TIDMHSBA
RNS Number : 8496U
HSBC Holdings PLC
03 August 2020
3 August 2020
HSBC HOLDINGS PLC
2020 INTERIM RESULTS - HIGHLIGHTS
Noel Quinn, Group Chief Executive, said:
"Our first half performance was impacted by the Covid-19
pandemic, falling interest rates, increased geopolitical risk and
heightened levels of market volatility. Despite this, our Asia
franchise showed resilience, and our Global Markets business
delivered strong growth compared with last year's first half.
Having paused parts of our transformation programme in response to
the Covid-19 outbreak, we now intend to accelerate implementation
of the plans we announced in February. We are also looking at what
additional actions we need to take in light of the new economic
environment to make HSBC a stronger and more sustainable
business."
"Current tensions between China and the US inevitably create
challenging situations for an organisation with HSBC's footprint.
We will face any political challenges that arise with a focus on
the long-term needs of our customers and the best interests of our
investors."
Financial performance (vs 1H19)
-- Reported profit after tax down 69% to $3.1bn and reported
profit before tax down 65% to $4.3bn from higher expected credit
losses and other credit impairment charges ('ECL') and lower
revenue. Reported profit in 1H20 also included a $1.2bn impairment
of software intangibles, mainly in Europe.
-- In Asia, we reported profit before tax of $7.4bn in 1H20,
despite higher ECL, demonstrating the strength and continued
resilience of our operations in the region and underlining the
importance of Asia to the Group. Higher ECL charges materially
impacted profitability in our markets across the rest of the world,
notably in our operations throughout Europe.
-- Reported revenue down 9% to $26.7bn, reflecting the impact of
interest rate reductions, as well as adverse market impacts in life
insurance manufacturing and adverse valuation adjustments in Global
Banking and Markets ('GBM'), notably in 1Q20. These factors more
than offset higher revenue in Global Markets.
-- Net interest margin ('NIM') of 1.43% in 1H20, down 18 basis
points ('bps') from 1H19. NIM in 2Q20 was 1.33%, down 21bps from
1Q20, primarily reflecting the initial impact of the reduction in
interest rates due to the Covid-19 outbreak.
-- Reported ECL increased by $5.7bn to $6.9bn due to the impact
of the Covid-19 outbreak and the forward economic outlook, and due
to an increase in charges related to specific wholesale customers.
ECL (annualised) as a percentage of average gross loans and
advances to customers was 1.33% in 1H20, while allowance for ECL
against loans and advances to customers increased from $8.7bn at 31
December 2019 to $13.2bn at 30 June 2020.
-- Reported operating expenses down 4%, despite a $1.2bn
impairment of software intangibles. Adjusted operating expenses
fell 5%, despite continued investment, due to lower
performance-related pay and reduced discretionary costs.
-- In 1H20, lending decreased by $18bn on a reported basis. On a
constant currency basis, lending increased by $12bn, reflecting
corporate customers drawing on existing and new credit lines and
re-depositing these to increase cash balances in 1Q20, which was
partly offset by paydowns in 2Q20. Deposits grew by $93bn on a
reported basis and $133bn on a constant currency basis, with growth
in all global businesses, including through the depositing of loans
from government-backed schemes.
-- Common equity tier 1 capital ('CET1') ratio of 15.0%, up
30bps from 4Q19, as higher CET1 capital, which included an increase
from the cancellation of the 4Q19 dividend and the current
suspension of dividends on ordinary shares, more than offset the
impact of risk-weighted asset ('RWA') growth.
Outlook for 2020
-- We continue to face a wide range of potential economic
outcomes for the second half of 2020 and into 2021, partly
dependent on the extent of any potential impacts from new waves of
Covid-19, the path to the development of a possible vaccine and
market and consumer confidence levels. Heightened geopolitical risk
could also impact a number of our markets, including Hong Kong and
the UK.
-- Applying a range of weightings to our ECL sensitivity
analysis, as disclosed on pages 56 to 62 of the Interim Report
2020, could result in an ECL charge in the range of $8bn to $13bn
for 2020. This range, which continues to be subject to a high
degree of uncertainty due to Covid-19 and geopolitical tensions, is
higher than at 1Q20 given the deterioration in consensus economic
forecasts and actual loss experience during 2Q20.
-- Lower global interest rates and reduced customer activity
have put increasing pressure on revenue, and are expected to
continue to do so.
-- We intend to accelerate our transformation programme and
execute additional cost actions to help mitigate pressures on
revenue and create capacity for further investments in
technology.
-- We expect mid-to-high single-digit RWA percentage growth in
2020, primarily from credit rating migration movements, which is
expected to have an adverse impact on our CET1 ratio. We will
continue to aim to reduce RWAs in low-returning areas, and improve
efficiency to allow resources to be further and faster allocated to
areas of competitive advantage, higher returns and growth.
-- Given the current high degree of uncertainty, we are
continuing to monitor closely the implications on our business plan
and medium-term financial targets, while also undertaking a review
of our future dividend policy. We intend to provide an update on
our medium-term financial targets and dividend policy at our
year-end results for 2020.
