, 2022, provided that, before concluding that it would be Impracticable to recover any amount of Erroneously Awarded Compensation based on violation of English law, the Company has obtained an opinion of English legal counsel, acceptable to the Listing Exchange, that recovery would result in such a violation and a copy of the opinion is provided to the Listing Exchange; or (iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
3 (p) “Listing Exchange” shall mean the New York Stock Exchange or such other U.S. national securities exchange or national securities association on which the Company’s securities are listed. (q) “Method of Recovery” shall include, but is not limited to: (i) requiring reimbursement of Erroneously Awarded Compensation; (ii) seeking recovery of any gain realised on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity- based awards; (iii) offsetting the Erroneously Awarded Compensation from any compensation otherwise owed by the Company to the Executive Officer; (iv) cancelling outstanding vested or unvested equity awards; and/or (v) taking any other remedial and recovery action permitted by applicable law, as determined by the Administrator. (r) “Policy” shall mean this Policy for the Recovery of Erroneously Awarded Compensation, as the same may be amended and/or restated from time to time. (s) “Received” shall, with respect to any Incentive-based Compensation, mean deemed receipt and Incentive-based Compensation shall be deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-based Compensation award is attained, even if the payment or grant of the Incentive-based Compensation occurs after the end of that period. For the avoidance of doubt, Incentive- Based Compensation that is subject to both a Financial Reporting Measure vesting condition and a service-based vesting condition shall be considered received when the Financial Reporting Measure is achieved, even if the Incentive-Based Compensation continues to be subject to the service-based vesting condition. (t) “Restatement Date” shall mean the earlier to occur of: (i) the date the Board, a committee of the Board or the officer or officers of the Company authorised to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement; or (ii) the date a court, regulator or other legally authorised body directs the Company to prepare an Accounting Restatement. (u) “SEC” shall mean the U.S. Securities and Exchange Commission. 4. Repayment of Erroneously Awarded Compensation. (a) In the event the Company is required to prepare an Accounting Restatement, the Administrator shall reasonably promptly (in accordance with the applicable Clawback Rules) determine the amount of any Erroneously Awarded Compensation for each Executive Officer in connection with such Accounting Restatement and shall reasonably promptly thereafter provide each Executive Officer with written notice containing the amount of Erroneously Awarded Compensation and a demand for repayment or return, as applicable. For Clawback Eligible Incentive Compensation based on stock price or total shareholder return where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined by the Administrator based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Clawback Eligible Incentive Compensation was Received (in which case, the Company shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Listing Exchange). The Administrator is authorised to engage, on behalf of the Company, any third-party advisors it deems advisable in order to perform any calculations contemplated by this Policy. For the avoidance of doubt, recovery under this Policy with respect to an Executive Officer shall not require the finding of any misconduct by such Executive Officer or such Executive Officer being found responsible for the accounting error leading to an Accounting Restatement.
4 (b) In the event that any repayment of Erroneously Awarded Compensation is owed to the Company, the Administrator shall recover reasonably promptly the Erroneously Awarded Compensation through any Method of Recovery it deems reasonable and appropriate in its discretion based on all applicable facts and circumstances and taking into account the time value of money and the cost to shareholders of delaying recovery. For the avoidance of doubt, except to the extent permitted pursuant to the Clawback Rules, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer’s obligations hereunder. Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated in this Section 4(b) if recovery would be Impracticable. In implementing the actions contemplated in this Section 4(b), the Administrator will act in accordance with the listing standards and requirements of the Listing Exchange and with the applicable Clawback Rules. (c) Subject to the discretion of the Administrator, an applicable Executive Officer may be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering Erroneously Awarded Compensation in accordance with Section 4(b). 5. Reporting and Disclosure. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of U.S. federal securities laws, including any disclosure required by applicable SEC rules. 6. Indemnification Prohibition. The Company shall not be permitted to indemnify any Executive Officer against the loss of any Erroneously Awarded Compensation that is repaid, returned or recovered pursuant to the terms of this Policy and/or pursuant to the Clawback Rules, including any payment or reimbursement for the cost of third-party insurance purchased by any Executive Officer to cover any such loss under this Policy and/or pursuant to the Clawback Rules. Further, the Company shall not enter into any agreement that exempts any Incentive-based Compensation from the application of this Policy or that waives the Company’s right to recovery of any Erroneously Awarded Compensation and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date). Any such purported indemnification (whether oral or in writing) shall be null and void. 7. Interpretation. The Administrator is authorised to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of the Clawback Rules. The terms