As filed with the Securities and Exchange Commission on February 20, 2025.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT<br><br>OF 1934

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	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 jonathan.bingham@hsbc.com

(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 Depository 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
4.250% Subordinated Notes due 2025 (US404280AU33)	HSBC25	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
Floating Rate Senior Unsecured Notes due 2026<br><br>(US404280BW89)	HSBC26D	New York Stock Exchange
4.292% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2026 (US404280BX62)	HSBC26C	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
2.099% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2026<br><br>(US404280CG21)	HSBC26E	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
1.645% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2026<br><br>(US404280CJ69)	HSBC26F	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
1.162% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2024<br><br>(US404280CW70)	HSBC24D	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
Floating Rate Senior Unsecured Notes due 2024<br><br>(US404280CZ02)	HSBC24E	New York Stock Exchange
2.999% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2026 (US404280DA42)	HSBC26G	New York Stock Exchange
Floating Rate Senior Unsecured Notes due 2026<br><br>(US404280DB25)	HSBC26H	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
7.336% Fixed Rate/Floating Rate Senior Unsecured Notes due<br><br>2026 (US404280DQ93)	HSBC26I	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

*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 17,946,950,582

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes ¨

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

Our ambition is to be the preferred international

financial partner for our clients.

Our purpose, ambition and values reflect our

strategy and support our focus on execution.

Read more on our values and strategy on pages 8 and 14.

Contents

1Cautionary statement regarding

forward-looking statements

2 Additional cautionary statement

regarding ESG data, metrics and

forward-looking statements

3 Certain defined terms

Strategic report

4 Performance in 2024

5 Highlights

7 Who we are

9 Group Chairman’s shareholder letter

11 Group CEO’s shareholder letter

14 Our strategy

18 ESG overview

23 Remuneration

24 Financial overview

29 Global businesses

36 Risk overview

Environmental, social and

governance (‘ESG’) review

40 Environmental

61 Social

71 Governance

Financial review

84 Financial summary

107 Global businesses and legal

entities

129 Reconciliation of alternative

performance measures

135Other information

Risk review

144Our approach to risk

148 Top and emerging risks

154Risk factors

167 Our material banking risks

Corporate governance report

267 Biographies of Directors and

senior management

289 Board committees

309 Directors’ remuneration report

Financial statements

361Report of Independent Registered

Public Accounting Firm to the

Board of Directors and Shareholders

of HSBC Holdings plc (PCAOB ID 876)

363Financial statements

375Notes on the financial statements

Additional information

461Shareholder information

480Abbreviations

This Strategic Report was approved by the

Board on 19 February 2025.

Sir Mark E Tucker

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

TCFD

Climate-related Financial Disclosures (‘TCFD’) within

this Form 20-F for the year ended 31 December

Our TCFD disclosures are highlighted with the

following 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: adjusted symbol.jpg

Further explanation may be found on page 28.

Targets and forward guidance

We do not reconcile our forward guidance on RoTE

excluding the impact of notable items, target basis

operating expenses, dividend payout ratio target

basis or banking net interest income (‘banking NII’)

to their equivalent reported measures.

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 2025.

See page 5 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 2024 (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

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 and the conflict in

the Middle East 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 and the conflict in the Middle

East, inflationary pressures, commodity

price changes, and ongoing developments

in the commercial real estate sector in

mainland China); potential changes in

HSBC’s dividend policy; changes and

volatility in foreign exchange rates and

interest rates levels, including the

accounting impact resulting from financial

reporting in respect of hyperinflationary

economies; volatility in equity markets; 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 or the conflict in the

Middle East (including the resurgence,

continuation or escalation thereof) and the

related imposition of sanctions and trade

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

developments in Hong Kong and Taiwan,

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 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; 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; the

discontinuation of certain key Ibors and the

transition of the remaining legacy Ibor

contracts to near risk-free benchmark rates,

which continues to expose HSBC to some

financial and non-financial risks; and price

competition in the market segments we

serve;

–changes in government policy and

regulation, including trade and tariff

policies, 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); 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;

evolving regulatory requirements and the

development of new technologies,

including artificial intelligence, affecting

how we manage model risk; model

limitations or failure, including, without

limitation, the impact that high inflationary

pressures and rising 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

2	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

increase the cost or decrease the

availability of our funding and affect our

liquidity 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-

Return on average tangible equity

14.6%

(2023: 14.6%)

Return on average tangible equity excluding

notable items of 16.0% (2023: 16.2%)
adjusted symbol.jpg

Profit before tax

$32.3bn

(2023: $30.3bn)

Net interest income

$32.7bn

(2023: $35.8bn)

Banking net interest income of $43.7bn

(2023: $44.1bn) adjusted symbol.jpg

Operating expenses

$33.0bn

(2023: $32.1bn)

Target basis operating expenses up 5% to

$32.6bn

Common equity tier 1 capital ratio

14.9%

(2023: 14.8%)

Dividend per share in respect of 2024

$0.87

Inclusive of a special dividend of $0.21 per

share.

(2023 dividend per share: $0.61)

Strategic performance

indicators

Our strategy supports our ambition of being

the preferred international financial partner for

our clients.

We are committed to building a business for

the long term, developing relationships that

last.

Read more on our strategy on pages 14 to 16.

Read more on multi-jurisdictional client revenue

on page 134.

Read more on how we set and define our ESG

metrics on page 20.

Read more on our definition of sustainable

finance and investment on page 43.

Grow our Wealth business

$64bn

Net new invested assets generated in 2024,

of which $47bn were in Asia.

(2023: $84bn generated, of which $47bn

were in Asia)

Serve our clients internationally

62%

Wholesale multi-jurisdictional client revenue
adjusted symbol.jpg

is generated by clients banking with us across

multiple markets.

(2023: 61%)

Gender representation

34.6%

Senior leadership roles held by women.

(2023: 34.1%)

Sustainable finance and investment

$393.6bn

Cumulative total provided and facilitated since

1 January 2020.

(2023: $294.4bn)

HSBC Holdings plc Annual Report on Form 20-F	5

Highlights

Financial performance reflected business growth, particularly in Wealth.

We continued to make progress in reshaping the Group and we have announced

a simplification of our organisation structure to accelerate strategic delivery.

Financial performance (vs 2023)

–Profit before tax rose by $2.0bn to $32.3bn,

including a $1.0bn net favourable impact from

notable items. In 2024, these included a gain of

$4.8bn on the disposal of our banking business

in Canada, 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. In 2023, notable items included an

impairment of $3.0bn on our associate, Bank of

Communications Co., Limited (‘BoCom’),

disposal losses of $1.0bn on Treasury

repositioning and risk management and a

$1.6bn gain recognised on the acquisition of

Silicon Valley Bank UK Limited (‘SVB UK’).

Profit after tax increased by $0.4bn to

$25.0bn.

–Constant currency profit before tax

excluding notable items increased by

$1.4bn to $34.1bn, primarily reflecting

revenue growth in Wealth and Personal

Banking (‘WPB’) and Global Banking and

Markets (‘GBM’), partly offset by a rise in

operating expenses, in line with our cost

growth targets.

–Revenue of $65.9bn was stable. There was

growth in revenue from higher customer

activity in Wealth in WPB, and in Equities and

Securities Financing in GBM. In addition, 2023

included disposal losses of $1.0bn related to

Treasury repositioning and risk management.

This was offset by the net adverse impact of

certain strategic transactions described above,

as well as a $0.2bn loss on the early

redemption of legacy securities.

–Constant currency revenue excluding

notable items rose by $2.9bn to $67.4bn.

–Net interest income (‘NII’) decreased by

$3.1bn, reflecting the impact of business

disposals and higher funding costs associated

with the redeployment of our commercial

surplus to the trading book, where the related

revenue is recognised in ‘net income from

financial instruments held for trading or

managed on a fair value basis‘, partly offset by

higher NII in HSBC UK, reflecting the benefit

of our structural hedge. Banking NII of

$43.7bn fell by $0.4bn or 1% compared

with 2023, as increased deployment of our

commercial surplus to the trading book only

partly mitigated the reductions in NII.

–Net interest margin (‘NIM’) of 1.56%

decreased by 10 basis points (‘bps’), mainly

due to increased deployment of our

commercial surplus to the trading book.

–Expected credit losses and other credit

impairment charges (‘ECL’) of $3.4bn were

stable. ECL were $1.8bn in Commercial

Banking (‘CMB’) and $0.2bn in GBM. This

included stage 3 charges relating to the

commercial real estate sector in mainland

China ($0.4bn), the onshore Hong Kong real

estate sector ($0.1bn), and a charge related to

a single CMB customer in the UK. ECL in

WPB were $1.3bn and primarily related to our

legal entities in Mexico, Hong Kong and the

UK. ECL were 36bps of average gross

loans, including loans and advances

classified as held for sale (2023: 32bps).

–Operating expenses grew by $1.0bn or 3%

to $33.0bn, mainly due to higher spend and

investment in technology and the impacts of

inflation, partly offset by reductions related to

our business disposals in Canada and

–France, and from lower levies in the UK and

the US.

–Target basis operating expenses rose by

5%, in line with our cost growth target.

This increase primarily reflected higher spend

and investment in technology, and the impact

of inflation. This is 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.

–Customer lending balances fell by $8bn on

a reported basis but rose by $14bn on a

constant currency basis. Growth included

lending balance growth in CMB and higher

mortgage balances in WPB.

–Customer accounts rose by $43bn on a

reported basis, and $75bn on a constant

currency basis, with growth across all of our

global businesses, primarily in Asia.

–Common equity tier 1 (‘CET1’) capital

ratio of 14.9% rose by 0.1 of a percentage

point, mainly due to capital generation and a

reduction in RWAs through strategic

transactions, offset by dividends, share buy-

backs and organic balance sheet growth.

–The Board has approved a fourth interim

dividend of $0.36 per share, resulting in a

total of $0.87 per share in respect of 2024,

inclusive of a special dividend of $0.21 per

share. We also intend to initiate a share buy-

back of up to $2bn, which we expect to

complete by our first quarter 2025 results

announcement.

Outlook

–We have announced measures to simplify the

Group and we are focused on opportunities

that build on our strong platform for growth.

–We are now targeting a mid-teens return on

average tangible equity (‘RoTE’) in each of

the three years from 2025 to 2027 excluding

notable items, while acknowledging the

outlook for interest rates remains volatile and

uncertain, particularly in the medium term.

–We expect banking NII of around $42bn in

Our current expectation reflects

modelling of a number of market-dependent

factors. If changes in these factors impact the

output of our modelling, we would update our

expectation for 2025 Banking NII in future

quarterly results announcements.

–We retain a Group-wide focus on cost

discipline. We are targeting growth in target

basis operating expenses of approximately

3% in 2025 compared with 2024.

–Our target basis operating expenses for 2025

excludes 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 cost target includes the impact of

simplification-related saves associated with our

announced reorganisation, which aims to

generate approximately $0.3bn of cost

reductions in 2025, with a commitment to an

–annualised reduction of $1.5bn in our cost

base expected by the end of 2026. To deliver

these reductions, we plan to incur severance

and other up-front costs of $1.8bn over 2025

and 2026, which will be classified as notable

items. We are focused on opportunities where

we have a clear competitive advantage and

accretive returns, and we aim to redeploy

around $1.5bn of additional costs from non-

strategic activities into these areas, over the

medium term.

–We expect ECL charges as a percentage of

average gross loans to continue to be

within our medium-term planning range of

30bps to 40bps in 2025 (including lending held

for sale balances).

6	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

–Over the medium to long term, we continue to

expect mid-single digit percentage growth

for year-on-year customer lending balances.

–We expect double-digit percentage average

annual growth in fee and other income in

Wealth over the medium-term.

–We intend to continue to manage the CET1

capital ratio within our medium-term target

range of 14% to 14.5%, with a dividend

payout ratio target basis of 50% for 2025,

excluding material notable items and related

impacts.

Our targets and expectations reflect our current

outlook for the global macroeconomic

environment and market-dependent factors, such

as market-implied interest rates (as of mid-January

2025) and rates of foreign exchange, as well as

customer behaviour and activity levels.

We do not reconcile our forward guidance on RoTE

excluding the impact of notable items, target basis

operating expenses, dividend payout ratio target

basis or banking NII to their equivalent reported

measures.

Reshaping the Group for growth

–We continue to make progress on

reshaping the Group. In 2024, we

completed the sales of our retail banking

operations in France, and exited our

businesses in Canada and Argentina. We have

also enhanced the efficiency of the Group

through smaller inorganic actions.

–In 2024, we served our customers through

three global businesses, Wealth and

Personal Banking, Commercial Banking

and Global Banking and Markets. In

October 2024, we announced that we are

simplifying our organisational structure to

accelerate delivery against our strategic

priorities. Effective 1 January 2025, the Group

operates through four new businesses: Hong

Kong, UK, Corporate and Institutional Banking,

and International Wealth and Premier Banking.

–In January 2024, we completed the sale of

our retail banking operations in France. In

accordance with the terms of the sale, we

retained a €7.1bn ($7.4bn) portfolio of home

and other loans. During the fourth quarter of

2024 we began to actively market this retained

portfolio for sale. On 1 January 2025 we

reclassified this portfolio as hold-to-collect-and-

sell and expect to recognise an estimated $1bn

fair value pre-tax loss in ‘other comprehensive

income’ in equity on the remeasurement of the

financial instruments in 1Q25.

–In March 2024, we completed the sale of

HSBC Bank Canada. The completion of the

transaction resulted in a $4.8bn gain on sale,

inclusive of the recycling of foreign currency

translation and other reserves losses.

Following completion of the sale, the Board

approved a special dividend of $0.21 per

share, which was paid on 21 June 2024.

–In December 2024, we completed the sale

of our business in Argentina. The

completion of the transaction resulted in a pre-

tax loss on sale of $1.0bn during 2024 and a

$5.2bn recycling of foreign currency

translation reserve losses and other reserves

to the income statement in 4Q24.

–During 2024, we completed the sale of our

business in Russia and recognised foreign

currency translation reserve losses of

approximately $0.1bn. We also completed the

sale of our operations in Armenia and exited

our retail banking operations in Mauritius.

–We also announced divestments in our

private banking business in Germany and

our business in South Africa, and we signed

a memorandum of understanding in relation to

the planned sale of our France life

insurance business. In addition, we have

launched a strategic review of our business in

Malta. The review is at an early stage and no

decisions have been made.

–In January 2025, as part of our efforts to

simplify HSBC and increase leadership in our

areas of strength, we announced that we

will begin to wind down our mergers and

acquisitions (‘M&A’) and equity capital

markets activities in the UK, Europe, and

the US, subject to local legal requirements.

We will retain more focused M&A and equity

capital markets capabilities in Asia and the

Middle East.

–In June 2024, we completed the

acquisition of Citi’s retail wealth

management portfolio in mainland China.

This portfolio complements our growing set of

wealth businesses and our ambition to be the

leading international wealth manager for mass

affluent and high net worth individuals in

mainland China.

–In January 2024, we acquired SilkRoad

Property Partners Group – expanding our

real estate investment capabilities in Asia-

Pacific, aligning with our ambition of becoming

a top direct real estate investment manager in

the region.

Acquisitions and disposals that are classified as

material notable items form part of ‘strategic

transactions’ and their impacts are separately

presented in our financial reporting. Read more

on the financial impact of our strategic

transactions on page 111.

Read more on our organisational update on

page 8.

ESG update

Transition to net zero

–Supporting the transition to net zero is a key

priority for HSBC. In our net zero transition plan

published in January 2024, we committed to

continually calibrate our approach to take into

consideration the latest scientific

methodologies, climate-related policy

measures and developments in the real world.

As we near the mid-point towards our 2030

targets, we have begun a review of our

interim 2030 financed emission targets and

associated policies. This forms part of our

annual net zero transition plan review as

referenced in our 3Q24 earnings release in

October.

–In 2020, we set an ambition to achieve net zero

in our own operations and supply chain by

We have made good progress in

reducing our scope 1 and 2 emissions and are

currently on track to deliver reductions of more

than 90% by 2030 compared to our 2019

baseline. However, progress in reducing

emissions in the scope 3 supply chain

component is proving slower than we

anticipated. We currently expect a 40%

emissions reduction across our operations,

travel and supply chain by 2030 which would

mean that we would need to rely heavily on

carbon offsets to achieve net zero in our supply

chain by 2030. As such, we have revisited our

ambition, taking into account latest best

practice on carbon offsets. We are now

focused on achieving net zero in our

operations, travel and supply chain by 2050.

–Since 2020, we have provided and facilitated

$393.6bn of sustainable finance and

investment, which was an increase of $99.2bn

in the past year. This consisted of green and

social financing, alongside other forms of

sustainable financing and investment.

–We have continued to focus on financing

our clients’ transition needs. In 2024, we

launched HSBC Infrastructure Finance to help

realise the financing and advisory

opportunities in creating the infrastructure

for a low carbon economy. We have also

continued to focus on emerging climate

technologies and supply chain

decarbonisation.

–We have continued to participate in cross

sector efforts to support customers’

transitions.

Build inclusion and resilience

–In 2024, 34.6% of senior leadership roles

were held by women, and we are on track

to achieve our ambition of 35% by 2025.

We also continued to work towards meeting

our ethnicity ambitions.

–Digital accessibility is important to us. We are

using the power of technology to help provide

a great digital experience for our customers and

employees, including people with disabilities

and those who are neurodivergent. We also

expanded our efforts to support customers

with disabilities in our branch spaces.

Act responsibly

–We have strengthened our AI governance

processes to help ensure the responsible

development and use of AI and launched

www.hsbc.com/ai to increase the transparency

of our AI strategy with clients and investors.

–We continued to develop our understanding

of our salient human rights issues. In 2024,

we focused 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.

HSBC Holdings plc Annual Report on Form 20-F	7

Who we are

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 be the preferred

international financial partner for our clients.

Our global

In 2024, we served around 41 million customers worldwide through a network

covering 58 countries and territories.

reach

Approximately

41m

Customers bank with us

We employ approximately

211,000

Full-time equivalent staff

Assets of

$3.0tn

Operations in

Countries and territories

Our customers range from individual savers

and investors to some of the world’s

biggest companies, governments and

international organisations. We aim to

connect them to opportunities and help

them to achieve their ambitions.

For further details of our customers and

approach to geographical information, see

page 94.

Our global

In 2024, we served our customers through three global businesses, which focused on

delivering growth in areas where we have distinctive capabilities and have significant

opportunities. Our 2024 operating segment results are presented on this basis.

Effective 1 January 2025, the Group will operate through four new businesses which

are detailed on page 8.

businesses

in 2024

Wealth and Personal

Banking (’WPB’)

WPB helped millions of our

customers look after their day-to-

day finances and manage, protect

and grow their wealth.

WPB who page.jpg

For further details, see page 29. Footnote Arrow.jpg

Commercial Banking

(‘CMB’)

Our global reach and expertise

helped domestic and international

businesses around the world

unlock their potential.

CMB who page.jpg

For further details, see page 31. Footnote Arrow.jpg

Global Banking and

Markets (’GBM’)

GBM provided a comprehensive

range of financial services and

products to corporates,

governments and institutions.

GBM who page.jpg

For further details, see page 33. Footnote Arrow.jpg

For further details on our Footnote Arrow.jpg

organisational update, see page 8.

Revenue in 2024 by global business1

3848290700093

WPB

42%

3848290700345

CMB

32%

3848290700268

GBM

26%

1 Calculation is based on revenue of our global businesses excluding Corporate Centre. Corporate Centre had negative

revenue of $1,929m in 2024. See page 35 for details of Corporate Centre results in 2024.

8	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Our new

Effective from 1 January 2025, we have implemented a new organisational business

structure that aims to unleash our full potential by building on our strong progress in

recent years and driving our success into the future.

organisational

structure

Hong Kong<br><br>Being the market leader in our home market of Hong<br><br>Kong is one of our clear strengths and remains a<br><br>strategic priority.	UK<br><br>Our UK ring-fenced bank has a leading market<br><br>position in our home market of the UK and will<br><br>continue to be a critical pillar of our strategy.
Corporate and Institutional<br><br>Banking<br><br>Our new Corporate and Institutional Banking<br><br>business is a market leader in cross-border<br><br>transaction banking and capital markets and<br><br>integrates our Commercial Banking business<br><br>(outside the UK and Hong Kong) with our Global<br><br>Banking and Markets business.	International Wealth<br><br>and Premier Banking<br><br>This business brings together Premier focused<br><br>banking (outside Hong Kong and the UK), our Global<br><br>Private Bank, and our wealth manufacturing<br><br>businesses of Asset Management and Insurance.
Group Operating Committee
To align with the new structure, a new Group Operating Committee comprised of 12 members now serves as<br><br>the leading decision-making committee of the Group, replacing the Group Executive Committee of 18<br><br>members. The Group’s functions are also being realigned to support the new business structure.
* Both our Hong Kong and UK businesses will serve our personal banking customers and commercial clients residing in these<br><br>home markets.
For further details on our senior management team, see page 272.<br>

Our values

Our values help define who we are as an organisation, and are key to our long-term success.

We value<br><br>difference	We succeed<br><br>together	We take<br><br>responsibility	We get<br><br>it done

Our stakeholders

Building strong relationships with our stakeholders helps enable us to deliver our strategy in

line with our long-term values, and operate the business in a sustainable way.

Our stakeholders are the people who<br><br>work for us, bank with us, own us,<br><br>regulate us, and live in the societies<br><br>we serve and the planet we all<br><br>inhabit. These human connections<br><br>are complex and overlap.	Many of our employees are<br><br>customers and shareholders, while<br><br>our business customers are often<br><br>suppliers. Guided by our purpose,<br><br>we aim to create value for our<br><br>customers and shareholders.	Our size and global reach mean our<br><br>actions can have a significant<br><br>impact. We are committed to doing<br><br>business responsibly, and thinking<br><br>for the long term. This is key to<br><br>delivering our strategy.

For further details of how we are engaging with our stakeholders, see page 19.

HSBC Holdings plc Annual Report on Form 20-F	9

Group Chairman’s shareholder letter

Sir Mark E Tucker<br><br>Group Chairman
2024 was a year of strong performance. We continued to help<br><br>our customers navigate challenges and capture meaningful<br><br>opportunities, whilst providing increased returns for our<br><br>shareholders. Looking ahead, we have the right people and<br><br>structure to drive accelerated growth in 2025 and beyond.

In 2024, global economic growth was mixed.

In the West, the US remained an

outperformer, while growth across Europe

was disappointing. In Asia and the Middle

East, there was broadly steady growth. With

inflation falling and with signs of the labour

market softening, the US Federal Reserve

was able to start cutting rates, as did most

advanced economies.

This was against a backdrop of significant

geopolitical uncertainty, heightened by

numerous and consequential elections across

the world. The war in Ukraine, now entering

its fourth year, and the conflicts and

continuing tensions in the Middle East, have

had a tragic human impact. Our thoughts are

with all those who have suffered and

continue to experience the devastating

consequences.

In this context, our focus is on our

customers, leveraging our global network to

help them navigate the challenges and

capture the opportunities that emerge. That

approach, combined with the disciplined

execution of our strategy, delivered another

strong financial performance and increased

returns in 2024.

And we are very well positioned for the

future.

HSBC’s 160th Anniversary

2025 will mark HSBC’s 160th anniversary.

In 1865, HSBC’s founders started out with a

clear and simple objective: to establish a bank

in Hong Kong and Shanghai that would

facilitate local and international trade,

connecting East and West, and the many

places in-between.

That objective is as relevant and significant

today as it was then.

2024 progress and performance

In 2024, we delivered profit before tax of

$32.3bn - an increase of $2.0bn compared

with 2023. Our return on average tangible

equity was 14.6%, or 16% excluding the

impact of notable items.

We delivered increased returns for our

shareholders. The Board approved a fourth

quarterly dividend of $0.36 per share, bringing

the total dividend announced for 2024 to

$0.87 per share. This includes the special

dividend of $0.21 per share that was paid in

June following the completion of the sale of

HSBC Bank Canada. In addition, we

announced three share buy-backs in respect

of 2024 worth a total of $9bn. And today, we

announced a further share buy-back of up to

$2bn.

Since the start of 2023, we have repurchased

11% of the issued share count. Combined

with our sustained levels of profitability, this

led to greater earnings and dividends per

share for our shareholders.

Dividends paid in 2024, together with a more

than 20% increase in the share price,

delivered a total shareholder return for the

year of more than 30%.

Our performance demonstrates that our

strategy is working. To maintain, and indeed

accelerate, the momentum, we are being

very deliberate in creating investment

capacity for priority areas, focusing on long-

term strategic growth.

Optimising cost and capital allocation, we

completed the sale of our businesses in

Canada, Russia, Argentina, and Armenia, as

well as our retail banking operations in France

and Mauritius. We announced the planned

sale of our business in South Africa and of

our private banking business in Germany, as

well as the planned sale of our life insurance

business in France.

In parallel, our strategic investments are

yielding significant results. In Wealth, for

instance, revenue grew by 18% in 2024,

including a 21% increase in fee and other

income. The continued inflow of Net New

Invested Assets and growth in total

customers point to the material upside

opportunity. In Hong Kong, for instance, we

added approximately 800k new-to-bank

customers.

10	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

"Our performance

demonstrates that our

strategy is working. To

maintain, and indeed

accelerate, the

momentum, we are

being very deliberate in

creating investment

capacity for priority

areas, focusing on long-

term strategic growth."

At the same time, we secured multiple

additional licences to expand our operations

in mainland China. In India, we received an

approval earlier this year to open bank

branches in 20 new cities that are at the

centre of the expanding wealth and

international opportunity.

We will continue to focus on and invest in

growth opportunities where we have a clear

competitive advantage.

Leadership and Board Changes

Following Noel Quinn’s decision to retire as

Group Chief Executive, the Board ran a

rigorous and robust process to appoint his

successor.

I would like to once again pay tribute to

Noel’s exceptional leadership and thank him

for his unwavering commitment and

dedication to HSBC during his 37 years of

service. We wish him the very best in all of

his future endeavours.

In September, Georges Elhedery became our

Group Chief Executive. He brings a wealth of

experience and an outstanding track record of

delivery, achieved over a career spent

working in Asia, the Middle East and Europe.

In a little over five months, he has already

made his mark.

From 1 January 2025, we began operating

through four businesses: Hong Kong, the UK,

Corporate and Institutional Banking, and

International Wealth and Premier Banking.

The objective is to create a simpler and more

dynamic organisation - with faster decision-

making and clear lines of accountability.

Georges was succeeded as Group Chief

Financial Officer by Pam Kaur, who joined the

Board as an Executive Director, having

previously served as Group Chief Risk and

Compliance Officer.

At the 2024 Annual General Meeting (‘AGM’),

David Nish retired from the Board. David

made invaluable contributions over eight

years, particularly as Chair of the Group Audit

Committee and as Senior Independent

Director. Ann Godbehere took over as Senior

Independent Director. Ann’s extensive

financial services experience, over a 30-year

career spanning insurance, retail and private

banking, and wealth management, positions

her very well for this role. Brendan Nelson

took over as Chair of the Group Audit

Committee. His UK and international financial

and auditing expertise and experience are

enormously valuable.

In 2024, the Board held meetings in mainland

China, Dubai, Singapore, New York, and

London. On each occasion, we had the

privilege and pleasure to meet with valued

clients, government officials, regulators, and

colleagues.

Our AGM in London and the Informal

Meeting of our Hong Kong Shareholders

provided substantive opportunities to engage

with our shareholders, on important issues

related to the Group.

Global outlook

The economic outlook remains uncertain with

potential downside risks to global growth

from trade frictions and supply chain

disruptions. Inflation has declined but is

proving stubborn and could be impacted by

oil and gas prices, as well as any trade tariffs.

Global growth is expected to remain fairly

stable in 2025, with the US still likely to

remain the major engine of growth. However,

policy priorities are adding to uncertainties

regarding growth prospects around the world.

Already, it appears that the improvement in

world trade growth may be starting to falter.

In China, the package of fiscal and monetary

measures announced in the final quarter of

2024 was welcome and helped it reach its

annual target of ‘around 5%’ GDP growth.

Aided by its transformation to a consumption-

led and innovation-focused economic model,

we expect it to deliver a comparable

performance in 2025. Hong Kong should also

continue to expand, with its growth directly

linked to mainland China.

Elsewhere in Asia, changing supply chains

and resilient local demand helped to drive

growth in a number of markets, including

India. Over the longer term, the demographic

dividend will benefit countries like India and

markets across South and Southeast Asia.

As this happens, we also continue to see

great potential in the fast-growing corridor

between Asia and the Middle East, where

strong demographics combine with large

scale capital spending on infrastructure and

further diversification, which are set to

continue.

In Europe, with inflation pressures easing and

interest rates on a downward trajectory,

consumer spending should rise. As a result,

we expect the Eurozone to expand this year.

Meanwhile, the new UK government is

pursuing a pro-growth agenda, which we fully

support.

Our people

I want to end by expressing the Board’s

immense appreciation and gratitude to all our

colleagues for driving our Group forward.

All that we delivered in 2024 was only made

possible by their sustained efforts, energies,

and execution focus. They are the lifeblood of

the HSBC Group, serving our customers and

creating value for shareholders.

Sir Mark E Tucker

Group Chairman

19 February 2025

HSBC Holdings plc Annual Report on Form 20-F	11

Group CEO’s shareholder letter

George Elhedery_NEW.jpg

Georges Elhedery<br><br>Group CEO
A simple, more agile, focused organisation built on our core<br><br>strengths, delivering sustainable strategic growth for our<br><br>customers and shareholders.

RoTE

14.6%

(2023: 14.6%)

RoTE excluding notable items

16.0%

(2023: 16.2%)

Profit before tax

$32.3bn

(2023: $30.3bn)

Dear fellow shareholders,

The opportunity to lead HSBC is a privilege.

Even more so as we celebrate our 160th

anniversary. Like each of my predecessors, I

see my responsibility as delivering

sustainable strategic growth for our

shareholders. This begins by putting our

customers at the centre of everything we do.

Our financial strength, international network,

heritage, and brand mean we build upon firm

foundations.

We look to the future with confidence.

We begin from a position of strength, which

is reinforced by our 2024 performance.

During the year, we delivered a return on

average tangible equity (‘RoTE’) of 14.6%.

This includes several notable items, in

particular related to strategic disposals.

Excluding these, our RoTE was 16.0%,

achieving our ‘mid-teens’ target. Our

common equity tier 1 (‘CET1’) capital ratio

was 14.9%, reflecting our long-standing

financial strength. With our continued focus

on cost discipline, we managed cost growth

on our target basis of around 5%, which was

in line with our targeted cost growth. This

strong performance enabled us to announce

$26.9 billion in returns to our shareholders

through dividends and share buy-backs,

which we expect to remain central to our

strategy.

Simple, more agile, focused

The world in which we operate is changing

quickly. We are adapting to help our

customers navigate new complexities. By

doing so, we will open up a world of

opportunity as we serve their needs,

delivering on our strategy.

Since assuming the role in September, I have

focused on injecting energy and intent into

the way we deliver our strategy. We are

being more agile in the way we allocate our

resources and invest to prepare for the

future. That includes retiring non-strategic

assets and embracing the productive power

of new technologies and tools to modernise

HSBC and enhance the way we serve our

customers.

We have renewed vigour in finding the

efficiencies that will optimise our resource

allocation, be that geographical, business line

or balance sheet. This will enhance the way

we actively and dynamically manage costs

and capital, and target investments.

We will be guided by three overarching

priorities:

–Focus on our customers, delivering high

levels of satisfaction;

–Drive long-term growth by focusing on our

strengths, increasing our leadership and

market share in the areas where we can

generate attractive returns;

–Simplify our structure and operating model.

Reshape and rationalise our portfolio, to

meet the needs of a fast-changing world.

To achieve this, I have put in place a smaller,

core team of exceptionally talented leaders.

They are each committed to fostering a culture

of excellence for our colleagues, driven by a

growth-orientated mindset. HSBC’s many

talented colleagues around the world are key to

delivering the exceptional customer experience

that will drive our future growth.

We have also simplified the organisation in

two important ways.

First, by moving away from a complex matrix

governance structure built around three

business lines and five geographical regions

to create four new businesses. Each firmly

rooted in our core strengths:

–Corporate and Institutional Banking, which

combines our two wholesale businesses;

–International Wealth and Premier Banking,

to focus on accelerating the build out of our

global wealth proposition;

12	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

"Our ambition is to

unlock HSBC’s full

potential for the benefit

of all our stakeholders,

provide excellent

customer outcomes that

enhance our franchise

and brand, generating

the strategic growth that

will deliver attractive

returns for you, our

shareholders."

–Our two home markets of Hong Kong and

the UK, where we have scale and market-

leading positions.

HSBC’s supporting infrastructure is being

simplified and realigned to enable these four

businesses to grow.

Simply put, we are aligning our structure to

our strategy.

Second, we are significantly improving our

operating model, led by a tighter team at the

Group Operating Committee, that will:

–Provide clarity of accountability, empower

colleagues to make faster decisions and

accelerate the pace at which we generate

greater productivity;

–Make HSBC simple, with fewer

management lines and layers, and less

committees, designed to reduce

bureaucracy, create closer collaboration,

emphasise teamwork, and facilitate the

flow of ideas and innovation;

–Adapt quickly to the factors that are

shaping the economies and industries in

which our customers operate;

–Sharpen and strengthen our focus on

capital efficiency and firm-wide risk

management.

This will create a step change in the way we

work, the way we serve customers and the

way we generate sustainable strategic

growth, driving higher returns for our

shareholders.

In short, unlocking HSBC’s full potential.

Designed to deliver strong, sustainable

strategic growth

For 160 years, HSBC has been defined by its

financial strength and international network.

Both remain enablers of everything we do.

What is changing is the clarity, speed and

intensity with which we are repositioning

HSBC around our four complementary, clearly

differentiated businesses.

Corporate and Institutional Banking (‘CIB’) is

an international wholesale bank with

significant competitive advantages. It has a

powerful deposit franchise with financing

capabilities supported by the strength of our

balance sheet and our network. It has the

products and skills required to serve the

global banking needs of international

corporate clients, particularly in transaction

banking where we continue to invest. This

positions us to better capture global and intra-

regional flows as supply chains reconfigure,

new trade routes emerge, economies grow,

and customers’ expectations of financial

services evolve.

The future economy will require financing and

investment in sectors such as advanced

technologies, specifically digitalisation,

computing and generative AI, as well as clean

energy and healthcare. CIB is well positioned

to facilitate this by helping entrepreneurs to

secure the capital they need to build the

businesses of the future and by supporting

our customers as they look to decarbonise.

International Wealth and Premier Banking

(‘IWPB’) is ideally placed to capture the

increasing number of affluent and high-net-

worth customers. Especially those with

international banking needs who seek new

investment opportunities to help them to

protect and grow their wealth. Our

recognised brand, financial strength and

complementary footprints across Asia and

the Middle East serve to reinforce HSBC‘s

position in the world’s fastest-growing wealth

markets. We also have an asset management

business with distinct specialism in both

regions offering customers access to

investment opportunities across asset

classes.

The Hong Kong and UK businesses give us

strong platforms in our home markets. We

serve personal banking customers and small

and medium enterprises in these businesses.

In Hong Kong specifically, where HSBC was

founded, Hang Seng Bank, a customer-

centric community bank, is a strategically

important investment of the HSBC Group,

which enhances the strength of our franchise

and market-leading position. We also have a

fast-growing insurance manufacturing

business in Hong Kong, leveraging the

inflows that are propelling Hong Kong to

become the leading international wealth hub.

In the UK, we have a leading retail,

commercial and innovation-focused bank

which continues to build market share.

Customers in Hong Kong and the UK with

global banking needs will be able to access

the power of our international network

through our CIB and IWPB businesses, that

are anchored in these two leading

international financial centres.

HSBC Holdings plc Annual Report on Form 20-F	13

Financial strength

CET1 ratio

14.9%

(2023: 14.8%)

In 2024, our strong financial performance

enabled us to announce

$26.9bn

in returns to our shareholders through

dividends and share buy-backs.

Cost discipline

Operating expenses

$33.0bn

(2023: $32.1bn)

Target basis operating expenses up 5% to

$32.6bn

Delivering on our priorities to customers

and shareholders

HSBC is a highly connected, global

organisation. Our international network is a

significant differentiator.

By refocusing on our core strengths, we are

creating a simple, more agile, focused

organisation structured to better serve our

customers and deliver for our shareholders.

We have taken the first deliberate and

decisive steps. We continue to move at pace

and with a relentless focus on actively

managing our costs. Not as a one off, but as

an embedded mindset.

How we deliver on our three priorities is

equally important. We are instilling a culture

of excellence, leadership and accountability

throughout the firm. We are also undergoing

a comprehensive transformation of our

operations, modernising our infrastructure,

and investing in technology such as AI,

generative AI, data and analytics. This will

enhance customer experience as well as

drive operational excellence.

The aim being to create a refocused,

reinvigorated HSBC, firmly rooted in four

complementary businesses with the ambition

to generate high levels of total shareholder

returns.

Today’s actions define a confident

future

I am confident about our future and what we

can achieve.

As we celebrate our 160th anniversary, our

history and heritage stand us in good stead.

In so many ways, adapting to new economic

realities and technologies is what we have

always done. It brings out the best in our

people and culture, especially when acting as

a trusted advisor to our customers as they

navigate the world’s economic uncertainties

and look towards new opportunities.

As we look to the future, our strategic

priorities are clear, our leadership team is

now in place, supported by a simplified

structure that enables action.

We have clarity on who we are and what we

seek to achieve. We are driven by a precision

of purpose that guides the way we do

business, the values we uphold and the way

we serve our customers, colleagues and

communities.

We are prioritising a high-performance culture

where employees are passionate about what

they can achieve and rewarded for their

strong customer focus, skills, ambition and

initiative. We will invest in our people, one of

our most valuable assets, providing them

with expansive career opportunities and

supporting them in developing future-focused

skills, establishing HSBC as an employer of

choice and a great place to work.

A strong culture and effective leadership will

be key to our long-term success.

I would like to thank all of my colleagues for

their valuable contributions to our results. It is

a privilege to work with such talented people.

Their dedication, commitment, and desire to

deliver for our customers differentiates HSBC

and is key to delivering long-term growth.

The actions we are taking will have clear and

tangible impact. Our ambition is to unlock

HSBC’s full potential for the benefit of all our

stakeholders, provide excellent customer

outcomes that enhance our franchise and

brand, generating the strategic growth that

will deliver attractive returns for you, our

shareholders.

Georges Elhedery

Group CEO

19 February 2025

14	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Our strategy

During 2024, we continued to implement our strategy

aligned to our purpose, values and ambition.

On 22 October 2024, we announced that we

would simplify our organisational structure to

help accelerate delivery against our strategic

priorities. Effective 1 January 2025, we are

operating through four new businesses:

Hong Kong, UK, Corporate and Institutional

Banking, and International Wealth and

Premier Banking. The Group’s functions are

being realigned to support the four

businesses. For 2024, the bank operated

under, and our reporting remained aligned to,

our prior global business structure, Wealth

and Personal Banking, Commercial Banking

and Global Banking and Markets.

Building leadership where we are strong

Our strategic priorities remain clear. We aim

to maintain and build on our leadership in

Hong Kong and the UK. International

connectivity distinguishes HSBC – indeed,

international trade has always been at the

heart of our business. We were founded in

Hong Kong in 1865 and by 1875 had

expanded into seven countries across Asia,

Europe and North America.

We are committed to building on our strong

platform for growth. HSBC is a highly

connected, global business and the plans we

set out in October 2024 aim to increase our

leadership and market share in areas where

we have competitive advantage, deliver

best-in-class products and service excellence

to our customers, and create a simple,

more agile, focused organisation with

clearer lines of accountability and faster

decision making.

2024 results

We delivered a good set of results again in

Our reported profit before tax was

$32.3bn. During 2024, we reported several

notable items, in particular related to the

disposal of our businesses in Canada and

Argentina. To facilitate comparison across

periods, we also consider profit before tax

excluding notable items and the impact of

foreign currency translation. On this basis,

profit before tax was $34.1bn, compared with

$32.7bn in 2023. Our reported revenue of

$65.9bn was broadly stable compared with

Excluding notable items and in

constant currency, we grew revenue by 5%

compared with 2023.

In 2024, we achieved a RoTE of 14.6%.

GBM

$7.1bn

During 2024, we reported several notable

items, in particular related to strategic

disposals. To facilitate comparison across

periods, we also consider our RoTE excluding

the impact of notable items. In 2024, RoTE

excluding notable items was 16.0%,

achieving our target of ‘mid-teens’. We

delivered a 16.2% RoTE excluding notable

items in 2023.

14.6%

Return on average tangible equity

(2023: 14.6%)

Reported profit before tax

Corporate Centre

$1.2bn

3848291422920

$32.3bn

(2023: $30.3bn)

WPB

$12.2bn

CMB

$11.9bn

Progress in our affluent and wealth businesses

In WPB, revenue increased by 7% compared

with 2023 on a constant currency basis.

We continued to demonstrate strategic

progress during 2024, building our affluent

and wealth propositions, taking advantage of

the growth of wealth assets, specifically in

Asia. At 31 December 2024, wealth balances

in WPB were $1.8tn, an increase of 7%

compared with 2023. Within this we

attracted net new invested assets of $64bn

in 2024, with $47bn booked in Asia. Wealth

deposits, including Premier and Global

Private Banking deposits, grew to $555bn.

Revenue in Wealth was up $1.3bn or 18%

on a constant currency basis, with an

increase in Asia of 32%. This supports our

medium term target to grow Wealth fees

and other income at a double-digit

percentage compound annual growth rate

over the medium term. Our total invested

assets were $1.3tn, up from $1.2tn in 2023.

There was a strong performance in our WPB

insurance business, which delivered revenue

growth of 32% to $1.8bn. Our insurance

manufacturing new business contractual

service margin (‘CSM’) of $2.5bn increased

by 49% compared with $1.7bn in 2023. The

growth in CSM underpins our potential future

revenue from this business.

$1.8tn

Wealth balances

Increased by 7% compared with 2023

HSBC Holdings plc Annual Report on Form 20-F	15

Progress in our wholesale businesses

In CMB, revenue declined by 4% compared

with 2023 on a constant currency basis. This

was primarily due to the non-recurrence of a

gain in 2023 on the acquisition of SVB UK. In

GBM, constant currency revenue grew by

11% compared with 2023.

Our strength in international connectivity is a

key differentiator. We partner with our clients

as they expand internationally. The

reconfiguration of global supply chains plays

to our strength in network business: in our 58

markets, we are well placed to help clients

manage increased complexity.

Transaction banking is a leading HSBC

proposition. We ranked second by Global

Payments Solutions (‘GPS’) revenue in the

first three quarters of 20241. We also

facilitated over $850bn in trade2 and have

been ranked first in revenue for the last

seven consecutive years3. We generated

revenue of $26.3bn from transaction banking

during 2024, which was broadly stable

compared with 2023. We were ranked joint

second in Global Foreign Exchange (‘GFX’)

revenue4 and second in APAC securities

services in the first three quarters of 20245.

$850bn

Trade volume facilitated

1 Source: Coalition Greenwich Competitor Analytics

– 9M24.

2 HSBC internal management information,

excluding Hang Seng, Malaysia and Germany.

3 Source: Coalition Greenwich Competitor Analytics

– 9M24.

4 Source: Coalition Greenwich Competitor

Analytics – 9M24.

5 Source: Coalition Greenwich Competitor

Analytics – 9M24.

Performance across geographies

Hong Kong

We have the leading banking franchise in Hong

Kong, with $575bn in customer deposits and

market leadership in a number of product

areas6. In 2024, reported revenue was

$21.2bn, an increase of 6%. We welcomed

799,000 new-to-bank customers in WPB, with

the rate of growth accelerating from 345,000 in

the first half of 2024, to 454,000 in the second

half. Our 2024 full year new-to-bank customers

numbers grew by 66% compared with 2023.

We also continued to solidify our leadership

position and grow our WPB business. In our

wholesale businesses, we focused on

maintaining our leading position across multiple

products. In trade finance, our market share

was 29.2%, an increase of 3.5 percentage

points from 20237.

HSBC UK has a top 3 franchise8 with $340bn

in customer deposits. Reported revenue was

$12.8bn in 2024, a decrease of 5%, although it

represented an increase of 5% excluding the

$1.6bn gain on acquisition of Silicon Valley

Bank UK – a notable item in 2023. We

continued to grow our CMB business and we

are ‘Share Leader’ in UK corporate banking

with 75% market penetration, according to

Coalition Greenwich. In our WPB business, we

grew mortgage lending balances by $4.6bn

since 31 December 2023 on a constant

currency basis, taking our UK mortgage

market share from 8.0% to 8.1%9. In the UK,

we see the opportunity to continue building

our mortgage franchise and build share in

small and medium-sized enterprise (‘SME’)

banking.

Other markets

In addition to Hong Kong and the UK, we

have an established presence in a number of

markets, including mainland China, India,

Singapore and the UAE. These markets are

well connected to international trade, wealth

and investment flow and are key to our

international connectivity.

In 2024, we reported profit before tax of

$3.2bn in our mainland China business,

including a $2.2bn share of profit from our

associate, BoCom. We have a strong client

franchise in mainland China, helping to

support clients’ international needs. We were

the Best Trade/Supply Chain Finance Bank in

We also completed the acquisition of

Citi’s retail wealth management portfolio, and

supported by our expanded onshore Global

Private Banking business, grew our wealth

invested assets by 61% compared with 2023.

In India, we reported a profit before tax of

$1.7bn. We aim to continue growing our

wholesale franchise by taking advantage of

corporate supply chains. In 2024, we were

recognised by Euromoney as the number one

International Bank in India. We are also

tapping into the wealth pools of the Indian

diaspora through Global Private Banking. In

2024, we remained the top foreign bank for

non-resident Indians in wealth11. In January

2025, we received permission to open 20

further branches, the largest such approval

for a foreign bank in over a decade.

In Singapore, we generated profit before tax

of $1.4bn. Singapore is our primary wholesale

offshore booking centre and wealth hub

within the ASEAN region and is a centre for

our transaction banking operations. In 2024,

we were recognised by Euromoney as the

Best International Bank and the Best Cash

Management Bank in Singapore. We

continued to grow our Premier and Wealth

balances in Singapore in 2024.

In the UAE, we generated $0.9bn in profit

before tax. We continue to be the largest

foreign bank in the UAE12 and aim to continue

growing our institutional and international

wholesale banking business, leveraging the

vital role the UAE and the Middle East play in

global trade. In 2024, we were ranked

number one in equity and debt capital

markets in MENAT for the 4th consecutive

year13 and Euromoney recognised us as the

UAE’s Best International Bank. We

established onshore Global Private Banking in

2022 and have continued to invest in our

wealth platforms including our global online

trading platform WorldTrader, launched in

Our Wealth invested assets grew by

25% compared with 2023, and we saw an

increase of 8% in our international new-to-

bank customers during the same period.

As noted above, from 1 January 2025, we are

operating through four businesses, while

during 2024, we operated through three

global businesses: WPB, CMB and GBM.

799,000

Hong Kong WPB new-to-bank customers

75%

UK corporate banking market penetration

6HSBC internal analysis based on loans and

advances to customers and customer accounts in

our Hong Kong legal entity as of 30 June 2024,

and the financial data presented in the 2Q24

results announcements of 13 selected peer banks.

7Source: HKMA.

8HSBC internal analysis based on the 9M24 PBT

of HSBC UK and the financial data presented in

the 3Q24 results announcements of four

selected peer banks.

9Source: Bank of England.

10Source: Corporate Treasurer Awards 2024.

11Source: Indian Mutual Fund Industry.

12HSBC internal analysis based on 9M24 revenue,

deposits and advances, using peers' published

results.

13Source: Bloomberg league table.

16	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Reshaping and focusing the Group

We have continued to make progress in

reshaping the Group. In 2024, we completed

the sales of our businesses in Canada,

Russia, Armenia and Argentina. Furthermore,

we disposed of our retail banking operations

in France and Mauritius.

We also announced planned disposals in our

private banking business in Germany and our

business in South Africa. We signed a

memorandum of understanding in relation to

the planned sale of our France life insurance

business and have launched a strategic

review of our business in Malta. The review

is at an early stage and no decisions have

been made.

We completed the acquisition of Citi’s retail

wealth management portfolio in mainland

China and SilkRoad Property Partners Group

in Singapore.

We expect further reshaping actions as we

align the Group with our four businesses.

Deposit strength core to our strategy

We are proud of our deposit strength across

all of our franchises, which has built steadily

since our founding. We have a total deposit

base of $1.65tn, comprised primarily of

current and savings accounts. Our balance

sheet is also highly liquid with customer

loans of $0.93tn, representing 56% of

customer deposits. We operate with a

customer deposits surplus of $724bn relative

to customer loans. We hold a surplus of

deposits in each of our major functional

currencies, including US dollars, Hong Kong

dollars, sterling, renminbi and the euro. We

also operate a surplus of customer deposits

relative to customer loans in our major

operating entities, including The Hongkong

and Shanghai Banking Corporation Limited,

HSBC UK and HSBC Bank plc.

The long 2009-2021 period of close-to-zero

central bank interest rates and very low

government bond yields in many of our

operational currencies constrained our

earnings in prior years. One contributor to

our rise in profits in recent years has been a

return of central bank interest rates and

government bond yields to levels more

typical of prior decades.

Over the period from 2022 to 2024, we

increased both the size and duration of our

structural hedge, further stabilising our

banking NII. The sensitivity of our banking NII

to a 100bps parallel downward shift in

interest rates has reduced from c.$(7)bn at

30 June 2022, to $(2.9)bn at 31 December

This was primarily due to hedging

actions, although higher prevailing interest

rates also contributed to a reduction in

sensitivity. The Group expects to further

increase the size and duration of the

structural hedge, subject to market

conditions.

$1.65tn

Customer deposit balances

(2023: $1.61tn)

$0.93tn

Customer loans

(2023: $0.94tn)

Improving operational excellence through artificial intelligence

We are transforming our operations to

enhance customer experiences through the

use of artificial intelligence (‘AI’) and

automation to help deliver faster,

personalised and more seamless services.

Through the reduction of inefficiencies and

streamlining processes we will help provide

quicker responses and better journeys for

our customers. The investments we are

making in Technology will contribute to a

simpler, safer organisation with operational

resilience and stability at its core, helping to

create lasting value for both our customers

and stakeholders.

By harnessing AI capabilities, HSBC aims to

improve customer service through AI

supported mobile apps and strengthened

contact centre capabilities, as well as

improving process efficiency in onboarding,

know-your-customer, and credit applications.

We are supporting our engineers through the

scaled roll out of coding assistants to

improve technology productivity, and we are

using AI to help protect the bank and our

customers more effectively against fraud and

cyber crime.

We are committed to the responsible use of

AI, ensuring that our initiatives align with

industry and regulatory standards and best

practices. Our governance frameworks aim

to enable robust prioritisation of use cases

whilst mitigating potential risk associated

with AI deployment.

HSBC Holdings plc Annual Report on Form 20-F	17

Our ambitions

Mid-teens RoTE extended

During 2024, we announced our intention to

target a mid-teens RoTE1, excluding the

impact of notable items, for 2025. Alongside

our 2024 annual results, we have extended

this target to each of 2025, 2026 and 2027.

We will consider our cost and investment

plans within this framework.

Simplification

With our 2024 results, we have announced

that we aim to generate approximately

$0.3bn of cost reductions in 2025, with a

commitment to an annualised reduction of

$1.5bn in our cost base expected by the end

of 2026. These savings are primarily people-

related organisational design reductions, have

negligible impact on revenues and are aligned

to the strategic reorganisation of the Group.

We have simplified our businesses in our

domestic markets, Hong Kong and the UK.

Our scale retail and commercial banking

platforms here will benefit from shorter lines

of decision making, empowering our

colleagues to get things done.

We plan to intensify successful partnerships

between our domestic markets and our

international franchises, CIB and IWPB, for

those clients with more complex and

networked needs. Ensuring we continue to

provide the services and products our global

scale enables us to create is key to our

growth. We will continue to service Wealth

clients; and internationally active commercial

and corporate clients in Hong Kong and the

UK on an integrated basis.

Growth

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 see growth opportunities in each of our

four franchises. In CIB, these include further

expanding our international network

businesses, notably transaction banking. In

IWPB, we intend to particularly focus on

building our successful wealth business,

especially in Asia. In Hong Kong, we intend to

support continued growth in non-resident

customer numbers and will seek to build on

our strong SME proposition. In the UK, we

see the opportunity to continue building our

mortgage franchise and build share in SME

banking.

We will consider using cost savings

generated through business disposals for

incremental re-investment into our core

franchises. This would be in addition to our

ongoing investments.

Capital generation

Our business model is designed to be highly

capital generative. In 2024, our common

equity tier 1 (‘CET1’) capital ratio grew from

14.8% to 14.9% as at 31 December 2024.

During the calendar year, we paid $5.5bn

ordinary dividends with respect to 2024, we

expect to pay a further $6.4bn through the

fourth interim dividend and we expect to

repurchase $11bn of our shares for

cancellation with respect to 2024. The capital

generated on the disposal of our Canadian

banking operations supported the $0.21 per

share special dividend paid in 2Q24,

representing a further $3.9bn distribution.

We aim to maintain a CET1 capital ratio in the

range of 14 to 14.5% over the medium term.

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

basis1). Our preferred use of capital after

paying the dividend is to support the growth

of our four businesses.

In recent years, much of our income growth

has come from capital-light income streams,

such as deposit revenue from higher interest

rates; and from fee income, notably in

Wealth. Our RWAs of $838.3bn at 31

December 2024 remained broadly stable

compared with 31 December 2022.

Combined with strategic actions, this enabled

the Group to buy back 11% of its outstanding

shares in two years, while reporting a CET1

ratio rising from 14.2% to 14.9% over the

two years.

Should organic growth in any given year

require less incremental capital than the

Group has retained after paying ordinary

dividends to our shareholders, we plan to

consider further share buy-backs.

c.$1.5bn

Annualised reduction in our cost base by the

end of 2026

14-14.5%

CET1 capital ratio over the medium term

50%

Dividend payout ratio target basis1

1We do not reconcile our forward guidance on

RoTE excluding the impact of notable items,

target basis operating expenses, dividend payout

ratio target basis or banking NII to their

equivalent reported measures.

18	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

ESG overview

Our approach to environmental, social and governance is rooted in

creating long-term value for our customers and the economies that we serve.

Our approach

Our approach to ESG is focused on creating

long-term value for our customers and wider

stakeholders. We focus our efforts on three

areas: the transition to net zero, building

inclusion and resilience, and acting

responsibly.

Our approach to the transition

Supporting the transition to net zero is a key

priority for HSBC. We believe the transition to

net zero will help make the global economy

stronger and more resilient against mounting

climate impacts. In October 2020, we

announced our ambition to become a net zero

bank by 2050. We believe supporting our

customers’ transition both benefits their

business and helps generate long-term

financial returns for our shareholders.

Since we set our net zero ambition, collective

global efforts have driven progress in some

vital areas of the decarbonisation challenge.

Billions of dollars have been allocated to clean

energy. Falling costs of renewables and

advancements in clean technologies have

accelerated their adoption. And while it is

taking time for more nascent industries such

as hydrogen, carbon capture and storage and

sustainable aviation fuel to scale, with

supportive government policies and industrial

strategies their adoption can be accelerated,

and their costs reduced.

We have always recognised that the

transition would not be linear. Yet while the

transition has progressed, the global pace of

change remains insufficient. As the UN’s

latest Emission Gap report recently warned,

current government policies, conventional

energy demand, clean technology adoption,

and wider consumption patterns are not yet

aligned with the Paris Agreement goal of

holding the 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.

As a bank, our ability to finance our

customers’ transition and, in turn, progress

toward and meet our targets, relies on

decarbonisation solutions scaling across

sectors, alongside growing demand from our

customers for capital to transition their

business models. Ambitious and credible

governmental policy measures also remain

fundamental prerequisites for decarbonising

the real economy at sufficient pace. We are

limited by, and cannot on our own overcome,

the present lag in policy measures and the

overall slower pace of the transition. These

factors put our customers’, and our own, net

zero ambitions at risk.

In our net zero transition plan published in

January 2024, we committed to continually

calibrate our approach to take into consideration

the latest scientific methodologies, climate-

related policy measures and developments in

the real world given that our sector portfolios

reflect progress in the real economy in the

regions where we operate. As we near the mid-

point towards our 2030 targets, it is important

to take stock of our own progress so far. We

have made good progress in reducing the

emissions from our own operations but more

uneven progress towards our ambitions for our

financed emissions footprint.

Net zero in our own operations,

business travel and supply chain

In 2020, we set an ambition to reach net zero

in our operations and supply chain by 2030

and we continue to make good progress in

driving down our direct emissions, which are

largely derived from energy consumption. We

are currently on track to achieve a reduction

in our scope 1 and 2 emissions of more than

90% by 2030 compared with our 2019

baseline, through a programme of energy

efficiency initiatives and significant

investment in renewable power. However,

progress in reducing emissions in the scope 3

supply chain component is proving slower

than we anticipated, driven mainly by the

slower pace of the transition across the real

economy.

It has become clear that we would need to

rely heavily on carbon offsets to achieve net

zero in our supply chain by 2030. This

approach would not be aligned with recently

updated guidance from the Science Based

Targets Initiative on the role of offsets in

meeting corporate net zero claims.

As such, we have revisited this ambition to

take into account latest best practice

guidance. We are now focused on cutting

emissions across our operations, travel and

supply chain to achieve net zero by 2050. We

expect to continue to report on our progress

up to 2030 and beyond. Presently, across our

operations, business travel and supply chain,

we expect to achieve a reduction of around

40% in emissions by 2030.

Interim financed emissions targets

Our strategy is to support emission

reductions in the wider economy by working

with our portfolio of customers to facilitate

the emission reductions they are seeking to

make. That is what we consider when setting

financed emissions targets. To the extent our

customers are facing challenges, especially in

light of the slower pace of the transition,

there is no real benefit to society in simply

sending those customers to another

organisation that may be less committed to

supporting their transition.

As such, we are supporting both new and

existing customers that are making positive

steps to transition to a net zero economy. We

continue to focus on engaging with our

customers on their transition plans,

considering our strategic business lines and

markets, managing the products and services

we offer, and adapting the financing choices

we make to help move the world towards a

resilient, net zero economy.

However, as we have set out in our net zero

transition plan, we must acknowledge that our

influence on the decarbonisation of individual

companies and the industries and economies in

which our customers operate has limits. There

are fundamental prerequisites, outside of our

control, which impact our ability to meet our

2030 interim financed emissions targets and

ultimately reach our net zero ambition. These

include technological advancements,

diversification of the energy mix, market

demand for climate solutions, evolving

customer preferences, and government

leadership and effective policy.

At the current pace of decarbonisation, a

combination of the above factors has led to

the transition being slower than envisaged by

recent Paris-aligned net zero scenarios.

Moreover, certain high emitting sectors are

not yet currently on a 1.5°C pathway. Until

the real economy makes significant progress

in decarbonising, our own progress towards

our 2030 targets and 2050 net zero ambition

will be constrained.

Against this background, we have begun a

review of our interim financed emissions

targets and associated policies as part of the

annual review of our net zero transition plan

that we referenced in our 3Q24 earnings

release in October. This analysis is complex:

it presents considerable data and

methodology challenges and it is going to

take time to complete.

As we calibrate our approach for the latest

context, we will seek to balance being

ambitious on net zero while recognising

present near-term global challenges, and the

associated impact of the transition playing out

differently across the regions and sectors we

serve. In doing so we plan to draw on the

latest scientific evidence and credible

industry-specific pathways while, at the same

time, maintaining our commitment under our

2021 Climate Resolution.

HSBC Holdings plc Annual Report on Form 20-F	19

We have been clear on our commitment to

being transparent on the risks, challenges and

opportunities arising from our ambition to be

net zero by 2050. As such, we intend to

provide the results of our review in our net

zero transition plan update, which we expect

to be released in the second half of 2025.

We remain committed to net zero,

recognising it is a priority for our customers

to support their growth and prosperity over

the long term. While no single actor can drive

the transition alone, we will continue to

actively look for opportunities to support our

customers’ transition and engage in the

ongoing efforts to achieve the goals of the

Paris Agreement.

Build inclusion and resilience

To help create long-term value for all

stakeholders, we focus on fostering inclusion

and building resilience for our colleagues, our

customers and the communities we operate

within.

For colleagues, we focus on creating an

inclusive, healthy and rewarding environment

as this helps us to attract, develop and retain

the best talent, and we support their

resilience through access to well-being and

learning resources.

We strive to provide an inclusive and

accessible banking experience for our

customers. We do this by providing

resources that help them manage their

finances, and services that help them protect

what they value.

In 2024 we updated our global philanthropy

strategy to align with our ESG areas of focus:

‘transition to net zero’; and ‘building inclusion

and resilience’, allowing us to work alongside

the communities we operate within to help

create change.

Act responsibly

We are focused on operating a strong and

sustainable business that puts the customer

first, values good governance, and gives our

stakeholders confidence in how we do what

we do. Our conduct approach guides us to do

the right thing and to focus on the impact we

have on our customers and the financial

markets in which we operate. Customer

experience is at the heart of how we operate.

We aim to act responsibly and with integrity

across the value chain.

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, including engagements outlined in the table below. Disclosure standards

such as the TCFD, World Economic Forum (‘WEF’) Stakeholder Capitalism Metrics and Sustainability Accounting Standards Board (‘SASB’), as

well as the ESG Guide under the Hong Kong Stock Exchange Listing Rules and other applicable rules and regulations, are considered as part of

the identification of material issues and disclosures.

Our stakeholders	How we engage
Customers<br><br>	Our customers’ voices are heard through our everyday interactions<br><br>with them, customer surveys, listening to their complaints, and<br><br>online feedback through social media and third-party financial<br><br>websites and forums.	Material topics highlighted through our<br><br>engagement1<br><br>–Customer advocacy<br><br>–Cybersecurity<br><br>–Employee training<br><br>–Inclusion<br><br>–Employee engagement<br><br>–Supporting our customers – financed<br><br>emissions<br><br>–Embedding net zero into the way we operate<br><br>–Sustainability risk policies, including thermal<br><br>coal phase-out policy and energy policy<br><br>–Net zero transition plan<br><br>–Financial inclusion and community investment<br><br>–Climate risk<br><br>–Anti-bribery and corruption<br><br>–Conduct and product responsibility<br><br>–Supply chain management<br><br>–Human rights
Employees<br><br>	Our colleagues’ voices are heard through our annual Snapshot<br><br>survey, exchange sessions, town hall meetings, leadership summits,<br><br>and our ‘speak-up’ channels, including our global whistleblowing<br><br>platform, HSBC Confidential.
Investors<br><br>	We engage with our investors through our AGMs, virtual and in-<br><br>person meetings, investor roadshows, conferences and investor<br><br>surveys, seeking to respond to questions they raise and to convey<br><br>their views to senior management.
Communities<br><br>	We regularly engage with non-governmental organisations (‘NGOs’),<br><br>charities and civil society groups both directly and through cross-<br><br>industry forums, as well as through partnerships. Our Climate<br><br>Advisory Panel, comprising representatives from NGOs and industry<br><br>experts, provides independent advice and challenge.
Regulators and<br><br>governments<br><br>	We proactively engage with regulators, governments and<br><br>international leaders to build strong relationships, responding to<br><br>consultations via industry bodies to help shape our approach to<br><br>financed emissions methodologies, scenario analysis and portfolio<br><br>alignment to support the transition to net zero in the global<br><br>economy.
Suppliers<br><br>	Our code of conduct sets out our expectations and the minimum<br><br>standards we expect from our suppliers on the environment,<br><br>diversity, and human rights. We have begun direct engagement with<br><br>our highest-emitting suppliers to understand their carbon reduction<br><br>targets and disclosure plans.

1 These form part of our ESG disclosures suite together with other requirements, and are not exhaustive or exclusive to one stakeholder group. For further details of

our disclosures, see our ESG review and ESG Data Pack, as well as our ESG reporting centre at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-

reporting-centre.

20	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Our ESG ambitions, metrics and targets	TCFD

We have established ambitions and targets

that guide how we do business, including

how we operate and how we serve our

customers. These include targets designed

to help track our progress against our

environmental and social sustainability goals.

They also help us to improve employee

advocacy and the representation of senior

leadership, as well as strengthen our market

conduct. The targets for these measures are

linked to the pillars of our ESG strategy:

transition to net zero, building inclusion and

resilience, and acting responsibly.

To help us achieve our ESG ambitions, a

number of measures are included in the

annual incentive and long-term incentive

scorecards of the Group CEO, Group CFO

and Group Executives that underpin the ESG

metrics in the table below.

For a summary of how all financial and non-

financial metrics link to executive

remuneration, see pages 327 to 339 of the

Directors’ remuneration report.

In our previous disclosures and in our net

zero transition plan we have highlighted the

risks, dependencies and uncertainties

associated with our approach and progress

towards our ESG ambitions. For further

details on our climate reporting, see the ESG

review page 41.

The table below sets out some of the key

ESG metrics we use to measure progress

against our ambitions. For further details of

how we are doing, see the ESG review on

page 39.

Environmental:<br><br>Transition to net<br><br>zero1	Sustainable finance and<br><br>investment2	Net zero in our own operations3	Financed emissions4
	$393.6bn	66.1%	7 sectors
	Cumulative total provided and<br><br>facilitated since 1 January 2020.<br><br>(2023: $294.4bn)<br><br>Ambition: Provide and facilitate<br><br>$750bn to $1tn of sustainable<br><br>finance and investment by 2030.	Reduction in absolute operational<br><br>greenhouse gas emissions from<br><br>2019 baseline.<br><br>(2023: 57.3%)<br><br>Updated ambition: Become a net<br><br>zero bank by 2050.	Number of sectors where we have set<br><br>interim financed emissions targets,<br><br>comprising five on-balance sheet and<br><br>two combined financed emissions<br><br>targets. Ambition: Align our financed<br><br>emissions to achieve net zero by 2050.
Social:<br><br>Build inclusion<br><br>and resilience	Gender representation5	Black heritage5	Inclusion Index7
	34.6%	3.0%	78%
	Senior leadership roles held by<br><br>women. (2023: 34.1%)<br><br>Ambition: Achieve 35% senior<br><br>leadership roles held by women<br><br>by 20256.	Senior leadership roles held by Black<br><br>heritage colleagues in the UK and US<br><br>combined. (2023: 3.0%)<br><br>Ambition: 3.4% of senior leadership<br><br>roles held by Black heritage<br><br>colleagues in the UK and US<br><br>combined by 20256.	Inclusion index score. (2023: 78%)<br><br>Ambition: Maintain 75% in the<br><br>Snapshot Inclusion index.
Governance:<br><br>Acting<br><br>responsibly	Conduct training8	Customer satisfaction9
	99%	4 out of 6	3 out of 6
	Employees who completed<br><br>conduct training in 2024.<br><br>(2023: 98%)<br><br>Target: At least 98% of employees<br><br>complete conduct and financial<br><br>crime training each year.	WPB markets that sustained top-<br><br>three rank and/or improved in<br><br>customer satisfaction.<br><br>(2023: 3 out of 6)<br><br>Target: To be ranked top three and/or<br><br>improve customer satisfaction rank.	CMB markets that sustained top-<br><br>three rank and/or improved in<br><br>customer satisfaction.<br><br>(2023: 5 out of 6)<br><br>Target: To be ranked top three and/or<br><br>improve customer satisfaction rank.

1 For further details of our approach to transition to net zero, methodology and third-party limited assurance reports on financed emissions, sustainable finance and

investment progress, and our own operations’ scope 1, 2 and 3 (business travel and supply chain) greenhouse gas emissions data, see www.hsbc.com/who-we-

are/esg-and-responsible-business/esg-reporting-centre.

2 In October 2020, we announced our ambition to provide and facilitate between $750bn to $1tn of sustainable finance and investment by 2030. For further details

and breakdown, see the ESG review on page 43. For details of how this ambition links with the scorecards, see page 327.

3 This absolute greenhouse gas emission figure covers scope 1, scope 2 and scope 3 (business travel) emissions. For further details of how this ambition links with

the scorecards, see page 327.

4 See page 46 for further details of our interim targets, which include combined on-balance sheet financed emissions and facilitated emission targets for two

emissions intensive sectors: oil and gas, and power and utilities. The remaining five sectors for which we have set on-balance sheet financed emissions targets are:

cement; iron, steel and aluminium; aviation; automotive; and thermal coal mining.

5 Senior leadership is classified as those at band 3 and above in our global career band structure. For further details, see the ESG review on page 65. For further

details of how this ambition links with the scorecards, see page 327.

6 These numerical ambitions do not form part of any US-based senior leader performance or other objectives, or in other jurisdictions where application of such

should not apply under local law.

7 For further details, see the ESG review on page 65. For details of how this ambition links with the scorecards, see page 327.

8 The completion rate shown relates to the ‘Conduct Matters’ training module that was launched in December 2023 and concluded in 2024, and covers permanent

and non-permanent employees (where legally permissible to assign training). For completion rates related to financial crime training, see the ESG review on page 78.

9 The markets where we report rank positions for WPB and CMB – the UK, Hong Kong, mainland China, India, Mexico and Singapore – are in line with the annual

executive scorecards. For further details of customer satisfaction, see the ESG review on page 75. For further details of how this target links with the scorecards, see

page 327.

HSBC Holdings plc Annual Report on Form 20-F	21

Task Force on Climate-related Financial Disclosures (‘TCFD’)	TCFD

The Financial Stability Board’s Task Force on

Climate-related Financial Disclosures (‘TCFD’)

recommendations set an important

framework for understanding and analysing

climate-related risks, and we are committed

to regular and transparent reporting to help

communicate and track our progress. We

also seek to advocate for the same from our

customers, suppliers and the industry.

We have set out our key climate-related

financial disclosures throughout the Annual

Report and Accounts 2024 and related

disclosures. We recognise that further work

lies ahead as we continue to develop our

management and reporting capabilities. In

2024, we enhanced our disclosures, such as

the portfolio breakdown for Energy

Performance Certificate (‘EPC’) ratings into

owner-occupied and buy-to-let properties.

We have considered our ‘comply or explain’

obligation under both the UK Financial

Conduct Authority’s Listing Rules and

Sections 414CA and 414CB of the UK

Companies Act 2006, and confirm that we

have made disclosures consistent with the

TCFD Recommendations and Recommended

Disclosures, including its annexes and

supplemental guidance, save for certain

items, which we summarise below.

–We set interim 2030 financed emissions

targets. However, we use different time

horizons for climate risk management. For

climate risk, we define short term as time

periods up to 2026; medium term between

2027 and 2035; and long term between

2036 and 2050. For financed emissions we

do not plan to set 2026 targets. In 2024, we

disclosed interim 2030 targets for financed

emissions for seven sectors as outlined on

page 50. Following this, we have set

combined on-balance sheet financed

emissions and facilitated emissions targets

for two emissions intensive sectors: oil and

gas, and power and utilities. We have also

set targets for on-balance sheet financed

emissions for the following five sectors:

cement; iron, steel and aluminium; aviation;

automotive; and thermal coal mining.

–The methodology and data used for

financed emissions is evolving. We expect

industry guidance, market practice, data

availability, scenarios and regulatory

disclosure requirements to continue to

change, along with the shape of our own

business. We have begun a review of our

2030 financed emissions targets and

associated policies, as part of the annual

review of our NZTP that we referenced in

our 3Q24 earnings release in October.

–We do not fully disclose impacts from

climate-related opportunities on financial

planning and performance, including on

revenue, costs and the balance sheet,

quantitative scenario analysis, 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. We expect these

data limitations to be addressed in the

medium term as more reliable data

becomes available and technology solutions

are implemented.

–We currently focus on disclosing only four

out of 15 categories of scope 3 greenhouse

gas emissions including business travel,

supply chain and financed emissions,

following our internal materiality

assessment. In relation to financed

emissions, we publish on-balance sheet

financed emissions for a number of sectors,

covering 2.7% of our loans and advances to

customers at 31 December 2023, as

detailed on page 54. We also publish

facilitated emissions for the oil and gas, and

power and utilities sectors. Data quality of

future disclosures on financed emissions

and related risks are reliant on our

customers publicly disclosing their

greenhouse gas emissions, targets and

plans, and related risks. 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 require significant

enhancements.

For a full summary of our TCFD disclosures,

including detailed disclosure locations for

additional information, see pages 466 to 472.

ESG disclosure map and directory

The table below sets out the key non-financial information, including risks and policies on environmental, social and governance matters, and

where it can be found:

Transition to<br><br>net zero	At a glance	Read more on our approach to the transition and understanding our climate reporting	Page 40<br>
	Supporting our customers	Read more on our progress made against our 750bn to 1tn sustainable finance and investment ambition	Page 43<br>
	Partnering for systemic change	Read more on how we partner externally in support of systemic change, including an update on our Climate Solutions Partnership	Page 45<br>
	Embedding net zero	Read more on our progress made against our ambition to achieve net zero in our financed emissions by 2050	Page 46<br>
		Read more on our progress in decarbonising our own operations and supply chain	Page 56<br>
		Read more on our sustainability risk policies and our thermal coal exposures	Page 59<br>
	Detailed Task Force on Climate-related<br><br>Financial Disclosures (‘TCFD’)	We make disclosures consistent with Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations,	Page 466<br>
		highlighted with the symbol:
Build<br><br>inclusion and<br><br>resilience	Inclusion disclosures	Read more on how we are building an inclusive environment that reflects our customers and communities, and our latest pay gap statistics	Page 61<br>
	Pay gap disclosures
Act<br><br>responsibly	How we govern ESG	Read more on our approach to ESG governance and human rights	Page 72<br><br><br>Page 73<br>
	Human rights disclosures
	How our ESG ambitions link to<br><br>executive remuneration	Read more on our ESG ambitions embedded in executive remuneration	Page 20<br><br><br>Pages 314 to 331<br>
ESG Data<br><br>Pack	Detailed ESG information	Our ESG Data Pack provides more granular ESG information, including the breakdown of our sustainable finance and investment progress, and complaints volumes	www.hsbc.com/esg

All values are in US Dollars.

22	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Responsible business culture

We have a responsibility to help protect our

customers, our communities and the integrity

of the financial system.

Employee matters

We are building a responsible business culture

that values difference, takes responsibility,

seeks different perspectives and upholds good

standards of conduct.

There may be times when our colleagues need

to speak up about behaviours in the workplace

and in the first instance we encourage

colleagues to speak to their line manager. Our

annual employee survey showed that 85% of

colleagues have trust in their direct manager.

HSBC Confidential is our whistleblowing

channel, which allows colleagues past and

present to raise concerns confidentially and, if

preferred, anonymously (subject to local laws).

Our Snapshot survey showed that 80% of

colleagues feel able to speak up when they see

behaviours they consider to be wrong.

Our inclusion index measures our colleagues’

sense of belonging and psychological safety

within the organisation, and in 2024 this

remained unchanged at 78%.

To help address under-representation across

our colleague base, we have an ambition to

achieve a 35% representation of women in

senior leadership roles (classified as those at

band 3 and above in our global career band

structure) by 20251. We remain on track,

having achieved 34.6% in 2024.

We have an ambition to increase our Black

heritage senior leader representation in both the

UK and US combined to 3.4% by 20251. In 2024

we maintained our position at 3.0%.

Our hiring practices are merit-based, and we

seek to ensure that every candidate, regardless

of their identity and background, has an equal

opportunity to demonstrate their skill and

potential. We have identified specific Group-

wide priorities, which we track and monitor

progress against. We adapt implementation of

our strategy across international operations to

ensure it remains relevant locally. We have

enabled 93% of our colleagues to disclose their

ethnicity, with 67% currently choosing to do so,

where this is legally permissible.

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 should not apply under local

law.

The table below outlines high-level

representation metrics.

All employees

3848290852954

Male

Female

Senior leadership1

Male

Female

3848290852969

Holdings Board

3848290852975

Male

Female

1 Senior leadership is classified as those at band 3

and above in our global career band structure.

For further details of how we look after our

people, including our inclusion ambitions, how

we encourage our employees to speak up, and

our approach to employee conduct, see the

Social section of the ESG review on page 61.

Listening to our customers

We continue to listen, learn and act on our

customers’ feedback. We use the net

promoter system to share customer feedback

with our front-line teams, allowing them to

respond directly to customers. We also have

dedicated global forums to promote ongoing

improvement of our customers’ experience.

Social matters

We aim to help provide people and

communities with the skills and knowledge

needed to thrive through the transition to a

sustainable future. For this reason, we focus

our support on programmes that help build

inclusion and resilience. We also support

climate solutions and innovation, and

contribute to disaster relief. For examples of

our programmes, see the ‘Engaging with our

communities’ section of the ESG review on

page 70.

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 Human Rights

Statement and annual statements under the

UK Modern Slavery Act, are available on

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre. For

further details of our approach, see the

‘Human rights’ section of the ESG review on

page 73.

Anti-corruption and anti-bribery

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 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.

Environmental matters

For details of our climate ambition and carbon

emission metrics, see the ESG review on

page 39.

Group non-financial and sustainability<br><br>information statement<br><br>This section primarily covers Group non-<br><br>financial and sustainability information as<br><br>required by applicable regulations. Other<br><br>related information can be found as follows:<br><br>For further details of our key performance <br><br><br>indicators, see page 4.<br><br>For further details of our business model, see <br><br><br>page 7.<br><br>For further details of our principal risks and <br><br><br>how they are managed, see pages 36 to 38.<br><br>For further details of our TCFD disclosures, <br><br><br>including alignment with sections 414CA and<br><br>414CB of the Companies Act 2006, see pages<br><br>466 to 472.
HSBC Holdings plc Annual Report on Form 20-F	23
---	---

Group non-financial and sustainability information statement This section primarily covers Group non- financial and sustainability information as required by applicable regulations. Other related information can be found as follows: For further details of our key performance

indicators, see page 4. For further details of our business model, see

page 7. For further details of our principal risks and

how they are managed, see pages 36 to 38. For further details of our TCFD disclosures,

including alignment with sections 414CA and 414CB of the Companies Act 2006, see pages 466 to 472.

HSBC Holdings plc Annual Report on Form 20-F

---

Remuneration

Our remuneration policy supports the achievement of our strategic objectives

by aligning reward with our long-term sustainable performance.

Remuneration for our executive Directors

At the 2025 Annual General Meeting (‘AGM’),

we will be seeking shareholder approval for a

new executive Director remuneration policy.

Over several years, the Group Remuneration

Committee has expressed concerns around

the competitiveness of the executive Director

remuneration opportunity and indicated a

preference to operate a policy with a higher

proportion of the package based on variable

pay linked to performance, aligned to practice

among our international peers.

The removal of the limits on the ratio between

fixed and variable pay by the UK regulators

provides an opportunity to revisit our current

Directors’ remuneration policy and the

Committee feels that now is the right time to

set a policy that better reflects the Group’s

focus on long-term sustainable performance.

After careful consideration, the Committee

concluded that the current variable pay

framework of an annual incentive and single

performance-based long-term incentive is most

appropriate. The Committee considered the

right approach is to unwind the changes made

in 2014, when the 2:1 pay ratio was introduced

and to reset the maximum opportunity.

The Committee reflected on the appropriate

maximum opportunity for the Group CEO and

Group CFO considering (i) the maximum

opportunity in 2014; (ii) market data for our

international banking peers and the largest

FTSE 30 companies, reflecting that HSBC is

one of the world’s leading international banks;

and (iii) compression challenges within the

senior HSBC team.

We will continue to set a scorecard of

stretching and quantitative financial and

strategic performance targets aligned to our

strategy and stakeholder interests. Maximum

pay outcomes will be delivered only for

exceptional performance as required by these

targets.

The Committee engaged with major investors

on the new remuneration policy and the Chair

of the Committee met with many shareholders

directly. Shareholders we spoke to were

generally supportive of our proposal and their

feedback has directly influenced the final

policy. We would like to thank our shareholders

for the time taken to engage with us during the

year.

For details of our proposed executive Director

remuneration policy, see page 314.

2024 remuneration decisions

The Committee considered carefully the

wider context in which performance was

delivered in 2024 and judged that the overall

scorecard outcome for both Sir Noel Quinn

and Georges Elhedery was appropriate

against the targets set at the start of the year

for financial, strategic and personal measures.

The Committee also carefully considered the

executive Directors’ pay outcomes in the

context of pay decisions made for the wider

workforce and determined that these were

an appropriate reflection of Group, business

and individual performance delivered in 2024.

Executive Directors’ scorecard outcomes

(% of maximum opportunity)

2024 annual incentive

Sir Noel Quinn	77.81%
Georges Elhedery	78.79%

2022–2024 long-term incentive

Sir Noel Quinn	75.00%
Georges Elhedery	75.00%

For details of Directors’ pay and performance for

2024, see the Directors’ remuneration report on

page 326.

Remuneration for our colleagues

Our focus remains on taking actions that

improve our ability to attract, retain and

energise colleagues to deliver high

performance and growth.

Rewarding colleagues responsibly

Fixed pay increases for 2025 were

determined based on consistent principles to

help address wage inflation in the markets

where we operate.

We will award an average global fixed pay

increase of 3.6% in 2025, compared with

4.4% for the previous year, reflecting that

projected wage inflation is lower in many of

our markets.

We continue to review all wages globally

against local Living Wage benchmarks to help

ensure we pay responsibly and provide

financial security to colleagues. We are proud

to have been certified by the Fair Wage

Network as a global Living Wage employer

for 2025.

Recognising colleagues’ success

We introduced new performance routines

and changes to performance assessment for

over 200,000 colleagues in 58 markets.

We also introduced a new variable pay

structure for over 150,000 colleagues,

providing more clarity around variable pay

levels for on-target performance, and how

this is impacted by Group, business and

individual performance.

The Group Remuneration Committee

determined overall variable pay of $3,800m

(2023: $3,774m). This followed a review of

our performance against financial and non-

financial metrics set out in the Group risk

framework. Our highest performers received

the largest increases in variable pay

compared with the previous year.

Variable pay pool

($m)

321057395538777

2024

2023

For details of how the Group Remuneration Footnote Arrow.jpg

Committee sets the pool, see page 313.

Supporting colleagues to grow

In our employee Snapshot survey, 78% of

respondents said they believe HSBC

genuinely cares about their well-being, a

record high. We have been ranked number

one for workplace mental health for the third

year running in the Global CCLA Corporate

Mental Health Benchmark 2024. We have

prioritised supporting colleagues to work

flexibly, balancing customer needs, social

connection and individual flexibility.

24	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Financial overview

In assessing the Group’s financial performance, management uses a range

of financial measures that focus on the delivery of sustainable returns for

our shareholders and maintaining our financial strength.

Executive summary

We delivered a strong performance in 2024

with reported profit before tax of $32.3bn, up

$2.0bn or 6% compared with 2023. Our

financial performance demonstrates the

progress against our strategic priorities.

In 2024, we achieved a return on average

tangible equity (‘RoTE’) of 14.6% and a RoTE

excluding notable items of 16.0%. We have

now further extended our mid-teens RoTE

target in each of the three years from 2025 to

2027, excluding notable items.

This section sets out our key Group financial

targets and the progress we made towards

these in 2024, and our expectations for 2025

and beyond. We also include a more detailed

table covering further key financial metrics that

we consider insightful for understanding the

Group’s performance.

The Group financial results that follow provide

more detailed insight into the performance

that has driven the outcomes of our financial

targets. It covers income statement

performance on both a reported and constant

currency basis, and the main factors impacting

the strength of our balance sheet, capital and

liquidity position.

Group financial targets

Return on average tangible equity

excluding notable items

16.0%

(2023: 16.2%)

In 2024, RoTE was 14.6%, in line with 2023.

For the purposes of measuring performance

against our Group target, we adjust RoTE to

exclude notable items. From 1 January 2024,

we revised the adjustments made to RoTE

from excluding only the impact of strategic

transactions and the impairment of BoCom, to

exclude all notable items. This was intended to

improve alignment with the treatment of

notable items in our other income statement

disclosures. RoTE excluding notable items has

been re-presented for 2023 on the revised

basis and we no longer disclose RoTE

excluding strategic transactions and the

impairment of BoCom.

RoTE excluding notable items was 16.0%, a

decrease of 0.2 percentage points compared

with 2023.

We are now targeting a mid-teens RoTE in

each of the three years from 2025 to 2027

excluding notable items.

Our targets and expectations reflect our

current outlook for the global macroeconomic

environment and market-dependent factors,

such as market-implied interest rates as of mid-

January 2025 and rates of foreign exchange, as

well as customer behaviour and activity levels.

Target basis operating expenses

$32.6bn

(2023: $31.1bn)

In 2024, reported operating expenses

increased by 3.0% compared with 2023.

Target basis operating expense growth was

5.1% compared with 2023, in line with our

target of approximately 5%. Growth primarily

reflected higher investment spend, including in

technology and from inflationary pressures.

Our target basis operating expenses for 2024

excluded the direct cost impact of the disposals

in France and Canada from the 2023 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.

We retain a Group-wide focus on cost

discipline. We are targeting growth in target

basis operating expenses of approximately

3% in 2025 compared with 2024. Our target

basis operating expenses for 2025 excludes

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 cost target includes the impact of

simplification-related savings associated with

our announced reorganisation, which aims to

generate approximately $0.3bn of cost

reductions in 2025, with a commitment to an

annualised reduction of $1.5bn in our cost

base expected by the end of 2026. To deliver

these reductions, we plan to incur severance

and other up-front costs of $1.8bn over 2025

and 2026, which will be classified as notable

items.

Capital and dividend policy

CET1 ratio

14.9%

Dividend payout ratio in respect of 2024

50%

on a dividend payout ratio target basis.

At 31 December 2024, 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 to within this range.

The total dividend per share in 2024 of $0.87

included a special dividend of $0.21 per share

that was paid in June following the completion

of the sale of HSBC Bank Canada. 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

dividends per share the special dividend of

$0.21 per share, and we exclude from earnings

per share material notable items and related

impacts. See page 130 for our calculation of

earnings per share.

The Board has established a target basis

dividend payout ratio of 50% for 2025,

subject to meeting capital requirements. This

policy is designed to provide sustainable cash

dividends, while retaining the flexibility to

invest and grow the business, supplemented

by additional shareholder distributions, if

appropriate.

HSBC Holdings plc Annual Report on Form 20-F	25

Key financial metrics

	For the year ended 31 Dec
Reported results	2024	2023	2022
Profit before tax ($m)	32,309	30,348	17,058
Profit after tax ($m)	24,999	24,559	16,249
Revenue ($m)	65,854	66,058	50,620
Cost efficiency ratio (%)	50.2	48.5	64.6
Net interest margin (%)	1.56	1.66	1.42
Basic earnings per share ($)	1.25	1.15	0.72
Diluted earnings per share ($)	1.24	1.14	0.72
Dividend per ordinary share (in respect of the period) ($)1	0.87	0.61	0.32
Dividend payout ratio (%)2	50	50	44
Alternative performance measures <br>
Constant currency profit before tax ($m)	32,309	29,903	16,302
Constant currency revenue ($m)	65,854	64,912	49,587
Constant currency cost efficiency ratio (%)	50.2	48.5	65.0
Constant currency profit before tax excluding notable items ($m)	34,122	32,680	23,057
Constant currency revenue excluding notable items ($m)	67,434	64,489	53,383
Constant currency profit before tax excluding notable items and strategic transactions ($m)	34,037	32,217	N/A
Constant currency revenue excluding notable items and strategic transactions ($m)	67,256	63,043	N/A
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances<br><br>to customers (%)	0.36	0.34	0.36
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances<br><br>to customers, including held for sale (%)	0.36	0.32	0.36
Basic earnings per share excluding material notable items and related impacts ($)	1.31	1.22	N/A
Return on average ordinary shareholders’ equity (%)	13.6	13.6	9.0
Return on average tangible equity (%)	14.6	14.6	10.0
Return on average tangible equity excluding notable items (%)	16.0	16.2	11.8
Target basis operating expenses ($m)	32,648	31,074	N/A
	At 31 Dec
Balance sheet	2024	2023	2022
Total assets ($m)	3,017,048	3,038,677	2,949,286
Net loans and advances to customers ($m)	930,658	938,535	923,561
Customer accounts ($m)	1,654,955	1,611,647	1,570,303
Average interest-earning assets ($m)	2,099,285	2,161,746	2,143,758
Loans and advances to customers as % of customer accounts (%)	56.2	58.2	58.8
Total shareholders’ equity ($m)	184,973	185,329	177,833
Tangible ordinary shareholders’ equity ($m)	154,295	155,710	146,927
Net asset value per ordinary share at period end ($)	9.26	8.82	8.01
Tangible net asset value per ordinary share at period end ($)	8.61	8.19	7.44
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)3,4	14.9	14.8	14.2
Risk-weighted assets ($m)3,4	838,254	854,114	839,720
Total capital ratio (%)3,4	20.6	20.0	19.3
Leverage ratio (%)3,4	5.6	5.6	5.8
High-quality liquid assets (liquidity value) ($m)4,5	649,210	647,505	647,046
Liquidity coverage ratio (%)4,5,6	138	136	132
Net stable funding ratio (%)4,5,6,7	143	138	141
Share count
Period end basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions)	17,918	19,006	19,739
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares, after<br><br>deducting own shares held (millions)	18,062	19,135	19,876
Average basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions)	18,357	19,478	19,849

For reconciliation and analysis of our reported results on a constant currency basis, including lists of notable items, see page 108. Definitions and calculations of other

alternative performance measures are included in ‘Reconciliation of alternative performance measures’ on page 129.

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.

2 In 2024 and 2023, our dividend payout ratio was adjusted for material notable items and related impacts, including all associated income statement impacts relating to

those items. In 2022, our dividend payout ratio was adjusted for the loss on classification to held for sale of our retail banking business in France, items relating to the

sale of our banking business in Canada, and the recognition of certain deferred tax assets.

3Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the

time. References to EU regulations and directives (including technical standards) should, as applicable, be read as references to the UK‘s version of such regulation or

directive, as onshored into UK law under the European Union (Withdrawal) Act 2018, and as may be subsequently amended under UK law.

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.

6 We enhanced our liquidity consolidation process in 2Q24 by revising provisions that addressed historical limitations. As our Group LCR and NSFR are reported on an

average basis, the benefit of these changes incrementally increased our LCR and NSFR by circa 3% and 11% during the year, respectively. Compared to year ended 31

December 2023, the increase in LCR was mainly driven by these enhancements. The associated NSFR increase driven by these changes was partly offset by higher

required stable funding primarily due to a rise in financial investments and derivatives activities.

7 We enhanced our calculation processes during 1Q24 and our NSFR comparatives have been restated.

26	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Basis of presentation

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

global businesses. Material notable items are

a subset of notable items and categorisation

is dependent on the nature of each item in

conjunction with the financial impact on the

Group’s income statement. Strategic

transactions classified as material notable

items comprise the disposal of our retail

banking operations in France, our banking

business in Canada, the sale of our business

in Argentina and the acquisition of SVB UK.

The impacts quoted include the gains or

losses on classification to held for sale or on

acquisition and all other related notable items.

They also include the distorting impact

between the periods of the operating income

statement results related to acquisitions and

disposals that affect period-on-period

comparisons. It 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. We

consider the monthly impacts of distorting

income statement results when calculating

the impact of strategic transactions. See page

111 for supplementary analysis of the impact

of strategic transactions.

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.

We consider constant currency performance

to provide useful information for investors by

aligning internal and external reporting, and

reflecting how management assesses period-

on-period performance.

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. We now disclose

‘profit before tax excluding notable items’ and

‘revenue excluding notable items’. We have

introduced these new measures due to the

significant impact of notable items on the

Group’s results. We consider profit before tax

excluding notable items and revenue

excluding notable items as useful information

in understanding period-on-period

performance.

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.

The tables on pages 108 to 110 and pages

122 to 127 detail the effects of notable items

on each of our global business segments and

legal entities during 2024, 2023 and 2022.

Management view of revenue on a

constant currency basis

Our global business segment commentary

includes tables that provide breakdowns of

revenue on a constant currency basis by

major product. These reflect the basis on

which revenue performance of the

businesses is assessed and managed.

Global Trade Solutions

During 2024, we renamed our Global Trade

and Receivables Finance business as Global

Trade Solutions (‘GTS’), to better reflect our

broad suite of products and the focus we

place on serving our clients globally.

Comparative periods

Unless otherwise stated, all performance

commentary that follows compares our

results in 2024 with those in 2023.

Reported results (vs 2023)

Reported profit

Reported profit before tax of $32.3bn was

$2.0bn or 6% higher. This included a net

$1.0bn favourable impact from notable items.

In 2024, notable items included a gain of

$4.8bn following the disposal of our banking

business in Canada, and losses associated

with the sale of our business in Argentina,

comprising a $1.0bn loss on disposal, as well

as the recycling of foreign currency reserve

losses and other reserves of $5.2bn. In 2023,

notable items included an impairment of

$3.0bn on our associate, Bank of

Communications Co., Limited (‘BoCom’),

which followed the reassessment of our

accounting value-in-use. They also included

disposal losses of $1.0bn on Treasury

repositioning and risk management and a

$1.6bn gain recognised on the acquisition of

Silicon Valley Bank UK Limited (‘SVB UK’).

For further details on our value-in-use

assessment for associates, see page 86.

The increase in reported profit before tax also

included revenue growth from Wealth

products in WPB and in Equities and

Securities Financing in GBM.

Reported operating expenses increased by

$1.0bn, mainly due to higher spend and

investment in technology and the impacts of

inflation, partly offset by reductions related to

our business disposals in Canada and France,

and from a reduction in levies in the UK and

the US. Target basis operating expenses rose

by 5% compared with 2023, in line with our

cost growth target.

Reported profit after tax of $25.0bn was

$0.4bn higher than in 2023. This included the

impact of an increase in the Group’s effective

tax rate, notably due to the impact of our

business disposals in Canada and Argentina.

Reported revenue

Reported revenue of $65.9bn was broadly

stable. There was growth in revenue from

higher customer activity in Wealth in WPB,

and in Equities and Securities Financing in

GBM. In addition, reported revenue in 2023

included disposal losses of $1.0bn related to

Treasury repositioning and risk management.

These items were broadly offset by the net

adverse impact of certain strategic

transactions described above, as well as a

$0.2bn loss on the early redemption of legacy

securities, and a reduction from the results of

the businesses that have now been disposed.

NII of $32.7bn fell by $3.1bn, and included

the adverse impact of foreign currency

translation differences of $1.6bn and the

impact from the early redemption of legacy

securities of $0.2bn. The reduction included

the effect of the disposal of our banking

business in Canada. The fall in NII also

reflected an increase of $2.7bn in funding

costs associated with the redeployment of

our commercial surplus into the trading book,

where the related revenue is recognised in

’net income on financial instruments held for

trading or managed on a fair value basis’.

These reductions were in part mitigated by

higher NII in HSBC UK, including the benefit

of our structural hedge. In Markets Treasury

NII increased due to reinvestments in our

portfolio at higher yields. Banking NII of

$43.7bn fell by $0.4bn or 1%, as increased

deployment of our commercial surplus to the

trading book partly mitigated the reductions in

NII.

Revenue in 2024 was adversely affected by a

$0.8bn impact of hyperinflationary accounting

in Argentina, including the devaluation of the

Argentinian peso, compared with a $1.4bn

adverse impact in 2023.

Reported ECL

Reported ECL charges of $3.4bn were stable

compared with 2023. This reflected

reductions in CMB and GBM, offset by an

increase in WPB.

HSBC Holdings plc Annual Report on Form 20-F	27

Reported results continued

	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions1
Reported results	$m	$m	$m	$m	%	$m
Net operating income before change in expected credit<br><br>losses and other credit impairment charges (‘revenue’)	65,854	66,058	50,620	(204)	—	(3,947)
ECL	(3,414)	(3,447)	(3,584)	33	1	72
Net operating income	62,440	62,611	47,036	(171)	—	(3,875)
Total operating expenses	(33,043)	(32,070)	(32,701)	(973)	(3)	1,100
Operating profit	29,397	30,541	14,335	(1,144)	(4)	(2,775)
Share of profit in associates and joint ventures less<br><br>impairment	2,912	(193)	2,723	3,105	>100	—
Profit before tax	32,309	30,348	17,058	1,961	6	(2,775)
Tax expense	(7,310)	(5,789)	(809)	(1,521)	(26)
Profit after tax	24,999	24,559	16,249	440	2
Revenue excluding notable items	67,434	65,723	54,222	1,711	3
Profit before tax excluding notable items	34,122	33,198	23,560	924	3

1For details, see ‘Impact of strategic transactions‘ on page 111.

	2024	2023	2022
Notable items	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1	(1,343)	1,298	(2,737)
Fair value movements on financial instruments2	—	14	(618)
Restructuring and other related costs	—	—	(247)
Disposal losses on Markets Treasury repositioning	—	(977)	—
Early redemption of legacy securities	(237)	—	—
Currency translation on revenue notable items	—	88	(174)
Operating expenses
Disposals, acquisitions and related costs	(199)	(321)	(18)
Impairment of non-financial items	—	—	—
Restructuring and other related costs	(34)	136	(2,882)
Currency translation on operating expenses notable items	—	—	(62)
Share of profit in associates and joint ventures less impairment
Impairment of interest in associate	—	(3,000)	—

1The amount in 2024 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 $4.8bn on the sale of our banking business in Canada, inclusive of fair value gains on

related hedging and recycling of related reserves. The amount in 2023 included a gain recognised in respect of the acquisition of SVB UK of $1.6bn. The amount in

2022 included losses from classifying businesses as held for sale as part of a broader restructuring of our European business of which $2.4bn related to the sale of

our retail banking operations in France.

2Fair value movements on non-qualifying hedges in HSBC Holdings.

ECL charges in CMB were $1.8bn in 2024, and

in GBM charges were $0.2bn. This 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

2024 in CMB included a charge related to a

single exposure in the UK, while charges in

HSBC Bank UK reduced compared with 2023. In

GBM, charges in 2024 also benefited from a

release of stage 3 allowances in HSBC Bank plc

related to a single exposure.

In WPB, ECL charges were $1.3bn. These

primarily related to our legal entity in Mexico,

reflecting growth in our unsecured lending

portfolio and unemployment trends, and also in

Hong Kong and the UK.

For further details of the calculation of ECL, see Footnote Arrow.jpg

pages 177 to 190.

Reported operating expenses

Reported operating expenses of $33.0bn were

$1.0bn or 3% higher, including favourable

foreign currency translation differences between

the periods of $0.6bn. The increase reflected

higher spend and investment in technology and

inflationary impacts, while performance-related

pay remained stable. Operating expenses were

also adversely impacted by the non-recurrence

of a $0.2bn reversal of historical asset

impairments in 2023.

These increases were partly offset by a

favourable impact from the UK bank levy of

$0.1bn, as 2023 included adjustments relating to

prior years, and from the non-recurrence of a

$0.2bn charge incurred in the US relating to the

FDIC special assessment.

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.

Reported share of profit in associates

and joint ventures less impairment

Reported share of profit in associates and joint

ventures less impairment of $2.9bn was $3.1bn

higher than in 2023. This primarily reflected the

non-recurrence of an impairment charge in 2023

of $3.0bn relating to our investment in BoCom

due to a reduction to the accounting value-in-use

of the investment. In addition, there was an

increase in the share of profit from Saudi Awwal

Bank (‘SAB’).

Tax expense

Tax in 2024 was a charge of $7.3bn,

representing an effective tax rate of 22.6%,

compared with 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.

Reported profit after tax in 2024

$25.0bn

(2023: $24.6bn)

28	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Constant currency results

	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions1
Results – on a constant currency basis <br>	$m	$m	$m	$m	%	$m
Revenue	65,854	64,912	49,587	942	1	(3,890)
ECL	(3,414)	(3,259)	(3,615)	(155)	(5)	36
Total operating expenses	(33,043)	(31,494)	(32,229)	(1,549)	(5)	992
Operating profit	29,397	30,159	13,743	(762)	(3)
Share of profit in associates and joint ventures less impairment	2,912	(256)	2,559	3,168	>100	—
Profit before tax	32,309	29,903	16,302	2,406	8	(2,862)
Revenue excluding notable items	67,434	64,489	53,383	2,945	5
Profit before tax excluding notable items	34,122	32,680	23,057	1,442	4

1 For details, see ‘Impact of strategic transactions‘ on page 111.

Profit before tax of $32.3bn was $2.4bn

higher than in 2023 on a constant currency

basis. Constant currency profit before tax

excluding notable items of $34.1bn was

$1.4bn or 4% higher.

Revenue increased by $0.9bn or 1% on a

constant currency basis, and included a

$3.9bn net adverse impact from strategic

transactions. The growth in revenue reflected

the impact of higher customer activity in our

Wealth products in WPB, and in Equities and

Securities Financing in GBM. NII fell due to

business disposals and a loss on the early

redemption of legacy securities in 2024.

The reduction also included higher funding

costs associated with the redeployment of

our commercial surplus into the trading book,

where the related revenue is recognised in

’net income on financial instruments held for

trading or managed on a fair value basis’,

partly offset by higher NII in HSBC UK,

including the benefit of our structural hedge.

On a constant currency basis, banking NII of

$43.7bn increased by $1.5bn or 4%.

ECL were $0.2bn or 5% higher on a constant

currency basis. This included an increase in

WPB, mainly in our legal entity in Mexico,

from higher unsecured lending and

unemployment trends, and from higher

charges in our main legal entities in Hong

Kong and the UK. This was partly offset by

reductions in CMB and GBM including lower

stage 3 charges, including charges relating to

the commercial real estate sector in mainland

China, and in CMB, lower charges in HSBC

UK. The reduction in CMB was partly offset

by a charge in 2024 related to a specific

exposure in the UK.

Operating expenses were $1.5bn or 5%

higher on a constant currency basis, primarily

reflecting higher spend and investment in

technology and inflationary impacts, partly

offset by continued cost discipline. The

favourable impacts from the completion of

disposals in Canada and France were largely

offset by the adverse impact of re-translating

the results of hyperinflationary economies at

constant currency. Target basis operating

expenses rose by $1.6bn or 5% compared

with 2023.

Share of profit in associates and joint

ventures less impairment of $2.9bn was

$3.2bn higher on a constant currency basis,

and included the non-recurrence of a $3.0bn

impairment of our investment in BoCom due

to a revision to the accounting value-in-use of

the investment. The increase also included a

higher share of profit from SAB.

Balance sheet and capital

Balance sheet strength

Total assets of $3.0tn were $22bn lower than

at 31 December 2023 on a reported basis,

and included adverse effects of foreign

currency translation differences of $66bn.

On a constant currency basis, total assets

rose by $45bn, mainly from an increase in

financial investments, and higher derivative

and trading asset balances. This was partly

offset by a reduction in assets held for sale,

notably following the completion of our

disposals in France, Canada and Argentina.

Reported loans and advances to customers

fell by $8bn. On a constant currency basis,

loans and advances increased by $14bn. The

increase included lending balance growth in

CMB, together with mortgage lending

growth in WPB.

Reported customer accounts of $1.7tn

increased by $43bn. On a constant currency

basis, they grew by $75bn, with growth

across all of our global businesses, mainly in

Asia.

Loans and advances to customers as a

percentage of customer accounts was 56.2%,

compared with 58.2% at 31 December 2023.

Distributable reserves

The distributable reserves of HSBC Holdings at

31 December 2024 were $28.3bn, a $2.6bn

decrease since 31 December 2023, primarily

driven by $27.4bn of dividends on ordinary

shares, additional tier 1 coupon and share buy-

back payments, offset by $24.8bn in profits

and other reserves movements generated in

Distributable reserves are sensitive to

impairments of investments in subsidiaries to

the extent they are not offset by the realisation

of related reserves. Further details on HSBC

Holdings’ intentions to increase distributable

reserves in 2025 are provided in the Corporate

Governance report on page 349.

Capital position

We actively manage the Group’s capital

position to support our business strategy and

meet our regulatory requirements at all

times, including under stress, while

optimising our capital efficiency. To do this,

we monitor our capital position using a

number of measures. These include our

capital ratios and the impact on our capital

ratios as a result of stress.

Our CET1 capital ratio at 31 December 2024

was 14.9%, up marginally compared with the

prior year as capital generation and a reduction

in RWAs through strategic transactions were

offset by dividends, share buy-backs and

organic balance sheet growth. In January 2025,

the PRA announced the delay of Basel 3.1

implementation to 1 January 2027 pending US

developments. We expect that the impact on

our CET1 ratio will be a modest benefit.

Liquidity position

We actively manage the Group’s liquidity and

funding to support the business strategy and

meet regulatory requirements at all times,

including under stress. To do this, we monitor

our position using a number of risk appetite

measures, including the liquidity coverage

ratio and the net stable funding ratio. During

2024, the average high-quality liquid assets we

held was $649.2bn. This excludes high-quality

liquid assets in legal entities which are not

transferable due to local restrictions.

For further details, see page 234. Footnote Arrow.jpg

Common equity tier 1 ratio (%)

14.9%

(2023: 14.8%)

HSBC Holdings plc Annual Report on Form 20-F	29

Global businesses

During the year we served our customers through three global businesses.

The following pages set out how each global business has performed.

From 1 January 2025, we have simplified our structure as explained on page 8.

Wealth and Personal Banking

Our WPB business served 40 million customers globally, including 7.7 million who are international, from retail

customers to ultra high net worth individuals and their families.

Contribution to Group profit before tax

10995116513247

$12.2bn

39%

Calculation is based on profit before tax of our global

businesses excluding Corporate Centre.

To meet our customers’ needs, WPB

offered a full suite of products and

services across transactional banking,

lending and wealth.

WPB continued to invest in our key strategic

priorities of expanding our Wealth franchise in

Asia, developing our transactional banking

and lending capabilities, and addressing our

customers’ international needs.

Divisional highlights

21%

Growth in wealth non-interest income

compared with 2023.

Performance in 2024 reflected strong growth

in Wealth, with double digit growth across

Retail investment distribution, Private

Banking and life insurance as well as growth

in asset management. We also saw

moderate balance sheet growth, and

increases in our invested assets and wealth

deposits. The results included growth in

operating expenses, reflecting investment

and inflationary impacts.

12%

Growth in contractual service margin in

insurance since 2023, up to $12.1bn.

Results – on a constant currency basis <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions2
	$m	$m	$m	$m	%	$m
Net operating income	28,674	26,848	20,772	1,826	7	(636)
ECL	(1,335)	(935)	(1,160)	(400)	(43)	(22)
Operating expenses	(15,204)	(14,352)	(14,141)	(852)	(6)	651
Share of profit in associates and JVs	47	64	29	(17)	(27)	—
Profit before tax	12,182	11,625	5,500	557	5	(7)
RoTE1 (%)	29.0	28.5	13.8
1 RoTE (annualised) in 2023 and 2022 included a 0.3 and 4.7 percentage point adverse impact from the impairment losses relating to the sale of our retail banking<br><br>operations in France respectively.<br><br>2 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

International customers are those who bank in more than one market, those whose address is different from the market we bank them in and customers whose

nationality, or country of birth for non-resident Indians and overseas Chinese, is different to the market we bank them in. Customers may be counted more than

once when banked in multiple countries.

30	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Management view of revenue <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions4
	$m	$m	$m	$m	%	$m
Wealth	8,758	7,446	6,973	1,312	18	(235)
– investment distribution	2,925	2,517	2,469	408	16	(167)
– Global Private Banking	2,612	2,268	2,039	344	15	—
net interest income	1,193	1,167	975	26	2	—
non-interest income	1,419	1,101	1,064	318	29	—
– life insurance	1,840	1,396	1,337	444	32	(10)
– asset management	1,381	1,265	1,128	116	9	(58)
Personal Banking	19,352	20,240	15,884	(888)	(4)	(669)
– net interest income	17,980	18,940	14,597	(960)	(5)	(578)
– non-interest income	1,372	1,300	1,287	72	6	(91)
Other1	564	(838)	(2,085)	1,402	>100	268
–of which: impairment (loss)/reversal relating to the sale of<br><br>our retail banking operations in France2	28	4	(2,374)	24	>100	24
Net operating income3	28,674	26,848	20,772	1,826	7	(636)

1 ‘Other’ includes Markets Treasury, HSBC Holdings interest expense and hyperinflation. It also includes the distribution and manufacturing (where applicable) of

retail and credit protection insurance, disposal gains and other non-product-specific income.

2 The amounts associated with the sale of our retail banking operations in France include all related impacts disclosed in notable items, which are presented across

various lines in our consolidated income statement.

3’Net operating income’ means net operating income before change in expected credit losses and other credit impairment charges (also referred to as ‘revenue’).

4Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions’ on page 111.

	2024	2023	2022
Notable items – on a reported basis	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	28	4	(2,212)
Restructuring and other related costs	—	—	98
Disposal losses on Markets Treasury repositioning	—	(391)	—
Currency translation on revenue notable items	—	34	(158)
Operating expenses
Disposals, acquisitions and related costs	(3)	(53)	(7)
Restructuring and other related costs	(10)	20	(357)
Currency translation on operating expenses notable items	—	—	(3)

Financial performance

Profit before tax of $12.2bn was $0.6bn higher

than in 2023 on a constant currency basis. The

growth reflected higher Wealth revenue, as

we continued to execute on our strategy. This

was partly offset by a $0.2bn reduction from

the sale of our banking business in Canada,

which completed in 1Q24. Net interest income

(‘NII’) grew by 2% compared with 2023, while

fee income increased by 12%. Operating

expenses grew by $0.9bn and there was an

increase in ECL of $0.4bn, both on a constant

currency basis.

Revenue of $28.7bn was $1.8bn or 7% higher

on a constant currency basis. Wealth

performed strongly, up $1.3bn. This included

double-digit percentage growth in life

insurance, Global Private Banking and

investment distribution, as well as growth in

asset management. This was partly offset by a

reduction in Personal Banking NII of $1.0bn,

due to the impact of the disposals in France

and Canada and margin compression, partly

offset by balance sheet and non-NII growth.

In Wealth, revenue of $8.8bn was up $1.3bn

or 18%.

–Investment distribution revenue grew by

$0.4bn, or 16%, driven by higher sales of

mutual funds, structured products and

bonds due to our continued investment in

Wealth and improved market sentiment,

including in our entities in Asia.

–Global Private Banking revenue was $0.3bn

or 15% higher, primarily driven by a strong

performance in brokerage and trading in our

entities in Asia.

–Life insurance revenue was $0.4bn or 32%

higher. The growth included an increase in

earnings from contractual service margin

(‘CSM’) release, largely due to continued

growth in the CSM balance. The year-on-

year increase in revenue also included the

impact of corrections to historical valuation

estimates recognised in 2023. Insurance

manufacturing new business CSM of $2.5bn

was 49% higher than in 2023, mainly in our

legal entities in Hong Kong.

–Asset management revenue was $0.1bn or

9% higher, driven by a 7% increase in

assets under management due to inflows

and positive market movements. This was

partly offset by a reduction in revenue due to

the sale of our banking business in Canada.

In Personal Banking, revenue of $19.4bn was

down $0.9bn or 4%.

–Net interest income was $1.0bn or 5%

lower due to the impact of the sales of our

banking businesses in France and Canada

and narrower margins. Compared with 2023,

lending balances were broadly stable with

growth mainly in mortgages in HSBC UK and

our legal entity in the US. This was offset by

the reclassification of the France retained

loans to Corporate Centre. Unsecured lending

balances increased, including in HSBC UK and

our legal entities in Asia and Mexico. Deposit

balances grew by $24bn, including in our legal

entities in Asia and the UK.

Other revenue increased by $1.4bn, mainly

due to a $1.1bn increase in revenue allocated

from Markets Treasury, including from the

non-recurrence of 2023 disposal losses on

repositioning and risk management, the non-

recurrence of a loss on sale of our business in

New Zealand in 2023 of $0.1bn and higher

interest income earned on own capital.

ECL were $1.3bn, an increase of $0.4bn

compared with 2023 on a constant currency

basis, reflecting higher charges in our legal

entity in Mexico, mainly in our unsecured

portfolio, due to portfolio growth and

unemployment trends. In addition, we had

higher charges in our legal entities in Hong

Kong and the UK as a result of portfolio

growth.

Operating expenses of $15.2bn were 6%

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 disposals in France and Canada.

HSBC Holdings plc Annual Report on Form 20-F	31

Commercial Banking

Our CMB business served around 1.21 million customers across 48 countries and territories, ranging from small

enterprises to large companies operating globally.

Contribution to Group profit before tax

10995116466656

$11.9bn

38%

Calculation is based on profit before tax of our global

businesses excluding Corporate Centre.

CMB partnered with businesses around

the world, supporting every stage of

their growth, international ambitions

and sustainability transitions. CMB

delivered value to clients through our

international network, financing

strength, digital capabilities and our

universal banking offering, including our

global trade and payments solutions.

HSBC has been recognised as the World’s best

Trade Finance Bank and the World’s best

Payments and Treasury Bank (Euromoney

Awards) and we continue to invest in

capabilities to assist clients in fulfilling their

business needs more efficiently.

We have completed our first full year of

HSBC Innovation Banking with global revenue

now standing at $0.7bn, and over 1,200 new

customers onboarded in 2024.

Divisional highlights

10%

Increase in loans and advances to customers

in Global Trade Solutions, compared with

2023, on a constant currency basis.

CMB profit before tax compared with 2023

was impacted by the non-recurrence of the

gain on acquisition of SVB UK recognised in

Excluding this, there was a good 2024

performance, with growth in revenue due to

balance sheet growth, continued momentum

in growing our multi-jurisdictional client base,

and investment in our core transaction

banking capabilities leading to higher fee

income. Revenue also benefited from the

growth in GBM collaboration income. The

increase in operating expenses reflected the

impact of hyperinflation in Argentina,

increased technology spend and investment,

incremental costs associated with HSBC

Innovation Banking and inflationary pressures.

1The number of customers reduced due to the

sale of our banking business in Canada.

$25bn

CMB grew deposits by $25bn or 5%

compared with 2023.

Results – on a constant currency basis <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions2
	$m	$m	$m	$m	%	$m
Net operating income	21,580	22,396	16,207	(816)	(4)	(2,228)
ECL	(1,815)	(2,006)	(1,868)	191	10	69
Operating expenses	(7,906)	(7,234)	(6,810)	(672)	(9)	255
Share of profit/(loss) in associates and JVs	1	(1)	1	2	>100	—
Profit before tax	11,860	13,155	7,530	(1,295)	(10)	(1,904)
RoTE1 (%)	20.0	23.4	13.7
1 RoTE in 2023 included a 3.1 percentage point favourable impact from the gain recognised on the acquisition of SVB UK.<br><br>2 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.
32	HSBC Holdings plc Annual Report on Form 20-F
---	---

Strategic Report

Management view of revenue <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions4
	$m	$m	$m	$m	%	$m
Global Trade Solutions	1,992	1,969	2,045	23	1	(39)
Credit and Lending	5,183	5,239	5,728	(56)	(1)	(281)
Global Payments Solutions	11,880	12,125	6,911	(245)	(2)	(225)
Markets products, Insurance and Investments and Other1	2,525	3,063	1,523	(538)	(18)	(1,683)
–of which: share of revenue for Markets and Securities Services<br><br>and Banking products	1,382	1,295	1,181	87	7
–of which: gain on the acquisition of Silicon Valley Bank UK Limited	—	1,659	—	(1,659)	(100)	(1,659)
Net operating income2	21,580	22,396	16,207	(816)	(4)	(2,228)
–of which: transaction banking3	14,867	15,077	9,853

1Includes a gain on the acquisition of SVB UK and CMB‘s share of revenue from the sale of Markets and Securities Services and Banking products to CMB

customers. GBM‘s share of revenue from the sale of these products to CMB customers is included within the corresponding lines of the GBM management view

of revenue. Also includes allocated revenue from Markets Treasury, HSBC Holdings interest expense and hyperinflation.

2 ’Net operating income’ means net operating income before change in expected credit losses and other credit impairment charges (also referred to as ‘revenue’).

3 Transaction banking comprises Global Trade Solutions, Global Payments Solutions and CMB’s share of Global Foreign Exchange (shown within ‘share of revenue

for Markets and Securities Services and Banking products’).

4Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

	2024	2023	2022
Notable items – on a reported basis	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	—	1,591	—
Restructuring and other related costs	—	—	(16)
Disposal losses on Markets Treasury repositioning	—	(316)	—
Currency translation on revenue notable items	—	65	6
Operating expenses
Disposals, acquisitions and related costs	(2)	(55)	—
Restructuring and other related costs	2	32	(266)
Currency translation on operating expenses notable items	—	—	(7)

Financial performance

Profit before tax of $11.9bn was $1.3bn

lower than in 2023 on a constant currency

basis. This was mainly due to a reduction in

revenue following the non-recurrence of a

$1.7bn gain recognised in 2023 on the

acquisition of SVB UK, the impact of the

disposal of our banking business in Canada in

2024, as well as higher operating expenses.

The reduction in profit before tax was partly

offset by balance-sheet-driven revenue

growth, excluding the disposal of our banking

business in Canada, higher revenue allocated

from Markets Treasury, transaction banking

fee growth and lower ECLs.

Revenue of $21.6bn was $0.8bn or 4% lower

on a constant currency basis. This was

primarily due to the non-recurrence of the

gain on the acquisition of SVB UK in 2023, as

mentioned above. It also included an adverse

impact of $0.6bn from strategic transactions,

notably in relation to the disposal of our

banking business in Canada. These were

partly offset by an increase in NII due to the

hyperinflationary impacts in Argentina and

higher allocated revenue from Markets

Treasury.

–In GTS, revenue was up $23m or 1%,

mainly due to growth in fee income from

guarantees, higher balances and improved

margins. This was partly offset by the

impact of the disposal of our banking

business in Canada.

–In Credit and Lending, revenue decreased

by $0.1bn or 1% due to the impact of the

disposal of our banking business in Canada,

partly offset by higher income in IVB.

–In GPS, revenue was down $0.2bn or 2%,

reflecting the impact of the disposal of our

banking business in Canada, and a

decrease in our main legal entities in Asia

and Europe from lower margins, reflecting

a change in the product mix. This was

partly offset by growth in fee income

reflecting business initiatives and

transaction volumes. There was also higher

revenue in HSBC UK due to higher margins

and in our legal entity in Argentina due to

hyperinflationary impacts.

–In GBM products, Insurance and

Investments, and Other, revenue

decreased by $0.5bn, largely due to the

non-recurrence of the $1.7bn gain

recognised in 2023 on the acquisition of

SVB UK. This adverse impact was partly

offset by higher allocated revenue from

Markets Treasury, including from the non-

recurrence of 2023 disposal losses on

repositioning and risk management and

interest income on own capital. There was

also higher GBM collaboration revenue,

reflecting growth in Global Markets and

Capital Financing products, notably in our

key entities in Hong Kong, the UK and in

Europe.

ECL charges of $1.8bn were $0.2bn lower on

a constant currency basis. ECLs in 2024

reflected lower charges in our main legal

entity in Asia, reflecting a reduction in ECL in

the commercial real estate sector in mainland

China, and in HSBC UK. These reductions

were partly offset by new stage 3 charges

related to a single customer in the UK, and in

our main legal entity in the Middle East.

Operating expenses of $7.9bn were $0.7bn

or 9% higher on a constant currency basis.

The increase reflected hyperinflationary

impacts in Argentina, incremental costs in

IVB 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.

HSBC Holdings plc Annual Report on Form 20-F	33

Global Banking and Markets

Our GBM business supported multinational corporates, financial institutions and institutional clients, as well as

public sector and government bodies.

Contribution to Group profit before tax

10995116462379

$7.1bn

23%

Calculation is based on profit before tax of our global

businesses excluding Corporate Centre.

GBM is a leading provider of transaction

banking, financing and risk

management solutions to our clients.

Our global network with expertise,

particularly in Asia and the Middle East,

provides a differentiated service to our

clients’ international financial

requirements.

Divisional highlights

13.0%

Return on average tangible equity, up 1.6

percentage points compared with 2023. adjusted symbol.jpg

GBM delivered a strong performance in 2024,

achieving a RoTE of 13.0%. On a constant

currency basis, we grew revenue by 11%,

while costs grew by 4% as we continued to

invest in technology to support future

revenue growth, and from the impact of

inflation. We also had a reduction in ECL

compared with 2023.

36%

Increase in Securities Financing revenue

compared with 2023, primarily from new

client onboarding in prime finance.

Results – on a constant currency basis <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions1
	$m	$m	$m	$m	%	$m
Net operating income	17,529	15,771	14,542	1,758	11	(49)
ECL	(235)	(317)	(578)	82	26	(11)
Operating expenses	(10,231)	(9,872)	(9,403)	(359)	(4)	59
Share of profit/(loss) in associates and JVs	—	—	(2)	—	—	—
Profit before tax	7,063	5,582	4,559	1,481	27	(1)
RoTE (%)	13.0	11.4	9.8

1 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

34	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

Management view of revenue <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions6
	$m	$m	$m	$m	%	$m
Markets and Securities Services	9,652	8,806	8,815	846	10	(63)
–Securities Services	2,280	2,305	1,994	(25)	(1)	(3)
–Global Debt Markets	968	827	698	141	17	(8)
–Global Foreign Exchange	3,972	4,030	4,088	(58)	(1)	(49)
–Equities	891	552	1,015	339	61	(1)
–Securities Financing	1,523	1,120	924	403	36	(5)
–Credit and funding valuation adjustments	18	(28)	96	46	>100	3
Banking	8,656	8,460	6,690	196	2	(125)
–Global Trade Solutions	690	658	670	32	5	(13)
–Global Payments Solutions	4,497	4,427	2,861	70	2	(72)
–Credit and Lending	1,820	1,967	2,229	(147)	(7)	(15)
–Investment Banking1	1,084	1,040	737	44	4	(9)
–Other2	565	368	193	197	54	(16)
GBM Other	(779)	(1,495)	(963)	716	48	139
–Principal Investments	24	(5)	57	29	>100	—
–Other3	(803)	(1,490)	(1,020)	687	46	139
Net operating income4	17,529	15,771	14,542	1,758	11	(49)
–of which: transaction banking5	11,439	11,420	9,613	19	—

1From 1 January 2024, we renamed ‘Capital Markets and Advisory‘ as ‘Investment Banking‘ to better reflect our purpose and offering.

2Includes portfolio management, earnings on capital and other capital allocations on all Banking products.

3Includes notional tax credits and Markets Treasury, HSBC Holdings interest expense and hyperinflation.

4‘Net operating income’ means net operating income before change in expected credit losses and other credit impairment charges (also referred to as ‘revenue’).

5Transaction banking comprises Securities Services, Global Foreign Exchange (net of revenue shared with CMB), GTS and GPS.

6Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

	2024	2023	2022
Notable items – on a reported basis	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	(14)	—	—
Restructuring and other related costs	—	—	(184)
Disposal losses on Markets Treasury repositioning	—	(270)	—
Currency translation on revenue notable items	—	(2)	4
Operating expenses
Disposals, acquisitions and related costs	(2)	3	—
Restructuring and other related costs	(1)	21	(252)
Currency translation on operating expenses notable items	—	—	(8)

Financial performance

Profit before tax of $7.1bn was $1.5bn or

27% higher than in 2023 on a constant

currency basis. This was driven by an

increase in revenue of $1.8bn or 11%on a

constant currency basis, including from strong

performances in Securities Financing,

Equities and Global Debt Markets. In addition,

ECL charges decreased compared with 2023,

while operating expenses increased by

$0.4bn on a constant currency basis.

Revenue of $17.5bn was $1.8bn or 11%

higher on a constant currency basis.

In Markets and Securities Services (‘MSS‘),

revenue increased by $0.8bn or 10% driven

by prime finance, fixed income and equity

derivatives.

–In Securities Services, revenue decreased

by $25m or 1% from divestments within

our fund administration business and from

lower NII due to reduced rates impacting

margins.

–In Global Debt Markets, revenue rose by

$0.1bn or 17%, from higher client demand

for financing products and increased volumes

primarily from emerging markets credit.

–In Global Foreign Exchange, revenue fell by

$0.1bn or 1%, as client activity remained

resilient given the market environment.

–In Equities, revenue increased by $0.3bn or

61% amid improved market sentiment,

which drove strong client demand for

wealth products, as well as higher levels of

volatility in 2H24.

–In Securities Financing, revenue rose by

$0.4bn or 36%, primarily driven by new

client onboarding in prime finance and

robust institutional financing demand.

In Banking, revenue increased by $0.2bn or

2%.

–In GPS, revenue increased by $0.1bn or

2%, driven by higher average balances and

fee performance resulting from business

initiatives, repricing and transaction growth.

–In Investment Banking, which includes

Issuer Services, revenue increased by

$44m or 4%, due to higher advisory and

financing activity, supported by the

recovery in global capital markets.

–In Credit and Lending, revenue decreased

by $0.1bn or 7% reflecting ongoing muted

client demand.

–In Banking Other, revenue increased by

$0.2bn or 54% due to hedging activities

and higher allocated earnings on capital

held in the business.

In GBM Other, revenue increased by $0.7bn

or 48%, driven by higher allocated revenue

from Markets Treasury, including from the non-

recurrence of 2023 disposal losses on

repositioning and risk management, and lower

HSBC Holdings interest expense.

ECL of $0.2bn decreased by $0.1bn on a

constant currency basis, mainly as the 2024

period included a release related to a single

exposure.

Operating expenses of $10.2bn increased by

$0.4bn or 4% on a constant currency basis,

due to the impact of inflation and higher

spend and investment in technology, partly

mitigated by continued cost discipline.

HSBC Holdings plc Annual Report on Form 20-F	35

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.

Corporate Centre performance in 2024 primarily

reflected the financial impact of certain

acquisitions and disposals, including the gain on

the sale of our banking business in Canada and

losses on the disposal of our business in

Argentina, including foreign currency and other

reserve losses. In 2023, performance included

the recognition of an impairment in our

investment in our associate BoCom.

Financial performance

Profit before tax of $1.2bn was $1.7bn higher

than in 2023 on a constant currency basis. The

increase included the impact of the non-

recurrence of an impairment charge of $3.0bn

in 2023 relating to our investment in BoCom.

Revenue of $1.9bn was $1.8bn 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.

The reduction in revenue also included adverse

fair value movements on financial instruments

in Central Treasury and structural hedges, a

reduction following the transfer of the retained

French retail lending portfolio from WPB, and

fair valuation losses on legacy portfolios. This

was partly offset by fair value gains on hedging

related to our retained French retail lending

portfolio.

Operating expenses decreased by $0.3bn 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.

Results – on a constant currency basis<br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions1
	$m	$m	$m	$m	%	$m
Net operating income	(1,929)	(103)	(1,934)	(1,826)	>(100)	(977)
ECL	(29)	(1)	(9)	(28)	>(100)	—
Operating expenses	298	(36)	(1,875)	334	>100	27
Share of profit in associates and joint ventures less impairment	2,864	(319)	2,531	3,183	>100	—
–of which: impairment loss relating to our investment in BoCom	—	(3,017)	—	3,017	>100	—
Profit/(loss) before tax	1,204	(459)	(1,287)	1,663	>100	(950)
RoTE (annualised) (%)	0.7	(1.0)	2.8

1Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

Management view of revenue <br>	2024	2023	2022	2024 vs 2023		of which strategic<br><br>transactions6
	$m	$m	$m	$m	%	$m
Central Treasury1	(49)	99	(743)	(148)	>(100)	—
Legacy portfolios	(50)	3	(181)	(53)	>(100)	—
Other2,3	(1,830)	(205)	(1,010)	(1,625)	>(100)	(977)
–of which: gain on the sale of banking business in Canada<br><br>and associated hedges4	4,795	(275)	—	5,070	>100	5,070
–of which: loss on the sale of business in Argentina	(1,011)	—	—	(1,011)	>(100)	(1,011)
–of which: recycling of foreign currency translation reserve<br><br>losses and other reserves on sale of business in Argentina	(5,166)	—	—	(5,166)	>(100)	(5,166)
Net operating income5	(1,929)	(103)	(1,934)	(1,826)	>(100)	(977)

1Central Treasury comprises valuation differences on issued long-term debt and associated swaps and fair value movements on financial instruments.

2 Other comprises gains and losses on certain transactions, funding charges on property and technology assets, the results of the retained France retail loan portfolio,

revaluation gains and losses on investment properties and property disposals, consolidation adjustments and other revenue items not allocated to global businesses.

3 Revenue from Markets Treasury, HSBC Holdings net interest expense and hyperinflation are allocated out to the global businesses, to align them better with their

revenue and expense. The total Markets Treasury revenue component of this allocation for 2024 was $1,569m (2023: $(339)m; 2022: $1,377m).

4 Includes fair value gains/(losses) on the foreign exchange hedging of the proceeds of the sale and the recycling of related reserves.

5 ’Net operating income’ means net operating income before change in expected credit losses and other credit impairment charges (also referred to as ‘revenue’).

6 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 111.

	2024	2023	2022
Notable items – on a reported basis	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	(1,357)	(297)	(525)
Fair value movements on financial instruments	—	14	(618)
Restructuring and other related costs	—	—	(145)
Early redemption of legacy securities	(237)	—	—
Currency translation on revenue notable items	—	(9)	(26)
Operating expenses
Disposals, acquisitions and related costs	(192)	(216)	(11)
Restructuring and other related costs	(25)	63	(2,007)
Currency translation on operating expenses notable items	—	—	(46)
Impairment of interest in associate	—	(3,000)	—
Currency translation on associate notable items		(17)
36	HSBC Holdings plc Annual Report on Form 20-F
---	---

Strategic Report

Risk overview

Active risk management helps us to achieve our strategy,

serve our customers and communities and grow our

business safely.

Managing risk

Key risk appetite metrics
Component	Measure	Risk<br><br>appetite	2024
Capital	CET1 ratio – end point basis	≥13.5%	14.9%
Change in expected<br><br>credit losses and<br><br>other credit<br><br>impairment charges	Change in expected credit losses and other credit<br><br>impairment charges as a % of advances: Retail (WPB)	≤0.50%	0.27%
	Change in expected credit losses and other credit<br><br>impairment charges as a % of advances: Wholesale<br><br>(GBM, CMB)	≤0.45%	0.37%

HSBC’s operations are subject to changes in

the economy, financial conditions and

geopolitical developments that could have a

material impact on the Group’s operations and

financial risks. These factors are a significant

source of uncertainty that we monitor and

review continuously.

Despite political and economic uncertainties,

global economic growth was resilient in 2024.

This was led by strong growth in the US and a

mild recovery in the EU, while key emerging

markets were supported by monetary policy

easing. In the US, performance was supported

by household consumption and government

spending. In mainland China activity by sector

has been uneven, but fiscal and monetary

support ensured that the official economic

growth target was still met. UK growth

remained low despite a fall in inflation and

lower interest rates, as consumers continued to

prioritise saving.

Continued moderate growth is expected in

2025, but the trajectory of US economic and

trade policies in the aftermath of the US

election, and geopolitical risks such as the

ongoing Russia-Ukraine war and conflict in

the Middle East, remain key sources of

forecast uncertainty.

Inflation and high interest rates remain key

considerations for policymakers. In the US and

Europe, headline inflation rates trended

downwards towards central bank target ranges,

despite high and persistent services price

increases. Disinflation enabled the US Federal

Reserve and the ECB to cut their policy rates by

100bps and 75bps respectively, and the Bank of

England by 50bps in 2024.

Further cuts in interest rates are expected in

the US, although the resilience of the

economy and the perceived supply chain and

inflation risks attached to new and

prospective US tariff policies, have led

markets to pare back their expectations for

rate cuts in 2025. In the Eurozone, interest

rates are expected to be cut in order to

support growth. Markets also expect the

Bank of England to continue to reduce the

bank rate throughout 2025. In mainland

China, authorities have reduced benchmark

policy interest rates to support private sector

borrowing as demand for loans has

weakened. Further fiscal and monetary

easing is expected to support local

consumption and offset some of the impact

of US tariffs.

Fiscal policy, public deficits and indebtedness

influence our risk profile. Public spending as a

proportion of GDP is likely to remain high for

most key economies. Against the backdrop of

higher global interest rates, a high level of

public debt issuance, and a strong US dollar,

borrowing costs for certain countries could

increase further. This could adversely impact

the fiscal capacity and debt sustainability of

highly-indebted sovereign issuers.

Additional sanctions on Iran were imposed in

2024 in response to Iran’s activities and the

increase in tensions between Israel and Iran.

The sanctions and trade restrictions imposed

by the US, the UK, and the EU, as well as

other countries, as a result of the Russia-

Ukraine war, remain complex, far-reaching

and evolving. The US has expanded the reach

of its secondary sanctions regime, which

includes broad discretion to impose severe

sanctions on non-US banks. The imposition of

such sanctions against any non-US HSBC

entity could result in significant adverse

commercial, operational and reputational

consequences for HSBC. In response to such

sanctions and trade restrictions, as well as

asset flight, Russia has implemented certain

countermeasures, including the expropriation

of certain foreign assets.

Strategic competition with China has the

potential to impact global supply chains which

may in turn impact the Group’s operations.

The US, the UK, the EU and other countries

have imposed various sanctions and trade

restrictions on Chinese individuals and

companies. China has also imposed its own

sanctions, trade restrictions and other

measures against certain countries,

businesses and individuals. This has resulted

in efforts to de-risk certain sectors with the

reshoring of manufacturing activities.

Further sanctions or counter-sanctions may

adversely affect the Group, its customers and

various markets.

Political changes may also have implications

for policy and regulations. Newly elected

governments in several key markets have

committed to a shift in domestic and foreign

policy priorities. The US administration

supports sweeping economic, foreign and

trade policy changes that, if enacted, are

expected to have geopolitical and

macroeconomic implications, including an

uncertain impact on growth and inflation.

HSBC continues to monitor these policy

changes and assess their implications for

economic conditions in our key markets.

Challenging conditions persist in the real

estate sector in several of our major markets.

The Hong Kong commercial real estate

market has seen prices fall amid low

transaction volumes and a high interest rate

environment. Despite an improvement in

sentiment associated with supportive policy

measures and recent US interest rate cuts,

commercial real estate market demand has

remained weak. Prices also fell in the Hong

Kong residential market during 2024 but

sentiment and transaction volumes started to

improve in the fourth quarter, supported by

more favourable government measures and

improved affordability as prices and interest

rates fell. Stabilisation of the real estate market

could be dependent on a further lowering of

interest rates to revive demand for property

both in the domestic market and from

mainland China. Higher interest rates, a

stronger US dollar and weak sentiment in

mainland China remain the key risks to

recovery.

HSBC Holdings plc Annual Report on Form 20-F	37

Managing risk continued

In mainland China an excess of inventory and

low confidence have resulted in the fall in

both commercial and residential real estate

prices. A recovery remains contingent on

reform and broader economy-wide stimulus

measures. We continue to closely monitor

market conditions and take steps to

proactively manage our commercial real

estate portfolios.

In the fourth quarter of 2024 management

adjustments to ECL were applied to reflect

sector or portfolio risks that are not fully

captured by our models.

We continue to assess the impact of Basel

3.1 standards on our capital, including the

release of more beneficial PRA near-final

rules, developments in the US and the

associated implementation challenges.

We monitor, and seek to manage, the

potential implications of all the above

developments on our customers and our

business. While the financial performance of

our operations varied by geography, our

balance sheet and liquidity remained strong.

For further details of our Central and other

scenarios, see ‘Measurement uncertainty and

sensitivity analysis of ECL estimates’ on page

178. Our risk appetite

Our risk appetite sets our approach to

monitoring and managing our risk exposure. It

defines our desired forward-looking risk

profile and informs the strategic and financial

planning process. It provides a baseline to

guide strategic decision making by helping

planned business activities to deliver an

appropriate balance of return for the risk

assumed, while remaining within acceptable

risk levels. Risk appetite supports senior

management in allocating financial resources

optimally to finance sustainable growth and

manage risk exposures.

At 31 December 2024 our CET1 ratio and

ECL charges were within their defined risk

appetite thresholds. Our CET1 capital ratio at

31 December 2024 was 14.9%, up marginally

compared with the prior year as capital

generation and a reduction in RWAs through

strategic transactions were offset by

dividends, share buy-backs and organic

balance sheet growth. For further details of

the key drivers of the overall CET1 ratio, see

‘Own funds’ on page 235. Wholesale ECL

charges during the year continued to reflect

stress in the mainland China and Hong Kong

commercial real estate sectors however,

Wholesale and Retail ECL charges remained

within appetite.

Stress tests

We regularly conduct stress tests to assess

the resilience of our balance sheet and our

capital adequacy, as well as to provide

actionable insights into how key elements of

our portfolios may behave during a crisis. We

use the outcomes to calibrate our risk

appetite to inform our strategic and financial

plans, helping to improve the quality of

management’s decision making. The results

from the stress tests also drive recovery and

resolution planning to help enhance the

Group’s financial stability under various

severe macroeconomic or idiosyncratic

scenarios. The selection of stress scenarios is

based upon the identification and assessment

of our top and emerging risks and our risk

appetite.

The Prudential Regulation Authority (‘PRA’)

cancelled the 2024 Annual Cyclical Scenario

stress testing exercise and instead

commenced a Desk Based Stress Test

exercise, which used PRA models and their

in-house expertise to test the resilience of

the UK banking system against more than

one adverse macroeconomic scenario. HSBC

provided 2023 year-end data to support this.

The results of this exercise across firms were

published in aggregate only, within the

Financial Stability Report issued in the fourth

quarter of 2024. The PRA announced an

updated Stress Testing Framework and

intends to return to a concurrent exercise in

2025, involving the submission of stressed

projections. Further details will be provided

by the PRA during 2025.

During 2024, the Group-wide internal stress

test was completed and assessed the impact

of two contrasting scenarios envisioning

severe macroeconomic conditions over a five-

year period. These scenarios reflected the

uncertain inflation and interest rate

environment, heightened geopolitical

tensions, banking sector challenges, and

global economic stress. The outcomes

demonstrated that the Group has sufficient

capital to withstand severe but plausible

stress conditions. Additionally, the

conclusions drawn from this exercise will also

be included in the Group Internal Capital

Adequacy Assessment Process.

Climate risk

Climate risk relates to the financial and non-

financial impacts that may arise as a

consequence of climate change and the

move to a net zero economy. Climate risk can

impact us either directly or through our

relationships with our clients. These include

the potential risks arising as a result of our

net zero ambition, which could lead to

reputational concerns, and potential legal and/

or regulatory enforcement action if we are

perceived to mislead stakeholders on our

business activities or if we fail to achieve our

stated net zero ambition.

We seek to manage climate risk across all our

businesses in line with our Group-wide risk

management framework and continue to

incorporate climate considerations within our

traditional risk types.

For further details of our approach to climate risk

management, see ‘Climate risk‘ on page 249.

For further details of our TCFD disclosures, see

the ‘ESG review‘ on page 466.

Climate stress tests

Scenario analysis supports our strategy by

assessing our potential exposures to climate

risks and vulnerabilities under a range of

climate scenarios. Scenario analysis helps to

build our awareness of climate change,

understand plausible impacts to our strategy,

plan for the future and meet our growing

regulatory requirements.

In 2024, we enhanced our internal climate

scenario analysis exercise by focusing our

efforts on generating more granular insights

for key sectors and regions to support core

decision-making processes. We also

continued to embed climate considerations

into core processes across the Group and to

respond to our regulatory requirements.

Additionally, we produced several climate

stress tests for regulators around the world,

including the Hong Kong Monetary Authority.

For further details of our approach to climate risk

stress testing, see ‘Insights from scenario

analysis’ on page 253.

Our operations

We remain committed to investing in the

reliability and resilience of our technology

systems and critical services. 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, affiliates and

counterparties, and minimise any disruption

to our services. In our approach to defending

against these threats, we invest in business

and technical controls to help us prevent,

detect, manage and recover from issues in a

timely manner within our risk appetite.

We are working to balance the opportunity

artificial intelligence (‘AI’) presents to

accelerate delivery of our strategy with the

need for appropriate controls to be in place to

mitigate the associated risks. HSBC is

committed to using AI responsibly. HSBC’s

Principles for the Ethical Use of Data and AI

are available at www.hsbc.com/ai. We

continue to refine and embed governance

and controls into our risk management

processes to help meet the Group’s needs

and increasing regulatory expectations for

when AI is both developed internally and

enabled through third parties.

We continue to focus on improving the

quality and timeliness of the data used to

inform management decisions, and are

progressing with the implementation of our

strategic and regulatory change initiatives to

help deliver the right outcomes for our

customers, people, investors and

communities.

For further details of our risk management

framework and risks associated with our banking

and insurance manufacturing operations, see

pages 167 and 261, respectively.

38	HSBC Holdings plc Annual Report on Form 20-F

Strategic Report

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.

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 could<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>cyclical and idiosyncratic macroeconomic risks. Among the key risks to the economic outlook is the prospective recalibration<br><br>of economic and trade policies following elections in the US and other markets in 2024. This could prove disruptive to the<br><br>global economy.
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 and the impact this may have on third-party risk management. We<br><br>operate a continuous improvement programme to help support the resilience and stability of our technology operations and<br><br>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<br><br>owing to the pace and volume of regulatory developments globally, signs of diverging national agendas, increasing frequency<br><br>of severe weather events, which require careful monitoring, and may impact financial and non-financial risks due to<br><br>stakeholders placing more emphasis on financial institutions’ actions and investment decisions in respect of ESG matters.<br><br>Failure to meet these evolving expectations may result in financial and non-financial risks, including reputational, legal and<br><br>regulatory 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	~	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>generative AI, 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 risk environment is set against continued geopolitical risk and regulatory focus on operational<br><br>resilience, financial resilience, model risk, ESG, financial crime and risk management practices. Multiple jurisdictions are<br><br>progressing the implementation of Basel 3.1 standards to various timescales, some of which are being delayed. The<br><br>governmental and regulatory focus on improving pro-business growth is also driving legislative and regulatory change.
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. Due to the current macroeconomic and geopolitical climate, the<br><br>risk of service disruption in our supply chain remains heightened. We continue to strengthen our controls, oversight and risk<br><br>management policies and processes to select and manage third parties, including our third parties’ own supply chains,<br><br>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 are driving material<br><br>changes to the way model risk is managed across the banking industry, with a particular focus on capital models. New<br><br>technologies, including AI and generative AI, are driving a need for enhanced model risk controls.
Change execution risk	}	Delivering change effectively is critical to achieving our strategy and enables us to meet rapidly-evolving customer and<br><br>stakeholder needs. We seek to deliver complex change in line with established risk management processes, prioritising<br><br>sustainable outcomes and understanding the associated risks. We focus on meeting industry and regulatory expectations and<br><br>fulfilling our obligations to customers and clients.
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,<br><br>changing skills requirements of our workforce, and compliance with employment laws and regulations. Attrition across the<br><br>Group remains stable, but failure to manage these risks may impact the delivery of our strategic objectives or lead to<br><br>regulatory sanctions or legal claims, and the risks are heightened during the current period of fundamental organisational<br><br>change.

~ Risk heightened during 2024 } Risk remained at the same level as 2023

HSBC Holdings plc Annual Report on Form 20-F	39

Dividers image-01.jpg

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 21 and

additional information is included on pages 466 to 472. Further

details have been embedded in this section and the Risk review

section on pages 249 to 258. Our TCFD disclosures are highlighted

with the following symbol:

40 Environmental
61 Social
71 Governance

Shanghai, China, 1870s. Waterfront View.

TCFD
40	HSBC Holdings plc Annual Report on Form 20-F
---	---

ESG review | Environment

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

At a glance

Supporting the transition to net zero is a key

priority for HSBC. In 2020, we set an ambition to

become a net zero bank by 2050. We continue

to develop our capabilities, products and services

to support our customers’ transition, reduce

emissions in our own operations and partner for

systemic change.

We believe supporting our customers’ transition

both benefits their business and helps generate

long-term financial returns for our shareholders.

Since we set our net zero ambition, we have

seen promising progress in some vital areas of

the decarbonisation challenge. Yet while the

transition has progressed, the global pace of

change remains insufficient. We are limited by,

and cannot on our own overcome, the present

lag in policy measures and the overall slower

pace of the transition.

In our net zero transition plan published in

January 2024 we committed to continually

calibrate our approach to take into consideration

the latest scientific methodologies, climate-

related policies, and developments in the real

world, given that our sector portfolios reflect

progress in the regional economies where we

operate. As we near the mid-point towards our

own 2030 targets, it is important to take stock of

our own progress so far. We have made good

progress in reducing the emissions from our

own operations but more uneven progress

towards our ambitions for our financed

emissions footprint.

Financed emissions

Our strategy is to support emissions reductions

in the wider economy by working with our

portfolio of customers to facilitate the emissions

reductions they are seeking to make. We

continue to focus on engaging with our

customers on their transition plans, managing

the products and services that we offer, and

adapting the financing choices we make to help

move the world towards a resilient, net zero

economy.

We have set 2030 targets that combine financed

and facilitated emissions for the oil and gas

sector on an absolute emissions reduction basis,

and for the power and utilities sector using an

emissions intensity metric. We have also set a

target for on-balance sheet financed emissions

for thermal coal mining.

For demand-side sectors, we have set 2030

emissions intensity targets to reflect the need to

scale up low-emissions technologies while

transitioning away from existing high-emitting

technologies in transport and industry. As part of

our financial reporting, we present the progress

for these sectors against our published financed

emissions baselines and targets.

As we have set out in our net zero transition

plan, we must acknowledge that there are

fundamental prerequisites, outside of our

control, which impact our ability to meet our

2030 interim financed emissions targets. These

include technological advancements,

diversification of the energy mix, market demand

for climate solutions, evolving customer

preferences, and government leadership and

effective policy.

At the current pace of decarbonisation, a

combination of the above factors has led to the

transition being slower than envisaged by recent

Paris-aligned net zero scenarios. Against this

background, we have begun a review of our

interim 2030 financed emission targets and

associated policies as part of the annual net zero

transition plan review referenced in our 3Q24

earnings release in October.

As we calibrate our approach for the latest

context, we will seek to balance being ambitious

on net zero while recognising the present near-

term global challenges and the associated

impact of the transition playing out differently

across the regions and sectors we serve. In

doing so we plan to draw on the latest scientific

evidence and credible industry-specific

pathways, while, at the same time, maintaining

our commitment under our 2021 Climate

Resolution.

Own operations and supply chain

In 2020, we set an ambition to reach net zero in

our operations and supply chain by 2030. Our

approach is to reduce emissions from

consumption, replace consumption with low-

emissions alternatives, and remove remaining

emissions with high-quality carbon credits, in line

with external guidance.

We continue to make good progress in driving

down our direct emissions. However, progress

in reducing scope 3 emissions in our supply

chain is proving slower than we anticipated,

driven mainly by the slower pace of the transition

across the real economy.

While we remain committed to our approach, it

has become clear that we would need to rely

heavily on carbon offsets to achieve net zero in

our supply chain by 2030. As such, we have

revisited our ambition to take into account latest

best practice guidance on carbon offsets. We are

now focused on achieving net zero across our

operations, travel and supply chain by 2050.

In this section
Understanding<br><br>our climate<br><br>reporting		We continue to evolve our disclosures taking into consideration data<br><br>limitations and other challenges, and provide an overview of key changes for<br><br>2024.	Page 41<br>
Supporting our<br><br>customers	Sustainable finance and<br><br>investment	We seek to support our customers’ transition to net zero, including through<br><br>the provision and facilitation of sustainable finance and investment solutions.	Page 43<br>
Partnering for<br><br>systemic change	Supporting systemic change<br><br>to help deliver net zero	We focus on building partnerships that help support an enabling environment for<br><br>scaling net zero solutions in the geographies most impacted by climate change.	Page 45<br>
Embedding net<br><br>zero	Financed emissions	We aim to align our financed emissions to achieve net zero by 2050.	Page 46<br>
	Net zero in our own<br><br>operations	We aim to achieve net zero in our own operations, travel and supply chain by<br><br>2050, in line with our overarching net zero ambition.	Page 56<br>
	Managing climate risk	We manage climate risk across our businesses in line with our Group-wide risk<br><br>management framework and continue to enhance our stress testing and<br><br>scenario analysis capability to identify and understand climate-related risks.	Page 58<br>
	Sustainability risk policies	Our sustainability risk policies help to set out our appetite for financing and<br><br>advisory activities in certain sectors.	Page 59<br>
HSBC Holdings plc Annual Report on Form 20-F	41
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Understanding our climate reporting

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 product labelling, sustainability disclosures,

sustainable finance taxonomy and emissions

accounting. In 2025, 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 relies heavily on the availability and

quality of both internal and external data.

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 invest in the development of

data and analytics capabilities to support our

transition. This includes sourcing more reliable

data from external providers. We are also

developing our processes, systems, controls

and governance to meet the demands of future

ESG reporting.

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 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.

Policies and implementation

We continue to review and enhance

implementation of sustainability risk policies as

we apply them in practice. They are reviewed

and, where appropriate, updated based on

factors including risk materiality,

implementation experience, evolving scientific

guidance, updated climate scenarios, policy

and regulatory requirements and evolving

industry practices.

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 have developed and disclosed our

Sustainable Finance and Investment Data

Dictionary to accompany reporting against our

sustainable financing and investment

ambition. For further details, see page 43.

The evolution of the dictionary could lead to

differences in year-on-year reporting. 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 58 and 253). For

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

376. 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. This report

provides key updates on our progress in 2024

and our annual TCFD reporting.

For further details of our climate risk exposures,

see page 249.

Key changes to our 2024 disclosures We are committed to timely and transparent reporting. However, we recognise that challenges may result in us having to change certain disclosures. In 2024, there was an impact on certain climate disclosures, including: –Financed emissions for the automotive, thermal coal mining and aviation sectors: In 2024, we made a methodological change to the way we calculate financed emissions for our automotive clients. In addition, we identified errors in both the thermal coal mining and aviation sectors, including errors in lending product codes. These changes have resulted in a 25% decrease in emissions reported for automotive and a 30% increase in emissions reported for aviation in 2022 figures, and a 18% increase in emissions reported for thermal coal mining in the 2020 baseline figure on an absolute financed emissions basis. For further details, see page 49. –Thermal coal exposure: we continue to refine our basis of preparation and have made further enhancements in 2024. For further details, see page 60. –Supply chain emissions: we have restated our supply chain emissions due to revisions in our methodology and an error in the mapping of industry averages. This has resulted in a 25% increase to our 2019 baseline emissions and a 2% increase to our 2023 reported emissions. For further details, see page 57. –Asset management financed emissions 2019 baseline: we have re-baselined our 2019 intensity figure due to an error in the issuer mapping and is now 124 tCO2e/M$ invested versus 131 tCO2e/ M$ invested reported in the Annual Report and Accounts 2022. For further details, see page 55. –Energy consumption: We have restated our 2019 metric for total energy consumption due to an error. For further details, see page 57

HSBC Holdings plc Annual Report on Form 20-F

---

ESG review | Environment

Explaining scope 1, 2 and 3 emissions
To measure and manage our greenhouse gas<br><br>emissions, we follow the Greenhouse Gas Protocol<br><br>global framework, which identifies three scopes<br><br>of emissions. Scope 1 represents the direct<br><br>emissions we create. Scope 2 represents the<br><br>indirect emissions resulting from the use of<br><br>electricity and energy to run a business. Scope 3<br><br>represents indirect emissions attributed to upstream<br><br>and downstream activities. Our upstream activities<br><br>include business travel and emissions from our<br><br>supply chain including transport, distribution and<br><br>waste. Our downstream activities include those<br><br>related to investments and including financed<br><br>emissions.<br><br>Under the protocol, scope 3 emissions are also<br><br>broken down into 15 categories, of which we<br><br>provide reporting emissions data for three related<br><br>to upstream activities. These are: purchased goods<br><br>and services (category 1); capital goods (category 2);<br><br>and business travel (category 6). We also report<br><br>data on downstream activities for financed<br><br>emissions (category 15).
For further breakdown of our scope 1, 2 and 3 emissions, see our ESG Data Pack at www.hsbc.com/esg.<br>
1 Our analysis of financed emissions comprises ‘on-balance sheet financed emissions’ and ‘facilitated emissions’.

scope arrows.jpg

Our own<br><br>operations and<br><br>supply chain<br><br>See page 58	Scope 2<br><br>Indirect	Scope 3<br><br>Indirect	Scope 1<br><br>Direct	Our financed<br><br>emissions See<br><br>page 46
	Electricity,<br><br>steam<br><br>heating<br><br>and<br><br>cooling	Purchased<br><br>goods and<br><br>services<br><br>(Category 1)	Company<br><br>facilities
			Company<br><br>vehicles
Business travel<br><br>(Category 6)	Capital goods<br><br>(Category 2)			Investments and<br><br>financed emissions<br><br>(category 15)

Upstream activities

Downstream activities

HSBC Holdings

Assurance relating to ESG metrics	TCFD

HSBC Holdings plc is responsible for

preparation of the ESG information and all

supporting records, including selecting

appropriate measurement and reporting

criteria, in this Form 20-F, ESG Data Pack and

the additional reports published on our

website.

We recognise the importance of ESG

disclosures and the quality of data underpinning

them. We also acknowledge that our internal

processes to support ESG disclosures continue

to be developed and that currently they partly

rely on manual sourcing and categorisation of

data. Certain aspects of our ESG disclosures are

subject to enhanced verification and assurance

procedures including the first, second and third

lines of defence. Assurance assists with

reducing the risk of misstatement, although it

cannot be fully eliminated given the challenges

in data, evolving methodologies and emerging

standards. We aim to continue to enhance our

approach in line with external regulations and

expectations.

For 2024, ESG metrics are subject to stand-

alone independent limited third-party assurance

in accordance with the International Standard

on Assurance Engagements 3000 (Revised)

‘Assurance Engagements other than Audits or

Reviews of Historical Financial Information’

and, in respect of the greenhouse gas

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, on

the following specific ESG metrics:

–our use of proceeds from Green Bond

issuances 2024 (published in December

2024);

–our cumulative sustainable finance and

investment provided and facilitated from

1 January 2020 to 31 December 2024 (see

page 43);

–our on-balance sheet financed emissions for

2023 for six sectors, our on-balance sheet

financed emissions for 2021 and 2022 for

thermal coal mining, and our facilitated

emissions for two sectors for 2023 (see

page 54);

–our thermal coal financing drawn balance

exposures for 2021 and 2022 (see page 60);

–our own operations’ scope 1, 2 and 3

(business travel) greenhouse gas emissions

data (see page 57), as well as supply chain

emissions (purchased good and services, and

capital goods) data; and

–our re-baselined 2019 intensity metric and the

scope 1 and 2 financed emission intensity

achieved by 31 December 2023 for our HSBC

asset management business (see page 55).

The work performed for independent limited

assurance is substantially less than the work

performed for a reasonable assurance opinion,

such as that provided for financial statements.

Our data dictionaries and methodologies for

preparing the above ESG-related metrics and

independent third-party limited assurance reports

can be found at www.hsbc.com/who-we-are/esg-

and-responsible-business/esg-reporting-centre.

HSBC Holdings plc Annual Report on Form 20-F	43

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 $352.5bn of

sustainable finance and $41.1bn of ESG and

sustainable investing, as defined in our

Sustainable Finance and Investment Data

Dictionary 2024. This included 39% where

the use of proceeds was dedicated to green

financing, 12% to social financing, and 15%

to other sustainable financing. It also included

24% of sustainability-linked financing and

10% of net new investment flows managed

and distributed on behalf of investors.

In 2024, our underwriting of green, social,

sustainability and sustainability-linked bonds

for clients increased over the year, measured

on a proportional share basis, in line with the

wider bond market environment, although it

remained at 15% of our total bond

underwriting.

On-balance sheet sustainable lending

transactions increased by 11% compared

with 2023. In 2024, transactions totalling

$0.5bn were identified as no longer fulfilling

our eligibility criteria. These were declassified

and removed from the cumulative progress

total, and reported as a negative entry in

Since 1 January 2020, the cumulative

amount declassified from the total is $1.2bn.

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 2024.

Sustainable finance and investment summary1	2024<br><br>($bn)	2023<br><br>($bn)	2022<br><br>($bn)	2021<br><br>($bn)	2020<br><br>($bn)	Cumulative<br><br>progress<br><br>since 2020<br><br>($bn)
Balance sheet-related transactions provided2	47.4	42.7	42.2	26.0	10.4	168.7
Capital markets/advisory (facilitated)	37.3	33.3	34.5	48.7	30.0	183.8
ESG and sustainable investing (net new flows)	14.5	7.7	7.5	7.7	3.7	41.1
Total contribution6	99.2	83.7	84.2	82.4	44.1	393.6
Sustainable finance and investment classification by theme1
Green use of proceeds5	42.2	37.1	29.0	27.1	18.9	154.3
Social use of proceeds	9.6	8.4	6.7	11.3	9.7	45.7
Other sustainable use of proceeds3	13.9	10.7	12.6	11.7	8.3	57.2
Sustainability-linked4	19.0	19.8	28.4	24.6	3.5	95.3
ESG and sustainable investing	14.5	7.7	7.5	7.7	3.7	41.1
Total contribution6	99.2	83.7	84.2	82.4	44.1	393.6

1 The 2024 data in this table has been prepared in accordance with our Sustainable Finance and Investment Data Dictionary 2024, 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-owned

(Asset Management) sustainable investment funds and Wealth and Global Private Banking investments.

2 In 2024 only 9 months of WPB green/energy efficient mortgages were included for the first time within Other Qualified Green Lending, future years’ reporting will

include 12 months of transactions.

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 251, of which approximately $56bn is

defined as green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2024.

6 The $393.6bn 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 2024 and independent third-party limited assurance report is available at: www.hsbc.com/who-we-are/esg-and-responsible-business/

esg-reporting-centre.

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 SDGs, 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. This

year, we also indicate for the first time the

types of eligible environmental and social

activities we intend to consider going forward

when qualifying certain use of proceeds

financing for inclusion towards our sustainable

finance and investment ambition including:

climate solutions; nature; adaptation and social-

related activities.

We engage in industry initiatives to develop our

understanding and approach to ‘transition

finance’. However, we do not currently plan to

include transition finance as a product label or

stand-alone category in our data dictionary and

reporting. We will continue to monitor industry

guidance as it develops.

For our 2024 ESG Data Pack and Sustainable

Finance and Investment Data Dictionary, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre.

44	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Sustainable finance and investment continued	TCFD

Leveraging our strengths

We are focused on three key areas that play to

our strengths as an organisation and can help

deliver an impact on decarbonisation in the

global economy, particularly in Asia-Pacific and

the Middle East where the need for financing at

scale is most critical. In 2024, we were named

the world’s best bank for sustainable finance in

the Euromoney Awards for Excellence.

Transitioning industry

We support our clients in emissions-intensive

industries with their transition goals by engaging

with them on their transition plans and by

providing financing solutions.

In 2024, we refreshed transition plan

assessments for major clients in the oil and gas,

power and utilities and coal mining sectors, and

we began assessing major clients in the

automotive, aviation, cement, steel and

aluminium sectors, to better understand their

objectives and identify opportunities to enable

their decarbonisation strategies.

Scaling infrastructure finance plays an important

role in meeting global decarbonisation

objectives. In 2024, we launched HSBC

Infrastructure Finance (‘HIF’), which brings

together our infrastructure finance, export

finance, and debt/project finance capabilities to

increase our capacity to realise opportunities in

the transition to a low carbon economy.

To support our WPB customers, HSBC UK

launched Energy Efficient Home Cashback

Mortgages, to offer cashback incentives to

customers taking out our mortgage loans to

finance their purchases of residential properties

with an A or B EPC rating.

Catalysing the new economy

We aim to support clean industrial development

and the scaling of entrepreneurial new economy

companies at all stages of financing across the

markets we operate in. We do this through

direct financing and investment as well as

through catalytic partnerships.

We continue to work closely with Breakthrough

Energy in developing and deploying critical

climate solutions. We are an anchor partner in

the Breakthrough Energy Catalyst platform,

which provides expertise, resources and capital

into first-of-a-kind or first commercial scale

projects.

Decarbonising trade and supply chains

We continue to focus on helping to decarbonise

trade flows and supply chains through our green

trade finance and sustainable trade instruments,

sustainable supply chain financing and

sustainability-linked lending for trade.

Mid-market and smaller businesses make up a

large proportion of global supply chains. In 2024,

we expanded our sustainable finance

capabilities with the launch of a sustainability

improvement loan (‘SIL’) for businesses of this

size in Hong Kong and Singapore, broadening

the sustainable finance options available in the

region.

For more examples of how we are supporting

our customers, see additional case studies on

pages 22, 46, 47, 48, 49, and 55.

ESG and sustainable investing

We offer a broad suite of ESG and sustainable

investing solutions across asset management,

wealth, private banking, and insurance, to help

institutional and individual investors generate

financial returns, manage risk and pursue ESG-

related objectives in line with their preferences.

As at 31 December 2024, HSBC Asset

Management managed $179.8bn in ESG and

sustainable investing portfolios for internal and

external investors. This includes those that are

distributed by HSBC Wealth and Private Banking

and those HSBC Asset Management manages

on behalf of HSBC Life.

HSBC Asset Management recognises that its

clients’ investment objectives are evolving, and

sustainability preferences vary, and offers a

broad range of sustainable investing solutions, in

both traditional and alternative areas of

investment. Our ESG and sustainable investing

approach includes impact funds with a clear

ESG or sustainable objective, thematic funds

that seek to invest in ESG or sustainable trends,

and strategies that seek to mitigate ESG risks by

investing assets with higher ESG performance

and exclusions of those that are lower ESG

performing. Considerations across our approach

can include, but are not limited to, climate or

net-zero transition plans and controversies

identified related to UN SDGs.

For the avoidance of doubt, products or assets

invested pursuant to our ESG and sustainable

investing approach do not necessarily qualify as

‘sustainable investments’ as defined by the EU

Sustainable Finance Disclosure Regulation and/or

other relevant regulations, and may not qualify as

‘sustainable’ products for the purposes of the UK

Sustainability Disclosure Requirements and

European Securities and Markets Authority fund

naming guidance and/or any other regulatory

standards. The HSBC ESG and sustainable

investing approach is an internal classification

used to establish our own ESG and sustainable

investing standards and to promote consistency

across asset classes and HSBC business lines

where relevant. Our ESG and sustainable

investing approach should not be relied on

externally to assess the sustainability

characteristics of any given product.

For our private banking and wealth customers,

we offer a range of ESG and sustainable investing

products across different asset classes, including

mutual funds, ETFs, equities, fixed income,

discretionary and alternatives. In 2024, we

continued to expand our investment offering with

the launch of eight ESG and sustainable investing

mutual funds and ETFs. We regularly publish

insights to help our clients better understand the

ESG implications of their investments.

In 2024, we made updates to integrate ESG into

our client wealth advisory journey in both

Switzerland and Luxembourg, including building

capabilities to understand private banking

clients’ sustainability preferences, rebalance

their investment portfolios and monitor

portfolios in line with their preferences. We also

integrated client sustainability preferences into

the investment product filtering process for

retail wealth clients in Hong Kong.

In 2024, HSBC Life increased ESG and

sustainable investing assets across its insurance

manufacturing entities in Asia, Europe, and Latin

America. The majority of these newly-deployed

assets were green and sustainability-linked

bonds, followed by placements into sustainable

private credit funds.

For further details of our asset management

policies, see page 60.

HSBC Holdings plc Annual Report on Form 20-F	45

Partnering for systemic change

Supporting systemic change to help deliver net zero

We focus on building strategic partnerships that

can help to create an enabling environment for

mobilising finance, and support development

and scaling-up of solutions for the net zero

transition.

We continue to participate in several

sustainability-related cross-industry alliances and

initiatives to help stimulate industry engagement

on climate and nature-related issues, encourage

the flow of finance for the net zero transition,

and improve global financial standards,

guidance, and frameworks to mobilise finance

and accelerate action.

Through our philanthropy, we partner with a

range of non-governmental organisations to

develop thought leadership, spur innovation,

build capacity and test and scale climate

solutions.

Highlights from our net zero and

sustainability-aligned partnerships

In 2024 we donated approximately $9m in grant

funding to help establish a portfolio of

partnerships aligned to the strategic focus areas

set out in our net zero transition plan:

transitioning industry, catalysing the new

economy, and decarbonising trade and supply

chains. We are also supporting initiatives

focused on driving progress on cross-cutting

issues, such as nature and the just transition.

Our collaboration with the Mission Possible

Partnership seeks to support decarbonisation of

some of the world’s hard-to-abate heavy

industry and transport sectors. We are funding a

joint initiative focused on demand creation for

green building materials in the Middle East,

fostering collaboration among industry leaders,

policymakers, and innovators to unlock projects.

We launched a new partnership with Third

Derivative and Founders Factory to support

climate tech innovation focused on hard-to-abate

sectors, particularly in Asia where there is a

significant need and growing market for such

technologies. The partnership seeks to provide

capacity building and facilitate connections with

the investment community to support the

development and scaling of key climate

technologies.

Our partnership with the Venture Climate

Alliance (‘VCA’) supports venture capital firms to

shape and share best practices that help to

prepare them for the climate transition at the

earliest stages of business creation. Work is

underway on developing a climate solutions

framework to support portfolio-level climate

impact disclosure and expand VCA membership

across emerging markets.

Climate Solutions Partnership

Our five-year Climate Solutions Partnership with

the World Resources Institute, WWF and over

50 local partners, continues to support nature-

based solutions and energy transition in Asia.

Since 2020, $105m in funding has been

deployed to our NGO partners. The energy

programmes have engaged companies across

Asia to help set new standards in climate

commitments for their industries and mobilised

finance to support the uptake of renewables.

The nature programmes supported the Asia

Sustainable Palm Oil Links programme, focused

on promoting sustainable palm oil production,

consumption and trade across Asia, and the

Nature-based Solutions Accelerator, which

supported projects to reach investment

readiness.

Through this partnership, we also launched an

open-access Environmental Crimes Financial

Toolkit to help financial institutions detect and

monitor activities related to environmental and

financial crimes. The first set of tools focuses on

commodity-driven deforestation and land

conversion.

Our just transition approach The transition to net zero is expected to drive social changes on a global scale, presenting risks and opportunities for our clients and our stakeholders. Our net zero transition plan sets out our initial approach to incorporating just transition considerations. We are taking steps to embed just transition principles into our client engagement activities, our own operations, and our financing decisions. HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers, and the communities in which they operate. This may include specific metrics or objectives in relation, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities. We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people- centred approach.

Our approach to nature

Around one third of the emissions reductions

required to limit global warming in line with

the Paris Agreement are linked to the land

use system and nature.

We have been further developing our

approach to nature, which builds on the

outline that was set out in our net zero

transition plan. This includes considering how

to: understand our exposure to nature;

manage nature-related risks and impacts;

support our customers, including financing

and investing in nature-related solutions; and

build nature-related skills, data capacities and

partnerships.

We are taking steps to embed our approach

to nature alongside delivery of our net zero

implementation plans. We continue to test

and scale approaches to financing and

investing in biodiversity and nature. In 2024,

starting with our European clients, we began

including nature-related questions in our

client transition engagement questionnaire.

Climate Asset Management, HSBC Asset

Management’s joint venture with climate

investment and advisory firm Pollination, has

now raised commitments of more than $1bn

for natural capital projects around the world,

and announced the final close of its Natural

Capital and Nature Based Carbon Funds.

46	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Embedding net zero

Financed emissions	TCFD

As part of our ambition to become a net zero

bank by 2050, we published initial financed

emissions targets for 2030. As we near the

mid-point towards our 2030 targets, we have

begun a review of our interim 2030 financed

emissions targets and associated policies as

described on page 18. This forms part of our

annual net zero transition plan review

referenced in our 3Q24 earnings release.

Our analysis of financed emissions comprises

‘on-balance sheet financed emissions’ and

‘facilitated emissions’, which we distinguish

where necessary in our reporting.

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 Global Banking

and Markets, and Commercial Banking.

Financed emissions link the financing we

provide to our customers and their activities

in the real economy, and provide an indication

of the associated greenhouse gas emissions.

They form part of our scope 3 emissions,

which include emissions associated with the

use of a company’s products and services.

We have set combined on-balance sheet

financed and facilitated emissions targets for

two emissions-intensive sectors: oil and gas,

and power and utilities. We have also set

targets for on-balance sheet financed

emissions for the following sectors: cement;

iron, steel and aluminium; aviation;

automotive; and thermal coal mining.

As part of our financial reporting, we present

the progress for these sectors against our

published financed emissions baselines and

targets.

We have set absolute emissions reduction

targets for the oil and gas, and thermal coal

mining sectors. For the power and utilities;

cement; iron, steel and aluminium; aviation;

and automotive sectors, we have set

emissions intensity targets that allow us to

deploy capital towards decarbonisation

solutions.

Our approach to financed emissions

In our approach to assessing our financed

emissions, our key methodological decisions

were shaped in line with industry practices

and standards. We recognise these are still

developing.

Coverage of our analysis

Our analysis focuses 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 of emissions. 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 251.

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

greenhouse gases, 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 follow 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. We

excluded products that were short term by

design and typically less than 12 months in

duration to reduce volatility, having considered

the PCAF guidance and subject matter expert

opinions from the business. 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.

For further details of our financed emissions

methodology, exclusions, and limitations, see

our Financed Emissions and Thermal Coal

Exposures Methodology at www.hsbc.com/who-

we-are/esg-and-responsible-business/esg-

reporting-centre.

HSBC Holdings plc Annual Report on Form 20-F	47

Financed emissions continued

The chart below shows the scope of our

financed emissions analysis of the 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.

Sector	Scope of<br><br>emissions	Value chain in scope				Coverage of<br><br>greenhouse<br><br>gases (‘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 utilities1	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, steel and<br><br>aluminium	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:
1 The power and utilities value chain has been updated to show diversified utilities power generation as a separate part of the value chain. This has always been<br><br>included in-scope of the power and utilities target.

Included in analysis

Setting our targets

Our target-setting approach to date for on-

balance sheet financed emissions and

facilitated emissions, has been to utilise a single

reference scenario – IEA’s NZE 2021 – to

underpin both energy supply-related sectors (oil

and gas; power and utilities; and thermal coal

mining), and our published targets for demand-

side sectors in transport (aviation and

automotive) and heavy industry (cement; and

iron, steel and aluminium).

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 three-year moving average across

transactions (i.e. average of 2021, 2022 and

2023 for the 2023 progress numbers) to track

progress to 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.

Our approach for financed emissions

accounting does not rely on purchasing credits

to achieve any financed emissions targets we

set.

An evolving approach

In the upcoming review of our financed

emissions targets, we will seek to balance being

ambitious on net zero while recognising present

near-term global challenges and the associated

impact of the transition playing out differently

across the regions and sectors we serve. In

doing so, we plan to draw on the latest

scientific evidence and credible industry-specific

pathways while, at the same time, maintaining

our commitment under our 2021 Climate

Resolution.

Other sector updates

For the agricultural sector, due to ongoing

data challenges, we are not in a position to

report our financed emissions or set a target at

this time. For commercial real estate, we

continue to work towards outlining our financed

emissions ambition. For residential real estate,

we continue to expect to measure and report

our financed emissions in future disclosures.

48	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Financed emissions continued

Data and methodology limitations

Our financed emissions estimates and

methodological choices are shaped by the

availability of data for the sectors we analyse.

We are members of the PCAF, which defines

and develops greenhouse gas accounting

standards for financial institutions. Its Global

GHG Accounting and Reporting Standards for

Financed Emissions and for Facilitated

Emissions provide detailed methodological

guidance to measure and disclose financed

and facilitated emissions.

–We have found that data quality scores vary

across the different sectors and years of

our analysis. 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

fluctuations within sectors year-on-year,

and/or differences in the data quality scores

between sectors due to changes in data

availability.

–The majority of our clients do not yet report

the full scope of greenhouse gas emissions

included in our analysis, in particular scope

3 emissions at a subsidiary level. In the

absence of client-reported emissions, we

estimated emissions using proxies based

on company production and revenue

figures. Although we sought to minimise

the use of non-company-specific data, we

applied industry averages in our analysis

where company-specific data was

unavailable through our third-party datasets.

As data improves, estimates will be

replaced with reported figures.

–Third-party datasets that feed into our

analysis may have up to a two-year lag in

reported emissions figures, and we are

working with data providers to help reduce

this. Mapping external datasets to our

internal client entities is challenging due to

complex company ownership structures.

–The methodology and data used to assess

financed emissions and set targets are new

and evolving, and we expect industry

guidance, market practice, and regulations

to continue to change. As we undertake the

review of our 2030 financed emissions

targets, we will use appropriate data

sources and current methodologies

available.

–We remain conscious that the attribution

factor used in the financed emissions

calculation is sensitive to changes in drawn

amounts or market fluctuations, and we

plan to be transparent around drivers for

change to portfolio financed emissions

where possible.

–We calculate sector-level emissions

intensity metrics using a portfolio-weighted

approach. Due to data limitations, we are

unable to obtain production data for all of

our clients. We therefore calculate an

emissions intensity figure using the 75th

percentile of available data points to meet

this data gap.

–The classification of our clients into sectors

is performed with inputs from subject

matter experts, and will also continue to

evolve with improvements to data and our

sector classification approach. Our internal

data on customer groups used to source

financial exposure and emissions data is

based on credit and relationship

management attributes, and is not always

aligned to the data needed to analyse

emissions across sector value chains. As

the sub-sector, and therefore the value

chain classification, is based on judgement,

this may be revised as better data becomes

available. As a consequence, classification

changes can result in sectoral movement

year-on-year. Emissions are calculated at a

counterparty group level, rather than at

subsidiary level, mainly due to the

availability of emissions data, but this may

lead to over-or under-estimation of

emissions compared with calculation at the

counterparty level. Companies with multiple

activities, such as conglomerates with near

to equal business activity split across

multiple sectors, are excluded as these can

have different activities covered by multiple

sector targets.

–The operating environment for climate

analysis and portfolio alignment is maturing.

We continue to work to improve our data

management processes.

For further details of our financed emissions

methodology, exclusions, and limitations, see

our Financed Emissions and Thermal Coal

Exposures Methodology at www.hsbc.com/who-

we-are/esg-and-responsible-business/esg-

reporting-centre.

HSBC Holdings plc Annual Report on Form 20-F	49

Financed emissions continued

Our approach to emissions re-baselines and restatements

The PCAF recommends that financial

institutions should, in line with the

Greenhouse Gas Protocol Corporate Value

Chain (scope 3) Accounting and Reporting

Standard requirement, establish a

recalculation policy to ensure consistency,

comparability and relevance of the reported

greenhouse gas emissions data over time.

Our emissions re-baseline and restatement

policy defines the circumstances for a

restatement of previously reported emissions

data and targets, including a re-baseline.

In 2024, we reviewed and enhanced our

policy by extending the scope to cover

additional emissions categories, including

scope 1 and 2 emissions in our own

operations. We also now include scope or

boundary changes as a key driver of change.

HSBC Asset Management is covered by a

different emissions re-baseline and

restatement framework as per page 55.

Emissions data and related 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 emissions

data and targets, including where necessary a

re-baseline, is required.

We expect our policy to evolve with further

industry guidance.

The table below outlines the key drivers of

change and what we expect to disclose when

thresholds are breached.

For further details of our emissions re-baseline

and restatement policy, see our Financed

Emissions and Thermal Coal Exposures

Methodology at www.hsbc.com/who-we-are/

esg-and-responsible-business/esg-reporting-

centre.

Key drivers of change	What we expect to disclose
Changes to the emissions methodology including those driven by<br><br>changes in industry guidance/regulations	–A revised comparative amount for the restatement period that<br><br>reflects the new information<br><br>–The difference between the amount disclosed in the previous<br><br>period and the revised comparative amount<br><br>–The reasons for revising the comparative amount and why the new<br><br>information provides reliable and more relevant information<br><br>–The actions being taken to remediate same or similar errors in the<br><br>future
Errors, such as those in the internal application or interpretation of<br><br>methodology, or errors in internal data
Scope or boundary changes, such as acquisitions or divestments,<br><br>and inventory boundary and coverage changes

In 2024, we made the decision to amend the

approach for prioritising data sources for

automotive clients to utilise production data

as opposed to reported third-party data,

representing a methodological change. This

change was implemented to include tailpipe

emissions instead of all scope 3 categories, in

order to be consistent with the target

scenario reference pathway and industry

practice.

For the aviation sector, we restated the 2022

metrics as a lending product code was

previously excluded in error; it is now

included in our analysis.

For the thermal coal mining sector, we re-

baselined the 2020 metric due to three

errors: an incorrect product code exclusion,

an error in the hierarchy construct of a client,

and the incorrect inclusion of a non-thermal

coal project. Methodological changes were

also applied to align with the refinements to

our basis of preparation in our reporting.

We are conducting a review of our controls

for population and product codes, and aim to

enhance them accordingly.

We have set out in the table below the

restated metrics for the automotive and

aviation sectors, and the re-baselined metric

for the thermal coal mining sector, for

applicable years where the significance

threshold was breached. The significance

threshold was not breached for all other

sectors, or for scope or boundary changes.

Re-baselines and restatements		Previously Reported		Restated Metrics		Percentage Change
Sector	Reporting metrics	2020	2022	2020	2022	2020	2022
Automotive	On-balance sheet financed - tCO2e/million vkm	-	216.6	-	170.1	-	(21)%
	On-balance sheet financed - Mt CO2e	-	5.5	-	4.1	-	(25)%
Aviation	On-balance sheet financed - tCO2e/million rpk	-	86.5	-	90.2	-	4%
	On-balance sheet financed - Mt CO2e	-	2.7	-	3.5	-	30%
Thermal coal mining	On-balance sheet financed - Mt CO2e	4.0	-	4.7	-	18%	-
50	HSBC Holdings plc Annual Report on Form 20-F
---	---

ESG review | Environment

Financed emissions continued

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.

In 2023, applying three-year average values

weighted at 33%, facilitated emissions for

the oil and gas sector total 6.5 Mt CO2e, and

for the power and utilities sector, they total

346.6 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 in

the facilitated emissions table on page 54.

We also set out our defined targets for the

on-balance sheet financed emissions of the

following sectors: cement; iron, steel and

aluminium; aviation; automotive; and thermal

coal mining. We disclose emissions in 2022

and 2023 and progress achieved in 2023

versus baseline for each sector, except for

the thermal coal mining sector, for which we

disclose financed emissions figures for 2021

and 2022. We are continuing to work on our

2023 and 2024 figures and expect to report

on these in future disclosures. In 2021,

thermal coal mining financed emissions

totalled 1.38 Mt CO2e. In 2022, they were

down by 69% against the re-baselined 2020

figure of

4.7

Mt CO2e.

When assessing the changes from 2019 to

2023, 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.

Sector1	Baseline	2022	2023	2023 % change<br><br>vs. baseline	2030 target	Unit2	Target scenario
Combined on-balance sheet financed and facilitated emissions at 33%, with three-year moving average
Oil and gas	42.6 in 2019	31.9	23.2	(46)%	(34)%	Mt CO2e	IEA NZE 2021
Power and utilities	513.4 in 2019	396.8	349.0	(32)%	138.0	tCO2e/GWh	IEA NZE 2021
On-balance sheet financed emissions
Cement	0.64 in 2019	0.71	0.59	(8)%	0.46	tCO2e/t cement	IEA NZE 2021
Iron, steel and aluminium	1.8 in 2019	2.5	2.1	17%	1.05 (1.43)3	tCO2e/t metal	IEA NZE 2021
Aviation	84.0 in 2019	90.2	79.6	(5)%	63.0 4	tCO2e/million rpk	IEA NZE 2021
Automotive	191.5 in 2019	170.1	152.4	(20)%	66.0	tCO2e/million vkm	IEA NZE 2021
Thermal coal mining	4.7 in 2020	1.44	N/A	N/A	(70)%5	Mt CO2e	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. For oil and gas; and power and

utilities, the baseline, progress and target figures represent combined on-balance sheet financed and facilitated emissions. For cement; iron, steel and aluminium;

aviation; automotive; and thermal coal mining, the baseline, progress and target figures represent on-balance sheet financed emissions. For the aviation and

automotive sectors, the target figure is unchanged while the 2022 figure represents restated on-balance sheet financed emissions. For thermal coal mining, the

target is unchanged while the 2020 baseline figure has been re-baselined.

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, steel and aluminium sector, intensity is measured in tonnes of carbon dioxide equivalent per tonne

of metal (‘tCO2e/t metal’); for the aviation sector, intensity is measured in tonnes of carbon dioxide equivalent per million revenue passenger kilometres (‘tCO2e/

million rpk’); 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 While the iron, steel and aluminium 2030 target is aligned with the IEA NZE 2021 scenario, we also reference the Mission Possible Partnership Technology

Moratorium scenario, whose 2030 reference range is shown in parentheses.

4 Our aviation unit includes passenger and cargo tonnes, converted into revenue passenger kilometre (‘rpk‘), to align with our target pathway. This is comparable to

revenue tonne kilometre ('rtk') using a 100kg per passenger conversion factor as we already include belly and dedicated cargo in our production figures. The

conversion factor changed from 95kg per passenger used in the baseline disclosure to align with industry practice.

5 The thermal coal mining scope differs from the other 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	51

Financed emissions continued

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 intensity-

based sectors, 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.

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 34% by 2030 relative to our 2019

baseline. This 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. We also indicate the

2030 figure derived from the updated IEA

NZE 2024 scenario, which suggests a 30%

reduction relative to the 2019 baseline.

In 2023, absolute combined on-balance sheet

financed and facilitated emissions in our

portfolio decreased by

46%

to 23.2 million

tonnes of carbon dioxide equivalent (‘Mt

CO2e’) relative to the 2019 baseline, and by

27% from 2022 to 2023. The reduction was

due to divestments and other strategic

decisions, and temporary factors such as low

loan drawdown levels, and subdued capital

markets activity.

A return to market conditions with clients

increasing capital markets activity, or other

factors that could lead to clients drawing

down existing loans, will lead to increased

financed emissions in our portfolio. Based on

Dealogic data, capital markets activity for the

sector increased by more than 15% in 2024

compared with 2023.

Oil and gas<br><br>Mt CO2e	2023 progress<br><br>from baseline
	(46)%

154481383906945

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. We

focused on power generation companies

because they control sector output, which

has the most material emissions impact in

the real economy. 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

138 tonnes of carbon dioxide equivalent per

gigawatt hour (‘tCO2e/GWh’) by 2030. We

have chosen an intensity-based target as

electricity demand is expected to more than

double by 2050, due to both population

growth and electrification required to

decarbonise mobility, buildings and industry.

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. We also indicate the

2030 figure of 194.6 tCO2e/GWh derived

from the updated IEA NZE 2024 scenario.

In 2023, the combined on-balance sheet

financed and facilitated emissions intensity in

our portfolio decreased by

32%

349.0

tCO2e/GWh relative to the 2019 baseline, and

by 12% from 2022 to 2023. This reduction

was driven by an increase in the financing of

renewable energy projects and companies,

and a decrease in the financing of high

emissions intensity clients.

Power and utilities<br><br>tCO2e/GWh	2023 progress<br><br>from baseline
	(32)%

69269232619179

52	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Financed emissions continued

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 0.46 tonnes of carbon

dioxide equivalent per tonne of cement

(‘tCO2e/t cement’) by 2030, using 2019 as our

baseline. 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. We also indicate the

2030 figure of

0.47

tCO2e/t cement derived

from the updated IEA NZE 2024 scenario.

While some emissions reductions can be

achieved through energy efficiency, we

believe that to significantly reduce fuel and

process emissions from cement

manufacturing, and to meet our targets,

large-scale investments are required in new

production processes and technologies,

including clinker substitution, alternative fuel

use such as bioenergy, and carbon capture

use and storage. Carbon capture use and

storage is a nascent technology and is

currently applied at around 45 facilities

worldwide with a capture capacity of roughly

50 MtCO2 per year. This is short of IEA NZE

scenarios, which lay out a pathway of around

1 Gt CO2 per year captured and stored by

Several cement sector customers are

making progress in carbon capture use and

storage and are launching their first carbon

capture use and storage pilot projects.

The 2023 emissions intensity of our portfolio,

at 0.59 tCO2e/t cement, was 8% lower than

the 2019 baseline. It was also down by 17%

in 2023 from 2022. The decline in 2023 was

mainly attributable to improvements in the

availability of emissions and production data

across a number of emissions-intensive

clients. Emissions intensity trends are highly

sensitive to material client exposures and

changes to drawn balances year-on-year.

Cement<br><br>tCO2e/t cement	2023 progress<br><br>from baseline
	(8)%

69269232619184

Iron, steel and aluminium

For the iron, steel and aluminium sector, we

covered scope 1 and 2 for midstream iron,

steel and aluminium production in our

analysis. We intend to address our coverage

of aluminium in future disclosures due to the

low materiality in our portfolio, as well as

volatility caused by the greater emissions

intensity of aluminium production, compared

to iron and steel.

We target an on-balance sheet financed

emissions intensity of 1.05 tonnes of carbon

dioxide equivalent per tonne of metal (‘tCO2e/

t metal’) by 2030, using 2019 as our baseline.

Our target is consistent with a global 1.5°C-

aligned pathway for iron and steel, as defined

by the IEA NZE 2021 scenario. Meeting the

2030 target will be technologically challenging

as this is a particularly hard-to-abate sector.

We show in the chart our progress to date

against our 2030 target. We also indicate the

2030 figure of

1.29

tCO2e/t metal derived

from the updated IEA NZE 2024 scenario, and

1.43

tCO2e/t metal from the MPP Tech

Moratorium scenario. The MPP Tech

Moratorium scenario confines investments to

near zero emissions technologies from 2030

onwards, and assumes no assets are

prematurely retired. It projects a slower

transition than IEA NZE scenarios in the near

term due to the use of different assumptions

for steel production, steelmaking technology

mix, steel emissions intensity, and use of

hydrogen in steelmaking.

The emissions intensity of our portfolio in

2023 rose by

17%

2.1

tCO2e/t metal

against our 2019 baseline, due to aluminium

sector exposures impacting the overall

sector’s emissions intensity in 2023, and a

low baseline figure resulting from a higher

mix of low emissions-intensive steel clients.

Emissions intensity dropped by 16% in 2023

versus 2022 due to the reduced exposure to

aluminium clients, and a larger mix of low

emissions-intensive clients.

Iron, steel and aluminium<br><br>tCO2e/t metal	2023 progress<br><br>from baseline
	17%

69269232623083

HSBC Holdings plc Annual Report on Form 20-F	53

Financed emissions continued

Aviation

For the aviation sector, we included

passenger airlines’ scope 1 and aircraft

lessors‘ scope 3 downstream emissions. We

excluded military and dedicated cargo flights

as the emissions intensity of such cargo

flights is different to that of passenger

airlines. This approach is in line with industry

practice to ensure consistency of financed

emissions measurement and target setting.

We target an on-balance sheet financed

emissions intensity of 63 tonnes of carbon

dioxide equivalent per million revenue

passenger kilometres (‘tCO2e/million rpk’) by

2030, using 2019 as our baseline. 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. We also indicate the

2030 figure of 70.3 tCO2e/million rpk derived

from the updated IEA NZE 2024 scenario.

To meet our target, we believe the sector

needs significant policy support, investments

in alternative fuels, such as sustainable

aviation fuel, and new efficient aircraft to

reduce emissions. The adoption of

sustainable aviation fuel is in its infancy,

currently accounting for an estimated 0.3% of

global jet fuel production. Sustainable aviation

fuel use needs to increase to 15% by 2030 to

be in line with the IEA NZE 2021. This

requires a significant ramp-up of investment

in production capacity and supportive policies,

such as fuel taxes and low carbon fuel

standards.

The industry is also adopting the unit of

revenue tonne kilometre (‘rtk’) to take into

account the transport of cargo for airlines in-

scope of the target. We plan to consider this

unit change to rtk in future disclosures to

better reflect the industry standard. We

already include passenger and cargo tonnes

in our production figures.

In 2023, the emissions intensity of our

portfolio fell by 5% to 79.6 tCO2e/million rpk

relative to the 2019 baseline and was down

by 12% from the 2022 restated emissions

intensity. This decline was largely driven by

improved data quality, higher exposure to

lower emissions-intensive airlines compared

with the sector average, and improved

operational efficiency with the return to pre-

Covid air traffic activity levels.

Aviation<br><br>tCO2e/million rpk	2023 progress<br><br>from baseline
	(5)%

69269232623086

Automotive

For the automotive sector, we looked at

scopes 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

reflects a change from previous disclosures

to only include tailpipe emissions instead of

all scope 3 categories, in order to be

consistent with the target scenario reference

pathway and industry practice. We will

consider including heavy-duty vehicle

manufacturers as well as heavy-duty vehicle

production at a later stage of our analysis, as

data and methodologies develop.

We target an on-balance sheet financed

emissions intensity of 66 tonnes of carbon

dioxide equivalent per million vehicle

kilometres (‘tCO2e/million vkm’) by 2030

using 2019 as our baseline. This is in line with

a global 1.5°C-aligned pathway, as defined by

the IEA NZE 2021 scenario, modified to

match the share of new in-year vehicle sales

for light-duty vehicles.

We show in the chart our progress to date

against our 2030 target. We also indicate the

2030 figure of 66.2 tCO2e/million vkm derived

from the updated IEA NZE 2024 scenario,

which remains close to the 2030 target figure

of 66.0 under the 2021 scenario.

Meeting our target is heavily dependent on

the share of new electric vehicle sales our

clients will achieve in 2030, including battery

and plug-in electric vehicles. BloombergNEF

estimates that the electric vehicle share of

sales in 2024 exceeded 20%, however this is

below the 27% implied by the IEA NZE 2021

scenario based on HSBC analysis.

Achieving our 2030 financed emissions target

will be challenging unless there is a strong

acceleration in the share of electric vehicle

sales. This will require large-scale

investments in new electric vehicle and

battery manufacturing plants, alongside

widespread charging infrastructure, and

government policies to support electric

vehicles.

The 2023 emissions intensity of our portfolio

dropped by

20%

152.4

tCO2e/million vkm

against our 2019 baseline, and by 10%

versus the restated emissions intensity of our

portfolio for 2022, which excludes non-

tailpipe scope 3 emissions. The decline

against baseline was driven by changes in our

loan book resulting primarily from credit-led

business decisions. From 2022 to 2023, the

reduction was driven by a portfolio mix with

lower emissions intensity clients, and lower

exposures to carbon-intensive clients.

Automotive<br><br>tCO2e/million vkm	2023 progress<br><br>from baseline
	(20)%

1722

54	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Financed emissions continued

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

4.7 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. We also indicate the

2030 figure of 2.7 Mt CO2e derived from the

updated IEA NZE 2024 scenario, which

suggests a 42% reduction relative to the re-

baselined 2020 figure.

In 2021, absolute on-balance sheet financed

emissions decreased by 71% to 1.38 Mt

CO2e relative to the re-baselined 2020 figure.

In 2022, the absolute on-balance sheet

financed emissions of our portfolio decreased

by 69% to 1.44 Mt CO2e relative to the re-

baselined 2020 figure, and they rose by 4%

from 2021 to 2022. The reduction from the

2020 re-baselined figure was due to strategic

decisions and temporary factors, such as low

loan drawdown levels.

A return to normal market conditions with

clients drawing down existing loans will lead

to increased financed emissions in our

portfolio.

Thermal coal mining<br><br>Mt CO2e	2022 progress<br><br>from baseline
	(69)%

2657

On-balance sheet financed emissions

The table below summarises the results of our assessment of on-balance sheet financed emissions using 2022 and 2023 data. For thermal coal

mining, we disclosed in 2023 our 2020 baseline, which has been re-baselined as described on page 49, and we now present figures for 2021

and 2022. The PCAF data quality scores across most sectors improved in 2023 due to better data availability.

		On-balance sheet financed emissions – wholesale credit lending and project finance1,2
Sector	Year	Scope 1–2<br><br>(Mt CO2e)	Scope 3<br><br>(Mt CO2e)	Emissions<br><br>intensity	PCAF data quality score3
					Scope 1 and 2	Scope 3
Oil and gas	2022	1.3	16.2	N/A	3.2	3.2
	2023†	1.6	15.2	N/A	2.4	2.7
Power and utilities	2022	7.6	N/A	401.7	3.3	N/A
	2023†	7.3	N/A	349.6	3.1	N/A
Cement	2022	4.5	N/A	0.71	2.9	N/A
	2023†	6.3	N/A	0.59	2.3	N/A
Iron, steel and aluminium	2022	2.7	N/A	2.5	3.0	N/A
	2023†	1.8	N/A	2.1	2.9	N/A
Aviation	2022	3.3	0.15	90.2	3.2	2.4
	2023†	2.6	0.21	79.6	3.1	2.6
Automotive	2022	0.11	4.0	170.1	2.7	3.4
	2023†	0.12	6.0	152.4	2.2	3.2
Thermal coal mining	2021†	0.05	1.33	N/A	3.1	3.1
	2022†	0.07	1.37	N/A	3.1	3.1

Facilitated emissions

The table below summarises the results of our assessment of facilitated emissions using 2022 and 2023 data for the oil and gas, and the power

and utilities sectors.

Applying a 100% weighting, the oil and gas values for scope 1 to 3 emissions decreased from 15.2 Mt CO2e in 2022 to 9.0 Mt CO2e in 2023.

For the power and utilities sector, the values for scope 1 and 2 emissions rose from 3.8 Mt CO2e in 2022 to 4.6 Mt CO2e in 2023. For all 100%-

weighted facilitated values, please refer to the ESG Data Pack4.