Key financial metrics
Half-year to
30 Jun 30 Jun 31 Dec
Footnotes 2020 2019 2019
--------- --------- -----------
Reported results
Reported revenue ($m) 26,745 29,372 26,726
---------
Reported profit before tax ($m) 4,318 12,407 940
---------
Reported profit after tax ($m) 3,125 9,937 (1,229)
---------
Profit attributable to the ordinary shareholders
of the parent company ($m) 1,977 8,507 (2,538)
---------
Cost efficiency ratio (%) 61.8 58.4 94.3
-------------------------------------------------- --------- --------- -----------
Basic earnings per share ($) 0.10 0.42 (0.13)
---------
Diluted earnings per share ($) 0.10 0.42 (0.13)
---------
Return on average ordinary shareholders' equity
(annualised) (%) 2.4 10.4 (3.0)
---------
Net interest margin (%) 1 1.43 1.61 1.58
-------------------------------------------------- ---------- --------- --------- -----------
Alternative performance measures
Adjusted revenue ($m) 26,477 27,815 26,632
--------- ---------
Adjusted profit before tax ($m) 5,635 12,273 9,660
---------
Adjusted cost efficiency ratio (%) 56.4 56.6 61.8
--------- --------- -----------
Annualised expected credit losses and other
credit impairment charges ('ECL') as a % of
average gross loans and advances to customers
(%) 1.33 0.22 0.30
-------------------------------------------------- ---------- --------- --------- ---------
Return on average tangible equity (annualised) 1,
(%) 2 3.8 11.2 8.4
-------------------------------------------------- ---------- --------- --------- -----------
At
30 Jun 30 Jun 31 Dec
2020 2019 2019
--------- --------- -----------
Balance sheet
Total assets ($m) 2,922,798 2,751,273 2,715,152
--------- --------- -----------
Net loans and advances to customers ($m) 1,018,681 1,021,632 1,036,743
--------- --------- -----------
Customer accounts ($m) 1,532,380 1,380,124 1,439,115
--------- --------- -----------
Average interest-earning assets ($m) 1 2,034,939 1,912,708 1,922,822
--------- --------- -----------
Loans and advances to customers as % of customer
accounts (%) 66.5 74.0 72.0
--------- --------- ---------
Total shareholders' equity ($m) 187,036 192,676 183,955
--------- --------- -----------
Tangible ordinary shareholders' equity ($m) 147,879 145,441 144,144
--------- --------- -----------
Net asset value per ordinary share at period
end ($) 3,4 8.17 8.35 8.00
--------- --------- -----------
Tangible net asset value per ordinary share
at period end ($) 4 7.34 7.19 7.13
-------------------------------------------------- ---------- --------- --------- -----------
Capital, leverage and liquidity
---------
Common equity tier 1 capital ratio (%) 5 15.0 14.3 14.7
--------- --------- ---------
Risk-weighted assets ($m) 5 854,552 885,971 843,395
--------- --------- -----------
Total capital ratio (%) 5 20.7 20.1 20.4
--------- --------- -----------
Leverage ratio (%) 5 5.3 5.4 5.3
--------- --------- -----------
High-quality liquid assets (liquidity value)
($bn) 654 533 601
--------- --------- -----------
Liquidity coverage ratio (%) 148 136 150
-------------------------------------------------- ---------- --------- --------- ---------
Share count
---------
Period end basic number of $0.50 ordinary shares
outstanding (millions) 20,162 20,221 20,206
Period end basic number of $0.50 ordinary shares
outstanding and dilutive potential ordinary
shares (millions) 20,198 20,286 20,280
Average basic number of $0.50 ordinary shares
outstanding (millions) 20,162 20,124 20,191
-------------------------------------------------- ---------- --------- --------- ---------
Dividend per ordinary share (in respect of
the period) ($) 1 - 0.20 0.30
-------------------------------------------------- ---------- --------- --------- ---------
1 For these metrics, half-year to 31 December 2019 is calculated
on a full-year basis and not a 2H19 basis.
2 Annualised profit attributable to ordinary shareholders,
excluding impairment of goodwill and other intangible assets and
changes in present value of in-force insurance contracts ('PVIF')
(net of tax), divided by average ordinary shareholders' equity
excluding goodwill, PVIF and other intangible assets (net of
deferred tax).
3 The definition of net asset value per ordinary share is total
shareholders' equity less non-cumulative preference shares and
capital securities, divided by the number of ordinary shares in
issue excluding shares the company has purchased and are held in
treasury.
4 Excludes impact of $0.10 per share dividend in 1Q19, following
a June 2019 change in accounting practice on the recognition of
interim dividends, from the date of declaration to the date of
payment.
5 Unless otherwise stated, regulatory capital ratios and
requirements are calculated in accordance with the transitional
arrangements of the Capital Requirements Regulation in force in the
EU at the time, including the regulatory transitional arrangements
for IFRS 9 'Financial Instruments' in article 473a. The capital
ratios and requirements at 31 December 2019 and 30 June 2020 are
reported in accordance with the revised Capital Requirements
Regulation and Directive ('CRR II'), as implemented, whereas the
Capital Requirements Regulation and Directive ('CRD IV') applied at
30 June 2019. Leverage ratios are calculated using the end point
definition of capital.
Highlights
Half-year to
30 Jun 30 Jun
2020 2019
Footnotes $m $m
---------- --------
Reported
Revenue 1 26,745 29,372
---------------------------------------------------------- ---------- ------- -------
Change in expected credit losses and other credit
impairment charges (6,858) (1,140)
---------------------------------------------------------- ---------- ------- -------
Operating expenses (16,527) (17,149)
---------------------------------------------------------- ---------- ------- -------
Profit before tax 4,318 12,407
---------------------------------------------------------- ---------- ------- -------
Adjusted 2
---------------------------------------------------------- ---------- --------
Revenue 1 26,477 27,815
---------------------------------------------------------- ---------- ------- -------
Change in expected credit losses and other credit
impairment charges (6,858) (1,088)
---------------------------------------------------------- ---------- ------- -------
Operating expenses (14,942) (15,739)
---------------------------------------------------------- ---------- ------- -------
Profit before tax 5,635 12,273
---------------------------------------------------------- ---------- ------- -------
Significant items affecting adjusted performance
Revenue
Customer redress programmes 26 -
---------------------------------------------------------- ---------- ------- -------
Disposals, acquisitions and investment in new businesses (8) 827
---------------------------------------------------------- ---------- ------- -------
Fair value movements on financial instruments 3 299 50
---------------------------------------------------------- ---------- ------- -------
Restructuring and other related costs (49) -
---------------------------------------------------------- ---------- ------- -------
Operating expenses
-------- ----------
Costs of structural reform 4 - (91)
---------------------------------------------------------- ---------- ------- -------
Customer redress programmes (50) (610)
---------------------------------------------------------- ---------- ------- -------
Impairment of goodwill and other intangibles (1,025) -
---------------------------------------------------------- ---------- ------- -------
Restructuring and other related costs 5 (505) (287)
---------------------------------------------------------- ---------- ------- -------
Settlements and provisions in connection with legal
and regulatory matters (5) 2
---------------------------------------------------------- ---------- ------- -------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Adjusted performance is computed by adjusting reported results
for the year-on-year effects of foreign currency translation
differences and significant items which distort year-on-year
comparisons.