of this Policy shall also be construed and enforced in such a manner as to comply with applicable law, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any other law or regulation that the Administrator determines is applicable. In the event any provision of this Policy is determined to be unenforceable or invalid under applicable law, such provision shall be applied to the maximum extent permitted by applicable law and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required by applicable law. 8. Effective Date. This Policy shall be effective as of the Effective Date. 9. Amendment; Termination. The Administrator may modify or amend this Policy, in whole or in part, from time to time in its discretion and shall amend any or all of the provisions of this Policy as it deems necessary, including as and when it determines that it is legally required by the Clawback Rules, or any U.S. federal securities law, SEC rule or Listing Exchange rule. The Administrator may terminate this Policy at any time, and this Policy shall remain in effect only so long as the Clawback Rules apply to the Company. Following termination, the Administrator may continue to apply this Policy to Incentive-based Compensation awarded or Received during such time that the Policy was active. Notwithstanding anything in this Section 9 to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any
5 actions taken by the Company contemporaneously with such amendment or termination) cause the Company to violate the Clawback Rules, or any U.S. federal securities law, SEC rule or Listing Exchange rule. Furthermore, unless otherwise determined by the Administrator or as otherwise amended, this Policy shall automatically be deemed amended in a manner necessary to comply with any change in the Clawback Rules. 10. Other Recoupment Rights; No Additional Payments. The Administrator intends that this Policy will be applied to the fullest extent permitted by applicable law. The Administrator may require that any employment agreement, equity award agreement, or any other agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require an Executive Officer to agree to abide by the terms of this Policy. Executive Officers shall be deemed to have accepted continuing employment on terms that include compliance with the Policy, to the extent of its otherwise applicable provisions, and to be contractually bound by its enforcement provisions. Executive Officers who cease employment or service with the Company shall continue to be bound by the terms of the Policy with respect to Clawback Eligible Incentive Compensation. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, cash-based bonus plan, equity award agreement or similar agreement and any other legal remedies available to the Company. To the extent that an Executive Officer has already reimbursed the Company for any Erroneously Awarded Compensation Received under any duplicative recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded Compensation that is subject to recovery under this Policy, as determined by the Administrator in its sole discretion. Nothing in this Policy precludes the Company from implementing any additional clawback or recoupment policies with respect to Executive Officers or any other service provider of the Company. Application of this Policy does not preclude the Company from taking any other action to enforce any Executive Officer’s obligations to the Company, including termination of employment or institution of civil or criminal proceedings or any other remedies that may be available to the Company with respect to any Executive Officer. 11. Successors. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, estates, heirs, executors, administrators or other legal representatives to the extent required by the Clawback Rules or as otherwise determined by the Administrator. * * *
Exhibit A HSBC HOLDINGS PLC POLICY FOR THE RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION ACKNOWLEDGEMENT AND ACCEPTANCE FORM Capitalised terms used but not otherwise defined in this Acknowledgement and Acceptance Form shall have the meanings ascribed to such terms in the HSBC Holdings plc Policy for the Recovery of Erroneously Awarded Compensation (the “Policy”). By signing below, the undersigned executive officer (the “Executive Officer”) acknowledges and confirms that the Executive Officer has received and reviewed a copy of the Policy and, in addition, the Executive Officer acknowledges and agrees as follows: (a) the Executive Officer is and will continue to be subject to the Policy and that the Policy will apply both during and after the Executive Officer’s employment with the Company; (b) to the extent necessary to comply with the Policy, the Policy hereby amends any employment agreement, equity award agreement or similar agreement that the Executive Officer is a party to with the Company; (c) the Executive Officer shall abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation to the Company to the extent required by, and in a manner permitted by, the Policy; (d) any amounts payable to the Executive Officer, including any Incentive-based Compensation, shall be subject to the Policy as may be in effect and modified from time to time in the sole discretion of the Administrator or as required by applicable law or the requirements of the Listing Exchange, and that such modification will be deemed to amend this acknowledgment; (e) the Company may recover compensation paid to the Executive Officer through any Method of Recovery the Administrator deems appropriate, and the Executive Officer agrees to comply with any request or demand for repayment by the Company in order to comply with the Policy; and (f) the Company may, to the greatest extent permitted by applicable law, reduce any amount that may become payable to the Executive Officer by any amount to be recovered by the Company pursuant to the Policy to the extent such amount has not been returned by the Executive Officer to the Company prior to the date that any subsequent amount becomes payable to the Executive Officer. Signature Print Name Date