	Facilitated emissions – ECM, DCM and syndicated loans (33% weighting)
Sector	Year4	Scope 1-2<br><br>(Mt CO2e)	Scope 3<br><br>(Mt CO2e)	Emissions<br><br>intensity	PCAF Data quality score3
					Scope 1 and 2	Scope 3
Oil and gas	2022	0.36	4.7	N/A	3.3	3.3
	2023†	0.27	2.7	N/A	2.1	2.5
Power and utilities	2022	1.2	N/A	358.7	2.9	N/A
	2023†	1.5	N/A	322.2	2.6	N/A

1 The total amount of short-term finance excluded for the thermal coal mining sector was 0.04% and 0.1% of total loans and advances to customers at 31 December 2021

and 31 December 2022 respectively; in 2023, for all other sectors, it was 0.7% of total loans and advances to customers at 31 December 2023.

2 The total loans and advances analysed for the thermal coal mining sector were 0.1% of total loans and advances to customers at 31 December 2021 and 31 December

2022, respectively. For all other sectors in 2023, the total loans and advances analysed were 2.7% of total loans and advances to customers at 31 December 2023. The

total loans and advances analysed for the purpose of the financed emissions calculation and reporting have not been adjusted for assets held for sale.

3 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.

4 The total capital markets activity analysed applying a 100% weighting in 2023 was $10.4.bn, representing 3.3% of capital markets activity at 31 December 2023.

† 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.

HSBC Holdings plc Annual Report on Form 20-F	55

Financed emissions continued

Reducing emissions in our 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 its in scope assets

under management (AUM), consisting of listed

equities and corporate fixed income managed

within its major investment hubs. As of 31

December 2019, in scope assets amounted to

$193.9bn, equating to 38% of global AUM.

2019 re-baselined metrics

In 2024, we improved our methodology for

calculating financed emissions intensity,

including a revised mapping logic for issuers’

carbon intensity and EVIC (enterprise value

including cash) data. We have re-baselined our

2019 intensity figure due to an error in the data

mapping and it is now 124 tCO2e/M$ invested

versus 131 tCO2e/M$ invested reported in the

Annual Report and Accounts 2022,

representing a decrease of 5.6%.

The Partnership for Carbon Accounting

Financials (PCAF)2 recommends that financial

institutions should, in line with the

Greenhouse Gas Protocol Corporate Value

Chain (Scope 3) Accounting and Reporting

Standard requirement, establish a restatement

policy to ensure consistency, comparability

and relevance of the reported greenhouse gas

emissions data over time. HSBC Asset

Management has defined an internal financed

emissions re-baseline and restatement

framework which adapts HSBC Group’s

approach and defines relevant circumstances

for HSBC Asset Management.

Our financed emissions metrics

As at 31 December 2023, the scope 1 and 2

financed emissions intensity of HSBC Asset

Management’s in scope assets stood at 69.8

tCO2e/M$ invested. The PCAF data quality

score for our 31 December 2023 financed

emissions intensity was 2.63.

Reported metrics3	2019	2023	Unit
Scope 1 and 2 financed emissions intensity	124.0*	69.8	tCO2e/M$ invested
AUM in scope	193.9	223.0	Billions $
PCAF Data Quality Score	2.63	2.63

*indicates that this metric has been re-baselined

1Our targets remain subject to consultation with stakeholders including investors and fund boards on whose behalf we manage the assets. The 58% target is based

on assumptions for financial markets and other data, including the IEA 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.

3The re-baselined 2019 financed emissions intensity metric, and 2023 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 greenhouse 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/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.

56	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Net zero in our own operations	TCFD

As described on page 18, we have revisited

our ambition to achieve net zero in our own

operations and supply chain by 2030 and are

now focused on actions to cut emissions

across these areas as part of our overall

ambition to become net zero by 2050.

Reduce, replace and remove

Our guiding approach is, and will continue to

be to reduce, replace and remove emissions

from our own operations and supply chain.

We plan to first focus on reducing carbon

emissions from consumption, and then

replace remaining emissions with low-carbon

alternatives in line with the Paris Agreement.

We will reduce emissions through the

purchase of 100% renewables and plan to

add investments in sustainable aviation fuel

to replace traditional fuel and reduce

emissions from our travel over time.

Altogether, across our operations, business

travel and supply chain, we expect to achieve

a reduction of around 40% in emissions by

In line with current guidance, we

expect to only use carbon credits to remove

emissions when it is not possible to directly

reduce or replace. However, recognising the

importance of high quality carbon removals in

limiting global temperature rises, we have

started to explore some high integrity carbon

removal projects.

Our energy consumption

In 2024 we achieved a 30.5% reduction in

our energy consumption compared with 2019

(2023: 26.3%).This has been achieved

through optimising the use of our real estate

portfolio and carrying out a reduction in our

office space and data centres. We continue

to optimise our assets to ensure greater

efficiency and capitalise on new energy

technologies. In 2024 we increased our

purchase of electricity from renewable

sources to 75.4% from 58.4% in 2023. This

included increasing our coverage of green

tariffs in India and mainland China.

Renewable electricity can help unlock our

emissions reduction potential, and we aim to

achieve 100% renewable electricity across

our own operations by 2030.

Our biggest challenge continues to be the

limited availability of power purchase

agreements and green tariffs in some of our

markets due to regulations. We continue to

expand our network of experts in the

renewables space to help us identify

opportunities globally.

Business travel

We have analysed our travel patterns to

identify areas where we can continue to

reduce emissions. For example, we have

introduced internal regional reduction targets

and emission information at the point of

booking to encourage ownership and

flexibility in decision making.

Engaging with our supply chain

Our supply chain contributes c.81% of our

operational emissions and is the area in

which we face the most significant

decarbonisation challenge. When we set our

ambition in 2020, we did so without detailed

supply chain data.

It has become clear that progress in reducing

emissions in our supply chain is proving

slower than we anticipated, mainly driven by

the slower pace of the transition across the

real economy. Many suppliers are still in the

early phase of their decarbonisation journey,

do not have sufficient insight into their own

emissions footprint, and have not set

decarbonisation targets. We have stepped up

targeted efforts to support decarbonisation

across our supply chain.

We aim to deepen collaboration with

suppliers and increase our focus on those

without public disclosures or emissions

reduction plans, supporting them through

education and incentivisation. We will build

partnerships with larger suppliers to drive

change in shared supply chains through

scaled solutions, including through industry

initiatives.

In 2024 we incorporated an additional supply

chain data source to complement data from

CDP (formerly the Carbon Disclosure Project).

We continue to improve the measurement,

quality and reporting of our supply chain

emissions data to generate insights to drive

targeted reduction activities. We have

engaged with our 300 highest-emitting

suppliers to collaborate and identify

emissions reduction opportunities based on

supplier maturity levels.

In October 2024 we convened our first

Supply Chain Decarbonisation Day to facilitate

in-depth discussion and the development of

joint action plans with some of our largest

suppliers in the technology, professional

services and real estate sectors, to help drive

emissions reduction. In 2025, we will hold a

similar event with different suppliers.

Focus on natural resources

We aim to be a responsible consumer of

natural resources across our operations and

supply chain. Wherever possible, through our

procurement choices, design and

construction, or operations, we aim to protect

the environment and mitigate our impact on

the depletion of natural resources. Our main

focus areas are waste, paper and sustainable

diets.

Our presence in environmentally sensitive

areas

Our global portfolio of buildings supports

customers and communities in areas that

may be of high or very high water stress, and/

or protected areas of biodiversity.

About 50% of our global offices, branches

and data centres are located mainly in urban

or city centre locations with large,

concentrated populations. These areas have

been identified as being subject to high and

very high water stress, accounting for 49% of

our annual water consumption and about

0.8% are in protected areas of biodiversity.

We have implemented consumption

reduction measures, including installation of

water efficient taps, flow restrictors, auto-

taps and low or zero flush sanitary fittings.

Our environmental and sustainability management policies
Our buildings policy recognises that regulatory and environmental requirements vary across<br><br>geographies and may include environmental certification. The policy is supported by Corporate<br><br>Services procedures on environmental and sustainability management, seeking to ensure that<br><br>HSBC’s properties continually reduce their overall direct impact on the environment.<br><br>Detailed design considerations documented in our global engineering standards aim to reduce or<br><br>avoid depletion of critical resources, such as energy, water, land and raw materials. Suppliers are<br><br>required to comply with our Supplier Code of Conduct and have in place environmental policies<br><br>appropriate to the size and nature of their operations to reduce environmental impacts.
HSBC Holdings plc Annual Report on Form 20-F	57
---	---

Net zero in our own operations continued

Energy and travel greenhouse gas emissions in tonnes CO2e3
		2024	2023	2019 baseline
Scope 11	Ä	15,025	16,918	22,066
Scope 2 (market-based)1	Ä	83,760	167,174	392,270
Scope 3	~	1,127,909	1,113,498	1,356,631
Category 1: Purchased goods and services1,2	Ä	866,873	880,494	1,033,972
Category 2: Capital goods1,2	~	127,158	123,763	50,651
Category 6: Business travel1	~	133,878	109,241	272,008
Total	Ä	1,226,693	1,297,590	1,770,967
Included Scope 1 and 2 of UK	Ä	5,887	5,909	10,432
1 Data in 2024 is subject to an independent third-party limited assurance in accordance with the<br><br>International Standard on Assurance engagements 3410 (Assurance Engagements on Greenhouse<br><br>Gas Statements). For further details, see GHG Reporting Guidance 2024 and third-party limited<br><br>assurance report at www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre. In<br><br>respect of data in 2019 and 2023, see our relevant Annual Report and Accounts.<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>3 Data is based on the 12-month period to 30 September.<br><br>For further details of our methodologies, our independent third-party limited assurance reports and <br><br><br>relevant environment key facts, see our ESG Data Pack at www.hsbc.com/esg.

2024 Emissions performance

We are making progress towards our updated

2050 net zero ambition. In 2024 we achieved a

reduction in absolute operational greenhouse

gas emissions (energy and business travel) of

66.1% from our 2019 baseline. Overall,

including supply chain emissions, we achieved a

30.7% reduction against 2019 and 5.5%

compared with 2023.

Emissions from our energy

We are currently on track to reduce our scope 1

and 2 emissions by more than 90% by 2030

compared with our 2019 baseline. In 2024, we

reduced these emissions (including energy and

road fleet) to 98,785 tonnes CO2e, representing

a 76.2% reduction from our 2019 baseline and a

46.3% reduction from 2023, helped by further

efficiency measures and portfolio reductions, and

an increase in renewable electricity procurement

to 75.4%, up from 58.4% in 2023.

Emissions from travel

We reduced our emissions from scope 3

business travel by 50.8% compared with

2019 with travel volumes remaining well

below pre-pandemic levels, although

emissions increased by 22.6% compared

with 2023 as travel behaviours normalise

gradually across the bank.

Emissions from our supply chain

In 2024, we reduced our supply chain emissions

by 8.4% against the restated 2019 baseline

emissions, while compared with 2023, they

remained relatively stable, with a small reduction

of 1.0%. This was mainly driven by suppliers

providing real estate-related services and financial

services, while emissions from suppliers of

technology-related goods and services have

increased, due to an increase in their investments

(e.g. data centres), growth of new services (e.g.

cloud and AI) and increase in our spend.

In 2024 we also expanded the calculation scope

by including two additional markets with third

party spend. We continue to widen our

reporting as more emissions and spend data are

added to the procurement scope.

Emissions calculations approach

Our emissions report adheres to the

Greenhouse Gas (‘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. As a financial services organisation,

carbon dioxide is the main type of GHG

applicable to our operations, however, our

current reporting also incorporates methane and

nitrous oxide for completeness, although

deemed immaterial.

Based on our operational control boundary, in

2024 we collected data on energy use and

business travel for our operations in 34 countries

and territories out of the 58 markets we operate

in, which accounted for approximately 97.7% 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%.

Greenhouse gas emissions in tonnes CO2e<br><br>per FTE					Energy consumption in kWh in 000s
		2024	2023	2019			2024	2023	2019
Scope 1, 2 and<br><br>3 (Category 6)	Ä	1.1	1.3	2.9	Total	Ä	728,890	772,736	1,049,072
Scope 1, 2 and<br><br>3 (Category 1, 2<br><br>and 6)	Ä	5.7	5.9	7.8	UK only	Ä	206,028	209,939	281,271	Revisions	Reporting<br><br>metrics	Previously<br><br>reported	Restated metrics	Percentage<br><br>change
---	---	---	---	---	---	---	---
		2019	2023	2019	2023	2019	2023
Category 1:<br><br>Purchased Goods and<br><br>Services	tonnes CO2e	829,635	859,256	1,033,972	880,494	25%	2%
Category 2: Capital<br><br>Goods	tonnes CO2e	37,617	121,783	50,651	123,763	35%	2%
Total Supply chain	tonnes CO2e	867,252	981,039	1,084,623	1,004,257	25%	2%
Energy consumption	kWh in 000s	913,556	n/a	1,049,072	n/a	15%	n/a

We apply reviewed and updated emission uplift

rates to reflect uncertainty concerning the

quality and coverage of emission measurement

and estimation. 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, and in the absence

of this we use estimations from a new data

provider and then 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

counterparty emissions. For further details, see

our GHG Reporting Guidance at

www.hsbc.com/esg

In 2024 we conducted a materiality

assessment on upstream scope 3 categories,

and we have identified categories 1

(purchased goods and services), 2 (capital

goods), and 6 (business travel) as material.

Our approach to re-baselines and

restatements

We re-baselined our 2019 and restated our 2023

supply chain metrics in line with our emissions

re-baseline and restatement policy (see page

49). As referenced above, in 2024, we made the

decision to amend the methodology. We also

identified an error in the mapping of industry

averages. In addition, we have identified an

error in our 2019 metric disclosed in our ARA

2023 for total energy consumption, which we

have now restated.

We are conducting a review of our controls

related to these items and aim to enhance

them accordingly.

58	HSBC Holdings plc Annual Report on Form 20-F

ESG review | 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 are incorporating 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.

In the table below, we set out our duties to

our stakeholders in our four most material

roles.

For further details of our approach to climate

risk, see ‘ESG risk’ on page 150 and ‘Climate

risk’ on page 249.

Banking<br><br>We manage the climate risk in our<br><br>banking portfolios through our risk<br><br>appetite and policies for financial<br><br>and non-financial risks.	Employee pensions<br><br>Our pension plans have fiduciaries<br><br>to manage climate risk in line with<br><br>their duties towards members<br><br>under local regulatory<br><br>requirements.	Asset management<br><br>Climate risk management is a key<br><br>feature of our investment decision<br><br>making and portfolio management<br><br>approach.	Insurance<br><br>We consider climate risk in the<br><br>management of our shareholder<br><br>and policyholder portfolio of<br><br>assets.
Climate risk
This enables us to identify<br><br>opportunities to support our<br><br>customers, while continuing to<br><br>meet stakeholder expectations.	We monitor climate risk exposure<br><br>internally for our largest plans<br><br>based on asset sector allocation<br><br>and carbon emissions data where<br><br>available.	We also engage with companies<br><br>on topics related to climate<br><br>change.	ESG factors are incorporated into<br><br>investment analysis to evaluate<br><br>climate risk impacts, as well as<br><br>the ongoing monitoring during the<br><br>investment cycle.

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 253).

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. HSBC Asset Management

continues to integrate climate analysis into its

actively managed product offerings and seeks

to assess climate-related risks that could

impact investment performance, where

applicable and relevant.

As part of its stewardship activities, HSBC

Asset Management engages on climate

change issues with investee companies on a

priority list, as defined in its Stewardship

Plan. HSBC Asset Management makes

independent engagement decisions in the

interests of its clients.

Employee pensions

The Trustee of the HSBC Bank (UK) Pension

Scheme (‘the Scheme’), our largest plan with

$34bn of assets under management, aims to

achieve net zero greenhouse gas emissions

across its defined benefit and defined

contribution assets by 2050. 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 its carbon emissions 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

ensure that financially material ESG risks are

explicitly considered in the investment

process.

Insurance

In 2024, our Insurance business enhanced

our stress testing modelling capability to

assess the solvency resilience of our

Insurance entities under prescribed climate

scenarios.

For further details of the HSBC Asset Footnote Arrow.jpg

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

For further details of the HSBC Bank (UK) Footnote Arrow.jpg

Pension Scheme’s annual TCFD statements and

UK Stewardship Code submission, see https://

futurefocus.staff.hsbc.co.uk/active-dc/

information-centre/search-documents

HSBC Holdings plc Annual Report on Form 20-F	59

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

Our sustainability risk policies comprise our

core net zero-aligned policies – thermal coal

phase-out and energy – and our broader

sustainability risk policies covering:

agricultural commodities, forestry, mining and

metals, and World Heritage Sites and

Ramsar-designated wetlands. We also apply

the Equator Principles when financing

relevant projects.

These policies aim to provide clear signals to

our customers on our risk appetite for certain

activities.

We continue to review policy implementation

as we apply our sustainability risk policies in

practice, and our operationalisation of such

policies continues to be enhanced. 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 where we

believe we can help drive meaningful change,

while taking into account experience from

policy implementation over time.

We regularly review our policies,

incorporating feedback and building on

experience from policy implementation over

time. We have begun a review of our interim

financed emissions targets and associated

policies as part of the annual review of our

net zero transition plan that we referenced in

our 3Q24 earnings release in October.

For clients in scope of our sustainability risk

policies, where we identify activities that

could cause material negative impacts, we

expect clients to demonstrate that they are

identifying and mitigating risks responsibly

and will look to take required actions as

outlined in our policies. This may, as

appropriate, include conducting enhanced

due diligence or applying financing

restrictions. Such instances may require

additional review and approval by our

sustainability risk specialists and risk

committees.

For further details of how we manage

sustainability risk, as well as our full policies, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/managing-risk/

sustainability-risk

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. They are supported by sustainability

risk managers for management of risks as

outlined in the 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.

Biodiversity and natural capital-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 covers the broader energy

system, including upstream oil and gas, fossil

fuel power generation, hydrogen, renewables

and hydropower, nuclear, biomass and

waste-to-energy sectors.

The policy seeks to balance three objectives:

driving down global greenhouse gas

emissions; enabling an orderly transition that

builds resilience in the long term; and

supporting a just and affordable transition,

recognising the local realities in all the

communities we serve.

The energy policy was first published in

December 2022, and is reviewed annually,

with the most recent update in February

2025.

For further details of our oil and gas, and power

and utilities financed emissions targets, see the

'Targets and progress’ section in ‘Financed

emissions on page 50.

For further details of our energy policy, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/managing-risk/

sustainability-risk.

60	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Environment

Sustainability risk policies continued

Our thermal coal phase-out policy

As set out in the thermal coal phase-out

policy, we are committed to phasing out the

financing of thermal coal-fired power and

thermal coal mining in EU and OECD markets

by 2030, and globally by 2040.

Our policy aims to support thermal coal

phase-out aligned to science-based

timeframes, recognising the different pace

between advanced and emerging economies.

In turn, our policy supports progress towards

our financed emissions targets for the power

and utilities and thermal coal mining sectors.

The policy was first published in December

2021 and is reviewed annually, with the most

recent update in February 2025.

For further details of our oil and gas, power and

utilities financed emissions target, see the

‘Targets and progress’ section in ‘Financed

emissions’ on page 50.

For our thermal coal phase-out policy, see

www.hsbc.com/-/files/hsbc/our-approach/risk-

and-responsibility/pdfs/240125-hsbc-thermal-

coal-phase-out-policy.pdf.

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 product types, short-term

lending exposures are excluded from our

thermal coal financing exposures reporting, in

line with our financed emissions

methodology. 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 the nature and the extent

of the connections and any restrictions on

use of financing proceeds to fund the thermal

coal activities.

We continue to refine our basis of preparation

and have made further enhancements in

2024 while taking into account experience

from policy implementation over time.

Applying our refined basis of preparation did

not have a material impact on the thermal

coal financing drawn balance exposure as of

31 December 2020.

For further details of our Financed Emissions and Footnote Arrow.jpg

Thermal Coal Exposures Methodology, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/esg-reporting-centre.

The chart below sets out our thermal coal

financing drawn balance exposure for the

2020 baseline as well as the exposure figures

for 2021† and 2022†, which were $1bn

(rounded).

We continue to work on our 2023 and 2024

numbers and expect to report on these in

future disclosures.

Thermal Coal Financing drawn balance<br><br>exposure1
$bn

162177965411467

1 The reduction is based on estimated underlying

numbers aligned to our refined basis of

preparation.

† 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.

For further details of our approach to financed

emissions, see ’Our Approach to financed

emissions’ on page 46.

Asset Management policy

HSBC Asset Management’s Energy and

Thermal Coal Policies have been developed in

support of HSBC Group’s net zero ambition.

In its capacity as a discretionary investment

manager and under its Energy Policy, HSBC

Asset Management engages and assesses

the transition plans of oil and gas, and power

and utilities issuers responsible for around 70

per cent of relevant emissions based upon all

listed equity and corporate fixed income

managed within its major investment hubs.

Its 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, and is intended to help

meet the dual objectives of phasing out

thermal coal within science-based

timeframes and of energy transition in more

coal-reliant economies.

The Energy Policy and Thermal Coal Policy

complement one another and are reviewed at

least annually.

For further details of the energy policy, see

www.assetmanagement.hsbc.co.uk/-/media/

files/attachments/common/energy-policy-en.pdf.

For further details of the thermal coal policy, see

www.assetmanagement.hsbc.co.uk/-/media/

files/attachments/common/coal-policy-en.pdf.

HSBC Holdings plc Annual Report on Form 20-F	61

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.

At a glance

Inclusion is key to opening up a world of

opportunity. It involves a commitment to

identifying and addressing barriers that may

stop people from accessing opportunities

because of who they are or where they are

from.

Inclusion goes hand in hand with resilience.

We aim to help people build the capabilities

they need to achieve their goals and to deal

with the challenges they face, so we are

focused on delivering products, services and

education that support our colleagues,

customers and communities.

Colleagues

We believe that an inclusive, healthy and

rewarding workplace helps the whole Group

succeed. We are focused on inclusive hiring so

we can help ensure our colleagues – and

particularly our leadership – are representative

of the communities we serve.

Employee well-being is essential. We offer all

colleagues a wide range of resources that help

support their mental, physical and financial

well-being so they can thrive in and out of

work. We are working to ensure that our

offices, branches and digital spaces are

accessible.

Customers

We are committed to helping our customers

access the financial services they need. They

should not find it more difficult to access

finance because of their gender, ethnicity,

sexual orientation, neurodiversity or disability.

Our ambition is to create a welcoming,

inclusive and accessible banking experience

for all our customers.

We build resilience by creating products and

services that simplify the banking experience,

so customers can manage their wealth more

easily. We also provide financial education for

our customers.

Communities

In 2024, we updated our global philanthropy

strategy to align with our ESG areas of focus –

‘transition to net zero’ and ‘building inclusion

and resilience’, allowing us to work alongside

the communities we operate within to help

create change.

We believe that fostering inclusion and

building resilience helps us to create long-term

value and growth. By removing unnecessary

barriers and striving to be a fair and equitable

organisation, we can attract and retain the best

talent, support a wider customer base to

achieve their goals and stimulate growth in our

communities.

In this section
Our commitment<br><br>to inclusion	Our approach to inclusion	We value diversity of thought and we are building an inclusive<br><br>environment that reflects our customers and communities.	Page 62<br>
	Fostering a diverse<br><br>environment		Page 63<br>
	Fostering an inclusive<br><br>culture		Page 64<br>
Building a healthy<br><br>workplace	Listening to our colleagues	We run a Snapshot survey and report insights to our Group Operating<br><br>Committee and the Board.	Page 65<br>
	Being a great place to<br><br>work	We aim to create a great workplace that will help in attracting, retaining and<br><br>motivating our colleagues so they can deliver for our customers across<br><br>countries and territories.	Page 66<br>
Developing skills,<br><br>careers and<br><br>opportunities	Learning and skills<br><br>development	We energise our colleagues for growth and build resilience by equipping<br><br>them with skills that they need today and preparing them to meet future<br><br>challenges.	Page 68<br>
Building customer<br><br>inclusion and<br><br>resilience	Our approach to customer<br><br>inclusion and resilience	We aim to support financial well-being and remove barriers customers can<br><br>face in accessing financial services.	Page 69<br>
Engaging with our<br><br>communities	Helping to build a more<br><br>inclusive and resilient<br><br>society	We focus on a number of priorities where we can make a difference to the<br><br>community and support sustainable growth.	Page 70<br>
62	HSBC Holdings plc Annual Report on Form 20-F
---	---

ESG review | Social

Our commitment to inclusion

Our approach to inclusion

Our purpose, ‘Opening up a world of

opportunity’, explains why we exist as an

organisation and is the foundation of our

global inclusion strategy.

We have identified specific Group-wide

priorities, which we track and monitor

progress against. Embracing our unique

international footprint, we adapt

implementation of our global inclusion

strategy to help ensure it remains locally

relevant and compliant with local laws.

How we hold ourselves to account
We set strategic priorities<br><br>Our strategic priorities are aligned to three<br><br>public aspirational ambitions, which have<br><br>been created to increase representation of<br><br>under-represented groups. In 2024, we<br><br>continued to make progress against our<br><br>priorities by:<br><br>–achieving a 34.6% representation of<br><br>women in senior leadership roles, with<br><br>an ambition of achieving 35% by 20251;<br><br>–attaining a 3.0% representation of Black<br><br>heritage colleagues in senior leadership<br><br>in the UK and US combined, against an<br><br>ambition to achieve 3.4% by 20251; and<br><br>–increasing our Inclusion index as<br><br>measured in our Snapshot survey, to<br><br>78% against a 2024 target of 75%.<br><br>1 These numerical ambitions do not form part<br><br>of any US-based senior leader performance or<br><br>other objectives, or in other jurisdictions where<br><br>application of such should not apply under<br><br>local law.	We monitor progress<br><br>We consistently track and measure<br><br>performance against our priorities, utilising<br><br>our data capabilities to accurately monitor<br><br>progress through:<br><br>–an inclusion dashboard, which monitors<br><br>progress against ambitions and is<br><br>reported to the Group Operating<br><br>Committee on a quarterly basis; and<br><br>–review meetings between our Head of<br><br>Inclusion and each Group Operating<br><br>Committee member to discuss progress<br><br>against aspirational ambitions and to<br><br>support further progress.	We are transparent<br><br>We are transparent in sharing our data<br><br>through external disclosures and we<br><br>participate in benchmarking to measure<br><br>our progress across the industry. In 2024,<br><br>we:<br><br>–ranked as a Top 75 employer in the UK<br><br>Social Mobility Index, improving 30<br><br>places to number 37;<br><br>–ranked number 3 in the Stonewall<br><br>Workplace Equality Index in the UK and<br><br>maintained our Stonewall Gold standard;<br><br>and<br><br>–were awarded an Ambassador Status by<br><br>Carers UK.
We are evidence-led<br><br>Our priorities are informed by data, and we continue to enable our colleagues to self-identify across a range of data points that reflect their<br><br>personal identity, including ethnicity, sexual orientation, gender identity and ability.<br><br>We have enabled our colleagues to self-identify through our systems and our Snapshot survey, helping us to understand the diverse<br><br>composition of our global workforce.<br><br>Data availability enables us to embrace our international footprint, set locally-relevant priorities, support under-represented groups and<br><br>improve outcomes for our colleagues. In countries and territories where we are able to do so, we invite colleagues to share their data with<br><br>us. In 2024, we enabled 93% of our colleagues to disclose their ethnic background, with 67% of colleagues currently choosing to do so,<br><br>where this is legally permissible. In certain markets we invite colleagues to share additional characteristics with us, for example, disability or<br><br>socio-economic background.<br><br>For further details of our representation data, pay gap data, and actions, see www.hsbc.com/who-we-are/our-people/inclusion-at-hsbc and<br><br>the ESG Data Pack at www.hsbc.com/esg.
HSBC Holdings plc Annual Report on Form 20-F	63
---	---

Fostering a diverse environment

Women in senior leadership

Increasing female representation in our senior

leadership roles is one of our longest-

standing strategic priorities. Since achieving

our ambition of having 30% of senior

leadership positions held by women in 2020,

we set a new ambition to reach 35% by

We are on track to meet our 2025

ambition, with 34.6% of senior leadership

roles held by women at the end of 2024. Our

hiring practices are merit-based, and we seek

to ensure that every candidate, regardless of

their identity and background, has an equal

opportunity to demonstrate their skill and

potential. A total of 36.8% of all external

appointments into senior positions were

female, compared with 37.7% in 2023.

Women represented 38.0% of all promotions

into senior leadership roles in 2024.

In 2024, we relaunched our Accelerating

Women’s Leadership programme, developed

in partnership with Cranfield Business School.

The programme aims to strengthen our talent

pipeline by improving the representation of

women in senior leadership roles. It is

designed to increase the visibility, career

advocacy and network of our high-performing

senior women, ultimately driving engagement

and enhancing leadership capability. In 2024,

we ran two pilot sessions held in the UK and

Hong Kong. We also launched a modified

version of the programme in a US pilot called

Accelerating Enterprise Leaders, which also

welcomes our male colleagues.

Our Coaching Circles programme, which

matches senior leaders with a small group of

colleagues to provide advice and support on

the development of leadership skills and

network building, welcomed 4,052 women

and 4,103 men in 2024.

Black colleagues in senior leadership

Having a workforce that better reflects the

communities we serve remains one of our

strategic priorities. We have an ambition to

increase our Black heritage senior leader

representation in both the UK and US

combined to 3.4% by 20251. In 2024 we

maintained our position at 3.0%.

Previously in 2020, we set our initial ethnicity

ambition to double the number of Black

colleagues in senior leadership roles globally

by 20251. While this ambition was not tracked

through our senior leadership performance

scorecards, it remained a strategic priority.

Since 2020, we have increased the

representation of our Black colleagues in

senior leadership by 60%. We have seen a

number of changes to the global footprint of

our business since setting this ambition, and

despite our efforts so far, we are not making

the progress towards our ambition as quickly

as we would like and we are unlikely to

achieve our 2020 ambition by 2025.

We remain committed to focusing on the

development of our Black heritage

colleagues. To address this, we use the

Solaris programme as a development

initiative for our UK-based Black heritage

women. To date, 41 women have completed

the programme, with 20% of participants

securing a promotion.

Our immersive development programme, ‘In

Their Shoes’ was designed to bring to life the

lived experiences of minority ethnic

colleagues, including the challenges they

face. In 2024, the programme was

recognised as an Outstanding Innovation at

the Learning Excellence Awards and was

highly commended in the Global Diversity

Initiative of the Year category at the British

Diversity Awards. Since its launch,12,707

colleagues have completed the programme.

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 should not apply under local

law.

Gender representation

162177965285348

Holdings Board
Group<br><br>Executives
Combined<br><br>Group<br><br>Executives and<br><br>reports1
Subsidiary<br><br>directors2
Senior<br><br>leadership3
Middle<br><br>management3
Junior<br><br>management3
All employees

1 Combined Group Executives and direct reports

includes HSBC Group Executives and their direct

reports (excluding administrative staff) as of 31

December 2024.

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.

Representation and pay gaps

We publish this data annually to ensure both

transparency and a maintained focus on

addressing representation gaps within the

organisation. Our gender and ethnicity pay gap

reporting shows the difference in average pay

between these two groups of people and the

wider workforce, regardless of role or seniority.

We have reported our UK gender

representation and pay gap data since 2017 in

line with reporting regulations, and have

voluntarily extended this to include the US,

mainland China, Hong Kong, India, Mexico,

Singapore, Malaysia, and the UAE, alongside

ethnicity data for the UK and US. In 2024, we

have also extended this to include our

colleagues with a disability in the UK. This now

covers approximately 81% of our workforce. In

2024, our mean aggregate UK-wide gender pay

gap was 40.6% compared with 43.2% in 2023,

and the ethnicity pay gap was 7.7% compared

with 4.5% in 2023. Our UK gender pay gap is

driven by several factors, including the shape of

our workforce, where there are more men than

women in senior higher-paid roles and more

women than men in junior roles. While we are

confident in our approach to pay equity, until

women and ethnic minority colleagues are

proportionately represented across all areas

and levels of the organisation we will continue

to see gaps in average pay.

We are committed to paying colleagues fairly

regardless of their gender or ethnicity and have

processes to review that remuneration is free

from bias. We also review our pay practices

and undertake a pay equity review annually. If

pay differences are identified that are not due

to objective, tangible reasons such as

performance, skills or experience, we make

adjustments.

For 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.

64	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Social

Fostering an inclusive culture

Looking to the future and beyond our public

commitments, we refreshed our global

inclusion strategy to refocus our ambitions

against our strategic priorities, and set out our

approach to inclusion over the next three to

five years. We have established key

principles that enable us to pivot towards

building a more inclusive culture for all of our

colleagues.

Our colleagues’ personal sense of belonging

and psychological safety are two key

measures captured as part of our Inclusion

Index in the annual Snapshot survey, which

we monitor and review by various identities

that comprise our global workforce. In 2024

we achieved a score of 78%, which is three

percentage points ahead of our annual

aspirational goal, and on par with the financial

services industry benchmark.

Analysis of our Inclusion index allows us to

measure engagement levels of specific

colleague groups in greater detail, in particular

different personal identities, to better

understand the experiences of our colleagues

globally. We found that scores from

colleagues who identify as male and female

were comparable, at 79% and 77%

respectively, remaining unchanged from

From an ethnicity perspective, our

Black heritage colleagues were two

percentage points below the Group-wide

average, while our Asian heritage colleagues’

results were on a par with the overall score,

at 78%. From a sexual orientation

perspective, colleagues who identified as

LGB+ were one percentage point above the

Group-wide result.

Our employee resource groups

Bringing together the shared identities,

values and interests of our colleagues allows

us to build an inclusive culture across the

organisation and our volunteer-led employee

resource groups (’ERGs’) enable this. Our

ERGs provide insight on key societal issues.

Through sponsorship by our non-executive

directors and our Group Operating

Committee, we bring together our senior

leaders and colleagues, bringing to life our

values of ‘valuing difference’ and ‘succeeding

together’.

In 2024, our ERGs led numerous initiatives

and events including our Pride ERG for

LGBTQ+ colleagues, who worked with our

Group Benefits team to expand Gender

Dysphoria healthcare benefits in India.

Our Ability ERG, for our colleagues with a

disability, created a framework called ‘Know

me Better’, as a tool to help facilitate

conversations between colleagues and line

managers regarding a colleague’s disability.

Our focus on disability

We are dedicated to creating an inclusive

culture where all employees, including those

with disabilities can thrive. Our progress is

guided by our Global Disability Council,

sponsored by our HSBC UK Chief Executive

Officer, with senior leaders across the

business meeting every two months.

We have launched the second cohort of our

Career Development Programme for our

colleagues in middle and junior management

with a disability, in partnership with an

external coaching provider. In 2024, we

launched an international pilot of the

programme in Hong Kong.

In 2024, stories from our colleagues were

showcased globally as part of our Disability

Confidence series. The series leveraged the

power of our colleagues sharing their

experiences, the support they receive, and

how this has helped them empower others to

do the same.

We have also expanded our workplace

adjustments programme through our provider

Microlink, with services now available to over

44,000 colleagues in India, a 17 percentage

point increase compared with 2023.

Socio-economic diversity

To better support our colleagues from lower

socio-economic backgrounds, we have

partnered with the London School of

Economics and Progress Together to produce

a comprehensive framework targeting socio-

economic mobility in 2024.

The ‘VOICE’ is designed to support

individuals, people managers, and

organisations in retaining and advancing

colleagues from lower socio-economic

backgrounds within the UK financial services

sector. The blueprint was developed through

extensive input from professionals across the

industry who come from a lower socio-

economic background, and they shared their

experiences as part of our qualitative

research. It highlights the biases that can

impact retention and progression and offers

actionable, evidence-based strategies rooted

in behavioural science to drive meaningful

change.

Through our Strive ERG for colleagues who

come from a lower socio-economic

background we have developed internal

mentoring programmes pairing junior and

senior colleagues for coaching and

development sessions.

We have enabled our colleagues in Singapore

to share their socio-economic background.

In 2023, we entered the Social Mobility Index

for the first time and gained recognition as a

top 75 employer. We continue to be

recognised as a top 75 employer, improving

our rank by 30 places to number 37 in 2024.

Supporting our colleagues with caring responsibilities
We have found that many of our colleagues are often involved in both their careers and<br><br>significant caring responsibilities outside work, and are finding managing both responsibilities<br><br>increasingly challenging. In our Snapshot survey nearly 16% of colleagues self-identified as<br><br>having caring responsibilities.<br><br>In 2024 we launched the Global Carers Charter, which comprises a series of tools, policies<br><br>and support available for colleagues with caring responsibilities. Following its launch in the UK,<br><br>HSBC’s Global Carers Charter was awarded Ambassador Status by Carers UK.
HSBC Holdings plc Annual Report on Form 20-F	65
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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

Our annual employee engagement survey is

called ‘Snapshot’ and runs every September.

It is an opportunity for all employees to share

feedback on what it is like to work at HSBC.

Our 2024 survey achieved a response rate of

88%, up from 85% in 2023, with more than

182,000 colleagues choosing to share their

views. This high level of participation enables

us to share results confidentially across all

levels of the organisation. Insights from our

Snapshot survey are shared with the Group

Operating Committee and the Board, and are

provided directly to more than 11,000 people

managers with 10 or more responses from

their teams. We support teams to have good

conversations about their feedback through

the provision of interactive dashboards, action

planning tools and discussion guides.

Our Employee Engagement Index, our key

measure of how people feel about HSBC, has

increased to 80%, up three percentage points

compared with 2023. This was the largest

increase seen across the Snapshot indices,

and puts us six points ahead of the global

financial services benchmark that we

measure against.

Key driver analysis shows engagement is

most influenced by a clear understanding of

HSBC’s strategic objectives, confidence in

the future and our strategy, positivity towards

career and development, and trust and

confidence in leadership.

Following significant increases last year, the

career index remained stable at 71% and is

six points ahead of the global financial

services benchmark. The proportion of

colleagues stating a preference to remain

with HSBC for five or more years increased

to 70%, up three percentage points from

Our inclusion index, a key measure of

building an inclusive culture at HSBC,

remained unchanged at 78%, against an

ambition of maintaining 75%.

We have found that 75% of colleagues have

said that working conditions enable them to

be productive, which is up two percentage

points compared with 2023. Despite this,

62% of colleagues report that work

processes allow them to work efficiently,

which is down three percentage points

compared with 2023. This remains one of the

lowest scoring items across the Snapshot

survey, particularly across our senior

leadership population. There are a number of

initiatives underway to make it easier for

colleagues to work efficiently.

We also run an annual Pay and Benefits

survey, which in 2024 helped to evaluate

changes to our performance approach, as

well as capturing ongoing feedback about

colleague expectations on compensation and

development in support of our employer

value proposition. We complement these

large surveys with continuous lifecycle

feedback from new joiners, internal movers

and voluntary leavers.

We are committed to building on our high

levels of engagement and feedback

throughout 2025.

For further details of our Snapshot data, see the

ESG Data Pack at www.hsbc.com/esg.

Employee conduct and harassment

We expect all our employees to treat each

other with respect and dignity, and we do not

tolerate or condone discrimination,

harassment or bullying in any form, as

outlined in our Global Anti-Bullying and

Harassment Code. This is supported by our

Global Code of Conduct, which helps us to

maintain high standards across the Group.

We encourage our colleagues to speak up

about poor behaviour or things that do not

seem right. At times, we know it can be

difficult to raise concerns, so regular

communication and tracking is important to

us. We measure confidence to speak up via

our Snapshot Speak Up Index, which is at

77% in 2024, up by one percentage point

from 2023. We recognise that our speak up

culture requires continued focus to ensure

we create the right environment for our

people. Our Snapshot survey revealed an

increase in colleagues able to state their

opinion without fear of negative

consequences, with 73% of colleagues

feeling able to do so, up by one percentage

point from 2023.

We strive to improve awareness and

education around poor behaviours and

strengthen our understanding and response

to these issues across all levels of the

organisation. In 2024, to ensure continued

high-quality investigations into conduct

concerns, we introduced six new investigator

training modules aimed at the Human

Resources investigator community.

Our colleagues continue to receive training on

bullying, harassment, discrimination and

retaliation at least every other year in our

Global Mandatory Training curriculum and as

part of other learning resources, including in

People Manager training.

We have mandatory procedures for handling

and investigating employee concerns, which

include those for bullying and harassment.

Cases are continually monitored from our

speak-up channels, and data is reported to

management committees to ensure there is

visibility at leadership level.

In 2024 the bank received a total of 624

concerns raised relating to bullying and

harassment. Where the concerns were

substantiated following an investigation,

appropriate action was taken, which included

termination of services where appropriate. In

2024, 26% of concerns raised were either

partly or fully substantiated and 34 colleagues

were dismissed in relation to bullying,

harassment, discrimination or retaliation.

We are committed to addressing this type of

behaviour and will continue to take action

where we find that an employee has

breached our values and high standards of

conduct.

Delivering accessible learning
We are committed to fostering an inclusive workplace for all colleagues, regardless of<br><br>technology or ability.<br><br>In 2024, our Global Mandatory Training received Gold at the Brandon Hall Awards for Best<br><br>Training Program for Global Accessibility Standards.<br><br>To uphold these standards we collaborate closely with our accessibility experts, ensuring our<br><br>digital learning aligns with the high benchmarks set for our customer-facing websites. Our<br><br>Global Mandatory Training assigned to all colleagues undergoes an external audit to identify<br><br>any gaps affecting the experience of colleagues, such as those with visual impairments or<br><br>those who are neurodiverse. We also conduct inclusive user testing to incorporate learner<br><br>feedback into the design, helping to ensure a seamless experience for everyone.
66	HSBC Holdings plc Annual Report on Form 20-F
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Being a great place to work

To fulfil our purpose and drive our strategy,

we need the best people, performing at their

best. Focusing on opportunities for

colleagues, making them a part of something

bigger and being clear on what they can

expect when they deliver on our strategy, is

fundamental to delivering for our customers.

Our workforce proposition strengthens our

ability to attract, retain and energise our

colleagues and is driven by three key reward

principles of rewarding colleagues’

responsibly, recognising colleagues’ success

and supporting our colleagues to grow.

Rewarding colleagues responsibly

Our pay and benefits proposition aims to

reward colleagues responsibly, helping to

ensure financial security for all. We remain

committed to providing a competitive total

compensation package with an appropriate

mix of fixed pay and variable pay. In our

Snapshot survey, 52% of colleagues feel they

are paid fairly for what they do, the sentiment

remaining unchanged from 2023.

Following our accreditation as a global living

wage employer in 2024 we have continued to

work with the Fair Wage Network, which

provides an independent source of wage

levels. HSBC has achieved accreditation as a

global living wage employer in 2025 in

respect of the next two years. A living wage

should be sufficient to cover an adequate

standard of living given the cost of goods and

services in each country in which we operate.

We will continue to review all wages globally

against local living wage benchmarks.

For our UK suppliers that have staff working

within the UK, we seek to encourage them to

pay at least the living wage.

For further details of our approach to workforce

reward, see page 332.

Recognising colleagues’ success

We believe in recognising our colleagues’

success and have a number of mechanisms

to help enable colleagues to be rewarded for

their work.

In 2024, we introduced performance routines,

to encourage our colleagues to talk about

their ambitious goals throughout the year.

This is complemented with improving the

exchange of feedback, so colleagues know

how they are doing and how they can

improve. These activities are brought

together through performance check-in

conversations at the year-end, with a

simplified approach to performance

assessments.

These changes were communicated to over

215,000 colleagues in 59 markets at the

beginning of the year. Our Pay and Benefits

survey measures several factors, including

our colleagues’ understanding of

performance routines, with 76% reporting a

‘good understanding’ of how to practice

them. In our Snapshot survey, 87% of

colleagues reported that they had a clear

understanding of what is expected of them

and 94% of colleagues said they have had at

least one performance check-in conversation

with their manager.

Variable pay allows us to recognise the

performance and behaviours of our

colleagues. In 2024 we introduced ‘Target

Variable Pay’ to 150,000 colleagues in 47

markets.

We have supported managers in their

understanding of the changes, with nearly

18,000 people managers attending training.

Changes to our pay structure provide more

clarity and transparency on how we make pay

decisions and how performance impacts

variable pay, helping colleagues understand

how they contribute to the performance of

the organisation.

Our ‘At Our Best’ recognition platform offers

employees the opportunity to recognise their

peers for role model behaviours linked to our

values. In 2024, our colleagues recognised

one another over 1.5 million times, up three

percentage points from 2023. Managers are

also encouraged to recognise colleagues’

service anniversaries every five years up to

30 years of service, and at 40 years. In 2024

over 28,000 anniversaries were celebrated.

Share plans are another way to empower

colleagues to participate in the Group’s

success. In 2024, we invited 194,000

colleagues to participate in our share plans

and 93% of colleagues globally now have

access to a share plan.

Supporting our colleagues to grow

To help our colleagues to grow personally and

professionally, we are committed to

supporting their mental, physical and financial

well-being, offering flexibility and helping

colleagues develop new skills.

We use colleague feedback, benchmarking

from industry experts and we work with

external partners across business, civil

society and academia. As a founding member

of the World Wellbeing Movement, we are

working with the associated Wellbeing

Research Centre at the University of Oxford

to shape our approach to well-being. In

Snapshot, a record 78% of our colleagues

said, ‘my organisation cares about my well-

being’, up nine percentage points from 2023.

We further detail our approach to supporting

our colleagues to grow on the following page.

We further detail our approach to skills and

career development on page 68.

HSBC Holdings plc Annual Report on Form 20-F	67

Being a great place to work continued

Supporting our colleagues in the Middle East

In the wake of regional conflicts we made promotion and support of mental health a priority. We held regular on-site Critical Incident Support across our MENAT region, covering Egypt, UAE, Kuwait, Türkiye and Qatar. Across the region, belief that HSBC genuinely cares about its colleagues was at 66%, up 12 percentage points from 2023. We also found that awareness of mental health support at HSBC was at 74%, up six percentage points from 2023. To support broader well-being across the region we increased paid maternity leave to a consistent 18 weeks. Family friendly enhancements were also made to the medical plan with the introduction of fertility treatment coverage and new coverage for Applied Behaviour Analysis in Bahrain, Kuwait, Oman, Qatar and the UAE. We also held on-site breast screening and flu immunisation appointments in the UAE. Following increased demand for these services, more appointments and longer hours have been made available.

Flexible working

Flexible working remains one of the top

reasons colleagues say they would

recommend HSBC to someone else, with

74% of colleagues saying flexible working is

the aspect of our well-being programme they

value the most. In 2024, 85% of our

colleagues practised some form of flexible

working arrangement, with 75% of

colleagues working in a hybrid way.

We acknowledged that not all our colleagues

had the right balance between working at

home or in the office. In 2024, we have found

that a better balance has been achieved, with

colleagues attending the office between 2-3

days per week on average. This was achieved

by our senior leadership reinforcing their

expectations on office attendance.

To further support flexibility and work-life

balance we have improved family leave

policies. We now offer 94% of employees at

least 18 weeks of parental leave on full pay

for primary caregivers, and 74% of

employees have at least two weeks of paid

leave for secondary caregivers. We also

provide five fully paid days of carers leave and

of compassionate leave, to 67% and 79% of

colleagues, respectively.

Mental well-being

In 2024 we continued to retain number one

status in the CCLA Corporate Mental Health

Benchmark for the third year running. While

we are pleased with the progress made in

2024, mental health did decline with 79% of

colleagues saying they have positive mental

health, compared with 83% in 2023. This

decline aligns with broader societal trends,

with younger generations in particular

experiencing lower levels of mental health.

We have continued to make the meditation

app Headspace available to our colleagues

globally, with over 35,000 enrolled, and we

have extended access to family and friends.

In 2024, we upgraded our Employee

Assistance Programme in over 30 countries

to support the mental health of colleagues

and their families. We have lowered the age

threshold on paediatric counselling support,

and in some countries this is now available

from age five years. More countries will aim

to enhance support for children in 2025.

We have sought third-party assurances and

benchmarking to ensure our approach

remains relevant and effective. In 2024, we

used the 2023 MindForward Alliance’s

Thriving at Work Benchmark, for which we

received a global score of 91 points, 14 points

ahead of the global average.

In 2024, mental health awareness training

was completed by more than 227,000

colleagues as part of Global Mandatory

Training. Our voluntary mental health

education modules have been completed

over 37,000 times, with 74% being

managers. We have also expanded the global

reach of mental health champions in our

Mindfulness Network by nearly 27%.

Physical well-being

The Snapshot survey also revealed that 72%

of colleagues rate their physical health as

positive, compared with 74% in 2023. In

2024, we continued to make the Virgin Pulse

app available to colleagues, supporting them

to increase their physical activity. Over

21,000 colleagues have now downloaded the

app, up 260% from 2023. More than 1,000

personal and team activity challenges were

run and nearly 5,000 health checks were

completed.

We have continued to provide access to

private medical insurance for 99% of

permanent employees and telemedicine

healthcare services in the majority of our

countries and territories. In certain countries

and territories, we also provide on-site

medical centres that the majority of

colleagues can access. We have also

increased the number of colleagues who

have access to company paid health

assessments. In 2024, eligibility for a

personalised health assessment was

extended to all UK employees. Health

assessments are provided in 43 countries and

we are working to extend availability in 2025.

Financial well-being

Financial challenges remain a concern for

many colleagues, caused by increases in the

cost of living globally. In 2024, 62% of

colleagues said they felt positive about their

financial health and 57% of colleagues said

they have at least three months of essential

outgoings saved, both up one percentage

point from 2023.

We launched a five-part financial well-being

series covering key career milestones. The

series had over 4,000 attendees during the

live events, with 93% of participants saying

the events were useful or very useful.

Recordings of the events have since been

watched more than 15,000 times across 37

countries. Since the launch of the series,

65% of colleagues said they know where to

find financial well-being support at HSBC, up

five percentage points from 2023.

In our Pay and Benefits survey one in three

colleagues said that they want more support

with financial well-being. In 2025 we aim to

trial a new financial well-being platform with

5,000 colleagues in the UK and Asia to help

our colleagues improve their financial literacy,

money skills and planning.

For further details of our Snapshot well-being

data see the ESG Data Pack at www.hsbc.com/

esg.

Awards

CCLA Global 100 Mental Health<br><br>Benchmark<br><br>–Ranked number 1 global<br><br>employer for the third<br><br>consecutive year
68	HSBC Holdings plc Annual Report on Form 20-F
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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.

Enabling future skills

We have adapted our skills development

platforms and learning resources, to help

prepare our workforce for future challenges

and enable skills building at scale. In 2024,

we:

–increased the number of active users and

participation in learning programmes via our

learning experience Degreed. This aims to

address skills gaps through internal and

external learning content and courses,

enabling colleagues to share, collaborate

and learn individually or in groups through

structured learning pathways;

–unlocked over 250,000 hours of skills

development through our Talent

Marketplace. To date more than 46,000

colleagues have created a profile helping

them match their interest in developing

specific skills or career goals with on-the-

job projects and networking;

–accelerated the use of digital badging to

acknowledge skill-building achievements.

We have launched over 150 badges and

issued over 12,000 badging credentials

associated with priority skills such as

sustainability, AI and data analytics; and

–enabled our colleagues to learn via a range

of channels, reflected in an increase of total

training hours by our colleagues to 6.2

million hours.

Maintaining our risk management culture

Our Risk Academy delivers and deploys

comprehensive learning opportunities for all

employees, including foundational training in

traditional areas of risk management, such as

financial crime risk, and specialised

development for senior leaders and those in

high-risk roles. The Academy also addresses

issues like ESG risk, AI and cybersecurity.

For senior leaders, we have introduced new

programmes centred on Enterprise

Leadership through a risk lens. These

programmes are designed to support HSBC’s

strategic priority of sustainable growth by

equipping leaders with the skills needed to

navigate an evolving risk environment. We

launched and concluded a new Financial

Crime masterclass series for our senior

leader population, focusing on the importance

of risk management and protecting the bank

from financial crime.

Building responsible AI expertise

As we continue to enhance our AI capabilities

across the organisation, our new AI Academy

helps to support advanced skills development

aligned with HSBC’s AI strategy. This was

launched in response to the growing global

interest in AI and focuses on fostering AI

literacy and promoting responsible AI use

throughout the bank.

Our Global Mandatory Training covers key

principles and foundational concepts of AI

usage and we have developed foundational

and intermediate pathways to raise

awareness of AI principles, ethics, risks and

governance. We have also developed specific

courses tailored for our senior leadership

population that focus on understanding AI

and exploring its use cases for business and

decision making.

Skilling the transition to net zero

Our Sustainability Academy continues to

support our net zero ambitions and strategy.

As the Academy has evolved, we have

increased our focus on building capabilities

beyond foundational skills, specifically

targeting priority groups that support both our

customers and our operations in the

transition to net zero. In 2024, our key focus

has been on:

–providing on-demand learning tailored to

the specific roles, regions, and client bases

of colleagues involved in supporting

customers through the transition;

–facilitating external certifications and

qualifications, as needed, to deepen

colleagues’ expertise in areas such as

Sustainability Climate Risk through

providers like GARP and Fitch;

–delivering a three-month Sustainability

Leadership Programme in collaboration

with Imperial College London and our own

Sustainability Centre of Excellence experts

for over 200 colleagues; and

–offering net zero learning opportunities to

the Board and 100 of our most senior

leaders.

We have leveraged our internal experts from

the Sustainability Centre of Excellence to

provide advanced skills training in key

transition areas, such as power systems and

storage, carbon removal, transition in Asia-

Pacific, steel and cement industries, road

transport systems, hydrogen and agriculture.

Training at HSBC

6.2 million

Training hours by our colleagues in 2024.

(2023: 5.3 million)

29.6 hours

Training hours per FTE in 2024.

(2023: 23.9 hours)

Energising our<br><br>colleagues for growth
We aim to provide our colleagues with<br><br>the opportunity to develop critical skills<br><br>while creating a pipeline of talent to<br><br>support our strategic ambitions. It is<br><br>essential that we promote effective<br><br>leadership and foster an environment<br><br>that inspires our colleagues to grow. In<br><br>2024, our focus has been on:<br><br>–Our Digital Acceleration Programme,<br><br>which aims to create dynamic working<br><br>methods and simplify our technology<br><br>landscape. This will enable us to work<br><br>faster and smarter, enhancing our<br><br>ability to develop better products and<br><br>services for our customers while<br><br>embracing innovative technologies;<br><br>–Our ‘CARE’ programme, which<br><br>embodies the principles of being<br><br>connected, accountable, responsive<br><br>and empathic. It outlines the<br><br>behaviours that reflect these values,<br><br>guiding our colleagues in delivering<br><br>exceptional service to our customers.<br><br>The programme has also been<br><br>integrated into our customer<br><br>experience objectives, with progress<br><br>tracked through our Customer<br><br>Centricity Index, which is included in<br><br>our 2024 Snapshot survey.<br><br>–The Managing Director Leadership<br><br>Programme, which was expanded in<br><br>2024. It combines immersive in-<br><br>person sessions on leadership with<br><br>virtual deep dives on key issues and<br><br>all-hands strategy sessions, alongside<br><br>an enterprise risk leaders programme<br><br>and a series focused on doing<br><br>business in key locations. To support<br><br>our leadership pipeline we have<br><br>refreshed our development offering<br><br>for the next layer of leaders to be<br><br>delivered in 2025; and<br><br>–Our Emerging Talent proposition,<br><br>supporting HSBC in a future-focused<br><br>way, supplying the organisation with<br><br>diverse and capable talent pools to<br><br>anticipate and address existing future<br><br>skill shortages.
HSBC Holdings plc Annual Report on Form 20-F	69
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Building customer inclusion and resilience

Our approach to customer inclusion and resilience

We believe that financial services, when

accessible and fair, can reduce inequality and

help more people access opportunities. We

play an active role in opening up a world of

opportunity for customers and communities,

by supporting their financial well-being, and

removing barriers to accessing financial

services.

Access to products and services

We provide innovative solutions to help

improve customer access to products and

services. For those in need of additional

support due to social or financial

vulnerabilities or for those customers who do

not qualify for a standard account, the UK and

Hong Kong offer a No-cost Account with no

minimum balance and no account opening

fees, to help with basic banking needs.

In the UK, we continue to offer our

groundbreaking ‘No Fixed Address’ service,

working in partnership with housing and

homelessness charity Shelter UK, providing

access to financial services to help rebuild lives

and increase financial resilience. Since its launch

in November 2019, this service has supported

over 7,000 individuals, with over 1,400 of these

in 2024 alone.

The reduction in no-cost accounts between 2023<br><br>and 2024 is due to bulk closure of inactive accounts<br><br>in the UK.

Making banking accessible

Number of no-cost accounts held for

customers, in the UK and Hong Kong, who do

not qualify for a standard account or who

might need additional support due to social or

financial vulnerability.

28587302326962

2024

2023

2022

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, for

example by offering programmes focused on

improving resilience and basic money

management skills.

Customers

Since 2020, we received over 8.8 million

unique visitors to our global digital financial

education content, which helps customers

expand their financial capabilities through our

personal financial management tools.

HSBC UK further enhanced capabilities that

help customers to establish healthy savings

habits through the launch of ‘Savings Goals’.

Customers have used this mobile banking

feature, since launch in April 2024, to set up

over 125,000 goals, with ‘Rainy Day’ as one of

the most popular categories. We have also

seen that over 10% of goals have already been

achieved showing how this capability is helping

support customers to build financial resilience.

Well+, our flagship health and wellness-based

reward programme on our HSBC HK mobile

banking app had another successful year with

over 267,000 new customers in this year alone.

More than 400,000 customers are now

engaged, earning points by taking part in

activities aimed at improving their holistic

health covering physical, mental and financial

well-being.

Communities

In the UK we continued to support the

development of children and young people's

financial capability, including those with special

education needs, through our Money Heroes

Programme – winner of the 2024 Third Sector

Business Charity Partnership Award (supported

by Young Enterprise). In addition, we launched

a new partnership with Girlguiding UK in

November 2024, introducing the Money Skills

– ‘I’m Money Confident’ badge.

For schools, colleges and youth groups we

offer the ‘Smart Money’ programme, where

training is delivered by HSBC colleagues to

help improve financial capability and

employability. In 2024, we trained over 1,000

colleagues, and working with our dedicated

Financial Education Team, over 280,000

children and young people were engaged in

the programme across the UK.

In Hong Kong we launched a face-to-face

training programme for teenagers with special

education needs on how to make healthy

financial choices and build essential financial

skills for day-to-day living.

Creating an inclusive banking experience

We endeavour 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. In

Hong Kong we introduced a simplified mobile

banking app designed to improve digital

inclusion for seniors, offering a more

accessible and intuitive user experience. The

app features an enhanced interface with easy-

to-understand buttons, increased use of

visuals, and streamlined access to essential

banking services. As the first initiative of its

kind among Hong Kong banks, the app has

been successful in engaging over 663,000

unique users since its launch in October 2022.

We are committed to improving accessibility

across our digital channels and continuously

review our browser-based websites and

mobile banking services against the Web

Content Accessibility Guidelines 2.1 AA

standards. We promote digital accessibility by

offering educational resource. In 2024 we

launched the Accessibility Hub, a multi-award

winning accessibility awareness e-learning

content, promoting digital accessibility to the

general public, attracting circa 150,000 views

as of September 2024. Also since launch,

more than 1,000 individuals across 140

companies globally have participated in our

specialised digital accessibility Training 1000

Programme.

Supporting customers extends beyond our

digital channels and we recognise that not all

disabilities are visible. We rolled out our

Hidden Disabilities Sunflower Lanyard Scheme

to two additional markets this year – Singapore

and the UAE – expanding it beyond the UK,

Hong Kong, the Channel Islands and Australia.

The lanyard indicates that an individual may

need a little more help, support or time.

In 2024 two UK branches, Loughborough and

Sheffield, received awards for their accessible

and inclusive branch design. We are proud to

be recognised by the Financial Times Diversity

in Finance Awards, the Construction Industry

Council and the Business Disability Forum for

our work to improve accessibility, equity and

inclusion in UK financial services.

We continue to introduce accessibility features

and designs (e.g. a curved notch and braille

dots) to our card products across the globe to

support people with visual impairments,

learning difficulties, and colour blindness. In

2024, we introduced accessibility features in

India, Philippines and Indonesia resulting in a

total of 20 markets where those features are

now available.

For the second year HSBC sponsored and

hosted the annual AbilityNet’s Techshare Pro

Conference, Europe's largest event for the

accessibility and disability inclusion

community, at our Group Head Office in

London. Over 1,600 individuals attended the

event (in person or online) globally.

Supporting women

UK CMB launched a Women’s Business

Growth Initiative Programme to support

women in scaling their businesses and

provide access to funding, making £250m

available for lending, education and

networking opportunities. The aim of the

support is to help narrow the credit gap for

women-led businesses, which is estimated to

be valued at $1.7tn globally.

In Mexico and Uruguay, our Mujeres Al

Mundo programme helps to address gender

gaps by providing businesswomen access to

funding, education and networking. In 2024

we provided over $190m in sustainable

financing to support women-owned

enterprises in both countries. We also won

the 2024 Financial Alliance for Women’s

‘Outstanding Contributor’ award for enabling

full financial access for women and unlocking

huge value in the Female Economy.

70	HSBC Holdings plc Annual Report on Form 20-F

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Engaging with our communities

Helping to build a more inclusive and resilient society

We have a long-standing commitment to

support the communities in which we

operate. We aim to empower people and

communities to develop the skills and

knowledge needed to thrive in the future.

Through the global reach of our charitable

partnerships we bring together diverse

people, ideas and perspectives that help us

open up opportunities and build a more

inclusive world.

Building community and future skills

We work with charity partners to initiate

programmes that help people and

communities respond to opportunities and

challenges as global economies transition

towards a low-carbon future. In 2024, these

included:

–Continuing a partnership with the British

Council in Brazil, Mexico, India, Indonesia

and Vietnam, and in Australia, India and

Malaysia with The King’s Trust Group, to

empower young, marginalised people with

the skills needed to excel in the green

economy.

–In India, HSBC collaborated with two

charities to help enhance sustainability in

the handloom and apparel sectors,

benefiting 10,000 weavers. Our initiatives

focused on adopting energy-efficient

practices, reducing water pollution,

promoting natural fibre products, and

increasing the use of natural dyes.

–HSBC Continental Europe collaborated with

Junior Achievement Europe to launch the

Climate Resilience Programme, which aims

to provide educational opportunities related

to innovations in climate resilience for

young people in France, Italy and Malta.

We also work with our charity partners to

help strengthen the resilience of

communities where we operate. Initiatives

launched in 2024 included:

–‘Saving for Good’, in partnership with INJAZ

Al Arab, which teaches financial literacy

fundamentals to 2,386 low-income workers

and the large migrant worker population in

the MENA region.

–A new financial literacy curriculum in Hong

Kong that aims to strengthen the financial

management knowledge of elderly learners

and provide a better understanding of

fintech applications and awareness of

online fraud.

–We responded to disaster relief appeals to

support efforts in Bangladesh, Central

Europe, Mexico, the Middle East, Spain,

Taiwan, Thailand, the USA and Vietnam.

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 2024, our colleagues gave

over 254,000 hours to community activities

during work hours. Examples of volunteering

efforts in 2024 included:

–around 260 employees supported

Waterkeeper, a US-based environmental

non-profit, with 700 hours volunteered

across 16 events in the country; and

–more than 200 employees acted as

mentors for marginalised youth in support

of the Strive and Rise Programme in Hong

Kong.

Charitable giving in 2024 (%)

154481383796753

Social, including Future Skills: 29%

Environment, including the Climate

Solutions Partnership: 40%

Local Priorities: 21%

Disaster relief and other giving: 10%

Total cash giving towards charitable

programmes

$94.7m

Hours volunteered during work time

>254,000

People projected to be reached through

our social and future skills programme

>928,000

HSBC Holdings plc Annual Report on Form 20-F	71

Governance

Acting responsibly

We remain committed to high standards of governance. We work

alongside our regulators and recognise our contribution to building

healthy and sustainable societies.

At a glance

Our relationship

We act on our responsibility to run our

business in a way that upholds high

standards of corporate governance.

Customer experience is at the heart of how

we operate. It is imperative that we treat our

customers well, that we listen, and that we

act to resolve complaints quickly and fairly.

We measure customer satisfaction through

net promoter scores across each of our global

businesses, listen carefully to customer

feedback so we know where we need to

improve, and take steps to do this. Our

customer satisfaction performance improved

in many markets in which we operate,

although we still have work to do to improve

our rank position against competitors.

We are committed to working with our

regulators to manage the safety of the

financial system, adhering to the spirit and

the letter of the rules and regulations

governing our industry.

We strive to meet our responsibilities to

society, including through being transparent

in our approach to paying taxes. We also seek

to ensure we respect human rights in our

workplace and our supply chains, and

continually work to improve our compliance

management capabilities.

For further details of our corporate governance,

see our corporate governance report on page

266.

In this section
Setting high<br><br>standards of<br><br>governance	How ESG is governed	We expect that our approach to ESG governance is likely to continue to<br><br>develop, in line with our evolving approach to ESG matters and<br><br>stakeholder expectations.	Page 72<br>
Human rights	Our respect for human rights	We have continued to develop our understanding of our salient human<br><br>rights issues and associated risk management.	Page 73<br>
Customer<br><br>experience	Customer satisfaction	While we are positioned among the top three banks in 58% of our key<br><br>markets within WPB and CMB, we recognise the need to improve our<br><br>customer experience further to enhance our competitive ranking.	Page 75<br>
	How we listen	We aim to be open and transparent in how we track, record and manage<br><br>complaints.	Page 76<br>
Integrity, conduct<br><br>and fairness	Safeguarding the<br><br>financial system	We have continued our efforts to combat financial crime and reduce its<br><br>impact on our organisation, customers and the communities that we<br><br>serve.	Page 78<br>
	Whistleblowing	Our global whistleblowing channel, HSBC Confidential, allows our<br><br>colleagues and other stakeholders to raise concerns confidentially.	Page 78<br>
	A responsible approach to<br><br>tax	We seek to pay our fair share of tax in all jurisdictions in which we<br><br>operate.	Page 79<br>
	Conduct: Our product<br><br>responsibilities	Our conduct approach guides us to do the right thing and to focus on the<br><br>impact we have on our customers and the financial markets in which we<br><br>operate.	Page 80<br>
	Our approach with<br><br>our suppliers	We require suppliers to meet our third-party risk compliance standards<br><br>and assess them to identify any financial stability concerns.	Page 80<br>
Safeguarding data	Data privacy	We are committed to protecting the data we process, in accordance with<br><br>the laws and regulations of the markets in which we operate.	Page 81<br>
	Cybersecurity	We invest in our business and technical controls to help prevent, detect<br><br>and mitigate cyber-threats.	Page 82<br>
72	HSBC Holdings plc Annual Report on Form 20-F
---	---

ESG review | Governance

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 sustainability infrastructure

finance and employee sentiment. The Board

is regularly provided with specific updates on

ESG matters, including the sustainability

execution programme, 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 267. For further details

of their induction and training in 2024, see

page 280.

In October 2024, we enhanced our ESG

governance with the establishment of a new

Sustainability Working Group (‘SWG’) of the

HSBC Holdings Board, with an initial duration

of 12 months. The SWG is comprised of five

non-executive Directors, along with

attendance by other executives. At the

executive level, the governance activity was

streamlined with the removal of the

Sustainability Execution Committee, with its

activity managed within the project team. 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, along with their

responsibilities and the responsible chair. The

structure of the process is similar for the

escalation of problems, 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

Disclosure and Controls Committee and

Group Audit Committee, which provide

oversight for the scope and content of ESG

disclosures, and the Group People

Committee, which provides oversight support

for the Group’s approach to performance

management.

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


Opportunities						Risks
		Board level governance
	Group Board		Group Audit Committee		Group Risk Committee
	Specialist Board governance
	Sustainability Working Group<br><br>Provides guidance on the Group-wide medium- and longer-term sustainability strategy,<br><br>including our progress towards our net zero ambitions, taking into account key factors such<br><br>as risk appetite, commerciality, capability and data. The group will also oversee progress<br><br>against the strategy, including financing and supporting clients’ transitions. The group will<br><br>provide guidance on target setting, policy review, financing and investing.<br><br>Chair: Independent non-executive Director - Geraldine Buckingham
	Management level governance
	ESG Committee<br><br>Has oversight of ESG strategy, policy,<br><br>material commitments and external<br><br>disclosure. Oversees and monitors<br><br>progress against ESG strategy,<br><br>policies, plans, targets, commitments<br><br>and execution processes. Reports to<br><br>the SWG and Board on progress on<br><br>the commitments, deliverables and<br><br>targets under the sustainability<br><br>execution programme.<br><br>Co-Chairs: Group CEO and Group<br><br>Chief Sustainability 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<br><br>climate risk profile and risk appetite,<br><br>top and emerging climate risks, and<br><br>key climate initiatives.<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.
	Sustainable Execution<br><br>Programme<br><br>Oversees the global<br><br>delivery of climate<br><br>strategy through 10<br><br>modules.<br><br>Chair: Global Head of<br><br>Sustainability<br><br>Transformation		Group Reputational Risk<br><br>Committee<br><br>Provides recommendations<br><br>and advice on significant<br><br>reputational risk matters<br><br>with impact across the<br><br>Group.<br><br>Chair: Group Chief Risk<br><br>and Compliance Officer		Human Rights<br><br>Steering Committee<br><br>Oversees the Group’s<br><br>evolving approach to<br><br>human rights and<br><br>provides enhanced<br><br>governance.<br><br>Chair: Group Chief Risk<br><br>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.

HSBC Holdings plc Annual Report on Form 20-F	73

Human rights

Our respect for human rights

Our salient human rights issues
Illustration of HSBC Group’s inherent human rights risks mapped to business activities.
Inherent human rights risks		HSBC activities
	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

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

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.

In 2023, building on this assessment, we

provided practical guidance and training,

where relevant, to our colleagues across the

Group on how to identify and manage human

rights risk.

In 2024, we focused 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.

We issued human rights due diligence good

practice guidance tailored to procurement and

corresponding high-level guidance for staff

who manage our relationships with our

business customers.

Managing risks to human rights

In 2024, we continued the process of

adapting our risk management procedures to

reflect what we learned from the work on

salient human rights issues and began

embedding the related guidance documents

described above.

We developed a human rights due diligence

operating procedure for procurement globally.

The procedure describes the due diligence

process undertaken to identify suppliers

where the risk of adverse human rights

impact is considered higher and the process

to be followed to review and mitigate the

risk. We built on the human rights supplier

audit pilots undertaken in 2023 in our Asia-

Pacific and Latin America regions with an

expanded programme of human rights audits

in 11 countries across Asia-Pacific, Latin

America, the Middle East and North Africa.

We continued to develop our in-house

capability on human rights with the launch of

further online resources for all staff and

bespoke human rights training for key

colleagues, including those managing

relationships with suppliers and business

customers, and those with responsibility for

overseeing risk management processes.

For 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/who-we-are/esg-and-

responsible-business/modern-slavery-act.

For further details of the actions taken to respect

the right to equality and freedom from

discrimination, see ’Our approach to inclusion’

on page 62.

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

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 recognise standards aimed at

respecting human rights.

We regularly review our sustainability risk

policies and policy implementation as we

apply our policies in practice.

For further details, see our sustainability risk

policies at www.hsbc.com/who-we-are/esg-and-

responsible-business/managing-risk/

sustainability-risk.

Financial crime controls

Our financial crime risk framework also helps

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.

For further details of how we fight financial

crime, see www.hsbc.com/who-we-are/esg-and-

responsible-business/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.

For further details see www.hsbc.com/-/files/

hsbc/our-approach/risk-and-responsibility/

pdfs/240715-hsbc-principles-for-the-ethical-use-

of-data-and-ai.pdf?download=1.

74	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Governance

Our respect for human rights continued

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. If mismanaged or

left unaddressed, human rights violations

may materialise as business risks, negatively

impacting investee companies’ operations,

supply chain or brand. These may in turn

present risk both to client investments and

reputation.

HSBC Asset Management engages with

companies prioritised for purposeful

engagement under its Stewardship Plan on

core themes material to investee companies,

including human rights. Engagements may be

on a one-on-one basis, or collaboratively with

other investors. In 2024, it has developed

engagement guidelines, highlighting its

expectations of good practice for companies,

where human rights may be a material issue.

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.

In 2024, HSBC Asset Management joined the

Investor Initiative on Human Rights Data

(‘II-HRD’), a collaborative engagement

initiative that aims to improve the depth and

breadth of corporate human rights data

available to investors and the transparency of

human rights assessment criteria. This

initiative seeks to address the industry-wide

challenges commonly cited, including lack of

transparent ESG ratings methodologies by

commercial data providers and insufficient

inclusion of human rights data.

For 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.

Measuring effectiveness
Metric	2024	2023
Contracted suppliers who either confirmed adherence to the code of<br><br>conduct or provided their own alternative that was accepted by our<br><br>Global Procurement function	96.7%	95%
Employees who have received training on one or more aspects of human<br><br>rights	11,884	8,176
For further inclusion metrics, see page 62 in this ESG review.<br>

Supporting those impacted and those

potentially at risk

We continued to expand our Survivor Bank

programme, which has now supported over

3,500 (a more than 15% increase since last

year) survivors of modern slavery and human

trafficking in the UK.

Our Wealth and Personal Banking team

continues to deliver training to raise

awareness of modern slavery, enabling

employees to spot signs of abuse and

escalate their concerns through established

channels. In addition, our customer-facing

employees globally are trained to identify and

support vulnerable customers as part of their

induction training.

For further details of our work to support

vulnerable communities, see page 69.

Effectiveness

The table below includes some indicative

metrics we use to measure year-on-year

improvement to our human rights processes.

HSBC Holdings plc Annual Report on Form 20-F	75

Customer experience

We remain committed to improving

customers’ experiences. In 2024, we

gathered feedback from over one million

customers across our three global businesses

to help us understand our strengths and the

areas we need to focus on. We were ranked

among the top three banks or improved our

ranking against our competitors in 58% of our

six key markets across WPB and CMB1 in line

with 2023.

Customer satisfaction

Listening to drive improvement

We have continued to embed our feedback

system so we can better listen, learn and act

on customer feedback. We use the net

promoter score (‘NPS’) and customer

satisfaction to provide a consistent measure

of our performance. NPS is measured by

subtracting the percentage of ‘detractors’

from the percentage of ‘promoters’.

‘Detractors’ are customers who provide a

score of 0 to 6, and ‘promoters’ are

customers who provide a score of 9 to 10 to

the question: ‘On a scale on 0 to 10, how

likely is it that you would recommend HSBC

to a friend or colleague’.

We run studies that allow us to benchmark

ourselves against other banks. We try to

make it as easy as possible for customers to

give us feedback, leveraging our use of digital

real-time surveys to capture insight. By

sharing this and other feedback with our

front-line teams, and allowing them to

respond directly to customers, we are

improving how we address issues and realise

opportunities.

We continue to run dedicated global forums

to provide oversight of our retail and business

customers’ experiences and promote

continuous improvement. This helps ensure

we use feedback in all aspects of how we run

our business, and prioritise initiatives that

matter most to our customers.

How we fared

In WPB, we were ranked among the top

three banks against our competitors in Hong

Kong and mainland China. In Hong Kong, we

remained first overall against our competitors,

and improved our NPS score. This was driven

by improved scores across all customer

segments.

Our NPS rank improved in the UK and

Singapore. This was largely driven by

improved scores among our affluent

customers. In Mexico our rank remained

stable, and in India our rank declined, largely

driven by our personal banking customers.

In our private bank, our global NPS increased

to 48 points, compared with 42 points in

All the existing markets included in the

programme increased their scores from 2023

and we have included India and UAE for the

first time this year.

In CMB, we were ranked among the top

three banks against our competitors in three

of our six key markets. We ranked first in

Hong Kong and as a top three bank in

Singapore and India. In mainland China, we

ranked outside the top three but ranked first

among international banks. In Mexico, we

have dropped from 3rd to 4th position due to

improved competitor performance in

business banking.

After an improved rank position in 2023, our

overall performance in the UK has stabilised

in 2024. Even though we sit outside of the

top 3 in business banking, we are still ranked

in the top 3 among mid-market enterprise and

large corporates in the UK. We remain

committed to improving our NPS

performance across markets, with action

plans developed centrally and locally.

In GBM, we have one of the highest

satisfaction scores against our international

competitors. We were ranked in the top three

banks globally, with high satisfaction scores

based on our digital capabilities.

Number of markets in top three or<br><br>improving rank1,2
	2024
WPB	4 out of 6
CMB	3 out of 6

1The six markets comprise: the UK, Hong Kong,

Mexico, mainland China, India and Singapore.

Rank positions are provided using data gathered

through third-party research agencies.

2We benchmark our NPS against our key

competitors to create a rank position in each

market. This table is based on the number of

markets where we are in the top three or have an

improved rank from the previous year.

Acting on feedback

In 2024, we have continued to focus on

developing our products and services, and

enhancing our digital capabilities to improve

customer experience.

Wealth and Personal Banking

We continue to redesign our international

products and services to make it quicker and

easier to bank internationally. This year we

have improved the way our customers make

international payments. Customers can send

funds directly to mobile wallets from their

banking app, with customers now able to

send international payments with just the

recipients’ name alongside their phone

number or email address.

Commercial Banking

Global Payments Solutions (‘GPS’)

implemented a new globally aligned client

service model focused on delivering an

enhanced front-to-back client experience. We

leverage data to improve our engagements

with customers and are investing in

technology to drive process efficiencies,

reduce query volumes and drive automation.

Our new Trade Solutions platform (‘HTS’) lets

us quickly deploy new capabilities (like

TradePay) across multiple markets. It helps

provide a consistent user experience and

enables easy connectivity to other platform

ecosystems.

In sustainability we continue to build an end-

to-end customer journey through launching

new propositions that incentivise and reward

customers for improving their ESG

performance, such as the HSBC Buildings

Sustainability Assessment Tool in the UK and

Sustainability Improvement Loan. In our

Customer Channels division, we have

deployed AI and personalisation solutions to

improve proactive engagement and the

speed of query resolution. We have increased

adoption of customer digital capabilities to

improve fulfilment turnaround times. We

have also increased the resilience of our

digital channels and further reduced customer

fraud risk. These actions are helping to build

greater digital trust with our customers and

thereby improving customer experience.

Global Banking and Markets

We continued our efforts to support our

clients in their sustainability and transition

journey by maintaining our Top 5 book-runner

position globally in green, sustainable and

social bonds, and by extending the

sustainability-focused product and solutions

range beyond the labelled products suite. We

have refined our priority and core coverage

model, including piloting a range of priority

client squads to drive specific client goals.

We continue to invest in our coverage

enablement strategy, including thought

leadership and transaction banking solutions.

76	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Governance

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. As

the table on the right demonstrates, we have

a consistent set of principles that enable us

to remain customer-focused throughout the

complaints process.

For further details of complaints volumes by

geography, see our ESG Data Pack at

www.hsbc.com/esg.

How we handle complaints
Our principles	Our actions
Making it easy<br><br>for customers<br><br>to complain	Customers can complain through the channel that best suits them. We provide a<br><br>point of contact along with clear information on next steps and timescales.
Acknowledging<br><br>complaints	All colleagues welcome complaints as opportunities and exercise empathy to<br><br>acknowledge our customers’ issues. Complaints are escalated if they cannot be<br><br>resolved at first point of contact.
Keeping the<br><br>customer up to<br><br>date	We set clear expectations and keep customers informed throughout the complaint<br><br>resolution process through their preferred channel.
Ensuring fair<br><br>resolution	We thoroughly investigate all complaints to address concerns and ensure the right<br><br>outcome for our customers.
Providing<br><br>available rights	We provide customers with information on their rights and the appeal process if<br><br>they are not satisfied with the outcome of the complaint.
Undertaking<br><br>root cause<br><br>analysis	Complaint causes are analysed on a regular basis to identify and address any<br><br>systemic issues and to inform process improvements.

Wealth and Personal Banking

In 2024, we received approximately 887,000

complaints from customers in eight priority

markets, and the ratio of complaints per 1,000

customers per month in these markets

decreased from 2.2 to 2.0. We had a reduction

in complaints in our top three markets (the UK,

Hong Kong and Mexico), which comprise 86%

of complaints globally.

In the UK, complaints fell 9%. During 2024,

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.

This has included identifying prominent

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.

The decrease in complaints in Hong Kong was

primarily driven by improvements in

capabilities that make banking with HSBC

easier for customers. A deeper customer-

centric culture, regular reviews, root cause

analysis of customer feedback and greater

collaboration across business lines to address

emerging customer pain points, also

contributed to the fall in complaints.

In Mexico, there was a 5.3% fall in the

volume of total complaints in 2024 compared

with 2023, with unrecognised debit card

charges down by 9% despite an increase in

transaction volumes. This was achieved

through targeted actions, including improving

fraud processes and the introduction of

enhancements to the way customers receive

purchase authorisations.

In our private bank, we received 647

complaints, an increase of 140 compared

with 2023. This was largely due to the

inclusion of complaint data for the private

banking operation in India, which received

128 complaints in 2024. Complaint data for

this business was reported in WPB figures in

Banking products and service issues

represented the largest volume of complaints

overall, a high proportion of which were

attributable to issues with payment

processing and credit cards. Overall, the

private bank resolved 646 complaints.

WPB complaint volumes1<br><br>(per 1,000 customers per month)
		2024	2023
Total2		2.0	2.2
UK3	q	1.0	1.1
Hong Kong3	q	0.7	0.9
Mexico3	q	5.0	5.2

1A complaint is any expression of dissatisfaction

about WPB’s activities, products or services

where a response or resolution is explicitly, or

implicitly, expected.

2Priority markets in 2024 included: the UK, Hong

Kong (excluding Hang Seng), Mexico, mainland

China, India, UAE, Singapore and Australia,

selected based on complaints volume, customer

base and strategic importance among other

factors. The 2023 total has been revised from 2.3

to 2.2 due to a change in the composition of these

eight priority markets.

3The UK, Hong Kong and Mexico make up 86%

of total complaints.

Acting on feedback In 2024, we continued to improve our capabilities and tools across the business to enhance the customer experience globally. By consistently measuring customer experience, we actively listen, learn and take action based on what our customers share with us. Additionally, we introduced a customer experience behavioural framework across the bank, aligned with HSBC’s core values. This framework supports our colleagues in meeting minimum service standards and prioritising customer experience in their daily routines. These efforts enable us to identify opportunities to continue to improve our customer experience and systematically track and measure our progress.

HSBC Holdings plc Annual Report on Form 20-F

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How we listen continued

Commercial Banking

In 2024 we received 46,276 customer and

client complaints, an increase of 0.8% from

Of the overall volume, 32,748 came

from HSBC UK, 8,779 from Asia-Pacific and

the remainder from the rest of our global

markets.

The most common complaint related to

servicing and transactions, with the largest

volume of complaints globally coming from

business banking customers, representing

68.2% of our total complaints.

Although we have seen a minor increase in

complaint volumes, this reflects

improvements in the quality of our logging

process and we have increased our

understanding of the root cause of many

complaints. In 2024, we enhanced training for

our front-line colleagues to ensure they can

accurately identify the differences between a

complaint, query and feedback and upgraded

our complaint reporting tools. For 2025, our

focus will be on addressing the root cause of

complaint trends, as well as improvements to

our systems, processes and customer advice.

CMB complaint volumes<br><br>(000s)
		2024	2023
Total		46.2	45.9
UK1	q	32.7	33.8
Hong Kong1	p	7.7	6.5

1The UK and Hong Kong (excluding Hang Seng)

account for 87% of total complaints.

Acting on feedback In 2024, we have further invested in comprehensive training programmes for our staff to ensure they are equipped with the skills and knowledge needed to manage complaints effectively. This includes training on active listening, empathy, identification and treatment of customers in financial difficulty and conflict resolution. All of our front-line teams globally went through this training to ensure that conduct and the customer are at the heart of our management of client feedback. We have implemented advanced complaint reporting tools that enable us to capture customer feedback more accurately and efficiently. These tools allow us to identify and address issues promptly. Within our Business Banking segment, we continue to work with front-line teams to identify and manage complaints better.

Global Banking and Markets

In 2024, we received 1,838 customer

complaints in Global Banking, an increase of

18.4% from 2023. Of the overall complaint

volumes, 37.6% came from Europe and

28.9% came from Asia-Pacific. The most

common complaint, at 34.2% of total

complaints, related to transactions.

In Markets and Securities Services (‘MSS’)

complaints decreased by 13.6% to 306. The

majority of complaints were operational in

nature and resolved in a timely manner. Of

the overall MSS complaints, 49% came from

Europe and 33.9% from Asia-Pacific, our two

largest markets.

GBM complaint volumes1
		2024	2023
Total		2,144	1,906
Global<br><br>Banking2	p	1,838	1,552
Global Markets<br><br>and Securities<br><br>Services3	q	306	354

1 Globally, a complaint is any expression of

dissatisfaction, whether justified or not, relating to

the provision of, or failure to provide, a specific

product or service or service activity. Within the

UK, a complaint is any expression of

dissatisfaction – whether justified or not – about

our products, services or activities, which suggests

we have caused (or might cause) financial loss,

material distress or a material inconvenience.

2Global Banking also includes Global Payments

Solutions (previously known as Global Liquidity

and Cash Management) and complaints relating

to payment operations.

3Contains Global Research complaint volumes.

Acting on feedback In 2024, our focus has been to increase the capture and quality of complaints received within GBM. Our focus has been on doing deep dives into the quality of complaints received and delivering bespoke training on the complaint themes that we see. We have defined robust feedback loops allowing us to learn continuously from customer experiences and embed these into our processes. We regularly review and analyse complaint data to identify trends and implement improvements in our services. Although we have seen growth in complaint volumes, we are seeing higher levels of compliant quality and better decisions to address them in the first instance.

HSBC Holdings plc Annual Report on Form 20-F

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ESG review | Governance

Integrity, conduct and fairness

Safeguarding the financial system

The scale of our work

Each month in 2024 we monitored approximately 900 million transactions for signs of financial crime. We performed daily screening of approximately 121 million customer records for sanctions exposure. In 2024, we filed over 113,000 suspicious activity reports to law enforcement and regulatory authorities where we identified potential financial crime.

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, 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. We have

a financial crime risk management framework

that is applicable across all global businesses

and functions, and in all countries and territories

in which we operate. The financial crime risk

framework, which is overseen by the Board, is

supported by our financial crime policy that 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.

We continue to invest in new technology; we

are enhancing our fraud monitoring capability

and our trade screening controls, and

investing in the application of machine

learning to improve the accuracy and

timeliness of our detection capabilities.

These new technologies should enhance our

ability to respond effectively to unusual

activity and be more granular in our risk

assessments.

Our anti-bribery and corruption policy

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. In 2024, two former

employees of an HSBC subsidiary in China

were convicted of bribery-related offences

and each received a fine and suspended

sentence. The HSBC subsidiary in China self-

reported this matter to the police and was not

a subject of the police investigation or

charges.

99%

Total percentage of permanent and non-

permanent employees who received financial

crime training, including on anti-bribery and

corruption.

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 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

(accountingdisclosures@hsbc.com). 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 2024,

13% fewer concerns were raised through

HSBC Confidential compared with 2023. Of

the concerns investigated through the HSBC

Confidential channel in 2024, 66% related to

individual behaviour and personal conduct,

21% to security and fraud risks, 12% to

compliance risks and less than 1% to other

categories.

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.

For further details of the role of the Group Audit

Committee in relation to whistleblowing,

including updates received in 2024 on

operational effectiveness, see page 297.

HSBC Confidential concerns raised in

2024:

1,527

(2023: 1,746)

Substantiation rate of concerns

investigated through HSBC Confidential

in 2024:

35%

(2023: 41%)

HSBC Holdings plc Annual Report on Form 20-F	79

A responsible approach to tax

We seek to pay our fair share of tax in all

jurisdictions in which we operate, and to

minimise the likelihood of customers using

our products and services to evade or

inappropriately avoid tax. We also abide by

international protocols that affect our

organisation. Our approach to tax and

governance processes is designed to achieve

these goals.

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 own taxes, we are guided

by the following principles:

–We are committed to applying both the

letter and spirit of the law. This includes

adherence to a variety of measures arising

from the OECD Base Erosion and Profit

Shifting initiative including the ‘Pillar Two’

global minimum tax rules that apply to the

Group from 2024. These rules seek to

ensure that the Group pays tax at a

minimum rate of 15% in each jurisdiction in

which it operates. We have identified 14

jurisdictions that may have an effective tax

rate below 15% in 2024. We continually

monitor the number of active subsidiaries

within each jurisdiction as part of our

ongoing entity rationalisation programme.

–We seek to ensure that our entities active

in nil or low tax jurisdictions have clear

business rationale for why they are based

in these locations and appropriate

transparency over their activities.

–We seek to have open and transparent

relationships with all tax authorities. Given

the size and complexity of our organisation,

which operates across 58 jurisdictions, a

number of areas of differing interpretation

or disputes with tax authorities exist at any

point in time. We cooperate with the

relevant local tax authorities to mutually

agree and resolve these in a timely manner.

With respect to our customers’ taxes, we are

guided by the following principles:

–We have made considerable investments

to support external tax transparency

initiatives and reduce the risk of banking

services being used to facilitate customer

tax evasion. Initiatives include the US

Foreign Account Tax Compliance Act, the

OECD Standard for Automatic Exchange of

Financial Account Information (‘Common

Reporting Standard’), and the UK legislation

on the corporate criminal offence of failing

to prevent the facilitation of tax evasion.

–We implement processes that aim to

ensure that inappropriately tax-motivated

products and services are not provided to

our customers.

Our tax contributions

The Group effective tax rate for the year of

22.6% was higher than in the previous year

(2023: 19.1%). The effective tax rate for the

year increased by 4.8% due to the non-

deductible loss in respect of the sale of our

business in Argentina, and decreased by

3.6% due to the non-taxable gain on the

disposal of HSBC Canada. Further details are

provided on page 402.

Tax paid in 2024 is higher than in 2023 mainly

because the Hong Kong Inland Revenue

Department did not issue HSBC’s corporation

tax assessments for 2023 until January 2024,

at which time they were paid. The equivalent

assessments for 2024 were received and

paid in December 2024.

The UK bank levy charge for 2024 of $249m

was lower than the charge of $339m in 2023,

as the charge for 2023 was increased by

adjustments arising upon filing prior year

returns.

As highlighted below, in addition to paying

$9.2bn (2023: $6.8bn) of our own tax

liabilities during 2024, we collected taxes of

$10.1bn (2023: $10.8bn) on behalf of

governments around the world. A more

detailed geographical breakdown of the taxes

paid in 2024 is provided in the ESG Data

Pack.

Taxes paid – by type of tax

162727720911341

Tax on profits $6,080m (2023: $3,685m)

Withholding taxes $667m (2023: $432m)

Employer taxes $1,003m (2023: $1,052m)

Bank levy $135m (2023: $57m)

Irrecoverable VAT $1,098m (2023: $1,298m)

Other duties and levies $229m1 (2023: $249m)

Taxes paid – by region

162727720911428

Europe $2,780m (2023: $2,945m)

Asia-Pacific $5,020m (2023: $2,488m)

Middle East, North Africa

and Türkiye $421m (2023: $296m)

North America $291m (2023: $389m)

Latin America $700m (2023: $655m)

Taxes collected – by region

162727720911620

Europe $4,214m (2023: $4,714m)

Asia-Pacific $3,223m (2023: $3,226m)

Middle East, North Africa

and Türkiye $118m (2023: $77m)

North America $1,025m (2023: $1,119m)

Latin America $1,483m (2023: $1,680m)

1Other duties and levies includes property taxes of $76m (2023: $91m).

80	HSBC Holdings plc Annual Report on Form 20-F

ESG review | Governance

Conduct: Our product responsibilities

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

into the way we design, approve, market and

manage products and services, 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.

We train all our colleagues on our approach to

customer and market conduct, helping to

ensure our conduct outcomes are part of

everything we do.

Designing products and services

Our approach to product development is set

out in our policies and provides a clear basis

on which informed decisions can be made.

Our policies require that products must be fit-

for-purpose throughout their existence,

meeting regulatory requirements and

associated conduct outcomes.

Our approach includes:

–designing products to meet identified

customer needs;

–managing products through governance

processes, helping to ensure they meet

customers’ needs and deliver a fair

exchange of value;

–periodically reviewing products to help

ensure they remain relevant and perform in

line with expectations we have set; and

–improving, or withdrawing from sale, products

which do not meet our customers’ needs or

no longer meet our high standards.

Meeting our customers’ needs

Our policies and procedures set standards to

help ensure that we consider and meet

customer needs. These include:

–enabling customers to understand the key

features of products and services;

–enabling customers to make informed

decisions before purchasing a product or

service; and

–ensuring processes are in place for the

provision of advice to customers.

They help us provide the right outcomes for

customers, including those with enhanced

care needs. This enables us to support

customers who are more vulnerable to

external impacts.

Financial promotion

Our policies help to ensure that in the sale of

products and services, we use marketing and

product materials that support customer

understanding and fair customer outcomes.

This includes providing information on

products and services that is fair, clear and

not misleading. We also have controls in

place to help ensure our cross-border

marketing complies with relevant regulatory

requirements.

Product governance Our product management policy covers the entire lifecycle of the product. This helps ensure that our products meet our requirements before we sell them and allows continued risk-based oversight of product performance against the intended customer outcomes. When we decide to withdraw a product from sale, we aim to consider the implications for our existing customers and agree actions to help them achieve a fair outcome where appropriate.

Our approach with our suppliers

We maintain global standards and procedures

for the onboarding and use of third-party

suppliers. We require suppliers to meet our

third-party risk compliance standards and

assess them to identify any financial stability

concerns.

Sustainable procurement

Supporting and engaging with our supply

chain is vital to the development of our

sustainable procurement processes. In 2024:

–We continued gathering carbon emission

data from our suppliers through CDP

(formerly the Carbon Disclosure Project) and

introduced a new data collection method to

simplify and improve our supplier outreach

for scope 3 data collection.

–We began implementing decarbonisation

plans for our three highest emitting

procurement categories: technology; real

estate; and professional services. We

engaged suppliers on their emissions

disclosure plans and carbon reduction

targets. We outlined what we expect of our

suppliers on these aspects and explored

joint opportunities.

–We hosted a Supply Chain Decarbonisation

Day with senior managers at HSBC and

suppliers to facilitate collaboration and

discuss innovative decarbonisation solutions

with some of our largest suppliers.

–We have started developing a biodiversity

strategy that aims to integrate biodiversity

considerations into our procurement

practices and define a clear set of

requirements for our suppliers.

–Since its launch in 2023, the Supplier

Diversity Portal is now live in a number of

jurisdictions. Further expansion is planned

for 2025 to reach a wider demographic of

diverse-owned suppliers (at least 51%

owned, managed or controlled by a

historically and locally under-represented

group). For further details, see

www.hsbc.com/who-we-are/esg-and-

responsible-business/working-with-suppliers.

–To increase engagement with diverse-

owned suppliers, we introduced a

development programme. The programme

is designed to empower diverse-owned

suppliers to effectively engage with large

corporations, including HSBC, and supports

our ambition to further diversify our supply

chain, to represent the communities that we

operate in.

Supplier code of conduct

Our supplier code of conduct (‘the code’) was

refreshed in 2024, setting out our ambitions

and areas of focus on the environment,

diversity and human rights, and outlines the

minimum standards we expect of our

suppliers on these issues. We continue to

formalise adherence to the code with clauses

in our supplier contracts, which support the

right to audit and act if a breach is discovered.

At the end of 2024, 96.7% of approximately

10,200 contracted suppliers had either

confirmed adherence to the code or provided

their own alternative that was accepted by

our Global Procurement function.

For 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	81

Safeguarding data

Data privacy

Data Privacy Day

In February 2024, we held a global online event for our colleagues to mark International Data Privacy Day. The event was hosted by our Global Head of Data Legal, in collaboration with the International Association of Privacy Professionals. The discussion focused on key developments in the data privacy landscape for 2024 and beyond, including the impact of digital entropy and rapidly evolving AI-related advancements. This was followed by a Q&A with the audience to encourage further dialogue.

We are committed to protecting the data we

process, in accordance with the laws and

regulations of the markets in which we

operate.

Our approach rests on having the right talent,

technology, systems, controls, policies and

processes to ensure appropriate

management of privacy risk. Our Group-wide

data risk policy and principles provide a

consistent global approach to managing data

privacy risk, and must be applied by all our

global businesses and functions. Our privacy

principles are available at www.hsbc.com/

who-we-are/esg-and-responsible-business/

managing-risk/operational-risk.

We conduct regular employee training and

awareness sessions on data privacy and

security issues throughout the year. This

includes mandatory training that is updated

regularly for all our global colleagues, with

additional training sessions where needed to

keep up to speed with new developments.

Where relevant, we encourage our data

privacy employees to obtain external

accreditation.

We provide transparency to our customers

and stakeholders on how we collect, use and

manage their personal data, and their

associated rights. Where relevant, we work

with third parties to help ensure adequate

protections are provided, in line with our data

risk policy and as required under applicable

data privacy laws. We offer a broad range of

channels in the markets where we operate,

through which customers and stakeholders

can raise concerns about the privacy of their

data.

Our dedicated privacy teams report to senior

management on data privacy risks and

issues, and provide oversight for global data

privacy programmes. We review data privacy

regularly at multiple governance forums,

including at Board level, to help ensure there

is appropriate oversight by senior executives.

Data privacy laws and regulations continue to

evolve globally. We continually monitor the

regulatory environment to ensure we respond

appropriately to any changes.

As part of our three lines of defence model,

our Global Internal Audit function provides

independent assurance as to whether our

data privacy risk management approaches

and processes are designed and operating

effectively. In addition, we have established

data privacy governance structures and

continue to embed accountability across all

businesses and functions.

We continue to implement industry practices

for data privacy and security. Our privacy

teams work closely with our data protection

officers, industry bodies and research

institutions to drive the design,

implementation and monitoring of privacy

solutions. We conduct regular reviews and

privacy risk assessments and continue to

develop solutions to strengthen our data

privacy controls.

We have procedures to articulate the actions

needed to deal with data privacy

considerations. These include notifying

regulators, customers or other data subjects,

as required under applicable privacy laws and

regulations, in the event of a reportable

incident occurring.

Intellectual property rights practices

We have a Group intellectual property risk

policy, supported by controls and guidance, to

manage risk relating to intellectual property.

This is to help ensure that commercially and

strategically valuable intellectual property is

identified and protected appropriately,

including by applying to register trademarks

and patents and enforcing our intellectual

property rights against unauthorised use by

third parties. Our intellectual property

framework also helps us avoid infringement

of third-party intellectual property rights,

supporting our consistent and effective

management of intellectual property risk in

line with our risk appetite.

Responsible AI
Artificial intelligence (‘AI’) and other emerging technologies provide the opportunity to process<br><br>and analyse data at a depth and breadth not previously possible. While these technologies<br><br>offer significant potential benefits for our customers, they also pose potential ethical risks for<br><br>the financial services industry and society as a whole. We have a set of principles to help<br><br>ensure we consider and address the ethical issues that could arise. HSBC’s Principles for the<br><br>Ethical Use of Data and Artificial Intelligence are available at www.hsbc.com/ai.<br><br>We continue to develop and enhance our approach to, and oversight of, AI, taking into<br><br>consideration the fast-evolving regulatory landscape, market developments and best practice.
82	HSBC Holdings plc Annual Report on Form 20-F
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ESG review | Governance

Cybersecurity

The threat of a cyber incident remains a

concern for our organisation, as it does across

the financial sector and other industries. As

cyber-threats continue to evolve, failure to

protect our operations may result in disruption

for our customers and our business, cause

financial loss or loss of sensitive data, and can

have a negative impact on our customers’ and

our own reputation, among other risks.

We continue to monitor ongoing geopolitical

events and changes to the cyber-threat

landscape and take proactive measures with

the aim of reducing any impact on our

customers.

Prevent, detect and mitigate

We invest in business and technical controls to

help prevent, detect and mitigate cyber

threats. Our cybersecurity 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 round-

the-clock security operations centre

capabilities is intended to help reduce the

impact of attacks.

Our cyber intelligence and threat analysis team

proactively collects and analyses internal and

external cyber information to continuously

evaluate threat levels for the most prevalent

attack types and their potential outcomes. We

actively participate in the broader cyber

intelligence community, including by sharing

technical expertise in investigations, alongside

others in the financial services industry and

government agencies around the world.

In 2024, we continued our programme of

continual improvement to further strengthen

our cyber defences and 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. One key area of focus is

the increasing use of AI, which could be used

to facilitate sophisticated cyber-attacks. We

are enhancing governance processes to

manage potential cybersecurity risks, along

with accelerating the potential this

technology brings.

We work with third parties, including suppliers,

financial infrastructure bodies and other non-

traditional third parties, in an effort to help

reduce the threat of cyber-attacks impacting

our business services.

We have a third-party security risk

management process in place to assess,

identify and manage the risks associated with

cybersecurity threats with supplier and other

third-party relationships. The process includes

risk-based cybersecurity due diligence reviews

that assess third parties’ cybersecurity

programmes against our standards and

requirements.

Policy and governance

We have a robust suite of cybersecurity

policies, procedures, and key 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 oversight and challenge of

our cybersecurity capabilities and priorities.

Within the first line of defence, risk owners

within global business and functions are

accountable for identifying and managing

cyber risk. They work with cybersecurity

control owners to apply risk treatment in line

with our risk appetite. Our controls are

designed to be executed in line with our

policies and are reviewed and challenged by

our risk stewards representing the second

line of defence. They are independently

assured by the Global Internal Audit function,

the third line of defence.

The assessment and management of our

cybersecurity risk is led and coordinated by a

Global Chief Information Security Officer

(‘CISO’). Our Global CISO 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 regional and

business-level CISOs. In the event of

incidents, the Global CISO and relevant

supporting CISOs are informed and are

engaged in alignment with our cybersecurity

incident response protocols.

Key performance indicators, control

effectiveness and other matters related to

cybersecurity, including significant cyber

incidents, are presented on a regular basis to

various management risk and control

committees including to Board committees,

the Group Risk Management Meeting and

across global businesses, functions and

regions. This is done to help ensure ongoing

awareness and management of our

cybersecurity position.

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

We understand the important role our people

play in protecting against cybersecurity

threats. Our aim is to equip every colleague

with the appropriate tools and behaviours they

need to keep our organisation and customers’

data safe. We provide cybersecurity training

and awareness to all our people, ranging from

our top executives to IT developers to front-

line branch staff around the world, and we

deliver targeted training to staff that are

identified as having elevated cyber risk

exposure.

Boosting gender representation in cybersecurity To help address barriers to opportunity, HSBC Cybersecurity has been working to increase the representation of women in emerging talent via a variety of initiatives across 2024. These include: –Sponsoring the CyberFirst Girls Competition for the second consecutive year, aimed at inspiring girls interested in technology to pursue a career in cybersecurity. –Providing cybersecurity work- shadowing opportunities to undergraduates who are part of the UK-based Women in Technology programme. –Cybersecurity colleagues have hosted a range of events with university students in Poland, Mexico, mainland China, India and the UK.

We host an annual Cyber Awareness Month

for all colleagues, covering topics such as

online safety at home, social media safety,

safe hybrid working, and cyber incidents and

response. Our dedicated cybersecurity

training and awareness team also provides a

wide range of education and guidance to both

customers and our colleagues about how to

spot and prevent online fraud.

HSBC Holdings plc Annual Report on Form 20-F	83

Dividers image-02.jpg

Financial

review

The financial review gives detailed reporting of our

financial performance at Group level as well as

across the global businesses we reported on in

2024 and legal entities.

84	Financial summary
107	Global businesses and legal entities
129	Reconciliation of alternative performance<br><br>measures
135	Other information

Hong Kong, 1980s. Serving Our Customers.

84	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

Financial summary
Contents
---	---
84	Key financial measures: basis of preparation
84	Use of alternative performance measures
86	Critical estimates and judgements
86	Impact of hyperinflationary accounting
87	Consolidated income statement
88	Income statement commentary
92	Consolidated balance sheet
96	Average balance sheet

Key financial measures: basis of

preparation

Return on average tangible equity

excluding notable items

From 1 January 2024, we revised the adjustments made to our

adjusted RoTE measure. Prior to this, we adjusted RoTE for the

impact of strategic transactions and the impairment of our investment

in Bank of Communications Co., Limited (‘BoCom‘), whereas from

1 January 2024 we have excluded all notable items. This was

intended to improve alignment with the treatment of notable items in

our other income statement disclosures. 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. It also adjusts

the ‘average tangible equity‘ for the post-tax impact of notable items

in each period, which remain as adjusting items for all relevant

periods within that calendar year. For a reconciliation from return on

equity (‘RoE’) to RoTE excluding notable items, see page 131.

We do not reconcile our forward RoTE guidance to the equivalent

reported 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 89.

Target basis operating expenses

Target basis operating expenses is computed by excluding the direct

cost impact of our France retail banking operations and Canada

banking business disposals from the 2023 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. For a reconciliation from reported operating expenses

to target basis operating expenses, see page 133.

In 2024, we targeted operating expenses growth on a target basis of

approximately 5% compared with 2023. This target reflected our

business plan for 2024, which included an increase in staff

compensation, higher spend and investment in technology for growth

and efficiency, in part mitigated by cost savings from actions taken

during 2023.

We are targeting growth in target basis operating expenses of

approximately 3% in 2025 compared with 2024. Our target basis

operating expenses for 2025 excludes 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 cost target includes the impact of simplification-related saves

associated with our announced reorganisation, see page 107, which

aims to generate approximately $0.3bn of cost reductions in 2025. To

deliver these reductions, we plan to incur severance and other up-

front costs of $1.8bn over 2025 and 2026, which will be classified as

notable items.

We do not reconcile our forward target basis operating expenses

guidance to the reported operating expenses.

Dividend payout ratio target basis

We established a dividend payout ratio target basis of 50% for 2023

and 2024, and we continue to target a 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 are

components of our income statement that management would

consider as outside the normal course of business and generally non-

recurring in nature, which are excluded from our dividend payout ratio

calculation and our earnings per share measure, along with related

impacts.

Material notable items are a subset of notable items for which

categorisation is dependent on the nature of each item in conjunction

with the financial impact on the Group’s income statement. They

comprise the impacts of the sales of our banking business in Canada

and our retail banking operations in France, the gain following the

acquisition of SVB UK, the impacts of the sale of our business in

Argentina and the impairment of BoCom. We also exclude HSBC

Bank Canada‘s financial results from the 30 June 2022 net asset

reference date until completion, as the gain on sale was recognised

through a combination of the consolidation of HSBC Bank Canada‘s

results in the Group‘s results since this date, and the remaining gain

on sale recognised at completion, inclusive of the recycling of related

reserves and fair value gains on related hedges. Following the

completion of the sale of our banking business in Canada, the Board

approved a special dividend of $0.21 per share, which was paid in

June 2024, alongside the first interim dividend.

For a reconciliation of basic earnings per share to basic earnings per

share excluding material notable items and related impacts, see

page 134. We do not reconcile our forward dividend payout ratio

target basis guidance to the reported dividend payout ratio.

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 363.

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 below.

Definitions and calculations of other alternative performance measures

HSBC Holdings plc Annual Report on Form 20-F	85

are included in our ‘Reconciliation of alternative performance measures’

on page 129. Also, the insurance-specific non-GAAP measure ‘Insurance

equity plus CSM net of tax‘, is provided on page 115, along with its

definition and reconciliation to the GAAP measure. All alternative

performance measures are reconciled to the closest reported

performance measure.

The global business segmental results are presented on a constant

currency basis in accordance with IFRS 8 ‘Operating Segments’ as

detailed in Note 10 ‘Segmental analysis’ on page 405.

Constant currency performance

Constant currency performance is computed by adjusting reported

results for the effects of foreign currency translation differences, which

distort year-on-year comparisons.

We consider constant currency performance to provide useful

information for investors by aligning internal and external reporting, and

reflecting how management assesses year-on-year performance.

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. We exclude material notable

items when computing our dividend payout ratio target basis. Material

notable items currently comprise the sale of our retail operations in

France and our banking business in Canada, the sale of our business in

Argentina, the acquisition of SVB UK and the impairment of our

investment in BoCom.

The tables on pages 108 to 110 and pages 122 to 127 detail the effects of

notable items on each of our global business segments, legal entities and

selected countries/territories in 2024, 2023 and 2022.

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 global businesses. At 31 December

2024, strategic transactions classified as material notable items in

current and comparative periods comprise the disposal of our retail

banking operations in France, the disposal of our banking business in

Canada, the sale of our business in Argentina and the acquisition of SVB

UK.

The impacts of strategic transactions include the gains or losses on

classification to held for sale or on acquisition and all other related

notable items. They also include the distorting impact between the

periods of the operating income statement results related to acquisitions

and disposals that affect period-on-period comparisons. This 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. We consider the monthly impacts of distorting income

statement results when calculating the impact of strategic transactions.

See page 111 for supplementary analysis of the impact of strategic

transactions.

Constant currency revenue and profit

before tax excluding notable items

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 consider this measure to provide useful

information to investors as it removes items which distort period-on-

period comparisons.

For a reconciliation of ‘constant currency revenue excluding notable items’

and ‘constant currency profit before tax excluding notable items’ to reported

revenue and reported profit respectively, see page 131.

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 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’. This measure excludes

the impact of strategic transactions classified as material notable items

from constant currency revenue and profit before tax excluding notable

items. At 31 December 2024, strategic transactions classified as

material notable items comprise the disposal of our retail banking

operations in France, our banking business in Canada, the sale of our

business in Argentina and the acquisition of SVB UK.

The impacts quoted include the gains or losses on classification to held

for sale or acquisition and all other related notable items. They also

include the distorting impact between the periods of the operating

income statement results related to acquisitions and disposals that

affect period-on-period comparisons. It 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. We consider the

monthly impacts of distorting income statement results when

calculating the impact of strategic transactions.

For a reconciliation of ‘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’

to reported revenue and reported profit respectively, see page 131.

Foreign currency translation

differences

Foreign currency translation differences reflect the movements of the

US dollar against most major currencies during 2024.

We exclude them to derive constant currency data, allowing us to assess

balance sheet and income statement performance on a like-for-like basis

and to better understand the underlying trends in the business.

Foreign currency translation differences for 2024 are computed by

retranslating into US dollars for non-US dollar branches, subsidiaries,

joint ventures and associates:

–the income statements for 2023 and 2022 at the average rates of

exchange for 2024; and

–the balance sheets at 31 December 2023 and 31 December 2022 at

the prevailing rates of exchange on 31 December 2024.

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 Argentina and 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 have been translated at the appropriate

exchange rates applied in the current period on the basis described above.

86	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

Impact of hyperinflationary

accounting

During 2024, we continued to treat Argentina and Türkiye as

hyperinflationary economies for accounting purposes. The impact of

applying IAS 29 ‘Financial Reporting in Hyperinflationary Economies’

and the hyperinflation provisions of IAS 21 ’The Effects of Changes in

Foreign Exchange Rates’ for our operations in both Argentina and

Türkiye was a decrease in the Group’s profit before tax of $917m

(2023: $1,297m), comprising a decrease in revenue, including loss on

net monetary position, of $840m (2023: $1,586m) and an increase in

ECL and operating expenses of $77m (2023: decrease of $289m).

These numbers reflect an increase in the consumer price index (‘CPI’)

of 3,915.03 (2023: 2,429.13 increase) for Argentina and 825.55 (2023:

730.89 increase) for Türkiye. We have now completed the sale of our

business in Argentina, so there will be no impact in 2025 of hyperinflation

in this market, although comparative data will include the impact of

hyperinflation.

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(i) on page 381.

–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(l) on page 386.

–Valuation of financial instruments: In determining the fair value of

financial instruments a variety of valuation techniques are used,

some of which feature significant unobservable inputs and are

subject to substantial uncertainty. See Note 1.2(c) on page 379.

–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 376.

–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 376.

–Impairment of goodwill and non-financial assets: A high degree of

uncertainty is involved in estimating the future cash flows of the

cash-generating units (‘CGUs’) and the rates used to discount these

cash flows. See Note 1.2(a) on page 376 and Note 1.2(n) on

page 387.

–Provisions: Significant judgement may be required due to the high

degree of uncertainty associated with determining whether a

present obligation exists, and estimating the probability and amount

of any outflows that may arise. See Note 1.2(m) on page 386.

–Post-employment benefit plans: The calculation of the defined benefit

pension obligation involves the determination of key assumptions

including discount rate, inflation rate, pension payments and deferred

pensions, pay and mortality. See Note 1.2(k) on page 385.

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	87

Consolidated income statement

Summary consolidated income statement
	2024	2023	20221	2021	2020
	$m	$m	$m	$m	$m
Net interest income	32,733	35,796	30,377	26,489	27,578
Net fee income	12,301	11,845	11,770	13,097	11,874
Net income from financial instruments held for trading or managed on a fair value basis2	21,116	16,661	10,278	7,744	9,582
Net income/(expense) from assets and liabilities of insurance businesses, including related<br><br>derivatives, measured at fair value through profit or loss	5,901	7,887	(13,831)	4,053	2,081
Net insurance premium income	—	—	—	10,870	10,093
Insurance finance (expense)/income	(5,978)	(7,809)	13,799	—	—
Insurance service result	1,310	1,078	809	—	—
Gain on acquisition3	—	1,591	—	—	—
Gains/(losses) recognised on sale of business operations4	(1,752)	(61)	(2,678)	—	—
Other operating income/(expense)5	223	(930)	96	1,687	1,866
Total operating income	65,854	66,058	50,620	63,940	63,074
Net insurance claims and benefits paid and movement in liabilities to policyholders	—	—	—	(14,388)	(12,645)
Net operating income before change in expected credit losses and other<br><br>credit impairment charges6	65,854	66,058	50,620	49,552	50,429
Change in expected credit losses and other credit impairment charges	(3,414)	(3,447)	(3,584)	928	(8,817)
Net operating income	62,440	62,611	47,036	50,480	41,612
Total operating expenses excluding impairment of goodwill and other intangible assets	(32,966)	(32,355)	(32,554)	(33,887)	(33,044)
(Impairment)/reversal of impairment of goodwill and other intangible assets	(77)	285	(147)	(733)	(1,388)
Operating profit	29,397	30,541	14,335	15,860	7,180
Share of profit in associates and joint ventures	2,912	2,807	2,723	3,046	1,597
Impairment of interest in associate	—	(3,000)	—	—	—
Profit before tax	32,309	30,348	17,058	18,906	8,777
Tax expense	(7,310)	(5,789)	(809)	(4,213)	(2,678)
Profit for the year	24,999	24,559	16,249	14,693	6,099
Attributable to:
– ordinary shareholders of the parent company	22,917	22,432	14,346	12,607	3,898
– preference shareholders of the parent company	—	—	—	7	90
– other equity holders	1,062	1,101	1,213	1,303	1,241
– non-controlling interests	1,020	1,026	690	776	870
Profit for the year	24,999	24,559	16,249	14,693	6,099
Five-year financial information
---	---	---	---	---	---
	2024	2023	20221	2021	2020
	$	$	$	$	$
Basic earnings per share	1.25	1.15	0.72	0.62	0.19
Diluted earnings per share	1.24	1.14	0.72	0.62	0.19
Dividends per ordinary share (paid in the period)7	0.82	0.53	0.27	0.22	—
	%	%	%	%	%
Dividend payout ratio8	50	50	44	40	79
Post-tax return on average total assets	0.8	0.8	0.5	0.5	0.2
Return on average ordinary shareholders’ equity	13.6	13.6	9.0	7.1	2.3
Return on average tangible equity	14.6	14.6	10.0	8.3	3.1
Effective tax rate	22.6	19.1	4.7	22.3	30.5

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 and 2020 are prepared on an IFRS 4 basis.

2 Includes a $255m gain (2023: $315m loss) on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada and a $114m mark-

to-market gain (2023:nil) on interest rate hedging of the portfolio of retained loans post sale of our retail banking business in France.

3 Gain recognised in respect of the acquisition of SVB UK.

4 This line item has been updated to include amounts from Other operating income relating to all sales of business operations; in the 2023 Annual Report and Accounts,

this line item only reflected the disposal of our France retail banking business. The amount in 2024 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 $255m 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.

5Other operating (expense)/income includes a loss on net monetary positions of $1,187m (2023: $1,667m; 2022: $678m) as a result of applying IAS 29 ‘Financial

Reporting in Hyperinflationary Economies’.

6Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.

7Includes dividend paid during the period, which consisted of a fourth interim dividend of $0.31 per ordinary share in respect of the financial year ended 31 December 2023

paid in April 2024 and the first, second and third interim dividends of $0.30 per ordinary share in respect of the financial year ending 31 December 2024. In addition, a

special dividend of $0.21 per ordinary share from the Canada sale proceeds was paid in June 2024 along with the first interim dividend.

8In 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 and 2020.

Unless stated otherwise, all tables are presented on a reported basis.

For a summary of our financial performance in 2024, see page 27.

For further financial performance data for each global business and legal entity, see pages 107 to 111 and 119 to 129 respectively. The global business

segmental results are presented on a constant currency basis in accordance with IFRS 8 ‘Operating Segments’ as set out in Note 10: Segmental analysis on

page 405.

88	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

Income statement commentary

The following commentary compares Group financial performance for the year ended 2024 with 2023, unless otherwise stated.

For commentary on the Group's financial performance for the year ended 31 December 2023 compared with the year ended 31 December

2022, please see pages 103 to 106 of the annual report of HSBC Holdings plc on Form 20-F for the year ended 31 December 2023.

For commentary on the performance of our global businesses for the year ended 31 December 2024, see pages 29 to 35 of the annual report

of HSBC Holdings plc on Form 20-F for the year ended 31 December 2024. For commentary on the performance of our global businesses for

the year ended 31 December 2023 compared with the year ended 31 December 2022, see pages 30 to 36 of the annual report of HSBC

Holdings plc on Form 20-F for the year ended 31 December 2023.

Net interest income

	Year ended			Quarter ended
	31 Dec 2024	31 Dec 2023	31 Dec 2022	31 Dec 2024	30 Sep 2024	31 Dec 2023
	$m	$m	$m	$m	$m	$m
Interest income	108,631	100,868	52,826	26,004	27,255	26,714
Interest expense	(75,898)	(65,072)	(22,449)	(17,819)	(19,618)	(18,430)
Net interest income	32,733	35,796	30,377	8,185	7,637	8,284
Average interest-earning assets	2,099,285	2,161,746	2,143,758	2,113,276	2,088,100	2,164,324
	%	%	%	%	%	%
Gross interest yield1	5.17	4.67	2.46	4.90	5.19	4.90
Less: gross interest payable1	(3.95)	(3.47)	(1.24)	(3.60)	(4.07)	(3.83)
Net interest spread2	1.22	1.20	1.22	1.30	1.12	1.07
Net interest margin3	1.56	1.66	1.42	1.54	1.46	1.52

1Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’). Gross interest payable is the average annualised

interest cost as a percentage 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
	2024			2023			2022
	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	349,517	14,727	4.21	403,674	14,770	3.66	445,659	5,577	1.25
Loans and advances to customers	949,825	49,879	5.25	957,717	47,673	4.98	1,022,320	32,543	3.18
Reverse repurchase agreements – non-trading1	238,694	17,721	7.42	240,263	14,391	5.99	231,058	4,886	2.11
Financial investments	470,182	20,587	4.38	407,363	16,858	4.14	372,702	7,704	2.07
Other interest-earning assets	91,067	5,717	6.28	152,729	7,176	4.70	72,019	2,116	2.94
Total interest-earning assets	2,099,285	108,631	5.17	2,161,746	100,868	4.67	2,143,758	52,826	2.46
Summary of interest expense by type of liability
---	---	---	---	---	---	---	---	---	---
	2024			2023			2022
	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	66,405	2,930	4.41	60,392	2,401	3.98	75,739	770	1.02
Customer accounts3	1,385,840	40,173	2.90	1,334,803	34,162	2.56	1,342,342	10,903	0.81
Repurchase agreements – non-trading1	187,337	15,617	8.34	146,605	10,858	7.41	118,308	3,085	2.61
Debt securities in issue – non-trading	196,440	12,806	6.52	184,867	11,223	6.07	179,775	5,607	3.12
Other interest-bearing liabilities	84,773	4,372	5.16	146,216	6,428	4.40	87,965	2,084	2.37
Total interest-bearing liabilities	1,920,795	75,898	3.95	1,872,883	65,072	3.47	1,804,129	22,449	1.24

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 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

HSBC Holdings plc Annual Report on Form 20-F	89

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

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 net interest income
	Year ended		Quarter ended
	31 Dec 2024	31 Dec 2023	31 Dec 2024	30 Sep 2024	31 Dec 2023
	$m	$m	$m	$m	$m
Net interest income	32,733	35,796	8,185	7,637	8,284
Banking book funding costs used to generate ‘net income from financial instruments<br><br>held for trading or managed on a fair value basis’	11,434	8,744	2,874	3,051	2,542
Third-party net interest income from insurance	(429)	(445)	(109)	(104)	(109)
Banking net interest income	43,738	44,095	10,950	10,584	10,717
– of which:
The Hongkong and Shanghai Banking Corporation Limited	21,691	22,024	5,464	5,475	5,566
HSBC UK Bank plc	10,368	9,684	2,663	2,643	2,455
HSBC Bank plc	4,630	4,596	1,182	1,152	1,205

Banking net interest income is an alternative performance measure,

and is defined as Group reported 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 GBM 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 costs 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 $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 GBM. 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. On a

constant currency basis, net fee income was $0.6bn higher, driven by

an increase in WPB, while a smaller rise in GBM was offset by a

reduction in CMB.

In WPB, net fee income increased by $0.6bn. The rise was mainly

due to higher income from unit trusts, broking income and funds

under management, including in Hong Kong. This reflected stronger

equity markets and improved customer sentiment. Cards income

grew, including in our main entity in Mexico, as customer spending

increased, as well as in our legal entities in Asia, which mitigated the

reduction from the disposal of our banking business in Canada. The

growth in cards activity resulted in a corresponding rise in fee

expense.

In GBM, net fee income was stable, including an adverse impact of

foreign currency translation of $42m. There was higher broking and

underwriting income in our main entity in Europe, although this was

partly offset by a rise in associated fee expense. In addition, there

was higher fee expense relating to broking and custody, as well as

intercompany fee expenses incurred on behalf of other global

businesses.

In CMB, net fee income decreased by $0.1bn driven by lower fees

from credit facilities, notably due to the disposal of our banking

operations in Canada. This reduction was partly offset by an increase

in fee income from GBM products sold to CMB customers.

90	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

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 Markets and Securities Services in GBM. A component of funding

costs incurred to generate this income are reported in NII, and these

increased by $2.7bn, compared with 2023.

In WPB, 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 income 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 reduction 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.

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.

Change in expected credit losses and other credit impairment

charges (‘ECL’) were a charge of $3.4bn, stable compared with 2023.

ECL charges in CMB were $1.8bn in 2024 and in GBM charges were

$0.2bn. This 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 CMB in 2024

included a charge related to a single exposure in the UK, while

charges in HSBC UK reduced compared with 2023. In GBM, charges

in 2024 also benefited from a release of stage 3 allowances in HSBC

Bank plc related to a single exposure.

In WPB, ECL charges were $1.3bn. These primarily related to our

legal entity in Mexico, reflecting growth in our unsecured lending

portfolio and unemployment trends, and also in Hong Kong.

For further details on the calculation of ECL, including the

measurement uncertainties and significant judgements applied to

such calculations, the impact of the economic scenarios and

management judgemental adjustments, see pages 178 to 191.

Operating expenses
	Year ended
	2024	2023	2022
	$m	$m	$m
Gross employee compensation and benefits	20,153	19,623	19,288
Capitalised wages and salaries	(1,688)	(1,403)	(1,285)
Property and equipment	4,786	4,285	4,949
Amortisation and impairment of intangibles	2,235	1,827	1,701
UK bank levy	249	339	13
Legal proceedings and regulatory matters	145	188	246
Other operating expenses1	7,163	7,211	7,789
Reported operating expenses	33,043	32,070	32,701
Currency translation		(576)	(472)
Constant currency operating expenses	33,043	31,494	32,229

1Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel.

Staff numbers (full-time equivalents)1
	2024	2023	2022
Global businesses
Wealth and Personal Banking	119,791	128,399	128,764
Commercial Banking	45,190	45,884	43,640
Global Banking and Markets	45,983	46,241	46,435
Corporate Centre	340	337	360
At 31 Dec	211,304	220,861	219,199

1Represents the number of full-time equivalent people with contracts of service with the Group who are being paid at the reporting date.

HSBC Holdings plc Annual Report on Form 20-F	91

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.

For a reconciliation of target basis operating expense to reported operating

expenses see page 133.

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.

For further details of our impairment review process, see Note 18: Interests

in associates and joint ventures on page 423.

Tax expense
	2024	2023
	$m	$m
Tax (charge)/credit
Reported	(7,310)	(5,789)
Currency translation	—	222
Constant currency tax (charge)/credit	(7,310)	(5,567)	Notable items
---	---	---
	2024	2023
	$m	$m
Tax
Tax (charge)/credit on notable items	108	207
Uncertain tax positions	—	427

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.

Return on average tangible equity

In 2024, RoTE was 14.6%, compared with 14.6% in 2023. RoTE

excluding notables was 16.0% in 2024, compared with 16.2% in

2023.

92	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

Consolidated balance sheet

Five-year summary consolidated balance sheet
	2024	2023	20221	2021	2020
	$m	$m	$m	$m	$m
Assets
Cash and balances at central banks	267,674	285,868	327,002	403,018	304,481
Trading assets	314,842	289,159	218,093	248,842	231,990
Financial assets designated and otherwise mandatorily measured at fair value<br><br>through profit or loss	115,769	110,643	100,101	49,804	45,553
Derivatives	268,637	229,714	284,159	196,882	307,726
Loans and advances to banks	102,039	112,902	104,475	83,136	81,616
Loans and advances to customers	930,658	938,535	923,561	1,045,814	1,037,987
Reverse repurchase agreements – non-trading	252,549	252,217	253,754	241,648	230,628
Financial investments	493,166	442,763	364,726	446,274	490,693
Assets held for sale	27,234	114,134	115,919	3,411	299
Other assets	244,480	262,742	257,496	239,110	253,191
Total assets at 31 Dec	3,017,048	3,038,677	2,949,286	2,957,939	2,984,164
Liabilities
Deposits by banks	73,997	73,163	66,722	101,152	82,080
Customer accounts	1,654,955	1,611,647	1,570,303	1,710,574	1,642,780
Repurchase agreements – non-trading	180,880	172,100	127,747	126,670	111,901
Trading liabilities	65,982	73,150	72,353	84,904	75,266
Financial liabilities designated at fair value	138,727	141,426	127,321	145,502	157,439
Derivatives	264,448	234,772	285,762	191,064	303,001
Debt securities in issue	105,785	93,917	78,149	78,557	95,492
Insurance contract liabilities	107,629	120,851	108,816	112,745	107,191
Liabilities of disposal groups held for sale	29,011	108,406	114,597	9,005	—
Other liabilities	203,361	216,635	212,319	190,989	204,019
Total liabilities at 31 Dec	2,824,775	2,846,067	2,764,089	2,751,162	2,779,169
Equity
Total shareholders’ equity	184,973	185,329	177,833	198,250	196,443
Non-controlling interests	7,300	7,281	7,364	8,527	8,552
Total equity at 31 Dec	192,273	192,610	185,197	206,777	204,995
Total liabilities and equity at 31 Dec	3,017,048	3,038,677	2,949,286	2,957,939	2,984,164

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 and 2020 are prepared on an IFRS 4 basis.

A more detailed consolidated balance sheet is contained in the financial statements on page 365.

Five-year selected financial information
	2023	20221	2021	2020
	$m	$m	$m	$m
Called up share capital	9,631	10,147	10,316	10,347
Capital resources2	171,204	162,423	177,786	184,423
Undated subordinated loan capital	18	1,967	1,968	1,970
Preferred securities and dated subordinated loan capital3	36,413	29,921	28,568	30,721
Risk-weighted assets	854,114	839,720	838,263	857,520
Total shareholders’ equity	185,329	177,833	198,250	196,443
Less: preference shares and other equity instruments	(17,719)	(19,746)	(22,414)	(22,414)
Total ordinary shareholders’ equity	167,610	158,087	175,836	174,029
Less: goodwill and intangible assets (net of tax)	(11,900)	(11,160)	(17,643)	(17,606)
Tangible ordinary shareholders’ equity	155,710	146,927	158,193	156,423
Financial statistics
Loans and advances to customers as a percentage of customer accounts	58.2%	58.8%	61.1%	63.2%
Average total shareholders’ equity to average total assets	6.01%	5.97%	6.62%	6.46%
Net asset value per ordinary share at year-end ()4	8.82	8.01	8.76	8.62
Tangible net asset value per ordinary share at year-end ()4	8.19	7.44	7.88	7.75
Tangible net asset value per fully diluted share at year-end ()	8.14	7.39	7.84	7.72
Number of 0.50 ordinary shares in issue (millions)	19,263	20,294	20,632	20,694
Basic number of 0.50 ordinary shares outstanding, after deducting own shares held (millions)	19,006	19,739	20,073	20,184
Basic number of 0.50 ordinary shares outstanding and dilutive potential ordinary shares, after deducting own shares held (millions)	19,135	19,876	20,189	20,272
Closing foreign exchange translation rates to :
1:	0.784	0.830	0.739	0.732
1:	0.903	0.937	0.880	0.816

All values are in US Dollars.

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 and 2020 are prepared on an IFRS 4 basis.

2Capital resources are regulatory total capital, the calculation of which is set out on page 234.

3 Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 438.

4 For the definition, see page 130.

HSBC Holdings plc Annual Report on Form 20-F	93
Combined view of customer lending and customer deposits1
---	---	---
	2024	2023
	$m	$m
Loans and advances to customers	930,658	938,535
Loans and advances to customers of disposal groups reported in ‘Assets held for sale’	965	73,285
– banking business in Canada	—	56,129
– retail banking operations in France	—	16,902
– private banking business in Germany	309	—
– business in South Africa	656	—
– other	—	254
Non-current assets held for sale	12	92
Combined customer lending	931,635	1,011,912
Currency translation	—	(27,137)
Combined customer lending at constant currency	931,635	984,775
Customer accounts	1,654,955	1,611,647
Customer accounts reported in ‘Liabilities of disposal groups held for sale’	5,399	85,950
– banking business in Canada	—	63,001
– retail banking operations in France	—	22,307
– private banking business in Germany	2,085	—
– business in South Africa	3,294	—
– other	20	642
Combined customer deposits	1,660,354	1,697,597
Currency translation	—	(38,656)
Combined customer deposits at constant currency	1,660,354	1,658,941

1On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to sell its business in Argentina to Grupo Financiero Galicia (‘Galicia‘). The sale was

completed on 6 December 2024, so is not included in the table above.

Balance sheet commentary compared with 31 December 2023

At 31 December 2024, total assets of $3.0tn were $22bn or 1% lower

on a reported basis and increased by $45bn or 1% on a constant

currency basis.

Reported loans and advances to customers as a percentage of

customer accounts was 56.2% compared with 58.2% at

31 December 2023. The movement in this ratio reflected a higher

growth in customer accounts than in lending.

Assets

Cash and balances at central banks decreased by $18bn or 6%,

which included an $11bn adverse impact of foreign currency

translation differences. The decrease was mainly in HSBC UK,

reflecting a reduction in repurchase agreements, as well as an

increase in the deployment of our cash surplus into financial

investments. Cash also decreased in our legal entities in the US to a

partial redeployment of surplus liquidity to reverse repurchase

agreements, and in Hong Kong due to lower balances maintained for

faster payment system flow. This was partly offset by increases in

HSBC Bank plc from an increase in deposit bank balances and

issuances of new commercial paper and certificates of deposit.

Trading assets increased by $26bn or 9%, mainly as we captured

increased client activity in equity and debt securities, particularly in

our legal entity in Hong Kong and in HSBC Bank plc. The increase in

trading assets also reflected the use of surplus liquidity to fund

trading activities given the subdued demand for customer lending.

Derivative assets increased by $39bn or 17%, reflecting an increase

in foreign exchange contracts, mainly in HSBC Bank plc and our legal

entities in Asia, as a result of foreign exchange rate movements. The

increase in derivative assets was consistent with the increase in

derivative liabilities, as the underlying risk is broadly matched.

Loans and advances to customers of $931bn decreased by $8bn or

1% on a reported basis. This included an adverse impact of foreign

currency translation differences of $21bn. Loans and advances to

customers are net of allowances for ECL.

On a constant currency basis, loans and advances to customers

increased by $14bn, reflecting the following movements.

In WPB, customer lending increased by $2bn, reflecting growth in

mortgage balances, including in our main legal entities in the UK (up

$5bn) and the US (up $3bn). There was also growth in lending in

Private Banking (up $3bn) and in unsecured lending (up $1bn).

These increases were partly offset by a $7.4bn (€7.1bn) transfer to

Corporate Centre of a portfolio of home and certain other loans

retained following the sale of our retail banking operations in France.

In CMB, customer lending was $6bn higher, reflecting increases in

our legal entities in mainland China (up $2bn), India (up $2bn), and

Mexico (up $1bn). There were also increases in HSBC UK (up $2bn)

and HSBC Bank plc (up $1bn) from higher revolving credit facility

balances and term lending. These increases were partly offset by a

reduction in lending balances in our main legal entity in Hong Kong

(down $3bn) due to lower market wide loan demand and competitive

pricing.

In GBM, customer lending balances were broadly stable. There was a

decrease in lending balances in our main legal entity in Hong Kong

(down $6bn) due to muted client demand. The reduction was broadly

offset by growth in our legal entity in Singapore (up $3bn) reflecting

higher overdraft balances, and in our main legal entity in Australia (up

$2bn) from higher term lending balances.

In Corporate Centre, the increase in customer balances of $7bn

reflected the transfer of balances from WPB, mentioned above.

Financial investments increased by $50bn or 11%, mainly in our

main legal entities in Hong Kong and Singapore as well as in HSBC

UK and HSBC Bank plc from the purchase of debt securities, treasury

and other eligible bills, as we redeployed our commercial surplus to

benefit from higher yield curves and enhance our hedging activities on

net interest income. The increase was across both debt instruments

held at fair value through other comprehensive income and

instruments held at amortised cost.

Assets held for sale decreased by $87bn or 76% following the

completion of the sales of our retail banking operations in France and

our banking operations in Canada in 2024.

Other assets decreased by $18bn or 7% primarily reflecting a

reduction in settlement accounts balances, including in HSBC Bank

plc as well as in our legal entities in the US and Hong Kong.

94	HSBC Holdings plc Annual Report on Form 20-F

Financial summary

Liabilities

Customer accounts of $1.7tn increased by $43bn or 3% on a

reported basis. This included an adverse impact of foreign currency

translation differences of $32bn.

On a constant currency basis, customer accounts increased by $75bn,

reflecting the following movements.

In WPB, customer accounts grew by $31bn, reflecting higher interest-

bearing savings and time deposit balances due to strong deposit

inflow as interest rates remained high. The increase in customer

accounts included growth in our main legal entities in Asia (up $30bn)

and in HSBC UK (up $6bn).

In CMB, customer accounts increased by $25bn, primarily in our legal

entities in Asia (up $12bn), including in Hong Kong (up $8bn) due to an

increase in term deposits and in mainland China (up $3bn) due to an

increase in current and savings accounts. Balances also increased in

HSBC Bank plc (up $9bn) driven by organic growth from existing

customers as well as new to bank customers, and in our main legal

entity in Mexico (up $3bn).

In GBM, customer accounts increased by $20bn, due to higher

balances in our legal entities in Asia (up $9bn) supported by term

deposit campaigns, and in HSBC Bank plc (up $8bn) driven by an

increase in short-term money market account balances. Balances also

rose in our main legal entity in the Middle East (up $3bn), including in

term deposits and current accounts.

Debt securities in issue increased by $12bn or 13%, primarily in

HSBC Bank plc mainly driven by new commercial paper and

certificates of deposit issued to meet liquidity and funding

requirements.

Derivative liabilities increased by $30bn or 13%, which is consistent

with the increase in derivative assets, since the underlying risk is

broadly matched.

Liabilities of disposal groups held for sale decreased by $79bn or

73% following the completion of the sales of our retail banking

operations in France and our banking operations in Canada during

2024.

Other liabilities decreased by $13bn or 6%, including from a $9bn

reduction in settlement account balances in our main legal entity in

the US.

Equity

Total shareholders’ equity, including non-controlling interests, of

$192bn was stable compared with 31 December 2023.

Shareholders’ equity was increased by profits generated of $24bn and

net gains through other comprehensive income (‘OCI’) of $2bn. These

increases were broadly offset by the impact of dividends paid of

$16bn, and the impact of our $11bn share buy-back activities in 2024.

The net gains through OCI of $2bn included a favourable movement

of $6bn due to the recycling of foreign exchange and other reserves

to the income statement, primarily relating to the completion of

disposals in Argentina and Canada, as well as a favourable movement

of $1bn from the effects of hyperinflation. These impacts were partly

offset by $5bn of exchange differences.

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 2024, we had recognised a pre-tax cumulative

unrealised loss reserve through other comprehensive income of

$3.8bn related to these hold-to-collect-and-sell positions, excluding

investments held in our insurance business. This reflected a $0.1bn

pre-tax gain in 2024, inclusive of movements on related fair value

hedges. In 2023, we recognised a loss of $1.0bn in the income

statement in relation to Treasury repositioning and risk management

actions in this portfolio, compared with minimal disposal losses in

Overall, the Group is positively exposed to rising interest rates

through NII, although there is an adverse impact on our capital base in

the early stages of a rising interest rate environment due to the fair

value of hold-to-collect-and-sell instruments. Over time, these adverse

movements will unwind as the instruments reach maturity, although

not all will necessarily be held to maturity, or as interest rates begin to

fall.

We also hold a portfolio of financial investments measured at

amortised cost, which are classified as hold-to-collect. At

31 December 2024, there was a cumulative unrecognised loss of

$2.9bn. This included an unrealised loss of $2.2bn that related to debt

instruments held to manage our interest rate exposure, representing

a deterioration of $1.2bn during 2024.

Customer accounts by country/territory
	2024	2023
	$m	$m
Hong Kong	575,141	543,504
UK	524,251	508,181
US	99,278	99,607
Singapore	76,737	73,547
Mainland China	63,169	56,006
France	40,384	42,666
Australia	31,951	32,071
Germany1	23,564	30,641
Mexico	27,525	29,423
UAE	28,008	24,882
India	27,199	24,377
Taiwan	17,067	16,949
Malaysia	17,038	15,983
Egypt	4,137	5,858
Indonesia	5,558	5,599
Türkiye	3,489	3,510
Other1	90,459	98,843
At 31 Dec	1,654,955	1,611,647

1At 31 December 2024, customer accounts of $5bn 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 $3bn and $2bn belongs to the planned sale of our South Africa business and planned sale of our private banking business in

Germany, respectively. Refer to Note 23 on page 433 for further details.

HSBC Holdings plc Annual Report on Form 20-F	95
Loans and advances, deposits by currency
---	---	---	---	---	---	---	---
	At
	31 Dec 2024
$m	USD	GBP	HKD	EUR	CNY	Others1	Total
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
	31 Dec 2023
Loans and advances to banks	33,231	15,632	7,106	4,688	8,772	43,473	112,902
Loans and advances to customers	170,274	284,261	213,079	68,655	49,594	152,672	938,535
Total loans and advances	203,505	299,893	220,185	73,343	58,366	196,145	1,051,437
Deposits by banks	28,744	18,231	2,597	6,997	4,517	12,077	73,163
Customer accounts	441,967	423,725	305,520	128,444	63,535	248,456	1,611,647
Total deposits	470,711	441,956	308,117	135,441	68,052	260,533	1,684,810

1‘Others’ includes items with no currency information available of $878m for loans to banks (2023: $1,592m), $941m for loans to customers (2023: $1,904m), nil

for deposits by banks (2023: $11m) and $6m for customer accounts (2023: $8m).

Risk-weighted assets

Risk-weighted assets (‘RWAs‘) decreased by $15.8bn during the year,

primarily due to strategic disposals of $47.8bn, a decrease of $22.2bn

from foreign currency translation differences and a $8.9bn reduction

from methodology and policy changes, mainly driven by a $7.5bn fall

due to regulatory changes related to the risk-weighting of residential

mortgages in Hong Kong. These were offset by the increase of

$63.1bn RWAs, reflected in the following movements:

–a $49.4bn increase in asset size, which was in part attributed to a

$14.6bn rise in operational risk, driven by an increase in average

income. Further increases were due to corporate lending growth,

largely in HSBC UK Bank plc and in SAB, higher sovereign

exposures in Other trading entities and Asia, and retail mortgage

growth in the US and HSBC UK Bank plc; and

–a $7.4bn increase mainly following a revision to the definition of

default in our probability of default (‘PD‘) models for exposures to

financial institutions and post-model adjustments in Hong Kong,

and a $6.3bn increase from credit risk migrations in Asia, including

in the Hong Kong commercial real estate sector.

In January 2025, the PRA announced the delay of Basel 3.1

implementation to 1 January 2027 pending US developments. The

near-final rules released in September 2024 are now subject to a

three-year transitional provision, ensuring that the date for full

implementation remains 1 January 2030. We expect that the impact

on our CET1 ratio will be a modest benefit.

RWAs by currency
	At
	31 Dec 2024
$m	USD	GBP	HKD	EUR	CNY	Others	Total
RWAs1	205,645	165,684	136,001	67,440	56,561	206,923	838,254
	31 Dec 2023
RWAs1	202,697	155,231	135,701	69,996	57,907	232,582	854,114

1 RWAs include credit risk, market risk and operational risk RWAs.

96	HSBC Holdings plc Annual Report on Form 20-F

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
	2024			2023
	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)	2,099,285	108,631	5.17	2,161,746	100,868	4.67
Trading assets and financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss	244,686	7,943	3.25	215,435	6,598	3.06
Expected credit losses provision	(10,633)	N/A	N/A	(11,603)	N/A	N/A
Non-interest-earning assets	729,136	N/A	N/A	694,309	N/A	N/A
Total assets and interest income	3,062,474	116,574	3.81	3,059,887	107,466	3.51
Average yield on all interest-earning assets			4.97			4.52
Short-term funds and loans and advances to banks
HSBC Bank plc	151,675	5,993	3.95	174,004	6,201	3.56
HSBC UK Bank plc	76,705	3,255	4.24	100,780	3,486	3.46
The Hongkong and Shanghai Banking Corporation Limited	86,976	3,250	3.74	88,089	3,078	3.49
HSBC Bank Middle East Limited	6,960	418	6.01	6,289	354	5.63
HSBC North America Holdings Inc.	29,434	1,275	4.33	33,034	1,136	3.44
HSBC Bank Canada	13	—	—	102	2	1.96
Grupo Financiero HSBC, S.A. de C.V.	3,037	298	9.81	2,609	267	10.23
Other trading entities	5,992	812	13.55	12,752	807	6.33
Holding companies, shared service centres and intra-group eliminations	(11,275)	(574)	5.09	(13,985)	(561)	4.01
At 31 Dec	349,517	14,727	4.21	403,674	14,770	3.66
Loans and advances to customers
---	---	---	---	---	---	---
HSBC Bank plc	110,123	5,740	5.21	109,576	4,989	4.55
HSBC UK Bank plc	275,614	13,176	4.78	261,516	11,219	4.29
The Hongkong and Shanghai Banking Corporation Limited	455,258	21,804	4.79	467,179	21,821	4.67
HSBC Bank Middle East Limited	20,558	1,313	6.39	19,769	1,229	6.22
HSBC North America Holdings Inc.	56,149	3,403	6.06	54,129	3,175	5.87
HSBC Bank Canada	—	—	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	26,704	3,631	13.60	24,844	3,406	13.71
Other trading entities	5,642	918	16.27	21,083	2,338	11.09
Holding companies, shared service centres and intra-group eliminations	(223)	(106)	47.53	(379)	(504)	132.98
At 31 Dec	949,825	49,879	5.25	957,717	47,673	4.98
Reverse repurchase agreements – banks1
HSBC Bank plc	38,819	3,293	8.48	53,042	3,177	5.99
HSBC UK Bank plc	2,401	109	4.54	1,700	69	4.06
The Hongkong and Shanghai Banking Corporation Limited	57,293	2,384	4.16	65,387	2,437	3.73
HSBC Bank Middle East Limited	4,195	243	5.79	3,105	171	5.51
HSBC North America Holdings Inc.	12,262	840	6.85	8,859	645	7.28
HSBC Bank Canada	—	—	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	2,599	281	10.81	2,419	254	10.50
Other trading entities	2,182	363	16.64	3,825	604	15.79
Holding companies, shared service centres and intra-group eliminations	(15,962)	(833)	5.22	(25,187)	(871)	3.46
At 31 Dec	103,789	6,680	6.44	113,150	6,486	5.73
HSBC Holdings plc Annual Report on Form 20-F	97
---	---
Assets (continued)
---	---	---	---	---	---	---
	2024			2023
	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	46,092	4,178	9.06	36,414	2,707	7.43
HSBC UK Bank plc	7,832	478	6.10	5,841	327	5.60
The Hongkong and Shanghai Banking Corporation Limited	41,295	1,368	3.31	49,010	970	1.98
HSBC Bank Middle East Limited	2,644	135	5.11	2,418	113	4.67
HSBC North America Holdings Inc.	42,410	4,851	11.44	34,842	3,756	10.78
HSBC Bank Canada	2	—	—	36	2	5.56
Grupo Financiero HSBC, S.A. de C.V.	280	32	11.43	269	31	11.52
Other trading entities	—	—	—	—	—	—
Holding companies, shared service centres and intra-group eliminations	(5,650)	(1)	0.02	(1,717)	(1)	0.06
At 31 Dec	134,905	11,041	8.18	127,113	7,905	6.22
Financial investments
HSBC Bank plc	70,702	3,013	4.26	51,179	1,866	3.65
HSBC UK Bank plc	41,036	1,845	4.50	27,025	891	3.30
The Hongkong and Shanghai Banking Corporation Limited	274,924	11,023	4.01	241,467	8,664	3.59
HSBC Bank Middle East Limited	11,690	565	4.83	10,682	451	4.22
HSBC North America Holdings Inc.	44,044	1,945	4.42	39,961	1,634	4.09
HSBC Bank Canada	—	—	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	5,150	481	9.34	4,050	291	7.19
Other trading entities	3,375	802	23.76	11,091	1,908	17.20
Holding companies, shared service centres and intra-group eliminations	19,261	913	4.74	21,908	1,153	5.26
At 31 Dec	470,182	20,587	4.38	407,363	16,858	4.14
Other interest-earning assets
---	---	---	---	---	---	---
HSBC Bank plc	59,244	2,587	4.37	58,744	3,197	5.44
HSBC UK Bank plc	252	35	13.89	1,304	79	6.06
The Hongkong and Shanghai Banking Corporation Limited	10,747	653	6.08	11,182	744	6.65
HSBC Bank Middle East Limited	(178)	1	(0.56)	583	2	0.34
HSBC North America Holdings Inc.	3,726	195	5.23	3,720	233	6.26
HSBC Bank Canada	19,475	984	5.05	82,832	4,023	4.86
Grupo Financiero HSBC, S.A. de C.V.	315	15	4.76	650	24	3.69
Other trading entities	3,551	1,922	54.13	104	1,853	1,781.73
Holding companies, shared service centres and intra-group eliminations	(6,065)	(675)	11.13	(6,390)	(2,979)	46.62
At 31 Dec	91,067	5,717	6.28	152,729	7,176	4.70
Total interest-earning assets
HSBC Bank plc	476,655	24,804	5.20	482,959	22,137	4.58
HSBC UK Bank plc	403,840	18,898	4.68	398,166	16,071	4.04
The Hongkong and Shanghai Banking Corporation Limited	926,493	40,482	4.37	922,314	37,714	4.09
HSBC Bank Middle East Limited	45,869	2,675	5.83	42,846	2,320	5.41
HSBC North America Holdings Inc.	188,025	12,509	6.65	174,545	10,579	6.06
HSBC Bank Canada	19,490	984	5.05	82,970	4,027	4.85
Grupo Financiero HSBC, S.A. de C.V.	38,085	4,738	12.44	34,841	4,273	12.26
Other trading entities	20,742	4,817	23.22	48,855	7,510	15.37
Holding companies, shared service centres and intra-group eliminations	(19,914)	(1,276)	6.41	(25,750)	(3,763)	14.61
At 31 Dec	2,099,285	108,631	5.17	2,161,746	100,868	4.67

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.

Equity and liabilities
	2024			2023
	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)	1,920,795	75,898	3.95	1,872,883	65,072	3.47
Trading liabilities and financial liabilities designated at fair value<br><br>(excluding own debt issued)	143,636	5,271	3.67	126,969	4,960	3.91
Non-interest bearing current accounts	220,291	N/A	N/A	253,741	N/A	N/A
Total equity and other non-interest bearing liabilities	777,753	N/A	N/A	806,294	N/A	N/A
Total equity and liabilities	3,062,475	81,169	2.65	3,059,887	70,032	2.29
Average cost on all interest-bearing liabilities			3.93			3.50
98	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial summary

Equity and liabilities (continued)
	2024			2023
	Average<br><br>balance	Interest<br><br>expense	Cost	Average<br><br>balance	Interest<br><br>expense	Cost
	$m	$m	%	$m	$m	%
Deposits by banks1
HSBC Bank plc	33,041	1,376	4.16	29,222	1,137	3.89
HSBC UK Bank plc	13,265	743	5.60	12,917	616	4.77
The Hongkong and Shanghai Banking Corporation Limited	24,561	611	2.49	22,416	507	2.26
HSBC Bank Middle East Limited	5,870	303	5.16	4,253	200	4.70
HSBC North America Holdings Inc.	9,012	329	3.65	8,150	315	3.87
HSBC Bank Canada	27	—	—	270	6	2.22
Grupo Financiero HSBC, S.A. de C.V.	648	74	11.42	540	101	18.70
Other trading entities	890	46	5.17	3,245	31	0.96
Holding companies, shared service centres and intra-group eliminations	(20,909)	(552)	2.64	(20,621)	(512)	2.48
At 31 Dec	66,405	2,930	4.41	60,392	2,401	3.98
Debt Securities in issue – non trading
HSBC Bank plc	47,684	2,536	5.32	38,067	1,887	4.96
HSBC UK Bank plc	22,042	1,357	6.16	18,285	759	4.15
The Hongkong and Shanghai Banking Corporation Limited	45,303	2,772	6.12	48,728	2,816	5.78
HSBC Bank Middle East Limited	1,668	67	4.02	1,970	73	3.71
HSBC North America Holdings Inc.	26,551	1,694	6.38	23,921	1,505	6.29
HSBC Bank Canada	181	12	6.63	741	51	6.88
Grupo Financiero HSBC, S.A. de C.V.	3,429	353	10.29	1,696	92	5.42
Other trading entities	1,608	142	8.83	1,643	155	9.43
Holding companies, shared service centres and intra-group eliminations	47,974	3,873	8.07	49,816	3,885	7.80
At 31 Dec	196,440	12,806	6.52	184,867	11,223	6.07
Customer accounts2
HSBC Bank plc	258,026	10,753	4.17	230,846	8,511	3.69
HSBC UK Bank plc	279,227	6,156	2.20	269,034	4,532	1.68
The Hongkong and Shanghai Banking Corporation Limited	738,028	17,654	2.39	702,788	14,523	2.07
HSBC Bank Middle East Limited	14,725	520	3.53	12,996	382	2.94
HSBC North America Holdings Inc.	78,919	3,030	3.84	77,557	2,731	3.52
HSBC Bank Canada	—	—	—	1	—	—
Grupo Financiero HSBC, S.A. de C.V.	22,573	1,555	6.89	22,579	1,489	6.59
Other trading entities	7,123	1,012	14.21	28,887	2,396	8.29
Holding companies, shared service centres and intra-group eliminations	(12,781)	(507)	3.97	(9,885)	(402)	4.07
At 31 Dec	1,385,840	40,173	2.90	1,334,803	34,162	2.56
Repurchase agreements – with banks3
HSBC Bank plc	17,981	2,212	12.30	22,132	1,915	8.65
HSBC UK Bank plc	317	23	7.26	656	34	5.18
The Hongkong and Shanghai Banking Corporation Limited	60,491	2,640	4.36	43,153	1,368	3.17
HSBC Bank Middle East Limited	3,276	178	5.43	1,982	99	4.99
HSBC North America Holdings Inc.	10,110	655	6.48	5,542	444	8.01
HSBC Bank Canada	—	—	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	181	25	13.81	296	36	12.16
Other trading entities	304	43	14.14	737	114	15.47
Holding companies, shared service centres and intra-group eliminations	(18,373)	(881)	4.80	(24,798)	(1,009)	4.07
At 31 Dec	74,287	4,895	6.59	49,700	3,001	6.04
Repurchase agreements – with customers3
HSBC Bank plc	44,267	4,090	9.24	34,218	2,514	7.35
HSBC UK Bank plc	3,147	273	8.67	7,556	428	5.66
The Hongkong and Shanghai Banking Corporation Limited	22,262	1,108	4.98	22,496	994	4.42
HSBC Bank Middle East Limited	19	1	5.26	—	—	—
HSBC North America Holdings Inc.	42,071	4,821	11.46	31,161	3,538	11.35
HSBC Bank Canada	230	13	5.65	487	25	5.13
Grupo Financiero HSBC, S.A. de C.V.	3,850	415	10.78	3,429	382	11.14
Other trading entities	10	1	10.00	12	1	8.33
Holding companies, shared service centres and intra-group eliminations	(2,806)	—	—	(2,454)	(25)	1.02
At 31 Dec	113,050	10,722	9.48	96,905	7,857	8.11
HSBC Holdings plc Annual Report on Form 20-F	99
---	---
Equity and liabilities (continued)
---	---	---	---	---	---	---
	2024			2023
	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	54,689	2,582	4.72	65,326	3,498	5.35
HSBC UK Bank plc	426	16	3.76	607	19	3.13
The Hongkong and Shanghai Banking Corporation Limited	14,052	619	4.41	16,699	800	4.79
HSBC Bank Middle East Limited	274	14	5.11	92	14	15.22
HSBC North America Holdings Inc.	7,582	367	4.84	3,253	334	10.27
HSBC Bank Canada	16,483	659	4.00	70,814	2,519	3.56
Grupo Financiero HSBC, S.A. de C.V.	183	24	13.11	191	27	14.14
Other trading entities	2,882	798	27.69	271	1,046	385.98
Holding companies, shared service centres and intra-group eliminations	(11,798)	(707)	5.99	(11,037)	(1,829)	16.57
At 31 Dec	84,773	4,372	5.16	146,216	6,428	4.40
Total interest-bearing liabilities
HSBC Bank plc	455,688	23,549	5.17	419,811	19,462	4.64
HSBC UK Bank plc	318,424	8,568	2.69	309,055	6,388	2.07
The Hongkong and Shanghai Banking Corporation Limited	904,697	25,404	2.81	856,280	21,008	2.45
HSBC Bank Middle East Limited	25,832	1,083	4.19	21,293	768	3.61
HSBC North America Holdings Inc.	174,245	10,896	6.25	149,584	8,867	5.93
HSBC Bank Canada	16,921	684	4.04	72,313	2,601	3.60
Grupo Financiero HSBC, S.A. de C.V.	30,864	2,446	7.93	28,731	2,127	7.40
Other trading entities	12,817	2,042	15.93	34,795	3,743	10.76
Holding companies, shared service centres and intra-group eliminations	(18,693)	1,226	(6.56)	(18,979)	108	(0.57)
At 31 Dec	1,920,795	75,898	3.95	1,872,883	65,072	3.47

1This includes interest-bearing bank deposits only. See page 104 for an analysis of all bank deposits.

2This includes interest-bearing customer accounts only. See page 105 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
	2024	2023	2022
	%	%	%
HSBC Bank plc	0.26	0.55	0.51
HSBC UK Bank plc	2.56	2.43	1.89
The Hongkong and Shanghai Banking Corporation Limited	1.63	1.81	1.54
HSBC Bank Middle East Limited	3.47	3.62	2.38
HSBC North America Holdings Inc.	0.86	0.98	1.06
HSBC Bank Canada	1.54	1.54	1.49
Grupo Financiero HSBC, S.A. de C.V.	6.02	6.17	6.22
Other trading entities	13.37	7.71	4.49
At 31 Dec	1.56	1.66	1.42

1Net interest margin is calculated as net interest income divided by average interest-earning assets.

Distribution of average total assets
	2024	2023	2022
	%	%	%
HSBC Bank plc	30.6	30.0	29.0
HSBC UK Bank plc	13.7	14.0	14.0
The Hongkong and Shanghai Banking Corporation Limited	45.4	44.0	44.0
HSBC Bank Middle East Limited	1.9	2.0	2.0
HSBC North America Holdings Inc.	8.4	8.0	9.0
HSBC Bank Canada	0.7	3.0	3.0
Grupo Financiero HSBC, S.A. de C.V.	1.6	2.0	1.0
Other trading entities	1.1	2.0	2.0
Holding companies, shared service centres and intra-group eliminations	(3.4)	(5.0)	(4.0)
At 31 Dec	100.0	100.0	100.0
100	HSBC Holdings plc Annual Report on Form 20-F
---	---

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 2024 compared with 2023, and for

2023 compared with 2022. We isolate rate variances and allocate any change arising from both volume and rate/volume to volume.

Interest income
		Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023			Increase/(decrease)<br><br>in 2023 compared<br><br>with 2022
	2024	Volume	Rate	2023	Volume	Rate	2022
	$m	$m	$m	$m	$m	$m	$m
Short-term funds and loans and advances to banks
HSBC Bank plc	5,993	(887)	679	6,201	(149)	4,815	1,535
HSBC UK Bank plc	3,255	(1,017)	786	3,486	(694)	2,467	1,713
The Hongkong and Shanghai Banking Corporation Limited	3,250	(48)	220	3,078	(122)	1,934	1,266
HSBC Bank Middle East Limited	418	40	24	354	65	168	121
HSBC North America Holdings Inc.	1,275	(155)	294	1,136	(356)	966	526
HSBC Bank Canada	—	—	(2)	2	(119)	44	77
Grupo Financiero HSBC, S.A. de C.V.	298	42	(11)	267	29	76	162
Other trading entities	812	(916)	921	807	36	541	230
Holding companies, shared service centres and intra-group eliminations	(574)	138	(151)	(561)	17	(525)	(53)
At 31 Dec	14,727	(2,263)	2,220	14,770	(1,547)	10,740	5,577
Loans and advances to customers
HSBC Bank plc	5,740	28	723	4,989	(159)	2,557	2,591
HSBC UK Bank plc	13,176	676	1,281	11,219	526	3,593	7,100
The Hongkong and Shanghai Banking Corporation Limited	21,804	(578)	561	21,821	(1,052)	8,619	14,254
HSBC Bank Middle East Limited	1,313	50	34	1,229	(49)	497	781
HSBC North America Holdings Inc.	3,403	125	103	3,175	(98)	1,294	1,979
HSBC Bank Canada	—	—	—	—	(1,684)	—	1,684
Grupo Financiero HSBC, S.A. de C.V.	3,631	252	(27)	3,406	641	391	2,374
Other trading entities	918	(2,512)	1,092	2,338	(143)	653	1,828
Holding companies, shared service centres and intra-group eliminations	(106)	74	324	(504)	(40)	(416)	(48)
At 31 Dec	49,879	(380)	2,586	47,673	(3,272)	18,402	32,543
Reverse repurchase agreements – with banks
HSBC Bank plc	3,293	(1,205)	1,321	3,177	1,226	1,307	644
HSBC UK Bank plc	109	32	8	69	1	46	22
The Hongkong and Shanghai Banking Corporation Limited	2,384	(334)	281	2,437	64	1,153	1,220
HSBC Bank Middle East Limited	243	63	9	171	23	95	53
HSBC North America Holdings Inc.	840	233	(38)	645	(123)	560	208
HSBC Bank Canada	—	—	—	—	(19)	—	19
Grupo Financiero HSBC, S.A. de C.V.	281	20	7	254	83	36	135
Other trading entities	363	(274)	33	604	251	122	231
Holding companies, shared service centres and intra-group eliminations	(833)	481	(443)	(871)	(514)	(50)	(307)
At 31 Dec	6,680	(609)	803	6,486	381	3,880	2,225
Reverse repurchase agreements – with customers
HSBC Bank plc	4,178	877	594	2,707	(7)	1,813	901
HSBC UK Bank plc	478	122	29	327	(306)	494	139
The Hongkong and Shanghai Banking Corporation Limited	1,368	(254)	652	970	75	521	374
HSBC Bank Middle East Limited	135	11	11	113	26	50	37
HSBC North America Holdings Inc.	4,851	865	230	3,756	636	2,012	1,108
HSBC Bank Canada	—	—	(2)	2	(165)	78	89
Grupo Financiero HSBC, S.A. de C.V.	32	1	—	31	6	13	12
Other trading entities	—	—	—	—	—	—	—
Holding companies, shared service centres and intra-group eliminations	(1)	(1)	1	(1)	1	(3)	1
At 31 Dec	11,041	645	2,491	7,905	166	5,078	2,661
HSBC Holdings plc Annual Report on Form 20-F	101
---	---
Interest income (continued)
---	---	---	---	---	---	---	---
		Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023			Increase/(decrease)<br><br>in 2023 compared<br><br>with 2022
	2024	Volume	Rate	2023	Volume	Rate	2022
	$m	$m	$m	$m	$m	$m	$m
Financial investments
HSBC Bank plc	3,013	835	312	1,866	162	928	776
HSBC UK Bank plc	1,845	630	324	891	264	359	268
The Hongkong and Shanghai Banking Corporation Limited	11,023	1,345	1,014	8,664	1,172	4,026	3,466
HSBC Bank Middle East Limited	565	49	65	451	61	254	136
HSBC North America Holdings Inc.	1,945	179	132	1,634	106	692	836
HSBC Bank Canada	—	—	—	—	(252)	—	252
Grupo Financiero HSBC, S.A. de C.V.	481	103	87	291	8	42	241
Other trading entities	802	(1,834)	728	1,908	(329)	724	1,513
Holding companies, shared service centres and intra-group eliminations	913	(126)	(114)	1,153	38	899	216
At 31 Dec	20,587	2,751	978	16,858	1,439	7,715	7,704
Interest expense
---	---	---	---	---	---	---	---
		Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023			Increase/(decrease)<br><br>in 2023 compared<br><br>with 2022
	2024	Volume	Rate	2023	Volume	Rate	2022
	$m	$m	$m	$m	$m	$m	$m
Deposits by banks
HSBC Bank plc	1,376	160	79	1,137	(392)	1,294	235
HSBC UK Bank plc	743	20	107	616	8	414	194
The Hongkong and Shanghai Banking Corporation Limited	611	52	52	507	(145)	413	239
HSBC Bank Middle East Limited	303	83	20	200	89	19	92
HSBC North America Holdings Inc.	329	32	(18)	315	(1)	228	88
HSBC Bank Canada	—	—	(6)	6	(10)	14	2
Grupo Financiero HSBC, S.A. de C.V.	74	12	(39)	101	(22)	54	69
Other trading entities	46	(122)	137	31	10	4	17
Holding companies, shared service centres and intra-group eliminations	(552)	(7)	(33)	(512)	(33)	(313)	(166)
At 31 Dec	2,930	269	260	2,401	(611)	2,242	770
Customer accounts
HSBC Bank plc	10,753	1,134	1,108	8,511	1,037	5,293	2,181
HSBC UK Bank plc	6,156	225	1,399	4,532	(7)	3,679	860
The Hongkong and Shanghai Banking Corporation Limited	17,654	882	2,249	14,523	165	10,202	4,156
HSBC Bank Middle East Limited	520	61	77	382	96	216	70
HSBC North America Holdings Inc.	3,030	51	248	2,731	36	1,886	809
HSBC Bank Canada	—	—	—	—	(567)	—	567
Grupo Financiero HSBC, S.A. de C.V.	1,555	(2)	68	1,489	228	478	783
Other trading entities	1,012	(3,094)	1,710	2,396	(6)	817	1,585
Holding companies, shared service centres and intra-group eliminations	(507)	(115)	10	(402)	(105)	(189)	(108)
At 31 Dec	40,173	1,473	4,538	34,162	(232)	23,491	10,903
102	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial summary

Interest expense (continued)
		Increase/(decrease)<br><br>in 2024 compared<br><br>with 2023			Increase/(decrease)<br><br>in 2023 compared<br><br>with 2022
	2024	Volume	Rate	2023	Volume	Rate	2022
	$m	$m	$m	$m	$m	$m	$m
Repurchase agreements – with banks
HSBC Bank plc	2,212	(511)	808	1,915	782	851	282
HSBC UK Bank plc	23	(25)	14	34	24	6	4
The Hongkong and Shanghai Banking Corporation Limited	2,640	758	514	1,368	536	368	464
HSBC Bank Middle East Limited	178	70	9	99	31	45	23
HSBC North America Holdings Inc.	655	296	(85)	444	(97)	400	141
HSBC Bank Canada	—	—	—	—	(12)	—	12
Grupo Financiero HSBC, S.A. de C.V.	25	(16)	5	36	18	8	10
Other trading entities	43	(61)	(10)	114	62	4	48
Holding companies, shared service centres and intra-group eliminations	(881)	309	(181)	(1,009)	(480)	(243)	(286)
At 31 Dec	4,895	1,621	273	3,001	848	1,455	698
Repurchase agreements – with customers
HSBC Bank plc	4,090	929	647	2,514	591	1,212	711
HSBC UK Bank plc	273	(382)	227	428	(115)	392	151
The Hongkong and Shanghai Banking Corporation Limited	1,108	(12)	126	994	357	409	228
HSBC Bank Middle East Limited	1	1	—	—	—	—	—
HSBC North America Holdings Inc.	4,821	1,249	34	3,538	291	2,222	1,025
HSBC Bank Canada	13	(15)	3	25	(188)	122	91
Grupo Financiero HSBC, S.A. de C.V.	415	45	(12)	382	133	71	178
Other trading entities	1	—	—	1	—	—	1
Holding companies, shared service centres and intra-group eliminations	—	—	25	(25)	1	(28)	2
At 31 Dec	10,722	1,537	1,328	7,857	1,156	4,314	2,387
Debt securities in issue – non trading
HSBC Bank plc	2,536	512	137	1,887	93	1,100	694
HSBC UK Bank plc	1,357	230	368	759	71	240	448
The Hongkong and Shanghai Banking Corporation Limited	2,772	(210)	166	2,816	154	1,293	1,369
HSBC Bank Middle East Limited	67	(12)	6	73	(9)	35	47
HSBC North America Holdings Inc.	1,694	167	22	1,505	193	653	659
HSBC Bank Canada	12	(37)	(2)	51	(762)	520	293
Grupo Financiero HSBC, S.A. de C.V.	353	178	83	92	28	(10)	74
Other trading entities	142	(3)	(10)	155	(27)	4	178
Holding companies, shared service centres and intra-group eliminations	3,873	(147)	135	3,885	531	1,509	1,845
At 31 Dec	12,806	751	832	11,223	313	5,303	5,607
HSBC Holdings plc Annual Report on Form 20-F	103
---	---

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.

	2024	2023
	$m	$m
Maturity of 1 year or less
Loans and advances to banks	97,156	107,658
Loans and advances to customers	341,022	344,777
	438,178	452,435
Maturity after 1 year but within 5 years
Loans and advances to banks	4,513	5,086
Loans and advances to customers	268,427	272,772
	272,940	277,858
Interest rate sensitivity of loans and advances to banks
Fixed interest rate	1,217	2,623
Variable interest rate	3,296	2,463
	4,513	5,086
Interest rate sensitivity of loans and advances to customers
Fixed interest rate	60,088	60,734
Variable interest rate	208,339	212,038
	268,427	272,772
Maturity after 5 years but within 15 years
Loans and advances to banks	383	173
Loans and advances to customers	164,603	169,345
	164,986	169,518
Interest rate sensitivity of loans and advances to banks
Fixed interest rate	333	173
Variable interest rate	50	—
	383	173
Interest rate sensitivity of loans and advances to customers
Fixed interest rate	69,464	72,458
Variable interest rate	95,139	96,887
	164,603	169,345
Maturity after 15 years
Loans and advances to banks	—	—
Loans and advances to customers	166,321	162,713
	166,321	162,713
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	76,945	72,014
Variable interest rate	89,376	90,699
	166,321	162,713
104	HSBC Holdings plc Annual Report on Form 20-F
---	---

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
	2024		2023
	Average<br><br>balance	Average<br><br>rate	Average<br><br>balance	Average<br><br>rate
	$m	%	$m	%
HSBC UK Bank Plc	13,243		12,966
– demand and other – non-interest bearing	31	—	85	—
– demand – interest bearing	11	2.7	20	5.0
– time	13,201	5.5	12,861	4.6
– other	—	—	—	—
HSBC Bank plc	33,104		29,569
– demand and other – non-interest bearing	6,159	—	6,354	—
– demand – interest bearing	18,384	4.9	16,781	4.1
– time	8,197	3.9	6,113	4.0
– other	364	—	321	—
The Hong Kong and Shanghai Banking Corporation Limited	21,785		21,179
– demand and other – non-interest bearing	3,412	—	3,569	—
– demand – interest bearing	13,326	2.3	14,311	2.2
– time	5,035	5.0	3,295	4.9
– other	12	—	4	—
HSBC Bank Middle East Limited	2,566		1,517
– demand and other – non-interest bearing	101	—	140	—
– demand – interest bearing	721	0.6	558	1.3
– time	1,665	5.9	717	5.4
– other	79	—	102	—
HSBC North America Holdings Inc.	5,449		5,352
– demand and other – non-interest bearing	942	—	780	—
– demand – interest bearing	4,271	4.8	3,918	4.4
– time	236	5.5	654	5.4
– other	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V	662		540
– demand and other – non-interest bearing	14	—	—	—
– demand – interest bearing	34	11.8	43	11.6
– time	614	10.7	497	18.7
– other	—	—	—	—
Other trading entities	271		291
– demand and other – non-interest bearing	16	—	94	—
– demand – interest bearing	13	7.7	37	5.4
– time	242	10.7	160	11.3
– other	—	—	—	—
Total	77,080	3.8	71,414
– demand and other – non-interest bearing	10,675	—	11,022	—
– demand – interest bearing	36,760	3.9	35,668	3.4
– time	29,190	5.1	24,297	4.9
– other	455	—	427	—
HSBC Holdings plc Annual Report on Form 20-F	105
---	---
Customer accounts
---	---	---	---	---
	2024		2023
	Average<br><br>balance	Average<br><br>rate	Average<br><br>balance	Average<br><br>rate
	$m	%	$m	%
HSBC UK Bank Plc	336,151		334,043
– demand and other – non-interest bearing	58,672	—	65,498	—
– demand – interest bearing	224,061	1.9	225,190	1.5
– savings	39,915	3.0	31,666	2.5
– time	13,473	4.3	11,538	3.8
– other	30	3.3	151	4.0
HSBC Bank plc	297,942		282,193
– demand and other – non-interest bearing	49,569	—	59,751	—
– demand – interest bearing	164,360	4.2	156,071	3.8
– savings	49,037	3.3	41,771	2.9
– time	34,976	5.1	22,647	4.4
– other	—	—	1,953	4.4
The Hong Kong and Shanghai Banking Corporation Limited	805,694		777,111
– demand and other – non-interest bearing	68,539	—	74,908	—
– demand – interest bearing	416,431	1.0	441,399	0.9
– savings	311,870	4.1	225,530	4.0
– time	8,704	4.9	35,274	4.5
– other	150	—	—	—
HSBC Bank Middle East Limited	33,470		31,265
– demand and other – non-interest bearing	18,761	—	18,308	—
– demand – interest bearing	6,372	2.4	6,255	1.8
– savings	7,186	4.2	5,414	3.6
– time	1,151	5.6	1,288	5.6
– other	—	—	—	—
HSBC North America Holdings Inc.	95,893		99,377
– demand and other – non-interest bearing	17,409	—	22,096	—
– demand – interest bearing	34,270	3.7	28,438	4.2
– savings	44,214	4.0	40,380	2.8
– time	—	—	8,463	4.8
– other	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	29,311	5.3	28,315	5.3
– demand and other – non-interest bearing	6,738	—	5,736	—
– demand – interest bearing	13,881	5.6	13,174	5.3
– savings	—	—	1,166	—
– time	8,692	8.9	8,239	9.6
– other	—	—	—	—
Other trading entities	11,504	12.8	40,516	4.3
– demand and other – non-interest bearing	4,438	—	11,720	—
– demand – interest bearing	2,252	8.0	11,936	—
– savings	4,060	30.9	10,476	16.7
– time	754	5.6	6,384	—
– other	—	—	—	—
Total	1,609,965	2.6	1,592,820	2.3
– demand and other – non-interest bearing	224,126	—	258,017	—
– demand – interest bearing	861,627	2.1	882,463	1.8
– savings	456,282	4.3	356,403	4.4
– time	67,750	5.4	93,833	5.0
– other	180	2.2	2,104	4.4
106	HSBC Holdings plc Annual Report on Form 20-F
---	---

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
	2024	2023
	%	%
Loans and advances to banks	—	—
Loans and advances to customers	0.44	0.38

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 174.

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 2024, the amount of uninsured deposits was $1.3tn

(31 December 2023: $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 2024
	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	262,268	20,540	9,433	4,783	297,024	At 31 Dec 2023
---	---	---	---	---	---
Uninsured time deposits	246,148	18,293	10,831	3,676	278,948
HSBC Holdings plc Annual Report on Form 20-F	107
---	---
Global businesses and legal<br><br>entities
---
Contents
---	---
107	Summary
108	Supplementary analysis of constant currency results and notable<br><br>items by global business
112	Reconciliation of reported and constant currency risk-weighted assets
113	Supplementary tables for WPB and GBM
119	Analysis of reported results by legal entities
122	Summary information – legal entities and selected countries/territories
127	Analysis by country/territory

Summary

The Group CEO, supported in 2024 by the Group Executive

Committee (‘GEC‘), reviewed operating activity on a number of bases,

including by global business and legal entities. Up to 31 December

2024, our global businesses – Wealth and Personal Banking,

Commercial Banking, and Global Banking and Markets – along with

Corporate Centre were our reportable segments under IFRS 8

‘Operating Segments’ and are presented below and in Note 10:

Segmental analysis on page 405. Following our organisational

announcement in October 2024, effective from 1 January 2025 the

Group’s operating segments will comprise four new businesses –

Hong Kong, UK, Corporate and Institutional Banking, and International

Wealth and Premier Banking – along with Corporate Centre. These

will replace our previously reported operating segments up to

31 December 2024.

Basis of preparation The Group CEO, supported in 2024 by the rest of the GEC, is considered the Chief Operating Decision Maker (‘CODM’) for the purposes of identifying the Group’s reportable segments. Global business results are assessed by the CODM on the basis of constant currency performance. We separately disclose ‘notable items’, which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. Constant currency performance information for 2023 and 2022 are presented as described on page 85. As required by IFRS 8, reconciliations of the total constant currency global business results to the Group’s reported results are presented on page 406. Supplementary reconciliations from reported to constant currency results by global business are presented on pages 108 to 110 for information purposes. Global business performance is also assessed using return on tangible equity (‘RoTE’). A reconciliation of global business RoTE to the Group’s RoTE is provided on page 132. 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 functions to the extent that they can be meaningfully attributed to global businesses and legal entities. While such allocations have been made on a systematic and consistent basis, they necessarily involve a degree of subjectivity. Costs that are not allocated to global businesses 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 the global businesses are presented in Corporate Centre. 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 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., HSBC Bank Canada and Grupo Financiero HSBC, S.A. de C.V. The results of legal entities are presented on a reported basis on page 119 and a constant currency basis on page 122.

108

HSBC Holdings plc Annual Report on Form 20-F

---

Global businesses

Supplementary analysis of constant currency results and notable items by

global business

Constant currency results1
	2024
	Wealth and<br><br>Personal<br><br>Banking2	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Revenue3	28,674	21,580	17,529	(1,929)	65,854
ECL	(1,335)	(1,815)	(235)	(29)	(3,414)
Operating expenses	(15,204)	(7,906)	(10,231)	298	(33,043)
Share of profit in associates and joint ventures	47	1	—	2,864	2,912
Profit/(loss) before tax	12,182	11,860	7,063	1,204	32,309
Loans and advances to customers (net)	447,085	306,926	169,516	7,131	930,658
Customer accounts	823,267	490,475	340,898	315	1,654,955

1In the current period constant currency results are equal to reported as there is no currency translation.

2On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking operations in France to CCF, a subsidiary of Promontoria MMB SAS (‘My

Money Group’). With effect from this date, we have prospectively reclassified the portfolio of retained loans, profit participation interest and licence agreement of

the CCF brand from WPB to Corporate Centre.

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

Notable items
	2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Notable items
Revenue
Disposals, acquisitions and related costs1	28	—	(14)	(1,357)	(1,343)
– of which:
Argentina1	—	—	—	(6,138)	(6,138)
Canada2	—	—	—	4,924	4,924
France	55	—	—	5	60
Early redemption of legacy securities	—	—	—	(237)	(237)
Operating expenses
Disposals, acquisitions and related costs	(3)	(2)	(2)	(192)	(199)
– of which:
Argentina	—	(9)	—	(34)	(43)
Canada	(1)	(1)	—	(151)	(153)
France	1	—	—	(6)	(5)
Restructuring and other related costs3	(10)	2	(1)	(25)	(34)

1Includes $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.

2 Includes $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.

3Amounts relate to restructuring provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.

HSBC Holdings plc Annual Report on Form 20-F	109
Reconciliation of reported results to constant currency results – global businesses (continued)
---	---	---	---	---	---
	2023
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Revenue1
Reported	27,275	22,867	16,115	(199)	66,058
Currency translation	(427)	(471)	(344)	96	(1,146)
Constant currency	26,848	22,396	15,771	(103)	64,912
ECL
Reported	(1,058)	(2,062)	(326)	(1)	(3,447)
Currency translation	123	56	9	—	188
Constant currency	(935)	(2,006)	(317)	(1)	(3,259)
Operating expenses
Reported	(14,738)	(7,524)	(9,865)	57	(32,070)
Currency translation	386	290	(7)	(93)	576
Constant currency	(14,352)	(7,234)	(9,872)	(36)	(31,494)
Share of profit/(loss) in associates and joint ventures
Reported	65	(1)	—	(257)	(193)
Currency translation	(1)	—	—	(62)	(63)
Constant currency	64	(1)	—	(319)	(256)
Profit/(loss) before tax
Reported	11,544	13,280	5,924	(400)	30,348
Currency translation	81	(125)	(342)	(59)	(445)
Constant currency	11,625	13,155	5,582	(459)	29,903
Loans and advances to customers (net)
Reported	454,878	309,422	173,966	269	938,535
Currency translation	(10,022)	(8,319)	(3,098)	(7)	(21,446)
Constant currency	444,856	301,103	170,868	262	917,089
Customer accounts
Reported	804,863	475,666	330,522	596	1,611,647
Currency translation	(12,153)	(10,571)	(9,296)	(14)	(32,034)
Constant currency	792,710	465,095	321,226	582	1,579,613

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

Notable items (continued)
	2023
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Notable items
Revenue
Disposals, acquisitions and related costs1,2,3	4	1,591	—	(297)	1,298
Fair value movements on financial instruments4	—	—	—	14	14
Disposal losses on Markets Treasury repositioning	(391)	(316)	(270)	—	(977)
Operating expenses
Disposals, acquisitions and related costs	(53)	(55)	3	(216)	(321)
Restructuring and other related costs5	20	32	21	63	136
Impairment of interest in 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 Amounts relate to reversals of restructuring provisions recognised during 2022.

6 Relates to an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom. See Note 18 on page 423 to 424.

110	HSBC Holdings plc Annual Report on Form 20-F

Global businesses

Reconciliation of reported results to constant currency results – global businesses (continued)
	2022
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Revenue1
Reported	21,103	16,494	14,899	(1,876)	50,620
Currency translation	(331)	(287)	(357)	(58)	(1,033)
Constant currency	20,772	16,207	14,542	(1,934)	49,587
ECL
Reported	(1,130)	(1,849)	(595)	(10)	(3,584)
Currency translation	(30)	(19)	17	1	(31)
Constant currency	(1,160)	(1,868)	(578)	(9)	(3,615)
Operating expenses
Reported	(14,415)	(7,052)	(9,383)	(1,851)	(32,701)
Currency translation	274	242	(20)	(24)	472
Constant currency	(14,141)	(6,810)	(9,403)	(1,875)	(32,229)
Share of profit/(loss) in associates and joint ventures
Reported	30	—	(2)	2,695	2,723
Currency translation	(1)	1	—	(164)	(164)
Constant currency	29	1	(2)	2,531	2,559
Profit/(loss) before tax
Reported	5,588	7,593	4,919	(1,042)	17,058
Currency translation	(88)	(63)	(360)	(245)	(756)
Constant currency	5,500	7,530	4,559	(1,287)	16,302
Loans and advances to customers (net)
Reported	422,309	311,957	188,940	355	923,561
Currency translation	2,763	(2,733)	(2,287)	(5)	(2,262)
Constant currency	425,072	309,224	186,653	350	921,299
Customer accounts
Reported	779,310	463,928	326,630	435	1,570,303
Currency translation	2,571	(1,122)	(3,210)	8	(1,753)
Constant currency	781,881	462,806	323,420	443	1,568,550

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

Notable items (continued)
	2022
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Notable items
Revenue
Disposals, acquisitions and related costs1	(2,212)	—	—	(525)	(2,737)
Fair value movements on financial instruments2	—	—	—	(618)	(618)
Restructuring and other related costs3	98	(16)	(184)	(145)	(247)
Operating expenses
Disposals, acquisitions and related costs	(7)	—	—	(11)	(18)
Restructuring and other related costs	(357)	(266)	(252)	(2,007)	(2,882)

1Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.3bn (inclusive of $0.4bn in

goodwill impairments) related to the sale of the retail banking operations in France. Held-for-sale classification for the sale of the retail banking operations in

France was reversed in 1Q23 ($2.1bn loss reversed) and reinstated in 4Q23 ($2.0bn loss reinstated).

2Fair value movements on non-qualifying hedges in HSBC Holdings.

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

HSBC Holdings plc Annual Report on Form 20-F	111

Strategic transactions supplementary analysis

The following table presents the selected impacts of strategic

transactions to the Group and our global business segments. These

comprise the strategic transactions where the financial impacts of the

acquisition or disposal have qualified for material notable item

treatment in our results. Material notable items are a subset of

notable items and categorisation is dependent on the financial impact

on the Group’s income statement. At 2024, strategic transactions

classified as material notable items in current and comparative

periods comprise the disposal of our retail banking operations in

France, our banking business in Canada, the sale of our business in

Argentina and the acquisition of SVB UK.

The impacts quoted include the gains or losses on classification to

held for sale or acquisition and all other related notable items. They

also include the distorting impact between the periods of the

operating income statement results related to acquisitions and

disposals that affect period-on-period comparisons. It 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.

We consider the monthly impacts of distorting income statement

results when calculating the impact of strategic transactions.

Constant currency results
	2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Revenue	54	179	—	(1,209)	(976)
ECL	—	(3)	—	—	(3)
Operating expenses	(7)	(76)	—	(191)	(274)
Share of profit in associates and joint ventures	—	—	—	—	—
Profit before tax	47	100	—	(1,400)	(1,253)
– HSBC Innovation Banking1		100		—	100
– Retail banking operations in France	47			(1)	46
– Banking business in Canada				4,773	4,773
– Business in Argentina				(6,172)	(6,172)
of which: notable items
Revenue	55	—	—	(1,209)	(1,154)
Profit before tax	55	7	—	(1,400)	(1,338)
of which: distorting impact of operating results between periods
Revenue	(1)	179	—	—	178
Profit/(loss) before tax	(8)	93	—	—	85	2023
---	---	---	---	---	---
Revenue	690	2,407	49	(231)	2,915
ECL	22	(72)	11	—	(39)
Operating expenses	(658)	(331)	(59)	(218)	(1,266)
Share of profit in associates and joint ventures	—	—	—	—	—
Profit/(loss) before tax	54	2,004	1	(449)	1,610
– HSBC Innovation Banking1		1,583		—	1,583
– Retail banking operations in France	(141)			(26)	(167)
– Banking business in Canada	211	400	82	(424)	269
– Business in Argentina	(16)	21	(81)	—	(76)
of which: notable items
Revenue	41	1,659	—	(231)	1,469
Profit before tax	(11)	1,607	—	(449)	1,147
of which: distorting impact of operating results between periods
Revenue	649	748	49	—	1,446
Profit before tax	65	397	1	—	463

1Includes the impact of our acquisition of SVB UK, which in June 2023 changed its legal entity name to HSBC Innovation Bank Limited.

112	HSBC Holdings plc Annual Report on Form 20-F

Global businesses

Reconciliation of reported and constant currency risk-weighted assets

	At 31 Dec 2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$bn	$bn	$bn	$bn	$bn
Risk-weighted assets
Reported	181.1	337.9	231.9	87.4	838.3
Constant currency	181.1	337.9	231.9	87.4	838.3
	At 31 Dec 2023
Risk-weighted assets
Reported	192.9	354.5	218.5	88.2	854.1
Currency translation	(6.8)	(12.6)	(4.8)	(1.1)	(25.3)
Constant currency	186.1	341.9	213.7	87.1	828.8	At 31 Dec 2022
---	---	---	---	---	---
Risk-weighted assets
Reported	182.9	342.4	225.9	88.5	839.7
Currency translation	(4.1)	(9.3)	(4.2)	(0.5)	(18.1)
Constant currency	178.8	333.1	221.7	88.0	821.6
HSBC Holdings plc Annual Report on Form 20-F	113
---	---

Supplementary tables for WPB and GBM

WPB constant currency performance by business unit

A breakdown of WPB by business unit is presented below to reflect the basis of how the revenue performance of the business units is

assessed and managed.

WPB – summary (constant currency basis)
		Consists of1
	Total<br><br>WPB	Banking<br><br>operations	Life<br><br>insurance	Global<br><br>Private<br><br>Banking	Asset<br><br>management
	$m	$m	$m	$m	$m
2024
Net operating income before change in expected credit losses and other credit<br><br>impairment charges2	28,674	22,842	1,840	2,611	1,381
– net interest income	20,352	18,819	326	1,193	14
– net fee income/(expense)	5,930	3,452	177	1,015	1,286
– other income	2,392	571	1,337	403	81
ECL	(1,335)	(1,334)	—	(1)	—
Net operating income	27,339	21,508	1,840	2,610	1,381
Total operating expenses	(15,204)	(11,728)	(716)	(1,752)	(1,008)
Operating profit	12,135	9,780	1,124	858	373
Share of profit in associates and joint ventures	47	14	33	—	—
Profit before tax	12,182	9,794	1,157	858	373
2023
Net operating income before change in expected credit losses and other credit<br><br>impairment charges2	26,848	21,920	1,396	2,268	1,264
– net interest income	19,902	18,455	282	1,167	(2)
– net fee income/(expense)	5,283	3,148	147	800	1,188
– other income	1,663	317	967	301	78
ECL	(935)	(933)	4	(6)	—
Net operating income	25,913	20,987	1,400	2,262	1,264
Total operating expenses	(14,352)	(11,075)	(683)	(1,639)	(955)
Operating profit	11,561	9,912	717	623	309
Share of profit in associates and joint ventures	64	14	50	—	—
Profit before tax	11,625	9,926	767	623	309	2022
---	---	---	---	---	---
Net operating income before change in expected credit losses and other<br><br>credit impairment charges2	20,772	16,267	1,337	2,039	1,129
– net interest income	15,887	14,576	342	975	(6)
– net fee income/(expense)	5,290	3,241	150	795	1,104
– other income	(405)	(1,550)	845	269	31
ECL	(1,160)	(1,146)	(8)	(5)	(1)
Net operating income	19,612	15,121	1,329	2,034	1,128
Total operating expenses	(14,141)	(11,001)	(787)	(1,495)	(858)
Operating profit	5,471	4,120	542	539	270
Share of profit in associates and joint ventures	29	12	17	—	—
Profit before tax	5,500	4,132	559	539	270

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

2From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the year ended

31 December 2022 have been restated accordingly.

114	HSBC Holdings plc Annual Report on Form 20-F

Global businesses

Life insurance business performance

The following table provides an analysis of the performance of our life insurance business for the period. It comprises income earned by our

insurance manufacturing operations within our WPB business, as well as income earned and costs incurred within our Wealth insurance

distribution channels, consolidation and inter-company elimination entries.

Results of WPB’s life insurance business unit (constant currency basis)
	2024			2023			2022
	Insurance<br><br>manufac-<br><br>turing<br><br>operations	Wealth<br><br>insurance<br><br>and other1	Life<br><br>insurance	Insurance<br><br>manufac-<br><br>turing<br><br>operations	Wealth<br><br>insurance<br><br>and other1	Life<br><br>insurance	Insurance<br><br>manufac-<br><br>turing<br><br>operations	Wealth<br><br>insurance<br><br>and other1	Life<br><br>insurance
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Net interest income	326	—	326	282	—	282	345	(3)	342
Net fee income/(expense)	10	167	177	(25)	172	147	(31)	181	150
Other income	1,331	6	1,337	975	(8)	967	832	13	845
– insurance service result	1,356	(15)	1,341	1,120	(31)	1,089	868	(19)	849
– net investment returns (excluding net<br><br>interest income)	(162)	(15)	(177)	(198)	55	(143)	(196)	(24)	(220)
– other operating income	137	36	173	53	(32)	21	160	56	216
Net operating income before change in<br><br>expected credit losses and other credit<br><br>impairment charges2	1,667	173	1,840	1,232	164	1,396	1,146	191	1,337
ECL	—	—	—	4	—	4	(9)	1	(8)
Net operating income	1,667	173	1,840	1,236	164	1,400	1,137	192	1,329
Total operating expenses	(601)	(115)	(716)	(570)	(113)	(683)	(593)	(194)	(787)
Operating profit	1,066	58	1,124	666	51	717	544	(2)	542
Share of profit/(loss) in associates and joint<br><br>ventures	33	—	33	50	—	50	17	—	17
Profit before tax	1,099	58	1,157	716	51	767	561	(2)	559

1‘Wealth insurance and other’ includes fee income earned and operating expenses incurred within our Wealth distribution channels. It also includes the IFRS 17

consolidation entries arising from transactions between our insurance manufacturing operations and Wealth distribution channels and with the wider Group, as

well as allocations of central costs benefiting life insurance.

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

HSBC Holdings plc Annual Report on Form 20-F	115

WPB insurance manufacturing (constant currency basis)

The following table shows the results of our insurance manufacturing operations for our WPB business and for all global business segments in

aggregate.

Results of insurance manufacturing operations1,2
	2024		2023		2022
	WPB	All global<br><br>businesses	WPB	All global<br><br>businesses	WPB	All global<br><br>businesses
	$m	$m	$m	$m	$m	$m
Net interest income	326	363	282	321	345	370
Net fee expense	10	21	(25)	(13)	(31)	(16)
Other income	1,331	1,326	975	965	832	842
Insurance service result	1,356	1,356	1,120	1,119	868	872
– release of contractual service margin	1,290	1,290	1,087	1,087	900	900
– risk adjustment release	74	74	44	44	47	47
– experience variance and other	36	36	31	30	50	54
– loss from onerous contracts	(44)	(44)	(42)	(42)	(129)	(129)
Net investment returns (excluding net interest income)3	(162)	(165)	(198)	(205)	(196)	(208)
– insurance finance income/(expense)	(5,985)	(5,985)	(7,718)	(7,718)	13,882	13,885
– other investment income	5,823	5,820	7,520	7,513	(14,078)	(14,093)
Other operating income	137	135	53	51	160	178
Net operating income before change in expected credit losses and other<br><br>credit impairment charges4,5	1,667	1,710	1,232	1,273	1,146	1,196
Change in expected credit losses and other credit impairment charges	—	—	4	4	(9)	(9)
Net operating income	1,667	1,710	1,236	1,277	1,137	1,187
Total operating expenses	(601)	(602)	(570)	(580)	(593)	(589)
Operating profit	1,066	1,108	666	697	544	598
Share of profit in associates and joint ventures	33	33	50	50	17	17
Profit before tax of insurance business operations5	1,099	1,141	716	747	561	615
Additional information
Insurance manufacturing new business contractual service margin (reported basis)	2,515	2,515	1,686	1,686	1,111	1,111
Consolidated Group new business contractual service margin (reported basis)	2,729	2,729	1,812	1,812	1,229	1,229
Annualised new business premiums of insurance manufacturing operations	4,912	4,912	3,797	3,797	2,354	2,354
Net dividends of insurance manufacturing operations (reported basis)6	1,522	1,522	813	813	(152)	(152)

1Constant currency results are derived by adjusting for period-on-period effects of foreign currency translation differences. The impact of foreign currency

translation differences on ‘All global businesses’ profit before tax was a $13m decrease for 2023 and a $60m decrease for 2022.