3 Includes fair value movements on non-qualifying hedges and
debt valuation adjustments on derivatives.
4 Comprises costs associated with preparations for the UK's exit from the European Union.
5 Includes impairment of software intangible assets of $173m.
Review by Noel Quinn, Group Chief Executive
The first six months of 2020 have been some of the most
challenging in living memory. Due to the Covid-19 pandemic, much of
the global economy slowed significantly and some sectors drew to a
near total halt.
This meant two things for HSBC. First, that the financial
performance of the bank inevitably suffered in line with the rest
of the global economy. But second, that the real measure of our
performance became our success in supporting our customers,
colleagues and communities during the pandemic, and in laying the
groundwork for the recovery to come.
Covid-19
In difficult times, HSBC's job has always been to support our
communities, provide stability and help build economic growth. I
have been immensely proud of the way our people have delivered this
purpose as the Covid-19 outbreak has unfolded.
Our approach has hinged on three themes - securing a continuous
service for all who rely on us; providing a financial bridge for
our personal and business customers beyond the crisis; and ensuring
that HSBC retains the strength to help our customers thrive once
restrictions begin to ease.
We maintained a high level of business continuity with 85% of
colleagues equipped to work from home, all of our customer contact
centres fully operational, and between 70% and 90% of our branches
open for business in the first half. We enhanced our digital
capabilities to serve more customers remotely, with faster access
and improved security. We also engaged with our regulators to
better enable customers to access a broad range of banking products
and services from their homes, including through remote
consultations and sales.
This underpinned our ability to get our customers the support
they need. For our personal lending customers, we granted more than
700,000 payment holidays on loans, credit cards and mortgages,
providing more than $27bn in customer relief in the first half of
the year. For our wholesale lending customers, we provided more
than $52bn of facilities to more than 172,000 customers globally
over the same period, both through government schemes and our own
relief initiatives.
As a global bank, HSBC played a vital role in keeping capital
flowing for our clients, arranging more than $1.1tn of loan, debt
and equity financing for our wholesale customers in the first six
months of 2020. Global Banking and Markets made a direct
contribution to the Covid-19 relief effort, helping to arrange more
than $48bn of financing for our clients through social and Covid-19
relief bonds.
We also took an early decision not to apply for government
support packages for employees across the countries in which we
operate.
Throughout all of this, the well-being of our people has been
our paramount concern. We have taken steps to enable our front-line
colleagues to do their jobs safely and effectively. For all our
colleagues, we have maintained a regular flow of communication and
listened closely to their needs, providing the support and
flexibility to help them manage their lives during the
pandemic.
This has been one of the most demanding periods that I can
remember for all of our people across HSBC. Many have had to juggle
personal and professional priorities, while adapting to new and
unfamiliar ways of working. I have been humbled by the dedication
and commitment that they have shown in incredibly tough
circumstances, and thank them deeply for all they have done - and
are doing - for our customers, communities and each other.
Transformation
On 18 February, we announced a substantial transformation
programme to ensure that HSBC is fit for the future. We published
plans to reshape underperforming businesses, simplify our complex
organisation and reduce our costs.
We are moving forward with these plans wherever we can. We have
already begun combining our wholesale back office operations, and
brought our retail, wealth and private banking businesses together
into a single global business - Wealth and Personal Banking. Our US
business has reduced its branch footprint, and Global Banking and
Markets has made good early progress in reducing its risk-weighted
assets. The lessons of the past six months are also being applied
more broadly, particularly from parts of the business that have
responded to a fast-moving situation with exceptional pace and
agility.
The operational risks posed by the Covid-19 outbreak meant that
we had to move more slowly in some areas than others. In March, I
paused the redundancy programme intended to deliver the reduction
in headcount we promised in February. It would have been wrong to
proceed with job losses at a time of significant stress for our
people and communities, and at a point when we needed to protect
our capacity to serve our customers. Now, many countries have
slowed the spread of the virus and are emerging from lockdown, and
we have adapted to new ways of working. I therefore decided in June
to lift the pause on redundancies, proceeding thoughtfully but
purposefully, while taking local considerations into account.
Now that many governments have become better accustomed to
managing the ebb and flow of the pandemic, we intend to accelerate
implementation of the plans we announced in February. At the same
time, our operating environment has changed significantly since the
start of the year. We will also therefore look at what additional
actions we need to take in light of the new economic environment to
make HSBC a stronger and more sustainable business.
Financial performance
A good start to the year in January and February was
overshadowed from March onwards by the Covid-19 outbreak and the
impact of falling interest rates.
The sharp increase in expected credit losses that followed
impacted all markets, but particularly those outside Asia. ECL grew
further from the first to the second quarter as the economic
outlook deteriorated, with increases in both stage 1 and 2
allowances. Stage 3 ECL were up overall but broadly stable during
the first half, although the first quarter included a charge in
Singapore unrelated to the Covid-19 crisis.
First half reported revenue was 9% lower than last year's first
half, due mainly to the effects of interest rate cuts made at the
start of the year across our deposit franchises. By contrast, our
Asia businesses showed good resilience and Global Markets grew
revenue on the back of higher client activity.
We took further action on costs in response to the weaker
revenue environment, reducing both performance-related pay and
discretionary spending. Together with our ongoing cost-saving
initiatives, this helped reduce reported operating expenses by
4%.
While these cost measures mitigated some of the adverse effects
of the radically changed economic environment, reported first half
profit before tax was 65% lower than the same period last year, and
adjusted profit before tax fell by 54%.
Lending decreased by $18bn in the first half. Customers
initially drew on new and existing credit lines in the first
quarter in response to the Covid-19 outbreak, but began to pay
these down in the second quarter as circumstances changed. Deposits
rose by $93bn in the first half, as customers increased their cash
reserves and reduced their spending during lockdown.
We continued to invest in the future of the business while
managing costs down, spending $2.8bn on technology in the first six
months of the year.
Our balance sheet remains robust with a CET1 ratio of 15.0% and
strong liquidity and funding.
Facing the future
Our performance in the second half of the year will continue to
be influenced by the path and economic impact of the Covid-19
outbreak. Geopolitical uncertainty could also weigh heavily on our
clients, particularly those impacted by heightened US-China and
UK-China tensions, and the future of UK-EU trade relations.
Amid the current uncertainty, we remain focused on the things we
can control - helping our customers navigate their own path to a
complex future, and acting with pace and decisiveness to adapt HSBC
to an environment in which no business can afford to stand
still.
HSBC has always helped our clients manage complexity. There have
been many times in the last 155 years when geopolitics has altered
the nature of trade, or disruptive forces have changed entire
industries. On each occasion, HSBC has adapted and innovated to
help our customers when they need us most, and we will do so
again.
We start from a strong position. As the world's leading trade
bank(1) , we have the knowledge and network to help customers
reorder their supply chains securely and sustainably. As the
world's number one bank for green, social and sustainable bonds(2)
, we have the experience and expertise to help customers finance
their transition to a cleaner, more resilient future. These are
important strengths, but we have to keep investing to maintain them
and to provide the agile, responsive and entrepreneurial service
that our clients require.
Like our clients, HSBC has to operate in a difficult
geopolitical environment. Current tensions between China and the US
inevitably create challenging situations for an organisation with
HSBC's footprint. However, the need for a bank capable of bridging
the economies of east and west is acute, and we are well placed to
fulfil this role. We will face any political challenges that arise
with a focus on the long-term needs of our customers and the best
interests of our investors.
As we seek to accelerate our transformation in the second half
of the year, I am mindful of the impact it will have for some of
our people, particularly those leaving us. As necessary as these
changes are, the human impact is a matter of deep personal regret
to me. We will make sure that all those leaving HSBC as part of our
transformation will be treated with fairness and consideration, and
will receive support in finding new employment.
Finally, HSBC is a global bank serving customers from many
different backgrounds. We therefore need to resemble the
communities we serve. In May, we launched a new global ethnicity
inclusion programme to better enable careers and career progression
for colleagues from ethnic minorities, and in July, we made a
series of commitments to address feedback from Black colleagues in
particular. However, I want us to be judged by our actions, not our
words. We will therefore provide more information about the
ethnicity of our workforce in our annual reporting in February, so
that our stakeholders can hold us accountable.
1 Euromoney, Trade Finance Survey, January 2020
2 Dealogic, Sustainable Finance Bond league table, 1H20
Financial summary
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
Footnotes $m $m $m
--------- --------- ------------
For the period
Profit before tax 4,318 12,407 940
----------------------------------------------- --------- --------- ---------
Profit attributable to:
- ordinary shareholders of the parent company 1,977 8,507 (2,538)
----------------------------------------------- ---------- --------- --------- ---------
Dividends on ordinary shares - 4,206 6,063
--------- --------- ---------
At the period end
Total shareholders' equity 187,036 192,676 183,955
--------- --------- ---------
Total regulatory capital 177,242 176,610 172,150
---------
Customer accounts 1,532,380 1,380,124 1,439,115
--------- --------- ---------
Total assets 2,922,798 2,751,273 2,715,152
--------- --------- ---------
Risk-weighted assets 854,552 885,971 865,318
--------- --------- ---------
Per ordinary share $ $ $
--------- ---------
Basic earnings 0.10 0.42 (0.13)
--------- --------- ---------
Dividend per ordinary share (declared in the
period) 1 - 0.31 0.20
----------------------------------------------- ---------- --------- --------- ---------
Net asset value 2 8.17 8.35 8.00
----------------------------------------------- ---------- --------- --------- ---------
1 Dividends recorded in the financial statements are dividends
per ordinary share declared in a year and are not dividends in
respect of, or for, that year.
2 The definition of net asset value per ordinary share is total
shareholders equity, less non-cumulative preference shares and
capital securities, divided by the number of ordinary shares in
issue, excluding own shares held by the company, including those
purchased and held in treasury.