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

global businesses‘ result consists primarily of WPB business, as well as a small proportion of CMB business.

3Net investment return under IFRS 17 for all global businesses for 2024 was $198m (2023: $116m; 2022: $162m), which consisted of net interest income, net

income/(expenses) on assets held at fair value through profit or loss, and insurance finance income/(expense).

4Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

5The effect of applying hyperinflation accounting in Argentina on insurance manufacturing operations in all global business resulted in a decrease of $53m in revenue in

2024 (2023: decrease of $35m, 2022: decrease of $7m) and a decrease of $53m in profit before tax in 2024 (2023: decrease of $35m, 2022: decrease of $6m).

6Net dividends of insurance manufacturing operations include dividends paid to immediate parent companies of $1,612m (2023: $993m; 2022: $606m) net of

CET1 qualifying injections to fund business growth of $90m (2023: $180m; 2022: $758m including a $528m capital injection to fund the acquisition of AXA

Singapore).

Insurance manufacturing

The following commentary, unless otherwise specified, relates to the

‘All global businesses’ results.

Profit before tax of $1.1bn increased by $0.4bn compared with 2023.

This primarily reflected the following:

–Insurance service result of $1.4bn increased by $0.2bn compared

with 2023 primarily due to an increase in the release of CSM.

–Net investment return (excluding net interest income) remained

broadly unchanged, with negative impacts in China from reducing

interest rates partly offset by gains in other markets.

–Other operating income increased by $0.1bn compared with 2023,

with the increase driven by the non-repeat of losses of $0.3bn in

2023 from corrections to historical valuation estimates, partly

offset by current period losses on reinsurance contracts in Hong

Kong.

Profit before tax of $0.7bn in 2023 increased by $0.1bn compared

with 2022. This primarily reflected the following:

–Insurance service result of $1.1bn increased by $0.3bn compared

with 2022. This was driven by an increase in the release of CSM of

$0.2bn as a result of a higher closing CSM balance. The improved

insurance service result also reflected a reduction to losses from

onerous contracts of $0.1bn, mainly in Hong Kong and Singapore,

in part due to improved market conditions in 2023.

–Other operating income decreased by $0.1bn compared with

2022, and included a $0.3bn loss from corrections to historical

valuation estimates, partly offset by gains of $0.2bn from

reinsurance contracts in Hong Kong.

Insurance manufacturing new business contractual service margin

increased by $0.8bn or 49% primarily in Hong Kong, from new

business volumes increasing and a $0.2bn benefit from recognising a

new reinsurance contract.

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 in 2024 increased by 29%

compared with 2023, primarily from strong new business sales in

Hong Kong.

Insurance equity plus CSM net of tax

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 2024, insurance equity plus

CSM net of tax was $17,025m (31 December 2023: $16,583m;

31 December 2022: $14,646m).

At 31 December 2024, insurance equity plus CSM net of tax was

calculated as insurance manufacturing operations equity of $7,015m

plus CSM of $12,063m less tax of $2,053m. At 31 December 2023, it

was calculated as insurance manufacturing operations equity of

116	HSBC Holdings plc Annual Report on Form 20-F

Global businesses

$7,731m plus CSM of $10,786m less tax of $1,934m. At

31 December 2022, it was calculated as insurance manufacturing

operations equity of $7,236m plus CSM of $9,058m less tax of

$1,648m.

The increase of $0.4bn in 2024 insurance manufacturing equity plus

CSM net of tax compared to the prior year includes an increase in

CSM net of tax of $1.2bn and a reduction in equity of $0.7bn. CSM

net of tax benefited from strong new business written in the period,

partially offset by a reduction of $0.6bn from reclassification of our

French insurance business to held for sale. The reduction in insurance

manufacturing equity of $0.7bn primarily reflected the benefit of profit

after tax in the year of $0.9bn offset by net dividends paid of $1.5bn.

Net dividends of $1.5bn in 2024 have increased by $0.7bn primarily

due to releases of surplus regulatory capital in Hong Kong.

WPB: Wealth balances

The following table shows the wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets

either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our

customers.

WPB – reported wealth balances1
	2024	2023
	$bn	$bn
Global Private Banking invested assets	395	363
– managed by Global Asset Management	68	61
– external managers, direct securities and other	327	302
Retail invested assets	409	383
– managed by Global Asset Management	175	178
– external managers, direct securities and other	234	205
Asset Management third-party distribution	489	445
Reported invested assets1	1,293	1,191
Wealth deposits (Premier and Global Private Banking)2	555	536
Total reported wealth balances	1,848	1,727

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. At 31 December 2024, $54bn of invested assets were classified as held for sale and are not included in the table above (2023: $32bn).

2Premier and Global Private Banking deposits, which include Prestige deposits in Hang Seng Bank, form part of the total WPB customer accounts balance of

$823bn (2023: $805bn) on page 108. At 31 December 2024, $3bn of wealth deposits were classified as held for sale and are not included in the table above

(2023: $42bn).

Asset Management: funds under management

The following table shows the funds under management of our Asset Management business. Funds under management represents assets

managed, either actively or passively, on behalf of our customers. Funds under management are not reported on the Group’s balance sheet,

except where it is deemed that we are acting as principal rather than agent in our role as investment manager.

Asset Management – reported funds under management1
	2024	2023
	$bn	$bn
Opening balance	684	595
Net new invested assets	30	54
Net market movements	47	23
Foreign exchange and others	(18)	12
Transfer to Markets Treasury	(12)	—
Closing balance	731	684
Asset Management – reported funds under management by legal entities
	2024	2023
	$bn	$bn
HSBC Bank plc	165	162
The Hongkong and Shanghai Banking Corporation Limited	223	198
HSBC North America Holdings Inc.	67	71
Grupo Financiero HSBC, S.A. de C.V.	15	15
Other trading entities2	261	238
Closing balance	731	684

1 Funds under management are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role

as investment manager.

2Funds under management of $194bn in 2024 and $177bn in 2023 relating to our Asset Management entity in the UK are reported under ‘other trading entities’ in

the table above.

HSBC Holdings plc Annual Report on Form 20-F	117

At 31 December 2024, Asset Management funds under management amounted to $731bn, an increase of $47bn or 7%. The increase reflected

net new invested assets of $30bn and a positive impact from market performance. These increases were partly offset by an adverse impact of

foreign exchange translation of $18bn and from a reduction of $12bn due to a transfer of a portfolio forming part of the Group’s Holdings Capital

Buffer from Asset Management to our Markets Treasury function. Net new invested assets were mainly in long-term products, primarily passive

investment, alternative investment, and multi-asset investment products. These inflows were partly offset by redemptions from money market

instruments in the US.

Global Private Banking: client balances

Global Private Banking client balances comprises invested assets and deposits, which are translated at the rates of exchange applicable for their

respective year-ends, with the effects of currency translation reported separately.

Global Private Banking – reported client balances1
	2024	2023
	$bn	$bn
Opening balance	447	383
Net new invested assets	23	17
Increase/(decrease) in deposits	1	9
Net market movements	37	19
Foreign exchange and others	(24)	19
Closing balance	484	447	Global Private Banking – reported client balances by legal entities
---	---	---
	2024	2023
	$bn	$bn
HSBC UK Bank plc	36	32
HSBC Bank plc	115	54
The Hongkong and Shanghai Banking Corporation Limited	251	209
HSBC North America Holdings Inc.	77	64
HSBC Bank Middle East Limited	3	—
Grupo Financiero HSBC, S.A. de C.V.	2	3
Other trading entities	—	85
Closing balance	484	447

1Client balances are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as

investment manager. Customer deposits included in these client balances are on balance sheet.

Retail invested assets

The following table shows the invested assets of our retail customers. These comprise customer assets either managed by our Asset

Management business or by external third-party investment managers as well as self-directed investments by our customers.

Retail invested assets are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than

agent in our role as investment manager.

Retail invested assets
	2024	2023
	$bn	$bn
Opening balance	383	363
Net new invested assets1	28	26
Net market movements	23	7
Foreign exchange and others	(25)	(13)
Closing balance	409	383
Retail invested assets by legal entities
	2024	2023
	$bn	$bn
HSBC UK Bank plc	31	29
HSBC Bank plc	8	31
The Hongkong and Shanghai Banking Corporation Limited	336	292
HSBC Bank Middle East Limited	3	3
HSBC North America Holdings Inc.	16	14
Grupo Financiero HSBC, S.A. de C.V.	10	9
Other trading entities	5	5
Closing balance	409	383

1‘Retail net new invested assets’ covers nine markets, comprising Hong Kong including Hang Seng Bank (Hong Kong), mainland China, Malaysia, Singapore,

HSBC UK, UAE, US, Canada and Mexico. The net new invested assets relating to all other geographies is reported in ‘foreign exchange and others’.

118	HSBC Holdings plc Annual Report on Form 20-F

Global businesses

WPB invested assets

Net new invested assets represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Global

Private Banking invested assets. It excludes all customer deposits. The net new invested assets in the table below is non-additive from the

tables above, as net new invested assets managed by Asset Management that are generated by retail clients or Global Private Banking will be

recorded in both businesses.

WPB: Invested assets
	2024	2023
	$bn	$bn
Opening balance	1,191	1,015
Net new invested assets	64	84
Net market movements	97	43
Foreign exchange and others	(59)	49
Closing balance	1,293	1,191
WPB: Net new invested assets by legal entities
	2024	2023
	$bn	$bn
HSBC UK Bank plc	3	1
HSBC Bank plc	9	3
The Hongkong and Shanghai Banking Corporation Limited	47	47
HSBC Bank Middle East Limited	1	1
HSBC North America Holdings Inc.	(10)	7
Grupo Financiero HSBC, S.A. de C.V.	2	5
Other trading entities	12	20
Total	64	84

GBM: Securities Services and Issuer Services

Assets held in custody

Custody is the safekeeping and servicing of securities and other

financial assets on behalf of clients. Assets held in custody are not

reported on the Group’s balance sheet, except where it is deemed

that we are acting as principal rather than agent in our role as

investment manager. At 31 December 2024, we held $10.6tn of

assets as custodian, an increase of 9% compared with 31 December

The balance comprised $9.7tn of assets in Securities Services,

which were recorded at market value, and $0.9tn of assets in Issuer

Services, recorded at book value.

The increase was mainly in Securities Services balances. This was

driven by net asset inflows in Asia and Europe and favourable market

movements in Asia, North America and Latin America, partly offset by

adverse impacts of currency translations in Asia and Europe.

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 2024, the value of assets held under administration by

the Group amounted to $5.2tn, which was 6% higher than at

31 December 2023. The balance comprised $3.1tn of assets in

Securities Services, which were recorded at market value, and $2.1tn

of assets in Issuer Services, recorded at book value.

The increase was mainly driven by Securities Services balances due

to net asset inflows in Europe and Asia together with favourable

market movement, partly offset by adverse impact of currency

translations notably in Europe and Asia. Issuer Services balances also

rose driven by new issuances, including in the UK and the US, as well

as new assets, including in our legal entity in Hong Kong.

HSBC Holdings plc Annual Report on Form 20-F	119

Analysis of reported results by legal entities

HSBC reported profit/(loss) before tax and balance sheet data
	2024
	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>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	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 profit<br><br>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)1	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>charges2	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 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 impairment3	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 assets4,5,6	138,332	137,609	402,847	26,624	74,416	—	29,671	50,731	(648)	838,254
120	HSBC Holdings plc Annual Report on Form 20-F
---	---

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 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	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 from assets and<br><br>liabilities of insurance businesses,<br><br>including related derivatives,<br><br>measured at fair value through profit<br><br>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	1,608	736	(31)	2	185	22	65	(1,481)	(506)	600
Net operating income before change<br><br>in expected credit losses and other<br><br>credit impairment charges2	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<br><br>impairment charges	(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
Share of profit in associates and<br><br>joint ventures less impairment3	—	(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 assets4,5	129,211	131,468	396,677	24,294	72,248	31,890	32,639	59,574	6,704	854,114
HSBC Holdings plc Annual Report on Form 20-F	121
---	---
HSBC reported profit/(loss) before tax and balance sheet data (continued)
---	---	---	---	---	---	---	---	---	---	---
	2022
	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. 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	7,615	2,357	14,031	903	1,922	1,251	1,796	2,244	(1,742)	30,377
Net fee income	1,536	1,601	4,924	458	1,223	598	455	1,127	(152)	11,770
Net income from financial<br><br>instruments held for trading or<br><br>managed on a fair value basis	472	3,564	5,270	360	485	76	351	639	(939)	10,278
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	—	(1,761)	(12,117)	—	—	—	(9)	66	(10)	(13,831)
Insurance finance income/(expense)	—	1,431	12,407	—	—	—	3	(32)	(10)	13,799
Insurance service result	—	149	636	—	—	—	50	(20)	(6)	809
Other income/(expense)1	148	(1,920)	491	22	533	29	67	(521)	(1,431)	(2,582)
Net operating income before loan<br><br>impairment (charges)/recoveries and<br><br>other credit risk provisions2	9,771	5,421	25,642	1,743	4,163	1,954	2,713	3,503	(4,290)	50,620
Change in expected credit losses<br><br>and other credit impairment<br><br>(charges)/recoveries	(563)	(292)	(2,090)	21	(20)	(84)	(507)	(61)	12	(3,584)
Net operating income	9,208	5,129	23,552	1,764	4,143	1,870	2,206	3,442	(4,278)	47,036
Total operating expenses excluding<br><br>impairment of goodwill and other<br><br>intangible assets	(4,667)	(6,497)	(13,011)	(1,033)	(3,429)	(1,017)	(1,631)	(2,359)	1,090	(32,554)
Impairment of goodwill and other<br><br>intangible assets	(54)	11	(42)	(3)	(9)	(21)	(5)	(2)	(22)	(147)
Operating profit/(loss)	4,487	(1,357)	10,499	728	705	832	570	1,081	(3,210)	14,335
Share of profit in associates and<br><br>joint ventures less impairment	—	(38)	2,400	—	—	—	13	351	(3)	2,723
Profit/(loss) before tax	4,487	(1,395)	12,899	728	705	832	583	1,432	(3,213)	17,058
	%	%	%	%	%	%	%	%	%	%
Share of HSBC’s profit before tax	26.3	(8.2)	75.6	4.3	4.1	4.9	3.4	8.4	(18.8)	100.0
Cost efficiency ratio	48.3	119.6	50.9	59.4	82.6	53.1	60.3	67.4	24.9	64.6
Balance sheet data	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers<br><br>(net)	245,921	86,964	473,985	19,762	54,159	—	20,446	22,325	(1)	923,561
Total assets	412,522	863,308	1,297,806	48,086	239,117	94,604	39,939	67,345	(113,441)	2,949,286
Customer accounts	336,086	253,075	784,236	29,893	100,404	—	25,531	41,078	—	1,570,303
Risk-weighted assets4,5	110,919	127,017	406,985	22,490	72,446	31,876	26,744	60,289	8,144	839,720

1Other income/(expense) in this context includes gain on acquisitions, impairment gain/(loss) relating to the sale of our retail banking operations in France, and

other operating income/(expense).

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

3Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.

4Risk-weighted assets are non-additive across the legal entities due to market risk diversification effects within the Group.

5Balances are on a third-party Group consolidated basis.

6Other trading entities’ RWAs balance at 31 December 2024 includes HSBC Argentina operational risk RWAs, due to the averaging calculation and will roll off over

future reporting cycles.

122	HSBC Holdings plc Annual Report on Form 20-F

Legal entities

Summary information – legal entities and selected countries/territories

Legal entity reported and constant currency results¹
	2024
	HSBC<br><br>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,<br><br>S.A.<br><br>de C.V.	Other<br><br>trading<br><br>entities2	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
Revenue3	12,752	9,557	34,053	2,504	4,264	462	3,573	3,303	(4,614)	65,854
ECL	(405)	(211)	(1,532)	(198)	(81)	(40)	(864)	(93)	10	(3,414)
Operating expenses	(5,135)	(6,723)	(14,329)	(1,192)	(3,351)	(236)	(1,994)	(1,981)	1,898	(33,043)
Share of profit in associates and joint<br><br>ventures	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
Loans and advances to customers (net)	272,973	103,464	449,940	20,440	55,786	—	23,439	4,617	(1)	930,658
Customer accounts	340,233	297,785	845,284	34,808	99,278	—	27,525	9,999	43	1,654,955

1In the current period, constant currency results are equal to reported, as there is no currency translation.

2Other 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 $1,429m.

Supplementary analysis is provided on page 129 to provide a fuller picture of the MENAT regional performance.

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

Legal entity results: notable items
	2024
	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,<br><br>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 related<br><br>costs1	—	(148)	—	—	—	—	—	(23)	(1,172)	(1,343)
Early redemption of legacy securities	—	—	—	—	—	—	—	—	(237)	(237)
Operating expenses
Disposals, acquisitions and related<br><br>costs	8	(9)	—	—	(29)	(36)	—	(61)	(72)	(199)
Restructuring and other 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 is 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 restructuring provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.

Selected countries/territories results1
	2024
	UK2	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue3	21,017	22,038	4,078	4,216	3,573
ECL	(526)	(1,273)	(121)	(81)	(864)
Operating expenses	(13,725)	(8,886)	(2,971)	(3,350)	(1,994)
Share of profit/(loss) in associates and joint ventures	24	8	2,241	—	15
Profit before tax	6,790	11,887	3,227	785	730
Loans and advances to customers (net)	313,925	272,152	44,551	55,786	23,439
Customer accounts	524,251	575,141	63,169	99,278	27,525

1In the current period, constant currency results are equal to reported, as there is no currency translation.

2UK 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’).

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

HSBC Holdings plc Annual Report on Form 20-F	123
Selected countries/territories results: notable items
---	---	---	---	---	---
	2024
	UK1	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1,2	285	—	—	—	—
Early redemption of legacy securities	(237)	—	—	—	—
Operating expenses
Disposals, acquisitions and related costs	(50)	(2)	(7)	(28)	—
Restructuring and other related costs3	(42)	(4)	—	(4)	—

1 UK 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’).

2 Includes 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.

3Amounts relate to restructuring provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.

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<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,<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
Revenue2
Reported	13,405	9,289	31,899	2,425	3,863	1,966	3,313	4,729	(4,831)	66,058
Currency translation	391	150	(93)	1	—	(28)	(103)	(1,567)	103	(1,146)
Constant currency	13,796	9,439	31,806	2,426	3,863	1,938	3,210	3,162	(4,728)	64,912
ECL
Reported	(523)	(212)	(1,641)	(90)	(94)	(46)	(696)	(279)	134	(3,447)
Currency translation	(11)	(1)	—	—	—	1	34	166	(1)	188
Constant currency	(534)	(213)	(1,641)	(90)	(94)	(45)	(662)	(113)	133	(3,259)
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	(126)	(99)	31	—	—	16	55	796	(97)	576
Constant currency	(4,738)	(6,485)	(13,364)	(1,096)	(3,251)	(1,033)	(1,771)	(1,839)	2,083	(31,494)
Share of profit/(loss) in<br><br>associates and joint ventures
Reported	—	(52)	(696)	—	—	—	14	544	(3)	(193)
Currency translation	—	(1)	(61)	—	—	—	(1)	—	—	(63)
Constant currency	—	(53)	(757)	—	—	—	13	544	(3)	(256)
Profit/(loss) before tax
Reported	8,270	2,639	16,167	1,239	518	871	805	2,359	(2,520)	30,348
Currency translation	254	49	(123)	1	—	(11)	(15)	(605)	5	(445)
Constant currency	8,524	2,688	16,044	1,240	518	860	790	1,754	(2,515)	29,903
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	(4,407)	(4,136)	(6,200)	(4)	—	—	(4,904)	(1,794)	(1)	(21,446)
Constant currency	265,801	91,614	449,115	20,068	54,829	—	21,506	14,157	(1)	917,089
Customer accounts
Reported	339,611	274,733	801,430	31,341	99,607	—	29,423	35,326	176	1,611,647
Currency translation	(5,539)	(9,425)	(7,068)	(12)	—	—	(5,464)	(4,527)	1	(32,034)
Constant currency	334,072	265,308	794,362	31,329	99,607	—	23,959	30,799	177	1,579,613

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 $1,286m,

and constant currency profit before tax of $1,090m. Supplementary analysis is provided on page 129 to provide a fuller picture of the MENAT regional

performance.

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

124	HSBC Holdings plc Annual Report on Form 20-F

Legal entities

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 of interest in<br><br>associate6	—	—	(3,000)	—	—	—	—	—	—	(3,000)

1 Includes the impacts 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.

Selected countries/territories results (continued)
	2023
	UK1	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue2
Reported	19,092	20,611	3,923	3,796	3,313
Currency translation	637	67	(64)	—	(103)
Constant currency	19,729	20,678	3,859	3,796	3,210
ECL
Reported	(594)	(1,529)	(93)	(94)	(696)
Currency translation	(14)	(5)	(2)	—	34
Constant currency	(608)	(1,534)	(95)	(94)	(662)
Operating expenses
Reported	(12,485)	(8,244)	(2,713)	(3,251)	(1,826)
Currency translation	(328)	(27)	41	—	55
Constant currency	(12,813)	(8,271)	(2,672)	(3,251)	(1,771)
Share of profit/(loss) in associates and joint ventures
Reported	(53)	30	(746)	—	14
Currency translation	—	—	(61)	—	(1)
Constant currency	(53)	30	(807)	—	13
Profit before tax
Reported	5,960	10,868	371	451	805
Currency translation	295	35	(86)	—	(15)
Constant currency	6,255	10,903	285	451	790
Loans and advances to customers (net)
Reported	309,262	279,551	44,275	54,829	26,410
Currency translation	(5,044)	1,663	(1,207)	—	(4,904)
Constant currency	304,218	281,214	43,068	54,829	21,506
Customer accounts
Reported	508,181	543,504	56,006	99,607	29,423
Currency translation	(8,289)	3,233	(1,525)	—	(5,464)
Constant currency	499,892	546,737	54,481	99,607	23,959

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’).

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

HSBC Holdings plc Annual Report on Form 20-F	125
Selected countries/territories results: notable items (continued)
---	---	---	---	---	---
	2023
	UK1	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs2,3,4	1,272	—	—	—	—
Fair value movements on financial instruments5	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 costs6	75	9	4	10	6
Impairment of interest in associate7	—	—	(3,000)	—	—

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’).

2Includes the gain of $1.6bn recognised in respect of the acquisition of SVB UK.

3Includes the impairment gain relating to the sale of our retail banking operations in France.

4 Includes fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.

5Fair value movements on non-qualifying hedges in HSBC Holdings.

6Balances relates to reversals of restructuring provisions recognised during 2022.

7Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.

Legal entity reported and constant currency results
	2022
	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,<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
Revenue2
Reported	9,771	5,421	25,642	1,743	4,163	1,954	2,713	3,503	(4,290)	50,620
Currency translation	399	(30)	(338)	3	—	(96)	265	(1,235)	(1)	(1,033)
Constant currency	10,170	5,391	25,304	1,746	4,163	1,858	2,978	2,268	(4,291)	49,587
ECL
Reported	(563)	(292)	(2,090)	21	(20)	(84)	(507)	(61)	12	(3,584)
Currency translation	(57)	8	2	—	—	5	(46)	59	(2)	(31)
Constant currency	(620)	(284)	(2,088)	21	(20)	(79)	(553)	(2)	10	(3,615)
Operating expenses
Reported	(4,721)	(6,486)	(13,053)	(1,036)	(3,438)	(1,038)	(1,636)	(2,361)	1,068	(32,701)
Currency translation	(178)	(177)	165	(1)	—	51	(163)	792	(17)	472
Constant currency	(4,899)	(6,663)	(12,888)	(1,037)	(3,438)	(987)	(1,799)	(1,569)	1,051	(32,229)
Share of profit/(loss) in<br><br>associates and joint ventures
Reported	—	(38)	2,400	—	—	—	13	351	(3)	2,723
Currency translation	—	—	(164)	—	—	—	—	—	—	(164)
Constant currency	—	(38)	2,236	—	—	—	13	351	(3)	2,559
Profit/(loss) before tax
Reported	4,487	(1,395)	12,899	728	705	832	583	1,432	(3,213)	17,058
Currency translation	164	(199)	(335)	2	—	(40)	56	(384)	(20)	(756)
Constant currency	4,651	(1,594)	12,564	730	705	792	639	1,048	(3,233)	16,302
Loans and advances to<br><br>customers (net)
Reported	245,921	86,964	473,985	19,762	54,159	—	20,446	22,325	(1)	923,561
Currency translation	10,166	331	(8,248)	16	—	—	(1,318)	(3,210)	1	(2,262)
Constant currency	256,087	87,295	465,737	19,778	54,159	—	19,128	19,115	—	921,299
Customer accounts
Reported	336,086	253,075	784,236	29,893	100,404	—	25,531	41,078	—	1,570,303
Currency translation	13,894	3,640	(9,033)	24	—	—	(1,645)	(8,633)	—	(1,753)
Constant currency	349,980	256,715	775,203	29,917	100,404	—	23,886	32,445	—	1,568,550

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 $997m and

constant currency profit before tax of $756m.

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

126	HSBC Holdings plc Annual Report on Form 20-F

Legal entities

Legal entity results: notable items (continued)
	2022
	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	—	(2,242)	—	—	—	—	—	—	(495)	(2,737)
Fair value movements on<br><br>financial instruments2	—	—	—	—	—	—	—	—	(618)	(618)
Restructuring and other<br><br>related costs3	1	(278)	46	(13)	98	1	(17)	—	(85)	(247)
Operating expenses
Disposals, acquisitions and<br><br>related costs	—	(18)	—	—	—	—	—	—	—	(18)
Restructuring and other<br><br>related costs	(521)	(656)	(741)	(64)	(421)	(87)	(115)	(150)	(127)	(2,882)

1Includes losses from classifying businesses as held for sale as part of a broader restructuring of our European business, of which $2.3bn (inclusive of $0.4bn in

goodwill impairments) relates to the sale of the retail banking operations in France. Held-for-sale classification for the sale of the retail banking operations in

France was reversed in 1Q23 ($2.1bn loss reversed) and reinstated in 4Q23 ($2.0bn loss reinstated).

2Fair value movements on non-qualifying hedges in HSBC Holdings.

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

Selected countries/territories results (continued)
	2022
	UK1	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue2
Reported	17,268	15,712	4,104	4,107	2,713
Currency translation	746	60	(272)	—	265
Constant currency	18,014	15,772	3,832	4,107	2,978
ECL
Reported	(712)	(1,683)	(326)	(20)	(507)
Currency translation	(54)	(8)	21	—	(46)
Constant currency	(766)	(1,691)	(305)	(20)	(553)
Operating expenses
Reported	(13,232)	(7,935)	(2,757)	(3,438)	(1,636)
Currency translation	(504)	(26)	178	—	(163)
Constant currency	(13,736)	(7,961)	(2,579)	(3,438)	(1,799)
Share of profit/(loss) in associates and joint ventures
Reported	(41)	5	2,386	—	12
Currency translation	—	—	(163)	—	1
Constant currency	(41)	5	2,223	—	13
Profit before tax
Reported	3,283	6,099	3,407	649	582
Currency translation	188	26	(236)	—	57
Constant currency	3,471	6,125	3,171	649	639
Loans and advances to customers (net)
Reported	286,032	294,580	50,481	54,159	20,446
Currency translation	11,825	1,122	(2,811)	—	(1,318)
Constant currency	297,857	295,702	47,670	54,159	19,128
Customer accounts
Reported	493,028	542,543	56,948	100,404	25,531
Currency translation	20,382	2,068	(3,169)	—	(1,645)
Constant currency	513,410	544,611	53,779	100,404	23,886

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’).

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

HSBC Holdings plc Annual Report on Form 20-F	127
Selected countries/territories results: notable items (continued)
---	---	---	---	---	---
	2022
	UK1	Hong<br><br>Kong	Mainland<br><br>China	US	Mexico
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	(60)	—	—	—	—
Fair value movements on financial instruments2	(617)	—	—	—	—
Restructuring and other related costs3	407	(124)	71	99	(17)
Operating expenses
Restructuring and other related costs	(1,741)	(393)	(70)	(424)	(115)

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’).

2Fair value movements on non-qualifying hedges in HSBC Holdings.

3Comprises gains and losses relating to the business update in February 2022, including losses associated with RWA reduction commitments.

Analysis by country/territory

Profit/(loss) before tax by country/territory within global businesses
	2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
UK1	2,487	3,446	12	845	6,790
– of which: HSBC UK Bank plc (ring-fenced bank)	2,628	4,367	146	72	7,213
– of which: HSBC Bank plc (non-ring-fenced bank)	534	97	657	(359)	929
– of which: Holdings and other	(675)	(1,018)	(791)	1,132	(1,352)
France	60	196	127	(153)	230
Germany	27	45	137	5	214
Hong Kong	7,453	3,212	1,704	(482)	11,887
Australia	141	378	99	(9)	609
India	96	448	875	269	1,688
Indonesia	7	156	63	(5)	221
Mainland China2	(167)	235	678	2,481	3,227
Malaysia	143	155	219	(3)	514
Singapore	572	376	448	(21)	1,375
Taiwan	113	70	223	(8)	398
Egypt	123	145	355	(16)	607
UAE	371	228	355	(83)	871
Saudi Arabia3	—	—	112	596	708
US	74	578	331	(198)	785
Canada4	71	126	26	4,503	4,726
Mexico	185	529	13	3	730
Other5	426	1,537	1,286	(6,520)	(3,271)
Year ended 31 Dec 2024	12,182	11,860	7,063	1,204	32,309

1 UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies (‘ServCo Group’).

2Includes our share of the profits of our associate, Bank of Communications Co., Limited.

3Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

4Corporate Centre includes a gain of $4.5bn 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 includes the profit and loss impact of inter-company debt eliminations of $(269)m and a loss of $6.2bn relating to the sale of our business in

Argentina.

128	HSBC Holdings plc Annual Report on Form 20-F

Legal entities

Profit/(loss) before tax by country/territory within global businesses (continued)
	2023
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking<br><br>and Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
UK1	2,415	4,437	(692)	(200)	5,960
– of which: HSBC UK Bank plc (ring-fenced bank)	2,754	5,282	144	90	8,270
– of which: HSBC Bank plc (non-ring-fenced bank)	396	295	121	177	989
– of which: Holdings and other	(735)	(1,140)	(957)	(467)	(3,299)
France	(35)	235	128	10	338
Germany	44	144	128	4	320
Hong Kong	6,808	2,970	1,394	(304)	10,868
Australia	177	319	85	(15)	566
India	56	398	774	289	1,517
Indonesia	23	124	68	(7)	208
Mainland China2	(90)	339	662	(540)	371
Malaysia	111	158	219	(21)	467
Singapore	233	436	444	(31)	1,082
Taiwan	99	72	198	(7)	362
Egypt	141	98	303	(11)	531
UAE	387	212	377	(83)	893
Saudi Arabia3	—	—	118	539	657
US	225	513	111	(398)	451
Canada	293	561	120	(96)	878
Mexico	317	504	15	(31)	805
Other4	340	1,760	1,472	502	4,074
Year ended 31 Dec 2023	11,544	13,280	5,924	(400)	30,348

1 UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies (‘ServCo Group’).

2Includes our share of the profits of our associate, Bank of Communications Co., Limited.

3Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.

4Corporate Centre includes the profit and loss impact of inter-company debt eliminations of $571m.

	2022
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking<br><br>and Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
UK1	1,764	2,094	(534)	(41)	3,283
– of which: HSBC UK Bank plc (ring-fenced bank)	2,112	2,662	143	(430)	4,487
– of which: HSBC Bank plc (non-ring fenced bank)	294	315	141	(473)	277
– of which: Holdings and other	(642)	(883)	(818)	862	(1,481)
France2	(2,248)	210	81	(231)	(2,188)
Germany	17	8	133	(147)	11
Hong Kong	4,435	1,278	955	(568)	6,100
Australia	147	180	157	(36)	448
India	45	304	622	306	1,277
Indonesia	4	71	100	(8)	167
Mainland China3	(100)	303	526	2,678	3,407
Malaysia	110	89	219	(36)	382
Singapore	218	255	351	(77)	747
Taiwan	36	43	137	(17)	199
Egypt	101	76	194	(4)	367
UAE	128	107	320	(86)	469
Saudi Arabia4	30	—	94	345	469
US	209	557	270	(387)	649
Canada	243	548	140	(89)	842
Mexico	241	414	39	(112)	582
Other5	208	1,056	1,115	(2,532)	(153)
Year ended 31 Dec 2022	5,588	7,593	4,919	(1,042)	17,058

1UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies (‘ServCo Group’).

2Includes the impact of goodwill impairment of $425m as a result of the reclassification of our retail banking operations in France to held for sale. At 31 December

2022, HSBC’s cash-generating units were based on geographical regions, sub-divided by global businesses.

3Includes our share of the profits of our associate, Bank of Communications Co., Limited.

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

5Corporate Centre includes the profit and loss impact of inter-company debt eliminations of $1,850m.

HSBC Holdings plc Annual Report on Form 20-F	129

Middle East, North Africa and Türkiye supplementary information

The following tables show the results of our Middle East, North Africa and Türkiye business operations on a regional basis (including results of

all the legal entities operating in the region and our share of the results of Saudi Awwal Bank). They also show the profit before tax of each of

the global businesses.

Middle East, North Africa and Türkiye regional performance
	2024	2023
	$m	$m
Revenue1	3,852	3,688
Change in expected credit losses and other credit impairment charges	(222)	(133)
Operating expenses	(1,695)	(1,592)
Share of profit in associates and joint ventures	596	538
Profit before tax	2,531	2,501
Loans and advances to customers (net)	22,975	22,766
Customer accounts	42,434	40,708

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

Profit before tax by global business
	2024	2023
	$m	$m
Wealth and Personal Banking	585	612
Commercial Banking	368	400
Global Banking and Markets	1,091	1,104
Corporate Centre	487	385
Total	2,531	2,501

Reconciliation of alternative

performance measures

Contents
129	Use of alternative performance measures
130	Alternative performance measure definitions
131	Constant currency revenue and profit before tax excluding notable<br><br>items and strategic transactions
131	Return on average ordinary shareholders’ equity and return on average<br><br>tangible equity
132	Net asset value and tangible net asset value per ordinary share
132	Post-tax return and average total shareholders’ equity on average total<br><br>assets
133	Expected credit losses and other credit impairment charges as % of<br><br>average gross loans and advances to customers
133	Target basis operating expenses
134	Basic earnings per share excluding material notable items and related<br><br>impacts
134	Multi-jurisdictional client revenue

Use of alternative performance

measures

Our reported results are prepared in accordance with IFRS Accounting

Standards as detailed in our financial statements starting on page 363.

As described on page 84, we use a combination of reported and

alternative performance measures, including those derived from our

reported results that eliminate factors that distort year-on-year

comparisons. These are considered alternative performance

measures (non-GAAP financial measures).

The following information details the adjustments made to the

reported results and the calculation of other alternative performance

measures. All alternative performance measures are reconciled to the

closest reported performance measure.

On 1 January 2023, HSBC adopted IFRS 17 ‘Insurance Contracts’. As

required by the standard, the Group applied the requirements

retrospectively with comparative data previously published under

IFRS 4 ‘Insurance Contracts’ restated from the 1 January 2022

transition date.

In addition to the alternative performance measures set out in this

section, another alternative performance measure in relation to the

Group’s insurance manufacturing operations is set out on pages 114

to 116.

130	HSBC Holdings plc Annual Report on Form 20-F

Reconciliation of alternative performance measures

Alternative performance measure definitions

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<br><br>less notable items reported under operating expenses
Constant currency revenue excluding notable items1	Reported revenue excluding notable items and the impact of foreign exchange<br><br>translation2
Constant currency profit before tax excluding notable<br><br>items1	Reported profit before tax excluding notable items and the impact of foreign<br><br>exchange translation2
Constant currency revenue excluding notable items<br><br>and strategic transactions1	Reported revenue excluding notable items, strategic transactions and the impact<br><br>of foreign exchange translation3
Constant currency profit before tax excluding notable<br><br>items and strategic transactions1	Reported profit before tax excluding notable items, strategic transactions and the<br><br>impact of foreign exchange translation3
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<br><br>of goodwill and other 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<br><br>and other intangible assets and notable items2
	Average ordinary shareholders’ equity adjusted for goodwill<br><br>and intangibles and notable items2
Net asset value per ordinary share	Total ordinary shareholders’ equity4
	Basic number of ordinary shares in issue after deducting own shares held
Tangible net asset value per ordinary share	Tangible ordinary shareholders’ equity5
	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<br><br>assets	Average total shareholders’ equity
	Average total assets
Expected credit losses and other credit impairment<br><br>charges (‘ECL’) as % of average gross loans and<br><br>advances to customers	Annualised constant currency ECL6
	Constant currency average gross loans and advances to customers6
Expected credit losses and other credit impairment<br><br>charges (‘ECL’) as % of average gross loans and<br><br>advances to customers, including held for sale	Annualised constant currency ECL6
	Constant currency average gross loans and advances to customers,<br><br>including held for sale6
Target basis operating expenses	Reported operating expenses excluding notable items, foreign exchange<br><br>translation and other excluded items7
Basic earnings per share excluding material notable<br><br>items and related impacts	Profit attributable to ordinary shareholders excluding material notable<br><br>items and related impacts8
	Weighted average number of ordinary shares outstanding after deducting own<br><br>shares held
Multi-jurisdictional client revenue	Total client revenue we generate from clients that hold a relationship with<br><br>us that generates revenue in more than one market

1Constant currency performance is computed by adjusting reported results for the effects of foreign currency translation differences, which distort period-on-

period comparisons.

2For details of notable items, see ‘Supplementary financial information‘ on page 108.

3For details of strategic transactions, see ‘Strategic transactions supplementary analysis‘ on page 111.

4Total ordinary shareholders’ equity is total shareholders‘ equity less non-cumulative preference shares and capital securities.

5Tangible ordinary shareholders’ equity is total ordinary shareholders’ equity excluding goodwill and other intangible assets (net of deferred tax).

6The constant currency numbers are derived by adjusting reported ECL and average loans and advances to customers for the effects of foreign currency

translation differences.

7Other excluded items includes the impact of re-translating comparative period financial information at the latest rates of foreign exchange in hyperinflationary

economies, which we consider to be outside of our control, and the impact of the sale of our retail banking operations in France and banking business in Canada.

8For details of material notable items and related impacts, that are included in the calculation of Profit attributable to ordinary shareholders excluding material

notable items and related impacts, see page 134.

HSBC Holdings plc Annual Report on Form 20-F	131
Constant currency revenue and profit before tax excluding notable items and strategic transactions
---	---	---	---
	Year ended
	2024	2023	2022
	$m	$m	$m
Revenue
Reported	65,854	66,058	50,620
Notable items	1,580	(335)	3,602
Reported revenue excluding notable items	67,434	65,723	54,222
Currency translation1		(1,234)	(839)
Constant currency revenue excluding notable items	67,434	64,489	53,383
Constant currency impact of strategic transactions (distorting impact of operating results between periods)2	(178)	(1,446)	N/A
Constant currency revenue excluding notable items and strategic transactions	67,256	63,043	N/A
Profit before tax
Reported	32,309	30,348	17,058
Notable items	1,813	2,850	6,502
Reported profit before tax excluding notable items	34,122	33,198	23,560
Currency translation1		(518)	(503)
Constant currency profit before tax excluding notable items	34,122	32,680	23,057
Constant currency impact of strategic transactions (distorting impact of operating results between periods)2	(85)	(463)	N/A
Constant currency profit before tax excluding notable items and strategic transactions	34,037	32,217	N/A

1Currency translation on the reported balance excluding currency translation on notable items.

2For more details of strategic transactions, please refer to page 111.

Return on average ordinary shareholders’ equity, return on average tangible equity and return on average tangible equity excluding notable<br><br>items
	2024	2023	2022
	$m	$m	$m
Profit after tax
Profit attributable to the ordinary shareholders of the parent company	22,917	22,432	14,346
Impairment of goodwill and other intangible assets (net of tax)	118	43	535
Profit attributable to the ordinary shareholders, excluding goodwill and other<br><br>intangible assets impairment	23,035	22,475	14,881
Impact of notable items1	1,588	2,173	2,750
Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment<br><br>and notable items	24,623	24,648	17,631
Equity
Average total shareholders’ equity	187,507	184,029	180,263
Effect of average preference shares and other equity instruments	(18,480)	(18,794)	(21,202)
Average ordinary shareholders’ equity	169,027	165,235	159,061
Effect of goodwill and other intangibles (net of deferred tax)	(11,626)	(11,480)	(10,786)
Average tangible equity	157,401	153,755	148,275
Average impact of notable items	(3,322)	(1,162)	1,565
Average tangible equity excluding notable items	154,079	152,593	149,840
	%	%	%
Ratio
Return on average ordinary shareholders’ equity	13.6	13.6	9.0
Return on average tangible equity	14.6	14.6	10.0
Return on average tangible equity excluding notable items	16.0	16.2	11.8

1For details of notable items please refer to Supplementary financial information on page 108.

From 1 January 2024, we have revised the adjustments made to

return on average tangible equity (‘RoTE’). Prior to this, we adjusted

RoTE for the impact of strategic transactions and the impairment of

our investment in Bank of Communications Co., Limited (‘BoCom’),

whereas from 1 January 2024 we have excluded all notable items.

This was intended to improve alignment with the treatment of notable

items in our other income statement disclosures. Comparatives have

been re-presented on the revised basis and we no longer disclose

RoTE excluding strategic transactions and the impairment of BoCom.

We will now target a RoTE in the mid-teens in each of the three years

from 2025 to 2027 excluding the impact of notable items.

132	HSBC Holdings plc Annual Report on Form 20-F

Reconciliation of alternative performance measures

The following table details the adjustments made to reported results by global business:

Return on average tangible equity by global business
	Year ended 31 Dec 2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Profit before tax	12,182	11,860	7,063	1,204	32,309
Tax expense	(2,173)	(2,834)	(1,573)	(730)	(7,310)
Profit after tax	10,009	9,026	5,490	474	24,999
Less attributable to: preference shareholders, other equity holders, non-controlling<br><br>interests	(824)	(471)	(520)	(267)	(2,082)
Profit attributable to ordinary shareholders of the parent company	9,185	8,555	4,970	207	22,917
Other adjustments	(110)	314	(202)	116	118
Profit attributable to ordinary shareholders	9,075	8,869	4,768	323	23,035
Average tangible shareholders’ equity	31,267	44,357	36,622	45,155	157,401
Return on average tangible equity (%)	29.0	20.0	13.0	0.7	14.6
	Year ended 31 Dec 2023
Profit before tax	11,544	13,280	5,924	(400)	30,348
Tax expense	(2,141)	(2,945)	(1,165)	462	(5,789)
Profit after tax	9,403	10,335	4,759	62	24,559
Less attributable to: preference shareholders, other equity holders, non-controlling<br><br>interests	(828)	(485)	(588)	(226)	(2,127)
Profit attributable to ordinary shareholders of the parent company	8,575	9,850	4,171	(164)	22,432
Other adjustments	(221)	364	168	(268)	43
Profit attributable to ordinary shareholders	8,354	10,214	4,339	(432)	22,475
Average tangible shareholders’ equity	29,352	43,687	38,036	42,680	153,755
Return on average tangible equity (%)	28.5	23.4	11.4	(1.0)	14.6
Net asset value and tangible net asset value per ordinary share
---	---	---	---
	2024	2023	2022
	$m	$m	$m
Total shareholders’ equity	184,973	185,329	177,833
Preference shares and other equity instruments	(19,070)	(17,719)	(19,746)
Total ordinary shareholders’ equity	165,903	167,610	158,087
Goodwill, PVIF and intangible assets (net of deferred tax)	(11,608)	(11,900)	(11,160)
Tangible ordinary shareholders’ equity	154,295	155,710	146,927
Basic number of $0.50 ordinary shares outstanding after deducting own shares held	17,918	19,006	19,739
Value per share	$	$	$
Net asset value per ordinary share	9.26	8.82	8.01
Tangible net asset value per ordinary share	8.61	8.19	7.44
Post-tax return and average total shareholders’ equity on average total assets
---	---	---	---
	2024	2023	2022
	$m	$m	$m
Profit after tax	24,999	24,559	16,249
Average total shareholders’ equity	187,507	184,029	180,263
Average total assets	3,062,474	3,059,887	3,017,495
Ratio	%	%	%
Post-tax return on average total assets	0.8	0.8	0.5
Average total shareholders’ equity to average total assets	6.12	6.01	5.97
HSBC Holdings plc Annual Report on Form 20-F	133
---	---
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
---	---	---	---
	2024	2023	2022
	$m	$m	$m
Expected credit losses and other credit impairment charges (‘ECL’)	(3,414)	(3,447)	(3,584)
Currency translation	—	188	(31)
Constant currency	(3,414)	(3,259)	(3,615)
Average gross loans and advances to customers	952,484	955,585	1,014,148
Currency translation	(16,140)	(10,586)	(17,751)
Constant currency	936,344	944,999	996,397
Average gross loans and advances to customers, including held for sale	968,785	1,020,992	1,035,678
Currency translation	(17,394)	(14,752)	(18,233)
Constant currency	951,391	1,006,240	1,017,445
Ratio	%	%	%
Expected credit losses and other credit impairment charges as % of average gross loans and advances to<br><br>customers	0.36	0.34	0.36
Expected credit losses and other credit impairment charges as % of average gross loans and advances to<br><br>customers, including held for sale	0.36	0.32	0.36

Target basis operating expenses

Target basis operating expenses for 2024 was computed by excluding

the direct cost impact of our retail banking operations in France and

Canada banking business disposals from the 2023 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. In 2024, we targeted

operating expenses growth of approximately 5% compared with

This target reflected our business plan for 2024, which included

an increase in staff compensation, higher spend and investment in

technology for growth and efficiency, in part mitigated by cost savings

from actions taken during 2023. We are targeting growth in target

basis operating expenses of approximately 3% in 2025 compared

with 2024.

Our target basis operating expenses for 2025 excludes 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 cost target includes the impact of simplification-related saves

associated with our announced reorganisation, which aims to

generate approximately $0.3bn of cost reductions in 2025, with a

commitment to an annualised reduction of $1.5bn in our cost base

expected by the end of 2026. To deliver these reductions, we plan to

incur severance and other up-front costs of $1.8bn over 2025 and

2026, which will be classified as notable items.

We do not reconcile our forward target basis operating expenses

guidance to the reported operating expenses.

Target basis operating expenses
	2024	2023
	$m	$m
Reported operating expenses	33,043	32,070
Notable items	(233)	(185)
– disposals, acquisitions and related costs	(199)	(321)
– restructuring and other related costs1	(34)	136
Currency translation2		(577)
Excluding the constant currency impact of the sale of our retail banking operations<br><br>in France and banking business in Canada3	(162)	(976)
Excluding the impact of retranslating prior year costs of hyperinflationary economies at a constant currency foreign exchange rate		742
Target basis operating expenses	32,648	31,074

1Amounts relate to restructuring provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.

2Currency translation on reported operating expenses, excluding currency translation on notable items.

3 This represents the business as usual costs which are not classified as notable items relating to our retail banking operations in France and banking business in

Canada, on a constant currency basis. This does not include the disposal costs which relate to these transactions.

134	HSBC Holdings plc Annual Report on Form 20-F

Reconciliation of 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
	2024	2023
	$m	$m
Profit attributable to shareholders of company	23,979	23,533
Coupon payable on capital securities classified as equity	(1,062)	(1,101)
Profit attributable to ordinary shareholders of company	22,917	22,432
Impairment of interest in associate1	—	3,000
Gain on acquisition of SVB UK	(5)	(1,549)
Impact of the sale of our retail banking operations in France	(56)	108
Impact of the sale of our banking business in Canada2	(4,963)	(311)
Impact of the sale of our business in Argentina	6,161	—
Profit attributable to ordinary shareholders of company excluding material notable items and related impacts	24,054	23,680
Number of shares
Weighted average basic number of ordinary shares (millions) after deducting own shares held	18,357	19,478
Basic earnings per share ($)	1.25	1.15
Basic earnings per share excluding material notable items and related impacts ($)	1.31	1.22
Dividend per ordinary share (in respect of the period) ($)3	0.87	0.61
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 an impairment loss of $3bn recognised in respect of the Group’s investment in BoCom in 2023. See Note 18 on page 424.

2Represents gain on sale of 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.

3 In 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.

Material notable items are a subset of notable items. Material notable

items are components of our income statement that management

would consider as outside the normal course of business and

generally non-recurring in nature, which are excluded from our

dividend payout ratio calculation and our earnings per share measure,

along with related impacts. 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.

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 calculation.

Material notable items in 2024 and comparative periods included the

sale of our business in Argentina, the sale of our retail banking

operations in France, the sale of our banking business in Canada, the

gain following the acquisition of SVB UK and the impairment of our

investment in BoCom. In determining this measure, we also excluded

HSBC Bank Canada‘s financial results from the 30 June 2022 net

asset reference date until completion of the sale, as the gain on sale

was recognised through a combination of the consolidation of HSBC

Bank Canada‘s results in the Group‘s results since this date, and the

remaining gain on sale recognised at completion. For the sale of our

business in Argentina, between signing and closing, the loss on sale

varied by changes in the net asset value of the disposed business and

associated hyperinflation and foreign currency translation, and in the

fair value of consideration including price adjustments and migration

costs. There were no additional related impacts identified, and the

ongoing profits from HSBC Argentina were not excluded from our

basic earnings per share excluding material notable items and related

impacts.

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 mastergroup (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 CMB and GBM reported revenue the revenue we

generate from client facilitation in Fixed Income and Equities, as well

as other non-client revenue. In 2023, we also excluded the gain on

the acquisition of SVB UK.

Wholesale multi-jurisdictional client revenue
	2024	2023
	$bn	$bn
CMB and GBM revenue	39.1	39.0
Allocated revenue and other1	(1.3)	0.9
Client facilitation in Fixed Income and Equities	(5.6)	(4.8)
Gain on acquisition of SVB UK	—	(1.6)
Wholesale client revenue	32.3	33.5
– clients banked in multiple jurisdictions (‘multi-jurisdictional’)	20.0	20.4
– domestic only clients	12.3	13.1

1Including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital

held in the global businesses.

HSBC Holdings plc Annual Report on Form 20-F	135

Other information

Contents

135	Disclosure controls
135	Management’s assessment of internal controls over financial<br><br>reporting
135	Regulation and supervision
141	Disclosures pursuant to Section 13(r) of the Securities Exchange<br><br>Act

Disclosure controls

The Group Chief Executive and Group Chief Financial Officer, 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

Based upon that evaluation, the Group Chief Executive and

Group Chief Financial Officer concluded that the disclosure controls

and procedures at 31 December 2024 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 2024. 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 2024 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 2024, 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

2024, has also audited the effectiveness of the Group’s internal

control over financial reporting as stated in their report on page 361.

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 ‘Report of the Directors: Statement of

Compliance’ on page 359.

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 14 of HSBC’s entities in the UK,

including seven 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 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.

The BoE conducts prudential regulation and supervision of financial

services firms through the PRA, and in addition to its wider role as the

UK’s central bank, the BoE is the 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 (No.

2) Order 2014.

These include own funds and liabilities that can be written down or

converted into capital resources 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 BoE set end state MREL

requirements for the Group, which have applied since 1 January 2022.

136	HSBC Holdings plc Annual Report on Form 20-F

Other information

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.

UK banking and financial services institutions are subject to numerous

laws and regulations, and related regulatory rules and guidance. 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, regulates payment systems in the

UK.

The PRA and FCA‘s rules establish the minimum criteria for the

authorisation of banks and other financial sector entities that carry out

regulated activities. In the UK, the PRA and FCA have the right to

object, on prudential grounds, to persons who hold, or intend to hold,

10% or more of the voting power or shares of a financial institution

that they regulate, or of its parent undertaking. In its capacity as our

supervisor on a consolidated basis, the PRA receives information on

the capital adequacy of, and sets requirements for, the Group as a

whole. In addition, it conducts stress tests both on HSBC’s UK

entities and more widely on the Group. Individual banking subsidiaries

in the Group are directly regulated by their local banking supervisors,

who set and monitor, inter-alia, their capital adequacy requirements.

The Group is subject to capital requirements as set out in Regulation

(EU) No. 575/2013 on prudential requirements for credit institutions

and investment firms of the European Parliament and of the Council

of 26 June 2013, as amended or supplemented, as it forms part of

domestic law in the UK by virtue of the EUWA (the ‘UK CRR’), the

PRA Rulebook and the UK law implementing the Capital

Requirements Directive (the ‘CRD’ and together with the UK CRR,

and the relevant rules of the PRA Rulebook, the ‘Capital

Requirements Legislative Package’).

The Pillar 1 regulatory capital framework has been, and continues to

be, significantly enhanced. The UK implemented the first tranche of

changes associated with Basel 3.1 in January 2022. This included

changes in relation to counterparty risk, equity investments in funds

and market risk RWAs and the leverage ratio. The second and final

tranche of Basel 3.1 includes the changes to credit and operational

risk and credit valuation adjustment RWAs, further changes to the

market risk RWAs and the implementation of an RWA output floor.

In December 2023, the PRA published its first set of near final rules

for the second tranche of Basel 3.1 covering market risk, credit

valuation adjustment and operational risk requirements. In September

2024, the PRA published its second set of near final rules for the

implementation of Basel 3.1 covering credit risk, the output floor and

reporting and disclosures. The PRA also set out its intention to

streamline the Pillar 2A capital framework and capital communications

process. Alongside this, HM Treasury published its policy statement

on the implementation of Basel 3.1 in the UK. This sets out the

process for transferring parts of the UK CRR out of UK legislation and

into the PRA Rulebook.

In September 2024, the PRA proposed implementation date for the

Basel 3.1 package was 1 January 2026, with a phase-in period of four

years for the output floor until 31 December 2029; however, in

January 2025, the proposed implementation date was delayed until 1

January 2027, to allow time for greater clarity in the implementation

plans of the US, and the phase-in period for the output floor has

consequently been reduced to three years. As a result, the final Basel

3.1 rules are scheduled to take effect from 1 January 2027, with a

three-year phase-in of the output floor until 31 December 2029, so

that the date of full implementation remains 1 January 2030.

The Group is also subject to liquidity requirements as set out in the

UK CRR and as implemented by the PRA, and, in January 2022

became subject to the net stable funding ratio (‘NSFR‘) requirements

as part of the first tranche of changes arising as part of Basel 3.1.

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 control 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 (‘BCBS‘) 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 the

BCBS 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 the BCBS. In December 2023, the

HKMA published final rules for the implementation of the Basel 3.1

standards, which became effective on 1 January 2025.

As outlined in the HKMA Supervisory Policy Manual SA-1 – Risk

based Supervisory Approach, the HKMA adopts a risk-based

supervisory approach which consists of a structured methodology

designed to establish a forward-looking view on the risk profile of

authorised institutions. During the process, the HKMA assesses eight

inherent risks, namely, credit, market, interest rate, liquidity,

operational, legal, reputation and strategic risks. In the assessment of

HSBC Holdings plc Annual Report on Form 20-F	137

these risks, the HKMA will also consider any new risk types that may

emerge from time to time, for example climate risk. The HKMA also

follows a policy of ‘continuous supervision’ through on-site

examinations, off-site reviews, prudential meetings, cooperation with

external auditors and sharing information with other supervisors as a

part of its risk-based supervisory methodology.

The HKMA aims to ensure that the standards for regulatory disclosure

in Hong Kong remain in line with those of other leading financial

centres.

The Banking (Disclosure) Rules take into account the latest disclosure

standards released by the BCBS, which prescribe quarterly, semi-

annual, and annual disclosure of specified items, including in the form

of standard templates and tables, in order to promote user-relevance

and the consistency and comparability of regulatory disclosure among

banks and across jurisdictions.

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.

The HKMA is the relevant authority under the Anti-Money Laundering

and Counter-Terrorist Financing Ordinance for supervising authorised

institutions’ compliance with the legal and supervisory requirements

set out in the Anti-Money Laundering and Counter-Terrorist Financing

Ordinance and the Guideline on Anti-Money Laundering and Counter-

Financing of Terrorism (for Authorised Institutions). The HKMA

requires authorised institutions in Hong Kong and its overseas

branches and subsidiaries to establish effective systems and controls

to prevent and detect money laundering and terrorist financing. It

works closely with other stakeholders within both the government

and the industry to ensure that the banking sector is able to play its

gatekeeper role in Hong Kong’s anti-money laundering and counter-

financing of terrorism regime.

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.

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 The Hongkong and Shanghai Banking

Corporation Limited) 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.

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 Managers-In-Charge 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 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.

In order 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 insurance related businesses of authorised institutions in

Hong Kong, which aims to improve efficiency and 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 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

Financial Institutions (Resolution) Ordinance (‘FIRO‘). The HKMA’s

function as a resolution authority is supported 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.

In order 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 the resolution

powers in the event of their failure or likely failure. The HKMA has set

resolution standards with which authorised institutions need to

comply in order to inform resolution planning and remove

impediments to resolvability. Those standards cover the periodic

submission of core information to the Resolution Office, loss-

absorbing capacity, liquidity and funding in resolution, operational

138	HSBC Holdings plc Annual Report on Form 20-F

Other information

continuity in resolution, the contractual recognition of the 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 Consumer Financial Protection Bureau 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 the other US banking regulators jointly finalised

rules that tailor the application of the enhanced prudential standards

for large US banking organisations and the US operations of certain

foreign banking organisations (the ‘Tailoring Rules’). The Tailoring

Rules assign each BHC, combined US operations of foreign banking

organisations and US IHC with $50bn or more in total US assets to

one of five buckets (Categories I, II, III, IV, and ‘Other Firms‘) based

on their relative size and complexity and assessed on asset size,

cross-jurisdictional activity, reliance on short-term wholesale funding,

non-bank asset size, and off-balance sheet exposures. As of 1 January

2024, HNAH continues to be classified as a Category IV firm per the

criteria set forth in the Tailoring Rules. As a Category IV banking

organization, HNAH will continue to be subject to specific enhanced

prudential standards applicable to banking organisations assigned to

Category IV. As the depository institution subsidiary of HNAH, HSBC

Bank USA is also subject to the regulatory capital requirements

applicable to Category IV firms.

HNAH, HSBC USA Inc. and HSBC Bank USA 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, HSBC USA Inc. and HSBC Bank

USA each calculate their risk-based capital requirements as Non-

Advanced Approaches banks in accordance with the Basel III rule 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". HSBC USA Inc. and HSBC Bank USA

continue to be subject to the static 2.5% capital conservation buffer

(‘CCB‘). Compliance with the SCB/CCB does not represent minimum

requirements per se, but rather a necessary condition to allow capital

distributions and discretionary bonus payments.

In 2023, the 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 that were

intended to be broadly consistent with the Basel III standards issued

by the Basel Committee on Banking Supervision (‘BCBS’) in 2017.

The future of this proposal is uncertain.

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. In August 2024,

the FRB announced a new SCB for each CCAR firm based on its most

recent CCAR stress tests and planned common stock distributions,

which took effect on 1 October 2024. HNAH’s SCB requirement was

5.1%, a reduction from 6.4% in 2023.

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, including HNAH,

are subject to a less stringent US LCR and NSFR modified regulatory

requirement so long as HNAH‘s weighted short-term wholesale

funding equals or exceeds $50bn. As a result, under the modified US

LCR rule, a LCR of 100 percent or higher reflects an unencumbered

HQLA balance that is equal to or exceeds 70 percent of the firm’s

liquidity needs for a 30 calendar day liquidity stress scenario.

HSBC Holdings plc Annual Report on Form 20-F	139

Under the modified US NSFR rule as applied to HNAH, a NSFR of 100

percent or more reflects an available stable funding balance from

liabilities and capital over the next 12 months that is equal to or

exceeds 70 percent 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 liquidity risk management and liquidity buffer

requirements as well as liquidity stress testing on a quarterly basis.

Under the FRB and FDIC rule implementing the resolution planning

requirements for depository institution holding companies (the "SIFI

Plan") in the Dodd-Frank Act, HSBC Holdings is required to file a SIFI

Plan every three years. HSBC Holdings’ last SIFI Plan was a targeted

resolution plan submitted in December 2021. The FRB and FDIC

provided feedback on this targeted plan in December 2022. The FRB

and FDIC did not identify any shortcomings or deficiencies but noted

areas where further progress will help improve HSBC Holdings’

preparation for a rapid and orderly resolution of its US subsidiaries and

operations that may be addressed in HSBC Holdings’ next plan

submission. As the combined US operations of HSBC Holdings

moved from Category III to Category IV shortly after its last

submission, it is now a triennial reduced filer, which requires the

submission of reduced plans every three years. The next SIFI Plan

submission is due on 1 July 2025. Under the FDIC’s separate

resolution plan requirements for insured depository institutions (the

‘IDI Plan‘) with $100bn or more in total consolidated assets, banks

including HSBC Bank USA, are required to submit an IDI Plan every

three years. HSBC Bank USA submitted its latest IDI plan in

December 2022. In June 2024, the FDIC adopted a final rule that

increased the frequency of, and substantive requirements applicable

to, IDI Plans. HSBC Bank USA continues to be required to submit an

IDI Plan every three years (now with an interim supplement required

in the off years) and would become subject to increased content

requirements and an emphasis on capabilities testing and

engagement with the FDIC. HSBC Bank USA’s interim supplement is

due on 1 July 2025 and a full IDI Plan is due on 1 July 2026. The OCC

also recently finalized revisions to its recovery planning guidelines,

which included lowering the threshold of banks to which it applies

from $250bn to $100bn average total consolidated assets. HSBC

Bank USA now becomes subject to these requirements and must

comply with most aspects of the revised rule by 1 January 2026. 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. As a Category IV firm, 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 Act (‘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 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 expands 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 which the FSOC, the CFPB or other regulators

may adopt 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’) 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 European Central Bank (‘ECB‘) and

the EU member states’ national supervisory authorities ,the European

Single Resolution Board (‘SRB‘) and the EU member states’ national

resolution authorities.

In the EU, the package of rules implementing the Basel 3.1 reforms

were finalised in 2024. The final version of the amendments to the

Capital Requirements Regulation, known as CRR3, was published in

June. The CRR3 amends the rules as regards to requirements for

credit risk, credit valuation adjustment risk, operational risk, market

risk and the output floor in accordance with Basel 3.1.

The implementation date for the majority of the requirements remains

1 January 2025, with an output floor transitional period of five years.

In October 2024, a delegated act postponing the implementation of

the market risk rules by one-year until 1 January 2026 was formally

adopted. The one-year delay aims to ensure that implementation in

Europe is aligned to other major jurisdictions.

In June 2024, the EU also enacted the amendments to the Capital

Requirements Directive, known as CRD6. While the CRR3 and most

of the CRD6 requirements apply only to European subsidiaries of

HSBC, the CRD6 Article 21c introduces a restriction on cross-border

activities provided by non-EU banking entities to EU-based clients,

subject to certain exemptions. EU member states have 18 months to

transpose the CRD6 rules into national law, so that the effective

implementation date is in January 2026. There is an additional one-

year transition period for provisions relating to cross-border services

and third-country branches.

As part of the implementation of CRR3 and CRD6, the EBA has been

mandated to draft 140 pieces of secondary legislation and guidance in

support of implementation.

Global and regional prudential and

other regulatory developments

The Group is subject to regulation and supervision by a large number

of regulatory bodies and other agencies. In addition to regulatory

changes being introduced at a country level, changes are often driven

by global bodies such as the G20, the FSB and the Basel Committee

on Banking Supervision, which are then implemented at country level

or in the case of the EU, regionally, subject to modifications and with

separate additional measures.

140	HSBC Holdings plc Annual Report on Form 20-F

Other information

Of principal importance from a prudential perspective are the changes

that relate to Basel 3.1 (as explained in the 'UK regulation and

supervision' section).

We are also subject to regulatory stress testing in many

jurisdictions.These have increased both in frequency and in the

granularity of information required by supervisors. They include the

programmes of the BoE, the FRB (as explained in the ‘US regulation

and supervision’ section), the OCC, the EBA, the ECB, the HKMA and

other regulators. For further details, see ‘Stress testing’ on page 146.

On prudential changes, further details can be found in the ‘Regulatory

developments’ section on page 7 of the Pillar 3 Disclosures as at

31 December 2024.

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

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 97% (US$ 810.8bn) of the Group’s

consolidated RWAs (US$ 835.1bn): 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.

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 biennial basis. 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 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. 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 and our own risk appetite.

HSBC's global financial crime programme is designed to enable 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 fraud, bribery and corruption, tax evasion, sanctions and

export control violations and evasion, money laundering, terrorist

financing and proliferation financing.

HSBC continues to develop its anti-money laundering programme in

light of emerging risks and new legislation. Technical and digital

innovation in how we engage with customers and the services we

HSBC Holdings plc Annual Report on Form 20-F	141

provide to them continues at pace. HSBC continues to monitor

developments, shape risk appetite and develop appropriate controls

to manage the risks associated with the increasing use of alternate

(including digitised) payment methods and technologies. HSBC

continues to enhance its control framework to detect, deter and

disrupt money laundering, terrorist financing and proliferation

financing more effectively, increasing its use of intelligence-led

technologies to monitor customers for unusual or suspicious activity.

HSBC has refreshed its processes and procedures to manage the risk

of the bank's products and services being used for the purposes of

tax evasion or bribery and corruption, whether by its customers or

through its staff or third party engagements, which may expose

HSBC to corporate criminal liability. HSBC seeks to comply with all

applicable anti-bribery and anti-corruption laws in every market and

jurisdiction in which it operates while focusing on the spirit of relevant

laws and regulations, demonstrating HSBC’s commitment to ethical

behaviours and conduct as part of our environmental, social and

corporate governance. HSBC provides annual mandatory training on

the prevention of money laundering, terrorist financing, proliferation

financing, bribery and corruption and tax evasion to all staff and

carries out regular monitoring and testing of its programmes to inform

enhancements to the global financial crime policy on an ongoing

basis. HSBC also maintains clear whistleblowing policies and

processes, to ensure that individuals can report concerns

confidentially.

HSBC continues to develop its fraud controls in conjunction with

areas such as cyber risk, to protect the bank and our customers;

investing in capabilities to fight financial crime through the application

of new technologies such as behavioural biometrics, advanced

analytics and artificial intelligence. A comprehensive programme of

customer awareness and staff training is in place to maintain strong

anti-fraud awareness. HSBC continues to invest in enhancements to

fraud prevention and detection tooling with leading vendors.

Enhanced metrics are tracked closely to assist with control

performance monitoring and support the ongoing optimisation of

fraud defences.

HSBC’s sanctions programme seeks to apply a globally consistent

standard to manage sanctions compliance and export control risk

effectively across all HSBC legal entities in all jurisdictions in which

HSBC operates. The external sanctions environment remains

dynamic, and sanctions regimes are increasingly complex and less

predictable as geopolitical tensions continue to rise. Russia, and less

so Belarus, have continued to be targeted by various trade and

financial sanctions in 2024, with greater focus on enforcing sanctions

and limiting methods of sanctions evasion and sources of Russian

revenue. The US-China relationship remains complex, with both sides

imposing sanctions and export restrictions. The US recently

implemented an Outbound Investment Programme, which seeks to

restrict / limit US Person investment in the non-publicly traded

securities of Chinese, Hong Kong and Macau entities that engage in

certain activity related to semiconductors and microelectronics,

quantum information technologies or artificial intelligence, and the EU

is considering a similar programme.

China has retaliated by imposing, among other things, export

restrictions on key high-tech materials with potential military

applications.

Other material sanctions regulatory developments include the US

terminating its Zimbabwe sanctions programme, partially rolling back

sanctions relief afforded to Venezuela in 2023, granting additional

sanctions relief for basic human needs following the fall of the Assad

regime, and increasing the statute of limitations for civil enforcement

action and criminal prosecution for breaches of US sanctions from five

to ten years. The UK also introduced new strict liability enforcement

powers for breaches of UK trade sanctions, including forming the

Office of Trade Sanctions Implementation to enforce UK trade

sanctions, as well as expanded authorities to impose sanctions on

financial institutions or other entities that facilitate certain transactions

relating to the Russian government. HSBC continues to monitor

regulatory developments and their impact on HSBC’s global financial

crime policy and risk appetite.

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 2024 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 2024, 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 2024, was approximately

$2,319.

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 had an individual customer in the Middle East that was

designated under Executive Order 13224 in 2023. The customer's

accounts were restricted at the time of designation and the

relationship was exited in 2024. As part of the exit process, we

returned the customer's funds to the customer.

We had an individual customer in the Middle East employed by a

corporate entity that was designated under Executive Order 13224 in

Shortly following the designation, we processed one local

currency salary payment to the individual customer from the entity.

The customer relationship was exited in 2024.

142	HSBC Holdings plc Annual Report on Form 20-F

We have individual and corporate customers in the Middle East that,

during 2024, made local currency cheque payments for the rental of

property to a corporate entity designated under Executive Order

We processed these cheques on behalf of our customers.

For these activities, there was no measurable gross revenue or net

profit to HSBC during 2024.

Activity related to U.S. Executive

Order 13382

We had two individual customers in Asia that were designated under

Executive Order 13382 in 2023. The customers' accounts were

restricted at the time of designation and the relationships were exited

in 2024. As part of the exit process, we returned the customers'

funds to the customers.

We administer a pension scheme for a corporate entity in Asia in

accordance with applicable laws and regulations. An individual

participant in this pension scheme was designated under Executive

Order 13382 in 2023. We have restricted the individual's pension

scheme account. During 2024, prior to the imposition of the account

restriction, we allocated two mandatory local currency contributions

into the individual's pension scheme account.

For this activity, there was no measurable gross revenue or net profit

to HSBC during 2024.

Other activity

We have a non-Iranian insurance company customer in the Middle

East that, during 2024, 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 two customers in the Middle East that, during 2024, 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 one corporate customer in the Middle East that, during

2024, 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 customer.

We have individual and corporate customers in the Middle East that,

during 2024, 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 one corporate customer in Europe that, during 2024,

received local currency domestic payments from an insurance

company located outside Iran that is owned by the Government of

Iran for the provision of repair services. We processed the payments

from the insurance company to our customer.

We have individual and corporate customers in Asia, Europe and the

Middle East that, during 2024, made small local currency domestic

payments to, or received such payments from, Iranian embassies or

consulates. These customers are engaged in activities that require

consular services provided by embassies or consulates or provide

goods and services that support the conduct of the official business

of the embassies or consulates. In addition, we have an international

organisation customer in Europe that, during 2024, received a local

currency payment from an Iranian embassy relating to annual

membership fees. We processed these payments between our

customers and the Iranian embassies or consulates.

We have two corporate customers in Europe that, during 2024,

received local currency payments from a bank owned by the

Government of Iran in relation to management charges for property

owned by the bank. We processed these payments to our customers.

We have individual customers in Europe that are employed by a bank

located outside Iran that is owned by the Government of Iran. During

2024, we processed local currency salary payments received via

banks that are not owned by the Government of Iran to our

customers.

For these activities, there was no measurable gross revenue or net

profit to HSBC during 2024.

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 2024. There was

no measurable gross revenue or net profit to HSBC during 2024

relating to these frozen accounts.

HSBC Holdings plc Annual Report on Form 20-F	143

Dividers image-03.jpg

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.

144	Our approach to risk
148	Top and emerging risks
154	Risk factors
167	Our material banking risks
169	Credit risk
230	Treasury risk
246	Market risk
249	Climate risk
258	Resilience risk
259	Regulatory compliance risk
259	Financial crime risk
260	Model risk
261	Insurance manufacturing operations risk

Bangkok, Thailand, 1990s. Customer Service Desk.

144	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Our approach to risk

Our risk appetite

Our risk appetite defines the level and types of risk that we are willing

to take, while informing the financial planning process and guiding

strategic decision making. Our risk appetite is defined as the

aggregate level of risk that we are comfortable to take to achieve our

strategic objectives. Risk appetite also provides a mechanism for non-

executive directors and executive directors to collectively establish

the Group’s willingness to engage in certain activities and assess

these activities.

Enterprise-wide application

Our risk appetite is expressed holistically through various risk

management mechanisms and activities, in both quantitative and

qualitative terms. The Group Risk and Compliance function carried out

a review in 2024, which led to enhancements to our Global Risk

Appetite Framework to help ensure it remains aligned to industry best

practices, regulatory expectations and our strategic goals. Our Global

Risk Appetite Framework continues to evolve and expand its scope as

part of our periodic review process.

The Board reviews and approves the Group’s risk appetite regularly to

make sure it remains fit for purpose. The Group’s risk appetite is

considered, developed, and enhanced through the following

principles:

–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.

We formally articulate our risk appetite through our Risk Appetite

Statement (‘RAS’). Setting out our risk appetite helps ensure that we

agree a suitable level of risk for our strategy. In this way, risk appetite

informs our financial planning process and helps senior management

to allocate capital to business activities, services and products.

At a Group level, performance against the RAS is reported to the

Group Risk Management Meeting alongside key risk indicators to

support targeted insight and discussion of breaches of risk appetite

and any associated mitigating actions. This reporting allows risks to

be promptly identified and mitigated, and informs risk-adjusted

remuneration to drive a strong risk culture.

Coverage of each principal subsidiary and material operating entity is

monitored through a RAS, which helps ensure they remain aligned

with the Group’s RAS. Each RAS and business activity is guided and

underpinned by qualitative principles and/or quantitative metrics.

Risk management

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. This is supported

through our three lines of defence model described on page 145.

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 implement change initiatives, we 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.

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,

including the key principles and practices that we employ in managing

material risks, both financial and non-financial. The framework fosters

continuous monitoring and promotes risk awareness and a positive

risk culture. It encourages a sound operational and strategic decision-

making and escalation process. It also supports a consistent approach

to identifying, assessing, managing and reporting the risks we accept

and incur in our activities, with clear accountabilities. We actively

review and enhance our risk management framework and our

approach to managing risk.

Group Risk and Compliance is independent from the global

businesses, including our sales and trading functions. It provides

challenge, oversight and appropriate balance in risk/return decisions.

HSBC Holdings plc Annual Report on Form 20-F	145

Our risk management framework

The following diagram and descriptions summarise key aspects of the risk management framework, including governance, structure, risk

management tools and our culture, which together help align employee behaviour with risk appetite.

Key components of our risk management framework
HSBC values and risk culture
Risk governance	Non-executive risk governance	The Board approves the Group’s risk appetite, plans and performance<br><br>targets. It sets the ‘tone from the top’ and is advised by the Group Risk<br><br>Committee (see page 281).
	Executive risk governance	Our executive risk governance structure is responsible for the enterprise-<br><br>wide management of all risks, including key policies and frameworks for the<br><br>management of risk within the Group (see pages 145 and 167).
Roles and<br><br>responsibilities	Three lines of defence model	Our ‘three lines of defence’ model defines roles and responsibilities for risk<br><br>management. An independent Group Risk and Compliance function helps<br><br>ensure the necessary balance in risk/return decisions (see page 145).
Processes and tools	Risk appetite	The Group has processes in place to identify, assess, monitor, manage and<br><br>report risks to help ensure we remain within our risk appetite and to<br><br>anticipate, prevent, respond to, and recover from, significant operational<br><br>disruptions.
	Enterprise-wide risk management tools
	Active risk management: identification/assessment,<br><br>monitoring, management and reporting
	Operational resilience
Internal controls	Policies and procedures	Policies and procedures define the minimum requirements for the controls<br><br>required to manage our risks.
	Control activities	Operational and resilience risk management defines minimum standards<br><br>and processes for managing operational risks and internal controls.
	Systems and infrastructure	The Group has systems and processes that support the identification,<br><br>capture and exchange of information to support risk management activities.

Risk governance

The Board has ultimate supervisory responsibility for the effective

management of risk and approves our risk appetite.

The Group Chief Risk and Compliance Officer, 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 Group Chief Risk and Compliance Officer is also responsible for

the oversight of reputational risk, with the support of the Group

Reputational Risk Committee. The Group Reputational Risk

Committee considers matters arising from customers, transactions

and third parties that either present a serious potential reputational

risk to the Group or merit a Group-led decision to help enable a

consistent risk management approach across the regions, global

businesses and global functions. 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. All our

people have a role to play in risk management. These roles are

defined using the three lines of defence model, which takes into

account our business and functional structures, including regulatory

compliance and financial crime, as described in the following

commentary, ‘Our responsibilities’.

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.

Governance structure for the management of risk and compliance
Authority	Membership	Responsibilities include:
Group Risk Management<br><br>Meeting	Group Chief Risk and Compliance Officer<br><br>Group Chief Legal Officer<br><br>Group CEO<br><br>Group CFO<br><br>Group Head of Financial Crime and Group<br><br>Money Laundering Reporting Officer<br><br>All other Group Executive Committee<br><br>members	–Supporting the Group Chief Risk and Compliance Officer in exercising Board-delegated<br><br>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>Executive Committee	Group Chief Risk and Compliance Officer<br><br>Chief risk and compliance officers of<br><br>HSBC’s global businesses<br><br>Regional chief risk and compliance<br><br>officers and chief risk officers<br><br>Heads of Global Risk and Compliance<br><br>sub-functions	–Supporting the Group Chief Risk and Compliance Officer in providing strategic<br><br>direction for the Group Risk and Compliance function, setting priorities and providing<br><br>oversight<br><br>–Overseeing a consistent approach to accountability for, and mitigation of, risk and<br><br>compliance across the Group
146	HSBC Holdings plc Annual Report on Form 20-F
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Risk review

Governance structure for the management of risk and compliance (continued)
Authority	Membership	Responsibilities include:
Global business/regional risk<br><br>management meetings	Global business/regional chief risk and<br><br>compliance officers and chief risk officers<br><br>Global business/regional chief executive<br><br>officers<br><br>Global business/regional chief financial<br><br>officers<br><br>Global business/regional heads of global<br><br>functions	–Supporting the Group Chief Risk and Compliance Officer in exercising Board-delegated<br><br>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

The Board committees with responsibility for oversight of risk-related matters are set out on page 279.

Treasury risks are the responsibility of the Group Executive Committee 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 the Group Risk

Management Meeting. Further details on treasury risk management are set out on page 230.

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.

Group Risk and Compliance function

Our Group Risk and Compliance function is responsible for the

Group’s risk management framework. This responsibility includes

establishing global policy, monitoring risk profiles, and identifying and

managing forward-looking risk. Group Risk and Compliance is made

up of sub-functions covering all risks to our business. Forming part of

the second line of defence, the Group Risk and Compliance function

is independent from the global businesses, including sales and trading

functions. It provides challenge, appropriate oversight and balance in

risk/return decisions.

Responsibility for minimising both financial and non-financial risk,

including regulatory compliance and financial crime, lies with our

people. 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 and

compliance officers.

We have continued to strengthen the control environment and our

approach to the management of risk, as set out in our risk

management framework. Our ongoing focus is on helping to enable

more effective oversight and better end-to-end identification and

management of financial and non-financial risks. This is overseen by

the Enterprise Risk Management function, headed by the Global Head

of Enterprise Risk Management.

Stress testing and recovery planning

Our stress testing programme assesses our capital and liquidity

strength through an examination of our resilience to external shocks,

and forms part of our risk management and capital and liquidity

planning. As well as undertaking regulatory-driven stress tests, we

conduct our own internal stress tests to understand the nature and

level of material risks, quantify the impact of such risks 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 financial stability.

Internal stress tests

Our internal capital assessment uses a range of stress scenarios that

explore risks identified by management. They include potential

adverse macroeconomic, geopolitical, climate and operational risk

events, as well as other potential events that are specific to HSBC.

The selection of stress scenarios is based upon the output of our

identified top and emerging risks and our risk appetite processes.

Stress testing analysis helps management understand the nature and

extent of vulnerabilities to which the Group is exposed. Using this

information, management decides whether risks can or should be

mitigated through management actions or, if they were to crystallise,

be absorbed through capital and liquidity. This in turn informs

decisions about preferred capital and liquidity levels and allocations.

During 2024, we completed a Group-wide internal stress test

alongside testing of the Group’s strategy, otherwise known as the

corporate plan, to test and inform our strategy and assumptions. The

stress scenario assessed the impact of two contrasting scenarios

envisioning severe macroeconomic conditions over a five-year period.

These scenarios reflected the uncertain inflation and interest rate

environment, heightened geopolitical tensions, banking sector

challenges and global economic stress.

In addition to the Group-wide stress testing scenarios, each major

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, such as 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 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.

HSBC Holdings plc Annual Report on Form 20-F	147

Recovery and resolution plans

Recovery and resolution plans form part of the integral framework

safeguarding the Group’s financial stability under severe stress. The

Group recovery plan, together with stress testing, helps us identify

credible recovery options that can be implemented under a range of

idiosyncratic and market-wide stress scenarios. The aim is to mitigate

the potential shortfall in capital and liquidity pressures. The Group

continues to develop its recovery and resolution capabilities, including

in relation to the Resolvability Assessment Framework.

Key developments in 2024

In 2024, 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 also 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. We made progress with, and continue to develop capabilities to

address key risks. More specifically, we sought to enhance our risk

management in the following areas:

–We are advancing on our comprehensive initiative aimed at

strengthening our global regulatory reporting processes and

making them more sustainable. This multifaceted programme

includes enhancing data, consistency and controls.

–We are further strengthening our control environment through the

delivery of a new Global Control Oversight function which aims to

help drive a centralised and consistent approach to controls

oversight across the first line of defence business and process

owners.

–We continue to maintain a focus on our technology and

cybersecurity controls to improve the resilience and security of our

technology services in response to the heightened external threat

environment.

–We have improved the quality of our strategic change investment

processes and associated control monitoring and are seeking to

transition to a more agile approach to delivery of complex

transformation portfolios and initiatives.

–We continue to enhance our model risk framework in response to

changes in regulation and external factors. AI and machine learning

models remain a key focus. Progress has been made in enhancing

governance activity in this area with particular focus on generative

AI due to the pace of technological change and regulatory and

wider interest in adoption and usage.

–We enhanced our processes, framework and controls to improve

the oversight of our material 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 operational resilience. We will continue to assess and

manage our operational resilience.

–Through our climate risk programme, we made progress on

embedding climate considerations throughout our organisation,

including through risk policy updates. We also developed risk

metrics to monitor and manage exposures, and further enhanced

our internal climate scenario analysis. We continue to implement

our climate risk programme to complete our annual materiality

assessment and make changes to our policies, processes and

capabilities to better embed climate considerations throughout our

organisation.

–We deployed industry-leading technology and advanced 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 embed our regulatory management systems

focusing on forward-looking analysis, regulatory mapping, and

regulatory content for our inventory.

–We continued to enhance our frameworks, policies and

governance processes to embed regulatory requirements.

148	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 the execution of our

strategy or operations over the medium to long term.

We proactively assess the internal and external risk environment, as

well as review the themes identified across our regions and global

businesses, 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

Elections and subsequent changes of government during 2024 have

created uncertainty as domestic and foreign policy priorities have

shifted. The US in particular is expected to continue to bring about

changes to economic and foreign policy that will have broad economic

and geopolitical implications.

Key economic and financial risks are monitored closely. Major

markets, including the US and UK, continued to grow during the

second half of 2024, due to expansionary fiscal policies and the

positive impact of monetary easing on domestic demand and

investment. Similarly, Hong Kong and mainland China also continued

to grow, despite ongoing declines in house prices and weakness in

consumer spending.

The outlook for 2025 remains uncertain as the new US administration

intends to enact a significant change in economic and foreign policies

that could have an uncertain impact on global growth, inflation and

interest rates. In particular, the prospect of additional US tariffs and

retaliatory actions on trade has started to weigh on economic growth

forecasts and has raised future inflation expectations. Consequently,

markets now expect that major central banks will adopt a more

cautious approach to lowering policy interest rates during the course

of 2025.

The prospective impact on individual economies from the imposition

of higher US tariffs will depend on the breadth and level of the

increases and the dependence of the relevant countries’ exports on

US import demand. Emerging markets with higher levels of US dollar-

denominated debt and weaker public finances could be further

impacted by higher US interest rates and US dollar strength which

could result in higher repayment costs and refinancing risks and the

associated possibility of sovereign rating downgrades.

The country and sector implications of changing global trade policies

remains an area that is closely monitored. The implications for export

demand from mainland China and Hong Kong is a key area of

concern.

Markets continue to finance high public deficits, but debt

sustainability remains a risk when set against a backdrop of more

uncertain global growth prospects and a higher interest rate

environment. Debt levels continue to rise in major markets as

demands grow on government budgets from rising social welfare

costs, defence and climate transition. We are monitoring the fiscal

and market implications of recent government changes, including in

the UK and the US, where election pledges are ambitious relative to

already stretched fiscal positions. As global yields have increased,

government bond prices have become increasingly sensitive to

differences in growth and inflation expectations between markets, as

well as the perception of fiscal and funding risks. A loss of investor

confidence could drive a rise in yields, raise funding costs for

governments and lead to tax increases and expenditure cuts that are

negative for growth. For HSBC, the risks of a sharp rise in funding

costs in our key markets relate both to the credit and refunding risks

of our customers, market pricing risks of assets held for sale, and

risks to net interest margins.

We continue to monitor real estate conditions in mainland China and

Hong Kong, where activity remains mixed. Various central

government policies have been introduced to support the property

market and wider economy, but meaningful signs of recovery are yet

to be observed, with the exception of the residential real estate

market in Hong Kong, which has seen some improvement in

sentiment and transaction volumes in the fourth quarter of 2024.

In Hong Kong, the high vacancy rate in the commercial real estate

sector and the elevated interest rate environment have added

downward pressure to the commercial real estate market.

Commercial land sales resumed during the latter part of 2024 after a

halt earlier in the year, and the recent reduction in interest rates has

provided some liquidity relief to borrowers operating in this sector.

Nevertheless, a sustainable recovery in underlying demand is yet to

materialise, so the pressure on property prices may persist. We

continue to closely monitor the risk of further credit deterioration and

defaults in the portfolio.

The Israel-Hamas conflict may resurge. While a 42-day ceasefire was

agreed in January 2025, the durability of the ceasefire remains

uncertain. The regional economic impact of this conflict was relatively

limited throughout 2024. The US and UK imposed additional sanctions

on Iran in 2024 in response to Iran’s activities and the increase in

tensions between Israel and Iran. Further sanctions may be imposed

and could increase the risk within our operations. While supply chains

have largely adapted to the Russia-Ukraine war and the conflict in the

Middle East, the disruption of key supply routes, particularly through

the Red Sea, continues to impact global supply costs. Escalation,

resurgence or other changes in the Russia-Ukraine war and the

conflict in the Middle East could impact economic activity regionally or

globally for a prolonged period, which in turn could have a material

adverse effect on the Group’s business, financial condition, results of

operations, prospects, liquidity, capital position and credit ratings.

HSBC actively monitors and responds to financial sanctions and trade

restrictions that have been adopted in response to the conflicts.

The sanctions and trade restrictions imposed by the US, the UK, and

the EU, as well as other countries, as a result of the Russia-Ukraine

war, remain complex, far-reaching and evolving. The US has

expanded the reach of its secondary sanctions regime, which includes

broad discretion to impose severe sanctions on non-US banks that are

knowingly or even unknowingly engaged in certain transactions or

services directly or indirectly involving Russia’s military-industrial

base, including certain third-party activities that are difficult to detect

or beyond HSBC’s control. The imposition of such sanctions against

any non-US HSBC entity could result in significant adverse

commercial, operational and reputational consequences for HSBC. In

response to such sanctions and trade restrictions, as well as asset

flight, Russia has implemented certain countermeasures, including

the expropriation of foreign assets.

Following a strategic review in 2022, HSBC Europe BV (a wholly-

owned subsidiary of HSBC Bank plc) entered into an agreement to

sell its wholly-owned subsidiary HSBC Bank Russia (RR) (Limited

Liability Company), which was completed in May 2024.

Global tensions over trade and technology are resulting in divergent

regulatory standards and compliance regimes, presenting long-term

strategic challenges for multinational businesses. The relationships

between China and several other countries, including the US and the

UK, remain complex.

To date, the US, the UK, the EU and other countries have imposed

various sanctions and trade restrictions on Chinese persons and

companies, and there is a continued risk of additional sanctions and

trade restrictions or tariffs being imposed by the US and other

governments in relation to, among other things, alleged human rights

abuses, advances in certain sensitive technologies, territorial conflicts,

and the illicit trade of fentanyl and other synthetic opioids. Strategic

competition with China has the potential to impact the Group's

operations and global supply chains remain vulnerable to a

HSBC Holdings plc Annual Report on Form 20-F	149

deterioration in the relationship between China and other countries.

For example, the US recently imposed a new programme restricting

certain US outbound investments in Chinese companies engaged in

sensitive technology sectors and the EU is considering a similar

programme. In addition, during 2024 both the US and the EU raised

the rate at which they levy tariffs on a range of Chinese imports,

including electric vehicles. These have been imposed on the basis of

unfair competition, where the Chinese government is accused of

providing unfair subsidies to industry.

China, in turn, imposed a number of its own sanctions and trade

restrictions that target, or provide authority to target, foreign

individuals or companies as well as certain goods such as rare earth

minerals and metals, and technology and services. These, as well as

certain other retaliatory measures, have been and may continue to be

imposed against certain countries, businesses and individuals.

Existing and additional sanctions, trade restrictions, counter-sanctions

and other retaliatory measures relating to the foregoing or other

geopolitical tensions may adversely affect the Group, its customers

and the markets in which the Group operates by creating regulatory,

reputational and market risks, including additional inflationary

pressures, and a more complex operating environment.

As the geopolitical landscape evolves, compliance by multinational

corporations with their legal or regulatory obligations 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.

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.

More stringent 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.

Key considerations in our calculation of ECLs included inflationary

pressures, interest rates and changes to economic and financial

policies. In the fourth quarter of 2024, to address heightened policy

uncertainty following the US election and to overcome any lags in

consensus forecasts, an adjustment factor based on more recent

views of expected tariffs and other policy changes was modelled and

then applied to each of the economic scenarios. The effect was to

lower growth expectations in our major markets, while the impact on

inflation and interest rates was varied.

Following the adjustment the Central scenario continues to be

assigned the highest probability weighting across all of our major

markets. Outer scenarios have incorporated more adverse tariff

escalations and the escalation of key geopolitical risks.

There remains uncertainty regarding the adequacy of our models to

reflect credit losses under emerging risks which are not captured

under the historical loss experience of our models, or to adequately

distinguish risks for specific sectors or 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.

For further details of our Central and other scenarios, see ‘Measurement

uncertainty and sensitivity analysis of ECL estimates’ on page 178.

Mitigating actions

–We closely monitor geopolitical and economic developments in

key markets and sectors and undertake scenario analysis where

appropriate. 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 stress test portfolios of particular concern to identify

sensitivity to loss under a range of scenarios, with management

actions being taken to rebalance exposures and manage risk

appetite where necessary.

–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 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 continue to seek to manage sanctions and trade restrictions

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

Like other organisations, we operate in an extensive and complex

technology landscape. We need to remain resilient in order to support

customers, our colleagues and financial markets globally. Risks arise

where, for example, technology 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 including access to

customer data, whether ours or that of our third-party suppliers’.

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 capabilities to seek to meet the expectations

of our customers and regulators, and to help prevent disruptions to

our services.

–Our cyber intelligence and threat analysis team continually

evaluate threat levels for the most prevalent cyber-attack types

and their potential outcomes (see page 82), 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 Cloud security, identity and access management, metrics

and data analytics, and third-party security reviews 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 global businesses,

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 prevent, detect and defend against

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.

150	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Environmental, social and governance (’ESG’) risk

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 72.

We may face credit losses 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. 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.

Trading losses may arise if climate change results in changes to

macroeconomic and financial variables that negatively impact our

trading book exposures.

We may also be exposed to liquidity impacts in the form of deposit

outflows due to changes in customer behaviours driven by impacts to

profitability/wealth, or from reputational concerns relating to the

progress we make towards our climate-related ambitions and targets.

We may face impacts to our real estate portfolios due to changes to

the climate, an increase in the frequency and severity of extreme

weather events and chronic 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 of HSBC mortgages.

Operational risk may increase if extreme weather events impact

critical operations and premises.

We may face regulatory compliance risk resulting from the increasing

pace, breadth and depth of climate-related regulatory expectations,

including on the management of climate risk, and variations in

climate-related reporting standards, 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.

We may face reputational risk arising 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 climate-related ambitions and targets.

We may also be exposed to model risk, as the uncertain and evolving

impacts of climate change as well as data and methodology

limitations, present challenges to creating reliable and accurate model

outputs.

Reputational, regulatory compliance and legal risks may increase as

we make progress towards our ESG-related ambitions and targets,

with stakeholders likely to place greater focus on our actions, such as

the development of ESG-related policies, our disclosures and

financing and investment decisions relating to our ESG-related

ambitions and targets.

We may be exposed to additional risks if we fail to:

–make sufficient progress towards our ESG-related ambitions and

targets;

–set adequate plans to execute those plans or adapt those plans to

changes in the external environment;

–manage the risks associated both with meeting and not meeting

our ESG-related ambitions and targets; and

–meet evolving regulatory expectations and requirements on the

management of ESG risks.

We may face additional risks if we knowingly or unknowingly make

inaccurate, unclear, misleading, or unsubstantiated claims regarding

sustainability to our stakeholders.

We may face climate and ESG-related litigation and regulatory

enforcement risks, either directly if stakeholders think that we are not

adequately managing climate and ESG-related risks, or indirectly, if

our clients and customers are themselves the subject of litigation,

potentially resulting in the 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 of

stakeholders in different markets, including the UK, the US, the EU and

other markets regarding climate impacts and the nature of the

appropriate responses to climate change. 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 may face financial reporting risk in relation to our climate and ESG

disclosures, as data remains of limited quality and consistency, exposing

us to the risk of using incomplete and inaccurate data and models that

could result in sub-optimal decision making. Methodologies, data,

scenarios and industry standards that we have used may evolve over

time in line with market practice, regulation or developments in science,

where applicable. Any such developments in methodologies and

scenarios, and changes in the availability, accuracy and verifiability of

data over time and our ability to collect and process such data, exposes

us to financial reporting risk in relation to our climate and ESG

disclosures. This could result in revisions to our internal measurement

frameworks as well as reported data going forward, including on

financed emissions, meaning that such data may not be reconcilable or

comparable year on year. We may also have to re-evaluate our progress

towards our ESG-related ambitions and targets in the future.

We may also be exposed to nature-related risks beyond climate change.

These risks may arise when the provision of ecosystem services, such

as water availability, air quality and soil quality, is compromised, primarily

by the five key drivers of nature loss: changes in land/freshwater/sea-

use; climate change; pollution of air, water and soil; over-exploitation of

natural resources; and invasive alien species. They can manifest

themselves in a variety of ways for both HSBC and its customers,

including through macroeconomic, market, credit, reputational,

regulatory compliance and legal risks.

Regulation and disclosure requirements in relation to human rights

are increasing. 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

–The Environmental Risk Steering Meeting provides oversight of

environmental risk and the risk of greenwashing. For further

details of the Group’s ESG governance structure, see page 72.

–Our climate risk programme continues to support the development

of our climate risk management capabilities across four key pillars:

governance and risk appetite, risk management, stress testing and

scenario analysis, and disclosures.

HSBC Holdings plc Annual Report on Form 20-F	151

–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 60.

–We are developing our understanding of nature-related risks in line

with European regulatory expectations.

–In 2024, we focused 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 73.

–The scope of our financial reporting risk framework includes

oversight of the accuracy and completeness of climate and ESG

disclosures. Our risk appetite statement references our climate

and ESG disclosures. Our internal controls incorporate

requirements for addressing the risk of misstatement in climate

and ESG disclosures. To support this, we have developed a

framework to guide control implementation over climate and ESG

disclosures, which includes areas such as process and data

governance, and risk assessment.

–We continue to engage with our customers, investors and

regulators proactively on the management of climate and ESG

risks. We also engage with initiatives, including the Climate

Financial Risk Forum, Task Force on Climate-related Financial

Disclosures and CDP (formerly the Carbon Disclosure Project) to

help drive best practice for climate risk management.

For further details of our approach to climate risk management, see ‘Climate

risk’ on page 249.

Our ESG review can be found on page 39.

Financial crime risk

Financial institutions remain under considerable regulatory scrutiny

regarding their ability to detect and prevent financial crime. In 2024,

these risks continued to be exacerbated by rising geopolitical tensions

and ongoing macroeconomic factors. These challenges require

managing conflicting laws and approaches to legal and regulatory

regimes, and implementing increasingly complex and less predictable

sanctions and trade restrictions.

Amid increasing 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 brings additional financial

crime risks. While there is potential for the technology to support

financial crime detection, there is also a risk that criminals use

generative AI 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 around 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.

The intersection of ESG issues and financial crime continues to pose

risks related to potential ‘greenwashing’, human rights issues and

environmental crime, as our organisation, customers and suppliers

transition to net zero. In addition, climate change itself could heighten

risks linked to vulnerable migrant populations in countries where

financial crime is already more prevalent.

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.

Mitigating actions

–We continue to seek to manage sanctions and trade restrictions

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 regularly review our existing policies and control framework so

that developments relating to ESG are considered and the related

financial crime risks are mitigated to the extent possible.

–We engage with regulators, policymakers and relevant

international bodies, seeking to address data privacy challenges

through international standards, guidance and legislation.

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 to address evolving

customer requirements, drive efficiency and adapt our products to

attract and retain customers. As a result, we may need to increase

investment in our business to adapt or develop products and services

to respond to our customers’ evolving needs. We aim to ensure that

new digital capabilities do not weaken our resilience or wider risk

management capabilities.

New technologies such as generative AI, large language models,

blockchain, and quantum computing offer both business opportunities

and 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 make public commitments as to how we engage 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 in order to enhance the end-to-end

management of risks from new technology innovations.

Evolving regulatory environment risk

We aim to keep abreast of the emerging regulatory compliance and

conduct risk agenda. Current focus areas include but are not limited

to: ESG developments, particularly managing the risk of

‘greenwashing’; ensuring good customer outcomes and addressing

customer vulnerabilities; enhancements to regulatory reporting

controls; employee compliance including the use of e-communication

channels; and developments in legal principles or conduct

requirements (including in relation to the risk of such developments in

one part of the financial industry being construed as applying to other

parts of the financial industry, which could lead to legal or regulatory

proceedings).

152	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The competitive landscape in which the Group operates may be

impacted by future regulatory changes and government intervention

including changes driven by governments adopting a pro-business

growth agenda.

Mitigating actions

–We monitor regulatory developments to understand the evolving

regulatory landscape, and seek to respond with changes in a

timely manner.

–We engage with governments and regulators, and respond to

consultations with a view to help shape regulations that can be

implemented effectively.

–We hold regular meetings with relevant authorities to discuss

strategic contingency plans, including those arising from

geopolitical issues.

–Our purpose-led conduct approach aligns to our purpose and

values, in particular the value ‘we take responsibility’.

Internally driven

Data risk

We use multiple systems and growing quantities of data to support

our customers. Risk arises if data is incorrect, unavailable, misused or

unprotected. Along with other banks and financial institutions, we

need to meet external regulatory obligations and laws that cover data,

such as the Basel Committee on Banking Supervision’s 239

guidelines and the General Data Protection Regulation.

Mitigating actions

–Through our global data management framework, we monitor the

quality, availability and security of data that supports our

customers and internal processes. We work towards resolving any

identified data issues in a timely manner.

–We continue to make improvements to our data policies and to our

control framework – which includes trusted sources, data flows

and data quality – in order to enhance the end-to-end management

of data risk.

–We have established a global data management utility and

continue to simplify and unify data management activities across

the Group.

–We seek to protect customer data through our data privacy

framework, which establishes practices, design principles and

guidelines that enable us to demonstrate compliance with data

privacy laws and regulations.

–We continue to modernise our data and analytics infrastructure

through investments in cloud technology, data visualisation,

machine learning and AI.

–We continue to educate our employees on data risk and data

management. We have delivered regular mandatory training

globally on how to protect and manage data appropriately.

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.

–We continued to develop the management of our intra-group

arrangements using the same control standards as we apply to

external third party arrangements.

–We have strengthened our due diligence and monitoring

capabilities in respect of the financial stability of our third parties.

–We have strengthened the way third-party risk is overseen and

managed across all non-financial risks, and have enhanced our

processes, framework and reporting capabilities to help improve

the visibility of risk and enable more robust management of our

material third parties by our global businesses, functions and

regions.

–We are implementing the changes required by new regulations as

set by our regulators.

Model risk

Model risk arises whenever business decision making includes

reliance on models. We use models in both financial and non-financial

contexts, as well as in a range of business applications such as

customer selection, product pricing, financial crime transaction

monitoring, creditworthiness evaluation and financial reporting.

Assessing model performance is a continuous undertaking including

both regular monitoring of the model’s performance and more

fundamental reviews of the model construct and data.

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 the PRA’s supervisory statement 1/23 (SS1/23)

coming into effect, This provided detailed principles-based guidance

on how model risk should be managed, and further developments in

policy are also expected from other regulators.

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 also launched a major

project to develop 32 Wholesale IRB models which are expected to

be submitted for regulatory approval over the next two and a half

years.

Focus remains on AI and machine learning models where the pace of

technological advances, including the development of generative 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 updated 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 a review of model tiering across the organisation

assessing the materiality and complexity of all models and

assigning a new tier which will drive the level of oversight required

at model level.

–We introduced a new framework to govern and manage the risks

associated with Deterministic Quantitative Methods. These are

complex and material calculators, which although not technically

models, still present similar risks.

–Model Risk Governance committees at the Group, business and

functional levels continue to provide oversight of model risk.

–Model Risk Management works closely with businesses to help

develop IRB/IMM/IMA/IFRS 9/stress testing models to meet risk

HSBC Holdings plc Annual Report on Form 20-F	153

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 generative AI 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 to manage the range of risks that are generated by

these advanced techniques and to recognise the multidisciplinary

nature of these risks has been developed.

Change execution risk

The needs of our customers are evolving faster than ever, and the

complexity and pace of strategic, regulatory and technological change

require us to improve the way we prioritise resources and deliver

strategic outcomes safely and sustainably. The embedding of

structural changes throughout the Group, arising as part of the

reorganisation of our businesses announced in October 2024, is

expected to enable the strategy to be executed more efficiently but

may elevate the level of change execution risk in the near to medium

term.

Mitigating actions

–We have strengthened our investment case and prioritisation

processes, while improving the monitoring and oversight of our

change portfolio and overall operating control environment.

–The Change Prioritisation and Oversight Committee continues to

oversee the prioritisation, strategic alignment, and management of

execution risk for strategic change portfolios and initiatives.

Additionally, the HSBC Holdings Board provides enhanced

oversight over the simplification programme, directly supervising

its mobilisation and delivery.

–Change benefits and funding will be aligned to the new Group

organisational structure. Consideration of integrated business and

technology architecture design will be a critical input to our

prioritisation of future change investment.

Risks associated with workforce

capability, capacity and

environmental factors with potential

impact on growth

Our global businesses 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 changing 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 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 Executive Committee.

154	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 past experience of financial and operational loss sustained

as a consequence of the economic cycle, various 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.

A key source of uncertainty for 2025 and beyond comes from the

expected shift in economic and financial policies in the US.

Potential changes in US tariff policy and other countries’

responses are likely to have significant consequences for the

global growth outlook and global trade, and may result in higher

inflation and affect interest rate expectations. The uncertain

outcome of the Chinese government’s policies introduced to

stimulate domestic growth and support a rebalancing of the

economy including the property sector is also a source of potential

risk. In particular, the economic challenges affecting the Chinese

property sector could further affect our customers in the region

and reduce their activity and demand for our services.

–Inflation and monetary policy: The combined pressure of tariffs,

inflation and higher interest rates can have material impacts on our

customers as these factors would erode real purchasing power

and increase debt service costs. Higher 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 higher rates were to result in lower lending

volumes and weaker wealth and insurance revenue. Across most

of our markets, high headline inflation continued to subside

throughout 2024 and major central banks, including the US Federal

Reserve and the Bank of England, enacted monetary easing in the

second half of 2024. However, uncertainty over the trajectory of

US economic and trade policies, specifically around additional

trade barriers and/or tariffs and immigration has shifted the

balance of risks around inflation and the future interest rate

trajectory and may affect future global growth.

–Financial stability: Changing economic conditions and shifting

policy create a more uncertain and volatile environment for asset

markets. Accommodative financial conditions in the aftermath of

the Covid-19 pandemic may have increased vulnerabilities given

the rise in asset price valuations and the increase in debt levels.

Changes to asset prices can adversely affect HSBC by increasing

the financial vulnerability of customers and decreasing the value of

collateral and other claims.

–Fiscal policy and high levels of government debt: Through the

Covid-19 pandemic period, government debt levels across both

developed and emerging markets increased sharply, and in many

cases left growth and employment dependent on continued deficit

spending. Against the backdrop of higher global interest rates, a

high level of public debt issuance and a strong US dollar,

borrowing costs for certain countries could increase further. This

could adversely impact the fiscal capacity and debt sustainability of

highly-indebted sovereign issuers. Emerging markets with higher

levels of US dollar-denominated debt and weaker public finances

could be further impacted by higher US interest rates and the US

dollar's strength which could result in higher repayment costs and

refinancing risks and the associated possibility of sovereign rating

downgrades. Where HSBC has exposure to such sovereigns or

related parties, it could incur losses. At the same time, external

sovereign ratings 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.

–Geopolitical risks: Geopolitical risks remain high. The disruption of

key supply routes, particularly through the Red Sea continues to

impact global supply cost. Escalation, resurgence or other changes

in the Russia-Ukraine war and the conflict in the Middle East could

impact economic activity regionally, or globally for a prolonged

period which, in turn, 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')

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: Our 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. For example, excess supply conditions,

coupled with a changes to government policies have given rise to

a broad decline in mainland China real estate conditions, which has

affected the financial performance of corporates operating in this

market. Similarly, the Hong Kong real estate market is suffering a

downturn due to high interest rates, a strong US dollar and a

decline in purchases from mainland Chinese buyers. In addition,

certain sectors in various countries may be targeted by material

increases in trade tariffs, with industry wide implications;

–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.

HSBC Holdings plc Annual Report on Form 20-F	155

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 2024, to address

heightened policy uncertainty following the US election and to

overcome any lags in consensus forecasts, an adjustment factor

based on more recent views of expected tariffs and other policy

changes was modelled and then applied to each of the economic

scenarios. The effect was to lower growth expectations in our major

markets, while the impact on inflation and interest rates was varied.

HSBC’s Central scenario, which has the highest probability weighting,

assumes that GDP growth in many of our key markets will be slower

in 2025 relative to 2024. The slowdown is assumed to follow from the

increase in global tariff rates, which impede trade flows, weaken

consumption and deter investment. The scenario also assumes that

central banks are expected to slow the pace of interest rate

reductions in 2025 as a result as inflation converges towards central

bank targets.

However, forecasts remain uncertain, and changing economic

conditions and the materialisation of key risks could reduce the

accuracy of our Central scenario. Forecasts in recent years have been

sensitive to changing economic and financial policy, changing supply

chain conditions, monetary policy expectations and the inflation

outlook. There remains uncertainty regarding the adequacy of our

models to reflect credit losses under emerging risks which are not

captured under the historical loss experience of our models, or to

adequately distinguish risks for specific sectors or 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:

–While globalisation appears to remain deeply embedded in the

international system, it is increasingly challenged by protectionism,

including trade tariffs, which could contribute to weaker global

trade, potentially affecting HSBC’s business. 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, 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;

–Uncertainty about the scope, duration and potential for escalation

or resurgence of the conflict in the Middle East presents global

economic and political implications. (For further details, see

’Economic and market conditions and geopolitical developments

may adversely affect our financial conditions and results’);

–The US and UK imposed additional sanctions on Iran in 2024 in

response to Iran's activities and the increase in tensions between

Israel and Iran. Further sanctions may be imposed and could

increase the risk within our operations;

–The Russia-Ukraine war along with related financial sanctions,

trade restrictions and Russian countermeasures, has had global

economic and political implications;

–The sanctions and trade restrictions imposed by the US, the UK,

and the EU, as well as other countries, as a result of the Russia-

Ukraine war, remain complex, far reaching and evolving. The US

has expanded the reach of its secondary sanctions regime, which

includes broad discretion to impose severe sanctions on non-US

banks that are knowingly or even unknowingly engaged in certain

transactions or services directly or indirectly involving Russia’s

military-industrial base, including certain third-party activities that

are difficult to detect or beyond HSBC’s control. The imposition of

such sanctions against any non-US HSBC entity could result in

significant adverse commercial, operational, and reputational

consequences for HSBC. In response to such sanctions and trade

restrictions, as well as asset flight, Russia has implemented

certain countermeasures, including the expropriation of foreign

assets;

–To date, the US, the UK, the EU and other countries have imposed

various sanctions and trade restrictions on Chinese persons and

companies, and there is a continued risk of additional sanctions

and trade restrictions or tariffs being imposed by the US and other

governments in relation to among other things, alleged human

rights abuses, advances in certain sensitive technologies, territorial

conflicts, and the illicit trade of fentanyl and other synthetic

opioids. Strategic competition with China has the potential to

impact the Group's operations and global supply chains remain

vulnerable to a deterioration in the relationship between China and

other countries. For example, the US recently imposed a new

programme restricting certain US outbound investments in

Chinese companies engaged in sensitive technology sectors, and

the EU is considering a similar programme. In addition, during

2024 both the US and the EU raised the rate at which they levy

tariffs on a range of Chinese imports, including electric vehicles.

These have been imposed on the basis of unfair competition,

where the Chinese government is accused of providing unfair

subsidies to industry;

–China, in turn, imposed a number of its own sanctions and trade

restrictions that target, or provide authority to target, foreign

individuals or companies as well as certain goods such as rare

earth minerals and metals, and technology and services. These, as

well as certain other retaliatory measures, have been and may

continue to be imposed against certain countries, businesses and

individuals;

–Diplomatic tensions between China and the US, 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;

–Existing and additional sanctions, trade restrictions, counter-

sanctions and other retaliatory measures relating to the foregoing

or other geopolitical tensions may adversely affect the Group, its

customers and the markets in which the Group operates by

156	HSBC Holdings plc Annual Report on Form 20-F

Risk review

creating regulatory, reputational and market risks including

additional inflationary pressures, and a more complex operating

environment.

–Developing alternative payment mechanisms, along with increased

use of domestic currencies for trade, have been persistent topics

of discussion within the BRICS group (Brazil, Russia, India, China,

South Africa, Iran, Egypt, Ethiopia, and the UAE). 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, technology and ideology are manifesting

themselves in divergent regulatory standards and compliance

regimes, creating a more complex operating environment for the

Group and its customers and presenting long-term strategic

challenges for multinational businesses more generally. As the

geopolitical landscape evolves, compliance by multinational

corporations with their legal or regulatory obligations 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 relative 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. In addition, we have

also identified net zero alignment risk and the risk of greenwashing as

thematic risk issues related to climate risk.

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 pattens 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.

Net zero alignment risk may arise from the risk of HSBC failing to

meet its net zero ambition or failing to meet external expectations

related to net zero.

The risk of greenwashing may arise from the act of knowingly or

unknowingly making inaccurate, unclear, misleading or

unsubstantiated claims regarding sustainability to our stakeholders.

We currently expect the following to be the most likely ways in which

climate risk may materialise for the Group:

–credit risk for our corporate customers may increase 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. 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;

–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/wealth, or

from reputational concerns relating to the progress we make

towards our climate-related ambitions and targets;

–real estate may be affected by changes to the climate, the

increase in the frequency and severity of extreme weather events

and chronic shifts in weather patterns, which could impact both

property values and the ability of borrowers to afford their

mortgage payments and lead to reduced availability or increased

cost of insurance, including insurance that protects property

pledged as collateral of 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 reporting standards, requiring implementation in

short timeframes across multiple jurisdictions;

–conduct risk could develop 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 climate-related ambitions and targets;

and

–model risk may arise from the uncertain and evolving impacts of

climate change as well as data and methodology limitations

present challenges to creating reliable and accurate model

outputs.

We face increased reputational, regulatory compliance and legal risks

as we make progress towards our ESG-related ambitions and targets,

with stakeholders likely to place greater focus on our actions, such as

the development of climate and ESG-related policies, our disclosures

and financing and investment decisions relating to our ESG-related

ambitions and targets. We may face additional risks if we fail to:

–make sufficient progress towards our ESG-related ambitions and

targets;

–set adequate plans, to execute those plans, or to adapt those

plans to changes in the external environment;

–manage the risks associated both with meeting and not meeting

our ESG-related ambitions and targets; and

–meet evolving regulatory expectations and requirements on the

management of ESG risks.

We may face additional risks if we knowingly or unknowingly make

inaccurate, unclear, misleading, or unsubstantiated claims regarding

sustainability to our stakeholders.

We may be exposed to climate and ESG-related litigation and

regulatory enforcement risks, either directly, if stakeholders think that

we are not adequately managing climate and ESG risks, or indirectly,

if our clients and customers are themselves the subject of litigation,

potentially resulting in the revaluation of their assets.

Requirements, policy objectives, expectations, views or market and

public perceptions and preferences in connection with the transition

HSBC Holdings plc Annual Report on Form 20-F	157

to a net zero economy and ESG-related matters may vary by

jurisdiction and stakeholder particularly in light of the differing

perspectives of stakeholders in different markets including the UK,

the US, the EU and other markets regarding climate impacts and the

nature of the appropriate responses to climate change. 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.

In addition, nature-related risks beyond climate change may have

significant economic impacts. These risks may arise when the

provision of ecosystem services, such as water availability, air quality

and soil quality is compromised, primarily by the five key drivers of

nature loss: changes in land/freshwater/sea-use; climate change;

pollution of air, water and soil; over-exploitation of natural resources;

and invasive alien species. They can manifest themselves in a variety

of ways for both HSBC and our customers, including through

macroeconomic, market, credit, reputational, regulatory compliance

and legal risks.

Regulation and disclosure requirements in relation to human rights are

increasing. 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.

In respect of all ESG-related risks, we also need to ensure that our

strategy and business model, including the products and services we

provide to customers and risk management processes (including

processes to measure and manage the various financial and non-

financial risks the Group faces as a result of ESG-related matters)

adapt to meet regulatory requirements and stakeholder and market

expectations, which continue to evolve significantly and at pace.

Achieving our strategy with respect to ESG matters, including any

ESG-related ambitions and targets that we may set, will depend on a

number of different factors outside of the Group’s control, such as

advancements in technologies and supportive public policies in the

markets where we operate. If these external factors and other

changes do not occur, or do not occur on a timely basis, the Group

may fail to achieve its ESG-related ambitions and targets.

In order to track and report on our progress against our ESG-related

ambitions and targets, we rely on internal and, where appropriate and

available, external data sources, guided by certain industry standards

and our own ability to collect and process such data. While ESG-

related reporting has improved over time, data remains of limited

quality and consistency, exposing us to the risk of using incomplete

and inaccurate data and models which could result in sub-optimal

decision making. Methodologies, data, scenarios and industry

standards that we have used may evolve over time in line with market

practice, regulation and developments in science, where applicable.

Any such developments in methodologies and scenarios, and

changes in the availability, accuracy and verifiability of data over time

and our ability to collect and process such data, exposes us to

financial reporting risk in relation to our climate and ESG disclosures

and could result in revisions to our internal measurement frameworks

as well as reported data going forward, including on financed

emissions, meaning that such data may not be reconcilable or

comparable year-on-year.

This could also result in the Group having to re-evaluate its progress

towards its ESG-related ambitions and targets in the future and this

could result 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 member

states must transpose into national law by 10 January 2026, will

introduce 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 come into

effect on 11 January 2027. However, grandfathering will be available

for contracts entered into before 11 July 2026.

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 ‘on shored’ 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. Any changes to the current rules in this respect,

the EU branch requirement and any further divergences in the legal

regimes could require modifications to our UK and EU operating

models, with resulting impacts to our clients and employees. The

precise impacts on our clients 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.

158	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 clients who need sophisticated global

financial solutions. We generally compete on the basis of the quality

of our customer service, the wide 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 increased competition in any one or all of

these areas may negatively affect our market share and/or cause us

to increase our capital investment in our businesses in order to

remain competitive. Additionally, our products and services may not

be accepted by our targeted clients.

In many markets, there is increased competitive pressure to provide

products and services at current or lower prices.

Consequently, 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 competitors who may or may not

charge similar fees for their products and services. 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.

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 our customers‘ evolving needs. We also

need to ensure that new digital capabilities do not weaken our

resilience. 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

‘The macroeconomic and market impact of major geopolitical

developments may 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 2024, we issued the equivalent of $21bn of senior debt

securities in the public capital markets in a range of currencies and

maturities from a number of Group entities, including $16bn 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.

HSBC Holdings plc Annual Report on Form 20-F	159

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.

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.

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. With regard to the non-financial

risk agenda, there is a focus on customers and markets, payments

and e-money, digital and artificial intelligence (‘AI’), ESG including

governance, and operational resilience. This is all set against

increased geopolitical tensions which may limit the development of

consistent regulatory requirements, and the ongoing regulatory

response to the ‘banking turmoil’ in 2023.

The specific areas where regulatory changes and increased

supervisory expectations could have a material 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

are as follows:

Prudential and related issues

–the implementation of the Basel Committee on Banking

Supervision‘s reforms to the prudential framework, ’Basel 3.1’,

which include 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 increased supervisory expectations arising from expanding and

increasingly complex regulatory reporting obligations, including

expectations on data integrity and associated governance and

controls;

–the possible impacts on some of our regulatory ratios, such as the

CET1 ratio, LCR and NSFR, arising from the programme initiated to

strengthen our global regulatory reporting processes and make

them more sustainable. This programme includes enhancing data,

consistency and controls;

–any changes to the prudential framework following the bank

failures in 2023, for example in relation to liquidity or interest rate

risk in the banking book or rules concerning depositor protection

(such as those related to the operation of the Financial Services

Compensation Scheme in the UK);

–HM Treasury’s work on improving the operation of the UK’s ring-

fencing regime, which includes proposals that may affect HSBC‘s

operations;

–requirements flowing from arrangements for the resolution

strategy of the Group and its individual operating entities that may

have different effects in different countries;

–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;

–reviews of regulatory frameworks applicable to the wholesale

financial markets, in particular the reforms and other changes to

the securitisation requirements.

Non-prudential and related issues

–the ongoing focus by regulators, international bodies and other

policy makers, on how we conduct business, particularly around

the delivery of fair outcomes for customers (for example, the

embedding of the requirements of the UK Consumer Duty and

regulatory expectations on access to bank accounts for those in

vulnerable circumstances), promoting effective competition and

ensuring the orderly and transparent operation of global financial

markets;

–the implementation of conduct and other measures as a result of

regulators’ focus on organisational culture, employee behaviour,

whistleblowing and inclusion;

–the supervisory and regulatory change focus globally on

technology adoption and digital delivery, underpinned by customer

protection, including the use of digital assets and currencies and

wider financial technology risks, for example, the EU‘s Markets in

Crypto-Assets Regulation, which introduces a framework for

regulating crypto-assets, and Hong Kong, Singapore, and the UK

are each introducing new regulations aimed at cryptocurrency

related activities;

–increasing regulatory expectations and requirements around the

use of AI for example, the EU’s AI Act;

–continuing supervisory and regulatory change focus globally on

payment services and related infrastructure;

–ongoing expectations with respect to managing emerging financial

crime risks and its impact on customers, and managing conflicting

laws and approaches to legal and regulatory regimes and

implementing increasingly complex and less predictable sanctions

and trade restrictions;

–the continued evolution of the UK’s regulatory framework

following the UK‘s withdrawal from the EU;

–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;

–requirements regarding remuneration arrangements and senior

management accountability more generally within the Group (for

example, the requirements of the Senior Managers and

Certification Regime in the UK and similar regimes in Hong Kong,

Singapore, Australia, Ireland, and elsewhere that are either in

effect or under consideration/implementation);

–changes in national or supra-national requirements regarding the

management of third-party risk;

–increasing regulatory expectations of firms in relation to ESG-

related governance, risk management and disclosure frameworks

(for example the UK Sustainability Disclosure Requirements and

the EU Corporate Sustainability Reporting Directive), particularly

relating to climate change, transition plans, greenwashing and

supply chain due diligence;

160	HSBC Holdings plc Annual Report on Form 20-F

Risk review

–the increasing regulatory expectations and requirements (for

example, under the EU‘s Digital Operational Resilience Act)

relating to various aspects of operational and cyber resilience,

including an ongoing focus on the response of institutions to

operational disruptions; and

–the regulatory focus on policies and controls related to the

unauthorised use by employees of electronic communications on

non-business platforms.

We may not manage risks associated

with the replacement of benchmark

rates and indices effectively

Ibors were previously used extensively to set interest rates on

different types of financial transactions and for valuation purposes,

risk measurement and performance benchmarking.

Key benchmark rates and indices, including Ibors such as the London

interbank offered rate (‘Libor’), have been the subject of both national

and international regulatory scrutiny and reform for many years. This

resulted in significant changes to the methodology and operation of

certain benchmarks and indices, the adoption of replacement near risk

free rates (‘RFRs‘) and the proposed discontinuation of certain

reference rates (including Libor). From the end of December 2021,

the European Money Markets Institute ceased publication of the

Euro Overnight Index average and from 30 September 2024 ICE

Benchmark Administration Limited ceased publication of all thirty-five

Libor settings, and RFRs have been adopted in their place.

The continued existence of a small number of legacy contracts in

benchmark rates that have demised (so called ‘tough legacy

contracts‘) results in risks for HSBC, its clients and, investors, and the

financial services industry more widely. These include but are not

limited to:

–Regulatory compliance, legal and conduct risks, which arise from

the continued transition of legacy contracts to RFRs or alternative

rates and from the sales of products referencing RFRs. These risks

could be heightened if HSBC’s sales processes and procedures do

not appropriately detail the risks and complexity of RFR market

conventions;

–Legal risks associated with legacy contracts that HSBC is unable

to transition, including those contracts that rely on the use of

legislative solutions. If HSBC is unable to transition legacy

contracts, this could lead to reliance on fallback provisions which

do not contemplate the permanent cessation of the relevant Ibor,

and there is a risk that these fallback provisions will not work from

a contractual, practical or financial perspective. While legislative

solutions have in some circumstances assisted market

participants, our clients and our investors with transitioning legacy

contracts and mitigating risks associated with ‘tough legacy’

contracts, there remains some uncertainty around the operation,

application and enforceability of such solutions.

If any of these risks materialise, this could result in unintended or

unfavourable outcomes for clients and investors, and could have a

material adverse effect on our business, financial condition, results of

operations, prospects, reputation and customers.

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 amount of damages

claimed in litigation, regulatory proceedings, investigations,

administrative actions and other adversarial proceedings against

financial institutions are increasing for many reasons. These 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 and higher expectations from

regulators and the public. 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 on 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 231. 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 Holdings plc Annual Report on Form 20-F	161

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 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 (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 140.

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

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 in order to support customers, the Group

and markets globally. Risks 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 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 confidential customer data,

could compromise HSBC Group’s ability to serve its customers. This

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 that impact and/

or are facilitated by technology

The threat of cyber-attacks remains a concern for HSBC, as it does

across the entire financial sector. As cyber-attacks continue to evolve,

failure to protect our operations may result in disruption for

162	HSBC Holdings plc Annual Report on Form 20-F

Risk review

customers, manipulation of data or financial loss. This could adversely

impact both us and our customers.

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 potentially physical

compromise of premises, or coercion of staff. Our customers may

also be subject to these constantly evolving cyber-attack techniques.

The Group, like other financial institutions, has experienced numerous

common cyberattacks, including for example, distributed denial of

service and phishing attacks. Some of our third-party service providers

also have experienced cyberattacks. To date, we have not been

materially affected by cybersecurity threats. However, we expect

cyberattacks 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 continued

increase of services delivered over the internet; increasing reliance on

internet-based products, applications and data storage; the increasing

use of AI, which could be used to facilitate sophisticated cyber

attacks and an increased use of hybrid working models by HSBC’s

employees, contractors, third party service providers and their sub-

contractors.

Failure to adhere to HSBC’s cybersecurity policies, procedures or

controls, employee wrongdoing, or human, governance or

technological error could also 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 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 of 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

jurisdictions and revised principles on model risk published by the

PRA which came into force in 2024 and further developments in

policy expected from other regulators.

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-party suppliers and service providers to supply

goods and services. The use of third-party suppliers and service

providers by financial institutions is of particular focus to global

regulators. This includes how outsourcing decisions are made, how

key relationships are managed and our understanding of third-party

dependencies and their impact on service provision.

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

retention 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, sanctions and export control violations,

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

counterparties 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

HSBC Holdings plc Annual Report on Form 20-F	163

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 business, 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 face increasing regulatory expectations. In 2024, financial

crime risk continued to be exacerbated by increasingly complex

geopolitical challenges, the macroeconomic outlook, the complex and

dynamic nature of sanctions compliance, evolving financial crime

regulations, rapid technological developments, an increasing number

of national data privacy requirements and the increasing sophistication

of fraud, scams 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 business, 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 related

behaviours and employee misconduct such as fraud, negligence or

non-financial misconduct, all of which could result in regulatory

sanctions and/or reputational or financial harm. In recent years, a

number of multinational financial institutions have suffered material

losses due to the actions of rogue employees. It is not always

possible to deter employee misconduct, and the precautions we take

to prevent and detect this activity may not always be effective.

Misconduct risks could be increased if our prevent-and-detect

measures are less effective because of remote and home working.

Employee misconduct or regulatory sanctions if a regulator deems

HSBC‘s actions to deter such activity to be insufficient, could have a

material adverse effect on our business, financial condition, results of

operations, prospects and reputation.

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

Effective management of transformation initiatives is required to

achieve the Group’s strategic priorities, which includes delivering both

on externally driven programmes and on our own key business

initiatives which seek to deliver growth, operational resilience and

efficiencies. The scale, complexity, and concurrent demands of such

transformation initiatives can result in heightened execution risk.

The Group’s strategy has been supported by global trends including

the continued economic development in emerging markets, growth of

international trade and capital flows, and wealth creation, particularly

in faster-growing markets. 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.

In October 2024, the Group announced a plan to simplify its

organisational structure to accelerate delivery against the Group’s

strategic priorities. Effective 1 January 2025, the Group operates

through four new businesses: Hong Kong, UK, Corporate and

Institutional Banking, and International Wealth and Premier Banking.

The Group’s functions are being realigned to support these four

businesses. The execution of this reorganisation will result in

significant organisational design changes throughout the Group. There

is a risk that the reorganisation 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.

Our ability to execute strategic change may be limited by our

operational capacity, effectiveness of our change management

controls, structural challenges posed by mergers and acquisitions,

and the potential for unforeseen changes in the market and/or

regulatory environment in which we operate. The global economic

outlook remains uncertain, particularly with regard to inflation,

changes in legislation and geopolitical tensions. Therefore, there

remains a risk that our cost and investment actions may not be

sufficient to deliver or achieve our expected benefits of the Group’s

strategic initiatives.

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 an integral part of all our activities. Risk

constitutes our exposure to uncertainty and the consequent variability

of return. Specifically, risk equates to the adverse effect on

profitability or financial condition arising from different sources of

uncertainty, including retail and wholesale credit risk, market risk, non-

traded market risk, operational risk, insurance risk, concentration risk,

capital risk, liquidity and funding risk, litigation risk, conduct risk,

reputational risk, strategic risk, pension risk and regulatory risk.

While we employ a broad and diversified set of risk monitoring and

mitigation techniques, such methods and the judgements that

accompany their application cannot anticipate every unfavourable

event or the specifics and timing of every outcome. Failure to manage

risks appropriately could have a material adverse effect on our

business, financial condition, results of operations, prospects, capital

position, strategy and reputation.

164	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 achieving its strategy or objectives as a result of

inadequate or failed internal processes, people and systems, or

from 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, strategy and reputation.

We rely on recruiting, retaining and

developing appropriate senior

management and skilled personnel

Our continued success and implementation of our strategy depend in

part on the retention of key members of our management team and

wider employee base, and the availability of skilled management and

personnel in each of our global businesses and global functions. The

implementation of organisational changes and ongoing talent and

capability shortages in key markets, particularly where those with the

specialist skills are required to be globally mobile, add to the

complexity of our supply challenge. This challenge is also increased

by rapidly changing skill requirements and ways of working, the

evolving regulatory landscape and increased requirements and

expectations regarding the employment of local nationals and

inclusion in some 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. In

addition, the Group has an ambition to increase our Black heritage

senior leader representation in both the UK and US combined to 3.4%

by 2025. If the Group fails to achieve these ambitions, its ability to

attract and retain qualified professionals may be negatively affected.

When we acquire or dispose of a Group operation, we need to ensure

that we comply with any employment requirements, provide support

to affected employees,and integrate new employees into HSBC‘s

Values, culture and ways of working.

If global businesses or global functions fail to staff their operations

appropriately or lose one or more of their key senior executives and

fail to successfully replace them in a satisfactory and timely manner,

or fail to implement successfully the organisational changes required

to support the Group’s strategy, our business, financial condition,

results of operations, prospects and reputation, including control and

operational risks, could be materially adversely affected.

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. Increased moves 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.

HSBC Holdings plc Annual Report on Form 20-F	165

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 arising from a

general deterioration in economic conditions or systemic risks in the

financial systems, including uncertainties driven by significant

macroeconomic and policy changes that might be enacted by the new

US administration could reduce the recoverability and value of our

assets, and 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,

including the impact of higher US tariff rates, retaliatory actions, and

sector or portfolio specific risks, 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 of claims and

benefits can be influenced by many factors, including mortality and

morbidity rates, lapse and surrender rates and, if the policy has a

savings element, 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.

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.

166	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 those 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 2024 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 86.

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, involves 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 involves 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.

At 31 December 2023, we performed an impairment review of our

investment in BoCom and concluded an impairment charge needed to

be taken in the fourth quarter of 2023. Impairment review included

consideration of the potential impact of BoCom’s designation as a

globally systemically important bank in November 2023. The

impairment reviews are complex and require significant judgments,

such as the appropriateness of projected future cash flows, discount

rate and regulatory capital assumptions. At 31 December 2024 a

further impairment review was conducted and we concluded that no

additional impairment (or reversal of impairment) was required.

However, there can be no assurance that no additional impairment

will be required in future financial periods. Refer to Note 18 on 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, pension payments and deferred pension and pay and mortality.

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.

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.

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 86.

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	167

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 See page 169<br>
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<br><br>fails to make repayments;<br><br>–monitored using various internal risk management measures and within<br><br>limits approved by individuals within a framework of delegated authorities;<br><br>and<br><br>–managed through a risk control framework, which outlines 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<br><br>sectors.
Treasury risk See page 230<br>
Treasury risk is the risk of having<br><br>insufficient capital, liquidity or funding<br><br>resources to meet financial<br><br>obligations and satisfy regulatory<br><br>requirements, including the risk of an<br><br>adverse impact on earnings or capital<br><br>due to structural and transactional<br><br>foreign exchange exposures and<br><br>changes in market interest rates,<br><br>together with pension and insurance<br><br>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 See page 246<br>
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 non-trading portfolios is<br><br>discussed in the Treasury risk section on<br><br>page 242. Market risk exposures arising<br><br>from our insurance operations are<br><br>discussed on page 263.	Market risk is:<br><br>–measured using sensitivities, value at risk 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 value at risk, stress testing and other measures; and<br><br>–managed using risk limits approved by the Group Risk Management<br><br>Meeting and the risk management meetings in various global businesses.
Climate risk See page 249<br>
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>weather events;<br><br>–transition risk, which arises from the<br><br>process of moving to a net zero<br><br>economy;<br><br>–net zero alignment risk, which arises<br><br>from failing to meet our net zero<br><br>ambition or to meet external<br><br>expectations related to net zero; and<br><br>–the risk of greenwashing, which arises<br><br>from the act of knowingly or<br><br>unknowingly making inaccurate,<br><br>unclear, misleading or unsubstantiated<br><br>claims regarding sustainability to<br><br>stakeholders.	Climate risk is:<br><br>–measured using risk metrics and stress testing;<br><br>–monitored against risk appetite statements; and<br><br>–managed through adherence to risk appetite thresholds, through specific<br><br>policies, and through enhancements to processes and development of<br><br>tools including the development of product market controls to manage the<br><br>risk of greenwashing and the development of portfolio steering capabilities<br><br>to manage our net zero ambitions.
Resilience risk See page 258<br>
Resilience risk is the risk of sustained<br><br>and significant business disruption<br><br>from execution, delivery, physical<br><br>security or safety events, causing the<br><br>inability to provide critical services to<br><br>our customers, affiliates, and<br><br>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.
168	HSBC Holdings plc Annual Report on Form 20-F
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Risk review

Description of risks – banking operations (continued)
Risks	Arising from	Measurement, monitoring and management of risk
Regulatory compliance risk See page 259<br>
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 the<br><br>failure to observe relevant laws, codes,<br><br>rules and regulations and can manifest<br><br>itself in poor market or customer outcomes<br><br>and lead to fines, penalties and reputational<br><br>damage to our business.	Regulatory compliance risk is:<br><br>–measured by reference to risk appetite, identified metrics, incident<br><br>assessments, regulatory feedback and the judgement and assessment of<br><br>our regulatory compliance teams;<br><br>–monitored against the first line of defence risk and control assessments,<br><br>and the results of the monitoring and control assurance activities of the<br><br>second line of defence functions; and<br><br>–managed by establishing and communicating appropriate policies and<br><br>procedures, training employees in them and monitoring activity to help<br><br>embed their observance. Proactive risk control and/or remediation work is<br><br>undertaken where required.
Financial crime risk See page 259<br>
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, 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-day<br><br>banking operations involving customers,<br><br>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,<br><br>and the results of the monitoring and control assurance activities of the<br><br>second 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<br><br>their observance. Proactive risk control and/or remediation work is<br><br>undertaken where required.
Model risk See page 260<br>
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 non-<br><br>financial contexts whenever business<br><br>decision making includes reliance on<br><br>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 review statuses and findings;<br><br>–monitored against model risk appetite statements, insight from the<br><br>independent validations completed by the model risk management team;<br><br>and<br><br>–managed by creating and communicating appropriate policies, procedures<br><br>and guidance, training colleagues in their application, and supervising their<br><br>adoption to help ensure operational effectiveness.

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 See page 263<br>
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 credit risk, in terms of economic capital and the amount that<br><br>could be lost if a counterparty fails to make repayments; for market risk, in<br><br>terms of economic capital, internal metrics and fluctuations in key financial<br><br>variables; and for liquidity risk, in terms of internal metrics including<br><br>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 outlines clear and<br><br>consistent policies, principles and guidance. This includes using product<br><br>design, asset liability matching and bonus rates.
Insurance risk See page 265<br>
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 life insurance liabilities and economic capital allocated<br><br>to insurance underwriting risk;<br><br>–monitored through a framework of approved limits and delegated<br><br>authorities; and<br><br>–managed through a risk control framework, which outlines 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	169
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Credit risk

Contents
169	Overview
169	Credit risk management
171	Credit risk in 2024
172	Summary of credit risk
175	Stage 2 decomposition
176	Assets held for sale
177	Credit exposure
178	Measurement uncertainty and sensitivity analysis of ECL estimates
191	Reconciliation of changes in gross carrying/nominal amount and<br><br>allowances for loans and advances to banks and customers including<br><br>loan commitments and financial guarantees
196	Credit quality
200	Wholesale lending
214	Personal lending
225	Supplementary information
229	HSBC Holdings

Overview

Credit risk is the risk of financial loss if a customer or counterparty

fails to meet an obligation under a contract. Credit risk arises

principally from direct lending, trade finance and leasing business, but

also from other products such as guarantees and derivatives.

Credit risk management

Key developments in 2024

There were no material changes to the policies and practices for the

management of credit risk in 2024. 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.

For further details, see ‘Top and emerging risks’ on page 148.

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)

Credit approval authorities are delegated by the Board to the Group

CEO together with the authority to sub-delegate them. 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.

The principal objectives of our credit risk management are:

–to maintain across HSBC a strong culture of responsible lending,

and robust risk policies and control frameworks;

–to both partner and challenge our businesses in defining,

implementing and continually re-evaluating our risk appetite under

actual and scenario conditions; and

–to ensure there is independent, expert scrutiny of credit risks, their

costs and their mitigation.

Key risk management processes

IFRS 9 ‘Financial Instruments’ process

The IFRS 9 process comprises three main areas: modelling, data and

forward economic guidance; implementation; and governance.

Modelling, data and forward economic guidance

We have established IFRS 9 modelling and data processes in various

geographies, which are subject to internal model risk governance

including independent review of significant model developments.

We have a centralised process for generating unbiased and

independent global economic scenarios. Scenarios are subject to a

process of review and challenge by a dedicated central team and

individually for each region. Each quarter, the scenarios and probability

weights are reviewed and checked for consistency with the economic

conjuncture and current economic and financial risks. These are

subject to final review and approval by senior management in a

forward economic guidance global business impairment committee.

Implementation

A centralised impairment engine performs the expected credit losses

calculation using data, which is subject to a number of 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 are established in key sites and

regions in order to review and approve the impairment results.

Regional management review forums have representatives from

Credit Risk and Finance. The key site and regional approvals are

reported up to the relevant global business impairment committee for

final approval of the Group’s ECL for the period. Required members of

the committee are the Wholesale Global Chief Corporate Credit

Officer and Chief Risk and Compliance Officer for Wealth and

Personal Banking Risk, as well as the relevant global business’s Chief

Financial Officer and the Global Financial Controller.

Concentration of exposure

(Audited)

Concentrations of credit risk arise when a number of counterparties or

exposures have comparable economic characteristics, or such

counterparties are engaged in similar activities or operate in the same

geographical areas or industry sectors so that their collective ability to

meet contractual obligations is similarly affected by changes in

economic, political or other conditions. We use a number of controls

and measures to minimise undue concentration of exposure in our

portfolios across industries, countries and global businesses. These

include portfolio and counterparty limits, approval and review controls,

and stress testing.

Credit quality of financial instruments

(Audited)

Our risk rating system facilitates the internal ratings-based approach

under the Basel framework adopted by the Group to support the

calculation of our minimum credit regulatory capital requirement. The

five credit quality classifications encompass a range of granular

internal credit rating grades assigned to wholesale and retail

170	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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.

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 lending
	External<br><br>credit rating	External<br><br>credit rating	Internal<br><br>credit rating	12-month Basel<br><br>probability of<br><br>default %	Internal<br><br>credit rating	12 month<br><br>probability-<br><br>weighted PD %
Quality classification1,2
Strong	BBB and above	A- and above	CRR 1 to CRR 2	0–0.169	Band 1 and 2	0.000–0.500
Good	BBB- to BB	BBB+ to BBB-	CRR 3	0.170–0.740	Band 3	0.501–1.500
Satisfactory	BB- to B and unrated	BB+ to B and unrated	CRR 4 to CRR 5	0.741–4.914	Band 4 and 5	1.501–20.000
Sub-standard	B- to C	B- to C	CRR 6 to CRR 8	4.915–99.999	Band 6	20.001–99.999
Credit impaired	Default	Default	CRR 9 to CRR 10	100	Band 7	100

1Customer risk rating (‘CRR’).

212-month point-in-time probability-weighted probability of default (‘PD’).

Quality classification definitions –‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. –‘Good’ exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk. –‘Satisfactory’ exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk. –‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern. –‘Credit-impaired’ exposures have been assessed as described in Note 1.2(i) 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.

For details of our policy on forbearance, see Note 1.2(i) 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 such

that they are in 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(i) on the financial statements.

HSBC Holdings plc Annual Report on Form 20-F	171

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.

Credit risk in 2024

At 31 December 2024, gross loans and advances to banks and

customers of $1,042bn decreased by $20.1bn on a reported basis

compared with 31 December 2023. Gross loans and advances to

customers decreased by $9.2bn while gross loans and advances to

banks decreased by $10.9bn. This included total adverse foreign

exchange movements of $26.2bn.

On a constant currency basis, the increase of $6.1bn was driven by a

$9.6bn rise in personal loans and advances to customers and a $3.0bn

rise in wholesale loans and advances to customers. These were partly

offset by a $6.5bn decrease in loans and advances to banks.

The rise in personal loans and advances to customers was driven by

mortgage growth (up $7.5bn), mainly in HSBC UK (up $4.5bn), in our

legal entities in the US (up $2.7bn) and in Mexico (up $0.3bn). There

was a further increase in other personal lending (up $2.1bn), mainly in

our entities in Europe (up $1.1bn) and in Asia (up $1.0bn).

The rise in wholesale loans and advances to customers was driven by

an increase in balances with non-bank financial institutions (up

$9.6bn), mainly in HSBC Bank plc (up $4.2bn) and in our legal entities

in Asia (up $2.2bn), in the US (up $1.2bn), in HSBC UK (up $1.0bn)

and in the Middle East (up $0.8bn). This was partly offset by a $6.6bn

reduction in corporate and commercial balances, observed mainly in

our legal entities in the US (down $2.9bn) and in Asia (down $2.4bn).

The decrease in loans and advances to banks was driven by lower

central bank balances and money market lending balances in our legal

entities in Asia (down $9.1bn), partly offset by higher balances in our

legal entities in the Middle East (up $3.6bn).

The movement in gross loans and advances to banks and customers

included a $3.1bn decrease on a constant currency basis due to the

reclassification of businesses into 'assets held for sale' during the

period.

At 31 December 2024, the allowance for ECL of $10.3bn decreased

by $1.7bn compared with 31 December 2023, including favourable

foreign exchange movements of $0.5bn. The $10.3bn allowance

comprised $9.8bn in respect of assets held at amortised cost, $0.4bn

in respect of loan commitments and financial guarantees, and $0.1bn

in respect of debt instruments measured at fair value through other

comprehensive income (‘FVOCI’).

On a constant currency basis, stage 3 gross loans and advances to

customers at 31 December 2024 increased by $3.9bn. The increase in

stage 3 exposures was driven by defaults in the commercial real

estate portfolio in Hong Kong, which are generally well collateralised.

There was a decrease in the associated allowance for ECL due to

write-offs of heavily-impaired exposures.

On a constant currency basis, the allowance for ECL in relation to

loans and advances to customers decreased by $0.9bn from

31 December 2023. This was attributable to:

–a $0.8bn decrease in wholesale loans and advances to customers,

which included a $0.7bn decrease in stage 3 and a $0.1bn

decrease in stages 1 and 2; and

–a $0.1bn decrease in personal loans and advances to customers

driven by stages 1 and 2.

The ECL charge for 2024 was $3.4bn, inclusive of recoveries. The

ECL charge comprised: $2.1bn in respect of wholesale lending, of

which the stage 3 charge was $1.6bn; $1.2bn in respect of personal

lending, of which $0.9bn were in stage 3; and $0.1bn in respect of

other assets and debt instruments measured at FVOCI.

Wholesale lending charges were recognised mainly in our legal

entities in Hong Kong ($1.0bn). While the mainland China commercial

real estate sector remained subdued, there were limited new defaults

and lower total ECL charges of $0.4bn during the period ($1.0bn

during 2023). ECL charges in the Hong Kong commercial real estate

sector excluding exposure to mainland China borrowers of $0.1bn

during the period were also low due to the limited impact from

defaults, driven by the high level of collateralisation in the portfolio.

Personal lending charges reflected higher charges in our legal entity in

Mexico, mainly in our unsecured portfolio, due to portfolio growth and

unemployment trends. In addition, there were higher charges in our

legal entities in the UK and Hong Kong as a result of portfolio growth.

At 31 December 2024, gross other financial assets measured at

amortised cost of $828.6bn decreased by $131.7bn on a reported

basis compared with 31 December 2023. This included total adverse

foreign exchange movements of $30.7bn.

On a constant currency basis, the decrease of $101.0bn was mainly

driven by a $91.9bn decrease in assets held for sale, due to the

completion of the disposals of our banking business in Canada and

our retail banking operations in France.

Income statement movements are analysed further on page 88.

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 178;

–measurement uncertainty and sensitivity analysis of ECL

estimates, see page 178;

–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 191;

–credit quality, see page 196;

–total wholesale lending for loans and advances to banks and

customers by stage distribution, see page 201;

–wholesale lending collateral, see page 211;

–total personal lending for loans and advances to customers at

amortised cost by stage distribution, see page 215; and

–personal lending collateral, see page 224.

172	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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
(Audited)
	31 Dec 2024		At 31 Dec 2023
	Gross carrying/<br><br>nominal amount	Allowance for<br><br>ECL1	Gross carrying/<br><br>nominal amount	Allowance for<br><br>ECL1
	$m	$m	$m	$m
Loans and advances to customers at amortised cost	940,373	(9,715)	949,609	(11,074)
Loans and advances to banks at amortised cost	102,052	(13)	112,917	(15)
Other financial assets measured at amortised cost	828,580	(92)	960,271	(422)
– cash and balances at central banks	267,674	—	285,868	—
– Hong Kong Government certificates of indebtedness	42,293	—	42,024	—
– reverse repurchase agreements – non-trading	252,549	—	252,217	—
– financial investments	153,982	(9)	148,346	(20)
– assets held for sale2	3,273	(4)	103,186	(324)
– prepayments, accrued income and other assets3	108,809	(79)	128,630	(78)
Total gross carrying amount on-balance sheet	1,871,005	(9,820)	2,022,797	(11,511)
Loans and other credit-related commitments	619,367	(348)	661,015	(367)
Financial guarantees	16,998	(29)	17,009	(39)
Total nominal amount off-balance sheet4	636,365	(377)	678,024	(406)
	2,507,370	(10,197)	2,700,821	(11,917)
	Fair value	Memorandum<br><br>allowance for<br><br>ECL5	Fair value	Memorandum<br><br>allowance for<br><br>ECL5
	$m	$m	$m	$m
Debt instruments measured at fair value through other comprehensive income<br><br>(‘FVOCI’)	346,124	(54)	302,348	(97)

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.

2For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 176. At 31 December

2024, the gross carrying amount comprised $1,113m of loans and advances to customers and banks (2023: $84,075m) and $2,160m of other financial assets at

amortised cost (2023: $19,111m). The corresponding allowance for ECL comprised $4m of loans and advances to customers and banks (2023: $303m) and

$0.3m of other financial assets at amortised cost (2023: $21m).

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 365 comprises both financial and non-financial assets, including cash collateral and settlement

accounts. It also includes ‘Items in the course of collection from other banks’ which was presented separately in 2023.

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.

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 significant increase in credit risk on 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 on which a lifetime ECL is recognised.

–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	173
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at<br><br>31 December 2024
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Audited)
	Gross carrying/nominal amount1					Allowance for ECL					ECL coverage %
	Stage<br><br>1	Stage<br><br>2	Stage<br><br>3	POCI2	Total	Stage<br><br>1	Stage<br><br>2	Stage<br><br>3	POCI2	Total	Stage<br><br>1	Stage<br><br>2	Stage<br><br>3	POCI2	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	%	%	%	%	%
Loans and<br><br>advances to<br><br>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<br><br>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<br><br>financial<br><br>institutions	79,687	2,098	679	—	82,464	(45)	(30)	(361)	—	(436)	0.1	1.4	53.2	—	0.5
Loans and<br><br>advances to<br><br>banks at<br><br>amortised cost	101,852	198	2	—	102,052	(9)	(2)	(2)	—	(13)	—	1.0	100.0	—	—
Other financial<br><br>assets<br><br>measured at<br><br>amortised cost	826,621	1,806	153	—	828,580	(64)	(5)	(23)	—	(92)	—	0.3	15.0	—	—
Loan and other<br><br>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<br><br>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<br><br>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<br><br>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<br><br>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).

Stage 2 days past due analysis at 31 December 2024
(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
	$m	$m	$m	$m	$m	$m	$m	$m	%	%	%	%
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.

174	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at<br><br>31 December 2023
(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<br><br>advances to<br><br>customers at<br><br>amortised<br><br>cost	809,384	120,871	19,273	81	949,609	(1,130)	(2,964)	(6,950)	(30)	(11,074)	0.1	2.5	36.1	37.0	1.2
– personal	396,534	47,483	3,505	—	447,522	(579)	(1,434)	(854)	—	(2,867)	0.1	3.0	24.4	—	0.6
–corporate<br><br>and<br><br>commercial	342,878	69,738	14,958	81	427,655	(499)	(1,500)	(5,774)	(30)	(7,803)	0.1	2.2	38.6	37.0	1.8
– non-bank<br><br>financial<br><br>institutions	69,972	3,650	810	—	74,432	(52)	(30)	(322)	—	(404)	0.1	0.8	39.8	—	0.5
Loans and<br><br>advances to<br><br>banks at<br><br>amortised<br><br>cost	111,479	1,436	2	—	112,917	(10)	(3)	(2)	—	(15)	—	0.2	100.0	—	—
Other<br><br>financial<br><br>assets<br><br>measured at<br><br>amortised<br><br>cost	946,873	12,734	664	—	960,271	(109)	(132)	(181)	—	(422)	—	1.0	27.3	—	—
Loan and<br><br>other credit-<br><br>related<br><br>commitments	630,949	28,922	1,140	4	661,015	(153)	(128)	(86)	—	(367)	—	0.4	7.5	—	0.1
– personal	253,183	3,459	355	—	256,997	(23)	—	(2)	—	(25)	—	—	0.6	—	—
– corporate<br><br>and<br><br>commercial	246,210	20,928	736	4	267,878	(120)	(119)	(83)	—	(322)	—	0.6	11.3	—	0.1
– financial	131,556	4,535	49	—	136,140	(10)	(9)	(1)	—	(20)	—	0.2	2.0	—	—
Financial<br><br>guarantees	14,746	1,879	384	—	17,009	(7)	(7)	(25)	—	(39)	—	0.4	6.5	—	0.2
– personal	1,106	13	—	—	1,119	—	—	—	—	—	—	—	—	—	—
– corporate<br><br>and<br><br>commercial	10,157	1,290	330	—	11,777	(6)	(6)	(24)	—	(36)	0.1	0.5	7.3	—	0.3
– financial	3,483	576	54	—	4,113	(1)	(1)	(1)	—	(3)	—	0.2	1.9	—	0.1
At 31 Dec<br><br>2023	2,513,431	165,842	21,463	85	2,700,821	(1,409)	(3,234)	(7,244)	(30)	(11,917)	0.1	2.0	33.8	35.3	0.4

1Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.

2Purchased or originated credit-impaired (‘POCI’).

Stage 2 days past due analysis at 31 December 2023
(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<br><br>2	Up-to-<br><br>date	1 to 29<br><br>DPD1	30 and ><br><br>DPD1	Stage<br><br>2	Up-to-<br><br>date	1 to 29<br><br>DPD1	30 and ><br><br>DPD1
	$m	$m	$m	$m	$m	$m	$m	$m	%	%	%	%
Loans and advances to<br><br>customers at amortised cost	120,871	116,320	2,571	1,980	(2,964)	(2,458)	(245)	(261)	2.5	2.1	9.5	13.2
– personal	47,483	44,634	1,785	1,064	(1,434)	(974)	(214)	(246)	3.0	2.2	12.0	23.1
– corporate and commercial	69,738	68,446	697	595	(1,500)	(1,454)	(31)	(15)	2.2	2.1	4.4	2.5
– non-bank financial<br><br>institutions	3,650	3,240	89	321	(30)	(30)	—	—	0.8	0.9	—	—
Loans and advances to banks<br><br>at amortised cost	1,436	1,424	—	12	(3)	(3)	—	—	0.2	0.2	—	—
Other financial assets<br><br>measured at amortised cost	12,734	12,417	171	146	(132)	(113)	(9)	(10)	1.0	0.9	5.3	6.8

1The days past due amounts presented above are on a contractual basis.

HSBC Holdings plc Annual Report on Form 20-F	175

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 2024.

The quantitative classification shows gross carrying amount and

allowances for ECL for which the applicable reporting date probability

of default (‘PD’) measure exceeds defined quantitative thresholds for

retail and wholesale exposures, as set out in Note 1.2 ‘Summary of

material accounting policies’, on page 381.

The qualitative classification primarily accounts for customer risk

rating (‘CRR’) deterioration, watch-and-worry and retail management

judgemental adjustments.

A 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 381.

Loans and advances to customers and banks1
	At 31 Dec 2024
	Loans and advances to customers						Loans and<br><br>advances<br><br>to banks at<br><br>amortised<br><br>cost	Total 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 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
	At 31 Dec 2023
---	---	---	---	---	---	---	---	---
Quantitative	35,742	31,178	1,940	2,624	53,034	2,955	781	92,512
Qualitative	11,678	7,077	2,477	2,124	16,241	653	642	29,214
of which: forbearance	171	69	34	68	982	2	—	1,155
30 DPD backstop2	63	32	2	29	463	42	13	581
Total gross carrying amount	47,483	38,287	4,419	4,777	69,738	3,650	1,436	122,307
Quantitative	(1,103)	(149)	(554)	(400)	(1,225)	(24)	(1)	(2,353)
Qualitative	(324)	(50)	(142)	(132)	(270)	(6)	(2)	(602)
of which: forbearance	(4)	—	(1)	(3)	(11)	—	—	(15)
30 DPD backstop2	(7)	(1)	(1)	(5)	(5)	—	—	(12)
Total allowance for ECL	(1,434)	(200)	(697)	(537)	(1,500)	(30)	(3)	(2,967)
ECL coverage %	3.0	0.5	15.8	11.2	2.2	0.8	0.2	2.4
Residual average life3 (in years)	16.0	19.3	<1.0	4.1	2.5	1.2	<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.

176	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Assets held for sale

(Audited)

At 31 December 2024, the most material balances held for sale arose

from our business in South Africa and our private banking business in

Germany.

Disclosures relating to assets held for sale are provided in the

following credit risk tables, primarily where the disclosure is relevant

to the measurement of these financial assets:

–‘Maximum exposure to credit risk’ (page 178); and

–‘Distribution of financial instruments by credit quality at

31 December’ (page 196);

Although there was a reclassification on the balance sheet, there was

no separate income statement reclassification. As a result, charges

for changes in expected credit losses and other credit impairment

charges shown in the credit risk disclosures include charges relating

to financial assets classified as ‘assets held for sale’.

‘Loans and other credit-related commitments’, ‘financial guarantees’

and ‘Debt instruments measured at fair value through other

comprehensive income’ as reported in credit disclosures, also include

exposures and allowances relating to financial assets classified as

‘assets held for sale’.

Loans and advances to customers and banks measured at amortised cost
(Audited)
	2024		2023
	Total gross loans<br><br>and advances	Allowance<br><br>for ECL	Total gross loans<br><br>and advances	Allowance<br><br>for ECL
	$m	$m	$m	$m
As reported	1,042,425	(9,728)	1,062,526	(11,089)
Reported in ‘Assets held for sale’	1,113	(4)	84,075	(303)
At 31 December	1,043,538	(9,732)	1,146,601	(11,392)

At 31 December 2024, gross loans and advances of our business in

South Africa were $660m and the related allowance for ECL was

$4m. Gross loans and advances of our private banking business in

Germany were $309m and of our French life insurance business were

$144m, both with negligible allowance for ECL.

Lending balances held for sale continue to be measured at amortised

cost less allowances for impairment and, therefore, such carrying

amounts may differ from fair value.

These lending balances are part of associated disposal groups that are

measured in their entirety at the lower of carrying amount and fair

value less costs to sell. Any difference between the carrying amount

of these assets and their sales price is part of the overall gain or loss

on the associated disposal group as a whole.

For further details of the carrying amount and the fair value at 31 December

2024 of loans and advances to banks and customers classified as held for

sale, see Note 23 on the financial statements.

Gross loans and allowance for ECL on loans and advances to customers and banks reported in ‘Assets held for sale’
(Audited)
	South Africa		German Private Banking<br><br>Business		Other		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
	$m	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers<br><br>at amortised cost	660	(4)	309	—	—	—	969	(4)
– personal	—	—	130	—	—	—	130	—
– corporate and commercial	586	(4)	19	—	—	—	605	(4)
– non-bank financial institutions	74	—	160	—	—	—	234	—
Loans and advances to banks at<br><br>amortised cost	—	—	—	—	144	—	144	—
At 31 Dec 20241	660	(4)	309	—	144	—	1,113	(4)
	Banking business in<br><br>Canada		Retail banking operations in<br><br>France		Other		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
	$m	$m	$m	$m	$m	$m	$m	$m
Loans and advances to customers<br><br>at amortised cost	56,349	(220)	16,984	(82)	255	(1)	73,588	(303)
– personal	27,071	(95)	13,920	(79)	140	(1)	41,131	(175)
– corporate and commercial	27,789	(120)	3,012	(3)	—	—	30,801	(123)
– non-bank financial institutions	1,489	(5)	52	—	115	—	1,656	(5)
Loans and advances to banks at<br><br>amortised cost	154	—	10,333	—	—	—	10,487	—
At 31 Dec 2023	56,503	(220)	27,317	(82)	255	(1)	84,075	(303)

1The table above does not include disposals completed during 2024 including the sale of our retail banking operations in France completed on 1 January 2024 and

our banking business in Canada completed on 28 March 2024. The sale of our business in Argentina was announced in the first quarter of 2024 and completed

on 6 December 2024. The gross loans and advances to customers and banks in Argentina were $1,760m and the associated allowance for ECL was $34m at

31 March 2024. For more details, please refer to business disposals as disclosed in Note 23 on page 433.

HSBC Holdings plc Annual Report on Form 20-F	177

The table below analyses the amount of ECL (charges)/releases arising from assets held for sale. The charges during the period relate to our

businesses in Canada ($41m) and in Argentina ($40m).

Changes in expected credit losses and other credit impairment
(Audited)
	2024	2023
	$m	$m
ECL (charges)/releases arising from:
– assets held for sale	(81)	(49)
– assets not held for sale	(3,333)	(3,398)
Year ended 31 Dec	(3,414)	(3,447)

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 2024 is provided on page 93.

‘Maximum exposure to credit risk’ table 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.

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

380 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 211.

178	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Maximum exposure to credit risk
(Audited)
	2024			2023
	Maximum exposure	Offset	Net	Maximum exposure	Offset	Net
	$m	$m	$m	$m	$m	$m
Loans and advances to customers held at amortised cost	930,658	(22,822)	907,836	938,535	(22,607)	915,928
– personal	444,701	(2,256)	442,445	444,655	(2,470)	442,185
– corporate and commercial	403,929	(18,897)	385,032	419,852	(18,771)	401,081
– non-bank financial institutions	82,028	(1,669)	80,359	74,028	(1,366)	72,662
Loans and advances to banks at amortised cost	102,039	—	102,039	112,902	—	112,902
Other financial assets held at amortised cost	854,427	(4,383)	850,044	973,316	(13,919)	959,397
– cash and balances at central banks	267,674	—	267,674	285,868	—	285,868
– Hong Kong Government certificates of indebtedness	42,293	—	42,293	42,024	—	42,024
– reverse repurchase agreements – non-trading	252,549	(4,383)	248,166	252,217	(13,919)	238,298
– financial investments	153,973	—	153,973	148,326	—	148,326
– assets held for sale	27,234	—	27,234	114,134	—	114,134
– prepayments, accrued income and other assets	110,704	—	110,704	130,747	—	130,747
Derivatives	268,637	(254,257)	14,380	229,714	(222,059)	7,655
Total on-balance sheet exposure to credit risk	2,155,761	(281,462)	1,874,299	2,254,467	(258,585)	1,995,882
Total off-balance sheet	970,610	—	970,610	1,007,885	—	1,007,885
– financial and other guarantees	109,380	—	109,380	111,102	—	111,102
– loan and other credit-related commitments	861,230	—	861,230	896,783	—	896,783
At 31 Dec	3,126,371	(281,462)	2,844,909	3,262,352	(258,585)	3,003,767

Concentration of exposure

We have a number of global businesses with a broad range of

products. We operate in a number of geographical markets 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 214 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

200 for wholesale lending and page 214 for personal lending.

Credit deterioration of financial

instruments

(Audited)

A 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 on the financial

statements.

Measurement uncertainty and sensitivity analysis of ECL estimates

(Audited)

The recognition and measurement of ECL involves the use of

judgement and estimation. We form multiple economic scenarios,

apply these forecasts to credit risk models to estimate future credit

losses, and probability weight the results to determine an unbiased

ECL estimate.

Management assessed the current economic environment, reviewed

the latest forecasts and discussed key risks before selecting the

appropriate economic scenarios and their weightings.

The Central scenario is constructed to reflect the latest

macroeconomic expectations. Outer scenarios incorporate the

crystallisation of economic and geopolitical risks.

In the fourth quarter of 2024, the four economic scenarios were

modified to reflect heightened policy uncertainty following the US

election and to overcome any lags in consensus forecasts. An

adjustment factor based on more recent views of expected tariffs and

other policy changes was modelled and then applied to each of the

economic scenarios. The effect was to lower growth expectations in

our major markets, while the impact on inflation and interest rates

was varied.

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.

At 31 December 2024, there was an overall reduction in management

judgemental adjustments compared with 31 December 2023, as

modelled outcomes better reflected the key risks at 31 December 2024.

Methodology

At 31 December 2024, four scenarios were used to capture the latest

economic expectations and to articulate management’s view of the

range of risks and potential outcomes. Each scenario is updated with

the latest economic forecasts and distributional estimates every

quarter.

Three scenarios, the Upside, Central and Downside, are drawn from

consensus forecasts, market data and distributional estimates of the

entire range of economic outcomes. The fourth scenario, the

Downside 2, represents management’s view of severe downside

risks. Consensus estimates are deployed as conditioning variables in a

proprietary expansion of the scenario variables.

The Central scenario is deemed the ‘most likely’ scenario, and usually

attracts the largest probability weighting. It is created using consensus

forecasts, which is the average of a panel of external forecasts.

The outer scenarios represent the tails of the distribution and are less

likely to occur. The consensus Upside and Downside scenarios are

created with reference to forecast probability distributions for select

markets that capture economists’ views of the entire range of

economic outcomes. In the later years of these scenarios, projections

revert to long-term consensus trend expectations. Reversion to trend

expectations is done with reference to historically observed quarterly

changes in the values of macroeconomic variables.

HSBC Holdings plc Annual Report on Form 20-F	179

The fourth scenario, the Downside 2, represents management’s view of

severe downside risks. It is a globally consistent, narrative-driven

scenario that 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.

The consensus Downside and the consensus Upside scenarios are each

constructed to be consistent with a 10% probability. The Downside 2 is

calibrated to a 5% probability. The Central scenario is assigned the

remaining 75%. This weighting scheme is deemed appropriate for the

unbiased estimation of ECL in most circumstances. 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.

For the fourth quarter of 2024, we assessed that consensus forecasts

and distributional estimates did not adequately reflect the

consequences of the US election on the global economic outlook.

Due to the lag in forecasts there was increased uncertainty as to how

tariffs would be implemented and economic policy would change. As

such, scenarios have been constructed using the described standard

methodology and an adjustment – to account for policy changes –

applied. The adjustment was based on a modelled update to the

Central scenario and incorporated a detailed narrative of US economic

policy proposals, including specific tariff rates. The modelled results

were then layered onto the Central scenario, which resulted in

changes to most variables. To quantify the impact, the adjustment

reduces GDP growth in our key markets by an average of 30bps and

50bps respectively, in the first two years of the Central scenario

forecast. Outer scenarios were adjusted in parallel.

The scenario adjustment entailed no change in scenario probability

weights, which remained in line with our Forward Economic Guidance

(’FEG’) framework. Uncertainties relating to the policy outlook have been

addressed in the scenarios directly. Measures of dispersion and

uncertainty have remained low but may reflect lags in the consensus

economic forecasting process.

Scenarios produced to calculate ECL are aligned to HSBC’s top and

emerging risks.

Description of economic scenarios

The economic assumptions presented in this section have been

formed by HSBC with reference to external forecasts and estimates,

specifically 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.

In our key markets, the Central scenario incorporates potential

impacts from anticipated changes to US economic and trade policy,

including higher tariffs. The overall effect of the adjustment in our key

markets is to lower GDP and raise inflation and unemployment

estimates, relative to the consensus. Consequently, GDP growth and

unemployment forecasts have deteriorated in the fourth quarter of

2024, compared with the fourth quarter of 2023. With regards to

monetary policy, the expected path for interest rates in many of our

markets is based on market futures. Interest rate expectations have

increased relative to the fourth quarter of 2023, with fewer rate cuts

forecast. The exception is mainland China, where the headwinds to

growth ensure that forecast interest rates are lower.

At the end of 2024, risks to the economic outlook included a number

of significant geopolitical issues. Within our Downside scenarios, the

economic consequences from the crystallisation of those risks were

captured by higher commodity and goods prices, the re-acceleration

of inflation, a further rise in interest rates and a global recession.

The scenarios used to calculate ECL are described below.

The consensus Central scenario

HSBC’s Central scenario reflects expectations for slower growth and

higher inflation and unemployment across many of our key markets.

Expectations of lower GDP growth during 2025 are driven by the

assumed effects of higher tariffs, which impede trade flows, weaken

consumption and deter investment. In the scenario, the US applies tariffs

on key trading partners, focusing on mainland China and Mexico at the

outset of the new administration’s term, before moving attention to

other trading partners. Countries are expected to respond in kind. As a

direct consequence of tariffs, trade growth is expected to be lower,

which in turn weighs on GDP growth.

Mainland China, Hong Kong and Mexico experience the greatest

negative consequences given their deeper trade and financial

interlinkages, with the US economy. Indirect consequences from tariffs

dampen growth elsewhere. Tariffs, or the threat of them, increases

uncertainty, leading to lower confidence and reduced investment.

Tighter restrictions on immigration into the US are also expected to

reduce the size of the labour force, putting upward pressure on wage

growth. At the same time, higher tariff rates drive US inflation. Higher

inflation is assumed to erode purchasing power and reduces GDP

growth. In other markets, including in Mexico, higher inflation is also

expected due to currency depreciation. The higher projected rates of

inflation ensure that central banks are expected to slow the pace of

interest rate reductions. The exception is in mainland China, where

the PBoC cuts interest rates as the excess of domestic supply is

expected to become more acute and drives prices lower.

Global GDP is expected to grow by 2.5% in 2025 in the Central

scenario, and the average rate of global GDP growth is forecast to be

2.6% over the five-year forecast period. This is below the average

growth rate over the five-year period prior to the onset of the pandemic

of 2.9%.

The key features of our Central scenario are:

–GDP growth rates across the majority of our main markets are

expected to slow in 2025 and 2026, due to the implementation of

higher tariffs as well as underlying structural weaknesses in some

economies. The most significant slowdowns in activity are expected

to occur in the markets with the highest trade dependence with the

US. Elevated interest rates and higher price levels are also expected

to continue to weigh on some consumer and corporate segments.

–In most markets, unemployment is forecast to rise moderately in

2025 as economic activity slows, although it will remain low by

historical standards.

–Inflation is forecast to increase in several of our main markets, as a

result of tariffs, even as services price inflation is expected to ease as

wage growth moderates. However, inflation largely remains within

central banks’ target ranges from 2025. The main exceptions are

Hong Kong and mainland China, where inflation is expected to remain

subdued, despite higher tariffs, due to weak domestic demand.

–Housing market conditions remain mixed, with price weakness

expected to persist in Hong Kong and mainland China, stronger

growth in the UAE and Mexico, and more muted price growth in the

UK, US and France. High inventory levels remain the biggest drag on

Hong Kong and mainland China residential property and this is

expected to lead to another year of price declines in 2025, before a

gradual recovery from 2026.

–Challenging conditions are also forecast to continue in certain

segments of the commercial property sector in a number of our key

markets. Structural changes to demand in the office segment in

particular have driven lower valuations.

–Policy interest rates in key markets are forecast to gradually decline

further in 2025. 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 $69 per barrel

over the projection period.

180	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The Central scenario was created with forecasts available in late November, and reviewed continually until the end of December 2024. In accordance

with HSBC’s scenario framework, a probability weight of 75% has been assigned to the Central scenario across all major markets.

The following tables describe key macroeconomic variables in the consensus Central scenario.

Consensus Central scenario 2025–2029 (as at 4Q24)
	UK	US	Hong Kong	Mainland 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	1.3	1.6	1.8	3.7	0.9	4.2	1.2
2027	1.8	1.6	3.5	4.3	1.4	3.9	1.7
2028	1.6	1.8	3.1	3.9	1.5	3.6	1.9
2029	1.6	2.0	2.7	3.7	1.4	3.6	2.0
5-year average1	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	4.7	4.3	3.7	5.4	7.3	2.6	3.5
2027	4.5	4.3	3.3	5.2	7.2	2.6	3.5
2028	4.3	4.2	3.0	5.0	7.0	2.5	3.5
2029	4.3	4.1	2.9	5.0	7.0	2.5	3.5
5-year average1	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	3.8	3.2	2.4	(0.7)	4.4	5.1	4.5
2027	4.6	2.4	3.0	3.2	4.4	3.6	4.2
2028	3.5	2.5	2.7	4.1	3.8	1.8	4.0
2029	2.7	2.6	2.7	2.9	3.1	1.3	4.0
5-year average1	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	2.1	2.8	1.9	1.0	1.6	1.9	3.9
2027	2.1	2.5	2.2	1.5	2.0	1.8	3.4
2028	2.0	2.2	2.2	1.7	2.3	1.9	3.4
2029	2.0	2.1	2.3	1.6	2.2	1.8	3.4
5-year average	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	3.9	3.7	4.1	2.9	1.8	3.8	8.8
2027	3.8	3.7	4.0	3.0	2.0	3.7	8.8
2028	3.7	3.6	4.0	3.2	2.0	3.6	8.9
2029	3.7	3.6	4.0	3.3	2.1	3.6	8.9
5-year average1	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 1Q25 to 4Q29.

2For mainland China, the rate shown is the Loan Prime Rate.

HSBC Holdings plc Annual Report on Form 20-F	181
Consensus Central scenario 2024–2028 (as at 4Q23)
---	---	---	---	---	---	---	---
	UK	US	Hong Kong	Mainland China	France	UAE	Mexico
GDP (annual average growth rate, %)
2024	0.3	1.0	2.6	4.5	0.8	3.7	1.9
2025	1.2	1.8	2.7	4.4	1.5	4.0	2.2
2026	1.7	2.1	2.6	4.3	1.6	3.8	2.3
2027	1.6	2.0	2.6	3.8	1.5	3.4	2.4
2028	1.6	2.0	2.6	3.9	1.5	3.4	2.4
5-year average1	1.3	1.8	2.6	4.2	1.4	3.6	2.2
Unemployment rate (%)
2024	4.7	4.3	3.0	5.2	7.5	2.6	2.9
2025	4.6	4.2	3.0	5.1	7.3	2.6	2.9
2026	4.3	4.0	3.2	5.1	7.0	2.6	2.9
2027	4.2	4.0	3.2	5.1	6.8	2.6	2.9
2028	4.2	4.0	3.2	5.1	6.8	2.6	2.9
5-year average1	4.4	4.1	3.1	5.1	7.1	2.6	2.9
House prices (annual average growth rate, %)
2024	(5.5)	2.9	(6.6)	(0.6)	(1.0)	12.6	6.5
2025	0.1	2.7	(0.7)	1.1	2.4	7.7	4.2
2026	3.5	3.1	2.6	2.6	4.0	4.4	4.2
2027	3.0	2.7	2.8	4.0	4.4	2.6	4.0
2028	3.0	2.1	3.0	4.5	4.0	2.3	4.0
5-year average1	0.8	2.7	0.2	2.3	2.8	5.9	4.6
Inflation (annual average growth rate,%)
2024	3.2	2.7	2.1	1.8	2.7	2.3	4.2
2025	2.2	2.2	2.1	2.0	1.8	2.2	3.6
2026	2.2	2.3	2.2	2.1	1.7	2.1	3.5
2027	2.3	2.2	2.4	2.0	1.9	2.1	3.5
2028	2.3	2.2	2.4	2.0	2.1	2.1	3.5
5-year average1	2.4	2.3	2.2	2.0	2.0	2.1	3.7
Central bank policy rate (annual average, %)
2024	5.0	5.0	5.4	3.2	3.6	5.1	10.4
2025	4.3	4.0	4.4	3.3	2.8	4.1	8.6
2026	3.9	3.7	4.1	3.5	2.6	3.7	7.9
2027	3.8	3.7	4.1	3.7	2.6	3.7	7.9
2028	3.7	3.8	4.1	3.9	2.7	3.8	8.1
5-year average1	4.1	4.1	4.4	3.5	2.9	4.1	8.6

1The five-year average is calculated over a projected period of 20 quarters from 1Q24 to 4Q28.

2For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including the 4Q23 disclosure, the reference rate shown for mainland China was the

Lending Rate.

The graphs compare the Central scenario at the year end 2023 with economic expectations at the end of 2024.

GDP growth: Comparison of Central scenarios

Hong Kong

119846767492320

4Q23 Central 5Y Average: 2.6%

4Q24 Central 5Y Average: 2.6%

Note: Real GDP shown as year-on-year percentage change.

Mainland China

119846767492325

4Q23 Central 5Y Average: 4.2%

4Q24 Central 5Y Average: 3.9%

Note: Real GDP shown as year-on-year percentage change.

182	HSBC Holdings plc Annual Report on Form 20-F

Risk review

UK

119846767492329

4Q23 Central 5Y Average: 1.3%

4Q24 Central 5Y Average: 1.5%

Note: Real GDP shown as year-on-year percentage change.

US

119846767492334

4Q23 Central 5Y Average: 1.8%

4Q24 Central 5Y Average: 1.8%

Note: Real GDP shown as year-on-year percentage change.

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 a faster

fall in the rate of inflation than in the Central scenario.

The scenario is consistent with a number of key upside risk themes.

These include only limited increases in tariffs and a faster fall in the

rate of inflation that allows central banks to reduce interest rates

more quickly. The Upside scenario would also be consistent with a

de-escalation in geopolitical tensions, where the Russia-Ukraine war

moves quickly towards a conclusion, tensions in the Middle East

subside and US-China relations become more cordial.

The following tables describe key macroeconomic variables in the

consensus Upside scenario.

Consensus Upside scenario 2025–2029 (as at 4Q24)
	UK		US		Hong Kong		Mainland 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)2	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 or policy interest rate in the scenario. For mainland China, rate shown is the Loan Prime Rate.

3Lowest projected year-on-year percentage change in inflation in the scenario.

Consensus Upside scenario 2024–2028 (as at 4Q23)
	UK		US		Hong Kong		Mainland China		France		UAE		Mexico
GDP level (%, start-to-peak)1	10.8	(4Q28)	14.3	(4Q28)	21.8	(4Q28)	30.4	(4Q28)	10.4	(4Q28)	30.7	(4Q28)	17.8	(4Q28)
Unemployment rate (%, min)2	3.1	(4Q24)	3.1	(2Q25)	2.4	(3Q24)	4.8	(4Q25)	6.2	(4Q25)	2.0	(4Q25)	2.4	(3Q24)
House price index (%, start-to-peak)1	13.0	(4Q28)	21.9	(4Q28)	17.9	(4Q28)	19.7	(4Q28)	19.6	(4Q28)	34.2	(4Q28)	30.6	(4Q28)
Inflation rate (YoY % change, min)3	1.3	(2Q25)	1.4	(1Q25)	0.3	(4Q24)	0.6	(3Q24)	1.5	(3Q24)	1.4	(1Q25)	2.7	(1Q25)
Central bank policy rate (%, min)2	3.7	(3Q28)	3.7	(2Q27)	4.1	(1Q27)	3.1	(3Q24)	2.6	(2Q26)	3.7	(1Q27)	7.8	(2Q25)

1Cumulative change to the highest level of the series during the 20-quarter projection.

2Lowest projected unemployment or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including the

4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.

3Lowest projected year-on-year percentage change in inflation in the scenario.

Downside scenarios

Downside scenarios explore the intensification and crystallisation of a

number of key economic and financial risks. These include a more

material escalation of tariff policies and geopolitical tensions, which

disrupt key commodity and goods markets, causing inflation and

interest rates to rise, and creating a global recession.

As the geopolitical environment remains volatile and complex, risks

include:

–an increase in protectionist policies, as countries that impose

tariffs are met with retaliatory actions. This lowers investment,

complicates international supply chains, and impedes trade flows;

–broader and more prolonged conflicts in the Middle East and

between Russia and Ukraine, which further disrupt energy and

food supplies; and

–continued differences between the US and China, which could

affect economic confidence, and the global goods trade and supply

chains for critical technologies.

High inflation and higher interest rates also remain key risks. Should

tariffs increase significantly and geopolitical tensions escalate, energy

and food prices could rise and increase pressure on household

budgets and firms’ costs. Higher inflation and labour supply shortages

could also trigger a wage-price spiral and put sustained pressure on

household incomes and corporate margins. In turn, it raises the risk

that central banks react by raising interest rates, leading to higher

defaults and an economic recession.

HSBC Holdings plc Annual Report on Form 20-F	183

The consensus Downside scenario

In the consensus Downside scenario, economic activity is weaker

compared with the Central scenario. In this scenario, GDP declines,

unemployment rates rise, and asset prices fall. The scenario features

an increase in tariffs over and above those assumed in the Central

scenario and an escalation of geopolitical tensions, which causes a

rise in inflation, as supply chain constraints intensify and energy prices

rise. The scenario also features a temporary increase in interest rates

above the Central scenario, before the effects of weaker consumption

demand begin to dominate and commodity prices and inflation fall

again.

The following tables describe key macroeconomic variables in the

consensus Downside scenario.

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-<br><br>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)2	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 or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate.

3The highest projected year-on-year percentage change in inflation in the scenario.

Consensus Downside scenario 2024–2028 (as at 4Q23)
	UK		US		Hong Kong		Mainland China		France		UAE		Mexico
GDP level (%, start-to-trough)1	(1.0)	(2Q25)	(1.4)	(3Q24)	(1.6)	(3Q25)	(1.5)	(1Q24)	(0.3)	(2Q24)	1.4	(1Q24)	(0.3)	(4Q24)
Unemployment rate (%, max)2	6.4	(1Q25)	5.6	(4Q24)	4.7	(4Q25)	6.9	(4Q25)	8.5	(4Q24)	3.7	(4Q25)	3.5	(4Q25)
House price index (%, start-to-<br><br>trough)1	(12.0)	(2Q25)	(1.3)	(3Q24)	(9.6)	(4Q24)	(7.1)	(3Q25)	(1.2)	(3Q24)	0.3	(1Q24)	1.2	(1Q24)
Inflation rate (YoY % change, max)3	4.1	(1Q24)	3.5	(4Q24)	3.8	(3Q24)	3.5	(4Q24)	3.8	(2Q24)	3.0	(1Q24)	6.5	(4Q24)
Central bank policy rate (%, max)2	5.7	(1Q24)	5.6	(1Q24)	6.0	(1Q24)	3.2	(3Q24)	4.2	(1Q24)	5.7	(1Q24)	12.0	(3Q24)

1Cumulative change to the lowest level of the series during the 20-quarter projection.

2The highest projected unemployment or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate. In prior periods, including

the 4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.

3The highest projected year-on-year percentage change in inflation in the scenario.

Downside 2 scenario

The Downside 2 scenario features a deep global recession and

reflects management’s view of the tail of the economic distribution. It

incorporates the crystallisation of a number of risks simultaneously,

including significant increases in tariffs globally, where the US

imposes particularly high and punitive tariffs on imports from

mainland China and Mexico. A further escalation of geopolitical crises

is also assumed, which creates severe supply disruptions to goods

and energy markets.

In the scenario, as inflation surges and central banks tighten monetary

policy further, consumer and business confidence falls. However, this

impulse is assumed to be short-lived, as recession takes hold, causing

a fall in demand, leading commodity prices to correct sharply and

global price inflation to fall.

The following tables describe key macroeconomic variables in the

Downside 2 scenario.

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-<br><br>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)2	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 or policy interest rate in the scenario. For mainland China, the rate shown is the Loan Prime Rate.

3 The highest projected year-on-year percentage change in inflation in the scenario.

Downside 2 scenario 2024–2028 (as at 4Q23)
	UK		US		Hong Kong		Mainland China		France		UAE		Mexico
GDP level (%, start-to-trough)1	(8.8)	(2Q25)	(4.6)	(1Q25)	(8.2)	(1Q25)	(6.4)	(1Q25)	(6.6)	(1Q25)	(4.9)	(2Q25)	(8.1)	(2Q25)
Unemployment rate (%, max)2	8.4	(2Q25)	9.3	(2Q25)	6.4	(4Q24)	7.0	(4Q25)	10.2	(4Q25)	4.3	(3Q24)	4.9	(2Q25)
House price index (%, start-to-<br><br>trough)1	(30.2)	(4Q25)	(14.7)	(4Q24)	(32.8)	(3Q26)	(25.5)	(4Q25)	(14.5)	(2Q26)	(2.9)	(4Q25)	1.2	(1Q24)
Inflation rate (YoY % change, max)3	10.1	(2Q24)	4.8	(2Q24)	4.1	(3Q24)	4.1	(4Q24)	8.6	(2Q24)	3.5	(2Q24)	7.0	(4Q24)
Central bank policy rate (%, max)2	6.0	(1Q24)	6.1	(1Q24)	6.4	(1Q24)	4.1	(3Q24)	5.2	(1Q24)	6.1	(1Q24)	12.7	(3Q24)

1Cumulative change to the lowest level of the series during the 20-quarter projection.

2 The highest projected unemployment or policy interest rate in the scenario. For mainland China, rate shown is the Loan Prime Rate. In prior periods, including the

4Q23 disclosure, the reference rate shown for mainland China was the Lending Rate.

3 The highest projected year-on-year percentage change in inflation in the scenario.

184	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The following graphs show the historical and forecasted GDP growth rate for the various economic scenarios in our four largest markets.

Hong Kong

119846767543989

Mainland China

119846767543996

UK

119846767544001

US

119846767544006

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.

In assessing the economic environment and the level of risk and

uncertainty, management has considered both global and country-

specific factors.

In the fourth quarter of 2024, key considerations around uncertainty

focused on:

–US import tariffs and bilateral tariff escalations globally, and the

impact on trade and manufacturing supply chains;

–the extent and success of mainland China in deploying fiscal and

monetary support to secure economic growth and underpin a

recovery in the real estate market;

–prospects for recovery in the Hong Kong residential property

market;

–the implications of changes to monetary policy expectations on

growth and employment;

–estimation and forecast uncertainty for UK unemployment given

ongoing methodology updates at the Office for National Statistics;

and

–risks of an asset price correction given elevated valuations across

different asset classes.

Although these factors are significant, management assessed that

following the tariff-based adjustment, the Central scenario reflected

the most likely future economic outcome and that outer scenarios

were sufficiently well calibrated to address the crystallisation of more

severe risks.

This led management to assign scenario probabilities that are aligned

to the standard scenario probability calibration framework in all major

markets. The 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 support of the decision, it was noted that the effect of higher tariffs

would be most negative in mainland China and Hong Kong, as it

would limit trade growth (a significant growth driver in 2024)

substantially and lead to weaker domestic demand. The adjustment to

the Central scenario reflected this assumption.

In the UK, tariffs have a small direct impact on GDP growth forecasts

in the Central scenario, but indirect effects would be larger through

weaker trade and lower global growth. The outlook also remains weak

given the only partially offsetting impacts from measures announced

in the 2024-25 Budget and higher US interest rates.

For the US, the Central scenario reflects expectations that economic

growth will slow in 2025 as households and businesses adjust to

higher inflation, lower labour supply and elevated interest rates.

HSBC Holdings plc Annual Report on Form 20-F	185

The impact from tariffs is minimal for the UAE, as trade with the US is

small, but it is assumed to be affected through secondary channels,

including a stronger US dollar and higher interest rates. It was also

observed that geopolitical risks have remained high since the

outbreak of conflict in the Middle East, but economic and market

impacts have been limited and oil production remains unaffected.

Escalation risks were assessed to be consistent with the probabilities

assigned to the Downside scenario.

Management concluded that Mexico is likely to be one of the most

heavily affected countries from US tariff policies and that the impacts

are reflected in the scenarios. GDP growth forecasts in the Central

scenario are lower than in previous periods, and inflation and interest

rates are higher, in part due to an expected deprecation of the

Mexican peso.

In France, recent domestic political uncertainty is the main factor

weighing on reduced growth prospects, and as with other European

markets, there are also assumed to be negative impacts stemming

from higher US tariffs.

The following tables describe the probabilities assigned in each

scenario.

Scenario weightings, %
	Standard<br><br>weights	UK	US	Hong<br><br>Kong	Mainland<br><br>China	Canada	France	UAE	Mexico
4Q24
Upside scenario	10	10	10	10	10	10	10	10	10
Central scenario	75	75	75	75	75	75	75	75	75
Downside scenario	10	10	10	10	10	10	10	10	10
Downside 2 scenario	5	5	5	5	5	5	5	5	5
4Q23
Upside scenario	10	10	10	10	10	10	10	10	10
Central scenario	75	75	75	75	75	75	75	75	75
Downside scenario	10	10	10	10	10	10	10	10	10
Downside 2 scenario	5	5	5	5	5	5	5	5	5

At 31 December 2024, the consensus Upside and Central scenarios for all markets had a combined weighting of 85%, unchanged as at

31 December 2023. Weightings assigned to downside scenarios also remained unchanged.

Critical estimates and judgements

The calculation of ECL under IFRS 9 involved significant judgements,

assumptions and estimates at 31 December 2024. These included:

–the selection and configuration of economic scenarios, given the

constant change in economic conditions and distribution of

economic risks; and

–estimating the economic effects of those scenarios on ECL, where

similar observable historical conditions cannot be captured by the

credit risk models.

How economic scenarios are

reflected in ECL calculations

Models are used to reflect economic scenarios in ECL estimates. As

described above, modelled assumptions and linkages based on historical

information could not alone produce relevant information under the

conditions experienced in 2024, and management judgemental

adjustments were still required to support modelled outcomes.

We have developed globally consistent methodologies for the

application of forward economic guidance into the calculation of ECL

for wholesale and retail credit risk. These standard approaches are

described below, followed by the management judgemental

adjustments made, including those to reflect the circumstances

experienced in 2024.

For our wholesale portfolios, a global methodology is used for the

estimation of the term structure of probability of default (‘PD’) and

loss given default (‘LGD’). For PDs, we consider the correlation of

forward economic guidance to default rates for a particular industry in

a country. For LGD calculations, we consider the correlation of

forward economic guidance to 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, allowance for ECL estimates are derived based on

discounted cash flow (‘DCF’) calculations for internal forward-looking

scenarios specific to individual borrower circumstances (see page

381). Probability-weighted outcomes are applied, and depending on

materiality and status of the borrower, the number of scenarios

considered will change. Where relevant for the case being assessed,

forward economic guidance is incorporated as part of these scenarios.

LGD-driven proxy and modelled 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, a

limited number of portfolios utilise a macroeconomic dependent

stressed LGD applied to the Downside 2 scenario.

Management judgemental

adjustments

In the context of IFRS 9, management judgemental adjustments are

typically short-term increases or decreases to the modelled allowance

for ECL at either a customer, segment or portfolio level where

management believes allowances do not sufficiently reflect the credit

risk/expected credit losses at the reporting date. These can relate to

risks or uncertainties that are not reflected in the models and/or to

any late-breaking events with significant uncertainty, subject to

management review and challenge.

This includes refining model inputs and outputs and using

adjustments to ECL based on management judgement and

quantitative analysis for impacts that are difficult to model.

The effects of management judgemental adjustments are considered for both

balances and allowance for ECL when determining whether or not a significant

increase in credit risk has occurred and is allocated to a stage where

appropriate. This is in accordance with the internal adjustments framework.

186	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Management judgemental adjustments are reviewed under the

governance process for IFRS 9 (as detailed in the section ‘Credit risk

management’ on page 169). Review and challenge focuses on the

rationale and quantum of the adjustments with a further review

carried out by the second line of defence where significant. For some

management judgemental adjustments, internal frameworks establish

the conditions under which these adjustments should no longer be

required and as such are considered as part of the governance

process. This internal governance process allows management

judgemental adjustments to be reviewed regularly and, where

possible, to reduce the reliance on these through model recalibration

or redevelopment, as appropriate.

The drivers of management judgemental adjustments continue to

evolve with the economic environment and as 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.

‘Management judgemental adjustments’ and ‘Other adjustments’

constitute the total value of adjustments to modelled allowance for

ECL. For the wholesale portfolio, defaulted exposures are assessed

individually and management judgemental adjustments are made only

to the performing portfolio.

At 31 December 2024, there was a $0.6bn reduction in management

judgemental adjustments compared with 31 December 2023. This

was driven by retail due to reductions in economic uncertainty,

primarily in the UK and Asia, and model redevelopments which

captured macro-economic risks more effectively.

Management judgemental adjustments made in estimating the

scenario-weighted reported allowance for ECL at 31 December 2024

are set out in the following table.

Management judgemental adjustments to ECL at 31 December 20241
	Retail	Wholesale2	Total
	$bn	$bn	$bn
Modelled ECL (A)3	2.6	2.0	4.6
Banks, sovereigns, government entities and low-risk counterparties		0.0	0.0
Corporate lending adjustments		0.1	0.1
Inflation related adjustments	0.0		0.0
Other credit judgements	0.0		0.0
Total management judgemental adjustments (B)4	0.0	0.1	0.1
Other adjustments (C)5	(0.0)	0.1	0.1
Final ECL (A + B + C)6	2.6	2.2	4.8	Management judgemental adjustments to ECL at 31 December 20231,7
---	---	---	---
	Retail	Wholesale2	Total
	$bn	$bn	$bn
Modelled ECL (A)3	2.6	2.4	5.0
Banks, sovereigns, government entities and low-risk counterparties		0.0	0.0
Corporate lending adjustments		0.1	0.1
Inflation-related adjustments	0.1		0.1
Other credit judgements	0.5		0.5
Total management judgemental adjustments (B)4	0.6	0.1	0.7
Other adjustments (C)5	(0.0)	0.0	0.0
Final ECL (A + B + C)6	3.2	2.5	5.7

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/expected credit losses 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 169).

731 December 2023 includes the Canada, Argentina, Armenia and Oman businesses and retail banking operations in France.

Management judgemental adjustments at 31 December 2024 were

an increase to allowance for ECL of $0.1bn for the wholesale portfolio

and $0.0bn for the retail portfolio.

At 31 December 2024, wholesale management judgemental

adjustments were an increase to allowance for ECL of $0.1bn

(31 December 2023: $0.1bn increase). 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 2024, retail management judgemental adjustments

to allowance for ECL were $0.0bn (31 December 2023 $0.6bn). The

reduction in adjustments compared with 31 December 2023 for

inflation-related adjustments was primarily due to the reduction of

inflation related risk in the UK and the sale of the Canadian banking

business. Other credit judgements decreased due to reductions in

economic uncertainty, primarily in the UK and Asia, and model

redevelopments which captured macro-economic risks more

effectively.

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.

HSBC Holdings plc Annual Report on Form 20-F	187

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 3) 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. 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.

Wholesale analysis

IFRS 9 ECL sensitivity to future economic conditions1,2,3
	Reported<br><br>Gross carrying<br><br>amount4	Reported<br><br>allowance for<br><br>ECL	Consensus<br><br>Central<br><br>scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Upside<br><br>scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Downside<br><br>scenario<br><br>allowance for<br><br>ECL	Downside 2<br><br>scenario<br><br>allowance for<br><br>ECL
By geography at 31 Dec 2024	$m	$m	$m	$m	$m	$m
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	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	By geography at 31 Dec 2023
---	---	---	---	---	---	---
UK	426,427	820	754	599	1,041	2,487
US	191,104	215	199	189	268	441
Hong Kong	447,480	609	566	433	807	1,393
Mainland China	129,945	258	217	142	414	945
Canada5	84,092	89	75	56	107	487
Mexico	30,159	60	56	46	73	226
UAE	52,074	32	32	30	34	40
France	178,827	98	102	90	124	141
Other geographies5,7	450,271	325	298	245	410	882
Total	1,990,378	2,507	2,301	1,829	3,278	7,043
of which:
Stage 1	1,820,843	754	702	553	860	854
Stage 2	169,535	1,753	1,599	1,276	2,418	6,189

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 200.

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.

6Classified as held for sale at 31 December 2023.

7Includes the Argentina and Armenia businesses, which were sold in 2024.