Distribution of results by global business
Adjusted profit before tax
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m % $m % $m %
Wealth and Personal Banking 1,695 30.1 4,824 39.3 3,989 41.3
Commercial Banking 184 3.2 3,911 31.9 3,197 33.1
Global Banking and Markets 2,548 45.2 2,735 22.3 2,396 24.8
Corporate Centre 1,208 21.5 803 6.5 78 0.8
----------------------------- ----- ----- ------ ----- ----- -----
Profit before tax 5,635 100.0 12,273 100.0 9,660 100.0
----------------------------- ----- ----- ------ ----- ----- -----
Distribution of results by geographical region
Reported profit/(loss) before
tax
------- ------ ------- ------ ------- ---------
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m % $m % $m %
Europe (3,060) (70.9) (520) (4.2) (4,133) (439.7)
------ -----
Asia 7,369 170.7 9,780 78.8 8,688 924.3
------ -----
Middle East and North Africa (26) (0.6) 1,736 14.0 591 62.9
------ -----
North America 23 0.5 746 6.0 21 2.2
------ -----
Latin America 12 0.3 665 5.4 (265) (28.2)
-------------------------------- ------ ----- ------ ------
Global GBM goodwill impairment - - - - (3,962) (421.5)
-------------------------------- ------ ----- ------ ----- ------
Profit before tax 4,318 100.0 12,407 100.0 940 100.0
-------------------------------- ------ ----- ------ ----- ------ ------
HSBC adjusted profit before tax and balance sheet data
Half-year to 30 Jun 2020
Global
Wealth Banking
and Personal Commercial and Corporate
Banking Banking Markets Centre Total
Footnotes $m $m $m $m $m
---------------------------------- ---------- ------------- ---------- ---------- --------- ------------
Net operating income before
change
in expected credit losses and
other
credit impairment charges 1 11,251 7,000 8,178 48 26,477
---------------------------------- ----------
- external 9,684 7,431 10,105 (743) 26,477
---------------------------------- ----------
- inter-segment 1,567 (431) (1,927) 791 -
---------------------------------- ---------- ------------ --------- --------- -------- ---------
of which: net interest
income/(expense) 8,032 4,883 2,372 (804) 14,483
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Change in expected credit losses
and other credit impairment
charges (2,202) (3,526) (1,118) (12) (6,858)
---------------------------------- ------------ --------- --------- -------- ---------
Net operating income 9,049 3,474 7,060 36 19,619
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Total operating expenses (7,346) (3,290) (4,512) 206 (14,942)
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Operating profit 1,703 184 2,548 242 4,677
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Share of profit in associates and
joint ventures (8) - - 966 958
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Adjusted profit before tax 1,695 184 2,548 1,208 5,635
---------------------------------- ---------- ------------ --------- --------- -------- ---------
% % % % %
Share of HSBC's adjusted profit
before tax 30.1 3.3 45.2 21.4 100.0
Adjusted cost efficiency ratio 65.3 47.0 55.2 (429.2) 56.4
Adjusted balance sheet data $m $m $m $m $m
------------- ---------- ---------- --------- ------------
Loans and advances to customers
(net) 429,487 344,567 243,355 1,272 1,018,681
Interests in associates and joint
ventures 425 13 136 24,226 24,800
Total external assets 814,719 549,530 1,390,006 168,543 2,922,798
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Customer accounts 775,870 418,263 337,573 674 1,532,380
Adjusted risk-weighted assets 3 161,744 330,887 277,633 84,288 854,552
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Half-year to 30 Jun 2019(2)
Net operating income/(expense)
before change in expected credit
losses and other credit impairment
charges 1 12,861 7,647 7,590 (283) 27,815
-------------------------------------------------- ------- ------- --------- ------- ---------
- external 10,747 8,087 10,258 (1,277) 27,815
- inter-segment 2,114 (440) (2,668) 994 -
-------------------------------------------------- ------- ------- --------- ------- ---------
of which: net interest income/(expense) 8,525 5,466 2,667 (1,761) 14,897
--------------------------------------------------
Change in expected credit losses
and other credit impairment (charges)/recoveries (527) (478) (97) 14 (1,088)
Net operating income/(expense) 12,334 7,169 7,493 (269) 26,727
-------------------------------------------------- ------- ------- --------- ------- ---------
Total operating expenses (7,551) (3,258) (4,758) (172) (15,739)
Operating profit/(loss) 4,783 3,911 2,735 (441) 10,988
-------------------------------------------------- ------- ------- --------- ------- ---------
Share of profit in associates and
joint ventures 41 - - 1,244 1,285
-------------------------------------------------- ------- ------- --------- ------- ---------
Adjusted profit before tax 4,824 3,911 2,735 803 12,273
-------------------------------------------------- ------- ------- --------- ------- ---------
% % % % %
Share of HSBC's adjusted profit
before tax 39.3 31.9 22.3 6.5 100.0
Adjusted cost efficiency ratio 58.7 42.6 62.7 (60.8) 56.6
Adjusted balance sheet data $m $m $m $m $m
-------- -------- ---------- -------- ------------
Loans and advances to customers
(net) 414,611 340,976 246,209 1,184 1,002,980
Interests in associates and joint
ventures 451 12 14 23,046 23,523
Total external assets 729,032 506,223 1,319,642 148,668 2,703,565
Customer accounts 714,969 354,806 286,867 505 1,357,147
-------------------------------------------------- ------- ------- --------- ------- ---------
Adjusted risk-weighted assets 3 160,993 331,912 298,777 77,272 868,954
-------------------------------------------------- ------- ------- --------- ------- ---------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 A change in reportable segments was made in 2Q20. Comparative
data have been re-presented accordingly. For further guidance,
refer to Note 5 on page 100 of the Interim Report 2020.
3 Adjusted risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency
translation differences and significant items.
HSBC adjusted profit before tax and balance sheet data (continued)
Half-year to 31 Dec 2019(3)
Global
Wealth Banking
and Personal Commercial and Corporate
Banking Banking Markets Centre Total
Footnotes $m $m $m $m $m
---------- ------------- ---------- ---------- --------- ------------
Net operating income/(expense)
before change in expected credit
losses and other credit
impairment
charges 1 12,492 7,379 7,113 (352) 26,632
----------
- external 10,320 7,871 9,886 (1,445) 26,632
----------
- inter-segment 2,172 (492) (2,773) 1,093 -
---------------------------------- ---------- ------------ --------- --------- -------- ---------
of which: net interest
income/(expense) 8,769 5,409 2,533 (1,495) 15,216
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Change in expected credit losses
and other credit impairment
(charges)/recoveries (829) (684) (61) 20 (1,554)
Net operating income/(expense) 11,663 6,695 7,052 (332) 25,078
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Total operating expenses (7,685) (3,498) (4,656) (609) (16,448)
Operating profit/(loss) 3,978 3,197 2,396 (941) 8,630
---------------------------------- ---------- ------------ --------- --------- -------- ---------
Share of profit in associates and
joint ventures 11 - - 1,019 1,030
Adjusted profit before tax 3,989 3,197 2,396 78 9,660
---------------------------------- ---------- ------------ --------- --------- -------- ---------
% % % % %
---------------------------------- ------------- ---------- ---------- --------- ------------
Share of HSBC's adjusted profit
before tax 41.3 33.1 24.8 0.8 100.0
Adjusted cost efficiency ratio 61.5 47.4 65.5 (173.0) 61.8
Adjusted balance sheet data $m $m $m $m $m
Loans and advances to customers
(net) 428,834 336,345 240,411 1,071 1,006,661
Interests in associates and joint
ventures 445 13 13 23,760 24,231
Total external assets 754,369 496,757 1,233,829 153,539 2,638,494
Customer accounts 735,301 377,691 285,954 710 1,399,656
Adjusted risk-weighted assets 2 157,777 315,605 267,075 80,807 821,264
---------------------------------- ---------- ------------ --------- --------- -------- ---------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Adjusted risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency
translation differences and significant items.
3 A change in reportable segments was made in 2Q20. Comparative
data have been presented accordingly.
Consolidated income statement
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m $m $m
Net interest income 14,509 15,240 15,222
------- ------- -------
- interest income 23,000 27,750 26,945
- interest expense (8,491) (12,510) (11,723)
------- ------- -------
Net fee income 5,926 6,124 5,899
------- ------- -------
- fee income 7,480 7,804 7,635
- fee expense (1,554) (1,680) (1,736)
---------------------------------------------------------- ------- ------- -------
Net income from financial instruments held for
trading or managed on a fair value basis 5,768 5,331 4,900
---------------------------------------------------------- ------- ------- -------
Net income/(expense) from assets and liabilities
of insurance businesses, including related derivatives,
measured at fair value through profit or loss (1,290) 2,196 1,282
---------------------------------------------------------- ------- ------- -------
Change in fair value of designated debt and related
derivatives 197 88 2
------- ------- -------
Changes in fair value of other financial instruments
mandatorily measured at fair value through profit
or loss 80 457 355
---------------------------------------------------------- ------- ------- -------
Gains less losses from financial investments 466 201 134
Net insurance premium income 5,020 6,323 4,313
------- ------- -------
Other operating income 471 2,072 885
------- ------- -------
Total operating income 31,147 38,032 32,992
---------------------------------------------------------- ------- ------- -------
Net insurance claims and benefits paid and movement
in liabilities to policyholders (4,402) (8,660) (6,266)
Net operating income before change in expected
credit losses and other credit impairment charges 26,745 29,372 26,726
---------------------------------------------------------- ------- ------- -------
Change in expected credit losses and other credit
impairment charges (6,858) (1,140) (1,616)
---------------------------------------------------------- ------- ------- -------
Net operating income 19,887 28,232 25,110
---------------------------------------------------------- ------- ------- -------
Employee compensation and benefits (8,514) (9,255) (8,747)
General and administrative expenses (4,918) (6,372) (7,456)
---------------------------------------------------------- ------- ------- -------
Depreciation and impairment of property, plant
and equipment and right-of-use assets (1,209) (1,010) (1,090)
---------------------------------------------------------- -------
Amortisation and impairment of intangible assets (1,845) (512) (558)
---------------------------------------------------------- ------- ------- -------
Goodwill impairment (41) - (7,349)
Total operating expenses (16,527) (17,149) (25,200)
---------------------------------------------------------- ------- ------- -------
Operating profit/(loss) 3,360 11,083 (90)
---------------------------------------------------------- ------- ------- -------
Share of profit in associates and joint ventures 958 1,324 1,030
Profit before tax 4,318 12,407 940
---------------------------------------------------------- ------- ------- -------
Tax expense (1,193) (2,470) (2,169)
Profit/(loss) for the period 3,125 9,937 (1,229)
---------------------------------------------------------- ------- ------- -------
Attributable to:
----------------------------------------------------------
- ordinary shareholders of the parent company 1,977 8,507 (2,538)
----------------------------------------------------------
- preference shareholders of the parent company 45 45 45
----------------------------------------------------------
- other equity holders 617 664 660
----------------------------------------------------------
- non-controlling interests 486 721 604
------- ------- -------
Profit/(loss) for the period 3,125 9,937 (1,229)
---------------------------------------------------------- ------- ------- -------
$ $ $
Basic earnings per ordinary share 0.10 0.42 (0.13)
Diluted earnings per ordinary share 0.10 0.42 (0.13)
---------------------------------------------------------- ------- ------- -------
Consolidated statement of comprehensive income
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m $m $m
------- ------- ---------
Profit/(loss) for the period 3,125 9,937 (1,229)
------------------------------------------------------------ ------ ------ ------
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 1,747 1,015 137
------------------------------------------------------------ ------ ------ ------
- fair value gains/(losses) 2,654 2,141 (348)
------------------------------------------------------------
- fair value (gains)/losses transferred to the
income statement on disposal (454) (794) 429
------------------------------------------------------------
- expected credit recoveries/(losses) recognised