188	HSBC Holdings plc Annual Report on Form 20-F

Risk review

At 31 December 2024, 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 2023, the Downside 2 ECL impact

reduced by $0.5bn mostly due to the sale of the Canada business

while observing offsetting impacts driven by 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

IFRS 9 ECL sensitivity to future economic conditions1
	Reported gross<br><br>carrying<br><br>amount	Reported<br><br>allowance for<br><br>ECL	Consensus<br><br>Central<br><br>scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Upside<br><br>scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Downside<br><br>scenario<br><br>allowance for<br><br>ECL	Downside 2<br><br>scenario<br><br>allowance for<br><br>ECL
By geography at 31 Dec 2024	$m	$m	$m	$m	$m	$m
UK
Mortgages	163,541	126	117	107	132	288
Credit cards	7,415	280	275	265	276	447
Other	8,249	241	233	217	243	351
Mexico
Mortgages	7,482	165	162	155	168	215
Credit cards	2,227	337	333	330	338	423
Other	3,722	419	416	413	422	593
Hong Kong
Mortgages	106,866	5	5	4	5	10
Credit cards	9,419	293	275	268	300	770
Other	6,210	106	102	101	105	249
UAE
Mortgages	1,993	8	8	8	8	8
Credit cards	536	31	31	31	31	35
Other	688	17	17	17	17	19
US
Mortgages	16,965	6	6	6	6	8
Credit cards	193	15	14	14	15	17
Other geographies
Mortgages	51,064	131	127	124	136	180
Credit cards	3,500	162	159	156	164	223
Other	2,292	72	72	69	73	93
Total	392,361	2,413	2,351	2,285	2,440	3,928
of which: mortgages	347,910	440	425	405	456	708
Stage 1	311,875	51	47	43	58	129
Stage 2	33,761	126	117	107	129	275
Stage 3	2,274	263	261	255	269	304
of which: credit cards	23,290	1,116	1,086	1,064	1,124	1,915
Stage 1	19,915	276	267	258	284	701
Stage 2	3,107	655	634	621	656	1,027
Stage 3	267	185	185	185	185	188
of which: others	21,161	856	839	816	860	1,305
Stage 1	18,574	216	204	193	217	532
Stage 2	2,005	360	355	343	363	483
Stage 3	583	279	279	279	279	290
HSBC Holdings plc Annual Report on Form 20-F	189
---	---
IFRS 9 ECL sensitivity to future economic conditions1,2
---	---	---	---	---	---	---
	Reported gross<br><br>carrying amount	Reported<br><br>allowance for<br><br>ECL	Consensus<br><br>Central scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Upside scenario<br><br>allowance for<br><br>ECL	Consensus<br><br>Downside<br><br>scenario<br><br>allowance for<br><br>ECL	Downside 2<br><br>scenario<br><br>allowance for<br><br>ECL
By geography at 31 Dec 2023	$m	$m	$m	$m	$m	$m
UK
Mortgages	161,127	189	180	172	201	334
Credit cards	7,582	344	340	302	353	486
Other	8,183	341	333	273	383	515
Mexico
Mortgages	8,666	188	180	150	235	363
Credit cards	2,445	295	286	206	376	489
Other	4,529	513	503	426	600	731
Hong Kong
Mortgages	106,136	2	2	1	3	5
Credit cards	9,128	287	239	214	395	887
Other	6,269	109	100	88	124	256
UAE
Mortgages	2,001	25	25	25	25	25
Credit cards	471	24	24	22	25	32
Other	721	20	20	19	21	28
France
Mortgages	20,589	50	50	50	51	51
Other	1,328	44	44	43	45	48
US
Mortgages	14,385	8	4	3	4	10
Credit cards	204	15	15	10	15	16
Canada
Mortgages	25,464	67	65	64	70	99
Credit cards	338	13	13	12	16	15
Other	1,368	13	13	12	14	33
Other geographies
Mortgages	55,368	152	149	144	158	198
Credit cards	3,655	173	166	151	202	291
Other	2,416	91	86	83	95	137
Total	442,373	2,962	2,835	2,471	3,411	5,049
of which: mortgages	393,736	681	655	609	747	1,085
Stage 1	347,874	101	92	77	145	303
Stage 2	43,451	264	249	225	280	429
Stage 3	2,412	316	314	307	322	352
of which: credit cards	23,822	1,150	1,082	918	1,381	2,217
Stage 1	18,557	249	232	180	329	604
Stage 2	4,953	707	657	546	859	1,415
Stage 3	312	193	193	192	194	197
of which: others	24,815	1,131	1,098	944	1,283	1,748
Stage 1	19,551	218	205	151	272	501
Stage 2	4,542	540	519	423	636	868
Stage 3	722	373	373	370	375	379

1Allowance for ECL sensitivities exclude portfolios utilising less complex modelling approaches.

2Included balances and allowance for ECL which had been reclassified from ‘loans and advances to customers’ to ‘assets held for sale’ in the balance sheet at

31 December 2023. This also included any balances and allowance for ECL which continued to be reported as personal lending in ‘loans and advances to

customers’ that are in accordance with the basis of inclusion for retail sensitivity analysis. This includes the Canada, Argentina businesses and retail banking

operations in France.

At 31 December 2024, 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 2024.

There was a reduction in the total sensitivity for ECL allowance in all

scenarios compared with 31 December 2023, due to banking portfolio

sales, reduction of management judgemental adjustments, model

redevelopments and scenario evolution.

There is limited sensitivity in credit cards and other unsecured lending

in stage 3 as levels of loss on defaulted exposures remain consistent

through various economic conditions. The Downside 2 scenario is

from the tail of the economic distribution where allowance for ECL is

more sensitive based on historical experience and includes a

macroeconomic-dependent 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.

190	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 2024, it

would increase/(decrease) as presented in the below table.

Total Group ECL at 31 December 2024
	Retail1	Wholesale1
	$bn	$bn
Reported allowance for ECL	2.4	2.2
Scenarios
100% Consensus Central scenario	(0.1)	(0.2)
100% Consensus Upside scenario	(0.1)	(0.6)
100% Consensus Downside scenario	0.0	0.7
100% Downside 2 scenario	1.5	4.3	Total Group ECL at 31 December 2023
---	---	---
Reported allowance for ECL	3.0	2.5
Scenarios
100% Consensus Central scenario	(0.1)	(0.2)
100% Consensus Upside scenario	(0.5)	(0.7)
100% Consensus Downside scenario	0.4	0.8
100% Downside 2 scenario	2.1	4.5

1On the same basis as retail and wholesale sensitivity analysis.

At 31 December 2024, the Group allowance for ECL decreased in the

retail portfolio by $0.6bn and decreased by $0.3bn in the wholesale

portfolio, compared with 31 December 2023.

There was also a reduction in allowance for ECL sensitivity across all

scenarios within the retail and wholesale portfolios since

31 December 2023, primarily as a result of the sale of our Canada

banking business, the sale of our retail banking operations in France,

and various other business sales during the first half of 2024.

For the wholesale portfolio this was the main driver of the decrease in

Downside 2 ECL sensitivity.

For the retail portfolios the ECL sensitivity decrease across all

scenarios including the Downside 2 was also primarily due to the

reduction of management judgemental adjustments, model

redevelopments and scenario evolution.

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	1,958,010	(2,205)	392,361	(2,413)	2,350,371	(4,618)
– Exclusions from sensitivity as described in the<br><br>section above1	20,409	(5,419)	309,178	(124)	329,587	(5,543)
– Debt instruments measured at fair value through<br><br>other comprehensive income2	(346,124)	54	—	—	(346,124)	54
– Performance guarantees2	(92,722)	311	—	—	(92,722)	311
– Other financial assets at amortised cost not<br><br>presented as wholesale or personal lending, including<br><br>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<br><br>(excluding debt instruments measured at FVOCI) by<br><br>stage distribution and ECL coverage by industry<br><br>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<br><br>(excluding debt instruments measured at FVOCI) by<br><br>stage distribution and ECL coverage by industry<br><br>sector at 31 Dec 2024					2,507,370	(10,197)
HSBC Holdings plc Annual Report on Form 20-F	191
---	---
Reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL (continued)
---	---	---	---	---	---	---
	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	1,990,378	(2,507)	442,373	(2,962)	2,432,751	(5,469)
– Exclusions from sensitivity as described in the<br><br>section above1	17,024	(6,237)	308,569	(93)	325,593	(6,330)
– Debt instruments measured at fair value through<br><br>other comprehensive income2	(302,348)	97	—	—	(302,348)	97
– Performance guarantees2	(93,312)	35	—	—	(93,312)	35
– Other financial assets at amortised cost not<br><br>presented as wholesale or personal lending, including<br><br>held for sale2	(579,534)	93	(41,129)	174	(620,663)	267
– Other3	2,704	(84)	(4,175)	(11)	(1,471)	(95)
As reported in the Summary of credit risk (excluding<br><br>debt instruments measured at FVOCI) by stage<br><br>distribution and ECL coverage by industry sector at 31<br><br>Dec 2023	1,034,912	(8,603)	705,638	(2,892)	1,740,550	(11,495)
Other financial assets at amortised cost					960,271	(422)
Total reported in the Summary of credit risk (excluding<br><br>debt instruments measured at FVOCI) by stage<br><br>distribution and ECL coverage by industry sector at 31<br><br>Dec 2023					2,700,821	(11,917)

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 FVOCI and performance guarantees, which are presented separately in the credit tables.

3Includes FX and other operational variances.

Reconciliations of changes in gross carrying/nominal amount and allowances

for loans and advances to banks and customers including loan commitments

and financial guarantees

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 customer risk rating (‘CRR’)/probability of default (‘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’, ‘assets

derecognised (including final repayments)’ and ‘changes to risk

parameters – further lending/repayment’.

192	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 2024	1,496,805	(1,300)	153,084	(3,102)	20,799	(7,063)	85	(30)	1,670,773	(11,495)
Transfers of financial<br><br>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<br><br>stage	—	959	—	(831)	—	(144)	—	—	—	(16)
Changes due to<br><br>modifications not<br><br>derecognised	—	—	—	—	(25)	—	—	—	(25)	—
Net new and further<br><br>lending/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<br><br>for ECL calculation	—	68	—	(4)	—	(20)	—	—	—	44
Assets written off	—	—	—	—	(4,459)	4,459	—	—	(4,459)	4,459
Credit-related modifications<br><br>that resulted in<br><br>derecognition	—	—	—	—	—	—	—	—	—	—
Foreign exchange and<br><br>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<br><br>change for the period		1,222		(2,019)		(2,420)		(18)		(3,235)
Recoveries										260
Others										(158)
Total ECL income<br><br>statement change for the<br><br>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 433.

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 banking business in

Argentina during 2024.

	At 31 Dec 2024		12 months ended<br><br>31 Dec 2024
	Gross carrying/<br><br>nominal amount	Allowance for ECL	ECL 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)

As shown in the previous table, the allowance for ECL for loans and

advances to customers and banks and relevant loan commitments

and financial guarantees decreased $1,390m during the period from

$11,495m at 31 December 2023 to $10,105m at 31 December 2024.

This decrease was driven by:

–$4,459m of assets written off;

–$2,103m relating to volume movements, which included the

allowance for ECL associated with new originations, assets

derecognised and further lending/repayment;

–foreign exchange and other movements of $166m; and

–$44m of changes to models used for ECL calculation.

HSBC Holdings plc Annual Report on Form 20-F	193

These were partly offset by:

–$5,366m relating to credit quality changes, including the credit

quality impact of financial instruments transferring between

stages; and

–$16m relating to the net remeasurement impact of stage

transfers.

The ECL charge for the period of $3,235m presented in the previous

table consisted of $5,366m relating to credit quality changes,

including the credit quality impact of financial instruments transferring

between stages and $16m relating to the net remeasurement impact

of stage transfers.

This was partly offset by $2,103m relating to underlying net book

volume movement and $44m in changes to models used for ECL

calculation.

Summary views of the movement in wholesale and personal lending

are presented on pages 203 and 215.

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>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 2023	1,433,643	(1,257)	177,223	(3,710)	21,207	(6,949)	129	(38)	1,632,202	(11,954)
Transfers of financial instruments:	(18,948)	(1,048)	10,286	2,228	8,662	(1,180)	—	—	—	—
– transfers from stage 1 to<br><br>stage 2	(150,728)	442	150,728	(442)	—	—	—	—	—	—
– transfers from stage 2 to<br><br>stage 1	133,079	(1,467)	(133,079)	1,467	—	—	—	—	—	—
– transfers to stage 3	(1,986)	23	(8,600)	1,379	10,586	(1,402)	—	—	—	—
– transfers from stage 3	687	(46)	1,237	(176)	(1,924)	222	—	—	—	—
Net remeasurement of ECL<br><br>arising from transfer of stage	—	917	—	(973)	—	(124)	—	—	—	(180)
Net new and further lending/<br><br>repayments	77,693	(185)	(36,795)	661	(4,956)	1,117	(36)	3	35,906	1,596
Changes to risk parameters –<br><br>credit quality	—	307	—	(1,262)	—	(3,896)	—	21	—	(4,830)
Changes to models used for ECL<br><br>calculation	—	(22)	—	46	—	7	—	—	—	31
Assets written off	—	—	—	—	(3,922)	3,922	—	—	(3,922)	3,922
Credit-related modifications that<br><br>resulted in derecognition	—	—	—	—	(119)	95	—	—	(119)	95
Foreign exchange and others1	4,417	(12)	2,370	(92)	(73)	(55)	(8)	(16)	6,706	(175)
At 31 Dec 2023	1,496,805	(1,300)	153,084	(3,102)	20,799	(7,063)	85	(30)	1,670,773	(11,495)
ECL income statement change for<br><br>the period		1,017		(1,528)		(2,896)		24		(3,383)
Recoveries										268
Others	—	—	—	—	—	—	—	—	—	(195)
Total ECL income statement<br><br>change for the period										(3,310)

1Total includes $7.7bn 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 $70m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 433.

(Audited)
	At 31 Dec 2023		12 months ended<br><br>31 Dec 2023
	Gross carrying/<br><br>nominal amount	Allowance for<br><br>ECL	ECL charge
	$m	$m	$m
As above	1,670,773	(11,495)	(3,310)
Other financial assets measured at amortised cost	960,271	(422)	(35)
Non-trading reverse purchase agreement commitments	69,777	—	—
Performance and other guarantees not considered for IFRS 9	—	—	(44)
Summary of financial instruments to which the impairment requirements in IFRS 9 are<br><br>applied/Summary consolidated income statement	2,700,821	(11,917)	(3,389)
Debt instruments measured at FVOCI	302,348	(97)	(58)
Total allowance for ECL/total income statement ECL change for the period	n/a	(12,014)	(3,447)
194	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

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 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 433.

Reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers (continued)
	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 2023	879,023	(1,109)	140,816	(3,518)	19,586	(6,851)	129	(38)	1,039,554	(11,516)
Transfers of financial instruments:	(19,276)	(980)	11,250	2,154	8,026	(1,174)	—	—	—	—
– transfers from stage 1 to stage 2	(108,758)	423	108,758	(423)	—	—	—	—	—	—
– transfers from stage 2 to stage 1	90,655	(1,382)	(90,655)	1,382	—	—	—	—	—	—
– transfers to stage 3	(1,692)	22	(7,975)	1,367	9,667	(1,389)	—	—	—	—
– transfers from stage 3	519	(43)	1,122	(172)	(1,641)	215	—	—	—	—
Net remeasurement of ECL arising<br><br>from transfer of stage	—	859	—	(934)	—	(118)	—	—	—	(193)
Net new and further lending/<br><br>repayments	55,024	(210)	(32,069)	685	(4,233)	1,026	(40)	3	18,682	1,504
Changes to risk parameters – credit<br><br>quality	—	311	—	(1,292)	—	(3,804)	—	21	—	(4,764)
Changes to models used for ECL<br><br>calculation	—	(17)	—	28	—	7	—	—	—	18
Assets written off	—	—	—	—	(3,922)	3,922	—	—	(3,922)	3,922
Credit-related modifications that<br><br>resulted in derecognition	—	—	—	—	(119)	95	—	—	(119)	95
Foreign exchange and others1	6,092	6	2,310	(90)	(63)	(55)	(8)	(16)	8,331	(155)
At 31 Dec 2023	920,863	(1,140)	122,307	(2,967)	19,275	(6,952)	81	(30)	1,062,526	(11,089)
ECL income statement change for<br><br>the period		943		(1,513)		(2,889)		24		(3,435)
Recoveries										268
Others										(203)
Total ECL income statement<br><br>change for the period										(3,370)

1Total includes $7.7bn 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 $70m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 433.

HSBC Holdings plc Annual Report on Form 20-F	195
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 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<br><br>stage 2	(25,600)	15	25,600	(15)	—	—	—	—	—	—
– transfers from stage 2 to<br><br>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<br><br>arising 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 –<br><br>credit 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<br><br>for the period		24		(46)		11		—		(11)
Recoveries										—
Others										3
Total ECL income statement<br><br>change 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 banking business in

Argentina during 2024.

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 2023	554,620	(148)	36,407	(192)	1,621	(98)	—	—	592,648	(438)
Transfers of financial instruments:	328	(68)	(964)	74	636	(6)	—	—	—	—
– transfers from stage 1 to<br><br>stage 2	(41,970)	19	41,970	(19)	—	—	—	—	—	—
– transfers from stage 2 to<br><br>stage 1	42,424	(85)	(42,424)	85	—	—	—	—	—	—
– transfers to stage 3	(294)	1	(625)	12	919	(13)	—	—	—	—
– transfers from stage 3	168	(3)	115	(4)	(283)	7	—	—	—	—
Net remeasurement of ECL<br><br>arising from transfer of stage	—	58	—	(39)	—	(6)	—	—	—	13
Net new and further lending/<br><br>repayments	22,669	25	(4,726)	(24)	(723)	91	4	—	17,224	92
Changes to risk parameters –<br><br>credit quality	—	(4)	—	30	—	(92)	—	—	—	(66)
Changes to models used for ECL<br><br>calculation	—	(5)	—	18	—	—	—	—	—	13
Foreign exchange and others	(1,675)	(18)	60	(2)	(10)	—	—	—	(1,625)	(20)
At 31 Dec 2023	575,942	(160)	30,777	(135)	1,524	(111)	4	—	608,247	(406)
ECL income statement change<br><br>for the period		74		(15)		(7)		—		52
Recoveries										—
Others										8
Total ECL income statement<br><br>change for the period										60
196	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

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 170.

Distribution of financial instruments by credit quality at 31 December 2024
(Audited)
	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
	$m	$m	$m	$m	$m	$m	$m	$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at<br><br>amortised cost	515,266	193,080	186,416	22,906	22,705	940,373	(9,715)	930,658
– personal	360,317	53,595	27,774	1,979	3,560	447,225	(2,524)	444,701
– corporate and commercial	114,504	118,785	138,705	20,224	18,466	410,684	(6,755)	403,929
– non-bank financial institutions	40,445	20,700	19,937	703	679	82,464	(436)	82,028
Loans and advances to banks held at amortised<br><br>cost	92,621	4,255	5,040	134	2	102,052	(13)	102,039
Cash and balances at central banks	266,713	949	12	—	—	267,674	—	267,674
Hong Kong Government certificates of<br><br>indebtedness	42,293	—	—	—	—	42,293	—	42,293
Reverse repurchase agreements – non-trading	155,831	70,877	25,799	42	—	252,549	—	252,549
Financial investments	146,970	3,681	3,331	—	—	153,982	(9)	153,973
Assets held for sale	2,425	458	367	1	22	3,273	(4)	3,269
Other assets	88,338	9,735	10,151	454	131	108,809	(79)	108,730
– endorsements and acceptances	2,101	2,663	3,090	243	10	8,107	(14)	8,093
– accrued income and other	86,237	7,072	7,061	211	121	100,702	(65)	100,637
Debt instruments measured at fair value<br><br>through other comprehensive income1	336,313	9,448	7,768	380	—	353,909	(54)	353,855
Out-of-scope for IFRS 9 ECL
Trading assets	119,546	21,951	15,804	2,300	47	159,648	—	159,648
Other financial assets designated and otherwise<br><br>mandatorily measured at fair value through profit<br><br>or loss	53,282	11,862	4,390	231	11	69,776	—	69,776
Derivatives	224,870	34,124	9,373	258	12	268,637	—	268,637
Assets held for sale	3,019	—	—	—	—	3,019	—	3,019
Total gross carrying amount on balance sheet	2,047,487	360,420	268,451	26,706	22,930	2,725,994	(9,874)	2,716,120
Percentage of total credit quality (%)	75.1	13.2	9.9	1.0	0.8	100
Loan and other credit-related commitments	400,120	131,396	77,220	9,670	961	619,367	(348)	619,019
Financial guarantees	7,365	4,263	4,399	723	248	16,998	(29)	16,969
In-scope: Irrevocable loan commitments and<br><br>financial guarantees	407,485	135,659	81,619	10,393	1,209	636,365	(377)	635,988
Loan and other credit-related commitments	96,952	76,340	65,619	2,847	453	242,211	—	242,211
Performance and other guarantees	39,940	32,956	17,339	1,671	817	92,723	(312)	92,411
Out-of-scope: Revocable loan commitments<br><br>and non-financial guarantees	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	197
Distribution of financial instruments by credit quality at 31 December 2023
---	---	---	---	---	---	---	---	---
(Audited)
	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
	$m	$m	$m	$m	$m	$m	$m	$m
In-scope for IFRS 9 ECL
Loans and advances to customers held at<br><br>amortised cost	497,665	206,476	197,582	28,532	19,354	949,609	(11,074)	938,535
– personal	346,562	62,656	32,314	2,485	3,505	447,522	(2,867)	444,655
– corporate and commercial	118,123	123,713	145,249	25,531	15,039	427,655	(7,803)	419,852
– non-bank financial institutions	32,980	20,107	20,019	516	810	74,432	(404)	74,028
Loans and advances to banks held at amortised<br><br>cost	101,057	4,640	6,363	855	2	112,917	(15)	112,902
Cash and balances at central banks	284,723	1,068	77	—	—	285,868	—	285,868
Hong Kong Government certificates of<br><br>indebtedness	42,024	—	—	—	—	42,024	—	42,024
Reverse repurchase agreements – non-trading	170,494	46,884	34,206	633	—	252,217	—	252,217
Financial investments	143,333	3,814	1,137	62	—	148,346	(20)	148,326
Assets held for sale	68,501	16,403	14,812	2,939	531	103,186	(324)	102,862
Other assets	106,184	11,982	9,965	366	133	128,630	(78)	128,552
– endorsements and acceptances	2,405	2,666	2,707	161	18	7,957	(18)	7,939
– accrued income and other	103,779	9,316	7,258	205	115	120,673	(60)	120,613
Debt instruments measured at fair value through<br><br>other comprehensive income1	288,959	12,037	7,897	805	5	309,703	(97)	309,606
Out-of-scope for IFRS 9 ECL
Trading assets	122,695	20,595	20,746	1,326	135	165,497	—	165,497
Other financial assets designated and otherwise<br><br>mandatorily measured at fair value through profit<br><br>or loss	52,649	11,517	4,733	84	6	68,989	—	68,989
Derivatives	196,098	27,377	6,041	187	11	229,714	—	229,714
Assets held for sale	12,495	—	—	—	—	12,495	—	12,495
Total gross carrying amount on balance sheet	2,086,877	362,793	303,559	35,789	20,177	2,809,195	(11,608)	2,797,587
Percentage of total credit quality (%)	74.3	12.9	10.8	1.3	0.7	100
Loan and other credit-related commitments	436,359	142,500	73,230	7,782	1,144	661,015	(367)	660,648
Financial guarantees	7,700	4,146	4,080	699	384	17,009	(39)	16,970
In-scope: Irrevocable loan commitments and<br><br>financial guarantees	444,059	146,646	77,310	8,481	1,528	678,024	(406)	677,618
Loan and other credit-related commitments	92,509	77,891	61,462	3,896	377	236,135	—	236,135
Performance and other guarantees	39,784	32,231	19,445	1,853	964	94,277	(145)	94,132
Out-of-scope: Revocable loan commitments and<br><br>non-financial guarantees	132,293	110,122	80,907	5,749	1,341	330,412	(145)	330,267

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.

198	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
(Audited)
	Gross carrying/notional 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
Loans and advances to customers at amortised cost	515,266	193,080	186,416	22,906	22,705	940,373	(9,715)	930,658
– stage 1	498,415	170,420	150,818	4,767	—	824,420	(1,078)	823,342
– stage 2	16,851	22,660	35,598	18,139	—	93,248	(2,546)	90,702
– stage 3	—	—	—	—	22,615	22,615	(6,040)	16,575
– POCI	—	—	—	—	90	90	(51)	39
Loans and advances to banks at amortised cost	92,621	4,255	5,040	134	2	102,052	(13)	102,039
– stage 1	92,528	4,226	4,981	117	—	101,852	(9)	101,843
– stage 2	93	29	59	17	—	198	(2)	196
– stage 3	—	—	—	—	2	2	(2)	—
– POCI	—	—	—	—	—	—	—	—
Other financial assets measured at amortised cost	702,570	85,700	39,660	497	153	828,580	(92)	828,488
– stage 1	702,373	85,032	38,977	239	—	826,621	(64)	826,557
– stage 2	197	668	683	258	—	1,806	(5)	1,801
– stage 3	—	—	—	—	153	153	(23)	130
– POCI	—	—	—	—	—	—	—	—
Loan and other credit-related commitments	400,120	131,396	77,220	9,670	961	619,367	(348)	619,019
– stage 1	398,779	125,956	67,949	4,547	—	597,231	(137)	597,094
– stage 2	1,341	5,440	9,271	5,123	—	21,175	(121)	21,054
– stage 3	—	—	—	—	958	958	(90)	868
– POCI	—	—	—	—	3	3	—	3
Financial guarantees	7,365	4,263	4,399	723	248	16,998	(29)	16,969
– stage 1	7,352	4,192	3,625	184	—	15,353	(8)	15,345
– stage 2	13	71	774	539	—	1,397	(5)	1,392
– stage 3	—	—	—	—	248	248	(16)	232
– POCI	—	—	—	—	—	—	—	—
At 31 Dec 2024	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	336,264	9,448	7,290	—	—	353,002	(31)	352,971
– stage 2	49	—	478	380	—	907	(23)	884
– stage 3	—	—	—	—	—	—	—	—
– POCI	—	—	—	—	—	—	—	—
At 31 Dec 2024	336,313	9,448	7,768	380	—	353,909	(54)	353,855	Loans and advances to customers at amortised cost	497,665	206,476	197,582	28,532	19,354	949,609	(11,074)	938,535
---	---	---	---	---	---	---	---	---
– stage 1	478,422	177,410	147,940	5,612	—	809,384	(1,130)	808,254
– stage 2	19,243	29,066	49,642	22,920	—	120,871	(2,964)	117,907
– stage 3	—	—	—	—	19,273	19,273	(6,950)	12,323
– POCI	—	—	—	—	81	81	(30)	51
Loans and advances to banks at amortised cost	101,057	4,640	6,363	855	2	112,917	(15)	112,902
– stage 1	101,011	4,631	5,550	287	—	111,479	(10)	111,469
– stage 2	46	9	813	568	—	1,436	(3)	1,433
– stage 3	—	—	—	—	2	2	(2)	—
– POCI	—	—	—	—	—	—	—	—
Other financial assets measured at amortised cost	815,259	80,151	60,197	4,000	664	960,271	(422)	959,849
– stage 1	814,776	78,486	53,095	516	—	946,873	(109)	946,764
– stage 2	483	1,665	7,102	3,484	—	12,734	(132)	12,602
– stage 3	—	—	—	—	664	664	(181)	483
– POCI	—	—	—	—	—	—	—	—
Loan and other credit-related commitments	436,359	142,500	73,230	7,782	1,144	661,015	(367)	660,648
– stage 1	432,017	135,192	61,213	2,527	—	630,949	(153)	630,796
– stage 2	4,342	7,308	12,017	5,255	—	28,922	(128)	28,794
– stage 3	—	—	—	—	1,140	1,140	(86)	1,054
– POCI	—	—	—	—	4	4	—	4
Financial guarantees	7,700	4,146	4,080	699	384	17,009	(39)	16,970
– stage 1	7,497	3,943	3,204	102	—	14,746	(7)	14,739
– stage 2	203	203	876	597	—	1,879	(7)	1,872
– stage 3	—	—	—	—	384	384	(25)	359
– POCI	—	—	—	—	—	—	—	—
At 31 Dec 2023	1,858,040	437,913	341,452	41,868	21,548	2,700,821	(11,917)	2,688,904
Debt instruments at FVOCI1
– stage 1	288,909	12,037	7,579	—	—	308,525	(37)	308,488
– stage 2	50	—	318	805	—	1,173	(59)	1,114
– stage 3	—	—	—	—	5	5	(1)	4
– POCI	—	—	—	—	—	—	—	—
At 31 Dec 2023	288,959	12,037	7,897	805	5	309,703	(97)	309,606

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	199

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.

A summary of our current policies and practices for forbearance is set out in

‘Credit risk management’ on page 169.

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	545	1,424	—	1,969
– first lien residential mortgages	266	1,040	—	1,306
– second lien residential mortgages	1	3	—	4
– guaranteed loans in respect of residential property	32	7	—	39
– other personal lending which is secured	—	7	—	7
– credit cards	86	87	—	173
– other personal lending which is unsecured	147	280	—	427
– motor vehicle finance	13	—	—	13
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)
– second lien residential mortgages	—	—	—	—
– guaranteed loans in respect of residential property	(1)	(1)	—	(2)
– other personal lending which is secured	—	(2)	—	(2)
– credit cards	(17)	(45)	—	(62)
– other personal lending which is unsecured	(38)	(109)	—	(147)
– motor vehicle finance	(5)	—	—	(5)
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)	Gross carrying amount
---	---	---	---	---
Personal	816	1,282	—	2,098
– first lien residential mortgages	530	815	—	1,345
– second lien residential mortgages	1	8	—	9
– guaranteed loans in respect of residential property	24	20	—	44
– other personal lending which is secured	1	6	—	7
– credit cards	96	83	—	179
– other personal lending which is unsecured	155	349	—	504
– motor vehicle finance	9	1	—	10
Wholesale	5,848	5,505	68	11,421
– corporate and commercial	5,778	5,459	68	11,305
– non-bank financial institutions	70	46	—	116
At 31 Dec 2023	6,664	6,787	68	13,519
Allowance for ECL
Personal	(113)	(307)	—	(420)
– first lien residential mortgages	(50)	(113)	—	(163)
– second lien residential mortgages	—	(3)	—	(3)
– guaranteed loans in respect of residential property	—	(2)	—	(2)
– other personal lending which is secured	—	(1)	—	(1)
– credit cards	(17)	(46)	—	(63)
– other personal lending which is unsecured	(43)	(142)	—	(185)
– motor vehicle finance	(3)	—	—	(3)
Wholesale	(259)	(1,932)	(28)	(2,219)
– corporate and commercial	(257)	(1,920)	(28)	(2,205)
– non-bank financial institutions	(2)	(12)	—	(14)
At 31 Dec 2023	(372)	(2,239)	(28)	(2,639)
200	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

Forborne loans and advances to customers by legal entities
	HSBC UK<br><br>Bank plc	HSBC Bank<br><br>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.	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	1,251	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)
Gross carrying amount
Performing forborne	1,478	2,081	1,574	31	954	503	43	6,664
Non-performing forborne	1,936	1,199	2,250	471	430	233	336	6,855
At 31 Dec 2023	3,414	3,280	3,824	502	1,384	736	379	13,519
Allowance for ECL
Performing forborne	(75)	(25)	(142)	(1)	(43)	(84)	(2)	(372)
Non-performing forborne	(289)	(400)	(986)	(225)	(74)	(126)	(167)	(2,267)
At 31 Dec 2023	(364)	(425)	(1,128)	(226)	(117)	(210)	(169)	(2,639)

Wholesale lending

This section presents further disclosures related to wholesale lending.

It provides details of the main legal entities, countries and customer

classification that are driving the change observed in wholesale loans

and advances to banks and customers, with the impact of foreign

exchange separately identified.

This section also provides reconciliations of the opening 1 January

2024 to 31 December 2024 closing gross carrying/nominal amounts

and the associated allowance for ECL. Further granularity is also

provided by stage, with data for our main legal entities presented for

gross loans and advances to banks and customers, loan and other

credit-related commitments and financial guarantees.

At 31 December 2024, wholesale lending for gross loans and

advances to banks and customers of $595.2bn decreased by $19.8bn

on a reported basis, compared with 31 December 2023. Excluding

adverse foreign exchange movements of $16.3bn, total wholesale

lending decreased by $3.5bn.

On a constant currency basis, the wholesale loans and advances to

customers grew by $3.0bn, mainly driven by an increase in non-bank

financial institutions (up $9.6bn), partly offset by a decrease in

corporate and commercial lending (down $6.6bn).

The increase in non-bank financial institutions of $9.6bn was largely

driven by growth in balances in HSBC Bank plc (up $4.2bn), in our

legal entities in Asia (up $2.2bn), in the US (up $1.2bn), in HSBC UK

(up $1.0bn) and in the Middle East (up $0.8bn).

The decrease in corporate and commercial balances of $6.6bn, mainly

in our legal entities in the US (down $2.9bn) and in Asia (down

$2.4bn), was driven by repayments, including in ‘real estate and

construction’ and in HSBC Bank plc (down $0.7bn). Additionally, there

was a decrease of $0.5bn from the sale of our business in Argentina.

On a constant currency basis, gross loans and advances to banks

decreased by $6.5bn, mainly driven by lower central bank balances

and money market lending balances in our legal entities in Asia (down

$9.1bn) and a decrease of $0.6bn from the sale of our business in

Argentina. This was partly offset by higher balances in our legal

entities in the Middle East (up $3.6bn).

The decrease in stage 2 exposures on a constant currency basis

(down $19.5bn) was mainly driven by maturities, repayments and

new downgrades to stage 3 exposures, primarily in Asia.

On a constant currency basis, stage 3 gross loans and advances to

customers increased by $3.7bn, primarily driven by corporate and

commercial exposure (up $3.8bn) driven by defaults in commercial

real estate lending in Hong Kong, which are generally well

collateralised. There was a decrease in the associated allowance for

ECL due to write-offs of heavily-impaired exposures.

At 31 December 2024, the write-offs attributable to wholesale lending

increased by $0.3bn to $2.9bn, compared with 31 December 2023.

The allowance for ECL attributable to loans and advances to banks

and customers of $7.2bn at 31 December 2024 decreased by $1.0bn

from $8.2bn at 31 December 2023. This included adverse foreign

exchange movements of $0.2bn.

On a constant currency basis, the allowance for ECL attributable to

corporate and commercial loans and advances decreased by $0.8bn,

largely due to the write-offs of heavily-impaired exposures in ‘real

estate and construction’, mainly in Hong Kong. The allowance for ECL

attributable to loans and advances to non-bank financial institutions

remained broadly stable.

On a reported basis, loan commitments and financial guarantees of

$381.7bn decreased by $38.2bn compared with 31 December 2023.

Excluding adverse foreign exchange movements of $14.0bn, financial

nominal amounts decreased by $14.8bn, and corporate and

commercial nominal amounts decreased by $9.4bn.

The allowance for ECL attributable to loan commitments and financial

guarantees at 31 December 2024 remained unchanged at $0.4bn.

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 (‘NACE’), which is applicable to other financial regulatory

reporting.

HSBC Holdings plc Annual Report on Form 20-F	201
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	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 plc1	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 entities1	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)

1At 31 December 2023, Other trading entities included gross carrying amount of $1,792m related to Private Banking entities that were reclassified to HSBC Bank

plc to continue the process of simplifying our structure in 2024 and gross carrying amount of $1,169m related to our business in Argentina which was sold on

6 December 2024.

Total wholesale lending for loans 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	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)
HSBC Bank Canada	—	—	—	—	—	—	—	—	—	—
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 loans 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’.

202	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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	342,878	69,738	14,958	81	427,655	(499)	(1,500)	(5,774)	(30)	(7,803)
– agriculture, forestry and fishing	5,207	1,662	312	—	7,181	(13)	(53)	(64)	—	(130)
– mining and quarrying	6,260	638	325	—	7,223	(7)	(11)	(83)	—	(101)
– manufacturing	69,690	13,744	1,877	22	85,333	(89)	(194)	(839)	(21)	(1,143)
– electricity, gas, steam and air-<br><br>conditioning supply	12,817	1,283	255	—	14,355	(14)	(17)	(88)	—	(119)
– water supply, sewerage, waste<br><br>management and remediation	2,753	407	102	—	3,262	(5)	(7)	(51)	—	(63)
– real estate and construction	73,701	21,871	5,835	48	101,455	(96)	(629)	(2,554)	(7)	(3,286)
– of which: commercial real estate	59,883	19,107	4,552	47	83,589	(73)	(603)	(2,091)	(7)	(2,774)
– wholesale and retail trade, repair of<br><br>motor vehicles and motorcycles	66,083	10,676	2,358	4	79,121	(80)	(127)	(1,132)	(2)	(1,341)
– transportation and storage	17,117	3,894	445	—	21,456	(18)	(52)	(160)	—	(230)
– accommodation and food	9,681	5,135	1,058	—	15,874	(27)	(118)	(112)	—	(257)
– publishing, audiovisual and<br><br>broadcasting	17,455	2,066	210	—	19,731	(42)	(81)	(50)	—	(173)
– professional, scientific and technical<br><br>activities	22,686	3,327	733	7	26,753	(32)	(63)	(306)	—	(401)
– administrative and support services	19,055	2,551	597	—	22,203	(31)	(63)	(174)	—	(268)
– public administration and defence,<br><br>compulsory social security	1,037	5	—	—	1,042	—	—	—	—	—
– education	1,137	277	46	—	1,460	(3)	(8)	(4)	—	(15)
– health and care	3,245	808	183	—	4,236	(9)	(21)	(26)	—	(56)
– arts, entertainment and recreation	1,666	196	99	—	1,961	(5)	(6)	(31)	—	(42)
– other services	7,065	972	318	—	8,355	(26)	(37)	(90)	—	(153)
– activities of households	684	10	—	—	694	—	—	—	—	—
– extra-territorial organisations and<br><br>bodies activities	100	1	—	—	101	—	—	—	—	—
– government	5,420	202	205	—	5,827	(2)	—	(10)	—	(12)
– asset-backed securities	19	13	—	—	32	—	(13)	—	—	(13)
Non-bank financial institutions	69,972	3,650	810	—	74,432	(52)	(30)	(322)	—	(404)
Loans and advances to banks	111,479	1,436	2	—	112,917	(10)	(3)	(2)	—	(15)
At 31 Dec 2023	524,329	74,824	15,770	81	615,004	(561)	(1,533)	(6,098)	(30)	(8,222)
By legal entity
HSBC UK Bank plc	76,793	18,735	3,769	—	99,297	(213)	(474)	(593)	—	(1,280)
HSBC Bank plc	82,025	8,452	2,673	40	93,190	(69)	(138)	(1,035)	(7)	(1,249)
The Hongkong and Shanghai Banking<br><br>Corporation Limited	287,876	37,402	7,077	38	332,393	(185)	(696)	(3,349)	(21)	(4,251)
HSBC Bank Middle East Limited	21,927	1,598	894	3	24,422	(17)	(11)	(571)	(2)	(601)
HSBC North America Holdings Inc.	30,797	5,712	583	—	37,092	(24)	(145)	(127)	—	(296)
Grupo Financiero HSBC, S.A. de C.V.	13,714	1,186	382	—	15,282	(39)	(56)	(231)	—	(326)
Other trading entities	11,164	1,739	392	—	13,295	(14)	(13)	(192)	—	(219)
Holding companies, shared service<br><br>centres and intra-Group eliminations	33	—	—	—	33	—	—	—	—	—
At 31 Dec 2023	524,329	74,824	15,770	81	615,004	(561)	(1,533)	(6,098)	(30)	(8,222)
Total wholesale lending for loans 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	256,367	22,218	1,066	4	279,655	(126)	(125)	(107)	—	(358)
Financial	135,039	5,111	103	—	140,253	(11)	(10)	(2)	—	(23)
At 31 Dec 2023	391,406	27,329	1,169	4	419,908	(137)	(135)	(109)	—	(381)
By legal entity
HSBC UK Bank plc	31,982	5,760	350	—	38,092	(31)	(32)	(56)	—	(119)
HSBC Bank plc	148,980	9,466	310	4	158,760	(20)	(27)	(27)	—	(74)
The Hongkong and Shanghai Banking<br><br>Corporation Limited	70,436	3,975	79	—	74,490	(59)	(39)	(16)	—	(114)
HSBC Bank Middle East Limited	6,944	323	56	—	7,323	(4)	(1)	(3)	—	(8)
HSBC North America Holdings Inc.	101,067	5,103	248	—	106,418	(14)	(27)	(1)	—	(42)
HSBC Bank Canada	28,156	2,461	66	—	30,683	(8)	(8)	(3)	—	(19)
Grupo Financiero HSBC, S.A. de C.V.	2,092	34	—	—	2,126	(1)	—	—	—	(1)
Other trading entities	1,749	207	60	—	2,016	—	(1)	(3)	—	(4)
At 31 Dec 2023	391,406	27,329	1,169	4	419,908	(137)	(135)	(109)	—	(381)

1Included in loans and other credit-related commitments and financial guarantees is $70bn 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	203
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	Allowanc<br><br>e for ECL	Gross<br><br>carrying/<br><br>nominal<br><br>amount	Allowanc<br><br>e for ECL	Gross<br><br>carrying/<br><br>nominal<br><br>amount	Allowanc<br><br>e for ECL	Gross<br><br>carrying/<br><br>nominal<br><br>amount	Allowanc<br><br>e for ECL	Gross<br><br>carrying/<br><br>nominal<br><br>amount	Allowanc<br><br>e 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<br><br>instruments:	(17,606)	(214)	6,997	825	10,609	(611)	—	—	—	—
–transfers from stage 1 to<br><br>stage 2	(70,991)	173	70,991	(173)	—	—	—	—	—	—
–transfers from stage 2 to<br><br>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<br><br>arising 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
Change to risk parameters –<br><br>credit quality	—	112	—	(899)	—	(2,508)	—	(11)	—	(3,306)
Changes to models used for<br><br>ECL calculation	—	39	—	105	—	—	—	—	—	144
Assets written off	—	—	—	—	(2,925)	2,925	—	—	(2,925)	2,925
Credit-related modifications<br><br>that resulted in derecognition	—	—	—	—	—	—	—	—	—	—
Foreign exchange and<br><br>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<br><br>change for 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 433.

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 banking business in

Argentina during 2024.

As shown in the above table, the allowance for ECL for loans and

advances to customers and banks and relevant loan commitments

and financial guarantees decreased by $1,044m during the period

from $8,603m at 31 December 2023 to $7,559m at 31 December

2024.

This decrease was driven by:

–$2,925m of assets written off;

–$1,372m relating to volume movements, which included the

allowance for ECL associated with new originations, assets

derecognised and further lending/repayments; and

–$144m relating to changes to models used for ECL calculation.

These were partly offset by:

–$3,306m relating to credit quality changes, including the credit

quality impact of financial instruments transferring between

stages;

–foreign exchange and other movements of $67m; and

–$24m relating to the net remeasurement impact of stage

transfers.

The ECL charge for the period of $1,814m presented in the previous

table consisted of $3,306m relating to credit quality changes,

including the credit quality impact of financial instruments transferring

between stages and $24m relating to the net remeasurement impact

of stage transfers. This was partly offset by $1,372m relating to

underlying net book volume movement and $144m in changes to

models used for ECL calculation.

During the period, there was a net transfer between stage 1 and

stage 2 of $15,809m gross carrying/nominal amounts. It was primarily

driven by our entities in Asia ($12,878m), mainly due to deterioration

in the real estate and construction sectors, and in our main entity in

the US ($1,986m) and Mexico ($1,805m), partly offset by

improvements in the economic outlook that led to upgrades to stage

1 exposures, primarily in our legal entities in the UK($3,077m).

A summary of basis of preparation is available on page 191.

204	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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 2023	830,322	(670)	124,660	(2,205)	17,068	(6,144)	129	(38)	972,179	(9,057)
Transfers of financial instruments:	(16,804)	(429)	10,247	1,141	6,557	(712)	—	—	—	—
– transfers from stage 1 to<br><br>stage 2	(93,511)	172	93,511	(172)	—	—	—	—	—	—
– transfers from stage 2 to<br><br>stage 1	77,772	(605)	(77,772)	605	—	—	—	—	—	—
– transfers to stage 3	(1,444)	20	(6,255)	765	7,699	(785)	—	—	—	—
– transfers from stage 3	379	(16)	763	(57)	(1,142)	73	—	—	—	—
Net remeasurement of ECL<br><br>arising from transfer of stage	—	354	—	(294)	—	(45)	—	—	—	15
Net new and further lending/<br><br>repayments	43,282	(138)	(32,082)	311	(3,787)	973	(36)	3	7,377	1,149
Changes to risk parameters –<br><br>credit quality	—	203	—	(621)	—	(2,941)	—	21	—	(3,338)
Changes to models used for ECL<br><br>calculation	—	(9)	—	25	—	—	—	—	—	16
Assets written off	—	—	—	—	(2,596)	2,596			(2,596)	2,596
Credit-related modifications that<br><br>resulted in derecognition	—	—	—	—	(119)	95	—	—	(119)	95
Foreign exchange and others1	(10,818)	(9)	(696)	(25)	(184)	(29)	(8)	(16)	(11,706)	(79)
At 31 Dec 2023	845,982	(698)	102,129	(1,668)	16,939	(6,207)	85	(30)	965,135	(8,603)
ECL income statement change<br><br>for the period		410		(579)		(2,013)		24		(2,158)
Recoveries										42
Others	—	—	—	—	—	—	—	—	—	(203)
Total ECL income statement<br><br>change for the period										(2,319)

1Total includes $13.5bn 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 $61m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for

sale’ on page 433.

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	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 and<br><br>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			By legal entity
---	---	---	---	---	---	---	---	---
HSBC UK Bank plc	20,777	30,245	36,206	8,300	3,769	99,297	(1,280)	98,017
HSBC Bank plc	41,149	20,962	24,164	4,202	2,713	93,190	(1,249)	91,941
The Hongkong and Shanghai Banking<br><br>Corporation Limited	165,255	72,683	78,566	8,774	7,115	332,393	(4,251)	328,142
HSBC Bank Middle East Limited	13,660	3,082	6,270	513	897	24,422	(601)	23,821
HSBC North America Holdings Inc.	6,244	13,668	13,094	3,503	583	37,092	(296)	36,796
Grupo Financiero HSBC, S.A. de C.V.	1,853	6,543	5,882	622	382	15,282	(326)	14,956
Other trading entities	3,189	1,277	7,449	988	392	13,295	(219)	13,076
Holding companies, shared service centres and<br><br>intra-Group eliminations	33	—	—	—	—	33	—	33
At 31 Dec 2023	252,160	148,460	171,631	26,902	15,851	615,004	(8,222)	606,782
Percentage of total credit quality (%)	41.0	24.1	27.9	4.4	2.6	100.0
HSBC Holdings plc Annual Report on Form 20-F	205
---	---

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 169.

Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost
		Gross carrying 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	%
Corporate<br><br>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<br><br>2024		522,526	53,527	19,057	90	595,200	(517)	(1,390)	(5,246)	(51)	(7,204)	1.2
206	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

Wholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost (continued)
	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		342,878	69,738	14,958	81	427,655	(499)	(1,500)	(5,774)	(30)	(7,803)	1.8
– CRR 1	0.000 to 0.053	34,097	715	—	—	34,812	(4)	(3)	—	—	(7)	—	AA- and above
– CRR 2	0.054 to 0.169	81,131	2,180	—	—	83,311	(23)	(14)	—	—	(37)	—	A+ to A-
– CRR 3	0.170 to 0.740	112,322	11,391	—	—	123,713	(106)	(87)	—	—	(193)	0.2	BBB+ to BBB-
– CRR 4	0.741 to 1.927	72,654	16,904	—	—	89,558	(156)	(130)	—	—	(286)	0.3	BB+ to BB-
– CRR 5	1.928 to 4.914	37,631	18,060	—	—	55,691	(169)	(240)	—	—	(409)	0.7	BB- to B
– CRR 6	4.915 to 8.860	2,675	7,341	—	—	10,016	(24)	(176)	—	—	(200)	2.0	B-
– CRR 7	8.861 to 15.000	1,031	6,319	—	—	7,350	(10)	(246)	—	—	(256)	3.5	CCC+
– CRR 81	15.001 to 99.999	1,337	6,828	—	—	8,165	(7)	(604)	—	—	(611)	7.5	CCC to C
– CRR 9/10	100.000	—	—	14,958	81	15,039	—	—	(5,774)	(30)	(5,804)	38.6	D
Non-bank financial<br><br>institutions		69,972	3,650	810	—	74,432	(52)	(30)	(322)	—	(404)	0.5
– CRR 1	0.000 to 0.053	15,475	211	—	—	15,686	(2)	—	—	—	(2)	—	AA- and above
– CRR 2	0.054 to 0.169	16,920	374	—	—	17,294	(6)	(2)	—	—	(8)	—	A+ to A-
– CRR 3	0.170 to 0.740	19,195	912	—	—	20,107	(10)	(4)	—	—	(14)	0.1	BBB+ to BBB-
– CRR 4	0.741 to 1.927	11,480	1,032	—	—	12,512	(19)	(5)	—	—	(24)	0.2	BB+ to BB-
– CRR 5	1.928 to 4.914	6,635	872	—	—	7,507	(9)	(15)	—	—	(24)	0.3	BB- to B
– CRR 6	4.915 to 8.860	232	116	—	—	348	(6)	(1)	—	—	(7)	2.0	B-
– CRR 7	8.861 to 15.000	25	93	—	—	118	—	(2)	—	—	(2)	1.7	CCC+
– CRR 8	15.001 to 99.999	10	40	—	—	50	—	(1)	—	—	(1)	2.0	CCC to C
– CRR 9/10	100.000	—	—	810	—	810	—	—	(322)	—	(322)	39.8	D
Banks		111,479	1,436	2	—	112,917	(10)	(3)	(2)	—	(15)	—
– CRR 1	0.000 to 0.053	89,112	10	—	—	89,122	(4)	—	—	—	(4)	—	AA- and above
– CRR 2	0.054 to 0.169	11,899	36	—	—	11,935	(2)	—	—	—	(2)	—	A+ to A-
– CRR 3	0.170 to 0.740	4,631	9	—	—	4,640	(1)	—	—	—	(1)	—	BBB+ to BBB-
– CRR 4	0.741 to 1.927	2,488	58	—	—	2,546	(1)	—	—	—	(1)	—	BB+ to BB-
– CRR 5	1.928 to 4.914	3,062	755	—	—	3,817	(2)	(1)	—	—	(3)	0.1	BB- to B
– CRR 6	4.915 to 8.860	22	20	—	—	42	—	—	—	—	—	—	B-
– CRR 7	8.861 to 15.000	1	—	—	—	1	—	—	—	—	—	—	CCC+
– CRR 8	15.001 to 99.999	264	548	—	—	812	—	(2)	—	—	(2)	0.2	CCC to C
– CRR 9/10	100.000	—	—	2	—	2	—	—	(2)	—	(2)	100.0	D
At 31 Dec 2023		524,329	74,824	15,770	81	615,004	(561)	(1,533)	(6,098)	(30)	(8,222)	1.3

1Corporate and commercial lending reported in CRR 8 for stage 1 includes $782m related to the UK Bounce Back Loan Scheme with immaterial allowances for

ECL.

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<br><br>rating
	%	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	%
Loan and<br><br>other credit-<br><br>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
HSBC Holdings plc Annual Report on Form 20-F	207
---	---
Wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees (continued)
---	---	---	---	---	---	---	---	---	---	---	---	---	---
		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 other<br><br>credit-related<br><br>commitments		377,766	25,463	785	4	404,018	(130)	(128)	(84)	—	(342)	0.1
– CRR 1	0.000 to 0.053	65,730	1,676	—	—	67,406	(5)	(1)	—	—	(6)	—	AA- and above
– CRR 2	0.054 to 0.169	152,224	2,490	—	—	154,714	(13)	(6)	—	—	(19)	—	A+ to A-
– CRR 3	0.170 to 0.740	105,569	6,044	—	—	111,613	(46)	(24)	—	—	(70)	0.1	BBB+ to BBB-
– CRR 4	0.741 to 1.927	38,102	4,751	—	—	42,853	(33)	(20)	—	—	(53)	0.1	BB+ to BB-
– CRR 5	1.928 to 4.914	14,054	5,367	—	—	19,421	(28)	(31)	—	—	(59)	0.3	BB- to B
– CRR 6	4.915 to 8.860	1,170	2,453	—	—	3,623	(4)	(15)	—	—	(19)	0.5	B-
– CRR 7	8.861 to 15.000	780	848	—	—	1,628	(1)	(10)	—	—	(11)	0.7	CCC+
– CRR 8	15.001 to 99.999	137	1,834	—	—	1,971	—	(21)	—	—	(21)	1.1	CCC to C
– CRR 9/10	100.000	—	—	785	4	789	—	—	(84)	—	(84)	10.6	D
Financial<br><br>guarantees		13,640	1,866	384	—	15,890	(7)	(7)	(25)	—	(39)	0.2
– CRR 1	0.000 to 0.053	2,553	1	—	—	2,554	—	—	—	—	—	—	AA- and above
– CRR 2	0.054 to 0.169	4,212	202	—	—	4,414	(1)	—	—	—	(1)	—	A+ to A-
– CRR 3	0.170 to 0.740	3,584	202	—	—	3,786	(2)	—	—	—	(2)	0.1	BBB+ to BBB-
– CRR 4	0.741 to 1.927	1,932	407	—	—	2,339	(2)	(1)	—	—	(3)	0.1	BB+ to BB-
– CRR 5	1.928 to 4.914	1,266	455	—	—	1,721	(2)	(2)	—	—	(4)	0.2	BB- to B
– CRR 6	4.915 to 8.860	91	387	—	—	478	—	(1)	—	—	(1)	0.2	B-
– CRR 7	8.861 to 15.000	1	76	—	—	77	—	—	—	—	—	—	CCC+
– CRR 8	15.001 to 99.999	1	136	—	—	137	—	(3)	—	—	(3)	2.2	CCC to C
– CRR 9/10	100.000	—	—	384	—	384	—	—	(25)	—	(25)	6.5	D
At 31 Dec 2023		391,406	27,329	1,169	4	419,908	(137)	(135)	(109)	—	(381)	0.1

Commercial real estate

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 commercial real estate 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 favourable foreign exchange movements of $1.1bn,

commercial real estate lending decreased by $10.1bn, mainly from

$6.4bn in our entities in Hong Kong due to loan repayments and write-

offs.

Commercial real estate lending to customers
									of which:
	HSBC<br><br>UK<br><br>Bank<br><br>plc	HSBC<br><br>Bank<br><br>plc	The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited	HSBC 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	Total	UK	Hong<br><br>Kong	of which:<br><br>Hong Kong<br><br>excluding<br><br>exposure to<br><br>mainland<br><br>China<br><br>borrowers
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Gross loans<br><br>and advances
Stage 1	9,394	3,285	34,337	1,136	1,420	380	42	49,994	9,758	22,643	22,132
Stage 2	4,052	313	9,103	—	1,184	67	1	14,720	4,112	7,619	6,515
Stage 3	492	213	6,451	117	240	22	23	7,558	492	5,967	4,554
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	33,201
– of which:<br><br>forborne 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)	(405)
208	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

Commercial real estate lending to customers (continued)
									of which:
	HSBC<br><br>UK<br><br>Bank<br><br>plc	HSBC<br><br>Bank<br><br>plc	The<br><br>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	UK	Hong Kong	of which:<br><br>Hong Kong<br><br>excluding<br><br>exposure to<br><br>mainland China<br><br>borrowers
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Gross loans and<br><br>advances
Stage 1	10,304	4,218	41,307	1,126	1,803	685	440	59,883	10,790	28,846	27,560
Stage 2	3,262	400	13,229	189	1,956	70	1	19,107	3,294	10,375	8,681
Stage 3	444	184	3,570	145	166	25	18	4,552	470	3,226	576
POCI	—	32	15	—	—	—	—	47	32	15	—
At 31 Dec 2023	14,010	4,834	58,121	1,460	3,925	780	459	83,589	14,586	42,462	36,817
– of which:<br><br>forborne loans	461	69	2,454	126	433	52	—	3,595	519	2,227
Allowance for<br><br>ECL	(148)	(49)	(2,399)	(55)	(98)	(15)	(10)	(2,774)	(172)	(2,149)	(296)	Commercial real estate gross loans and advances to customers by global business
---	---	---	---	---	---	---	---	---	---	---
									of which:
	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<br><br>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
Wealth and<br><br>Personal<br><br>Banking1	325	273	37	—	2	—	—	637	469	37
Commercial<br><br>Banking	13,613	2,757	33,551	695	2,842	469	66	53,993	13,640	24,473
Global Banking<br><br>and Markets	—	824	16,183	558	—	—	—	17,565	296	11,599
Corporate<br><br>Centre	—	—	138	—	—	—	—	138	—	138
At 31 Dec 2024	13,938	3,854	49,909	1,253	2,844	469	66	72,333	14,405	36,247
Wealth and<br><br>Personal<br><br>Banking1	409	377	66	—	2	—	423	1,277	409	66
Commercial<br><br>Banking	13,601	3,322	37,826	733	3,923	780	36	60,221	13,686	27,811
Global Banking<br><br>and Markets	—	1,135	20,066	727	—	—	—	21,928	491	14,444
Corporate<br><br>Centre	—	—	163	—	—	—	—	163	—	141
At 31 Dec 2023	14,010	4,834	58,121	1,460	3,925	780	459	83,589	14,586	42,462

1Comprised exclusively by exposures in Global Private Banking.

HSBC Holdings plc Annual Report on Form 20-F	209
Commercial real estate gross loans and advances to customers by credit quality
---	---	---	---	---	---	---	---	---	---	---	---
									of which:
	HSBC<br><br>UK<br><br>Bank<br><br>plc	HSBC<br><br>Bank<br><br>plc	The<br><br>Hongkong<br><br>and<br><br>Shanghai<br><br>Banking<br><br>Corporation<br><br>Limited	HSBC 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	Total	UK	Hong<br><br>Kong	of which:<br><br>Hong Kong<br><br>excluding<br><br>exposure to<br><br>mainland<br><br>China<br><br>borrowers
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Strong	4,663	739	9,106	137	—	18	42	14,705	4,875	4,522	4,484
Good	2,098	1,430	16,113	407	566	111	—	20,725	2,107	10,421	9,754
Satisfactory	5,770	1,312	13,556	592	1,423	283	—	22,936	5,948	10,850	10,716
Sub-standard	915	117	4,665	—	615	35	1	6,348	940	4,469	3,693
Credit impaired	492	256	6,469	117	240	22	23	7,619	535	5,985	4,554
At 31 Dec 2024	13,938	3,854	49,909	1,253	2,844	469	66	72,333	14,405	36,247	33,201
Strong	3,940	740	12,394	255	25	65	16	17,435	4,191	6,527	6,118
Good	2,555	2,054	17,777	246	781	130	18	23,561	2,592	12,004	11,262
Satisfactory	6,370	1,642	19,509	634	1,691	500	407	30,753	6,575	16,290	15,759
Sub-standard	701	182	4,856	180	1,262	60	—	7,241	726	4,400	3,102
Credit impaired	444	216	3,585	145	166	25	18	4,599	502	3,241	576
At 31 Dec 2023	14,010	4,834	58,121	1,460	3,925	780	459	83,589	14,586	42,462	36,817

The Hong Kong CRE portfolio (excluding exposure to mainland China

borrowers) saw negative credit migration in 2024 as a result of higher

interest rates, high inventory levels and weak demand. This was

predominantly driven by a deterioration in the secured portfolio as

borrowers sought payment deferrals to accommodate debt

serviceability challenges.

Secured exposures account for 54% of the total portfolio

(31 December 2023: 54%), with collateral values regularly updated in

line with our existing practice. The trend of loan right-sizing and

borrower deleveraging within the secured portfolio has supported

good collateral coverage levels that continue to provide headroom in

the event of a further softening of property valuations. As at

31 December 2024, the weighted average LTV:

–of performing exposures rated ‘sub-standard’ was 46%

(31 December 2023: 54%);

–of ‘credit impaired’ exposures was 58% (31 December 2023:

71%). This has driven relatively low levels of stage 3 allowance for

ECL. The reduction in LTV reflects the significantly smaller 'credit

impaired' portfolio at 31 December 2023.

The unsecured portfolio remained stable in size and quality, with

limited levels of default and close to 90% rated Strong or Good.

Unsecured exposures are typically granted to strong, listed Hong

Kong CRE developers, which commonly are members of

conglomerate groups with diverse cashflows. 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.

Market conditions remain challenging, particularly for commercial

property as a result of continued weakness in demand. The

performance of the residential market remains mixed, with some

initial improvement in sentiment and transaction levels observed in

the fourth quarter of 2024, driven by a further easing of real estate

regulatory policies in October and improved end-user affordability as

prices and interest rates fell. Nevertheless, property price pressure is

likely to persist in the near term and until economic conditions and

sentiment improve. Given the more uncertain interest rate outlook,

we expect broader market fundamentals to remain subdued and

challenges in this sector to continue.

Refinance risk in commercial real estate

Commercial real estate 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 commercial real estate 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 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	Total	UK	Hong<br><br>Kong
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
< 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
< 1 year	3,553	1,496	25,427	396	1,472	619	437	33,400	3,950	19,887
---	---	---	---	---	---	---	---	---	---	---
1–2 years	4,514	474	14,144	175	623	60	2	19,992	4,571	10,923
2–5 years	5,411	2,149	16,052	441	1,814	71	3	25,941	5,520	9,885
> 5 years	532	715	2,498	448	16	30	17	4,256	545	1,767
At 31 Dec 2023	14,010	4,834	58,121	1,460	3,925	780	459	83,589	14,586	42,462
210	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

The following table presents the Group’s exposure to borrowers

classified in the commercial real estate sector where the ultimate

parent is based in mainland China, as well as all commercial real

estate 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 2024 are split by country/territory and credit quality

including allowances for ECL by stage.

Mainland China commercial real estate
(Audited)
	Hong Kong	Mainland China	Rest of the Group	Total
	$m	$m	$m	$m
Loans and advances to customers1	3,161	3,694	303	7,158
Guarantees issued and others2	80	16	5	101
Total mainland China commercial real estate exposure at 31 Dec 2024	3,241	3,710	308	7,259
Distribution of mainland China commercial real estate exposure by<br><br>credit quality
Strong	118	1,817	109	2,044
Good	578	595	1	1,174
Satisfactory	196	899	49	1,144
Sub-standard	777	136	149	1,062
Credit impaired	1,572	263	—	1,835
At 31 Dec 2024	3,241	3,710	308	7,259
Allowance for ECL by credit quality
Strong	—	(4)	—	(4)
Good	—	(3)	—	(3)
Satisfactory	—	(13)	—	(13)
Sub-standard	(261)	(30)	(17)	(308)
Credit impaired	(749)	(81)	—	(830)
At 31 Dec 2024	(1,010)	(131)	(17)	(1,158)
Allowance for ECL by stage distribution
Stage 1	—	(9)	—	(9)
Stage 2	(261)	(41)	(17)	(319)
Stage 3	(743)	(81)	—	(824)
POCI	(6)	—	—	(6)
At 31 Dec 2024	(1,010)	(131)	(17)	(1,158)
ECL coverage %	31.2	3.5	5.5	16.0	Loans and advances to customers1	6,033	4,917	839	11,789
---	---	---	---	---
Guarantees issued and others2	255	66	37	358
Total mainland China commercial real estate exposure at 31 Dec 2023	6,288	4,983	876	12,147
Distribution of mainland China commercial real estate exposure by<br><br>credit quality
Strong	781	1,723	6	2,510
Good	604	953	421	1,978
Satisfactory	679	1,704	261	2,644
Sub-standard	1,298	327	188	1,813
Credit impaired	2,926	276	—	3,202
At 31 Dec 2023	6,288	4,983	876	12,147
Allowance for ECL by credit quality
Strong	—	(3)	—	(3)
Good	—	(5)	(1)	(6)
Satisfactory	(3)	(27)	—	(30)
Sub-standard	(66)	(87)	(16)	(169)
Credit impaired	(1,726)	(125)	—	(1,851)
At 31 Dec 2023	(1,795)	(247)	(17)	(2,059)
Allowance for ECL by stage distribution
Stage 1	—	(10)	—	(10)
Stage 2	(69)	(112)	(17)	(198)
Stage 3	(1,726)	(125)	—	(1,851)
At 31 Dec 2023	(1,795)	(247)	(17)	(2,059)
ECL coverage %	28.5	5.0	1.9	17.0

1Amounts represent gross carrying amount.

2Amounts represent nominal amount for guarantees and other contingent liabilities.

HSBC Holdings plc Annual Report on Form 20-F	211

(Unaudited)

The mainland China commercial real estate portfolio continues to face

challenges as market fundamentals remain weak and refinancing risks

continue. The portfolio remains closely managed, with reductions in

exposures driven by a combination of de-risking measures,

repayments by performing customers and write-offs in the ‘credit

impaired’ category.

The portfolio of mainland China CRE loans booked in Hong Kong

remains relatively higher risk, with allowances for ECL substantially

against unsecured exposures. For secured exposures, allowances for

ECL are minimal, reflecting the nature and value of the security held.

Approximately half of the performing exposure in the mainland China

CRE portfolio booked in Hong Kong 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.

Mainland China real estate market activity remains depressed with

continued weakness in underlying buyer demand for housing. Various

government stimulus measures were introduced in 2024 to underpin

market confidence. Despite some early signs of price stabilisation in

certain cities, these measures have not yet triggered a meaningful

recovery in transaction levels. Financing conditions and liquidity for

borrowers operating in the real estate sector therefore remains

constrained, particularly for privately-owned enterprises. A market

recovery is likely to be protracted and contingent on further

government support.

The Group has additional exposures to mainland China commercial

real estate as a result of lending to multinational corporates booked

outside of mainland China, which is not incorporated in the table

above.

Collateral and other credit enhancements

(Audited)

Although collateral can be an important mitigant of credit risk, it is the

Group’s practice to 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. While single name concentrations arise in portfolios

managed by Global Banking and Corporate Banking, it is only in Global

Banking that their size requires the use of portfolio level credit

mitigants. Across Global 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,

Global 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 Global

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 commercial real estate 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.

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 381.

Commercial real estate loans and advances

The value of commercial real estate collateral is determined by using

a combination of external and internal valuations and physical

inspections. For commercial real estate, 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, market practice is typically for lending to major

property companies to be either secured by guarantees or unsecured.

In Europe, facilities of a working capital nature are generally not

secured by a first fixed charge, and are therefore disclosed as not

collateralised.

212	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Wholesale lending – commercial real estate loans and advances to customers including loan commitments by level of collateral for key<br><br>countries/territories (by stage)
(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	%	%	%	%	%
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
Total at 31 Dec 2024	75,377	17,316	7,773	64	100,530	0.1	3.8	17.7	45.8	2.1
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
Total UK at 31 Dec 2024	14,129	5,649	551	46	20,375	0.2	2.2	15.5	48.6	1.3
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
Total Hong Kong at 31 Dec 2024	33,680	8,419	6,093	18	48,210	—	4.9	16.6	38.1	3.0
Not collateralised	36,754	5,128	2,543	—	44,425	0.1	3.9	72.4	—	4.7
Fully collateralised by LTV ratio	46,212	15,177	1,963	—	63,352	0.1	2.5	12.0	—	1.0
– less than 50%	24,391	7,413	574	—	32,378	0.1	1.9	13.1	—	0.7
– 51% to 75%	16,086	5,240	657	—	21,983	0.1	3.1	9.3	—	1.1
– 76% to 90%	3,140	1,437	454	—	5,031	0.1	3.5	11.8	—	2.1
– 91% to 100%	2,595	1,087	278	—	3,960	0.2	2.3	16.6	—	1.9
Partially collateralised (A): LTV > 100%	7,075	1,487	156	50	8,768	0.1	1.8	30.2	14.5	1.0
– collateral value on A	4,004	1,061	115	26	5,206
Total at 31 Dec 2023	90,041	21,792	4,662	50	116,545	0.1	2.8	45.6	14.5	2.4
of which: UK
Not collateralised	4,644	1,288	97	—	6,029	0.4	2.0	12.4	—	0.9
Fully collateralised by LTV ratio	9,762	2,512	295	—	12,569	0.1	1.3	13.9	—	0.7
– less than 50%	3,514	507	51	—	4,072	0.1	1.9	21.6	—	0.6
– 51% to 75%	4,826	1,418	103	—	6,347	0.1	1.1	16.4	—	0.6
– 76% to 90%	749	292	80	—	1,121	0.1	1.3	14.9	—	1.5
– 91% to 100%	673	295	61	—	1,029	0.1	1.6	1.9	—	0.6
Partially collateralised (B): LTV > 100%	1,580	239	82	35	1,936	0.1	1.1	34.2	20.7	2.0
– collateral value on B	524	171	62	17	774
Total UK at 31 Dec 2023	15,986	4,039	474	35	20,534	0.2	1.5	17.1	20.7	0.9
of which: Hong Kong
Not collateralised	16,889	2,323	2,215	—	21,427	—	6.5	78.7	—	8.8
Fully collateralised by LTV ratio	20,783	8,447	989	—	30,219	—	2.1	5.0	—	0.8
– less than 50%	15,425	5,604	294	—	21,323	—	1.5	1.4	—	0.5
– 51% to 75%	4,102	2,140	312	—	6,554	0.1	3.8	2.1	—	1.4
– 76% to 90%	657	619	315	—	1,591	0.1	1.8	8.0	—	2.3
– 91% to 100%	599	84	68	—	751	—	0.1	20.5	—	1.9
Partially collateralised (C): LTV > 100%	1,770	616	52	15	2,453	—	0.8	24.5	—	0.7
– collateral value on C	1,569	535	39	8	2,151
Total Hong Kong at 31 Dec 2023	39,442	11,386	3,256	15	54,099	—	2.9	55.5	—	4.0
HSBC Holdings plc Annual Report on Form 20-F	213
---	---

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, which focuses on the

countries/territories containing the majority of our loans and advances

balances. 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.

Wholesale lending – other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level<br><br>of collateral for key countries/territories (by stage)
(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	%	%	%	%	%
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
Total at 31 Dec 2024	852,052	80,608	12,675	29	945,364	0.1	1.1	31.2	72.8	0.6
of which: UK
Not collateralised	134,075	10,822	2,661	4	147,562	0.1	2.5	32.4	—	0.9
Fully collateralised by LTV ratio	24,552	3,046	968	—	28,566	0.1	2.4	5.8	—	0.6
– less than 50%	9,183	1,288	473	—	10,944	0.1	2.2	2.8	—	0.5
– 51% to 75%	7,544	1,216	244	—	9,004	0.1	2.7	7.0	—	0.7
– 76% to 90%	2,942	367	129	—	3,438	0.1	2.3	15.3	—	0.9
– 91% to 100%	4,883	175	122	—	5,180	0.1	2.1	5.3	—	0.3
Partially collateralised (B): LTV > 100%	7,016	1,055	395	—	8,466	0.2	1.3	10.8	—	0.8
– collateral value on B	3,832	581	252	—	4,665
Total UK at 31 Dec 2024	165,643	14,923	4,024	4	184,594	0.1	2.4	23.9	—	0.8
of which: Hong Kong
Not collateralised	117,849	6,389	1,313	—	125,551	—	0.6	58.1	—	0.7
Fully collateralised by LTV ratio	28,291	5,866	1,877	21	36,055	0.1	2.1	5.3	98.1	0.7
– less than 50%	14,500	1,774	903	—	17,177	0.1	1.4	5.1	—	0.5
– 51% to 75%	7,331	2,766	449	21	10,567	0.1	3.0	8.3	98.1	1.4
– 76% to 90%	2,896	752	372	—	4,020	0.1	1.9	3.6	—	0.7
– 91% to 100%	3,564	574	153	—	4,291	—	0.3	1.7	—	0.1
Partially collateralised (C): LTV > 100%	17,125	1,535	1,048	—	19,708	—	0.4	46.8	—	2.6
– collateral value on C	6,741	627	639	—	8,007
Total Hong Kong at 31 Dec 2024	163,265	13,790	4,238	21	181,314	—	1.2	31.9	98.1	0.9
Not collateralised	672,142	76,261	7,702	8	756,113	0.1	0.9	40.0	6.8	0.6
Fully collateralised by LTV ratio	113,339	19,747	2,629	23	135,738	0.1	1.4	10.7	89.8	0.5
– less than 50%	42,953	7,069	1,168	—	51,190	0.1	1.5	11.8	—	0.5
– 51% to 75%	24,011	8,222	887	—	33,120	0.1	1.3	6.4	—	0.6
– 76% to 90%	10,194	2,531	421	23	13,169	0.1	1.6	10.3	90.6	0.9
– 91% to 100%	36,181	1,925	153	—	38,259	—	1.1	27.6	—	0.2
Partially collateralised (A): LTV > 100%	53,686	9,019	2,233	3	64,941	0.1	0.7	32.2	38.4	1.3
– collateral value on A	24,505	4,266	993	1	29,765
Total at 31 Dec 2023	839,167	105,027	12,564	34	956,792	0.1	1.0	32.5	67.1	0.6
of which: UK
Not collateralised	117,824	20,401	3,423	—	141,648	0.2	1.9	23.2	—	1.0
Fully collateralised by LTV ratio	22,217	5,912	1,162	—	29,291	0.1	1.7	3.7	—	0.6
– less than 50%	7,385	2,340	601	—	10,326	0.1	1.2	1.3	—	0.5
– 51% to 75%	6,966	2,292	434	—	9,692	0.1	1.7	3.6	—	0.7
– 76% to 90%	2,256	809	106	—	3,171	0.2	2.5	15.8	—	1.3
– 91% to 100%	5,610	471	21	—	6,102	0.1	2.1	14.5	—	0.3
Partially collateralised (B): LTV > 100%	6,335	1,732	299	—	8,366	0.2	1.8	18.4	—	1.2
– collateral value on B	3,508	1,080	175	—	4,763
Total UK at 31 Dec 2023	146,376	28,045	4,884	—	179,305	0.2	1.8	18.3	—	0.9
of which: Hong Kong
Not collateralised	114,025	7,523	906	—	122,454	—	0.4	57.5	—	0.5
Fully collateralised by LTV ratio	32,857	8,918	877	22	42,674	0.1	1.3	6.6	94.7	0.5
– less than 50%	16,175	2,898	230	—	19,303	0.1	1.4	11.8	—	0.4
– 51% to 75%	9,461	4,515	336	—	14,312	0.1	1.2	3.1	—	0.5
– 76% to 90%	4,245	863	253	22	5,383	0.1	1.8	2.0	94.7	0.9
– 91% to 100%	2,976	642	58	—	3,676	—	0.4	27.0	—	0.5
Partially collateralised (C): LTV > 100%	16,152	2,887	704	—	19,743	—	0.6	30.2	—	1.2
– collateral value on C	6,619	1,306	318	—	8,243
Total Hong Kong at 31 Dec 2023	163,034	19,328	2,487	22	184,871	0.1	0.8	31.8	94.7	0.6
214	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

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.

Collateral accepted as security that the Group is permitted to sell or

repledge under these arrangements is described on page 422 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.

For further information on these arrangements, see Note 32 on the financial

statements.

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’).

For an analysis of CVAs, see Note 12 on the financial statements.

The following table reflects by risk type 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
	2024			2023
	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	29,273,397	368,938	367,759	24,551,539	337,066	343,098
– total OTC derivatives cleared by central counterparties	13,484,581	111,974	113,091	11,130,785	116,520	118,796
– total OTC derivatives not cleared by central counterparties	15,788,816	256,964	254,668	13,420,754	220,546	224,302
Total exchange traded derivatives	1,267,685	12,445	9,435	1,111,247	9,134	8,159
Gross	30,541,082	381,383	377,194	25,662,786	346,200	351,258
Offset		(112,746)	(112,746)		(116,486)	(116,486)
At 31 Dec		268,637	264,448		229,714	234,772

The 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.

See 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.

Personal lending

This section presents further disclosures related to personal lending.

It provides details of the main legal entities, countries and products

that are driving the change observed in personal gross loans and

advances to customers, with the impact of foreign exchange

separately identified. Additionally, Hong Kong and UK mortgage book

loan to value (‘LTV’) data is provided.

This section also provides reconciliations of the opening

1 January 2024 to 31 December 2024 closing gross carrying/nominal

amounts and associated allowance for ECL by product. Further

product granularity is also provided by stage, with data for our main

legal entities presented for gross loans and advances to customers,

loan and other credit-related commitments and financial guarantees.

At 31 December 2024, total personal lending for gross loans and

advances to customers of $447.2bn decreased by $0.3bn on a

reported basis, compared with 31 December 2023. This decrease

included adverse foreign exchange movements of $9.9bn. On a

constant currency basis, the increase of $9.6bn was driven by growth

in mortgages (up $7.5bn) and other personal lending (up $2.1bn).

On a constant currency basis, mortgage lending gross balances

increased by $7.5bn to $361.3bn at 31 December 2024. Mortgages

grew in our main legal entities in the UK (up $4.5bn), in the US (up

$2.7bn), Australia (up $1.3bn) and Mexico (up $0.3bn). These

increases were partly offset by a $1.2bn decrease in China, mainly

due to loan repayments.

HSBC Holdings plc Annual Report on Form 20-F	215

On a constant currency basis, other personal lending balances at

31 December 2024 increased by $2.1bn compared with 31 December

This included an increase in our entities in Europe (up $1.1bn),

in our entities in Asia (up $1.0bn) and in Mexico (up $0.3bn). This was

partly offset by the sale of our business in Argentina (down $0.3bn).

Total personal lending gross carrying amounts in stage 2 decreased

by $7.6bn compared with 31 December 2023. Excluding adverse

foreign exchange movements of $1.1bn, the decrease of $6.5bn was

driven by a reduction in credit judgements, primarily in the UK.

At 31 December 2024, the write-offs attributable to personal lending

increased by $0.2bn to $1.5bn, compared with 31 December 2023.

At 31 December 2024, the allowance for ECL attributable to personal

lending, excluding off-balance sheet loan commitments and

guarantees, decreased by $0.3bn to $2.5bn, compared with

31 December 2023. This decrease included favourable foreign

exchange movements of $0.2bn.

On a constant currency basis, the allowance for ECL attributable to

other personal lending of $2.1bn decreased by $0.1bn compared with

31 December 2023. This net release was driven by resilient

performance and a reduction in credit judgements in the UK. The

allowance for ECL attributable to mortgages of $0.5bn remained

unchanged compared with 31 December 2023.

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 67%, compared

with an estimated 63% for the overall mortgage portfolio. The

average LTV ratio on new lending in the UK was 69%, compared with

an estimated 53% for the overall mortgage portfolio.

Total personal lending for loans and advances to customers at amortised cost by stage distribution
	Gross carrying amount				Allowance for ECL
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
By portfolio
First lien residential mortgages	324,703	34,177	2,450	361,330	(59)	(130)	(284)	(473)
– of which: interest-only (including offset)	21,155	2,457	103	23,715	(3)	(10)	(17)	(30)
– affordability (including US adjustable rate<br><br>mortgages)	16,628	386	243	17,257	(2)	(2)	(7)	(11)
Other personal lending	79,043	5,742	1,110	85,895	(511)	(1,028)	(512)	(2,051)
– second lien residential mortgages	366	10	19	395	—	—	(2)	(2)
– guaranteed loans in respect of residential property	6,492	186	20	6,698	(2)	(2)	(5)	(9)
– other personal lending which is secured	30,564	478	138	31,180	(12)	(4)	(15)	(31)
– credit cards	21,611	2,991	313	24,915	(268)	(660)	(199)	(1,127)
– other personal lending which is unsecured	18,198	1,864	598	20,660	(214)	(345)	(279)	(838)
– motor vehicle finance	1,812	213	22	2,047	(15)	(17)	(12)	(44)
At 31 Dec 2024	403,746	39,919	3,560	447,225	(570)	(1,158)	(796)	(2,524)
By legal entity
HSBC UK Bank plc	152,338	31,325	1,075	184,738	(148)	(307)	(211)	(666)
HSBC Bank plc1	23,501	1,198	324	25,023	(17)	(24)	(99)	(140)
The Hongkong and Shanghai Banking Corporation<br><br>Limited	191,614	5,519	1,170	198,303	(174)	(385)	(164)	(723)
HSBC Bank Middle East Limited	3,678	158	40	3,876	(14)	(29)	(30)	(73)
HSBC North America Holdings Inc.	20,851	497	327	21,675	(4)	(12)	(11)	(27)
Grupo Financiero HSBC, S.A. de C.V.	11,016	1,172	620	12,808	(207)	(400)	(279)	(886)
Other trading entities1	748	50	4	802	(6)	(1)	(2)	(9)
At 31 Dec 2024	403,746	39,919	3,560	447,225	(570)	(1,158)	(796)	(2,524)

1At 31 December 2023, ‘Other trading entities’ included gross carrying amount of $9,079m and allowances for ECL of $23m related to Private Banking entities

that were reclassified to HSBC Bank plc to continue the process of simplifying our structure.

Total personal lending for loans and other credit-related commitments and financial guarantees by stage distribution
	Nominal amount				Allowance for ECL
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
HSBC UK Bank plc	51,078	442	47	51,567	(6)	—	(3)	(9)
HSBC Bank plc	1,605	7	2	1,614	—	—	—	—
The Hongkong and Shanghai Banking Corporation<br><br>Limited	189,737	1,165	35	190,937	(4)	—	(2)	(6)
HSBC Bank Middle East Limited	2,452	7	—	2,459	—	—	—	—
HSBC North America Holdings Inc.	3,707	68	2	3,777	—	—	—	—
HSBC Bank Canada	—	—	—	—	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	3,892	—	—	3,892	(7)	—	—	(7)
Other trading entities	434	2	—	436	—	—	—	—
At 31 Dec 2024	252,905	1,691	86	254,682	(17)	—	(5)	(22)
216	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

Total personal lending for loans and advances to customers at amortised cost by stage distribution (continued)
	Gross carrying amount				Allowance for ECL
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
By portfolio
First lien residential mortgages	320,410	38,287	2,212	360,909	(102)	(200)	(269)	(571)
– of which: interest-only (including offset)	21,895	2,923	139	24,957	(4)	(27)	(31)	(62)
– affordability (including US adjustable rate<br><br>mortgages)	14,380	381	291	15,052	(3)	(1)	(10)	(14)
Other personal lending	76,124	9,196	1,293	86,613	(477)	(1,234)	(585)	(2,296)
– second lien residential mortgages	317	58	21	396	—	(3)	(5)	(8)
– guaranteed loans in respect of residential property	8,001	502	90	8,593	(1)	(5)	(14)	(20)
– other personal lending which is secured	28,900	424	157	29,481	(13)	(5)	(24)	(42)
– credit cards	19,909	4,419	352	24,680	(236)	(697)	(203)	(1,136)
– other personal lending which is unsecured	17,010	3,582	659	21,251	(212)	(505)	(331)	(1,048)
– motor vehicle finance	1,987	211	14	2,212	(15)	(19)	(8)	(42)
At 31 Dec 2023	396,534	47,483	3,505	447,522	(579)	(1,434)	(854)	(2,867)
By legal entity
HSBC UK Bank plc	146,354	35,190	1,218	182,762	(152)	(490)	(255)	(897)
HSBC Bank plc	14,598	1,747	273	16,618	(24)	(22)	(91)	(137)
The Hongkong and Shanghai Banking Corporation<br><br>Limited	191,382	7,741	948	200,071	(165)	(402)	(162)	(729)
HSBC Bank Middle East Limited	3,335	397	47	3,779	(19)	(33)	(36)	(88)
HSBC North America Holdings Inc.	18,096	553	364	19,013	(5)	(14)	(16)	(35)
Grupo Financiero HSBC, S.A. de C.V.	12,717	1,740	536	14,993	(197)	(463)	(273)	(933)
Other trading entities	10,052	115	119	10,286	(17)	(10)	(21)	(48)
At 31 Dec 2023	396,534	47,483	3,505	447,522	(579)	(1,434)	(854)	(2,867)	Total personal lending for loans and other credit-related commitments and financial guarantees by stage distribution (continued)
---	---	---	---	---	---	---	---	---
	Nominal amount				Allowance for ECL
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	$m	$m	$m	$m	$m	$m	$m	$m
HSBC UK Bank plc	52,093	734	88	52,915	(11)	—	(2)	(13)
HSBC Bank plc	1,630	36	4	1,670	—	—	—	—
The Hongkong and Shanghai Banking Corporation<br><br>Limited	181,967	2,479	223	184,669	(3)	—	—	(3)
HSBC Bank Middle East Limited	1,978	7	1	1,986	—	—	—	—
HSBC North America Holdings Inc.	3,695	72	8	3,775	—	—	—	—
HSBC Bank Canada	6,610	113	30	6,753	—	—	—	—
Grupo Financiero HSBC, S.A. de C.V.	4,308	—	—	4,308	(8)	—	—	(8)
Other trading entities	2,008	31	1	2,040	(1)	—	—	(1)
At 31 Dec 2023	254,289	3,472	355	258,116	(23)	—	(2)	(25)

Exposure to UK interest-only mortgage loans

The following information is presented for HSBC branded interest-

only mortgage loans. This excludes offset mortgages in first direct

and private banking mortgages.

At the end of 2024, the average LTV ratio of the interest-only

mortgage loans was 44% (2023: 44%), and 99% (2023: 97%) had an

LTV ratio of 75% or less.

Of the interest-only mortgage loans that expired in 2022, 82% were

repaid within 12 months of expiry with a total of 97% being repaid

within 24 months of expiry. For those expired during 2023, 83% were

repaid within 12 months of expiry.

At 31 December 2024, interest-only mortgage loan exposures were

$15.2bn (2023: $15.2bn) and the maturity profile was as follows:

UK interest-only mortgage loans
	$m
Expired interest-only mortgage loans	128
Interest-only mortgage loans by maturity
– 2025	165
– 2026	247
– 2027	366
– 2028	515
– 2029–2033	2,728
– post-2033	11,100
At 31 Dec 2024	15,249
HSBC Holdings plc Annual Report on Form 20-F	217
---	---
UK interest-only mortgage loans (continued)
---	---
	$m
Expired interest-only mortgage loans	141
Interest-only mortgage loans by maturity
– 2024	141
– 2025	242
– 2026	315
– 2027	436
– 2028–2032	2,919
– post-2032	11,010
At 31 Dec 2023	15,204

Exposure to offset mortgage in first direct

The offset mortgage in first direct is no longer on sale and is only available for existing offset mortgage customers. It works by grouping

together the customer’s mortgage, savings and current accounts to offset their credit and debit balances against their mortgage exposure. At

31 December 2024, exposures were worth a total $4.1bn with an average LTV ratio of 28% (2023: $5.0bn exposure and 29% LTV ratio).

Reconciliations of changes in personal lending gross carrying/nominal amount

and allowances for loans and advances to customers including loan

commitments and financial guarantees

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 since 2023.

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
(Audited)
	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	650,823	(602)	50,955	(1,434)	3,860	(856)	705,638	(2,892)
Transfers of financial instruments:	(2,023)	(1,045)	(345)	1,477	2,368	(432)	—	—
– transfers from stage 1 to stage 2	(45,220)	246	45,220	(246)	—	—	—	—
– transfers from stage 2 to stage 1	43,549	(1,247)	(43,549)	1,247	—	—	—	—
– transfers to stage 3	(743)	9	(2,715)	685	3,458	(694)	—	—
– transfers from stage 3	391	(53)	699	(209)	(1,090)	262	—	—
Net remeasurement of ECL arising from transfer<br><br>of stage	—	745	—	(605)	—	(132)	—	8
Changes due to modifications not derecognised	—	—	—	—	(25)	—	(25)	—
Net new and further lending/repayments	29,789	(17)	(7,889)	278	(796)	470	21,104	731
Change to risk parameters – credit quality	—	251	—	(874)	—	(1,437)	—	(2,060)
Changes to models used for ECL calculation	—	29	—	(109)	—	(20)	—	(100)
Assets written off	—	—	—	—	(1,534)	1,534	(1,534)	1,534
Foreign exchange and others1,2,3	(21,938)	52	(1,111)	109	(227)	72	(23,276)	233
At 31 Dec 2024	656,651	(587)	41,610	(1,158)	3,646	(801)	701,907	(2,546)
ECL income statement change for the period		1,008		(1,310)		(1,119)		(1,421)
Recoveries								220
Others								(32)
Total ECL income statement change for the<br><br>period								(1,233)

1Total includes $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

$23m, reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 433.

2Total 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.

3Total includes $2.4bn of nominal amount related to derecognition of loan commitments and financial guarantees following the sale of our banking business in

Argentina during 2024.

As shown in the above table, the allowance for ECL for loans and advances to customers and relevant loan commitments and financial

guarantees decreased by $346m during the period from $2,892m at 31 December 2023 to $2,546m at 31 December 2024.

218	HSBC Holdings plc Annual Report on Form 20-F

Risk review

This decrease was driven by:

–$1,534m of assets written off;

–$731m relating to volume movements, which included the

allowance for ECL associated with new originations, assets

derecognised and further lending/repayment;

–foreign exchange and other movements of $233m; and

–$8m relating to the net remeasurement impact of stage transfers.

These were partly offset by:

–$2,060m relating to credit quality changes, including the credit

quality impact of financial instruments transferring between

stages; and

–$100m of changes to models used for ECL calculation.

The ECL charge for the period of $1,421m presented in the above

table consisted of $2,060m relating to credit quality changes,

including the credit quality impact of financial instruments transferring

between stages, and $100m relating to changes to models used for

the calculation of ECL. This was partly offset by $731m relating to

underlying net book volume movements and $8m relating to the net

remeasurement impact of stage transfer.

During the period, there was a net transfer between stage 1 and

stage 2 of $1,671m gross carrying/nominal amounts. This increase

was mainly driven by HSBC UK ($3,410m) due to mortgages portfolio

and Mexico ($860m) due to a slight deterioration in unsecured lending

portfolio, partly offset by Hong Kong ($2,983m) due to improvement

in credit cards and other unsecured lending portfolio.

A summary of basis of preparation is available on page 191.

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
(Audited)
	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 2023	603,321	(587)	52,563	(1,505)	4,139	(805)	660,023	(2,897)
Transfers of financial instruments:	(2,144)	(619)	39	1,087	2,105	(468)	—	—
– transfers from stage 1 to stage 2	(57,217)	270	57,217	(270)	—	—	—	—
– transfers from stage 2 to stage 1	55,307	(862)	(55,307)	862	—	—	—	—
– transfers to stage 3	(542)	3	(2,345)	614	2,887	(617)	—	—
– transfers from stage 3	308	(30)	474	(119)	(782)	149	—	—
Net remeasurement of ECL arising from transfer of<br><br>stage	—	563	—	(679)	—	(79)	—	(195)
Net new and further lending/repayments	34,411	(47)	(4,713)	350	(1,169)	144	28,529	447
Change to risk parameters – credit quality	—	104	—	(641)	—	(955)	—	(1,492)
Changes to models used for ECL calculation	—	(13)	—	21	—	7	—	15
Assets written off	—	—	—	—	(1,326)	1,326	(1,326)	1,326
Foreign exchange and others1,2	15,235	(3)	3,066	(67)	111	(26)	18,412	(96)
At 31 Dec 2023	650,823	(602)	50,955	(1,434)	3,860	(856)	705,638	(2,892)
ECL income statement change for the period		607		(949)		(883)		(1,225)
Recoveries								226
Others								8
Total ECL income statement change for the period								(991)

1Total includes $7.8bn of gross carrying loans and advances and a corresponding allowance for ECL of $11m, due to the retention of certain balances previously

classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 ‘Assets held for sale and liabilities of disposal groups

held for sale’ on page 433.

2Total includes $2.0bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of

$20m, reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 433.

HSBC Holdings plc Annual Report on Form 20-F	219
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 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)
Changes due to modifications not derecognised	—	—	—	—	—	—	—	—
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<br><br>period								27	At 1 Jan 2023	317,666	(74)	40,048	(231)	2,230	(270)	359,944	(575)
---	---	---	---	---	---	---	---	---
Transfers of financial instruments:	(1,182)	(109)	421	138	761	(29)	—	—
– transfers from stage 1 to stage 2	(41,207)	28	41,207	(28)	—	—	—	—
– transfers from stage 2 to stage 1	40,164	(117)	(40,164)	117	—	—	—	—
– transfers to stage 3	(354)	1	(958)	100	1,312	(101)	—	—
– transfers from stage 3	215	(21)	336	(51)	(551)	72	—	—
Net remeasurement of ECL arising from transfer of<br><br>stage	—	72	—	(79)	—	(67)	—	(74)
Net new and further lending/repayments	15,447	(3)	(3,939)	22	(751)	322	10,757	341
Change to risk parameters – credit quality	—	16	—	(67)	—	(269)	—	(320)
Changes to models used for ECL calculation	—	(2)	—	28	—	—	—	26
Assets written off	—	—	—	—	(53)	53	(53)	53
Foreign exchange and others	8,833	(9)	1,983	(13)	71	(4)	10,887	(26)
At 31 Dec 2023	340,764	(109)	38,513	(202)	2,258	(264)	381,535	(575)
ECL income statement change for the period		83		(96)		(14)		(27)
Recoveries								10
Others								13
Total ECL income statement change for the period								(4)
220	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

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 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<br><br>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.

	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 2023	140,519	(244)	6,747	(777)	353	(160)	147,619	(1,181)
Transfers of financial instruments:	199	(292)	(848)	496	649	(204)	—	—
– transfers from stage 1 to stage 2	(7,855)	102	7,855	(102)	—	—	—	—
– transfers from stage 2 to stage 1	8,124	(391)	(8,124)	391	—	—	—	—
– transfers to stage 3	(82)	1	(621)	227	703	(228)	—	—
– transfers from stage 3	12	(4)	42	(20)	(54)	24	—	—
Net remeasurement of ECL arising from transfer of<br><br>stage	—	185	—	(301)	—	(5)	—	(121)
Net new and further lending/repayments	13,206	27	621	169	12	(41)	13,839	155
Change to risk parameters – credit quality	—	82	—	(281)	—	(301)	—	(500)
Changes to models used for ECL calculation	—	(9)	—	15	—	1	—	7
Assets written off	—	—	—	—	(571)	571	(571)	571
Foreign exchange and others	(632)	(2)	27	(19)	7	(5)	(598)	(26)
At 31 Dec 2023	153,292	(253)	6,547	(698)	450	(144)	160,289	(1,095)
ECL income statement change for the period		285		(398)		(346)		(459)
Recoveries								108
Others								(200)
Total ECL income statement change for the period								(551)
HSBC Holdings plc Annual Report on Form 20-F	221
---	---
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 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<br><br>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 433.

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.

	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 2023	145,136	(269)	5,768	(497)	1,556	(375)	152,460	(1,141)
Transfers of financial instruments:	(1,161)	(218)	466	453	695	(235)	—	—
– transfers from stage 1 to stage 2	(8,155)	140	8,155	(140)	—	—	—	—
– transfers from stage 2 to stage 1	7,019	(354)	(7,019)	354	—	—	—	—
– transfers to stage 3	(106)	1	(766)	287	872	(288)	—	—
– transfers from stage 3	81	(5)	96	(48)	(177)	53	—	—
Net remeasurement of ECL arising from transfer of<br><br>stage	—	306	—	(299)	—	(7)	—	—
Net new and further lending/repayments	5,758	(71)	(1,395)	159	(430)	(137)	3,933	(49)
Change to risk parameters – credit quality	—	6	—	(293)	—	(385)	—	(672)
Changes to models used for ECL calculation	—	(2)	—	(22)	—	6	—	(18)
Assets written off	—	—	—	—	(702)	702	(702)	702
Foreign exchange and others1	7,034	8	1,056	(35)	33	(17)	8,123	(44)
At 31 Dec 2023	156,767	(240)	5,895	(534)	1,152	(448)	163,814	(1,222)
ECL income statement change for the period		239		(455)		(523)		(739)
Recoveries								108
Others								195
Total ECL income statement change for the period								(436)

1Total includes $7.2bn of gross carrying loans and advances and a corresponding allowance for ECL of $10m, due to the retention of certain balances previously

classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 ‘Assets held for sale and liabilities of disposal groups

held for sale’ on page 433.

222	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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		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	100.000	—	—	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	First lien residential<br><br>mortgages	320,410	38,287	2,212	360,909	(102)	(200)	(269)	(571)	0.2
---	---	---	---	---	---	---	---	---	---	---
– Band 1	0.000 to 0.250	229,188	3,174	—	232,362	(16)	(14)	—	(30)	—
– Band 2	0.251 to 0.500	54,891	12,266	—	67,157	(11)	(17)	—	(28)	—
– Band 3	0.501 to 1.500	28,159	16,140	—	44,299	(22)	(49)	—	(71)	0.2
– Band 4	1.501 to 5.000	7,451	4,559	—	12,010	(52)	(30)	—	(82)	0.7
– Band 5	5.001 to 20.000	599	1,097	—	1,696	—	(11)	—	(11)	0.6
– Band 6	20.001 to 99.999	122	1,051	—	1,173	(1)	(79)	—	(80)	6.8
– Band 7	100.000	—	—	2,212	2,212	—	—	(269)	(269)	12.2
Credit cards		19,909	4,419	352	24,680	(236)	(697)	(203)	(1,136)	4.6
– Band 1	0.000 to 0.250	9,490	1	—	9,491	(32)	—	—	(32)	0.3
– Band 2	0.251 to 0.500	2,481	6	—	2,487	(21)	(1)	—	(22)	0.9
– Band 3	0.501 to 1.500	4,799	294	—	5,093	(56)	(17)	—	(73)	1.4
– Band 4	1.501 to 5.000	2,787	2,291	—	5,078	(93)	(158)	—	(251)	4.9
– Band 5	5.001 to 20.000	352	1,374	—	1,726	(34)	(258)	—	(292)	16.9
– Band 6	20.001 to 99.999	—	453	—	453	—	(263)	—	(263)	58.1
– Band 7	100	—	—	352	352	—	—	(203)	(203)	57.7
Other personal lending		56,215	4,777	941	61,933	(241)	(537)	(382)	(1,160)	1.9
– Band 1	0.000 to 0.250	28,115	30	—	28,145	(34)	(1)	—	(35)	0.1
– Band 2	0.251 to 0.500	6,634	286	—	6,920	(11)	(1)	—	(12)	0.2
– Band 3	0.501 to 1.500	12,935	329	—	13,264	(61)	(9)	—	(70)	0.5
– Band 4	1.501 to 5.000	7,215	1,447	—	8,662	(79)	(46)	—	(125)	1.4
– Band 5	5.001 to 20.000	1,137	2,005	—	3,142	(55)	(199)	—	(254)	8.1
– Band 6	20.001 to 99.999	179	680	—	859	(1)	(281)	—	(282)	32.8
– Band 7	100.000	—	—	941	941	—	—	(382)	(382)	40.6
At 31 Dec 2023		396,534	47,483	3,505	447,522	(579)	(1,434)	(854)	(2,867)	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 185.

HSBC Holdings plc Annual Report on Form 20-F	223
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		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)	—	Loan and other credit-<br><br>related commitments	253,183	3,459	355	256,997	(23)	—	(2)	(25)	—
---	---	---	---	---	---	---	---	---	---	---
– Band 1	0.000 to 0.250	196,201	114	—	196,315	(15)	—	—	(15)	—
– Band 2	0.251 to 0.500	17,861	63	—	17,924	(1)	—	—	(1)	—
– Band 3	0.501 to 1.500	29,623	1,262	—	30,885	(1)	—	—	(1)	—
– Band 4	1.501 to 5.000	8,550	1,334	—	9,884	(4)	—	—	(4)	—
– Band 5	5.001 to 20.000	508	564	—	1,072	(2)	—	—	(2)	0.2
– Band 6	20.001 to 99.999	440	122	—	562	—	—	—	—	—
– Band 7	100.000	—	—	355	355	—	—	(2)	(2)	0.6
Financial guarantees		1,106	13	—	1,119	—	—	—	—	—
– Band 1	0.000 to 0.250	348	—	—	348	—	—	—	—	—
– Band 2	0.251 to 0.500	386	—	—	386	—	—	—	—	—
– Band 3	0.501 to 1.500	359	1	—	360	—	—	—	—	—
– Band 4	1.501 to 5.000	3	—	—	3	—	—	—	—	—
– Band 5	5.001 to 20.000	2	12	—	14	—	—	—	—	—
– Band 6	20.001 to 99.999	8	—	—	8	—	—	—	—	—
– Band 7	100.000	—	—	—	—	—	—	—	—	—
At 31 Dec 2023		254,289	3,472	355	258,116	(23)	—	(2)	(25)	—

112-month point in time adjusted for multiple economic scenarios.

224	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Collateral on loans and advances

(Audited)

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.

Personal lending – residential mortgage loans including loan commitments by level of collateral for key countries/territories by stage
(Audited)
	Gross carrying/nominal amount				ECL coverage
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	$m	$m	$m	$m	%	%	%	%
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
Total at 31 Dec 2024	344,672	34,342	2,474	381,488	—	0.4	11.5	0.1
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
Total UK at 31 Dec 2024	151,410	30,589	752	182,751	—	0.2	8.6	0.1
of which: Hong Kong
Fully collateralised	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
Total Hong Kong at 31 Dec 2024	107,495	859	152	108,506	—	0.1	2.9	—	Fully collateralised by LTV ratio	331,279	38,378	2,129	371,786	—	0.5	10.1	0.1
---	---	---	---	---	---	---	---	---
– less than 50%	140,992	19,715	1,165	161,872	—	0.3	7.1	0.1
– 51% to 70%	113,043	12,636	568	126,247	—	0.6	10.9	0.1
– 71% to 80%	37,866	4,111	229	42,206	—	0.9	15.2	0.2
– 81% to 90%	23,278	1,499	109	24,886	—	1.2	17.3	0.2
– 91% to 100%	16,100	417	58	16,575	—	1.6	28.9	0.2
Partially collateralised (A): LTV > 100%	9,529	136	129	9,794	—	3.4	42.0	0.6
– collateral value on A	8,968	123	104	9,195
Total at 31 Dec 2023	340,808	38,514	2,258	381,580	—	0.5	11.9	0.1
of which: UK
Fully collateralised by LTV ratio	146,739	33,597	759	181,095	—	0.3	9.7	0.1
– less than 50%	60,403	17,629	458	78,490	—	0.2	7.9	0.1
– 51% to 70%	49,945	11,248	207	61,400	—	0.4	9.4	0.1
– 71% to 80%	20,293	3,275	61	23,629	—	0.6	13.4	0.1
– 81% to 90%	12,946	1,161	18	14,125	—	0.8	17.5	0.1
– 91% to 100%	3,152	284	15	3,451	—	1.0	41.6	0.3
Partially collateralised (B): LTV > 100%	317	19	27	363	0.1	1.7	17.5	1.4
– collateral value on B	244	15	22	281
Total UK at 31 Dec 2023	147,056	33,616	786	181,458	—	0.3	9.9	0.1
of which: Hong Kong
Fully collateralised by LTV ratio	97,414	1,354	93	98,861	—	—	0.3	—
– less than 50%	41,903	831	66	42,800	—	—	0.1	—
– 51% to 70%	29,762	330	15	30,107	—	—	0.5	—
– 71% to 80%	5,260	48	2	5,310	—	0.1	0.4	—
– 81% to 90%	8,161	61	4	8,226	—	0.1	1.9	—
– 91% to 100%	12,328	84	6	12,418	—	0.3	1.8	—
Partially collateralised (C): LTV > 100%	8,973	86	4	9,063	—	0.9	7.8	—
– collateral value on C	8,535	81	4	8,620
Total Hong Kong at 31 Dec 2023	106,387	1,440	97	107,924	—	0.1	0.7	—
HSBC Holdings plc Annual Report on Form 20-F	225
---	---

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	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)
– of which: Other trading<br><br>entities	—	—	—	—	—	—	—	—
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)
UK	105,536	17,852	18,343	123,879	(1,451)	(246)	(231)	(1,682)
---	---	---	---	---	---	---	---	---
–of which: HSBC UK Bank<br><br>plc (ring-fenced bank)	80,248	17,060	9,372	89,620	(1,212)	(212)	(66)	(1,278)
–of which: HSBC Bank plc<br><br>(non-ring-fenced bank)	24,791	792	8,971	33,762	(240)	(34)	(165)	(405)
– of which: Other trading<br><br>entities	497	—	—	497	1	—	—	1
France	27,017	4,796	5,701	32,718	(636)	(53)	(18)	(654)
Germany	6,667	240	632	7,299	(74)	—	—	(74)
Hong Kong	125,340	48,594	19,319	144,659	(3,099)	(2,147)	(57)	(3,156)
Australia	12,685	4,443	1,564	14,249	(49)	(1)	—	(49)
India	10,856	2,083	5,315	16,171	(47)	(7)	(4)	(51)
Indonesia	3,100	162	411	3,511	(136)	(58)	—	(136)
Mainland China	28,655	6,709	7,775	36,430	(313)	(212)	(11)	(324)
Malaysia	5,797	1,137	258	6,055	(69)	(15)	—	(69)
Singapore	15,845	3,458	948	16,793	(321)	(40)	(1)	(322)
Taiwan	4,512	30	81	4,593	—	—	—	—
Egypt	899	45	86	985	(128)	(10)	(1)	(129)
UAE	13,740	1,979	823	14,563	(543)	(296)	—	(543)
US	26,993	5,143	9,155	36,148	(239)	(101)	(58)	(297)
Mexico	11,326	865	1,349	12,675	(320)	(19)	(5)	(325)
Other	28,687	3,919	2,672	31,359	(378)	(81)	(18)	(396)
At 31 Dec 2023	427,655	101,455	74,432	502,087	(7,803)	(3,286)	(404)	(8,207)

1Real estate lending within this disclosure corresponds solely to the industry of the borrower. Commercial real estate on page 207 includes borrowers in multiple

industries investing in income-producing assets and, to a lesser extent, their construction and development.

226	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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	Other<br><br>personal	of which:<br><br>credit<br><br>cards	Total	First lien<br><br>residential<br><br>mortgages	Other<br><br>personal	of which:<br><br>credit<br><br>cards	Total
	$m	$m	$m	$m	$m	$m	$m	$m
UK	170,809	21,426	8,016	192,235	(139)	(540)	(284)	(679)
–of which: HSBC UK Bank plc (ring-fenced bank)	166,709	18,029	7,933	184,738	(132)	(534)	(283)	(666)
– of which: HSBC Bank plc (non-ring-fenced<br><br>bank)	4,100	3,397	83	7,497	(7)	(6)	(1)	(13)
–of which: Other trading entities	—	—	—	—	—	—	—	—
France1	377	6,601	1	6,978	(12)	(12)	—	(24)
Germany	—	—	—	—	—	—	—	—
Hong Kong	107,759	31,676	10,165	139,435	(5)	(421)	(291)	(426)
Australia	22,154	407	372	22,561	(7)	(9)	(8)	(16)
India	1,984	865	265	2,849	(3)	(18)	(14)	(21)
Indonesia	46	323	142	369	(3)	(11)	(6)	(14)
Mainland China	6,087	771	227	6,858	(12)	(42)	(33)	(54)
Malaysia	3,252	1,198	938	4,450	(23)	(62)	(36)	(85)
Singapore	5,802	6,653	571	12,455	—	(56)	(28)	(56)
Taiwan	5,788	1,424	340	7,212	—	(15)	(4)	(15)
Egypt	—	321	89	321	—	(1)	—	(1)
UAE	2,082	1,338	543	3,420	(3)	(55)	(31)	(58)
US	21,021	653	195	21,674	(12)	(16)	(14)	(28)
Mexico	7,488	5,320	2,242	12,808	(167)	(719)	(339)	(886)
Other	6,681	6,919	809	13,600	(87)	(74)	(39)	(161)
At 31 Dec 2024	361,330	85,895	24,915	447,225	(473)	(2,051)	(1,127)	(2,524)	UK	168,469	19,503	8,056	187,972	(209)	(697)	(339)	(906)
---	---	---	---	---	---	---	---	---
– of which: HSBC UK Bank plc (ring-fenced bank)	164,878	17,884	7,975	182,762	(205)	(692)	(336)	(897)
– of which: HSBC Bank plc (non-ring-fenced<br><br>bank)	3,226	141	81	3,367	(3)	(5)	(2)	(8)
– of which: Other trading entities	365	1,478	—	1,843	(1)	—	(1)	(1)
France1	436	7,476	1	7,912	(13)	(8)	—	(21)
Germany	—	165	—	165	—	—	—	—
Hong Kong	107,182	31,248	9,663	138,430	(2)	(417)	(286)	(419)
Australia	23,001	446	396	23,447	(5)	(19)	(18)	(24)
India	1,537	680	185	2,217	(4)	(16)	(12)	(20)
Indonesia	58	288	137	346	(2)	(11)	(7)	(13)
Mainland China	7,503	754	287	8,257	(3)	(49)	(39)	(52)
Malaysia	2,313	2,115	882	4,428	(23)	(87)	(36)	(110)
Singapore	8,151	5,589	521	13,740	—	(38)	(17)	(38)
Taiwan	5,607	1,370	309	6,977	—	(17)	(4)	(17)
Egypt	—	341	89	341	—	(1)	(1)	(1)
UAE	1,957	1,325	440	3,282	(10)	(62)	(24)	(72)
US	18,340	673	199	19,013	(15)	(19)	(14)	(34)
Mexico	8,778	6,215	2,465	14,993	(176)	(757)	(297)	(933)
Other	7,577	8,425	1,050	16,002	(109)	(98)	(42)	(207)
At 31 Dec 2023	360,909	86,613	24,680	447,522	(571)	(2,296)	(1,136)	(2,867)

1Included in other personal lending at 31 December 2024 is $6,562m (31 December 2023: $7,424m) guaranteed by Crédit Logement.

HSBC Holdings plc Annual Report on Form 20-F	227
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied – by global business
---	---	---	---	---	---	---	---	---	---	---
	Gross carrying/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
WPB1	569,548	39,984	3,717	—	613,249	(596)	(1,166)	(811)	—	(2,573)
CMB	436,536	44,223	16,912	48	497,719	(446)	(1,020)	(4,713)	(29)	(6,208)
GBM	674,730	10,676	2,116	42	687,564	(106)	(331)	(524)	(22)	(983)
Corporate Centre1	72,079	369	25	—	72,473	(3)	(36)	(17)	—	(56)
Total gross carrying amount on-balance sheet at<br><br>31 Dec 2024	1,752,893	95,252	22,770	90	1,871,005	(1,151)	(2,553)	(6,065)	(51)	(9,820)
WPB	252,695	1,674	84	—	254,453	(17)	—	(9)	—	(26)
CMB	132,703	13,879	896	—	147,478	(97)	(92)	(86)	—	(275)
GBM	226,995	7,019	226	3	234,243	(31)	(34)	(11)	—	(76)
Corporate Centre	191	—	—	—	191	—	—	—	—	—
Total nominal amount off-balance sheet at<br><br>31 Dec 2024	612,584	22,572	1,206	3	636,365	(145)	(126)	(106)	—	(377)
WPB	142,388	339	—	—	142,727	(14)	(2)	—	—	(16)
CMB	103,406	323	—	—	103,729	(7)	(2)	—	—	(9)
GBM	97,422	149	—	—	97,571	(9)	—	—	—	(9)
Corporate Centre	2,028	69	—	—	2,097	(1)	(19)	—	—	(20)
Debt instruments measured at FVOCI at<br><br>31 Dec 2024	345,244	880	—	—	346,124	(31)	(23)	—	—	(54)	WPB	630,661	54,069	4,233	—	688,963	(621)	(1,551)	(977)	—	(3,149)
---	---	---	---	---	---	---	---	---	---	---
CMB	464,893	66,688	12,698	49	544,328	(508)	(1,336)	(4,995)	(23)	(6,862)
GBM	696,377	14,247	3,002	32	713,658	(119)	(199)	(1,161)	(7)	(1,486)
Corporate Centre	75,805	37	6	—	75,848	(1)	(13)	—	—	(14)
Total gross carrying amount on-balance sheet at<br><br>31 Dec 2023	1,867,736	135,041	19,939	81	2,022,797	(1,249)	(3,099)	(7,133)	(30)	(11,511)
WPB	253,333	3,811	333	—	257,477	(22)	—	(2)	—	(24)
CMB	142,206	16,238	877	—	159,321	(100)	(101)	(102)	—	(303)
GBM	250,007	10,752	314	4	261,077	(38)	(34)	(7)	—	(79)
Corporate Centre	149	—	—	—	149	—	—	—	—	—
Total nominal amount off-balance sheet at<br><br>31 Dec 2023	645,695	30,801	1,524	4	678,024	(160)	(135)	(111)	—	(406)
WPB	124,747	406	—	—	125,153	(14)	(17)	—	—	(31)
CMB	86,021	405	—	—	86,426	(9)	(18)	—	—	(27)
GBM	88,229	173	1	—	88,403	(13)	(6)	(1)	—	(20)
Corporate Centre	2,201	165	—	—	2,366	(1)	(18)	—	—	(19)
Debt instruments measured at FVOCI at<br><br>31 Dec 2023	301,198	1,149	1	—	302,348	(37)	(59)	(1)	—	(97)

1With effect from 1 January 2024, following the sale of our retail banking business in France, we have prospectively reclassified the $7.4bn portfolio of retained

loans from WPB to Corporate Centre.

228	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Loans and advances to customers and banks – other supplementary information
	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
First lien residential mortgages	361,330	2,450	(473)	(284)	33	(63)	7
– second lien residential mortgages	395	19	(2)	(2)	6	—	1
– guaranteed loans in respect of residential property	6,698	20	(9)	(5)	3	(7)	—
– other personal lending which is secured	31,180	138	(31)	(15)	5	(3)	—
– credit cards	24,915	313	(1,127)	(199)	(804)	(736)	106
– other personal lending which is unsecured	20,660	598	(838)	(279)	(484)	(699)	103
– motor vehicle finance	2,047	22	(44)	(12)	(38)	(26)	3
Other personal lending	85,895	1,110	(2,051)	(512)	(1,312)	(1,471)	213
Personal lending	447,225	3,560	(2,524)	(796)	(1,279)	(1,534)	220
– agriculture, forestry and fishing	7,033	282	(94)	(46)	4	(10)	1
– mining and quarrying	7,592	318	(45)	(32)	29	(26)	—
– manufacturing	82,724	1,487	(893)	(638)	(170)	(403)	3
– electricity, gas, steam and air-conditioning supply	16,457	209	(122)	(85)	—	—	—
– water supply, sewerage, waste management and<br><br>remediation	2,961	43	(24)	(16)	2	(40)	—
– real estate and construction	90,063	8,949	(2,598)	(1,842)	(812)	(1,554)	12
– wholesale and retail trade, repair of motor vehicles and<br><br>motorcycles	77,830	2,728	(1,372)	(1,188)	(369)	(337)	8
– transportation and storage	22,643	417	(321)	(232)	(104)	(20)	1
– accommodation and food	14,734	1,610	(299)	(214)	(81)	(27)	—
– publishing, audiovisual and broadcasting	19,826	229	(158)	(61)	(79)	(75)	2
– professional, scientific and technical activities	26,128	648	(266)	(188)	(132)	(174)	1
– administrative and support services	20,117	739	(320)	(254)	(39)	(88)	1
– public administration and defence, compulsory social<br><br>security	64	—	—	—	—	—	—
– education	1,596	43	(27)	(16)	(16)	(3)	—
– health and care	4,030	184	(51)	(25)	(3)	(12)	1
– arts, entertainment and recreation	2,066	78	(35)	(26)	(19)	(22)	—
– other services	7,288	327	(110)	(66)	(82)	(115)	10
– activities of households	589	—	—	—	—	—	—
– extra-territorial organisations and bodies activities	118	—	—	—	—	—	—
– government	6,793	175	(7)	(5)	6	—	—
– asset-backed securities	32	—	(13)	—	1	—	—
Corporate and commercial	410,684	18,466	(6,755)	(4,934)	(1,864)	(2,906)	40
Non-bank financial institutions	82,464	679	(436)	(361)	(59)	(19)	—
Wholesale lending	493,148	19,145	(7,191)	(5,295)	(1,923)	(2,925)	40
Loans and advances to customers	940,373	22,705	(9,715)	(6,091)	(3,202)	(4,459)	260
Loans and advances to banks	102,052	2	(13)	(2)	(1)	—	—
At 31 Dec 2024	1,042,425	22,707	(9,728)	(6,093)	(3,203)	(4,459)	260
HSBC Holdings plc Annual Report on Form 20-F	229
---	---
Loans and advances to customers and banks – other supplementary information (continued)
---	---	---	---	---	---	---	---
	Gross<br><br>carrying<br><br>amount	of which:<br><br>stage 3 and<br><br>POCI	Allowance<br><br>for ECL	of which:<br><br>stage 3 and<br><br>POCI	Change in<br><br>ECL	Write-offs	Recoveries
	$m	$m	$m	$m	$m	$m	$m
First lien residential mortgages	360,909	2,212	(571)	(269)	(10)	(53)	10
– second lien residential mortgages	396	21	(8)	(5)	(1)	(1)	2
– guaranteed loans in respect of residential property	8,593	90	(20)	(14)	2	(8)	2
– other personal lending which is secured	29,481	157	(42)	(24)	8	(2)	2
– credit cards	24,680	352	(1,136)	(203)	(577)	(571)	108
– other personal lending which is unsecured	21,251	659	(1,048)	(331)	(380)	(663)	99
– motor vehicle finance	2,212	14	(42)	(8)	(61)	(28)	3
Other personal lending	86,613	1,293	(2,296)	(585)	(1,009)	(1,273)	216
Personal lending	447,522	3,505	(2,867)	(854)	(1,019)	(1,326)	226
– agriculture, forestry and fishing	7,181	312	(130)	(64)	(21)	(9)	—
– mining and quarrying	7,223	325	(101)	(83)	27	(49)	—
– manufacturing	85,333	1,899	(1,143)	(860)	(355)	(273)	11
– electricity, gas, steam and air-conditioning supply	14,355	255	(119)	(88)	(26)	(10)	—
– water supply, sewerage, waste management and<br><br>remediation	3,262	102	(63)	(51)	(44)	(2)	—
– real estate and construction	101,455	5,883	(3,286)	(2,561)	(1,358)	(1,191)	6
– wholesale and retail trade, repair of motor vehicles and<br><br>motorcycles	79,121	2,362	(1,341)	(1,134)	(124)	(447)	12
– transportation and storage	21,456	445	(230)	(160)	(87)	(42)	—
– accommodation and food	15,874	1,058	(257)	(112)	(33)	(26)	—
– publishing, audiovisual and broadcasting	19,731	210	(173)	(50)	(106)	(73)	—
– professional, scientific and technical activities	26,753	740	(401)	(306)	(262)	(110)	1
– administrative and support services	22,203	597	(268)	(174)	39	(137)	—
– public administration and defence, compulsory social<br><br>security	1,042	—	—	—	—	—	—
– education	1,460	46	(15)	(4)	(1)	(22)	—
– health and care	4,236	183	(56)	(26)	40	(7)	—
– arts, entertainment and recreation	1,961	99	(42)	(31)	15	(8)	—
– other services	8,355	318	(153)	(90)	22	(181)	12
– activities of households	694	—	—	—	—	—	—
– extra-territorial organisations and bodies activities	101	—	—	—	—	—	—
– government	5,827	205	(12)	(10)	(15)	—	—
– asset-backed securities	32	—	(13)	—	—	—	—
Corporate and commercial	427,655	15,039	(7,803)	(5,804)	(2,289)	(2,587)	42
Non-bank financial institutions	74,432	810	(404)	(322)	(168)	(9)	—
Wholesale lending	502,087	15,849	(8,207)	(6,126)	(2,457)	(2,596)	42
Loans and advances to customers	949,609	19,354	(11,074)	(6,980)	(3,476)	(3,922)	268
Loans and advances to banks	112,917	2	(15)	(2)	53	—	—
At 31 Dec 2023	1,062,526	19,356	(11,089)	(6,982)	(3,423)	(3,922)	268

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 372); 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 372), 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 $3.0bn at

31 December 2024 (2023: $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 (2023: 100%). For further details of

credit quality classification, see page 170.

230	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Treasury risk

Contents
230	Overview
230	Treasury risk management
232	Other Group risks
234	Capital risk in 2024
237	Liquidity and funding risk in 2024
241	Structural foreign exchange risk in 2024
242	Interest rate risk in the banking book in 2024

Overview

Treasury risk is the risk of having insufficient capital, liquidity or

funding resources to meet financial obligations and satisfy regulatory

requirements, including the risk of adverse impact on earnings or

capital due to structural and transactional foreign exchange

exposures, as well as changes in market interest rates, together with

pension and insurance risk.

Treasury risk arises from changes to the respective resources and risk

profiles driven by customer behaviour, management decisions or the

external environment.

Approach and policy

(Audited)

Our objective in the management of treasury risk is to maintain

appropriate levels of capital, liquidity, funding, foreign exchange and

market risk to support our business strategy, and meet our regulatory

and stress testing-related requirements.

Our approach to treasury management is driven by our strategic and

organisational requirements, and considers the regulatory, economic

and commercial environment. We aim to maintain a strong capital and

liquidity base to support the risks inherent in our business and invest

in accordance with our strategy, meeting both consolidated and local

regulatory requirements at all times.

Our policy is underpinned by our risk management framework. The

risk management framework incorporates a number of measures

aligned to our assessment of risks for both internal and regulatory

purposes. These risks include credit, market, operational, pensions,

structural and transactional foreign exchange risk, and interest rate

risk in the banking book.

For further details, refer to our Pillar 3 Disclosures at 31 December 2024.

Treasury risk management

Key developments in 2024

–The Group continues to benefit from a healthy capital, liquidity and

funding position.

–The Board approved a fourth interim dividend for full year 2023,

paid in April 2024. For the full year 2024, the Board approved three

interim dividends, which were paid in June, September and

December 2024. A fourth interim dividend has also been

announced with these results. We announced a total of $11bn of

share buy-backs during 2024.

–On 1 January 2024, HSBC Continental Europe completed the sale

of its retail banking operations in France.

–On 28 March 2024, HSBC completed the sale of HSBC Bank

Canada to the Royal Bank of Canada. The associated gain on sale

of $4.8bn, including the recycling of related reserves, added

approximately 0.8 percentage points to our CET1 ratio in 1Q24.

The Board approved a special dividend of $0.21 per share, paid in

June 2024 alongside the first interim dividend.

–On 6 December 2024, HSBC completed the sale of HSBC

Argentina to Grupo Financiero Galicia recognising a loss on

disposal of $1bn. In addition, $5.2bn of FX and other reserve

losses were recycled to the income statement on completion. The

sale had an immaterial capital impact.

–The Bank continues its delivery efforts against regulatory

commitments, including enhancements to regulatory reporting and

the implementation of prudential policy changes across the

jurisdictions in which we operate. We continue to assess the

impact of Basel 3.1, following the PRA announcement to delay the

implementation until 1 January 2027, and expect a modest benefit

to our CET1 ratio.

–We have made significant progress in improving our recovery and

resolution capabilities in line with the Group’s preferred resolution

strategy and regulatory expectations, including the Bank of

England’s (‘BoE’) Resolvability Assessment Framework (‘RAF’).

–We further stabilised our banking net interest income through

increasing both the size and duration of our structural hedge.

For quantitative disclosures on capital ratios, own funds and risk-weighted

assets (‘RWAs’), see pages 234 to 235. For quantitative disclosures on liquidity

and funding metrics, see pages 238 to 239. For quantitative disclosures on

interest rate risk in the banking book, see pages 242 to 244.

Governance and structure

The Global Head of Traded and Treasury Risk Management and Risk

Analytics is the accountable risk steward for all treasury risks. The

Group Treasurer is the risk owner for all treasury risks, with the

exception of pension risk and insurance risk. The Group Treasurer co-

owns pension risk with the Group Head of Performance and Reward.

Insurance risk is owned by the Chief Executive Officer for Global

Insurance.

Capital risk, liquidity risk, interest rate risk in the banking book,

structural foreign exchange risk and transactional foreign exchange

risk are the responsibility of the Group Operating Committee and the

Group Risk Committee (‘GRC’). Global Treasury actively manages

these risks on an ongoing basis, supported by the Holdings Asset and

Liability Management Committee (‘ALCO’) and local ALCOs, overseen

by Treasury Risk Management and Risk Management Meetings.

Pension risk is overseen by a network of local and regional pension

risk management meetings. The Global Pensions Financial Risk

Management Meeting provides oversight of all pension plans

sponsored by HSBC globally and is 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 and supporting frameworks for recovery and resolution

planning and stress testing. The policy sets out our approach to

determining key capital risk appetites including CET1, total capital,

minimum requirements for own funds and eligible liabilities (‘MREL’),

the leverage ratio and double leverage. Our internal capital adequacy

assessment process (‘ICAAP’) is an assessment of the Group’s

capital position, outlining both regulatory and internal capital resources

and requirements resulting from HSBC’s business model, strategy,

risk profile and management, performance and planning, risks to

capital, and the implications of stress testing. Our assessment of

capital adequacy is driven by an assessment of risks. These risks

include credit, market, operational, pensions, insurance, structural

foreign exchange, interest rate risk in the banking book and group

risk. Climate risk is also considered as part of the ICAAP, and we are

continuing to develop our approach. The Group’s ICAAP supports the

HSBC Holdings plc Annual Report on Form 20-F	231

determination of the consolidated capital risk appetite and target

ratios, as well as enables the assessment and determination of capital

requirements by regulators. Subsidiaries prepare ICAAPs in line with

global guidance, while considering their local regulatory regimes to

determine their own risk appetites and ratios.

HSBC Holdings is the provider of MREL to its subsidiaries, including

equity and non-equity capital. These investments are funded by HSBC

Holdings’ own equity capital and MREL-eligible debt. MREL includes

own funds and 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. In line with our existing structure and business

model, HSBC has three resolution groups – the European Resolution

Group, the Asian Resolution Group and the US Resolution Group.

There are some smaller entities that fall outside these resolution

groups.

HSBC Holdings seeks to maintain a prudent balance between the

composition of its capital and its investments in subsidiaries.

As a matter of long-standing policy, the holding company group

retains a substantial holdings capital buffer comprising cash and other

high-quality liquid assets, which at 31 December 2024 was in excess

of $20bn, our target operating level.

We aim to ensure that management has oversight of our liquidity and

funding risks at Group and entity level through governance

arrangements, in line with our risk management framework. We

manage liquidity and funding risk at an operating entity level in

accordance with globally consistent policies, procedures and reporting

standards. This ensures that obligations can be met in a timely

manner, in the jurisdiction where they fall due.

Operating entities are required to meet internal minimum

requirements and any applicable regulatory requirements at all times.

These requirements are assessed through our internal liquidity

adequacy assessment process (‘ILAAP’), which ensures that

operating entities have strategies, policies, processes and systems

for the identification, measurement, management and monitoring of

liquidity risk over an appropriate set of time horizons, including intra-

day. The ILAAP informs the setting of risk appetite. It also assesses

the capability to manage liquidity and funding effectively in each major

entity. These metrics are set and managed locally but are subject to

global review and challenge to ensure consistency of approach and

application of the Group’s policies and controls.

Planning and performance

Capital and RWA plans form part of the annual financial resource plan

that is approved by the Board. Capital and RWA forecasts are

submitted to the Group Executive Committee on a monthly basis, and

capital and RWAs are monitored and managed against the plan. 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 Holdings ALCO.

Through our internal governance processes, we seek to strengthen

discipline over our investment and capital allocation decisions, and to

ensure that returns on investment meet management’s objectives.

The Group allocates financial resources to businesses and entities to

support the execution of our strategy and to meet their regulatory and

economic capital needs. We evaluate and manage business returns

by using a return on average tangible equity measure and a related

economic profit measure.

Funding and liquidity plans also form part of the financial resource

plan that is approved by the Board. The Board-level appetite measures

are the liquidity coverage ratio (‘LCR’) and net stable funding ratio

(‘NSFR’), together with an internal liquidity metric, at entity level. In

addition, we use a wider set of measures to manage an appropriate

funding and liquidity profile, including legal entity depositor

concentration limits, intra-day liquidity, forward-looking funding

assessments and other key measures.

Risks to capital and liquidity

Outside the stress testing framework, other risks may be identified

that have the potential to affect our RWAs, capital and/or liquidity

position. Downside and upside scenarios are assessed against our

management objectives, and mitigating actions are assigned as

necessary. We closely monitor future regulatory developments and

continue to evaluate the impact of these upon our capital and liquidity

requirements, particularly those related to the UK’s implementation of

the outstanding measures to be implemented from the Basel III

reforms (‘Basel 3.1‘).

Regulatory developments

The Prudential Regulation Authority (‘PRA‘) published the second part

of its near-final rules on the UK’s implementation of Basel 3.1 on

12 September 2024. On 17 January 2025, the PRA revised the

implementation date to 1 January 2027 to allow greater clarity

regarding implementation in the United States. The Risk Weighted

Asset (‘RWA‘) output floor is now subject to a three-year transitional

provision, ensuring that the date for full implementation remains

1 January 2030. We continue to assess the impact of Basel 3.1

standards on our capital, including the recent release of more

beneficial PRA near-final rules, developments in the US and

associated implementation challenges (including data provision). We

expect that the impact on our CET1 ratio at 1 January 2027 will be a

modest benefit.

Regulatory reporting processes and controls

We are advancing a comprehensive initiative aimed at strengthening

our global regulatory reporting processes and making them more

sustainable. This multifaceted programme includes enhancing data,

consistency and controls. This remains a key priority for both HSBC

management and regulatory authorities.

While this programme continues, there may be further impacts on

some of our regulatory ratios, such as the CET1, LCR and NSFR, as

we implement recommended changes and continue to enhance our

controls across the process.

Stress testing and recovery and resolution

planning

The Group uses stress testing to inform management of the capital

and liquidity needed to withstand internal and external shocks,

including a global economic downturn or a systems failure. Stress

testing results are also used to inform risk mitigation actions, input

into global business performance through tangible equity allocation,

and recovery and resolution planning, as well as to re-evaluate

business plans where analysis shows capital, liquidity and/or returns

do not meet their target.

In addition to a range of internal stress tests, we are subject to

supervisory stress testing in many jurisdictions. These include the

exercises of the Bank of England (‘BoE’), the US Federal Reserve

Board, the European Banking Authority, the European Central Bank

and the Hong Kong Monetary Authority. The results of regulatory

stress testing and our internal stress tests are used when assessing

our internal capital and liquidity requirements through the ICAAP and

ILAAP. The outcomes of stress testing exercises carried out by the

PRA and other regulators feed into the setting of regulatory minimum

ratios and buffers.

We maintain recovery plans for the Group and material entities, which

set out potential options management could take in a range of stress

scenarios that could result in a breach of capital or liquidity buffers.

The Group recovery plan sets out the framework and governance

arrangements to support restoring HSBC to a stable and viable

position, and so lowering the probability of failure from either

idiosyncratic company-specific stress or systemic market-wide issues.

Our material entities’ recovery plans provide detailed actions that

management would consider taking in a stress scenario should their

positions deteriorate and threaten to breach risk appetite and

regulatory minimum levels. This is to help ensure that HSBC entities

can stabilise their financial position and recover from financial losses

in a stress environment.

232	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The Group has capabilities, resources and arrangements in place to

address the unlikely event that HSBC might not be recoverable and

would therefore need to be resolved by regulators. In August 2024,

the Group and the Bank of England (‘BoE’) publicly disclosed the

status of HSBC’s progress against the BoE’s Resolvability

Assessment Framework (‘RAF‘). The BoE acknowledged the

significant progress made by HSBC in enhancing its resolvability

capabilities.

Overall, our recovery and resolution planning helps safeguard the

Group’s financial and operational stability. HSBC has a programme of

continuous improvement to maintain and enhance its recovery and

resolution capabilities, designed to meet the BoE’s expectations and

RAF requirements.

Measurement of interest rate risk in

the banking book processes

Assessment and risk appetite

Interest rate risk in the banking book (‘IRRBB’) is the risk of an

adverse impact to earnings or capital due to changes in market

interest rates or changes in expected interest rate repricing of client

products that impact banking book positions. It is generated by our

non-traded assets and liabilities, specifically loans, deposits and

financial instruments 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 ensure

that all material sources of IRRBB are identified, measured, managed,

and monitored, with policies and frameworks in place.

Our IRRBB risks are measured and managed using a combination of

earnings-based and economic value measures to ensure that the

balance between stabilising earnings and generating value sensitivity

is managed appropriately. These metrics measure IRRBB risks across

the banking book, to support the overall monitoring against risk

appetite, including:

–Banking Net Interest Income (‘BNII’) Sensitivity; and

–Economic Value of Equity (‘EVE’) Sensitivity.

Banking net interest income sensitivity

BNII sensitivity captures the risk to earnings generated from the

Banking Book from changes in market implied interest rates over a

12-month period using static rolling balance sheet assumptions.

The static rolling balance sheet assumptions are in place to ensure

that IRRBB management actions are focused on risks which can be

managed within Treasury. A notable exception to this is related to the

price sensitivity of certain interest bearing non-maturity deposits,

where we apply dynamic assumptions to ensure we capture any

potential margin widening or compression over the corresponding

shock horizon and rate scenario.

Economic value of equity sensitivity

EVE measures the present value of our banking book assets and

liabilities excluding equity, based on a run-off balance sheet. EVE

sensitivity measures the impact to EVE from a movement in interest

rates, including the assumed term profile of non-maturing deposits

having adjusted for stability and price sensitivity. It is measured and

reported as part of our internal risk metrics, regulatory rules (including

the Supervisory Outlier Test) and Pillar 3 disclosures.

Further 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 2024.

Other Group risks

Non-trading book foreign exchange

exposures

Structural foreign exchange exposures

Structural foreign exchange exposures arise from capital invested or

net assets in a foreign operation. A foreign operation is an entity that

is a subsidiary, associate, joint venture or branch of a reporting entity

the activities of which are based or conducted in a country or currency

other than those of the reporting entity. An entity’s functional

reporting currency is normally that of the primary economic

environment in which the entity operates.

Exchange differences on structural exposures are recognised in other

comprehensive income. We use the US dollar as our presentation

currency in our consolidated financial statements because the US

dollar and currencies linked to it form the major currency bloc in which

we transact and fund our business. Therefore, our consolidated

balance sheet is affected by exchange differences between the US

dollar and all the non-US dollar functional currencies of underlying

foreign operations.

Our structural foreign exchange exposures are managed with the

primary objective of ensuring, where practical, that our consolidated

capital ratios and the capital ratios of individual banking subsidiaries

are largely protected from the effect of changes in exchange rates.

We hedge structural foreign exchange positions where it is capital

efficient to do so, and subject to approved limits. This is achieved

through a combination of net investment hedges and economic

hedges. Hedging positions are monitored and rebalanced periodically

to manage RWA or downside risks associated with HSBC’s foreign

currency investments.

For further details of our structural foreign exchange exposures, see page 241.

Transactional foreign exchange exposures

Transactional foreign exchange risk arises primarily from day-to-day

transactions in the banking book generating profit and loss or fair

value through other comprehensive income reserves in a currency

other than the reporting currency of the operating entity. Transactional

foreign exchange exposure generated through profit and loss is

periodically transferred to Markets and Securities Services and

managed within limits, with the exception of limited 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. Its activities predominantly involve maintaining

sufficient capital resources to support the Group’s diverse activities;

allocating these capital resources across the Group’s businesses;

earning dividend and interest income on its investments in the

businesses; payment of operating expenses; providing dividend

payments to its equity shareholders and interest payments to

providers of debt capital; and maintaining a supply of short-term liquid

assets for deployment under extraordinary circumstances.

The main market risks to which HSBC Holdings is exposed are

banking book interest rate risk and foreign currency risk. Exposure to

these risks arises from short-term cash balances, funding positions

held, loans to subsidiaries, investments in long-term financial assets,

financial liabilities including debt capital issued, and structural foreign

exchange hedges. In addition, the impacts of the American

Depository Receipts in Grupo Financiero Galicia received as part of

the purchase consideration for HSBC Argentina are recognised by

HSBC Holdings. The objective of HSBC Holdings’ market risk

management strategy is to manage volatility in capital resources, cash

flows and distributable reserves that could be caused by movements

in market parameters. Market risk for HSBC Holdings is monitored by

Holdings ALCO in accordance with its risk appetite statement.

HSBC Holdings plc Annual Report on Form 20-F	233

HSBC Holdings uses interest rate swaps and cross-currency interest

rate swaps to manage the interest rate risk and foreign currency risk

arising from its long-term debt issues. It also uses forward foreign

exchange contracts to manage its structural foreign exchange

exposures.

For quantitative disclosures on HSBC Holdings’ interest rate risk in the

banking book see page 245.

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 material defined benefit plans have

been closed to new entrants for many years, and the majority

(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 ultimate pension benefit will

vary, typically with investment returns achieved by investment

choices made by the employee. While the market risk to HSBC of

defined contribution plans is low, the Group is still exposed to

operational and reputational risk.

In defined benefit pension plans, the level of pension benefit is

known. Therefore, the level of contributions required by HSBC will

vary due to a number of risks, including:

–investments delivering a return below the level required to provide

the projected plan benefits;

–the prevailing economic environment leading to corporate failures,

thus triggering write-downs in asset values (both equity and debt);

–a change in either interest rates or inflation expectations, causing

an increase in the value of plan liabilities; and

–plan members living longer than expected (known as 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 in accordance with advice from actuaries

and in consultation with the plan’s fiduciaries where relevant. These

contributions are normally set to ensure that there are sufficient funds

to meet the cost of the accruing benefits for the future service of

active members. However, higher contributions are required when

plan assets are considered insufficient to cover the existing pension

liabilities. Contribution rates are typically revised annually or once

every three years, depending on the plan.

The defined benefit plans invest contributions in a range of

investments designed to limit the risk of assets failing to meet a

plan’s liabilities. Any changes in expected returns from the

investments may also change future contribution requirements. In

pursuit of these long-term objectives, an overall target allocation is

established between asset classes of the defined benefit plan. In

addition, each permitted asset class has its own benchmarks, such as

stock-market or property valuation indices or liability characteristics.

The benchmarks are reviewed at least once every three to five years

and more frequently if required by local legislation or circumstances.

The process generally involves an extensive asset and liability review.

In addition, some of the Group’s pension plans hold longevity swap

contracts. These arrangements provide long-term protection to the

relevant plans against costs resulting from pensioners or their

dependants living longer than initially expected. The most sizeable

plan to do this is the HSBC Bank (UK) Pension Scheme, which holds

longevity swaps covering approximately 50% of the plan’s pensioner

liabilities.

234	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Capital risk in 2024

Capital overview

Capital and liquidity adequacy metrics

	31 Dec 2023
Risk-weighted assets (‘RWAs’) (bn)
Credit risk	683.9
Counterparty credit risk	35.5
Market risk	37.5
Operational risk	97.2
Total RWAs	854.1
Capital on a transitional basis (bn)
Common equity tier 1 capital	126.5
Tier 1 capital	144.2
Total capital	171.2
Capital ratios on a transitional basis (%)
Common equity tier 1 ratio	14.8
Tier 1 ratio	16.9
Total capital ratio	20.0
Capital on an end point basis (bn)
Common equity tier 1 (‘CET1’) capital	126.5
Tier 1 capital	144.2
Total capital	167.1
Capital ratios on an end point basis (%)
Common equity tier 1 ratio	14.8
Tier 1 ratio	16.9
Total capital ratio	19.6
Liquidity coverage ratio (‘LCR’)
Total high-quality liquid assets (bn)	647.5
Total net cash outflow (bn)	477.1
LCR (%)1	136
Net stable funding ratio (‘NSFR’)1,2
Total available stable funding (bn)	1,601.9
Total required stable funding (bn)	1,162.3
NSFR (%)	138

All values are in US Dollars.

1We enhanced our liquidity consolidation process in 2Q24 by revising provisions that addressed historical limitations. As our Group LCR and NSFR are reported on

an average basis, the benefit of these changes incrementally increased our LCR and NSFR by circa 3% and 11% during the year, respectively. Compared to year

ended 31 December 2023, the increase in LCR was mainly driven by these enhancements. The associated NSFR increase driven by these changes was partly

offset by higher required stable funding primarily due to a rise in financial investments and derivatives activities.

2We enhanced our calculation process during 1Q24 and our NSFR comparatives have been restated.

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’).

The table presents them under the transitional arrangements in CRR II

for capital instruments and after their expiry, known as the end point.

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	235
Own funds disclosure
---	---	---	---
(Audited)		At
		31 Dec 2024	31 Dec 2023
Ref*		$m	$m
	Common equity tier 1 capital: instruments and reserves
1	Capital instruments and the related share premium accounts	22,378	22,964
	– ordinary shares	22,378	22,964
2	Retained earnings1	138,959	135,614
3	Accumulated other comprehensive income (and other reserves)1	(8,410)	(7,195)
5	Minority interests (amount allowed in consolidated CET1)	3,960	3,917
5a	Independently reviewed net profits net of any foreseeable charge or dividend	7,184	10,568
6	Common equity tier 1 capital before regulatory adjustments	164,071	165,868
28	Total regulatory adjustments to common equity tier 1	(39,160)	(39,367)
29	Common equity tier 1 capital	124,911	126,501
36	Additional tier 1 capital before regulatory adjustments	19,286	17,732
43	Total regulatory adjustments to additional tier 1 capital	(70)	(70)
44	Additional tier 1 capital	19,216	17,662
45	Tier 1 capital	144,127	144,163
51	Tier 2 capital before regulatory adjustments	29,334	28,148
57	Total regulatory adjustments to tier 2 capital	(1,075)	(1,107)
58	Tier 2 capital	28,259	27,041
59	Total capital	172,386	171,204

*The references identify lines prescribed in the PRA template, which are applicable and where there is a value.

1We have updated the classification between components of shareholders’ equity to present ‘Retained Earnings’ in Row 2 and ‘Accumulated other

comprehensive income (and other reserves)’ in Row 3. The comparatives have been aligned.

The CET1 capital ratio increased marginally from 14.8% at

31 December 2023 to 14.9% at 31 December 2024, reflecting a

decrease in RWAs of $15.8bn, partly offset by a decrease in CET1

capital of $1.6bn. The key drivers of the overall rise in our CET1 ratio

during the year were:

–a 0.9 percentage point increase, excluding foreign exchange

fluctuations, was primarily driven by a reduction in RWAs through

strategic transactions, and the gain on disposal of our Canadian

banking business adjusted for the $0.21 per share special

dividend;

–a 0.9 percentage point reduction excluding foreign exchange

fluctuations, owing to higher RWAs mainly driven by organic

balance sheet growth and credit migrations excluding strategic

transactions;

–a 0.4 percentage point increase from capital generation, mainly

through regulatory profits and other reserves less dividends and

share buy-backs; and

–a 0.3 percentage point decrease from the adverse impact of

regulatory deductions and foreign exchange fluctuations on our

RWAs and capital.

Our Pillar 2A requirement at 31 December 2024, as per the PRA’s

Individual Capital Requirement based on a point-in-time assessment,

was equivalent to 2.6% of RWAs, of which 1.5% was required to be

met by CET1. Throughout 2024 we complied with the PRA’s

regulatory capital adequacy requirements.

Risk-weighted assets

RWAs by global business
	WPB	CMB	GBM	Corporate<br><br>Centre	Total<br><br>RWAs
	$bn	$bn	$bn	$bn	$bn
Credit risk	143.3	299.7	132.6	82.3	657.9
Counterparty credit risk	0.7	0.2	35.2	1.6	37.7
Market risk	1.1	0.9	27.1	7.1	36.2
Operational risk1	36.0	37.1	37.0	(3.6)	106.5
At 31 Dec 20242	181.1	337.9	231.9	87.4	838.3
At 31 Dec 2023	192.9	354.5	218.5	88.2	854.1

1Operational risk RWAs for HSBC Bank Canada are excluded post the PRA waiver permission granted in October 2024.

2RWAs balance at 31 December 2024 includes HSBC Argentina operational risk RWAs due to the averaging calculation and will roll off over future reporting

cycles.

236	HSBC Holdings plc Annual Report on Form 20-F

Risk review

RWAs by legal entities1
	HSBC<br><br>UK<br><br>Bank<br><br>plc	HSBC<br><br>Bank<br><br>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>Canada3	Grupo<br><br>Financiero<br><br>HSBC,<br><br>S.A.<br><br>de C.V.	Other<br><br>trading<br><br>entities4	Holding<br><br>companies,<br><br>shared service<br><br>centres and<br><br>intra-Group<br><br>eliminations	Total<br><br>RWAs
	$bn	$bn	$bn	$bn	$bn	$bn	$bn	$bn	$bn	$bn
Credit risk	117.2	71.8	314.3	19.3	60.7	—	23.7	40.7	10.2	657.9
Counterparty credit risk	0.3	19.7	10.9	0.6	3.4	—	0.6	2.2	—	37.7
Market risk2	0.2	26.1	23.0	2.1	2.7	—	0.5	1.3	1.5	36.2
Operational risk3	20.6	20.0	54.6	4.6	7.6	—	4.9	6.5	(12.3)	106.5
At 31 Dec 2024	138.3	137.6	402.8	26.6	74.4	—	29.7	50.7	(0.6)	838.3
At 31 Dec 2023	129.2	131.5	396.7	24.3	72.2	31.9	32.6	59.6	6.7	854.1

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.

3Operational risk RWAs for HSBC Bank Canada are excluded post the PRA waiver permission granted in October 2024.

4RWAs balance at 31 December 2024 includes HSBC Argentina operational risk RWAs due to the averaging calculation and will roll off over future reporting

cycles.

RWA movement by global business by key driver
	Credit risk, counterparty credit risk and operational<br><br>risk
	WPB	CMB	GBM	Corporate<br><br>Centre	Market<br><br>risk	Total<br><br>RWAs
	$bn	$bn	$bn	$bn	$bn	$bn
RWAs at 1 Jan 2024	191.6	353.5	196.3	75.2	37.5	854.1
Asset size	11.1	17.3	13.9	2.6	4.5	49.4
Asset quality	1.7	5.4	(0.9)	0.1	—	6.3
Model updates	3.2	0.7	3.5	—	—	7.4
Methodology and policy	(8.9)	(3.2)	0.2	2.8	0.2	(8.9)
Acquisitions and disposals1	(12.3)	(26.1)	(3.7)	0.3	(6.0)	(47.8)
Foreign exchange movements2	(6.4)	(10.6)	(4.5)	(0.7)	—	(22.2)
Total RWA movement	(11.6)	(16.5)	8.5	5.1	(1.3)	(15.8)
RWAs at 31 Dec 2024³	180.0	337.0	204.8	80.3	36.2	838.3

1Balance includes operational risk RWAs for HSBC Bank Canada post the PRA waiver permission granted in October 2024.

2Credit 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.

3RWAs balance at 31 December 2024 includes HSBC Argentina operational risk RWAs due to the averaging calculation and will roll off over future reporting

cycles.

RWA movement by legal entities by key driver1
	Credit risk, counterparty credit risk and operational risk
	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>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>Canada2	Grupo<br><br>Financiero<br><br>HSBC,<br><br>S.A.<br><br>de C.V.	Other<br><br>trading<br><br>entities4	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	$bn
RWAs at 1 Jan 2024	129.0	108.8	369.3	21.5	69.6	31.1	31.9	58.0	(2.6)	37.5	854.1
Asset size	10.2	4.3	15.5	2.5	0.6	—	2.3	11.0	(1.5)	4.5	49.4
Asset quality	1.9	0.5	6.2	(0.8)	0.5	—	—	(2.0)	—	—	6.3
Model updates	0.1	0.8	5.3	0.7	0.4	—	—	0.1	—	—	7.4
Methodology and policy	(0.6)	4.5	(11.5)	0.7	0.7	—	—	(4.6)	1.7	0.2	(8.9)
Acquisitions and<br><br>disposals2	—	(3.9)	0.1	—	—	(30.5)	—	(7.8)	0.3	(6.0)	(47.8)
Foreign exchange<br><br>movements3	(2.5)	(3.5)	(5.1)	(0.1)	(0.1)	(0.6)	(5.0)	(5.3)	—	—	(22.2)
Total RWA movement	9.1	2.7	10.5	3.0	2.1	(31.1)	(2.7)	(8.6)	0.5	(1.3)	(15.8)
RWAs at 31 Dec 2024	138.1	111.5	379.8	24.5	71.7	—	29.2	49.4	(2.1)	36.2	838.3

1Balances are on a third-party Group consolidated basis.

2Balance includes operational risk RWAs for HSBC Bank Canada post the PRA waiver permission granted in October 2024.

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.

4RWAs balance at 31 December 2024 includes HSBC Argentina operational risk RWAs due to the averaging calculation and will roll off over future reporting

cycles.

HSBC Holdings plc Annual Report on Form 20-F	237

RWAs decreased by $15.8bn during the year, mainly due to strategic

disposals of $47.8bn and foreign currency translation differences of

$22.2bn, which were partly offset by asset size movements of

$49.4bn.

Asset size

Asset size RWAs increased by $49.4bn, including a $14.6bn rise in

operational risk RWAs driven by an increase in average income.

CMB RWAs rose by $17.3bn, including a $6.4bn increase in

operational risk RWAs, and additional RWAs contributed by an

increase in corporate lending, mainly in HSBC UK Bank plc and higher

sovereign exposures in Other trading entities and Asia.

GBM RWAs increased by $13.9bn, mainly reflecting an increase in

operational risk RWAs of $5.5bn, higher securities financing

exposures in HSBC Bank plc, and mark-to-market movements and

organic growth in counterparty credit risk, mainly in Asia. Further

RWA increases were due to higher sovereign exposures in Asia and

Other trading entities.

WPB RWAs increased by $11.1bn, including a $4.2bn rise in

operational risk RWAs, and due to retail mortgage growth in the US

and HSBC UK Bank plc, and higher sovereign exposures in Other

trading entities and Asia.

Corporate Centre RWAs increased by $2.6bn, primarily due to lending

growth in SAB, reflected in Other trading entities.

Market risk RWAs increased by $4.5bn, which was mainly attributed

to an increase in stressed value at risk due to higher sensitivities to

interest rate shocks under the stress scenario, and the higher

incremental risk charge due to increased positions, mainly in Asia and

HSBC Bank plc.

Asset quality

The $6.3bn rise in RWAs was mainly due to unfavourable credit

migrations in Asia, including in the Hong Kong commercial real estate

sector, which was partly offset by favourable credit risk migrations in

Sri Lanka and Other trading entities. A further RWA increase in HSBC

UK Bank plc was mainly attributed to changes in the loan-to-value mix

of our mortgages portfolio.

Model updates

The $7.4bn RWAs increase mainly followed a revision to the definition

of default in our PD models for exposures to financial institutions, and

an increase in the post-model adjustments for the Hong Kong models.

Methodology and policy

The $8.9bn decrease in RWAs largely reflected a $7.5bn fall due to

regulatory changes related to the risk-weighting of residential

mortgages in Hong Kong. Credit risk parameter refinements, mainly in

Asia, further contributed to the fall in RWAs.

Acquisitions and disposals

RWAs decreased by $47.8bn, predominantly from the disposal of our

banking business in Canada, including operational risk RWAs post the

PRA waiver permission granted in October 2024, the sale of our

business in Argentina and the sale of our retail banking operations in

France.

Leverage ratio

	At
	31 Dec 2024	31 Dec 2023
	$bn	$bn
Tier 1 capital (leverage)	144.1	144.2
Total leverage ratio exposure	2,571.1	2,574.8
	%	%
Leverage ratio	5.6	5.6

Our leverage ratio was 5.6% at 31 December 2024, unchanged from

31 December 2023. Leverage exposures decreased primarily due to

strategic disposals and adverse foreign currency translation

differences, which exceeded the increase in the underlying balance

sheet. This was offset by a fall in the tier 1 capital.

At 31 December 2024, our UK minimum leverage ratio requirement of

3.25% was supplemented by a leverage ratio buffer of 0.9%, which

consists of an additional leverage ratio buffer of 0.7% and a

countercyclical leverage ratio buffer of 0.2%. These buffers translated

into capital values of $18.0bn and $5.1bn respectively.

Regulatory transitional arrangements

for IFRS 9 ‘Financial Instruments’

We have adopted the regulatory transitional arrangements of the

Capital Requirements Regulation for IFRS 9, including paragraph four

of article 473a. These allow banks to add back to their capital base a

proportion of the impact that IFRS 9 has upon their loan loss

allowances. Our capital and ratios are presented under these

arrangements throughout the tables in this section, including the end

point figures.

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.

For further details, see our Pillar 3 Disclosures at 31 December 2024, which

is expected to be published on or around 19 February 2025 at

www.hsbc.com/investors.

Liquidity and funding risk in 2024

Liquidity metrics

At 31 December 2024, 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 local and 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.

238	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The Group liquidity and funding position on an average basis is analysed in the following sections.

Operating entities’ liquidity
	At 31 Dec 2024
	LCR1	HQLA	Net<br><br>outflows	NSFR1
	%	$bn	$bn	%
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 Canada	—	—	—	—
HSBC Mexico	164	9	6	125	At 31 Dec 2023
---	---	---	---	---
HSBC UK Bank plc (ring-fenced bank)2	201	118	59	158
HSBC Bank plc (non-ring-fenced bank)3	148	132	89	116
The Hongkong and Shanghai Banking Corporation – Hong Kong branch4	192	147	77	127
HSBC Singapore5	292	26	9	174
Hang Seng Bank	254	52	21	163
HSBC Bank China	170	24	14	139
HSBC Bank USA	172	82	48	131
HSBC Continental Europe	158	83	52	137
HSBC Bank Middle East Ltd – UAE branch	281	13	5	163
HSBC Canada	164	21	13	129
HSBC Mexico	149	8	5	124

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.

2HSBC UK Bank plc refers to the HSBC UK liquidity group, which comprises five legal entities: HSBC UK Bank plc, Marks and Spencer Financial Services plc,

HSBC Private Bank (UK) Ltd, HSBC Innovation Bank Limited and HSBC Trust Company (UK) 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.

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 2024, calculated from the average of the four

preceding quarters, was 143%.

	At1,2
	31 Dec 2024	30 Jun 2024	31 Dec 2023
	$bn	$bn	$bn
Total available stable funding ($bn)	1,523	1,544	1,602
Total required stable funding ($bn)	1,064	1,115	1,162
NSFR ratio (%)	143	138	138

1We enhanced our liquidity consolidation process in 2Q24 by revising provisions that addressed historical limitations. As our Group NSFR is reported on an

average basis, the benefit of these changes incrementally increased our NSFR by circa 11% during the year by reducing required stable funding. This reduction

was partly offset by a rise in financial investments and derivatives activities, resulting in a net 5% increase of NSFR compared with year ended 31 December

2023.

2We enhanced our calculation process during 1Q24 and our NSFR comparatives have been restated.

HSBC Holdings plc Annual Report on Form 20-F	239

Liquidity coverage ratio

At 31 December 2024, the average high-quality liquid assets (‘HQLA‘)

held at entity level amounted to $790bn (31 December 2023:

$795bn). 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 $141bn

to LCR HQLA and $6bn to LCR inflows on an average basis.

We enhanced our liquidity consolidation process in 2Q24 by revising

the provisions that addressed historical limitations. As Group LCR is

reported on an average basis, the benefits of these changes have

incrementally increased our LCR by circa 3% during the year by

reducing net outflows. This reduction was partly offset by an organic

increase in outflows, mostly in Asia, resulting in a net 2% increase of

our LCR compared with year ended 31 December 2023.

	At1
	31 Dec 2024	30 Jun 2024	31 Dec 2023
	$bn	$bn	$bn
High-quality liquid assets (in<br><br>entities)	790	780	795
Group LCR HQLA	649	646	648
Net outflows	471	472	477
Liquidity coverage ratio (%)	138	137	136
Adjustment for transfer<br><br>restrictions2	(147)	(141)	(154)

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.

Liquid assets

After the $141bn deduction, the average Group LCR HQLA of $649bn

(31 December 2023: $648bn) was held in a range of asset classes and

currencies. Of these, 95% were eligible as level 1 (31 December

2023: 97%).

The following tables reflect the composition of the average liquidity

pool by asset type and currency at 31 December 2024.

Liquidity pool by asset type1
	Liquidity<br><br>pool	Cash	Level 12	Level 22
	$bn	$bn	$bn	$bn
Cash and balance at central<br><br>bank	266	266	—	—
Central and local government<br><br>bonds	352	—	326	26
Regional government public<br><br>sector entities	2	—	2	—
International organisation and<br><br>multilateral developments<br><br>banks	18	—	18	—
Covered bonds	8	—	2	6
Other	3	—	1	2
Total at 31 Dec 2024	649	266	349	34
Total at 31 Dec 2023	648	310	317	21

1Group liquid assets numbers are based on average values.

2As defined in EU regulations, 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 31 Dec<br><br>2024	196	170	113	47	123	649
Liquidity pool at 31 Dec<br><br>2023	184	173	112	51	128	648

1Group liquid assets numbers are based on average values.

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 to change the currency mix,

maturity profile or location 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.

Funding sources
(Audited)
	2024	2023
	$m	$m
Customer accounts	1,654,955	1,611,647
Deposits by banks	73,997	73,163
Repurchase agreements – non-trading	180,880	172,100
Debt securities in issue	105,785	93,917
Cash collateral, margin, settlement accounts and<br><br>items in course of transmission to other banks	82,732	92,550
Liabilities of disposal groups held for sale	29,011	108,406
Subordinated liabilities	25,958	24,954
Financial liabilities designated at fair value	138,727	141,426
Insurance contract liabilities	107,629	120,851
Trading liabilities	65,982	73,150
– repos	14,806	12,198
– stock lending	3,525	3,322
– other trading liabilities	47,651	57,630
Total equity	192,273	192,610
Other balance sheet liabilities	359,119	333,903
At 31 Dec	3,017,048	3,038,677	Funding uses
---	---	---
(Audited)
	2024	2023
	$m	$m
Loans and advances to customers	930,658	938,535
Loans and advances to banks	102,039	112,902
Reverse repurchase agreements – non-trading	252,549	252,217
Cash collateral, margin, settlement accounts and<br><br>items in course of collection from other banks	78,538	96,253
Assets held for sale	27,234	114,134
Trading assets	314,842	289,159
– reverse repos	16,823	16,575
– stock borrowing	8,374	14,609
– other trading assets	289,645	257,975
Financial investments	493,166	442,763
Cash and balances with central banks	267,674	285,868
Other balance sheet assets	550,348	506,846
At 31 Dec	3,017,048	3,038,677

240	HSBC Holdings plc Annual Report on Form 20-F

Risk review

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<br><br>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<br><br>over<br><br>5 years	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
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
Debt securities issued	17,620	9,798	14,284	13,226	12,226	20,882	64,010	50,045	202,091
– unsecured CDs and CP	6,400	6,777	7,601	6,429	6,513	1,179	1,073	925	36,897
– unsecured senior MTNs	8,190	1,160	4,365	3,627	3,267	12,903	54,984	41,007	129,503
– unsecured senior structured notes	2,307	1,491	1,617	2,513	1,978	2,924	2,793	5,910	21,533
– secured covered bonds	—	—	—	—	—	—	1,275	—	1,275
– secured asset-backed commercial paper	426	—	—	—	—	—	—	—	426
– secured ABS	22	44	62	58	55	188	861	539	1,829
– others	275	326	639	599	413	3,688	3,024	1,664	10,628
Subordinated liabilities	—	2,013	—	—	—	3,358	4,282	27,234	36,887
– subordinated debt securities	—	2,000	—	—	—	3,358	4,282	25,441	35,081
– preferred securities	—	13	—	—	—	—	—	1,793	1,806
At 31 Dec 2023	17,620	11,811	14,284	13,226	12,226	24,240	68,292	77,279	238,978

1Excludes financial liabilities of disposal groups.

HSBC Holdings plc Annual Report on Form 20-F	241

Structural foreign exchange risk in 2024

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
	2024
Currency of structural exposure	Net investment in<br><br>foreign operations<br><br>(excl non-<br><br>controlling 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
Canadian dollars	43	—	43	—	—	43
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
Argentinian peso	—	—	—	—	—	—
Vietnamese dong	769	—	769	—	—	769
Others, each less than $700m	4,327	(463)	3,864	—	—	3,864
At 31 Dec	181,318	(34,334)	146,984	(12,691)	(3,640)	130,653
	2023
Hong Kong dollars	39,014	(5,792)	33,222	(7,979)	—	25,243
Pounds sterling	46,661	(16,415)	30,246	—	(1,275)	28,971
Chinese renminbi	33,809	(3,299)	30,510	(1,066)	—	29,444
Euros	15,673	(515)	15,158	—	(1,384)	13,774
Canadian dollars	5,418	(1,076)	4,342	—	—	4,342
Indian rupees	6,286	(2,110)	4,176	—	—	4,176
Mexican pesos	4,883	—	4,883	—	—	4,883
Saudi riyals	4,312	—	4,312	—	—	4,312
UAE dirhams	4,995	(613)	4,382	(2,761)	—	1,621
Malaysian ringgit	2,754	—	2,754	—	—	2,754
Singapore dollars	2,345	(224)	2,121	—	—	2,121
Australian dollars	2,362	—	2,362	—	—	2,362
Taiwanese dollars	2,212	(1,127)	1,085	—	—	1,085
Indonesian rupiah	1,535	(512)	1,023	—	—	1,023
Swiss francs	1,191	(526)	665	—	—	665
Korean won	1,354	(864)	490	—	—	490
Thai baht	1,022	—	1,022	—	—	1,022
Egyptian pound	959	—	959	—	—	959
Qatari rial	834	(215)	619	(299)	—	320
Argentinian peso	794	—	794	—	—	794
Vietnamese dong	872	—	872	—	—	872
Others, each less than $700m	4,386	(487)	3,899	—	—	3,899
At 31 Dec	183,671	(33,775)	149,896	(12,105)	(2,659)	135,132

1Represents hedges that do not qualify as net investment hedges for accounting purposes. The SGD position represents the hedge against our SGD AT1

issuance.

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.

For a definition of structural foreign exchange exposures, see page 232.

242	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Interest rate risk in the banking book in 2024

Banking net interest income sensitivity

Banking NII Sensitivity analyses the sensitivity of our banking net

interest income to interest rate shocks. This metric, which was

introduced in our Annual Report and Accounts 2023, includes the

sensitivity arising from the use of banking book liabilities to fund

trading assets, as well as the currency impacts of vanilla foreign

exchange swaps to optimise cash management across the Group.

Banking NII Sensitivity is therefore a more comprehensive measure

than NII Sensitivity which was disclosed previously and is aligned

with the presentation of banking net interest income 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 2024 (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 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, hypothetical managed rate

product pricing assumptions, prepayment of mortgages and deposit

stability. The sensitivity calculations exclude pensions, insurance

exposures, and our interest in associates.

The sensitivity analysis performed in the case of a down-shock does

not include floors to market rates, and it does not include floors on

some wholesale assets and liabilities. However, floors have been

maintained for deposits and loans to customers where this is

contractual or where negative rates would not be applied.

As the market and policy rates move, the degree to which these

changes are passed on to customers will vary based on a number of

factors, including the absolute level of market 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 $2.1bn. An immediate interest rate fall of 100bps

would decrease projected banking NII by $2.9bn.

The sensitivity of banking NII for 12 months as at 31 December 2024

decreased by $0.7bn in the plus 100bps parallel shock and by $0.5bn

in the minus 100bps parallel shock, when compared with

31 December 2023. The decline in sensitivities is primarily due to an

increase in stabilisation activities in line with our strategy.

For further details of measurement of interest rate risk in the banking book,

see page 232.

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 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)
Change in Jan 2024 to Dec 2024 (based on balance sheet at 31 Dec 2023)
+100bps parallel	343	411	496	285	1,297	2,832
-100bps parallel	(494)	(493)	(602)	(304)	(1,460)	(3,353)	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 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)
Change in banking NII (based on balance sheet at 31 Dec 2023)
Year 2 (Jan 2025 to Dec 2025)	(1,015)	(693)	(938)	(333)	(1,798)	(4,777)
Year 3 (Jan 2026 to Dec 2026)	(1,289)	(761)	(1,439)	(405)	(1,926)	(5,820)

Non-trading portfolios

Value at risk of non-trading portfolios

Non-trading portfolios comprise of positions that primarily arise from

the interest rate management of our retail and wholesale banking

assets and liabilities, financial investments measured at fair value

through other comprehensive income (‘FVOCI’) or at amortised cost,

and certain exposures arising from our insurance operations.

Value at risk (‘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. The use of VaR is integrated into the

market risk management of non-trading portfolios to have a complete

picture of risk, complementing risk sensitivity analysis.

From 1Q24, we adopted a methodology change to measure non-

trading VaR over a 10-day holding period as opposed to 1 day in order

to better reflect longer average time horizons in the management of

non-trading portfolios compared with trading portfolios.

Comparative data at 31 December 2023 has been restated on a 10-

day basis accordingly, using a scalar approach that results in restated

numbers being approximately three times higher than previously

reported 1-day basis numbers.

HSBC Holdings plc Annual Report on Form 20-F	243

Our models are predominantly based on historical simulation that

incorporates the following features:

–historical market rates and prices, which are calculated with

reference to interest rates, credit spreads 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 10-day holding

period.

Although a valuable guide to risk, VaR is used for non-trading

portfolios 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 market regime.

–The use of a 10-day holding period for risk management purposes

of non-trading books is only an indication of exposure and not

indicative of the time period required to hedge or liquidate

positions.

–The use of a 99% confidence level by definition does not take into

account 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 242.

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 245. Non-trading VaR

also excludes the equity risk on securities held at fair value and non-

trading book foreign exchange risk.

The daily levels of total non-trading VaR in 2024 are set out in the graph below.

Weekly VaR (non-trading portfolios), 99% 10 day ($m)

1562

The Group non-trading VaR for 2024 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 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
Balance at 31 Dec 2023	549.6	356.7	(329.5)	576.7
Average	494.0	266.1	(201.6)	558.6
Maximum	638.6	368.0	—	709.4
Minimum	344.0	174.5	—	401.5

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 decreased by $23m from $577m at

31 December 2023 to $554m at 31 December 2024 due to the 2022

inflation-driven stress period dropping out of our two-year historical

scenario window, decreasing the volatility calibrated by the model

during the second half of the year, largely offset by an increase in the

duration risk of Global Treasury’s portfolios. Prior to this change in

calibration, non-trading VaR peaked at $1,097m during May 2024,

driven by an increase in the duration of Global Treasury’s portfolios,

higher market yields and more volatile historical scenarios from

March 2022. The average portfolio diversification effect between

interest rate and credit spread exposure remained broadly stable.

Non-trading VaR is managed and controlled through a limit approved

by the Group Chief Risk and Compliance Officer for HSBC Holdings.

The limit was rescaled higher to reflect the change in the basis of

preparation detailed above.

244	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Sensitivity of capital and reserves

Global Treasury maintains a portfolio of high-quality liquid assets for

contingent liquidity and NII stabilisation purposes, which is in part

accounted for under a hold-to-collect-and-sell business model. This

hold-to-collect-and-sell portfolio, together with any associated

derivatives in designated hedge accounting relationships, is

accounted for at fair value through other comprehensive income and

has an impact on CET1. The portfolio represents the vast majority of

our hold-to-collect-and-sell capital risk and is risk managed with a

variety of tools, including risk sensitivities and value at risk measures.

The table below measures the sensitivity of the value of this portfolio

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 movements
	$m
At 31 Dec 2024
+100 basis point parallel move in all yield curves	(3,433)
As a percentage of total shareholders’ equity	(1.86)%
At 31 Dec 2023
+100 basis point parallel move in all yield curves	(2,264)
As a percentage of total shareholders’ equity	(1.22)%

The increase in the sensitivity of the portfolio during 2024 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 on a yearly basis by

assessing the expected reduction in valuation of cash flow hedges

due to parallel movements of plus or minus 100bps in all yield curves.

The following table details the sensitivity of our cash flow hedging

reserves to the stipulated movements in yield curves at the year end.

The sensitivities are indicative and based on simplified scenarios. We

apply flooring on negative rates in the minus 100bps scenario in this

assessment. The effect of this flooring is immaterial at the end of

2024.

The sensitivity of the cash flow hedging reserve increased compared

with 31 December 2023. The increase was mainly driven by our NII

stabilisation activity. Our exposure to fixed rate pound sterling hedges

continued to be the largest in size and in terms of year-on-year

increase. Hong Kong dollar and euro hedges contributed the majority

of the rest of the increase in exposure.

Sensitivity of cash flow hedging reported reserves to interest rate movements
	$m
At 31 Dec 2024
+100 basis point parallel move in all yield curves	(4,496)
As a percentage of total shareholders’ equity	(2.43)%
-100 basis point parallel move in all yield curves	4,500
As a percentage of total shareholders’ equity	2.43%
At 31 Dec 2023
+100 basis point parallel move in all yield curves	(3,436)
As a percentage of total shareholders’ equity	(1.85)%
-100 basis point parallel move in all yield curves	3,474
As a percentage of total shareholders’ equity	1.87%

Third-party assets in Markets Treasury

Third-party assets in Markets Treasury increased by 2% compared

with 31 December 2023. The net increase of $19bn is partly

reflective of higher commercial surpluses during the year, with the

increase of $69bn in ‘Financial Investments’ and the decrease of

$17bn in ‘Cash and balances at central banks’ largely driven by NII

stabilisation activity. Additionally, a decrease of $22bn in ‘Other’ is

attributed to the disposal of HSBC Bank Canada assets previously

classified as held for sale.

Third-party assets in Markets Treasury
	2024	2023
	$m	$m
Cash and balances at central banks	261,284	278,289
Trading assets	163	238
Loans and advances:
– to banks	66,518	78,667
– to customers	743	1,083
Reverse repurchase agreements	47,812	45,419
Financial investments	465,123	396,259
Other	12,232	34,651
At 31 Dec	853,875	834,606
HSBC Holdings plc Annual Report on Form 20-F	245
---	---

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.

For details of our defined benefit plans, including asset allocation, see Note

5 on the financial statements, and for pension risk management, see page

233.

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 2024, HSBC Holdings had forward

foreign exchange contracts of $33.9bn (2023: $33.8bn) to manage

the Group’s structural foreign exchange exposures.

For further details of our structural foreign exchange exposures, see page

241.

Sensitivity of banking net interest income

HSBC Holdings monitors banking NII sensitivity in the first, second

and third years. Banking NII sensitivity includes the impact of AT1

instruments as well as vanilla foreign exchange swaps to optimise

cash management. For 2024, we have changed the HSBC Holdings

disclosure from NII sensitivity to banking NII sensitivity to reflect our

internal management of interest rate sensitivity, aligned to the Group

approach (see page 242). Comparative data for the financial year

ended 31 December 2023 have been re-presented accordingly.

These sensitivities assume that any issuance where HSBC Holdings

has an option to redeem at a future call date is called at that date.

The tables below set out the effect on HSBC Holdings’ future

banking NII of an immediate shock of +/-100bps to the current

market-implied path of interest rates across all currencies on 31

December 2024.

The banking NII sensitivities shown are indicative and based on

simplified scenarios. An immediate interest rate rise of 100bps would

decrease projected banking NII for the 12 months to 31 December

2025 by $156m. Conversely, an immediate fall of 100bps would

increase projected banking NII for the 12 months to 31 December 2025

by $156m.

Overall the banking NII sensitivity is mainly driven by interest rate

sensitive liabilities funding equity (non-interest bearing) investments in

subsidiaries.

Banking NII sensitivity to an instantaneous change in yield curves (12 months) – Year 1 sensitivity by currency
	$	HK$	£	€	Other	Total
	$m	$m	$m	$m	$m	$m
Change in Jan 2025 to Dec 2025 (based on balance sheet at 31 Dec 2024)
+100bps parallel	(194)	—	31	7	—	(156)
-100bps parallel	194	—	(31)	(7)	—	156
Change in Jan 2024 to Dec 2024 (based on balance sheet at 31 Dec 2023)
+100bps parallel	(228)	—	34	8	(1)	(187)
-100bps parallel	228	—	(34)	(8)	1	187
Banking NII sensitivity to an instantaneous down 100bps parallel change in yield curves – Year 2 and Year 3 sensitivity by currency
---	---	---	---	---	---	---
	$	HK$	£	€	Other	Total
	$m	$m	$m	$m	$m	$m
Change in banking NII (based on balance sheet at 31 Dec 2024)
Year 2 (Jan 2026 to Dec 2026)	182	—	(36)	(24)	—	122
Year 3 (Jan 2027 to Dec 2027)	192	—	(28)	(27)	—	137
Change in banking NII (based on balance sheet at 31 Dec 2023)					—
Year 2 (Jan 2025 to Dec 2025)	194	—	(47)	(8)	(1)	138
Year 3 (Jan 2026 to Dec 2026)	194	—	(44)	(29)	(3)	118

The figures represent hypothetical movements in banking NII based

on projected yield curve scenarios, HSBC Holdings’ current interest

rate risk profile and assumed changes to that profile during the next

three years.

The sensitivities represent our assessment of the change to a

hypothetical base case based on a static balance sheet assumption,

and do not take into account the effect of actions that could be taken

to mitigate this interest rate risk.

246	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Market risk

Contents
246	Overview
246	Market risk management
247	Market risk in 2024
247	Trading portfolios
248	Market risk balance sheet linkages

Overview

Market risk is the risk of an adverse financial impact on trading

activities arising from changes in market parameters such as interest

rates, foreign exchange rates, asset prices, volatilities, correlations

and credit spreads. 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.

For further details of market risk in non-trading portfolios, see page 242.

Market risk management

Key developments in 2024

There were no material changes to our policies and practices for the

management of market risk in 2024.

Governance and structure

The following diagram 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	GBM
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 to

optimise return on risk while maintaining a market profile consistent

with our established risk appetite.

Market risk is managed and controlled through limits approved by the

Group Chief Risk and Compliance Officer. 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.

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. Where we do not

calculate VaR explicitly, we use alternative tools as summarised in

the ‘Stress testing’ section below.

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.

HSBC Holdings plc Annual Report on Form 20-F	247

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 2024, the Group experienced one back-testing exception on

losses against actual and hypothetical profit and losses, mainly driven

by volatility in certain equity markets.

Market risk in 2024

The past year had a busy political agenda, with the November US

election being the main event. Geopolitics remained prominent amid

ongoing tensions in the Middle East and the Russia-Ukraine war.

Major central banks began their easing cycles in 2024, with the US

Federal Reserve cutting its policy rate by 1% since September, while

the ECB and some other European central banks implemented rate

cuts starting in June. In contrast, the Bank of Japan raised its

overnight rate in March, ending a prolonged period of negative

interest rates and ceasing yield curve control.

Throughout the year, government bond yields generally trended

upward, except during the third quarter, largely driven by volatile

inflation figures and shifting central bank expectations. In Europe, the

yield spread between France and Germany widened amid

uncertainties surrounding French fiscal policy following local

legislative elections. Global equities reached multiple record highs in

the US and Europe, buoyed by strong corporate earnings and positive

sentiment in the technology sector. Global markets rebounded from a

short period of volatility in August, triggered by the unwinding of carry

trades due to rising Japanese government bond yields, US recession

concerns, and equity market valuations.

In foreign exchange markets, the trend of a strengthening US dollar

continued against most developed and emerging market currencies.

The euro approached parity with the US dollar, while the yen

weakened to multi-decade lows. Credit markets performed positively

throughout the year, with a more pronounced tightening of high-yield

credit spreads compared with investment-grade spreads, despite a

broad widening of spreads in August.

We continued to manage market risk prudently during 2024.

Sensitivity exposures and VaR remained within appetite as the

business pursued its core market-making activity in support of our

customers. Market risk was managed using a complementary set of

risk measures and limits, including stress testing and scenario

analysis.

Trading portfolios

Value at risk of the trading portfolios

Trading VaR predominantly resides within the Markets and Securities

Services business. As of 31 December 2024, Trading VaR stood at

$38.3m, down from $52.8m as of 31 December 2023. At the end of

December 2024, Trading VaR was mainly driven by exposures to

interest rate risk factors from the Global Debt Markets and Global

Foreign Exchange business lines to facilitate client-driven activity.

Trading VaR peaked in March 2024 due to the sensitivity of the

trading book to interest rates movements, coupled with relatively

large interest rate shocks captured in the VaR scenario window. VaR

reduced in the second half of 2024, mainly as a result of some

volatile scenarios rolling off the VaR scenario window.

248	HSBC Holdings plc Annual Report on Form 20-F

Risk review

The daily levels of total trading VaR during 2024 are set out in the graph below.

Daily VaR (trading portfolios), 99% 1 day ($m)

762

The Group trading VaR for the year is shown in the table below.

Trading VaR, 99% 1 day1
(Audited)
	Foreign<br><br>exchange and<br><br>commodity	Interest<br><br>rate	Equity	Credit<br><br>spread	Portfolio<br><br>diversification2	Total3
	$m	$m	$m	$m	$m	$m
Balance at 31 Dec 2024	14.6	34.9	16.3	8.2	(35.7)	38.3
Average	15.2	48.3	14.8	9.9	(35.1)	53.1
Maximum	29.8	78.1	20.5	13.1		83.3
Minimum	6.9	24.8	12.7	6.6		37.0
Balance at 31 Dec 2023	13.4	55.9	15.2	7.2	(38.9)	52.8
Average	16.2	53.9	19.0	11.6	(40.8)	59.8
Maximum	24.6	86.0	27.8	16.5		98.2
Minimum	9.3	25.5	13.4	6.6		34.4

1Trading portfolios comprise positions arising from the market-making and warehousing of customer-derived positions.

2Portfolio 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, equity and foreign exchange – 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.

3The 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 2024.

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 31 Dec 2024	38.3	23.4
Average	53.1	33.0
Maximum	83.3	48.9
Minimum	37.0	22.0
Balance at 31 Dec 2023	52.8	35.3
Average	59.8	36.8
Maximum	98.2	53.3
Minimum	34.4	21.0

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 GBM. 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 Global

Banking where the short-term acquisition and disposal of assets are

linked to other non-trading-related activities such as loan origination.

HSBC Holdings plc Annual Report on Form 20-F	249

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 GBM. 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.

For information on the accounting policies applied to financial instruments

at fair value, see Note 1.2 on the financial statements.

Climate risk	TCFD
Contents
---	---
249	Overview
250	Climate risk management
251	Embedding our climate risk approach
253	Insights from climate scenario analysis

Overview

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.

In addition, we have also identified the following thematic issues

related to climate risk, which are most likely to materialise in the form

of reputational, regulatory compliance and litigation risks:

–net zero alignment risk, which arises from the risk of HSBC failing

to meet its net zero ambition or failing to meet external

expectations related to net zero; and

–the risk of greenwashing, which arises from the act of knowingly

or unknowingly making inaccurate, unclear, misleading or

unsubstantiated claims regarding sustainability to our

stakeholders.

Approach

We recognise that the physical impacts of climate change and the

transition to a net zero economy can create significant financial risks

for companies, investors and the financial system. HSBC may be

affected by climate risks either directly or indirectly through our

relationships with customers, which could result in both financial and

non-financial impacts.

Our climate risk approach aims to effectively manage the material

climate risks that could impact our operations, financial performance

and stability, and reputation. It is informed by the evolving

expectations of our regulators.

We continue to develop our approach and climate risk capabilities

across our businesses, by prioritising sectors, portfolios and

counterparties with the highest impacts, and recognise that this is a

long-term iterative process. This includes increasing coverage and

incorporating more mature data, climate analytics, frameworks and

tools, and responding to emerging industry best practice and climate-

related regulations.

This also necessitates reflecting on how climate risk continues to

evolve in the real world, and improving how we embed climate risk

factors into strategic planning, transactions and decision making

across our businesses. For example, our mergers and acquisitions

process considers potential climate and sustainability-related targets,

net zero transition plans and climate strategy, and how this relates to

HSBC.

Our climate risk approach is aligned to our Group-wide risk

management framework and three lines of defence model, which

sets out how we identify, assess and manage our risks. For further

details of the three lines of defence framework, see page 146.

The tables below provide an overview of the climate risk drivers and thematic issues 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 on, 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.
250	HSBC Holdings plc Annual Report on Form 20-F
---	---

Risk review

Climate risk – thematic issues
Net zero<br><br>alignment risk	Net zero ambition<br><br>risk	Failing to set or adapt our net zero ambition and broader business strategy in alignment with key stakeholder<br><br>expectations, latest scientific understanding and commercial objectives.
	Net zero<br><br>execution risk	Failing to meet our net zero ambition due to taking insufficient or ineffective actions, or due to the actions of clients,<br><br>suppliers and other stakeholders or due to other external factors.
	Net zero reporting<br><br>risk	Failing to report emissions baselines and targets, and performance against these accurately due to data, methodology<br><br>and model limitations.
Risk of<br><br>greenwashing	Firm	Making inaccurate, unclear, misleading or unsubstantiated claims in relation to our sustainability commitments and<br><br>targets, 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 HSBC’s risk taxonomy.

The assessment considers short-term (up to 2026), medium-term

(2027-2035) and long-term (2036-2050) periods. The table below

provides a summary of how climate risk may impact a subset of

HSBC’s principal risks.

In addition to this assessment, we also consider climate risk in our

emerging risk reporting and scenario analysis (for further details, see

‘Top and emerging risks’ on page 38).

Climate risk drivers	Credit risk	Traded risk	Reputational risk1	Regulatory<br><br>compliance risk1	Resilience risk	Other financial<br><br>and non-<br><br>financial risk<br><br>types
Physical risk	u	u			u	u
Transition risk	u	u	u	u	u	u

1Our climate risk approach identifies thematic issues such as net zero alignment risk and the risk of greenwashing, which are most likely to materialise in the

form of reputational, regulatory compliance and litigation risks.

Climate risk management

Key developments in 2024

Our climate risk programme continues to support the development of

our climate risk management capabilities. The following outlines key

developments in 2024:

–We have started to enhance our approach to managing net zero

alignment risk in our wholesale portfolio, through developing

portfolio steering capabilities and revenue assessments.

–We enhanced our approach to assessing the impact of climate

change on capital, focusing on credit, market and operational risk.

–We enhanced our internal climate scenario analysis, including

through improvements to input data and models (e.g. for the

power and utilities sector). For further details of scenario analysis,

see page 253.

–We enhanced our approach to managing and mitigating the risk of

greenwashing.

–We developed 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, holding overall accountability for the Group’s

climate risk programme.

The Sustainability Working Group, established in 4Q24, oversees and

provides guidance on the Group-wide medium and longer-term

sustainability strategy.

The ESG Committee has oversight of ESG strategy, policy, material

commitments and external disclosure. It is co-chaired by the Group

CEO and the Group Chief Sustainability Officer.

The Group Reputational Risk Committee provides recommendations

and advice on significant reputational risk matters with impacts

across the Group.

The Environmental Risk Steering Meeting (formerly the

Environmental Risk Oversight Forum) provides oversight of

environmental risk and the risk of greenwashing. Equivalent forums

have been established at a regional level.

The Group Risk Management Meeting and the Group Risk

Committee receive regular updates on our climate risk profile and the

progress of our climate risk programme.

For further details of the Group’s ESG governance structure, see page 72.

Risk appetite

Our climate risk appetite forms part of the Group’s risk appetite

statement and supports the business in delivering our net zero

ambition effectively and sustainably.

Our climate risk appetite statement is approved and overseen by the

Board. 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 integrate climate risk into policies, processes and

controls across many areas of our organisation, and we will continue

to update these as our climate risk management capabilities mature

over time.

For further details of how we manage climate risk across our global

businesses, see page 58.

HSBC Holdings plc Annual Report on Form 20-F	251

Embedding our climate risk approach

The table below provides further details of 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 253.

Risk type	Our approach
Wholesale<br><br>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 2024, the overall exposure to the six high transition risk sectors was 18% of 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 can be judgemental in nature. We use publicly available data as well as internal data to determine the appropriate sector. The classification of our clients into sectors is performed with inputs from subject matter experts. The sector classifications are subject to the remediation of ongoing data quality challenges and continuous improvement of our ongoing processes. The data will continue to be enhanced and refined in future years.Our relationship managers engage with our key wholesale customers, including those in higher transition risk sectors, through a transition engagement questionnaire (‘TEQ’). In 2024, the TEQ was expanded to cover all geographies. The TEQ 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 risk-assess our key 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.Key developments to our framework in 2024 included the expansion of the TEQ, as set out above, and additionally the development of 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.
	Wholesale loan exposure to high transition risk sectors at 31 December 2024
		Automotive	Chemicals	Construction,<br><br>Contracting &<br><br>Building<br><br>Materials5	Metals<br><br>and<br><br>mining	Oil<br><br>and<br><br>gas	Power<br><br>and<br><br>utilities	Total<br><br>2024
	Wholesale loan exposure as a proportion of total wholesale loans and advances1,2,3,4	4	2	3	2	3	4	18
	1 Percentages 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 in 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 readily available and will not always align to our own reporting period.3 The six high transition risk sectors make up 18% of total gross carrying amount of wholesale loans and advances to banks and customers of 596bn. 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 'Financed emissions' section on page 48.5 Construction, Contracting & Building Materials has been renamed from Construction & Building Materials. The name has been revised to clarify that parties who build assets for end clients, investors and landowners, which should be included in this sector for their associated construction risks.
Retail credit<br><br>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 current climate assessment, in line with last year’s assessment, indicates that our retail mortgage portfolio remains resilient to climate risk, with impact severity muted at a portfolio level given that our book has diversified property locations, with insurance coverage being a key loan covenant. Our retail credit risk mortgage policy requires that every mortgage market conducts an annual review of their climate risk management framework, to ensure they remain fit for purpose. Within our mortgage portfolios, properties or areas with potentially heightened physical risk are identified and assessed locally with exposure monitored using risk indicators. A reduction in property value, higher insurance costs and insurance availability are potential future negative financial impacts for properties with higher physical risk.UK retail mortgage bookThe UK is our largest mortgage market, and as of November 2024, made up 46.7% of our global mortgage portfolio. Our ESG Data Pack includes our climate risk exposures for this portfolio across regions. The maturity profile of the UK mortgage book shows that the average remaining contractual term in the UK is 21.8 years. However, with some customers undertaking refinancing options during this term, the average term of the mortgage can be reduced to between five and eight years. This means our strategic approach to climate risk considers both present day risk and long-term forward-looking risk, given that customers may choose to remain with us over the lifespan of the loan. Please see the result of our climate scenario analysis on page 255.Physical riskFor the UK mortgage book, flood data is sourced from a third-party data provider, and considers the UK only, covering present day risk from tidal, river and surface water/flash flooding baselined to 2021. A flood risk rating score of 0-100 is provided with 100 being highest risk. Flood risk scores are based on the average annual loss generated using flood hazard frequency, flood depths and based on the probability of flooding events occurring. For the UK mortgage book, flood data is available for 93.7% of the mortgage book of which 0.9% is at a very high risk of flooding, with 2.7% of the book at a high risk of flooding. Geographically, by lending balances, our highest risk exposures are the Greater London and South-East regions. During 2024 we changed our flood risk classification of very high risk to align to the provider’s flood score bands. The postcode data used in the regional flood table has also been refined to incorporate a more granular approach. This has helped to aid the regional allocation and as a result the 2023 data has been restated to reflect this.

All values are in US Dollars.

252	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Risk type	Our approach
Retail credit<br><br>risk<br><br>(continued)	Transition riskWe 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 in the UK mortgage book. All UK rental properties must have a minimum EPC rating of E. It is broadly expected that the rental market will need to transition all rented properties to an EPC rating of C by 2030. We track EPC ratings for both owner occupied (‘OO’) and buy to let (‘BTL’), which are 96.6% of the portfolio and 3.4% of the portfolio by lending value, respectively. The EPC profile is broadly improving (to higher bands) but is evolving slowly, and the pace is dependent on regulation. Where we do not hold a current EPC, we have included expired EPCs for 2024. EPCs are a reliable proxy as energy efficiency ratings gradually improve over time.
	UK residential mortgages tenor (remaining mortgage term by balance (m)) as at 31 December 20241
	Tenor
	<1 year
	1 to 5 years
	>5 years
	Weighted average of remaining mortgage term (years)
	There has been an increase observed across the market in the number of people seeking new mortgages of up to 35 years or more due to rising house prices, higher interest rates and cost of living challenges although the average life of an HSBC mortgage loan is approximately between five and eight years due to refinancing. Despite this, our strategic approach to climate risk considers present day and long-term risk given customers may remain on our book for the whole loan term. For further details of flood risk and the EPC breakdown of our UK retail mortgage portfolio, see our ESG Data Pack at www.hsbc.com/esg.
	1 The table includes instances where individual properties have multiple associated accounts and mortgage balances. These are aggregated to a property level and the longest term remaining is taken as the tenor. UK mortgage balances presented here are not directly reconcilable to other tables in the document due to differences in the basis of preparation.
Treasury<br><br>risk	Climate risk may impact Treasury risk through increased regulatory requirements and from changes to customer behaviours, which may result in increased deposit outflows.As part of our ICAAP, we assess the impact of climate change on capital, focusing on credit risk, market 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. As part of our Internal Climate Scenario Analysis (‘ICSA’), we have developed an exploratory scenario to understand the impact of a potential greenwashing event on our deposits. For further details, please see page 254.In October 2024 we published our Green Financing Framework, in alignment with the International Capital Market Association Green Bond Principles. This framework promotes transparency, forming part of our sustainability strategy and helping to further our aim of supporting our clients in transitioning to a net zero future.Pension riskClimate risk could result in additional costs within our defined benefit pension plans, due to changes in the pension plans’ investment performance or through having to meet evolving regulatory requirements. Our global policies on the oversight of pension investments explicitly reflect climate considerations. Training has been provided to local management on how to consider ESG risks in pension investments. We also conduct an annual exercise to estimate the exposure of our largest pension plans to climate risk.Insurance riskClimate risk could result in losses on our insurance assets due to changes in macroeconomic parameters.We develop an annual plan to support the management of climate risk. This plan includes enhancing our stress test modelling capabilities to assess the solvency resilience of our insurance entities under prescribed climate scenarios.
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 have implemented climate risk limits in global and regional trading mandates to monitor exposure to climate-sensitive sectors and countries across different asset classes in the Markets and Securities Services (‘MSS‘) business.Our market risk policies include specific climate risk control requirements, which ensure that our climate risk limits and utilisations are monitored in the same way as market and traded credit risk exposures.We conduct monthly stress testing to understand the vulnerabilities of our trading portfolio to various climate scenarios, which are refined on an annual basis, with the results reported to global and regional senior management.
Reputational<br><br>risk	We manage the reputational impact of climate risk through our broader reputational risk framework, supported by our sustainability risk policies and metrics.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. Our thermal coal phase-out and energy policies aim to drive down greenhouse gas emissions while supporting a just transition.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. For further details of our sustainability risk policies, see page 59. We have developed risk appetite metrics to monitor our performance against our financed emissions targets. For further details of our targets, see page 50.
Regulatory<br><br>compliance<br><br>risk	Regulatory Compliance is responsible for the oversight and management of climate-related risks that could cause breaches of our regulatory duties to customers and inappropriate market conduct. We have updated our policies to incorporate considerations for ESG and climate risks, particularly in relation to new and ongoing product management, sales outcomes, and product marketing. To support our key policies, we have also enhanced the underlying control frameworks and processes. This includes the integration of greenwashing risk and controls considerations in the design of new products and changes to them, as well as in relation to marketing materials. From a product sales perspective, we have established key control principles, encompassing the sales journey design, training and competence, supervision, sales quality, and governance.We operate an ESG and climate risk working group tasked with tracking and monitoring the integration of ESG and climate risk stewardship across our operations. This group also monitors regulatory and legislative developments related to the ESG and climate agenda.

All values are in US Dollars.

HSBC Holdings plc Annual Report on Form 20-F	253
Risk type	Our approach
---	---
Resilience<br><br>risk	Resilience risks may potentially crystallise through physical climate risk impacts to our buildings supporting service provision, or through physical<br><br>and/or transition disruption to our third-party supply chain relationships.<br><br>We have developed metrics to assess how physical risk may impact our critical properties and to monitor progress against our own operations’<br><br>net zero ambitions.<br><br>Our resilience risk policies are subject to continuous improvement to remain relevant to evolving climate risks.
Model risk	Model risk in the ESG context refers to the uncertainties and complexities inherent in the modelling of the financial impact translation of climate-<br><br>related changes and scenarios.<br><br>Climate risk models are used for climate scenario analysis, risk management, and emissions reporting among other use cases. Climate risk<br><br>modelling is at a nascent stage, with challenges – including limitations in data availability, consistency and quality – shared across the industry.<br><br>We have developed model risk procedures that set out the minimum control requirements for identifying, measuring and managing model risk<br><br>for climate-related models. All the identified climate-related models are subject to HSBC’s model lifecycle controls and policy.
Financial<br><br>reporting<br><br>risk	Climate risk impacts financial reporting risk through increased reporting requirements.<br><br>The scope of financial reporting risk includes oversight of the accuracy and completeness of ESG and climate reporting. Our risk appetite<br><br>statement states that HSBC has no appetite for material errors in ESG disclosures in our key markets, balanced with the evolving requirements<br><br>and data availability.<br><br>In addition, our internal controls incorporate requirements for addressing the risk of misstatement in ESG and climate reporting. To support this,<br><br>a framework is used to provide guidance on control implementation over ESG and climate reporting and disclosures, which includes areas such<br><br>as process and data governance, and risk assessment.

Challenges

Key challenges include:

–the diverse range of internal and external data sources and data

structures needed for climate-related reporting, which introduces

data accuracy and reliability risks;

–data limitations on customer assets and supply chains, and

methodology gaps, which hinder our ability to assess physical

risks accurately;

–industry-wide data gaps on customer emissions and transition plan

and methodology gaps, which limit our ability to assess transition

risks accurately; and

–limitations in our management of net zero alignment risk due to

known and unknown factors, including the limited accuracy and

reliability of data, emerging methodologies, and the need to

develop new tools to better inform decision making.

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. It is one of the key tools used to support the

evaluation of portfolios in line with our net zero ambition.

The scenarios developed for climate scenario analysis are designed to

examine HSBC’s financial performance and capital resilience across a

wide range of potential climate outcomes. They are sufficiently

diverse to enable HSBC’s key physical and transition risk

vulnerabilities to be explored. For further details about these risks,

see ‘Overview under Climate risk’ on page 249.

The analysis supports our approach to supporting our clients in the

transition to net zero through assessing, where available, client level

financial and credit risk metrics, and identifying where further analysis

and climate risk focus is required.

From a risk management perspective, it enhances our understanding

of the various transition and global warming pathways that may

unfold and their plausibility, and informs how we manage implications

to credit risk and revenues.

To meet our global regulatory needs, we produced several climate

stress tests for regulators around the world, including the Hong Kong

Monetary Authority (‘HKMA’). We continue to enhance our climate

scenario analysis exercises so that we can have a more

comprehensive understanding of climate headwinds, risks and

opportunities to support our strategic planning, actions and risk

management.

Use of climate scenario outputs to

support how we assess our climate

resilience

As we navigate the transition to net zero, climate scenario analysis is

used to support core banking processes such as client-facing

activities, finance activities and risk management.

From a financial and capital planning perspective, we use climate

scenario analysis to support the Group’s internal capital adequacy

assessment process (‘ICAAP’) to understand the amount of capital

the Group should hold to meet identified climate risks, including

integration of climate impacts into the Group’s internal stress testing

exercises. In addition, it informs strategic planning by providing

insights on the size and timing of financial impacts, and IFRS 9 loss

provisioning to ensure climate risks are adequately provisioned for in

our balance sheet, such as expected credit losses (‘ECL’).

Climate scenario analysis also supports portfolio steering frameworks

set up to help shape our Global Businesses strategy to meet net zero

ambitions. Portfolio steering has been developed to enable the Group

to manage sector portfolios in line with its net zero by 2050 ambition,

while managing risks and capturing commercial opportunities. This

enables HSBC to manage financed emissions within our appetite at

portfolio level.

Climate scenario analysis supports the Group to assess the impact of

our net zero ambitions on our revenue and profitability to help

strengthen our understanding of business model risk, and supports

building the organisation’s awareness of climate change risk,

informing our climate risk appetite.

Our climate scenarios

Our 2024 scenarios considered the key regions in which we operate

and were designed to assess the impact on our balance sheet across

three distinct periods: short term up to 2026; medium term from

2027 to 2035; and long term from 2036 to 2050.

Building on prior years, the 2024 climate scenario analysis exercise

benefited from new scenarios, including: the introduction of a new

Below 2 Degrees scenario that is aligned with the Paris Agreement

goal of limiting global warming to below 2 degrees by the end of the

century; and a bespoke near-term Severe Climate Stress scenario;

and from updated climate scenario assumptions, which include

increased sector and geographical granularity for all scenarios.

The 2024 climate scenarios range from a combination of highest

physical risk to highest transition risk as follows:

254	HSBC Holdings plc Annual Report on Form 20-F

Risk review

–Downside Physical Risk scenario: with significant global warming

and physical risk events, assumes climate action is limited to

currently implemented governmental policies, new

decarbonisation policies fail to get introduced and global warming

continues.

–Severe Climate Stress scenario: a near term disorderly climate

action, triggered by unprecedented global weather events that

lead to a short, sharp economic recession. In this scenario,

extreme physical events pivot the public view on climate and the

transition to net zero accelerates. This extreme stress scenario is

used to test HSBC’s capital resilience to extreme and very unlikely

events, combining downside climate and macroeconomic risks

with a horizon ending in 2030.

–Current Commitments scenario: assumes a slower-than-required

transition to a net zero economy, reflective of the current pace of

transition, which assumes that climate action is limited to current

governmental committed policies, including already implemented

actions. This scenario helps us determine the actions we need to

take to reach our net zero ambition while operating in a world that

is not on a net zero by 2050 pathway.

–Below 2 Degrees scenario: a Paris Agreement-aligned scenario

where net zero is achieved, but beyond the 2050 scenario horizon,

as it assumes an orderly and gradual rise in the stringency of

climate policies over time.

–Delayed Transition Risk scenario: in which action is delayed until

2030 but is then stringent and rapid enough to meet net zero by

2050, accentuating disorderly transition risks.

We have chosen these scenarios to provide a holistic view that

supplements the Group’s current and future strategic thinking. The

2024 climate scenarios are underpinned by well-established industry

bodies such as the Network for Greening Finance Phase IV, the

Intergovernmental Panel on Climate Change (‘IPCC’) and International

Energy Agency (‘IEA’), which are further enriched for additional

granularity, ensuring consistency with industry-recognised work and

reflecting the latest climate policy and economic outlook.

+Physical Risk Transition Risk+

Characteristics of our scenarios

		Scenarios
		Downside<br><br>Physical Risk				Severe Climate<br><br>Stress			Current<br><br>Commitments				Below 2 Degrees				Delayed<br><br>Transition Risk
Scenario<br><br>outcomes	Rise in global temperatures by 2100 (vs pre-industrial levels)	4.2°C				N/A			2.4˚c				1.7˚c				1.6˚c
	End of horizon	2050				2030			2050				2050				2050
Underlying<br><br>assumptions<br><br>based on<br><br>global<br><br>averages	Global climate actions	Implemented<br><br>policies only				Rapid & disorderly<br><br>transition			All currently pledged<br><br>policies				Gradually rising<br><br>stringency of policies				Rapid & disorderly<br><br>transition
	Assumed pace of technology change and adoption	Slow change				Accelerated progress			Limited progress				Moderate change				Accelerates from<br><br>2030
	Assumed socioeconomic impact	Very high				Very high			Moderate				High				Very high
	Assumed carbon price (/tCO2)	2030		2050		2030			2030		2050		2030		2050		2030		2050
			8		326			30		78		46		136		30		558
Scenario risk<br><br>characteristics	Climate risk	p		Higher		p	Higher		u		Moderate		q		Lower		q		Lower
		q		Lower		p	Higher		u		Moderate		p		Higher		p		Higher

All values are in US Dollars.

Group outputs and our methodology

Climate scenario analysis allows us to model how different potential

climate pathways may impact the resilience of our customers and our

portfolios.

Our models continue to incorporate a range of climate-specific

metrics that could potentially impact our customers, including

expected production volumes, revenue, costs and capital

expenditure.

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.

We analyse how climate risks impact principal risk types within our

organisation, including credit and traded risks, non-financial risks and

pension risk. While the following sections focus primarily on credit

risk, we also set out how we continue to enhance and embed

impacts from traded risk, pension risk and non-financial risks.

For our wholesale lending portfolio, the scope of our 2024 analysis

prioritised high-emitting sectors, and we focused on delving deeper

into a selection of high transition risk sectors. We have enhanced our

climate models for the power and utilities and automotive sectors,

while regional deep dives focused on select high risk and material

sectors. The financial metrics used in our models included credit

rating and client cashflow impacts to derive ECLs and risk-weighted

assets (‘RWAs’), emissions and balance sheet impacts.

For our retail mortgage portfolio, our analysis focused on key regions

and physical risk factors, including property locations, perils and

insurance coverage.

The internal climate scenario analysis exercise showed that losses

are influenced by their exposure to a variety of climate risks under

different climate scenarios.

When assessing our long-term scenarios, climate-related losses are

expected to remain minimal in the short term and likely to increase in

the medium and longer time horizon, driven by the transition to a net

zero economy and greater physical risk impacts.

Under the defined climate scenarios, transition risk impacts are

predominantly driven by credit risk losses and are expected to create

a drag on the Group’s profitability across all scenarios. In the Below 2

Degrees scenario, we expect to see an increase in projected credit

losses that materialise in the medium term if early action to transition

to net zero is taken. Credit losses are projected to increase in the

medium to long term if the transition to net zero is delayed, which

was underlined within the Delayed Transition scenario, where climate

action begins later and is therefore expected to be more rapid and

disruptive for our customers who will have less time to restructure

their business models and reduce their carbon emissions.

The risks and opportunities will need to be carefully balanced, and by

building a more climate-resilient balance sheet, we can reduce

impairment risks and improve longer-term stability.

Increased lending opportunities exist during an accelerated transition

period such as those expected in the Below 2 Degrees, Delayed

HSBC Holdings plc Annual Report on Form 20-F	255

Transition Risk and Severe Climate Stress scenarios, noting that

these scenarios also experience the risk of heightened impairments

in the latter stages of their time horizons.

Modelling limitations

We continue to look for ways of enhancing our methodology to

improve the effectiveness of our climate scenario analysis by

incorporating lessons learnt from previous exercises and feedback

from key stakeholders, including regulators. There are industry-wide

limitations, particularly on data availability, although our models are

designed to produce outputs that can support our assessment of the

level of our climate resilience.

Climate scenario analysis requires considerable amounts of data and

we are continuing to enhance coverage of our exposures. Where data

is only available for a subset of our counterparties, we extrapolate the

results observed where available to the wider population or dataset.

We do not capture the second order impacts of climate risk

exposures within our modelling approach, such as impacts on our

counterparties from their supply chains.

For 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.

How climate change is impacting our

wholesale lending portfolio

The 2024 climate scenario analysis exercise was designed to

examine the climate risks and vulnerabilities of corporate

counterparties across high transition risk sectors under climate

scenarios of varying severity. Specifically, we measured the modelled

effect on our projected ECL change over the short-, medium- and

long-term horizons under each scenario. This was compared to a

counterfactual scenario that excludes climate change impacts to

isolate the climate only changes in ECL.

Counterparty specific analysis was conducted for those corporates

where transition risk is elevated either from an overall sectoral

perspective or in response to specific jurisdictional policies, which

require HSBC to respond to regulatory requirements. This analysis

was conducted to generate more granular counterparty-specific

insights relative to previous exercises.

The impact on our wholesale portfolios is demonstrated by the table

below, which shows the size of exposures by sector in 2024 and the

cumulative change in ECL compared with a 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.

Under the Current Commitments scenario, our modelled outputs

predict that ECL will not be more than 25% higher than the

counterfactual scenario for any of the assessed sectors. The highest

impacts are seen in the chemicals, construction and building

materials, power and utilities and agriculture and soft commodities

sectors. Greater climate risks would crystallise in the Below 2

Degrees scenario with its gradually increasing transition to net zero,

driven by pockets of customers in higher-emitting sectors that are

continuously exposed to larger climate-related losses.

The analysis shows credit risk losses continue to be driven by

counterparties in certain high transition risk sectors where the

Group’s largest exposures are concentrated, such as construction

and building materials, chemicals, and power and utilities sectors. In

these sectors we have counterparties, such as steel or cement

manufacturers who have high emissions in their processes and in

their downstream or upstream value chains, who may also

experience cost pressures due to carbon-tax pass-through rates.

Furthermore, harder to abate sectors contain a high proportion of

customers without climate transition plans.

We have continued to incorporate information from our customers’

transition plans to consider how our clients and their sectors will be

impacted. For the oil and gas sector, we see counterparties having

relatively lower projected climate-related losses on a consistent basis,

which is highly dependent on the assumption of continued

government support and commitment to the execution of their

complex transition plans.

In the case of the Severe Climate Stress scenario, we observed that

impacts would be more severe and focused than other climate

scenarios in the short- to medium-term. These impacts were driven

by the underlying severity of the scenario, particularly due to the

sharp increase in stricter climate policies and therefore carbon prices

that adversely affect the debt servicing capabilities of companies, and

acute extreme weather events.

We have the opportunity to ease potential negative impacts as

transition risks increase, by supporting our customers to diversify into

more renewable and greener revenue streams and invest in

emission-reducing technologies.

Impact on wholesale lending portfolios
Wholesale<br><br>sectors	Exposure<br><br>at default<br><br>(EAD)3<br><br>2023	ECL increase 1, 2
		Climate Scenarios
		Current<br><br>Commit<br><br>ments	Below 2 Degrees
		Peak 4	Short<br><br>term	Medium<br><br>term	Long<br><br>term
Conglomerates and<br><br>industrials	n
Chemicals	n
Construction,<br><br>contracting and<br><br>building materials	n
Power and utilities	n
Oil and gas	n
Automotive	n
Land transport and<br><br>logistics	n
Agriculture & soft<br><br>commodities	n
Metals and mining	n
Aviation	n
Marine	n

1 Increase in cumulative ECL compared with counterfactual over short-,

medium- and long-term time horizons, expressed as a multiple.

2 Values in the key represent the multiplier of increase in ECL, i.e. <1.1

equates to less than 10% increase over the counterfactual (or equivalent

proxy which is most representative of baseline for the sector).

3 The size of the bubbles is a visual representation of the portfolios, in terms

of EAD, relative to one another.

4 The peak multiplier reflects the maximum increase in ECL for the Current

Commitments scenario over the forecasted scenario time horizon.

Lower<br><br>Impact	<1.1x	<1.25x	<1.5x	<1.75x	<2.25x	<2.75x	Higher<br><br>Impact

How climate change is impacting our

retail mortgage portfolio

As part of our 2024 climate scenario analysis exercise, we completed

a detailed climate risk assessment for the UK, US, Singapore and

Malaysia. In our 2023 exercise we also assessed Hong Kong,

Australia and mainland China. Our coverage represented 91% of the

balances in our global retail mortgage portfolio, across the two

exercises. For our Hong Kong portfolio, we completed a short- and

long-term scenario analysis exercise during late 2023 and early 2024

at the request of the HKMA.

Our analysis shows that over the longer term, we expect minimal

losses to materialise when considering the Current Commitments

scenario. Although the severity of climate perils is expected to

worsen over time, our overall losses remain low under a severe

Downside Physical Risk scenario.

256	HSBC Holdings plc Annual Report on Form 20-F

Risk review

In 2024, we continued to develop our approach to assess impacts

from severe acute physical risk events with an exploratory new near-

term Severe Climate Stress scenario.

Within all scenarios, loss impacts are assessed by considering

borrowers’ ability and willingness to service their debts, including

customers’ affordability incorporating increased debt servicing costs

and the impact on property valuation.

When quantifying impacts from climate events, insurance availability

is a key mitigation of loss. Our scenario analysis methodology was

enriched further in 2024 by enhancing insurance availability and

assumptions related to insurance premium costs. This approach has

been benchmarked with the insurance industry, based on a

calculation of average annualised loss.

When assessing impacts from climate risk, we note that there are

several limitations as mentioned previously. Specifically for our retail

mortgage portfolio, these limitations include:

–Lack of historical experience and limited benchmark data,

especially around loss quantification, there is strong reliance on

external peril models and vulnerability assumptions.

–Accuracy of peril projection data relies upon the exact coordinates

of a property. The geocoding process can lead to inaccurate

results for some properties where address data is incomplete or in

regions where geocoding services are less accurate.

–Additionally, a key assumption in quantifying the impacts from

perils is the level of resilience a particular building archetype has,

for example age of construction, material or relevant building

standards. This information is often limited, and assumptions are

made.

Projected peril risk

Perils are assessed that are material to each region and where we

have the external peril data available.

Flooding has the potential to be the peril having the largest impact on

our portfolio. When assessing the risk in the portfolio we assess both

the inherent and residual risks. An inherent view considers property

location, whereas the residual risk incorporates the resilience a

particular building has to the peril impacts. The inherent flood risk is

shown below, and outlines the percentage of properties and their

corresponding flood depths predicted in a 1-in-100 year event.

In 2024, we provided further granularity in our flood risk table by

reporting the proportion of properties that we would expect to be at

no risk of flooding during a 1-in-100 year severity flood event. In the

2024 exercise under the Baseline flood risk 1-in-100 year event for

the UK, 92.1% of properties have no forecasted flood risk (2023:

92.4%), as such c.8% of properties are situated in areas that could be

exposed to varying severities of flooding, however there are often

mitigating factors, such as the floor level of a building, that reduce

risk.

The table below outlines the flood depths that the properties would

be exposed to under different climate scenarios.

Exposure to flooding (%)1
		Climate Scenarios
Markets	Flood<br><br>depth<br><br>(metres)	Baseline flood<br><br>risk<br><br>1-in-100 year<br><br>event2, 3	Current<br><br>Commitments	Downside<br><br>Physical Risk
		2024	2050	2050
UK	0	92.1	91.5	91.6
	0-0.5	7.8	8.3	5.2
	0.5-1.5	0.1	0.2	2.8
	>1.5	0	0	0.4
Hong<br><br>Kong4	0	67.9	64.0	64.0
	0-0.5	16.9	17.0	15.5
	0.5-1.5	15.1	18.9	20.4
	>1.5	0.1	0.1	0.1

1 Severe flood events include river and surface flooding and coastal

inundation. The table compares 2050 snapshots under the Current

Commitments and Downside Physical Risk scenarios with a baseline view

in 2024. We do expect to see changes to our flood depth distributions as

climate risk data is refreshed.

2 Baseline flood risk is the flood risk for a 1-in-100 year event, based on

current peril data.

3 2024 relates to the year in which the assessment was conducted. The

baseline data is based on the mortgage portfolio as at 31 December 2023

and 2022, for the UK and Hong Kong respectively.

4 In 2022, 94% of properties in Hong Kong (where HSBC provides

mortgages) are apartments located on the second floor or above. For

properties located in areas exposed to flooding, direct damages would be

mitigated against, with only common ground floor areas potentially

impacted.

Through our climate scenario analysis, we recognise acute impacts

are more severe than long-term chronic impacts. We observed this

when assessing the outputs under the Severe Climate Stress

scenario, which focuses on prescribed physical risk events rather

than recognising the probabilistic nature of these perils, which are

considered very unlikely by 2030. Overall, our retail mortgage

portfolio remains resilient to climate risk and impact severity is muted

at portfolio levels as our book has diversified property locations with

insurance coverage being a key loan covenant.

How climate change is impacting our

commercial real estate portfolios

In our climate scenario analysis exercise, we assess our commercial

real estate (‘CRE’) customers’ vulnerability to various perils, including

flooding and cyclonic wind exposures. Our CRE portfolio is globally

diversified with larger concentrations in Hong Kong, the UK, France

and the US. In our 2024 exercise we carried out a detailed

assessment of our UK portfolio. In addition, we performed a bespoke

assessment of our Hong Kong portfolio via the HKMA climate

scenario analysis exercise.

Geographical location is a key determinant in our exposure to

potential physical risk events, which can lead to higher ECLs due to

the cost of repairing damage as well as the longer-term impacts on

property valuations. These can lead to higher defaults and

consequential losses in areas where physical risk events are gradually

increasing in frequency and severity.

HSBC Holdings plc Annual Report on Form 20-F	257

The table below shows the proportion of our CRE portfolio exposed

to specific physical perils in our key markets.

Exposure to peril (%)1
Market	Exposure<br><br>at default<br><br>(EAD)2<br><br>2023	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	1	100	12	10	2
UK	n	17	0	9	8	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 Assumes all properties are impacted by some damage due to extreme

wind, but the intensity of impact is very insignificant and highly muted in

some regions, represented by (~0%) exposure to this peril.

As assessed through our internal climate scenario analysis exercise,

impacts on our UK portfolio are largely driven by chronic physical risk,

related mainly to coastal and tidal river flooding due to a rise in sea

level. The UK analysis explored acute weather events, such as

extreme rainfall accompanied with storm winds that may lead to

further property damage and business disruption.

We assessed the impacts on transition risk for the UK portfolio,

mainly focused on the impact of retrofitting costs on property

valuations due to meet minimum energy performance certificate

(‘EPC’) requirements for properties having low energy efficiency.

Sensitivity analysis has been conducted on EPC upgrade costs that

would be higher in a faster transition scenario due to the accelerated

pace of upgrades. In the Below 2 Degrees scenario, we assume

actions where non-domestic properties are required to achieve an

EPC rating of B by 2040. To meet these minimum standards,

counterparties in our portfolio would potentially need to retrofit their

properties or risk having stranded assets with a material valuation

haircut.

The table below demonstrates the impact on our CRE portfolio for

specific markets, including the three biggest markets – Hong Kong,

the UK and the US. This shows the increase in cumulative ECL over

different time horizons, under each scenario, 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
Below 2 Degrees
Downside Physical Risk
Lower<br><br>Impact	<1.1x	<1.25x	<1.5x	<1.75x	<2.25x	<2.75x	Higher<br><br>Impact
---	---	---	---	---	---	---	---

1 Increase in cumulative ECL compared with counterfactual over short,

medium and long-term time horizons, expressed as a multiple.

2 Values in the key represent the multiplier of increase in ECL, i.e. <1.1

equates to less than 10% increase over the counterfactual which excludes

climate change impacts.

Geographically, our most significant exposure is in Hong Kong, which

was assessed in a bespoke exercise. This region has material

physical risk exposure to wind and flooding due to strong tropical

cyclones. However, in the HKMA exercise, a large proportion of CRE

exposures were not materially impacted, with less than 0.5% of

properties suffering from damage greater than 3% of their asset

values per year. The properties are protected from cyclonic winds and

flooding due to high building standards, high elevation, and protection

from coastal defences in this region, such as rainstorm impacts being

muted due to the positive impact of new drainage tunnels and tanks

in the city.

Overall, and in line with our assessment in prior years, our analysis

shows our commercial real estate portfolio remains resilient to

climate risk. Under our Below 2 Degrees scenario, impact severity is

muted at the portfolio level as our counterparties have diversified

property portfolios with insurance coverage being a key loan

covenant. Under the Downside Physical Risk scenario, the impacts

were observed to be heightened due to significant global weather

events. We also observed impacts in the Severe Climate Stress

scenario are more significant, which were driven by coastal

inundation and flooding events.

Our CRE modelling is subject to similar limitations as our retail

mortgage climate models in regard to lack of historical data, reliance

on exact building co-ordinates and information on building resilience.

How we assess climate risk impacts

on other risk types

We use climate scenario analysis to assess the impacts on other

risks including traded risk, sovereign credit risk, pension risk and non-

financial risks.

In 2024 for traded risk, we explored the potential fair value impacts of

climate risks on our trading and banking portfolios across multiple

scenarios, covering physical and transition risk climate drivers, and

capturing short and long-term impacts. The analysis considered all

relevant asset classes including interest rates, exchange rates, credit

and equities, with market shocks capturing the impact of abrupt

increases in carbon prices or physical risk perils resulting in structural

economic impacts that affect the productivity of high-risk sectors at a

country level.

For sovereign credit risk we continued to assess the impacts of

climate risks on sovereign debt under the different climate scenarios.

For pension risk we modelled balance sheet and income statement

projections for the main defined benefit pension plans. This year’s

exercise focused on assessing the impact of a severe physical risk

shock using the Severe Climate Stress scenario.

For non-financial risk we assessed the potential impacts of a

misstatement in our ESG and climate-related reporting and

disclosures. For regulatory compliance risk, we assessed the

potential impacts of greenwashing in the manufacturing and

marketing of ESG funds and in the marketing of sustainability-linked

bonds. For resilience risk, we assessed the potential impacts on our

critical real estate from climate change, including temperature

extremes, drought, water stress, wildfire, tropical cyclones and

flooding.

Understanding 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 2024, there were 40 major storms that had

a minor impact on three of our buildings.

We use stress testing to evaluate the potential impact on our owned

or leased premises. Our 2024 scenario stress test analysed how nine

climate change-related hazards – comprising coastal flooding, fluvial

flooding, pluvial flooding, soil movement due to drought, temperature

extremes, water stress, wildfires, landslides and tropical cyclones –

could impact 2,719 of our properties.

The 2024 test modelled climate change with the Intergovernmental

Panel on Climate Change (‘IPCC’) Taking the Highway scenario

(SSP5-8.5), which projects that the rise in global temperatures will

likely exceed 4°C by 2100. It also modelled a less severe IPCC Middle

of the Road scenario (SSP2-4.5), which projects that global warming

will likely be limited to 2°C.

258	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Key findings from the Taking the Highway scenario included that by

2050, 15 of our 2,719 properties will have a high potential for impact

due to climate change, with insurance-related losses estimated to be

in excess of 10% of the insured value of the buildings.

A key finding from the Middle of the Road scenario showed that the

total number of buildings at risk reduced from 15 to 9. The

highlighted facilities are still at risk from the same perils of extreme

temperature and water stress by 2050.

This forward-looking data 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 depending on its availability

and price.

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.

Conclusion to insights from climate

scenario analysis

Climate scenario analysis is an evolving process and there are data

and modelling limitations due to the information and expertise

available in the current market. Physical risk modelling is nascent and

currently we are only able to model direct climate peril impacts on

real estate. Limited considerations are made to the pricing

implications of new green products and clients that are likely to

emerge over the time horizon.

We will continue to enhance the use of climate scenario analysis in

our business decision making, supporting our climate resilience. We

have started to explore the impacts on our portfolio from a nature risk

perspective and expect the model and capabilities to evolve over

time.

Resilience risk

Overview

Resilience risk is the risk of sustained and significant business

disruption from execution, delivery, physical security or safety events,

causing the inability to provide critical services to our customers,

affiliates and counterparties. Resilience risk arises from failures or

inadequacies in processes, people, systems or external events.

Resilience risk management

Key developments in 2024

During the year, we conducted several initiatives to keep pace with

geopolitical, regulatory and technology changes, and strengthened

the management of resilience risk.

–We continued to recognise that our customers were impacted by

service disruptions, responded to these urgently and aimed to

recover with minimum delay. We continued to initiate post-

incident review processes to prevent recurrence. Where we

identify that investment is required to further enhance the Group’s

operational resilience capabilities, findings are fed into the Group’s

financial planning, helping to ensure we continue to meet the

expectations of our customers and our regulators.

–We continued to monitor markets affected by the Russia-Ukraine

war and the conflict in the Middle East, as well as other

geopolitical events, for any potential impact they may have on our

colleagues and operations.

–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 further strengthened our non-financial risk governance and

senior leadership.

We prioritise 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 Enterprise Risk Management target operating model provides a

globally consistent view across resilience risks, strengthening our risk

management oversight while operating effectively as part of a

simplified non-financial risk structure.

We view resilience risk across nine sub-risk types related to:

technology and cybersecurity risk; third-party risk; transaction

processing risk; business interruption and incident risk; data risk;

change execution risk; building unavailability risk; protective security

risk and workplace safety.

Risk appetite and key escalations for resilience risk are reported to

the Non-Financial Risk Management Board, chaired by the Group

Chief Risk and Compliance Officer, with an escalation path to the

Group Risk Management Meeting and Group Risk Committee.

Key risk management processes

We operate processes to support our resilience according to our Risk

Management Framework. Our operational resilience is our ability to

anticipate, prevent, adapt, respond to, recover, and learn from internal

or external disruption, continuing to provide Important Business

Services to customers and clients, while minimising impact on the

wider financial system when disruption occurs. This is achieved via

day-to-day oversight and periodic and ongoing assurance, such as

deep dive reviews and controls testing, which may result in

challenges being raised to our businesses and group governance by

our risk stewards. We have invested to improve response and

recovery strategies for our important business services and Important

Group business services to meet regulatory and customer

expectations.

Business operations continuity

We continue to monitor the Russia-Ukraine war and the conflict in the

Middle East, and remain ready to take measures to ensure business

continuity in affected markets should the situations require. There

have been no related significant disruptions to our services, although

businesses and functions in nearby markets continually review their

plans and responses to minimise any potential impacts.

HSBC Holdings plc Annual Report on Form 20-F	259

Regulatory compliance risk

Overview

Regulatory Compliance risk is the risk associated with breaching our

duty to clients and other counterparties, inappropriate market conduct

(including unauthorised trading) and breaching related financial

services regulatory standards. Regulatory Compliance risk arises from

the failure to observe relevant laws, codes, rules and regulations and

can manifest itself in poor market or customer outcomes and lead to

fines, penalties and reputational damage to our business. We aim to

keep abreast of developments in legal principles or conduct

requirements (including in relation to the risk of such developments in

one part of the financial industry being construed as applying to other

parts of the financial industry, which could lead to legal or regulatory

proceedings).

Regulatory compliance risk

management

Key developments in 2024

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.

We have enhanced our processes, framework, and governance

capabilities to improve the controls and oversight of Consumer Duty

outcomes in the UK. 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 Compliance teams work together and with relevant

stakeholders to 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 capability is responsible for setting

global policies, standards and risk appetite to guide the Group’s

management of Regulatory Compliance risk. It also devises the

required frameworks, support processes and tooling to protect

against Regulatory Compliance risks. The Group capability provides

oversight, review and challenge to the global market, regional and

local line of business teams to help them identify, assess and

mitigate Regulatory Compliance risks, where required. The Group’s

Regulatory Compliance risk policies are regularly reviewed. Global

policies and procedures require the identification and escalation of

any actual or potential regulatory breaches.

Relevant events and issues are escalated to the Group’s Non-

Financial Risk Management Board, the Group Risk Management

Meeting and the Group Risk Committee, as appropriate. The Group

Head of Regulatory Compliance attends the Risk and Compliance

Executive Committee, the Group Risk Management Meeting and the

Group Risk Committee.

Financial crime risk

Overview

Financial crime risk is the risk that HSBC’s products and services will

be exploited for criminal activity. This includes fraud, bribery and

corruption, tax evasion, sanctions and export control violations and

evasion, money laundering, terrorist financing and proliferation

financing. Financial crime risk arises from day-to-day banking

operations involving customers, third parties and employees.

Financial crime risk management

Key developments in 2024

We regularly review the effectiveness of our financial crime risk

management framework, which includes continued consideration of

the complex and dynamic nature of sanctions compliance and export

control risk. We continued to respond to the financial sanctions and

trade restrictions that have been imposed on Russia, including

methods used to limit sanctions evasion.

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 global businesses;

–deployment of a next generation capability to increase our

monitoring coverage on 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 our digital assets

and currencies strategy.

Governance and structure

The structure of the Financial Crime function remained substantively

unchanged in 2024. The Group Head of Financial Crime and Group

Money Laundering Reporting Officer 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 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.

260	HSBC Holdings plc Annual Report on Form 20-F

Risk review

We are committed to working in partnership with the wider industry

and the public sector in managing financial crime risk. In 2024, our

focus remained on measures to improve the overall effectiveness of

the global financial crime framework and promote the 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 standard setter, the Financial

Action Task Force. We did this by contributing to the development of

responses to consultation papers focused on how financial crime risk

management frameworks can deliver more effective outcomes in

detecting and deterring criminal activity. In addition, we participated

in a number of public events related to the promotion of risk-based

supervision, payment transparency, fraud risk management and

financial inclusion, as well as tackling forestry crimes, wildlife

trafficking and human trafficking.

Model risk

Overview

Model risk is the risk of the potential for adverse consequences from

model errors or the inappropriate use of modelled outputs to inform

business decisions.

Model risk arises in both financial and non-financial contexts

whenever business decision making includes reliance on models.

Key developments in 2024

In 2024, we continued to make improvements in our Model Risk

Management (‘MRM’) processes amid regulatory changes in MRM

requirements.

Initiatives during the year included:

–updating our MRM Framework to meet the requirements of the

PRA’s SS1/23 with a programme of work in progress to

implement these changes across the model landscape;

–completing a review of model tiering across the organisation

assessing the materiality and complexity of all models and

assigning a new tier which will drive the level of oversight required

at model level;

–introducing a new framework to govern and manage the risks

associated with Deterministic Quantitative Methods, which are

complex and material calculators that although not technically

models still present similar risks;

–following feedback from the PRA and other regulators on a

number of our model submissions for internal ratings-based (‘IRB’)

models, we are delivering a programme of work to redevelop

several IRB models for wholesale credit;

–enhancing our framework for the independent validation of models

accounting for new generative AI techniques becoming more

widely used; and

–working closely with businesses and functions in developing a

governance framework to manage the range of risks these AI and

Machine Learning (‘ML’) techniques can introduce.

Governance and structure

Model risk governance committees at the Group, business and

functional levels provide oversight of model risk. The committees

include senior leaders from the global businesses and the Group Risk

and Compliance function, and focus on model-related concerns and

are supported by key model risk metrics. We also have Model Risk

Committees in our geographical regions focused on local delivery and

requirements. The Group-level Model Risk Committee 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 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 appropriate

understanding and ownership of model risk is embedded in the

businesses and functions.

HSBC Holdings plc Annual Report on Form 20-F	261

Insurance manufacturing

operations risk

Contents
261	Overview
261	Insurance manufacturing operations risk management
262	Insurance manufacturing operations risk in 2024
262	Measurement
263	Key risk types
263	– Market risk
264	– Credit risk
264	– Liquidity risk
265	– Insurance underwriting risk

Overview

The key risks for our insurance manufacturing operations are market

risk, in particular interest rate and equity, credit risk and insurance

underwriting risk. These have a direct impact on the financial results

and capital positions of the insurance operations.

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, although 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 eight

markets, which are Hong Kong, Macau, Singapore, mainland China,

France, UK, Malta and Mexico. This excludes Argentina where the

sale of the insurance business was completed on 6 December 2024.

In addition, we have: an interest in a life insurance manufacturing

associate in India; a captive insurance entity in Bermuda that insures

the non-financial risks of the wider Group; 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 small 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 2024

The insurance manufacturing subsidiaries follow the Group’s risk

management framework. In addition, there are specific policies and

practices relating to the risk management of insurance contracts,

which did not change materially over 2024. 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 and wider inflationary

concerns. Other areas of focus were the ongoing integration of the

insurance business that was acquired through AXA Singapore in 2022

into the Group’s risk management framework, development of

processes and systems within the reinsurance entity established in

Bermuda, and controls supporting IFRS 17.

As mentioned, the insurance business in Argentina was sold during

2024, with the sale completing on 6 December 2024. Following

HSBC’s announcement on 20 December 2024 of the signing of a

memorandum of understanding for the planned sale of its French

insurance business, the balance sheet of the French business has

been reported as held for sale at 31 December 2024. Further details

are provided on page 433.

Governance and structure

(Audited)

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 145. The Global

Insurance Risk Management Meeting oversees the control

framework globally and is accountable to the WPB 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

(Audited)

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 to manage the liabilities to

policyholders for products with participating features. The effect is

that a significant proportion of the market risk is borne by the

policyholder.

–We use asset and liability matching where asset portfolios are

structured to support projected liability cash flows. The Group

manages its assets using an approach that considers asset quality,

diversification, cash flow matching, liquidity, volatility and target

262	HSBC Holdings plc Annual Report on Form 20-F

Risk review

investment return. We use models to assess the effect of a range

of future scenarios on the values of financial assets and

associated liabilities, and ALCOs employ the outcomes in

determining how best to structure asset holdings to support

liabilities.

–We use derivatives and other financial instruments 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.

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 Group’s economic capital basis, and the relevant local

insurance regulatory 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;

–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 financial reporting committees and actuarial review

committees in each of our entities of the methodology and

assumptions that underpin IFRS 17 reporting.

Insurance manufacturing operations risk in 2024

Measurement

The following tables show the composition of the fair value of underlying items of the Group’s participating contracts at the reporting date.

Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
	Life direct<br><br>participating<br><br>and investment<br><br>DPF contracts1	Life<br><br>other<br><br>contracts2	Other<br><br>contracts3	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
– trading assets	—	—	—	—	—
–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
Other assets and investment properties4	24,647	64	36	3,337	28,084
Total assets at 31 Dec 2024	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
Deferred tax	—	—	—	12	12
Other liabilities4	21,772	39	—	6,035	27,846
Total liabilities	124,377	5,167	5,931	6,047	141,522
Total equity	—	—	—	7,015	7,015
Total liabilities and equity at 31 Dec 2024	124,377	5,167	5,931	13,062	148,537
HSBC Holdings plc Annual Report on Form 20-F	263
---	---
Balance sheet of insurance manufacturing subsidiaries by type of contract
---	---	---	---	---	---
(Audited)
	Life direct<br><br>participating and<br><br>investment DPF<br><br>contracts1	Life<br><br>other<br><br>contracts2	Other<br><br>contracts3	Shareholder<br><br>assets<br><br>and liabilities	Total
At 31 Dec 2023	$m	$m	$m	$m	$m
Financial assets	113,605	3,753	5,812	7,696	130,866
– trading assets	—	—	—	—	—
– financial assets designated and otherwise mandatorily measured<br><br>at fair value through profit or loss	100,427	3,593	4,177	1,166	109,363
– derivatives	258	10	—	6	274
– financial investments – at amortised cost	1,351	67	1,157	4,772	7,347
– financial assets at fair value through other comprehensive income	8,859	—	5	693	9,557
– other financial assets	2,710	83	473	1,059	4,325
Insurance contract assets	13	213	—	—	226
Reinsurance contract assets	—	4,871	—	—	4,871
Other assets and investment properties	2,782	164	35	1,636	4,617
Total assets at 31 Dec 2023	116,400	9,001	5,847	9,332	140,580
Liabilities under investment contracts designated at fair value	—	—	5,103	—	5,103
Insurance contract liabilities	116,389	3,961	—	—	120,350
Reinsurance contract liabilities	—	819	—	—	819
Deferred tax	—	1	—	3	4
Other liabilities	—	—	—	6,573	6,573
Total liabilities	116,389	4,781	5,103	6,576	132,849
Total equity	—	—	—	7,731	7,731
Total liabilities and equity at 31 Dec 2023	116,389	4,781	5,103	14,307	140,580

1‘Life direct participating and investment DPF contracts’ are life direct participating contracts and investment contracts with discretionary participating features.

These are substantially measured under the variable fee approach measurement model.

2‘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.

3‘Other contracts’ includes investment contracts for which HSBC does not bear significant insurance risk.

4’Other assets and investment properties’ includes $24,222m and ’Other liabilities’ includes $23,420m in respect of the classification of the French insurance

business assets and liabilities as held for sale at 31 December 2024. Further details are provided on page 433.

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 primarily invested in fixed

income, with a proportion in some cases allocated to 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 addition, in some scenarios the asset returns can become insufficient

to cover the policyholders’ financial guarantees, and some contracts are

non-participating, in which case the shortfall has to be met by HSBC.

Amounts are held against the cost of such positions, calculated by

stochastic modelling in the larger entities.

The cost of such guarantees are generally not material and are absorbed

by the insurance fulfilment cash flows.

For unit-linked contracts, market risk is substantially borne by the

policyholder, but some market risk exposure typically remains, as fees

earned are related to the market value of the linked assets.

Sensitivities

The following table provides the impacts on the CSM, profit after tax and

equity of our insurance manufacturing subsidiaries from reasonably

possible effects of changes in selected interest rate, credit spread, equity

price, growth assets and foreign exchange rate scenarios for the year.

These sensitivities are prepared in accordance with current IFRS

Accounting Standards and are based on changing one assumption at a

time with other variables being held constant, recognising that in practice

such variables could be correlated.

Due in part to the impact of the cost of guarantees and hedging strategies

which may be in place, the relationship between the CSM, profit after tax

and total equity and the risk factors is non-linear. Therefore, the results

disclosed should not be extrapolated to measure sensitivities to different

levels of stress. For the same reason, the impact of the stress is not

necessarily symmetrical on the upside and downside. The sensitivities

are stated before allowance for management actions, which may mitigate

the effect of changes in the market environment.

The method used for deriving sensitivity information and significant

market risk factors remain unchanged except for updates made to the

foreign exchange rate risk methodology, which now limits the impacts to

within more recent historical ranges. 2023 comparative sensitivities have

been updated to reflect this change.

The sensitivities provided below include the French insurance

business, which was classified as held for sale at 31 December 2024.

Further details are provided on page 433.

264	HSBC Holdings plc Annual Report on Form 20-F

Risk review

Sensitivity of HSBC’s insurance manufacturing subsidiaries to market risk factors
(Audited)
	2024			2023
	Effect on<br><br>CSM	Effect on profit<br><br>after tax1	Effect on<br><br>total equity	Effect on<br><br>CSM	Effect on<br><br>profit after tax1	Effect on<br><br>total equity
	$m	$m	$m	$m	$m	$m
+100 basis point parallel shift in yield curves	(155)	83	52	(92)	66	32
-100 basis point parallel shift in yield curves	(249)	(217)	(186)	(390)	(137)	(103)
+100 basis point shift in credit spreads	(907)	(84)	(115)	(884)	(11)	(45)
-100 basis point shift in credit spreads	876	60	91	806	104	138
10% increase in growth assets2	467	73	73	436	78	78
10% decrease in growth assets2	(514)	(79)	(79)	(507)	(85)	(85)
10% appreciation in US dollar exchange rate against local<br><br>functional currency3	71	17	17	24	(1)	(1)
10% depreciation in US dollar exchange rate against local<br><br>functional currency3	(26)	(3)	(3)	(35)	(3)	(3)

1‘Effect on profit after tax‘ in respect for the year.

2‘Growth assets’ primarily comprise equity securities and investment properties. Variability in growth asset fair value constitutes a market risk to insurance

manufacturing subsidiaries.

3During the year 10% US dollar exchange rate methodology changed and the 10% sensitivity range applies to all currencies except for the Hong Kong dollar,

where the extent of change is limited by the impact of the HKD to USD peg. The comparatives have been restated accordingly.

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 262.

The credit quality of the reinsurers’ share of liabilities under insurance

contracts is assessed as ‘satisfactory’ or higher (as defined on

page 170), with none of the exposure being either past due or

impaired (2023: 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 196.

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 395.

The amounts of insurance contract liabilities that are payable on demand are set out by the product grouping below; 2024 balances exclude the

French insurance business that was classified as held for sale at 31 December 2024 (further details are provided on page 433).

Amounts payable on demand
(Audited)
	2024		2023
	Amounts payable<br><br>on demand	Carrying amount<br><br>for these<br><br>contracts	Amounts payable<br><br>on demand	Carrying amount<br><br>for these contracts
	$m	$m	$m	$m
Life direct participating and investment DPF contracts	98,275	102,605	107,287	116,389
Life other contracts	2,960	4,427	2,765	3,961
At 31 Dec	101,235	107,032	110,052	120,350
HSBC Holdings plc Annual Report on Form 20-F	265
---	---

Insurance underwriting risk

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 262 analyse our life insurance underwriting risk

exposures by composition of the fair value of the underlying items.

The insurance underwriting risk profile and related exposures remain

largely consistent with those observed at 31 December 2023.

Sensitivities

(Audited)

The following table shows the sensitivity of the CSM, profit and total

equity to reasonably foreseeable changes in non-economic

assumptions across all our insurance manufacturing subsidiaries.

These sensitivities are prepared in accordance with current IFRS.

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. During the year we have revised the sensitivity to mortality

and morbidity rates from 10% to 5% to align with reasonably

foreseeable changes, and the comparatives have been restated

accordingly. 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 our profits. This risk is

generally greatest for our smaller entities.

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 sensitivities provided below include the French insurance

business, which was classified as held for sale at 31 December 2024.

Further details are provided on page 433.

Sensitivity of HSBC’s insurance manufacturing subsidiaries to insurance underwriting risk factors1
(Audited)
	Effect on<br><br>CSM	Effect on<br><br>profit after tax2	Effect on<br><br>total equity
At 31 Dec 2024	$m	$m	$m
10% increase in lapse rates	(282)	(21)	(30)
10% decrease in lapse rates	297	23	36
5% increase in mortality and/or morbidity rates	(92)	(16)	(20)
5% decrease in mortality and/or morbidity rates	102	14	23
10% increase in expense rates	(66)	(11)	(15)
10% decrease in expense rates	68	12	15
At 31 Dec 2023
10% increase in lapse rates	(277)	(24)	(24)
10% decrease in lapse rates	290	29	29
5% increase in mortality and/or morbidity rates3	(87)	(11)	(11)
5% decrease in mortality and/or morbidity rates3	87	16	16
10% increase in expense rates	(68)	(6)	(6)
10% decrease in expense rates	67	11	11

1The sensitivities impacts are provided after considering the impacts of reinsurance contracts held as risk mitigation.

2‘Effect on profit after tax‘ in respect for the year.

3During the year the sensitivity to mortality and morbidity rates have been changed from 10% to 5% and the comparatives have been restated accordingly.

266	HSBC Holdings plc Annual Report on Form 20-F

Dividers image-04.jpg

Corporate

governance

report

HSBC continues to enhance its corporate

governance practices and procedures to

support the Board’s commitment to high

standards of corporate governance.

The corporate governance report contains the

Report of the Directors and gives details of our

Board of Directors, senior management, and

Board committees. It outlines key aspects of

our approach to corporate governance,

including internal control.

It also includes the Directors’ remuneration

report, which explains our policies on

remuneration and their application.

We have a comprehensive range of policies and systems

in place designed to help ensure that the Group is well

managed, with effective oversight and control.

267	The Board
272	Senior management
275	How we are governed
281	Board matters considered and workforce<br><br>engagement
287	Board and committee effectiveness,<br><br>performance and accountability
289	Board committees
309	Directors’ remuneration report
349	Share capital and other related governance<br><br>disclosures
354	Internal control
356	Employees
359	Statement of compliance

London, UK, 2019. HSBC Lion, 8 Canada Square.

HSBC Holdings plc Annual Report on Form 20-F	267

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.

Chairman and executive Directors

Mark Tucker.jpg

Sir Mark E Tucker (67)

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Group Chairman

Appointed to the Board: September 2017

Group Chairman since: October 2017

Skills and experience: With over 40 years of

experience in financial services in Asia, the US, the

UK, and Africa, including 30 years based in Hong

Kong, Mark has a deep understanding of the

industry and the markets in which we operate.

Career: Mark is also non-executive Group Chairman

of the Discovery Group of South Africa. Mark was

previously Group Chief Executive and President of

AIA Group Limited (‘AIA’). Prior to that, he was

Group Chief Executive of Prudential plc. Mark

previously served on the Court of the Bank of

England. He has also served on the Board of the

Goldman Sachs Group.

External appointments:

–Non-executive Group Chairman of Discovery

Group of South Africa

–Supporting Chair of Chapter Zero

–Member of the Asia Business Council

–Member of the Hong Kong Chief Executive’s

Council of Advisers

–Member of the Investment Council of the

Supreme National Investment Committee of the

Kingdom of Saudi Arabia

–Chairman of the Multinational Chairmen’s Group

–Director, Peterson Institute for International

Economics

–Director, Institute of International Finance

–Trustee, Asia Society Global Board of Trustees

–Member of the China National Financial

Regulatory Administration International Advisory

Council (NFRA IAC)

–International Adviser, Hong Kong Academy of

Finance - International Council of Advisers

–Member of the Advisory Board of the Asia Global

Institute

–International Business Leaders’ Advisory Council

to the Mayor of Beijing (IBLAC Beijing) – Advisor

to the Mayor

–International Business Leaders’ Advisory Council

to the Mayor of Shanghai (IBLAC Shanghai) –

Advisor to the Mayor

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Georges Elhedery (50)

Group CEO

Appointed to the Board: January 2023

Skills and experience: Georges has over 25 years

of experience in the banking industry across

Europe, the Middle East and Asia, and has held a

number of executive roles at a regional, global

business and functional level.

Career: Georges was appointed Group CEO from

2 September 2024. He most recently served as

Group CFO between January 2023 and September

Georges joined HSBC in 2005 with extensive

trading experience in London, Paris and Tokyo. He

has since held a number of senior leadership roles,

including Head of Global Banking and Markets,

Middle East and North Africa; Chief Executive

Officer for HSBC, Middle East, North Africa and

Türkiye; Global Head of Markets; and co-Chief

Executive Officer, Global Banking and Markets

based in London.

External appointments:

–Member of the Monetary Authority of Singapore,

International Advisory Panel

–Independent non-executive Director of

Sustainable Markets Initiative Limited

–Member of the Financial Services Task Force of

the Sustainable Markets Initiative

–Member of the Advisory Board of The China

Children Development Fund

–Principal Member of The Glasgow Financial

Alliance for Net Zero

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Manveen Kaur

(known as Pam Kaur) (61)

Group CFO

Appointed to the Board: January 2025

Skills and experience: Pam has extensive global

banking experience, gained over an almost 40-year

career with a number of global financial institutions.

She has performed many senior roles in audit,

business, compliance, finance and risk

management.

Career: Pam was appointed Group CFO on

1 January 2025. Prior to this, she served as Group

Chief Risk Officer from January 2020 and assumed

responsibility for Compliance in June 2021. She

served as Group Chief Risk and Compliance Officer

until December 2024. Prior to joining HSBC in April

2013 as Group Head of Internal Audit, Pam held

several senior positions including Global Head of

Group Audit for Deutsche Bank; Chief Financial

Officer and Chief Operating Officer of the

Restructuring and Risk Division for Royal Bank of

Scotland Group plc; Group Head of Compliance and

Anti-Money Laundering for Lloyds TSB; and Chief

Compliance Officer for Citigroup International.

External appointments:

–Non-executive Director of The Hongkong and

Shanghai Banking Corporation Limited

–Independent non-executive Director of abrdn plc

Board committee membership key

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Group Technology and Operations Committee Governance icons-11.jpg

For full biographical details of our Board

members, see www.hsbc.com/who-we-are/our-

people/board-of-directors.

268	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Independent non-executive Directors

Geraldine Buckingham (47)

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Independent non-executive

Director

Appointed to the Board: May 2022

Skills and experience: Geraldine is

an experienced executive within the

global financial services industry, with

significant leadership experience in

Asia.

Career: Geraldine is the former Chair

and Head of Asia-Pacific at BlackRock,

where she was responsible for all

business activities across Hong Kong,

mainland China, Japan, Australia,

Singapore, India and Korea. After

stepping down from this role, she

acted as senior adviser to the

Chairman and Chief Executive Officer

of BlackRock. She earlier served as

BlackRock’s Global Head of Corporate

Strategy, and previously was a partner

within McKinsey & Company’s

financial services practice.

External appointments:

–Independent non-executive Director

of Brunswick Group Partnership Ltd

–Independent non-executive Director

of H.R.L. Morrison & Co Limited

–Member of the Advisory Board of

ClimateWorks Centre Australia

–Member of the Advisory Board of

the McKinsey Health Institute

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Rachel Duan (54)

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Independent non-executive

Director

Appointed to the Board: September

2021

Skills and experience: Rachel is an

experienced business leader with

exceptional international experience in

the US, Japan, mainland China and

Hong Kong.

Career: Rachel spent 24 years at

General Electric (‘GE’), where she

held positions including Senior Vice

President of GE, and President and

Chief Executive Officer of GE’s Global

Markets where she was responsible

for driving GE’s growth in Asia-Pacific,

the Middle East, Africa, Latin America,

Russia and the Commonwealth of

Independent States. She also

previously served as President and

Chief Executive Officer of GE

Advanced Materials China and then of

Asia-Pacific; President and CEO of GE

Healthcare China; and President and

CEO of GE China. She has previously

served as a non-executive Director of

AXA S.A.

External appointments:

–Independent non-executive Director

of Sanofi S.A.

–Independent non-executive Director

of the Adecco Group AG

–Independent non-executive Director

of Kering S.A.

Dame Carolyn Fairbairn (64)

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Independent non-executive

Director

Appointed to the Board: September

2021

Skills and experience: Carolyn has

significant experience across the

media, government and finance

sectors, and a deep understanding of

the macroeconomic, regulatory and

political environment.

Career: An economist by training,

Carolyn has served as a partner at

McKinsey & Company, a member of

the UK prime minister John Major’s

Number 10 Policy Unit, and as

Director-General of the Confederation

of British Industry, and held senior

executive positions at the BBC and

ITV plc. She has extensive board

experience, having previously served

as non-executive Director of Lloyds

Banking Group plc, The Vitec Group

plc, Capita plc and BAE Systems plc.

She has also served as a non-

executive Director of the UK

Competition and Markets Authority

and the Financial Services Authority.

External appointments:

–Senior Independent non-executive

Director of Tesco plc

–Chair of Royal Mencap Society

HSBC Holdings plc Annual Report on Form 20-F	269

James Forese.jpg

James Forese (61)

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Independent non-executive

Director

Appointed to the Board: May 2020

Skills and experience: Jamie has

over 30 years of international

business and management

experience in the finance industry

working in areas including global

markets, investment and private

banking.

Career: Jamie formerly served as

President of Citigroup. He began his

career in securities trading with

Salomon Brothers, one of Citigroup’s

predecessor companies, in 1985. In

addition to his most recent role as

Citigroup’s President, he was Chief

Executive Officer of Citigroup’s

Institutional Clients Group. He has

held the positions of Chief Executive

of its Securities and Banking division

and Head of its Global Markets

business.

External appointments:

–Non-executive Chair of HSBC North

America Holdings Inc

–Non-executive Chairman of Global

Bamboo Technologies

Ann Godbehere .jpg

Ann Godbehere (69)

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Independent non-executive

Director

Appointed to the Board: September

2023

Senior Independent non-executive

Director: May 2024

Skills and experience: Ann brings

deep financial acumen and extensive

financial services experience over a

30-year career spanning insurance,

retail and private banking, and wealth

management. She also provides

global perspectives, drawing upon

experiences and insights gained from

a long career in international business.

Career: After joining Swiss Re in

1996, Ann served as the company’s

Chief Financial Officer from 2003 to

She was also Interim Chief

Financial Officer of Northern Rock

Bank from 2008 to 2009 in the period

immediately after its nationalisation.

Ann also has extensive board

experience, including with FTSE 100

companies, having previously served

as non-executive Director of

Prudential plc, British American

Tobacco plc, UBS AG, UBS Group AG

and as Senior Independent non-

executive Director of Rio Tinto plc and

Rio Tinto Limited.

External appointments:

–Non-executive Director of HSBC

Bank plc

–Non-executive Director and Chair of

the Audit Committee of Stellantis

N.V.

–Non-executive Director and Chair of

the Audit and Risk Committee of

Shell plc

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Steven Guggenheimer (59)

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Independent non-executive

Director

Appointed to the Board: May 2020

Skills and experience: Steven

brings extensive insight into

technologies ranging from artificial

intelligence to Cloud computing,

through his experience advising

businesses on digital transformation.

Career: Steven has more than 25

years of experience at Microsoft,

including more than a decade as

Corporate Vice President, where he

led teams focused on original

equipment manufacturers, developers

and independent software vendors

and artificial intelligence solutions.

External appointments:

–Independent non-executive Director

of BT Group plc

–Independent non-executive Director

of Leupold & Stevens, Inc

–Independent non-executive Director

of Forrit Holdings Limited

270	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Dr José Antonio Meade

Kuribreña (55)

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Independent non-executive

Director

Appointed to the Board: March 2019

Workforce engagement non-executive

Director since: June 2022

Skills and experience: José has

extensive experience in public

administration, banking and financial

policy.

Career: José has held Cabinet-level

positions in the federal government of

Mexico, including as Secretary of

Finance and Public Credit, Secretary

of Social Development, Secretary of

Foreign Affairs and Secretary of

Energy. Prior to his appointment to

the Cabinet, he served as

Undersecretary and as Chief of Staff

in the Ministry of Finance and Public

Credit. José is also a former Director

General of Banking and Savings at the

Ministry of Finance and Public Credit,

and served as Chief Executive Officer

of the National Bank for Rural Credit.

External appointments:

–Independent non-executive

Director of Alfa S.A.B. de C.V.

–Independent non-executive

Director of Grupo Comercial

Chedraui, S.A.B. de C.V.

–Independent Member of the

Technical Committee of Fibra Uno

Administracion SA de CV

–Board member of the Global

Center on Adaptation

–Member of the Advisory Board of

the University of California, Centre

for US-Mexican Studies

–Member of the UNICEF Mexico

Advisory Board

Kalpana Morparia (75)

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Independent non-executive

Director

Appointed to the Board: March 2023

Skills and experience: Kalpana is a

skilled business leader with significant

experience gained through a 45-year

career in banking across Asia,

primarily in India.

Career: Kalpana’s most recent

executive role was as Chair of J.P.

Morgan, South and Southeast Asia

and a member of J.P. Morgan’s Asia

executive committee, held until her

retirement in 2021. Before J.P.

Morgan, she was the Joint Managing

Director of ICICI Bank, India’s second-

largest bank, from 2001 to 2007. She

previously served as a non-executive

Director of Hindustan Unilever Limited

and Dr.Reddy’s Laboratories Ltd.

External appointments:

–Independent non-executive

Director of The Great Eastern

Shipping Company Limited

–Independent non-executive

Director of Philip Morris

International Inc

–Independent Director of Meesho

Inc

–Member of the Mentor Council of

the Institute for Sustainability,

Employment and Growth (ISEG

Foundation)

Eileen Murray.jpg

Eileen Murray (66)

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Independent non-executive

Director

Appointed to the Board: July 2020

Skills and experience: Eileen has

extensive knowledge in financial

services, technology and corporate

strategy from a career spanning more

than 40 years.

Career: Eileen previously served as

co-Chief Executive Officer of

Bridgewater Associates, LP. Before

this, she was Chief Executive Officer

for Investment Risk Management

LLC, and President and co-Chief

Executive Officer of Duff Capital

Advisors. Eileen started her

professional career at Morgan

Stanley, where she held positions

including Controller, Treasurer, and

Global Head of Technology and

Operations, as well as Chief

Operating Officer for its Institutional

Securities Group. She was also Head

of Global Technology, Operations and

Product Control at Credit Suisse.

External appointments:

–Independent non-executive Director

of Guardian Life Insurance

Company of America

–Independent non-executive Director

of Broadridge Financial Solutions,

Inc

–Chair of Invisible Urban Charging

–Operating partner of Liberty City

Ventures

HSBC Holdings plc Annual Report on Form 20-F	271

Brendan Nelson.jpg

Brendan Nelson (75)

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Independent non-executive

Director

Appointed to the Board: September

2023

Skills and experience: Brendan

brings UK and international financial

and auditing expertise, and significant

experience in auditing and as audit

committee chair of UK-listed

companies.

Career: Brendan spent over 25 years

as a partner at KPMG LLP, served on

the board from 2000 and as Vice

Chairman from 2006, until his

retirement in 2010. Internationally, he

held various senior positions including

Global Chairman of the financial

services practice. Subsequently,

Brendan joined the boards of bp plc

and NatWest Group plc where he also

served as Chairman of both

companies’ audit committees.

During his career, Brendan was

President of the Institute of Chartered

Accountants of Scotland, a member

of the Financial Reporting Review

Panel and a member of the Financial

Services Authority's Practitioner

Panel. As current Chairman of the

Board of BP Pension Trustees Ltd,

Brendan has received training in ESG

considerations for investment

decisions and helped set an ambition

to be net zero in terms of greenhouse

gas emissions from investments by

2050.

External appointments:

–Non-executive Director of HSBC UK

Bank plc

–Chairman of BP Pension Trustees

Ltd

Swee Lian Teo .jpg

Swee Lian Teo (65)

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Independent non-executive

Director

Appointed to the Board: October 2023

Skills and experience: Swee Lian

brings extensive experience within

the international financial services

industry, having previously spent over

27 years with the Monetary Authority

of Singapore (‘MAS‘).

Career: During Swee Lian’s time at

the MAS, she worked in foreign

reserves management, financial

sector development, strategic

planning and financial supervision,

before she became the Deputy

Managing Director for Financial

Supervision. She retired from the

MAS in 2015 after serving as Special

Advisor, focused on MAS’s role in the

international regulatory framework, in

the Managing Director’s office. Swee

Lian previously served as a non-

executive Director on the boards of

AIA Group Limited, Singapore

Telecommunications Limited and the

Dubai Financial Services Authority.

External appointments:

–Chair of CapitaLand Integrated

Commercial Trust Management

Limited

–Director of Clifford Capital Pte Ltd

–Director of Clifford Capital Holdings

Pte Ltd

Aileen Taylor (52) Group Chief People & Governance Officer Appointed: October 2024 Skills and experience: Aileen is a solicitor with significant risk, governance and regulatory experience across the banking industry. She is a member of the European Corporate Governance Council and the GC100. Career: Prior to joining HSBC, Aileen spent 19 years at the Royal Bank of Scotland Group, holding various legal, risk and compliance roles. She was appointed Group Secretary in 2010 and subsequently Chief Governance Officer and Board Counsel. Aileen started her HSBC career as Group Company Secretary and Chief Governance Officer in 2019 and has been leading connectivity between Board and Executive for over five years. Her role was expanded to Group Chief Human Resources and Governance Officer in October 2024 and then became Group Chief People & Governance Officer. Aileen has held various industry positions such as a member of the Financial Conduct Authority's Listing Authority Advisory Panel.

Former Directors who served during the year

David Nish

David Nish retired from the Board on 3 May 2024

Sir Noel Quinn

Sir Noel Quinn retired from the Board on 2 September 2024

For full biographical details of our Board members, see

www.hsbc.com/who-we-are/our-people/board-of-directors.

272	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Senior management

Senior management, which includes

the Group Operating Committee,

effective from 1 January 2025,

supports the Group CEO in the day-

to-day management of the business

and the implementation

of strategy.

Richard Blackburn.jpg

Richard Blackburn (59)

Interim Group Chief Risk and

Compliance Officer

Richard was appointed Interim Group

Chief Risk and Compliance Officer in

January 2025. He also retains his

existing responsibilities as Global

Head of Traded and Treasury Risk

Management & Global Head of Risk

Analytics. Richard has 35 years’

experience in the financial services

sector and has been with HSBC for

over 20 years. In that time, he has

held a number of senior roles

including Regional Chief Risk Officer

for Europe and MENAT, Chief Risk &

Compliance Officer for Global Banking

& Markets, Chief Risk & Compliance

Officer for Global Commercial

Banking, Chief Financial Officer for

Global Markets and Head of Global

Markets Asset & Liability

Management.

Jonathan Calvert-Davies (56)

Group Head of Internal Audit

Jonathan is a standing attendee of the

Group Operating Committee, having

joined HSBC as Group Head of

Internal Audit in October 2019. He has

over 30 years of experience providing

assurance, audit and advisory services

to the banking and securities

industries in the UK, the US and

Europe. Jonathan’s previous roles

included leading KPMG UK’s financial

services internal audit services

practice and PwC’s UK internal audit

services practice. He also previously

served as interim Group Head of

Internal Audit at the Royal Bank of

Scotland Group.

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Bob Hoyt (60)

Group Chief Legal Officer

Bob joined HSBC as Group Chief

Legal Officer in January 2021. He was

previously Group General Counsel at

Barclays from 2013 to 2020. Prior to

that, he was General Counsel and

Chief Regulatory Affairs Officer for

PNC Financial Services Group. Bob

has served as General Counsel and

Senior Policy Adviser to the US

Department of the Treasury under

Secretary Henry M. Paulson Jr, and as

Special Assistant and Associate

Counsel to the White House under

President George W. Bush.

1.4.9.1 RT_David Liao_Adobe RGB.jpg

David Liao (52)

Co-Chief Executive,

Asia and Middle East

David was appointed Co-Chief

Executive of the Asia-Pacific region in

2021, which was expanded to cover the

Middle East in January 2025. David,

who joined HSBC in 1997, has held

several senior roles during his HSBC

career including: Head of Global

Banking Coverage for Asia-Pacific;

President and Chief Executive of HSBC

China; Head of Global Banking and

Markets, HSBC China; and Treasurer

and Head of Global Markets, HSBC

China. He also serves as the Chair of

HSBC Bank (China) Company Limited,

and as a Director of Bank of

Communications Co., Limited and Hang

Seng Bank Limited.

HSBC Holdings plc Annual Report on Form 20-F	273

Barry O’Byrne (49)

Chief Executive Officer,

International Wealth & Premier

Banking

Barry was appointed Chief Executive

Officer of Wealth and Premier

Banking in October 2024. He joined

HSBC in 2017 firstly as Chief

Operating Officer for Global

Commercial Banking and became

Chief Executive Officer in 2019.

Before joining HSBC, Barry worked at

GE Capital for 19 years where he held

a number of senior leadership roles,

including Chief Executive Officer and

Chief Operating Officer for GE Capital

International.

Michael Roberts (64)

Chief Executive Officer,

HSBC Bank plc, and Corporate

and Institutional Banking

Michael was appointed Chief

Executive Officer, Corporate and

Institutional Banking and Western

Markets in January 2025. In this role

he also holds the role of CEO, HSBC

Bank plc, the Group’s non-ring-fenced

bank. Michael previously served as

Chief Executive Officer of HSBC US

and Americas until December 2024.

Prior to this he held the role of Chief

Executive Officer of HSBC USA when

he joined HSBC in 2019. Prior to

joining HSBC, Michael spent over 30

years at Citigroup in a number of

senior leadership roles, most recently

as Global Head of Corporate Banking

and Capital Management and Chief

Lending Officer.

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Surendra Rosha (56)

Co-Chief Executive,

Asia and Middle East

Surendra was appointed Co-Chief

Executive of the Asia-Pacific region in

2021, which was expanded to cover

the Middle East in January 2025. He

is a Director of The Hongkong and

Shanghai Banking Corporation

Limited, HSBC Global Asset

Management Limited and HSBC Bank

Malaysia Berhad. Surendra joined

HSBC in 1991 and has held several

senior positions within Global Banking

and Markets, including Head of Global

Markets in Indonesia and Head of

Institutional Sales, Asia-Pacific. He

previously held the position of Chief

Executive for HSBC India and Head of

Financial Institutions Group, Asia-

Pacific.

Additional members of the Group Operating Committee Georges Elhedery Pam Kaur Aileen Taylor Other Senior Management who served on the Group Executive Committee during the year: –Greg Guyett, former Chief Executive Officer Global Banking and Markets stepped down as a Group Executive Committee member on 31 December 2024. He assumed the role of Chair, Strategic Clients Group on 1 January 2025. –Elaine Arden, former Group Chief Human Resources Officer stepped down on 30 September 2024. –John Hinshaw, former Group Chief Operating Officer stepped down on 30 September 2024. –Nuno Matos, former Chief Executive Officer Wealth and Personal Banking stepped down on 30 September 2024. –Colin Bell, former Chief Executive Officer HSBC Bank plc and HSBC Europe stepped down on 31 December 2024. –Dr Celine Herweijer, former Group Chief Sustainability Officer stepped down on 31 December 2024. –Steve John, former Group Chief Communications and Brand Officer stepped down on 31 December 2024. –Stephen Moss, former Regional Chief Executive Officer – Middle East, North Africa and Türkiye stepped down on 31 December 2024. –Jonathan Bingham, Global Financial Controller, served on the Group Executive Committee as interim Group Chief Financial Officer from 2 September 2024 to 31 December 2024. –Jo Miyake attended meetings of the Group Executive Committee as interim CEO, Global Commercial Banking from 1 October 2024 to 31 December 2024.

SM_Ian Stuart .jpg

John David Stuart

(known as Ian Stuart) (61)

Chief Executive Officer,

HSBC UK Bank plc

Ian has been Chief Executive Officer

of HSBC UK Bank plc, the Group’s UK

ring-fenced bank, since 2017. He

joined HSBC in 2014 and served as

Head of Commercial Banking, UK and

Europe, until taking up his current

role. Ian has worked over 45 years in

financial services, and previously

worked at Bank of Scotland, NatWest,

RBS and Barclays. Ian holds an

Honorary Masters and Honorary

Doctorate degree for his services to

the banking sector. He is a member of

the UK Finance Board, TheCityUK

Board, the UK Investment Council and

is a business ambassador for

Meningitis Now.

Stuart Riley.jpg

Stuart Riley (50)

Group Chief Information Officer

Stuart was appointed Group Chief

Information Officer in February 2024,

initially overseeing the Technology

function. In October 2024, he

assumed responsibilities for data and

analytics, and emerging technology,

innovation, and ventures. Prior to

joining HSBC, Stuart was Co-Chief

Information Officer of Citi, and

previously held senior technology

roles at Deutsche Bank. He has also

held the role of Partner at TAG

Consulting, a technology consulting

firm.

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Suzy White (48)

Group Chief Operating Officer

Suzy was appointed Group Chief

Operating Officer in October 2024.

Suzy has been with HSBC for more

than 25 years and has held a number

of senior leadership roles, most

recently Chief Operating Officer for

Global Banking and Markets. Previous

roles included Regional Chief

Operating Officer for Global Markets

in the Americas, and Chief Risk

Officer for Global Banking and

Markets and Commercial Banking in

the US.

274	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

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.

This section outlines the key inclusion metrics for Board members and executive management as at 31 December 2024. The metrics as at 1 January

2025 have also been included to reflect changes to the Board and senior management that took effect from 1 January 2025.

Gender and ethnic representation

In accordance with the requirements of UK Listing Rule 6.6.6 (10) the tables below outline the current gender and ethnic representation of the

HSBC Holdings Board and executive management reflecting data gathered through self-identification.

Gender Identity

	As at 31 December 2024					As at 1 January 2025
	Board members			Executive<br><br>management2		Board members			Executive<br><br>management3
	Number	%	Number of<br><br>senior<br><br>positions1	Number	%	Number	%	Number of<br><br>senior<br><br>positions1	Number	%
Male	6	46	3	15	79	6	43	2	10	77
Female	7	54	1	4	21	8	57	2	3	23
Other	—	—	—	—	—	—	—	—	—	—
Not specified/prefer not to say	—	—	—	—	—	—	—	—	—	—

Ethnic Background

	As at 31 December 2024					As at 1 January 2025
	Board members			Executive<br><br>management2		Board members			Executive<br><br>management3
	Number	%	Number of<br><br>senior<br><br>positions1	Number	%	Number	%	Number of<br><br>senior<br><br>positions1	Number	%
White British or other White (including<br><br>minority-White groups)	8	62	3	13	69	8	57	2	9	69
Mixed/multiple ethnic groups	—	—	—	—	—	—	—	—	—	—
Asian/Asian British	3	23	—	4	21	4	29	1	3	23
Black/African/Caribbean/Black British	—	—	—	—	—	—	—	—	—	—
Other ethnic groups	2	15	1	1	5	2	14	1	1	8
Not specified/prefer not to say	—	—	—	1	5	—	—	—	—	—

1Senior positions on the Board comprise the Group Chairman, Group CEO, Group CFO and Senior Independent non-executive Director.

2Executive management comprises the Group Executive Committee members and the Group Head of Internal Audit.

3Executive management comprises the Group Operating Committee members and the Group Head of Internal Audit.

Skills and experience

72567767435969

Banking

Finance

Risk

Customer

Digital technology

CSR1/ESG

Direct Asia market experience

Global business experience

11
9
9
7
4
4
6
9

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 Directors are also included in

the summary.

1Corporate Social Responsibility ('CSR')

HSBC Holdings plc Annual Report on Form 20-F	275

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,

which are reviewed on a regular basis, designed to help ensure that

the Group’s end-to-end governance is well managed, with effective

oversight and controls.

Governance highlights 2024

Appointment of new Group<br><br>CEO<br><br>Read more on pages 289 to 292<br>	Appointment of new Group CFO<br><br>Read more on pages 289 to 292<br>
Governance simplification<br><br>Read more on page 279<br>	Oversight of organisational<br><br>changes<br><br>Read more on page 281<br>
Establishment of new Board<br><br>Sustainability Working Group<br><br>Read more on pages 72 and 279<br>	Establishment of Group<br><br>Technology and Operations<br><br>Committee<br><br>Read more on pages 279 and <br><br><br>306 to 308
Active stakeholder engagement<br><br>Read more on page 19<br>	Revised Directors’<br><br>Remuneration Policy<br><br>Read more from page 309<br>

Board and executive governance

The Board, led by the Group Chairman, is responsible for, among

other matters:

–promoting the Group’s long-term success and delivering

sustainable value to shareholders;

–establishing and approving the Group’s strategy and objectives,

and monitoring the alignment of the Group’s purpose, strategy and

values with the desired culture and standards;

–setting the Group’s risk appetite and monitoring the Group’s risk

profile;

–approving and monitoring capital and financial resource plans for

achieving strategic objectives, including material transactions;

–considering and approving the Group’s technology and

environmental, social and governance strategies;

–reviewing the effectiveness of stakeholder engagement

mechanisms, including engagement with the workforce;

–approving the appointment and remuneration of Directors,

including Board roles;

–reviewing the Group’s overall corporate governance arrangements;

and

–providing entrepreneurial leadership of the Group within a

framework of prudent and effective controls, which enable risks to

be assessed and managed.

A schedule of matters reserved to the Board is set out within its

terms of reference, which are available on our website at

www.hsbc.com/who-we-are/our-people/board-of-directors/board-

responsibilities. The Board’s powers are subject to relevant laws,

regulations and HSBC’s articles of association.

The role of the independent non-executive Directors is to support the

development of strategy, oversee risk, hold management to account

and ensure the executive Directors are discharging their

responsibilities properly, while creating the right culture to encourage

constructive challenge. Further details on the independence of the

Board can be found on page 352. Non-executive Directors also review

the performance of management in meeting agreed goals and

objectives. The Group Chairman meets with the non-executive

Directors without the executive Directors in attendance after Board

meetings and otherwise, as necessary.

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 management of HSBC’s

business undertaken by the Group CEO.

The majority of Board members are independent non-executive

Directors. As at 31 December 2024, the Board comprised the Group

Chairman, 11 non-executive Directors, and one executive Director

who is the Group CEO. From 1 January 2025, the newly appointed

Group CFO will be an executive Director.

For further details of Board members’ career backgrounds, skills, experience

and external appointments, see their biographies on page 267, and for a

breakdown of the diversity and skills of the Board and senior management,

see page 274.

Operation of the Board

The Board is ordinarily scheduled to meet nine times a year. In 2024,

the Board held 10 meetings. For further details on attendance at

those meetings, see page 276. The Board agenda is agreed by the

Group Chairman, working with both the Group CEO and the Group

Company Secretary. For further information, see ’Board matters

considered’ on page 281.

The Group Chief People & Governance Officer (who is also the duly

appointed Group Company Secretary), the Group Chief Risk and

Compliance Officer and the Group Chief Legal Officer were regular

attendees at Board meetings during 2024. The non-executive

Chairman of The Hongkong and Shanghai Banking Corporation

Limited was also a regular attendee at Board meetings. The chief

executive officers of the three global businesses often attended

Board strategy discussions, and other senior executives attended

Board meetings for specific items as and when requested by the

Board.

In addition, as agreed by the Board, the Board Oversight Sub-Group is

called on an ad hoc basis where necessary. Such meetings are an

informal mechanism for a smaller group of Board members and

management to discuss emerging issues and upcoming Board

matters.

276	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Board roles, responsibilities and meeting attendance

The table below sets out the Board members’ respective roles, responsibilities and attendance at Board meetings and the AGM in 2024. For a

full description of key Board members’ responsibilities, see www.hsbc.com/who-we-are/our-people.

Roles	Board<br><br>attendance in<br><br>20241	Responsibilities
Group Chairman<br><br>Sir Mark E Tucker2,4	11/11	–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<br><br>among Directors.<br><br>–Maintains internal and external relationships with key stakeholders, and communicates investors’ views to the<br><br>Board.<br><br>–Organises periodic monitoring and evaluation, including externally facilitated evaluation, of the performance of the<br><br>Board, its committees and individual Directors.<br><br>–Leads on succession planning for the Board and its committees, ensuring appointments reflect diverse cultures,<br><br>skills and experiences.
Executive Director<br><br>Group CEO<br><br>Sir Noel Quinn4,6<br><br>Georges Elhedery4,6,7	7/7<br><br>4/4	–Leads and directs the fulfilment of the Group’s purpose and strategy, in alignment with the desired culture and<br><br>values as set by the Board.<br><br>–Leads the senior executive committee with responsibility for the day-to-day leadership and management of the<br><br>Group, in accordance with the authority delegated to him from the Board.<br><br>–Maintains effective relationships with key internal and external stakeholders including the Group Chairman, the<br><br>Board, customers, regulators, governments and investors.<br><br>–Maintains accountability for the Group’s compliance with applicable laws, codes, rules and regulations, good<br><br>market practice and HSBC’s own standards, value and policies.
Executive Director<br><br>Group CFO<br><br>Georges Elhedery4,6,7<br><br>Jonathan Bingham7	7/7<br><br>4/4	–Supports the Group CEO in developing and implementing the Group strategy, and recommends the annual budget<br><br>and long-term strategic and financial resource plan.<br><br>–Leads the Finance function and is responsible for effective financial and regulatory reporting, including the<br><br>effectiveness of the processes and controls, to ensure the financial control framework is robust and fit for<br><br>purpose.<br><br>–Maintains relationships with key stakeholders including shareholders.
Non-executive Director<br><br>Senior Independent<br><br>Director<br><br>David Nish3,4,,5<br><br>Ann Godbehere3,4,5	5/5<br><br>11/11	–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<br><br>responsibility between 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		–Develop and approve the Group strategy.<br><br>–Challenge and oversee the performance of management in achieving agreed corporate goals and objectives.<br><br>–Approve the Group’s risk appetite and review risk profile and performance.<br><br>–Contribute to the assessment and monitoring of culture.<br><br>–Maintain internal and external relationships with the Group’s key stakeholders.<br><br>-
Geraldine Buckingham3,4	11/11
Rachel Duan3,4,8	10/11
Dame Carolyn Fairbairn3,4	11/11
James Forese3,4	11/11
Steven Guggenheimer3,4	11/11
Dr José Antonio Meade<br><br>Kuribreña3,4	11/11
Kalpana Morparia3,4	11/11
Eileen Murray3,4,8	10/11
Brendan Nelson3,4	11/11
Swee Lian Teo3,4	11/11
Group Chief People &<br><br>Governance Officer<br><br>(duly appointed Group<br><br>Company Secretary)<br><br>Aileen Taylor		–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 transparent<br><br>engagement between senior 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<br><br>making across the Group.

1The total number of meetings comprises nine scheduled meetings, one ad hoc meeting and the AGM.

2The non-executive Group Chairman was considered to be independent on appointment.

3Independent non-executive Director. All of the non-executive Directors are considered to be independent. There are no relationships or circumstances that are

likely to affect any individual non-executive Director’s objective judgement. All non-executive Directors have confirmed their independence during the year.

4Attended the AGM on 3 May 2024. Kalpana Morparia attended virtually.

5David Nish retired from the Board with effect from 3 May 2024 and was succeeded as the Board’s senior independent non-executive Director on that date by

Ann Godbehere.

6Sir Noel Quinn retired from the Board with effect from 2 September 2024 and was succeeded as Group CEO on that date by Georges Elhedery.

7Georges Elhedery stepped down from his role as Group CFO with effect from 2 September 2024 and Jonathan Bingham was appointed interim Group CFO on

that date. Jonathan Bingham was not appointed as an executive Director. From 1 January 2025, Pam Kaur was appointed as an executive Director and assumed

the role of Group CFO.

8Due to prior commitments, Eileen Murray was unable to attend the Board meeting in September 2024 and Rachel Duan was unable to attend the ad hoc Board

meeting held in October 2024.

HSBC Holdings plc Annual Report on Form 20-F	277

Relationship between the Board and

senior management

The Board delegates day-to-day management of the business and

implementation of strategy to the Group CEO. During the year, the

incumbent Group CEO was supported in his management of the

Group by recommendations and advice from the Group Executive

Committee (’GEC’), an executive forum comprising members of

senior management that included chief executive officers of the

global businesses and regions, as well as functional heads. With

effect from 1 January 2025, the Group CEO is supported in his role by

the Group Operating Committee (‘Group OpCo’) in place of the GEC.

The Group CEO reports to the Board on Group OpCo meetings'

outcomes and other executive matters of note relevant for the Board.

For further details of the senior management team, see page 272.

All Directors are encouraged to have contact with management at all

levels and have full access to management information as may be

required. Visits to local business operations and meetings with local

management are arranged for the non-executive Directors, alongside

the executive Directors, when they attend Board meetings in different

locations, and when travelling for other reasons. Senior management

often attend Directors’ engagements and receive updates from the

workforce engagement non-executive Director, José Meade. For

further details, see ’The Board's engagement with the workforce’ on

page 284.

Executive governance

Throughout 2024, the GEC promoted the culture, as led and overseen

by the Board, across the organisation by demonstrating the right tone

from the top. The GEC modelled our values through their everyday

behaviours, fostering a culture that delivered against our purpose of

opening up a world of opportunity. At its meetings, the GEC

dedicated time to reflect on how they had demonstrated our purpose

and values in the day-to-day course of business.

The GEC’s operating rhythm helped to facilitate end-to-end

governance between senior leadership and the Board. The operating

rhythm had the following three pillars:

–regular check-in meetings to review and discuss current and

emerging trends and issues;

–a monthly meeting to review the performance of each of the

global businesses in principal geographies and legal entities,

supported by strategic key performance indicators; and

–a strategy- and governance-focused meeting, held in advance of

each Board meeting.

Separate committees have been established to provide specialist

oversight for matters delegated to the Group CEO and senior

management. For further details of these committees, see page 279.

To further support our senior management, we have dedicated

company secretaries and corporate governance officers who support

and advise legal entities, global businesses and global functions on

our corporate governance practices. These roles serve to strengthen

the consistency and effectiveness of our end-to-end governance

arrangements, and support connectivity and information sharing.

From 1 January 2025 the GEC has been replaced by the Group

Operating Committee (‘Group OpCo’), whose key focus has been

establishing clear lines of accountability and enabling the Group to

execute our strategy at pace.

The Group OpCo serves as the leading executive decision-making

committee and supports the Group CEO in discharging his

responsibilities for the management and delivery of Group strategy.

In support of the ambition to simplify HSBC, the Nomination &

Corporate Governance Committee endorsed a new Group

Governance Framework and Operating Rhythm, which will be

implemented throughout the organisation in 2025.

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 with 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 to enhance communications and

connectivity; and

–ensuring a shared and consistent understanding of the Group’s

strategic objectives, culture and values.

The subsidiary accountability framework also focuses on ensuring that

each subsidiary is led by an effective board with an appropriate

balance of skills, diversity, experience and knowledge, having regard

to the nature of the subsidiary’s business and local legal and

regulatory requirements. Board composition of the Group’s

subsidiaries is kept under review as part of succession planning. The

Nomination & Corporate Governance Committee reviews the

succession plans of principal subsidiaries, and principal subsidiaries

review the succession plans for their own subsidiaries, as appropriate.

The framework is subject to periodic review by the Board and/or the

Nomination & Corporate Governance Committee and updated as

required to ensure it is aligned to regulatory requirements and best

practices. A comprehensive internal review of the framework was

undertaken in 2024 with the outputs reported to the Nomination &

Corporate Governance Committee. A number of improvements were

made to the framework to provide greater clarity and additional

guidance for 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. Chairs of principal subsidiaries’ risk

and audit committees are invited to attend relevant Group Risk

Committee and Group Audit Committee meetings. Attendance and

participation at these meetings enhances subsidiary directors’

understanding of the challenges facing the Group and helps to identify

common challenges and facilitates the sharing of lessons learned.

Such committee participation supplements the regular reports,

certifications and escalations from principal subsidiaries’ boards and

their respective committees to the Board and relevant committee(s)

of the Board.

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 non-executive 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.

278	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

In 2024, the Chairman’s Forum covered topics such as strategic

business considerations, geopolitical issues and economic outlook,

shareholder engagements, Group-wide connectivity of non-executive

Directors, key regulatory themes, employee engagement and financial

performance.

The Group Remuneration Committee Chair hosted dedicated forums

with the chairs of principal subsidiaries to share key priorities for 2024

and the future. These sessions provided an opportunity for review and

input on proposed pay outcomes and allocation, before approval by

the Group Remuneration Committee.

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)<br><br>Limited	Mexico and Latin America

Subsidiary director development

The Group is dedicated to supporting the continuing professional

development of its subsidiary directors. A global non-executive

director update was held in September 2024, which was attended by

subsidiary non-executive directors from across the Group. Updates

were provided by the Group Chairman and Group CEO, along with

presentations on net zero transition, digital acceleration, AI and

geopolitics.

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. The

programme covers six modules: governance and the role of a bank

director; finance, capital and liquidity management; risk and

regulation; strategy, leadership and culture; ESG and managing

stakeholders; and technology and operations. The programme was

delivered for a second time in 2024 to a cohort of 26 participants

selected from across the Group. Many of those colleagues who have

completed the programme have already taken up positions as internal

non-executive directors on Group subsidiary boards.

During 2024 we launched our inaugural Bank Chair Programme with a

group of subsidiary board and committee chairs from across our

regions. The programme represents a significant investment in

subsidiary director development and is sponsored by the Group

Chairman together with the Group Chief People & Governance

Officer. It is a unique and forward-looking initiative, focused on

developing our ‘chairs of the future‘ and equipping them to lead ‘best-

in-class’ subsidiary boards and committees at HSBC. Part one of the

programme was delivered in November 2024 and comprised three

modules covering: the challenges faced by board and committee

chairs; the evolving role of the chair; and navigating regulatory

priorities.

HSBC Holdings plc Annual Report on Form 20-F	279

Board and Group executive committees and working groups

The Board delegates oversight of certain audit, risk, remuneration,

nomination, technology and governance matters to its committees,

which are each chaired by a non-executive Director. Only the Group

Chairman and the independent non-executive Directors are members

of Board committees. Members of the senior management team

attend Board committee meetings, as appropriate. Details of the

responsibilities and work carried out by each of the Board committees

can be found in the respective committee reports starting on page

289.

The Chairman’s Committee is an ad hoc committee, which provides

the Board with the opportunity to consider time-critical matters

between scheduled Board meetings. All Board members are invited

to attend Chairman’s Committee meetings.

In addition to the Board committees, bespoke working groups have

been established as an informal mechanism for smaller groups of

Board members and senior management to meet to discuss

emerging issues and upcoming Board matters, as appropriate.

The GEC established a number of committees to support the senior

management during 2024 in their running of the business and provide

specialist oversight for matters delegated to them, including capital

and liquidity, risk management, disclosure and financial reporting,

restructuring and investment considerations, transformation

oversight, ESG matters and talent and development. These

committees also help fulfil their responsibilities under the Senior

Managers and Certification Regime.

The structure below sets out the current committees and working

groups at the Board and Group Executive level as at 31 December

The key changes in the year include:

The Board Sustainability Working Group (‘SWG‘) was established,

with effect from October 2024, to enhance the Board’s oversight of

sustainability matters.

On 25 January 2024, the Board approved that the Technology

Working Group be demised and, in its place, established the creation

of the Group Technology Committee (‘GTC’), effective from March

The GTC was delegated responsibility to oversee the Group’s

technology strategy and its alignment with the wider global strategy

of the Group. In December 2024, the remit of the GTC (renamed the

Group Technology and Operations Committee (‘GTOC‘)) was

extended to cover oversight of global operations.

The Board also approved a proposal from the Group CEO to combine

the Group‘s executive level ESG Committee and Sustainability

Execution Committee, with effect from October 2024. For more

information on this Committee please refer to ‘Board matters

considered on page 281‘.

In addition, the Board approved that the GEC of 18 members be

simplified and replaced by a new Group Operating Committee

comprised of 12 members, with effect from 1 January 2025

(www.hsbc.com/who-we-are/our-people/senior-management).

Board Chair: Sir Mark Tucker
Chairman’s<br><br>Committee	Nomination &<br><br>Corporate<br><br>Governance<br><br>Committee	Group Audit<br><br>Committee	Group Risk<br><br>Committee	Group<br><br>Remuneration<br><br>Committee	Group Technology<br><br>and Operations<br><br>Committee	Informal<br><br>Governance
Chair: Sir Mark<br><br>Tucker	Chair: Sir Mark<br><br>Tucker	Chair: Brendan<br><br>Nelson	Chair: James<br><br>Forese	Chair: Dame<br><br>Carolyn Fairbairn	Chair: Eileen Murray	Board Oversight<br><br>Sub-Group<br><br>Chair: Sir Mark<br><br>Tucker
	See page 289<br>	See page 293<br>	See page 301<br>	See page 309<br>	See page 306<br>	Sustainability<br><br>Working Group<br><br>Chair: Geraldine<br><br>Buckingham	Group Executive Committee Chair: Georges Elhedery1
---	---	---	---	---	---	---
Acquisitions and<br><br>Disposals<br><br>Committee	Group Disclosure<br><br>and Controls<br><br>Committee	Group People<br><br>Committee	Group Risk<br><br>Management<br><br>Meeting	Holdings Asset<br><br>and Liabilities<br><br>Committee	Change<br><br>Prioritisation and<br><br>Oversight<br><br>Committee	Environmental,<br><br>Social and<br><br>Governance<br><br>Committee
Chair: Georges<br><br>Elhedery	Chair: Jonathan<br><br>Bingham2	Chair: Aileen<br><br>Taylor	Chair: Pam Kaur3	Chair: Jonathan<br><br>Bingham2	Chair: Jonathan<br><br>Bingham2	Co-Chairs:<br><br>Jonathan Bingham<br><br>and Celine<br><br>Herweijer4

1With effect from 2 September 2024, the role of Chair changed from Sir Noel Quinn to Georges Elhedery and with effect from 1 January 2025 the GEC was

replaced by the Group Operating Committee and committees reporting into it are under review.

2Pam Kaur appointed as Chair with effect from 1 January 2025.

3Richard Blackburn appointed as Chair with effect from 1 January 2025.

4With effect from 2 September 2024, Jonathan Bingham succeeded Georges Elhedery as Co-Chair and Pam Kaur appointed as sole Chair with effect from

1 January 2025.

280	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Board induction and training

The Board recognises the importance of induction and training for its

Directors. The Group Chief People & Governance Officer 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 conflicts. To ensure Directors’ contribution to

the Board remains informed and relevant, all Board members receive

appropriate training, both individually and collectively, throughout their

time served on the Board.

The Group Chief People & Governance Officer also helps to arrange

and deliver the induction programme for new Board members,

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 within 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.

Prior to his appointment as Group CEO becoming effective, Georges

Elhedery received relevant training and legal advice from a firm of

solicitors on 15 August 2024. Prior to her appointment as Group CFO,

Pam Kaur received relevant training and legal advice from a firm of

solicitors on 11 December 2024.

Following this training, both Georges Elhedery and Pam Kaur

confirmed their understanding of their obligations as directors of a

listed issuer pursuant to Rule 3.09D of the Hong Kong Listing Rules.

The approach to training is agreed annually, with key topics agreed for

2024 including cybersecurity, media interaction and the UK’s Senior

Manager and Certification Regime. Training sessions were facilitated

by both internal subject matter experts and by external presenters.

Directors were also issued with training modules, which mirrored the

mandatory training undertaken by employees. During 2024, this

training covered topics including risk management, sustainability,

health and safety, well-being, cyber-security, financial crime, and

conduct.

Non-executive Directors also discussed individual development areas

with the Group Chairman as part of their ongoing performance

discussions regarding their contributions on the Board. The Group

Chief People & Governance Officer makes appropriate arrangements

for any additional training needs identified using internal resources, or

otherwise, at HSBC’s expense.

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 289 onward. Directors may take independent professional

advice 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. Opportunities exist for the principal subsidiaries'

committee chairs to share their understanding of specific areas with

the Directors as part of the Chairman’s Forum. For further details, see

’The role of principal subsidiaries’ on page 277.

Directors’ induction and ongoing development in 2024
Director	Induction	Strategy and<br><br>business briefings2	Risk and<br><br>control3	Corporate<br><br>governance, ESG<br><br>and other<br><br>reporting matters4	Board global<br><br>mandatory<br><br>training5
Geraldine Buckingham	u	u	u	u	u
Rachel Duan	u	u	u	u	u
Georges Elhedery1	u	u	u	u	u
Dame Carolyn Fairbairn	u	u	u	u	u
James Forese	u	u	u	u	u
Ann Godbehere	u	u	u	u	u
Steven Guggenheimer	u	u	u	u	u
José Antonio Meade Kuribreña	u	u	u	u	u
Kalpana Morparia	u	u	u	u	u
Eileen Murray	u	u	u	u	u
Brendan Nelson	u	u	u	u	u
Swee Lian Teo	u	u	u	u	u
Sir Mark Tucker	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---

1As part of the transition from Group CFO to Group CEO, Georges Elhedery completed an induction and development plan.

2Directors participated in business strategy, market development and business briefings, which are global, regional and/or market-specific. Examples of specific

sessions held in 2024 included: ’Technology and the future of artificial intelligence’, ’WPB customer-centricity improvement plan’, and ’Investor sentiments’.

3Directors received risk and control training and briefings. Examples of specific sessions held in 2024 included: ’Cybersecurity’ and ’The UK’s Senior Manager

Certification Regime’.

4Directors received training on the UK’s Senior Managers’ and Certification Regime as well as development updates at Board meetings on: ’Board stakeholder

engagement and management’ 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.

5Training modules, issued to all Directors, mirrored training undertaken by employees. This included: risk management, sustainability, health and safety, well-

being, cybersecurity, financial crime and conduct and values, personal conflicts of interest, data quality, privacy and security and AI and our changing world.

HSBC Holdings plc Annual Report on Form 20-F	281

Board matters considered

During 2024, the Board remained focused on HSBC’s strategic direction and delivery, and overseeing Group performance. It considered

performance against financial and other strategic objectives, key business challenges, emerging risks, sustainability and governance, business

development, investor relations and the Group’s relationships with its stakeholders. The end-to-end governance framework facilitated discussion

on strategy and performance by each of the global businesses and across the principal geographical areas, which enabled the Board to support

executive management with its delivery of the Group’s strategy. The Board considers the impacts of its decision making on the Group’s

stakeholders and examples of how the Board has taken principal strategic decisions.

Board matters considered in 2024
		Meetings at which topics were discussed1
Main topic	Sub-topic	Jan	Feb	Mar	May	Jun	Jul	Sep	Oct	Nov	Dec
Strategy	Group strategy	u	u	u	u	u	u	u	u	u	u
	Regional strategy/global business strategy	u	u	u	u	u	u	u	u	u	u
	Environmental, social and governance strategies	u	u	u	u	u	u	u	u	u	u
Business and financial<br><br>performance	Region/global business	u	u	u	u	u	u	u	u	u	u
	Financial performance	u	u	u	u	u	u	u	u	u	u
Financial	Results and accounts1	u	u	u	u	u	u	u	u	u	u
	Dividends	u	u	u	u	u	u	u	u	u	u
	Group financial resource planning	u	u	u	u	u	u	u	u	u	u
Risk	Risk update	u	u	u	u	u	u	u	u	u	u
	Risk appetite	u	u	u	u	u	u	u	u	u	u
	Capital and liquidity adequacy	u	u	u	u	u	u	u	u	u	u
Regulatory	Regulatory and legal matters2	u	u	u	u	u	u	u	u	u	u
	Regulatory matters with regulators in attendance3	u	u	u	u	u	u	u	u	u	u
External	External insights4	u	u	u	u	u	u	u	u	u	u
Technology	Strategic and operational	u	u	u	u	u	u	u	u	u	u
People and culture	Purpose, values and engagement	u	u	u	u	u	u	u	u	u	u
Governance	Policies, terms of reference and delegations of<br><br>authority	u	u	u	u	u	u	u	u	u	u
	Board/committee effectiveness	u	u	u	u	u	u	u	u	u	u
	Appointments and conflicts of interest	u	u	u	u	u	u	u	u	u	u
	Stakeholder/workforce engagement	u	u	u	u	u	u	u	u	u	u
	AGM and resolutions	u	u	u	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---

1No Board meetings were held during April and August 2024. An ad hoc board meeting was held in October 2024.

2Includes recovery and resolution planning, modern slavery and human trafficking, UK regulatory activities, and listing authority renewals.

3Meetings attended by members of the Prudential Regulation Authority.

4Includes presentations and/or talks from external parties, for example government officials or regulators.

Key areas of focus

The Board’s key areas of focus in 2024 are set out by theme below.

Strategy and business performance

The Group remains focused on building a sustainable platform for

growth by increasing returns for investors, enhancing customer

service, and creating capacity for future investment. In 2024, the

Board reviewed progress within the Group’s global businesses and

regions against its agreed strategy. At each Board meeting, the Board

discussed the Group’s strategic performance and opportunities to

track strategic execution and delivery.

There was a continued focus in 2024 to build upon efforts to re-shape

the Group to align with areas of strength in key markets. Disposals

such as those completed in Canada and Argentina, and in progress in

Germany, allow for a renewed focus on businesses that more closely

align with the Group’s strategic aims, and support resource allocation

to provide the strongest competitive advantage to ultimately benefit

the wider Group and its customers.

Upon his appointment, the new Group CEO has been driving a more

dynamic organisational structure, to set the Group up to accelerate

delivery of its strategic objectives and drive the next phase of its

growth and development. Together, the executive team and the

Board work to ensure that strategic decisions taken capitalise on

opportunities that will work to drive profitability for shareholders and

efficiencies with a more streamlined Group structure.

Environmental, social and governance

In October 2020, we announced our ambition to become a net zero

bank by 2050. We believe supporting our customers’ transition

benefits their businesses and helps generate long-term financial

returns for our shareholders.

The Board has overall responsibility for ESG strategy, overseeing

executive management in developing the approach, execution, and

associated reporting. To support senior leadership in the delivery of

the ESG strategy, with effect from October 2024, the Board

established a new sustainability working group, the SWG, comprised

of five non-executive Directors. This working group engages with

executive management on sustainability matters and provides

oversight and guidance in relation to the Group’s sustainability

activities. The SWG was actively involved in the consideration of our

approach to net zero transition, covered in more detail within our ESG

overview on page 18.

During the year, the Board also oversaw the rationalisation of the ESG

Committee and Sustainability Execution Committee into a single

governance body (named the ESG Committee). These Board and

executive level governance forums support senior management in the

operationalisation of the Group’s sustainability strategy, through the

oversight of the sustainability execution programme. For further

details see page 72. In 2024, the Board oversaw the implementation

of ESG strategy through regular dashboard reports and detailed

updates including: review and approval of the net zero transition plan;

deep dives on the sustainability execution programme; and updates

on human rights.

282	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Financial decisions

The Board and its dedicated committees approved key financial

decisions throughout the year, including the Annual Report and

Accounts 2023, the Interim Report 2024 and the first quarter and the

third quarter Earnings Releases. In January 2024, the Board approved

the 2024 financial resource plan. The Board monitored the Group’s

performance against the approved plan, as well as the plans of each

of the global businesses. The Board also approved the renewal of the

various debt issuance programmes.

As previously communicated, we established and achieved a target

dividend payout ratio of 50% of earnings per ordinary share (’EPS’) for

2023 and 2024, excluding the special dividend. EPS for this purpose

excludes material notable items and related impacts. Material notable

items in 2023 and 2024 included the sale of our businesses in Canada

and Argentina, the sale of our retail banking operations in France, the

gain following the acquisition of SVB UK and the impairment of our

investment in BoCom. We also exclude HSBC Bank Canada‘s

financial results from the 30 June 2022 net asset reference date until

completion on 29 March 2024, as the gain on sale was recognised

through a combination of the consolidation of HSBC Bank Canada‘s

results in the Group‘s results since this date, and the remaining gain

on sale recognised at completion, inclusive of the recycling of related

reserves and fair value gains on related hedges. 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. The Board has established a target

dividend payout ratio of 50% for 2025, subject to meeting capital

requirements. In addition to dividend payments, HSBC announced a

share buy-back of up to $2bn on 22 February 2024 and further share

buy-backs of up to $3bn on 7 May 2024, 1 August 2024 and

30 October 2024, bringing the total announced during 2024 to $11bn.

On 21 February 2024, an interim dividend of $0.31 per share for the

2023 full-year was announced, followed by a special dividend of $0.21

per share on 30 April 2024 and interim dividends of $0.10 each

announced on 30 April 2024, 31 July 2024 and 29 October 2024. For

further details of dividend payments, see page 461.

Risk, regulatory and legal

considerations

The Board, advised by the Group Risk Committee, promotes a strong

risk governance culture that shapes the Group’s risk appetite and

supports the maintenance of a strong risk management framework,

giving consideration to the measurement, evaluation, acceptance and

management of risks, including emerging risks.

The Board considered the Group’s approach to risk including its

regulatory obligations. A number of key frameworks, control

documents, core processes and legal responsibilities were also

reviewed and approved as required by the Board and/or its relevant

committees. These included:

–the Group’s risk appetite framework and risk appetite statement;

–the individual liquidity adequacy assessment process;

–the individual capital adequacy assessment process;

–the Group’s obligations under the Modern Slavery Act and

approval of the Modern Slavery and Human Trafficking Statement;

–the Group Recovery Plan;

–the efficacy of Model Risk Management (’MRM’) activities within

the Bank;

–the Group’s risk data aggregation and risk reporting framework

aligned to the Basel Committee on Banking Supervision 239

Principles;

–the Group’s PRA Operational Resilience self-assessment

regulatory submission;

–the internal controls framework; and

–the revised matters reserved to the Board and terms of reference

for the Board committees.

The Board also reviewed and monitored the implications of

geopolitical and macroeconomic developments during the year, both

directly and by way of updates from the Group Risk Committee, and

received regular updates on the Group’s risk profile, including in

relation to financial crime risk.

Technology

Throughout the year, the Board received updates on technology and

innovation from the Group Chief Operating Officer and Group Chief

Information Officer. These included regular updates on the

programme established to simplify the Group’s technology

infrastructure, enhance system resilience, and accelerate digital

transformation across the bank, following recommendations from the

third-party review of technology strategy conducted in 2023.

The Technology Governance Working Group was demised on

1 March 2024, and the Group Technology Committee (‘GTC‘) became

effective from the same date. Since its establishment, the GTC has

supported the Board in overseeing execution of the technology

strategy with a focus on areas where technology is fundamental to

strategic delivery including technology architecture, innovation, data

and cybersecurity. In December 2024, the remit of the GTC (renamed

the Group Technology and Operations Committee (‘GTOC‘)) was

extended to cover oversight of global operations, reflecting changes

to the Group’s organisational structure and in recognition of the

importance of operations to delivery of the Group’s strategy. The

Board received regular updates from the Chair of GTOC during the

year. For further details of matters considered at GTOC, refer to the

Group Technology and Operations Committee Report on page 306.

People and culture

The Board is responsible for setting and monitoring the desired

culture of the Group and dedicates time to people and culture related

matters at Board and Committee meetings and in its engagements

with management and the wider workforce.

Each scheduled Board meeting begins with a ’culture moment’,

which helps to ensure that the right cultural tone is set from the top

and establishes the right cultural context for Board discussion. To help

raise its awareness of employee and other stakeholder perspectives,

Board meetings and dedicated reports feature insights into

behaviours within the Group, which demonstrate alignment to its

purpose and values. Board papers highlight relevant stakeholder

considerations, including in connection with its workforce. The Board

also gains valuable cultural insights through its many personal

interactions with the workforce and other stakeholders.

Additionally, the Board receives cultural insights from the all-

employee Snapshot survey and broader reporting, which provides key

data indicators, including on peoples' behaviours, sentiment and

business outcomes. Following her appointment as Group Chief

People & Governance Officer, Aileen Taylor has also introduced a new

people and governance report that will be presented to the Board on a

regular basis to help ensure that they have sight over such matters

within the Group.

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 293).

The Directors also learn about people and culture matters by way of

presentations at the Chairman’s Forum. The principal subsidiary chairs

report on their respective approaches to workforce engagement as

well as what they have learned from such engagements and other

cultural insights.

HSBC Holdings plc Annual Report on Form 20-F	283

Each of the non-executive Directors is aligned to one or more of our

Group Employee Resource Groups (’ERGs’): Ability, Balance,

Embrace, Generations, Nurture and Pride. Attending ERG events

provides Directors with opportunities to hear directly from employees

on matters of cultural importance to the Group. Board engagement

with management and the wider workforce continued to remain a

strong area of attention, particularly with the ongoing activities carried

out by the dedicated workforce engagement non-executive Director

and in respect of the changes to the Group’s leadership. For further

details of the work carried out by the workforce engagement non-

executive Director, see page 284.

Governance

During the year, the Board continued to oversee the overall

governance of the Group. There are processes in place to ensure that

the Board and its Committees receive timely and relevant information

pertaining to Group governance matters and that this information is

duly considered at the appropriate level. The Board allocated time at

its scheduled meetings for Group governance matters and, during the

year, these included regular reports on the activities of its

Committees, reviews of Directors’ conflicts of interest, the review

and approval of delegations of authority for specific Treasury matters

and review of the broader Group Delegated Authority Framework, and

oversight of the Board’s annual effectiveness review.

The Board has due regard to its oversight of Group governance,

including compliance with the UK Corporate Governance Code and

the Hong Kong Corporate Governance Code and the duties of

directors under the Companies Act 2006, when taking decisions.

The Board and senior management continued to support further

improvements to various governance initiatives to encourage

simplification and promote effective decision making in the business.

Guidance and training for Board and committee paper templates

remained a focus in 2024 for global businesses and functions. In

particular, a training session sponsored by the Group Chairman and

the Group CEO took place to ensure that standards remained

consistent and accurate across the Group. Additionally, the Group-

wide delegations of authority framework was reviewed and approved

by the Board and its relevant subsidiaries in February 2024. This

decision was key to driving efficiencies in the execution of contracts

and documents by directors and senior management.

The Board, supported by the Nomination & Corporate Governance

Committee, reviews the skills and experience of the Directors on an

ongoing basis. This ensures that the composition of the Board and its

Committees comprise the necessary skills, diversity, experience and

competencies to discharge their responsibilities effectively. For

further details of the review and changes to the Board, see the

Nomination & Corporate Governance Committee report on page 289.

For further details of diversity of the Board, see page 274.

284	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

The Board’s engagement with the workforce

The Board is committed to engaging with the Group’s workforce,

which takes place in a variety of ways across many forums, including

small-scale exchange sessions and larger town halls. These

interactions allow the Board to have meaningful engagement with

colleagues and gain insights from the workforce which inform Board

discussion and decision-making. These engagements also provide

colleagues with the opportunity to share ideas and feedback on topics

that are important to them with the Board directly.

It is the responsibility of all Directors to engage with colleagues, and

the Board’s dedicated workforce engagement non-executive Director,

José Meade, leads on the delivery of such engagements. The Board

recognises that a dedicated non-executive director, that champions

workforce engagement, presents an inclusive opportunity to help

ensure that the employee voice is being considered and accounted

for in Board decision-making.

96	7,000+
Virtual/physical sessions<br><br>attended by non-executive<br><br>Directors	Number of employees engaged<br><br>physically/virtually
9	55
Countries where in-person<br><br>engagement took place and<br><br>many more virtually	Virtual/physical sessions attended by<br><br>workforce engagement non-<br><br>executive Director
4,600+
Number of employees engaged virtually/physically by workforce<br><br>engagement non-executive Director

The Board’s workforce engagement programme

In early 2024, the Board agreed a workforce engagement programme

designed to ensure that Directors were afforded various opportunities

to interact with colleagues across the Group. A non-exhaustive extract

of the 2024 programme can be seen below. In structuring the

programme, two mechanisms were used through which the Board

engaged with the workforce. First, targeted events for Board

members during Board travel or as individual Director location

allowed, and second, Board members joined pre-existing Group

employee events scheduled throughout the year. This approach

allowed the Board to meet a diverse group of colleagues and

participate in a broad range of different engagements. Engagement

events were held in three broad formats; in-person events, larger-

scale events, including town halls; and virtual events.

Visits to Global Services Centres (‘GSCs’) took on a variety of formats,

mixing exchange sessions with floor walks, networking lunches and

town halls. Engagements across all formats were designed to

promote open dialogue and two-way discussions between the

attending Directors and colleagues.

When designing the programme at the start of 2024, it took into

account the Group’s key strategic areas of focus in place at the time

and thereby worked to complement the Board’s priorities and agenda

for 2024. Structuring the programme in this way meant that when the

Board travelled for Board meetings to different regions, in-person

engagements were arranged as part of the Board timetabling, which

were highly valued by colleagues and Board members alike. A key

component of the 2024 programme was visits to GSCs in locations

that were convenient to scheduled Board travel. Further engagement

events, town halls and meetings with the workforce were scheduled

throughout the year either in person, where individual Director

location allowed, or virtually.

Board’s Workforce Engagement: 2024 Extract

	January	February	March	May	June	September	October	December
	Colleague<br><br>Engagement<br><br>Lunch & Floor<br><br>Walks	Representation<br><br>& Inclusion<br><br>exchange<br><br>session	Black Leaders<br><br>Action and<br><br>Advisory<br><br>Council<br><br>(’BLAAC’)	Strategy &<br><br>Performance &<br><br>Female Talent<br><br>Engagement	GB&M Floor<br><br>walk	Tour of Risk &<br><br>Compliance<br><br>floor and<br><br>exchange with<br><br>colleagues	Engagement<br><br>with respective<br><br>Employee<br><br>Resource<br><br>Groups (’ERG’)	US key talent &<br><br>Market<br><br>Securities<br><br>Services team<br><br>exchange
Audience	ERG Members<br><br>and talent<br><br>across a range<br><br>of grades and<br><br>businesses	Leaders in the<br><br>US market	BLAAC<br><br>members	Senior and<br><br>female UK-<br><br>based talent	GB&M<br><br>colleagues	MENAT<br><br>colleagues	ERG Global<br><br>Leads	US colleagues
Location	Shanghai	New York	Virtual	London	Singapore	Dubai	Virtual	New York
HSBC Holdings plc Annual Report on Form 20-F	285
---	---

The outputs and key themes arising from all engagements formed the

bases of José Meade’s regular reports to the Board and facilitated

Board discussions and decision-making. Further to José Meade’s

commitment to attend the Group Executive Committee (’GEC’) and

the Chairman’s Forum, by so doing this year he continued to help

facilitate discussions on key themes, issues, employee sentiment,

and other outcomes from the 2024 workforce engagements. His

participation helped to ensure that good dialogue with senior

executives and other Group subsidiary chairs was maintained and

helped management to respond appropriately and in a timely manner

to colleagues and their feedback. In addition, this allowed for José

Meade to capture feedback from executives on workforce

engagement and take their suggestions into consideration going

forward. In his role, José Meade will continue to engage in these and

other relevant forums during 2025.

Workforce engagement non-executive Director activities during 2024

Key themes arose throughout the year such as, inclusion in the

workplace, engagement with HSBC top talent, and Group Strategy.

The themes guided conversations between colleagues and Board

members and helped to shape the 2024 workforce engagement

programme to ensure that it developed events that were reflective of

these key topics.

Non-executive Director sponsorship of our Global Employee Resource

Groups (’ERGs’) continued during 2024. Each Director is aligned to a

Global ERG and during the course of 2024 has met with their

respective ERGs to discuss the ERGs’ strategy for the year and

upcoming priorities. Directors will also take part in other ERG events

where possible, and every effort is 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 2024 across multiple regions, attended by José Meade

and other members of the Board where the occasion permitted.

China
–Directors completed a floor walk to meet with teams from<br><br>across the Wealth and Private Banking business line, as well<br><br>as the Pinnacle team.<br><br>–Directors learnt about the financial planning journey of an<br><br>HSBC customer, the role colleagues play and the digital<br><br>capabilities available.<br><br>–Connected with various ERG representatives and colleagues<br><br>across functions to informally discuss and share<br><br>experiences.
New York
–Attended the ‘HSBC Latin-Americans in NYC Day’ with key<br><br>speakers including macro strategists and featuring external<br><br>speakers on the Mexican economic outlook.<br><br>–Met with a small group of leaders in HSBC to discuss<br><br>inclusion and culture in the US market and consider any<br><br>more progress needed.
London
–An engagement session was held with colleagues where<br><br>views were sought on how colleagues interpreted and<br><br>understood Group strategy and its practical application.<br><br>–An event was held to promote female talent in the UK.<br><br>Discussions held included the change of Group senior<br><br>leadership, what it meant to individuals and teams, and the<br><br>opportunities for female promotion.
Hong Kong
–Participated in several sessions that allowed for Directors to<br><br>meet and network with Executive Leadership Programme<br><br>colleagues.
Singapore
–Several sessions were held that were designed to promote<br><br>ERG engagement. Directors participated in sessions<br><br>including a Pride Panel as well as Ability, Sustainability and<br><br>Balance Exchanges, to ensure HSBC is inclusive and<br><br>supportive.
Dubai
–Participated in a varied schedule of workforce engagement<br><br>events including a discussion with regional Embrace ERG<br><br>members and networking with senior talent.

Diversity and Inclusion Photo.jpg

Representation & Inclusion Exchange session

New York, February

Pride Panel

Singapore, June

286	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

Spotlight on our Global Service Centres (‘GSCs‘)

HSBC currently has GSCs in eight countries that operate in over 50

markets and in 20 languages. The GSCs play a pivotal role in helping

to support the wider HSBC business and are key in driving the

technological capabilities of the Group.

Continuing the focus on the Group’s GSCs in 2023 when José Meade

visited Mexico City and Hyderabad, during 2024 he visited the GSCs

in Krakow, Guangzhou and Cairo. Details of each visit are set out

below. In July 2024, José Meade attended the GEC meeting where

he discussed insights from his various engagements to date,

including with the GSCs. Discussions at the GEC focused on key

themes arising from the GSC visits, and how these could be further

considered and taken forward by the executive team.

“It is impossible to discuss strategy without

considering the role of our GSCs. I have

visited several of our GSCs over the past year,

which have further highlighted to me their

pivotal role in our operations and in

developing our technological capabilities

more broadly for the success of the Group

through strategy execution.”

José Meade, Dedicated Workforce Engagement NED

GSC: Krakow, Poland (May 2024)
4,570	29	13
FTE permanent<br><br>employees	countries serviced	languages supported
–José Meade visited the Krakow GSC during planned Board travel to the UK. Sessions were held by the local team, including a ‘Tech and Ops Roadshow’ and<br><br>Cybersecurity ‘Show & Tell’, where José Meade learnt how the Polish GSC looks to leverage technology in servicing their businesses and functions.<br><br>–HSBC Krakow employees have looked to build upon the ‘energise for growth’ strategic pillar. They have partnered with local universities to develop branded<br><br>HSBC courses to recruit top talent locally and leverage relationships with fellow businesses to collaborate and problem-solve using technology-forward<br><br>solutions.
GSC: Guangzhou, China (June 2024)
8,571	19	7
FTE permanent<br><br>employees	countries serviced	languages supported
–Brendan Nelson and José Meade visited the Guangzhou GSC during planned Board travel to Hong Kong. They participated in several sessions during their<br><br>visit, including those on risk capabilities delivered by the GSC and systems developed in collaboration with business and Technology to help enhance data<br><br>accuracy. Directors had the opportunity to share and exchange their experiences with local GSC employees on topics such as talent, GSC intelligence,<br><br>operations, and the future of HSBC.<br><br>–The local GSC in Guangzhou continues to act as a strategic centre specifically for markets across Hong Kong, Singapore and the UK. The visit underpinned<br><br>how the GSC works to identify both issues and opportunities alike and deliver digital solutions in response, to the benefit of global business lines.
GSC: Cairo, Egypt (September 2024)
2,243	23	3
FTE permanent<br><br>employees	countries serviced	languages supported
–Rachel Duan and José Meade visited the Cairo GSC during planned Board travel to the Middle East. A deep dive session with the local HR lead allowed for<br><br>insights into how the Cairo GSC supports its employees and seeks to attract and retain top talent through development opportunities to help ensure that<br><br>employees are engaged with their own growth within the organisation. Interactions with employees across Group operations, through local office floorwalks<br><br>and networking lunches, allowed José Meade to understand how these policies work in practice and obtain first-hand feedback from employees on how the<br><br>Group is working to promote their voice and ideas.<br><br>–Group strategy remained a key theme during the GSC visit to Cairo, and Directors learnt more about the legacy and history of HSBC Egypt, as well as how it<br><br>looks to progress in the future.

Looking to the Future

“In 2024 we connected with our colleagues across the business and throughout the world. We

focused discussions on our strategy, inclusion and our GSCs. This approach enabled us to

highlight to the Board and senior management the strengths of our inclusive workforce. By

engaging with our talented workforce directly, understanding and valuing their contributions,

we continue to work together to open up a world of opportunity and achieve our strategic

aims. In 2025, I look forward to working with my fellow Directors and senior leadership to

build on this engagement and design a programme aligned to the refreshed strategic priorities,

and help support the Group‘s ambitions, guided by our values, for the benefit of its many

stakeholders.“ José Meade

HSBC Holdings plc Annual Report on Form 20-F	287

Board and committee

effectiveness, performance and

accountability

Actions following the 2023

Performance Review

As disclosed in last year’s report, the 2023 Board review concluded

that the Board was performing well as an engaged, global governance

body. The review highlighted, amongst other things, strong Board

performance in areas including Stakeholder Accountability, Board

Culture, Relationship with Senior Management, and Board Resources

and Support, and identified some minor areas where further

enhancement to the Board’s operating practices may be beneficial.

During 2024, the Board successfully implemented the actions agreed

to address the findings from the 2023 review. This included the

establishment of the Group Technology Committee (‘GTC‘) to provide

oversight of technology-related matters across the Group. The GTC’s

remit was later expanded to include responsibility for Operations, and

as a result was renamed as the Group Technology and Operations

Committee (‘GTOC’). Further details of the work of the GTC/GTOC

can be found on pages 306 to 308.

In addition, the Board approved a revised set of Key Performance

Indicators, ensuring that the Board can effectively oversee the

performance of the business, and receive insights into execution,

trends, and emerging areas of risk. These are kept under regular

review.

Other actions have resulted in changes to the Board’s operating

practices, including through greater training on effective Board

reporting and enhanced stakeholder engagement plans to ensure the

Board has the opportunity for regular engagement with the full

spectrum of key stakeholder groups.

2024 Board and committee

performance review process

Performance reviews are an important part of the effective

governance and operation of the Board and its committees. In 2024,

the Nomination & Corporate Governance Committee invited

Independent Board Evaluation (‘IBE’) to conduct a follow-up review to

the 2023 external performance review. IBE is an independent external

service provider with no other connection with the Group or any

individual Directors.

A comprehensive brief was provided to IBE to ensure focus on

priority areas relevant to the Board and committees, IBE were also

asked to provide an independent view as to whether the actions

taken following the 2023 review had appropriately addressed the

findings of that review.

The review took the form of detailed 1-2-1 interviews with members

of the Board and select members of management and advisers. IBE

also attended and observed the Board and committee meetings in

December 2024, and were provided with relevant meeting materials

for review in advance.

Initial observations were shared with the Board in December 2024,

following which a report was compiled by IBE based on the views

supplied by those interviewed as well as IBE’s observations as part of

the review process. The process and findings set out in this report

were shared and agreed with the Group Chairman, committee chairs

and IBE.

Board effectiviness_1.jpg

288	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

Findings and recommendations

Overall, the review concluded that the Board and its committees

continued to operate effectively, with the 2023 report findings having

been appropriately addressed and a few minor areas identified for

further improvement. Positive feedback and practices were

highlighted in relation to succession planning for the Board and senior

management, with the pace and robustness of the Group CEO

selection process considered to be particularly strong. Key strengths

highlighted included the efficient, inclusive and transparent

communication with the wider Board, and regulators through the

duration of the process. The good practices would be leveraged for

future senior succession practices, with the importance of a sufficient

handover period being noted.

The report from IBE also confirmed that the culture of the Board

continues to be regarded as a key strength. The major organisational

and leadership changes that took place during 2024 further

demonstrated the flexibility of the Board governance and operating

rhythm, and its commitment in response to the needs of the Group

and its stakeholders. It was acknowledged that the refresh of the

senior leadership team and executive governance framework would

require ongoing strong and open communication between the Board

and the new Group Operating Committee. The new committee

structure, in particular the establishment of the Group Technology and

Operations Committee and the launch of the Sustainability Working

Group, have enhanced Board oversight and support to management

in these areas of critical strategic importance. Further, it was

acknowledged that work continues to ensure the quality and insight

of reporting to the Board, with concise reports that focus on the most

material and emerging risks.

IBE presented its report to the December 2024 Board meeting, and

was present for the Board’s discussion, led by the Group Chairman,

on the findings identified through IBE’s review. Actions arising from

the Board and committee review will be monitored by the Board over

the coming months. Further details on the findings specific to each

committee can be found within the respective committee reports

later in this section.

HSBC Holdings plc Annual Report on Form 20-F	289

Nomination & Corporate

Governance Committee

	“We have full confidence in Georges and the new senior leadership team. They have the<br><br>skills, experience and track record necessary to deliver the next exciting phase of the<br><br>Group’s development and growth.“
Sir Mark E Tucker<br><br>Chair<br><br>Nomination & Corporate Governance Committee
Membership			Key responsibilities
	Member since	Meeting attendance<br><br>in 20241	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 framework<br><br>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.
Sir Mark Tucker (Chair)	Oct 2017	9/9
Geraldine Buckingham	May 2022	9/9
Rachel Duan	Sep 2021	9/9
Dame Carolyn Fairbairn	Sep 2021	8/9
James Forese	May 2020	9/9
Ann Godbehere	Sep 2023	9/9
Steven Guggenheimer	May 2020	9/9
José Antonio Meade<br><br>Kuribreña	Apr 2019	9/9
Kalpana Morparia	Mar 2023	9/9
Eileen Murray2	Jul 2020	8/9
Brendan Nelson	Sep 2023	9/9
David Nish3	Apr 2018	3/3
Swee Lian Teo	Oct 2023	9/9
1 In addition to the scheduled Committee meetings, various sub-groups of<br><br>the Committee were established during the year to oversee the<br><br>succession process for the Group CEO and other senior leadership<br><br>changes.<br><br>2 Due to personal reasons, Eileen Murray was unable to attend the<br><br>Committee meeting in September 2024.<br><br>3 David Nish retired from the Board on 3 May 2024.

I am pleased to present the Nomination & Corporate Governance

Committee report, which provides an overview of the Committee’s

activities during 2024.

Succession planning was central to the Committee’s agenda during

the year. The main area of focus was the Group CEO succession

planning, which was triggered by Sir Noel Quinn’s decision to retire as

Group CEO. The Committee undertook a formal search process,

which built upon the Committee’s long-term work to develop

potential internal and external succession options for the Group CEO

role. Additional details on this process, which unanimously concluded

that Georges Elhedery was an outstanding candidate and the right

person for the role, are set out later in this report. The rigorous and

detailed work undertaken by the Committee over the prior years on

Group CEO succession enabled us to conduct a thorough, robust and

market-leading process, at pace. The process received positive

feedback from key stakeholders, including from Committee

members, as part of the 2024 Board and Committee performance

review.

The Committee also oversaw and supported the changes made to the

Group’s organisational structure and leadership team. This included

endorsing the establishment of the new Group Operating Committee

(‘Group OpCo’), which serves as the leading decision-making

executive committee of the Group. The Committee was fully

supportive of Georges' recommendations for appointments to the

Group OpCo. We have full confidence in Georges and the new senior

leadership team. They have the skills, experience and track record

necessary to deliver the next exciting phase of the Group’s

development and growth.

We were delighted to welcome Pam Kaur to the Board as an

Executive Director, following her appointment as Group CFO. Pam is

well known to the Board, having served as Group Chief Risk Officer

since 2020, and in the expanded role of Group Chief Risk and

Compliance Officer since 2021, and we look forward to working

closely with her in this new capacity. Georges and Pam formed an

effective partnership in their prior roles, and I am confident that the

Group and its stakeholders will continue to benefit from this

relationship in the years ahead. I would also like to thank Jonathan

Bingham, for his excellent work and valuable contributions during his

tenure as Interim Group CFO.

We have continued to review our governance structure in light of

evolving business needs to ensure that it remains appropriate in

supporting the delivery of Group strategy and aligned with

stakeholder expectations. During 2024, this led to several changes to

our Board and Committee operations, including the establishment of

the Group Technology Committee and of the Sustainability Working

Group. We subsequently agreed to expand the remit of the Group

Technology Committee to include Operations. Going forward, the

290	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

Group Technology and Operations Committee will oversee the work

of the new Group CIO and Group COO.

Both forums have strengthened our governance oversight in the key

areas of technology and sustainability, which are two critical elements

of our strategy and risk management activity. Additional details on

these forums can be found on pages 26, and 306.

Separately, following the changes to the organisational structure

announced in October 2024, the Committee considered what further

enhancements to the Group’s governance arrangements were

necessary. This resulted in two principal changes. Firstly, in order to

strengthen the connectivity between the Group and our most

significant subsidiary boards, the Committee recommended that Ann

Godbehere and Brendan Nelson be appointed as directors of HSBC

Bank plc and HSBC UK Bank plc, respectively. Secondly, the

Committee approved changes to the Group’s executive governance

framework and operating rhythm aimed at ensuring enhanced, clearer

lines of accountability and decision-making.

The annual Board and Committee performance review is critically

important for ensuring that our governance practices meet the

highest standards and work effectively. Following the externally

facilitated review in 2023, conducted by IBE, the Committee invited

them again to conduct a follow-up review in 2024. The objective was

to provide assurance that the recommendations made had been

addressed and that the Board and its Committees were working

effectively. The findings and agreed actions from the 2024 review can

be found from page 287.

Finally, there were changes to the UK and Hong Kong Corporate

Governance Codes, which take effect from this year. Whilst our

existing governance practices are aligned with the requirements of

these revised Codes, the Committee continues to assess possible

enhancements, monitoring market practices to ensure that we not

only remain compliant, but also meet our objective of having world

class governance.

Sir Mark E Tucker

Group Chairman

Committee governance

The Group Chief People & Governance Officer, in her capacity as the

Group Company Secretary, attended all Committee meetings during

the year. She supported the Group Chairman in ensuring that the

Committee fulfilled its governance responsibilities. The Group CEO

selectively attended Committee meetings, joining when required.

Russell Reynolds Associates (’RRA’) supported the Committee and

the management team with Board succession planning and

appointments. RRA also provided support to management on senior

management succession, and on development and recruitment.

Representatives from RRA regularly attend meetings during the year

and have no other connection with the Group or members of the

Board.

Board composition and succession

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.

The Committee has a long-standing policy under which non-executive

Directors are expected to serve two three-year terms. Any

appointments that extend beyond this are reviewed on an annual

basis, with consideration given to the future needs of the Board, and

the performance and contributions of the individual.

José (’Pepe’) Meade, Workforce Engagement non-executive Director,

will complete his second three-year term at the 2025 AGM. As a

result, a review was conducted, which took into account the broader

needs of the Board and the Group, to determine whether his term

should be extended. Pepe has played an important and valuable role,

significantly enhancing the Board’s engagements with all colleagues

and its understanding of their views. In order to allow him to build on

this work, as the business embarks on a period of change under new

leadership, the Committee agreed that his appointment should be

extended by a year, leading up to the 2026 AGM, subject to his re-

election by shareholders. It is the Board’s strong belief that this

extension of Pepe’s appointment, given his performance and

contributions to the Board in 2024, is in the best interests of the

Group and all of its stakeholders.

The Committee will continue to monitor the market throughout 2025

for potential candidates for appointment to the Board in both the short

and medium-term. This will ensure that the Board has a pipeline of

credible successors with the relevant skills, knowledge, and

experience.

Committee composition

As communicated in the 2023 Annual Report and Accounts, the

Board-level Group Technology Committee (’GTC’), chaired by Eileen

Murray, was established on 1 March 2024. In December 2024,

reflecting the changes to the Group COO role and its inclusion in the

newly formed Group OpCo, the Committee approved changes to the

remit of the GTC, adding responsibility for Operations, in addition to

Technology. As a result, the GTC was renamed as the Group

Technology and Operations Committee. Additional information on the

work undertaken by the Group Technology and Operations

Committee since its formation, along with its priorities for the year

ahead, can be found from page 306.

As part of the decision to establish the Sustainability Working Group

(’SWG’), it was agreed that Geraldine Buckingham would be

appointed as its Chair.

The Committee also reviewed the composition of the Board

Committees, to ensure that it remains appropriate, with consideration

given to the Board diversity and inclusion policy, and to ensure

effective use of the skills and expertise of the Directors. Several

changes to the Committees’ composition were agreed during the

year. The Committee will continue to review the Committees’

composition to ensure that it remains appropriate.

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.

At the end of 2024, the Board had 54% female representation, with

seven female Board members out of a total of 13, which is above the

year-end 2025 target set by the FTSE Women Leaders Review.

Following Pam Kaur’s appointment as an Executive Director on

1 January 2025, female representation increased to 57%. The Board

now also has two female leaders holding one of the four senior

positions. These four senior roles, as defined by the FTSE Women

Leaders Review, are Chair, Chief Executive Officer, Senior

Independent Director and Chief Financial Officer.

Beyond gender, the Committee remains focused on enhancing the

ethnic heritage diversity of the Board, reflecting the international

nature of our business and HSBC’s Asia heritage.

The Board’s diversity and inclusion policy highlights our commitment

to diversity, while providing specifics on the approach taken to

achieving our relevant ambitions. Additional details on activities aimed

at improving representation across senior management and the wider

workforce, together with supporting statistics, can be found on page

The Board’s diversity and inclusion policy is available at

www.hsbc.com/who-we-are/our-people/board-of-directors/board-

responsibilities

HSBC Holdings plc Annual Report on Form 20-F	291

Group CEO succession

Following the announcement on 30 April 2024 that Sir Noel Quinn

would retire as Group CEO, the Committee oversaw a rigorous formal

search, selection and appointment process to identify the next leader

of the Group. A high-level overview of the process is shown in the

graphic below.

The Committee’s focus on Group CEO succession planning since Sir

Noel Quinn’s appointment in 2020, supported its objective to

complete the search at pace and provide clarity on future leadership

to the organisation and our stakeholders.

The process to select Sir Noel Quinn’s successor was led by the

Group Chairman and the Committee, who were supported by a

leading external search partner.

Key steps in the process included:

–The establishment of a committee sub-group, comprising the

Group Chairman, Senior Independent non-executive and

Committee Chairs, to oversee the process. Regular updates were

provided to the broader Committee through weekly update notes

from the Group Chairman, who also engaged with the Group’s

principal regulators throughout the process.

–Agreement on the regulatory role profile and key selection criteria,

which included key technical, experiential and leadership

competencies that were determined to be essential for the

successful candidate.

–The assessment of all internal and external candidates against this

role profile and selection criteria, with the support of a leading

external search firm. Candidates also provided a written

articulation of their strategic vision for the Group, which was

followed by the shortlisting of the final candidates.

–Thorough referencing and background checks, which were

conducted on the final candidates, to provide the Committee with

a deeper understanding of their character and motivations.

–The final candidates were interviewed with all non-executive

Directors. They also presented their strategic vision for the Group

to the Committee and participated in Q&A.

–Interview feedback, which included non-executive Directors

scoring each candidate against the successful selection profile, as

well as qualitative feedback based on candidate interviews,

presentation and Q&A, which was collated and discussed by the

Committee.

Establishment of a<br><br>sub-group of the<br><br>Committee	Agreement of the<br><br>regulatory role profile<br><br>and success criteria	Internal and external<br><br>candidate assessment	Candidate interviews<br><br>with Group Chairman<br><br>and NEDs	Presentations to<br><br>Committee on<br><br>strategic vision and<br><br>Q&A
Announcement of<br><br>appointment of<br><br>Georges Elhedery as<br><br>Group CEO	Board approval<br><br>following receipt of<br><br>regulatory approval	Regulatory<br><br>engagement,<br><br>application and<br><br>interview	Decision on preferred<br><br>candidate	Feedback collated and<br><br>discussed by the<br><br>Committee

Based on the information gathered on the candidates over the past

four years, as well as the succession process, the Committee

selected Georges Elhedery as the preferred candidate.

Georges then participated in the required regulatory interviews with

the PRA and FCA, after which the Committee received confirmation

of regulatory approval, and announced Georges’ appointment on

Wednesday 17 July 2024.

The Committee also agreed on a comprehensive induction and

development plan to best support Georges’ transition to Group CEO.

The Committee continues to oversee this plan and receives regular

updates on progress.

Senior executive succession and

development

Jonathan Bingham, Global Financial Controller, was appointed as

Interim Group CFO with effect from 2 September 2024. This interim

appointment allowed Georges to focus on his new responsibilities as

Group CEO, whilst the process to identify a permanent successor

was conducted. The process to select the permanent Group CFO was

led by the Group CEO, with the support of the Group Chief People &

Governance Officer and a leading external search firm. Consistent

with the approach taken for the selection of Georges Elhedery as

Group CEO, internal and external candidates were considered and

assessed against the agreed role profile and selection criteria.

Following the completion of interviews with members of the Board,

Pam Kaur was selected to join the Board as an Executive Director and

Group CFO.

Following Pam’s selection for the role of Group CFO, Richard

Blackburn, Global Head of Traded and Treasury Risk Management &

Global Head of Risk Analytics, was appointed as Interim Group Chief

Risk and Compliance Officer with effect from 1 January 2025. An

update on permanent succession for this position will be provided in

due course.

In conjunction with the announcement on the new, simpler

organisational structure, designed to unleash the full potential of

HSBC, the Committee also approved several changes to the senior

leadership team, based on the recommendations of the new Group

CEO. These included the approval of the new Group OpCo terms of

reference, together with its membership. Members of the Committee

were closely involved in the assessment and selection process for

roles on the new Group OpCo, including the roles of CEO of

Corporate and Institutional Banking and Western Markets, and the

split of the previous Group COO’s responsibilities into two new Group

OpCo roles – those of Group CIO and Group COO.

Committee performance review

The 2024 annual review of the effectiveness of the Board and Board

Committees, including the Nomination & Corporate Governance

Committee, was conducted externally by IBE.

It determined that the Committee continued to perform effectively.

There were no specific actions identified for the Committee. The

review acknowledged the Committee’s role in the Group CEO

succession process, which was very well managed, and identified

several good practices that would be applied to future succession

processes for key roles across the Group. Additional details on the

annual review of the Board and Committees’ effectiveness can be

found from page 287.

292	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

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 277.

Given the improvement in quality of the succession planning updates

over the previous years, the Committee agreed that, for 2024, the

material subsidiary plans no longer required direct oversight. Principal

Subsidiaries continued to oversee plans for their respective

subsidiaries, with the Committee retaining the ability to review

material subsidiary succession plans, where necessary.

The Committee continued to support and seek opportunities to

enhance subsidiary connectivity. That included leveraging the

Chairman’s Forum and Remuneration Committee Chairs’ Forum,

which regularly brought together the chairs of the principal

subsidiaries to discuss issues of common interest.

In order to further strengthen connectivity between the Board and the

most significant subsidiary boards, the Committee took relevant steps

with two of the principal UK regulated entities. It recommended that

Ann Godbehere be appointed to the HSBC Bank plc board and

Brendan Nelson be appointed to the HSBC UK Bank plc board. Given

that the Board has benefitted from James Forese’s leadership of the

HSBC North America Holdings Inc. Board, the Committee is confident

that these appointments will enhance governance arrangements and

connectivity.

The committee continues to provide support and look for

opportunities to enhance subsidiary connectivity through non-

executive Director events and other engagement forums. The

Group’s flagship events held in 2024 included the Bank Director

Programme and the Bank Chair Programme. The Group Chairman also

hosted an annual Global NED Update, which was attended by over

200 subsidiary non-executive Directors.

	Jan	Feb	Apr	May	Jun	Jul	Sep	Sep	Dec
Board composition and succession
Board composition, including succession planning and skills matrices	u	u	u	u	u	u	u	u	u
Executive talent and development
Senior executive succession and appointments	u	u	u	u	u	u	u	u	u
Governance
Board and corporate governance developments	u	u	u	u	u	u	u	u	u
Board and committee performance review	u	u	u	u	u	u	u	u	u
Subsidiary governance	u	u	u	u	u	u	u	u	u
Subsidiary appointments	u	u	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---
HSBC Holdings plc Annual Report on Form 20-F	293
---	---

Group Audit Committee

	“Given changes in the external operating environment and as a result of the<br><br>reorganisation of the Group, the Group Audit Committee will play an important role in<br><br>monitoring the impact on the control environment during this period of change.“
Brendan Nelson<br><br>Chair<br><br>Group Audit Committee
Membership			Key responsibilities
	Member since	Meeting attendance<br><br>in 20241	The Committee’s key responsibilities include:<br><br>–monitoring and assessing the integrity of the financial<br><br>statements, formal announcements and regulatory information<br><br>in relation to the Group’s financial performance, as well as<br><br>significant accounting judgements;<br><br>– reviewing the effectiveness of internal controls;<br><br>– reviewing management’s arrangements for compliance with<br><br>prudential regulatory financial reporting;<br><br>– reviewing the annual financial resource plan, including annual<br><br>budget, capital expenditure and business plans;<br><br>– reviewing and monitoring the relationship with the external<br><br>auditor and overseeing its appointment, remuneration and<br><br>independence;<br><br>– overseeing the Group’s policies, procedures and arrangements<br><br>for capturing and responding to whistleblower concerns and<br><br>ensuring they are operating effectively; and<br><br>–overseeing the work of Global Internal Audit and monitoring and<br><br>assessing the effectiveness, performance, resourcing,<br><br>independence and standing of the function.
Brendan Nelson (Chair)	Sept 2023	10/10
Geraldine Buckingham2	Oct 2024	2/2
Rachel Duan3	Apr 2022	9/10
James Forese3	May 2020	9/10
Ann Godbehere4	Feb 2024	7/7
Eileen Murray5, 6	June 2022	6/8
David Nish7	May 2016	4/4
Notes:<br><br>1 These included one ad hoc meeting held on 31 January 2024 and a joint<br><br>meeting with the Group Risk Committee (’GRC’), which took place on 18<br><br>June 2024.<br><br>2 Geraldine Buckingham was appointed as a member of the GAC on<br><br>1 October 2024.<br><br>3 Rachel Duan and James Forese were unable to join one ad hoc GAC<br><br>meeting, due to prior commitments.<br><br>4 Ann Godbehere joined the GAC on 21 February 2024.<br><br>5 Eileen Murray stepped down from the GAC on 1 October 2024.<br><br>6 Eileen Murray was unable to attend the meeting held on 25 September<br><br>2024 due to personal reasons.<br><br>7 David Nish stepped down from the GAC on 3 May 2024 upon his<br><br>retirement from the Board.

I am pleased to introduce the Group Audit Committee (‘GAC’) report,

my first as GAC Chair. In this report, I have provided an overview of

the key matters and issues considered by the GAC in 2024. I

assumed the role of GAC Chair following the publication of the FY23

results and Annual Report in February 2024, succeeding David Nish. I

would like to acknowledge and thank David for his leadership of the

GAC during his time as Chair.

Internal controls have been a key focus during 2024, and the GAC

assumed responsibility for the oversight of all internal controls - which

was previously limited to those related to financial reporting. We have

overseen management’s proposed enhancement of controls,

including the creation of a new Group Chief Controls Oversight Office

function. This will enhance effective operation and monitoring of the

Group’s control environment. This will include the work to support

preparations for the Board's declaration on the effectiveness of

material controls, which will be required from 2026 under the 2024

UK Corporate Governance Code.

Given changes in the external operating environment and as a result

of the reorganisation of the Group, the GAC will have an important

role in monitoring the impact on the control environment during this

period of change. A key element of this continues to be our progress

in enhancing the control environment regarding the Group’s

regulatory reporting obligations. Remediation of errors in regulatory

reporting and achieving a sustainable controls environment over these

returns, remains a priority for the Committee, management and our

regulators globally. Further details on progress under this programme

can be found later in this report.

The GAC received regular updates from the Group Chief Financial

Officer 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 ECLs, in particular those relating to the Group’s

exposure to the mainland China and Hong Kong corporate real estate

sectors.

I have spent time with several of the subsidiary audit committee

chairs, building on the important connectivity between the Group and

subsidiaries established over the past few years. Regular engagement

with our subsidiary audit chairs will continue to be an important part

of the GAC’s governance practices through 2025 and beyond.

The GAC also oversaw the External Quality Review of the Global

Internal Audit function during the year, which was conducted by

Deloitte in accordance with the Internal Audit Code. I am pleased to

report that the function is highly valued across the HSBC Group, and

received a ’Generally Confirms’ rating, which is the highest attainable

under the internal audit International Professional Practices

framework.

Finally, I was pleased that the review of the GAC’s performance

concluded that the GAC continued to operate effectively. Further

details on the review, which also considered the performance of the

Board and the other Board committees, can be found as part of the

'How we are governed' section on page 287.

Brendan Nelson

Chair of the Group Audit Committee

294	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

Committee governance

The Committee operates under delegated authority from the Board,

and advises the Board on matters concerning the Group’s financial

reporting requirements. The Committee Chair reports on the key

matters and discussions at the subsequent Board meeting, and the

Board also receives copies of the Committee agendas and minutes.

This supports the Board‘s oversight of the work carried out by

management, Global Internal Audit and PricewaterhouseCoopers LLP

(‘PwC‘), as the Group’s statutory auditor.

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 audit committee ‘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.

The Committee Chair continued to engage with various key

stakeholders, including the UK PRA, 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

trilateral meetings involving the Group’s external auditor, PwC, and

the UK PRA.

Members of senior management routinely attended meetings of the

GAC. The external auditor attended all meetings.

The Chair holds regular meetings with management, Global Internal

Audit and PwC, as the external auditor, to discuss relevant items as

they arose during the year outside the formal Committee process.

The Committee also regularly meets with the internal and external

auditors, without management present. Private discussions are also

held with relevant members of senior management, including the

Group Chief Financial Officer and Group Chief Risk and Compliance

Officer.

Matters considered during 2024
	Jan	Feb	Apr	Jun	Jul	Sep	Oct	Dec
Reporting
Financial reporting matters including:<br><br>– review of financial statements, ensuring that disclosures are fair, balanced and understandable<br><br>– significant accounting judgements<br><br>– going concern assumptions and viability statement<br><br>– supplementary regulatory information	u	u	u	u	u	u	u	u
Review of the Group's annual financial resource plan	u	u	u	u	u	u	u	u
ESG and climate reporting	u	u	u	u	u	u	u	u
Regulatory reporting-related matters including:<br><br>–oversight of the Group's engagement with PRA-requested skilled person reviews<br><br>–reports from the principal subsidiaries on progress and learnings in relation to their local<br><br>remediation efforts<br><br>–adequacy of resources across Finance and other SME teams to deliver the Group-wide<br><br>remediation programme	u	u	u	u	u	u	u	u
Certificates from principal subsidiary audit committees	u	u	u	u	u	u	u	u
Control environment
Control enhancement programmes	u	u	u	u	u	u	u	u
Group transformation	u	u	u	u	u	u	u	u
Review of deficiencies and effectiveness of internal financial controls	u	u	u	u	u	u	u	u
Internal audit
Reports from Global Internal Audit	u	u	u	u	u	u	u	u
Audit plan updates, independence and effectiveness	u	u	u	u	u	u	u	u
External audit
Reports from external audit, including external audit plan	u	u	u	u	u	u	u	u
Appointment, remuneration, non-audit services and effectiveness	u	u	u	u	u	u	u	u
Compliance
Accounting standards and critical accounting policies	u	u	u	u	u	u	u	u
Corporate governance codes and listing rules	u	u	u	u	u	u	u	u
Whistleblowing
Whistleblowing arrangements and effectiveness	u	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---
HSBC Holdings plc Annual Report on Form 20-F	295
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How the Committee discharged its responsibilities

Financial, sustainability and climate reporting

The GAC is responsible for reviewing the Group’s financial reporting

during the year, 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 executive-level ESG Committee, provided close oversight of

the disclosure risks in relation to sustainability and climate reporting,

amid rising stakeholder expectations. The work will continue

throughout 2025 in partnership with the Sustainability Working Group.

As part of its review, the GAC:

–challenged and evaluated management’s application of critical

accounting policies 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 for disclosures to ensure these were

consistent, appropriate and could be validated under the relevant

financial and governance reporting requirements;

–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 independent third-party limited standalone

assurance on the Group’s climate reporting. Further details can be

found in ’Assurance relating to ESG data’ on page 42.

In conjunction with the GRC, 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 continues to adopt the

going concern basis in preparing the annual and interim financial

statements. Further details can be found on page 38.

Following the October 2024 announcement in relation to the Group's

organisation structure, the GAC oversaw management proposals

regarding the external disclosure requirements following the

reorganisation of the Group around four core business. The GAC

reviewed the financial resource plan, prior to approval by the Board,

which helped to support the revised guidance, including in relation to

the expected benefits from the reorganisation and simplification of

the Group, which were communicated to the market as part of the

FY24 results. In relation to the expected benefits specifically, the GAC

considered the independent validation report provided by a third party,

and which provided additional comfort on the appropriateness of

management's proposed guidance.

The GAC will complete a thorough review of the pro-forma historical

financial performance for 2023 and 2024, based on the new

organisational structure, prior to their communication to the market

next month.

Financial planning

The GAC reviewed and debated the robustness of the financial plan

for the financial years 2025 to 2029. 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.

Fair, balanced and understandable

Following review and challenge of the disclosures, the Committee

recommended to the Board that the Annual Report and Accounts,

taken as a whole, were fair, balanced and understandable. These

provided the shareholders with the necessary information to assess

the Group’s position and performance, business model, strategy and

risks facing the business.

The Committee reviewed the draft Annual Report and Accounts 2024

and results announcements to provide feedback and challenge to

management. It was supported by the work of the Group Disclosure

and Controls Committee, which also reviewed and assessed the

Annual Report and Accounts 2024 and investor communications.

This work enabled the GAC to discharge its responsibilities and

support the Board in making the statement required under the UK and

Hong Kong Corporate Governance Codes.

Internal controls

During the year, the Board approved changes to the scope of the

GAC’s responsibilities in relation to internal controls. These changes

saw the GAC assume responsibility for oversight of the effectiveness

of all internal controls. This reflected the GAC’s experience in

overseeing internal controls over financial reporting, and the

responsibility that will apply from the 2026 financial year to make a

declaration on the effectiveness of material controls under the 2024

UK Corporate Governance Code.

Regular updates and confirmations are provided to the GAC on the

action management takes to remediate any failings or weaknesses

identified through the operation of the Group’s framework of internal

financial controls. This is supplemented by reviews of these controls

by the second line of defence and internal audit, and the external

auditors, who provided additional comfort to the Committee on the

effectiveness of these controls. These reviews confirmed that there

were no material weaknesses as at the year-end.

These updates included the Group’s work on compliance with section

404 of the US Sarbanes-Oxley Act. Based on this work, the GAC

recommended that the Board support its assessment of the internal

controls over financial reporting.

The GAC continued to focus on controls over the Group's Insurance

business following the implementation of the IFRS 17 ‘Insurance

Contracts‘ accounting standards. The GAC welcomed management's

progress in improving the control environment during 2024. However,

there remains further work to ensure that the Insurance business

embeds the control standards expected on a consistent basis across

all markets.

For further details of how the Board reviewed the effectiveness of key

aspects of internal control, see page 354.

Regulatory reporting

Regulatory reporting has been a key priority for the Committee over

recent years and will continue to be a priority for 2025. The

Committee is focused on monitoring the programme of work to

address the quality and reliability of regulatory reporting to meet

regulatory expectations.

Management provided updates on the status of ongoing HSBC-

specific external reviews, and discussed the issues and themes

identified from the increased assurance work and focus on regulatory

reporting. The GAC also discussed root cause themes, remediation of

known issues and new issues identified through the increased

assurance work. The Committee challenged management on

remediation plans, to assess whether there was a sustainable

reduction in issues and that dependencies with other key

programmes were well understood.

Further details can be found in the ‘Principal activities and significant issues

considered during 2024’ table on page 298.

296	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

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

and endorsed the annual update to the Board.

In recognition that the enhancement of the Group’s regulatory reporting

processes and controls was a priority for both the Committee and the

Group’s regulators, the GAC also considered the adequacy of regulatory

reporting resources as part of the year-end activities.

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

2024 this included a particular focus on regulatory reporting, with the

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 update on

progress, share local challenges, and areas of focus with the

Committee.

In addition to the Chair‘s regular meetings with the audit chairs of the

Group’s UK, European, US, Middle Eastern and Asian principal

subsidiaries, and their attendance at GAC meetings for relevant items,

they provided quarterly reports on their local audit committee activity.

This included updates on internal control, and financial and regulatory

reporting matters that are significant from a local or enterprise-wide

perspective. In addition, the Committee received escalations from

subsidiary boards for information and action, as appropriate. The

connectivity between the Group and subsidiary audit committees is

supplemented by attendance at committee meetings by the Group

and subsidiary audit committee chairs.

On a half-year basis, principal subsidiary audit committees provided

certifications to the Committee that regarded the preparation of their

financial statements, adherence to Group policies and escalation of

any issues that required the attention of the Committee. These

certifications also included information regarding the governance,

review and assurance activities undertaken by principal subsidiary

audit committees in relation to prudential regulatory reporting.

External auditor

The GAC has the primary responsibility for overseeing the relationship

with the Group’s external auditor, PwC.

PwC completed its tenth audit, providing robust challenge to

management and sound independent advice to the Committee on

specific financial reporting judgements, sustainability reporting and

the overall control environment. The senior audit partner is Matthew

Falconer, who assumed the role as part of the regular rotation of audit

partners in support of the independence of PwC for the 2024 financial

year. The Committee reviewed the external auditor’s approach and

strategy for the annual audit and received regular updates on the

audit, including observations on the control environment.

Key audit matters discussed with PwC are set out in its report on

page 361. The Committee reviewed, and concluded that, all

requirements of the Financial Reporting Council's (‘FRC’) Audit

Committee and the External Audit: Minimum Standard (’the

Standard’), where relevant, were met during 2024.

The GAC reviewed the PwC external audit approach, including the

materiality, risk assessment and scope of the audit. PwC highlighted

the changes being made to its approach to enhance the quality and

effectiveness of the audit. PwC’s plan supports its, and the GAC’s,

focus on audit quality through standardisation, centralisation and the

use of technology.

Following commitments made as part of the audit tender process

conducted in 2022, specifically in relation to plans for greater

utilisation of digital solutions on the HSBC audit, the Committee

received a demonstration of how PwC were leveraging digital audit

tooling as part of the audit of the Group’s accounts. PwC continue to

look for opportunities to further leverage technology to enhance the

efficiency, robustness and quality of the Group statutory audit.

Effectiveness of external audit process

The GAC assessed the effectiveness of PwC as the Group’s external

auditor, using a questionnaire that focused on the overall audit

process, its effectiveness and the quality of output.

In addition, the GAC Chair, certain principal subsidiary audit chairs and

members of the Group Executive Committee met with the Senior

Audit Partner to discuss findings from the questionnaire and provide

in-depth feedback on the interaction with the PwC audit team.

Key strengths identified through the review included strong

independent challenge, the knowledge of the audit team and the

good understanding of the Group‘s businesses and associated risks

that were demonstrated through the course of the audit. The review

also identified some areas for improvement, including with regards to

communication and coordination with management, and planning.

The GAC receives regular updates from PwC and management on

performance across the audit quality indicators, which provides 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.

During the year, the Committee considered the impact of the fine and

six-month suspension on PwC’s China Firm upon PwC UK‘s ability to

act as auditor for the Group. The GAC received assurance from PwC’s

Global Leadership Team that the issues leading to the sanctions did

not impact the Group, and that PwC were taking appropriate steps to

prevent reoccurrence. The GAC will continue to monitor until the

completion of the suspension, which is due to expire during March

2025.

Independence and objectivity

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 and 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 2024.

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 2024

AGM. At the same time, shareholders authorised the Committee to

determine PwC‘s audit fee for the financial year ended 31 December

2024, which was approved by the Committee at its July 2024

meeting.

HSBC Holdings plc Annual Report on Form 20-F	297

Non-audit services

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.

The non-audit services carried out by PwC included 16 engagements

approved during the year where the fees were over $100,000 but less

than $1m. Group Finance, to whom the GAC has delegated authority

for non-audit services below $1m, considered that it was 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.

There were no engagements during the year where the fees

exceeded $1m, above which GAC approval would be required.

	2024	2023
Auditors‘ remuneration	$m	$m
Total fees payable	146.6	155.9
of which fees for non-audit services	43.8	46.1
Ratio of non-audit fees to audit fees1	43.0%	42.0%

1 The calculation is on a simple ratio and is not based on FRC guidance on non-

audit fees ratio thresholds.

Whistleblowing and speak-up culture

An important part of HSBC’s values is speaking up when something

does not feel right. HSBC remains committed to ensuring colleagues

have confidence to speak up and acting when they do. A wide variety

of channels are provided for colleagues to raise concerns, including

the Group’s whistleblowing channel, HSBC Confidential (see page 78

for further information).

The Board has delegated responsibility to the GAC to oversee the

effectiveness of HSBC’s whistleblowing procedures. The Chair of the

GAC is a Group Senior Manager (’SMF7’), and has a prescribed

responsibility as the Whistleblowers’ Champion to ensure integrity of

HSBC’s policy and procedure on whistleblowing and protecting those

who report concerns. As part of his responsibility, the GAC Chair

reports to the Board on the GAC’s oversight of whistleblowing as part

of his regular reporting updates.

The Group Head of Regulatory Compliance regularly updates the GAC

on whistleblowing effectiveness, including controls assessments and

internal audit findings. In 2024, the GAC has been briefed on actions

to improve the timeliness of HSBC Confidential investigations against

internal standards. The Committee is also briefed on culture and

conduct risks from whistleblowing cases and actions taken. In 2024,

the GAC Chair also met with the Group Head of Regulatory

Compliance for briefings on significant whistleblowing matters.

Global Internal Audit

The primary role of the Global Internal Audit function is to help the

Board and Management to strengthen the organisation’s ability to

create, protect and sustain value. Global Internal Audit does this by

providing independent, risk based and objective assurance on the

design and operating effectiveness of the Group’s governance, risk

management and control framework and 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.

In addition, in 2024, there was continued heightened interaction

between Global Internal Audit Senior Management and the members

of the GAC, aimed at increasing knowledge and awareness of the

audit universe and existing and emerging risks identified by Global

Internal Audit. Global Internal Audit adheres to The Institute of Internal

Auditors' mandatory guidance.

Consistent with previous years, the 2025 audit planning process

includes assessing the inherent risks and strength of the control

environment across the audit entities representing the Group. Results

of this assessment are combined with a top-down analysis of risk

themes by risk category to ensure that themes identified are

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. In

addition to the ongoing importance of regulatory-focused work, key

risk theme categories for 2025 audit coverage remain as: strategy,

governance and culture; financial crime, conduct and compliance;

financial resilience; and operational resilience. A quarterly continuous

monitoring assessment of key risk themes will form the basis of

thematic reporting and plan updates and will ultimately drive the 2026

planning process.

Global Internal Audit has made updates to the audit universe and risk

assessment to reflect the Group reorganisation. As a result, audits

have been added to the 2025 Annual Audit Plan, and audits have been

refocused, to reflect the risks arising from the Group reorganisation.

In addition to the Group reorganisation, Global Internal Audit’s new or

heightened areas of coverage for 2025 are: Group strategy; significant

change initiatives including regulatory change; material regulatory

obligations; compliance; anti-money laundering and sanctions;

conduct, internal and external fraud; credit risk management; financial

forecasting; regulatory reporting; enterprise wide risk management,

operational resilience; Financial Reporting Council Corporate

Governance reporting on material controls; model risk management;

data management; technology resilience and cybersecurity; and

incident and escalation management. In addition, Global Internal Audit

will continue its programme of culture audits to assess the extent that

behaviours reflect HSBC’s purpose, ambition, strategy and values.

The annual audit plan and material plan updates made in response to

changes in the Group’s structure and risk profile are approved by the

GAC.

The results of audit work, together with an assessment of the Group’s

overall governance, risk management and control framework and

processes are reported to the GAC, GRC and local audit and risk

committees, as appropriate. This reporting highlights key themes

identified through audit activity, and the output from continuous

monitoring. This 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. In December 2024, Global

Internal Audit’s External Quality Assessment Review was reported to

the GAC, which concluded that Global Internal Audit is a well-

respected, independent provider of assurance which is highly valued

across the Group and that Global Internal Audit generally conforms

with the 2017 International Professional Practices framework (’IPPF’),

which includes the IIA Standards and Code of Ethics. ’Generally

Conforms’ is the highest rating attainable and means the function is

compliant with the requirements of the Standards in all material

298	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

aspects. Global Internal Audit also generally meets the CIIA’s IA

Financial Services Code of Practice requirements.

Executive management is accountable for addressing the matters raised

by Global Internal Audit, which must be addressed within an appropriate

and agreed timetable. Confirmation to this effect must be provided to

Global Internal Audit, which validates closure on a risk basis.

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.

Principal activities and significant issues considered during 2024
Areas of focus	Key issues	Conclusions and actions
Significant<br><br>accounting<br><br>judgements	Expected credit losses<br><br>The measurement of expected credit losses involves<br><br>significant judgements, particularly under current<br><br>economic conditions. There remains uncertainty over<br><br>ECL estimation due to sustained high inflation,<br><br>interest rate volatility, economic policy changes<br><br>following election outcomes globally 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 judgemental adjustments to account for uncertainty in specific<br><br>sectors and geographies, including the controls underpinning the adjustments<br><br>process and 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 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 GAC has considered the effect of changes in key assumptions on the HSBC UK<br><br>Bank plc section of the HSBC Bank (UK) Pensions Scheme, which is the principal<br><br>plan of HSBC Group. Details of key assumptions can be found on pages 400 to 401<br><br>of the ’Notes on the financial statements’.
	Valuation of financial instruments<br><br>During 2024, management continuously refined its<br><br>methodology and approach to valuing the Group’s<br><br>portfolio in relation to investments, trading assets and<br><br>liabilities 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>and agreed with the judgements applied by management, which were validated<br><br>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>conducted impairment reviews where relevant. These<br><br>involve exercising significant judgement to assess the<br><br>recoverable amounts of subsidiaries, by reference to<br><br>projected future cash flows, discount rates and<br><br>regulatory capital assumptions.	–The Committee reviewed the judgements in relation to the impairment review of<br><br>HSBC Overseas Holdings (UK) Limited and the key inputs such as projected profits,<br><br>underpinning the recoverable amounts of its subsidiaries.
HSBC Holdings plc Annual Report on Form 20-F	299
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Principal activities and significant issues considered during 2024 (continued)
---	---	---
Areas of focus	Key issues	Conclusions and actions
Significant<br><br>accounting<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’). This included<br><br>assessment as to whether there is indication of<br><br>further impairment, or that previously recognised<br><br>impairment may no longer exist or may have<br><br>decreased. The impairment reviews are complex and<br><br>require significant judgements, such as the<br><br>appropriateness of projected future cash flows,<br><br>discount rate, and regulatory capital assumptions.	–The GAC reviewed and challenged management’s judgements and disclosures in<br><br>relation to impairment reviews of HSBC’s investment in BoCom, performed using a<br><br>value-in-use methodology.<br><br>–The Committee reviewed the appropriateness of key assumptions such as projected<br><br>future cash flows, with particular focus on the potential impacts of the publicly<br><br>announced policies aimed at promoting growth and economic development in China<br><br>during the fourth quarter of 2024.<br><br>–The GAC considered the consistency of judgements with prior period impairment<br><br>reviews, reflecting available details as at 31 December 2024 as to how these<br><br>policies may be enacted.
	Interest rate management<br><br>During 2024, management proposed a framework for<br><br>the disposal of selected hold-to-collect-and-sell<br><br>securities to improve risk management of hold-to-<br><br>collect-and-sell positions and to stabilise and protect<br><br>net interest income over the medium term.	–The GAC received regular management updates on hedging strategy, including the<br><br>repositioning of structural interest rate hedges.<br><br>–The Committee reviewed controls on, and financial outcomes of, disposals of hold-<br><br>to-collect-and-sell securities.
	Impairment of goodwill and non-financial assets<br><br>During the year, management tested for impairment<br><br>goodwill and non-financial assets including additional<br><br>consideration for the future impacts resulting from the<br><br>announced organisational restructure. Key<br><br>judgements in this area relate to long-term growth<br><br>rates, discount rates and projected future cash flows<br><br>to include for each cash-generating unit tested, both<br><br>in terms of compliance with the accounting standards<br><br>and reasonableness of the 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 GAC also challenged management’s key judgements and considered the<br><br>reasonableness of the outcomes against business forecasts and strategic objectives<br><br>of HSBC.
	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.
	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. The Committee<br><br>also considered management’s judgements relating to tax positions in respect of<br><br>which the appropriate tax treatment is uncertain, open to interpretation or has been<br><br>challenged by the tax authority.
	Long-term viability and going concern statement<br><br>The GAC has considered a wide range of information<br><br>relating to present and future projections of<br><br>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 and Middle East conflicts, US-China<br><br>tensions and the consequential impacts on the<br><br>supply 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 following<br><br>election outcomes globally; 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 GAC considered the statement to be made by the<br><br>Directors and concluded that the Group and parent company will be able to continue<br><br>in operation and meet liabilities as they fall due, and that it is appropriate that the<br><br>long-term viability statement covers a period of three years.
	Impact of acquisitions and disposals<br><br>HSBC engaged in a number of business acquisitions<br><br>and disposals, notably in Canada, Germany, South<br><br>Africa, Argentina, Armenia and Russia. Judgement<br><br>was involved in determining the timing of recognition<br><br>of assets held-for-sale, gains or losses, and the<br><br>measurement of assets and liabilities on acquisition or<br><br>disposal.	–The Committee reviewed management’s judgements related to the completion of<br><br>the sale of the Group's banking business in Canada and of HSBC Argentina, as well<br><br>as the planned sales of the German private bank business and the business in South<br><br>Africa, such as the timing of classification as held-for-sale and the remeasurement of<br><br>assets.
Financial and<br><br>regulatory<br><br>reporting	Environmental, social and governance (‘ESG’)<br><br>reporting<br><br>The Committee considered management’s efforts to<br><br>enhance ESG disclosures and associated verification<br><br>and assurance activities, with a specific focus on the<br><br>net zero transition plan and climate-related disclosures<br><br>made in the Annual Report and Accounts 2024.	–The Committee considered ESG disclosures for the Annual Report and Accounts<br><br>2024 in detail, to ensure these were fair and balanced, and were also transparent on<br><br>the challenges faced and aligned with the Group’s progress in the embedding of<br><br>sustainable and climate-related policies across the business. In addition, the<br><br>committee reviewed the narrative relating to our net zero ambitions and targets and<br><br>the planned annual net zero transition plan review.
300	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Board committees

Principal activities and significant issues considered during 2024 (continued)
Areas of focus	Key issues	Conclusions and actions
	Regulatory reporting<br><br>The GAC monitored progress by management in<br><br>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 and in particular, data.
Control<br><br>environment	Sustainable control environment<br><br>The GAC oversaw the effectiveness of the internal<br><br>control environment of the Group, including with<br><br>regards to the requirements of US Sarbanes-Oxley<br><br>Act.<br><br>During the year, the remit of the GAC with regards to<br><br>internal control was extended beyond financial<br><br>reporting controls to include oversight of all internal<br><br>controls.	–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, with regular updates provided on IFRS 17 and Basel 3.1.<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>significant deficiencies. This oversight helped the Committee to understand the<br><br>progress being made by management to set out strategic actions to remediate<br><br>identified issues and uplift the control environment to enable a sustainable reduction<br><br>in risk.<br><br>–Management’s updates were supplemented by further focus and assurance work<br><br>from Global Internal Audit, including audits of significant programmes of activity<br><br>during 2024.<br><br>–The Committee oversaw the work to support the Group’s oversight of internal<br><br>controls, including the establishment and scope of responsibilities of the new Group<br><br>Controls Oversight Office.
Regulatory<br><br>change	Basel 3.1 Reform<br><br>The GAC considered the implementation of the Basel<br><br>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, including following the publication by the PRA on<br><br>12 September 2024 of the second near-final policy statement and rules covering<br><br>their implementation.<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 given the concentration of delivery during 2024 & 1H25. The<br><br>discussion highlighted the dependencies of the Basel 3.1 programme with data,<br><br>models and subject matter resources.<br><br>–The Committee reviewed the ongoing management of risks, issues and<br><br>dependencies and challenged management to prioritise deliverables across each<br><br>jurisdiction in line with regulatory timelines. The Committee discussions focused on<br><br>ensuring, in each case, that the Group complied with the applicable minimum<br><br>standards under the regulation.

Committee performance review

In 2024, the annual review of the performance of the Board

committees, including the GAC, was conducted externally by IBE. On

the basis of the review, directors concluded that the GAC continued

to operate effectively.

Positive feedback was noted on the refreshed Committee

composition, in particular the change of Committee leadership and

the new practices and focus introduced, including on the control

environment. The Committee will consider scheduling an extra

meeting in 2025 to provide additional, dedicated time for discussion,

given the range and complexity of topics under the Committee’s

remit. The review highlighted the continued importance of strong

interaction between the GAC, GRC, and GTOC agendas, via the

Committee Chairs, and this will continue to be an area of focus in

2025.

Further details of the annual review of the Board and Committee

effectiveness can be found on page 287.

HSBC Holdings plc Annual Report on Form 20-F	301

Group Risk Committee

	“Managing the impacts of political change and policy volatility has been a key trend this<br><br>year, with changes in governments globally, having economic and commercial<br><br>implications for both the Group and the industry.“
James Forese<br><br>Chair<br><br>Group Risk Committee
Membership			Key responsibilities
	Member since	Meeting attendance<br><br>in 20241	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.
James Forese (Chair)	Jun 2022	10/10
Geraldine Buckingham2	Jun 2022	8/8
Dame Carolyn Fairbairn	Sep 2021	10/10
Steven Guggenheimer	May 2020	10/10
Kalpana Morparia3	Jul 2020	8/8
Eileen Murray4	Oct 2024	2/2
Brendan Nelson	Sep 2023	10/10
David Nish5	Feb 2020	3/4
Swee Lian Teo	Oct 2023	10/10
1 These included six scheduled meetings, two ad hoc meetings and two<br><br>joint meetings, one with the Group Remuneration Committee and one<br><br>with the Group Audit Committee.<br><br>2 Geraldine Buckingham stepped down from the GRC on 1 October 2024.<br><br>3 Kalpana Morparia stepped down from the GRC on 1 October 2024.<br><br>4 Eileen Murray was appointed to the GRC on 1 October 2024.<br><br>5 David Nish stepped down from the GRC on 3 May 2024. He was unable<br><br>to attend one meeting due to a prior commitment.

I am pleased to present the GRC report.

The GRC membership has been refreshed this year to ensure that the

mix of skills and experience remains appropriate for the business of the

Committee and due to the retirement of David Nish, who stepped down

from the Committee in May after completing eight years of service with

the Group. I would like to thank David for his contribution to the GRC as a

valued member. Geraldine Buckingham and Kalpana Morparia stepped

down from the GRC in order to join other Board Committees. Eileen

Murray joined the GRC to complement her chair responsibilities for the

Group Technology and Operations Committee.

From a macroeconomic perspective, the year has been characterised by

a fluctuating interest rate outlook. There have been persistent concerns

over potential ’hard landings’ in major economies, and ’higher for longer’

policy rate predictions gradually shifting to market expectations for more

and rapid rate cuts, though with significant ongoing volatility and

uncertainty. Managing the impacts of political change and policy volatility

has been a key trend this year, with changes in governments having

economic and commercial implications for both the Group and the

industry. While performance in Hong Kong has improved, mainland China

continues to experience a slow economic recovery. The Group’s

wholesale credit risk and retail credit risk portfolios remain resilient

despite these challenges and the GRC has regularly reviewed portfolio

performance throughout the year.

Financial risks have been well managed this year, and the GRC has

continued to focus on treasury, capital and liquidity risk management

activities, including dedicating time to its assessment of the internal

capital adequacy assessment process (‘ICAAP’) and internal liquidity

adequacy assessment process (‘ILAAP’), which the GRC considers to be

one of its primary responsibilities. This is alongside prudential sensitivity

analysis and its recovery and resolution responsibilities. The Group made

its Resolvability Assessment Framework public disclosure in August,

receiving positive feedback from the Bank of England, which recognised

the progress made and our success in remediating previously identified

shortcomings. The Group Recovery Plan was submitted in June and we

await feedback from the PRA.

Non-financial risk has necessitated considerable GRC attention this year.

The fast-paced regulatory landscape has resulted in dynamic, and in

many cases, increasing expectations from regulators around the world.

With the ongoing conflict between Russia and Ukraine, navigating

sanctions obligations has been an ongoing challenge, and the Israel-

Hamas conflict poses a significant risk to security in the region, with

associated potential customer, staff and operational impacts. With the

publication of Supervisory statement 1/23 – ‘Model risk management

principles for banks’ last year, the GRC has undertaken to better

understand its responsibilities under the new regime, by challenging the

revised Group policy and framework, and holding an education session to

increase knowledge. The GRC supported management through an

exercise to enhance the HSBC Risk Management Framework, which has

resulted in several areas of improvement and brings us into line with

industry best practice. The Committee has also considered updates to

the Global Risk Appetite Framework and Group Risk Appetite Statement

to promote more transparency and consistency across the Group. The

Group continues to prepare for the PRA’s regulatory requirements

relating to Operational Resilience by improving its capabilities, identifying

its vulnerabilities and undertaking an extensive programme of testing.

Risk culture and its importance has also featured extensively throughout

committee discussions, including the development and implementation

of the Risk Culture Framework. Other areas of focus and challenge

include the Group’s data strategy and remediation programme, conduct

and financial crime, technology and cyber risk, ESG and ongoing Risk

Transformation programmes. As explained in the Report of the GAC on

page 295, responsibility for oversight of all internal controls transitioned

to the GAC during 2024.

Further details on these and other areas of GRC oversight during the year

are set out below.

302	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

I am proud to have led the GRC this year and am pleased at the

effective execution of its duties. I am confident the Committee

remains well placed to discharge its responsibilities and provide

valuable advice to the Board in 2025 and the future.

Committee governance

The Group Chief Risk and Compliance Officer, Group CFO, Group

Chief Operating Officer, Group Chief Information Officer, Group Chief

People & Governance Officer, Group Chief Legal Officer and Group

Head of Internal Audit are standing attendees at GRC meetings. The

Chair and members of the GRC also hold private meetings with the

Group Chief Risk and Compliance Officer, the Group Head of Strategy

and Corporate Development, the Group Head of Internal Audit and the

external auditor, PwC, following scheduled GRC meetings.

The participation of our senior business leaders, including the Group

CEO who attended five scheduled GRC meetings in 2024, and the

chief executive officers of the three global businesses reaffirmed the

ownership of, and accountability for, risks in the first line of defence.

Outside of formal meetings, the Chair meets regularly with the Group

Chief Risk and Compliance Officer, and, where appropriate, members

of senior management, to discuss priorities and track progress on key

actions. The Chair also meets regularly with the GRC Secretary to

ensure the GRC addresses its governance responsibilities. A

summary of coverage is set out in the ’Matters considered during

2024’ table.

Matters considered during 2024
	Jan2	Feb	Mar2	May	Jun	Jul	Sep	Dec
Holistic enterprise risk monitoring including<br><br>Group risk profile1	u	u	u	u	u	u	u	u
Risk framework and policies	u	u	u	u	u	u	u	u
Treasury and traded risk	u	u	u	u	u	u	u	u
Wholesale/retail credit risk	u	u	u	u	u	u	u	u
Financial reporting risk	u	u	u	u	u	u	u	u
Resilience risk (including IT and operational risk)	u	u	u	u	u	u	u	u
Financial crime risk	u	u	u	u	u	u	u	u
People and conduct risk	u	u	u	u	u	u	u	u
Regulatory compliance risk	u	u	u	u	u	u	u	u
Legal risk	u	u	u	u	u	u	u	u
Model risk	u	u	u	u	u	u	u	u
Climate risk	u	u	u	u	u	u	u	u
Strategic risk	u	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---

1 The GRC receives updates on all risk types through the Group risk profile, which is presented to all regular meetings.

2 The January and March meetings are ad hoc meetings with a reduced agenda.

How the Committee discharged its responsibilities

Activities outside formal meetings

The GRC held a number of meetings outside its regular schedule to

facilitate deeper and more effective oversight of the risks impacting

the Group. Areas covered included ICAAP and ILAAP preparations,

interest rate risk in the banking book, operational resilience and model

risk management, as well as briefings on the Resolvability

Assessment Framework and the Group Risk Appetite Framework.

Further details of these sessions are included in the ’Principal

activities and significant issues considered during 2024’ table starting

on page 303.

Connectivity with principal subsidiary risk

committees

During 2024, 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 are also attended by the Group Chief

Risk and Compliance Officer. This participation and connectivity

promoted the sharing of information and best practices between the

GRC and principal subsidiary risk committees, as well as encouraging

director relationships. Principal subsidiary risk committee chairs were

invited to attend a joint meeting between the GRC and the GAC in order

that a consistent message on changes to committee responsibilities

with regards to internal controls was received.

The GRC has 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.

Collaborative oversight by the GRC, GAC,

Group Technology and Operations Committee

(’GTOC’) and Group Remuneration Committee

(’RemCo’)

The GRC worked closely with the GAC and the GTOC to address any

areas of significant overlap, and to oversee risk and controls more

comprehensively through inter-committee communications and joint

meetings.

The GRC and the GAC convened on one occasion to consider a range

of issues, including changes being made to how each committee

manages and oversees internal controls.

The GRC and GTOC worked closely to ensure appropriate alignment

in the review, discussion, challenge and conclusions on topics

including risk and control issues relating to digital assets and

currencies, the Group's data strategy, artificial intelligence and

cybersecurity. This ensured that the committees benefited from each

other’s expertise and challenge.

Coordination between the GRC, GAC and the GTOC is supported by

cross-membership. The GRC Chair attends the GAC, the GTOC Chair

attends the GRC, and the GAC Chair attends both the GTOC and

GRC, strengthening connectivity and the flow of information between

the committees.

HSBC Holdings plc Annual Report on Form 20-F	303

The GRC and Group RemCo work collaboratively to consider risk adjustment to the variable pay pool as part of the Group reward process, given

the integral nature of risk management to the Group’s performance culture. This year, the committee has also considered improvements to the

Risk and Reward framework.

Principal activities and significant issues considered during 2024
Risk areas	Key issues	Conclusions and actions
Holistic<br><br>enterprise risk<br><br>monitoring,<br><br>including Group<br><br>risk 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, business performance or operations. These risks were<br><br>exacerbated by ongoing conflict between Russia-Ukraine, the Israel-Hamas conflict<br><br>and rising political tensions between the US and China. The resulting sanctions risk<br><br>from these events has required significant focus and oversight by the Committee.<br><br>While market sentiment and economic growth had been more positive than forecast,<br><br>the real estate sector continued to experience pressure, particularly in mainland<br><br>China and Hong Kong.<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 GRC provided oversight and challenge of a robust<br><br>book of strategic management actions to respond to potential downside scenarios.<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.
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.	–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 changes to the Group’s risk appetite<br><br>statements and recommending these to the Board for approval. This year's update to<br><br>the risk appetite statement was focused on providing essential coverage of the key<br><br>risks facing the Group and setting thresholds that reflected its desired risk profile for<br><br>these risks. A review of the Group risk appetite framework was also undertaken to<br><br>assess the dimensions of the framework and consider principles and approaches to<br><br>support effective and consistent appetite setting for the Group’s broader business<br><br>strategy. Areas of proposed improvement included: expanding assessments against<br><br>appetite to an evaluation-based risk appetite that considers the entire risk profile; and<br><br>enhancing Board-level overall statements to explicitly define the Group’s targeted<br><br>appetite and the risks outside of appetite or tolerance, as well as qualitative context.<br><br>–The GRC met with the Group Chief Risk and Compliance Officer and the Global Head<br><br>of Enterprise Risk Management individually to ensure clarity and understanding of<br><br>the changes being proposed, and how the improved design would support better<br><br>outcomes for the Group. The framework has been validated by Oliver Wyman and<br><br>brings the risk appetite framework into line with industry peers.<br><br>–The GRC also reviewed and approved proposed annual updates to HSBC’s Risk<br><br>Management Framework, providing a standardised, Group-wide approach to the<br><br>identification, treatment and reporting of risk.
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 a subsidiary or Group level<br><br>is an essential part of HSBC’s prudential<br><br>management.	–The Group proactively tracks and maintains safeguarding of its capital and liquidity<br><br>positions. It performs internal and regulatory stress tests to measure resilience and<br><br>performance against a range of stress scenarios, and to challenge the strategic<br><br>management actions that could be applied against anticipated stress events and<br><br>headwinds.<br><br>–The GRC conducted its annual review and challenge of the Group’s ICAAP and ILAAP,<br><br>and provided its recommendation to the Board for approval. The GRC continued to<br><br>monitor Interest Rate Risk in the Banking Book (’IRRBB’) sensitivity, structural hedging<br><br>strategy and the ongoing activities to develop the Group’s capabilities for internal<br><br>reporting and enhanced external disclosures. An education session on IRRBB was held<br><br>in April to provide the Committee with the Group’s latest position, context around the<br><br>regulatory feedback and an overview of the different components of IRRBB.<br><br>–The GRC reviewed the Group’s ongoing activities to identify, manage and mitigate<br><br>treasury, capital and liquidity risks, including early warning indicators, sensitivity<br><br>analysis, capital and liquidity reporting and adequacy.<br><br>–In relation to stress testing exercises, the GRC reviewed the Group Recovery Plan<br><br>stress scenarios in March and September. The GRC also considered the Group-wide<br><br>internal stress test, scenarios and outputs, which contribute to the Group’s<br><br>commitment to regularly test the resilience of the balance sheet and profit and loss<br><br>under multiple scenarios of varying severity. An internal climate scenario analysis was<br><br>undertaken, with results presented in February 2024.<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. The GRC has been regularly updated on the Group’s implementation<br><br>of the PRA’s Trading Activity Wind Down requirements in preparation for the March<br><br>2025 deadline, which will require the Group to have implemented a set of capabilities<br><br>that will allow the execution of a full or partial wind down of its trading activities in an<br><br>orderly fashion. In March 2024, the GRC reviewed the Resolvability Assessment<br><br>Framework public disclosure and made a recommendation to the Board for approval. In<br><br>June 2024, management presented the 2024 Group Recovery Plan ahead of its<br><br>submission to the PRA in June. The plan was also recommended to the Board for<br><br>approval. The Chairs of the GRC and the GAC both received comprehensive briefings<br><br>prior to the presentation of both submissions.
304	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Board committees

Principal activities and significant issues considered during 2024 (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 has had significant engagement on model risk management due to the<br><br>release of Supervisory Statement (SS) 1/23 – ‘Model risk management principles for<br><br>banks’ in 2023, and the required remediation in order to be in compliance with the<br><br>PRA’s new expectations. The GRC has overseen revisions to the model risk policy<br><br>and framework, plus the self-assessment exercise required by the statement. In<br><br>addition, a separate education session was held in July, providing an in-depth<br><br>overview of model risk, how models are used within the business, and with a<br><br>specific focus on Wholesale IRB Models and the data challenges.
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 IT system within<br><br>HSBC, as a result of malicious acts, accidental<br><br>actions, poor IT practice, or IT 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 GRC reviewed and<br><br>challenged the operational resilience self-assessment against regulatory expectations<br><br>and was briefed on the methodology used to identify vulnerabilities from the<br><br>mapping and testing of Important Group Business Services and Entity Important<br><br>Business Services in line with regulatory policy. An additional briefing session on<br><br>operational resilience was held in June to prepare the Committee for the self-<br><br>assessment in June.<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 risk and control<br><br>environment, as well as the current threat landscape and emerging risks. The GRC<br><br>will continue to work with the Group Technology and Operations Committee to<br><br>consider the risks and opportunities in the use of AI (generative and advanced) and<br><br>digital assets and currencies in 2025.<br><br>–The GRC continued with its strong focus on understanding the Group’s data risk<br><br>landscape, its data strategy and data management programme. This has included the<br><br>tracking of progress made against the Group’s data execution programme and<br><br>timelines are being monitored closely.<br><br>–Third-party risk management received additional focus this year in light of a number<br><br>of external incidents that had largely occurred due to the failure of third-party<br><br>vendors. The GRC will continue this focus into 2025, working closely with the GTOC.
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<br><br>commercial real estate sector has presented unique<br><br>challenges for the wholesale credit risk portfolio,<br><br>particularly for office properties.	–The GRC received briefings on the macroeconomic and policy landscape impacting<br><br>credit risk, both retail and commercial, and reviewed updates on the strategy and<br><br>approach to managing credit risk and credit risk capabilities. The GRC received regular<br><br>updates on the Group’s expected credit losses and provisions, and the credit risk<br><br>arising from the wholesale portfolio and mortgage books. Throughout the year, the<br><br>GRC focused on building even stronger credit capabilities for specialty sectors,<br><br>including the continued implementation of the Country and Industry components of the<br><br>Credit Risk Appetite Framework.<br><br>–The GRC challenged on changes made to the Commercial Real Estate cap to ensure<br><br>adequate control of the business, given commercial real estate is the largest corporate<br><br>sector concentration in the wholesale portfolio.<br><br>–The GRC had oversight of the development of stronger portfolio management<br><br>capabilities and further improving the Group’s credit risk culture. A key focus area<br><br>continued to be maintaining appropriate tools and treatments available to our<br><br>customers to support anyone experiencing financial difficulty, having the right people<br><br>available to give the right advice and ensuring that conduct and good customer<br><br>outcomes are first priorities.
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 295, the GRC receives reports<br><br>on entity level control assessments to enable the oversight of the effectiveness of<br><br>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 and<br><br>controls pertaining to financial crime risk across geographies and businesses. This<br><br>included reviewing updates to the Group’s financial crime policy, enhancing the<br><br>approach to insider risk, and monitoring the fraud landscape and strategies for<br><br>managing fraud risk.<br><br>–Specific updates on Russia sanctions have been necessary with the ongoing conflict<br><br>between Russia and Ukraine, in particular due to the increasing severity of US<br><br>sanctions and the Group's unique global position in many of the affected markets. The<br><br>GRC has been appraised of all management engagement with local governments and<br><br>regulators in impacted regions.<br><br>–The GRC increased their focus on Insider Threat, as HSBC’s inherent risk has increased<br><br>due to factors including cost-of-living challenges and inflation affecting markets, the<br><br>potential impact of restructures on staff morale, and the inherent risks associated with<br><br>growth.
HSBC Holdings plc Annual Report on Form 20-F	305
---	---
Principal activities and significant issues considered during 2024 (continued)
---	---	---
Risk areas	Key issues	Conclusions and actions
People and<br><br>conduct risk	People are central to everything HSBC does<br><br>and it is essential to manage the risk of not<br><br>having the right people with the right skills,<br><br>and to ensure staff always have the<br><br>customer’s interest at the forefront.<br><br>Monitoring of conduct outcomes is integral to<br><br>ensuring the needs of our customers are<br><br>adequately met.	–The GRC considered people risk issues with a focus on capacity, capability, culture and<br><br>conduct. It also considered remuneration risks, and strategies to retain talent and acquire new<br><br>capabilities in key areas, with a particular focus on approaches to maintain low attrition rates.<br><br>–The GRC now considers an Annual Conduct Update, further to the implementation of the<br><br>Purpose Led Conduct Framework in 2023.<br><br>–The GRC and Group RemCo met in September to consider improvements to the Risk and<br><br>Reward framework. The proposed changes support better understanding of the risk factors<br><br>used to drive performance assessments and how judgements made align to the application<br><br>of the Risk Modifier.<br><br>–The GRC met in November to review the Group’s risk and reward alignment framework to<br><br>promote sound and effective risk management in meeting PRA and FCA remuneration rules<br><br>and expectations.
Regulatory<br><br>compliance risk	As a result of operating in multiple<br><br>jurisdictions globally, HSBC is exposed to risks<br><br>associated with inappropriate market conduct<br><br>or breaching related financial services<br><br>regulatory standards or expectations.	–The GRC and its members actively engage with regulators and act on feedback. The<br><br>Committee closely monitors the progress of regulatory remediation activities, with support<br><br>from the Group Chief Risk and Compliance Officer as well as principal subsidiary risk<br><br>committee chairs. Throughout the year, the GRC had oversight over reports providing<br><br>feedback from regulators, including a summary of regulatory deliverables to ensure HSBC<br><br>remains in line with regulatory standards and expectations.<br><br>–The GRC also considered the 'Statement of Compliance' exercise, which is an assessment of<br><br>Significant Regulatory Matters undertaken for principal subsidiary CEOs, providing an opinion<br><br>as to how well managed these are and where gaps may exist. Further to a pilot undertaken in<br><br>Mexico, this approach is now being rolled out across all principal subsidiaries.
Legal risk	HSBC is exposed to the risk of financial loss,<br><br>legal or regulatory action resulting from<br><br>contractual risk, dispute management risk,<br><br>breach of competition law or intellectual<br><br>property risk.	–The GRC oversees and receives regular updates on key legal developments and material legal<br><br>issues from the Group Chief Legal Officer. The updates also cover material litigation and<br><br>regulatory enforcement matters and an overview of the legal risk profile of HSBC.
Climate risk	Environmental, social and governance risks<br><br>present significant risks to organisations both<br><br>in terms of their own operations and how they<br><br>engage with stakeholders and communities.	–The GRC remained focused on climate risk and greenwashing risk. The GRC received reports<br><br>on climate risk management and sustainability risk policies, while maintaining oversight of<br><br>delivery plans and risk appetite breaches to help ensure that the Group continues to develop<br><br>and maintains robust climate risk management capabilities. Reputation risk considerations<br><br>have also formed part of these discussions.<br><br>–The GRC approved the 2024 internal climate scenario analysis in February 2024. The<br><br>outcomes will be used to respond to multiple regional regulatory climate exercises as well as<br><br>meeting regulatory expectations on incorporating climate change within the Group’s strategic<br><br>plans and ICAAP.

Committee performance review

2024/2025

In 2024 the annual review of the performance of the Board

Committees, including the GRC, was conducted externally by IBE. On

the basis of the review, Directors concluded that the GRC continued

to operate effectively.

Areas for enhancement were identified, including the need for:

continued focus on paper quality and content to increase focus on the

most significant enterprise and emerging risks; ongoing refinement of

the GRC agenda to streamline and enable greater attention to

strategic risk areas; continued additional educational and ‘deep dive’

sessions outside of the formal schedule of meetings to allow for

greater debate, insights and learnings, coupled with other

mechanisms to guide the scheduled Committee discussions; ongoing

work with Management to ensure effective and timely follow up to

Committee challenge. The collaboration across the GRC, GAC and

GTOC agendas, via the Committee Chairs, will continue in 2025.

The outcomes of the performance review have been reported to the

Board, and the GRC will track the progress in implementing

recommendations during 2025.

Further details of the annual review of the Board and Committee

effectiveness can be found on page 287.

Focus of future activities

The GRC’s focus for 2025 will include the following activities:

–to continue to monitor the effective delivery of risk transformation

programmes and to seek assurance that the enhanced capabilities

have been fully embedded into the business;

–to support the continued enhancement of the Group's risk appetite

and risk management frameworks further to the improvements

made in 2024, particularly in light of continued geopolitical and

macroeconomic headwinds;

–to continue to assess the Group's operational resilience capability

and to track the completion of the programme of work required by

the PRA rules coming into effect in March 2025;

–to continue to support and challenge the remediation activities

identified to enhance Model Risk Management capabilities in line

with SS 1/23;

–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 our Trading Activity Wind Down obligations;

–to monitor delivery against our climate ambitions and the

development of appropriate data and model management tools

and capabilities; and

–to continue to oversee financial crime risk and the strengthening of

the financial crime control framework, including proactive

management by the business.

306	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Board committees

Group Technology and Operations

Committee

	“The Committee oversees all aspects of the Group’s technology and operations<br><br>strategies, which enable the efficient provision of resilient, sustainable, and innovative<br><br>products and services to our customers.“
Eileen Murray<br><br>Chair<br><br>Group Technology and Operations Committee
Membership			Key responsibilities
	Member since	Meeting attendance<br><br>in 20241	The GTOC has overall responsibility for the oversight of HSBC’s<br><br>technology and operations strategies and alignment with the overall<br><br>HSBC Group strategy, including global business and global function<br><br>priorities. The GTOC’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,<br><br>procurement, corporate real estate and operational resilience.
Eileen Murray (Chair)	Mar 2024	7/7
Steven Guggenheimer	Mar 2024	7/7
Kalpana Morparia2	Mar 2024	6/7
Brendan Nelson	Mar 2024	7/7
Swee Lian Teo	Mar 2024	7/7
1These included seven scheduled meetings.<br><br>2 Kalpana Morparia was unable to attend the November meeting due to a<br><br>prior commitment.

I am pleased to present the first report of the Group Technology and

Operations Committee (‘GTOC’), which was established in March

2024 as the Group Technology Committee with the responsibility for

oversight of execution against the Group’s Technology strategy. In

December 2024, the remit of the Committee was extended to also

cover global operations, including payments, procurement, corporate

real estate, and operational resilience, reflecting changes to the Group

organisational structure and the importance of operations to delivery

of the Group’s strategy. I would like to thank Steve Guggenheimer,

Kalpana Morparia, Brendan Nelson and Swee Lian Teo, all of whom

joined the Committee alongside me in March. Each director has

brought their unique skills, experience and perspectives to the

matters we have spent time on.

Since our first meeting in March 2024, a key area of oversight and

focus has been oversight of the enterprise-wide programme

established to simplify the Group’s technology infrastructure, enhance

system resilience, and accelerate digital transformation across the

bank. The GTOC has challenged management on its plans and

prioritisation and has overseen progress in execution of what is a

multi-year deliverable, seeking assurance from Risk and Global

Internal Audit on the robustness of the approach.

The GTOC has worked closely with management since its inception

to reinforce and enhance the guardrails supporting technology

investments and transformation, the tracking of benefits and

outcomes, and to enhance accountability for delivery. It has received

updates on key projects and programmes, and has considered the

technology deliverables within our payments, core banking, and global

private banking and wealth strategies.

The GTOC has also received regular updates on management’s

programme to meet regulatory deliverables and address technology-

related risk and control matters and we have again challenged the

approach to prioritisation and delivery timelines.

Other areas of focus for the GTOC during the year have included the

Group’s data and cybersecurity programmes. We provided input and

challenge to management’s remediation plans and efforts to enhance

technology, cybersecurity, and data metrics and key performance

indicators. We also considered the innovation agenda, including

opportunities in respect of artificial intelligence and digital assets.

To support engagement and connectivity across the Group on key

technology matters, I invited observers from each of the four largest

principal subsidiaries to join the GTOC meetings. We held two

subsidiary-focused meetings during 2024, with a focus on operational

resilience, including data and third-party risks. We discussed

regulatory regimes across the different markets, progress against

agreed timelines, challenges to meet expectations, and dependencies

on Group-level programmes and deliverables.

In October 2024, the GTOC hosted a training session to which all

Board members were invited, to hear external insights and

perspectives on third-party suppliers, including key risks and trends.

Further details on these and other areas of GTOC oversight during the year

are set out below.

HSBC Holdings plc Annual Report on Form 20-F	307

Committee governance

The GTOC 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 GTOC Chair reports on

the key matters and discussions at the subsequent Board meeting,

and the Board also has access to the GTOC papers and receives

copies of meeting agendas and minutes.

The Group Chief Information Officer, Group Chief Operating Officer,

Group Chief Risk and Compliance Officer, Global Head of Enterprise

Risk Management, Group CFO, Group Head of Internal Audit, and the

external auditor are standing attendees at GTOC meetings. The Chair

and members of the GTOC also hold private meetings with the Group

Chief Information Officer, Group Chief Operating Officer, Group Chief

Risk and Compliance Officer, and Group Head of Internal Audit, as

required.

The GTOC Chair meets regularly with the Group Chief Information

Officer and Group Chief Operating Officer and other members of

senior management, to discuss priorities and track progress on key

actions. The Chair also meets regularly with the GTOC Secretary to

ensure the GTOC addresses its governance responsibilities. A

summary of coverage is set out in the ’Matters considered during

2024’ table.

Matters considered during 2024
	Mar	May	Jun	Jul	Sep	Nov	Dec
Technology	u	u	u	u	u	u	u
Investment and transformation	u	u	u	u	u	u	u
Resilience	u	u	u	u	u	u	u
Innovation	u	u	u	u	u	u	u
Cybersecurity	u	u	u	u	u	u	u
Data	u	u	u	u	u	u	u
Resource and capability	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---

How the Committee discharged its responsibilities

Engagement outside formal meetings

The GTOC Chair held several meetings outside its regular schedule to

facilitate deeper and more effective oversight of all key topics under

its remit. The Chair regularly met with key stakeholders, including

executives, programme sponsors, second and third line of defence,

and independent third parties.

On 16 October 2024, KPMG held an education session on Third Party

Management for the HSBC Holdings Board covering industry insights,

trends, and the regulatory landscape. Further details of this and

similar sessions are included in the ’Principal activities and significant

issues considered during 2024’ table starting on page 307.

Connectivity with principal subsidiaries

Board members representing the four principal subsidiaries (UK, Asia,

Europe and the US) are invited to attend the GTOC. As described

above, two additional ‘GTOC - Principal Subsidiaries’ meetings were

held covering Operational Resilience (resiliency challenges, regulatory

requirements and action plans to address resilience issues).

Collaborative oversight by the GTOC, GRC

and GAC

The GTOC worked closely with the GRC and the GAC to address any

areas of significant overlap, and to oversee technology 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 and innovation. This ensured that the

committees benefited from each other’s expertise and challenge.

On 16 September 2024, members of the Group Technology, Group

Risk and Group Remuneration Committees met to consider proposed

changes to HSBC’s risk and reward alignment framework and to

promote accountability for technology deliverables.

Coordination between the GTOC, GRC and the GAC is supported by

cross-membership. The GTOC Chair attends the GRC, the GRC Chair

attends the GAC, and the GAC Chair attends both the GTOC and

GRC, strengthening connectivity and the flow of information between

the committees.