in the income statement 109 (5) 114
------------------------------------------------------------
- income taxes (562) (327) (58)
------------------------------------------------------------ ------ ------ ------
Cash flow hedges 476 239 (33)
------------------------------------------------------------ ------ ------ ------
* fair value gains 255 241 310
------------------------------------------------------------
- fair value losses/(gains) reclassified to the
income statement 364 68 (354)
------------------------------------------------------------
* income taxes and other movements (143) (70) 11
------------------------------------------------------------ ------ ------ ------
Share of other comprehensive income/(expense) of
associates and joint ventures (115) 73 (52)
------------------------------------------------------------ ------ ------ ------
* share for the period (115) 85 (64)
------------------------------------------------------------
* fair value (gains)/losses transferred to the income
statement on disposal - (12) 12
------------------------------------------------------------ ------
Exchange differences (4,552) 109 935
------------------------------------------------------------ ------ ------ ------
Items that will not be reclassified subsequently
to profit or loss:
------------------------------------------------------------ ------- ------- ---------
Remeasurement of defined benefit asset/liability 1,182 (45) 58
------------------------------------------------------------ ------ ------ ------
* before income taxes 1,703 (50) 33
------------------------------------------------------------
* income taxes (521) 5 25
------------------------------------------------------------ ------ ------ ------
Changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk 2,354 (1,445) (557)
------------------------------------------------------------ ------ ------
- before income taxes 2,936 (1,816) (823)
- income taxes (582) 371 266
------------------------------------------------------------ ------ ------ ------
Equity instruments designated at fair value through
other comprehensive income (123) 268 98
------------------------------------------------------------ ------ ------ ------
- fair value gains/(losses) (122) 265 99
------------------------------------------------------------
- income taxes (1) 3 (1)
------------------------------------------------------------ ------ ------ ------
Effects of hyperinflation 72 113 104
------------------------------------------------------------ ------ ------ ------
Other comprehensive expense for the period, net
of tax 1,041 327 690
------------------------------------------------------------ ------ ------ ------
Total comprehensive income/(expense)
for the period 4,166 10,264 (539)
------------------------------------------------------------ ------ ------ ------
Attributable to:
------------------------------------------------------------
- ordinary shareholders of the parent company 3,043 8,741 (1,903)
- preference shareholders of the parent company 45 45 45
- other equity holders 617 664 660
- non-controlling interests 461 814 659
------------------------------------------------------------ ------ ------ ------
Total comprehensive income/(expense)
for the period 4,166 10,264 (539)
------------------------------------------------------------ ------ ------ ------
Consolidated balance sheet
At
30 Jun 31 Dec
2020 2019
$m $m
Assets
Cash and balances at central banks 249,673 154,099
Items in the course of collection from other banks 6,289 4,956
Hong Kong Government certificates of indebtedness 39,519 38,380
Trading assets 208,964 254,271
Financial assets designated and otherwise mandatorily
measured at fair value through profit and loss 41,785 43,627
Derivatives 313,781 242,995
Loans and advances to banks 77,015 69,203
Loans and advances to customers 1,018,681 1,036,743
Reverse repurchase agreements - non-trading 226,345 240,862
Financial investments 494,109 443,312
Prepayments, accrued income and other assets 197,425 136,680
Current tax assets 821 755
Interests in associates and joint ventures 24,800 24,474
Goodwill and intangible assets 19,438 20,163
-------------------------------------------------------
Deferred tax assets 4,153 4,632
------------------------------------------------------- --------- ---------
Total assets 2,922,798 2,715,152
------------------------------------------------------- --------- ---------
Liabilities and equity
Liabilities
Hong Kong currency notes in circulation 39,519 38,380
Deposits by banks 82,715 59,022
Customer accounts 1,532,380 1,439,115
Repurchase agreements - non-trading 112,799 140,344
Items in the course of transmission to other banks 6,296 4,817
Trading liabilities 79,612 83,170
Financial liabilities designated at fair value 156,608 164,466
Derivatives 303,059 239,497
Debt securities in issue 110,114 104,555
Accruals, deferred income and other liabilities 173,181 118,156
Current tax liabilities 1,141 2,150
Liabilities under insurance contracts 98,832 97,439
Provisions 3,209 3,398
-------------------------------------------------------
Deferred tax liabilities 4,491 3,375
-------------------------------------------------------
Subordinated liabilities 23,621 24,600
------------------------------------------------------- --------- ---------
Total liabilities 2,727,577 2,522,484
------------------------------------------------------- --------- ---------
Equity
Called up share capital 10,346 10,319
Share premium account 14,268 13,959
Other equity instruments 20,914 20,871
Other reserves (301) 2,127
Retained earnings 141,809 136,679
Total shareholders' equity 187,036 183,955
------------------------------------------------------- --------- ---------
Non-controlling interests 8,185 8,713
Total equity 195,221 192,668
------------------------------------------------------- --------- ---------
Total liabilities and equity 2,922,798 2,715,152
------------------------------------------------------- --------- ---------
Consolidated statement of cash flows
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m $m $m
----------------------------------------------------------
Profit before tax 4,318 12,407 940
---------------------------------------------------------- -------- -------- --------
Adjustments for non-cash items:
---------------------------------------------------------- --------- --------- -----------
Depreciation, amortisation and impairment 3,095 1,522 8,997
---------------------------------------------------------- -------- -------- --------
Net gain from investing activities (405) (352) (47)
Share of profits in associates and joint ventures (958) (1,324) (1,030)
Gain on disposal of subsidiaries, businesses, associates
and joint ventures - (828) (101)
--------
Change in expected credit losses gross of recoveries
and other credit impairment charges 6,875 1,347 1,665
-------- -------- --------
Provisions including pensions 277 1,012 1,411
--------
Share-based payment expense 195 288 190
--------
Other non-cash items included in profit before
tax (718) (1,401) (896)
--------
Change in operating assets 11,185 (114,049) 9,818
--------
Change in operating liabilities 134,734 136,627 (20,544)
--------
Elimination of exchange differences(1) 3,775 (10,266) 6,524