Principal activities and significant issues considered during 2024
Area of focus	Key issues	Conclusions and actions
Technology<br><br>strategy	There is Group-wide focus to<br><br>implement the technology strategy.<br><br>This requires clarity and alignment of<br><br>priorities and collaboration across<br><br>businesses, functions, and markets to<br><br>deliver the most critical initiatives.	–The GTOC regularly reviewed and challenged updates in relation to the technology strategy and the<br><br>programmes in place to deliver. The committee oversaw and requested more granularity on<br><br>timelines, the prioritisation approach, key risks, dependencies and challenges.<br><br>–Additionally, the GTOC challenged that focus, funding and resource was being applied to enable the<br><br>execution timelines to be met and requested assurances from Risk and Global Internal Audit on the<br><br>robustness of the approach and progress being made.
Technology<br><br>strategy:<br><br>management<br><br>information and<br><br>KPIs	The Board and Board Committees rely<br><br>on quality management information,<br><br>KPIs and metrics to effectively<br><br>oversee the areas under their remit.	–The GTOC provided detailed feedback and insights on work to refine Board level metrics to ensure<br><br>strong governance and accountability across technology, cybersecurity and data. Discussions<br><br>included the calibration of quantifiable triggers and tolerance levels.
Investment and<br><br>transformation	A number of significant programmes<br><br>with material technology components<br><br>have been subject to replanning and/<br><br>or did not deliver the benefits<br><br>expected.	–The GTOC challenged management on the quality of business cases and provided inputs to the<br><br>enhanced investment case framework, which has been refined to require:<br><br>–articulation of risks and dependencies to ensure that these are well understood by<br><br>management, and appropriately considered;<br><br>–detailed insights on the opportunity and peer insights; and<br><br>–accurate and informed cost estimations.
Investment and<br><br>transformation:<br><br>Global Payments<br><br>Solutions	Payments is a significant proposition<br><br>for HSBC and is subject to an ongoing<br><br>investment programme.	–The GTOC provided oversight of the Global Payments Solutions strategy, including the risk profile,<br><br>effectiveness of the control environment, investment and expected benefits, and alignment of the<br><br>current technology stack to the desired target state architecture.
308	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Board committees

Principal activities and significant issues considered during 2024 (continued)
Area of focus	Key issues	Conclusions and actions
Investment and<br><br>transformation:<br><br>Global Private<br><br>Banking and<br><br>Wealth	GPB and Wealth is a significant<br><br>proposition for HSBC and is subject to<br><br>an ongoing investment programme.	–The GTOC provided oversight of the Global Private Banking and Wealth strategy, including the risk<br><br>profile, effectiveness of the control environment, investment and expected benefits, and alignment<br><br>of the current technology stack to the desired target state architecture.
Resilience	Operational resilience is a key priority<br><br>for HSBC	–The GTOC regularly discussed actions being taken to improve resiliency, including work to simplify the<br><br>technology estate and to enhance controls to reduce service interruptions impacting customers.<br><br>–In view of our reliance on services provided by third parties, the GTOC also reviewed the third-party risk<br><br>management framework that is in place to monitor associated risks and identify and implement<br><br>mitigating actions, and provided oversight of third-party related topics in relation to: regulatory feedback/<br><br>trends; technology and cybersecurity resilience; third-party security risk; spend and usage<br><br>–In addition, committee members met with principal subsidiaries to discuss resiliency challenges,<br><br>regulatory requirements, and action plans to address resilience issues.
Innovation<br><br>strategy	While AI, and particularly generative<br><br>AI, is likely to provide much<br><br>opportunity for the bank, the risks<br><br>need to be understood and managed<br><br>appropriately.	–The GTOC has reviewed strategies to leverage the opportunities presented by innovation and new<br><br>technologies, including in relation to digital assets and generative AI. These discussions set clear<br><br>expectations with regard to risk, control and governance frameworks, enhancements (where required)<br><br>and associated funding needs.
Cybersecurity	Cybersecurity remains one of the<br><br>most significant risks faced by the<br><br>financial services industry.	–The GTOC provided oversight of cybersecurity; receiving regular updates from the Group Chief<br><br>Information Officer and Group Chief Information Security Officer relating to: key controls; service and<br><br>resilience; the external threat environment; enhancements to metrics; and progress updates on key<br><br>programmes. The Committee also discussed the impacts of cyber issues experienced by suppliers and<br><br>challenged management on what additional actions could be taken to mitigate those risks.<br><br>–The GTOC reviewed and challenged regular updates on the cybersecurity programme, including<br><br>specific focus on the results of an industry-wide peer review and the timelines for ongoing<br><br>enhancements to the cyber risk and control framework.
Data	Significant work is ongoing to develop<br><br>the Group’s data strategy and deliver<br><br>the data remediation programme.	–The GTOC requested several specific updates on the Group’s data remediation programme,<br><br>including on progress made, and challenges encountered, to meet regulatory commitments.<br><br>Additionally, the Committee challenged to understand the assessment of the control landscape,<br><br>residual risk and plans to mitigate, both short and long term. The GTOC challenged management to<br><br>articulate a clear data strategy, and this will remain an area of material focus in 2025.<br><br>–The Committee demonstrated oversight of the key priorities to implement improvements to the<br><br>integrity of regulatory reporting; enhance data quality measures across priority processes; and meet<br><br>regulatory commitments.
Resource and<br><br>capability	Having the right skills and resources is<br><br>critical to achieving our strategic<br><br>ambitions.	–The GTOC reviewed management's technology people and capability plans. Key resources,<br><br>dependencies on subject matter experts, and future skills needs were also considered in respect of<br><br>programme updates.

Committee performance review

In 2024 the annual review of the effectiveness of the Board

committees, including the GTOC, was conducted externally by IBE.

On the basis of the review, directors concluded that the GTOC was

operating effectively.

Positive feedback was noted on the leadership of the GTOC Chair, the

quality of information received, and the responsiveness of

management in relation to the topics of focus during 2024. The

review highlighted the importance of continued connectivity between

the Board Committees, in particular the GTOC and GRC given the

overlap of issues within their respective remits.

Further details of the annual review of the Board and Committee

performance can be found on pages 287 to 288.

Focus of future activities

The GTOC’s focus for 2025 will include the following activities:

–Oversight and review of the Group's global operations strategy,

including payments, procurement, corporate real estate and

operational resilience;

–continued oversight and review of the Group’s technology

strategy, cybersecurity strategy and related matters;

–continued oversight of key transformation programmes, with a

particular focus on accountability;

–continued focus on data remediation activities and management’s

articulation of its data strategy, and the monitoring of progress to

execute;

–continued focus on the resilience of services; and

–continued consideration of technology innovation initiatives and

how these might be leveraged in support of the Group strategy.

HSBC Holdings plc Annual Report on Form 20-F	309

Directors’ remuneration report

		“Our new remuneration policy will support the delivery of our strategy and materially<br><br>strengthen the alignment between performance, pay and shareholder interests.“
	Dame Carolyn Fairbairn<br><br>Chair<br><br>Group Remuneration Committee
	Membership1			Key responsibilities
		Member<br><br>since	Meeting attendance<br><br>in 2024	The Committee’s key responsibilities include:<br><br>–making recommendations to the Board, for approval by<br><br>shareholders, on the Group’s remuneration policy;<br><br>–setting the overarching principles, parameters and governance<br><br>framework of the Group’s remuneration policy;<br><br>–approving the remuneration of executive Directors and other senior<br><br>Group employees; and<br><br>–regularly reviewing the effectiveness of the remuneration policy of<br><br>the Group and its subsidiaries in the context of strategy, culture,<br><br>conduct and effective risk management.
	Dame Carolyn Fairbairn (Chair)	Sep 2021	9/9
	Geraldine Buckingham	Jun 2022	9/9
	Rachel Duan	Sep 2021	9/9
	Ann Godbehere	Sep 2023	9/9
	José Antonio Meade<br><br>Kuribreña	May 2021	9/9
	Kalpana Jaisingh Morparia2	Oct 2024	2/2
	Eileen Murray	May 2023	9/9
	1 All members of the Committee are independent non-executive Directors<br><br>of HSBC Holdings plc.<br><br>2 Kalpana Jaisingh Morparia joined the Committee on 1 October 2024.
All disclosures in the Directors’ remuneration report are unaudited unless otherwise stated. Disclosures marked as audited should be<br><br>considered audited in the context of financial statements taken as a whole.

Dear shareholders,

I am delighted to present our 2024 Directors’ remuneration report on

behalf of the members of the Group Remuneration Committee (the

’Committee’). I would like to thank Geraldine Buckingham for her

valued contribution and to welcome Kalpana Morparia.

I also thank you, our shareholders, for your support of our

remuneration resolutions at the 2024 Annual General Meeting

(’AGM’). Our implementation of the current Directors’ remuneration

policy and our resolution to provide the Committee with discretion to

set an appropriate variable to fixed pay ratio received respectively

over 97% and 99% of votes cast in favour.

The most significant item on the Committee's agenda this year was

the review of the Directors’ remuneration policy. The changes and

supporting rationale are set out over the following pages. We present

the formal policy for shareholder approval before describing the key

remuneration decisions for our executive Directors for 2024, our

approach to wider workforce reward and Committee governance.

Further information and disclosure is provided at the end of the report

to meet our reporting obligations in the UK and Hong Kong.

2025 executive Director remuneration policy

Commencing in 2023, the Committee undertook a detailed review of

the executive Directors’ remuneration policy to ensure it remains

appropriate given the size and complexity of the Group, the talent

market in which we compete and regulatory and best practice

developments.

We extensively engaged with major shareholders, representing 65%

of those who voted at the 2024 AGM, and proxy advisory bodies.

Shareholders were supportive of the proposals and understood the

rationale for change. We received valuable feedback on our

disclosure, which we have covered within this report. Our discussions

focused on the need for stretching performance targets, and some

individual shareholders had feedback on specific performance

measures. The Committee carefully considered all feedback received,

which has directly influenced final proposals.

Context for the review and overall remuneration structure

In 2014, as a result of European legislation (CRD IV), the Prudential

Regulation Authority (’PRA’) and Financial Conduct Authority (’FCA’)

introduced a 2:1 cap on the ratio between variable and fixed pay for

material risk takers (’MRTs’). In response to this change, in line with

other global banks operating in Europe, we introduced Fixed Pay

Allowances (’FPAs’) so that HSBC could balance being competitive on

a total compensation basis and complying with the remuneration

rules.

For our executive Directors, we converted part of their variable pay

opportunity (annual incentive of 300% of salary and long-term

incentive of 600% of salary) into new FPAs at an effective discount of

50% to reflect the greater certainty of fixed pay. The change

materially weakened the link between performance and pay and

reduced the maximum total remuneration opportunity from

£13,125,000 to £10,725,000 for the Group CEO and from £7,350,000

to £6,000,000 for the Group CFO. The total opportunity has remained

largely unchanged over the last decade, despite subsequent changes

to the Directors’ remuneration policy and changes in incumbents and

scope of the Group CFO role.

Over several years, the Committee has expressed concerns that the

2:1 cap was having a material impact on the competitiveness of the

executive Director remuneration opportunity at HSBC versus

international peers.

Now that the 2:1 variable to fixed pay ratio has been removed by UK

regulators, the Committee feels it is the right time to return to a

remuneration structure with a higher proportion of variable pay linked

to performance that is more closely aligned to the experience of our

shareholders. This will also help address compression between the

total compensation of our executive Directors and some of our Group

Operating Committee roles.

We have received strong support from shareholders for our existing

policy over many years, which we discussed in our recent

engagement. In determining the new policy, the Committee

considered several different incentive structures, recognising the

diversity in approach among our global peers. This included more

310	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

complex models such as hybrid structures, the use of restricted stock

and retaining part of the FPA. These were ultimately rejected in the

interests of simplicity and transparency, and a fundamental desire for

pay to be linked to performance and shareholder value creation.

The Committee concluded that the current framework of an annual

incentive and single performance-based long-term incentive is most

appropriate. It is a simple and well understood structure and supports

the delivery of our strategy and alignment with performance through

the cycle.

Evolution of our maximum opportunity over time (£000)

224850129190796

Group CEO	Pre-2014
	2014<br><br>Policy
	2023<br><br>Policy
	Current<br><br>(2024)
Group CFO	Pre-2014
	2014<br><br>Policy
	2023<br><br>Policy
	Current<br><br>(2024)

We propose to reverse the changes made in 2014 to increase the

proportion of pay linked to long-term performance. This means

removing FPAs in their entirety and resetting the maximum variable

pay opportunity to 900% of salary, split between 300% in annual

incentive and 600% in long-term incentive (‘LTI’).

At this level, the LTI enables the Committee to target an appropriate

maximum opportunity relative to peers with significantly less reliance

on fixed pay. Specifically, the proposed structure reduces fixed pay by

49% for the Group CEO and 51% for the Group CFO.

The Committee considered a lower maximum LTI opportunity for the

Group CFO but decided against this, reflecting on the relative

complexity of the Group CFO role at HSBC compared to other listed

peers in the FTSE 30, practice at international banks, and internal pay

compression. We tested this with shareholders during our

engagement who were largely supportive of the approach.

In line with current market practice and in direct response to investor

feedback, we propose to increase the shareholding guideline to equal

the LTI opportunity of 600% of salary for both the Group CEO and

Group CFO.

The Committee also intends to implement a post-employment

shareholding guideline in line with Investment Association guidelines,

which will apply for two-years post cessation of employment.

Overall, the structure ensures that a significant portion of pay is tied

to the creation of long-term, sustainable shareholder value.

Shareholders we spoke to were supportive of the principle and

simplicity of returning to our 2014 structure, reducing reliance on

fixed pay and increasing the proportion of variable pay.

2025 total remuneration opportunity

The Committee reflected on the appropriate maximum opportunity for

the Group CEO and Group CFO considering (i) the maximum

opportunity in 2014; (ii) market data for our international banking peers

and the largest FTSE 30 companies; and (iii) internal pay compression

challenges with members of the Group Operating Committee.

After considering these factors, which are described further below,

the Committee determined the appropriate maximum opportunity for

2025 should be £15,150,000 for the Group CEO role and £8,837,500

for the Group CFO.

Returning to the pre-2014 structure increases the proportion of pay

subject to performance to 89%, compared to 69% under the current

policy. This provides less certainty in pay outcomes with higher pay at

maximum performance offset by lower pay for weaker performance.

The Committee felt that a higher maximum opportunity was required

to reflect the additional volatility given the lower fixed pay and reverse

the reduction in total compensation when FPAs were introduced.

Group CEO payout under different performance scenarios (£m)

194063803653067

n Fixed pay n Variable pay

’Target’, ’Minimum’ and ’Below Minimum’ scenarios assume performance outcomes

of 50%, 25% and 0% respectively for both the annual incentive and LTI.

Current

Proposed

Group CEO maximum total compensation opportunity (000)	Group CFO maximum total compensation opportunity (000)
International banking peer group	International banking peer group

All values are in British Pounds.

(Stock ticker and ranking by market capitalisation)

194063803487142

n HSBC proposed n HSBC currentn HSBC pre-2014

Data source: Deloitte. 2024 total compensation is based on 2023 year-end disclosures. The market capitalisation ranking shown in brackets is based on a 3-month

average as at 31 December 2024.

195163315084364

195163315114578

195163315083944

HSBC Holdings plc Annual Report on Form 20-F	311
Group CEO target total compensation (000)	Group CFO target total compensation (000)
---	---
International banking peer group	International banking peer group

All values are in British Pounds.

(Stock ticker and ranking by market capitalisation)

194063803637154

n HSBC proposed n HSBC currentn HSBC pre-2014

Data source: Deloitte. 2024 total compensation based on 2023 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 2024.

194063803637156

194063803637159

194063803663299

Over several years, the Committee has seen increases to pay

opportunities and changes to pay structures, which have further

widened the gap between HSBC and some of our US and European

banking peers. In determining the new policy, we have not targeted

the quantum or structure of pay in US banks given the differences in

market and business models compared to HSBC. However, we

believe it is appropriate to narrow the gap to these roles as we recruit

from this talent base across various levels of the organisation and this

will help alleviate some of the challenges of pay compression.

HSBC is the third-largest company in the FTSE by market

capitalisation, a proxy for the scale and complexity of the Group.

Operating within 58 countries and territories and employing over

211,000 full-time equivalent employees means that HSBC is also one

of the most geographically diverse companies and one of the largest

employers in the FTSE 30. The Committee believes that the

maximum pay opportunities towards the upper end of the FTSE 30

are reflective of the size and scope of HSBC. These also remain

below the pay levels had the growth in median executive Director

salaries observed amongst FTSE 30 companies over the last 10 years

been applied to our 2014 maximum opportunities.

Compared to our international banking peers, the maximum pay

opportunities place HSBC second amongst our European peers, and

behind all comparable US roles. The Committee believe this is

appropriate given HSBC is one of the largest banking and financial

services organisations in the world, which is listed in the UK, whilst

recognising the different pay environment in the US.

The Committee also reflected on the challenges of pay compression

between the executive Directors and members of the Group

Operating Committee in the context of succession planning, and

considering pay outcomes and market benchmarks for each role.

From 2021 to 2023, the expected total compensation of nearly a third

of Group Executive Committee members was higher by on average

30% than the Group CFO. The proposed maximum opportunity for

the Group CFO helps to restore the pay differential expected by the

market versus other senior roles, albeit a gap still remains.

2025 fixed pay

To achieve the increased maximum pay opportunity, base salary for

Georges Elhedery will increase to £1,500,000, up 9%. Whilst this is

higher than the average 2025 fixed pay increase of 2.9% for UK

employees, overall fixed pay for Georges will reduce by 49%

following removal of his FPA.

Georges’ proposed salary remains behind the level we would expect

had average UK wider workforce salary increases of 4% been applied

since 2014, when the 2:1 cap was introduced. The average annual

HSBC Group CEO salary increase over the same period was 1%.

Evolution of Group CEO salary over time (£000)

194063803636340

We considered higher base salaries given the significant reduction in

fixed pay but elected to keep the base salary increase lower,

recognising wider cost of living challenges faced by colleagues and

customers. This was a view shared by shareholders and reflects our

disciplined approach to executive pay.

For Pam Kaur, base salary will increase to £875,000, up 9%. This

enables a maximum pay opportunity reflecting the scale and

complexity of the Group CFO role at HSBC and limits pay

compression with comparable roles on our Group Operating

Committee. Similar to Georges, though Pam’s salary increase is

above the average fixed pay increase for UK employees, her overall

fixed pay will reduce by 51% following removal of the FPA.

Subject to shareholder approval of the remuneration policy, salary

increases for both Georges and Pam will be effective from 1 March

2025, in line with the UK workforce.

Performance measures and targets

Our proposal represents a material change in structure and quantum,

but this will only be realised if stretching performance targets are met

and value is delivered for shareholders.

The Committee has undertaken a comprehensive review of the

performance measures used for our incentive arrangements to

ensure alignment to the Group’s priorities and balance delivery of

financial and strategic performance. Performance targets and ranges

have been set with stretch to reflect the increased pay opportunities.

This topic has been a strong focus of policy discussions with

shareholders and their views are reflected in our decisions.

For the 2025 annual incentive scorecard, we will:

–Retain our core measures of PBT, Group RoTE and costs, each

assessed excluding notable items, and introduce a measure on fee

income growth relative to balance sheet growth to incentivise

growth with less reliance on capital.

312	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

–Reduce the weighting for PBT to 10% and remove Asia RoTE to

reduce overlap with Group RoTE and simplify the scorecard. This

change retains financial measures at 60% of the scorecard, which

the Committee believes appropriately balances investor views

with regulatory expectations for a balanced scorecard.

–Maintain customer Net Promoter Score as a strategic measure to

reflect our ambition to be a top-three bank for customer

satisfaction and/or improve customer satisfaction rank.

–Include people and culture measures that support us in

strengthening our inclusive culture of high-performance.

For the 2025–2027 LTI, we will:

–Retain Group RoTE, relative total shareholder return (’TSR’) and

environment measures.

–Increase the weighting of RoTE to 40%, reflecting that the delivery

of a strong stable return on tangible equity is a core measure of

the sustainable returns expected by our investors.

–Increase the weighting of relative TSR to 40% as it is a key

measure of shareholder returns, a material relative measure used

by our peers and in line with investor expectations.

–Reduce the weighting of the environment measure from 25% to

20% following feedback from our shareholders on the metrics and

targets used given the higher LTI opportunity, recognising that

financed emissions targets remain difficult to include at this time.

This ensures a greater proportion of the scorecard is aligned to

value creation while supporting our ESG ambitions.

We will not use financed emission targets for the 2025-2027 LTI

awards given current challenges in methodology and the timeliness

and frequency of reporting, which was generally accepted by the

investors we spoke to. The Committee will keep this under review for

future performance cycles.

Group RoTE is the only measure used in both our annual incentive

and LTI scorecards, reflecting our focus on delivering sustainable

returns and a strong preference for the measure by most

shareholders. This ensures we incentivise capital productivity for the

current year whilst supporting our external commitment to deliver

sustainable returns and mid-teens RoTE over the medium-term.

We will continue to utilise a risk modifier and operate a judgement-

based approach to adjustments for all risk and compliance matters,

aligned to shareholder feedback and the expectations of our

regulators. The Committee considers the application of the risk

modifier each year and has applied it in three instances for our

executive Directors since its introduction in 2021.

When setting performance targets, we consider our internal financial

planning and strategy process, our strategic guidance and analyst

consensus where available such that minimum, target, and maximum

performance levels are set with stretch. This was a key focus of

investors in our consultation, who recognised that our recent LTI

targets have been set to deliver maximum payouts only for

outperformance. The Committee remains committed to ensuring

there is sufficient stretch in our targets in future years, which is

demonstrated in the maximum RoTE target for the 2025-2027 LTI and

illustrated below.

LTI Group RoTE performance range versus external guidance

Mid-teens

229797931648789

15.5%

14.3%

13.0%

17.0%

16.0%

14.0%

16.0%

18.0%

12%+

Changes in non-executive Director fees

The Board, excluding non-executive Directors, has reviewed the fees

payable to non-executive Directors in the context of changes to the

organisational structure. Following this review, it was considered that

the fees payable for chairing or being a member of a Board

Committee (excluding the Nomination & Corporate Governance

Committee) should be increased to recognise the responsibilities and

material additional time commitment associated with such a role.

Giving due consideration to the highly regulated and complex industry

in which HSBC operates, it was agreed to align the additional fee for

chairing a Board Committee at £150,000 per annum (i.e., in line with

the current fee for chairing the Group Risk Committee). The increase

in the fee for chairing a Board Committee will be phased over two

years, with an increase to £125,000 per annum for 2025, and a further

increase to £150,000 per annum with effect from 1 January 2026.

The Board also agreed increases to the additional fee for being a

member of a Board Committee, and for the role of designated non-

executive Director for workforce engagement to £50,000 per annum.

These increases reflect the additional activity being undertaken during

this period of organisational and cultural change. No other changes

are proposed to non-executive Director fees for 2025.

Performance in 2024

Financial performance

Our financial performance in 2024 demonstrates that our strategy is

working and is delivering strong returns for our shareholders.

We delivered a reported profit before tax of $32.3bn, up $2.0bn

compared with 2023. This increase included a $1.0bn net favourable

impact from notable items, which in 2024 included gains and losses

relating to our disposals in Canada and Argentina. Constant currency

profit before tax excluding notable items increased by $1.4bn to

$34.1bn.

Reported revenue of $65.9bn was stable compared to 2023, despite a

net adverse movement in gains and losses on our strategic

transactions. This reflected higher customer activity in our Wealth

products in WPB and in Equities and Securities Financing in GBM.

2024 costs on a target basis grew by around 5% in line with our

targeted growth.

Our RoTE for 2024 was 14.6%, compared with 14.6% in 2023.

Excluding notable items, RoTE was 16.0%.

The Board approved a fourth quarterly dividend of $0.36 per share,

bringing the total dividend announced for 2024 to $0.87 per share.

This includes the special dividend of $0.21 per share that was paid in

June following the completion of the sale of HSBC Bank Canada.

Furthermore, in respect of 2024 we announced three share buy-backs

worth a total of $9bn, and today we have announced a further share

buy-back of up to $2bn.

Strategic performance

We continue to make good progress in reshaping the Group. In 2024,

we completed the sales of our retail banking operations in France, our

banking business in Canada, and our businesses in Argentina, Russia

and Armenia. We acquired SilkRoad Property Partners Group in

Singapore and Citi’s retail wealth management portfolio in mainland

China. We announced divestments in our private banking business in

Germany and our business in South Africa, as well as the planned sale

of our life insurance business in France. In October 2024, we

announced a simplified organisational structure to accelerate delivery

against our strategic priorities.

We continue to strengthen our scale positions in Hong Kong and the

UK and drive strong profit generation in these businesses. We remain

focused on our goal to become a digital-first bank and have continued

to see growth in customer adoption of our digital services across all

our businesses, which is reflected in our Net Promoter Scores.

Over 88% of colleagues participated in our 2024 Snapshot survey

where our employee engagement index rose a further three

percentage points to reach an all-time high of 80%, six percentage

points above the global financial services benchmark.

HSBC Holdings plc Annual Report on Form 20-F	313

Key remuneration decisions for executive

Directors

Executive Director changes

Sir Noel Quinn stepped down as Group CEO and as an executive

Director of the Board on 2 September 2024 and was succeeded by

Georges Elhedery. Pam Kaur was appointed Group CFO from 1

January 2025. All remuneration decisions in respect of this change

were made in accordance with our shareholder-approved policy.

Given his retirement from the Group on 30 April 2025, Sir Noel Quinn

will be treated as a good leaver for the purpose of unvested incentive

awards. He remained eligible for a 2024 annual incentive but will not

receive an LTI award for the 2025–2027 performance period, nor will

he be eligible for a 2025 annual incentive.

Annual incentive for 2024 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 2024.

Georges Elhedery's formulaic scorecard outcome of 78.79% (2023:

76.75%) results in an annual incentive outcome of £1,677,000 (2023:

£1,287,000). This was calculated by applying respective formulaic

scorecard outcomes to the pro-rated maximum opportunities for the

Group CEO and Group CFO roles, based on the period spent in each

role during 2024.

The formulaic scorecard outcome for Sir Noel Quinn was 77.81%

(2023: 75.93% pre risk adjustment, 70.24% post risk adjustment),

which results in an annual incentive outcome of £1,540,000 (2023:

£2,018,000), after pro-rating for his time as Group CEO during 2024.

Taking into account the Group’s performance against risk metrics, and

inputs from the Group Risk Committee, the Committee used its

judgement and applied no adjustment in respect of risk matters to

executive Director annual incentive outcomes for 2024.

2022–2024 LTI vesting

Georges Elhedery and Sir Noel Quinn participated in the 2022–2024

LTI that will vest in March 2025.

The maximum RoTE and relative TSR targets were exceeded,

reflecting the strong absolute and relative performance of the Group

over the performance period. The capital reallocation to Asia measure

was not met and performance against the environment measures

exceeded the maximum target. 75% of the original award will vest on

a pro-rata basis over the next five years.

2025–2027 LTI awards

The Committee intends to grant both Georges Elhedery and Pam Kaur

the maximum 2025-2027 LTI award of 600% of base salary (Georges

Elhedery: £9,000,000, Pam Kaur: £5,250,000), subject to shareholder

approval of the LTI opportunity under the new policy.

The value realised from the award is subject to performance over the

next three years and the award will vest over a further five years with

a one-year retention period on vesting shares.

For further details, see ‘Long-term incentive (’LTI’) awards‘ on page 329.

Rewarding our colleagues

We are taking actions that improve our ability to attract, retain and

energise colleagues to deliver high performance and growth.

In 2024, we changed our performance approach by simplifying ratings

and focusing on better performance routines. In our Snapshot survey,

87% of colleagues reported a clear understanding of what is expected

of them and 77% confirmed at least two performance check-in

conversations with their manager. We also introduced a new target

variable pay plan, which covers over 150,000 colleagues in 46

markets to increase transparency and differentiation of variable pay.

The Committee is encouraged by increasing pay sentiment year-on-

year in most areas because of actions taken through 2023, which is

expected to improve further following changes introduced in 2024.

For further details, see ‘Our approach to workforce reward‘ on page 332.

Fixed pay

We are pleased to be accredited as a global living wage employer in

2025 and meet or exceed living wage benchmarks in all our markets.

This gives confidence that we provide core financial security to

colleagues through fixed pay, which is the largest part of most

colleagues' reward.

Fixed pay is primarily reviewed through our annual pay cycle. Effective

in 2025, we have awarded an overall fixed pay increase of 3.6%. The

level of increases vary by market, depending on the economic

situation 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 $3,800m, broadly flat

compared with the $3,774m awarded in 2023. 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 2024 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 position

compared with market and the broader economic outlook.

Total compensation across all our businesses increased relative to

2023, rewarding our colleagues for their contribution to our

performance. Distribution of variable pay by business considered

relative performance against RoTE, reported profit before tax and cost

targets, and performance against risk and compliance metrics. Strong

differentiation has meant our highest performers received the largest

increases in variable pay compared with the previous year.

Ex-post risk adjustments were made to the variable pay of relevant

individuals for material risk events over 2024. This included

adjustments for some individuals following the conclusion of the

investigation into the PRA’s 29 January 2024 Notice for historic

depositor protection failings arising in HSBC Bank plc and HSBC UK

Bank plc and the Committee now considers this matter closed.

Other remuneration matters

HSBC's variable to fixed pay ratio

Following shareholder approval at the 2024 AGM, the Committee

reviewed several options to set new pay ratios and concluded that a

single overall ratio of 10:1 was most appropriate, supported by

internal guidance to manage expectations on its application. The ratio

will apply across the Group, where permitted by regulation.

The ratio will support us to materially strengthen alignment of pay and

performance in our executive Directors’ remuneration policy. The ratio

has limited impact on the wider workforce and is higher than we

intend on using in practice. However, the new cap gives us flexibility

to reward extraordinary individual performance delivered by a small

number of employees in frontline roles.

We will continue to keep our pay principles and approach under

review, monitoring market developments and competitiveness, to

increase the proportion of pay for performance over time.

PRA/FCA consultation on UK remuneration rules

The Committee welcomes the recent consultation announced by the

PRA and FCA to review the UK remuneration rules to improve overall

competitiveness of UK capital markets.

We have introduced a degree of flexibility into our policy to ensure it

remains competitive against peers once the final rules are known.

Any changes made would always be in line with the key principles

used by the Committee when setting the policy. We would engage

with major shareholders ahead of making any material changes, and

provide clear and comprehensive disclosure in our Annual Report and

Accounts.

We remain supportive of the use of deferral mechanisms and will

continue to deliver a substantial portion of variable pay in shares to

ensure alignment between shareholder interests, good risk

management and individual reward. Our policy commits to a weighted

average time horizon of at least five years for the deferral period of

LTI awards, in line with UK Corporate Governance requirements.

314	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

Plan limits under Share Plan 2011

The rules of the HSBC Share Plan 2011 currently include an annual

individual limit on awards of 600% of salary, based on the market

value of shares.

LTI awards are not eligible to receive dividend equivalents to comply

with regulatory requirements. Consistent with our disclosed practice

since 2017 when the regulatory change came into force, the number

of shares awarded is calculated using a share price discounted for the

expected dividend yield over the vesting period. The market value of

the proposed LTI award would therefore exceed 600% of base salary.

Amending this limit to reflect the fair value of shares (defined in

accordance with relevant accounting standards) will enable the

Committee to grant up to the maximum award under the new policy.

Shareholder support for this change will be sought at the 2025 AGM.

Conclusion

On behalf of the Committee, I would like to thank our shareholders

for the time taken to engage with us and their valuable feedback as

we developed our new policy. 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 2024

Directors’ remuneration report, our new Directors’ remuneration

policy and the amendment to plan limits under Share Plan 2011 at this

year's AGM.

Dame Carolyn Fairbairn

Chair

Group Remuneration Committee

19 February 2025

2024 executive remuneration at a glance

This section sets out an overview of our performance and 2024 remuneration outcomes for executive Directors.

Our performance

Reported profit before tax<br><br>$32.3bn<br><br>(2023: $30.3bn)	Operating expenses<br><br>$33.0bn<br><br>(2023: $32.1bn)<br><br>Target basis operating<br><br>expenses up 5% to $32.6bn	Return on average tangible<br><br>equity<br><br>14.6%<br><br>(2023: 14.6%)<br><br>Return on average tangible equity<br><br>excluding notable items of 16.0%<br><br>(2023: 16.2%)	HK customer net promoter score<br><br>in WPB and CMB relative to peers<br><br>1st<br><br>(2023: WPB: 3rd; CMB: 1st)
Employee engagement<br><br>index<br><br>80%<br><br>(2023: 77%)	Inclusion index<br><br>78%<br><br>(2023: 78%)	Percentage of women in senior<br><br>leadership roles<br><br>34.6%<br><br>(2023: 34.1%)	Percentage of colleagues of Asian<br><br>heritage in senior leadership roles<br><br>39.3%<br><br>(2023: 37.8%)

Remuneration outcomes for executive Directors

Summary remuneration outcomes for 2024 are set out below. Further details are set out in our annual report on Directors‘ remuneration on

pages 327 to 329.

Sir Noel Quinn
Annual incentive outcome (000)

All values are in British Pounds.

194063802404532

Maximum opportunity

2024 annual incentive

195163314032400

Maximum opportunity

2024 annual incentive1

1Calculated based on Group CFO and Group CEO scorecard outcomes

applied to the respective salary for each role.

Long-term incentive (LTI) outcome (£000)

194063802404652

Maximum opportunity

2022–2024 LTI

224850127993562

Maximum opportunity2

2022–2024 LTI

2 Received in prior role as Co-CEO, GBM.

Single total figure of remuneration (£000)

194063802417319

2024

2023

194063802417325

2024

2023

HSBC Holdings plc Annual Report on Form 20-F	315

Directors’ remuneration policy

This section sets outs the Directors’ remuneration policy proposed for

shareholders' approval at the AGM on 2 May 2025.

The Committee is responsible for reviewing and recommending to

the Board the Directors’ remuneration policy for shareholder approval.

The policy is intended to apply for three years to the end of the AGM

in 2028, although we may seek shareholders’ approval for a new

policy during the period depending on regulatory developments,

changes to our strategy or competitive pressures.

Remuneration policy – key principles

The Committee determined the policy using the following key

principles:

–The rationale and operation of the policy should be easy to

understand and transparent.

–There should be a strong alignment between reward and the

interests of our stakeholders, including shareholders, customers

and employees.

–The policy should maintain a focus on long-term performance.

–Total remuneration should be competitive to ensure we can retain

and attract talent to deliver our strategic priorities.

–The structure should meet the expectations of investors and our

regulators.

Setting the policy

The Committee reviewed the Director’s remuneration policy in the

context of significant regulatory change following removal of the 2:1

variable to fixed pay ratio. Input was received from the Group

Chairman and management while ensuring that conflicts of interest

were suitably mitigated. Input was provided by the Committee’s

appointed independent advisers throughout the process.

Key changes to the policy as a result of this review include:

–removal of Fixed Pay Allowances.

–an increase in the maximum opportunity of the annual and long-

term incentives.

–an increase in shareholding guidelines and the introduction of a

post-cessation shareholding guideline.

We extensively engaged with major shareholders, representing 65%

of those who voted at the 2024 AGM, and proxy advisory bodies. The

Committee carefully considered all feedback received, which has

directly influenced the final proposal.

Full detail on the context for the review, the Committee's key

considerations, including how the Committee has responded to

shareholder feedback, is provided in the Chair's letter on pages 309 to

314.

Remuneration policy at a glance

This section sets out the key changes in our Directors’ remuneration policy and our proposed implementation for 2025.

Policy structure
Total remuneration mix	Maximum total remuneration opportunity (£000)

28%

42%

57174604843463

CEO<br><br>Current1
CFO<br><br>Current1
CEO/CFO<br><br>Proposed1

13%

16%

10%

30%

59%

13%

17%

28%

41%

1Pension accounts for 1% of the total remuneration mix.

224850128062500

CEO<br><br>Current
CEO<br><br>Proposed
CFO<br><br>Current
CFO<br><br>Proposed
Fixed pay - 2025 implementation (000)
---
Georges Elhedery

All values are in British Pounds.

57174604843580

Current
Proposed

57174604843594

Current
Proposed		Variable pay
---	---	---	---
Annual incentive opportunity	Long-term incentive opportunity	Shareholding requirement
		Group CEO	Group CFO

195163314125941

195163314125942

195163314125943

195163314125944

Current	Current	Current	Current
Proposed	Proposed	Proposed	Proposed
316	HSBC Holdings plc Annual Report on Form 20-F
---	---

Report of the Directors | Corporate governance report | Directors’ remuneration report

Remuneration policy – executive Directors

Fixed pay
Elements	Details
Base salary	To attract, retain and develop key talent by being market competitive and rewarding ongoing contribution to role.
Operation	–The base salary for an executive Director is designed to reflect the individual’s role, experience and responsibility.<br><br>–Base salaries are normally reviewed on an annual basis against relevant comparator groups and may be reviewed more frequently<br><br>at the discretion of the Committee.
Maximum opportunity	–No maximum opportunity.<br><br>–Increases may be made at the Committee’s discretion, taking into consideration factors such as increases to scope and<br><br>responsibilities of the role, development of the individual within the role, salary increases for the wider workforce and<br><br>competitiveness against market.
Cash in lieu of pension	To help executive Directors build retirement savings.
Operation	–Directors receive a cash allowance in lieu of a pension entitlement.
Maximum opportunity	–The maximum opportunity will be aligned with the maximum contribution rate that HSBC could make for the majority of employees<br><br>in the relevant jurisdiction. This is currently set at 10% of base salary in line with the maximum contribution rate, as a percentage of<br><br>salary, that HSBC could make for a majority of employees who are defined contribution members of the HSBC Bank (UK) pension<br><br>scheme in the UK.	Benefits and all employee share plans
---	---
Elements	Details
Benefits	To provide support for physical, mental and financial health in accordance with local market practice.
Operation	Benefits take account of local market practice and include, but are not restricted to:<br><br>–taxable benefits (gross value before payment of tax) including provision of medical insurance, accommodation, car, club<br><br>membership, independent legal advice in relation to a matter arising out of the performance of employment duties for HSBC, tax<br><br>return assistance or preparation, and travel assistance (including any associated tax due, where applicable); and<br><br>–non-taxable benefits including the provision of a health assessment, life assurance and other insurance coverage.<br><br>Additional benefits may also be provided when an executive is relocated or spends a substantial proportion of their time in more than<br><br>one jurisdiction for business needs, or in such other circumstances as the Committee may determine in its discretion. Such benefits<br><br>could include, but are not restricted to, airfare, accommodation, shipment, storage, utilities, and any tax and social security that may<br><br>be due in respect of such benefits.
Maximum opportunity	–No maximum opportunity.<br><br>–The maximum value is determined by the nature of the benefit provided. The benefit amount will be disclosed in the single total<br><br>figure of remuneration table for the relevant year.
All employee share plans	To promote share ownership by all employees.
Operation	–Executive Directors are entitled to participate in all employee share plans, such as HSBC Sharesave, on the same basis as all other<br><br>employees in the relevant jurisdiction.<br><br>–Under Sharesave, executive Directors can make monthly savings over a period of three or five years towards the grant of an option<br><br>over HSBC shares. The option price can be at a discount, currently up to 20%, on the share price at the time the option is granted.
Maximum opportunity	–The maximum number of options is determined by the maximum savings limit set by HM Revenue and Customs. This is currently<br><br>£500 per month.<br><br>–Executive Directors may also receive additional share options at no extra cost via the Sharesave bonus mechanism, with applicable<br><br>rates set by HM Revenue and Customs.
HSBC Holdings plc Annual Report on Form 20-F	317
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Variable pay<br><br>Adhering to HSBC’s values-aligned behaviours and conduct standards is a prerequisite to be considered for variable pay. Executive Directors<br><br>receive an overall performance assessment that considers performance against goals and role expectations, and demonstration of our values-<br><br>aligned behaviours. This is considered by the Committee when applying discretion to the formulaic scorecard outcomes.
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Elements	Details
Annual incentive	To drive and reward performance against annual financial and non-financial objectives that are consistent with the strategy and align<br><br>to shareholder interests.
Operation	Annual incentive awards are discretionary and can be delivered in any combination of cash and shares under the HSBC Share Plan<br><br>2011 (‘HSBC Share Plan’). Shares will not normally represent less than 50% of any award and are normally immediately vested.<br><br>On vesting, shares equivalent to the net number of shares that vested (after those sold to cover any income tax and social security<br><br>payable) must be held for a retention period up to one year, or such other period as may be expected by regulators.<br><br>The awards will be subject to clawback (i.e. repayment or recoupment of paid/vested awards) on or after vesting for a period of seven<br><br>years from the date of award, or such other period as required by regulators. This may be extended to 10 years, or such other period<br><br>as required by regulators in the event of an ongoing internal/regulatory investigation at the end of the seven-year period. Details of the<br><br>clawback provision are set out in the bottom section of this table.<br><br>Any deferred shares may be entitled to dividend equivalents during the vesting period, which will be paid on vesting. Where awards<br><br>do not receive dividend equivalents during the vesting period (to meet regulatory requirements), the number of shares to be awarded<br><br>will be determined using a fair value share price (defined in accordance with relevant accounting standards) discounted for the<br><br>expected dividend yield.<br><br>Any deferred cash award may be entitled to notional returns during the deferral period, or any appropriate adjustment to reflect such<br><br>notional returns, as determined by the Committee.<br><br>The Committee retains discretion to:<br><br>–apply a longer retention period;<br><br>–increase the proportion of the award to be delivered in shares; or<br><br>–defer the vesting of a portion of the awards, subject to such conditions that the Committee may determine at its discretion (which<br><br>may include continued employment). The deferred awards will be subject to malus (i.e. reduction and/or cancellation of unvested<br><br>awards) provisions during any applicable deferral period.<br><br>The Committee also retains discretion to amend the structure and terms of awards to reflect changes in regulatory requirements<br><br>whilst ensuring that any changes will align with the key principles of the Directors' remuneration policy.<br><br>The Committee may adjust and amend awards in accordance with the relevant plan rules.
Maximum opportunity	The maximum opportunity for the annual incentive award in respect of a financial year is up to 300% of base salary.
Performance measures	Performance is normally measured against an annual scorecard, based on targets set for financial and non-financial measures,<br><br>determined at the beginning of the financial year. The scorecards may vary by individual.<br><br>Measures with financial targets will generally have a weighting of 60% for both the Group CEO and the Group CFO. The Committee<br><br>will review the scorecard annually and may vary the measures, weighting and targets each year.<br><br>The overall payout of the annual incentive could be between 0% (for below minimum performance) and 100% of the maximum<br><br>opportunity.<br><br>Minimum and maximum performance levels for each measure are defined in the scorecard. 25% of the award opportunity will pay<br><br>out for achieving minimum performance and 100% of the award will pay out for achieving maximum performance. Details on payout<br><br>between these levels will be disclosed in the respective Directors' Remuneration Report.<br><br>The Committee exercises its judgement to determine performance achieved and awards at the end of the performance period, which<br><br>in normal circumstances will be one financial year, to ensure that the outcome is fair in the context of overall Group and individual<br><br>performance. The Committee can adjust the payout based on the outcome of the performance measures, if it considers that the<br><br>payout determined does not appropriately reflect the overall position and performance of the Group for the relevant performance<br><br>period.<br><br>The scorecard outcome may also be subject to a risk and compliance modifier and/or a capital underpin under which the Committee<br><br>will have the discretion to adjust down the overall scorecard outcome, taking into account performance against those factors.<br><br>The Committee has the discretion to:<br><br>–change the overall weighting of the financial and non-financial measures, whilst ensuring the overall balance remains appropriate;<br><br>–vary the measures and their respective weightings within each category. The specific performance measures will be disclosed in<br><br>the ‘annual report on remuneration’ for the relevant year; and<br><br>–make adjustments to performance targets, measures, weightings and/or outcomes in exceptional circumstances. This may be to<br><br>reflect significant one-off items that occur during the measurement period and/or where the Committee determines that original<br><br>measures, targets or conditions are no longer appropriate or that amendment is required so that the measures, targets or<br><br>conditions achieve their original purpose. Full and clear disclosure of any such adjustments will be made in the 'annual report on<br><br>remuneration' for the relevant year, subject to commercial confidentiality.
Malus and clawback<br><br>(applicable to both annual<br><br>incentive and LTI)	The Committee has the discretion to operate malus and clawback provisions.<br><br>Malus can be applied to unvested awards 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.<br><br>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<br><br>of employment;<br><br>–a material failure of risk management suffered by HSBC or a business unit in the context of Group risk management standards,<br><br>policies and procedures; and<br><br>–any other circumstances required by local regulatory obligations to which any member of the HSBC Group or its subsidiary is<br><br>subject.
318	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Directors’ remuneration report

Elements	Details
Long-term incentives<br><br>(‘LTI’)	To incentivise sustainable long-term performance and alignment with shareholder interests.
Operation	LTI awards are discretionary and are granted if the Committee considers that there has been satisfactory performance over the prior<br><br>year. The awards are granted as rights to receive shares under the HSBC Share Plan, normally subject to a forward-looking three-year<br><br>performance period from the start of the financial year in which the awards are granted.<br><br>At the end of the performance period, the performance outcome will be used to assess the percentage of the awards that will vest.<br><br>These shares will then normally vest in five equal instalments, with the first vesting on or around the third anniversary of the grant<br><br>date and the last instalment vesting on or around the seventh anniversary of the grant date, in accordance with current UK<br><br>remuneration rules.<br><br>On each vesting, shares equivalent to the net number of shares that vested (after those sold to cover any income tax and social<br><br>security payable) must be held for a retention period up to one year (or such other period as may be permitted by regulators).<br><br>Awards are subject to malus provisions prior to vesting. The awards will also be subject to clawback on or after vesting for a period of<br><br>seven years from the date of award, or such other period as required by regulators. This may be extended to 10 years, or such other<br><br>period as required by regulators, in the event of an ongoing internal/regulatory investigation at the end of the seven-year period.<br><br>Details of the malus and clawback provisions are set out in the previous section on annual incentive awards.<br><br>Awards may be entitled to dividend equivalents during the vesting period, which will be paid on vesting. Where awards do not receive<br><br>dividend equivalents during the vesting period (to meet regulatory requirements), the number of shares to be awarded will be<br><br>determined using a fair value share price discounted for the expected dividend yield.<br><br>The Committee also retains discretion to amend the structure and terms of awards to reflect changes in regulatory requirements<br><br>whilst ensuring that any changes will align with the key principles of the Directors' remuneration policy. In any event, we expect the<br><br>weighted average time horizon of the deferral period to be at least five years.<br><br>The Committee may adjust or amend awards in accordance with the rules of the HSBC Share Plan.
Maximum opportunity	The maximum opportunity for the LTI award in respect of a financial year is up to 600% of base salary.
Performance measures	The Committee will take into consideration prior performance when assessing the value of the LTI grant. Forward-looking<br><br>performance is measured against a long-term scorecard, determined at the start of the financial year in which awards are granted.<br><br>Financial measures will generally have a weighting of 60% or more.<br><br>For each measure, the Committee will determine the extent of achievement based on actual performance against the target set and<br><br>other relevant factors that the Committee considers appropriate to take account of in order to better reflect the Group's underlying<br><br>performance. The overall payout level could be between 0% (for below minimum performance) and 100% of the maximum.<br><br>Minimum, target and maximum performance levels for each measure are defined in the scorecard. 25% of the award opportunity will<br><br>vest for achieving minimum performance, 50% of the award will vest for achieving target performance and 100% of the award will<br><br>vest for achieving maximum performance. Where performance achieved is between the minimum, target and maximum level of<br><br>performance set in the scorecard, the number of awards that will vest will be determined on a straight-line basis.<br><br>The Committee can adjust the LTI payout based on the outcome of the performance measures, if it considers that the payout<br><br>determined does not appropriately reflect the overall position and performance of the Group during the performance period.<br><br>The scorecard outcome may also be subject to a risk and compliance modifier and/or a capital underpin under which the Committee<br><br>will have the discretion to adjust down the overall scorecard outcome, taking into account performance against those factors.<br><br>Performance targets will normally be set annually for each three-year cycle. The Committee has the discretion to:<br><br>–change the overall weighting of the financial and non-financial measures, whilst ensuring the overall balance remains appropriate;<br><br>–vary the measures and their respective weightings within each category. The specific performance measures will be disclosed in<br><br>the ‘annual report on remuneration’ for the relevant year;<br><br>–vary the risk and compliance and/or any underpin measures; and<br><br>–make adjustments to performance targets, measures, weightings and/or outcomes in exceptional circumstances. This may be to<br><br>reflect significant one-off items that occur during the measurement period and/or where the Committee determines that original<br><br>measures, targets or conditions are no longer appropriate or that an amendment is required so that the measures, targets or<br><br>conditions achieve their original purpose. Revised targets/measures will be, in the opinion of the Committee, no less difficult to<br><br>satisfy had they been set at the same time as the original targets. Full and clear disclosure of any such adjustments will be made<br><br>within the 'annual report on remuneration' for the relevant year, subject to commercial confidentiality.	Other
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Elements	Details
Shareholding guidelines	To ensure appropriate alignment with the interest of our shareholders.
Operation	Executive Directors are expected to satisfy the following shareholding requirement as a percentage of base salary within five years<br><br>from the date of their appointment:<br><br>–Group CEO: 600%<br><br>–Group CFO: 600%<br><br>On cessation of employment, executive Directors will normally be required to maintain the minimum shareholding requirement for<br><br>two years (or, if their actual shareholding is lower at the time of cessation, the actual shareholding upon departure). For this purpose,<br><br>unvested shares which are not subject to forward-looking performance conditions (on a net of tax basis) will count towards the<br><br>shareholding requirement. HSBC operates an anti-hedging policy under which individuals are not permitted to enter into any personal<br><br>hedging strategies in relation to HSBC shares subject to a vesting and/or retention period.
Maximum opportunity	Not applicable.
HSBC Holdings plc Annual Report on Form 20-F	319
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Committee discretion

The Committee welcomes the recent consultation announced by the

PRA and FCA to review the UK remuneration rules to improve the

overall competitiveness of UK capital markets. The proposals cover a

wide range of areas, including the application of deferral and retention

periods, which are directly applicable to our policy design.

Aligned to the key principles used by the Committee to set the policy,

the Committee feel it is important that it retains discretion to amend

the structure and terms of awards in the event of regulatory change

to ensure the policy continues to meet the expectations of our

regulators and it remains competitive versus peers.

Where discretion is exercised by the Committee, changes will always

be made in line with the key principles used to determine the policy.

We will engage with major shareholders ahead of making any material

change, and clearly disclose any changes and their rationale in our

Annual Report and Accounts.

One area discussed with shareholders as part of our engagement was

how the Committee would exercise their discretion on the length and

amount of deferral in the event of regulatory change.

The Committee believe that deferral mechanisms and the

requirements to deliver a substantial portion of variable remuneration

in shares are critical policy design elements to ensure ongoing

alignment between reward and the interests of our shareholders.

We have therefore included in the policy a commitment to ensure

that the weighted average time horizon of the deferral period for LTI

awards is at least five years, in line with UK Corporate Governance

requirements.

In addition to the specific areas of discretion expressly set out in the

policy table, the incentive plans include a number of operational areas

of discretion available to the Committee, including:

–the right to grant awards in the form of conditional share awards or

options (including nil-cost options);

–the right to amend a performance condition in accordance with its

terms, or if anything happens that causes the Committee to

consider it appropriate to do so;

–the right to settle the award in cash, based on the relevant share

price, or shares as appropriate; and

–the right to adjust the award on a variation of share capital or other

corporate event that affects the current or future value of the

award, or alternatively, the right to vest the award early in such

circumstances.

The Committee reserves the right to make any remuneration

payments and payments for loss of office, notwithstanding that they

are not in line with the policy set out above, where the terms of the

payment were agreed:

–before the policy above or any previous policy came into effect;

–at a time where a previous policy, approved by shareholders, was

in place provided the payment is in line with the terms of that

policy; or

–at a time when the relevant individual was not a Director of the

Group and the payment was not in consideration for the individual

becoming a Director of the Group.

For these purposes, payments include the Committee satisfying

awards of variable remuneration. This means making payments in line

with the terms that were agreed at the time the award was granted.

Choice of performance measures and targets

The performance measures selected for the annual incentive and LTI

awards will be set on an annual basis by the Committee, taking into

account the Group’s strategic priorities and any feedback received

from our shareholders. The following table sets out the performance

measures we currently consider for inclusion in our scorecards. The

Committee retains the discretion to choose other measures that are

appropriate for achieving our strategic priorities and meeting any

regulatory expectations, taking into account the views of our

shareholders.

Our objective when setting targets is to balance stretch and

achievability so they act as an effective incentive whilst recognising

outperformance.

Financial targets are set on a reported basis excluding notable items.

This means items occurring outside the normal course of business

and which are generally not expected to repeat, are excluded, and

assessed performance is not impacted by one-offs. Performance

targets are set taking into account a number of factors, including the

targets set in our financial resource plan, our strategic priorities,

shareholder expectations, the economic environment and risk

appetite. Non-financial targets are set based on progress versus prior

year actuals, external commitments and market benchmarks.

Minimum targets are set considering prior year(s) performance and

downside risks to the financial resource plan. Maximum targets

include a stretch above plan, considering upside opportunities.

The overall range is reviewed, taking into account external

commitments and analyst consensus, where available. As a result,

the final target ranges are not formulaically driven or always

symmetrically spread around the plan.

Performance measures
Measures and<br><br>modifier/underpin	Example measures for annual incentive scorecard	Example measures for<br><br>LTI scorecard	Rationale
Financial measures	–Profit before tax<br><br>–RoTE<br><br>–Revenue growth<br><br>–Volume growth<br><br>–Costs	–RoTE<br><br>–Total shareholder return<br><br>–Underpin to maintain a<br><br>minimum CET1 ratio	Measures are selected to<br><br>incentivise the achievement<br><br>of our financial targets as set<br><br>out in our strategic priorities<br><br>and financial resource plan.
Strategic measures	–Customer satisfaction<br><br>–Employee engagement<br><br>–Succession planning and inclusion<br><br>–Carbon reduction and sustainable finance	–Reduce carbon<br><br>emissions<br><br>–Sustainable finance	Measures are selected to<br><br>support the delivery of our<br><br>strategic priorities.
Risk and compliance<br><br>measures, modifier<br><br>and/or underpin	–Sustained delivery of global conduct outcomes<br><br>–Effective financial crime risk management<br><br>–Effective management of material operational risks<br><br>–Risk metrics to identify when business activities are outside of tolerance<br><br>level for a significant period of time<br><br>–Failures in risk management that have resulted in significant customer<br><br>detriment, reputational damage and/or regulatory censure<br><br>–CET1 level	–Modifier linked to risk<br><br>and compliance<br><br>performance	Measures are chosen to<br><br>ensure a high level of<br><br>accountability of risk and<br><br>conduct, to promote an<br><br>effective risk management<br><br>environment and to embed a<br><br>robust governance system.
320	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Directors’ remuneration report

Approach to recruitment remuneration – executive Directors

On the recruitment or appointment of a new executive Director, the

Committee would adhere to the following principles:

–Remuneration packages should be in line with the approved policy

for executive Directors.

–Remuneration packages must meet any applicable local regulatory

requirements.

–Where necessary, compensation may be provided in respect of

forfeiture of remuneration awards from an existing employer (for

example, buy-out awards).

Outlined in the following table are all components that would be

considered for inclusion in the remuneration package of a new

executive Director appointment and, for each, the approach that

would be adopted.

In the case of an internal appointment, any existing commitments will

be honoured and any variable element awarded in respect of the prior

role will be allowed to be paid out according to its existing terms.

Components of remuneration package of a new executive Director
Component of remuneration	Approach taken
Fixed pay	The base salary will reflect the individual’s role, experience and responsibility, and will be set in the context of market<br><br>practice.<br><br>The maximum cash in lieu of pension allowance will be no more than the maximum contribution, as a percentage of salary,<br><br>that can be made for the majority of employees in the relevant jurisdiction.
Benefits	Benefits to be provided will be dependent on circumstances while in line with Group policy and the remuneration policy<br><br>table, including the global mobility policy (where applicable) and local regulations.
Variable pay awards	New appointments will be eligible to be considered for variable pay awards consisting of an annual incentive and/or LTI<br><br>award (or any other element which the Committee considers appropriate given the particular circumstances but not<br><br>exceeding the maximum level of variable remuneration set out below).<br><br>For the year in which the individual commences providing services as an executive Director, the Committee retains the<br><br>discretion to determine the proportion of variable pay to be deferred, the deferral and retention period, whether any<br><br>performance and/or continued employment conditions should be applied, and the period over which such performance<br><br>should be assessed. In exercising this discretion, the Committee will take into account the circumstances in which the<br><br>individual is appointed (for example, if it is promotion of an internal candidate or an external appointment), expectations of<br><br>shareholders and any regulatory requirements.<br><br>Total variable pay awarded for the year in which the individual is newly appointed as an executive Director will be limited to<br><br>900% of base salary. This limit excludes buy-out awards and is in line with the aggregate maximum variable pay opportunity<br><br>set out in the remuneration policy table.<br><br>Guaranteed bonuses are only permitted by exception and in very rare and limited circumstances (for example, where the<br><br>individual loses a variable pay opportunity with the previous employer as a result of joining HSBC and such an award is<br><br>considered essential to attract and hire the candidate). If such an award is provided, then in line with the PRA remuneration<br><br>rules, it will be limited to the first year of service, subject to the Group deferral policy and performance requirements.
Buy-out awards	The Committee may make an award to buy out remuneration terms forfeited on resignation from the previous employer.<br><br>The Group buy-out policy is in line with the PRA remuneration rules, which state that both the terms and amount of any<br><br>replacement awards will not be more generous than the award forfeited on departure from the former employer.<br><br>In considering buy-out levels and conditions, the Committee will take into account the type of award, performance measures<br><br>and likelihood of performance conditions being met in setting the quantum of the buy-out. Buy-out awards will match the<br><br>terms of forfeited awards with the previous employer as closely as possible, subject to proof of forfeiture and other relevant<br><br>documentation. Where the vesting time is fewer than 90 days, cash or deferred cash may be awarded for administrative<br><br>purposes.<br><br>Where appropriate, the Committee retains the discretion to utilise the provisions provided in the UK Financial Conduct<br><br>Authority's Listing Rules for the purpose of making buy-out awards.
HSBC Holdings plc Annual Report on Form 20-F	321
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Policy on payments for loss of office – executive Directors

The following table sets out the basis on which payments for loss of office may be made. Other than as set out in the table, there are no further

obligations that could give rise to remuneration payments or payments for loss of office:

Payments for 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, cash in lieu of pension allowance, and other contractual benefits, or an amount in<br><br>lieu 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>incentives and/or LTIs under the HSBC Share Plan, taking into account the time worked in the performance year and based<br><br>on the 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 include:<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 HSBC share plan rules, and malus and clawback provisions. Unless the<br><br>Committee determined otherwise, awards made subject to forward-looking performance conditions, including LTI awards,<br><br>will normally be subject to pro-rating for time in employment during the performance period.<br><br>In the event of death, unvested awards will vest and be released to the executive Director’s estate as soon as 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 Director 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.
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) in connection with<br><br>an executive Director’s cessation of office or employment. This may include payments that are made in good faith in<br><br>discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement of<br><br>any claim arising in connection with the cessation of that executive Director’s office or employment.
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.

Other directorships

Executive Directors may accept appointments as non-executive

Directors of companies that are not part of HSBC if so authorised by

either the Board or the Nomination & Corporate Governance

Committee.

When considering a request to accept a non-executive Director

appointment, the Board or the Nomination & Corporate Governance

Committee will take into account, among other things, the expected

time commitment associated with the proposed appointment.

The time commitment for external appointments is also routinely

reviewed to ensure that it will not compromise the executive

Director’s commitment to HSBC.

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 and governance

considerations.

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. Executive Directors may be eligible for a

payment in relation to statutory rights.

	Contract date (rolling)	Notice period<br><br>(Director and HSBC)
Georges Elhedery	01 January 2023	12 months
Pam Kaur	01 January 2025	12 months
322	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Directors’ remuneration report

Remuneration scenarios

The following charts show how the total value of remuneration and its

composition would vary under different performance scenarios for

executive Directors under the proposed policy, which is effective

from the date of the 2025 AGM, subject to shareholders’ approval.

The charts have been prepared using 2025 salaries and, therefore, the

cash in lieu of pension, annual incentive and LTI opportunities have

been computed as percentages of 2025 salaries. Benefits is

represented by the value of regular benefits in the 2024 single figure

of total remuneration. For Georges Elhedery, this is the annualised

value of benefits for Sir Noel Quinn, and for Pam Kaur this is the value

of benefits for Georges Elhedery.

The charts set out:

–the minimum level of remuneration receivable under the policy for

each performance year;

–the remuneration level for achieving target level of performance

(which assumes 50% of maximum variable pay opportunity is

realised);

–the maximum level of remuneration (which assumes 100% of the

variable pay opportunity is realised); and

–the maximum level of remuneration assuming a 50% increase in

share price for LTI awards.

Georges Elhedery (£000)

241342802492618

Proposed policy<br><br>minimum1
Proposed policy<br><br>target
Proposed policy<br><br>maximum
Proposed policy<br><br>maximum with 50%<br><br>share price increase

26%

29%

23%

59%

68%

53%

11%

19%

90%

Pam Kaur (£000)

241342802492623

Proposed policy<br><br>minimum1
Proposed policy<br><br>target
Proposed policy<br><br>maximum
Proposed policy<br><br>maximum with 50%<br><br>share price increase

19%

11%

91%

26%

53%

29%

59%

23%

68%

1Under the proposed policy minimum, benefits account for 10% of the total remuneration receivable for Georges Elhedery, and 9% of the total remuneration

receivable for Pam Kaur.

HSBC Holdings plc Annual Report on Form 20-F	323

Remuneration policy – non-executive Directors

The Nomination & Corporate Governance Committee has considered the time commitments required for all non-executive Directors as the

Board supports HSBC through its ambitious agenda of governance reform, growth and organisational development in an environment of

increasing regulatory, political and organisational complexity. Further information on the time commitment non-executive Directors are expected

to fulfil is set out on page 353.

The following table sets out the framework that will be used to determine the fees for non-executive Directors during the term of this policy.

Elements and link to<br><br>strategy	Operation	Maximum opportunity
Fees<br><br>To reflect the time<br><br>commitment and<br><br>responsibilities of a non-<br><br>executive Director of HSBC<br><br>Holdings.	The policy for non-executive Directors is to pay:<br><br>–base fees; and<br><br>–further fees for additional Board duties, including but not limited to chairing a<br><br>committee, membership of a committee, or acting as the Senior Independent<br><br>Director and/or Deputy Chairperson.<br><br>Fees are paid in cash. The Board retains the discretion to pay in shares rather than<br><br>cash where appropriate.<br><br>The non-executive Group Chairperson will be paid a fixed annual fee for all Board<br><br>responsibilities based on their experience and the time commitments expected<br><br>for the role, together with such other benefits as the Committee may in its<br><br>absolute discretion determine.<br><br>A newly appointed non-executive Director would be paid in line with the policy on<br><br>a time-apportioned basis in the first year as necessary. No sign-on payments are<br><br>offered to non-executive Directors.<br><br>The Board (excluding the non-executive Directors) has discretion to approve<br><br>changes to the fees. The Board may also introduce any new component of fees<br><br>for non-executive Directors, subject to the principles, parameters and other<br><br>requirements set out in this remuneration policy.<br><br>Certain non-executive Directors may be entitled to receive fees for their services<br><br>as directors of subsidiary companies of HSBC Holdings. Such additional<br><br>remuneration is determined by the Board of Directors of each relevant subsidiary<br><br>within a framework set by the Committee.	–The Board will normally review the amount<br><br>of each component of fees periodically to<br><br>assess whether, individually and in<br><br>aggregate, they remain competitive and<br><br>appropriate in light of changes in roles,<br><br>responsibilities and/or time commitment of<br><br>the non-executive Directors, and to ensure<br><br>that individuals of the appropriate calibre are<br><br>retained or appointed.<br><br>–There is no prescribed maximum annual<br><br>increase. The Committee is guided by the<br><br>general increase for the employee<br><br>population but on occasions may need to<br><br>recognise other factors including, but not<br><br>limited to, change in responsibility and/or<br><br>variance to market levels of remuneration.<br><br>–Travel allowances are set at an appropriate<br><br>level, taking into account the time<br><br>requirement for non-executive Directors to<br><br>travel to overseas meetings.
Expenses/benefits	Any taxable or other expenses incurred in performing their role are reimbursed, as<br><br>well as any related tax cost on such reimbursement.<br><br>Non-executive Directors may on occasion receive reimbursement for costs<br><br>incurred in relation to the provision of professional advice. These payments, if<br><br>made, are taxable benefits to the non-executive Directors and the tax arising is<br><br>paid by the Group on the Directors’ behalf.	Not applicable
Shareholding guidelines<br><br>To ensure appropriate<br><br>alignment with the interests<br><br>of our shareholders.	Non-executive Directors, individually or with their connected persons, are<br><br>expected to satisfy a shareholding guideline of 15,000 shares within five years<br><br>from their appointment.<br><br>The Committee reviews compliance with the guidelines annually. The Committee<br><br>has full discretion in determining any consequences in cases of non-compliance.	Not applicable

Service contracts

Non-executive Directors 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 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.

Policy on payments for loss of office –

non-executive Directors

There are no obligations in the non-executive Directors’ letters of

appointment that could give rise to remuneration payments or

payments for loss of office.

Non-executive Directors are entitled to notice under their letter of

appointment. Non-executive Directors’ current terms of appointment

will expire as follows:

2025 AGM	2026 AGM	2027 AGM
José Antonio Meade<br><br>Kuribreña	Kalpana Morparia	James Forese
	Geraldine Buckingham	Steven Guggenheimer
Rachel Duan		Eileen Murray
Dame Carolyn<br><br>Fairbairn		Ann Godbehere
		Brendan Nelson
		Swee Lian Teo
324	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Directors’ remuneration report

Policy alignment with UK Corporate Governance Code

The table below details how the Group Remuneration Committee addresses the principles set out in the UK Corporate Governance Code with

respect to the Directors’ remuneration policy. This covers both the 2018 UK Corporate Governance Code applicable in 2024, and the revised

2024 UK Corporate Governance Code applicable from 2025 onwards. Information related to malus and clawback can be found on page 317.

Provision	Approach
Clarity	–The Committee regularly engages and consults with major shareholders to take into account shareholder<br><br>feedback and to ensure there is transparency on our policy and its implementation.<br><br>–Details of our remuneration practices and our remuneration policy for Directors are published and<br><br>available to all our employees.
Remuneration arrangements should be transparent<br><br>and promote effective engagement with<br><br>shareholders and the workforce.
Simplicity	–Our Directors’ remuneration policy has been designed so that it is easy to understand and transparent,<br><br>while complying with the provisions set out in the UK Corporate Governance Code and the remuneration<br><br>rules of the UK’s PRA and FCA, as well as meeting the expectations of our shareholders. The objective of<br><br>each remuneration element is explained and the amount paid in respect of each element is clearly set<br><br>out.
Remuneration structures should avoid complexity<br><br>and their rationale and operation should be easy to<br><br>understand.
Risk	–In line with regulatory requirements, our remuneration practices promote sound and effective risk<br><br>management while supporting our business objectives.<br><br>–The Group Chief Risk and Compliance Officer attends Committee meetings and updates the Committee<br><br>on the overall risk profile of the Group. The Committee also seeks inputs from the Group Risk Committee<br><br>when making remuneration decisions.<br><br>–Risk and conduct considerations are taken into account in setting the variable pay pool, from which any<br><br>executive Director variable pay is funded.<br><br>–Executive Directors' annual incentive and LTI scorecards include a mix of financial and non-financial<br><br>measures. Financial measures are subject to a CET1 underpin to ensure CET1 remains within risk<br><br>tolerance levels while achieving financial targets. In addition, the overall scorecard outcome is subject to<br><br>a risk and compliance modifier.<br><br>–The deferred portion of any awards granted to executive Directors is subject to a seven-year deferral<br><br>period during which our malus policy can be applied. All variable pay awards that have vested are subject<br><br>to our clawback policy for a period of up to seven years from the award date (extending to 10 years<br><br>where an investigation is ongoing).
Remuneration structures should identify and<br><br>mitigate against reputational and other risks from<br><br>excessive rewards, as well as behavioural risks that<br><br>can arise from target-based incentive plans.
Predictability	–The charts set out on page 292 show how the total value of remuneration and its composition vary<br><br>under different performance scenarios for executive Directors.
The range of possible values of rewards to individual<br><br>Directors and any other limits or discretions should<br><br>be identified and explained at the time of approving<br><br>the policy.
Proportionality	–The annual incentive and LTI scorecards reward achievement of our financial resource plan targets, as<br><br>well as long-term financial and shareholder value creation targets.<br><br>–The Committee retains the discretion to adjust the annual incentive and LTI payout based on the<br><br>outcome of the relevant scorecards, if it considers that the payout determined does not appropriately<br><br>reflect the overall position and performance of the Group during the performance period.
The link between individual awards, the delivery of<br><br>strategy and the long-term performance of the<br><br>Group should be clear and outcomes should not<br><br>reward poor performance.
Alignment with culture	–In order for any annual incentive award to be made, each executive Director must achieve a minimum<br><br>standard of conduct, which is assessed by reference to HSBC values.<br><br>–Annual incentive and LTI scorecards contain non-financial measures linked to our wider social strategy.<br><br>These include measures related to reducing the environmental impact of our operations, improving<br><br>customer satisfaction and inclusion.<br><br>–Our Leadership 360 provides one of several ways for senior employees to ask for feedback about how<br><br>they lead to help inform their ongoing development.
Incentive schemes should drive behaviours<br><br>consistent with the Group’s purpose, values and<br><br>strategy.

Remuneration arrangements for colleagues

Our reward principles and commitments guide our approach to

workforce reward and support our focus on being a great place to

work. The Committee reviews these principles and commitments to

support HSBC’s overall ability to attract, retain, develop and energise

the best people, and who are aligned to HSBC’s values. Full details of

our remuneration framework for colleagues is provided on page 325.

Our executive Directors’ remuneration policy aligns with the

framework for colleagues as follows:

–Externally sourced market data is used to help guide pay decisions

for colleagues, including executive Directors.

–The base salary increases for executive Directors take into

consideration the base salary increases of colleagues across the

Group, and relevant market conditions.

–The cash in lieu of pension allowance for executive Directors will not

exceed the maximum contribution (as a percentage of salary) that can

be made for the majority of colleagues in the relevant jurisdiction.

–All colleagues are eligible to be considered for an annual incentive

award based on their overall performance assessment, which

considers performance against goals and role expectations, and

demonstration of our values-aligned behaviours. The variable pay

for all colleagues, including executive Directors, is funded from a

Group variable pay pool that is determined with reference to Group

performance. Colleagues who receive a variable pay award above

a certain level have a portion of their award deferred over a period

of three to seven years, or other period as required by regulators.

–LTI awards are considered for senior management, given their

ability to directly influence the Group's long-term performance.

The Board gathers views from our colleagues through a number of

engagement channels. Our management engages with colleagues,

either on a Group-wide basis or in the context of smaller focus

groups, to solicit feedback generally on a wide range of matters,

including pay. Our annual survey on pay seeks the views of all

colleagues on their performance and pay outcomes. The Committee

reviews the outcomes of the survey and determines the key

remuneration priorities for the forthcoming year. Whilst we have not

explicitly sought the views of colleagues on the new policy, many of

our colleagues are also shareholders and therefore have the

opportunity to vote on the policy at the 2025 AGM.

As part of our annual calendar, the Committee Chair also hosts a

forum attended by the chairs of our principal subsidiary boards and

remuneration committees. This allows the Committee to understand

local market factors and feedback gathered from colleagues, within

the regions where we operate, on pay and performance matters. This

also helps both management and the Committee to determine the

prioritisation of pay budgets, and allows the Committee to ensure that

funding is directed to the areas of need in support of the Group’s

strategic ambitions.

HSBC Holdings plc Annual Report on Form 20-F	325

Remuneration structure for colleagues

We set out below the key features of our remuneration framework, which applies on a Group-wide basis, subject to compliance with local laws:

Remuneration components<br><br>and objectives	Application for Group employees	Approach for executive<br><br>Directors
Fixed pay<br><br>Attract and retain colleagues<br><br>with market competitive pay<br><br>for the role, skills and<br><br>experience required.	–Fixed pay may include base salary, fixed pay allowances, cash in lieu of pension and other cash<br><br>allowances in accordance with local market practice.<br><br>–It is based on predetermined criteria, non-discretionary, transparent and not reduced based on<br><br>performance.<br><br>–It represents a higher proportion of total compensation for more junior colleagues.<br><br>–Fixed pay may change to reflect an individual’s position, role or grade, cost of living in the<br><br>country, individual skills, capabilities and experience.<br><br>–Fixed pay is generally delivered in cash on a monthly basis.	–Consistent with approach for<br><br>Group colleagues except that<br><br>under our proposed new<br><br>policy, executive Directors will<br><br>not receive a fixed pay<br><br>allowance.
Benefits<br><br>Support the physical, mental<br><br>and financial health of a<br><br>diverse workforce in<br><br>accordance with local market<br><br>practice.	–Benefits may include, but are not limited to, the provision of a pension, medical insurance, life<br><br>insurance and health assessment.	–Provision of medical insurance,<br><br>life insurance, car and tax<br><br>return assistance.
Variable pay<br><br>Incentivise and reward<br><br>performance based on<br><br>annual financial and non-<br><br>financial measures<br><br>consistent with the medium-<br><br>to long-term strategy,<br><br>stakeholder interests and<br><br>values-aligned behaviours.	–All colleagues are eligible to be considered for a discretionary variable pay award. Individual<br><br>awards are 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<br><br>strengthen alignment between total compensation and business performance.<br><br>–Variable pay for employees is limited to 10 times fixed pay, except where local regulations<br><br>require otherwise.<br><br>–Awards are generally paid in cash and shares. For 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.	–Annual incentive is determined<br><br>based on the outcomes of an<br><br>annual scorecard of financial<br><br>and non-financial measures.<br><br>–Executive Directors and<br><br>members of the Group<br><br>Operating Committee are also<br><br>eligible to be considered for a<br><br>long-term incentive award,<br><br>which is subject to three-year<br><br>forward-looking performance<br><br>measures.
Buy-out awards<br><br>Support recruitment of key<br><br>individuals.	–Buy-out awards may be offered if an individual holds any outstanding unvested awards that are<br><br>forfeited on 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<br><br>awards forfeited on cessation of employment with the previous employer.	–For new hires, the approach is<br><br>consistent with the approach<br><br>taken for employees and the<br><br>policy approved by shareholders.
New hire indicative<br><br>variable pay<br><br>Support recruitment of key<br><br>individuals.	–New hire indicative variable pay is awarded in exceptional circumstances, typically involving a<br><br>critical senior new hire, and is limited to an individual’s first year of employment only. The award<br><br>is subject to a number of factors (such as the respective performance of the Group, business<br><br>unit and individual), and the final value paid remains at the full discretion of HSBC.	–For new hires, the approach is<br><br>consistent with the approach<br><br>taken for employees and the<br><br>policy approved by shareholders.
Deferral<br><br>Align employee interests<br><br>with the medium- to long-<br><br>term strategy, stakeholder<br><br>interests and values-aligned<br><br>behaviours.	–A Group-wide deferral approach is applicable to all employees. A portion of annual incentive<br><br>awards above a specified threshold is deferred in shares vesting annually over a three-year<br><br>period (33% vesting on the first and second 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<br><br>with local regulations.<br><br>–This means that awards are generally subject to a minimum 40% deferral (60% for awards of<br><br>£500,000 or more) over a minimum period of four years up to a maximum of seven years.<br><br>–Group standard deferral generally applies to MRTs identified as ’de minimis’. Individuals based<br><br>outside the UK and identified as MRTs under local regulations, would be subject to local<br><br>requirements where necessary.<br><br>–All deferred awards are subject to malus provisions, subject to compliance with local laws.<br><br>Awards granted to MRTs on or after 1 January 2015 and awards granted to non-MRTs on or<br><br>after 1 January 2022 are subject to clawback.<br><br>–HSBC operates an anti-hedging policy for all employees, which prohibits employees from<br><br>entering into any personal hedging strategies in respect of HSBC securities.<br><br>–For all Group MRTs and the majority of local MRTs, excluding executive Directors, a minimum<br><br>50% of the deferred awards is in HSBC shares with the remaining portion in deferred cash.<br><br>Local regulatory requirements would also apply where necessary.<br><br>–For some employees in our asset management business, where required by the relevant<br><br>regulations, at least 50% of the deferred award is linked to fund units reflective of funds<br><br>managed by those entities, with the remaining portion in deferred cash awards.<br><br>–Variable pay awards made in HSBC shares or linked to relevant fund units granted to MRTs are<br><br>generally subject to a one-year retention period post-vesting.<br><br>–MRTs who are subject to a five-year deferral period, except senior management or individuals in<br><br>PRA- and FCA-designated senior management functions, have a six-month retention period<br><br>applied to their awards.<br><br>–Where an employee is subject to more than one regulation, the requirement specific to the<br><br>sector and/or country in which the individual is working is applied.	–All of the LTI award, or at least<br><br>60% of the total variable<br><br>award (including LTI), is<br><br>deferred. The deferred awards<br><br>will vest in five equal annual<br><br>instalments, with the first<br><br>vesting on or around the third<br><br>anniversary of the grant date<br><br>and the last instalment vesting<br><br>on or around the seventh<br><br>anniversary of the grant date.<br><br>–All deferred awards are in<br><br>HSBC shares and subject to a<br><br>post-vesting retention period<br><br>of one year.
Severance payments<br><br>Adhere to contractual<br><br>agreements with involuntary<br><br>leavers.	–Where an individual’s employment is terminated involuntarily for gross misconduct then,<br><br>subject to compliance with local laws, the Group’s policy is not to make any severance<br><br>payment and all outstanding unvested awards are forfeited.<br><br>–For other cases of involuntary termination of employment, the determination of any<br><br>severance will take into consideration the performance of the individual, contractual notice<br><br>period, applicable local laws and circumstances of the case.<br><br>–Generally, for good leavers, all outstanding unvested awards will normally continue to vest in<br><br>line with the applicable vesting dates. Where relevant, any performance conditions attached to<br><br>the awards, and malus and clawback provisions, will remain applicable to those awards.<br><br>–Severance amounts awarded to MRTs are not considered as variable pay for the purpose of<br><br>application of the deferral and variable pay cap rules under the PRA and FCA remuneration rules<br><br>where such amounts include: (i) payments of fixed remuneration that would have been payable<br><br>during the notice and/or consultation period; (ii) statutory severance payments; (iii) payments<br><br>determined in accordance with any approach applicable in the relevant jurisdictions; and (iv)<br><br>payments made to settle a potential or actual dispute.	–Any payments will be in line<br><br>with the policy on loss of<br><br>office.
326	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | 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	327
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Annual report on Directors’ remuneration

This section sets out how our approved Directors’ remuneration policy was implemented during 2024.

Single total figure of remuneration

(Audited)

The following table shows the single total figure of remuneration of each executive Director for 2024, together with comparative figures. Sir

Noel Quinn retired as Group CEO and as an executive Director of the Board on 2 September 2024 and was succeeded by Georges Elhedery.

The figures below reflect the remuneration paid in respect of time spent as executive Director during 2024.

Single total figure of remuneration
	Sir Noel Quinn		Georges Elhedery
(£000)	2024	2023	2024	2023
Base salary	914	1,336	989	780
Fixed pay allowance (’FPA’)	1,138	1,700	1,288	1,085
Cash in lieu of pension	91	134	99	78
Taxable benefits1	66	127	39	4
Non-taxable benefits	60	89	58	52
Total fixed	2,270	3,386	2,473	1,999
Annual incentive2,3	1,540	2,018	1,677	1,287
Notional returns4	56	43	8	6
Replacement award	—	—	—	—
Long-term incentive5,6	5,298	4,949	1,207	—
Total variable	6,894	7,010	2,891	1,293
Total fixed and variable	9,164	10,396	5,364	3,292

1Taxable benefits include the provision of medical insurance, car benefit, accommodation and tax return assistance (including any associated tax due, where applicable).

Non-taxable benefits include the provision of life assurance and other insurance cover.

2Sir Noel Quinn was not eligible to be considered for a 2025-2027 LTI award. To satisfy regulatory requirements, 40% of the annual incentive award for Sir Noel Quinn

is delivered immediately and 60% is deferred. Both immediate and deferred portions of the award are split evenly between cash and shares. The shares portion of the

award is subject to a retention period of one year and both the shares and the deferred cash portions of the award are subject to clawback provisions.

3The annual incentive award for Georges Elhedery 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.

4Deferred 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.

5LTI awards were made in February 2022 (in respect of 2021) at a share price of £5.380 for which the performance period ended on 31 December 2024. The value of

the awards has been computed based on a share price of £7.184, the average share price during the three-month period to 31 December 2024. The value attributable

to share price appreciation for Sir Noel Quinn is £1,330,238 and for Georges Elhedery is £303,006. The vesting LTI granted to Georges Elhedery was in respect of

2021 performance in his role as Co-CEO, GBM. See the following section for details of the performance assessment, which resulted in 75.00% vesting.

6The value of the 2021-2023 LTI for Sir Noel Quinn has been restated based on a share price of £5.899 to reflect the value of the award on 12 March 2024, when the

first tranche of the award vested. In 2023, the value was based on the average share price during the three-month period to 31 December 2023 of £6.192.

Benefits

The values of the significant benefits in the single total figure table are set out in the following table. The accommodation benefits in Hong Kong

and the car benefits for Georges Elhedery are not included in the table below as they were not deemed significant.

	Sir Noel Quinn		Georges Elhedery
(£000)	2024	2023	2024	2023
Group income protection (non-taxable)	57	84	49	49
Accommodation in Hong Kong (taxable)	18	67	—	—
Car and driver in UK and Hong Kong (taxable)	15	47	—	—

Determining executive Directors’ incentive outcomes

(Audited)

Both executive Directors met the minimum standard of conduct and

behaviour for an annual incentive award to be made.

The award is determined by applying the outcome of their annual

scorecard to the maximum opportunity, set at 215% of base salary.

Sir Noel Quinn has been assessed on full-year performance against

the Group CEO annual scorecard with his pay outcome pro-rated for

time in role up to and including 1 September 2024. Georges Elhedery

has been assessed on full-year performance against both the Group

CEO and Group CFO scorecards with his pay outcome pro-rated

based on the time spent and salary received in each role.

The financial measures, weightings and targets were set at the start

of the year to align with our reported financial performance, excluding

notable items, to ensure that out-turns were not impacted by one-

offs. In setting the targets, the Committee considered the 2024

financial plan, 2023 performance, external commitments, scenario

testing of upside and downside risks in the plan, and analyst

consensus where available.

Diversity representation target ranges were set based on a trajectory

to meet our external commitments. Other strategic measures were

set based on maintaining or improving when compared with 2023

performance and/or market benchmarks.

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 2024 and judged that the overall

scorecard outcome for both Sir Noel Quinn and Georges Elhedery

was appropriate against the targets set at the start of the year for

financial, strategic and personal measures.

Taking into account inputs from the Group Risk Committee, the

Committee concluded that the risk and compliance modifier should not

be applied for 2024 based on the Group’s performance against key risk

metrics for either Sir Noel Quinn or Georges Elhedery.

328	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

Annual incentive scorecard assessment

(Audited)

Summary assessment
	Minimum<br><br>(25% payout)	Maximum<br><br>(100% payout)	Performance	Weighting<br><br>(%)	Assessment<br><br>(%)	Sir Noel Quinn<br><br>Outcome (%)	Georges Elhedery<br><br>Outcome (%)
Profit before tax ($bn)1	27.1	33.5	34.1	15.0	100.00	15.00	15.00
Target basis operating expenses ($bn)1	32.9	32.3	32.6	15.0	60.09	9.01	9.01
Group RoTE1,2	13.5%	16.5%	16.0%	25.0	87.50	21.88	21.88
Asia RoTE1,2	15.1%	18.1%	18.2%	5.0	100.00	5.00	5.00
Customer satisfaction	See following tables for commentary			15.0	75.00	11.25	11.25
Employee experience		10.0	70.00	7.00	7.00
Wider society		5.0	50.00	2.50	2.50
Personal measures		10.0		6.17	7.15
Total				100.0		77.81	78.79
Scorecard outcome (000)						£1,540	£1,677
Risk adjustment (000)						£—	£—
Annual incentive (000)						£1,540	£1,677

1Excluding notable items.

2The CET1 capital ratio of 14.9% exceeded the tolerance level in the risk appetite statement as required by the underpin.

Strategic measures for both executive Directors
	Measures	Weighting	Performance achievement	Assessment	Outcome
Customer<br><br>satisfaction	Maintain and improve<br><br>NPS in the UK and<br><br>Hong Kong, and in<br><br>key growth markets	15.0%	–The Committee assessed performance against a scorecard of quantitative<br><br>targets set at the start of the year, and using NPS data from external providers.<br><br>–In Hong Kong we met our NPS targets, and are ranked in first place in both CMB<br><br>and WPB.<br><br>–In HSBC UK, WPB saw a modest improvement in rank by two positions to joint<br><br>11th. In CMB, as measured by the Savanta MarketVue Business Banking<br><br>Survey, our Mid-Market Enterprise (’MME’) segment has improved its rank to<br><br>2nd position at FY24 (FY23: 3rd). Our Large Corporate sector was ranked 3rd for<br><br>NPS in the 2024 Coalition Greenwich UK Commercial Study.<br><br>–For other key growth markets, in WPB we improved rank in Singapore, but saw<br><br>a decline in India and rank remained stable in Mexico and China. In CMB,<br><br>Singapore and India rankings are in the Top 3.<br><br>–GBM has seen an improvement globally rising from 3rd to 2nd place.<br><br>–Overall, the Committee assessed that the NPS targets were met.	75.00%	11.25%
Employee<br><br>experience	Improve diversity and<br><br>inclusion	10.0%	–Senior leadership representation for women increased by 0.5 percentage points<br><br>year-on-year to 34.6%, exceeding the target set.<br><br>–Senior leadership colleagues with Asian heritage increased by 1.5 percentage<br><br>points year-on-year to 39.3%, exceeding target.<br><br>–The percentage of Black heritage colleagues in senior leadership roles remained<br><br>flat at 3.0%, which was above the minimum set, but behind target.<br><br>–The Inclusion index in our employee Snapshot survey remained flat at 78%,<br><br>above minimum, but behind target.	70.00%	7.00%
Wider<br><br>society	Execution of<br><br>sustainability<br><br>commitments	5.0%	–Whilst the Sustainability Execution Programme (’SEP’) is on track with mitigating<br><br>actions in place for known risks, the Committee assessment considered that the<br><br>pace of progress could have been accelerated with greater management focus.<br><br>–The absolute financed emissions for oil & gas and thermal coal mining exceeded<br><br>the 2024 goal on the trajectory towards our 2030 reduction target.	50.00%	2.50%	Personal measures for the Group CEO and the Group CFO
---	---	---	---
Personal measures were set at the start of the year and measured by the Committee against agreed targets and key performance indicators.
Group CEO	Weighting	Assessment	Performance achievement
Technology<br><br>transformation	4.67%	75.00%	–Progress was made on our technology strategy through mobilisation of 83% value streams with clear<br><br>accountability across technology and business leads.<br><br>–Future State Architecture (’FSA’), which defines the technology roadmap, was agreed for four areas<br><br>(Wholesale Credit & Lending, GPB & Wealth, Global FX and Wholesale Client Services Onboarding and Know<br><br>Your Customer) with 97% of FSAs approved providing a better end-state view of our strategic application<br><br>estate.
Driving data quality<br><br>remediation	2.33%	50.00%	–The Committee’s assessment balanced strong progress against the targets set at the start of the year, while<br><br>noting that data risk is one of the three principal risk areas to have a material impact on the Group in 2024,<br><br>and taking into consideration regulatory feedback.
Simplification of<br><br>processes and<br><br>organisation	3.0%	50.00%	–In 2024, we completed the sales of our retail banking operations in France, and businesses in Canada,<br><br>Argentina, Russia and Armenia. We announced divestments in our private banking business in Germany and<br><br>our business in South Africa, and announced the planned sale of our France life insurance business. We<br><br>acquired SilkRoad Property Partners Group in Singapore and Citi’s retail wealth management portfolio in<br><br>mainland China. In October 2024, we announced a simplified organisational structure.
Total	6.17% out of 10.00%
HSBC Holdings plc Annual Report on Form 20-F	329
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Personal measures for the Group CEO and the Group CFO (continued)
---	---	---	---
Group CFO	Weighting	Assessment	Performance achievement
Deliver activities<br><br>relating to<br><br>regulatory priorities	5.0%	75.00%	–The Committee’s assessment considered improved regulatory feedback on recovery and resolution planning<br><br>activity, and measurement and management of IRRBB risk.<br><br>–The Integrity of Regulatory Reporting programme continues to remediate against known gaps to deliver<br><br>improvements in the quality of regulatory returns, partially meeting the targets set at the start of the year.<br><br>–The regulatory excellence programme achieved efficiencies and outcomes broadly in line with the targets and<br><br>milestones set, and the Finance on The Cloud programme successfully closed in April 2024.
Enhanced<br><br>disclosures and<br><br>controls	2.5%	67.86%	–Implemented enhanced disclosures covering banking NII, structural hedge and multi-jurisdictional revenue.<br><br>–Progress against external disclosure commitments for scope 3 emissions of Pillar 3 sections and coal<br><br>exposures and delivery of other ESG regulatory deliverables including climate risk stress testing and<br><br>regulatory reporting.
Drive liquidity and<br><br>capital management<br><br>across the Group	2.5%	87.50%	–Strong capital and liquidity positions with no breaches in risk appetite, meeting the targets set.
Total	7.63% out of 10.00%

Long-term incentive (’LTI’) awards

LTI awards over 2022 to 2024 performance period

(Audited)

Sir Noel Quinn, Georges Elhedery and Ewen Stevenson were each

granted a 2022–2024 LTI award in February 2022. In line with the

terms of his departure, Ewen Stevenson is a good leaver and his

award has been pro-rated for time in employment.

The scorecard delivered an outcome of 75.00%, reflecting strong

shareholder returns across the performance period.

Based on the performance outcome, 737,504 shares will vest for Sir

Noel Quinn, 167,991 shares will vest for Georges Elhedery and

191,224 shares will vest for Ewen Stevenson. The awards will vest in

five equal annual instalments commencing in March 2025.

The Committee determined that there were no windfall gains to

consider for this award given the share price at grant (£5.38) was

above the share price at the previous LTI grant (£4.26).

The 2022–2024 LTI award is subject to a risk and compliance

modifier. 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 should be made.

Assessment of the 2022–2024 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%)		8.0%	9.5%	11.0%	14.6%	100.0%	25.00%
Capital reallocation to Asia with CET1 capital ratio<br><br>underpin3 (25%)		46.0%	48.0%	50.0%	43.7%	0.0%	0.00%
Transition to net<br><br>zero4 (25%)	Carbon reduction (own<br><br>emissions)	52.0%	56.0%	60.0%	66.1%	100.0%	12.50%
	Sustainable finance and<br><br>investment	$285bn	$340bn	$370bn	$394bn	100.0%	12.50%
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							75.00%

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 2024 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 2024.

4Carbon reduction assessed on percentage reduction in total energy and travel emissions achieved by 31 December 2024 using 2019 as the baseline. Sustainable

finance and investment assessed on cumulative financing provided over the performance period.

5The peer group was: Bank of America, Barclays, BNP Paribas, Citigroup, DBS Group Holdings, Deutsche Bank, J.P. Morgan Chase & Co., Lloyds Banking Group,

Morgan Stanley, Standard Chartered and UBS Group. Credit Suisse Group was removed following its acquisition by UBS Group in June 2023.

330	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

LTI awards over 2025 to 2027 performance period

After taking into account performance for 2024, and subject to

shareholder approval of the new policy, the Committee intends 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 2025.

Alongside reviewing the policy, the Committee has undertaken a

comprehensive review of the performance measures used for our

incentive arrangements to ensure alignment to the Group's priorities

and balance delivery of financial and strategic performance.

For the 2025-2027 LTI, we will retain Group RoTE, relative TSR and

environment measures, reflecting our strategic commitments, and to

assess relative performance compared with peers.

We will increase the weighting of RoTE to 40%, reflecting that the

delivery of a strong stable return on tangible equity is a core measure

of the sustainable returns expected by our investors. Group RoTE will

be assessed excluding notable items in the last year of assessment to

mirror our outlook on RoTE which targets a mid-teens return in each

of the three years from 2025 to 2027 excluding notable items.

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.

We will increase the weighting of relative TSR to 40% as it is a key

measure of shareholder returns, a material relative measure used by

our peers and in line with investor expectations. No changes have

been made to our relative TSR peer group, which continues to include

more Asian peers to better reflect our growth and investment focus

following a review in 2023.

Following feedback from our shareholders on the metrics used and

recognising the increase in LTI opportunity, we have reduced the

overall weighting of the environment measure from 25% to 20% to

ensure a greater proportion of the LTI is aligned to value creation

while supporting our ESG ambitions.

The Committee completed a comprehensive review of the

environment metrics in the LTI and discussed with major

shareholders. At this stage, financed emission targets remain difficult

to include given challenges in the methodology, timeliness and

frequency of reporting. This was recognised by the investors we

spoke to as part of our policy engagement. We therefore decided to

retain metrics on carbon reduction in our own emissions and

sustainable finance and investment, given we cannot currently use

financed emissions, which is a material metric in supporting our ESG

ambitions.

The Committee will continue to keep the environment measures and

weighting under review for future performance cycles.

Performance targets have been set to balance stretch and

achievability so that awards act as an effective incentive for

management, and incentivise outperformance against our external

strategic commitments. The proposed change in remuneration

structure will be supported by target ranges calibrated to reflect the

increase to the remuneration opportunity.

It was recognised by investors in our engagement that our recent LTI

targets have been set to deliver maximum payouts only for

outperformance compared to consensus and our external strategic

commitments.

For 2025-2027 awards:

–The maximum target for RoTE reflects stretch above plan and

performance forecasts, taking into account the macroeconomic

environment. The minimum target for RoTE is aligned to our

external commitment of mid-teens RoTE over the medium term.

–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’.

–Our emissions reduction targets have been set based on meeting

our forecasts relating to emissions reduction and purchase of

renewable energy.

–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 financing and investment by 2030. We

reflected on sustainable financing forecasts, market demand, and

regulation, as well as higher LTI opportunity in setting the stretch

in the target range.

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.

Consistent with our approach since 2017, the number of shares to be

awarded will be adjusted to reflect the expected dividend yield of the

shares over the vesting period, as awards are not entitled to dividend

equivalents in accordance with regulatory requirements.

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 up to one

year, or such period as required by regulators.

Performance conditions for the 2025–2027 LTI awards
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%
Relative TSR3 (40%)		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
Environment4 (20%)	Carbon reduction (own<br><br>emissions)	71.0%	73.0%	78.0%
	Sustainable finance and<br><br>investment	$648.0bn	$720.0bn	$792.0bn
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 excluding notable items at the end of the performance period, subject to the CET1 capital ratio underpin.

3The peer group for the 2024 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.

4Carbon 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 performance period starting from

1 January 2020 and ending 31 December 2027.

HSBC Holdings plc Annual Report on Form 20-F	331

Annual incentive measures for 2025

The 2025 annual incentive scorecard measures for our executive

Directors have been set to incentivise the delivery of our strategy and

its execution at pace.

Following the Committee’s comprehensive review of the policy and

its implementation, core measures of PBT, Group RoTE and costs

have been retained, with each assessed excluding notable items so

that the outcome reflects performance in the control of management.

We have introduced a measure on fee income growth relative to

balance sheet growth to incentivise growth with less reliance on

capital. To simplify and retain financial measures at 60% of the

scorecard (in order to meet regulatory expectations), we have

reduced the weighting for PBT to 10% and removed the Asia RoTE

measure to reduce overlap with Group RoTE.

The Committee felt it appropriate to have financials weighted at 60%

to balance alignment with shareholder performance and regulatory

expectations, and in line with UK peers.

Customer Net Promoter Score (’NPS’) has been retained to reflect our

ambition to be a top-three bank for customer satisfaction and/or

improve customer satisfaction rank.

We have added a measure focused on delivery of benefits from the

organisational change.

Our people and culture measures support our strategy to have an

inclusive culture of high performance. The Committee intends to

assess this by considering our established inclusion index, the

retention of high performers and other relevant indicators.

We have removed the sustainability measure introduced in 2024 to

reduce duplication with the environment measure in the LTI, which

better reflects the time horizon of our sustainability commitments.

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.

The weightings and performance measures for the 2025 annual

incentive scorecard for executive Directors are opposite.

Performance targets have been set to reflect the Group’s 2025 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 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. However, as with the 2025-2027 LTI scorecard, the

Committee is mindful that targets must remain suitably stretching to

support the increased remuneration opportunity of the new policy.

Subject to commercial sensitivity, we will disclose the targets in the

2025 Directors’ remuneration report.

2025 annual incentive performance measures	Weighting
Financial measures (all measures subject to CET1 capital<br><br>ratio underpin)	60.0%
Group RoTE (excluding notable items)	25.0%
Profit before tax (excluding notable items)	10.0%
Fee income growth relative to balance sheet growth	10.0%
Target basis operating expenses (excluding notable items)	15.0%
Strategic measures	30.0%
Customer satisfaction:<br><br>Improvement in NPS scores/rank	15.0%
Deliver benefits of announced organisational changes	8.0%
People and culture:<br><br>Inclusion and retention of high performers	7.0%
Personal measures<br><br>–Group CEO: Deliver enterprise-wide foundational priorities<br><br>including regulatory excellence, wealth acceleration and<br><br>strategic investments, and the Group's technology strategy.<br><br>–Group CFO: Deliver activities relating to regulatory excellence<br><br>priorities, Group Sustainability priorities, and robust liquidity<br><br>and capital management.	10.0%
Subject to risk and compliance modifier<br><br>The Group Remuneration Committee retains the discretion to<br><br>revise down the formulaic outcome taking into account<br><br>performance against risk and compliance factors during the<br><br>performance period.
332	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | Directors’ remuneration report

Our approach to workforce reward

Our goal is to deliver a unique and exceptional experience to energise

colleagues to perform at their best. This is critical to strengthening our

ability to attract, retain and motivate the people we need in competitive

markets where employee expectations continue to evolve.

Our workforce reward principles and commitments guide our

approach and support our focus on being a great place to work.

–We will 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 will recognise colleagues' success through our performance

routines, including feedback and recognition, pay for performance,

and all employee share ownership opportunities.

–We will 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 several changes to improve colleague experience and

unlock our performance edge:

–We introduced new performance routines to over 200,000

colleagues in 58 markets, so colleagues know what is expected of

them, how they are doing and how they can improve. This is

achieved by discussing performance more frequently through the

year, regularly exchanging feedback and simplifying year-end

performance assessment to focus less on ratings and more on a

dialogue between managers and colleagues.

–We introduced 'Target Variable Pay' to over 150,000 colleagues in 46

markets, helping improve clarity and transparency on how we make

pay decisions and the impact of Group, business and individual

performance on variable pay.

–We continued to improve our wellbeing offering by enhancing

country Employee Assistance Programmes, increasing the number

of mental health champions to expand the network's global reach,

developing new financial wellbeing support and running global

activity challenges to improve employees' physical wellbeing.

The Committee tracks various metrics to assess how we are doing and

prioritise action plans. Our approach overall is working and has positively

contributed to employee engagement, which has risen to a record high

of 80% in our employee Snapshot survey. Additional metrics

highlighting some of our areas of focus in 2024 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. We will continue

to track and measure progress against key metrics at a Group, global

business and market level and use these insights to inform what

improvements we can make. In 2025, we will continue to embed our

performance and pay changes, protect well-being and flexibility, and

reinvest in colleagues' skills development.

We will reward<br><br>you responsibly	Living wage	Fixed pay	Pay fairness
	Global living wage<br><br>employer	3.6% (2023: 4.4%)	5	percentage<br><br>points	p
	Following our accreditation as a global<br><br>living wage employer in 2024, we have<br><br>continued to work with the Fair Wage<br><br>Network which provides an independent<br><br>source of wage levels. HSBC has<br><br>achieved accreditation as a global living<br><br>wage employer in 2025 and will<br><br>continue to review all wages against<br><br>local living wage benchmarks.	increase to fixed pay for 2025, targeted at<br><br>colleagues that need it most, such as<br><br>those in high inflation markets.	increase in the number of colleagues who<br><br>say they are paid fairly for what they do,<br><br>compared with the 2021 year-end pay<br><br>review.
We will recognise<br><br>your success	Feedback		Recognition
	81% (2023: 81% )	42% p	1.5m (2023: 1.4m) p
	of colleagues say they receive feedback<br><br>to help them improve performance.	average monthly increase in colleagues<br><br>receiving feedback compared to 2023.	recognitions by employees of their peers<br><br>for demonstrating role model behaviours<br><br>that are linked to our values, up 7% on<br><br>2023.
We will support<br><br>you to grow	Mental health	Financial wellbeing	Career
	#1 (2023: #1)	65% (2023: 60%) p	71% (2023: 71%)
	in the Global CCLA Corporate Mental<br><br>Health Benchmark for the third year<br><br>running.	of colleagues say they know where to find<br><br>financial wellbeing support, an increase of<br><br>five percentage points compared to 2023.	Our Career Index is six percentage points<br><br>higher than the financial services<br><br>benchmark.
HSBC Holdings plc Annual Report on Form 20-F	333
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Committee governance

The Group Chairman, Chair of the Group Risk Committee, Group

CEO, Group Chief Risk and Compliance Officer, Group Chief People

and Governance Officer, Group Chief Legal Officer, Global Head of

Remuneration Governance and Regulatory Accountabilities

(Committee Secretary), 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 regularly engaged with the Committee’s key stakeholders,

including senior management, independent advisors, investors, proxy

advisors and regulators to listen to numerous perspectives to help

inform the broader decision-making of the Committee.

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 and further information on stakeholder

engagement for setting the remuneration policy is set out from

page 315.

The Committee Secretary regularly met with the Chair to ensure the

Committee fulfilled its governance responsibilities, to consider input

from stakeholders when finalising meeting agendas and track

progress on actions and priorities. A summary of coverage is set out

in the ’Matters considered during 2024’ table below.

Matters considered during 2024
	Feb1	Feb1	Jun2	Jun	Jul	Sep2	Sep	Oct2	Dec
Remuneration framework and governance
Group variable pay, workforce performance and pay matters and insights	u	u	u	u	u	u	u	u	u
Directors’ remuneration policy design	u	u	u	u	u	u	u	u	u
Executive Director remuneration policy implementation, scorecards and pay proposals	u	u	u	u	u	u	u	u	u
Remuneration for other senior executives of the Group	u	u	u	u	u	u	u	u	u
Directors’ remuneration report	u	u	u	u	u	u	u	u	u
Regulatory, risk and governance
Material risk and audit events, and performance and remuneration impacts for individuals involved	u	u	u	u	u	u	u	u	u
Regulatory updates, including identification of Material Risk Takers	u	u	u	u	u	u	u	u	u
Governance matters	u	u	u	u	u	u	u	u	u
Matters from principal subsidiary committees	u	u	u	u	u	u	u	u	u	u	Matter considered	u	Matter not considered
---	---	---	---

1 There were two meetings held during February.

2 The June, September and October meetings were ad hoc with reduced agenda.

How the Committee discharged its responsibilities

Activities outside formal meetings

In addition to its regular schedule, the Committee convened three ad

hoc meetings to facilitate oversight of key topics under its remit in

support of strategic priorities and initiatives during 2024.

The Committee keeps abreast of regulatory and investor

developments and periodically undertakes training to explore key

topics in more detail. A comprehensive induction session was held

with Kalpana Morparia in October 2024 to introduce her to the work

of the Committee.

Connectivity with principal subsidiary

remuneration committees

The Chair hosted the biannual Remuneration Committee Chairs

Forum in October and November 2024, 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 focus in October

was progress on Committee priorities for the year including the

development of a new executive Director policy, progress on

delivering the employee value proposition commitments and to

receive regional feedback on key considerations for the 2024 pay

review. In November, the forum focused on the preliminary Group

variable pay for 2024, and allocation by business, function and region

and the 2025 fixed pay budgets.

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.

Collaborative oversight by the GRC, GAC and

GTOC

The Committee worked closely with, and received feedback and input

from, the GRC and GAC on the alignment of remuneration with risk

appetite, conduct and compliance-related matters, including risk

adjustment considerations for Group variable pay and the application

of the risk modifier in respect of senior employees.

The Chair met with the Chair of the GRC, GAC and GTOC to consider

the Group’s risk and reward alignment framework, which is designed

to promote sound and effective risk management in meeting PRA and

FCA remuneration rules and expectations. During the year, the Chair

of the Committee hosted a joint session with the GRC and GTOC to

consider improvements to the risk and reward framework, more

details of which can be found on page 335.

334	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

Advisers

The Committee received input and advice from different advisers on

specific topics during 2024. Deloitte was retained as independent

advisor to the Committee in 2024 having been reappointed in 2022

following a formal tender process. Deloitte also provided tax

compliance and other advisory services to the Group in 2024. 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 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 and Willis Towers Watson was objective and

independent in 2024.

For 2024, total fees of £275,150 and £68,971 were incurred in relation

to remuneration advice provided by Deloitte and Willis Towers

Watson, respectively. This was based on pre-agreed fees and a time-

and-materials basis.

Committee performance review

In 2024, the annual review of the performance of the Board

committees, including the Committee, was conducted externally by

IBE. On the basis of the review, the directors concluded that the

Committee continued to operate effectively.

Positive feedback was noted on the leadership of the Committee

Chair and membership of the Committee, which was considered to

have practical overlap of members with other Board committees, and

an appropriate flow of information between Committee Chairs.

The review highlighted the importance of both continuing to consider

performance and pay for the wider workforce, and taking the

opportunity to take a fresh look at the performance and pay approach

in the context of changes to the employee value proposition.

The outcomes of the evaluation have been reported to the Board, and

the Committee will track the progress in implementing

recommendations during 2025.

Further details of the annual review of the Board and Committee

effectiveness can be found on page 287.

HSBC Holdings plc Annual Report on Form 20-F	335

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 Executive 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 structured<br><br>payout ratio range, that varies the payout ratio with profits before tax, and a countercyclical funding methodology, with both a floor and a<br><br>ceiling, with the payout ratio generally reducing as performance increases to avoid pro-cyclicality. The floor recognises that even in challenging<br><br>times, remaining competitive is important. The ceiling recognises that at higher levels of performance it is not always necessary to continue to<br><br>increase variable pay, thereby 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.
Individual<br><br>performance	–Assessment of individual performance is made with reference to clear and relevant financial and non-financial goals. Goals for senior<br><br>management take into account appropriate measures linked to sustainability risks, such as: reduction in carbon footprint; facilitating financing<br><br>to help clients with their transition to net zero; employee inclusion; and risk and compliance measures, subject to local legal requirements.<br><br>–A mandatory global risk and compliance goal is included for all other employees. Subject to any legal/regulatory requirements, all employees<br><br>receive an overall performance assessment supported by an assessment against the minimum values-aligned behaviours and conduct<br><br>standards expected of all colleagues and performance on their goals. This ensures that performance is assessed not only on what is achieved<br><br>but also on how it is achieved.
Control<br><br>function staff	–Group policy is for control functions staff to report into their respective function. Remuneration decisions for senior functional roles are made<br><br>by the global function 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 oversee.<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 on or after 1 January 2015 (and awards granted to non-MRTs on or after<br><br>1 January 2022) for a period of seven years, extended to 10 years for employees in PRA and FCA designated senior management functions in<br><br>the event of ongoing internal/regulatory investigation at the end of the seven-year period. 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 (consolidated) and HSBC UK Bank 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 global business and function that<br><br>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 compensation thresholds and individuals in certain roles and<br><br>grades who otherwise would not be identified as MRTs under the remuneration rules.
336	HSBC Holdings plc Annual Report on Form 20-F
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Report of the Directors | Corporate governance report | 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 2024.

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 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

568

	2015	2016	2017	2018		2019		2020	2021	2022	2023	2024
Group CEO	Stuart<br><br>Gulliver	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
Single total figure £0004	7,340	5,675	6,086	2,387	4,582	2,922	1,977	4,154	4,895	5,562	10,396	9,164	1,867
Annual incentive5 (% of<br><br>maximum)	45%	64%	80%	76%	76%	61%	66%	32%	57%	75%	70%	78%	78%
Long-term incentive5,6,7 (% of<br><br>maximum)	41%	–%	–%	100%	–%	–%	–%	–%	–%	–%	75%	75%	—%

1Sir Noel Quinn’s 2024 single total figure reflects his single total figure of remuneration and includes 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.

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 total single figure reflects his total fixed pay, annual incentive and benefits 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.

4Sir Noel Quinn’s 2023 single total figure has been restated to reflect the value of the 2021-2023 LTI on 12 March 2024, when the first tranche of the award

vested.

5The 2012 annual incentive figure for Stuart Gulliver included 60% of the annual incentive disclosed in the 2012 Directors’ remuneration report, which was

deferred for five years and subject to service conditions and satisfactory completion of the five-year deferred prosecution agreement with the US Department of

Justice, entered into in December 2012 (’AML DPA’) as determined by the Committee. The AML DPA performance condition was met and the award vested in

The value of the award at vesting was in the 2018 single total figure of remuneration and included as long-term incentive for 2018.

6Long-term incentive awards are included in the single total figure of remuneration for the year in which the performance period is deemed to be substantially

completed. For Group Performance Share Plan (’GPSP’) awards, this is the end of the financial year preceding the date of grant. The GPSP award shown in 2015

therefore relates to the award granted in 2016.

7The GPSP was replaced by the LTI in 2016 and the value for GPSP is nil for 2016 as no GPSP award was made. LTI awards have a three-year performance period

and the first LTI award was made in February 2017. The value of the LTI awards expected to vest will be included in the total single total figure of remuneration

of the year in which the performance period ends.

Voting results from Annual General Meeting

2024 Annual General Meeting voting results
	For	Against	Withheld
Remuneration report (votes cast)	97.36%	2.64%	––
	9,581,517,143	259,382,421	7,973,872
Remuneration Committee discretion to set appropriate variable to fixed pay ratio(s) for<br><br>Material Risk Takers (votes cast)	99.31%	0.69%
	9,760,585,369	67,898,883	20,437,945
Remuneration policy (votes cast from 2022 Annual General Meeting)	95.73%	4.27%	––
	7,666,488,029	342,320,697	7,773,468
HSBC Holdings plc Annual Report on Form 20-F	337
---	---

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.

Total pay and benefits for the Group CEO reflects the total fixed pay,

annual incentive and benefits for Sir Noel Quinn up to and including

1 September 2024 and for Georges Elhedery from 2 September 2024,

plus the value of Sir Noel Quinn’s vesting 2022-2024 long-term incentive

(’LTI’), which was awarded in respect of his performance as Group CEO

in 2021. The median ratio is stable year on year, reflecting that a LTI has

vested in each of the last two years with a similar scorecard outcome.

Total pay ratio
	Method	Lower<br><br>quartile	Median	Upper<br><br>quartile
2024	A	283:1	165:1	87:1
20231	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<br><br>pay and<br><br>benefits	Total<br><br>salary	Total<br><br>pay and<br><br>benefits	Total<br><br>salary	Total<br><br>pay and<br><br>benefits	Total<br><br>salary
2024	A	38,995	31,962	66,772	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 2023 pay ratios have been restated to reflect the revised 2023 single

total figure of remuneration for Sir Noel Quinn.

The total pay and benefits for the median employee for 2024 was

£66,772, a 6.0% increase compared with 2023.

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 2024. 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 34,000 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 2024;

–variable pay awards for 2024;

–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 2024.

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 2023 and 2024; and

–dividends and share buy-backs in respect of 2023 and 2024.

In 2024, total spend on pay was stable compared with 2023. The total

return to shareholders increased by 43% compared with 2023. This

included the special dividend of $0.21 per share that was paid in June

following the completion of the sale of our banking business in Canada,

as well as $11bn of capital return to shareholders through share buy-

backs, which included the up to $2bn buy-back announced at our 2023

annual results in February 2024. In addition, the Group has announced

the intention to initiate a further buy-back of up to $2bn. Dividends

include an approximation of the amount payable in April 2025 in relation

to the fourth interim dividend of $0.36 per ordinary share.

Relative importance of spend on pay

21440476754464

Total return<br><br>to<br><br>shareholder	2024	▲ 43%
	2023
Employee<br><br>pay	2024	▲ 1%
	2023

$15.9bn

$11.0bn

$11.8bn

$7.0bn

338	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | 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 2020 and 2024

with the percentage change in each of those elements of pay for UK-

based employees of HSBC Group Management Services Limited, the

employing entity of the executive Directors.

The non-executive Director fees were increased in 2024. The year-on-

year percentage change in fees noted in the table below is primarily

driven by any pro-rated fees received by the non-executive Director

based on time served by them on the Board and the relevant Board

committees and any additional responsibilities taken on by the non-

executive Director during each year. The value of benefits received by

the non-executive Directors reflect the taxable expense

reimbursements claimed, and the associated gross-up tax, in relation

to attending the Board meetings in each year. Page 344 provides the

underlying single total figure of remuneration for non-executive

Directors used to calculate these figures.

Annual percentage change in remuneration
	Base salary/fees					Benefits					Annual incentive
Director/employees	2024	2023	2022	2021	2020	2024	2023	2022	2021	2020	2024	2023	2022	2021	2020
Executive Directors
Sir Noel Quinn1,2,3	(31.6)	0.5	3.2	1.7	151.7	(47.8)	6.7	25.3	(48.9)	353.7	(23.7)	(6.7)	36.1	99.0	20.2
Georges Elhedery4	26.7	—	—	—	—	866.0	—	—	—	—	30.3	—	—	—	—
Non-executive Directors
Geraldine Buckingham5	10.7	57.4	—	—	—	(40.0)	—	—	—	—	—	—	—	—	—
Rachel Duan6,7	4.5	8.4	235.8	—	—	—	(100.0)	—	—	—	—	—	—	—	—
Dame Carolyn Fairbairn7,8	4.7	5.3	231.1	—	—	—	(100.0)	—	—	—	—	—	—	—	—
James Forese9	5.5	10.2	20.5	257.5	—	300.0	—	—	—	—	—	—	—	—	—
Ann Godbehere10	472.1	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Steven Guggenheimer11	(1.9)	0.8	4.8	86.6	—	300.0	(90.0)	—	—	—	—	—	—	—	—
José Antonio Meade<br><br>Kuribreña12	3.7	0.8	8.5	10.4	28.7	75.0	(71.4)	—	(100.0)	100.0	—	—	—	—	—
Kalpana Morparia13	45.9	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Eileen Murray14,15	14.1	10.7	(1.5)	121.7	—	(100.0)	—	—	—	—	—	—	—	—	—
Brendan Nelson16	306.2	—	—	—	—	216.7	—	—	—	—	—	—	—	—	—
David Nish17	(66.8)	0.4	(1.0)	0.4	108.7	57.9	(13.6)	120.0	25.0	(50.0)	—	—	—	—	—
Swee Lian Teo18	402.0	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Sir Mark Tucker	—	—	—	—	—	184.3	(54.9)	242.4	(36.5)	(77.5)	—	—	—	—	—
Employee group19	3.3	5.0	3.1	1.0	2.0	4.1	5.7	7.0	1.3	2.3	2.4	11.7	3.7	25.2	(20.0)

1Sir Noel Quinn succeeded John Flint as interim Group CEO with effect from 5 August 2019 and was appointed permanently into the role on 17 March 2020. The

annual percentage change in 2020 for Sir Noel Quinn is based on remuneration reported in his 2019 single total figure of remuneration (for the period 5 August

2019 to 31 December 2019) and his 2020 single total figure of remuneration (for the period 1 January 2020 to 31 December 2020). Based on his annualised 2019

compensation as an executive Director, his percentage change in salary, benefits and annual incentive was 2.1%, 85.2% and -50.9%, respectively for 2020.

2Sir Noel Quinn voluntarily waived the cash portion of his 2020 annual incentive. The year-on-year percentage change between 2020 and 2021 would be -1%

without this cash waiver.

3Sir Noel Quinn stepped down as Group CEO and as an executive Director of the Board with effect from 2 September 2024. The annual percentage change in

2024 for Sir Noel Quinn is based on remuneration reported in his 2024 single total figure of remuneration (for the period 1 January 2024 to 1 September 2024).

Based on his annualised 2024 compensation as an executive Director, his percentage change in salary, benefits and annual incentive was 3.0%, -22.4% and

14.1% respectively for 2024.

4Georges Elhedery succeeded Ewen Stevenson as Group CFO with effect from 1 January 2023, and succeeded Sir Noel Quinn as Group CEO with effect from

2 September 2024. The annual percentage change in 2024 for Georges Elhedery is based on remuneration reported in his 2024 single total figure of

remuneration, which reflects compensation as both Group CFO and Group CEO during 2024.

5Geraldine Buckingham stepped down as a member of the Group Risk Committee on 1 October 2024 and was appointed as a member of the Group Audit

Committee and Chair of the Sustainability Working Group on 1 October 2024.

6Rachel Duan was appointed as a member of the Group Audit Committee on 1 June 2022.

7Rachel Duan and Dame Carolyn Fairbairn did not receive taxable benefits in 2023, resulting in a 100% reduction in benefits from the prior year.

8Dame Carolyn Fairbairn was appointed as Chair of the Group Remuneration Committee effective 29 April 2022.

9James Forese was appointed as non-executive Chair of HSBC North America Holdings, Inc in 2021. He was appointed as a member of the Sustainability Working

Group on 1 October 2024.

10Ann Godbehere was appointed as a member of the Group Audit Committee on 21 February 2024 and as a member of the Sustainability Working Group on 1

October 2024. She was also appointed as Senior Independent Director on 3 May 2024.

11Steven Guggenheimer joined the Board on 1 May 2020. He stepped down as a Co-Chair of the Technology Governance Working Group on 1 March 2024 and

was appointed as a member of the Group Technology Committee on 1 March 2024.

12José Antonio Meade Kuribreña did not receive taxable benefits in 2021, resulting in a 100% reduction in benefits from the prior year.

13Kalpana Morparia joined the Board on 1 March 2023. She was appointed as a member of the Group Technology Committee on 1 March 2024 and Group

Remuneration Committee on 1 October 2024. Kalpana Morparia stepped down as a member of Group Risk Committee on 1 October 2024.

14Eileen Murray was appointed as a member of the Group Audit Committee on 1 June 2022. She stepped down as the Co-Chair of the Technology Governance

Working Group Committee and was appointed as the Chair of the Group Technology Committee on 1 March 2024. Eileen Murray stepped down as a member of

the Group Audit Committee and was appointed as a member of the Group Risk Committee on 1 October 2024.

15Eileen Murray did not receive taxable benefits in 2024, resulting in a 100% reduction in benefits from the prior year.

16Brendan Nelson was appointed as Chair of the Group Audit Committee on 21 February 2024. He was appointed as a member of the Group Technology

Committee on 1 March 2024 and the Sustainability Working Group on 1 October 2024.

17David Nish retired from the Board effective 3 May 2024.

18Swee Lian Teo was appointed as a member of the Group Technology Committee on 1 March 2024 and the Sustainability Working Group on 1 October 2024.

19Employee group consists of individuals employed by HSBC Group Management Services Ltd, the employing entity of the executive Directors, as no individuals

are employed directly by HSBC Holdings.

HSBC Holdings plc Annual Report on Form 20-F	339

Scheme interests awarded during 2024

(Audited)

The table below sets out the scheme interests granted to executive Directors during 2024 in respect of the 2023 performance year, as

disclosed in the 2023 Directors’ remuneration report. No non-executive Directors received scheme interests during the financial year. The below

table includes details of immediate shares and fixed pay allowances in compliance with Chapter 17 of the Rules Governing the Listing of

Securities on The Stock Exchange of Hong Kong Limited.

Scheme awards in 2024
(Audited)
	Type of interest<br><br>awarded	Basis on which<br><br>award made	Date of award	Face<br><br>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
Sir Noel Quinn	LTI deferred shares1	% of base salary	26 February 2024	5,822	25	974,853	31 December 2026
	Immediate shares2	% of base salary	26 February 2024	1,009	N/A	168,955	31 December 2023
	Fixed pay allowance3	N/A	8 May 2024	300	N/A	42,146	N/A
			15 August 2024	300	N/A	46,219	N/A
			5 November 2024	300	N/A	41,846	N/A
Georges Elhedery	LTI deferred shares1	% of base salary	26 February 2024	3,399	25	569,177	31 December 2026
	Immediate shares2	% of base salary	26 February 2024	643	N/A	107,752	31 December 2023
	Fixed pay allowance3	N/A	8 May 2024	192	N/A	26,899	N/A
			15 August 2024	192	N/A	29,498	N/A
			5 November 2024	299	N/A	41,720	N/A

1In accordance with the remuneration policy approved by shareholders at the 2022 AGM, the LTI award was determined at 320% of base salary for Sir Noel

Quinn and 320% of base salary for Georges Elhedery. The number of shares to be granted was determined by taking HSBC’s closing share price of £5.972 taken

on 23 February 2024, and applying a discount based on HSBC’s expected dividend yield of 6.25% per annum for the vesting period (£4.385). The fair value of the

awards was £2.028 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 a maximum period of 10 years from the date of the award and are not eligible for dividend equivalents.

2Immediate share awards are granted based on the previous years’ performance as part of the annual incentive and are not subject to forward-looking

performance conditions. On vesting, awards will be subject to a one-year retention period. The face values of the immediate share awards have been computed

using HSBC’s closing share price of £5.972 taken on 23 February 2024. The fair value of the awards was £5.957 based on IFRS 2 accounting standards. Awards

are subject to clawback for a maximum period of 10 years from the date of the award.

3Fixed pay allowance awards are granted in instalments in accordance with the remuneration policy approved by shareholders at the 2022 AGM, and are not

subject to forward-looking performance conditions. Individual tax liabilities were satisfied in cash, therefore the face value awarded represents the net of tax

value of the shares and the number of shares awarded reflects the net of tax number of shares. The fixed pay allowance awards have been computed using

HSBC’s closing share price of £7.126 taken on 7 May 2024, £6.498 taken on 14 August 2024 and £7.177 taken on 4 November 2024. The fair values of these

awards are based on IFRS 2 accounting standards and are £7.208, £6.558 and £7.224 respectively. These awards vest immediately and are subject to a retention

period and released annually on pro-rata basis over five years, starting in March 2025.

Performance conditions for the 2024–2026 LTI awards<br><br>(Audited)
Measures (weighting)1		Minimum<br><br>(25% payout)	Target<br><br>(50% payout)	Maximum<br><br>(100% payout)
RoTE with CET1 capital ratio underpin2 (37.5%)		14.0%	16.0%	17.0%
Environment and sustainability3<br><br>(25%)	Carbon reduction<br><br>(own emissions)	66.0%	70.0%	74.0%
	Sustainable finance and<br><br>investment	$539.0bn	$641.0bn	$693.0bn
Relative TSR4 (37.5%)		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 2026 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 2026.

4The peer group for the 2024–2026 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.

340	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

Other scheme interests held during 2024

The table below details scheme interests held by executive Directors during 2024, 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 2024
						HSBC Holdings ordinary shares
	Type of<br><br>interest held	Dates of<br><br>award	Award<br><br>price (£)1	Usually vesting		At 1 Jan<br><br>2024	Vested in<br><br>period	Lapsed in<br><br>period	Cancelled in<br><br>period	At 31 Dec<br><br>2024
				from	to
Sir Noel<br><br>Quinn	LTI deferred<br><br>shares	1 Mar 2021	4.262	1 Mar 2024	31 Mar 2028	1,118,554	167,7822	279,639	—	671,133
		28 Feb 2022	5.380	1 Mar 2025	31 Mar 2029	983,339	—	—	—	983,339
		27 Feb 2023	6.357	1 Mar 2026	31 Mar 2030	861,422	—	—	—	861,422
	Deferred<br><br>shares	27 Feb 20173	6.503	1 Mar 2020	31 Mar 2024	19,886	20,6984	—	—	—
		26 Feb 20185	7.234	1 Mar 2021	31 Mar 2025	43,011	21,504	—	—	21,507
		25 Feb 20196	6.235	1 Mar 2022	31 Mar 2026	84,351	28,117	—	—	56,234
		24 Feb 20207	5.622	1 Mar 2023	31 Mar 2027	161,362	40,340	—	—	121,022
Georges<br><br>Elhedery	LTI deferred<br><br>shares	28 Feb 2022	5.380	1 Mar 2025	31 Mar 2029	223,989	—	—	—	223,989
		27 Feb 2023	6.357	1 Mar 2026	31 Mar 2030	251,474	—	—	—	251,474
	Deferred<br><br>shares	25 Feb 20198	6.235	1 Mar 2020	31 Mar 2024	17,193	17,193	—	—	—
		24 Feb 20207	5.622	1 Mar 2023	31 Mar 2027	118,129	29,532	—	—	88,597
		1 Mar 20219	4.262	1 Mar 2024	31 Mar 2028	305,523	61,104	—	—	244,419
		28 Feb 202210	5.380	1 Mar 2025	31 Mar 2029	273,163	—	—	—	273,163

1The award price is the closing price on the day before the grant date. 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 commencing in 2024. The

first tranche vested on 12 March 2024 at a market value of £5.8992. The closing price of the shares immediately before the date on which the awards were

vested was £5.758.

3The award vested in five equal annual tranches. The final tranche vested on 11 March 2024 at a market value of £5.7534. Shares equivalent in number to those

that vest under the award (net of tax liabilities) must be retained for six months from the vesting date. The closing price of the shares immediately before the

date on which the awards were vested was £5.799.

4The quantity vested included 812 dividend equivalents allocated in respect of the Q4 2023 dividend.

5Shares 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 will vest in

five equal annual tranches. The fourth tranche vested on 12 March 2024 at a market value of £5.8992. The closing price of the shares immediately before the

date on which the awards were vested was £5.758.

6Shares 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 will vest in

five equal annual tranches. The third tranche vested on 11 March 2024 at a market value of £5.7534. The closing price of the shares immediately before the date

on which the awards were vested was £5.799.

7Shares 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 will vest in

five equal annual tranches. The second tranche vested on 11 March 2024 at a market value of £5.7534. The closing price of the shares immediately before the

date on which the awards were vested was £5.799.

8Shares equivalent in number to those that vest under the award (net of tax liabilities) must be retained for six months from the vesting date. The award vested in

five equal annual tranches. The final tranche vested on 11 March 2024 at a market value of £5.7534. The closing price of the shares immediately before the date

on which the awards were vested was £5.799.

9Shares 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 will vest in

five equal annual tranches. The first tranche vested on 12 March 2024 at a market value of £5.8992. The closing price of the shares immediately before the date

on which the awards were vested was £5.758.

10The award will vest in five equal annual tranches commencing in 2025. 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.

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 2024 to the date of this report.

HSBC Holdings plc Annual Report on Form 20-F	341

Executive Directors’ interests in shares

(Audited)

The shareholdings of executive Directors in 2024, including the

shareholdings of their connected persons, at 31 December 2024 (or

the date they stepped down from the Board, if earlier) are set out

below. The following table shows the comparison of shareholdings

with the company shareholding guidelines. There have been no

changes in the shareholdings of the executive Directors from

31 December 2024 to the date of this report.

Individuals have five years from their appointment date to build up the

recommended levels of shareholding. In line with investor guidance,

for executive Directors, unvested shares that are not subject to

forward-looking performance conditions (on a net of tax basis) can

count towards their shareholding requirement under the shareholder-

approved policy.

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.

With regard to post-employment shareholding arrangements, we

believe that our remuneration structure achieves the objective of

ensuring there is ongoing alignment of executive Directors’ interests

with shareholder experience post-cessation of their employment due

to the following features of the policy:

–Shares delivered to executive Directors as part of the fixed pay

allowance have a five-year retention period, which continues to

apply following a departure of an executive Director.

–Shares delivered as part of an annual incentive award are subject

to a one-year retention period, which continues to apply following

a departure of an executive Director.

–LTI awards have a seven-year vesting period with a one-year post-

vesting retention period, which is not accelerated on departure.

The weighted average holding period of an LTI award within HSBC is

therefore 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 HSBC 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 20242 or<br><br>date stepped<br><br>down<br><br>(% of salary)	At 31 Dec 2024, or date stepped down from the Board if earlier
				Scheme interests
			Share<br><br>interests<br><br>(number<br><br>of shares)	Share<br><br>options3	Shares awarded subject to deferral1
					without<br><br>performance<br><br>conditions	with<br><br>performance<br><br>conditions4
Executive Directors
Sir Noel Quinn5 (stepped down from 2<br><br>September 2024)	400%	1,068%	2,046,949	—	869,896	2,819,614
Georges Elhedery5 (appointed as Group<br><br>CEO from 2 September 2024)	400%	504%	966,017	—	606,179	1,044,640

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 2024 (£7.184), and does not

include any unvested interests.

3At 31 December 2024, Sir Noel Quinn and Georges Elhedery did not hold any options under the HSBC Holdings Savings-Related Share Option Plan (UK).

4LTI awards granted in February 2022, 2023 and 2024 are subject to the performance conditions as set out in the preceding sections.

5Executive Directors are expected to meet their shareholding guidelines within five years of the date of their appointment.

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 2022, Ewen Stevenson was granted good leaver status.

Ewen Stevenson is eligible to receive vesting of the 2022–2024 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 2022–2024

LTI outcome are outlined on page 329.

No other payments 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.

External appointments

During 2024, executive Directors did not receive any fees from

external appointments.

Payments for loss of office

(Audited)

Departure terms for Sir Noel Quinn

Sir Noel Quinn is leaving the Group on 30 April 2025. He will continue

to receive his salary, Fixed Pay Allowance (’FPA’), cash in lieu of

pension allowance and other benefits up to (and including) his

retirement date in the normal way. The aggregate value of these

payments from 2 September 2024 to 31 December 2024 was

£1,147,055 and comprised a salary of £454,844, a FPA of £562,019,

cash in lieu of pension allowance of £45,484 and benefits totalling

£84,707, which includes Group Income Protection, a contribution

towards Sir Noel Quinn's legal fees incurred in connection with his

departure arrangements and other benefits in connection with his

retirement. Sir Noel Quinn will also receive cash in lieu of unused

holiday on expiry of his notice period. The fixed pay allowance will be

awarded in immediately vested shares, be subject to a retention

period and released on a pro-rata basis over five years.

Sir Noel Quinn will not be eligible for an LTI award in respect of the

2024 performance year, or any annual incentive award in respect of

the 2025 performance year. In accordance with the contractual terms

342	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | Directors’ remuneration report

agreed and our approved Directors’ remuneration policy, Sir Noel

Quinn was granted good leaver status in respect of his outstanding

unvested share awards. Good leaver status is conditional upon him

not taking up a role with a defined list of competitor financial services

firms for a year from his departure date. As a good leaver, his

deferred share awards will continue to vest and be released on their

scheduled vesting dates, subject to the relevant terms (including post-

vesting retention periods, malus and, where applicable, clawback).

Any vesting of his LTI awards will be pro-rated for the period up to the

departure date and will be subject to the relevant terms (including

post-vesting retention periods, malus and clawback) and the

achievement of the required performance conditions. For this

purpose, his 2022 and 2023 LTI awards have been pro-rated for time

with the maximum number of shares, being 669,995 and 433,268

respectively, still subject to performance.

Sir Noel Quinn will be eligible to receive certain post-departure

benefits for a period of up to seven years after the departure date. Sir

Noel Quinn will receive no other compensation or payment for the

termination of his service agreement or his ceasing to be a Director of

the Group.

Directors’ emoluments

The details of compensation paid to executive and non-executive Directors for the year ended 31 December 2024 are set out below:

Emoluments
	Sir Noel Quinn		Georges Elhedery		Non-executive Directors1
	2024	2023	2024	2023	2024	2023
	£000	£000	£000	£000	£000	£000
Directors' base salary, allowances and benefits in kind	2,270	3,386	2,473	1,999
Non-executive Directors' fees and benefits in kind					5,583	4,769
Pension contributions	—	—	—	—	—	—
Performance-related pay paid or receivable2,3	1,540	6,293	10,677	3,783	—	—
Inducements to join paid or receivable	—	—	—	—	—	—
Compensation for loss of office	1,147	—	—	—	—	—
Notional return on deferred cash	56	43	8	6	—	—
Total	5,013	9,722	13,157	5,788	5,583	4,769
Total ($000)	6,406	12,424	16,814	7,397	7,135	6,095

1Fees and benefits in kind for 2024 reflects the population as per the single total figure table for non-executive Directors, which excludes individuals who have

stepped down from the Board during 2024.

2Includes the value of the deferred and LTI awards at grant.

3The 2024 value of performance-related pay paid or receivable for Georges Elhedery includes the proposed 2025-2027 LTI award under the new executive

Director remuneration policy, which is subject to shareholder approval at the 2025 AGM.

The aggregate amount of Directors’ emoluments (including both executive Directors and non-executive Directors) for the year ended

31 December 2024 was $30,355,377. 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 2024 are set out below:

Emoluments to former executive Directors
	Douglas Flint		Stuart Gulliver		John Flint		Marc Moses
	£	$	£	$	£	$	£	$
Post-employment medical insurance benefits	8,018	10,246	8,018	10,246	12,161	15,541	18,950	24,217
Tax return support	—	—	—	—	—	—	2,500	3,195

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 2024 was £49,646 ($63,444). There were payments under

retirement benefit arrangements to four former Directors of £3,225,964.

We note an additional retirement benefit payment made in 2023 to a former Director of £1,038,863. This means payments under retirement

benefit arrangements for 2023 were made to four former Directors, totalling £2,420,537.

The provision at 31 December 2024 in respect of unfunded pension obligations to two former Directors amounted to £352,441. This relates to

unfunded unapproved retirement benefits schemes.

HSBC Holdings plc Annual Report on Form 20-F	343

Emoluments of senior management and five highest paid employees

The following tables set out the emoluments paid to senior management, which in this case comprises executive Directors and members of the

Group Executive Committee, for the year ended 31 December 2024, or for the period of appointment in 2024 as a Director or member of the

Group Executive Committee. Details of 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 Executive Committee for the year ended 31 December 2024, are also

presented.

Five highest paid employees – share awards (HSBC Share Plan 2011)
Dates of award	Awardprice ()1		HSBC Holdings ordinary share awards
			At 1 Jan<br><br>2024	Granted in<br><br>period	Vested in<br><br>period2	Lapsed<br><br>in period	Cancelled in<br><br>period	At 31 Dec 2024
		to
2017 to 2023	—	30 Mar 2030	4,290,807	—	478,332	—	—	3,812,475
26 Feb 20243	5.972	30 Mar 2031	—	2,064,764	568,482	—	—	1,496,282
18 Mar 20244	5.980	30 Mar 2028	—	313,085	113,864	—	—	199,221
8 May 20245	7.126	30 Mar 2027	—	1,012,813	332,397	—	—	680,416
15 Aug 20246	6.498	15 Aug 2024	—	29,498	29,498	—	—	—
5 Nov 20247	7.177	5 Nov 2024	—	41,720	41,720	—	—	—
1 Jan to 31 Dec 20248	—	30 Mar 2024	—	5,269	5,269	—	—	—
			4,290,807	3,467,149	1,569,562	—	—	6,188,394

All values are in British Pounds.

1The award price is the closing price on the day before the grant date. 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 £6.2037.

3The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair values, which vary based on the length of the vesting period,

range between £2.028 and £5.957. These awards include LTI awards and other awards which are subject to satisfaction of performance conditions. LTI awards

are subject to a combination of financial and non-financial metrics that are detailed in the Directors’ remuneration report in this Form 20-F.

4The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair values, which vary based on the length of the vesting period,

range between £5.165 and £5.789.

5The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair values, which vary based on the length of the vesting period,

range between £6.823 and £7.208.

6The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair value of the award was £6.558.

7The fair values of the awards were calculated according to the IFRS 2 accounting standard. The fair value of the award was £7.224.

8Relates to the allocation of dividend equivalent shares in relation to eligible awards.

Emoluments
£000s	Five highest paid employees	Senior management
Basic salaries, allowances and benefits in kind	10,688	37,990
Pension contributions	9	656
Performance-related pay paid or receivable1	33,459	58,290
Inducements to join paid or receivable	—	—
Compensation for loss of office2	—	2,221
Total	44,156	99,157
Total ($000)	56,429	126,717

1Includes the value of deferred share awards at grant.

2Excludes expected payments in 2025 in connection with loss of office for senior management in 2024.

Emoluments by bands
Hong Kong dollars	US dollars	Number of highest paid employees	Number of senior management
$5,500,001 – $6,000,000	$704,877 – $768,956	—	2
$8,000,001 – $8,500,000	$1,025,275 – $1,089,355	—	1
$20,000,001 – $20,500,000	$2,563,187 – $2,627,267	—	3
$21,000,001 – $21,500,000	$2,691,347 – $2,755,426	—	1
$29,500,001 – $30,000,000	$3,780,701 – $3,844,781	—	1
$33,000,001 – $33,500,000	$4,229,259 – $4,293,339	—	1
$34,500,001 – $35,000,000	$4,421,498 – $4,485,578	—	1
$35,000,001 – $35,500,000	$4,485,578 – $4,549,658	—	1
$37,000,001 – $37,500,000	$4,741,897 – $4,805,976	—	1
$40,000,001 – $40,500,000	$5,126,375 – $5,190,454	—	1
$44,000,001 – $44,500,000	$5,639,012 – $5,703,092	—	1
$47,500,001 – $48,000,000	$6,087,570 – $6,151,650	—	1
$49,000,001 – $49,500,000	$6,279,809 – $6,343,889	—	2
$50,500,001 – $51,000,000	$6,472,048 – $6,536,128	—	1
$57,000,001 – $57,500,000	$7,305,084 – $7,369,164	1	2
$76,500,001 – $77,000,000	$9,804,192 – $9,868,271	1	—
$83,000,001 – $83,500,000	$10,637,228 – $10,701,307	1	1
$107,000,001 – $107,500,000	$13,713,053 – $13,777,132	1	1
$131,000,001 – $131,500,000	$16,788,877 – $16,852,957	1	1
344	HSBC Holdings plc Annual Report on Form 20-F
---	---

Report of the Directors | Corporate governance report | Directors’ remuneration report

Non-executive Directors

(Audited)

The following table shows the total fees and benefits of non-executive Directors for 2024, together with comparative figures for 2023.

Fees and benefits
(Audited)	Fees1		Benefits2		Total
(£000)	2024	2023	2024	2023	2024	2023
Geraldine Buckingham3	270	244	3	5	273	249
Rachel Duan	255	244	3	—	258	244
Dame Carolyn Fairbairn	292	279	5	—	297	279
James Forese4	801	759	4	1	805	760
Ann Godbehere5	389	68	—	—	389	68
Steven Guggenheimer6	259	264	4	1	263	265
José Antonio Meade Kuribreña	253	244	7	4	260	248
Kalpana Morparia7	248	170	1	—	249	170
Eileen Murray8	331	290	—	3	331	293
Brendan Nelson9	329	81	38	12	367	93
David Nish10	159	479	30	19	189	498
Swee Lian Teo11	256	51	—	—	256	51
Sir Mark Tucker	1,500	1,500	145	51	1,645	1,551
Total (£000)	5,343	4,673	240	96	5,583	4,769
Total ($000)	6,828	5,972	307	123	7,135	6,095

1Fees are in line with the Directors’ remuneration policy. There was a 5% increase in fees for Director fees, Group Risk Committee Member, Group Audit

Committee Chair and Member, Remuneration Committee Chair and Member, Nomination & Corporate Governance Committee Member and Group Technology

Committee Chair and Member).

2Benefits include taxable expenses such as accommodation, travel and subsistence relating to attendance at Board and other meetings at HSBC Holdings’

registered offices. Amounts disclosed have been grossed up using a tax rate of

45%

, where relevant.

3Stepped down as a member of the Group Risk Committee and joined the Group Audit Committee as member on 1 October 2024. Appointed as Chair of the

Sustainability Working Group on 1 October 2024.

4Appointed as a member of the Sustainability Working Group on 1 October 2024. Includes fee of £430,000 (2023: £443,000) in relation to his role as Chair of

HSBC North America Holdings, Inc.

5Appointed as a member of the Group Audit Committee on 21 February 2024 and the Sustainability Working Group on 1 October 2024. Appointed as Senior

Independent Director on 3 May 2024.

6Stepped down as a member of the Technology Governance Working Group on 1 March 2024. Appointed as a member of the Group Technology Committee on

1 March 2024.

7Appointed as a member of the Group Technology Committee on 1 March 2024. Stepped down as a member of Group Risk Committee on 1 October 2024 and

joined the Group Remuneration Committee on 1 October 2024.

8Stepped down as the Co-Chair of the Technology Governance Working Group Committee on 1 March 2024 and as the member of the Group Audit Committee

on 1 October 2024. Appointed as the Chair of the Group Technology Committee on 1 March 2024 and as a member of the Group Risk Committee on 1 October

2024.

9Appointed as Chair of the Group Audit Committee on 21 February 2024. Appointed as member of the Group Technology Committee on 1 March 2024 and

Sustainability Working Group on 1 October 2024.

10Retired from the Board at the conclusion of the 2024 AGM on 3 May 2024.

11Appointed as member of the Group Technology Committee on 1 March 2024 and the Sustainability Working Group on 1 October 2024.

HSBC Holdings plc Annual Report on Form 20-F	345

Non-executive Directors’ interests in shares

(Audited)

The shareholdings of persons who were non-executive Directors in

2024, including the shareholdings of their connected persons, at

31 December 2024, 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 2024 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 2024 met the guidelines.

Shares
	Shareholding<br><br>guidelines (number<br><br>of 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
David Nish (retired on 3 May 2024)	15,000	50,000
Swee Lian Teo	15,000	15,200
Sir Mark Tucker	15,000	307,352

2025 fees for non-executive Directors

The table below sets out the 2025 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).

		2025 fees
Position		£
Non-executive Group Chairman1		1,500,000
Non-executive Director (base fee)		136,500
Senior Independent Director		200,000
Group Risk Committee	Chair	150,000
	Member	50,000
Group Audit Committee, Group Remuneration Committee and Group Technology Committee	Chair	125,000
	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.

The Board has reviewed the fees payable to non-executive Directors in the context of changes to the organisational structure. Following this

review, the Board considered that the fees payable for chairing or being a member of a Board Committee (excluding the Nomination &

Corporate Governance Committee) should be increased to recognise the responsibilities and additional time commitment associated with such

a role. Overall, giving due consideration to the highly regulated and complex industry in which HSBC operates, the Board agreed to align the

additional fee payable for chairing a Board Committee at £150,000 per annum (i.e., in line with the current fee for chairing the Group Risk

Committee). The increase in the fee for chairing a Board Committee will be phased over two years, with an increase to £125,000 per annum for

2025, and a further increase to £150,000 per annum with effect from 1 January 2026.

The Board also agreed increases to the additional fee for being a member of a Board Committee, and for the role of designated non-executive

Director for workforce engagement, which were both increased to £50,000 per annum. These increases reflect the additional activity being

undertaken during this period of organisational and cultural change.

No other changes are proposed to non-executive Director fees for 2025.

346	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | 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 2024 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 remuneration	13.0	2.0	18.9	1,260.6
	7.1	7.4	45.0	703.8
	7.1	3.6	45.0	703.8
	—	3.8	—	—
	—	—	—	—
	—	—	—	—
	—	—	—	—
Variable remuneration3	13.0	2.0	18.9	1,260.6
	—	20.2	81.1	769.0
	—	2.1	36.8	387.8
	—	0.6	16.3	179.7
	—	18.1	44.3	367.6
	—	16.7	31.3	209.5
	—	—	—	9.3
	—	—	—	5.1
	—	—	—	—
	—	—	—	—
	—	—	—	4.3
	—	—	—	2.7
Total remuneration (m)	7.1	27.6	126.1	1,472.8

All values are in US Dollars.

1Cash-based fixed remuneration is paid immediately.

2Paid in HSBC shares. Vested shares are subject to a retention period of up to one year.

3Variable pay awarded in respect of 2024. 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 ten 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.

427 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 $7.1m, of which $6.0m is fixed pay and $1.1m 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	—	—	—	1.0
Total amount ($m)	—	—	—	3.4
Severance payments awarded during the financial year2
Number of identified staff	—	—	6.9	34.0
Total amount ($m)	—	—	7.5	42.6
– of which paid during the financial year ($m)	—	—	—	37.1
– of which deferred ($m)	—	—	—	—
– of which severance payments paid during the financial year, that are not taken into account in<br><br>the bonus cap ($m)	—	—	7.5	42.6
– of which highest payment that has been awarded to a single person ($m)	—	—	4.3	9.3

1No guaranteed variable remuneration was awarded in 2024. 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	347
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<br><br>year due to<br><br>ex post<br><br>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<br><br>but is subject<br><br>to retention<br><br>periods
Supervisory function	—	—	—	—	—	—	—	—
Cash-based	—	—	—	—	—	—	—	—
Shares	—	—	—	—	—	—	—	—
Share-linked instruments	—	—	—	—	—	—	—	—
Other instruments	—	—	—	—	—	—	—	—
Other forms	—	—	—	—	—	—	—	—
Management function	58.9	4.1	54.8	(3.0)	—	11.5	4.2	2.7
Cash-based	6.5	1.3	5.2	—	—	—	1.3	—
Shares	52.4	2.8	49.6	(3.0)	—	11.5	2.9	2.7
Share-linked instruments	—	—	—	—	—	—	—	—
Other instruments	—	—	—	—	—	—	—	—
Other forms	—	—	—	—	—	—	—	—
Other senior management	195.8	17.9	177.9	(5.4)	—	29.6	18.2	7.5
Cash-based	65.7	8.2	57.5	—	—	—	8.3	—
Shares	130.1	9.7	120.4	(5.4)	—	29.6	9.9	7.5
Share-linked instruments	—	—	—	—	—	—	—	—
Other instruments	—	—	—	—	—	—	—	—
Other forms	—	—	—	—	—	—	—	—
Other identified staff	1,253.5	247.3	1,006.2	—	—	152.6	250.8	63.5
Cash-based	467.3	97.3	370.0	—	—	—	98.2	—
Shares	749.1	142.2	606.9	—	—	145.8	144.7	57.8
Share-linked instruments	31.9	6.4	25.5	—	—	6.3	6.5	4.4
Other instruments	—	—	—	—	—	—	—	—
Other forms	5.2	1.4	3.8	—	—	0.5	1.4	1.3
Total amount	1,508.2	269.3	1,238.9	(8.4)	—	193.7	273.2	73.7

1This table provides details of balances and movements during performance year 2024. For details of variable pay awards granted for 2024, 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	257
€1,500,000 – 2,000,000	118
€2,000,000 – 2,500,000	48
€2,500,000 – 3,000,000	35
€3,000,000 – 3,500,000	13
€3,500,000 – 4,000,000	8
€4,000,000 – 4,500,000	7
€4,500,000 – 5,000,000	10
€5,000,000 – 6,000,000	7
€6,000,000 – 7,000,000	6
€7,000,000 – 8,000,000	1
€8,000,000 – 9,000,000	1
€9,000,000 – 10,000,000	1
€10,000,000 – 11,000,000	3
€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	1
€16,000,000 – 17,000,000	—
€17,000,000 – 18,000,000	—
€18,000,000 – 19,000,000	—
€19,000,000 – 20,000,000	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.

348	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report | 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										1,294.5
–of which members of<br><br>the Board	13.0	2.0	15.0
–of which senior<br><br>management				2.0	2.0	—	6.9	2.0	6.0
–of which other<br><br>identified staff				532.9	289.6	29.0	165.0	183.5	60.6
Total remuneration of<br><br>identified staff ($m)	7.1	27.6	34.7	721.4	329.7	38.8	220.8	149.0	139.2
–of which variable<br><br>remuneration ($m)1	—	20.2	20.2	394.6	167.6	20.6	112.9	69.6	84.8
–of which fixed<br><br>remuneration ($m)	7.1	7.4	14.5	326.8	162.1	18.2	107.9	79.4	54.4

1Variable pay awarded in respect of 2024. 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 ten 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.

Share plan matters considered by the Group Remuneration Committee

The Group Remuneration 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 2024. The HSBC variable pay

deferral approach for the 2024 performance year was approved, for

which certain minor updates were made to comply with legal and

regulatory requirements. The Directors Remuneration Policy was

approved and will be available for shareholders to vote on at the 2025

AGM. Other awards with performance conditions were approved for

certain strategically important projects during 2024.

Certain awards were granted to executive Directors or senior

managers with vesting periods of less than 12 months:

–Fixed pay allowance awards were granted to executive Directors

in accordance with the approved Directors’ remuneration policy,

which vest immediately and are subject to a retention period.

These awards are not subject to clawback on the basis that they

form part of the executive Directors’ fixed pay. The awards were

granted under the HSBC Share Plan 2011.

–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	349

Share capital and other related

governance disclosures

Share buy-backs

On 1 November 2023, HSBC Holdings commenced a further share

buy-back of its ordinary shares of up to a maximum consideration of

$3.0bn. The share buy-back continued in 2024 and was concluded on

16 February 2024, with 64,733,089 ordinary shares repurchased for

cancellation on UK trading venues and 79,414,800 ordinary shares

repurchased for cancellation on The Stock Exchange of Hong Kong

Limited (’HKEx’) from 1 January 2024 to 16 February 2024.

On 23 February 2024, 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 23 April 2024 with

127,570,463 ordinary shares repurchased for cancellation on UK

trading venues and 127,412,800 ordinary shares repurchased for

cancellation on HKEx.

On 8 May 2024, 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 26 July 2024 with 171,668,799

ordinary shares repurchased for cancellation on UK trading venues

and 171,252,800 ordinary shares repurchased for cancellation on

HKEx.

On 2 August 2024, 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 October 2024 with

172,311,192 ordinary shares repurchased for cancellation on UK

trading venues and 173,041,600 ordinary shares repurchased for

cancellation on HKEx.

On 31 October 2024, HSBC Holdings commenced a further share

buy-back of its ordinary shares of up to a maximum consideration of

$3.0bn. As at 31 December 2024, 132,349,029 ordinary shares had

been repurchased for cancellation on UK trading venues and

82,502,400 ordinary shares had been 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 2024, the total number of ordinary shares

repurchased during the year was 1,302,256,972, representing a

nominal value of $651,128,486 and an aggregate consideration paid

by HSBC of £4,477,248,660 on UK trading venues and

HK$41,961,808,443 on HKEx. The ordinary shares repurchased

represent 7.256% of the ordinary shares in issue as at 31 December

Of the repurchased ordinary shares, 20,433,459 were awaiting

cancellation as at 31 December 2024.

The table that follows outlines details of the ordinary shares

purchased and cancelled on a monthly basis during 2024.

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 2024	64,733,089	6.4300	5.8190	6.1356	397,174,665
Feb 2024	17,761,890	6.2050	5.9270	6.0468	107,403,375
Mar 2024	59,048,017	6.2810	5.7290	6.0295	356,031,979
Apr 2024	50,760,556	6.6960	6.1950	6.4603	327,930,581
May 2024	59,069,838	7.2440	6.8240	6.9678	411,587,427
Jun 2024	76,307,014	7.0080	6.7040	6.8620	523,621,847
Jul 2024	36,291,947	6.9330	6.6350	6.7829	246,165,955
Aug 2024	51,180,681	6.6810	6.1090	6.4796	331,631,735
Sep 2024	78,450,902	6.8340	6.4550	6.6528	521,919,215
Oct 2024	46,324,540	7.1490	6.5930	6.8097	315,457,983
Nov 2024	86,259,230	7.3510	6.8880	7.1500	616,752,033
Dec 2024	42,444,868	7.8500	7.3080	7.5762	321,571,865
Total	668,632,572				4,477,248,660
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 2024	57,819,600	63.8000	57.8500	61.0549	3,530,172,280
Feb 2024	33,790,800	62.4500	58.8500	60.8394	2,055,810,581
Mar 2024	63,110,400	61.9500	58.1000	60.1891	3,798,555,480
Apr 2024	52,106,800	64.9500	61.1000	63.0989	3,287,883,380
May 2024	53,104,800	70.6500	67.5000	68.7465	3,650,768,500
Jun 2024	65,043,200	69.7500	67.0500	68.2592	4,439,796,237
Jul 2024	53,104,800	69.2500	65.9000	67.3965	3,579,076,860
Aug 2024	64,395,200	68.9000	61.1500	65.5441	4,220,726,180
Sep 2024	64,664,000	70.9500	65.7500	68.4382	4,425,485,800
Oct 2024	47,667,200	72.3000	67.3500	69.1996	3,298,553,120
Nov 2024	58,186,800	72.5500	68.8500	71.1225	4,138,390,665
Dec 2024	20,630,800	75.9500	72.3500	74.4804	1,536,589,360
Total	633,624,400				41,961,808,443
350	HSBC Holdings plc Annual Report on Form 20-F
---	---

Report of the Directors | Corporate governance report

Dividends

Dividends for 2024

First, second and third interim dividends for 2024, each of $0.10 per

ordinary share, were paid on 21 June 2024, 27 September 2024 and

19 December 2024. A special dividend of $0.21 was paid on 21 June

For further details of the dividends approved in 2024, see Note

8 on the financial statements.

On 19 February 2025, the Directors approved a fourth interim

dividend for 2024 of $0.36 per ordinary share, making a total of $0.87

for the 2024 full-year when including the $0.21 special dividend. The

fourth interim dividend for 2024 will be payable on 25 April 2025 in

cash in US dollars, or in sterling or Hong Kong dollars at exchange

rates to be determined on 14 April 2025. The fourth interim dividend

for 2024 of $1.80 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 2024.

A quarterly dividend of £0.01 per non-cumulative preference share of

£0.01 each was paid on 15 March, 17 June, 16 September and

16 December 2024.

Dividends for 2025

The Group intends to pay quarterly dividends on its ordinary shares

during 2025.

A quarterly dividend of £0.01 per non-cumulative preference share of

£0.01 each is payable on 17 March, 16 June, 15 September and

15 December 2025 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 17 March 2025

to holders of record on 28 February 2025.

Distributable Reserves

As at 31 December 2024, the distributable reserves of HSBC

Holdings were $28.3bn, inclusive of $24.8bn in profits and other

reserves movements generated in 2024. As at the date of this report,

HSBC Holdings intends to increase its distributable reserves subject

to shareholder and court approval. Shareholder approval will be

sought at the 2025 AGM. The process will involve the conversion of

the amount standing to the credit of each of the share premium

account ($14.8bn) and capital redemption reserve ($1.8bn) as at

31 December 2024 into retained earnings, and will have no impact on

regulatory capital. Further information will be included in the Notice of

the 2025 AGM which will be circulated to shareholders on 21 March

The process is expected to complete by the end of July 2025.

Share capital

Issued share capital

The nominal value of HSBC Holdings’ issued share capital paid up at

31 December 2024 was $8,973,475,291 divided into 17,946,950,582

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 2024.

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.

Information 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 461.

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 2024 was $28.85m.

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.

Information on dividends approved for 2023 and 2024 may be found in

Note 8 on the financial statements.

Further 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 2024

In addition to the share buy-backs, the following events occurred

during the year in relation to the ordinary share capital of HSBC

Holdings:

Scrip dividends

There were no scrip dividends issued during the year.

Treasury shares

HSBC Holdings does not hold any ordinary shares in treasury.

HSBC Holdings plc Annual Report on Form 20-F	351
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	141,770	70,885	5.957	6.707

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 358 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	10,141,660	5,070,830	5.799	7.177

Authorities to allot and to purchase

shares and pre-emption rights

At the AGM in 2024, shareholders renewed the general authority for

the Directors to allot new shares up to 12,700,701,506 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 1,905,105,226 ordinary shares.

The Directors exercised their market/off-market purchase authority

from both the 2023 AGM and the 2024 AGM and repurchased

1,302,256,972 ordinary shares during the year.

In addition, shareholders gave authority for the Directors to grant

rights to subscribe for, or to convert any security into, no more than

3,810,210,452 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 2024’, the Directors did not allot any shares during 2024.

Debt securities

In 2024, HSBC Holdings issued the equivalent of $24.0bn of debt

securities in the public capital markets in a range of currencies and

maturities, of which $16.1bn 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 438 and 445.

Treasury shares

HSBC Holdings does not hold any ordinary shares in treasury.

Notifiable interests in share capital

During 2024, 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 2024 and

14 February 2025. 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 2024, 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 24 December 2024 that on

19 December 2024 it had the following interests in HSBC Holdings

ordinary shares: a long position of 1,615,527,141 shares and a

short position of 4,231,678 shares, representing 8.99% and

0.02%, respectively, of the ordinary shares in issue at that date.

–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 that date.

Between 31 December 2024 and 14 February 2025, the following

notification was received:

–BlackRock, Inc. gave notice on 31 January 2025 that on 28 January

2025 it had the following interests in HSBC Holdings ordinary

shares: a long position of 1,601,449,305 shares and a short

position of 5,961,010 shares, representing 8.97% and 0.03%,

respectively, of the ordinary shares in issue at that date.

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

2024 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

2024.

Directors’ interests

Pursuant to the requirements of the UK Listing Rules and according to the

section 352 of the Securities and Futures Ordinance of Hong Kong, the

Directors of HSBC Holdings at 31 December 2024 had certain interests,

all beneficial unless otherwise stated, in the shares or debentures of

HSBC Holdings and its associated corporations.

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.

352	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

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 2024 or date of cessation, if earlier
	At 1 Jan 2024, 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	753,467	966,017				966,017
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
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
David Nish (retired on 3 May 2024)	50,000		50,000			50,000
Sir Noel Quinn2 (retired on 2 September 2024)	1,721,465	2,046,949				2,046,949
Swee Lian Teo	15,200	15,200				15,200
Sir Mark Tucker	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 309. At 31 December 2024, 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: Sir Noel Quinn – 5,736,459; and Georges Elhedery – 2,616,836, representing approximately 0.03% and 0.015% 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 and other

disclosures

The disclosures required by UKLR 6.6.1, and other regulations, are set

out on the following pages:

Content	Page references
Long-term incentives	329
Dividends and Dividend waivers	350
Share buy-back	349
Emissions	40
Energy Efficiency	40, 43-44
Principal activities of HSBC	14, 29, 94-95, 427
Business review and future developments	14-38, 40, 145, 167, 452
Risk Review	36-38, 145-265

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’ 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 2024 AGM were elected and re-elected by

shareholders.

Joint Company Secretary

Aileen Taylor is the Group Company Secretary and Group Chief

People & Governance Officer.

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. She is a Fellow of the Chartered

Governance Institute UK and Ireland. Hannah has over 20 years’

governance and regulatory experience across multiple sectors including

financial services, asset management, energy, leisure and retail.

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 Group 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, the Group Nomination & Corporate Governance Committee

has reviewed and confirmed that all non-executive Directors 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.

HSBC Holdings plc Annual Report on Form 20-F	353

In line with the requirements of the Hong Kong Corporate

Governance Code, the Group 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;

–facilitating the option of having brokers and external industry

experts in attendance at Board meetings during 2024, 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

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, with consideration given to their total time

commitments, potential conflicts of interest, 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 2024, 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 2024, 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. For examples of such engagement, see

’Directors’ engagements with key stakeholders in 2024’ on page 24

and the Group Remuneration Committee Chair’s letter on page 309.

During 2024, 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 by the Board, and in

2024 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 and Chief Governance Officer. 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 and Chief Governance Officer at 8 Canada

Square, London E14 5HQ.

Annual General Meeting

The AGM in 2025 is planned to be held in London, UK at 10:00am on

Friday, 2 May 2025. Information on how to vote and participate, both

in advance and on the day, can be found in the Notice of the 2025

AGM, which will be sent to shareholders on 21 March 2025 and be

354	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

available on www.hsbc.com/agm. A live webcast will be available on

www.hsbc.com/agm. A recording of the proceedings will be available

on www.hsbc.com/agm shortly after the conclusion of the AGM.

Shareholders should monitor our website and announcements for any

changes to these arrangements. Shareholders may send enquiries to

the Board in writing via Company Secretary, HSBC Holdings plc,

8 Canada Square, London E14 5HQ or by sending an email to

shareholderquestions@hsbc.com.

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

shareholderquestions@hsbc.com.

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 $124,450 during 2024 (2023: $110,004).

Charitable contributions

For details of charitable contributions, see page 70.

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 these procedures on an annual basis.

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 19 February 2025, the date of publication of the Annual

Report and Accounts 2024.

The Board, the GRC and the GAC monitored the effectiveness of the

Group’s system of risk management and internal control during the

year through regular updates on the operation of the Group's internal

controls, supplemented by reviews of these controls by the second

line of defence and internal audit, and the external auditors. In

particular, this focused on the Group’s regulatory remediation and

change programmes, and involved working closely with management

to better prioritise and understand where there are key

interdependencies. These reviews enabled to the Board to perform an

annual review of effectiveness, identifying no material weaknesses as

at the year-end. To support the work of the Board, the GRC and the

GAC in discharging their responsibilities in this regard, assurance was

also provided by executive management confirming that a risk

assessment had been undertaken and controls were in place to

mitigate the risks arising from the Group’s key activities. Necessary

actions will be taken to remedy any failings or weaknesses identified

from these activities on an ongoing basis.

In 2025, continued focus will be placed on the quality and timeliness

of data used to inform management decisions and support oversight

of emerging risks and potential risks arising from new products and

offerings. In preparation for the Board’s forthcoming responsibility

under the 2024 UK Corporate Governance Code, the Board approved

changes to the scope of the GAC’s responsibilities in relation to

internal controls to extend these to cover all internal controls and,

once defined, all material controls including financial, operational,

reporting and compliance controls.

HSBC Holdings plc Annual Report on Form 20-F	355

The key risk management and internal control procedures include the

following:

The HSBC Book

In 2024, the HSBC Book replaced the Global Principles document and

is situated at the top of the HSBC document hierarchy. It underpins

the key principles, policies and procedures that are fundamental to

the Group’s risk management structure. It informs and connects our

purpose, ambition, strategy and values, guiding us to make

responsible decisions aligned to our risk culture and risk management

approach, to do the right thing, and to treat our customers and our

colleagues fairly at all times.

Risk management framework

The risk management framework supports our HSBC Book. It outlines

the key principles and practices that we employ in managing material

risks. It applies to all categories of risk and supports a consistent

approach in identifying, assessing, managing and reporting the risks

we accept and incur in our activities.

Delegation of authority within limits

set by the Board

Subject to certain matters reserved for the Board, the Group CEO has

been delegated authority limits and powers within which 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. 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 identification and monitoring

Systems and procedures are in place to identify, assess, control and

monitor the material risk types facing HSBC as set out in the risk

management framework. The Group‘s risk measurement and

reporting systems are designed to help ensure that material risks are

captured with all the attributes necessary to support well-founded

decisions, that those attributes are accurately assessed and that

information is delivered in a timely manner for those risks to be

successfully managed and mitigated.

Changes in market conditions/

practices

Processes are in place to identify new risks arising from changes in

market conditions/practices or customer behaviours, which could

expose the Group to heightened risk of loss or reputational damage.

The Group employs both 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.

We remain committed to investing in the reliability and resilience of

our IT systems and critical services, including those provided by third

parties, that support all parts of our business. We do so to help

protect our customers, affiliates and counterparties, and to help

ensure that we minimise any disruption to services that could result in

reputational and regulatory consequences. In our approach to defend

against these threats, we invest in business and technical controls to

help us detect, manage and recover from issues, including data loss,

in a timely manner.

We continue our focus on the quality and timeliness of the data used

to inform management decisions, through measures such as early

warning indicators, prudent active risk management of our risk

appetite, and ensuring regular communication with our Board and

other key stakeholders.

Responsibility for risk management

All employees are responsible for identifying and managing risk within

the scope of their role as part of the three lines of defence model.

This is an activity-based model to delineate management

accountabilities and responsibilities for risk management and the

control environment. The second line of defence sets the policy and

guidelines for managing specific risk areas, provides advice and

guidance in relation to the risk, and challenges the first line of defence

(the risk owners) on effective risk management.

The Board delegated 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 detailed analysis of

risk appetite describing the types and quantum of risk that the Group

is prepared to take in executing its strategy, 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 2024. 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 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 144.

356	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

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 and Controls

Committee

Chaired by the Group CFO, the Group Disclosure and Controls

Committee supports the discharge of the Group’s obligations under

relevant legislation and regulation including the UK and Hong Kong

listing rules, the UK Market Abuse Regulation and US Securities and

Exchange Commission rules. In so doing, the Group Disclosure and

Controls Committee is empowered to determine whether a new

event or circumstance should be disclosed, including the form and

timing of such disclosure, and review certain material disclosures

made or to be made by the Group. The membership of the Group

Disclosure and Controls Committee consists of senior management,

including the Group CFO, Group Chief Risk and Compliance Officer;

Group Chief Legal Officer; and Group Chief People and Governance

Officer. 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 2024.

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 2024, 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.

Other information included in the

Annual Report and Accounts 2024

We include other non-statutory information in the Annual Report and

Accounts to enable a broader perspective of our performance for the

period, including ESG and regulatory capital and liquidity information.

On page 41 we highlight the challenges we face in our sustainability

and climate reporting alongside the key changes we have made to our

2024 climate disclosures. Strengthening our global regulatory

reporting processes with an aim to enhance data, consistency, and

controls remains a key priority for the Group and regulatory

authorities. See page 231 for further details. The GAC provides

oversight to our reporting across these areas, including the disclosure

risks in relation to sustainability and climate reporting, and monitoring

of the programme of work to address the quality and reliability of

regulatory reporting. See page 295 for further details.

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 148 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 14 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 144 of this annual report on Form 20-F) and top and

emerging risks (see page 148 of this annual report on Form 20-F);

–the impact on the Group due to the Russia-Ukraine war and

conflict in the Middle East; uncertainty around Hong Kong and

mainland China’s commercial real estate sector, potential trade

restrictions and tariff increases and strained economic and

diplomatic relations between China and the US, the UK, the EU

and other countries;

–reports and updates regarding regulatory and internal stress

testing. In 2024 the Bank of England completed their Desk Based

Stress Test exercise to assess the resilience of the UK banking

system. The stress scenario explored the potential impacts of a

number of adverse macroeconomic conditions, including global

aggregate demand and supply shock, global commodity prices and

supply-chain disruptions from increased geopolitical tensions,

uncertain inflation across advanced economies and rapidly

changing interest rates. Additionally, HSBC completed the 2024

Group-wide internal stress test, which explored the impact of two

contrasting scenarios depicting severe macroeconomic conditions

over a five-year period, reflecting banking sector strains and global

economic stress. The results of both these exercises indicated the

Group is sufficiently capitalised to withstand severe but plausible

adverse stress;

–the results of our 2024 internal climate scenario analysis exercise

further demonstrate the Group is sufficiently capitalised to

withstand severe stress. Further details of the insights from the

2024 climate scenario analysis are explained from page 253 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 2024, HSBC had a total workforce equivalent to

211,000 full-time employees compared with 221,000 at the end of

Our main centres of employment were India with

approximately 44,000 employees, the UK with 35,000, mainland

China with 33,000, Hong Kong with 27,000, 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 to provide an open culture, where our

colleagues feel connected and supported to speak up, and where our

leaders encourage and use feedback. Where we make organisational

changes, we support our colleagues, in particular where there are job

impacts.

HSBC Holdings plc Annual Report on Form 20-F	357

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 62 alongside our

ambitions and progress.

For 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

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 to complete

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 programs centred on Enterprise Risk

Leadership, which are designed to equip them with the skills

necessary to navigate an evolving risk environment.

Effective leadership is essential for empowering our colleagues to

develop critical skills, fostering a robust talent pipeline, and supporting

our strategic ambitions. To facilitate this, we have introduced the

Career Academy, which enables our colleagues to explore their

aspirations, and continued to evolve our flagship Enterprise

Leadership Programs, including uGrow, Accelerating Women’s

Leadership, and Accelerating into Leadership.

We have also expanded our Managing Director leadership offering,

supported by a Leadership 360 survey, to ensure comprehensive

development and alignment with our strategic goals.

Health and safety

We are committed to providing a safe and healthy working

environment for everyone. We have adopted global policies,

mandatory procedures, and incident and information reporting

systems across the organisation that reflect our core values and are

aligned to international standards. Our global health and safety

performance is subject to ongoing monitoring and assurance to

ensure we are compliant with relevant laws and regulations.

Our chief operating officers have overall responsibility for engendering

a positive health and safety culture and ensuring that global policies,

procedures and systems are put into practice locally. They also have

responsibility for ensuring all local legal requirements are met.

We delivered a range of activities in 2024 to help us understand and

manage our health and safety risks:

–We achieved the WELL Health and Safety Rating from the

International WELL Building Institute at 54 of our global offices as

a demonstration of our commitment to the provision of safe and

healthy workplaces for our employees, customers and

stakeholders.

–We reinforced our advice and risk assessment and control

methodology on working from home for employees adopting a

hybrid work style, providing more awareness and best practices on

good ergonomics and well-being.

–We delivered health and safety training and awareness to 228,000

of our employees and contractors globally, ensuring roles and

responsibilities were clear and understood.

–We completed the annual safety inspection on all of our buildings

globally, to ensure we were meeting our standards and

continuously improving our safety performance.

–We maintained measures in our workplaces globally to minimise

the risks from the spread of respiratory disease, including through

the provision of hand sanitiser, improved ventilation and guidance

on good hygiene practices.

–We extended the reach of our Workplace Adjustments programme

to include all colleagues in India, providing tools and

technologies which contribute to making work-life manageable for

employees with disability (including physical or sensory), long

term / mental health condition or a neurodiversity, and will

continue the expansion of this programme to further Regions.

–We continued to hold health & safety themed awareness campaigns

and facilitate CPR and first aid training for our colleagues.

–We continued to provide our guidance and training programme for

our construction partners, focusing on our key markets globally to

reduce the likelihood of accidents occurring by helping them

understand and deliver industry-leading health and safety

performance. More than 7,200 construction workers received

safety passport training across 13 countries.

–In 2024, we achieved full implementation of the Eat Well Live Well

programme across 100% of catered HSBC sites, driving global

healthy food sales to 32% with over 10% of all dishes sold globally

being plant-based. These results were supported by monthly Eat

Well Live Well events, and virtual teaching kitchens accessible to

all employees.

358	HSBC Holdings plc Annual Report on Form 20-F

Report of the Directors | Corporate governance report

–Protection of our colleagues and operations is of critical importance,

and we have effective controls in place to protect our people from

natural disasters (such as storms and earthquakes). In 2024, there

were 40 named storms that passed over 3,127 of our buildings,

resulting in no injuries and only a minor impact on 3 of our buildings.

Employee health and safety
	2024	2023	2022
Rate of workplace fatalities per 100,000 employees	—	—	—
Number of major injuries to employees1	14	12	7
All injury rate per 100,000 employees	91	110	70
Lost days due to work injury	335	594	485

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.

For further details of the Group’s approach to remuneration, see page 332.

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

Company Secretary, 8 Canada Square, London E14 5HQ.

Particulars of options held by Directors of HSBC Holdings are set out on

page 341.

Note 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	359

Statement of compliance

The statement of corporate governance practices set out on pages

266 to 359 and the information referred to therein constitutes the

’Corporate governance report’ and ’Report of the Directors’ of HSBC

Holdings for 2024. 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 referred to 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<br><br>Governance Code (set out in<br><br>Appendix C1 to the Rules<br><br>Governing the Listing of<br><br>Securities on the Stock<br><br>Exchange of Hong Kong Limited<br><br>(’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-<br><br>and-responsible-business/<br><br>governance/internal-control

HSBC is subject to corporate governance requirements in both the UK

and Hong Kong. During 2024, HSBC complied with the provisions and

requirements of both the UK and Hong Kong Corporate Governance

Codes.

Under the Hong Kong Corporate Governance Code, the audit

committee should be responsible for the oversight of all risk

management and internal control systems. During 2024, the Board

approved changes to the scope of the Group Audit Committee’s

responsibilities in relation to internal controls to extend these to cover

oversight of the effectiveness of all internal controls. HSBC’s Group

Risk Committee retains oversight of internal controls relating to risk

management and risk management systems and provides input to the

Group Audit Committee on these.

HSBC Holdings has codified obligations for transactions in Group

securities in accordance with the requirements of the UK Market

Abuse Regulation and the rules governing the listing of securities on

HKEx. The Group has been granted certain waivers by HKEx from

strict compliance with 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 2024.

On behalf of the Board

Sir Mark E Tucker

Group Chairman

HSBC Holdings plc

Registered number 617987

19 February 2025

360	HSBC Holdings plc Annual Report on Form 20-F

Dividers image-05.jpg

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.

361	Independent auditors’ report to the members of<br><br>HSBC Holdings plc
363	Financial statements
363	– Consolidated income statement
364	– Consolidated statement of comprehensive income
365	– Consolidated balance sheet
366	– Consolidated statement of changes in equity
369	– Consolidated statement of cash flows
371	– HSBC Holdings financial statements
375	Notes on the financial statements

Hong Kong, 2019. Colleague Collaboration.

HSBC Holdings plc Annual Report on Form 20-F	361

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 sheets of HSBC Holdings plc and its subsidiaries (the “Group”) as of 31 December

2024 and 2023, and the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements

of changes in equity and consolidated statements of cash flows for each of the three years in the period ended 31 December 2024, 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 2024, 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 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended 31

December 2024 in conformity with (i) International Financial Reporting Standards as issued by the International Accounting Standards Board, (ii)

UK-adopted International Accounting Standard and (iii) International Financial Reporting Standards adopted pursuant to Regulation (EC) No

1606/2002 as it applies to the European Union. Also in our opinion, the Group maintained, in all material respects, effective internal control over

financial reporting as of 31 December 2024, 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 management’s assessment of

internal controls over financial reporting on page 355 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

authorisations of management and directors of the company; and

(iii)provide reasonable assurance regarding prevention or timely detection of unauthorised 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 judgements. 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 (i) 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 $10.2bn at 31 December 2024. The assessment of credit risk and the estimation of ECL are

362	HSBC Holdings plc Annual Report on Form 20-F

Report of Independent Registered Public Accounting Firm

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, apply these forecasts to credit risk models to estimate future credit losses,

and probability weight the results to determine an ECL estimate. The ECL for wholesale stage 3 exposures is determined on an individual basis

using discounted cash flow methodologies. At the end of 2024, risks to the economic outlook included a number of significant geopolitical

issues. In addition, the mainland China commercial real estate (‘CRE’) portfolio continues to face challenges as market fundamentals remain

weak and refinancing risks continue.

The principal considerations for our determination that performing procedures relating to the measurement of ECL is a critical audit matter are

the significant judgements by management in developing the assumptions for: (i) multiple economic scenarios and the weighting of those

scenarios; and (ii) the discounted cash flow projections for certain material credit impaired exposures in relation to the mainland China CRE

portfolio. This led to a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence

obtained. The audit effort involved the use of professionals with specialised skill 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; (iii)

evaluating the reasonableness of discounted cash flow projections for certain material credit impaired exposures in relation to the mainland

China CRE portfolio; (iv) testing the completeness and accuracy of certain 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, assessing the reasonableness of the selection and

weighting of economic scenarios and testing the reasonableness of discounted cash flow projections for certain material credit impaired

exposures in relation to the mainland China CRE portfolio.

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 $22.4bn

at 31 December 2024. As disclosed by management, the investment in BoCom is 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. The recoverable amount is determined by a value in use (‘VIU’) calculation. As disclosed by management, there is significant

judgement in determining the VIU, and in particular estimating the present value of cash flows expected to arise from continuing to hold the

investment, based on a number of assumptions. Management has concluded there is no indication of further or reversal of impairment since

31 December 2023. The VIU calculation uses discounted cash flow projections based on management’s best estimates of future earnings

available to ordinary shareholders. The significant assumptions used were discount rate, operating income growth rate, cost-income ratio, ECL

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 requirements for 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 the investment in

BoCom is a critical audit matter are: (i) the significant judgement by management when determining significant assumptions for the discount

rate, operating income growth rate, cost-income ratio, ECL 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 requirements for capital adequacy ratio and tier 1 capital

adequacy ratio, 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

20 February 2025

We have served as the Group's auditor since 2015.

HSBC Holdings plc Annual Report on Form 20-F	363

Financial statements

Consolidated income statement
for the year ended 31 December 2024
		2024	2023	2022
	Notes*	$m	$m	$m
Net interest income		32,733	35,796	30,377
– interest income1,2		108,631	100,868	52,826
– interest expense3		(75,898)	(65,072)	(22,449)
Net fee income	2	12,301	11,845	11,770
– fee income		16,266	15,616	15,124
– fee expense		(3,965)	(3,771)	(3,354)
Net income from financial instruments held for trading or managed on a fair value basis4	3	21,116	16,661	10,278
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,<br><br>measured at fair value through profit or loss	3	5,901	7,887	(13,831)
Insurance finance (expense)/income	4	(5,978)	(7,809)	13,799
Insurance service result	4	1,310	1,078	809
– insurance revenue		2,752	2,259	1,977
– insurance service expense		(1,442)	(1,181)	(1,168)
Gain on acquisition5		—	1,591	—
Gains/(losses) recognised on sale of business operations6		(1,752)	(61)	(2,678)
Other operating income/(expense)7		223	(930)	96
Net operating income before change in expected credit losses and other credit impairment charges8		65,854	66,058	50,620
Change in expected credit losses and other credit impairment charges		(3,414)	(3,447)	(3,584)
Net operating income		62,440	62,611	47,036
Employee compensation and benefits	5	(18,465)	(18,220)	(18,003)
General and administrative expenses		(10,498)	(10,383)	(10,848)
Depreciation and impairment of property, plant and equipment and right-of-use assets9		(1,845)	(1,640)	(2,149)
Amortisation and impairment of intangible assets		(2,235)	(1,827)	(1,701)
Total operating expenses		(33,043)	(32,070)	(32,701)
Operating profit		29,397	30,541	14,335
Share of profit in associates and joint ventures	18	2,912	2,807	2,723
Impairment of interest in associate	18	—	(3,000)	—
Profit before tax		32,309	30,348	17,058
Tax expense	7	(7,310)	(5,789)	(809)
Profit for the year		24,999	24,559	16,249
Attributable to:
– ordinary shareholders of the parent company		22,917	22,432	14,346
– preference shareholders of the parent company		—	—	—
– other equity holders		1,062	1,101	1,213
– non-controlling interests		1,020	1,026	690
Profit for the year		24,999	24,559	16,249
		$	$	$
Basic earnings per ordinary share	9	1.25	1.15	0.72
Diluted earnings per ordinary share	9	1.24	1.14	0.72

For Notes on the financial statements, see page 375.

1Interest income includes $93,388m (2023: $88,657m; 2022: $45,994m) of interest recognised on financial assets measured at amortised cost and $15,273m

(2023: $12,134m; 2022: $6,293m) of interest recognised on financial assets measured at fair value through other comprehensive income. It also includes a net

$237m 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 $72,594m (2023: $62,095m; 2022: $20,798m) of interest on financial instruments, excluding interest on debt instruments issued by

HSBC for funding purposes that are designated under the fair value option to reduce an accounting mismatch and on derivatives managed in conjunction with

those debt instruments included in interest expense.

4Includes a $255m gain (2023: $315m loss) on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada and a $114m

mark-to-market gain (2023:nil) on interest rate hedging of the portfolio of retained loans post sale of our retail banking business in France.

5Gain recognised in respect of the acquisition of SVB UK.

6This line item has been updated to include amounts from Other operating income relating to all sales of business operations; in the 2023 Annual Report and Accounts,

this line item only reflected the disposal of our France retail banking business. The amount in 2024 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 $255m 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. The amount in 2022 included losses from classifying businesses as held for

sale as part of a broader restructuring of our European business.

7Other operating income/(expense) includes a loss on net monetary positions of $1,187m (2023: $1,667m; 2022: $678m) as a result of applying IAS 29 ‘Financial

Reporting in Hyperinflationary Economies’.

8Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.

9Includes depreciation of the right-of-use assets of $711m (2023: $663m; 2022: $717m).

364	HSBC Holdings plc Annual Report on Form 20-F

Financial statements

Consolidated statement of comprehensive income
for the year ended 31 December 2024
	2024	2023	2022
	$m	$m	$m
Profit for the year	24,999	24,559	16,249
Other comprehensive income/(expense)
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
Debt instruments at fair value through other comprehensive income	163	2,599	(7,232)
– fair value gains/(losses)	41	2,381	(9,618)
– fair value losses/(gains) transferred to the income statement on disposal	69	905	(18)
– expected credit (recoveries)/losses recognised in the income statement	(6)	59	56
– disposal of subsidiary	85	—	—
– income taxes	(26)	(746)	2,348
Cash flow hedges	(52)	2,953	(3,655)
– fair value gains/(losses)	(282)	2,534	(4,207)
– fair value (gains)/losses reclassified to the income statement	(135)	1,463	(758)
– disposal of subsidiary	262	—	—
– income taxes	103	(1,044)	1,310
Share of other comprehensive income/(expense) of associates and joint ventures	462	47	(367)
– share for the year	462	47	(367)
Net finance income/(expenses) from insurance contracts	(142)	(364)	1,775
– before income taxes	(191)	(491)	2,393
– income taxes	49	127	(618)
Exchange differences	833	(204)	(9,918)
– foreign exchange losses reclassified to the income statement on disposal of a foreign operation	5,816	—	—
– other exchange differences	(4,983)	(204)	(9,918)
Items that will not be reclassified subsequently to profit or loss:
Fair value gains on property revaluation	5	1	280
Remeasurement of defined benefit asset/(liability)	(228)	(314)	(1,031)
– before income taxes	(342)	(413)	(1,723)
– income taxes	114	99	692
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in<br><br>own credit risk	(439)	(1,219)	1,922
– before income taxes	(579)	(1,617)	2,573
– income taxes	140	398	(651)
Equity instruments designated at fair value through other comprehensive income	99	(120)	107
– fair value gains/(losses)	141	(120)	107
– income taxes	(42)	—	—
Effects of hyperinflation	1,239	1,604	877
Other comprehensive income/(expense) for the year, net of tax	1,940	4,983	(17,242)
Total comprehensive income/(expense) for the year	26,939	29,542	(993)
Attributable to:
– ordinary shareholders of the parent company	24,833	27,397	(2,810)
– other equity holders	1,062	1,101	1,213
– non-controlling interests	1,044	1,044	604
Total comprehensive income/(expense) for the year	26,939	29,542	(993)
HSBC Holdings plc Annual Report on Form 20-F	365
---	---
Consolidated balance sheet
---	---	---	---
at 31 December 2024
		At
		31 Dec 2024	31 Dec 2023
	Notes*	$m	$m
Assets
Cash and balances at central banks		267,674	285,868
Hong Kong Government certificates of indebtedness		42,293	42,024
Trading assets	11	314,842	289,159
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	14	115,769	110,643
Derivatives	15	268,637	229,714
Loans and advances to banks		102,039	112,902
Loans and advances to customers		930,658	938,535
Reverse repurchase agreements – non-trading		252,549	252,217
Financial investments	16	493,166	442,763
Assets held for sale	23	27,234	114,134
Prepayments, accrued income and other assets1	22	152,740	171,597
Current tax assets		1,313	1,536
Interests in associates and joint ventures	18	28,909	27,344
Goodwill and intangible assets	21	12,384	12,487
Deferred tax assets	7	6,841	7,754
Total assets		3,017,048	3,038,677
Liabilities
Hong Kong currency notes in circulation		42,293	42,024
Deposits by banks		73,997	73,163
Customer accounts		1,654,955	1,611,647
Repurchase agreements – non-trading		180,880	172,100
Trading liabilities	24	65,982	73,150
Financial liabilities designated at fair value	25	138,727	141,426
Derivatives	15	264,448	234,772
Debt securities in issue	26	105,785	93,917
Liabilities of disposal groups held for sale	23	29,011	108,406
Accruals, deferred income and other liabilities1	27	130,340	143,901
Current tax liabilities		1,729	2,777
Insurance contract liabilities	4	107,629	120,851
Provisions	28	1,724	1,741
Deferred tax liabilities	7	1,317	1,238
Subordinated liabilities	29	25,958	24,954
Total liabilities		2,824,775	2,846,067
Equity
Called up share capital	32	8,973	9,631
Share premium account	32	14,810	14,738
Other equity instruments		19,070	17,719
Other reserves		(10,282)	(8,907)
Retained earnings		152,402	152,148
Total shareholders’ equity		184,973	185,329
Non-controlling interests	19	7,300	7,281
Total equity		192,273	192,610
Total liabilities and equity		3,017,048	3,038,677

*For Notes on the financial statements, see page 375.

1In 2023 ‘Items in the course of collection from other banks’ ($6.3bn) were presented on the face of the balance sheet but are now reported within

‘Prepayments, accrued income and other assets’ in the Annual Report and Accounts 2024. Similarly, ‘Items in the course of transmission to other

banks’ ($7.3bn) are now presented within ‘Accruals, deferred income and other liabilities’.

The accompanying notes on pages 375 to 460 and the audited sections in the Risk review on pages 143 to 265 and ‘Directors’ remuneration

report’ on pages 309 to 348 form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 19 February 2025 and signed on its behalf by:

Sir Mark E Tucker	Pam Kaur
Group Chairman	Group Chief Financial Officer
366	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial statements

Consolidated statement of changes in equity
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<br><br>other<br><br>reserves<br><br>1,2	Insurance<br><br>finance<br><br>reserve3	Retained<br><br>earnings<br><br>1,4	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 of a foreign<br><br>operation5	—	—	—	—	5,816	—	—	—	5,816	—	5,816
– other reserves reclassified to<br><br>income statement on<br><br>disposal of a foreign<br><br>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)	—	—	—
Capital securities issued6	—	3,601	—	—	—	—	—	—	3,601	—	3,601
Dividends to shareholders	—	—	—	—	—	—	—	(16,410)	(16,410)	(690)	(17,100)
Redemption of securities7	—	(2,250)	—	—	—	—	—	—	(2,250)	—	(2,250)
Transfers8	—	—	—	—	—	(2,945)	—	2,945	—	—	—
Cost of share-based payment<br><br>arrangements	—	—	—	—	—	—	—	529	529	—	529
Share buy-back9	—	—	—	—	—	—	—	(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	367
---	---
Consolidated statement of changes in equity (continued)
---	---	---	---	---	---	---	---	---	---	---	---
for the year ended 31 December 2023
			Other reserves
	Called up<br><br>share<br><br>capital and<br><br>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<br><br>other<br><br>reserves<br><br>1,2	Insurance<br><br>finance<br><br>reserve3	Retained<br><br>earnings<br><br>1,4	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)	—	—	—
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
368	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial statements

Consolidated statement of changes in equity (continued)
for the year ended 31 December 2022
			Other reserves
	Called up<br><br>share<br><br>capital and<br><br>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<br><br>other<br><br>reserves<br><br>1,2	Insurance<br><br>finance<br><br>reserve3	Retained<br><br>earnings<br><br>1,4	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 2022	24,918	22,414	49	(197)	(22,769)	30,060	(696)	135,236	189,015	7,303	196,318
Profit for the year	—	—	—	—	—	—	—	15,559	15,559	690	16,249
Other comprehensive income<br><br>(net of tax)	—	—	(7,089)	(3,613)	(9,806)	174	1,775	1,403	(17,156)	(86)	(17,242)
– debt instruments at fair value<br><br>through other<br><br>comprehensive income	—	—	(7,181)	—	—	—	—	—	(7,181)	(51)	(7,232)
– equity instruments<br><br>designated at fair value<br><br>through other<br><br>comprehensive income	—	—	92	—	—	—	—	—	92	15	107
– cash flow hedges	—	—	—	(3,613)	—	—	—	—	(3,613)	(42)	(3,655)
– 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	—	—	—	—	—	—	—	1,922	1,922	—	1,922
– property revaluation	—	—	—	—	—	174	—	—	174	106	280
– remeasurement of defined<br><br>benefit asset/liability	—	—	—	—	—	—	—	(1,029)	(1,029)	(2)	(1,031)
– share of other<br><br>comprehensive income of<br><br>associates and joint ventures	—	—	—	—	—	—	—	(367)	(367)	—	(367)
– effects of hyperinflation	—	—	—	—	—	—	—	877	877	—	877
– insurance finance income/<br><br>(expense) recognised in<br><br>other comprehensive income	—	—	—	—	—	—	1,775	—	1,775	—	1,775
– exchange differences	—	—	—	—	(9,806)	—	—	—	(9,806)	(112)	(9,918)
Total comprehensive income<br><br>for the year	—	—	(7,089)	(3,613)	(9,806)	174	1,775	16,962	(1,597)	604	(993)
Shares issued under employee<br><br>remuneration and share plans	67	—	—	—	—	—	—	(67)	—	—	—
Dividends to shareholders	—	—	—	—	—	—	—	(6,544)	(6,544)	(426)	(6,970)
Redemption of securities	—	(2,668)	—	—	—	—	—	402	(2,266)	—	(2,266)
Transfers8	—	—	—	—	—	2,499	—	(2,499)	—	—	—
Cost of share-based payment<br><br>arrangements	—	—	—	—	—	—	—	400	400	—	400
Share buy-back	—	—	—	—	—	—	—	(1,000)	(1,000)	—	(1,000)
Cancellation of shares	(174)	—	—	—	—	174	—	—	—	—	—
Other movements	—	—	2	2	—	302	—	(481)	(175)	(117)	(292)
At 31 Dec 2022	24,811	19,746	(7,038)	(3,808)	(32,575)	33,209	1,079	142,409	177,833	7,364	185,197

1Cumulative goodwill amounting to $5,138m was charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including $3,469m

charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of $1,669m was charged against retained earnings.

2Statutory share premium relief under section 131 of the Companies Act 1985 was taken in respect of the acquisition of HSBC Bank plc in 1992,

HSBC Continental Europe in 2000 and HSBC Finance Corporation in 2003, and the shares issued were recorded at their nominal value only. In HSBC’s

consolidated financial statements, the fair value differences of $8,290m in respect of HSBC Continental Europe and $12,768m in respect of HSBC Finance

Corporation were recognised in the merger reserve. The merger reserve created on the acquisition of HSBC Finance Corporation subsequently became

attached to HSBC Overseas Holdings (UK) Limited, following a number of intra-Group reorganisations, and has since been transferred to retained earnings as

part of the impairment recognised in respect of HSBC Overseas Holding (UK) Limited. During 2009, pursuant to section 131 of the Companies Act 1985,

statutory share premium relief was taken in respect of the rights issue and $15,796m was recognised in the merger reserve.

3The 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’).

4At 31 December 2024, retained earnings included 28,744,609 own shares held. These include own shares held within HSBC’s insurance business’s retirement

funds for the benefit of policyholders or beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share

schemes or bonus plans, and the market-making activities in Markets and Securities Services.

5 At 31 December 2024, accumulated foreign currency translation reserve losses of $5,816m were recycled to the income statement, including $5,166m upon

completion of the sale of our business in Argentina and $564m upon completion of the sale of our banking business in Canada.

6HSBC Holdings issued SGD1,500m 5.250% contingent convertible securities in June 2024, and a further $1,350m 6.875% and $1,150m 6.950% contingent

convertible securities in September 2024. All instruments were recorded net of issuance costs.

7In September 2024, HSBC Holdings redeemed its $2,250m 6.375% contingent convertible securities.

8At 31 December 2024, an impairment of $11,442m (2023: $5,512m) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer

of $2,945m (2023: $5,130m) from the remaining historical merger reserve to retained earnings, and a realisation of nil share-based payment reserve (2023:

$382m) within retained earnings. In 2022, a part-reversal of the impairment resulted in a transfer from retained earnings back to the merger reserve of $2,499m.

9HSBC Holdings announced the following share buy-backs during the year: a share buy-back of up to $2.0bn in February 2024, which was completed in April

2024; a share buy-back of up to $3.0bn in April 2024, which was completed in July 2024; a share buy-back of up to $3.0bn in July 2024, which was completed in

October 2024; and a share buy-back of up to $3.0bn in October 2024, which was completed in February 2025.

HSBC Holdings plc Annual Report on Form 20-F	369
Consolidated statement of cash flows
---	---	---	---
for the year ended 31 December 2024
	2024	2023	2022
	$m	$m	$m
Profit before tax	32,309	30,348	17,058
Adjustments for non-cash items:
Depreciation, amortisation and impairment	4,080	3,466	3,850
Net loss from investing activities	180	1,213	11
Share of profit in associates and joint ventures	(2,912)	(2,807)	(2,723)
Impairment of interest in associate	—	3,000	—
(Gain)/loss on acquisition/disposal of subsidiaries, businesses, associates and joint ventures	1,704	(1,775)	2,554
Change in expected credit losses gross of recoveries and other credit impairment charges	3,674	3,717	3,898
Provisions including pensions	299	266	638
Share-based payment expense	529	482	400
Other non-cash items included in profit before tax	(5,290)	(4,299)	(774)
Elimination of exchange differences1	26,734	(10,678)	48,718
Changes in operating assets and liabilities
Change in net trading securities and derivatives	(41,385)	(63,247)	20,166
Change in loans and advances to banks and customers	7,275	(14,145)	31,649
Change in reverse repurchase agreements – non-trading	(4,227)	(2,095)	(23,405)
Change in financial assets designated and otherwise mandatorily measured at fair value	(20,662)	(9,994)	14,164
Change in other assets2	7,685	(10,254)	(12,858)
Change in deposits by banks and customer accounts	44,237	45,021	(91,194)
Change in repurchase agreements – non-trading	8,700	43,366	4,344
Change in debt securities in issue	11,942	11,945	12,518
Change in financial liabilities designated at fair value	(2,248)	10,097	(13,654)
Change in other liabilities	(1,603)	8,742	6,021
Dividends received from associates	1,062	1,067	944
Contributions paid to defined benefit plans	(167)	(208)	(194)
Tax paid	(6,611)	(4,117)	(2,776)
Net cash from operating activities	65,305	39,111	19,355
Purchase of financial investments2	(523,454)	(563,561)	(511,097)
Proceeds from the sale and maturity of financial investments2	453,502	504,174	492,624
Net cash flows from the purchase and sale of property, plant and equipment	(1,344)	(1,145)	(1,284)
Net cash flows from disposal of loan portfolio and customer accounts	—	623	(3,530)
Net investment in intangible assets	(2,542)	(2,550)	(3,125)
Net cash inflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures3	9,891	1,239	—
Net cash outflow on acquisition/disposal of subsidiaries, businesses, associates and joint ventures4	(12,617)	(1,692)	(989)
Net cash from investing activities	(76,564)	(62,912)	(27,401)
Issue of ordinary share capital and other equity instruments	3,602	1,996	—
Cancellation of shares	(11,348)	(5,812)	(2,285)
Net purchases of own shares for market-making and investment purposes	(541)	(614)	(91)
Net cash flow from change in stake of subsidiaries	—	(19)	(197)
Redemption of preference shares and other equity instruments	(3,433)	(4,003)	(2,266)
Subordinated loan capital issued	4,361	5,237	7,300
Subordinated loan capital repaid5	(2,000)	(2,147)	(1,777)
Dividends paid to shareholders of the parent company and non-controlling interests	(17,100)	(12,196)	(6,970)
Net cash from financing activities	(26,459)	(17,558)	(6,286)
Net decrease in cash and cash equivalents	(37,718)	(41,359)	(14,332)
Cash and cash equivalents at 1 Jan	490,933	521,671	574,032
Exchange differences in respect of cash and cash equivalents	(18,275)	10,621	(38,029)
Cash and cash equivalents at 31 Dec6	434,940	490,933	521,671
370	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial statements

Consolidated statement of cash flows (continued)
for the year ended 31 December 2024
	2024	2023	2022
	$m	$m	$m
Cash and cash equivalents comprise:
– cash and balances at central banks	267,674	285,868	327,002
– loans and advances to banks of one month or less	69,803	76,620	72,295
– reverse repurchase agreements with banks of one month or less	58,290	64,341	68,682
– treasury bills, other bills and certificates of deposit less than three months8	27,307	33,303	26,727
– cash collateral, net settlement accounts and items in course of collection from/transmission to other banks	9,827	14,866	18,878
– cash and cash equivalents held for sale7	2,039	15,935	8,087
Cash and cash equivalents at 31 Dec6	434,940	490,933	521,671

Interest received was $110,106m (2023: $98,910m; 2022: $55,664m), interest paid was $81,680m (2023: $65,980m; 2022: $22,856m) and

dividends received (excluding dividends received from associates, which are presented separately above) were $2,812m (2023: $1,869m; 2022:

$1,638m).

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.

2Post adoption of IFRS 17 ‘Insurance Contracts’, certain assets have been reclassified from ‘Investing activities’ to ‘Operating activities’. The comparative data

for 2022 have not been re-presented.

3This includes $9.3bn from the sale of our banking business in Canada.

4This includes $10.6bn from the sale of our retail banking business in France and $1.8bn from the sale of our business in Argentina.

5Subordinated liabilities changes during the year are attributable to repayments of $(2.0)bn (2023: $(2.1)bn; 2022: $(1.8)bn) of securities. Non-cash changes

during the year included foreign exchange gains/losses of $1.6bn gain (2023: $0.6bn loss; 2022: $1.1bn gain) and fair value gains/losses of $1.0bn gain (2023:

$0.8bn loss; 2022: $3.1bn gain).

6At 31 December 2024, $50.4bn (2023: $61.8bn; 2022: $59.3bn) was not available for use by HSBC due to a range of restrictions, including currency exchange

and other restrictions.

7Includes $1.9bn (2023: $5.6bn, 2022: $6.5bn) of cash and balances at central banks and $0.1bn (2023: $10.5bn, 2022: $0.2bn) of loans and advances to banks of

one month or less. There is nil balance in 2024 for reverse repurchase agreements with banks of one month or less (2023: $0.2bn, 2022: $1.3bn) and cash

collateral, net settlement accounts and items in course of collection from/transmission to other banks (2023: $(0.4)bn, 2022: $(0.2)bn).

8 The 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 365.

HSBC Holdings plc Annual Report on Form 20-F	371
HSBC Holdings income statement
---	---	---	---	---
for the year ended 31 December 2024
		2024	2023	2022
	Notes*	$m	$m	$m
Net interest expense		(5,758)	(5,339)	(3,074)
– interest income		3,053	2,864	937
– interest expense		(8,811)	(8,203)	(4,011)
Net fee (expense)/income		(10)	2	(3)
Net income from financial instruments held for trading or managed on a fair value basis	3	2,899	1,063	2,129
Changes in fair value of designated debt and related derivatives1	3	(125)	(1,468)	2,144
Changes in fair value of other financial instruments mandatorily measured at fair value through<br><br>profit or loss	3	2,086	3,692	(2,409)
Gains less losses from financial investments		2	45	58
Dividend income from subsidiaries3		33,846	16,824	9,478
Other operating income		276	332	91
Total operating income		33,216	15,151	8,414
Employee compensation and benefits	5	(29)	(15)	(41)
General and administrative expenses		(1,148)	(1,327)	(1,586)
(Impairment) of subsidiaries/reversal of impairment3	19	(11,490)	(5,574)	2,493
Total operating expenses		(12,667)	(6,916)	866
Profit before tax		20,549	8,235	9,280
Tax credit2,3		499	977	3,077
Profit for the year		21,048	9,212	12,357

*For Notes on the financial statements, see page 375.

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

2The tax credit in 2022 includes $2.2bn arising from the recognition of a deferred tax asset from historical tax losses in HSBC Holdings. This was a result of

improved profit forecasts for the UK tax group, which accelerated the expected utilisation of these losses and reduced uncertainty regarding their recoverability.

3The 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 2024
	2024	2023	2022
	$m	$m	$m
Profit for the year	21,048	9,212	12,357
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	21	(124)	326
– before income taxes	32	(166)	435
– income taxes	(11)	42	(109)
Other comprehensive income/(expense) for the year, net of tax	21	(124)	326
Total comprehensive income for the year	21,069	9,088	12,683
372	HSBC Holdings plc Annual Report on Form 20-F
---	---

Financial statements

HSBC Holdings balance sheet
		31 Dec 2024	31 Dec 2023
	Notes*	$m	$m
Assets
Cash and balances with HSBC undertakings		2,548	7,029
Financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value		61,286	59,879
Derivatives	15	3,054	3,344
Loans and advances to HSBC undertakings		37,677	27,354
Trading Assets		709	—
Financial investments	16	10,328	19,558
Prepayments, accrued income and other assets		4,353	5,341
Current tax assets		305	924
Investments in subsidiaries	19	152,337	159,478
Intangible assets		162	180
Deferred tax assets		1,498	2,082
Total assets at 31 Dec		274,257	285,169
Liabilities and equity
Liabilities
Amounts owed to HSBC undertakings		231	168
Financial liabilities designated at fair value	25	41,582	43,638
Derivatives	15	5,340	6,090
Debt securities in issue	26	64,320	65,239
Accruals, deferred income and other liabilities		3,097	4,289
Subordinated liabilities	29	23,548	24,439
Total liabilities		138,118	143,863
Equity
Called up share capital	32	8,973	9,631
Share premium account	32	14,810	14,738
Other equity instruments	32	19,024	17,703
Merger and other reserves		33,664	35,946
Retained earnings		59,668	63,288
Total equity		136,139	141,306
Total liabilities and equity at 31 Dec		274,257	285,169

*For Notes on the financial statements, see page 375.

The accompanying notes on pages 375 to 460, the audited sections in the Risk review on pages 143 to 265 and ‘Directors’ remuneration

report’ on pages 309 to 348 form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 19 February 2025 and signed on its behalf by:

Sir Mark E Tucker	Pam Kaur
Group Chairman	Group Chief Financial Officer
HSBC Holdings plc Annual Report on Form 20-F	373
---	---
HSBC Holdings statement of changes in equity
---	---	---	---	---	---	---
for the year ended 31 December 2024
				Other<br><br>reserves
	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<br><br>and other<br><br>reserves	Total<br><br>shareholders’<br><br>equity
	$m	$m	$m	$m	$m	$m
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 under employee share plans	5	72	—	(181)	—	(104)
Capital securities issued3	—	—	3,571	—	—	3,571
Purchase and cancellation of shares4	(663)	—	—	(11,043)	663	(11,043)
Dividends to shareholders	—	—	—	(16,410)	—	(16,410)
Redemption of capital securities5	—	—	(2,250)	—	—	(2,250)
Transfers6	—	—	—	2,945	(2,945)	—
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 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)
Transfers6	—	—	—	5,130	(5,130)	—
At 31 Dec 2023	9,631	14,738	17,703	63,288	35,946	141,306
At 1 Jan 2022	10,316	14,602	22,414	65,116	37,882	150,330
Profit for the year	—	—	—	12,357	—	12,357
Other comprehensive income (net of tax)	—	—	—	326	—	326
– changes in fair value of financial liabilities designated at fair value due to<br><br>movement in own credit risk	—	—	—	326	—	326
Total comprehensive income for the year	—	—	—	12,683	—	12,683
Shares issued under employee share plans	5	62	—	(161)	—	(94)
Capital securities issued	—	—	—	—	—	—
Purchase and cancellation of shares	(174)	—	—	(1,001)	174	(1,001)
Dividends to shareholders	—	—	—	(6,544)	—	(6,544)
Redemption of capital securities	—	—	(2,668)	402	—	(2,266)
Transfers6	—	—	—	(2,499)	2,499	—
At 31 Dec 2022	10,147	14,664	19,746	67,996	40,555	153,108

Dividends per ordinary share at 31 December 2024 were $0.82 (2023: $0.53; 2022: $0.27).

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 2024, retained earnings included 29,739,384 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 SGD1,500m 5.250% contingent convertible securities in June 2024, and a further $1,350m 6.875% and $1,150m 6.950% contingent

convertible securities in September 2024. 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 2024, which was completed in April

2024; a share buy-back of up to $3.0bn in April 2024, which was completed in July 2024; a share buy-back of up to $3.0bn in July 2024, which was completed in

October 2024; and a share buy-back of up to $3.0bn in October 2024, which was completed in February 2025.

5In September 2024, HSBC Holdings redeemed its $2,250m 6.375% contingent convertible securities.

6At 31 December 2024, an impairment of $11,442m (2023: $5,512m) of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer

of $2,945m (2023: $5,130m) from the remaining historical associated merger reserve to retained earnings, and a realisation of nil share-based payment reserves

(2023: $382m) to retained earnings. In 2022, a part-reversal of the impairment resulted in a transfer from retained earnings back to the merger reserve of

$2,499m.

374	HSBC Holdings plc Annual Report on Form 20-F

Financial statements

HSBC Holdings statement of cash flows
for the year ended 31 December 2024
	2024	2023	2022
	$m	$m	$m
Profit before tax	20,549	8,235	9,280
Adjustments for non-cash items	11,721	5,611	(2,500)
– depreciation, amortisation and impairment/expected credit losses	11,552	5,629	(2,428)
– share-based payment expense	1	—	1
– other non-cash items included in profit before tax	53	(38)	(73)
– elimination of exchange differences1	115	20	—
Changes in operating assets and liabilities
Change in loans and advances to HSBC undertakings	(2,753)	(1,267)	(1,657)
Change in financial assets with HSBC undertakings designated and otherwise mandatorily measured at fair value	(1,978)	(7,767)	(914)
Change in net trading securities and net derivatives	(1,537)	(529)	4,712
Change in other assets	603	363	51
Change in financial investments	—	—	196
Change in debt securities in issue	469	1,964	(5,625)
Change in financial liabilities designated at fair value	292	3,096	(4,755)
Change in other liabilities	(1,897)	1,947	(3,394)
Tax received	1,691	577	215
Net cash from operating activities	27,160	12,230	(4,391)
Purchase of financial investments	(29,812)	(7,803)	(21,481)
Proceeds from the sale and maturity of financial investments	31,779	20,074	17,165
Net cash outflow from acquisition of or increase in stake of subsidiaries	(7,473)	(2,517)	(5,696)
Repayment of capital from subsidiaries	2,963	4,993	3,860
Net investment in intangible assets	(43)	(46)	(39)
Net cash from investing activities	(2,586)	14,701	(6,191)
Issue of ordinary share capital and other equity instruments	3,648	2,059	67
Redemption of preference shares and other equity instruments	(2,250)	(4,003)	(2,266)
Purchase of own shares	(532)	(855)	(438)
Cancellation of shares	(11,204)	(5,812)	(2,298)
Subordinated loan capital issued	4,268	5,270	7,300
Subordinated loan capital repaid	(3,994)	—	—
Debt securities issued	16,102	17,180	18,076
Debt securities repaid	(18,179)	(13,047)	(10,094)
Dividends paid on ordinary shares	(15,348)	(10,492)	(5,330)
Dividends paid to holders of other equity instruments	(1,062)	(1,101)	(1,214)
Net cash from financing activities	(28,551)	(10,801)	3,803
Net increase/(decrease) in cash and cash equivalents	(3,977)	16,130	(6,779)
Cash and cash equivalents at 1 January	22,814	6,756	13,535
Exchange differences in respect of cash and cash equivalents2	(144)	(72)	—
Cash and cash equivalents at 31 Dec	18,693	22,814	6,756
Cash and cash equivalents comprise:
– cash at bank with HSBC undertakings	2,548	7,029	3,210
– cash collateral and net settlement accounts	2,544	3,422	3,544
– loans and advances to HSBC undertakings of one month or less	8,500	—	—
– treasury and other eligible bills	5,101	12,363	2

Interest received was $6,624m (2023: $5,695m; 2022: $2,410m), interest paid was $8,800m (2023: $7,754m; 2022: $3,813m) and dividends

received were $33,846m (2023: $16,824m; 2022: $9,478m).

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. As this change has immaterial impact, 2022 prior period comparatives have not been restated.

2In 2023, additional disclosure has been made in respect of exchange differences on cash and cash equivalents. As this change has immaterial impact, 2022 prior

period comparatives have not been restated.

HSBC Holdings plc Annual Report on Form 20-F	375

Notes on the financial statements

Contents
375	1	Basis of preparation and material accounting policies
388	2	Net fee income
389	3	Net income/(expense) from financial instruments measured at<br><br>fair value through profit or loss
389	4	Insurance business
396	5	Employee compensation and benefits
401	6	Auditor’s remuneration
402	7	Tax
404	8	Dividends
405	9	Earnings per share
405	10	Segmental analysis
408	11	Trading assets
408	12	Fair values of financial instruments carried at fair value
415	13	Fair values of financial instruments not carried at fair value
417	14	Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss
417	15	Derivatives
421	16	Financial investments
422	17	Assets pledged, collateral received and assets<br><br>transferred
423	18	Interests in associates and joint ventures	427	19	Investments in subsidiaries
---	---	---
429	20	Structured entities
431	21	Goodwill and intangible assets
433	22	Prepayments, accrued income and other assets
433	23	Assets held for sale, liabilities of disposal groups held for sale<br><br>and business acquisitions
435	24	Trading liabilities
436	25	Financial liabilities designated at fair value
436	26	Debt securities in issue
436	27	Accruals, deferred income and other liabilities
437	28	Provisions
438	29	Subordinated liabilities
439	30	Maturity analysis of assets, liabilities and off-balance sheet<br><br>commitments
444	31	Offsetting of financial assets and financial liabilities
445	32	Called up share capital and other equity instruments
447	33	Contingent liabilities, contractual commitments and guarantees
448	34	Finance lease receivables
448	35	Legal proceedings and regulatory matters
451	36	Related party transactions
452	37	Events after the balance sheet date
452	38	HSBC Holdings’ subsidiaries, joint ventures and associates
460	39	Non-statutory accounts
1	Basis of preparation and material accounting policies
---	---

1.1

Basis 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 2024

affecting these consolidated and separate financial statements.

IFRS Accounting Standards adopted during the year ended 31 December 2024

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 2025. 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 is undertaking an assessment of the potential impact.

376	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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.

While IFRS 18 will not change recognition criteria or measurement bases, it may 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 assessing impacts and data

readiness before developing a more detailed implementation plan.

(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 included in other

comprehensive income or in the income statement depending on where the gain or loss on the underlying item is recognised. 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 2024 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 143 to 265.

–The ‘Own funds disclosure’ is included in the ‘Risk review’ on page 235.

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 2024 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, liquidity, capital requirements and capital

resources.

These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following uncertain inflation,

rapidly changing interest rates, slower Chinese economic activity, and disrupted supply chains as a result of the Russia-Ukraine war, conflict in

the Middle East and US-China tensions. They also included 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

Investments in subsidiaries

Where an entity is governed by voting rights, HSBC consolidates 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 having exposure to variability of returns, power to direct relevant activities, and whether power is held as agent or principal.

HSBC Holdings plc Annual Report on Form 20-F	377

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. HSBC Holdings’ investments in subsidiaries are stated at cost less impairment losses.

Impairment testing is performed where there is an indication of impairment, by comparing the recoverable amount of the relevant investment

to its carrying amount. 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, and to the extent that it does not increase the carrying amount above that had no impairment loss been

previously 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 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 uncertain factors as follows:

Judgements

Estimates

–The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests for impairment or reversal more frequently than once a year when indicators exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management’s best estimate of future business prospects.

–The future cash flows of each investment are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. –The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of equity assigned to the investment. The cost of equity percentage is generally derived from a capital asset pricing model and the market implied cost of equity, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. –Key assumptions used in estimating impairment in subsidiaries and their reversal where relevant are described in Note 19.

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. HSBC’s CGUs are based on its main legal entities subdivided by global business,

except for Global Banking and Markets, for which goodwill is monitored on a global basis.

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.

Critical estimates and judgements

The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management’s best estimate of the future cash flows of the CGUs and the rates used to 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 high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests goodwill for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management’s best estimate of future business prospects.

–The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. –The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of equity assigned to individual CGUs. The cost of equity percentage is generally derived from a capital asset pricing model and market implied cost of equity, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. –Key assumptions used in estimating goodwill and non-financial asset impairment are described in 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. The Group’s consideration of this risk includes taking account of the

potential implications for CGUs arising from the revised organisational structure effective from 1 January 2025.

HSBC sponsored structured entities

HSBC is considered to sponsor another entity if, in addition to ongoing involvement with the entity, it had a key role in establishing that entity or

in bringing together relevant counterparties so the transaction that is the purpose of the entity could occur. HSBC is generally not considered a

sponsor if the only involvement with the entity is merely administrative.

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, and those that are neither subsidiaries nor joint arrangements, as

associates.

378	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

HSBC recognises its share of the assets, liabilities and results in a joint operation. Investments in associates and interests in joint ventures are

recognised using the equity method. The attributable share of the results and reserves of joint ventures and associates is included in the

consolidated financial statements of HSBC 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 (‘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 estimate of future earnings available to ordinary shareholders prepared in accordance with IAS 36 ‘Impairment of Assets’. Those cash flows use 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. –Key assumptions used in estimating BoCom’s value in use and the sensitivity of the value in use calculations to different assumptions are described in Note 18.

(b)Income and expense

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. With the exception of certain fund management and

performance fees, all other fees are generated at a fixed price. Fund management and performance fees can be variable depending on the size

of the customer portfolio and HSBC’s performance as fund manager. Variable fees are recognised when all uncertainties are resolved. Fee

income is generally earned from short-term contracts with payment terms that do not include a significant financing component.

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 fully 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.

Net income/(expense) from financial instruments measured 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.

–‘Changes in fair value of designated debt instruments and related derivatives’: Interest paid on debt instruments and interest cash flows on

related derivatives is presented in interest expense where doing so reduces an accounting mismatch.

–‘Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss’: This includes interest on

instruments that fail the solely payments of principal and interest (‘SPPI’) test, see (d) below.

The accounting policies for insurance service result and insurance finance income/(expense) are disclosed in Note 1.2(j).

HSBC Holdings plc Annual Report on Form 20-F	379

(c)Valuation of financial instruments

All 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. The fair value of a financial instrument on initial recognition is

generally its transaction price (that is, the fair value of the consideration given or received). 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 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 inputs if, in the opinion of management, greater than 5% of the instrument’s valuation is driven by unobservable inputs. –‘Unobservable’ in this context means that there is little or no current market data available from which to determine the price at which an arm’s length transaction would be likely to occur. It generally does not mean that there is no data available at all upon which to base a determination of fair value (consensus pricing data may, for example, be used).

–Details on the Group’s Level 3 financial instruments and the sensitivity of their valuation to the effect of applying reasonably possible alternative assumptions in determining their fair value are set out in Note 12.

(d)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 included in the impairment calculations set out below.

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 debt 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 debt 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.

(e)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 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 as ‘Gains less losses from financial instruments’. Financial assets

measured at FVOCI are included in the impairment calculations set out below and impairment is recognised in profit or loss.

380	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

(f)Equity securities measured at fair value with fair value movements presented in other

comprehensive income

The 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.

(g)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.

–The financial liability 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 in ‘Net income from financial instruments held for trading or

managed on a fair value basis’ or ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,

measured at fair value through profit or loss’ or ‘Changes in fair value of designated debt and related derivatives’ 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.

(h)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 within ‘Net income from financial instruments held for trading or managed on a fair value basis’. 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 immediately reclassified to

the income statement.

HSBC Holdings plc Annual Report on Form 20-F	381

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.

Derivatives that do not qualify for hedge accounting

Non-qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied.

(i)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.

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 170.

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. Changes made to these financial instruments that are economically equivalent and required by interest rate benchmark

reform do not result in the derecognition or a change in the carrying amount of the financial instrument, but instead require the effective

interest rate to be updated to reflect the change of the interest rate benchmark.

382	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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. For these loans, 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<br><br>deterioration (stage 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 notch

Further information about the 23-grade scale used for CRR can be found on page 170.

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 are defined as 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 continue to refine the retail transfer criteria approach for certain portfolios as additional data becomes available, in order to utilise a more

relative approach. 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.

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.

Purchased or originated credit impaired

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.

HSBC Holdings plc Annual Report on Form 20-F	383

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 should take 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 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 a reasonable approximation of 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 for stage 2 exposures to

default or close as performing accounts, determined on a portfolio basis and ranging from between two and six years. 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 178.

384	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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 out below:

Judgements

Estimates

–Defining what is considered to be a significant increase in credit risk –Determining the lifetime and point of initial recognition of overdrafts and credit cards –Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including making reasonable and supportable judgements about how models react to current and future economic conditions –Selecting model inputs and economic forecasts, including determining whether sufficient and appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss –Making management adjustments to account for late-breaking events, model and data limitations and deficiencies, and expert credit judgements –Selecting applicable recovery strategies for certain wholesale credit-impaired loans

–The section ‘Measurement uncertainty and sensitivity analysis of ECL estimates’, marked as audited from page 178, sets out the assumptions used in determining ECL, and provides an indication of the sensitivity of the result to the application of different weightings being applied to different economic assumptions

(j)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 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. 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): 60th percentile (2023: 60th percentile).

–Europe (France): 60th percentile (2023: 60th percentile).

–Latin America (Mexico): 64th percentile (2023: 65th percentile).

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.

HSBC Holdings plc Annual Report on Form 20-F	385

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 (e.g. 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, whereas these changes do not adjust the CSM under the GMM, but are recognised in profit or

loss as they arise. 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.

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.

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 expenses comprise 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 VFA contracts, changes in the fair value of underlying items

(excluding additions and withdrawals) are recognised in insurance finance income or expenses.

(k)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.

386	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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 (see Note

1.2(c)), 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 plan.

Judgements

Estimates

–A range of assumptions could be applied, and different assumptions could significantly alter the defined benefit obligation and the amounts recognised in profit or loss or OCI. –The calculation of the defined benefit pension obligation includes assumptions with regard to the discount rate, inflation rate, pension payments and deferred pensions, pay and mortality. Management determines these assumptions in consultation with the plan’s actuaries. –Key assumptions used in calculating the defined benefit pension obligation for the principal plan and the sensitivity of the calculation to different assumptions are described in Note 5.

(l)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.

Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.

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 cash flows projected for periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of cash flows thereafter, on which forecasts of future taxable profit are based, and which affect the expected recovery periods and the pattern of utilisation 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.

(m)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.

HSBC Holdings plc Annual Report on Form 20-F	387

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 below:

Judgements

Estimates

–Determining whether a present obligation exists. Professional advice is taken on the assessment of litigation and similar obligations. –Provisions for legal proceedings and regulatory matters typically require a higher degree of judgement than other types of provisions. When matters are at an early stage, accounting judgements can be difficult because of 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. As matters progress, management and legal advisers evaluate on an ongoing basis whether provisions should be recognised, revising previous estimates as appropriate. At more advanced stages, it is typically easier to make estimates around a better defined set of possible outcomes.

–Provisions for legal proceedings and regulatory matters remain very sensitive to the assumptions used in the estimate. There could be a wider range of possible outcomes for any pending legal proceedings, investigations or inquiries. As a result it is often not practicable to quantify a range of possible outcomes for individual matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in aggregate for these types of provisions because of the diverse nature and circumstances of such matters and the wide range of uncertainties 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.

(n)Impairment of 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. For this purpose, CGUs are considered to be the

principal operating legal entities divided by global business. 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-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 other non-financial assets for impairment reflects management’s best estimate of the future cash flows of the CGUs and the rates<br><br>used to discount these cash flows, both of which are subject to uncertain factors as described in the ‘Critical estimates and judgements’ in Note 1.2(a).

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill and non-financial assets

in the next financial year, but does consider this to be an area that is inherently judgemental.

(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.

388	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

2Net fee income

Net fee income by global business
	2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Funds under management	1,864	78	497	—	2,439
Cards	2,448	351	44	—	2,843
Credit facilities	85	722	621	—	1,428
Broking income	561	13	716	—	1,290
Account services	348	791	360	—	1,499
Unit trusts	1,060	10	1	—	1,071
Underwriting	—	8	683	—	691
Global custody	120	7	704	—	831
Remittances	77	387	361	—	825
Imports/exports	—	463	182	—	645
Insurance agency commission	329	18	—	—	347
Other	1,551	1,249	2,725	(3,168)	2,357
Fee income	8,443	4,097	6,894	(3,168)	16,266
Less: fee expense	(2,513)	(245)	(4,348)	3,141	(3,965)
Net fee income	5,930	3,852	2,546	(27)	12,301
	2023
---	---	---	---	---	---
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Funds under management	1,763	71	539	—	2,373
Cards	2,385	353	38	—	2,776
Credit facilities	103	856	615	—	1,574
Broking income	463	22	592	—	1,077
Account services	402	788	347	—	1,537
Unit trusts	727	10	1	—	738
Underwriting	—	3	583	—	586
Global custody	128	6	730	—	864
Remittances	86	389	347	1	823
Imports/exports	—	470	154	—	624
Insurance agency commission	280	18	—	—	298
Other	1,433	1,161	2,458	(2,706)	2,346
Fee income	7,770	4,147	6,404	(2,705)	15,616
Less: fee expense	(2,416)	(210)	(3,858)	2,713	(3,771)
Net fee income	5,354	3,937	2,546	8	11,845
	2022
---	---	---	---	---	---
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Funds under management	1,765	107	500	(12)	2,360
Cards	2,146	313	32	—	2,491
Credit facilities	100	783	591	—	1,474
Broking income	576	40	635	—	1,251
Account services	337	730	344	1	1,412
Unit trusts	682	14	—	—	696
Underwriting	1	2	443	(5)	441
Global custody	140	19	762	—	921
Remittances	72	380	346	1	799
Imports/exports	—	493	141	—	634
Insurance agency commission	283	16	1	—	300
Other	1,330	1,102	2,376	(2,463)	2,345
Fee income	7,432	3,999	6,171	(2,478)	15,124
Less: fee expense	(2,128)	(212)	(3,459)	2,445	(3,354)
Net fee income	5,304	3,787	2,712	(33)	11,770

Net fee income included $6,816m 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 (2023: $6,971m; 2022: $6,410m), $1,951m 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 (2023: $1,872m; 2022: $1,613m),

$3,480m of fees earned on trust and other fiduciary activities (2023: $3,452m; 2022: $3,492m) and $401m of fees payable relating to trust and

other fiduciary activities (2023: $333m; 2022: $370m).

HSBC Holdings plc Annual Report on Form 20-F	389

3Net income/(expense) from financial instruments measured at fair value

through profit or loss

	2024	2023	2022
	$m	$m	$m
Net income/(expense) arising on:
Net trading activities	23,186	20,391	2,372
Other instruments managed on a fair value basis	(2,070)	(3,730)	7,906
Net income from financial instruments held for trading or managed on a fair value basis	21,116	16,661	10,278
Financial assets held to meet liabilities under insurance and investment contracts	6,210	8,086	(14,392)
Liabilities to customers under investment contracts	(309)	(199)	561
Net income/(expense) from assets and liabilities of insurance businesses, including related<br><br>derivatives, measured at fair value through profit or loss	5,901	7,887	(13,831)

HSBC Holdings

	2024	2023	2022
	$m	$m	$m
Net income/(expense) arising on:
Net trading activities	984	(546)	2,094
Other instruments managed on a fair value basis	1,915	1,609	35
Net income from financial instruments held for trading or managed on a fair value basis	2,899	1,063	2,129
Derivatives managed in conjunction with HSBC Holdings-issued debt securities	93	426	(1,529)
Other changes in fair value	(218)	(1,894)	3,673
Changes in fair value of designated debt and related derivatives	(125)	(1,468)	2,144
Changes in fair value of other financial instruments mandatorily measured at fair value through profit<br><br>or loss	2,086	3,692	(2,409)
Year ended 31 Dec	4,860	3,287	1,864
4	Insurance business
---	---
Insurance service result
---	---	---	---	---	---	---
	Year ended 31 Dec 2024			Year ended 31 Dec 2023
	Life direct<br><br>participating<br><br>and investment<br><br>DPF contracts1	Life other<br><br>contracts2	Total	Life direct<br><br>participating and<br><br>investment DPF<br><br>contracts1	Life other<br><br>contracts2	Total
	$m	$m	$m	$m	$m	$m
Insurance revenue
Amounts relating to changes in liabilities for remaining coverage	1,890	566	2,456	1,626	470	2,096
– Contractual service margin recognised for services provided	1,143	188	1,331	975	151	1,126
– Change in risk adjustment for non-financial risk for risk expired	46	20	66	21	15	36
– Expected incurred claims and other insurance service expenses	698	358	1,056	594	304	898
– Other	3	—	3	36	—	36
Recovery of insurance acquisition cash flows	195	101	296	109	54	163
Total insurance revenue	2,085	667	2,752	1,735	524	2,259
Insurance service expenses
Incurred claims and other insurance service expenses	(616)	(428)	(1,044)	(615)	(292)	(907)
Losses and reversal of losses on onerous contracts	(50)	(73)	(123)	(32)	(77)	(109)
Amortisation of insurance acquisition cash flows	(195)	(101)	(296)	(109)	(54)	(163)
Adjustments to liabilities for incurred claims	(6)	27	21	(1)	(1)	(2)
Total insurance service expenses	(867)	(575)	(1,442)	(757)	(424)	(1,181)
Total insurance service result	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.

390	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Net investment return
	Year ended 31 Dec 2024			Year ended 31 Dec 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
	$m	$m	$m	$m	$m	$m
Investment return
Amounts recognised in profit or loss1	5,644	273	5,917	7,663	214	7,877
Amounts recognised in OCI2	185	—	185	493	—	493
Total investment return (memorandum)	5,829	273	6,102	8,156	214	8,370
Net finance expense
Changes in fair value of underlying items of direct participating contracts	(5,805)	—	(5,805)	(7,995)	—	(7,995)
Effect of risk mitigation option	44	—	44	(35)	—	(35)
Interest accreted	—	(110)	(110)	—	(127)	(127)
Effect of changes in interest rates and other financial assumptions	—	(298)	(298)	(12)	(121)	(133)
Effect of measuring changes in estimates at current rates and adjusting<br><br>the CSM at rates on initial recognition	—	—	—	—	(10)	(10)
Total net finance expense from insurance contracts	(5,761)	(408)	(6,169)	(8,042)	(258)	(8,300)
Represented by:
Amounts recognised in profit or loss	(5,570)	(408)	(5,978)	(7,551)	(258)	(7,809)
Amounts recognised in OCI	(191)	—	(191)	(491)	—	(491)
Total net investment return	68	(135)	(67)	114	(44)	70
Represented by:
Amounts recognised in profit or loss	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

$5,901m gain (2023: $7,886m gain) includes returns on assets and liabilities supporting insurance policies of $5,685m (2023: $7,627m loss) and on shareholder

assets of $216m (2023: $259m gain). Investment returns of $5,917m (2023: $7,877m gain) include gains of $5,685m (2023: $7,627m gain) on underlying assets

supporting insurance liabilities reported in ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at

fair value through profit or loss’, $235m gains (2023: $257m gain) reported in ‘Net interest income’ and $3m loss (2023: $7m loss) reported in ‘Other operating

income’.

2‘Amounts recognised in OCI’ insurance investment income comprises of fair value gains of $185m (2023: $497m gain) and expected credit (recoveries)/losses

of nil (2023: $4m loss). The Group statement of comprehensive income statement ‘Debt instruments at fair value through other comprehensive income – fair

value gains/(losses)’ gain of $41m (2023: $2,381m gain) includes insurance investment income recognised in OCI of $185m gain (2023: $497m gain) and ‘Debt

instruments at fair value through other comprehensive income - expected credit (recoveries)/losses recognised in the income statement’ recovery of $6m (2023:

$59m loss) includes insurance expected credit (recoveries)/losses recognised in OCI of nil (2023: $4m loss).

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
	2024	2023
	$m	$m
Balance at 1 Jan	(670)	(973)
Net change in fair value	(153)	451
Net amount reclassified to profit or loss	3	(6)
Related income tax	39	(115)
Foreign exchange and other	45	(27)
Balance at 31 Dec	(736)	(670)
HSBC Holdings plc Annual Report on Form 20-F	391
---	---
Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims
---	---	---	---	---	---	---	---	---	---
	Year ended 31 Dec 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 2024	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<br><br>comprehensive income
Insurance revenue
Contracts under the fair value approach1	(715)	—	—	(715)	(217)	—	—	(217)	(932)
Contracts under the modified<br><br>retrospective approach	(141)	—	—	(141)	(18)	—	—	(18)	(159)
Other contracts2	(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<br><br>service expenses	—	(7)	623	616	—	(49)	477	428	1,044
Amortisation of insurance acquisition<br><br>cash flows	195	—	—	195	101	—	—	101	296
Losses and reversal of losses on<br><br>onerous contracts	—	50	—	50	—	73	—	73	123
Adjustments to liabilities for incurred<br><br>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>contracts3	5,720	41	—	5,761	405	3	—	408	6,169
Other movements recognised in the<br><br>statement of profit or loss	—	—	—	—	—	—	—	—	—
Effect of movements in exchange rates	(1,162)	(5)	(9)	(1,176)	(76)	1	(24)	(99)	(1,275)
Total changes in the consolidated<br><br>income statement and statement of<br><br>comprehensive 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<br><br>expenses 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 movements4	(23,495)	(54)	(31)	(23,580)	53	8	60	121	(23,459)
Net closing balance at 31 Dec 2024	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 2024	103,029	147	224	103,400	3,571	211	315	4,097	107,497
392	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Movements in carrying amounts of insurance contracts – analysis by remaining coverage and incurred claims (continued)
	Year ended 31 Dec 2023
	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	(5)	—	—	(5)	(187)	21	35	(131)	(136)
Opening liabilities	104,676	114	355	105,145	3,359	109	203	3,671	108,816
Net opening balance at 1 Jan 2023	104,671	114	355	105,140	3,172	130	238	3,540	108,680
Changes in the consolidated income<br><br>statement and statement of comprehensive<br><br>income
Insurance revenue
Contracts under the fair value approach1	(508)	—	—	(508)	(196)	—	—	(196)	(704)
Contracts under the modified retrospective<br><br>approach	(148)	—	—	(148)	(22)	—	—	(22)	(170)
Other contracts2	(1,079)	—	—	(1,079)	(306)	—	—	(306)	(1,385)
Total insurance revenue	(1,735)	—	—	(1,735)	(524)	—	—	(524)	(2,259)
Insurance service expenses
Incurred claims and other insurance service<br><br>expenses	—	(6)	621	615	—	(24)	316	292	907
Amortisation of insurance acquisition cash<br><br>flows	109	—	—	109	54	—	—	54	163
Losses and reversal of losses on onerous<br><br>contracts	—	32	—	32	—	77	—	77	109
Adjustments to liabilities for incurred claims	—	—	1	1	—	—	1	1	2
Total insurance service expenses	109	26	622	757	54	53	317	424	1,181
Investment components	(8,104)	—	8,104	—	(818)	—	818	—	—
Insurance service result	(9,730)	26	8,726	(978)	(1,288)	53	1,135	(100)	(1,078)
Net finance expense from insurance<br><br>contracts3	8,042	—	—	8,042	254	3	1	258	8,300
Other movements recognised in the<br><br>statement of profit or loss	513	(5)	(214)	294	(8)	4	(13)	(17)	277
Effect of movements in exchange rates	942	1	6	949	25	(2)	8	31	980
Total changes in the consolidated income<br><br>statement and statement of comprehensive<br><br>income	(233)	22	8,518	8,307	(1,017)	58	1,131	172	8,479
Cash flows
Premiums received	12,616	—	—	12,616	1,256	—	—	1,256	13,872
Claims, other insurance service expenses<br><br>paid and other cash flows	(15)	—	(8,502)	(8,517)	1	—	(1,112)	(1,111)	(9,628)
Insurance acquisition cash flows	(522)	—	—	(522)	(282)	—	—	(282)	(804)
Total cash flows	12,079	—	(8,502)	3,577	975	—	(1,112)	(137)	3,440
Acquisition of subsidiaries and other<br><br>movements	14	(14)	—	—	(9)	(13)	22	—	—
Net closing balance at 31 Dec 2023	116,531	122	371	117,024	3,121	175	279	3,575	120,599
Closing assets	(15)	1	1	(13)	(279)	(16)	56	(239)	(252)
Closing liabilities	116,546	121	370	117,037	3,400	191	223	3,814	120,851
Net closing balance at 31 Dec 2023	116,531	122	371	117,024	3,121	175	279	3,575	120,599

1On 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.

2‘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.

3‘Net finance expense from insurance contracts’ expense of $6,169m (2023: $8,300m expense) comprises expense of $5,978m (2023: $7,809m expense)

recognised in the income statement and expense of $191m (2023: $491m expense) recognised in other comprehensive income.

4The ‘Other movements‘ reduction of $23,459m in insurance contracts includes $21,811m in respect of our French insurance business, classified as held for sale

at 31 December 2024. Further details are provided on page 434.

HSBC Holdings plc Annual Report on Form 20-F	393
Movements in carrying amounts of insurance contracts – analysis by measurement component
---	---	---	---	---	---	---	---	---	---	---	---
	Year ended 31 Dec 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<br><br>1	Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach	Other<br><br>contracts<br><br>2	Total		Contracts<br><br>under the<br><br>fair value<br><br>approach1	Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach	Other<br><br>contracts<br><br>2	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<br><br>1 Jan 2024	106,410	4,682	715	5,217	117,024	2,774	397	19	385	3,575	120,599
Changes in the<br><br>consolidated income<br><br>statement and<br><br>statement of<br><br>comprehensive income
Changes that relate to<br><br>current services
Contractual service<br><br>margin recognised for<br><br>services provided	—	(488)	(59)	(596)	(1,143)	—	(77)	(6)	(105)	(188)	(1,331)
Change in risk adjustment<br><br>for non-financial risk<br><br>expired	(46)	—	—	—	(46)	(20)	—	—	—	(20)	(66)
Experience adjustments	(82)	—	—	—	(82)	70	—	—	—	70	(12)
Other movements<br><br>recognised in insurance<br><br>service result	—	52	—	(55)	(3)	—	—	—	—	—	(3)
Changes that relate to<br><br>future services
Contracts initially<br><br>recognised in the year	(2,384)	—	—	2,400	16	(201)	—	—	220	19	35
Changes in estimates that<br><br>adjust the contractual<br><br>service margin3	(914)	229	(6)	691	—	(7)	30	7	(30)	—	—
Changes in estimates that<br><br>result in losses and<br><br>reversal of losses on<br><br>onerous contracts	34	—	—	—	34	54	—	—	—	54	88
Changes that relate to<br><br>past services
Adjustments to liabilities<br><br>for incurred 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<br><br>insurance contracts4	5,761	—	—	—	5,761	380	12	—	16	408	6,169
Other movements<br><br>recognised in the<br><br>statement of profit or loss	—	—	—	—	—	—	—	—	—	—	—
Effect of movements in<br><br>exchange rates	(1,167)	51	(24)	(36)	(1,176)	(50)	(11)	—	(38)	(99)	(1,275)
Total changes in the<br><br>consolidated income<br><br>statement and<br><br>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<br><br>service expenses paid and<br><br>other cash flows	(9,018)	—	—	—	(9,018)	(1,506)	—	—	—	(1,506)	(10,524)
Insurance acquisition cash<br><br>flows	(835)	—	—	—	(835)	(260)	—	—	—	(260)	(1,095)
Total cash flows	6,589	—	—	—	6,589	184	—	—	—	184	6,773
Other movements5	(22,736)	(23)	(626)	(195)	(23,580)	153	2	(20)	(14)	121	(23,459)
Net closing balance at<br><br>31 Dec 2024	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<br><br>31 Dec 2024	91,471	4,503	—	7,426	103,400	3,310	353	—	434	4,097	107,497
394	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Movements in carrying amounts of insurance contracts – analysis by measurement component (continued)
	Year ended 31 Dec 2023
	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>approach1	Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach	Other<br><br>contracts<br><br>2	Total		Contracts<br><br>under the<br><br>fair value<br><br>approach<br><br>1	Contracts<br><br>under the<br><br>modified<br><br>retros-<br><br>pective<br><br>approach	Other<br><br>contracts<br><br>2	Total	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Opening assets	(18)	3	—	10	(5)	(308)	86	—	91	(131)	(136)
Opening liabilities	96,174	4,364	792	3,815	105,145	3,162	325	18	166	3,671	108,816
Net opening balance at 1 Jan<br><br>2023	96,156	4,367	792	3,825	105,140	2,854	411	18	257	3,540	108,680
Changes in the consolidated<br><br>income statement and<br><br>statement of comprehensive<br><br>income
Changes that relate to current<br><br>services
Contractual service margin<br><br>recognised for services provided	—	(188)	(70)	(717)	(975)	—	(69)	(6)	(76)	(151)	(1,126)
Change in risk adjustment for<br><br>non-financial risk expired	(21)	—	—	—	(21)	(15)	—	—	—	(15)	(36)
Experience adjustments	21	—	—	—	21	(12)	—	—	—	(12)	9
Other movements recognised in<br><br>insurance service result	(36)	—	—	—	(36)	—	—	—	—	—	(36)
Changes that relate to future<br><br>services
Contracts initially recognised in<br><br>the year	(1,606)	—	—	1,619	13	(176)	—	—	207	31	44
Changes in estimates that adjust<br><br>contractual service margin3	(771)	368	(33)	436	—	21	26	6	(53)	—	—
Changes in estimates that result<br><br>in losses and reversal of losses<br><br>on onerous contracts	19	—	—	—	19	46	—	—	—	46	65
Changes that relate to past<br><br>services
Adjustments to liabilities for<br><br>incurred claims	1	—	—	—	1	1	—	—	—	1	2
Insurance service result	(2,393)	180	(103)	1,338	(978)	(135)	(43)	—	78	(100)	(1,078)
Net finance expense from<br><br>insurance contracts4	8,042	—	—	—	8,042	235	11	—	12	258	8,300
Other movements recognised in<br><br>the statement of profit or loss	145	133	(1)	17	294	(43)	6	—	20	(17)	277
Effect of movements in<br><br>exchange rates	883	2	27	37	949	—	12	1	18	31	980
Total changes in the<br><br>consolidated income statement<br><br>and statement of<br><br>comprehensive income	6,677	315	(77)	1,392	8,307	57	(14)	1	128	172	8,479
Cash flows
Premiums received	12,616	—	—	—	12,616	1,256	—	—	—	1,256	13,872
Claims, other insurance service<br><br>expenses paid and other cash<br><br>flows	(8,517)	—	—	—	(8,517)	(1,111)	—	—	—	(1,111)	(9,628)
Insurance acquisition cash flows	(522)	—	—	—	(522)	(282)	—	—	—	(282)	(804)
Total cash flows	3,577	—	—	—	3,577	(137)	—	—	—	(137)	3,440
Other movements	—	—	—	—	—	—	—	—	—	—	—
Net closing balance at<br><br>31 Dec 2023	106,410	4,682	715	5,217	117,024	2,774	397	19	385	3,575	120,599
Closing assets	(30)	3	—	14	(13)	(339)	36	—	64	(239)	(252)
Closing liabilities	106,440	4,679	715	5,203	117,037	3,113	361	19	321	3,814	120,851
Net closing balance at<br><br>31 Dec 2023	106,410	4,682	715	5,217	117,024	2,774	397	19	385	3,575	120,599

1On 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.

2‘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.

3‘Changes in estimates that adjust contractual service margin’ increase of $921m (2023: $750m increase) includes an increase of $651m (2023: $233m increase)

from economic factors and an increase of $270m (2023: $517m increase) from non-economic factors.

4‘Net finance expense from insurance contracts’ expense of $6,169m (2023: $8,300m expense) comprises expense of $5,978m (2023: $7,809m expense)

recognised in the income statement and expense of $191m (2023: $491m expense) recognised in other comprehensive income.

5‘Other movements‘ $23,459m reduction in insurance contracts includes $21,811m in respect of the classification of the France insurance business to held for

sale at 31 December 2024. Further details are provided on page 434.

HSBC Holdings plc Annual Report on Form 20-F	395
Effect of contracts initially recognised in the year
---	---	---	---	---	---	---
	Year ended 31 Dec 2024			Year ended 31 Dec 2023
	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	16,878	495	17,373	12,418	215	12,633
– insurance acquisition cash flows	805	38	843	602	21	623
– claims and other insurance service expenses payable	16,073	457	16,530	11,816	194	12,010
Estimates of present value of cash inflows	(19,326)	(481)	(19,807)	(14,074)	(204)	(14,278)
Risk adjustment for non-financial risk	48	2	50	37	2	39
Contractual service margin	2,400	—	2,400	1,619	—	1,619
(Losses) recognised on initial recognition	—	(16)	(16)	—	(13)	(13)
Life other contracts
Estimates of present value of cash outflows	1,484	476	1,960	1,116	464	1,580
– insurance acquisition cash flows	125	65	190	106	50	156
– claims and other insurance service expenses payable	1,359	411	1,770	1,010	414	1,424
Estimates of present value of cash inflows	(1,731)	(460)	(2,191)	(1,350)	(438)	(1,788)
Risk adjustment for non-financial risk	27	3	30	27	5	32
Contractual service margin	220	—	220	207	—	207
(Losses) recognised on initial recognition	—	(19)	(19)	—	(31)	(31)
Present value of expected future cash flows of insurance contract liabilities and contractual service margin
---	---	---	---	---	---	---	---	---	---
	Less<br><br>than 1<br><br>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
2024
Insurance liability future cash flows1
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	(2,555)	(551)	2,363	2,915	3,226	11,395	22,284	55,649	94,726
Remaining contractual service margin1
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	1,180	1,065	965	879	799	3,051	3,081	1,696	12,716
2023
Insurance liability future cash flows
Life direct participating and investment DPF contracts	(2,620)	(545)	2,321	2,419	3,344	11,695	23,351	65,897	105,862
Life other contracts	1,276	362	(347)	4	(45)	36	102	1,628	3,016
Insurance liability future cash flows at 31 Dec	(1,344)	(183)	1,974	2,423	3,299	11,731	23,453	67,525	108,878
Remaining contractual service margin
Life direct participating and investment DPF contracts	917	848	783	722	666	2,597	2,653	1,428	10,614
Life other contracts	172	113	84	74	61	141	115	41	801
Remaining contractual service margin at 31 Dec	1,089	961	867	796	727	2,738	2,768	1,469	11,415

1 ‘Insurance liability future cash flows’ and ‘Remaining contractual service margin’ at 31 December 2024 exclude the French insurance business that was

classified as held for sale at 31 December 2024. Further details are provided on page 434.

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(j) ‘Summary of

material accounting policies – Insurance contracts’ on page 376. 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		HSBC Assurances<br><br>Vie (France)
	HK$	US$	HK$	US$	€
At 31 Dec 2024
10-year discount rate (%)	4.32	5.16	4.43	5.25	2.97
20-year discount rate (%)	4.42	5.51	4.53	5.60	2.95
At 31 Dec 2023
10-year discount rate (%)	4.02	4.47	4.16	4.62	2.96
20-year discount rate (%)	4.21	4.91	4.34	5.06	2.97
396	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

5Employee compensation and benefits

	2024	2023	2022
	$m	$m	$m
Employee compensation and benefits1	18,465	18,220	18,003
Capitalised wages and salaries2	1,688	1,403	1,285
Gross employee compensation and benefits for the year ended 31 Dec	20,153	19,623	19,288
Consists of:
Wages and salaries	17,815	17,359	16,970
Social security costs	1,487	1,507	1,403
Post-employment benefits	851	757	915
Year ended 31 Dec	20,153	19,623	19,288

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 $1,118m (2023: $1,043m; 2022: $922m) software capitalisation costs and $570m (2023: $360m; 2022: $363m) costs included in the insurance

contract fulfilment cash flow liabilities under IFRS 17.

Average number of persons employed by HSBC during the year by global business1
	2024	2023	2022
Wealth and Personal Banking	125,068	132,336	135,676
Commercial Banking	47,135	46,826	48,004
Global Banking and Markets	48,351	48,043	48,597
Corporate Centre	374	347	365
Year ended 31 Dec	220,928	227,552	232,642

1Average number of persons employed represents the number of persons with contracts of service with the Group.

Average number of persons employed by HSBC during the year by legal entity1
	2024	2023	2022
HSBC UK Bank plc	20,034	20,415	20,501
HSBC Bank plc	11,456	14,809	15,405
The Hongkong and Shanghai Banking Corporation Limited	54,478	54,321	54,792
HSBC Bank Middle East Limited	3,344	3,316	3,338
HSBC North America Holdings Inc.	5,928	6,046	6,749
HSBC Bank Canada	758	4,354	4,241
Grupo Financiero HSBC, S.A. de C.V.	13,928	14,412	14,484
Other trading entities2	8,393	9,247	10,026
Holding companies, shared service centres and intra-Group eliminations	102,609	100,632	103,106
Year ended 31 Dec	220,928	227,552	232,642

1Average number of persons employed represents the number of persons with contracts of service with the Group.

2Other trading entities includes entities located in Türkiye, Egypt and Saudi Arabia.

Reconciliation of total incentive awards granted to income statement charge
	2024	2023	2022
	$m	$m	$m
Total incentive awards approved for the current year	3,800	3,774	3,359
Less: deferred bonuses awarded, expected to be recognised in future periods	(381)	(353)	(343)
Total incentives awarded and recognised in the current year	3,419	3,421	3,016
Add: current year charges for deferred bonuses from previous years	439	375	239
Other	(97)	(56)	(22)
Income statement charge for incentive awards	3,761	3,740	3,233

Share-based payments

‘Wages and salaries’ includes the effect of share-based payments arrangements, of which $529m (2023: $482m; 2022: $400m) was equity

settled, as follows:

	2024	2023	2022
	$m	$m	$m
Conditional share awards	551	499	402
Savings-related and other share award option plans	27	23	22
Year ended 31 Dec	578	522	424
HSBC Holdings plc Annual Report on Form 20-F	397
---	---
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.
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
---	---	---
	2024	2023
	Number	Number
	(000s)	(000s)
Conditional share awards outstanding at 1 Jan	125,023	126,246
Additions during the year	84,930	72,289
Released in the year	(71,849)	(70,054)
Forfeited in the year	(4,461)	(3,458)
Conditional share awards outstanding at 31 Dec	133,643	125,023
Weighted average fair value of awards granted ($)	6.08	5.84
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% (2023: 20%) discount to the market value immediately preceding the date of invitation.

Calculation of fair values

The fair values of share options are calculated using a Black-Scholes model. The fair value of a share award is based on the share price at the

date of the grant.

Movement on HSBC share option plans
	Savings-related<br><br>share option plans
	Number	WAEP1
	(000s)	£
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
Outstanding at 1 Jan 2023	115,651	2.89
Granted during the year2	23,382	4.70
Exercised during the year3	(49,007)	2.73
Expired during the year	(3,832)	3.78
Forfeited during the year	(2,200)	2.88
Outstanding at 31 Dec 2023	83,994	3.42
– of which exercisable	7,165	2.70
Weighted average remaining contractual life (years)	2.41

1Weighted average exercise price.

2The weighted average fair value of options granted during the year was $1.66 (2023: $1.92).

3The weighted average share price at the date the options were exercised was $8.54 (2023: $7.39).

398	HSBC Holdings plc Annual Report on Form 20-F

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 233 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 58.

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)
	2024	2023	2022
	$m	$m	$m
Defined benefit pension plans	(116)	(151)	42
Defined contribution pension plans	933	874	845
Pension plans	817	723	887
Defined benefit and contribution healthcare plans	34	34	28
Year ended 31 Dec	851	757	915
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	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
Defined benefit pension plans	33,897	(27,011)	—	6,886
Defined benefit healthcare plans	107	(403)	—	(296)
At 31 Dec 2023	34,004	(27,414)	—	6,590
Total employee benefit liabilities (within Note 27 ‘Accruals, deferred<br><br>income and other liabilities’)				(1,160)
Total employee benefit assets (within Note 22 ‘Prepayments,<br><br>accrued income and other assets’)				7,750
HSBC Holdings plc Annual Report on Form 20-F	399
---	---

HSBC Holdings

Employee compensation and benefit expense in respect of HSBC Holdings’ employees in 2024 amounted to $29m (2023: $15m). The average number

of persons employed during 2024 was 28 (2023: 29). A small number of employees are members of defined benefit pension plans. These employees

are members of the HSBC Bank (UK) Pension Scheme. HSBC Holdings pays contributions to such plan for its own employees 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 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 gains/(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
At 1 Jan 2023	25,121	7,050	(18,787)	(6,906)	—	—	6,334	144
Service cost	—	—	(10)	(150)	—	—	(10)	(150)
– current service cost	—	—	(14)	(135)	—	—	(14)	(135)
– past service cost and losses from settlements	—	—	4	(15)	—	—	4	(15)
Net interest income/(cost) on the net defined benefit asset/<br><br>(liability)	1,247	298	(925)	(286)	—	—	322	12
Remeasurement effects recognised in other<br><br>comprehensive income	(225)	110	7	(300)	—	—	(218)	(190)
– return on plan assets (excluding interest income)	(225)	110	—	—	—	—	(225)	110
– actuarial gains/(losses) financial assumptions	—	—	(123)	(327)	—	—	(123)	(327)
– actuarial gains/(losses) demographic assumptions	—	—	357	17	—	—	357	17
– actuarial gains/(losses) experience adjustments	—	—	(227)	10	—	—	(227)	10
– other changes	—	—	—	—	—	—	—	—
Exchange differences	1,472	228	(1,098)	(190)	—	—	374	38
Benefits paid	(1,063)	(548)	1,063	629	—	—	—	81
Other movements2	38	169	(32)	(26)	—	—	6	143
At 31 Dec 2023	26,590	7,307	(19,782)	(7,229)	—	—	6,808	78

1For further details of the principal plan, see page 398.

2Other movements include contributions by HSBC, contributions by employees, administrative costs and taxes paid by plan.

HSBC expects to make $97m of contributions to defined benefit pension plans during 2025, consisting of $nil for the principal plan and $97m

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
	2025	2026	2027	2028	2029	2030-2034
	$m	$m	$m	$m	$m	$m
The principal plan1,2	1,094	1,129	1,165	1,203	1,242	6,837
Other plans1	437	423	438	432	428	2,223

1The duration of the defined benefit obligation is 11.8 years for the principal plan under the disclosure assumptions adopted (2023: 12.9 years) and 9.8 years for

all other plans combined (2023: 10.3 years).

2For further details of the principal plan, see page 398.

400	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Fair value of plan assets by asset classes
	31 Dec 2024				31 Dec 2023
	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	23,652	13,903	9,749	421	26,590	15,006	11,584	547
– equities3	65	—	65	—	83	—	83	—
– bonds fixed income	5,864	5,372	492	—	5,262	4,739	523	—
– bonds index-linked	8,253	8,253	—	—	10,300	10,300	—	—
– derivatives	295	—	295	421	1,061	—	1,061	547
– property	833	—	833	—	830	—	830	—
– pooled investment vehicles	8,064	—	8,064	—	9,087	—	9,087	—
– other	278	278	—	—	(33)	(33)	—	—
Other plans
Fair value of plan assets	7,106	6,407	699	19	7,307	5,361	1,946	39
– equities	587	587	—	4	556	556	—	3
– bonds fixed income	3,671	3,671	—	4	3,624	3,623	1	5
– bonds index-linked	33	33	—	—	90	90	—	—
– bonds other	473	473	—	—	447	415	32	—
– derivatives	2	(3)	5	—	2	(1)	3	—
– property	103	98	5	—	112	108	4	—
– other	2,237	1,548	689	11	2,476	570	1,906	31

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 398.

3Includes $65m (2023: $83m) in relation to private equities.

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 rate	Inflation rate (RPI)	Inflation rate (CPI)	Rate of increase for pensions	Rate of pay increase
	%	%	%	%	%
UK
At 31 Dec 2024	5.54	3.33	2.88	3.22	3.63
At 31 Dec 2023	4.65	3.23	2.67	3.14	3.42

1For further details of the principal plan, see page 398.

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 2024	SAPS S32	26.1	27.7	28.3	29.9
At 31 Dec 2023	SAPS S33	26.2	27.7	28.3	29.8

1For further details of the principal plan, see page 398.

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 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.

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 2022 core

projection model with an initial addition to improvement of 0.25% per annum, a long-term rate of improvement of 1.25% per annum, with a 0% weighting to

2020 and 2021, mortality experience and a 25% weighting to 2022, reflecting updated 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
	2024	2023	2024	2023
	$m	$m	$m	$m
Discount rate – increase/decrease of 0.25%	(473)	(599)	496	631
Inflation rate (RPI and CPI) – increase/decrease of 0.25%	389	500	(391)	(497)
Pension payments and deferred pensions – increase/decrease of 0.25%	487	622	(478)	(590)
Pay – increase/decrease of 0.25%	6	8	(6)	(6)
Change in mortality – increase/decrease of 1 year	483	613	(464)	(613)

1For further details of the principal plan, see page 398.

HSBC Holdings plc Annual Report on Form 20-F	401

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 309.

| 6 | Auditor’s remuneration | | --- | --- || | 2024 | 2023 | 2022 | | --- | --- | --- | --- | | | $m | $m | $m | | Audit fees payable to PwC1 | 102.8 | 109.8 | 97.6 | | Other audit fees payable | 1.6 | 2.2 | 1.6 | | Year ended 31 Dec | 104.4 | 112.0 | 99.2 | | Fees payable by HSBC to PwC | | | | | --- | --- | --- | --- | | | 2024 | 2023 | 2022 | | | $m | $m | $m | | Fees for HSBC Holdings’ statutory audit2 | 22.0 | 24.1 | 21.9 | | Fees for other services provided to HSBC | 124.6 | 131.8 | 126.2 | | – audit of HSBC’s subsidiaries | 80.8 | 85.7 | 75.7 | | – audit-related assurance services3 | 25.0 | 26.0 | 26.4 | | – other assurance services4,5 | 18.8 | 20.1 | 24.1 | | Year ended 31 Dec | 146.6 | 155.9 | 148.1 |

1Audit fees payable to PwC in 2024 included adjustments made to the prior year audit fee after finalisation of the 2023 financial statements.

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
	2024	2023	2022
	$000	$000	$000
Audit of HSBC’s associated pension schemes	320	297	480
Year ended 31 Dec	320	297	480

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 $9.9m (2023: $12.3m;

2022: $13.1m). 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.

402	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

7	Tax
Tax expense
---	---	---	---
	2024	2023	2022
	$m	$m	$m
Current tax1	6,115	5,718	2,984
– for this year	5,863	5,737	3,264
– adjustments in respect of prior years	31	(19)	(280)
– Pillar 2 and qualifying domestic top-up taxes	221	—	—
Deferred tax	1,195	71	(2,175)
– origination and reversal of temporary differences	1,288	19	(2,278)
– effect of changes in tax rates	(2)	17	(293)
– adjustments in respect of prior years	(91)	35	396
Year ended 31 Dec2	7,310	5,789	809

1Current tax included Hong Kong profits tax of $1,615m (2023: $1,328m; 2022: $604m). The Hong Kong tax rate applying to the profits of subsidiaries assessable

in Hong Kong was 16.5% (2023: 16.5%; 2022: 16.5%).

2In addition to amounts recorded in the income statement, a tax credit of $12m (2023: credit of $41m) was recorded directly to equity.

Tax reconciliation

The tax charged to the income statement differs from the tax charge that would apply if all profits had been taxed at the UK corporation tax rate

as follows:

	2024		2023		2022
	$m	%	$m	%	$m	%
Profit before tax	32,309		30,348		17,058
Tax expense
Taxation at UK corporation tax rate of 25.0% (2023: 23.5%, 2022: 19.0%)	8,077	25.0	7,132	23.5	3,241	19.0
Impact of differently taxed overseas profits in overseas locations	(1,351)	(4.2)	(612)	(2.0)	459	2.7
UK banking surcharge	215	0.7	350	1.2	283	1.7
Items increasing tax charge in 2024:
– tax impact of sale of HSBC Argentina	1,536	4.8	—	—	—	—
– local taxes and overseas withholding taxes	584	1.8	419	1.4	346	2.0
– other permanent disallowables	344	1.0	227	0.7	363	2.1
– impacts of hyperinflation	327	1.0	348	1.1	171	1.0
– movements in unrecognised deferred tax	259	0.7	(22)	(0.1)	(2,503)	(14.7)
– Global Minimum Tax top-up charge	221	0.7	—	—	—	—
– bank levy	73	0.2	112	0.4	59	0.3
– movements in provisions for uncertain tax positions	38	0.1	(472)	(1.6)	27	0.2
– impact of changes in tax rates	6	—	17	0.1	(293)	(1.7)
– impairment of interest in associate	—	—	705	2.3	—	—
Items reducing tax charge in 2024:
– non-taxable gain on disposal of HSBC Canada	(1,174)	(3.6)	—	—	—	—
– non-taxable income and gains	(1,079)	(3.3)	(1,189)	(3.9)	(825)	(4.8)
– effect of profits in associates and joint ventures	(456)	(1.4)	(571)	(1.9)	(504)	(3.1)
– deductions for AT1 coupon payments	(249)	(0.8)	(229)	(0.7)	(246)	(1.4)
– adjustments in respect of prior period	(46)	(0.1)	16	0.1	116	0.7
– tax impact of sale of French retail banking business	(15)	—	—	—	115	0.7
– accounting gain on acquisition of SVB UK	—	—	(442)	(1.5)	—	—
Year ended 31 Dec	7,310	22.6	5,789	19.1	809	4.7

The Group’s profits are taxed at different rates depending on the country or territory in which the profits arise. The key applicable tax rates for

2024 include Hong Kong (16.5%), the US (21%) and the UK (25%). 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 21.4% (2023: 22.6%).

The effective tax rate for the year of 22.6% was higher than in the previous year (2023: 19.1%). The effective tax rate for the year 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 70.0% by movements in unrecognised deferred tax, primarily relating to French tax losses, and increased by

70.0% by the Group’s Pillar 2 Global Minimum Tax charge. The effective tax rate for 2023 was increased by 2.3% by the non-taxable

impairment of the Group’s investment in BoCom, reduced by 1.6% by the release of provisions for uncertain tax positions and reduced by

1.5% by the non-taxable accounting gain on the acquisition of SVB UK.

In July 2023, the UK enacted legislation to introduce the ‘Pillar Two’ global minimum tax model rules of the OECD’s Inclusive Framework on

Base Erosion and Profit Shifting (’BEPS’) and a UK qualified domestic minimum top-up tax, with effect from 1 January 2024. Under the Pillar

Two rules, a top-up tax liability arises where the Group’s effective tax rate in a jurisdiction is below 15%. The Group has recorded a Pillar Two

global minimum tax charge of $221m for the period, primarily related to the non-taxation of dividends and income on government bonds in

Hong Kong (which have the effect of reducing the effective tax rate from the statutory rate of 16.5% to below 15%) and low or nil statutory tax

rates in jurisdictions such as Bermuda and the Channel Islands. For the current period, this tax expense will be substantially payable in the UK

by HSBC Holdings.

Many jurisdictions have introduced or announced the introduction of domestic minimum tax rules that are closely aligned to the OECD’s Pillar

Two model rules, as well as new or amended corporate income tax rules, with effect from 2024 or 2025. As and when such taxes are

introduced, they will have the effect of increasing local tax liabilities, eliminating or reducing the top-up tax liability payable in the UK by HSBC

HSBC Holdings plc Annual Report on Form 20-F	403

Holdings in respect of those jurisdictions. Hong Kong, Bermuda and the Channel Islands have introduced such new tax rules with effect from

1 January 2025.

Accounting for taxes involves some estimation because tax law is uncertain and its application requires a degree of judgement, which

authorities may dispute. Liabilities are recognised based on best estimates of the probable outcome, taking into account external advice where

appropriate. Exposures relating to legacy tax cases were reassessed during 2024, resulting in a charge of $38m 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	1,158	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)
Assets	1,062	4,397	850	1,271	—	3,048	10,628
Liabilities	—	—	—	—	(1,673)	(1,567)	(3,240)
At 1 Jan 2023	1,062	4,397	850	1,271	(1,673)	1,481	7,388
Income statement	(39)	102	541	1	(114)	(562)	(71)
Other comprehensive income	—	—	(598)	(974)	99	399	(1,074)
Foreign exchange and other adjustments	135	45	83	121	(126)	15	273
At 31 Dec 2023	1,158	4,544	876	419	(1,814)	1,333	6,516
Assets1	1,158	4,544	876	419	—	2,933	9,930
Liabilities1	—	—	—	—	(1,814)	(1,600)	(3,414)

1After netting off balances within countries, the balances as disclosed in the accounts are as follows: deferred tax assets of $6,841m (2023: $7,754m) and

deferred tax liabilities of $1,317m (2023: $1,238m).

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 $5.5bn (2023: $6.5bn) included $2.6bn (2023: $3.3bn) of deferred tax assets relating to the UK, $3.0bn

(2023: $3.1bn) of deferred tax assets relating to the US and a net deferred asset of $0.5bn (2023: $0.9bn) in France.

The UK deferred tax asset of $2.6bn excluded a $1.8bn 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 3 years

and as such are less sensitive to changes in long-term profit forecasts.

The net US deferred tax asset of $3.0bn included $1.2bn related to US tax losses, of which $0.9bn expire in 10 to 15 years. Management

expects the US deferred tax asset to be substantially recovered within 13 years, with the majority recovered in the first 5 years.

The net deferred tax asset in France of $0.5bn included $0.5bn related to tax losses, which are expected to be substantially recovered within

12 years. Unused tax losses with a tax value of $0.2bn 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 $11.0bn (2023: $10.4bn). This amount included unused US state tax losses of $3.8bn (2023: $4.0bn) which are forecast to expire

before they are recovered, unused French tax losses of $0.7bn (2023: nil) for which there is insufficient evidence of future taxable profits to

support recognition, and unused UK tax losses of $3.5bn (2023: $4.5bn), 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, $6.0bn (2023: $5.1bn) had no

expiry date, $1.0bn (2023: $0.5bn) 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 $15.2bn (2023: $14.4bn)

and the corresponding unrecognised deferred tax liability was $0.7bn (2023: $0.7bn).

404	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

8	Dividends
Dividends to shareholders of the parent company
---	---	---	---	---	---	---
	2024		2023		2022
	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	0.18	3,576
– fourth interim dividend	0.31	5,872	—	—	—	—
In respect of current year:
– first interim dividend	0.10	1,877	0.10	2,001	0.09	1,754
– special dividend	0.21	3,942	—	—	—	—
– second interim dividend	0.10	1,852	0.10	1,956	—	—
– third interim dividend	0.10	1,805	0.10	1,946	—	—
Total	0.82	15,348	0.53	10,492	0.27	5,330
Total coupons on capital securities classified as equity		1,062		1,101		1,214
Dividends to shareholders		16,410		11,593		6,544
Total coupons on capital securities classified as equity
---	---	---	---	---	---
		2024		2023	2022
			Total	Total	Total
	First call date	Per security	$m	$m	$m
Perpetual subordinated contingent convertible securities1
$2,250m issued at 6.375%2	Sep 2024	$63.750	122	143	143
$2,450m issued at 6.375%	Mar 2025	$63.750	156	156	156
$3,000m issued at 6.000%	May 2027	$60.000	180	180	180
$2,350m issued at 6.250%3	Mar 2023	$62.500	—	52	147
$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%4	Mar 2028	$80.000	160	80	—
$1,350m issued at 6.875%5	Sep 2029	$68.750	—	—	—
$1,150m issued at 6.950%6	Mar 2034	$69.500	—	—	—
€1,500m issued at 5.250%7	Sep 2022	€52.500	—	—	76
€1,000m issued at 6.000%8	Sep 2023	€60.000	—	56	63
€1,250m issued at 4.750%	Jul 2029	€47.500	65	64	65
£1,000m issued at 5.875%	Sep 2026	£58.750	77	72	70
SGD1,000m issued at 4.700%9	Jun 2022	SGD47.000	—	—	14
SGD750m issued at 5.000%10	Sep 2023	SGD50.000	—	25	27
SGD1,500m issued at 5.250%11	Jun 2029	SGD52.500	29	—	—
Total			1,062	1,101	1,214

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 30 January 2023 and was redeemed and cancelled on 23 March 2023.

4This 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.

5This 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.

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 September 2034.

7This security was called by HSBC Holdings on 9 August 2022 and was redeemed and cancelled on 16 September 2022.

8This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 29 September 2023.

9This security was called by HSBC Holdings on 4 May 2022 and was redeemed and cancelled on 8 June 2022.

10This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 25 September 2023.

11This 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.

On 19 February 2025, the Directors approved a fourth interim dividend in respect of the financial year ended 31 December 2024 of $0.36 per

ordinary share (the ‘dividend’), an expected distribution of approximately $6.4bn. The dividend will be payable on 25 April 2025 to holders of

record on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on

7 March 2025. No liability was recorded in the financial statements in respect of the fourth interim dividend for 2024.

On 6 January 2025, HSBC paid a coupon on its €1,250m subordinated capital securities, representing a total distribution of €30m ($31m). No

liability was recorded in the balance sheet at 31 December 2024 in respect of this coupon payment.

HSBC Holdings plc Annual Report on Form 20-F	405

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
	2024			2023			2022
	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	22,917	18,357	1.25	22,432	19,478	1.15	14,346	19,849	0.72
Effect of dilutive potential<br><br>ordinary shares		128			122			137
Diluted1	22,917	18,485	1.24	22,432	19,600	1.14	14,346	19,986	0.72

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 Nil

(2023: 23 million; 2022: 9.4 million).

10	Segmental analysis

The Group CEO, supported by the rest of the Group Executive Committee (‘GEC’), was considered the Chief Operating Decision Maker

(‘CODM’) during the reporting period for the purposes of identifying the Group’s reportable segments. As the reorganisation only took effect

from 1 January 2025, it has no effect on the 2024 segmental reporting. Global business 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 2023 and 2022 income statements are converted at the average rates

of exchange for 2024, and the balance sheets at 31 December 2023 and 31 December 2022 at the prevailing rates of exchange on

31 December 2024.

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 functions to the extent that they can be meaningfully

attributed to global businesses. 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.

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 global businesses are presented in Corporate Centre.

Our global businesses

We provide a comprehensive range of banking and related financial services to our customers in our three global businesses. The products and

services offered to customers are organised by these global businesses.

–Wealth and Personal Banking (‘WPB’) provides a full range of retail banking and wealth products to our customers from personal banking to

ultra high net worth individuals. Typically, customer offerings include retail banking products, such as current and savings accounts,

mortgages and personal loans, credit cards, debit cards and local and international payment services. We also provide wealth management

services, including insurance and investment products, global asset management services, investment management and private wealth

solutions for customers with more sophisticated and international requirements.

–Commercial Banking (‘CMB’) offers a broad range of products and services to serve the needs of our commercial customers, including small

and medium-sized enterprises, mid-market enterprises and corporates. These include credit and lending, international trade and receivables

finance, treasury management and liquidity solutions (payments and cash management and commercial cards), commercial insurance and

investments. CMB also offers customers access to products and services offered by other global businesses, such as Global Banking and

Markets, which include foreign exchange products, raising capital on debt and equity markets and advisory services.

–Global Banking and Markets (‘GBM’) provides tailored financial solutions to major government, corporate and institutional clients and private

investors worldwide. The client-focused business lines deliver a full range of banking capabilities, including financing, advisory and

transaction services, a markets business that provides services in credit, rates, foreign exchange, equities, money markets and securities

services, and principal investment activities.

406	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

HSBC constant currency profit before tax and balance sheet data
	2024
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Net operating income/(expense) before change in expected credit losses<br><br>and other credit impairment charges1	28,674	21,580	17,529	(1,929)	65,854
– external	20,460	21,565	30,698	(6,869)	65,854
– inter-segment	8,214	15	(13,169)	4,940	—
– of which: net interest income/(expense)2	20,352	17,261	7,488	(12,368)	32,733
Change in expected credit losses and other credit impairment charges	(1,335)	(1,815)	(235)	(29)	(3,414)
Net operating income/(expense)	27,339	19,765	17,294	(1,958)	62,440
Total operating expenses	(15,204)	(7,906)	(10,231)	298	(33,043)
Operating profit/(loss)	12,135	11,859	7,063	(1,660)	29,397
Share of profit in associates and joint ventures less impairment	47	1	—	2,864	2,912
Constant currency profit before tax	12,182	11,860	7,063	1,204	32,309
	%	%	%	%	%
Share of HSBC’s constant currency profit before tax	37.7	36.7	21.9	3.7	100.0
Constant currency cost efficiency ratio	53.0	36.6	58.4	15.4	50.2
Constant currency balance sheet data	$m	$m	$m	$m	$m
Loans and advances to customers (net)	447,085	306,926	169,516	7,131	930,658
Interests in associates and joint ventures	558	25	108	28,218	28,909
Total external assets	890,080	603,841	1,388,845	134,282	3,017,048
Customer accounts	823,267	490,475	340,898	315	1,654,955	2023
---	---	---	---	---	---
Net operating income/(expense) before change in expected credit losses and<br><br>other credit impairment charges1	26,848	22,396	15,771	(103)	64,912
– external	18,669	23,686	27,618	(5,061)	64,912
– inter-segment	8,179	(1,290)	(11,847)	4,958	—
– of which: net interest income/(expense)2	19,902	16,289	6,860	(8,899)	34,152
Change in expected credit losses and other credit impairment charges	(935)	(2,006)	(317)	(1)	(3,259)
Net operating income/(expense)	25,913	20,390	15,454	(104)	61,653
Total operating expenses	(14,352)	(7,234)	(9,872)	(36)	(31,494)
Operating profit/(loss)	11,561	13,156	5,582	(140)	30,159
Share of profit/(loss) in associates and joint ventures3	64	(1)	—	(319)	(256)
Constant currency profit/(loss) before tax	11,625	13,155	5,582	(459)	29,903
	%	%	%	%	%
Share of HSBC’s constant currency profit before tax	38.9	44.0	18.7	(1.6)	100.0
Constant currency cost efficiency ratio	53.5	32.3	62.6	(35.0)	48.5
Constant currency balance sheet data	$m	$m	$m	$m	$m
Loans and advances to customers (net)	444,856	301,103	170,868	262	917,089
Interests in associates and joint ventures	539	23	107	26,226	26,895
Total external assets	915,062	613,124	1,298,065	146,296	2,972,547
Customer accounts	792,710	465,095	321,226	582	1,579,613
HSBC Holdings plc Annual Report on Form 20-F	407
---	---
HSBC constant currency profit before tax and balance sheet data (continued)
---	---	---	---	---	---
	2022
	Wealth and<br><br>Personal<br><br>Banking	Commercial<br><br>Banking	Global<br><br>Banking and<br><br>Markets	Corporate<br><br>Centre	Total
	$m	$m	$m	$m	$m
Net operating income/(expense) before change in expected credit losses and<br><br>other credit impairment charges1	20,772	16,207	14,542	(1,934)	49,587
– external	18,176	16,834	18,704	(4,127)	49,587
– inter-segment	2,596	(627)	(4,162)	2,193	—
– of which: net interest income/(expense)2	15,887	11,584	4,602	(2,633)	29,440
Change in expected credit losses and other credit impairment charges	(1,160)	(1,868)	(578)	(9)	(3,615)
Net operating income/(expense)	19,612	14,339	13,964	(1,943)	45,972
Total operating expenses	(14,141)	(6,810)	(9,403)	(1,875)	(32,229)
Operating profit/(loss)	5,471	7,529	4,561	(3,818)	13,743
Share of profit/(loss) in associates and joint ventures	29	1	(2)	2,531	2,559
Constant currency profit/(loss) before tax	5,500	7,530	4,559	(1,287)	16,302
	%	%	%	%	%
Share of HSBC’s constant currency profit before tax	33.7	46.2	28.0	(7.9)	100.0
Constant currency cost efficiency ratio	68.1	42.0	64.7	(96.9)	65.0
Constant currency balance sheet data	$m	$m	$m	$m	$m
Loans and advances to customers (net)	425,072	309,224	186,653	350	921,299
Interests in associates and joint ventures	503	27	90	27,676	28,296
Total external assets	873,688	602,624	1,305,319	161,872	2,943,503
Customer accounts	781,881	462,806	323,420	443	1,568,550

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

2Net interest expense recognised in Corporate Centre includes $11.4bn (2023: $8.7bn; 2022: $2.5bn) of interest expense in relation to the internal cost to fund

trading and fair value net assets; and the funding cost of foreign exchange swaps in our Markets Treasury function.

3Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom in 2023.

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:

	2024	2023	2022
	$m	$m	$m
Reported external net operating income/(expense) by country/territory1	65,854	66,058	50,620
– UK2	12,307	11,027	11,710
– Hong Kong	20,811	20,185	15,454
– US	4,233	3,816	3,893
– France	3,804	4,208	(177)
– other countries/territories	24,699	26,822	19,740

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

2UK 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
	2024	2023			2022
	Reported and<br><br>constant<br><br>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
Revenue1	65,854	64,912	(1,146)	66,058	49,587	(1,033)	50,620
ECL	(3,414)	(3,259)	188	(3,447)	(3,615)	(31)	(3,584)
Operating expenses	(33,043)	(31,494)	576	(32,070)	(32,229)	472	(32,701)
Share of profit/(loss) in associates and<br><br>joint ventures less impairment2	2,912	(256)	(63)	(193)	2,559	(164)	2,723
Profit before tax	32,309	29,903	(445)	30,348	16,302	(756)	17,058

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

2Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom in 2023.

Constant currency balance sheet reconciliation
	2024	2023			2022
	Reported and<br><br>constant<br><br>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)	930,658	917,089	21,446	938,535	921,299	2,262	923,561
Interests in associates and joint ventures	28,909	26,895	449	27,344	28,296	958	29,254
Total external assets	3,017,048	2,972,547	66,130	3,038,677	2,943,503	5,783	2,949,286
Customer accounts	1,654,955	1,579,613	32,034	1,611,647	1,568,550	1,753	1,570,303
408	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Notable items
	2024	2023	2022
	$m	$m	$m
Year ended 31 Dec
Notable items
Revenue
Disposals, acquisitions and related costs1,2	(1,343)	1,298	(2,737)
Fair value movements on financial instruments3	—	14	(618)
Restructuring and other related costs	—	—	(247)
Disposal losses on Markets Treasury repositioning	—	(977)	—
Early redemption of legacy securities	(237)	—	—
Operating expenses
Disposals, acquisitions and related costs	(199)	(321)	(18)
Restructuring and other related costs4	(34)	136	(2,882)
Impairment of interests in associates5	—	(3,000)	—

1Amounts 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 is 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 in 2023 include the gain of $1.6bn recognised in respect of the acquisition of SVB UK, as well as the impact of the sale of our retail banking operations

in France.

3Fair value movements on non-qualifying hedges in HSBC Holdings.

4Amounts 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.

5Relates to an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom in 2023.

11Trading assets

	2024	2023
	$m	$m
Treasury and other eligible bills	32,022	24,433
Debt securities	97,275	106,108
Equity securities	155,194	123,663
Trading securities	284,491	254,204
Loans and advances to banks1	6,123	9,761
Loans and advances to customers1	24,228	25,194
Year ended 31 Dec	314,842	289,159

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.

Changes in fair value are generally subject to a profit and loss analysis process and are disaggregated into high-level categories including

portfolio changes, market movements and other fair value adjustments.

The majority of financial instruments measured at fair value are in GBM. GBM’s fair value governance structure comprises its Finance function,

Valuation Committees and a Valuation Committee Review Group. 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. These committees are overseen by the Valuation Committee Review Group, which considers all material

subjective valuations.

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.

HSBC Holdings plc Annual Report on Form 20-F	409

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.

Financial instruments carried at fair value and bases of valuation
	2024				2023
	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	236,593	71,574	6,675	314,842	202,020	82,833	4,306	289,159
Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss	39,331	56,694	19,744	115,769	27,030	63,825	19,788	110,643
Derivatives	1,859	264,629	2,149	268,637	931	226,714	2,069	229,714
Financial investments	258,371	78,088	2,734	339,193	215,228	76,591	2,618	294,437
Liabilities
Trading liabilities	42,038	23,160	784	65,982	53,354	19,318	478	73,150
Financial liabilities designated at fair value	2,152	127,458	9,117	138,727	1,266	129,232	10,928	141,426
Derivatives	1,088	260,518	2,842	264,448	1,918	230,285	2,569	234,772

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
	2024				2023
	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	—	—	—	—	2,403	61	—	2,465
Financial assets designated and otherwise mandatorily<br><br>measured at fair value through profit or loss	2,967	9,018	2,575	14,560	—	15	49	64
Derivatives	—	36	—	36	—	528	—	528
Financial investments	2,651	5,345	504	8,500	9,357	—	28	9,385
Liabilities
Trading liabilities	—	—	—	—	1,352	64	—	1,417
Financial liabilities designated at fair value	—	130	—	130	—	2,370	—	2,370
Derivatives	—	19	—	19	—	615	—	615
Transfers between Level 1 and Level 2 fair values
---	---	---	---	---	---	---	---
	Assets				Liabilities
	Financial<br><br>investments	Trading<br><br>assets	Designated and otherwise<br><br>mandatorily measured<br><br>at fair value	Derivatives	Trading<br><br>liabilities	Designated<br><br>at fair<br><br>value	Derivatives
	$m	$m	$m	$m	$m	$m	$m
At 31 Dec 2024
Transfers from Level 1 to Level 2	13,511	9,246	1,540	—	191	—	—
Transfers from Level 2 to Level 1	10,752	6,060	3,042	—	159	—	—
At 31 Dec 2023
Transfers from Level 1 to Level 2	13,200	8,066	1,709	—	54	—	—
Transfers from Level 2 to Level 1	9,975	5,758	2,477	—	309	—	—

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.

410	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Fair value adjustments

Fair value adjustments take into consideration additional factors not incorporated within the primary product valuation model that would

otherwise be considered by a market participant. Adjustments are calculated using model infrastructure including those within primary valuation

systems. We classify fair value adjustments as either ‘risk-related’ or ‘model-related’. The majority of these adjustments relate to MSS.

Movements in the amount of fair value adjustments do not necessarily translate in equivalent movements of profits or losses within the

income statement, as these movements can be compensated by other related profits or loss effects. For example, as models are enhanced,

fair value adjustments may no longer be required. Similarly, fair value adjustments will decrease when the related positions are unwound, but

this may not result in profit or loss.

Fair value adjustments
	2024		2023
	GBM	Corporate<br><br>Centre	GBM	Corporate<br><br>Centre
	$m	$m	$m	$m
Type of adjustment
Risk-related	634	35	692	41
– bid-offer	366	2	414	—
– uncertainty	98	3	75	3
– credit valuation adjustment	126	27	164	35
– debit valuation adjustment	(24)	—	(54)	—
– funding fair value adjustment	68	3	93	3
Model-related	50	—	63	—
– model limitation	50	—	63	—
Inception profit (Day 1 P&L reserves)	92	—	86	—
At 31 Dec	776	35	841	41

The net reduction in fair value adjustments was predominantly driven by changes to exposure, and tightening of credit and liquidity market

spreads.

Bid-offer

IFRS 13 ‘Fair Value Measurement’ requires the use of the price within the bid-offer spread that is most representative of fair value. Valuation

models will typically generate mid-market values. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if

substantially all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position.

Uncertainty

Certain model inputs may be less readily determinable from market data and/or the choice of model itself may be more subjective. In these

circumstances, an adjustment may be necessary to reflect the likelihood that market participants would adopt more conservative values for

uncertain parameters and/or model assumptions than those used in HSBC’s valuation model.

Credit and debit valuation adjustments

The credit valuation adjustment (‘CVA’) is an adjustment to the valuation of over-the-counter (‘OTC’) derivative contracts to reflect the possibility

that the counterparty may default and that HSBC may not receive the full market value of the transactions.

The debit valuation adjustment (‘DVA’) is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC may

default, and that it may not pay the full market value of the transactions. The DVA considers the overlap with the funding fair value adjustment.

HSBC calculates a separate CVA and DVA for each legal entity, and for each counterparty to which the entity has exposure. With the exception

of central clearing parties, all third-party counterparties are included in the CVA and DVA calculations, and these adjustments are not netted

across Group entities.

HSBC calculates the CVA by applying the probability of default (‘PD’) of the counterparty, conditional on the non-default of HSBC, to HSBC’s

expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default. Conversely, HSBC calculates

the DVA by applying the PD of HSBC, conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to

HSBC and multiplying the result by the loss expected in the event of default. Both calculations are performed over the life of the potential exposure.

For most products HSBC uses a simulation methodology, which incorporates a range of potential exposures over the life of the portfolio, to

calculate the expected positive exposure to a counterparty. The simulation methodology includes credit mitigants, such as counterparty netting

agreements and collateral agreements with the counterparty.

The methodologies do not, in general, account for ‘wrong-way risk’. Wrong-way risk is an adverse correlation between the counterparty’s probability of

default and the mark-to-market value of the underlying transaction. The risk can either be general, perhaps related to the currency of the issuer country,

or specific to the transaction concerned. When there is significant wrong-way risk, a trade-specific approach is applied to reflect this risk in the valuation.

Funding fair value adjustment

The funding fair value adjustment (‘FFVA’) is calculated by applying future market funding spreads to the expected future funding exposure of

any uncollateralised component of the OTC derivative portfolio. The expected future funding exposure is calculated by a simulation

methodology, where available, and is adjusted for events that may terminate the exposure, such as the default of HSBC or the counterparty.

Model limitation

Models used for portfolio valuation purposes may be based upon a simplified set of assumptions that do not capture all current and future

material market characteristics. In these circumstances, model limitation adjustments are adopted.

HSBC Holdings plc Annual Report on Form 20-F	411

Inception profit (Day 1 P&L reserves)

Inception profit adjustments are adopted when the fair value estimated by a valuation model is based on one or more significant unobservable

inputs. The accounting for inception profit adjustments is discussed in Note 1.

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<br><br>value	Derivatives	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
Private equity including<br><br>strategic investments	552	1	17,705	—	18,258	—	1	—	1
Asset-backed securities	182	198	—	—	380	—	—	—	—
Structured notes	—	—	3	—	3	—	9,113	—	9,113
Other derivatives	—	—	—	2,149	2,149	—	—	2,842	2,842
Other portfolios	2,000	6,476	2,036	—	10,512	784	3	—	787
At 31 Dec 2024	2,734	6,675	19,744	2,149	31,302	784	9,117	2,842	12,743
Private equity including<br><br>strategic investments	507	7	17,640	—	18,154	—	1	—	1
Asset-backed securities	309	128	8	—	445	—	—	—	—
Structured notes	—	—	3	—	3	—	10,331	—	10,331
Other derivatives	—	—	—	2,069	2,069	—	—	2,569	2,569
Other portfolios	1,802	4,171	2,137	—	8,110	478	596	—	1,074
At 31 Dec 2023	2,618	4,306	19,788	2,069	28,781	478	10,928	2,569	13,975

Level 3 instruments are present in both ongoing and legacy businesses. Loans held for securitisation, derivatives with monolines, certain ‘other

derivatives’ and predominantly all Level 3 asset-backed securities are legacy positions. HSBC has the capability to hold these positions.

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.

Asset-backed securities

While quoted market prices are generally used to determine the fair value of the asset-backed securities (‘ABSs’), valuation models are used to

substantiate the reliability of the limited market data available and to identify whether any adjustments to quoted market prices are required.

For certain ABSs, such as residential mortgage-backed securities, the valuation uses an industry standard model with assumptions relating to

prepayment speeds, default rates and loss severity based on collateral type, and performance, as appropriate. The valuations output is

benchmarked for consistency against observable data for securities of a similar nature.

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.

412	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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<br><br>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	—	—	—	—
– changes in fair value of other financial instruments<br><br>mandatorily measured at fair value through profit<br><br>or loss	—	—	212	—	—	—	—
– gains less losses from financial investments at fair<br><br>value through other comprehensive income	(9)	—	—	—	—	—	—
Total gains/(losses) recognised in other<br><br>comprehensive income (‘OCI’)1	(78)	(115)	(39)	(36)	(18)	(45)	(53)
– financial investments: fair value gains/(losses)	18	—	—	—	—	33	—
– exchange differences	(96)	(115)	(39)	(36)	(18)	(78)	(53)
Purchases	1,670	4,170	6,261	—	924	—	—
New issuances	—	—	—	—	—	6,521	—
Sales	(97)	(1,477)	(649)	—	(295)	—	—
Settlements2	(1,011)	(967)	(6,476)	(897)	(307)	(4,750)	(568)
Transfers out3	(438)	(429)	(278)	(777)	(29)	(6,048)	(1,346)
Transfers in3	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)
– changes in fair value of other financial instruments<br><br>mandatorily measured at fair value through profit<br><br>or loss	—	—	11	—	—	(94)	—
At 1 Jan 2023	2,961	4,817	17,407	1,964	474	10,432	2,920
---	---	---	---	---	---	---	---
Total gains/(losses) recognised in profit or loss	(44)	266	921	692	75	97	910
– net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis	—	266	—	692	75	97	910
– net income from assets and liabilities of insurance<br><br>businesses, including related derivatives,<br><br>measured at fair value through profit or loss	—	—	—	—	—	—	—
– changes in fair value of other financial instruments<br><br>mandatorily measured at fair value through profit<br><br>or loss	—	—	921	—	—	—	—
– gains less losses from financial investments at fair<br><br>value through other comprehensive income	(44)	—	—	—	—	—	—
Total gains/(losses) recognised in other<br><br>comprehensive income (‘OCI’)1	28	108	87	81	24	523	111
– financial investments: fair value gains/(losses)	(44)	—	—	—	—	335	—
– exchange differences	72	108	87	81	24	188	111
Purchases	353	2,276	3,555	—	291	—	—
New issuances	—	2	—	—	2	5,389	—
Sales	(290)	(2,478)	(658)	—	(320)	(2)	—
Settlements	(352)	(872)	(1,886)	(1,018)	(74)	(3,258)	(1,565)
Transfers out	(662)	(922)	(156)	(240)	(45)	(2,881)	(358)
Transfers in	624	1,109	518	590	51	628	551
At 31 Dec 2023	2,618	4,306	19,788	2,069	478	10,928	2,569
Unrealised gains/(losses) recognised in profit or loss<br><br>relating to assets and liabilities held at 31 Dec 2023	—	(152)	82	737	—	(433)	(903)
– net income/(losses) from financial instruments<br><br>held for trading or managed on a fair value basis	—	(152)	—	737	—	—	(903)
– changes in fair value of other financial instruments<br><br>mandatorily measured at fair value through profit<br><br>or loss	—	—	82	—	—	(433)	—

1Included in ‘financial investments: fair value gains/(losses)’ in the current year and ‘exchange differences’ in the consolidated statement of comprehensive income.

2Includes $3.1bn decrease from classification of the assets of our French Life Insurance business as assets held for sale.

3Includes $4.4bn of transfers out and $1.5bn of transfers in relating to enhancement of observability assessments on equity structured notes.

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.

HSBC Holdings plc Annual Report on Form 20-F	413

Effect of changes in significant unobservable assumptions to reasonably

possible alternatives

Sensitivity of fair values to reasonably possible alternative assumptions
	2024				2023
	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	481	(313)	—	—	492	(531)	—	—
Financial assets and liabilities designated<br><br>and otherwise mandatorily measured at<br><br>fair value through profit or loss	1,434	(1,141)	—	—	1,092	(1,100)	—	—
Financial investments	21	(21)	47	(50)	13	(12)	61	(66)
At 31 Dec	1,936	(1,475)	47	(50)	1,597	(1,643)	61	(66)

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 for certain private equity positions has been enhanced in order to reduce dependency on historical observations and

focus on current valuation uncertainty, resulting in some increases in favourable sensitivities.

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.

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 2024.

Quantitative information about significant unobservable inputs in Level 3 valuations
	Fair value			2024		2023
	Assets	Liabilities	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>investments2	18,258	1	Current Value/Cost	0	291	See footnote 2
Asset-backed securities	380	—
– collateralised loan/debt obligation	100	—	Price	0	97	0	94
– other ABSs	280	—	Price	0	248	0	220
Structured notes	3	9,113
– equity-linked notes	3	5,739	Equity volatility	6%	70%	6%	154%
			Equity correlation	15%	100%	34%	100%
– Foreign exchange-linked notes	—	1,833	Foreign exchange<br><br>volatility	3%	35%	1%	34%
– other structured notes	—	1,541
Derivatives	2,149	2,842
– interest rate derivatives	1,102	1,066
securitisation swaps	196	186	Prepayment rate	5%	10%	5%	10%
long-dated swaptions	71	76	Interest rate<br><br>volatility	9%	30%	11%	37%
other interest rate derivatives	835	804
– Foreign exchange derivatives	202	212
Foreign exchange options	154	174	Foreign exchange<br><br>volatility	1%	26%	1%	31%
other foreign exchange derivatives	48	38
– equity derivatives	460	638
long-dated single stock options	145	166	Equity volatility	6%	118%	6%	110%
other equity derivatives	315	472
– credit derivatives	376	922
total return swaps	349	847	Price	0	104	0	104
other credit derivatives	27	75
– other derivatives	9	4
Other portfolios	10,512	787
– repurchase agreements	1,739	742	Interest rate curve	0%	26%	3%	8%
– bonds	4,300	27	Price	0	140	0	101
– other1	4,473	18
At 31 Dec 2024	31,302	12,743

All values are in US Dollars.

1‘Other’ includes a range of asset holdings including loans and deposits, syndicated loans and infrastructure debt.

2‘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. The analysis for private equity positions has been enhanced with the range of key unobservable inputs now quoted.

414	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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 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.

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.

Credit spread

Credit spread is the premium over a benchmark interest rate required by the market to accept lower credit quality. In a discounted cash flow

model, the credit spread increases the discount factors applied to future cash flows, thereby reducing the value of an asset. Credit spreads may

be implied from market prices and may not be observable in more illiquid markets.

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
	2024			2023
	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	—	61,286	61,286	—	59,879	59,879
Derivatives	—	3,054	3,054	—	3,344	3,344
Liabilities at 31 Dec
Financial liabilities designated at fair value	—	41,582	41,582	—	43,638	43,638
Derivatives	—	5,340	5,340	—	6,090	6,090
HSBC Holdings plc Annual Report on Form 20-F	415
---	---
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 2024
Assets
Loans and advances to banks	102,039	—	101,007	1,048	102,055
Loans and advances to customers1	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
At 31 Dec 2023
Assets
Loans and advances to banks	112,902	2	111,263	1,479	112,744
Loans and advances to customers	938,535	—	13,258	911,124	924,382
Reverse repurchase agreements – non-trading	252,217	—	252,243	—	252,243
Financial investments – at amortised cost	148,326	115,383	30,765	440	146,588
Liabilities
Deposits by banks	73,163	—	73,176	—	73,176
Customer accounts	1,611,647	—	1,611,795	—	1,611,795
Repurchase agreements – non-trading	172,100	—	172,081	—	172,081
Debt securities in issue	93,917	—	93,196	706	93,902
Subordinated liabilities	24,954	—	27,151	—	27,151

1Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of $6.9bn (2023:

$7.9bn). We reclassified the portfolio to a hold-to-collect-and-sell business model from 1 January 2025 and will measure it prospectively from the first quarter of

2025 at fair value through other comprehensive income. We expect to recognise an estimated $1bn fair value pre-tax loss in other comprehensive income on

the remeasurement of these financial instruments. The valuation of this portfolio of loans may be substantially different in the event of a sale due to entity and

deal-specific factors, including funding costs and the value of customer relationships (refer Note 23 for details).

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 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	—	—	—	—	—
At 31 Dec 2023
Assets
Loans and advances to banks	10,487	—	10,487	—	10,487
Loans and advances to customers	73,376	—	90	72,200	72,290
Reverse repurchase agreements – non-trading	2,723	—	2,723	—	2,723
Financial investments – at amortised cost	7,624	7,530	—	5	7,535
Liabilities
Deposits by banks	78	—	78	—	78
Customer accounts	85,950	—	86,475	—	86,475
Repurchase agreements – non-trading	2,768	—	2,768	—	2,768
Debt securities in issue	9,084	—	8,820	—	8,820
Subordinated liabilities	8	—	7	—	7
416	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

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

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
	2024		2023
	Carrying amount	Fair value1	Carrying amount	Fair value1
	$m	$m	$m	$m
Assets at 31 Dec
Loans and advances to HSBC undertakings	37,677	38,359	27,354	27,878
Financial investments – at amortised cost	10,328	10,335	19,558	19,531
Liabilities at 31 Dec
Debt securities in issue	64,320	65,123	65,239	65,172
Subordinated liabilities	23,548	25,911	24,439	26,651

1Fair values (other than Financial investments which are Level 1) were determined using valuation techniques with observable inputs (Level 2).

HSBC Holdings plc Annual Report on Form 20-F	417

14Financial assets designated and otherwise mandatorily measured at fair

value through profit or loss

	2024				2023
	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	2,406	104,093	106,499	2,353	101,152	103,505
– treasury and other eligible bills	732	393	1,125	695	724	1,419
– debt securities	1,674	59,904	61,578	1,658	60,045	61,703
– equity securities	—	43,796	43,796	—	40,383	40,383
Loans and advances to banks and customers	951	6,120	7,071	371	5,495	5,866
Other	—	2,199	2,199	—	1,272	1,272
At 31 Dec	3,357	112,412	115,769	2,724	107,919	110,643
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	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
Foreign exchange	9,463,768	63,547	99,014	935	99,949	99,949	780	100,729
Interest rate	14,853,397	361,312	223,534	5,119	228,653	225,443	4,080	229,523
Equities	677,149	—	14,427	—	14,427	17,603	—	17,603
Credit	153,606	—	1,351	—	1,351	1,861	—	1,861
Commodity and other	90,007	—	1,820	—	1,820	1,542	—	1,542
Gross total fair values	25,237,927	424,859	340,146	6,054	346,200	346,398	4,860	351,258
Offset (Note 31)					(116,486)			(116,486)
At 31 Dec 2023	25,237,927	424,859	340,146	6,054	229,714	346,398	4,860	234,772

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	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
Foreign exchange	66,711	—	486	—	486	1,705	—	1,705
Interest rate	33,480	92,268	1,730	1,128	2,858	747	3,638	4,385
At 31 Dec 2023	100,191	92,268	2,216	1,128	3,344	2,452	3,638	6,090

Use of derivatives

For details regarding the use of derivatives, see page 248 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.

418	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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	Change in fair value3
Hedged risk	$m	$m	m	$m
Interest rate4	190,332	4,180	4,411	(449)
At 31 Dec 2024	190,332	4,180	4,411	(449)

All values are in US Dollars.

Interest rate4	172,985	3,729	2,965	Derivatives	(1,043)
At 31 Dec 2023	172,985	3,729	2,965		(1,043)

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 $71,916m (2023: $62,480m), of which the weighted-average maturity date is March 2031 and

the weighted-average swap rate is 3.24% (2023: 3.04%).

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 hedged item by hedged risk
	Hedged item					Ineffectiveness
	Carrying amount		Accumulated fair value<br><br>hedge adjustments<br><br>included in carrying<br><br>amount1		Change in<br><br>fair value2	Recognised in profit and loss
	Assets	Liabilities	Assets	Liabilities
Hedged risk	$m	$m	$m	m	$m	m
Interest rate3	93,055		(2,701)		(728)	(8)
	492		11		(14)
	13,915		(104)	—	16
	—		—		—
		72,576		(1,800)	1,110
		207		—	—
		1,205		(266)	57
At 31 Dec 2024	107,462	73,988	(2,794)	(2,066)	441	(8)

All values are in US Dollars.

HSBC Holdings plc Annual Report on Form 20-F	419
HSBC hedged item by hedged risk (continued)
---	---	---	---	---	---	---
	Hedged item					Ineffectiveness
	Carrying amount		Accumulated fair value<br><br>hedge adjustments<br><br>included in carrying<br><br>amount1		Change in fair<br><br>value2	Recognised in profit and loss
	Assets	Liabilities	Assets	Liabilities
Hedged risk	$m	$m	$m	m	$m	m
Interest rate3	82,321		(2,282)		2,053	5
	514		32		32
	4,701		(18)		122
	—		—		15
		64,269		(2,147)	(1,179)
		—		—	—
		—		—	5
At 31 Dec 2023	87,536	64,269	(2,268)	(2,147)	1,048	5

All values are in US Dollars.

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 $311m (2023: $136m) for FVOCI assets and liabilities of $745m (2023: $1,256m) 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.

HSBC Holdings hedging instrument by hedged risk
	Hedging instrument
		Carrying amount
	Notional amount1,2	Assets	Liabilities	Change in fair value3
Hedged risk	$m	$m	m	$m
Interest rate4	90,074	714	3,838	(1,103)
At 31 Dec 2024	90,074	714	3,838	(1,103)
Interest rate4	92,268	1,128	3,638	1,426
At 31 Dec 2023	92,268	1,128	3,638	1,426

All values are in US Dollars.

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 $90,074m (2023: $92,268m), of which the weighted-average maturity date is May 2030 and

the weighted-average swap rate is 2.78% (2023: 2.46%). 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.

4The hedged risk ‘interest rate’ includes foreign exchange risk.

HSBC Holdings hedged item by hedged risk
	Hedged item					Ineffectiveness
	Carrying amount		Accumulated fair value<br><br>hedge adjustments<br><br>included in carrying<br><br>amount1		Change in<br><br>fair value2	Recognised in profit and loss
	Assets	Liabilities	Assets	Liabilities
Hedged risk	$m	$m	$m	m	$m	m
Interest rate3		78,402		(2,423)	861	(9)
	7,769		(244)		233
At 31 Dec 2024	7,769	78,402	(244)	(2,423)	1,094	(9)
Interest rate3		80,889		(2,971)	(1,716)	29
	7,772		(490)		319
At 31 Dec 2023	7,772	80,889	(490)	(2,971)	(1,397)	29

All values are in US Dollars.

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 $1,216m (2023: $1,299m) for debt issued.

2Used in effectiveness testing, comprising amount attributable to the designated hedged risk that can be a risk component.

3The hedged risk ‘interest rate’ includes foreign exchange risk.

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.

420	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

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 profit and loss
	Notional<br><br>amount1	Assets	Liabilities
Hedged risk	$m	$m	m	$m	$m	m
Foreign currency	47,194	2,088	68	2,451	2,451	—
Interest rate	215,777	619	519	(2,954)	(2,964)	10
At 31 Dec 2024	262,971	2,707	587	(503)	(513)	10

All values are in US Dollars.

Foreign currency	29,772	935	257	Derivatives	977	977	—	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	188,327	1,390	1,116	Derivatives	1,542	1,512	30
At 31 Dec 2023	218,099	2,325	1,373		2,519	2,489	30

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.

Reconciliation of equity and analysis of other comprehensive income by risk type
	Interest rate	Foreign currency
	$m	$m
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)	Cash flow hedging reserve at 1 Jan 2023	(3,387)	(421)
---	---	---
Fair value gains/(losses)	1,512	977
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	2,196	(718)
Income taxes	(937)	(29)
Others	(285)	59
Cash flow hedging reserve at 31 Dec 2023	(901)	(132)

1Hedged items that have affected profit or loss are primarily recorded within interest income.

HSBC Holdings plc Annual Report on Form 20-F	421

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 212.

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
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	—
2023
Pound sterling-denominated structural foreign exchange		(404)	16,415	604	(843)	—
Swiss franc-denominated structural foreign exchange		(23)	526	49	(62)	—
Hong Kong dollar-denominated structural foreign exchange		—	5,792	—	2	—
Other structural foreign exchange3		(96)	11,042	477	102	—
Total	—	(523)	33,775	1,130	(801)	—

1Amount recognised in OCI for Swiss franc includes $110m (2023: $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, Canadian dollar, Omani rial, South Korean won, UAE dirham, Indian rupee, Chinese

renminbi, Kuwaiti dinar, Qatari riyal, Saudi riyal, Indonesian rupiah, Thai baht and Philippine peso.

16Financial investments

Carrying amount of financial investments
	2024	2023
	$m	$m
Financial investments measured at fair value through other comprehensive income	339,193	294,437
– treasury and other eligible bills	112,705	102,438
– debt securities	224,496	190,119
– equity securities	1,569	1,447
– other instruments	423	433
Debt instruments measured at amortised cost	153,973	148,326
– treasury and other eligible bills	22,148	30,733
– debt securities	131,825	117,593
At 31 Dec	493,166	442,763
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	620	29
Business facilitation	886	29
Others	63	2
At 31 Dec 2024	1,569	60
Investments required by central institutions	609	27
Business facilitation	793	35
Others	45	2
At 31 Dec 2023	1,447	64
422	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

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	3.4	2.5	2.3
US Government agencies	0.8	—	3.1	3.1
US Government-sponsored agencies	1.7	3.5	1.6	1.8
UK Government	3.8	3.8	2.3	2.4
Hong Kong Government	—	1.9	2.0	—
Other governments	2.7	4.1	3.7	2.3
Asset-backed securities	3.4	3.0	5.4	4.3
Corporate debt and other securities	2.7	3.5	3.2	1.9
Debt securities measured at amortised cost
US Treasury	3.5	3.8	3.8	2.1
US Government agencies	0.7	0.7	1.1	4.6
US Government-sponsored agencies	—	2.8	3.7	2.9
UK Government	3.5	2.9	2.8	—
Hong Kong Government	—	2.7	—	—
Other governments	2.8	4.1	5.2	—
Asset-backed securities	—	—	7.7	—
Corporate debt and other securities	2.7	2.9	3.2	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 2024 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
	2024	2023
	$m	$m
Debt instruments measured at amortised cost
– treasury and other eligible bills	9,556	15,629
– debt securities	772	3,929
At 31 Dec	10,328	19,558
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 amortised cost
US Treasury	4.3	—	—	—

The weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year ended

31 December 2024 by the book amount of debt securities at that date. The yields do not include the effect of related derivatives.

17	Assets pledged, collateral received and assets transferred

Assets pledged1

Financial assets pledged as collateral
	2024	2023
	$m	$m
Treasury bills and other eligible securities	17,713	20,504
Loans and advances to banks	14,880	13,636
Loans and advances to customers	24,524	27,490
Debt securities	91,975	88,367
Equity securities	51,642	40,280
Other	63,386	61,223
Assets pledged at 31 Dec	264,120	251,500
HSBC Holdings plc Annual Report on Form 20-F	423
---	---

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.

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
	2024	2023
	$m	$m
Trading assets	84,863	77,847
Financial investments	47,248	39,324
At 31 Dec	132,111	117,171

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 $515,267m (2023: $495,653m).

The fair value of any such collateral sold or repledged was $293,460m (2023: $284,108m).

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 2024
Repurchase agreements	83,585	75,625
Securities lending agreements	58,232	4,361
At 31 Dec 2023
Repurchase agreements	81,486	74,517
Securities lending agreements	46,663	3,826

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
---	---	---
	2024	2023
	$m	$m
Interests in associates	28,777	27,200
Interests in joint ventures	132	144
Interests in associates and joint ventures	28,909	27,344
Principal associates of HSBC
---	---	---	---	---
	2024		2023
	Carrying amount	Fair value1	Carrying amount	Fair value1
	$m	$m	$m	$m
Bank of Communications Co., Limited	22,367	11,631	21,210	8,812
Saudi Awwal Bank	5,027	5,705	4,659	6,438

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).

424	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Principal associates of HSBC (continued)
	At 31 Dec 2024
	Jurisdiction of incorporation<br><br>and principal place of<br><br>business	Principal activity	HSBC’s interest1<br><br>%
Bank of Communications Co., Limited	Mainland China	Banking services	19.03
Saudi Awwal Bank	Saudi Arabia	Banking services	31.00

1There has been no percentage change in HSBC’s shareholding interest in the principal associates when compared with 2023.

Share of profit in associates and joint ventures
	2024	2023
	$m	$m
Bank of Communications Co., Limited	2,241	2,250
Saudi Awwal Bank	596	538
Other associates and joint ventures	75	19
Share of profit in associates and joint ventures	2,912	2,807
Less: Impairment of interest in BoCom	—	(3,000)

A list of all associates and joint ventures is set out in Note 38.

Bank of Communications Co., Limited

The Group maintains a 19.03% interest in Bank of Communications Co., Limited (‘BoCom’). The Group’s investment in BoCom is classified as

an associate. Significant influence in BoCom was established with consideration of all relevant factors, including 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.

At 31 December 2023, the Group performed an impairment test on the carrying amount, which resulted in an impairment of $3.0bn, as the

recoverable amount as determined by a value in use (‘VIU’) calculation was lower than the carrying amount. No further impairment 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.

On 24 September 2024, the People’s Bank of China, National Financial Regulatory Administration and China Securities Regulatory Commission

announced several policies aimed at promoting growth and economic development. These included monetary stimulus, property market

support and capital market strengthening measures, as well as measures to recapitalise the largest commercial banks. In the absence of

further details on how the recapitalisation of the largest commercial banks may be enacted, there is no change to the impairment test result at

31 December 2024. As further details become available, the impairment test will be updated to reflect their impact and may result in a change

to the carrying value of our investment in BoCom. These developments have the potential to impact on the Group‘s reported earnings, but are

unlikely to have an impact on HSBC's capital or capital ratios.

We remain supportive of our relationship with BoCom and will consider any broader implications on the carrying value of our investment as

further details become available.

Impairment testing

At 31 December 2024, the carrying amount of the investment was $22.4bn (2023: $21.2bn) with fair value of $11.6bn (2023: $8.8bn). The

Group has concluded there is no indication of further impairment (or indication that an impairment may no longer exist or may have decreased)

since 31 December 2023. As part of this assessment, the Group updated the VIU calculation which supported that there was no significant

change to the 31 December 2023 impairment position. As a result, no additional impairment to the carrying amount (or reversal of impairment)

was made at 31 December 2024.

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	425

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% (2023: 3.00%) for periods after 2028, 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% (2023: 3.00%) for periods after 2028, which is the rate that assets are expected to grow to achieve long-term

profit growth of 3.00%. The increase of long-term asset growth rate was supported by historical data, which is expected to continue.

–Discount rate: 8.53% (2023: 9.00%), 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 8.8% (2023: 7.9% to 9.7%) indicated by the CAPM, and decreased 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 0.74% to 0.93% (2023: 0.80% to 0.97%)

in the short to medium term, reflecting reported credit experience in mainland China. For periods after 2028, the ratio is 0.97% (2023:

0.97%), which is higher than BoCom’s average ECL as a percentage of loans and advances to customers in recent years prior to the

Covid-19 pandemic.

–Risk-weighted assets as a percentage of total assets: ranges from 62.0% to 62.5% (2023: 62.0% to 63.7%) 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 2028, the ratio

is 62.0% (2023: 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 9.5% (2023: 9.0% to 10.0%) in the short to medium term, which is

similar to BoCom’s actual results in recent years. Changes in the forecast growth rate of loans and advances to customers are likewise

reflected in the forecast ECL.

–Operating income growth rate: ranges from 0.1% to 9.9% (2023: -0.4% to 9.7%) in the short to medium term, which is similar to BoCom’s

actual results in recent years, and is impacted by projections of net interest income in the short term as a consequence of recent

macroeconomic, policy and industry factors in mainland China.

–Cost-income ratio: ranges from 34.6% to 39.8% (2023: 35.5% 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% (2023: 15.0%) for periods after 2028, 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% (2023: 12.5%) and tier 1 capital adequacy ratio of 9.5% (2023: 9.5%), based on

BoCom’s capital risk appetite and capital requirements respectively.

The changes in VIU would impact the carrying amount if there is an indication of further impairment (or indication that an impairment may no

longer exist or may have decreased, to the extent of impairment loss previously recognised). 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 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>customers	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)
At 31 Dec 2023
Long-term profit growth rate	58	3.3	(79)	(3.4)
Long-term asset growth rate	(79)	4.5	58	(4.0)
Discount rate	(110)	4.5	280	(6.1)
Expected credit losses as a percentage of loans and advances to<br><br>customers	2023 to 2027: 78<br><br>2028 onwards: 91	2.9	2023 to 2027: 120<br><br>2028 onwards: 104	(4.4)
Risk-weighted assets as a percentage of total assets	(150)	0.9	216	(1.6)
Loans and advances to customers growth rate	(213)	3.2	207	(2.9)
Operating income growth rate	57	2.6	(81)	(2.6)
Cost-income ratio	(212)	0.8	99	(2.9)
Long-term effective tax rate	(426)	1.6	1,000	(3.5)
Capital requirements – capital adequacy ratio	—	—	215	(7.5)
Capital requirements – tier 1 capital adequacy ratio	—	—	248	(3.7)
426	HSBC Holdings plc Annual Report on Form 20-F
---	---

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

$13.5bn to $30.8bn (2023: $13.1bn to $28.8bn), acknowledging that the fair value of the Group’s investment has ranged from $6.8bn to

$11.6bn 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 earnings 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 2024, HSBC included the associate’s

results on the basis of the financial statements for the 12 months ended 30 September 2024, taking into account any known changes in the

subsequent period from 1 October 2024 to 31 December 2024 that would have materially affected the results.

Selected balance sheet information of BoCom
	At 30 Sep	At 30 Sep
	2024	2023
	$m	$m
Cash and balances at central banks	99,663	112,800
Due from and placements with banks and other financial institutions	122,607	100,464
Loans and advances to customers	1,128,603	1,087,613
Other financial assets	587,721	587,949
Other assets	61,086	59,215
Total assets	1,999,680	1,948,041
Due to and placements from banks and other financial institutions	326,742	292,065
Deposits from customers	1,195,590	1,216,611
Other financial liabilities	282,894	251,246
Other liabilities	38,082	36,766
Total liabilities	1,843,308	1,796,698
Total equity	156,372	151,343
Reconciliation of BoCom’s total shareholders’ equity to the carrying amount in HSBC’s consolidated financial statements
---	---	---
	At 30 Sep
	2024	2023
	$m	$m
Equity attributable to shareholders	154,748	149,713
Other equity instruments	(23,946)	(24,616)
Equity attributable to shareholders less other equity instruments	130,802	125,097
The Group's share of equity1	25,284	24,210
Impairment2	(2,917)	(3,000)
Carrying amount	22,367	21,210

1This balance includes goodwill originally arising on acquisition.

2This balance includes the impact of foreign exchange movements on the $3bn impairment booked in the financial year ended 31 December 2023.

Selected income statement information of BoCom
	For the 12 months ended 30 Sep
	2024	2023
	$m	$m
Net interest income	23,180	23,432
Net fee and commission income	5,315	6,221
Credit and impairment losses	(7,410)	(8,099)
Depreciation and amortisation	(2,589)	(2,560)
Tax expense	(835)	(1,007)
Profit for the year	12,922	13,211
Other comprehensive income	1,361	686
Total comprehensive income	14,283	13,897
Dividends received from BoCom	745	736

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

There were no indicators of impairment at 31 December 2024. The fair value of the Group’s investment in SAB of $5.7bn was above the

carrying amount of $5.0bn.

HSBC Holdings plc Annual Report on Form 20-F	427
19	Investments in subsidiaries
---	---
Main subsidiaries of HSBC Holdings1
---	---	---	---
	At 31 Dec 2024
	Place of<br><br>incorporation or<br><br>registration	HSBC’s<br><br>interest<br><br>%
			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	63.12	HK$5 Ordinary
HSBC Bank (China) Company Limited	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. During 2024, we completed the sale of HSBC Bank Canada to the

Royal Bank of Canada, therefore it is no longer an indirect subsidiary of HSBC Holdings. There has been no material percentage change in HSBC’s shareholding

for its existing main subsidiaries since 2023.

2In addition to the strategic holding disclosed above, the Group held 0.06% (2023: 0.09%) 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 Limited on 18 June 2024 was 63.04%. Movements in our shareholding since 18 June 2024 are reflected in the above table.

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 2024, 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 2024,

cash flow projections until the end of 2029 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.

428	HSBC Holdings plc Annual Report on Form 20-F

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. 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.

As at 31 December 2024, the carrying amount of HSBC Holdings’ investments in subsidiaries was $152.3bn (2023: $159.5bn). The year-on-year

reduction was predominantly due to the recognition of an $11.4bn impairment of HSBC Holdings’ investment in HSBC Overseas Holdings (UK)

Limited.

The recoverable amount of HSBC Overseas Holdings (UK) Limited is assessed as the aggregate of the recoverable amounts of its subsidiaries.

During the year HSBC Overseas Holdings (UK) Limited sold its stake in its direct subsidiary HSBC Bank Canada to Royal Bank of Canada, and

transferred HSBC Private Bank (Suisse) SA, its indirect subsidiary (via HSBC Private Banking Holdings (Suisse) SA), to HSBC Bank plc.

Following these disposals HSBC Overseas Holdings (UK) Limited paid $12.1bn in dividend income to HSBC Holdings, which mainly drove the

recognition of an $11.4bn impairment in its investment in HSBC Overseas Holdings (UK) Limited, offset by a higher recoverable amount of

HSBC Overseas Holdings (UK) Limited’s principal remaining subsidiary as at 31 December 2024, HSBC North America Holdings Inc, driven by

higher projected profits and lower projected capital requirements. As at 31 December 2024, HSBC Holdings had recognised for HSBC

Overseas Holdings (UK) Limited a cumulative impairment of $21.6bn (2023: $10.2bn), and a carrying amount of $14.0bn (2023: $25.8bn).

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 2024	13,264	11.00	2.25
At 31 Dec 2023	12,756	10.50	2.17

Sensitivities of key assumptions in calculating VIU

At 31 December 2024, 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%.<br><br>–Discount rate increases<br><br>by 1%.	Sensitivity of VIU to reasonably possible changes in key assumptions
---	---	---
In $bn (unless otherwise stated)	At 31 Dec 2024	At 31 Dec 2023
HSBC North America Holdings Inc.
VIU	13.3	12.8
Impact on VIU
100bps decrease in the discount rate – single variable1	1.5	1.6
100bps increase in the discount rate – single variable1	(1.2)	(1.2)
10% decrease in forecast profitability – single variable1	(1.3)	(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	429
Subsidiaries with significant non-controlling interests
---	---	---
	2024	2023
Hang Seng Bank Limited
Proportion of ownership interests and voting rights held by non-controlling interests (%)1	36.88	37.86
Place of business	Hong Kong	Hong Kong
	$m	$m
Profit attributable to non-controlling interests	905	889
Accumulated non-controlling interests of the subsidiary	6,879	6,877
Dividends paid to non-controlling interests	620	490
Summarised financial information:
– total assets	229,069	214,321
– total liabilities	208,908	194,621
– net operating income before changes in expected credit losses and other credit impairment charges	5,249	5,210
– profit for the year	2,434	2,356
– total comprehensive income for the year	2,482	2,723

1This includes the Group’s shareholding held under trading books 0.06% (2023: 0.09%).

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 funds	Other	Total
	$bn	$bn	$bn	$bn	$bn
At 31 Dec 2024	2.4	7.0	7.2	1.8	18.4
At 31 Dec 2023	3.6	7.8	5.5	8.2	25.1

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 2024, Solitaire, HSBC’s principal SIC, held $0.7bn of ABSs (2023: $1.0bn). It is currently funded entirely by commercial

paper (‘CP’) issued to HSBC. At 31 December 2024, HSBC held $1.0bn of CP (2023: $1.3bn).

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 $5.2bn at 31 December 2024 (2023: $6.1bn). 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.

430	HSBC Holdings plc Annual Report on Form 20-F

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
	HSBC managed<br><br>funds	Non-HSBC<br><br>managed funds	Other	Total
Total asset values of the entities (m)
0–500	344	1,215	46	1,772
500–2,000	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	472	2,719	49	3,409
	$bn	$bn	$bn	$bn
Total assets in relation to HSBC’s interests in the unconsolidated structured entities	12.1	25.4	2.4	45.3
– trading assets	0.1	—	—	0.1
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss	7.8	22.2	—	30.0
– loans and advances to customers	—	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 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	13.1	33.5	3.3	55.3
Total asset values of the entities (m)
0–500	337	1,271	42	1,770
500–2,000	96	1,069	3	1,172
2,000–5,000	39	418	—	457
5,000–25,000	24	217	—	241
25,000+	3	11	—	14
Number of entities at 31 Dec 2023	499	2,986	45	3,654
	$bn	$bn	$bn	$bn
Total assets in relation to HSBC’s interests in the unconsolidated structured entities	13.9	20.7	3.3	41.1
– trading assets	0.6	—	—	0.6
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss	12.6	19.7	—	32.3
– loans and advances to customers	—	0.6	2.5	6.3
– financial investments	0.7	0.4	—	1.1
– other assets	—	—	0.8	0.8
Total liabilities in relation to HSBC’s interests in the unconsolidated structured entities	—	—	0.3	0.3
– other liabilities	—	—	0.3	0.3
Other off-balance sheet commitments	1.9	5.0	1.2	8.2
HSBC’s maximum exposure at 31 Dec 2023	15.8	25.7	4.2	49.0

All values are in US Dollars.

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 116.

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	431

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 2024 and 2023 was not significant.

21Goodwill and intangible assets

	2024	2023
	$m	$m
Goodwill	4,118	4,323
Other intangible assets1	8,266	8,164
At 31 Dec	12,384	12,487

1Included within other intangible assets is internally generated software with a net carrying amount of $7,100m (2023: $6,895m). During the year, capitalisation

of internally generated software was $2,476m (2023: $2,306m), impairment was $67m (2023: reversal impairment of $285m) and amortisation was $1,995m

(2023: $1,877m).

Movement analysis of goodwill
	2024	2023
	$m	$m
Gross amount
At 1 Jan	19,560	18,965
Exchange differences	(962)	523
Reclassified to held for sale and additions1	28	73
Other	—	(1)
At 31 Dec	18,626	19,560
Accumulated impairment losses
At 1 Jan	(15,237)	(14,809)
Exchange differences	716	(428)
Reclassified to held for sale1	13	—
At 31 Dec	(14,508)	(15,237)
Net carrying amount at 31 Dec	4,118	4,323

1Includes goodwill arising from acquisition of Silkroad, offset by goodwill reclassified to held for sale associated with sales of HSBC Bank Armenia, private

banking business in Germany, and 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 2024. 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 20241
	Carrying<br><br>amount at<br><br>1 Oct 2024	of which<br><br>goodwill	Value in<br><br>use at<br><br>1 Oct 2024	Discount<br><br>rate	Growth<br><br>rate<br><br>beyond<br><br>initial<br><br>cash flow	Carrying<br><br>amount at<br><br>1 Oct 2023	of which<br><br>goodwill	Value in<br><br>use at<br><br>1 Oct 2023	Discount<br><br>rate	Growth<br><br>rate<br><br>beyond initial<br><br>cash flow<br><br>projections
	$m	$m	$m	%	%	$m	$m	$m	%	%
HSBC UK<br><br>Bank plc –<br><br>WPB	12,785	2,843	27,118	10.6	2.0	11,167	2,597	27,933	10.4	2.0

1For impacts arising from the revised organisational structure effective from 1 January 2025, see Note 1.2(a).

At 1 October 2024, aggregate goodwill of $1,493m (1 October 2023: $1,599m) 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.

432	HSBC Holdings plc Annual Report on Form 20-F

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 2024 impairment test, cash flow projections until the end of 2029 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 2024, given the extent by which VIU exceeds carrying amount, the HSBC UK WPB 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(n) 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(a), 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 2024 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	433

22Prepayments, accrued income and other assets

	2024	2023
	$m	$m
Prepayments and accrued income	13,781	13,854
Settlement accounts and items in course of collection from other banks	19,050	39,195
Cash collateral and margin receivables	59,488	57,058
Bullion	16,841	13,701
Endorsements and acceptances	8,093	7,939
Insurance contract assets (Note 4)	132	252
Reinsurance contract assets	4,798	4,728
Employee benefit assets (Note 5)	7,548	7,750
Right-of-use assets	2,205	2,456
Owned property, plant and equipment	9,407	10,478
Other accounts	11,397	14,186
At 31 Dec1	152,740	171,597

1Prepayments, accrued income and other assets include $109,336m (2023: $129,203m) 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

	2024	2023
	$m	$m
Held for sale at 31 Dec
Disposal groups	27,126	115,836
Unallocated impairment losses1	(31)	(1,975)
Non-current assets held for sale	139	273
Assets held for sale	27,234	114,134
Liabilities of disposal groups held for sale	29,011	108,406

1This represents impairment losses in excess of the carrying value of the non-current assets, excluded from the measurement scope of IFRS 5.

Disposal groups

France retail banking operations

On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking business in France to CCF, a subsidiary of Promontoria

MMB SAS (‘My Money Group’). The sale also included HSBC Continental Europe’s 100% ownership interest in HSBC SFH (France) and its 3%

ownership interest in Crédit Logement.

Upon completion and in accordance with the terms of the sale, HSBC Continental Europe received a €0.1bn ($0.1bn) profit participation interest

in the ultimate holding company of My Money Group. The associated impacts on initial recognition of this stake at fair value were recognised as

part of the pre-tax loss on disposal in 2023, upon the reclassification of the disposal group as held for sale. In accordance with the terms of the

sale, HSBC Continental Europe retained a portfolio of €7.1bn ($7.4bn) at the time of the sale, consisting of home and certain other loans, and

the CCF brand, which it licensed to the buyer under a long-term licence agreement. Additionally, HSBC Continental Europe’s subsidiaries,

HSBC Assurances Vie (France) and HSBC Global Asset Management (France), entered into distribution agreements with the buyer.

The customer lending balances and associated income statement impacts of the portfolio of retained loans, together with the profit

participation interest and the licence agreement of the CCF brand, were reclassified from WPB to Corporate Centre, with effect from 1 January

2024.

During the fourth quarter of 2024, we began the process of marketing the retained home and other loan portfolio for sale, which had a carrying

value of €6.7bn ($6.9bn) at 31 December 2024. As a result, we reclassified the portfolio to a hold-to-collect-and-sell business model from

1 January 2025 and will measure it prospectively from the first quarter of 2025 at fair value through other comprehensive income. We expect to

recognise an estimated $1bn fair value pre-tax loss in other comprehensive income on the remeasurement of the financial instruments. The

valuation of this portfolio of loans may be substantially different in the event of a sale due to entity and deal-specific factors, including funding

costs and the value of customer relationships. In the event of a sale, upon completion, the cumulative fair value changes recognised through

other comprehensive income, which would reflect the terms of an agreed sale, would reclassify to the income statement. In December 2024,

we entered into non-qualifying economic hedges, hedging interest rate risk on the portfolio and recognised a $0.1bn mark-to-market gain year-

to-date.

Canada banking business

On 28 March 2024, HSBC Overseas Holdings (UK) Limited, a direct subsidiary of HSBC Holdings plc, completed the sale of HSBC Bank Canada

to the Royal Bank of Canada.

The completion of the transaction resulted in a gain on sale of $4.8bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve

losses and $0.4bn in other reserves losses. The gain on sale also included $0.3bn in fair value gains recognised on the related foreign exchange

hedges in the first quarter of 2024. There was no tax on the gain recognised at completion due to the substantial shareholding exemption rule

in the UK.

Following the completion of this transaction, the Board approved a special dividend of $0.21 per share, which was paid in June 2024 alongside

the first interim dividend.

434	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Argentina business

On 6 December 2024, HSBC Latin America B.V. completed the sale of its business in Argentina to Grupo Financiero Galicia (‘Galicia‘).

Galicia acquired all of HSBC Argentina’s business covering banking, asset management and insurance, together with $100m of subordinated

debt issued by HSBC Argentina and held by HSBC Latin America Holdings (UK) Limited for a base consideration of $550m. The consideration

was adjusted for the results of the business and fair value gains or losses on HSBC Argentina’s securities portfolios during the period between

31 December 2023 and 30 November 2024. HSBC received the purchase consideration in a combination of cash and Galicia’s American

Depositary Receipts (‘ADRs‘), with ADRs representing less than a 10% economic interest in Galicia. At 31 December 2024, the fair value of the

ADRs received and held as fair value through profit and loss was $0.7bn.

For the year ended 31 December 2024, we recognised a $1.0bn pre-tax loss and we recycled $5.2bn foreign currency reserve and other

reserve losses to the income statement on completion. There was no tax deduction on the loss recognised.

Other disposals

On 30 May 2024, HSBC Europe BV, a wholly-owned subsidiary of HSBC Bank plc, completed the sale of HSBC Bank (RR) (Limited Liability

Company) to Expobank. Foreign currency translation reserve losses of $0.1bn were recognised in the income statement upon completion.

On 6 July 2024, The Hongkong and Shanghai Banking Corporation Limited (acting through its Mauritius branch) completed the sale of its

Wealth and Personal Banking business in Mauritius to Absa Bank (Mauritius) Limited, a wholly-owned subsidiary of Absa Group Limited. The

financial impact of the sale was not significant for the Group.

On 23 September 2024, HSBC Continental Europe, a wholly owned subsidiary of HSBC Bank plc, reached an agreement to sell its private

banking business in Germany to BNP Paribas and the disposal group met the held for sale criteria at 31 December 2024. This sale, which

remains subject to works council consultation, is expected to be completed in the second half of 2025. The sale is expected to generate an

estimated pre-tax gain on disposal of $0.2bn, which will be recognised on completion.

On 25 September 2024, HSBC reached an agreement to transfer its business in South Africa to local lender FirstRand Bank Ltd and the

disposal group met the held for sale criteria at 31 December 2024. The transaction, which is subject to regulatory and governmental approvals,

is expected to complete in the second half of 2025. At closing, cumulative foreign currency translation reserves and other reserves will recycle

to the income statement. At 31 December 2024, foreign currency translation reserve and other reserve losses stood at $0.2bn.

On 29 November 2024, HSBC Europe BV completed the sale of HSBC Bank Armenia to Ardshinbank with a year-to-date loss of $0.1bn

recognised.

On 20 December 2024, HSBC Continental Europe signed a Memorandum of Understanding (‘MoU’) for the planned sale of its French life

insurance business, HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. The transaction, which is subject to regulatory

approvals and employee consultation, is expected to complete in the second half of 2025. The disposal group met the held for sale criteria at

31 December 2024, resulting in the reclassification of $24.2bn in assets and $23.4bn in liabilities to held for sale, and the recognition of an

immaterial loss on disposal. The total pre-tax loss at completion is estimated at $0.2bn inclusive of migration costs and the recycling of

cumulative foreign currency translation reserves, insurance finance reserves and other reserves which stood at a net loss of $0.1bn as at

31 December 2024.

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	German 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 investments2	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
Expected date of completion	Second half of 2025	Second half of 2025	Second half of 2025
Operating segment	WPB	WPB	GBM and<br><br>Corporate Centre

1 Under the financial terms of the sale of our South Africa business, HSBC Bank plc will transfer the business with a net asset value of $0.7bn for a book value

less any provisions. The purchase price will be satisfied by the transfer of agreed liabilities of $3.3bn. 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 2024, HSBC

would be expected to include a cash contribution of $2.6bn.

2Represents financial investments measured at fair value through other comprehensive income.

HSBC Holdings plc Annual Report on Form 20-F	435

At 31 December 2023, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment

losses, were as follows:

	Canada	Retail banking<br><br>operations in France	Other	Total
	$m	$m	$m	$m
Assets of disposal groups held for sale
Cash and balances at central banks	5,370	226	—	5,596
Trading assets	2,465	—	—	2,465
Financial assets designated and otherwise mandatorily measured at fair value through<br><br>profit or loss	15	49	—	64
Derivatives	528	—	—	528
Loans and advances to banks	154	10,333	—	10,487
Loans and advances to customers	56,129	16,902	254	73,285
Reverse repurchase agreements – non-trading	2,723	—	—	2,723
Financial investments1	16,978	33	—	17,011
Goodwill	225	—	—	225
Prepayments, accrued income and other assets	3,318	132	2	3,452
Total assets at 31 Dec 2023	87,905	27,675	256	115,836
Liabilities of disposal groups held for sale
Trading liabilities	1,417	—	—	1,417
Deposits by banks	78	—	—	78
Customer accounts	63,001	22,307	642	85,950
Repurchase agreements – non-trading	2,768	—	—	2,768
Financial liabilities designated at fair value	—	2,370	—	2,370
Derivatives	608	7	—	615
Debt securities in issue	7,707	1,377	—	9,084
Subordinated liabilities	8	—	—	8
Accruals, deferred income and other liabilities	5,916	196	4	6,116
Total liabilities at 31 Dec 2023	81,503	26,257	646	108,406
Date of completion	28 March 2024	1 January 2024
Operating segment	All global<br><br>businesses	WPB

1Includes financial investments measured at fair value through other comprehensive income of $9.4bn and debt instruments measured at amortised cost of

$7.6bn.

Business acquisitions

In October 2023, HSBC Global Asset Management Singapore Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking

Corporation Limited, entered into an agreement to acquire 100% of the shares of Silkroad Property Partners Pte Ltd (‘Silkroad’) and for HSBC

Global Asset Management Limited to acquire Silkroad’s affiliated General Partner entities. Silkroad is a Singapore headquartered Asia-Pacific-

focused, real estate investment manager. The acquisition was completed on 31 January 2024.

In October 2023, HSBC Bank (China) Company Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation

Limited, entered into an agreement to acquire Citibank China’s retail wealth management portfolio in mainland China. The portfolio comprises

assets under management and deposits and the associated wealth customers. The acquisition was completed on 7 June 2024.

The financial impact of these business acquisitions was not significant for the Group.

24Trading liabilities

	2024	2023
	$m	$m
Deposits by banks1	7,671	6,779
Customer accounts1	10,709	8,955
Other debt securities in issue (Note 26)	73	27
Other liabilities – net short positions in securities	47,529	57,389
At 31 Dec	65,982	73,150

1‘Deposits by banks’ and ‘Customer accounts’ include repos, stock lending and other amounts.

436	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

25	Financial liabilities designated at fair value
HSBC
---	---	---
	2024	2023
	$m	$m
Deposits by banks and customer accounts1	23,773	21,043
Liabilities to customers under investment contracts	5,931	5,103
Debt securities in issue (Note 26)	99,706	103,803
Subordinated liabilities (Note 29)	9,317	11,477
At 31 Dec	138,727	141,426

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 $4,365m less than the contractual amount at maturity (2023: $4,421m

less). The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $1,655m (2023: loss of $1,286m).

HSBC Holdings
	2024	2023
	$m	$m
Debt securities in issue (Note 26)	33,268	35,189
Subordinated liabilities (Note 29)	8,314	8,449
At 31 Dec	41,582	43,638

The carrying amount of financial liabilities designated at fair value was $17m less than the contractual amount at maturity (2023: $246m less).

The cumulative amount of change in fair value attributable to changes in credit risk was a loss of $540m (2023: $682m).

26	Debt securities in issue
HSBC
---	---	---
	2024	2023
	$m	$m
Bonds and medium-term notes	163,903	160,632
Other debt securities in issue	41,661	37,115
Total debt securities in issue	205,564	197,747
Included within:
– trading liabilities (Note 24)	(73)	(27)
– financial liabilities designated at fair value (Note 25)	(99,706)	(103,803)
At 31 Dec	105,785	93,917
HSBC Holdings
---	---	---
	2024	2023
	$m	$m
Debt securities	97,588	100,428
Included within:
– financial liabilities designated at fair value (Note 25)	(33,268)	(35,189)
At 31 Dec	64,320	65,239

27Accruals, deferred income and other liabilities

	2024	2023
	$m	$m
Accruals and deferred income	16,277	16,814
Settlement accounts and items in course of transmission to other banks	24,692	35,718
Cash collateral and margin payables	58,040	56,832
Endorsements and acceptances	8,102	7,911
Employee benefit liabilities (Note 5)	1,017	1,160
Reinsurance contract liabilities	701	819
Lease liabilities	2,459	2,813
Other liabilities	19,052	21,834
At 31 Dec1	130,340	143,901

1Accruals, deferred income and other liabilities include $122,051m (2023: $136,696m) of financial liabilities, the majority of which are measured at amortised

cost.

HSBC Holdings plc Annual Report on Form 20-F	437

28 Provisions

	Restructuring<br><br>costs	Legal<br><br>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 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	Provisions (excluding contractual commitments)
---	---	---	---	---	---
At 1 Jan 2023	445	409	195	397	1,446
Additions	255	236	37	170	698
Amounts utilised	(288)	(231)	(69)	(68)	(656)
Unused amounts reversed	(149)	(30)	(41)	(95)	(315)
Exchange and other movements	21	(4)	8	16	41
At 31 Dec 2023	284	380	130	420	1,214
Contractual commitments1
At 1 Jan 2023					512
Net change in expected credit loss provision and other movements					15
At 31 Dec 2023					527
Total provisions
At 31 Dec 2022					1,958
At 31 Dec 2023					1,741

1Contractual commitments include the expected credit loss provision in relation to off-balance sheet financial guarantee contracts and commitments where

HSBC has become party to an irrevocable commitment, as defined under IFRS 9 ‘Financial Instruments’; and provisions for performance and other guarantee

contracts.

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 192.

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 PIS and 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. 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 2024, no provision

has been booked for this amount.

438	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

29	Subordinated liabilities
HSBC’s subordinated liabilities
---	---	---
	2024	2023
	$m	$m
At amortised cost	25,958	24,954
– subordinated liabilities	25,080	23,149
– preferred securities	878	1,805
Designated at fair value (Note 25)	9,317	11,477
– subordinated liabilities	9,317	11,477
– preferred securities	—	—
At 31 Dec	35,275	36,431
Issued by HSBC subsidiaries	3,144	4,154
Issued by HSBC Holdings	32,131	32,277

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’s subordinated liabilities: subsidiaries
	2024	2023
	$m	$m
Additional tier 1 capital securities issued by HSBC subsidiaries1	732	1,672
Tier 2 securities issued by HSBC subsidiaries
– Tier 2 securities issued by HSBC Bank plc	715	764
– Tier 2 securities issued by The Hongkong and Shanghai Banking Corporation Limited		—
– Tier 2 securities issued by HSBC Bank USA Inc	223	223
– Tier 2 securities issued by HSBC Bank USA N.A.	1,431	1,449
Securities issued by other HSBC subsidiaries	43	46
Subordinated liabilities issued by HSBC subsidiaries at 31 Dec	3,144	4,154

1 The $900m 10.176% security issued by HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.

HSBC Holdings’ subordinated liabilities
	2024	2023
	$m	$m
At amortised cost	23,548	24,439
Designated at fair value (Note 25)	8,314	8,449
At 31 Dec	31,862	32,888
HSBC Holdings’ subordinated liabilities in issue
---	---	---
	2024	2023
	$m	$m
Tier 2 securities issued by HSBC Holdings
Amounts owed to third parties	31,862	31,975
Amounts owed to HSBC undertakings1	—	913
Subordinated liabilities issued by HSBC Holdings at 31 Dec	31,862	32,888

1The $900m 10.176% security issued by HSBC Holdings to HSBC Capital Funding (Dollar 1) L.P. was redeemed on 31 October 2024.

HSBC Holdings plc Annual Report on Form 20-F	439

Guaranteed by HSBC Holdings or HSBC Bank plc

Capital securities guaranteed by HSBC Holdings or HSBC Bank plc were issued by the Jersey limited partnerships. The proceeds of these were

lent to the respective guarantors by the limited partnerships in the form of subordinated notes. They qualified as additional tier 1 capital for

HSBC under CRR II until 31 December 2021 by virtue of the application of grandfathering provisions. The capital securities guaranteed by HSBC

Bank plc also qualified as additional tier 1 capital for HSBC Bank plc (on a solo and a consolidated basis) under CRR II until 31 December 2021

by virtue of the same grandfathering process. Since 31 December 2021, these securities have no longer qualified as regulatory capital for HSBC

Holdings or HSBC Bank plc. On 31 October 2024, the capital securities guaranteed by HSBC Holdings were redeemed.

As at 31 December 2024 the preferred securities guaranteed by HSBC Bank plc 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 guaranteed by HSBC Bank plc 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 guaranteed by HSBC Bank plc 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 either perpetual or 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, either as fully eligible capital or by virtue of the

application of grandfathering provisions. 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 440 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 395. 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.

440	HSBC Holdings plc Annual Report on Form 20-F

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	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<br><br>fair value	19,037	8,732	5,890	4,765	5,600	17,013	43,274	34,416	138,727
– debt securities in issue: covered bonds	—	—	—	—	—	—	—	—	—
– 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
HSBC Holdings plc Annual Report on Form 20-F	441
---	---
Maturity analysis of assets, liabilities and off-balance sheet commitments (continued)
---	---	---	---	---	---	---	---	---	---
	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 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	285,868	—	—	—	—	—	—	—	285,868
Hong Kong Government certificates of<br><br>indebtedness	42,024	—	—	—	—	—	—	—	42,024
Trading assets	284,865	2,010	637	363	555	165	564	—	289,159
Financial assets designated and otherwise<br><br>mandatorily measured at fair value through profit<br><br>or loss	5,530	697	821	753	581	4,839	11,917	85,505	110,643
Derivatives	227,343	138	134	71	35	383	570	1,040	229,714
Loans and advances to banks	76,524	18,662	6,487	2,689	3,281	2,756	2,328	175	112,902
Loans and advances to customers	142,803	66,425	52,218	40,135	36,323	94,206	175,381	331,044	938,535
– personal	44,105	9,558	6,960	6,422	6,127	19,606	54,365	297,512	444,655
– corporate and commercial	83,281	50,268	38,250	24,685	24,566	61,612	106,598	30,592	419,852
– financial	15,417	6,599	7,008	9,028	5,630	12,988	14,418	2,940	74,028
Reverse repurchase agreements – non-trading	164,826	43,893	23,840	6,708	5,126	6,113	1,711	—	252,217
Financial investments	48,969	69,816	44,493	16,348	18,603	46,124	106,117	92,293	442,763
Assets held for sale1	39,882	2,929	7,041	4,176	3,261	17,085	33,015	7,943	115,332
Accrued income and other financial assets	114,480	6,574	4,404	550	698	220	764	1,513	129,203
Financial assets at 31 Dec 2023	1,433,114	211,144	140,075	71,793	68,463	171,891	332,367	519,513	2,948,360
Non-financial assets	—	—	—	—	—	—	—	90,317	90,317
Total assets at 31 Dec 2023	1,433,114	211,144	140,075	71,793	68,463	171,891	332,367	609,830	3,038,677
Off-balance sheet commitments received
Loan and other credit-related commitments	39,836	—	—	—	—	—	—	—	39,836
Financial liabilities
Hong Kong currency notes in circulation	42,024	—	—	—	—	—	—	—	42,024
Deposits by banks	52,747	2,758	2,324	381	94	1,458	13,064	337	73,163
Customer accounts	1,343,858	138,117	78,611	20,832	17,724	7,785	4,616	104	1,611,647
– personal	621,112	84,909	61,286	14,794	12,465	5,507	2,742	2	802,817
– corporate and commercial	545,207	43,562	14,525	4,605	3,393	2,165	1,527	92	615,076
– financial	177,539	9,646	2,800	1,433	1,866	113	347	10	193,754
Repurchase agreements – non-trading	158,882	10,311	1,759	300	847	1	—	—	172,100
Trading liabilities	66,548	6,302	300	—	—	—	—	—	73,150
Financial liabilities designated at fair value	22,080	8,366	7,823	7,197	6,239	16,679	39,497	33,545	141,426
– debt securities in issue: covered bonds	—	—	—	—	—	—	—	—	—
– debt securities in issue: unsecured	10,383	2,760	5,748	6,225	5,390	14,090	34,757	23,898	103,251
– subordinated liabilities and preferred<br><br>securities	—	1,995	—	—	—	1,471	3,429	4,581	11,476
– other	11,697	3,611	2,075	972	849	1,118	1,311	5,066	26,699
Derivatives	233,134	113	25	9	47	73	1,223	148	234,772
Debt securities in issue	6,891	6,664	10,816	6,896	6,427	6,317	27,452	22,454	93,917
– covered bonds	—	—	—	—	—	—	1,273	—	1,273
– otherwise secured	447	44	62	58	55	188	861	1,679	3,394
– unsecured	6,444	6,620	10,754	6,838	6,372	6,129	25,318	20,775	89,250
Liabilities of disposal groups held for sale2	69,868	5,231	5,479	6,728	6,541	4,730	7,918	1,511	108,006
Accruals and other financial liabilities	111,559	11,827	6,007	1,205	1,414	1,053	1,491	2,137	136,693
Subordinated liabilities	—	13	—	—	—	1,790	897	22,254	24,954
Total financial liabilities at 31 Dec 2023	2,107,591	189,702	113,144	43,548	39,333	39,886	96,158	82,490	2,711,852
Non-financial liabilities	—	—	—	—	—	—	—	134,215	134,215
Total liabilities at 31 Dec 2023	2,107,591	189,702	113,144	43,548	39,333	39,886	96,158	216,705	2,846,067
Off-balance sheet commitments given
Loan and other credit-related commitments	895,140	95	126	72	171	439	807	300	897,150
– personal	256,272	21	30	46	107	279	745	192	257,692
– corporate and commercial	472,507	74	26	26	64	160	62	108	473,027
– financial	166,361	—	70	—	—	—	—	—	166,431

1Unallocated impairment losses in relation to disposal groups of $0.03bn (2023: $2.0bn) and non-financial assets of $0.9bn (2023: $0.9bn) 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 $21.8bn (2023: $0.4bn) 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.

442	HSBC Holdings plc Annual Report on Form 20-F

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 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<br><br>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	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 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	Financial assets
---	---	---	---	---	---	---	---	---	---
Cash at bank and in hand:
– balances with HSBC undertakings	7,029	—	—	—	—	—	—	—	7,029
Financial assets with HSBC undertakings<br><br>designated and otherwise mandatorily<br><br>measured at fair value	—	—	—	—	—	3,815	26,284	29,780	59,879
Derivatives	2,217	—	—	—	—	18	675	434	3,344
Loans and advances to HSBC undertakings	—	—	120	—	—	1,016	6,783	19,435	27,354
Financial investments	10,365	6,017	898	750	757	771	—	—	19,558
Accrued income and other financial assets	3,511	860	254	229	5	—	—	—	4,859
Total financial assets at 31 Dec 2023	23,122	6,877	1,272	979	762	5,620	33,742	49,649	122,023
Non-financial assets	—	—	—	—	—	—	—	163,146	163,146
Total assets at 31 Dec 2023	23,122	6,877	1,272	979	762	5,620	33,742	212,795	285,169
Financial liabilities
Amounts owed to HSBC undertakings	—	168	—	—	—	—	—	—	168
Financial liabilities designated at fair value	—	—	—	—	—	5,287	19,604	18,747	43,638
– debt securities in issue	—	—	—	—	—	3,816	16,175	15,198	35,189
– subordinated liabilities and preferred<br><br>securities	—	—	—	—	—	1,471	3,429	3,549	8,449
Derivatives	2,452	209	7	59	75	558	1,318	1,412	6,090
Debt securities in issue	—	—	816	2,158	—	4,920	33,735	23,610	65,239
Accruals and other financial liabilities	1,437	1,599	1,049	127	34	—	—	23	4,269
Subordinated liabilities	—	1,987	—	—	—	1,600	880	19,972	24,439
Total financial liabilities at 31 Dec 2023	3,889	3,963	1,872	2,344	109	12,365	55,537	63,764	143,843
Non-financial liabilities	—	—	—	—	—	—	—	20	20
Total liabilities at 31 Dec 2023	3,889	3,963	1,872	2,344	109	12,365	55,537	63,784	143,863
HSBC Holdings plc Annual Report on Form 20-F	443
---	---

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	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%
Deposits by banks	52,938	2,898	3,304	17,123	362	76,625
Customer accounts	1,345,006	141,348	119,660	13,423	109	1,619,546
Repurchase agreements – non-trading	159,264	10,457	2,996	1	—	172,718
Trading liabilities	73,150	—	—	—	—	73,150
Financial liabilities designated at fair value	22,262	9,156	26,033	63,960	44,886	166,297
Derivatives	232,598	609	1,295	2,445	2,910	239,857
Debt securities in issue	6,837	7,407	24,117	43,513	27,119	108,993
Subordinated liabilities	39	135	1,465	9,020	34,920	45,579
Other financial liabilities1	149,904	9,752	5,943	2,555	2,109	170,263
	2,041,998	181,762	184,813	152,040	112,415	2,673,028
Loan and other credit-related commitments	895,156	95	371	1,437	91	897,150
Financial guarantees2	16,966	4	39	—	—	17,009
At 31 Dec 2023	2,954,120	181,861	185,223	153,477	112,506	3,587,187
Proportion of cash flows payable in period	83%	5%	5%	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

2024, 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.

444	HSBC Holdings plc Annual Report on Form 20-F

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	—	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
Amounts owed to HSBC undertakings	—	168	—	—	—	168
Financial liabilities designated at fair value	23	405	1,437	31,050	25,610	58,525
Derivatives	1,244	556	1,651	2,227	726	6,404
Debt securities in issue	—	680	4,787	46,909	27,745	80,121
Subordinated liabilities	46	2,163	1,360	8,239	30,862	42,670
Other financial liabilities	1,436	1,620	1,210	—	23	4,289
At 31 Dec 2023	2,749	5,592	10,445	88,425	84,966	192,177

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	445
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<br><br>non-cash<br><br>collateral	Cash<br><br>collateral	Net<br><br>amount
	$m	$m	$m	$m	$m	$m	$m	$m
Financial assets
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
Derivatives (Note 15)2	341,473	(116,486)	224,987	(198,743)	(22,926)	3,318	4,727	229,714
Reverse repos, stock borrowing and<br><br>similar agreements classified as:3
– trading assets	29,152	(602)	28,550	(28,513)	(34)	3	2,633	31,183
– non-trading assets	365,922	(135,210)	230,712	(230,240)	(80)	392	21,653	252,365
Loans and advances to customers4	34,173	(15,792)	18,381	(15,613)	(93)	2,675	2	18,383
At 31 Dec 2023	770,720	(268,090)	502,630	(473,109)	(23,133)	6,388	29,015	531,645
Financial liabilities
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
Derivatives (Note 15)2	344,799	(116,486)	228,313	(198,640)	(23,748)	5,925	6,459	234,772
Repos, stock lending and similar<br><br>agreements classified as:3
– trading liabilities	15,686	(172)	15,514	(15,453)	—	61	6	15,520
– non-trading liabilities	270,493	(135,640)	134,853	(134,095)	(669)	89	37,247	172,100
Customer accounts5	42,522	(15,792)	26,730	(15,613)	(93)	11,024	13	26,743
At 31 Dec 2023	673,500	(268,090)	405,410	(363,801)	(24,510)	17,099	43,725	449,135

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.

2 At 31 December 2024, the amount of cash margin received that had been offset against the gross derivatives assets was $5,303m (2023: $5,105m). The

amount of cash margin paid that had been offset against the gross derivatives liabilities was $5,614m (2023: $7,142m).

3For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within ‘Trading assets’ of

$25,197m (2023: $31,183m) and ‘Trading liabilities’ of $18,331m (2023: $15,520m), see the ‘Funding sources and uses’ table on page 239.

4At 31 December 2024, the total amount of ‘Loans and advances to customers’ was $930,658m (2023: $938,535m), of which $18,042m (2023: $18,381m) was

subject to offsetting.

5At 31 December 2024, the total amount of ‘Customer accounts’ was $1,654,955m (2023: $1,611,647m), of which $24,869m (2023: $26,730m) 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
		2023
	$m	Number	$m
At 1 Jan	9,631	20,293,607,410	10,147
Shares issued under HSBC employee share plans	5	10,778,479	5
Shares issued in lieu of dividends	—	—	—
Less: shares repurchased and cancelled	663	716,384,289	358
Less: treasury shares cancelled	—	325,273,407	163
At 31 Dec1	8,973	19,262,728,193	9,631

All values are in US Dollars.

1All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.

446	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

HSBC Holdings share premium
	2024	2023
	$m	$m
At 31 Dec	14,810	14,738
Total called up share capital and share premium
---	---	---
	2024	2023
	$m	$m
At 31 Dec	23,783	24,369

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 has included two types of additional tier 1 capital securities in its tier 1 capital, including the contingent convertible securities

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. See Note 29 for additional tier 1 securities accounted for as liabilities.

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 on an end point basis. 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 further strengthen its

capital base to meet requirements under CRR II. These securities bear a fixed rate of interest until their initial call dates. After the initial call

dates, if they are not redeemed, the securities will bear interest at rates fixed periodically in advance for five-year periods based on credit

spreads, fixed at issuance, above prevailing market rates. 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 non-transitional CET1 ratio fall below 7.0%. Therefore, in accordance

with the terms of the securities, if the non-transitional CET1 ratio breaches the 7.0% trigger, the securities will convert into ordinary shares at

fixed contractual conversion prices in the issuance currencies of the relevant securities, subject to anti-dilution adjustments.

HSBC’s additional tier 1 capital – contingent convertible securities in issue which are accounted for in equity
Original nominal<br><br>amount (LCY)		First call<br><br>date	2024	2023
			$m	$m
$2,250m	6.375% Perpetual Subordinated Contingent Convertible Securities1	Sept 2024	—	2,250
$2,450m	6.375% Perpetual Subordinated Contingent Convertible Securities	Mar 2025	2,450	2,450
$3,000m	6.000% Perpetual Subordinated Contingent Convertible Securities	May 2027	3,000	3,000
$1,800m	6.500% Perpetual Subordinated Contingent Convertible Securities	Mar 2028	1,800	1,800
$1,500m	4.600% Perpetual Subordinated Contingent Convertible Securities2	Dec 2030	1,500	1,500
$1,000m	4.000% Perpetual Subordinated Contingent Convertible Securities3	Mar 2026	1,000	1,000
$1,000m	4.700% Perpetual Subordinated Contingent Convertible Securities4	Mar 2031	1,000	1,000
$2,000m	8.000% Perpetual Subordinated Contingent Convertible Securities5	Mar 2028	1,980	1,980
€1,250m	4.750% Perpetual Subordinated Contingent Convertible Securities	Jul 2029	1,422	1,422
£1,000m	5.875% Perpetual Subordinated Contingent Convertible Securities	Sept 2026	1,301	1,301
$1,350m	6.875% Perpetual Subordinated Contingent Convertible Securities6	Sept 2029	1,337	—
$1,150m	6.950% Perpetual Subordinated Contingent Convertible Securities7	Mar 2034	1,138	—
SGD1,500m	5.250% Perpetual Subordinated Contingent Convertible Securities8	Jun 2029	1,096	—
At 31 Dec			19,024	17,703

1This security was called by HSBC Holdings on 23 July 2024 and redeemed and cancelled on 17 September 2024.

2This security was issued by HSBC Holdings on 17 December 2020. The first call period commences six months prior to reset date of 17 June 2031.

3This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2026.

4This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2031.

5This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six months prior to reset date of 7 September 2028. This security

has been accounted for net of directly attributable transaction costs.

6This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six months prior to reset date of 11 March 2030. This

security has been accounted for net of directly attributable transaction costs.

7This security was issued by HSBC Holdings on 11 September 2024. The first call period commences six months prior to reset date of 11 September 2034. This

security has been accounted for net of directly attributable transaction costs.

8This security was issued by HSBC Holdings on 14 June 2024. The first call period commences six months prior to reset date of 14 December 2039.

HSBC Holdings plc Annual Report on Form 20-F	447

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 2024			31 Dec 2023
Number of<br><br>HSBC Holdings<br><br>ordinary shares	Usual period of<br><br>exercise	Exercise price	Number of<br><br>HSBC Holdings<br><br>ordinary shares	Usual period of<br><br>exercise	Exercise price
75,335,399	2023 to 2030	£2.6270–£5.4490	83,993,678	2022 to 2029	£2.6270–5.4490

Maximum obligation to deliver HSBC Holdings ordinary shares

At 31 December 2024, 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 209,683,768 (2023: 208,539,316). The total number of shares at 31 December 2024 held by employee benefit

trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 9,305,925 (2023: 20,902,218).

33	Contingent liabilities, contractual commitments and guarantees
	HSBC		HSBC Holdings1
---	---	---	---	---
	2024	2023	2024	2023
	$m	$m	$m	$m
Guarantees and other contingent liabilities:
– financial guarantees	16,998	17,009	—	—
– performance and other guarantees	92,723	94,277	7,327	7,723
– other contingent liabilities	298	636	—	—
At 31 Dec	110,019	111,922	7,327	7,723
Commitments:2
– documentary credits and short-term trade-related transactions	7,096	7,818	—	—
– forward asset purchases and forward deposits placed	61,017	78,535	—	—
– standby facilities, credit lines and other commitments to lend	793,465	810,797	—	—
At 31 Dec	861,578	897,150	—	—

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 $619,367m of commitments at 31 December 2024 (31 December 2023: $661,015m), to which the impairment requirements in IFRS 9 are applied

where HSBC has become party to an irrevocable commitment.

The preceding table discloses the nominal principal amounts of off-balance sheet liabilities and commitments for the Group, which represent

the maximum amounts at risk should the contracts be fully drawn upon and the clients default. As a significant portion of guarantees and

commitments are expected to expire without being drawn upon, the total of the nominal principal amounts is not indicative of future liquidity

requirements. The expected credit loss provision relating to guarantees and commitments under IFRS 9 is disclosed in Note 28.

The majority of the guarantees have a term of less than one year, while guarantees with terms of more than one year are subject to HSBC’s

annual credit review process.

Contingent liabilities arising from legal proceedings, regulatory and other matters against Group companies are excluded from this note but are

disclosed in Notes 28 and 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 $74.5bn at 31 December 2024 (2023:

$69.9bn). No matters arose where HSBC was severally liable.

448	HSBC Holdings plc Annual Report on Form 20-F

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 $1,595m was reclassified to ‘Assets held for sale’ in 2023 as a result of the sale of our banking business in

Canada. There was no net investment in finance leases classified as held-for-sale at 31 December 2024.

	2024			2023
	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	2,331	(295)	2,036	2,355	(308)	2,047
One to two years	1,787	(226)	1,561	1,954	(249)	1,705
Two to three years	1,290	(171)	1,119	1,380	(189)	1,191
Three to four years	839	(134)	705	930	(153)	777
Four to five years	766	(147)	619	593	(132)	461
Later than one year and no later than five years	4,682	(678)	4,004	4,857	(723)	4,134
Later than five years	3,518	(639)	2,879	4,116	(838)	3,278
At 31 Dec	10,531	(1,612)	8,919	11,328	(1,869)	9,459

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 2024 (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 non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US

whose assets were invested with Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’). Based on information provided by Madoff

Securities as at 30 November 2008, the purported aggregate value of these funds was $8.4bn, including fictitious profits reported by Madoff.

Based on information available to HSBC, the funds’ actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities

during the time HSBC serviced the funds are estimated to have totalled approximately $4bn. Various HSBC companies have been named as

defendants in lawsuits arising out of Madoff Securities’ fraud.

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 $543m (plus interest), and these

lawsuits remain pending in the US Bankruptcy Court for the Southern District of New York.

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 (together, the ‘Fairfield Funds’) (in

liquidation) 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). Fairfield Funds’ claims against most

of the HSBC companies have been dismissed, but remain pending on appeal before the US Court of Appeals for the Second Circuit. Fairfield

Funds’ claims against HSBC Private Bank (Suisse) SA (‘PBRS’) and HSBC Securities Services Luxembourg (‘HSSL’) have not been dismissed

and are ongoing before the US Bankruptcy Court for the Southern District of New York. PBRS and HSSL have appealed the decision not to

dismiss them and these appeals are pending before the US Court of Appeals for the Second Circuit.

Herald Fund SPC (‘Herald’) litigation: HSSL and HSBC Bank plc are defending an action brought by Herald (in liquidation) before the

Luxembourg District Court seeking restitution of securities and cash in the amount of $2.5bn (plus interest), or damages in the amount of

$5.6bn (plus interest). In 2013, the Luxembourg District Court dismissed Herald’s securities restitution claim and stayed the cash restitution

and damages claims. In December 2024, the Luxembourg Court of Appeal reversed the Luxembourg District Court’s dismissal and determined

that Herald’s claims for restitution of securities and cash were founded in principle. HSSL has appealed this decision. Herald’s claim against

HSBC Bank plc is pending.

Alpha Prime Fund Limited (‘Alpha Prime’) litigation: Various HSBC companies are defending a number of actions brought by Alpha Prime in

the Luxembourg District Court seeking damages for alleged breach of contract and negligence in the amount of $1.16bn (plus interest). These

matters are currently pending before the Luxembourg District Court.

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.

HSBC Holdings plc Annual Report on Form 20-F	449

Senator Fund SPC (‘Senator’) litigation: HSSL and the Luxembourg branch of HSBC Bank plc are defending a number of actions brought by

Senator before the Luxembourg District Court seeking restitution of securities in the amount of $625m (plus interest), or damages in the

amount of $188m (plus interest). These matters are currently pending before the Luxembourg District Court.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or

any possible impact on HSBC, which could be significant.

US Anti-Terrorism Act litigation

Since November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others on behalf

of plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants aided

and abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism Act, or provided banking services to

customers alleged to have connections to terrorism financing. Seven actions, which seek damages for unspecified amounts, remain pending

and HSBC’s motions to dismiss have been granted in three of these cases. These dismissals are subject to appeals and/or the plaintiffs re-

pleading their claims. The four other actions are at an early stage.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or

any possible impact on HSBC, which could be significant.

Interbank offered rates investigation and litigation

Euro interest rate derivatives: In December 2016, the European Commission (‘EC’) issued a decision finding that HSBC, among other banks,

engaged in anti-competitive practices in connection with the pricing of euro interest rate derivatives, and the EC imposed a fine on HSBC based

on a one-month infringement in 2007. The fine was annulled in 2019 and a lower fine was imposed in 2021, which has been paid. In January

2023, the European Court of Justice dismissed an appeal by HSBC and upheld the EC’s findings on HSBC’s liability. In November 2024, the

General Court of the European Union rejected a separate appeal by HSBC concerning the amount of the fine. This matter is now closed.

US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named as defendants in a number of individual and putative class

action lawsuits filed in federal and state courts in the US with respect to the setting of US dollar Libor. The complaints assert claims under

various US federal and state laws, including antitrust and racketeering laws and the Commodity Exchange Act (‘US CEA’). HSBC has concluded

class settlements with five groups of plaintiffs, and several class action lawsuits brought by other groups of plaintiffs have been voluntarily

dismissed. Two individual US dollar Libor-related actions seeking damages from HSBC for unspecified amounts remain pending.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the

timing or any possible impact on HSBC, which could be significant.

Foreign exchange-related investigations and litigation

In December 2016, Brazil’s Administrative Council of Economic Defense initiated an investigation into the onshore foreign exchange market

and identified a number of banks, including HSBC, as subjects of its investigation, which remains ongoing. 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 N.A. (‘HSBC Bank USA’) as a defendant. In January 2024, the South

African Competition Appeal Court dismissed HSBC Bank USA from the revised complaint but denied HSBC Bank plc’s application to dismiss.

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 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 against

various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking approximately £3bn in damages

from all the defendants. This matter is at an early stage.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or

any possible impact on HSBC, which could be significant.

Precious metals fix-related litigation

US litigation: HSBC and other members of The London Silver Market Fixing Limited are defending a class action pending in the US District

Court for the Southern District of New York alleging that, from January 2007 to December 2013, the defendants conspired to manipulate the

price of silver and silver derivatives for their collective benefit in violation of US antitrust laws, the US CEA and New York state law. In May

2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.

HSBC and other members of The London Platinum and Palladium Fixing Company Limited have been defending a class action in the US District

Court for the Southern District of New York alleging that, from January 2008 to November 2014, the defendants conspired to manipulate the

price of platinum group metals and related financial products for their collective benefit in violation of US antitrust laws and the US CEA. In

January 2025, the court approved a settlement reached with the plaintiffs to resolve this action. This matter is now closed.

Canada litigation: HSBC and other financial institutions are defending putative class actions filed in the Ontario and Quebec Superior Courts of

Justice alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation of the Canadian

Competition Act and common law. These actions each seek CA$1bn in damages plus CA$250m in punitive damages. Two of the actions are

proceeding and the others have been stayed.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the

timing or any possible impact on HSBC, which could be significant.

450	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Tax-related investigations

Since 2023, the French National Financial Prosecutor has been investigating a number of banks, including HSBC Continental Europe and the

Paris branch of HSBC Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading

activities. HSBC Bank plc and the German branch of HSBC Continental Europe also continue to cooperate with investigations by the German

public prosecutor into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain

trading activities.

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or

any possible impact on HSBC, which could be significant.

Gilts trading investigation and litigation

Since 2018, the UK Competition and Markets Authority has been investigating HSBC and four other banks for suspected anti-competitive

conduct in relation to the historical trading of gilts and related derivatives. This matter is nearing conclusion. The impact on HSBC is not

expected to be significant.

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 remains subject to court approval. 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.

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 February 2025, the Korean court acquitted HBAP of all

charges. The Korean Prosecutors’ Office has the right to appeal this decision. Proceedings against the individual defendants have been

suspended.

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 July 2024, the court dismissed several of First Citizens’ claims and also dismissed certain defendants for lack of jurisdiction,

but allowed limited discovery into whether some of these defendants may be subject to jurisdiction. The remaining claims are proceeding

against certain defendants.

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 continue to defend a mortgage loan repurchase action seeking unspecified damages and specific

performance brought by the trustee of a mortgage securitisation trust in New York state court.

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 in the Mexican government bond market 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.

HSBC Holdings plc Annual Report on Form 20-F	451

36Related party transactions

Related parties of the Group and HSBC Holdings include subsidiaries, associates, joint ventures, 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 267 to 273 except for the roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief Human

Resources Officer, Group Chief Sustainability Officer, Group Chief Communications and Brand Officer, and Group Chief People & Governance

Officer 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.

Key Management Personnel

Details of Directors’ remuneration and interests in shares are disclosed in the ‘Directors’ remuneration report’ on pages 309 to 348.

IAS 24 ‘Related Party Disclosures’ requires the following additional information for key management compensation.

Compensation of Key Management Personnel
	2024	2023	2022
	$m	$m	$m
Short-term employee benefits	53	51	52
Post-employment benefits	1	1	1
Other long-term employee benefits	12	10	8
Share-based payments	29	29	26
Year ended 31 Dec	95	91	87
Shareholdings, options and other securities of Key Management Personnel
---	---	---
	2024	2023
	(000s)	(000s)
Number of options held over HSBC Holdings ordinary shares under employee share plans	20	32
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially	17,455	20,409
Number of other HSBC securities held	228	228
At 31 Dec	17,703	20,669
Advances and credits, guarantees and deposit balances during the year with Key Management Personnel
---	---	---	---	---
	2024		2023
	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	9	12	11	16
Deposits	78	191	60	130

1Advances and credits entered into by subsidiaries of HSBC Holdings plc during 2024 with Directors and former Directors, disclosed pursuant to section 413 of

the Companies Act 2006, totalled $1.3m (2023: $2.6m).

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
	2024		2023
	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	104	72	98	94
Unsubordinated amounts due from associates	8,097	5,011	7,907	5,910
Amounts due to associates	2,992	1,844	3,002	1,668
Amounts due to joint ventures	101	85	95	61
Fair value of derivative assets with associates	919	763	1,514	795
Fair value of derivative liabilities with associates	3,718	2,641	4,388	2,962
Guarantees and commitments	569	577	503	331

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.

452	HSBC Holdings plc Annual Report on Form 20-F

Notes on the financial statements

Post-employment benefit plans

At 31 December 2024, $3.4bn (2023: $3.1bn) of HSBC post-employment benefit plan assets were under management by HSBC companies,

earning management fees of $14m in 2024 (2023: $13m). At 31 December 2024, HSBC’s post-employment benefit plans had placed deposits

of $395m (2023: $402m) with its banking subsidiaries, earning interest payable to the schemes of $2m (2023: $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 2024, the gross notional value of the swaps was $6.4bn (2023: $7.1bn). These swaps had a

positive fair value to the scheme of $0.4bn (2023: $0.5bn); and HSBC had delivered collateral of $0.4bn (2023: $0.6bn) 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

Details of HSBC Holdings’ subsidiaries are shown in Note 38.

Transactions and balances during the year with subsidiaries
	2024		2023
	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	9,342	2,548	8,396	7,029
Financial assets with HSBC undertakings designated and otherwise mandatorily<br><br>measured at fair value	66,030	61,286	60,309	59,879
Derivatives	3,391	3,054	4,010	3,344
Loans and advances to HSBC undertakings	37,677	37,677	28,213	27,354
Prepayments, accrued income and other assets	7,108	4,216	7,417	5,145
Investments in subsidiaries	160,805	152,337	167,542	159,478
Total related party assets at 31 Dec	284,353	261,118	275,887	262,229
Liabilities
Amounts owed to HSBC undertakings	231	231	179	168
Derivatives	7,944	5,340	9,309	6,090
Accruals, deferred income and other liabilities	399	194	505	341
Subordinated liabilities	1,202	—	927	913
Total related party liabilities at 31 Dec	9,776	5,765	10,920	7,512
Guarantees and commitments	7,440	7,327	7,723	7,723

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.

Some employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company.

HSBC Holdings incurs a charge for these employees equal to the contributions paid into the scheme on their behalf. Disclosure in relation to

the scheme is made in Note 5.

37	Events after the balance sheet date

A fourth interim dividend for 2024 of $0.36 per ordinary share (a distribution of approximately $6.4bn was approved by the Directors after

31 December 2024. On 19 February 2025, HSBC Holdings announced a share buy-back to purchase its ordinary shares up to a maximum

consideration of $2.0bn, which is expected to commence shortly and complete by our first quarter 2025 results announcement. On 30 January

2025, HSBC Holdings called $1,750m 2.999% fixed rate/floating rate senior unsecured and $500m floating rate senior unsecured securities.

These securities are expected to be redeemed and cancelled on 10 March 2025. On 7 February 2025, HSBC Holdings called $2,450m 6.375%

perpetual subordinated contingent convertible securities which are expected to be redeemed and cancelled on 30 March 2025. The accounts

were approved by the Board of Directors on 19 February 2025 and authorised for issue.

38HSBC Holdings’ subsidiaries, joint ventures and associates

In accordance with section 409 of the Companies Act 2006 a list of HSBC Holdings plc subsidiaries, joint ventures and associates, the

registered office addresses and the effective percentages of equity owned at 31 December 2024 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	453

Subsidiaries

Subsidiaries	% of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies)		Footnotes
AI Nominees (UK) One Limited	100.00		12
AI Nominees (UK) Two Limited	100.00		12
Almacenadora Banpacifico S.A. (In<br><br>Liquidation)	N/A		1, 13
Assetfinance December (F) Limited	100.00		14
Assetfinance December (H) Limited	100.00		12
Assetfinance December (P) Limited	100.00		12
Assetfinance December (R) Limited	100.00		12
Assetfinance June (A) Limited	100.00		12
Assetfinance June (D) Limited	100.00		14
Assetfinance March (B) Limited	100.00		15
Assetfinance March (D) Limited	100.00		14
Assetfinance March (F) Limited	100.00		12
Assetfinance September (F) Limited	100.00		12
Assetfinance September (G) Limited	100.00		14
B&Q Financial Services Limited	100.00		12
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, 20
Beijing Miyun HSBC Rural Bank Company<br><br>Limited	100.00		11, 21
BentallGreenOak China Real Estate<br><br>Investments, L.P.	N/A		1, 22
Canada Crescent Nominees (UK) Limited (In<br><br>Liquidation)	100.00		23
Canada Square Nominees (UK) Limited	100.00		12
Capco/Cove, Inc.	100.00		24
Card-Flo #3, Inc.	100.00		25
CC&H Holdings LLC	N/A		1, 26
CCF & Partners Asset Management Limited	100.00	(99.99)	12
Charterhouse Administrators (D.T.) Limited	100.00	(99.99)	12
Charterhouse Management Services Limited	100.00	(99.99)	12
Charterhouse Pensions Limited	100.00		12
Chongqing Dazu HSBC Rural Bank Company<br><br>Limited	100.00		11, 28
Chongqing Fengdu HSBC Rural Bank<br><br>Company Limited	100.00		11, 29
Chongqing Rongchang HSBC Rural Bank<br><br>Company Limited	100.00		11, 30
CI 10 LP Inc	N/A		107
COIF Nominees Limited	N/A		1, 12
Corsair IV Financial Services Capital Partners -<br><br>B L.P	N/A		1, 31
D9 LP Inc	N/A		107
Dalian Pulandian HSBC Rural Bank Company<br><br>Limited	100.00		11, 32
Decision One Mortgage Company, LLC	N/A		1, 33
Dempar 1	100.00	(99.99)	5, 34
Desarrollo Turistico, S.A. de C.V. (In<br><br>Liquidation)	100.00	(99.99)	13
Electronic Data Process México, S.A. de C.V.	100.00		35
ERISA Actions Europe N°2	N/A		1, 175
ERISA Actions Grandes Valeurs	N/A		1, 175
ERISA Opportunities	N/A		1, 175
Eton Corporate Services Limited	100.00		17
Flandres Contentieux S.A.	100.00	(99.99)	5, 34
Foncière Elysées	100.00	(99.99)	5, 34
Fujian Yongan HSBC Rural Bank Company<br><br>Limited	100.00		11, 36
Fulcher Enterprises Company Limited	100.00	(63.12)	37
Fundacion HSBC, A.C.	100.00	(99.99)	2, 9, 13	Subsidiaries	% of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies)	Footnotes
---	---	---	---
Giller Ltd.	100.00		24
GPIF Co-Investment, LLC	N/A		1, 25
Griffin International Limited	100.00		12
Grupo Financiero HSBC, S. A. de C. V.	99.99		13
Guangdong Enping HSBC Rural Bank<br><br>Company Limited	100.00		11, 38
Guangzhou HSBC Real Estate Company Ltd	100.00		11, 39
H5 LP Inc	N/A		107
H8 LP Inc	N/A		107
H9 LP Inc	N/A		107
Hang Seng (Nominee) Limited	100.00	(63.12)	37
Hang Seng Bank (China) Limited	100.00	(63.12)	11, 40
Hang Seng Bank (Trustee) Limited	100.00	(63.12)	37
Hang Seng Bank Limited	63.12		37
Hang Seng Bullion Company Limited	100.00	(63.12)	37
Hang Seng Credit Limited	100.00	(63.12)	37
Hang Seng Data Services Limited	100.00	(63.12)	37
Hang Seng Finance Limited	100.00	(63.12)	37
Hang Seng Financial Information Limited	100.00	(63.12)	37
Hang Seng Indexes (Netherlands) B.V.	N/A		1, 41
Hang Seng Indexes Company Limited	100.00	(63.12)	37
Hang Seng Insurance Company Limited	100.00	(63.12)	37
Hang Seng Investment Management Limited	100.00	(63.12)	37
Hang Seng Investment Services Limited	100.00	(63.12)	37
Hang Seng Japan Topix 100 Index ETF	66.43		19
Hang Seng Qianhai Fund Management<br><br>Company Limited	70.00	(43.86)	11, 42
Hang Seng Real Estate Management Limited	100.00	(63.12)	37
Hang Seng Securities Limited	100.00	(63.12)	37
Hang Seng Security Management Limited	100.00	(63.12)	37
HASE Wealth Limited	N/A		137
Haseba Investment Company Limited	100.00	(63.12)	37
HBPH Corporation (In Dissolution)	99.99		43
HFC Bank Limited (In Liquidation)	100.00		44
High Time Investments Limited	100.00	(63.12)	37
HLF	100.00	(99.99)	5, 34
Honey Blue Enterprises Limited (亨京企業有<br><br>限公司)	100.00		19
Honey Green Enterprises Ltd.	100.00		45
Honey Grey Enterprises Limited (亨穗企業有<br><br>限公司)	100.00		19
Honey Silver Enterprises Limited	100.00		19
Household International Europe Limited (In<br><br>Liquidation)	100.00		44
Household Pooling Corporation	100.00		47
Housing (USA) LLP	N/A		1, 25
HSBC (BGF) Investments Limited	100.00		12
HSBC (General Partner) Limited	100.00		3, 48
HSBC (Guernsey) GP PCC Limited	100.00		17
HSBC (Kuala Lumpur) Nominees Sdn Bhd	100.00		49
HSBC (Malaysia) Trustee Berhad	100.00		50
HSBC (Singapore) Nominees Pte Ltd	100.00		51
HSBC Actions Europe	50.66		175
HSBC Agency (India) Private Limited	100.00		52
HSBC Alternative Investments Limited	100.00		12
HSBC Amanah Malaysia Berhad	100.00		49
HSBC Americas Corporation (Delaware)	100.00		25
HSBC Asia Holdings B.V.	100.00		12
HSBC Asia Holdings Limited	100.00		3, 19
HSBC Asia Pacific Holdings (UK) Limited	100.00		6, 12
HSBC Asset Finance (UK) Limited	100.00		12
HSBC Asset Finance M.O.G. Holdings (UK)<br><br>Limited	100.00		12
HSBC Asset Management (Fund Services UK)<br><br>Limited	100.00		12
454	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Subsidiaries	% 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 Asset Management (India) Private<br><br>Limited	99.99		53
HSBC Asset Management (Japan) Limited	100.00		54
HSBC Assurances Vie (France)	100.00	(99.99)	5, 55
HSBC Australia Holdings Pty Limited	100.00		6, 56
HSBC BANK (CHILE)	100.00		57
HSBC Bank (China) Company Limited	100.00		11, 58
HSBC Bank (General Partner) Limited	100.00		48
HSBC Bank (Mauritius) Limited	100.00		59
HSBC Bank (Singapore) Limited	100.00		51
HSBC Bank (Taiwan) Limited	100.00		60
HSBC Bank (Uruguay) S.A.	100.00		61
HSBC Bank (Vietnam) Ltd.	100.00		62
HSBC Bank A.S.	100.00		63
HSBC Bank Australia Limited	100.00		56
HSBC Bank Bermuda Limited	100.00		18
HSBC Bank Capital Funding (Sterling 1) LP	N/A		1, 48
HSBC Bank Egypt S.A.E	94.54		64
HSBC Bank Malaysia Berhad	100.00		4, 49
HSBC Bank Malta p.l.c.	70.03		65
HSBC Bank Middle East Limited	100.00		4, 66
HSBC Bank Middle East Limited<br><br>Representative Office Morocco SARL (In<br><br>Liquidation)	100.00		67
HSBC Bank Pension Trust (UK) Limited	100.00		12
HSBC Bank plc	100.00		3, 4, 12
HSBC Bank USA, National Association	100.00		4, 68
HSBC Branch Nominee (UK) Limited	100.00		14
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		25
HSBC Capital Funding (Dollar 1) L.P.	N/A		1, 48
HSBC Card Services Inc.	100.00		25
HSBC Casa de Bolsa, S.A. de C.V., Grupo<br><br>Financiero HSBC	100.00	(99.99)	13
HSBC Cayman Limited	100.00		69
HSBC Cayman Services Limited	100.00		69
HSBC Client Holdings Nominee (UK) Limited	100.00		12
HSBC Client Nominee (Jersey) Limited	100.00		2, 70
HSBC Climate Tech Venture Capital Fund<br><br>SCSp	87.15		177
HSBC Columbia Funding, LLC	N/A		125
HSBC Continental Europe	99.99		5, 34
HSBC Corporate Advisory (Malaysia) Sdn Bhd	100.00		49
HSBC Corporate Finance (Hong Kong) Limited	100.00		19
HSBC Corporate Secretary (UK) Limited	100.00		3, 12
HSBC Corporate Services (Shanghai) Co., Ltd.	N/A		1, 71
HSBC Corporate Trustee Company (UK)<br><br>Limited	100.00		12
HSBC Custody Nominees (Australia) Limited	100.00		56
HSBC Custody Services (Guernsey) Limited	100.00		17
HSBC Daisy Investments (Mauritius) Limited	100.00		72
HSBC Diversified Loan Fund General Partner<br><br>Sarl	N/A		1, 73
HSBC Diversified Loan SCSp-RAIF	N/A		73	Subsidiaries	% 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 Electronic Data Processing<br><br>(Guangdong) Limited	100.00		11, 74
HSBC Electronic Data Processing (Malaysia)<br><br>Sdn Bhd	100.00		75
HSBC Electronic Data Processing<br><br>(Philippines), Inc.	99.99		76
HSBC Electronic Data Processing India<br><br>Private Limited	100.00		77
HSBC Electronic Data Processing Lanka<br><br>(Private) Limited	100.00		78
HSBC Electronic Data Service Delivery<br><br>(Egypt) S.A.E	100.00		79
HSBC Equipment Finance (UK) Limited	100.00		14
HSBC Equity (UK) Limited	100.00		12
HSBC EURO Protect 80+	78.06		55
HSBC Europe B.V.	100.00		12
HSBC European Senior Direct Lending Fund<br><br>2023 RAIF SICAV-S.A.	43.00		91
HSBC Executor & Trustee Company (UK)<br><br>Limited	100.00		14
HSBC Factoring (France)	100.00	(99.99)	5, 34
HSBC Finance (Netherlands)	100.00		3, 12
HSBC Finance Corporation	100.00		25
HSBC Finance Limited	100.00		12
HSBC Finance Transformation (UK) Limited	100.00		12
HSBC Financial Advisors Singapore Pte. Ltd.	100.00		2, 51
HSBC Financial Services (Lebanon) S.A.L	99.83		80
HSBC Financial Technology Venture Capital<br><br>Fund SCSp	100.00		177
HSBC FinTech Services (Shanghai) Company<br><br>Limited	N/A		1, 2, 81
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, 82
HSBC Global Asset Management (France)	100.00	(99.99)	5, 55
HSBC Global Asset Management (Hong<br><br>Kong) Limited	100.00		83
HSBC Global Asset Management (Malta)<br><br>Limited	100.00	(70.03)	84
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)	13
HSBC Global Asset Management (Singapore)<br><br>Limited	100.00		51
HSBC Global Asset Management<br><br>(Switzerland) AG	100.00		5, 171
HSBC Global Asset Management (Taiwan)<br><br>Limited	100.00		86
HSBC Global Asset Management (UK)<br><br>Limited	100.00		12
HSBC Global Asset Management (USA) Inc.	100.00		87
HSBC Global Asset Management Holdings<br><br>(Bahamas) Limited	100.00		88
HSBC Global Asset Management Limited	100.00		3, 12
HSBC Global Custody Nominee (UK) Limited	100.00		12
HSBC Global Custody Proprietary Nominee<br><br>(UK) Limited	100.00		12
HSBC Global Funds ICAV - Digital Leaders<br><br>Equity Fund	100.00		27
HSBC Global Funds ICAV - Euro Lower<br><br>Carbon Government 10+ Year Bond UCITS<br><br>ETF	100.00		27
HSBC Global Funds ICAV - Euro Lower<br><br>Carbon Government 1-3 Year Bond UCITS<br><br>ETF	100.00		27
HSBC Global Funds ICAV - Global Aggregate<br><br>Bond ESG UCITS ETF	100.00		27
HSBC Holdings plc Annual Report on Form 20-F	455
---	---
Subsidiaries	% 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 Global Funds ICAV - Global Equity<br><br>Index Fund -ACEUR	N/A		1, 176
HSBC Global Funds ICAV - Japan Equity Index<br><br>Fund	99.77		105
HSBC Global Infrastructure Debt Fund Feeder<br><br>SCA SICAV-RAIF- Global Infrastructure Debt<br><br>EUR	N/A		1, 91
HSBC GLOBAL INVESTMENT FUNDS - ASIA<br><br>ESG BOND	93.03		129
HSBC Global Investment Funds – ESG Short<br><br>Duration Credit Bond	74.22		129
HSBC GLOBAL INVESTMENT FUNDS -<br><br>GLOBAL EMERGING MARKETS EQUITY	56.47		129
HSBC Global Investment Funds - Strategic<br><br>Duration and Income Bond	100.00		129
HSBC Global Multi-asset Seeding course<br><br>(Stable Type)	67.39		54
HSBC Global Services (Canada) Limited	100.00		89
HSBC Global Services (China) Holdings<br><br>Limited	100.00		12
HSBC Global Services (Hong Kong) Limited	100.00		19
HSBC Global Services (UK) Limited	100.00		12
HSBC Global Services Limited	100.00		3, 12
HSBC Global Transition Infrastructure Debt<br><br>Fund RAIF SICAV-S.A.	31.00		91
HSBC Group Management Services Limited	100.00		12
HSBC Group Nominees UK Limited	100.00		3, 12
HSBC Holdings B.V.	100.00		12
HSBC Horizon 2034 2036 A 3D	76.72		175
HSBC India Small Cap Equity Fund (QII）	40.38		54
HSBC Infrastructure Debt GP 1 S.à r.l.	N/A		1, 91
HSBC Infrastructure Debt GP 2 S.à r.l.	N/A		1, 91
HSBC Innovation Bank Limited	100.00		92
HSBC INSN (Non Operating) Pte. Ltd. (In<br><br>Liquidation)	100.00		51
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		93
HSBC Institutional Trust Services (Singapore)<br><br>Limited	100.00		51
HSBC Insurance (Asia) Limited	100.00		95
HSBC Insurance (Asia-Pacific) Holdings<br><br>Limited	100.00		83
HSBC Insurance (Bermuda) Limited	100.00		96
HSBC Insurance Agency (USA) Inc.	100.00		97
HSBC Insurance Brokerage Company Limited	N/A		1,2, 98
HSBC Insurance Brokers Greater China<br><br>Limited	100.00		83
HSBC Insurance SAC 1 (Bermuda) Limited	100.00		18
HSBC Insurance SAC 2 (Bermuda) Limited	100.00		18
HSBC Insurance Services Holdings Limited<br><br>(In Liquidation)	100.00		23
HSBC International Finance Corporation<br><br>(Delaware)	100.00		100
HSBC International Trustee (BVI) Limited	100.00		10, 101
HSBC International Trustee (Holdings) Pte.<br><br>Limited	100.00		51
HSBC International Trustee Limited	100.00		102
HSBC Inversiones S.A.	100.00		57
HSBC InvestDirect (India) Private Limited	99.99		53
HSBC InvestDirect Financial Services (India)<br><br>Limited	99.99		53
HSBC InvestDirect Sales & Marketing (India)<br><br>Private Limited	98.99	(98.98)	103
HSBC InvestDirect Securities (India) Private<br><br>Limited	99.99		53	Subsidiaries	% 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 Investment and Insurance Brokerage,<br><br>Philippines Inc.	99.99		104
HSBC Investment Bank Holdings B.V.	100.00		12
HSBC Investment Bank Holdings Limited	100.00		12
HSBC Investment Company Limited	100.00		3, 12
HSBC Investment Funds (Hong Kong) Limited	100.00		83
HSBC Investment Funds (Luxembourg) SA	100.00		105
HSBC Invoice Finance (UK) Limited	100.00		14
HSBC Issuer Services Common Depositary<br><br>Nominee (UK) Limited	100.00		12
HSBC Latin America B.V.	100.00		12
HSBC Latin America Holdings (UK) Limited	100.00		3, 12
HSBC Leasing (Asia) Limited	100.00		19
HSBC Legacy Partnership Limited	100.00		12
HSBC Life (Bermuda) Limited	100.00		18
HSBC Life (Cornell Centre) Limited	100.00		95
HSBC Life (Edwick Centre) Limited	100.00		95
HSBC Life (International) Limited	100.00		18
HSBC Life (Property) Limited	100.00		95
HSBC Life (Singapore) Pte. Ltd.	100.00		51
HSBC Life (Tsing Yi Industrial) Limited	100.00		95
HSBC Life (UK) Limited	100.00		12
HSBC Life (Workshop) Limited	100.00		95
HSBC Life Assurance (Malta) Ltd.	100.00	(70.03)	84
HSBC Life Insurance Company Limited	100.00		11, 106
HSBC LU Nominees Limited	100.00		12
HSBC Management (Guernsey) Limited	100.00		107
HSBC Markets (USA) Inc.	100.00		25
HSBC Marking Name Nominee (UK) Limited	100.00		12
HSBC Master Trust Trustee Limited (In<br><br>Liquidation)	100.00		23
HSBC Mexico, S.A., Institucion de Banca<br><br>Multiple, Grupo Financiero HSBC	99.99		13
HSBC Middle East Asset CO. LLC	100.00		108
HSBC Middle East Holdings B.V.	100.00		3, 4, 66
HSBC Middle East Leasing Partnership	N/A		1, 109
HSBC Middle East Securities L.L.C	100.00		110
HSBC Mix Dynamique	58.13		55
HSBC Mortgage Corporation (USA)	100.00		25
HSBC Multi-Asset Style Factors S	N/A		1, 175
HSBC Nominees (Asing) Sdn Bhd	100.00		49
HSBC Nominees (Hong Kong) Limited	100.00		19
HSBC Nominees (New Zealand) Limited	100.00		111
HSBC Nominees (Tempatan) Sdn Bhd	100.00		49
HSBC North America Holdings Inc.	100.00		4, 25
HSBC Operational Services GmbH	100.00	(99.99)	7, 82
HSBC Overseas Holdings (UK) Limited	100.00		3, 12
HSBC Overseas Investments Corporation<br><br>(New York)	100.00		112
HSBC Overseas Nominee (UK) Limited	100.00		12
HSBC PB Corporate Services 1 Limited	100.00		113
HSBC PB Services (Suisse) SA	100.00		114
HSBC Pension Trust (Ireland) DAC	100.00		115
HSBC Pensiones, S.A. (In Liquidation)	100.00	(99.99)	13
HSBC PI Holdings (Mauritius) Limited	100.00		116
HSBC Portfolios – World Selection 5 (Part<br><br>ACHEUR)	N/A		1, 105
HSBC Portfoy Yonetimi A.S.	100.00		117
HSBC Preferential LP (UK)	100.00		12
HSBC Private Bank (Luxembourg) S.A.	100.00	(99.99)	105
HSBC Private Bank (Suisse) SA	100.00		114
HSBC Private Bank (UK) Limited	100.00		12
HSBC Private Banking Holdings (Suisse) SA	100.00		114
HSBC Private Banking Nominee 3 (Jersey)<br><br>Limited	100.00		113
HSBC Private Equity Investments (UK)<br><br>Limited	100.00		12
HSBC Private Markets Management SARL	N/A		1, 2, 118
456	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Subsidiaries	% 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 Private Trustee (Hong Kong) Limited	100.00		19
HSBC Professional Services (India) Private<br><br>Limited	100.00		119
HSBC Property (UK) Limited	100.00		12
HSBC Property Funds (Holding) Limited	100.00		12
HSBC Provident Fund Trustee (Hong Kong)<br><br>Limited	100.00		19
HSBC Qianhai Securities Limited	90.00		11, 120
HSBC RCF Partnership Fund RAIF SICAV-S.A.	11.00		175
HSBC Real Estate Leasing (France)	100.00	(99.99)	5, 34
HSBC REGIO Fund General Partner S.à r.l.	100.00		91
HSBC REIM (France)	100.00	(99.99)	5, 55
HSBC Responsible Investment Funds - SRI<br><br>Balanced	64.14		55
HSBC Responsible Investment Funds - SRI<br><br>Dynamic	72.79		55
HSBC Resposible Investment Funds - SRI<br><br>Global Equity A	N/A		1, 175
HSBC Retirement Benefits Trustee (UK)<br><br>Limited	100.00		3, 12
HSBC Retirement Services Limited (In<br><br>Liquidation)	100.00		23
HSBC Saudi Arabia, Closed Joint Stock<br><br>Company	100.00	(66.19)	121
HSBC Securities (Egypt) S.A.E. (In<br><br>Liquidation)	100.00	(94.65)	122
HSBC Securities (Japan) Co., Ltd.	100.00		54
HSBC Securities (Singapore) Pte Limited	100.00		51
HSBC Securities (South Africa) (Pty) Limited	100.00		123
HSBC Securities (Taiwan) Corporation Limited	100.00		60
HSBC Securities (USA) Inc.	100.00		25
HSBC Securities and Capital Markets (India)<br><br>Private Limited	99.99		6, 103
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		115
HSBC Securities Services (Luxembourg) S.A.	100.00		105
HSBC Securities Services Holdings (Ireland)<br><br>DAC	100.00		115
HSBC Securities Services Nominees Limited	100.00		19
HSBC Seguros, S.A de C.V., Grupo Financiero<br><br>HSBC	100.00	(99.99)	13
HSBC Select Dynamic	80.59		55
HSBC Select Equity	86.38		55
HSBC Select Flexible	63.93		55
HSBC Semfi Limited	75.00		12
HSBC Senior UK Direct Lending 2020 RAIF<br><br>SICAV-S.A	N/A		91
HSBC Senior UK Direct Lending Fund II RAIF<br><br>SICAV-S.A.	72.46		91
HSBC Service Company Germany GmbH	100.00	(99.99)	7, 82
HSBC Service Delivery (Polska) Sp. z o.o.	100.00		124
HSBC Services (France)	100.00	(99.99)	5, 34
HSBC Services Japan Limited	100.00		88
HSBC Services USA Inc.	100.00		125
HSBC Servicios Financieros, S.A. de C.V	100.00	(99.99)	13
HSBC Servicios, S.A. DE C.V., Grupo<br><br>Financiero HSBC	100.00	(99.99)	13
HSBC SFT (C.I.) Limited	100.00		17
HSBC Singapore Dollar Liquidity Fund	76.37		51
HSBC Small Cap France	52.70		55
HSBC Software Development (Guangdong)<br><br>Limited	100.00		11, 126
HSBC Software Development (India) Private<br><br>Limited	100.00		127	Subsidiaries	% 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 Software Development (Malaysia) Sdn<br><br>Bhd	100.00		75
HSBC Specialist Investments Limited	100.00		6, 12
HSBC Technology & Services (China) Limited<br><br>(In Liquidation)	N/A		1, 128
HSBC Technology & Services (USA) Inc.	100.00		25
HSBC Transaction Services GmbH	100.00	(99.99)	7, 82
HSBC Trinkaus & Burkhardt (International)<br><br>S.A.	100.00	(99.99)	129
HSBC Trinkaus & Burkhardt Gesellschaft fur<br><br>Bankbeteiligungen mbH	100.00	(99.99)	82
HSBC Trinkaus & Burkhardt GmbH	100.00	(99.99)	7, 82
HSBC Trinkaus Family Office GmbH	100.00	(99.99)	7, 82
HSBC Trinkaus Real Estate GmbH	100.00	(99.99)	7, 82
HSBC Trust Company (Delaware), National<br><br>Association	100.00		100
HSBC Trust Company (UK) Limited	100.00		12
HSBC Trustee (C.I.) Limited	100.00		113
HSBC Trustee (Cayman) Limited	100.00		69
HSBC Trustee (Guernsey) Limited	100.00		17
HSBC Trustee (Hong Kong) Limited	100.00		19
HSBC Trustee (Singapore) Limited	100.00		51
HSBC Trustees (India) Private Limited	99.99		103
HSBC UK Bank plc	100.00		3, 14
HSBC UK Client Nominee Limited	100.00		14
HSBC UK Covered Bonds LLP	N/A		1, 14
HSBC UK Societal Projects Limited	N/A		1, 14
HSBC USA Inc.	100.00		4, 112
HSBC Ventures USA Inc.	100.00		25
HSBC Violet Investments (Mauritius) Limited	100.00		72
HSBC Wealth Client Nominee Limited	100.00		14
HSBC World Equity Protect 80	98.87		55
HSBC Yatirim Menkul Degerler A.S.	100.00		63
HSI Asset Securitization Corporation	100.00		25
HSI International Limited	100.00	(63.12)	37
HSIL Investments Limited	100.00		12
Hubei Macheng HSBC Rural Bank Company<br><br>Limited	100.00		11, 131
Hubei Suizhou Cengdu HSBC Rural Bank<br><br>Company Limited	100.00		11, 132
Hubei Tianmen HSBC Rural Bank Company<br><br>Limited	100.00		11, 133
Hunan Pingjiang HSBC Rural Bank Company<br><br>Limited	100.00		11, 134
I3 LP Inc.	N/A		107
Imenson Limited	100.00	(63.12)	37
INHK PC LP Inc	100.00		17
INHK PE LP Inc	100.00		17
Inmobiliaria Bisa, S.A. de C.V.	99.99		13
Inmobiliaria Grufin, S.A. de C.V.	100.00	(99.99)	13
Inmobiliaria Guatusi, S.A. de C.V.	100.00	(99.99)	13
Internationale Kapitalanlagegesellschaft mit<br><br>beschränkter Haftung	100.00	(99.99)	82
J6 LP Inc	N/A		107
James Capel (Nominees) Limited	100.00		12
James Capel (Taiwan) Nominees Limited	100.00		12
Keyser Ullmann Limited	100.00	(99.99)	12
L1 LP Inc	N/A		107
Lion Corporate Services Limited	100.00		19
Lion International Corporate Services Limited	100.00		135
Lion International Management Limited	100.00		135
Lion Management (Hong Kong) Limited	100.00		19
Lyndholme Limited	100.00		19
Marks and Spencer Financial Services plc	100.00		136
Marks and Spencer Unit Trust Management<br><br>Limited	100.00		136
Midcorp Limited	100.00		12
Midland Bank (Branch Nominees) Limited	100.00		14
HSBC Holdings plc Annual Report on Form 20-F	457
---	---
Subsidiaries	% of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies)		Footnotes
---	---	---	---
Midland Nominees Limited	100.00		14
MP Payments Group Limited	100.00		12
MP Payments Middle East AE L.L.C.	100.00		137
MP Payments Netherlands B.V.	100.00		138
MP Payments Operations Limited	100.00		12
MP Payments Singapore Pte. Ltd.	100.00		51
MP Payments UK Limited	100.00		12
P2 LP Inc	N/A		107
Prudential Client HSBC GIS Nominee (UK)<br><br>Limited	100.00		12
PT Bank HSBC Indonesia	98.94		139
PT HSBC Sekuritas Indonesia	85.00		140
R/CLIP Corp.	100.00		25
Real Estate Collateral Management Company	100.00		25
Red Hexagon Energy Transition Asia GP S.à<br><br>r.l.	100.00		2, 91
Republic Nominees Limited	100.00		17
RLUKREF Nominees (UK) One Limited	100.00		12
RLUKREF Nominees (UK) Two Limited	100.00		12
S.A.P.C. - Ufipro Recouvrement	99.99		9, 34
Saf Baiyun	100.00	(99.99)	5, 34
Saf Guangzhou	100.00	(99.99)	5, 34
SCI HSBC Assurances Immo	100.00	(99.99)	9, 55
SCPI Elysees Grand Large	98.50		175
Select INKA	N/A		1, 82
Serai Limited	100.00		19
SFM	100.00	(99.99)	5, 34
SFSS Nominees (Pty) Limited	100.00		123
Shandong Rongcheng HSBC Rural Bank<br><br>Company Limited	100.00		11, 141
Shenzhen HSBC Development Company Ltd	100.00		11, 142
Sico Limited	100.00		143
SilkRoad Fund Management S.à.r.l	100.00		2, 144
Silkroad GP II Limited	100.00		2, 145
Silkroad GP II S.a.r.l.	100.00		2, 144
Silkroad GP Limited	100.00		2, 69
Silkroad GP SC S.a r.l	100.00		2, 146
Silkroad Property Partners K.K. (In Liquidation)	100.00		147
Silkroad Property Partners Limited	100.00		148
Silkroad Property Partners Management<br><br>Consultancy Limited	N/A		1, 149
Silkroad Property Partners PTE. LTD.	100.00		150
SNC Les Oliviers D'Antibes	60.00	(59.99)	9, 55
SNCB/M6-2007 A	100.00	(99.99)	2, 5, 34
SNCB/M6-2007 B	100.00	(99.99)	2, 5, 34
SNCB/M6-2008 A	100.00	(99.99)	2, 5, 34
Société Française et Suisse	100.00	(99.99)	5, 34
Somers Dublin DAC	100.00	(99.99)	115
Somers Nominees (Far East) Limited	100.00		18
Sopingest	100.00	(99.99)	5, 34
South Yorkshire Light Rail Limited	100.00		12
St Cross Trustees Limited	100.00		14
Sun Hung Kai Development (Lujiazui III)<br><br>Limited	100.00		11, 151
The Hongkong and Shanghai Banking<br><br>Corporation Limited	100.00		19
Tooley Street View Limited	100.00		3, 12
Trinkaus Europa Immobilien-Fonds Nr.3<br><br>Objekt Utrecht Verwaltungs-GmbH	100.00	(99.99)	7, 82
Trinkaus Immobilien-Fonds<br><br>Geschaeftsfuehrungs-GmbH	100.00	(99.99)	7, 82
Trinkaus Immobilien-Fonds Verwaltungs-<br><br>GmbH	100.00	(99.99)	7, 82
Trinkaus Private Equity Management GmbH	100.00	(99.99)	7, 82
Trinkaus Private Equity Verwaltungs GmbH	100.00	(99.99)	7, 82
Turnsonic (Nominees) Limited	100.00		14
Valeurs Mobilières Elysées	100.00	(99.99)	5, 34	Subsidiaries	% of share class<br><br>held by immediate<br><br>parent company<br><br>(or by the Group<br><br>where this varies)	Footnotes
---	---	---	---
W4 LP Inc	N/A		107
WARDLEY LIMITED	100.00		19
Wayfoong Nominees Limited	100.00		19
Westminster House, LLC	N/A		1, 25
Woodex Limited	100.00		18
Yan Nin Development Company Limited	100.00	(63.12)	37

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 (or<br><br>by the Group<br><br>where this varies)		Footnotes
Climate Asset Management Limited	N/A		1,2, 152
Global Payments Technology México, S.A. de<br><br>C.V.	50.00	(49.99)	2, 153
MK HoldCo Limited	50.32		2, 154
Pentagreen Capital Pte. Ltd	50.00		155
ProServe Bermuda Limited	50.00		156
The London Silver Market Fixing Limited	N/A		1,2, 157
Vaultex UK Limited	50.00		158

Non-Profit Foundation

The undertakings below are Non-Profit Foundation.

Non-Profit Foundation	% of share class<br><br>held by<br><br>immediate parent<br><br>company (or by<br><br>the Group where<br><br>this varies)	Footnotes
HSBC Philanthropy Foundation Beijing	N/A	1, 175
458	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Associates

The undertakings below are associates and equity accounted.

Associates	% of share class<br><br>held by<br><br>immediate parent<br><br>company (or by<br><br>the Group where<br><br>this varies)		Footnotes
Bank of Communications Co., Ltd.	19.03		2, 159
Barrowgate Limited	24.64	(15.53)	160
BGF Group plc	24.62		161
Bud Financial Limited	4.50		4, 162
CANARA HSBC LIFE INSURANCE<br><br>COMPANY LIMITED	26.00		163
Divido Financial Services Limited (In<br><br>Administration)	7.85		164
Electronic Payment Services Company (Hong<br><br>Kong) Limited	38.69		2, 19
Episode Six Inc.	5.69		4, 165
EPS Company (Hong Kong) Limited	38.69		19
HQLAX S.à r.l.	6.10		4, 90
HSBC Jintrust Fund Management Company<br><br>Limited	49.00		2, 11, 166
HSBC UK Covered Bonds (LM) Limited	N/A		1,2, 167
Lightico Ltd	2.80		4, 85
LiquidityMatch LLC	N/A		1, 168
London Precious Metals Clearing Limited	30.00		2, 169
Marketnode PTE. Ltd.	12.60		4, 46
MENA Infrastructure Fund (GP) Ltd	33.33		170
Quantexa Limited	9.36		4, 99
Radiant Global Investors LLC	N/A		1, 2, 172
Saudi Awwal Bank	31.00		173
The London Gold Market Fixing Limited	N/A		1, 157
Threadneedle Software Holdings Limited	7.10		4, 174
Trade Information Network Limited	12.76		152
Trinkaus Europa Immobilien-Fonds Nr. 7<br><br>Frankfurt Mertonviertel KG	N/A		182
We Trade Innovation Designated Activity<br><br>Company (In Liquidation)	9.88		2, 130	Footnotes for Note 38
---	---
Description of shares
1	Where an entity is governed by voting rights, HSBC consolidates when<br><br>it holds – directly or indirectly – the necessary voting rights to pass<br><br>resolutions by the governing body. In all other cases, the assessment<br><br>of control is more complex and requires judgement of other factors,<br><br>including having exposure to variability of returns, power to direct<br><br>relevant activities, and whether power is held as an agent or principal.<br><br>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 meet<br><br>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	Nominal Shares
9	Parts
10	Non-Participating Voting
11	Registered Capital Shares
Registered offices
---	---
12	8 Canada Square, London, United Kingdom, E14 5HQ
13	Paseo de la Reforma 347 Col. Cuauhtemoc, Mexico, 06500
14	1 Centenary Square, Birmingham, United Kingdom, B1 1HQ		Registered offices
---	---
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 Julians 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	2401-55 24/F, Office Tower Two 1 Jianguomenwai Street, Chaoyang<br><br>District, Beijing, China
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	c/o Teneo Financial Advisory Limited, The Colmore Building, 20<br><br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT
24	239 Van Rensselaer Street,, Buffalo, New York, United States of<br><br>America, 14210
25	c/o The Corporation Trust Company 1209 Orange Street, Wilmington,<br><br>Delaware, United States of America, 19801
26	Corporation Service Company 251 Little Falls Drive, Wilmington,<br><br>Delaware, United States of America, 19808
27	25/28 North Wall Quay, IFSC, Dublin 1, Leinster
28	No 1, Bei Huan East Road Dazu County, Chongqing, China
29	No 107 Ping Du Avenue (E), Sanhe Town, Fengdu County,<br><br>Chongqing, China
30	No. 3, 5, 7, Haitang Erzhi Road Changyuan, Rongchang, Chongqing,<br><br>China, 402460
31	c/o Walkers Corporate Services Limited, Walker House, 87 Mary<br><br>Street, George Town, Grand Cayman, Cayman Islands, KY1-9005
32	First & Second Floor No.3 Nanshan Road, Pulandian, Dalian, Liaoning,<br><br>China
33	160 Mine Lake CT, Ste 200, Raleigh, North Carolina, United States of<br><br>America, 27615-6417
34	38 avenue Kléber, Paris, France, 75116
35	Avenida de las Granjas 972, Building A, Floor 2, Colonia Santa<br><br>Bárbara, Alcaldía Azcapotzalco, Mexico City, Mexico, 02230
36	No. 1 1211 Yanjiang Zhong Road, Yongan, Fujian, China
37	83 Des Voeux Road Central, Hong Kong
38	No. 44 Xin Ping Road Central, Encheng, Enping, Guangdong, China,<br><br>529400
39	Room 311, Cheng Hui No. 2, Nan Sha Street, Nan Sha District,<br><br>Guangzhou, Guangdong, China
40	34/F, 36/F and 46/F, Hang Seng Bank Tower 1000 Lujiazui Ring Road,<br><br>Pilot Free Trade Zone, Shanghai, China, 200120
41	Gustav Mahlerplein 2 1082 MA, Amsterdam, Netherlands
42	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
43	Unit 1 GF The Commerical Complex Madrigal Avenue, Ayala Alabang<br><br>Village, Muntinlupa City, Philippines, 1780
44	C/O Teneo Financial Advisory Limited The Colmore Building, 20<br><br>Colmore Circus, Queensway, Birmingham, United Kingdom, B4 6AT
45	Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town,<br><br>Tortola, British Virgin Islands, VG1110
46	1 Harbourfront Avenue, #14-07 Keppel Bay Tower, Singapore, 098632
47	701 S CARSON ST STE 200, Carson City, Nevada, United States of<br><br>America, 89701
48	HSBC House Esplanade, St. Helier, Jersey, JE4 8UB
49	Level 21 Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala<br><br>Lumpur, Malaysia, 55188
50	Level 19, Menara IQ, Lingkaran TRX, Tun Razak Exchange, Kuala<br><br>Lumpur, Malaysia, 55188
51	10 Marina Boulevard #48-01 Marina Bay Financial Centre, Singapore,<br><br>018983
52	52/60, M G Road Fort, Mumbai, India, 400 001
HSBC Holdings plc Annual Report on Form 20-F	459
---	---
Registered offices
---	---
53	9-11 Floors, NESCO IT Park Building No. 3 Western Express<br><br>Highway, Goregaon (East), Mumbai, India, 400063
54	HSBC Building 11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan,<br><br>103-0027
55	Immeuble Cœur Défense 110 esplanade du Général de Gaulle,<br><br>Courbevoie, France, 92400
56	Level 36, Tower 1, International Towers Sydney, 100 Barangaroo<br><br>Avenue, Sydney, New South Wales, Australia, 2000
57	Isidora Goyenechea 2800 23rd floor, Las Condes, Santiago, Chile,<br><br>7550647
58	HSBC Building Shanghai ifc, 8 Century Avenue, Pudong, Shanghai,<br><br>China, 200120
59	IconEbene, Level 5 Office 1 (West Wing), Rue de L’institut, Ebene,<br><br>Mauritius
60	54F, 7 Xinyi Road Sec. 5 Xinyi district, Taipei, Taiwan
61	1266 Dr Luis Bonativa 1266 Piso 30 (Torre IV WTC), Montevideo,<br><br>Uruguay, CP 11.000
62	Level 1, 2, 6 The Metropolitan, 235 Dong Khoi, Ben Nghe Ward,<br><br>District 1, Ho Chi Minh, Vietnam
63	Esentepe Mah. Büyükdere Caddesi No.128 Şişli, Istanbul, Turkiye,<br><br>34394
64	306 Corniche El Nil Street, Maadi, Cairo, Egypt
65	116 Archbishop Street, Valletta, Malta, VLT1444
66	Unit 401, Level 4 Gate Precinct Building 2, Dubai International<br><br>Financial Centre, P. O. Box 30444, Dubai, United Arab Emirates
67	Majer Consulting, Office 54/44, Building A1, Residence Ryad Anfa,<br><br>Boulevard Omar El Khayam, Casa Finance City (CFC), Casablanca,<br><br>Morocco
68	1800 Tysons Boulevard Suite 50, Tysons, Virginia, United States of<br><br>America, 22102
69	P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands,<br><br>KY1-1104
70	HSBC House Esplanade, St. Helier, Jersey, JE1 1HS
71	Room 2703, 27F, Tower A, No.8 Century Avenue, China (Shanghai)<br><br>Pilot Free Trade Zone, Shanghai, China, 200120
72	c/o Rogers Capital St. Louis Business Centre, Cnr Desroches & St<br><br>Louis Streets, Port Louis, Mauritius
73	49 avenue J.F. Kennedy, Luxembourg, Luxembourg, 1855
74	4-17/F, Office Tower 2 TaiKoo Hui Development, No. 381 Tian He<br><br>Road, Guangzhou, Guangdong, China
75	Suite 1005, 10th Floor, Wisma Hamzah Kwong, Hing No. 1, Leboh<br><br>Ampang, Kuala Lumpur, Malaysia, 50100
76	Building C-1 UP Ayala Technohub, Commonwealth Avenue,, Diliman,<br><br>Quezon City, Metro Manila, Philippines
77	HSBC House Plot No.8 Survey No.64 (Part), Hightec City Layout<br><br>Madhapur, Hyderabad, India, 500081
78	Mireka City 324/9 Havelock Road, Colombo 05, Sri Lanka, 00500
79	Smart Village 28th Km Cairo- Alexandria Desert Road Building, Cairo,<br><br>Egypt
80	Centre Ville 1341 Building - 4th Floor Patriarche Howayek Street, PO<br><br>Box Riad El Solh, Lebanon, 9597
81	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
82	Hansaallee 3, Düsseldorf, Germany, 40549
83	HSBC Main Building 1 Queen's Road Central, Hong Kong
84	80 Mill Street, Qormi, Malta, QRM 3101
85	121 HaHashmonaim St., Tel Aviv, Israel, 6713328
86	36F., No. 68 Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City, Taiwan,<br><br>110419
87	452 Fifth Avenue, New York, United States of America, NY10018
88	Mareva House 4 George Street, Nassau, Bahamas
89	150 King Street West, Suite 200, Toronto, Ontario, Canada, M5H 1J9
90	9 rue du Laboratoire, Grand Duchy of Luxembourg, Luxembourg,<br><br>L-1911		Registered offices
---	---
91	4, rue Peternelchen, Howald, Grand Duchy of Luxembourg,<br><br>Luxembourg, L-2370
92	Alphabeta 14-18 Finsbury Square, London, United Kingdom, EC2A<br><br>1BR
93	IConEbene Rue de L’institut, Ebene, Mauritius
94	Meeting Room 18.R005, 18/F Fortune Financial Center No. 5<br><br>Dongsanhuan Zhong Road, Chaoyang District, Beijing, China, 100020
95	18th Floor Tower 1, HSBC Centre 1 Sham Mong Road, Kowloon,<br><br>Hong Kong
96	37 Front Street, Harbourview Center, Ground Floor, Hamilton,<br><br>Pembroke, Bermuda, HM 11
97	CT Corporation System 28 Liberty Street, New York, New York,<br><br>United States of America, 10005
98	Unit 201, Floor 2, Building 3 No. 12, Anxiang Street, Shunyi District,<br><br>Beijing, Beijing, China
99	C/O Company Secretarial Department, 280 Bishopsgate, London,<br><br>United Kingdom, EC2M 4AG
100	300 Delaware Avenue Suite 1401, Wilmington, Delaware, United<br><br>States of America, 19801
101	Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box<br><br>916
102	Craigmuir Chambers, Road Town Tortola, British Virgin Islands,<br><br>VG1110
103	52/60 M G Road Fort, Mumbai, India, 400 001
104	5/F HSBC Centre 3058 Fifth Ave West, Bonifacio Global City, Taguig<br><br>City, Philippines
105	18 Boulevard de Kockelscheuer, Luxembourg, Luxembourg, 1821
106	Unit 2002 of 20/F, Unit 2101 of 21/F HSBC Building, 8 Century<br><br>Avenue, China (Shanghai) Pilot Free Trade Zone, Shanghai, China,<br><br>200120
107	Arnold House St Julians Avenue, St Peter Port, Guernsey, GY1 1WA
108	HSBC Tower, Downtown Dubai, P O Box 66, Dubai, United Arab<br><br>Emirates
109	Unit 401, Level 4, Gate Precinct Building 2, Dubai International<br><br>Financial Centre, P. O. Box 506553, Dubai, United Arab Emirates
110	Level 16, HSBC Tower, Downtown Dubai, P.O. Box 66, Dubai, United<br><br>Arab Emirates
111	HSBC Tower, Level 21, 188 Quay Street, Auckland, New Zealand,<br><br>1010
112	The Corporation Trust Incorporated, 2405 York Road, Suite 201,<br><br>Lutherville Timonium, Maryland, United States of America, 21093
113	HSBC House Esplanade, St. Helier, Jersey, JE1 1GT
114	9-17 Quai des Bergues, Geneva, Switzerland, 1201
115	1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland, D02<br><br>P820
116	6th floor HSBC Centre 18, Cybercity, Ebene, Mauritius, 72201
117	Esentepe Mah. Büyükdere Caddesi No.128, 34394, Şişli, Istanbul,<br><br>Turkiye
118	5 rue Heienhaff, Senningerberg, Luxembourg, L-1736
119	52/60 M G Road, Fort, Mumbai, India, 400 001
120	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
121	HSBC Building 7267 Olaya - Al Murrooj, Riyadh, Saudi Arabia, 12283 -<br><br>2255
122	306 Corniche El Nil, HSBC Building, Maadi, Cairo, Egypt
123	1 Mutual Place, 107 Rivonia Road, Sandton, Gauteng, South Africa,<br><br>2196
124	Kapelanka 42A, Krakow, Poland, 30-347
125	C T Corporation System 820 Bear Tavern Road, West Trenton, New<br><br>Jersey, United States of America, 08628
126	22/F, Tower 2, Taikoo Hui Building, No. 381 Tianhe Road, Tianhe<br><br>District, Guangzhou, China
127	Business Bay, Wing 2 Tower B, Survey no 103, Hissa no. 2, Airport<br><br>road, Yerwada, Pune, India, 411006
460	HSBC Holdings plc Annual Report on Form 20-F
---	---

Notes on the financial statements

Registered offices
128	Room 3102, L31 HSBC Building, Shanghai ifc, 8 Century Avenue,<br><br>China (Shanghai) Free Trade Zone, Shanghai, China, 200120
129	16 Boulevard d'Avranches, Luxembourg, L-1160
130	10 Earlsfort Terrace, Dublin, Ireland, D02 T380
131	No. 56 Yu Rong Street, Macheng, China, 438300
132	No. 205 Lie Shan Road Suizhou, Hubei, China
133	Building 3, Yin Zuo Di Jing Wan Tianmen New City, Tianmen, Hubei<br><br>Province, China
134	RM101, 102 & 106 Sunshine Fairview, Sunshine Garden, Pedestrian<br><br>Walkway, Pingjiang, China
135	Craigmuir Chambers, Road Town, Tortola, British Virgin Islands,<br><br>VG1110
136	Kings Meadow Chester Business Park, Chester, United Kingdom,<br><br>CH99 9FB
137	Level 15 HSBC Tower, Downtown Dubai, Dubai, United Arab<br><br>Emirates, PO Box 66
138	De Entrée 201, Amsterdam, Netherlands, 1101 HG
139	World Trade Center 3, 9th Floor, Jalan Jendral Sudirman Kaveling<br><br>29-31, Karet, Setiabudi, South Jakarta, DKI Jakarta, Indonesia, 12920
140	5th Floor, World Trade Center 1, Jl. Jend. Sudirman Kav. 29-31,<br><br>Jakarta, Indonesia, 12920
141	No.198-2 Chengshan Avenue (E), Rongcheng, China, 264300
142	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
143	Woodbourne Hall, Road Town, Tortola, British Virgin Islands, P.O. Box<br><br>3162
144	1 Côte d'Eich, Luxembourg, 1450
145	P.O. Box 3119 Grand Pavilion, Hibiscus Way, 802 West Bay Road,<br><br>Grand Cayman, Cayman Islands, KY1 – 1205
146	17 Boulevard F.W Raiffeisen, Luxembourg, 2411
147	Tokyo Club Building 11F, 3-2-6 Kasumigaseki, Chiyoda-ku, Tokyo,<br><br>Japan
148	27/F, Alexandra House, 18 Chater Road Central, Hong Kong
149	Unit 2017, Floor 20, Tower 1 No.288, Shimen 1st Road, Jing An<br><br>District, Shanghai, China, 200041
150	10 Collyer Quay, #10-01 Ocean Financial Centre, Singapore,<br><br>Singapore, 049315
151	RM 2112, HSBC Building, Shanghai ifc No. 8 Century Road, Pudong,<br><br>Shanghai, China, 200120
152	3 More London Riverside, London, United Kingdom, SE1 2AQ	Registered offices
---	---
153	296, floor 18, office A Paseo de la Reforma, Mexico City, Mexico,<br><br>06600
154	35 Ballards Lane, London, United Kingdom, N3 1XW
155	1 Raffles Quay #23-01, Singapore, 048583
156	c/o Mayfair Corporate Services Ltd., 26 Burnaby Street, Hamilton,<br><br>Bermuda, HM11
157	27 Old Gloucester Street, London, United Kingdom, WC1N 3AX
158	All Saints Triangle Caledonian road, London, United Kingdom, N19UT
159	188 Yin Cheng Zhong Lu (Shanghai) Pilot Free Trade Zone, China
160	50/F, Lee Garden One, 33 Hysan Avenue, Hong Kong
161	13-15 York Buildings, London, United Kingdom, WC2N 6JU
162	167-169 Great Portland Street, 5th Floor, London, United Kingdom,<br><br>W1W 5PF
163	8th Floor Unit No. 808-814, Ambadeep Building, Plot No. 14, Kasturba<br><br>Gandhi Marg, New Delhi, India, 110001
164	C/O Interpath Ltd, 10 Fleet Place, London, United Kingdom, EC4M<br><br>7RB
165	251 Little Falls Drive, New Castle, Wilmington, United States of<br><br>America, 19808
166	17F, HSBC Building, Shanghai ifc 8 Century Avenue, Pudong,<br><br>Shanghai, China
167	10th Floor 5 Churchill Place, London, United Kingdom, E14 5HU
168	111 Town Square Place, Suite 840, Jersey City, New Jersey, United<br><br>States of America, 07310
169	7th Floor, 62 Threadneedle Street, London, United Kingdom, EC2R<br><br>8HP
170	Unit 306,307, 308, Gate Village Building 05, Dubai International<br><br>Financial Centre, Dubai, United Arab Emirates
171	Gartenstrasse 26, Zurich, Switzerland, 8002
172	4482 Deer Ridge Road, Danville, CA, Delaware, United States of<br><br>America, 94506
173	7383 King Fahad Branch Rd, 2338 - Al Yasmeen Dist., Riyadh, Saudi<br><br>Arabia, 13325
174	2nd Floor, Regis House, 45 King William Street, London, United<br><br>Kingdom, EC4R 9AN
175	Coeur Défense - 110, esplanade du Général de Gaulle - La Défense 4<br><br>– 92400 Courbevoie
176	3 Dublin Landings, North Wall Quay, Dublin 1, Ireland
177	3, rue Jean Piret,L-2350 Luxembourg,Grand Duchy of Luxembourg
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 2024 or

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 2023 have been delivered to the Registrar of Companies and those for 2024 will be delivered in due course.

HSBC Holdings plc Annual Report on Form 20-F	461

Shareholder information

Contents
461	Fourth interim dividend for 2024	473	Information made about the enforceability of judgments made in<br><br>the US
461	Interim dividends for 2025
461	Other equity instruments	473	Exchange controls and other limitations affecting equity security
462	2024 Annual General Meeting	473	Insider trading policies and procedures
462	Earnings releases and interim results	474	Dividends on the ordinary shares of HSBC Holdings
462	Shareholder enquiries and communications	474	American Depository Shares
462	Stock symbols	474	Nature of trading market
463	Investor relations	474	Memorandum and Articles of Association
463	Where more information about HSBC is available	475	Differences in HSBC Holdings/New York Stock Exchange corporate
463	Taxation of shares and dividends	476	Glossary of accounting terms and US equivalents
465	Approach to ESG reporting	477	Reconciliations

This section gives important information for our shareholders, including contact information. It also includes an overview of key abbreviations

and terminology used throughout this Form 20-F.

A 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 2024

The Directors have approved a fourth interim dividend for 2024 of $0.36 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	19 February 2025
Shares quoted ex-dividend in London, Hong Kong and Bermuda	6 March 2025
American Depositary Shares (‘ADS’) quoted ex-dividend in New York	7 March 2025
Record date – London, Hong Kong, New York, Bermuda1	7 March 2025
Mailing of Annual Report and Accounts 2024 and/or Strategic Report 2024	21 March 2025
Final date for dividend election changes including Investor Centre electronic instructions and revocations of standing instructions for dividend elections	10 April 2025
Exchange rate determined for payment of dividends in pounds sterling and Hong Kong dollars	14 April 2025
Payment date	25 April 2025

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 2025

As previously communicated, we established and achieved a target dividend payout ratio of 50% of earnings per ordinary share (‘EPS’) for 2023

and 2024, excluding the special dividend. EPS for this purpose excludes material notable items and related impacts. Material notable items in

2023 and 2024 included the sale of our businesses in Canada and Argentina, the sale of our retail banking operations in France, the gain

following the acquisition of SVB UK and the impairment of our investment in BoCom. We also exclude HSBC Bank Canada‘s financial results

from the 30 June 2022 net asset reference date until completion on 29 March 2024, as the gain on sale recognised through a combination of

the consolidation of HSBC Bank Canada‘s results in the Group‘s results since this date, and the remaining gain on sale was recognised at

completion, inclusive of the recycling of related reserves and fair value gains on related hedges.

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. The Board has established a target dividend payout

ratio of 50% for 2025, subject to meeting capital requirements.

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 SGD1,500m 5.250% perpetual subordinated contingent convertible securities on 14 June 2024. In addition, HSBC

Holdings issued US$1,350m 6.875% and US$1,150m 6.950% perpetual subordinated contingent convertible securities on 11 September 2024.

462	HSBC Holdings plc Annual Report on Form 20-F

Additional information

2024 Annual General Meeting

With the exception of the shareholder requisitioned Resolution 17, which the Board recommended that shareholders vote against, all

resolutions considered at the 2024 AGM held at 11:00am on 3 May 2024 at InterContinental London O2, 1 Waterview Drive, London SE10 0TW,

UK, were passed on a poll.

Earnings releases and interim results

First and third quarter results for 2025 will be released on 29 April 2025 and 28 October 2025, respectively. The interim results for the six

months to 30 June 2025 will be issued on 30 July 2025.

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<br><br>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>hsbc.ecom@computershare.com.hk<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	hbbm.shareholder.services@hsbc.bm<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>shrrelations@cpushareownerservices.com

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 2024 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 2024 will be available upon request after 21 March 2025 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.

《2024 年報及賬目》備有中譯本，各界人士可於2025年3月21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
HSBC Holdings plc Annual Report on Form 20-F	463
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Investor relations

Enquiries relating to HSBC’s strategy or operations may be directed to:

Neil Sankoff, 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) 20 7991 5072	Telephone: +852 2899 8909
Email: investorrelations@hsbc.com	Email: investorrelations@hsbc.com.hk

Where more information about HSBC is available

The Annual Report and Accounts 2024 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 PublicInfo@sec.gov. 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 2024 by

31 December 2025. 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 2024 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.

464	HSBC Holdings plc Annual Report on Form 20-F

Additional information

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 2024 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.

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 2024 taxable year and

does not anticipate becoming a passive foreign investment company

in 2025 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.

HSBC Holdings plc Annual Report on Form 20-F	465

Approach to ESG reporting

The information set out in the ESG review on pages 39 to 82, taken

together with other information relating to ESG issues included in this

Form 20-F, aims to provide key ESG information and data relevant to

our operations for the year ended 31 December 2024. The data is

compiled for the financial year 1 January to 31 December 2024

unless otherwise specified. Measurement techniques and

calculations are explained next to data tables where necessary. There

are no significant changes from the previous reporting period in terms

of scope, boundary or measurement of our reporting of ESG matters.

Where relevant, 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, which

we set out in more detail within the ‘ESG overview’ on page 19. 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 ESG Committee and other relevant governance bodies

regularly 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 Guide (which refers to our

obligations under the Environmental, Social and Governance

Reporting Guide contained in Appendix C2 to The Rules Governing

the Listing of Securities on The Stock Exchange of Hong Kong

Limited), 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

Guide and the FCA’s Listing Rules.

Under the ESG Guide, ’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’) or the Corporate

Sustainability Reporting Directive (‘CSRD’), and support the efforts to

harmonise the disclosures. In this Form 20-F we continue to report

against the core World Economic Forum (‘WEF’), Stakeholder

Capitalism Metrics and Sustainability Accounting Standards Board

(‘SASB’) metrics, and will continue to review our approach as the

regulatory landscape evolves.

Consistent with the scope of financial information presented in this

Form 20-F, the ESG review covers the operations of HSBC Holdings

plc and its subsidiaries. Given the relative immaturity of ESG-related

data and methodologies in general, we are on a journey towards

improving completeness and robustness.

For further details of our material ESG topics, see ‘Engaging with our

stakeholders and our material ESG topics’ on page 19.

Our reporting around ESG

We report on ESG matters throughout this Form 20-F, including the

’ESG overview’ section of the Strategic Report (pages 18 to 22), ESG

review (pages 39 to 82), and the ‘Climate risk’ and ‘Insights from

climate scenario analysis’ sections of the Risk review (pages 249 to

258). 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 2024,<br><br>including SASB Index<br><br>2024 and WEF Index<br><br>2024	UK Pay Gap Report 2024<br><br>Modern Slavery and Human Trafficking Statement<br><br>2024<br><br>Green Bond Report 2024<br><br>HSBC UN Sustainable Development Goals Bond<br><br>Report 2024

For 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.

ESG Guide

We comply with the ‘comply or explain’ provisions in the ESG Guide,

save for certain items, which we describe in more detail below:

–A1(b) on 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 carbon emissions, while we only partially publish

information on scope 3 carbon emissions, as the data required for

that publication is not yet fully available.

–A1.3 on total hazardous waste produced, A1.4 on 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.

–A1.6 on 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 previous operational environmental

strategy, 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 56.

–A2.4 on 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 flow restrictors, auto-taps and low or

zero flush sanitary fittings and continue to track our water

consumption.

–A2.5 on packaging material, B6(b) on issues related to health and

safety and labelling relating to products and services provided,

B6.1 on percentage of total products sold or shipped subject to

recalls for safety and health reasons and 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.

This is aligned with the materiality reporting principle that is set out in

the ESG Guide. See ‘How we decide what to measure’ for further

information on how we determine what matters are material to our

stakeholders.

466	HSBC Holdings plc Annual Report on Form 20-F

Additional information

Task Force on Climate-related Financial Disclosures (‘TCFD’)

TCFD

As noted on page 21, we have considered our ‘comply or explain’ obligation under both UKLR 6.6.6(8) of the Financial Conduct Authority’s

(‘FCA’) Listing Rules and Sections 414CA and 414CB of the UK Companies Act 2006. We perform an assessment to ascertain the appropriate

level of detail to be included in the climate-related financial disclosures that are set out in this Form 20-F, 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’ for further information.

We confirm that we have made disclosures consistent with 11 TCFD Recommendations and Recommended Disclosures, including its annexes

and supplemental guidance, which we summarise in the table below:

Recommendation	Response	Disclosure<br><br>location
Governance
a) Describe the Board’s oversight of climate-related risks and opportunities (Companies Act 2006 - Sections 414CA and 414CB 2A (a))
Process, frequency and<br><br>training	–The Board takes overall responsibility for ESG strategy, overseeing executive management in developing the<br><br>approach, execution and associated reporting. ESG strategies were considered at eight Board meetings during the<br><br>year.	Pages 72<br><br><br>and 283
	–Board members receive ESG-related training as part of their induction and ongoing development, and seek out further<br><br>opportunities to build their skills and experience in this area.	Page 72<br>
Sub-committee<br><br>accountability,<br><br>processes and<br><br>frequency	–The Group Audit Committee (‘GAC’) considered ESG and climate reporting matters at six meetings during 2024.<br><br>Furthermore, as an area of expanded assurance, the GAC, supported by the executive-level ESG Committee, provided<br><br>close oversight of the disclosure risks in relation to sustainability and climate reporting, amid rising stakeholder<br><br>expectations. The work will continue throughout 2025 in partnership with the Sustainability Working Group.	Page 294<br>
	–The Group Risk Committee (‘GRC’) remained focused on climate risk and greenwashing risk. The GRC received reports<br><br>on climate risk management and sustainability risk policies, while maintaining oversight of delivery plans and risk appetite<br><br>breaches to help ensure that the Group continues to develop and maintains robust climate risk management capabilities.<br><br>Reputation risk considerations have also formed part of these discussions. It considered climate risk at four meetings in<br><br>2024.	Pages 302<br><br><br>and 305
	–The diagram on page 72 provides an illustration of our ESG governance process, including how the Board’s strategy<br><br>on climate is cascaded and implemented throughout the organisation. It identifies examples of forums that manage<br><br>both climate-related opportunities and risks, along with their responsibilities and the responsible chair.	Page 72<br>
Examples of the Board<br><br>and relevant Board<br><br>committees taking<br><br>climate into account	–The Board has overall responsibility for ESG strategy, overseeing executive management in developing the approach,<br><br>execution, and associated reporting.	Page 281 <br>
	–We enhanced our ESG governance with the establishment of a new Sustainability Working Group (‘SWG’) of the HSBC<br><br>Holdings Board. This working group has an initial remit to provide oversight and guidance in relation to the Group’s<br><br>sustainability activities, including the targets and timelines set out in the net zero transition plan, key sustainability risk<br><br>policies and communication with key stakeholder groups.	Page 72<br>
	–In 2024, the Board oversaw the implementation of ESG strategy through regular dashboard reports and detailed<br><br>updates including: review and approval of the net zero transition plan; deep dives on the sustainability execution<br><br>programme; and updates on human rights.	Page 281<br>
b) Describe management’s role in assessing and managing climate-related risks and opportunities (Companies Act 2006 - Sections 414CA and 414CB 2A (a))
Who manages climate-<br><br>related risks and<br><br>opportunities	–The Sustainability Working Group, established in 4Q24, oversees and provides guidance on the Group-wide medium<br><br>and longer-term sustainability strategy. The ESG Committee has oversight of ESG strategy, policy, material<br><br>commitments and external disclosure. It is co-chaired by the Group CEO and the Group Chief Sustainability Officer.	Page 250<br>
	–The Group Chief Risk and Compliance Officer is the senior manager responsible for the management of climate risk<br><br>under the UK Senior Managers Regime, holding overall accountability for the Group’s climate risk programme.	Page 250<br>
How management<br><br>reports to the Board	–The Board delegates day-to-day management of the business and implementation of strategy to the Group CEO. During the<br><br>year, the incumbent Group CEO was supported in his management of the Group by recommendations and advice from the<br><br>Group Executive Committee (’GEC’), an executive forum comprising members of senior management that include chief<br><br>executive officers of the global businesses and regions, as well as functional heads.	Page 277 <br>
	–During the year, the Board also oversaw the rationalisation of the ESG Committee and Sustainability Execution<br><br>Committee into a single governance body (named the ESG Committee). These Board and executive level governance<br><br>forums support senior management in the operationalisation of the Group’s sustainability strategy, through the oversight<br><br>of the sustainability execution programme. For further details see page 72.	Page 281<br>
Processes used to<br><br>inform management	–The Group Risk Management Meeting oversees the enterprise-wide management of all risks, including updates<br><br>relating to the Group’s climate risk profile and risk appetite, top and emerging climate risks, and key climate initiatives.	Page 72<br>
Strategy
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term (Companies Act 2006 -<br><br>Sections 414CA and 414CB 2A (d))
Processes used to<br><br>determine material<br><br>risks and opportunities	–When assessing our long-term scenarios, climate-related losses are expected to remain minimal in the short term and<br><br>likely to increase in the medium and longer time horizon, driven by the transition to a net zero economy and greater<br><br>physical risk impacts.	Page 254<br>
	–Our models continue to incorporate a range of climate-specific metrics that could potentially impact our customers,<br><br>including expected production volumes, revenue, costs and capital expenditure.	Page 254<br>
Relevant short-,<br><br>medium-, and long-term<br><br>time horizons	–Our annual climate risk materiality assessment helps us to understand how climate risk may impact HSBC’s risk<br><br>taxonomy. The assessment considers short-term (up to 2026), medium-term (2027-2035) and long-term (2036-2050)<br><br>periods.	Page 249<br>
HSBC Holdings plc Annual Report on Form 20-F	467
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Task Force on Climate-related Financial Disclosures (‘TCFD’) continued

Recommendation	Response	Disclosure<br><br>location
Transition or physical<br><br>climate-related issues<br><br>identified	–We aim to help our customers transition to net zero and a sustainable future by providing and facilitating between<br><br>$750bn and $1tn of sustainable finance and investment by 2030. Our Sustainable Finance and Investment Data<br><br>Dictionary 2024 includes a detailed definition of contributing activities.	Page 43<br>
	–For transition risk, we have metrics in place to monitor the exposure of our wholesale corporate lending portfolio to six<br><br>high transition risk sectors. As at 31 December 2024, the overall exposure to six high transition risk sectors was 18% of<br><br>total gross carrying amount of wholesale loans and advances. Our relationship managers engage with our key wholesale<br><br>customers, including those in higher transition risk sectors, through a transition engagement questionnaire (‘TEQ’). In<br><br>2024, the TEQ was expanded to cover all geographies. The TEQ helps to gather information and assess our wholesale<br><br>customers’ business model alignment to a net zero transition and their exposure to physical and transition risks.	Page 251<br>
	–The impact on our wholesale portfolios is demonstrated by the table on page 255 which shows the size of exposures by<br><br>sector in 2024 and the cumulative change in ECL compared with a counterfactual scenario (expressed as a multiple).<br><br>The size of our exposure in each sector is represented by our exposure at default (‘EAD’) relative to one another.	Page 255<br>
	–The table on page 256 demonstrates the impact on our commercial real estate (‘CRE’) portfolio for specific markets,<br><br>including the three biggest markets – Hong Kong, the UK and the US. This shows the increase in cumulative ECL over<br><br>different time horizons, under each scenario, compared with a counterfactual scenario (expressed as a multiple).	Page 256<br>
	–We measure the impacts of climate and weather events on our buildings on an ongoing basis using historical, current<br><br>and scenario-modelled forecast data. In 2024, there were 40 major storms that had a minor impact on three of our<br><br>buildings.	Page 257<br>
Risks and<br><br>opportunities by<br><br>sector and/or<br><br>geography	–For transition risk, we have metrics in place to monitor the exposure of our wholesale corporate lending portfolio to six<br><br>high transition risk sectors. These are automotive, chemicals, construction, contracting & building materials, metals and<br><br>mining, oil and gas, and power and utilities.	Page 251<br>
	–Within our mortgage portfolios, properties or areas with potentially heightened physical risk are identified and assessed<br><br>locally with exposure monitored using risk indicators. A reduction in property value, higher insurance costs and insurance<br><br>availability are potential future negative financial impacts for properties with higher physical risk. Geographically, for the<br><br>UK lending balances, our highest flood risk exposures are the Greater London and South-East regions.	Page 251<br>
	–Development of clean power generation is critical to achieving net zero. We supported Abu Dhabi Future Energy<br><br>Company (Masdar) towards its equity commitments on new greenfield projects in renewable energy and energy<br><br>efficiency, by acting as joint lead manager and bookrunner in raising $1bn through its second green bond issuance.	Page 44<br>
	–We aim to help our customers transition to net zero and a sustainable future by providing and facilitating between<br><br>$750bn and $1tn of sustainable finance and investment by 2030. Additional detailed information on our sustainable<br><br>finance and investment progress can be found in the ESG Data Pack.	Page 43<br>
Concentrations of<br><br>credit exposure to<br><br>carbon-related assets<br><br>(supplemental<br><br>guidance for banks)	–We report our exposure to the six high transition risk sectors in the wholesale portfolio, which are automotive,<br><br>chemicals, construction, contracting & building materials, metals and mining, oil and gas, and power and utilities. For<br><br>details, see the ESG Data Pack.	Page 251<br>
	–We monitor the energy performance certificate (‘EPC’) ratings of individual properties from A (highest efficiency) through<br><br>to G (least efficient) as EPCs are commonly used as an indicator of transition risk in the UK mortgage book.	Page 251<br>
Climate-related risks<br><br>(transition and<br><br>physical) in lending<br><br>and other financial<br><br>intermediary business<br><br>activities<br><br>(supplemental<br><br>guidance for banks)	–Our material exposure to climate risk relates to wholesale and retail client financing activity within our banking portfolio.	Page 58<br>
	–We are also exposed to climate risk in relation to asset ownership by our insurance business and employee pension<br><br>plans.	Page 58<br>
	–HSBC Asset Management recognises that climate-related risks may impact the operational and financial performance of<br><br>investee companies. The impact of these risks will vary depending on characteristics such as asset class, sector,<br><br>business model and geography. HSBC Asset Management continues to integrate climate analysis into its actively<br><br>managed product offerings and seeks to assess climate-related risks that could impact investment performance, where<br><br>applicable and relevant.	Page 58<br>
	–Our relationship managers engage with our key wholesale customers, including those in higher transition risk sectors,<br><br>through a transition engagement questionnaire (‘TEQ’). In 2024, the TEQ was expanded to cover all geographies. The<br><br>TEQ helps to gather information and assess our wholesale customers’ business model alignment to a net zero transition<br><br>and their exposure to physical and transition risks. We use the responses to the questionnaire to risk-assess our key<br><br>wholesale customers.	Page 251<br>
	–Under the Current Commitments scenario, our modelled outputs predict that ECL will not be more than 25% higher than the<br><br>counterfactual scenario for any of the assessed sectors. The highest impacts are seen in the chemicals, construction and<br><br>building materials, power and utilities and agriculture and soft commodities sectors. Greater climate risks would crystallise<br><br>in the Below 2 Degrees scenario with its gradually increasing transition to net zero, driven by pockets of customers in higher-<br><br>emitting sectors that are continuously exposed to larger climate-related losses.	Page 255<br>
	–The UK is our largest mortgage market, and as of November 2024, made up 46.7% of our global mortgage portfolio. Our<br><br>ESG Data Pack includes our climate risk exposures for this portfolio across regions. The maturity profile of the UK mortgage<br><br>book shows that the average remaining contractual term in the UK is 21.8 years. This means our strategic approach to<br><br>climate risk considers both present day risk and long-term forward-looking risk, given that customers may choose to remain<br><br>with us over the lifespan of the loan. For the UK mortgage book, flood data is available for 93.7% of the mortgage book of<br><br>which 0.9% is at a very high risk of flooding, with 2.7% of the book at a high risk of flooding.	Page 251<br>
468	HSBC Holdings plc Annual Report on Form 20-F
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Additional information

Task Force on Climate-related Financial Disclosures (‘TCFD’) continued
Recommendation	Response	Disclosure<br><br>location
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning (Companies Act 2006<br><br>- Sections 414CA and 414CB 2A (e))
Impact on strategy,<br><br>business, and<br><br>financial planning	–We aim to help our customers transition to net zero and a sustainable future by providing and facilitating between $750bn<br><br>and $1tn of sustainable finance and investment by 2030.	Page 40<br>
	–Climate scenario analysis supports our strategy by assessing our potential exposures to risks and vulnerabilities under a range<br><br>of climate scenarios. It is one of the key tools used to support the evaluation of portfolios in line with our net zero ambition.<br><br>Our 2024 scenarios considered the key regions in which we operate and were designed to assess the impact on our balance<br><br>sheet across three distinct periods: short term up to 2026; medium term from 2027 to 2035; and long term from 2036 to<br><br>2050.	Page 253<br>
	–From a financial and capital planning perspective, we use climate scenario analysis to support the Group’s internal capital<br><br>adequacy assessment process (‘ICAAP’) to understand the amount of capital the Group should hold to meet identified<br><br>climate risks, including integration of climate impacts into the Group’s internal stress testing exercises.	Page 253<br>
	–We have assessed the impact of climate risk on our balance sheet and have concluded that no incremental adjustments were<br><br>needed to capture climate impacts in our financial statements for the year ended 31 December 2024.	Page 41<br>
	–We have used climate scenarios to inform our organisation’s business, strategy and financial planning. In 2024, we<br><br>continued to incorporate certain aspects of sustainable finance within our financial planning process.
	–We do not fully disclose impacts from climate-related opportunities on financial planning and performance including on<br><br>revenue, costs and the balance sheet, quantitative scenario analysis, detailed climate risk exposures for all sectors and<br><br>geographies or physical risk metrics. This is due to transitional challenges in relation to data limitations, although nascent<br><br>work is ongoing in these areas. We expect these data limitations to be addressed in the medium term as more reliable<br><br>data becomes available and technology solutions are implemented.
Impact on products<br><br>and services	–We aim to help our customers transition to net zero and a sustainable future by providing and facilitating between $750bn<br><br>and $1tn of sustainable finance and investment by 2030.	Page 43<br>
	–Thermal coal mining: In 2021, absolute on-balance sheet financed emissions decreased by 71% to 1.38 Mt CO2e relative<br><br>to the re-baselined 2020 figure. In 2022, the absolute on-balance sheet financed emissions of our portfolio decreased by<br><br>69% to 1.44 Mt CO2e relative to the re-baselined 2020 figure, and they rose by 4% from 2021 to 2022. The reduction<br><br>from the 2020 re-baselined figure was due to strategic decisions and temporary factors, such as low loan drawdown<br><br>levels.	Page 54<br>
Impact on supply<br><br>chain and/or value<br><br>chain	–In 2024 we incorporated an additional supply chain data source to complement data from CDP (formerly the Carbon<br><br>Disclosure Project). We continue to improve the measurement, quality and reporting of our supply chain emissions data to<br><br>generate insights to drive targeted reduction activities.	Page 56<br>
	–Our supply chain contributes c.81% of our operational emissions and is the area in which we face the most significant<br><br>decarbonisation challenge. Many suppliers are still in the early phase of their decarbonisation journey. We have stepped<br><br>up targeted efforts to support decarbonisation across our supply chain.	Page 56<br>
	–We focus on building strategic partnerships that can help to create an enabling environment for mobilising finance, and<br><br>support development and scaling-up of solutions for the net zero transition. In 2024 we donated approximately $9m in<br><br>grant funding to help establish a portfolio of partnerships aligned to the strategic focus areas set out in our net zero<br><br>transition plan: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. We are<br><br>also supporting initiatives focused on driving progress on cross-cutting issues, such as nature and the just transition.	Page 45<br>
	–As part of its stewardship activities, HSBC Asset Management engages on climate change issues with investee companies<br><br>on a priority list, as defined in its Stewardship Plan.	Page 58<br>
Impact on adaptation<br><br>and mitigation<br><br>activities	–In 2024 we achieved a 30.5% reduction in our energy consumption compared with 2019 (2023: 26.3%). This has been<br><br>achieved through optimising the use of our real estate portfolio and carrying out a reduction in our office space and data<br><br>centres. We continue to optimise our assets to ensure greater efficiency and capitalise on new energy technologies. In 2024<br><br>we increased our purchase of electricity from renewable sources to 75.4% from 58.4% in 2023. This included increasing our<br><br>coverage of green tariffs in India and mainland China. Renewable electricity can help unlock our emissions reduction<br><br>potential, and we aim to achieve 100% renewable electricity across our own operations by 2030.	Page 56<br>
	–This forward-looking data along with historical data helps inform real estate planning. We will continue to enhance our<br><br>understanding of how extreme weather events impact our buildings portfolio as climate risk assessment tools improve and<br><br>evolve. We buy insurance for property damage and business interruption and consider insurance as a loss-mitigation<br><br>strategy depending on its availability and price. We regularly review and enhance our building selection process and global<br><br>engineering standards and will continue to assess historical claims data to help ensure our building selection and design<br><br>standards address the potential impacts of climate change.	Page 257<br>
Impact on operations	–We measure the impacts of climate and weather events on our buildings on an ongoing basis using historical, current and<br><br>scenario-modelled forecast data. In 2024, there were 40 major storms that had a minor impact on three of our buildings.<br><br>We use stress testing to evaluate the potential impact on our owned or leased premises. Our 2024 scenario stress test<br><br>analysed how nine climate change-related hazards – comprising coastal flooding, fluvial flooding, pluvial flooding, soil<br><br>movement due to drought, temperature extremes, water stress, wildfires, landslides and tropical cyclones – could impact<br><br>2,719 of our properties.	Page 257<br>
Impact on<br><br>investment in<br><br>research and<br><br>development	–Our five-year Climate Solutions Partnership with the World Resources Institute, WWF and over 50 local partners,<br><br>continues to support nature-based solutions and energy transition in Asia. Since 2020, $105m in funding has been<br><br>deployed to our NGO partners. The energy programmes have engaged companies across Asia to help set new standards<br><br>in climate commitments for their industries and mobilised finance to support the uptake of renewables. The nature<br><br>programmes supported the Asia Sustainable Palm Oil Links programme, focused on promoting sustainable palm oil<br><br>production, consumption and trade across Asia, and the Nature-based Solutions Accelerator, which supported projects to<br><br>reach investment readiness.	Page 45<br>
	–We are a founding funder of the Just Transition Finance Lab, hosted at the LSE’s Grantham Research Institute, which<br><br>aims to accelerate solutions to achieve progress on climate and wider environmental goals through a people-centred<br><br>approach. Since its launch in early 2024, the Lab has produced a range of outputs including: mapping just transition<br><br>policies to a set of metrics, exploration of the role investors can play in facilitating a just transition in India, a case study of<br><br>the coal-to-clean shift in Chile, and a detailed examination of the financial path to a just transition in the critical minerals<br><br>sector.	Page 45<br>
HSBC Holdings plc Annual Report on Form 20-F	469
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Task Force on Climate-related Financial Disclosures (‘TCFD’) continued
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Recommendation	Response	Disclosure<br><br>location
Impact on acquisitions<br><br>or divestments	–Our mergers and acquisitions process considers potential climate and sustainability-related targets, net zero transition<br><br>plans and climate strategy, and how this relates to HSBC.	Page 249<br>
Impact on access to<br><br>capital	–We have considered the impact of climate-related issues on our businesses, strategy and financial planning. Our access to<br><br>capital may be impacted by reputational concerns as a result of climate action or inaction. In addition, if we are perceived<br><br>to mislead stakeholders on our business activities or if we fail to achieve our stated net zero ambitions, we could<br><br>potentially face reputational damage, impacting our revenue-generating ability and our access to capital markets. We<br><br>expect to make the disclosure in the medium term as more data becomes available. To manage these risks we have<br><br>integrated climate risk into our existing risk taxonomy, and incorporated it within the risk management framework through<br><br>the policies and controls for the existing risks where appropriate.
Transition plan to a low-<br><br>carbon economy	–In 2020, we set an ambition to become a net zero bank by 2050. Since then, we have taken various actions across our<br><br>organisation to support implementation as set out in our net zero transition plan. We continue to review both our transition<br><br>plan and associated GHG targets to, where possible, ensure they remain consistent with assumptions used in our financial<br><br>planning, including related financial approach for the implementation of the transition plan in the medium term (e.g. amount<br><br>of capital and other expenditures supporting our decarbonisation strategy). The reference pathways we consider are global<br><br>and we do not currently set GHG targets for individual countries or entities; however, we continue to explore the use of<br><br>multiple climate-related scenarios to test achievability of the financed emissions targets and own operations ambition.
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario<br><br>(Companies Act 2006 - Sections 414CA and 414CB 2A (f))
Embedding climate into<br><br>scenario analysis	–Climate scenario analysis supports our strategy by assessing our potential exposures to risks and vulnerabilities under<br><br>a range of climate scenarios. It is one of the key tools used to support the evaluation of portfolios in line with our net<br><br>zero ambition.	Page 253<br>
	–Our 2024 scenarios considered the key regions in which we operate and were designed to assess the impact on our<br><br>balance sheet across three distinct periods: short term up to 2026; medium term from 2027 to 2035; and long term<br><br>from 2036 to 2050.	Page 253<br>
Key drivers of<br><br>performance and how<br><br>these have been taken<br><br>into account	–The 2024 climate scenario analysis exercise was designed to examine the climate risks and vulnerabilities of corporate<br><br>counterparties across high transition risk sectors under climate scenarios of varying severity. Specifically, we<br><br>measured the modelled effect on our projected ECL change over the short-, medium- and long-term horizons under<br><br>each scenario. This was compared to a counterfactual scenario that excludes climate change impacts to isolate the<br><br>climate only changes in ECL. Our analysis shows that over the longer term, we expect minimal losses to materialise<br><br>when considering the Current Commitments scenario.	Pages 255 <br><br><br>and 255
	–From a financial and capital planning perspective, we use climate scenario analysis to support the Group’s internal<br><br>capital adequacy assessment process (‘ICAAP’) to understand the amount of capital the Group should hold to meet<br><br>identified climate risks, including integration of climate impacts into the Group’s internal stress testing exercises.	Page 253<br>
	–Climate scenario analysis also informs strategic planning by providing insights on the size and timing of financial<br><br>impacts, and IFRS 9 loss provisioning to ensure climate risks are adequately provisioned for in our balance sheet, such<br><br>as expected credit losses (‘ECL’).	Page 253<br>
Scenarios used and how<br><br>they factored in<br><br>government policies	–Our scenarios are: Downside Physical Risk scenario, Severe Climate Stress scenario, Current Commitments scenario,<br><br>Below 2 Degrees scenario and Delayed Transition Risk scenario.	Page 253<br>
	–Our 2024 scenarios considered the key regions in which we operate and were designed to assess the impact on our<br><br>balance sheet across three distinct periods: short term up to 2026; medium term from 2027 to 2035; and long term<br><br>from 2036 to 2050.	Page 253<br>
	–We have chosen these scenarios to provide a holistic view that supplements the Group’s current and future strategic<br><br>thinking. The 2024 climate scenarios are underpinned by well-established industry bodies such as the Network for<br><br>Greening Finance Phase IV, the Intergovernmental Panel on Climate Change (‘IPCC’) and International Energy Agency<br><br>(‘IEA’), which are further enriched for additional granularity, ensuring consistency with industry-recognised work and<br><br>reflecting the latest climate policy and economic outlook.	Page 253<br>
	–The scenarios developed for climate scenario analysis are designed to examine HSBC’s financial performance and<br><br>capital resilience across a wide range of potential climate outcomes. They are sufficiently diverse to enable HSBC’s<br><br>key physical and transition risk vulnerabilities to be explored. To meet our global regulatory needs, we produced<br><br>several climate stress tests for regulators around the world, including the Hong Kong Monetary Authority (‘HKMA’).	Page 253<br>
How our strategies may<br><br>change and adapt	–The analysis supports our approach to supporting our clients in the transition to net zero through assessing, where<br><br>available, client level financial and credit risk metrics, and identifying where further analysis and climate risk focus is<br><br>required.	Page 253<br>
	–In our net zero transition plan published in January 2024 we committed to continually calibrate our approach to take<br><br>into consideration the latest scientific methodologies, climate-related policies and developments in the real world<br><br>given that our sector portfolios reflect progress in the regional economies where we operate. See page 18 for details.	Page 40<br>
	–Our target-setting approach to date for on-balance sheet financed emissions and facilitated emissions, has been to<br><br>utilise a single reference scenario – IEA’s NZE 2021 – to underpin both energy supply-related sectors (oil and gas;<br><br>power and utilities; and thermal coal mining), and our published targets for demand-side sectors in transport (aviation<br><br>and automotive) and heavy industry (cement; and iron, steel and aluminium).	Page 46<br>
	–We do not currently fully disclose the impacts of transition and physical risk quantitatively, due to transitional<br><br>challenges including data limitations and evolving science and methodologies. In 2024, we disclosed the potential<br><br>impairment impacts for our wholesale and commercial real estate portfolios in different climate scenarios. We also<br><br>disclose our exposure to flooding in our retail mortgage book for specific markets. For our wholesale book, we<br><br>disclose potential implications on our expected credit losses for 11 sectors under two scenarios. These are<br><br>accompanied with a heat map, illustrating how we expect the potential risks to evolve over time under a variety of<br><br>scenarios.
470	HSBC Holdings plc Annual Report on Form 20-F
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Additional information

Task Force on Climate-related Financial Disclosures (‘TCFD’) continued
Recommendation	Response	Disclosure<br><br>location
Risk management
a) Describe the organisation’s processes for identifying and assessing climate-related risks (Companies Act 2006 - Sections 414CA and 414CB 2A (b))
Process	–The scenarios developed for climate scenario analysis are designed to examine HSBC’s financial performance and<br><br>capital resilience across a wide range of potential climate outcomes. They are sufficiently diverse to enable HSBC’s<br><br>key physical and transition risk vulnerabilities to be explored. We continue to enhance our climate scenario analysis<br><br>exercises so that we can have a more comprehensive understanding of climate headwinds, risks and opportunities to<br><br>support our strategic planning, actions and risk management.	Page 253<br>
	–We continue to review policy implementation as we apply our sustainability risk policies in practice, and our<br><br>operationalisation of such policies continues to be enhanced. We take a risk-based approach when identifying<br><br>transactions and clients to which our sustainability risk policies apply and, where relevant, when reporting on relevant<br><br>exposures, adopting approaches proportionate to risk and materiality.	Page 59<br>
Integration into policies<br><br>and procedures	–We continue to integrate climate risk into policies, processes and controls across many areas of our organisation, and<br><br>we will continue to update these as our climate risk management capabilities mature over time.	Page 250<br>
Consider climate-related<br><br>risks in traditional<br><br>banking industry risk<br><br>categories<br><br>(supplementary guidance<br><br>for banks)	–We provide further details of how we have embedded the management of climate risk across key risk types, including<br><br>wholesale credit risk, retail credit risk, treasury risk, traded risk, reputational risk, regulatory compliance risk, resilience<br><br>risk, model risk, and financial reporting risk.	Page 251<br>
b) Describe the organisation’s processes for managing climate-related risks (Companies Act 2006 - Sections 414CA and 414CB 2A (b))
Process and how we<br><br>make decisions	–The Group Risk Management Meeting and the Group Risk Committee receive regular updates on our climate risk<br><br>profile and the progress of our climate risk programme.	Page 250<br>
	–The Environmental Risk Steering Meeting (formerly the Environmental Risk Oversight Forum) provides oversight of<br><br>environmental risk and the risk of greenwashing. Equivalent forums have been established at a regional level.	Page 250<br>
c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management<br><br>framework (Companies Act 2006 - Sections 414CA and 414CB 2A (c))
How we have aligned<br><br>and integrated our<br><br>approach	–Our climate risk approach is aligned to our Group-wide risk management framework and three lines of defence model,<br><br>which sets out how we identify, assess and manage our risks.	Page 249<br>
	–We continue to develop our approach and climate risk capabilities across our businesses, by prioritising sectors,<br><br>portfolios and counterparties with the highest impacts, and recognise that this is a long-term iterative process.	Page 249<br>
	–Our annual climate risk materiality assessment helps us to understand how climate risk may impact HSBC’s risk<br><br>taxonomy.	Page 249<br>
	–In addition to this assessment, we also consider climate risk in our emerging risk reporting and scenario analysis.	Page 249<br>
How we take into<br><br>account<br><br>interconnections<br><br>between entities and<br><br>functions	–Our climate risk approach is aligned to our Group-wide risk management framework and three lines of defence model,<br><br>which sets out how we identify, assess and manage our risks.	Page 249<br>
	–Through our climate risk programme, we have made progress on embedding climate considerations throughout our<br><br>organisation. We also developed risk metrics to monitor and manage exposures, and further enhanced our internal<br><br>climate scenario analysis. We continue to implement our climate risk programme to complete our annual materiality<br><br>assessment and make changes to our policies, processes and capabilities to better embed climate considerations<br><br>throughout our organisation.	Page 147<br>
	–This includes increasing coverage and incorporating more mature data, climate analytics, frameworks and tools, and<br><br>responding to emerging industry best practice and climate-related regulations. This also necessitates reflecting on<br><br>how climate risk continues to evolve in the real world, and improving how we embed climate risk factors into strategic<br><br>planning, transactions and decision making across our businesses.	Page 249<br>
HSBC Holdings plc Annual Report on Form 20-F	471
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Task Force on Climate-related Financial Disclosures (‘TCFD’) continued

Recommendation	Response	Disclosure<br><br>location
Metrics and targets
a) Disclose the metrics used by the organisation to assess climate-related risk and opportunities in line with its strategy and risk management process<br><br>(Companies Act 2006 - Sections 414CA and 414CB 2A (h))
Metrics used to assess<br><br>the impact of climate-<br><br>related risks on our loan<br><br>portfolio	–We have metrics in place to monitor the exposure of our wholesale corporate lending portfolio to six high transition<br><br>risk sectors. As at 31 December 2024, the overall exposure to the six high transition risk sectors was 18% of total<br><br>gross carrying amount of wholesale loans and advances.	Page 251<br>
	–The UK is our largest mortgage market, and as of November 2024, made up 46.7% of our global mortgage portfolio.<br><br>Our ESG Data Pack includes our climate risk exposures for this portfolio across regions. The maturity profile of the UK<br><br>mortgage book shows that the average remaining contractual term in the UK is 21.8 years. However, with some<br><br>customers undertaking refinancing options during this term, the average term of the mortgage can be reduced to<br><br>between five and eight years. For the UK mortgage book, flood data is available for 93.7% of the mortgage book of<br><br>which 0.9% is at a very high risk of flooding, with 2.7% of the book at a high risk of flooding. We monitor the energy<br><br>performance certificate (‘EPC’) ratings of individual properties from A (highest efficiency) through to G (least efficient)<br><br>as EPCs are commonly used as an indicator of transition risk in the UK mortgage book.	Page 251<br>
	–We have started to enhance our approach to managing net zero alignment risk in our wholesale portfolio, through<br><br>developing portfolio steering capabilities and revenue assessments. While we have made progress, further work<br><br>remains, including the need to develop additional metrics and tools to measure our exposure to climate-related risks.	Page 250<br>
Metrics used to assess<br><br>progress against<br><br>opportunities	–Since 1 January 2020, we have provided and facilitated a cumulative $352.5bn of sustainable finance and $41.1bn of<br><br>ESG and sustainable investing, as defined in our Sustainable Finance and Investment Data Dictionary 2024. This<br><br>included 39% where the use of proceeds was dedicated to green financing, 12% to social financing, and 15% to<br><br>other sustainable financing. It also included 24% of sustainability-linked financing and 10% of net new investment<br><br>flows managed and distributed on behalf of investors.	Page 43<br>
	–We do not currently fully disclose the proportion of revenue or proportion of assets, capital deployment or other<br><br>business activities aligned with climate-related opportunities, including revenue from products and services designed<br><br>for a low-carbon economy, forward-looking metrics consistent with our business or strategic planning time horizons.<br><br>In relation to sustainable finance revenue and assets, we are disclosing certain elements. We expect the data and<br><br>system limitations related to financial planning and performance, and climate-related opportunities metrics to be<br><br>addressed in the medium term as more reliable data becomes available and technology solutions are implemented.<br><br>We expect to further enhance this disclosure in the medium term.
Board or senior<br><br>management incentives	–To help us achieve our ESG ambitions, a number of measures are included in the annual incentive and long-term<br><br>incentive scorecards of the Group CEO, Group CFO and Group Executives that underpin the ESG metrics in the table<br><br>on page 20.	Page 20<br>
Internal carbon price	–We do not currently disclose internal carbon prices due to transitional challenges, such as data challenges. However,<br><br>we considered carbon prices as an input for our climate scenario analysis exercise. We expect to further enhance this<br><br>disclosure in the medium term.
Metrics used to assess<br><br>the impact of climate<br><br>risk on lending and<br><br>financial intermediary<br><br>business (supplemental<br><br>guidance for banks)	–As part of our 2024 climate scenario analysis exercise, we completed a detailed retail mortgage risk assessment for<br><br>the UK, US, Singapore and Malaysia. In our 2023 exercise we also assessed Hong Kong, Australia and mainland<br><br>China. Our coverage represented 91% of the balances in our global retail mortgage portfolio, across the two<br><br>exercises. For our Hong Kong portfolio, we completed a short- and long-term scenario analysis exercise during late<br><br>2023 and early 2024 at the request of the HKMA. Our analysis shows that over the longer term, we expect minimal<br><br>losses to materialise when considering the Current Commitments scenario.	Page 255<br>
	–The impact on our wholesale portfolios is demonstrated by the table on page 255 which shows the size of exposures<br><br>by sector in 2024 and the cumulative change in ECL compared with a counterfactual scenario (expressed as a<br><br>multiple). The size of our exposure in each sector is represented by our exposure at default (‘EAD’) relative to one<br><br>another.	Page 255<br>
	–We do not fully disclose metrics used to assess the impact of climate-related physical (chronic) and transition (policy and<br><br>legal, technology and market) risks on retail lending, parts of wholesale lending and other financial intermediary business<br><br>activities (specifically credit exposure, equity and debt holdings, or trading positions, broken down by industry,<br><br>geography, credit quality and average tenor). We are aiming to develop the appropriate systems, data and processes to<br><br>provide these disclosures in future years. We disclose the exposure to six, high-transition risk wholesale sectors as a<br><br>proportion of total wholesale loans and advances and the flood risk exposure and Energy Performance Certificate (‘EPC’)<br><br>breakdown for the UK retail mortgage portfolio.
472	HSBC Holdings plc Annual Report on Form 20-F
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Additional information

Task Force on Climate-related Financial Disclosures (‘TCFD’) continued

Recommendation	Response
b) Disclose scope 1, scope 2 and, if appropriate, scope 3 greenhouse gas emissions and the related risks (Companies Act 2006 - Sections 414CA and<br><br>414CB 2A (h))
Our own operations	–Our supply chain contributes c.81% of our operational emissions and is the area in which we face the most significant decarbonisation challenge. Many suppliers are still in the early phase of their decarbonisation journey. We have stepped up targeted efforts to support decarbonisation across our supply chain.
	–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. 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 counterparty emissions.
Greenhouse gas<br><br>emissions for lending<br><br>and financial<br><br>intermediary business<br><br>(supplemental guidance<br><br>for banks)	–Our analysis of financed emissions comprises ‘on-balance sheet financed emissions’ and ‘facilitated emissions’, which we distinguish where necessary in our reporting. 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 Global Banking and Markets, and Commercial Banking.
	–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. HSBC Asset Management continues to integrate climate analysis into its actively managed product offerings and seeks to assess climate-related risks that could impact investment performance, where applicable and relevant.
	–We currently disclose partial scope 3 greenhouse gas emissions. We currently focus on disclosing only four out of fifteen categories of scope 3 greenhouse gas emissions, including business travel, supply chain and financed emissions, following our internal materiality assessment. In relation to financed emissions, we publish on-balance sheet financed emissions for a number of sectors, covering 2.7% of our loans and advances to customers at 31 December 2023, as detailed on page 54. We also publish facilitated emissions for the oil and gas, and power and utilities sectors. Data quality of future disclosures on financed emissions and related risks are reliant on our customers publicly disclosing their greenhouse gas emissions, targets and plans, and related risks. 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 require significant enhancements.
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets (Companies Act<br><br>2006 - Sections 414CA and 414CB 2A (g))
Details of targets set<br><br>and whether they are<br><br>absolute or intensity<br><br>based	–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.
	–We set interim 2030 financed emissions targets. However, we use different time horizons for climate risk management. For climate risk, we define short term as time periods up to 2026; medium term is between 2027 and 2035; and long term is between 2036 and 2050. For financed emissions we do not plan to set 2026 targets. In 2024, we disclose interim 2030 financed emissions targets for seven sectors comprising five on-balance sheet and two combined financed emissions targets, as we outline on page 50. We have set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas; and power and utilities; and report the combined progress for both sectors. In 2025, we plan to review our targets to consider the latest net zero-aligned scenarios available. For further details on the restatements and targets and progress of financed emissions, see ’Our approach to emissions re-baselines and restatements’ and ‘Targets and progress’ on pages 49 and 50 respectively.
	–We do not currently disclose a target for capital deployment. In relation to capital deployment, since 2015, we have issued more than 2bn of our own green bonds and structured green bonds with the capital invested into a variety of green projects, including: green buildings; and renewable energy and clean transportation projects. Following extensive internal and external review of HSBC’s green issuance framework, we published the updated HSBC Green Financing Framework in October 2024. This Green Financing Framework forms part of our sustainability strategy and sets out our approach to allocating amounts equivalent to the net proceeds raised through certain instruments and transactions against financing for businesses and projects that meet certain eligibility criteria. See the HSBC Green Financing Framework at www.hsbc.com/investors/fixed-income-investors/green-financing-framework for further information.
	–We do not currently disclose an internal carbon pricing target due to transitional challenges, such as developing the appropriate systems and processes, but we considered carbon prices as an input for our climate scenario analysis exercise. We expect to further enhance the disclosure in the medium term as more data becomes available.
	–We do not currently disclose targets used to measure and manage physical risk. This is due to transitional challenges, including the data limitations of physical risk metrics. For retail, we do not use targets to measure and manage physical risk. In 2024, we continued to use an internally developed global ‘soft trigger’ monitoring and review process for physical risk exposure where a market reaches or exceeds a set threshold, as this ensures markets are actively considering their balance sheet risk exposure to peril events. We also consider physical and transition risk as an input for our climate scenario analysis exercise. We expect to further enhance our disclosures as our data, quantitative scenario analysis, risk metrics and physical risk targets evolve, and technology solutions are implemented in the medium term.
	–We have described the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. However, taking into account the nature of our business, we do not consider water usage to be a material target for our business and, therefore, we have not included a target in this year’s disclosure.
Other key performance<br><br>indicators used	–In 2024 we achieved a 30.5% reduction in our energy consumption compared with 2019 (2023: 26.3%).
	–In 2024 we increased our purchase of electricity from renewable sources to 75.4% from 58.4% in 2023. This included increasing our coverage of green tariffs in India and mainland China. Renewable electricity can help unlock our emissions reduction potential, and we aim to achieve 100% renewable electricity across our own operations by 2030.

All values are in US Dollars.

HSBC Holdings plc Annual Report on Form 20-F	473

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, awards of punitive 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.

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
20243	$	0.310	0.100	0.100	0.360	0.870
	£	0.243	0.076	0.078	0.287	0.684
	HK$	2.420	0.779	0.777	2.796	6.772
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			2.510
2021	$	0.070	0.180	–	–	0.250
	£	0.051	0.138	–	–	0.189
	HK$	0.545	1.412	–	–	1.957
2020	$	–	–	–	0.150	0.150
	£	–	–	–	0.108	0.108
	HK$	–	–	–	1.165	1.165

1The fourth interim dividend for 2024 of $0.36 per ordinary share will be paid on 25 April 2025. The fourth interim dividend for 2024 has been translated into

pounds sterling and Hong Kong dollars at the closing rate on 31 December 2024.

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.

474	HSBC Holdings plc Annual Report on Form 20-F

Additional information

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<br><br>none)
Conversion of non-US currency to US dollars	Charges and expenses incurred by The Bank of New York<br><br>Mellon 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<br><br>been 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 2024, the depositary reimbursed, paid and/or waived

fees and expenses totalling $1.769,264.44 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

As at 31 December 2024, there were a total of 165,963 holders of

record of HSBC Holdings ordinary shares on the share register.

As at 31 December 2024, approximately 16.2m HSBC Holdings

ordinary shares were registered in the HSBC Holdings’ share register

in the name of 13,733 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 2024, there were 4,475 holders of record of ADSs

holding approximately 83.77m ADSs, representing approximately

418.85m HSBC Holdings ordinary shares, 4.402 of these holders had

addresses in the US, holding approximately 83.75m ADSs,

representing approximately 418.73m HSBC Holdings ordinary shares.

As at 31 December 2024, approximately 2.33% 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	475

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 2024, 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 2024 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 2024 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 287) and provides extensive information regarding Directors’

compensation in the Directors’ remuneration report (on page 309).

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 2021, 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 2024, 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.

476	HSBC Holdings plc Annual Report on Form 20-F

Additional 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	477
---	---
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	154-166
4. Information on the Company
A. History and Development of the Company	Shareholder information	462,463,482
	Strategic Report	1-38
	ESG Review	39-82
	Financial Review	83-142
	Risk Review	143-265
	Report of the Directors: Corporate Governance Report	266-359
B. Business review	Strategic Report	1-38
	Financial Review	99-157
	Note 10 on the Financial Statements - Segmental analysis	405-408
C. Organisational Structure	Strategic Report	1-38
	Report of the Directors: Corporate Governance Report - Subsidiary governance	277-278
	Note 19 on the Financial Statements - Investments in subsidiaries	427-429
	Note 38 on the Financial Statements - HSBC Holdings’ subsidiaries, joint ventures<br><br>and associates	452-460
D. Property, Plants and Equipment	Note 22 on the Financial Statements - Prepayments, accrued income and other<br><br>assets	433
4 A..Unresolved Staff Comments	Not Applicable	—
5. Operating and Financial Review and Prospects
A. Operating Results	Strategic Report	1-38
	Financial Review	83-142
	Risk Review	143-265
	Note 15 on the Financial Statements - Derivatives	417-421
B. Liquidity and Capital Resources	Financial Review - Loan maturity and interest sensitivity analysis	103
	Risk Review - Capital and Liquidity Risk	234-240
	Risk Review - Insurance Manufacturing Operations Risk	261-265
	Note 30 on the Financial Statements - Maturity analysis of assets, liabilities and off-<br><br>balance sheet commitments	439-444
	Note 33 on the Financial Statements - Contingent liabilities, contractual commitments<br><br>and guarantees	447
C. Research and Development, Patents and Licences, etc.	Not Applicable	—
D. Trend Information	Strategic Report	1-38
	Financial Review	83-142
	Risk Review	143-265
E. Critical Accounting Estimates	Not Applicable	—
6. Directors, Senior Management and Employees
A. Directors and Senior Management	Report of the Directors: Corporate Governance Report	266-359
B. Compensation	Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report	309-348
	Note 5 on the Financial Statements - Employee compensation and benefits	396-401
	Note 36 on the Financial Statements - Related party transactions	451-452
C. Board Practices	Report of the Directors: Corporate Governance Report	266-359
	Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report	309-348
D. Employees	Report of the Directors: Corporate Governance Report	266-359
	Strategic Report	1-38
	ESG Review - Social	61-70
	Note 5 on the Financial Statements - Employee compensation and benefits	396-401
	Note 36 on the Financial Statements - Related party transactions	451-452
E. Share Ownership	Report of the Directors: Corporate Governance Report	266-359
	Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report	309-348
	Note 5 on the Financial Statements - Employee compensation and benefits	396-401
	Note 32 on the Financial Statements - Called up share capital and other equity<br><br>instruments	445-447
F. Disclosure of a registrant’s action to recover erroneously<br><br>awarded compensation	Not Applicable	—
478	HSBC Holdings plc Annual Report on Form 20-F
---	---

Additional information

Form 20-F Item Number and Caption	Location	Page
7. Major Shareholders and Related Party Transactions
A. Major Shareholders	Report of the Directors: Corporate Governance Report	266-359
B. Related Party Transactions	Note 36 on the Financial Statements - Related party transactions	451-452
C. Interests of Experts and Counsel	Not required for Annual Report	—
8. Financial Information
A. Consolidated Statements and Other Financial<br><br>Information	Financial Statements	363-460
	Report of Independent Registered Public Accounting Firm to the Board of Directors and<br><br>Shareholders of HSBC Holdings plc	361-362
	Shareholder Information	461-482
B. Significant Changes	Note 37 on the Financial Statements - Events after the Balance Sheet date	452
9. The Offer and Listing
A. Offer and Listing Details	Not required for Annual Report	—
B. Plan of Distribution	Not required for Annual Report	—
C. Markets	Shareholder Information	461-482
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	461-482
C. Material Contracts	Report of the Directors: Corporate Governance Report - Directors’ Remuneration<br><br>Report	309-348
	Corporate Governance Report - Contracts of significance	353
	Note 35 on the Financial Statements - Legal proceedings and regulatory matters	448-450
D. Exchange Controls	Shareholder Information	473
E. Taxation	Shareholder Information	463-464
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	462-463
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	242-243,<br><br>and 246-49
	Risk Review - Market risk	246-249
	Note 15 on the Financial Statements - Derivatives	417-421
	Note 16 on the Financial Statements - Financial investments	421-422
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	474
	Shareholder information	461-482
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	361-362
	Financial Review: Other Information	135-142
	Financial Review: Other information - Management's review of internal controls over<br><br>financial reporting	135
16A. Audit Committee Financial Expert	Report of the Directors: Corporate Governance	266-359
16B. Code of Ethics	Shareholder Information	474-475
16C. Principal Accountant Fees and Services	Report of the Directors: Corporate Governance	266-359
	Note 6 on the Financial Statements - Auditors’ remuneration	401
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	266-359
16F. Change in Registrant’s Certifying Accountant	Not applicable	—
16G. Corporate Governance	Shareholder Information	461-482
16H. Mine Safety Disclosure	Not applicable	—
16I. Disclosure Regarding Foreign Jurisdictions that<br><br>Prevent Inspections	Not applicable	—
16J. Insider Trading Policies	Shareholder information - Insider trading policies and prcedures	473
16K. Cybersecurity	ESG Review - Cybersecurity	82
	Risk Review - Top and Emerging risks	148-153
	Risk review - Risk factors	154-166
	Report of the Directors: Corporate Governance Report - Group Risk Committee	301-305
HSBC Holdings plc Annual Report on Form 20-F	479
---	---
PART III
---	---	---
17. Financial Statements	Not applicable	—
18. Financial Statements	Financial Statements	363-460
19. Exhibits (including Certifications)		*
480	HSBC Holdings plc Annual Report on Form 20-F
---	---

Additional information

Abbreviations

Currencies
£	British pound sterling
CA$	Canadian dollar
€	Euro
HK$	Hong Kong dollar
MXN	Mexican peso
RMB	Chinese renminbi
SGD	Singapore dollar
$	United States dollar
Abbreviations
1H24	First half of 2024
1Q24	First quarter of 2024
2Q24	Second quarter of 2024
3Q24	Third quarter of 2024
4Q24	Fourth quarter of 2024
9M24	Nine months of 2024
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
AML DPA	Five-year deferred prosecution agreement with the US<br><br>Department of Justice, entered into in December 2012
ANP	Annualised new business premium
ASEAN	Association of Southeast Asian Nations
AT1	Additional tier 1
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
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
CEA	Commodity Exchange Act (US)
CET1¹	Common equity tier 1
CGUs	Cash-generating units
CIB	Corporate and Institutional Banking
CMB	Commercial Banking, a global business
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
---	---
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
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
DVA¹	Debit valuation adjustment
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
EEA	European Economic Area
Eonia	Euro Overnight Index Average
EPC	Energy performance certificate
EPS	Earnings per ordinary share
ESG	Environmental, social and governance
EU	European Union
Euribor	Euro interbank offered rate
EVE	Economic value of equity
F
FAST-Infra	Finance to Accelerate the Sustainable Transition-<br><br>Infrastructure
FCA	Financial Conduct Authority (UK)
FDIC	Federal Deposit Insurance Corporation
FFVA	Funding fair value adjustment estimation methodology on<br><br>derivative contracts
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
GBM	Global Banking and Markets, a global business
GDP	Gross domestic product
GEC	Group Executive Committee
GHG	Greenhouse Gas
GMP	Guaranteed minimum pension
GPS	Global Payments Solutions, the business formerly known as<br><br>Global Liquidity and Cash Management
GPSP	Group Performance Share Plan
GRC	Group Risk Committee
HSBC Holdings plc Annual Report on Form 20-F	481
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Group	HSBC Holdings together with its subsidiary undertakings
---	---
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
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
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>Middle East	HSBC Bank Middle East Limited
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<br><br>Continental<br><br>Europe	HSBC Continental Europe
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
ICMA	International Capital Market Association
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
ISDA	International Swaps and Derivatives Association
ISSB	International Sustainability Standard Board
IVB	HSBC Innovation Banking
IWPB	International Wealth and Premier Banking
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 2025
LTI	Long-term incentive
LTV¹	Loan to value
M
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 four years, commencing 1 January 2025	MENAT	Middle East, North Africa and Türkiye
---	---
MREL	Minimum requirement for own funds and eligible liabilities
MRT¹	Material Risk Taker
MSS	Markets and Securities Services, HSBC’s capital markets<br><br>and securities services businesses in Global Banking and<br><br>Markets
N
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
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
PVIF	Present value of in-force long-term insurance business and<br><br>long-term investment contracts with DPF
PwC	The member firms of the PwC network, including<br><br>PricewaterhouseCoopers LLP
R
RAS	Risk appetite statement
Repo¹	Sale and repurchase transaction
Revenue	Net operating income before ECL
Reverse repo	Security purchased under commitments to sell
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
SBTi	Science Based Targets initiative
SDG	United Nation’s Sustainable Development Goals
SEC	Securities and Exchange Commission (US)
ServCo group	Separately incorporated group of service companies<br><br>established in response to UK ring-fencing requirements
Sibor	Singapore interbank offered rate
SIC	Securities investment conduit
SME	Small and medium-sized enterprise
Solitaire	Solitaire Funding Limited, a special purpose entity managed<br><br>by HSBC
SPE¹	Special purpose entity
SVB UK	Silicon Valley Bank UK Limited, now HSBC Innovation Bank<br><br>Limited
T
TCFD¹	Task Force on Climate-related Financial Disclosures
THBFIX	Thai Baht Interest Rate Fixing
TNFD	Taskforce on Nature-related Financial Disclosures
TSR¹	Total shareholder return
U
UAE	United Arab Emirates
UK	United Kingdom
482	HSBC Holdings plc Annual Report on Form 20-F
---	---

Additional information

UN	United Nations
US	United States of America
V
VaR¹	Value at risk
VIU	Value in use
W
WEF	World Economic Forum
WPB	Wealth and Personal Banking, a global business

1A full definition is included in the glossary to the Annual Report and

Accounts 2024 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
HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom

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

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

2024).

4.3

Service Agreement dated July 16, 2024 between HSBC Group Management Services Limited and Georges Elhedery.

4.4

Service Agreement dated October 21, 2024 between HSBC Group Management Services Limited and Manveen (Pam) Kaur.

4.5

Engagement Letter dated March 12, 2017, between HSBC Holdings plc and Mark Tucker (incorporated by reference to Exhibit 4.11 to

HSBC Holdings plc’s Form 20-F filed with the Securities and Exchange Commission on February 20, 2018).

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.

12.1 Certificate of HSBC Holdings plc’s Group Chief Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2 Certificate of HSBC Holdings plc’s Group Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1 Annual Certification of HSBC Holdings plc’s Group Chief Executive and Group Chief Financial Officer pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002.

15.1 Consent of PricewaterhouseCoopers LLP.

15.2 Pages of HSBC Holdings plc’s 2000 Form 20-F/A dated February 26, 2001 relating to the Memorandum and Articles of Association of

HSBC Holdings plc (incorporated by reference to Exhibit 14.2 to HSBC Holdings plc’s Form 20-F filed with the Securities and Exchange

Commission on March 20, 2006).

15.3

Page of HSBC Holdings plc’s 2001 Form 20-F dated March 13, 2002 relating to the Memorandum and Articles of Association of HSBC

Holdings plc (incorporated by reference to Exhibit 14.3 to HSBC Holdings plc’s Form 20-F filed with the Securities and Exchange Commission on

March 20, 2006).

15.4 Page of HSBC Holdings plc’s 2018 Form 20-F dated February 20, 2019 relating to the Memorandum and Articles of Association of

HSBC Holdings plc (incorporated by reference to Exhibit 15.4 to HSBC Holdings plc’s Form 20-F filed with the Securities and Exchange

Commission on February 19, 2020).

15.5 Page of HSBC Holdings plc’s 2022 Form 20-F dated February 22, 2023 relating to the Memorandum and Articles of Association of

HSBC Holdings plc (incorporated by reference to Exhibit 15.5 to HSBC Holdings plc’s Form 20-F filed with the Securities and Exchange

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 (incorporated by reference to Exhibit 97 to HSBC

Holdings plc’s Form 20-F filed with the Securities and Exchange Commission on February 22, 2024).

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 20, 2025

a21_descxsec

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, 2024, 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, 2024. As of December 31, 2024, Holdings had ordinary shares in issue (the “Ordinary Shares”) which are governed by the laws of England and Wales. As at December 31, 2024, there were 17,946,950,582 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 3, 2024, to give directors of Holdings the authority to increase our share capital by the allotment of up to 12,700,701,506 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 3,810,210,452 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 2025 and the close of business on June 30, 2025, unless otherwise renewed or passed pursuant to a separate resolution. 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, 2024, 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) Events of Default(10)(11)(12)(13) 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) Events of Default(10)(11)(12)(13) Offering Documents Indenture $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 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 2.999% Fixed Rate/Floating Rate Senior Unsecured Notes due 2026 US404280DA42(14) Fixed Rate: 2.999% p.a. Floating Rate: Compounded Daily SOFR plus 1.430% p.a. Benchmark Transition Provisions March 10, 2022 to March 10, 2026 Fixed Rate: March 10 and September 10 of each year, beginning on September 10, 2022 and ending on March 10, 2025 Floating Rate: June 10, 2025, September 10, 2025, December 10, 2025 and March 10, 2026 Par Redemption Date: March 10, 2025 Make-Whole Redemption Period: from (and including) September 10, 2022 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption, LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 3, 2022 2009 Indenture and Twenty-Fourth Supplemental Indenture dated March 10, 2022 $500,000,000 Floating Rate Senior Unsecured Notes due 2026 US404280DB25(14) Floating Rate: Compounded Daily SOFR plus 1.430% p.a. Benchmark Transition Provisions March 10, 2022 to March 10, 2026 March 10, June 10, September 10 and December 10 of each year, beginning on June 10, 2022 and ending on March 10, 2026 March 10, 2025 Tax Redemption, Par Redemption and LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 26, 2021 and Prospectus Supplement dated March 3, 2022 2009 Indenture and Twenty-Fourth Supplemental Indenture dated March 10, 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) Events of Default(10)(11)(12)(13) 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, 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, 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) Events of Default(10)(11)(12)(13) Offering Documents Indenture $1,750,000,000 7.336% Fixed Rate/Floating Rate Senior Unsecured Notes due 2026 US404280DQ93 Fixed Rate: 7.336% p.a. Floating Rate: Compounded Daily SOFR plus 3.030% p.a. Benchmark Transition Provisions November 3, 2022 to November 3, 2026 Fixed Rate: May 3 and November 3 of each year, beginning on November 3, 2022 and ending on November 3, 2025 Floating Rate: February 3, 2026, May 3, 2026, August 3, 2026 and November 3, 2026 Par Redemption Date: November 3, 2025 Make-Whole Redemption Period: from (and including) May 3, 2023 to (but excluding) the Par Redemption Date Tax Redemption, Make-Whole Redemption, Par Redemption, 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 $2,250,000,000 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, 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, 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) Events of Default(10)(11)(12)(13) 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, 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, 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, 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) Events of Default(10)(11)(12)(13) 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, 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, 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, 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) Events of Default(10)(11)(12)(13) 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, 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, 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, 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) Events of Default(10)(11)(12)(13) 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, 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 $500,000,000 Floating Rate Senior Unsecured Notes due 2030 US404280EP02 Floating Rate: Compounded Daily SOFR plus 1.29% p.a. November 19, 2024 to November 19, 2030 February 19, May 19, August 19 and November 19 of each year, beginning on February 19, 2025, and ending on November 19, 2030 November 19, 2029 Tax Redemption, Par Redemption, LADE Redemption Limited Events of Default and Defaults Base Prospectus dated February 23, 2024 and Prospectus Supplement dated November 12, 2024 2009 Indenture and Thirty-Fourth Supplemental Indenture dated November 19, 2024 (1) The principal amount of each series of Debt Securities set forth in the table corresponds to the original principal amount of such series on the relevant issue date. (2) Debt Securities denominated in United States dollars ($) 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 and Par Redemption means that we have the right to redeem the specified series of Debt Securities during the Make-Whole Redemption Period and on the Par Redemption Date, as described below under “Redemption—Make-Whole and Par Redemption.” (9) 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.” (10) 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. (11) 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. (12) 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.” (13) 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. (14) On January 30, 2025, Holdings issued a notice of redemption with respect to these series of Debt Securities. Pursuant to the notice of redemption, these Debt Securities will be redeemed on March 10, 2025.

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, 2023, 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), the Floating Rate Senior Unsecured Notes due 2026 issued on September 12, 2018 (US404280BW89 / 404280 BW8), the 4.292% Fixed Rate/Floating Rate Senior Unsecured Notes due 2026 issued on September 12, 2018 (US404280BX62 / 404280 BX6), 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, 2024, the aggregate amount of outstanding indebtedness senior to the Subordinated Debt Securities is $108,641,000,0001. 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 1 This figure is comprised of senior debt securities, collateralized derivatives and other items.

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. 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. In respect of the Subordinated Debt Securities, we may only redeem the Debt Securities prior to their maturity if (i) we have obtained the relevant supervisory consent (if and to the extent required); and (ii) prior to the fifth anniversary of the issue date, if the relevant rules so oblige, (a) we have demonstrated to the satisfaction of the relevant regulator that (x) the Tax Event was not reasonably foreseeable at the issue date and (y) such Tax Event was 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 (iii) 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 pre-conditions to redemption or repurchase, as applicable, set out in the relevant rules. 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) 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, 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). We may only redeem the Subordinated Debt Securities prior to their maturity if (i) we have obtained the relevant supervisory consent (if and to the extent required); and (ii) prior to the fifth anniversary of the issue date, if the relevant rules so oblige, (a) we have demonstrated to the satisfaction of the relevant regulator that the Capital Disqualification Event was not reasonably foreseeable at the issue date; or (b) in the case of Subordinated Debt Securities issued on or after March 29, 2022, we have (or will have), before or at the same time as such redemption or purchase, replaced the Subordinated Debt Securities with own funds instruments of equal or higher quality at terms that are sustainable for our 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 pre-conditions to redemption or repurchase, as applicable, set out in the relevant rules.

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. For the purposes of the Senior Debt Securities issued on or after March 10, 2022, a “Loss Absorption Disqualification Event” shall be deemed to have occurred if such notes become fully or partially ineligible to meet the Company’s and/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 and/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. We may only redeem or repurchase 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. 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 and the 4.25% Fixed Rate Subordinated Notes due 2025, (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.

a43_gehxservxag

16 JULY 2024 HSBC GROUP MANAGEMENT SERVICES LIMITED and MR GEORGES ELHEDERY SERVICE AGREEMENT EUROPE·LEGAL-292961689

CO TE TS CLAUSE PAGE I. Appointment ................................................................................................................. 1 2. Remuneration ................................................................................................................ l 3. Benefits and Pension ..................................................................................................... 3 4. Scope and duties of the Employment... ......................................................................... 5 5. Hours and place of ,vork ............................................................................................... 6 6. Expenses ....................................................................................................................... 6 7. Holidays ........................................................................................................................ 6 8. Sickness benefits ........................................................................................................... 7 9. Restrictions during the Employment ............................................................................ 7 I 0. Confidential lnfonnation and Company documents ..................................................... 8 11. Inventions and other Intellectual Property .................................................................... 9 12. Tennination and Garden Leave .................................................................................. 10 13. Restrictive covenants .................................................................................................. I 3 14. Grievance, dismissal and disciplinary procedures ...................................................... 17 I 5. Disclosure of infonnation ........................................................................................... 17 16. General ........................................................................................................................ 18 17. Definitions ................................................................................................................... I 8 EUROPE-lEGAl·292961689

THIS AGREEME Tis dated 16 July 2024 and is made BETWEEN: (1) HSBC GROUP MANAGEMENT SERVICES LIMITED (registered number 9231974). whose registered offi1.:e is at 8 Canada Square, London El4 5IIQ (the Company): and (2) GEORGES ELHEDERY (the Executive). IT IS AGREED as follows: I. Appointment 1.1 The Employment will begin on the Commencement Date. The Executive's continuous employment began on 2 May 2005. 1.2 Subject to Clauses 1.5 and 12. the Employment will continue until terminated by either party giving to the other twelve months' notice in writing. 1.3 The Executi,e shall be employed as Group Chief Executive, an Executive Director role al I ISBC. The Executive shall report to the Group Chairman or such other appropriate person as the Company shall designate from time to time. The Employment also requires the Executive to hold various directorships and offices within the Group from time to time. 1.4 The Executive consents to the Company transferring the Executive's employment and assigning the provisions of this Agreement to any Group Company at any time (on the terms and conditions of this Agreement). 1.5 The Employment is and remains at all times subject to the Executive successfully completing all Company required and on-going screenings for a .. High Risk Role". given that any abuse of U1e role poses particular potential damage to the Group and external stakeholders. Additionally, the Executive is at all times required to hold the required approvals by the FCA and all other relevant regulatof) bodies in order to be able to carry out his duties. In the event of any screening result being considered unsatisfactory in the reasonable opinion of the Company and/or where FCA or any other relevant regulatory approval is withdrawn, the Company has the right to tem1inate the Employment with immediate effect and with no further sums payable to the Executive beyond any sums accrued due as at the date of that termination. 2. Remuneration 2.1 The Company will pay the Executive a Base Salary of £1,376,000 per annum (Base Salary). The Base Salary will be paid less Statutory Deductions and accrue from day to day and be payable in equal monthly instalments in arrears on or around the 20th da1 of each calendar month. Unless notice to tenninate the Employment has been given by either party, the Company will review the Executive's Base Salary each calendar year. in good faith, the first such review to take place in 2025. The Company has no obligation to increase the Executive's Base Salary following a review. 2.2 The Executive will not be entitled to receive any other fees for holding any offices in the Compan) or any Group Company or for any other office, position or role that he holds by virtue of the Employment. EUROPE·LEGAL-292961689

2.3 2.4 2.5 2.6 2.7 2.8 In its absolute discretion, and subject always to such payment being consistent with the Directors' Remuneration Policy, the Company will pay the Executive a fixed allowance of£ l, 700,000 per annum (the Fixed Pay Allowance). The Fixed Pay Allowance will be granted in shares that vest immediately on a quarterly basis or at any other frequency that the Group's Remuneration Committee deems appropriate. These shares (net of those sold to cover any income tax and social security) will then be released annually on a pro rata basis over five years, starting from the March immediately following the end of the financial year for which the shares are granted. The Company and/or the Group may decide, in its discretion, to award the Executive an amount of Variable Pay for any complete financial year of the Company and/or the Group during which the Employment has continued. The Executive acknowledges that he has no contractual right to receive any Variable Pay in any financial year even where it may have been paid to him in any previous year(s). The Executive will not, unless otherwise approved in '"'Titing by the Group's Remuneration Committee in its absolute discretion, be considered for any Variable Pay award if, at the date when it might otherwise have been payable, he is under notice of termination (served by either party) or is suspended pursuant Lo Clause 12.3 and/or is on garden leave in accordance with Clause 12.4. The Company (on behalf of itself and/or any Group Company) also has the right to postpone the payment of any Variable Pay award if, at the date when it might otherwise have been payable, the Executive is subject to an ongoing investigation or disciplinary process or any Group Company is considering applying malus and/or clawback to any Variable Pay in accordance with the Group's Malus and Clawback Policies. Where a decision to pay to the Executive a Variable Pay award is made, the Executive agrees that this will always be, and remain, subject to (i) any obligations or conditions required by the regulator(s) of the Group or any other regulatory requirements, including the application of malus and/or clawback in accordance with the Group's Malus and Clawback Policies in force from time to time; (ii) any remuneration policy of the Company or any relevant Group Company from time to time (including the Directors' Remuneration Policy); and (iii) any other applicable rules, codes of practice and/or guidance regarding remuneration from time to time. Any adjustment, forfeiture or repayment arising from the application of malus and/or clawback may be deducted from any sums due to the Executive at any time. This is without prejudice to any right the Company or any Group Company may have to recover any sums from the Executive including any clawback. The Executive irrevocably agrees that such sums are recoverable by the Company and/or any Group Company from any sums otherwise due and/or payable to the Executive. The Executive may be eligible to participate in any employee share plan established by the Company and/or the Group from time to time. Eligibility to participate is subject always to the-rules of the relevant plan in force-fr om time to time and is-atthe dtscretion of the Company and/or any Group Company (as applicable). Subject to the rules of the relevant plan as referenced in Clause 2. 7 and in the defirution of Variable Pay, the Executive waives all rights to compensation or damages arising from any loss sustained to him by a failure to receive any rights or benefits under the relevant plan (or by their reduction in value) as a result of: EUROPE-LEGAL-292961689 2121

(a) notice of termination and/or lhe termination of his office and/or lhe Employment given by either party for any reason whatsoever; and/or (b) the Company':, 1::xercise or failw·e to exercise any discretion available to it, whether conferred by the rules of the plan or otherwise. 2.9 The Executive authorises the Company to deduct from any Salary or awards of Variable Pay or from any other remuneration or payments due to the Executive from the Company or any Group Company at any time, any swns due from the Executive to the Company including any overpayments, loans or advances made to him by the Company or any Group Company, the cost of repairing any damage or loss to the Group's property caused by the Executive (and of recovering such costs). sums in respect of Clause 8.3 and/or any sums owing in connection any malus and/or clawback pursuant to the Group's Malus and Clawback Policies from time to time in force. 2.10 To avoid any doubt, the operation of and all arrangements relating to any Variable Pay, can be terminated, replaced and/or amended by the Company at any time with or without notice to the Executive and. further, the Executive acknowledges and agrees that the payment of any amount or provision of any benefit to him is conditional upon such payment or provision being consistent with the Directors' Remuneration Policy. Any provision of this Agreement which is not consistent with the Directors' Remuneration Policy shall be void and the Executive shall have no entitlement to damages in respect of any loss suffered in consequence thereof. 3. Benefits and Pension 3.1 In connection with his role as an Executive Director of the Group. the Executive is eligible to receive the following benefits during the Employment: 3.1.1 Car The Executive has access to the chauffeur driven services operated by the Company under the terms of the Global Expenses Framework for Executive Directors, Group Executives and General Managers that may apply from time to time. 3.1.2 Personal Accident Insurance Cover The Executive is eligible to pa,ticipate on a non-contributory basis in the Group's personal accident insurance scheme, subject to the rules of the scheme in force from time to time. 3.1.3 Clubs The Company will make reasonable payments on the Executive's behalf in respect of the membership fees for annual memberships of up to two clubs nominated by the Executive each year, to be pre-approved by the Group Chairman. 3. I .4 Health Check EUROPE-LEGAL-292961689 The Executive is eligible for an annual voluntary health check with a medical adviser appointed and paid for by the Company. 3121

3.1.5 Medical Cover The Executive and his spouse/partner and eligible dependants are eligible to participate in any relevant medical scheme operated for officers of the Group, from time to time subject al ways to the rules of the scheme for the time being in force. 3.J .6 Group Income Protection If the Executive is unable by reason of illness or injury, to perform the material or substantial parts of his duties, following a period of absence from work in excess of26 consecutive weeks, the Executive will be eligible to be considered for income protection under the terms of the policy outlined on HR Direct. 3.1.7 Life Assurance Cover The Executive is eligible for cover under the Group Life Assurance Scheme up to a sum (currently) equivalent to four times the Executive's Base Salary, subject to the rules of the scheme in force from time and any necessary approvals by the Scheme's trustees. 3.1.8 Tax Return Preparation The Executive is eligible to receive tax return support provided by Lhe Group's tax provider for global mobility activities, from time to time. The provision of the tax return support will cover only compensation delivered to the Executive in respect of the Employment and will not cover extended wealth management or other investment advice. 3.1. 9 Directors' and Officers' Liability The Executive is eligible for cover under the relevant Company or Group Directors' and Officers' Liability policy (including Outside Directors' and Officers' Liability) subject always to the existence of that policy (determined by the Company in its discretion and the rules of the policy in force from time in force). The Executive is entitled to benefit from the indemnity for directors and officers at Article 169 of the articles of association of HSBC Holdings pie. 3.1.10 Pension The Company will pay to the Executive an annual pension allowance (Pension Allowance) of IO per cent of the Executive's Base Salary payable monthly in arrears, less Statutory Deductions. The Executive has already opted out of the relevant Company and/or Group sponsored UK pension plan under UK pension legislation. 3.� -'fne-eompanyreserves-nrertgl'rncnnnendor withdraw any employee beneht Witliout prior notice (although the Company will take reasonable endeavours to advise the Executive of any such variation or withdrawal) in circumstances either where Director's remuneration is not approved or where it is otherwise reasonable to do so. The Company is not obliged to provide any alternative benefit or other compensation in the event of withdrawal and/or generally, where any scheme provider refuses to provide benefits to the Executive (or to his partner/spouse and/or eligible dependants). EUROPE·LEGAL-292961689 4121

For the avoidance of doubt. HR Direct and the benefit provision set out in I IR Direct do not form part of this Agreement and the Company may amend them at any time. 4. Scope and duties of the Employment 4.1 The Executive will comply with any role profile and/or statement of responsibilities applicable to his role. As at the date of this Agreement. the Group Chief Executive (with delegated authority from the Board) is responsible for the day to da1 operations of the Group; leading and directing the implementation or the Group's business strategies; embedding the Group's culture, values and supporting behaviours: managing risks associated with the Group ·s business activities and ensuring these remain within the risk appetite in the Group·s risk management framework: and ensuring the fulfilment of the Group·s corporate responsibilities in all communities in which the Group operates. As custodian of the Group's franchise. the Group Chief Exccutive will have a primary responsibility to protect the Group·s reputation and develop the franchise. During the Employment, the Executive will at all times: 4.1.1 diligently perform such duties and exercise such powers consistent with his position as Group Chief Executive may from time to time be assigned to or vested in him by the Board (including where he may be assigned duties or another position of comparable status): 4.1.2 comply with all reasonable and lawful directions given to him by the Board: 4. I .3 act in good faith. and in a way most likely to promote the success of the Group for the benefit of its members as a whole (which may also include performing duties from time to time on behalf of any Group Company); 4.1.4 perform his services in a professional and competent manner and in cooperation with others: 4.1.5 use his best endeavours to promote, protect, develop and extend the business of the Company and any Group Company; 4.1.6 keep the Board and any relevant Group Company promptly and fully informed (in writing if so requested) of his conduct and activities in relation to the business of the Company and an) Group Company and provide such explanations as the Board may require from time to time (including for the avoidance of doubt, any misconduct of other employees or directors or his own (including any plans of any other senior employee lo leave, join a competitor and/or establish a business in competition with the Company or any Group Company as required by Clause 9.5): 4.1. 7 not do or fail to do anything that might reasonably be expected to harm the reputation of the Company or an} relevant Group Company: 4.1.8 do all such things as arc necessary to ensure his compliance with the Companies Act 2006. the UK Listing Rules, the MaJket Abuse Regulation (596/2014/EU) and the Corporate Governance Code, and all equivalent legal obligations elsewhere in the world to which he is or may become subject (and specifically. so far as it lies within his power to do so, in all cases, also by the Company and any Group Company): EUROPE-LEGAL-292961689 5 I 21

4.1.9 comply with all Company and Group Company policies, including, wilhout limitation, the Group Code of Conduct, the Code for Dealing in HSBC Group Securities, the Personal Account Dealing and Employee Conduct Activities Policies and those set out on I IR Direct from time to time together with any relevant statement ofresponsibilities as a Senior Manager and/or Group Chief Executive as required by the Company, any Group Company, the FCA or similar or equivalent regulator; 4.1.10 not, in breach of any applicable legislation, directly or indirectly seek, receive or obtain, in respect of the performance of his duties or of any goods or services sold or purchased or other business transacted (whether or not by the Executive) by or on behaJf of the Company or any Group Company, any personal benefits, discount, rebate, commission. bribe, kickback or other inducement (whether in cash or in kind). 5. Hours and place of work 5.1 The Company's standard working week is 35 hours. The Executive will, however, devote the whole of his time, skill and attention during nonnal business hours, and at such other times as may be reasonably necessary (without additional remuneration), to his duties. 5.2 The Executive acknowledges that, because of the autonomous nature of his role, the duration of his working time is not measured or monitored or determined by the Company, so that the limit on weekly working time set out in Regulation 4 of the Working Time Regulations I 998 (or such other regulations as may from time to time come into force) does not apply to the Employment. 5.3 The Executive's normal place of work is the Company's offices at 8 Canada Square, London El4 SHQ and such other places as the Company may reasonably require for the proper performance of his duties including Hong Kong. The Executive will be required (subject always to the appropriate immigration approvals) to travel to such places within or outside the UK as may be required in order to properly perform his duties. 6. Expenses The Company will reimburse the Executive the amount of all expenses evidenced by him as properly and reasonably incurred in the discharge of his duties, in accordance with the Global Expenses Framework for Executive Directors, Group Executives and General Managers and any other relevant global policies for directors that may apply from time to time. 7. Holidays 7.1 The Executive is entitled to 30 days' holiday in each holiday year (1 January to 31 December) calculated on Base Salary and any relevant allowance notified to the Executive under Clause 2.3, in addition to the usual annual public or bank holidays in England, to be taken at times convenient to the Company. Holiday entitlement may only be carried over from one holiday year to the next in line with the Company's policy as set out in the UK: Annual Leave Policy. Failure to take EUROPE-LEGAL-292961689 6121

holiday entitlement in the appropriate holiday year except in line with this policy, will lead to forfeiture of any accrued holiday not taken. without any right to payment in lieu thereof. 7.2 lf the Employment begins or ends part way through a holiday year. the Executive·s holiday entitlement ,...,ill be calculated on a prorated basis for that holiday year. 7.3 If, on the termination of the Employment, the Executive has: (i) exceeded his accrued holiday entitlement. the excess may be deducted from sums due to the Executive and the Executive hereby authorises the Company to make such deduction; or (ii) any unused accrued holiday entitlement, the Company may either require the Executive to take such unused holida} during any notice period (whether or not the Executive is on Garden Leave) or make an appropriate payment in lieu of such untaken accrued holiday. 8. Sickness benefits 8.1 If the Executive cannot attend work due to sickness or injury. he will comply with the notification and certification requirements of the UK Sickness Absence policy (as applicable to the Executive) set out in I IR Direct and will receive relevant payments in respect of his absence according to the policy. 8.2 If so required. the Executive agrees to supply the Company with medical certificates covering any period of sickness or incapacity exceeding seven da) s (including weekends) and to undergo. at the Company's expense, a medical examination by a doctor appointed by the Com pan} (and the Executive agrees that copies of any medical reports prepared by such doctor shall be sent directly to the Company). 8.3 If the Executive is incapable of performing his duties b1 reason of injury sustained wholly or partly as a result of negligence or breach of any duty on the part of a third party. and the Executive recovers an amount by way of compensation for loss of earnings from that third party, he will pay to the Compan1 an) sum (or part sum) received by him in respect of any amount paid to him under Clause 8.1 above. 9. Restrictions during the Employment 9.1 During the Employment. the Exccuti,e ,,ill not directly or indirectly either on his O\ T I account or on bchal f of any other person. company. business entity or other organisation be employed, engaged, concerned or interested in any other business or undertaking. except: 9.1.1 as holder (directly or through nominees) of investments listed on the London Stock Exchange pie or in respect of which dealing takes place on the Alternative Investment Market of the London Stock Exchange pJc or on The Stock Exchange of I long Kong Limited or on any Recognised Investment Exchange. as long as not more than 5 per cent of the issued shares or other securities of any class of any one company shall be so held; or 9.1.2 with the consent in writing of the Company which may be given subject to any terms which the Company requires. 9.2 The Executive will not (and will procure so far as he is able that any person connected with the Executive within the meaning of section 252 Companies Act 2006 (Co1111ected EUROPE-LEGAL·292961689 7121

Perso11) shall not) deal or become or cease to be interested (within the meaning set out in Schedule 1 Companies Act 2006) in any securities of the Company, except in accordance with the Company and/or the Group Code for Dealing in HSBC Group Securities and every regulation of the Group for the time being in force in relation to dealings in shares or other securities of the Company or any Group Company. 9.3 Subject to any regulations issued by the Company or any relevant Group Company, the Executive and any Connected Person shall not be entitled to receive or obtain directly or indirectly any discount, rebate or commission in respect of any sale or purchase of goods effected or other business transacted (whether or not by the Executive) by or on behalf of the Company or any Group Company and if he or any Connected Person (or any firm or company in which he or any Connected Person is interested) shall obtain any such discount, rebate or commission the Executive will account to the Company or the relevant Group Company for the amount received by the Executive or any Connected Person (or a due proportion of the amount received by such company or firm having regard to the extent of the Executive's or the Connected Person's interest therein). 9.4 The Executive agrees to disclose to the Board any matters relating to any Connected Person which may, in the reasonable opinion of the Board, be considered to interfere, conflict or compete with the proper perfonnance of the Executive's obligations under this Agreement. 9.5 During the Employment the Executive will inform the appropriate member of the Board without delay if he becomes aware that any director, officer, or senior employee of the Company or any Group Company is or may be planning to materially breach any of the provisions of their contract of employment or implied duties of loyalty, good faith and fidelity. 9.6 The Executive will not, other than having observed the relevant policies and procedures in force from time to time make or issue any press, radio or television statement or publish or submit for publication any letter or article relating directly or indirectly to the business or affairs of the Company or any Group Company, its or their officers, directors or employees or the Employment or its termination. 10. Confidential Information and Company documents 10.1 The Executive recognises that, whilst performing the duties for the Company the Executive will have access to and come into contact with Confidential Information belonging to the Company and/or any Group Company and will obtain personal knowledge of and influence over its or their customers, suppliers and/or employees. The Executi vc therefore agrees that the restrictions set out in this Clause 10 are reasonable and necessary to protect the legitimate business interests of the Company and the Group both during and after the termination of the Em_e_lqyment. The Executive s-lYall neither durmg tbe"Employment (except in the proper performance of the duties) nor at any time (without limit) after the termination of the Employment directly or indirectly: 10.1.1 divulge or communicate 1n any person, company, business entity or other organisation; or EUROPE-LEGAL-292961689 8 I 21

10.1.2 use for his own purposes or for any purposes other than those of the Company or any Group Company: or I 0.1.3 through any failun: to t:xt:n.:i�t: Jue care and diligence. cause any unauthorised disclosure of any Confidential Information relating to the Company or any Group Company. 10.2 This restriction does not apply to information which: 10.2.1 is used or disclosed by the Executive in the proper perfonnance of his duties or with the prior written consent of the Company or any Group Company; 10.2.2 the Executive is ordered by a court of competent jurisdiction to disclose or which is otherwise required to be disclosed by law; or I 0.2.3 is already in the pub! ic domain ( other than as a result of unauthorised disclosure by the Executive or any other person). 10.3 The Executive will not. during the Employment or at any time thereafter, make, except for the benefit of the Company or any Group Company, any copy, record or memorandum of any Confidential Information and any such copy, record or memorandum will be and remain the property of the Company and will be returned by the Executive to the Company or irrevocably deleted from any computer, mobile and/or handheld device and/or any other media (including. but not limited to. any cloud based storage system) in the Executive's possession or under the Executive's control, when required to do so by the Company and in any event on the termination of the Employment. I 0.4 Nothing in this Agreement precludes the Executive from making any legitimate whistleblowing type disclosure to any relevant regulator anywhere in the world (including, so far as the UK is concerned, within the meaning of Part 4A (Protected Disclosures) of the Employment Rights Act 1996 and so far as repo1table concerns are defined by the FCA). 11. Inventions and other Intellectual Property 11.1 The Executive may make inventions or create other Intellectual Property during the Employment. In this respect the Executive has a special responsibility to further the interests of the Company and the Group given the Executive's position at the Company and the remuneration paid to the Executive under this Agreement. 11.2 In recognition of the Executive's position, remuneration and responsibility, the Executive acknowledges and agrees that any Intellectual Property made, created or discovered by him during the Employment (whether capable of being patented or registered or not) in conjw1ction wiU1 or in any way affecting or relating to the business of the Company or any Group Company or capable of being used or adapted for use in the Company or any such Group Company or in connection therewith shall be immediately disclosed to the Company and shall belong to and be the absolute prope1ty of the Company or such Group Company as the Company may direct. 11.3 However, this will only apply to the extent that any invention was made by the Executive in the course of his duties or in the course of duties falling outside the Executive's normal duties but which have been specifically assigned to him EUROPE-LEGAL-292961689 9121

(together Duties) and (i) such invention was reasonably expected to result therefrom; and/or (ii) at the time of making the invention, because of the nature of his Duties and the particular responsibilities arising therefrom, the Executive had a special obligation to further the interests of the Company. 11.4 The Executive acknowledges that he has no rights, interest or claims, either during the Employment or after the termination of the Employment, in or to any such Intellectual Property and he shall not use such lntellectual Property other than during the period of the Employment and for the purpose of the Company or the Group. 11.5 The Executive agrees to sign all documents and to do all other acts which the Company requests (at its expense) to enable the Company to enjoy the full benefit of this Clause 11. This includes joining in any application, which may be made in the Company's sole name for registration of any Intellectual Property Rights (such as a patent, trademark or registered design), and assisting the Company in defending and enforcing such rights during and after the employment (at the Company's expense). I 1.6 The Executive understands and accepts that the remuneration and benefits provided to him by the Company in accordance with this Agreement constitute sufficient consideration to the Executive for the performance of his obligations under this Clause 11. including the waiver of or covenant not to assert any moral rights that he may have. 11.7 This Clause I l , and the rights and obligations of the parties contained, will survive expiry of this Agreement, or its termination, for any reason. 12. Termination and Garden Leave 12.1 Notwithstanding the notice obligation to which the parties are generally subject in Clause 1.2. the Employment may also be terminated by the Company: 12.1.1 by not less than six months' notice in writing given at any time where the Executive has been incapacitated by reason of ill health or accident from performing the duties hereunder for a period of (or periods aggregating) 26 weeks in total in any period of 12 months, provided that such termination does not take effect if it would remove any entitlement he would otherwise have thereafter for a maximum period of 24 months to enjoy the receipt of any benefits arising out of or in connection with any permanent health insurance policy or arrangement existing from time to time for his benefit. The Executive generally agrees that if he has been incapacitated by reason of ill health or accident from performing the duties hereunder for the said period of (or periods aggregating) 26 weeks in any period of 12 months, the Company may appoint another person or persons to perform his role of CEO pursuant to Clause 1.3 without giving rise to any breach of any obligation owed to the Executive under--tlris agreement" or generally, as a matter of law, ana, accordingly, he will have no cause of action against the Company or the Group whatsoever in respect of such termination of employment. 12.1.2 by summary notice in writing and with no liability to make any further payment to the Executive (other than in respect of any sums accrued due as at the Termination Date) if the Executive: EUROPE·LEGAL-292961689 IO I 21

(a) fails or neglects efficiently and diligently to discharge his duties, or is guilty of any serious or repeated breach of his obligations under this Agreement: (b) is guilty of any fraud, dishonesty, serious misconduct or any other conduct which brings or is likely to bring the Executive or the Company or any Group Company into disrepute or affects or is like!, to affect prejudicially the interests of the Company or the Group: (c) is convicted of an arrestable offence (other than a road tranic offence for which a non-custodial penalty is imposed); (d) is guilty of any material breach or material non-observance of any code of conduct, rule or regulation referred to in Clause 4.1: (e) becomes bankrupt or makes any arrangement or composition 'Aith his creditors: (f) is prohibited from being a director by lav., or has such regulator) approval as required pursuant to Clause 1.5, withheld or withdrawn: (g) voluntarily resigns as a director of the Company or any Group Company: or (h) is not or ceases to be eligible to work in the UK. 12.2 The Company's rights under Clause 12.1 are without prejudice to any other rights that it might have at law to terminate the Emplo1ment or to accept any breach of this Agreement by the Executive as having brought the Agreement to an end. Any delay by the Compan) in exercising its rights 'Nill not constitute a ""aiver. 12.3 If the Company may be or becomes entitled to terminate the Employment pursuant to Clauses 1.5 or 12.1.2. or whilst the Company or any external body may wish to investigate an1 allegation against the Executive it\ ill be entitled (without prejudice to its termination rights) to suspend the Executive tor so long as it considers necessary or appropriate. 12.4 FolJowing service of notice to terminate the Employment by either party, the Company may require the Executive to stay away from all or any of the Company·s premises and/or"' ill not be provided\ ith any work. and/or will have no business contact \ilh all or any of the Group's agents, employees, customers, clients, distributors and suppliers and/or will have no access to the Company's communications systems (Garden Leave). During any period of Garden Leave. the Company may appoint a replacement to exercise any of the Executive·s duties and responsibilities and may require the Executive to take such actions as it reasonably requires to effect a proper handover or any or all of his duties and responsibilities. However. the Executive \vill continue to be bound by all his obligations under this Agreement, including. without limitation. his duties of fidelity and of good faith. 12.5 In addition to the circumstances referred to in Clause 12.1.1 above. the Compan1 may terminate the Employment at any time and with immediate effect by notifying the Executive in .Hiting of that fact. confirming the date termination is to occur. If the Company tem1inates the Executive's employment in this way, it will make a payment EUROPE•LEGAL·29296l689 11 21

in lieu of any notice of tennination corresponding to the notice period as set out in Clause 1.2 (the Payment i11 Lieu). The Executive agrees that the Payment in Lieu will consist of Base Salary, Fixed Pay Allowance (to the extent the Executive is in receipt of Fixed Pay Allowance at the Tennination Date) and Pension Allowance less Statutory Deductions but will not include any Variable Pay, payment in respect of benefits or any holiday entitlement for the notice period (or, if notice has already been given, during the remainder of the notice period). 12.6 The Company may decide to pay any Payment in Lieu in equal monthly instalments until the date on which the notice period referred to in Clause 1.2 would have expired if notice had been given (the Payment Period). The Executive shall comply with his common law duty immediately following the tennination of his employment and take all reasonable steps to obtain alternative employment or engagement during the Payment Period. 12.7 lf the Executive obtains alternative employment or engagement during the Payment Period, any further monthly instalments of the Payment in Lieu will be reduced on a pro rata basis by the amount he receives from that alternative employment or engagement. If the Executive fails to take aJl reasonable steps to obtain alternative employment or engagement, the Company will have the right to terminate all further instalments of the Payment in Lieu. and he will not be entitled to any further compensation. I 2.8 Without prejudice to the constitution (including for the avoidance of doubt the articles of association) of any Group Company, on the Tennination Date or on either the Company or the Executive having served notice of such termination, the Executive will: 12.8.1 at the request of the Company resign from office as a Director of the Company and all offices held by the Executive in any Group Company provided however that such resignation shall be without prejudice to any claims which the Executive may have against the Company or any Group Company arising out of the termination of the Employment; 12.8.2 transfer without payment to the Company or as the Company may direct to any third party, any shares or other securities held by the Executive in the Company as a nominee or trustee for the Company or any Group Company and deliver to the Company the related certificates; 12.8.3 deliver to the Company all Confidential lnfo1mation which may be in the Executive's possession or under the Executive's power or control and, if requested, provide a signed statement that he has fully complied with the obligations under this Clause 12.8.3; and 12.8.4 cooperate with the Company and any Group Company by providing such assistance as may reasonably be-required in �nneclien with any handover arrangements or any claim made by or against the Company or any such Group Company. I 2. 9 lf the Employment is terminated for the purpose of the reconstruction or amalgamation of the Compnny or by reason or lht: Company transferring all or a substantial part of its business to another company and the Executive is offered employment by the reconstructed or amalgamated or transferee company on similar tenns to the terms of EUROPE-LEGAL-292961689 12121

this Agreement, the Executive will have no claim against the Company or such reconstructed or amalgamated or transferee company in respect of the termination of the Appointment. 13. Restrictive covenants 13.l For the purposes of this Clause 13 the following words have the following meanings: 13.1.1 Capacity means as agent, consultant. director, employee, owner, partner, shareholder beyond the shareholding limits applied in Clause 9.1 or in any other capacity: 13 .1.2 Compa11y Products means any risk, banking or financial products researched into, developed, supplied, disn·ibuted or sold to or by the Company with which the duties of the Executive were materially concerned or for which he was directly or ultimately responsible during the Restricted Period; 13.1.3 Company Services means any risk, banking or financial services (including but not limited to technical and product support, technical advice and customer services) developed or supplied to or by the Company with which the duties of the Executive were materially concerned or for which he was directly or ultimately responsible during the Restricted Period: 13.1.4 Comparator Group as at the date of this Agreement means the following companies and entities, subject always to amendment from time to time by the HSBC Group's Remuneration Committee: Bank of America, Barclays, BNP Paribas, Citigroup, DBS, Deutsche Bank, Goldman Sachs. J.P. Morgan Chase, Lloyds Banking Group. Morgan Stanley, Natwest, Santander, Societe Generate, Standard Chartered, UBS, Westpac, Wells Fargo. and/or any listed bank headquartered in Hong Kong or China (and all group companies of the companies and entities set out in this clause) and. where any companies or entities set out in this clause are the subject of a takeover or undergo any form of reconstruction, the entities to which the relevant business assets of such companies or entities are transferred from time to time; 13.1.5 Customer means any person or firm or company or other organisation whatsoever to whom or which the Company supplied Company Products and/or Company Services during the Restricted Period and with whom or which, dw·ing the Restricted Period: EUROPE·LEGAL-292961689 (a) the Executive had material personal dealings pursuant to the Employment; or (b) any employee who was under the direct supervision of either the Executive or of the Executive's direct reports, had material personal dealings pursuant to their employment, provided that in the case of a firm, company or other organisation ··Customer'· shall not include any division. branch or o ffice of such firm or company or other organisation with which the Executive and/or any such employee as defined in sub-clause (b) above had no dealings during the Restricted Period save that where a restructuring of the firm or company or organisation has 13121

occurred following such personal dealings "Customer" shall include the part of the business with which the Executive or any employee as defined m sub-clause (b) above had dealings during the Restricted Period; 13. l.6 Prospective Customer means any person or firm or company or other organisation whatsoever with whom or which the Company shall have had negotiations or material discussions regarding the possible distribution, sale or supply of Company Products and/or Company Services during the Restricted Period and which were ongoing and not finally concluded at the Termination Date and with whom or which during such period: (a) the Executive will have had material personal dealings pursuant to the Employment; or (b) any employee who was under the direct supervision of either the Executive or of the Executive's direct reports will have had material personal dealings pursuant to their employment; or (c) the Executive was directly responsible in a client management capacity on behalf of the Company, provided that in the case of a firm, company or other organisation '·Prospective Customer·• shall not include any division, branch or office of such firm, company or other organisation with which the Executive and/or any such employee had no dealings during the Restricted Period save that where a restructuring of the firm or company or organisation has occurred following such personal dealings, "Prospective Customer" shaJJ include the part of the business with which the Executive or any employee as defined in sub clause (b) had dealings during the Restricted Period; 13.1.7 Restricted Employee means any person who is on the Tem1ination Date, or was during the Restricted Period, employed or engaged by the Company or any Group Company and is by reason of such employment or engagement in possession of, or is reasonably likely to be in possession of, any trade secret or Confidential Information relating lo the business of the Company or any Group Company or has acquired influence over its Customers or Prospective Customers (as defined in this Clause 13 but so that references to ··the Executive" will be replaced by references to the relevant employee and so that references to Employment will mean the relevant employee's employment with the Company or Group Company, being in either case a person with whom the Executive had material dealings during the Restricted Period); 13.1.8 Restricted Period means the period of 12 months ending on the Termination Date or, in the event that no duties were assigned to the Executive for any part of the-duration of the notice period, the--12-months-i mmediatety preceding-the last day on which the Executive can-ied out any duties for the Company; 13. l.9 Restricted Products means Company Products or any products of the san1e or of a similar kind; 13.1.10 Restricted Services means Company Services or any services of the same or of a similar kind; EUROPE-LEGAL-292961689 14121

l .11 Restricted Supplier means any person, company, business entity or other organisation whatsoever who has supplied goods or services to the Company or any Group Company (other than utilities and goods or services supplied for administrative purposes) during any part of the Restricted Period or who has agreed prior to the Termination Date to supply goods or services to the Company to commence at any time in the twelve months following the Termination Date. 13.2 The Executive recognises that, whilst performing his duties for the Company, he will have access to and come into contact with Confidential Information belonging to the Company and certain Group Companies and will obtain personal knowledge of and influence over their customers and/or employees. 13.3 The Executive hereby undertakes with the Company that he will not for the period of six months after the Termination Date without the prior written consent of tbe Company (such consent not to be unreasonably withheld) whether by hjmself, th.rough his employees or agents or otherwise and whether on his own behalf or on behalf of any other person, firm, company or other organisation, directly or indirectly: 13.3.1 in competition with the Company anywhere in the world in a senior role, be involved in any Capacity in any of the companies (or other entities) in the Comparator Group in the business of researching into, developing, distributing, selling, supplying or otherwise dealing with Restricted Products or Restricted Services: or 13.3.2 in competition with the Company, accept orders or facilitate the acceptance of any orders or have any business dealings for Restricted Products or Restricted Services from any Customer or Prospective Customer; or 13.3.3 employ or otherwise engage any Restricted Employee in the business of or be personally involved to a material extent in employing or otherwise engaging any Restricted Employee in the business of researching into, developing, manufacturing, distributing, selling. supplying or otherwise dealing with Restricted Products or Restricted Services; or 13.3.4 interfere with, or endeavour to interfere with, the supply or provision of goods or services (other than utilities, or goods or services supplied for an administrative purpose) to the Company or to induce the cessation of the supply or provision of such goods or services from any Restricted Supplier; or 13.3.S in competition with the Company, solicit business from, or solicit the supply of goods or services (other than utilities, or goods or services supplied for an administrative purpose) from any Restricted Supplier for the purposes of the provision of Restricted Products or Restricted Services. 13.4 The Executive hereby undertakes with the Company that he will not for the period of twelve months after the Termination Date without the prior written consent of the Company (such consent not to be unreasonably withheld) whether by himself through his employees or agents or otherwise and whether on his own behalf or on behalf of any other person. firm, company or other organisation, directly or indirectly: EUROPE·LEGAL-292961689 1s l21

13 .4.1 in competition with the Company, solicit business from or endeavour to entice away or canvass any Customer or Prospective Customer if such solicitation or canvassing is in respect of Restricted Products or Restricted Services; 13.4.2 solicit or induce or endeavour to solicit or induce any Restricted Employee lo cease working for or providing services to the Company, whether or not any such person would thereby commit a breach of contract. 13.5 The Executive agrees that a copy of this Clause 13, and Clauses IO and 11 will be provided by him to any person firm company or other entity that makes or may make an offer to him of employment, appointment as a director or officer, agency, partnership, or joint venture either during Employment or after its tennination (in such latter case, where such restriction continues in full force and effect). 13.6 If the restrictions in Clauses 13.3 and 13.4 are for any reason held to be unenforceable in any jurisdiction in the world the Executive agrees to such amended or lesser restriction as would enable that restriction to be enforced so far as possible in such jurisdiction. 13.7 In addition to the provisions of Clause 16.6, the benefit of Clauses 13.3 and 13.4 shall be held on trust by the Company for each Group Company and the Company reserves the right to assign the benefit of such provisions to any Group Company, in addition such provisions also apply as though there were substituted for references to "the Company" references to each Group Company in relation to which the Executive has in the course of his duties for the Company or by reason of rendering services to or holding office in such Group Company: 13.7.1 acquired knowledge of its trade secrets or Confidential Irifonnation; or 13.7.2 had material personal dealings with its Customers or Prospective Customers; or 13.7.3 supervised directly or indirectly employees having material personal dealings with its Customers or Prospective Customers, but so that references in Clause 13 to "the Company•· shall for this purpose be deemed to be replaced by references to the relevant Group Company. The obligations undertaken by the Executive pursuant to this Clause 13. 7 shall, with respect to each such Group Company, constitute a separate and distinct covenant and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenants in favour of any other Group Company or the Company. 13.8 1n the event of the transfer (within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 and other equivalent legislation (the Transfer Reg11latio11s) of the undertaking or the pa1t of the undertaking in which the Executive shall a nhetime be employed as the result of wfucb (by virfiieortbe Transfer Regulations) the Employment is automatically transferred to another company (the Transferee), the provisions of this Clause 13 shall have effect as though references in it (and in all associated terms defined in this Agreement) to '1he Group·• are construed as references to "nny other company within the Transferee's Group" (which for these purposes shall comprise the Transferee and any holding company of the Transferee and EUROPE-LEGAL-292961689 16121

the subsidiaries of the Transferee and of any such holding companies for the time being). 13.9 The Executive hereby undertakes with the Company that he will not al any time without the consent of the Company after the Termination Date: 13.9.1 engage other than as a private consumer in any trade or business or be associated with any person, firm or company engaged in any trade or business using the name(s) ''HSBC" or ··Hongkong and Shanghai Banking Corporation'· or incorporating the word(s) --Hongkong Shanghai Banking Corporation"; l 3.9.2 in the course of carrying on any trade or business, claim, represent or otherwise indicate any present association with the Company or any Group Company or for the purpose of carrying on or retaining any business or custom, claim. represent or otherwise indicate any past association with the Company or any Group Company to its detriment other than simple and factual statements regarding Lhe Executive's period of employment, job title, responsibilities and role. 13.10 The parties agree that the periods refe1Ted to in Clauses 13.3 and 13.4 above will be reduced by one day for every day, during which. at the Company's direction, the Executive is on Garden Leave. 13.11 The Executive agrees that, having taken independent legal advice. the restrictions contained in this Clause 13 are reasonable and necessary for the protection of the Company and any Group Company and that they do not bear harshly upon him. The parties agree that: I 3.11.1 each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions shall not be affected; and 13.11.2 if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable. 14. Grievance, dismissal and disciplinary procedures The non-contractual grievance and disciplinary procedures applicable to the Executive are available via HR Direct. Neither the grievance procedure nor the disciplinary procedure are contractually binding on the Company. 15. Disclosure of information 15.1 For the purposes of data protection requirements under the UK General Data Protection Regulation (GDPR). the Company is a data controller in respect of the Executive's personal data. In order to comply with its obligations and responsibilities under the GDPR, the Company will make information about the processing of the Executive's personal data available to him in its HR Data Privacy Notice. The HR Data Privacy Notice does not have contractual effect. EUROPE-LEGAL-292961689

15.2 The Executive consents to the Company monitoring and recording any use that he makes of the Company's electronic communications systems for the purpose of ensuring compliance with the Company's policies and procedures. 16. General 16.1 This Agreement is governed by and interpreted in accordance with English law. 16.2 The parties submit to the exclusive jurisdiction of the courts ofEngland and Wales, but this Agreement may be enforced by the Company in any court of competent jurisdiction. 16.3 This Agreement contains all the information required to be provided to the Executive under section 1 of the Employment Rights Act 1996. 16.4 Any notices or other docwnent to be served on a party under this Agreement will be delivered by hand or sent to the party at the address given in this Agreement or as otherwise notified in writing to the other pru1y. A properly addressed and prepaid notice sent by post will be deemed to have been served at 9am on the second working day after posting or at the time recorded by the delivery service. 16.5 The Executive will, at the time of signing this Agreement, appoint the Company as his attorney so that the Company can give effect to the provisions of Clauses 11 and 12.8. l . 16.6 Each Group Company will have the right under the Contracts (Rights of Third Parties) Act 1999 to enforce the rights bestowed on it by this Agreement. The consent or a Group Company is not required to amend any terms of this Agreement. Except as set out in this Clause 16, a person who is not a party to this Agreement may not enforce any of its provisions under the Contracts (Rights of Third Patties) Act 1999. 16. 7 The Company is not party to any collective agreement which affects the Employment. 16.8 Save as otherwise advised in writing to the Executive, upon or during the Employment, pursuant to Clause 2.3 or othe1wise, this Agreement comprises the whole agreement between the parties relating to the Employment. Accordingly, as from the effective date of this Agreement, all other agreements or arrangements between the Company and/or any Group Company relating to the employment of the Executive, save for such matters referred to within this Agreement or required to be entered into pursuant to this Agreement will cease to have effect. I 6.9 This Agreement may be executed in any number of counterparts, each of which, when executed, shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement. 17. Definitions 17.1 In this Agreement unless the context otherwise requires the following expressions have the following meanings: Board means the Board of Directors for the time being of HSBC Holdings pie or any committee of the Board to which powers have been properly delegated or such person or persons designated by the Boru·d from time to time as its representative for the purposes of this Agreement; EUROPE·LEGAL-292961689 I 8121

Commencement Date means 2 September 2024; Conjidentia/ Information means information relating to the business, clients, customers, products, affairs and finances of the Company or any Group Company that is confidential to the Company or any Group Company, or in relation to which the Company or any Group Company is subject to a duty of confidentiality, and trade secrets including technical data and know-how relating to the business of the Company or any Group Company or of any persons having dealings with the Company or any Group Company, whether or not such information is marked confidential. This includes: details of suppliers and their terms of business. details of customers, clients and prospective customers/clients and their requirements, the prices charged to and terms of business with customers, marketing plans and sales forecasts. financial information, results and forecasts (save to the extent that these are included in published audited accounts). any proposals relating to the acquisition or disposal of a company or business or any part thereof or to any proposed expansion or contraction of activities, or any other business strategy or tender, details of employees, atypical workers and officers and of the remuneration and other benefits paid to them, information relating to research activities, inventions, secret processes, designs, software, formulae and product lines. any infonnation which the Executive either is aware or reasonably ought to know is confidential and any infonnation which bas been given to the Company or any Group Company in confidence by customers, suppliers or other persons; Corporate Governance Code means the UK Corporate Governance Code published by the Financial Reporting Council (as amended from time to time); Directors' Renumeration Policy means at any time the Group's directors· remuneration policy as set out in the Directors' Remuneration Report of the Group's Annual Rep01i and Accounts most recently approved by shareholders in accordance with section 439A of the Companies Act 2006; Employment means the Executive's employment under this Agreement: FCA means the Financial Conduct Authority; Group means ()) HSBC Holdings pie and any entity which from time to time is a holding company of HSBC 1 loldings pie or a subsidiary of HSBC I loldings pie or of any such holding company; and (2) any entity over which from time to time any of the entities defined in paragraph (1) of this definition either directly or indirectly exercises management control, even though it may own less than fifty per cent (50%) of the shares and is prevented by law from owning a greater shareholding and Group Company and Group Companies shall be construed accordingly; Group Chairman means the Chairman of the Group from time to time; Group Chief Executive means the Chief Executive of the Group (not simply of the Company) from time to time; Group's Ma!IIS am( C/awback Policies means any of the Group's policies on malus and clawback which may be in force and amended from ti.me to time; HR Direct means the Company· s HR intranet or other applicable HR system from time to time; EUROPE·LEGAL-292961689 19121

J11tellectual Property means any invention, improvement, design, process, infonnation, copyright work, trade mark, trade name or get-up or any other inlellectuaJ property; Recognised Investment Exchange means an investment exchange granted recognition under section 285 (1) Financial Services and Markets Act 2000 including a recognised overseas investment exchange; Statutory Deductions means appropriate tax, national insurance contributions and any other applicable statutory deductions; Termination Date means the date on which the Executive's Employment terminated; and Variable Pay means any non-pensionable incentive compensation (excluding any other allowance notified to the Executive in writing from time to time) including any bonus or deferred bonus in the form of (i) cash (ii) deferred cash or (iii) equity awarded under any share or variable pay / Long Term Incentive plan in force from time to time (in relation to which performance and/or other conditions may or may not be attached) and subject always to the deferral policy and/or any other variable pay policy applicable at the time of such award and subject to Clauses 2.5, 2.6, 2.8, 2.9 and 2.10. 17.2 References to Clauses. sub-clauses and Schedules are unless otherwise stated to Clauses and sub-clauses of and Schedules to this Agreement. 17.3 The headings to the Clauses are for convenience only and shall not affect the construction or interpretation of this Agreement. 17.4 The words subsidiary and Ito/ding company have the meanings set out in section 1159 of the UK Companies Act 2006 and "management control" shall be demonstrated by the ability to exercise significant influence over an entity or its management. 17.5 A reference lo any statute or statutory provision (whether of the United Kingdom or elsewhere) includes any subordinate provision (as defined by section 21(1) Interpretation Act 1978) made under it and provision which has superseded it or re enacted it (with or without modification) before or after the date of this Agreement except where it is after the date of this Agreement to the extent that the liability of any party is thereby increased or extended. EUROPE-LEGAL-292961689 20!21

This Agreement has been signed on behalf of the Company by its Authorised Signatories and executed as a Deed by the Executive on the date below. SIGNED by EXECUTED as a DEED by the EXECUTIVE EUROPE-LEGAL-292961689 ) Authorised Signatory: _(]Al .. � / {;, Yu L.. 'J J-� Date: Authorised Signatory: -f-�: .. . Date: ........ ./.� ... :Ji./.?:; .. ?-!f .................. . Signature: in the presence of: Signature of Witness: .�. • 1--\E:1".:)\ Pl�I-\L•'"1 W1lness name: .............................................. . Witness address: W · · 1--\ E A-Q fl"'f- C. C•••VVY'-' ~, C..1"1 t I <:I"' ..{' 1tness occupation: .................................... .. 21121

a44_mkaurxservxag

21 October 2024 HSBC GROUP MANAGEMENT SERVICES LIMITED and Manveen Kaur SERVICE AGREEMENT

Contents Clause Page 1 Appointment ............................................................. _...................................... 3 2 Remuneration ................................................................................................. 3 3 Benefits and Pension ...................................................................................... 3 4 Scope and duties of the Employment ............................................................. 7 5 Hours and place of work ...................................................... ........................... 8 6 Expenses ........................................................................................................ 8 7 Holidays ......................................................................................................... 8 8 Sickness benefits ............................................................................................ 9 9 Restrictions during the Employment ............................................................... 9 10 Confident,ial Information and Company documents ....................................... 1 O 11 Inventions and other Intellectual Property ..................................................... 11 12 Termination and Garden Leave .................................................................... 12 13 Restrictive covenants .................................................................................... 15 14 Grievance, dismissal and disciplinary procedures ......................................... 19 15 Disclosure of information .............................................................................. 19 16 General ........................................................................................................ 20 17 Definitions ............................................................................................... , ..... 21 2

THIS AGREEMENT is dated 21 October 2024 and is made BETWEEN: (1) HSBC GROUP MANAGEMENT SERVICES LIMITED (registered number 9231974), whose registered office is at 8 Canada Square, London E14 5HQ (the Company); and (2) Manveen Kaur c/o Executive). IT IS AGREED as follows: 1 Appointment (the 1.1 The Employment will begin on the Commencement Date. The Executive's continuous employment began on 01 April 2013. 1.2 Subject to clauses 1.5 and 12, the Employment will continue until terminated by either party giving to the other twelve months' notice in writing. 1.3 The Executive shall be employed as Group Chief Financial Officer (a Group Executive level role) and shall serve as an executive director on the Board. The Executive shall report to the Group Chief Executive or such other appropriate person as the Company shall designate from time to time. The Employment also requires the Executive to hold various directorships and offices within the Group from time to time including in relation to Hongkong and Shanghai Banking Corporation Limited. 1.4 The Executive consents to the Company transferring the Executive's employment and assigning the provisions of this Agreement to any Group Company at any time (on the terms and conditions of this Agreement). 1.5 The Employment is and remains at all times subject to the Executive successfully completing all Company required and on-going screenings for a "High Risk Role", given that any abuse of the rote poses particular potential damage to the Group and external stakeholders. Additionally, the Executive is at all times required to hold the required approvals by the FCA and all other relevant regulatory bodies in order to be able to carry out her duties. In the event of any screening result being considered unsatisfactory in the reasonable opinion of the Company and/or where FCA or any other relevant regulatory approval is withdrawn, the Company has the right to terminate the Employment with immediate effect and with no further sums payable to the Executive • beyond any sums accrued due as at the date of that termination. The Company's summ�ry termination right in this clause 1.5 shall not apply in the event that any required regulatory approval in connection with the commencement of the Employment (following any applicable grace period) is not granted. 2 Remuneration • 2.1 The Company will pay the Executive a Base Salary of £803,000 per annum (Base Salary). The Base Salary will be paid less Statutory Deductions and accrue from day to day and be payable in equal monthly instalments. Unless notice to terminate the Employment has been given by either party, the Company will review the Executive's Base Salary in March of each calendar year, in good faith, the first such review to take place on or about March 2025. 3

The Company has no obligation to increase the Executive's Ba$e Salary following a review. 2.2 The Executive will not be entitled to receive any other fees for holding any offices in the Company or any Group Company or for any other office, position or role that she holds by virtue of the Employment. 2.3 Subject always to such payment being consistent with the Directors' Remuneration Policy, the Executive may be eligible for a fixed allowance (the Fixed Pay Allowance), the amount, terms and conditions of which will be separately notified to the Executive in writing. This Fixed Pay Allowance would replace any fixed pay allowance which she was eligible for in connection with her previous role or otherwise. 2.4 The Company and/or the Group may decide, in its discretion, to award the Executive an amount of Variable Pay for any complete financial year of the Company and/or the Group during which the Employment has continued. The Executive acknowledges that she has no contractual right to receive any Variable Pay in any financial year even where it may have been paid to her in any previous year(s). 2.5 The Executive will not, unless otherwise approved iri writing by the Group's Remuneration Committee in its absolute discretion, be considered for any Variable Pay award if, at the date when it might otherwise have been payable, she is under notice of termination (served by either party) or is suspended pursuant to clause 12.3 and/or is on garden leave in accordance with clause 12.4. The Company (on behalf of itself and/or any Group Company) also has the right to postpone the payment of any Variable Pay award if, at the date when it might otherwise have been payable, the Executive is subject to an ongoing investigation or disciplinary process or any Group Company is considering applying malus and/or clawback to any Variable Pay in accordance with the Group's Malus and Clawback Policies. 2.6 Where a decision to pay to the Executive a Variable Pay award is made, the Executive agrees that this will always be, and remain, subject to (i) any obligations or conditions required by the regulator(s) of the Group or any other regulatory requirements, including the application of malus and/or clawback in accordance with the Group's Malus and Clawback Policies in force from time to time; (il) any remuneration policy of the Company or any relevant Group Company from time to time (including the Directors' Remuneration Policy); and (iii) any other applicable rules, codes of practice and/or guidance regarding remuneration from time to time. Any adjustment, forfeiture or repayment arising from the application of malus and/or clawback may be deducted from any sums due to the Executive at any time. This is without prejudice to any right the Company or any Group Company may have to recover any sums from the Executive including any clawback. The Executive irrevocably agrees that such sums are recoverable by the Company and/or any Group Company from any sums otherwise due and/or payable to her. 2. 7 The Executive may be eligible to participate in any employee s.hare plan established by the Company and/or the Group from time to time. Eligibility to participate is subject always to the rules of the relevant plan in force from time to time and is at the discretion of the Company and/or any Group Company (as applicable). 4

2.8 Subject to the rules of the relevant plan as referenced in clause 2. 7 and in the definition of Variable Pay, the Executive waives all rights to compensation or damages arising from any loss sustained to her by a failure to receive any rights or benefits under the relevant plan (or by their reduction in value) as a result of: (a) notice of termination and/or the termination of her office and/or the Employment given by either party for any reason whatsoever; and/or (b) the Company's exercise or failure to exercise any discretion available to it, whether conferred by the rules of the plan or otherwise. 2.9 The Executive authorises the Company to deduct from any Salary or awards of Variable Pay or from any other remuneration or payments due to the Executive from the Company or any Group Company at any time, any sums due from the Executive to the Company including any overpayments, loans or advances made to her by the Compan·y or any Group Company, the cost of repairing any damage or loss to the Group's property caused by the Executive (and of recovering such costs), sums in respect of clause 8.3 and/or any sums owing in connection with any malus and/or clawback pursuant to the Group's Malus and Clawback Policies from time to time in force. 2.10 To avoid any doubt, the operation of and all arrangements relating to any Variable Pay, can be terminated, replaced and/or amended by the Company at any time with or without notice to the Executive and, further, the Executive's total remuneration in respect of the Employment is at all times subject to the Directors' Remuneration Policy as approved by the Group's shareholders from time to time. Any provision of this Agreement which is not consistent with the Directors' Remuneration Policy shall be void and the Executive shall have no entitlement to damages in respect of any loss suffered in consequence thereof. 3 Benefits and Pension 3.1 In connection with her role as an Executive Director of the Group, the Executive is eligible to receive the following benefits during the Employment: 3.1.1 Car The Executive has access to the chauffeur driven services operated by the Company under the terms of the Global Expenses Framework for Executive Directors, Group Executives and General Managers that may apply from time to time. 3.1.2 Personal Accident Insurance Cover The Executive is eligible to participate on a non-contributory basis in the Group's personal accident insurance scheme, subject to the rules of the scheme in force from time to ·time. 3.1.3 • Clubs The Company will make reasonable payments on the Executive's behalf in respect of the membership fees for annual memberships of up to two clubs nominated by the Executive each year, to be pre approved by the Group Chief Executive. 5

3.1.4 Health Check The Executive is eligible for an annual voluntary health check with a medical adviser appointed and paid for by the Company. 3.1.5 • Medical Cover The Executive and her spouse/partner and eligible dependants are eligible to participate in any relevant medical scheme operated for officers of the Group, from time to time subject always to the rules of the scheme for the time being in force. 3.1.6 Group Income Protection If the Executive is unable by reason of illness or injury, to perform the material or substantial parts of her duties, following a period of absence from work in excess of 26 consecutive weeks, the Executive will be eligible to be considered for income protection under the terms of the policy outlined on HR Direct. 3.1. 7 Life Assurance Cover The Executive is eligible for cover under the Group Life Assurance Scheme up to a sum ( currently) equivalent to four times the Executive's Base Salary, subject to the rules of the scheme in force from time and any necessary approvals by the Scheme's trustees. 3.1.8 Tax Return Preparation The Executive is eligible to receive tax return support provided by the Group's tax provider for global mobility activities, in accordance with the relevant policy in place from time to time. The provision of the tax· return support will cover only compensation delivered to the Executive in respect of the Employment and will not cover extended wealth management or other investment advice. 3.1.9 Directors' and Officers' Liability • The Executive is eligible for cover under the relevant Company or Group Directors' and Officers' Liability policy (including Outside Directors' and Officers' Liability) during her employment and after the termination of her employment, subject always to the existence of that policy (determined by the Company in its discretion and the rules of the policy in force from time in force). The Executive is entitled to benefit from the indemnity for directors and officers at Article 169 of the Articles of Association of HSBC Holdings pie. 3.1.1 0 Pension The Company will pay to the Executive an annual pension allowance (Pension Allowance) of 10 per cent of the Executive's Base Salary payable monthly in arrears, less Statutory Deductions. 3.2 The Company reserves the right to amend or withdraw any employee benefit without prior notice {although the Company will take reasonable endeavours to advise the Executive of any such variation or withdrawal) in circumstances 6

either where Director's remuneration is not approved or where it is otherwise reasonable to do so. The Company is not obliged to provide any alternative benefit or other compensation in the event of withdrawal and/or generally, where any scheme provider refuses to provide benefits to the Executive (or to her partner/spouse and/or eligible dependants). For the avoidance of doubt, HR Direct and the benefit provision set out in HR Direct do not form part of this Agreement and the Company may amend them at any time. 4 Scope and duties of the Employment 4.1 In her role as Group Chief Financial Officer, the Executive will devote the whole of her time, attention and skills to her duties. During the Employment, the Executive will comply with any role profile and/or statement of responsibilities applicable to her role, and will at all times: 4.1.1 diligently perform such duties and exercise such powers consistent with her position as Group Chief Financial Officer, as may from time to time be assigned to or vested in her by the Board (including where she may be assigned duties of another position of comparable status); 4.1.2 comply with all reasonable and lawful directions given to her by the Board; 4.1.3 act in good faith, and in a way most likely to promote the success. of the Group for the benefit of its members as a whole (which may also include performing duties from time to time on behalf of any Group Company); 4.1.4 perform her services in a professional and competent manner and in cooper�tion with others; 4.1.5 use her best endeavours to promote, protect, develop and extend the business of the Company and any Group Company; 4.1.6 keep the Board and any relevant Group Company promptly and fully informed (in writing if so requested) of her conduct and activities in relation to the business of the Company and any Group Company and provide such explanations as the Board may require from time to time (including for the avoidance of doubt, any misconduct of other employees or directors or her own (including any plans of any other senior employee to leave, join a competitor and/or establish a business in competition with the Company or any Group Company as required by clause 9.5); 4.1. 7 not do or fail to do anything that might reasonably be expected to harm the reputation of the Company or any relevant Group Company; 4.1.8 do all such things as are necessary to ensure her compliance with the Companies Act 2006, the • UK Listing Rules, the Market Abuse Regulation (596/2014/EU) and the Corporate Governance Code, and all equivalent legal obligations elsewhere in the world to which she is or may become subject (and specifically, so far as it lies within her power to do so, in all cases, also by the Company and any Group Company); 7

4.1.9 comply with all Company and Group Company policies, including, without limitation, the Group Code of Conduct, the Code for Dealing in HSBC Group Securities, the Personal Account Dealing and Employee Conduct Activities Policies and those set out on HR Direct from time to time together with any relevant statement of responsibilities as a Senior Manager and/or Group Chief Financial Officer, as required by the Company, any Group Company, the FCA or similar or equivalent regulator; 4.1.10 not, in breach of any applicable legislation, directly or indirectly seek, receive or obtain, in respect of the performance of her duties or of any goods or services sold or purchased or other business transacted (whether or not by the Executive) by or on behalf of the Company or any Group Company, any personal benefits, discount, rebate, commission, bribe, kickback or other inducement (whether in cash or in kind). 5 Hours and place of work 5.1 The Executive will devote the whole of her time, skill and attention during normal business hours, and at such other times as may be reasonably necessary (without additional remuneration), to her duties. 5.2 The Executive acknowledges that, because of the autonomous nature of her role, the duration of her working time is not measured or monitored or determined by the Company, so that the limit on weekly working time set out in Regulation 4 of the Working Time Regulations 1998 (or such other regulations as may from time to time come into force) does not apply to the Employment. 5.3 The Executive's normal place of work is the Company's offices at 8 Canada Square, London E14 5HQ and such other places within the UK as the Company may reasonably require for the proper performance of her duties. The Executive will be required (subject always to the appropriate immigration approvals) to travel to such places within or outside the UK as may be required in order to properly perform her duties. 6 Expenses 6.1 The Company will reimburse the Executive the amount of all expenses evidenced by her as properly and reasonably incurred in the discharge of her duties, in accordance with the Global Expenses Framework for Executive Directors, Group Executives and General Managers and any other relevant global policies for directors that may apply from time to time. 7 Holidays 7.1 The Executive is entitled to 30 days' holiday in each holiday year (1 January to 31 December) calculated on Base Salary and any relevant allowance notified to the Executive under clause 2.3, -in addition to the usual (currently eight) annual public or bank holidays in England, to be taken at times convenient to the Company. Holiday entitlement may only be carried over from one holiday year to the next in line with the Company's policy as set out in the UK Annual Leave Policy. Failure to take holiday entitlements in the appropriate holiday year except in line with this policy will lead to forfeiture of any accrued holiday not taken, without any right to payment in lie-u thereof. 8

7.2 If the Employment begins or ends part way through a holiday year, the Executive's holiday entitlement will be calculated on a prorated basis for that holiday year. 7.3 If, on the termination of the Employment, the Executive has: (i) exceeded her accrued holiday entitlement, the excess may be deducted from sums due to the Executive and the Executive hereby authorises the Company to make such deduction; or (ii) any unused accrued holiday entitlement, the Company may either require the Executive to take such unused holiday during any notice period (whether or not the Executive is on Garden Leave) or make an appropriate payment in lieu of such untaken accrued holiday. 8 Sickness benefits 8.1 If the Executive cannot attend work due to sickness or injury, she will comply with the notification and certification requirements of the UK Sickness A_bsence policy available on HR Direct (as applicable to the Executive) and clause 8.2 below. The Executive will receive relevant payments in respect of her absence according to the UK Sickness Absence Policy (which are deemed inclusive of Statutory Sick Pay and all other statutory benefits to which the Executive may otherwise be entitled). 8.2 If so required, the Executive agrees to supply the Company with medical certificates covering any period of sickness or incapacity exceeding seven days (including weekends) and to undergo, at the Company's expense, a medical examination by a doctor appointed by the Company (and the Executive agrees that copies of any medical reports prepared by such doctor shall be sent directly to the Company). 8.3 If the Executive is incapable of performing her duties by reason of injury sustained wholly or partly as a result of negli-gence or breach of any duty on the part of a third party, and the Executive recovers an amount by way of compensation for loss of earnings from that third party, she will pay to the Company any sum (or part sum) received by her 1n respect of any amount paid to her under clause 8.1 above. 9 Restrictions during the Employment 9.1 During the Employment, the Executive will not directly or indirectly either on her own account or on behalf of any other person, company, business entity or other organisation be employed, engaged, concerned or interested in any other business or undertaking, except: 9.1.1 as holder (directly or through nominees) of investments listed on the London Stock Exchange pie or in respect of which dealing takes place on the Alternative Investment Market of the London Stock Exchange pie or on The Stock Exchange of Hong Kong Limited or on any Recognised Investment Exchange, as long as not more than 5 per cent. of the issued shares or other securities of any class of any one company shall be so held; or 9.1.2 with the consent in writing of the Company which may be given subject to any terms which the Company requires. 9.2 The Executive will not (and will procure so far as she is able that any person connected with the Executive within the meaning of section 252 Companies 9

Act 2006 (Connected Person) shall not) deal or become or cease to be interested (within the me·aning set out in Schedule 1 Companies Act 2006) in any securities of the Company, except in accordance with the Company and/or the Group Code for Dealing in HSBC Group Securities and every regulation of the Group for the time being in force in relation to dealings in shares or other securities of the Company or any Group Company. 9.3 Subject to any regulations issued by the Company or any relevant Group Company, the Executive and any Connected Person shall not be entitled to receive or obtain directly or indirectly any discount, rebate or commission in respect of any sale or purchase of goods effected or other business transacted (whether or not by the Executive) by or on behalf of the Company or any Group Company and if she or any Connected Person (or any firm or company in which she or any Connected Person is interested) shall obtain any such discount, ,rebate or commission the Executive will account to the Company or the relevant Group Company for the amount received by the Executive or any Connected Person (or a due proportion of the amount received by such company or firm having regard to the extent of the Executive's or the Connected Person's interest therein). 9.4 The Executive agrees to disclose to the Board any matters relating to any Connected Person which may, in the reasonable opinion of the Board, be considered to interfere, conflict or compete with the proper performance of the Executive's obligations under this Agreement. 9.5 During the Employment the Executive will inform the appropriate member of the Board without delay if she becomes aware that any director, officer, or senior employee of the Company or any Group Company is or may be planning to materially breach any of the provisions of their contract of employment or implied dlllties of loyalty, good faith and fidelity. 9.6 The Executive will not, other than having observed the relevant policies and procedures in force from time to time make or issue any press, radio or television statement or publish or submit for publication any letter or article relating directly or indirectly to the business or affairs of the Company or any Group Company, its or their officers, directors or employees or the Employment or its termination. 10 Confidential Information and Company documents 10.1 The Executive recognises that, whilst performing the duties for the Company the Executive will have access to and come into contact with Confidential Information belonging to the Company and/or any Group Company and will obtain personal knowledge of and influence over its or their customers, suppliers and/or employees. The Executive therefore agrees that the restrictions set out in this clause 1 0 are reasonable and necessary to protect the legitimate business interests of the Company and the Group both during and after the termination of the Employment. The Executive shall neither during the Employment (except in the proper performance of the duties) nor at any time (without limit) after the termination of the Employment directly or indirectly: 10.1.1 divulge or communicate to any person, company, business entity or other organisation; or 10.1.2 use for her own purposes or for any purposes other than those of the Company or any Group Company; or 10

through any failure to exercise due care and diligence, cause any unauthorised disclosure of any Confidential Information relating to the Company or any Group Company. 10.2 This restriction does not apply to information which: 10.2.1 is used or disclosed by the Executive in the proper performance of her duties or with the prior written consent of the Company or any Group Company; 10.2.2 the Executive is ordered by a court of competent jurisdiction to disclose or which is otherwise required to be disclosed by law; or 10.2.3 is already in the public domain (other than as a result of unauthorised disclosure by the Executive or any other person). 10.3 The Executive will not, during the Employment or at any time thereafter, make, except for the benefit of the Company or any Group Company, any copy, record or memorandum of any Confidential Information and any such copy, record or memorandum will be and remain the property of the Company and will be returned by the Executive to the Company or irrevocably deleted from any computer, mobile and/or handheld device and/or any other media (including, but not limited to, any cloud based storage system) in the Executive's possession or under the Executive's control, when required to do so by the Company and in any event on the termination of the Employment. 10.4 Nothing in this Agreement precludes the Executive from making any legitimate whistleblowing type disclosure to any relevant regulator anywhere in the world (including, so far as the UK is concerned, within the meaning of Part 4A (Protected Disclosures) of the Employment Rights Act 1996 and so far as reportable concerns are defined by the FCA). 11 Inventions and other Intellectual Property 11.1 The Executive may make inventions or create other Intellectual Property during the Employment. In this respect the Executive has a special responsibility to further the interests of the Company and the Group given the Executive's position at the Company and the remuneration paid to the Executive under this Agreement. 11.2 In recognition of the Executive's position, remuneration and responsibility, the Executive acknowledges and agrees that any Intellectual Property made, created or discovered by her during the Employment (whether capable of being patented or registered or not) in conjunction with or in any way affecting or relating to the business of the Company or any Group Company or capable of being used or adapted for use in the Company or any such Group Company or in connection therewith shall be immediately disclosed to the Company and shall belong to and be the absolute property of the Company or such Group Company as the Company may direct. 11.3 However, this will only apply to the extent that any invention was made by the E�ecutive in the course of her duties or in the course of duties falling outside the Executive's normal duties but which have been specifically assigned to her (together Duties) and (i) such invention was reasonably expected to result therefrom; and/or (ii) at the time of making the invention, because of the nature 11

of her Duties and the particular responsibilities arising therefrom, the Executive had a special obligation to further the interests of the Company. 11.4 The Executive acknowledges that she has no rights, .interest or claims, either during the Employment or after the termination of the Employment, in or to any such Intellectual Property and she shall not use such Intellectual Property other than during the period of the Employment and for the purpose of the Company or the Group. 11.5 The Executive agrees to sign all documents and to do all other acts which the Company requests (at its expense) to enable the Company to enjoy the full benefit of this clause 11. This includes joining in any application, which may be made in the Company's sole name for registration of any Intellectual Property Rights (such as a patent, trademark or registered design), and assisting the Company in defending and enforcing such rights during and after the employment (at the Company's expense). 11.6 The Executive understands and accepts that the remuneration and benefits provided to her by the Company in accordance with this Agreement constitute sufficient consideration to the Executive for the performance of her obligations under this clause 11, including the waiver of or covenant not to assert any moral rights that she may have. 11. 7 This clause 11, and the rights and obligations of the parties contained, will survive expiry of this Agreement, or its termination, for any reason. 12 Termination and Garden Leave 12.1 Notwithstanding the notice obligation to which the parties are generally subject in clause 1.2, the Employment may also be terminated by the Company: 12.1.1 by not less than six months' notice in writing given at any time where the Executive has been incapacitated by reason of ill health or accident from performing the duties hereunder for a period of (or periods aggregating) 26 weeks in total in any period of 12 months, provided that such termination does not take effect if it would remove any entitlement she would otherwise have thereafter for a maximum period of 24 months to enjoy the receipt of any benefits arising out of or in connection with any permanent health insurance policy or arrangement existing from time to time for her benefit. The Executive generally agrees that if she has been incapacitated by reason of ill health or accident from performing the duties hereunder for the said period of (or periods aggregating) 26 weeks in any period of 12 months, the Company may appoint another person or persons to perform her role of Group Chief Financial Officer pursuant to clause 1.3 without giving rise to any breach of any obligation owed to the Executive (under this agreement or generally, as a matter of law, and, accordingly, she will have no cause of action against the Company or the Group whatsoever in respect of such termination of employment. 12.1.2 by summary notice in writing and with no liability to make any further payment to the Executive (other than in respect of any sums accrued due as at the Termination Date) if the Executive: 12

(a) fails or neglects efficiently and diligently to discharge her duties, or is guilty of any serious or repeated breach of her obligations under this Agreement; (b) is guilty of any fraud, dishonesty, serious misconduct or any other conduct which brings or is likely to bring the Executive or the Company or any Group Company into disrepute or affects or is likely to affect prejudicially the interests of the Company or the Group; (c} is convicted of an arrestable offence (other than a road traffic offence for which a non-custodial penalty is imposed); . (d) is guilty of any material breach or material non-observance of any code of conduct, rule or regulation referred to in clause 4.1; (e) becomes bankrupt or makes any arrangement or composition with her creditors; (f) is prohibited from being a director by law, or has such regulatory approval as required pursuant to clause 1.5, withheld or withdrawn; (g) voluntarily resigns as a director of the Company or any Group Company; or (h) is not or ceases to be eligible to work in the UK. 12.2 The Company's rights under clause 12.1 are without prejudice to any other rights that it might have at law to terminate the Employment or to accept any breach of this Agreement by the Executive as having brought the Agreement to an end. Any delay by the Company in exercising its rights will not constitute a waiver. 12.3 If the Company may be or becomes entitled to terminate the Employment pursuant to clauses 1.5 or 12.1.2, or whilst the Company or any external body may wish to investigate any allegation against the Executive it will be entitled (without prejudice to its termination rights) to suspend the Executive for so long as it considers necessary or appropriate. 12.4 Following service of notice to terminate the Employment by either party, the Company may require the Executive to stay away from all or any of the Company's premises and/or will not be provided with any work and/or will have no business contact with all or any of the Group's agents, employees, customers, clients, distributors and suppliers and/or will have no access to the Company's communications systems (Garden Leave). During any period of Garden Leave, the Company may appoint a replacement to exercise any of the Executive's duties and responsibilities and may require the Executive to take such actions as it reasonably requires to effect a proper handover of any or all of her duties and responsibilities. However, the Executive will continue to be bound by all her obligations under this Agreement, including, without limitation, her duties of fidelity and of good faith. 12.5 In addition to the circumstances referred to in clause 12.1.1 above, the Company may terminate the Employment at any time and with immediate effect 13

by notifying the Executive in writing of that fact, confirming the date termination is to occur. If the Company terminates the Executive's employment in this way, it will make a payment in lieu of any notice of termination and/or in lieu of the balance of the remaining term of employment corresponding to the notice . period as set out in clause 1.2 (the Payment in Lieu). The Executive agrees that the Payment in Lieu will consist of Base Salary, any Fixed Pay Allowance (if payable at the relevant time) and Pension Allowance less Statutory Deductions but will not include any Variable Pay, payment in respect of benefits or any holiday entitlement for the notice period (or, if notice has already been given, during the remainder of the notice period). 12.6 The Company may decide to pay any Payment in Lieu only in equal monthly instalments until the date on which the notice period referred to in clause 1.2 would have expired if notice had been given (the Payment Period). The Executive shall comply with her common law duty immediately following the termination of her employment and take all reasonable steps to obtain alternative employment or engagement during the Payment Period. 12. 7 If the Executive obtains alternative employment or engagement during the Payment Period, any further monthly instalments of the Payment in Lieu will be reduced on a pro rata basis by the amount she receives from that alternative· employment or engagement. If the Executive fails to take all reasonable steps to obtain alternative employment or engagement, the Company will have the right to terminate all further instalments of the Payment in Lieu, and she will not be entitled to any further compensation. 12.8 Without prejudice to the constitution (including for the avoidance of doubt the articles of association) of any Group Company, on the Termination Date or on either the Company or the Executive having served notice of such termination, the Executive will: 12.8.1 at the request of the Company resign from office as a Director of the Company and all offices held by the Executive in any Group Company provided however that such resignation shall be without prejudice to any claims which the Executive may have against the Company or any Group Company arising out of the termination of the Employment; 12.8.2 transfer without payment to the Company or as the Company may direct to any third party, any shares or other securities held by the Executive in the Company as a nominee or trustee for the Company or any Group Company and deliver to the Company the related certificates; 12.8.3 deliver to the Company all Confidential Information which may be in the Executive's possession or under the Executive's power or control and, if requested, provide a signed statement that she has fully complied with the obligations under this clause 12.8.3; and 12.8.4 cooperate with the Company and any Group Company by providing such assistance as may reasonably be required in connection with any handover arrangements or any claim made by or against the Company or any such Group Company. 12.9 If the Employment is terminated for the purpose of the reconstruction or amalgamation of the Company or by reason of the Company transferring all or a substantial part of its business to another company and the Executive is 141

offered employment by the reconstructed or amalgamated or transferee company on similar terms to the terms of this Agreement, the Executive will have no claim against the Company or such reconstructed or amalgamated or transferee company in respect of the termination of the Appointment. 13 Restrictive covenants 13.1 For the purposes of this clause 13 the following words have the following meanings: 13.1.1 Capacity means as agent, consultant, director, employee, owner, partner, shareholder beyond the shareholding limits applied in clause 9.1 or in any other capacity; 13.1.2 Company Products means any risk, banking or financial products researched into, developed, supplied, distributed or sold to or by the Company with which the duties of the Executive were materially concerned or for which she was directly or ultimately responsible during the Restricted Period; 13.1.3 Company Services means any risk, banking or financial services (including but not limited to technical and product support, technical advice and customer services) developed or supplied to or by the Company with which the duties of the Executive were materially concerned or for which she was directly or ultimately responsible during the Restricted Period; 13.1.4 Comparator Group as at the date of this Agreement means Bank of America, Barclays, BNP Paribas, Citigroup, DBS, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Lloyds Banking Group, Morgan Stanley, Natwest, Santander, Societe Generale, Standard Chartered, UBS, Westpac, Wells Fargo and any listed bank headquartered in Hong Kong or China (and all group companies of the companies and entities set out in this clause) together with any transfer, merger, amalgamation and/or reconstruction of any relevant business or part of such business of any such company. This list of Comparator Group may have names removed, amended and/or added at any time during the Employment by the HSBC Group's Remuneration Committee; 13.1.5 Customer means any person or firm or company or other organisation whatsoever to whom or which t11e Company supplied Company Products and/or Company Services during the Restricted Period and with whom or which, during the Restricted Period: (a} the Executive had material personal dealings pursuant to the Employment; or (b) any employee who was under the direct supervision of either the Executive or of the Executive's direct reports, had material personal dealings pursuant to their employment, provided that in the case of a firm, company or other organisation "Customer" shall not include any division, branch or office of such firm or company or other organisation with which the Executive and/or any such employee as defined in sub-clause (b) above had no dealings during the Restricted Period save that where a restructuring of the firm 15

or company or organisation has occurred following such personal dealings "Customer" shall include the part of the business with which the Executive or any employee as defined in sub-clause (b) above had dealings during the Restricted Period; 13.1.6 Prospective Customer means any person or firm or company or other organisation whatsoever with whom or which the Company shall have had negotiations or material discussions regarding the possible distribution, sale or supply of Company Products· and/or Company Services during the Restricted Period and which were ongoing and not finally concluded at the Termination Date and with whom or which during such period: (a) the Executive will have had material personal dealings pursuant to the Employment; or (b) any employee who was under the direct supervision of either the Executive or -of the Executive's direct reports will have had material personal dealings pursuant to their employment; or (c) the Executive was directly responsible in a client management capacity on behalf of the Company, provided that in the case of a firm, company or other organisation "Prospective Customer" shall not include any division, branch or office of such firm, company or other organisation wfth which the Executive and/or any such employee had no dealings during the Restricted Period save that where a restructuring of the firm or company or organisation has occurred following such personal dealings, "Prospective Customer" shall include the part of the business with which the Executive or any employee as defined in sub-clause (b) had dealings during the Restricted Period; 13.1.7 Restricted Employee means any person who is on the Termination Date, or was during the Restricted Period, employed or engaged by the Company or any Group Company and is by reason of such employment or engagement in possession of, or is reasonably likely to be in possession of, any trade secret or Confidential Information relating to the business of the Company or any Group Company or has acquired influence over its Customers or Prospective Customers (as defined in this clause 13 but so that references to "the Executive" will be replaced by references to the relevant employee and so that references to Employment will mean the relevant employee's employment with the Company or Group Company, being in either case a person with whom the Executive had material dealings during the Restricted Period); 13.1.8 Restricted Period means the period of 12 months ending on the Termination Date or, in the event that no duties were assigned to the Executive for any part of the duration of the notice period, the 12 months immediately preceding the last day on which the Executive carried out any duties for the Company; 13.1.9 Restricted Products means Company Products or any products of the same or of a similar kind; 16

13.1.1 O Restricted Services means Company Services or any services of the same or of a similar kind; 13.1.11 Restricted Supplier means any person, company, business entity or other organisation whatsoever who has supplied goods or services to the Company or any Group Company (other than utilities and goods or services supplied for administrative purposes) during any part of the Restricted Period or who has agreed prior to the Termination Date to supply goods or services to the Company to commence at any time in the twelve months following the Termination Date. 13.2 The Executive recognises that, whilst performing her duties for the Company, she will have access to and come into contact with Confidential Information belonging to the Company and certain Group Companies and will obtain personal knowledge of and influence over their customers and/or employees. 13.3 The Executive hereby undertakes with the Company that she will not for the period of six months after the Termination Date without the prior written consent of the Company (such consent not to be unreasonably withheld) whether by herself, through her employees or agents or otherwise and whether on her own behalf or on behalf of any other person, firm, company or other organisation, directly or indirectly: 13.3.1 in competition with the Company anywhere in the world in a senior role, be involved in any Capacity in any of the companies (or other entities) in the Comparator Group in the business. of researching into, developing, distributing, selling, supplying or otherwise dealing with Restricted Products or Restricted Services; or 13.3.2 in competition with the Company, accept orders or facilitate the acceptance of any orders or have any business dealings for Restricted Products or Restricted Services from any Customer or Prospective Customer; or 13.3.3 employ or otherwise engage any Restricted Employee in the business of or be personally involved to a material extent in employing or otherwise engaging any Restricted Employee in the business of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products or Restricted Services; or 13. 3.4 interfere with, or endeavour to interfere with, the supply or provision of goods or services (other than utilities, or goods or services supplied foli an administrative purpose) to the Company or to induce the cessation of the supply or provision of such goods or services from any Restricted Supplier; or 13.3.5 in competition with the Company, solicit business from, or solicit the supply of goods or services (other than utilities, or goods or services supplied for an administrative purpose) from any Restricted Supplier for the purposes of the provision of Restricted Products or Restri.cted Services. 13.4 The Executive hereby undertakes with the Company that she will not for the period of twelve months after the Termination Date without the prior written consent of the Company (such consent not to be unreasonably withheld) 17

whether by herself through her employees or agents or otherwise and whether on her own behalf or on behalf of any other person, firm, company or other organisation, directly or indirectly: 13.4.1 • in competition with the Company, solicit business from or endeavour to entice away or canvass any Customer or Prospective Customer if such solicitation or canvassing is in respect of Restricted Products or Restricted Services; 13.4.2 solicit or induce or endeavour to solicit or induce any Restricted· Employee to cease working for or providing services to the Company, whether or not any such person would thereby commit a breach of contract. 13.5 The Executive agrees that a copy of this clause 13, and clauses 1 O and 11 will be provided by her to any person firm company or other entity that makes or may make an offer to her of employment, appointment as a director or officer, agency, partnership, or joint venture either during Employment or after its termination (in such latter case, where such restriction continues in full force and effect). 13.6 If the restrictions in clauses 13.3 and 13.4 are for any reason held to be unenforceable in any jurisdiction in the world the Executive agrees to such amended or lesser restriction as would enable that restriction to be enforced so far as possible in such jurisdiction. 13.7 In addition to the provisions of clause 16.6, the benefit of clauses 13.3 and 13.4 shall be held on trust by the Company for each Group Company and the Company reserves the right to assign the benefit of such provisions to any Group Company, in addition such provisions also apply as though there were substituted for references to "the Company" references to each Group Company in relation to which the Executive has in the course of her duties for the Company or by reason of rendering services to or holding office in such Group Company: 13. 7 .1 acquired knowledge of its trade secrets or Confidential Information; or 13. 7.2 had material personal dealings with its Customers or Prospective Customers; or 13.7.3 supervised directly or indirectly employees having material personal dealings with its Customers or Prospective Customers, but so that references in clause 13 1o "the Company" shall for this purpose be deemed to be replaced by references to the relevant Group Company. The obligations undertaken by the Executive pursuant to this clause 13. 7 shall, with respect to each such Group Company, constitute a separate and distinct covenant and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenants in favour of any other Group Company or the Company. 13.8 In the event of the transfer (within·the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 and other equivalent legislation (the Transfer Regulations) of the undertaking or the part of the undertaking in which the Executive shall at the time be employed as the result of which (by virtue of the Transfer Regulations) the Employment is automatically transferred 18

to another company (the Transferee), the provisions of this clause 13 shall have effect as though references in it (and in all associated terms defined in this Agreement) to "the Group" are construed as references to "any other company within the Transferee's Group" (which for these purposes shall comprise the Transferee and any holding company of the Transferee and the subsidiaries of the Transferee and of any such holding companies for the time being). 13.9 The Executive hereby undertakes with the Company that she will not at any time without the consent of the Company after the Termination Date: 13.9.1 engage other than as a private consumer in any trade or business or be associated with any person, firm or company engaged in any trade or business using the name(s) HSBC or Hongkong and Shanghai Banking Corporation or incorporating the word(s) Hongkong Shanghai Banking Corporation; 13.9.2 in the course of carrying on any trade or business, claim, represent or otherwise indicate any present association with the Company or any Group Company or for the purpose of carrying on or retaining any business or custom, claim, represent or otherwise indicate any past association with the Company or any Group Company to its detriment other than simple and factual statements regarding the Executive's period of employment, job title, responsibilities and role. 13.10 The parties agree that the periods referred to in clauses 13.3 and 13.4 above will be reduced by one day for every day, during which, at the Company's direction, the Executive is on Garden Leave. 13.11 The Executive agrees that, having had the opportunity to take independent legal advice, the restrictions contained in this clause 13 are reasonable and necessary for the protection of the Company and any Group Company and that they do not bear harshly upon her. The parties agree that: 13.11.1 each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions shall not be affected; and 13.11.2 if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable. 14 Grievance, dismissal and disciplinary procedures The non-contractual grievance and disciplinary procedures applicable to the Executive are available via HR Direct. Neither the grievance procedure nor the disciplinary procedure are contractually binding on the Company. 15 Disclosure of information 15.1 .For the purposes of data protection requirements under the General Data Protection Regulation ("GDPR"), the Company is a data controller in respect of the Executive's personal data. In order to comply with its obligations and responsibilities under the GDPR, the Company will make information about the 19

processing of the Executive's personal data available to her in its HR Data Privacy Notice. The HR Data Privacy Notice does not have contractual effect. 15.2 The Executive consents to the Company monitoring and recording any use that she makes of the Company's electronic communications systems for the purpose of ensuring compliance with the Company's policies and procedures. 16 General 16.1 This Agreement is governed by and interpreted in accordance with English law. 16.2 The parties submit to the exclusive jurisdiction of the courts of England and Wales, but this Agreement may be enforced by the Company in any court of competent jurisdiction. 16.3 This Agreement contains all the information required to be provided to the Executive under section 1 of the Employment Rights Act 1996. 16.4 Any notices or other document to be served on a party under this Agreement will be delivered by hand or sent to the party at the address given in this Agreement or as otherwise notified in writing to the other party. A properly addressed and prepaid notice sent by post will be deemed to have been served at 9.00am on the second working day after posting or at the time recorded by the delivery service. 16.5 The Executive will, at the time of signing this Agreement, appoint the Company as her attorney so that the Company can give effect to the provisions of clauses 11 and 12.8.1. 16.6 Each Group Company will have the right under the Contracts (Rights of Third Parties) Act 1999 to enforce the rights bestowed on it by this Agreement. The consent of a Group Company is not required to amend any terms of this Agreement. Except as set out in this clause 16, a person who is not a party to this Agreement may not enforce any of its provisions under the Contracts (Rights of Third Parties) Act 1999. 16. 7 The Company is not party to any collective agreement which affects the Employment. 16.8 Save as otherwise advised in writing to the Executive, upon or during the Employment, pursuant to clause 2.3 or otherwise, this Agreement comprises the whole agreement between the parties relating to the Employment. Accordingly, as from the effective date of this Agreement, all other agreements or arrangements between the Company and/or any Group Company relating to the employment of the Executive, save for such matters referred to within • this Agreement or required to be entered into pursuant to this Agreement will cease to have effect. 16.9 This Agreement may be executed in any number of counterparts, each of which, when executed, shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement. 20

17 Definitions 17.1 In this Agreement unless the context otherwise requires the following expressions have the following meanings: Board means the Board of Directors for the time being of HSBC Holdings pie or any committee of the Board to which powers have been properly delegated or such person or persons designated by the Board from time to time as its representative for the purposes of this Agreement; Commencement Date means 01 January 2025, subject to regulatory approval and appointment at the next Annual General Meeting; Confidential Information means information relating to the business, clients, customers, products, affairs and finances of the Company or any Group Company that is confidential to the Company or any Group Company, or in relation to which the Company or any Group Company is subject to a duty of confidentiality, and trade secrets including technical data and know-how relating to the business of the Company or any Group Company or of any persons having dealings with the Company or any Group Company, whether or not such information is marked confidential. This includes: details of suppliers and their terms of . business, details of customers, clients and prospective customers/clients and their requirements, the prices charged to and terms of business with customers, marketing plans and sales forecasts, financial information, results and forecasts (save to the extent that these are included in published audited accounts), any proposals relating to the acquisition or disposal of a company or business or any part thereof or to any proposed expansion or contraction of activities, or any other business strategy or tender, details of employees, atypical workers and officers and of the remuneration and other benefits paid to them, information relating to research activities, inventions, secret processes, designs, software, formulae and product lines, any information which the Executive either is aware or reasonably ought to know is confidential and any information which has been given to the Company or any Group Company in confidence by customers, suppliers or other persons; Corporate Governance Code means the UK Corporate Governance Code published by the Financial Reporting Council (as amended from time to time); Directors' Remuneration Policy means at any time the Group's directors' remuneration policy as set out in the Directors' Remuneration Report of the Group's Annual Report and Accounts most recently approved by shareholders in accordance with section 439a of the Companies Act 20_06; Employment means the Executive's employment under this Agreement; FCA means the Financial Conduct Authority; Group means (1) HSBC Holdings pie and any entity which from time to time is a holding company of HSBC Holdings pie or a subsidiary of HSBC Holdings pie or of any such holding company; and (2) any entity over which from time to time any of the entities defined in paragraph (1) of this definition either directly or indirectly exercises management control, even though it may own less than fifty per cent. (50%) of the shares and is prevented by law from owning a greater shareholding and Group Company and Group Companies shall be construed accordingly; 21

Group Chief Executive means the Chief Executive of the Group (not simply of the Company) from time to time; Group Chief Financial Officer means the Finance Director of the Group (not simply of the Company) from time to time; Group's Malus and Clawback Policies means any of the Group's policies on malus and clawback which may be in force and amended from time to time; HR Direct means the Company's HR intranet or such applicable HR system from time to time; Intellectual Property means any invention, improvement, design, process, information, copyright work, trade mark, trade name or get-up or any other intellectual property; Recognised Investment Exchange means an investment exchange granted recognition under section 285 (1) Financial Services and Markets Act 2000 including a recognised overseas investment exchange; Statutory Deductions means appropriate tax, national insurance contributions and any other applicable statutory deductions; Termination Date means the date on which the Executive's Employment terminated; Variable Pay means any non-pensionable incentive compensation (excluding any other allowance notified to the Executive ir, writing from time to time) including any bonus or deferred bonus in the form of (i) cash (ii) deferred cash or (iii) equity awarded under any share or variable pay / Long Term Incentive plan in force from time to time (in relation to which performance and/or other conditions may or may not be attached) and subject always to the deferral policy and/or any other variable pay policy applicable at the time of such award and subject to clauses 2.5, 2.6, 2.8, 2.9 and 2.10. 17.2 References to clauses, sub-clauses and schedules are unless otherwise stated to clauses and sub-clauses of and schedules to this Agreement. 17 .3 The headings to the clauses are for convenience only and shall not affect the· construction or interpretation of this Agreement. 17.4 The words subsidiary and holding company have the meanings set out in section 1159 of the UK Companies Act 2006 and "management control" shall be demonstrated by the ability to exercise significant influence over an entity or its management. 22

17.5 A reference to any statute or statutory provision (whether of the United Kingdom or elsewhere) includes any subordinate provision (as defined by _ section 21 ( 1) Interpretation Act 1978) made under it and provision which has superseded it or re-enacted it (with or without modification) before or after the date of this Agreement except where it is after the date of this Agreement to the extent that the liability of any party is thereby increased or extended. This Agreement has been signed on behalf of the Company by its Authorised Signatories and executed as a deed by the Executive the day and year first above written. Executed as a Deed by HSBC GROUP MANAGEMENT SERVICES LIMITED in the presence of: �JAJA� .... /J.�.�·J······· ......... : .... . Dated: .... Z.l .(. l.o./. ;?-4-. ........... . Authorised Signatory :it/1 o/Af Dated: ........ ...... .................... .. Authorised Signatory Executed as a Dee � � theEXECUTIVE = Dated �v!f:?/2J{ in the presence of: �� Signature of Witness . . GH ll� M. t:E t\ t\N Witness Name . .................................... . Q1/l6/L.l( Dated: ......... ............... .. · · . CfNvt f A� 'f S l=CJt .. £!7 tbL 1Witness Occupation . ............................. . 23

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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. 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 must not conduct any transactions on his/her own account or for the account of a third party, 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 he/she is in possession of inside information in relation to HSBC. 2.3 A PDMR must notify his/her intention in writing to conduct any transactions on his/her own account or for the account of a third party, which relates directly or indirectly to any Group Securities to Corporate Governance & Secretariat (CG&S) in order that written clearance for the transaction can be sought from a Designated Director; 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;

2 (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 he or she comes 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 his/her own account or for the account of a third party, 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 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 Hong Kong Stock Exchange’s website. 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. 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.

3 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 he/she is 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 him/ her immediately after they have conducted any transaction relating to Group Securities on behalf of the trust so that he/she 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 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 position as a director of a listed company, they are in possession of inside information relating to that listed company’s securities (including HSBC).

4 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 minor child; (iii) a relative who has shared the same household for at least one year; (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 point (i), (ii) or (iii) above, which is directly or indirectly controlled by such a person, 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; “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; “Executive PDMR” means an Executive Director or a senior executive of HSBC who falls within clause (ii) of the definition of PDMR;

5 “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 includes shares and debt instruments. “HSBC” means HSBC Holdings plc; “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 his or her investment decisions; (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;

6 “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” / “transact/s”, interpreted in accordance with MAR (and, where relevant for Directors, the SFO), includes any type of transaction in or relating to Group Securities. 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. “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.

7 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;

8 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 he/she becomes, or ceases 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 pdmr.transactions@hsbc.com. 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_302xceo

Section 302 Certification of Group Chief Executive I, Georges Elhedery, certify that: 1. I have reviewed this annual report on Form 20-F of HSBC Holdings plc; Exhibit 12.1 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- l 5( e) and I Sd-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 accordanc 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 o f 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 20, 2025 Georges Elhedery Group Chief Executive /s/ Georges Elhedery

a122_302xcfo

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; Exhibit 12.2 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 l 3a- l 5( 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 procedm:es 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 20, 2025 Manveen (Pam) Kaur Group Chief Financial Officer /s/ Manveen (Pam) Kaur

a131_902xceoxcfo

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, 2024 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 20, 2025 Dated: February 20, 2025 Manveen (Pam) Kaur Group Chief Financial Officer /s/ Georges Elhedery /s/ Manveen (Pam) Kaur Georges Elhedery Group Chief Executive

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 20, 2025 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 20, 2025

a156_actuary

20 February 2025 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, 2024 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, /s/ Tim Panter Tim Panter Fellow of the Institute and Faculty of Actuaries Willis Towers Watson 3 Temple Quay Temple Back East Bristol BS1 6DZ D +44 1179 897 407 M +44 7808 176 449 E tim.panter@wtwco.com 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.

Hsbc Holdings PLC 20-F for FY2024

About this 20-F

Headline figures

As filed with the Securities and Exchange Commission on February 20, 2025.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

For the fiscal year ended December 31, 2024

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Strategic report

Environmental, social and

governance (‘ESG’) review

Financial review

Risk review

Corporate governance report

Financial statements

Additional information

A reminder

Our approach to ESG reporting

Use of alternative performance

measures

Targets and forward guidance

Return on average tangible equity

14.6%

(2023: 14.6%)

Profit before tax

Net interest income

Operating expenses

$32.6bn

Common equity tier 1 capital ratio

14.9%

(2023: 14.8%)

Dividend per share in respect of 2024

$0.87

Grow our Wealth business

Serve our clients internationally

62%

Gender representation

34.6%

(2023: 34.1%)

Sustainable finance and investment

$393.6bn

–Profit before tax rose by $2.0bn to $32.3bn,

Profit after tax increased by $0.4bn to

$25.0bn.

–Constant currency profit before tax

excluding notable items increased by

–Constant currency revenue excluding

notable items rose by $2.9bn to $67.4bn.

–Net interest income (‘NII’) decreased by

$43.7bn fell by $0.4bn or 1% compared

–Net interest margin (‘NIM’) of 1.56%

–Expected credit losses and other credit

impairment charges (‘ECL’) of $3.4bn were

UK. ECL were 36bps of average gross

loans, including loans and advances

–Operating expenses grew by $1.0bn or 3%

–Target basis operating expenses rose by

5%, in line with our cost growth target.

–Customer lending balances fell by $8bn on

a reported basis but rose by $14bn on a

–Customer accounts rose by $43bn on a

reported basis, and $75bn on a constant

–Common equity tier 1 (‘CET1’) capital

ratio of 14.9% rose by 0.1 of a percentage

dividend of $0.36 per share, resulting in a

total of $0.87 per share in respect of 2024,

–We are now targeting a mid-teens return on

average tangible equity (‘RoTE’) in each of

–We expect banking NII of around $42bn in

basis operating expenses of approximately

3% in 2025 compared with 2024.

–annualised reduction of $1.5bn in our cost

–We expect ECL charges as a percentage of

average gross loans to continue to be