----------------------------------------------------------
Dividends received from associates 120 170 463
--------
Contributions paid to defined benefit plans (335) (153) (380)
---------------------------------------------------------- -------- -------- --------
Tax paid (2,373) (1,347) (920)
---------------------------------------------------------- -------- -------- --------
Net cash from operating activities 159,785 23,653 6,090
---------------------------------------------------------- -------- -------- --------
Purchase of financial investments (271,830) (234,762) (211,145)
Proceeds from the sale and maturity of financial
investments 225,733 204,600 208,586
Net cash flows from the purchase and sale of property,
plant and equipment (447) (532) (811)
----------------------------------------------------------
Net cash flows from purchase of customer and loan
portfolios 244 435 683
Net investment in intangible assets (957) (951) (1,338)
Net cash flow on (purchase)/disposal of subsidiaries,
businesses, associates and joint ventures (409) (75) (8)
Net cash from investing activities (47,666) (31,285) (4,033)
---------------------------------------------------------- -------- -------- --------
Cancellation of shares - - (1,000)
--------
Net sales/(purchases) of own shares for market-making
and investment purposes (48) 27 114
Redemption of preference shares and other equity
instruments (398) - -
Subordinated loan capital repaid (1,538) (4,138) (72)
Dividends paid to shareholders of the parent company
and non-controlling interests (1,204) (4,271) (5,502)
Net cash from financing activities (3,188) (8,382) (6,460)
---------------------------------------------------------- -------- -------- --------
Net increase/(decrease) in cash and cash equivalents 108,931 (16,014) (4,403)
---------------------------------------------------------- -------- -------- --------
Cash and cash equivalents at the beginning of the
period(2) 293,742 312,911 296,723
Exchange differences in respect of cash and cash
equivalents (7,455) (174) 1,422
---------------------------------------------------------- -------- -------- --------
Cash and cash equivalents at the end of the period(2) 395,218 296,723 293,742
---------------------------------------------------------- -------- -------- --------
1 Adjustments to bring changes between opening and closing
balance sheet amounts to average rates. This is not done on a
line-by-line basis, as details cannot be determined without
unreasonable expense.
2 At 31 December 2019, HSBC re-presented cash and cash
equivalents to reflect a consistent global approach to these
amounts. The net effect of these changes decreased cash and cash
equivalents by $15.3bn at 30 June 2019.
Consolidated statement of changes in equity
Other reserves
Called
up
share
capital Financial Cash Merger
and Other assets flow Foreign and Total Non-
share equity Retained at FVOCI hedging exchange other share-holders' controlling Total
premium instru-ments earnings reserve reserve reserve reserves equity interests equity
$m $m $m $m $m $m $m $m $m $m
At 1 Jan 2020 24,278 20,871 136,679 (108) (2) (25,133) 27,370 183,955 8,713 192,668
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Profit for the period - - 2,639 - - - - 2,639 486 3,125
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Other comprehensive
income (net of tax) - - 3,506 1,654 465 (4,559) - 1,066 (25) 1,041
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- -------
* debt instruments at fair value through other
comprehensive income - - - 1,735 - - - 1,735 12 1,747
-------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - (81) - - - (81) (42) (123)
-------------------------------------------------------------
* cash flow hedges - - - - 465 - - 465 11 476
-------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - 2,354 - - - - 2,354 - 2,354
-------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - 1,195 - - - - 1,195 (13) 1,182
-------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - (115) - - - - (115) - (115)
-------------------------------------------------------------
- effects of hyperinflation - - 72 - - - - 72 - 72
-------------------------------------------------------------
- exchange differences - - - - - (4,559) - (4,559) 7 (4,552)
Total comprehensive
income for the period - - 6,145 1,654 465 (4,559) - 3,705 461 4,166
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Shares issued under
employee remuneration
and share plans 336 - (329) - - - - 7 - 7
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Dividends to shareholders - - (662) - - - - (662) (542) (1,204)
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- -------- -------
Cost of share-based
payment arrangements - - 195 - - - - 195 - 195
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Other movements - 43 (219) 12 - - - (164) (447) (611)
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- -------- -------
At 30 Jun 2020 24,614 20,914 141,809 1,558 463 (29,692) 27,370 187,036 8,185 195,221
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
At 1 Jan 2019 23,789 22,367 138,191 (1,532) (206) (26,133) 29,777 186,253 7,996 194,249
Profit for the period - - 9,216 - - - - 9,216 721 9,937
-------------------------------------------------------------
Other comprehensive
income (net of tax) - - (1,297) 1,202 237 92 - 234 93 327
-------------------------------------------------------------
* debt instruments at fair value through other
comprehensive income - - - 1,001 - - - 1,001 14 1,015
-------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - 201 - - - 201 67 268
-------------------------------------------------------------
* cash flow hedges - - - - 237 - - 237 2 239
-------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - (1,445) - - - - (1,445) - (1,445)
-------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - (38) - - - - (38) (7) (45)
-------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - 73 - - - - 73 - 73
-------------------------------------------------------------
- effects of hyperinflation - - 113 - - - - 113 - 113
-------------------------------------------------------------
- exchange differences - - - - - 92 - 92 17 109
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Total comprehensive
income for the period - - 7,919 1,202 237 92 - 9,450 814 10,264
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Shares issued under
employee remuneration
and share plans 490 - (475) - - - - 15 - 15
Shares issued in lieu
of dividends and amounts
arising thereon - - 1,160 - - - - 1,160 - 1,160
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Dividends to shareholders - - (4,915) - - - - (4,915) (516) (5,431)
------------------------------------------------------------- ------- ------- ----- ------- -------- --------
Cost of share-based
payment arrangements - - 255 - - - - 255 - 255
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Other movements - - 458 - - - - 458 (96) 362
At 30 Jun 2019 24,279 22,367 142,593 (330) 31 (26,041) 29,777 192,676 8,198 200,874
------------------------------------------------------------- ------- ------------ ------- ------- ----- ------- -------- ----------- --- -------- --- -------
Consolidated statement of changes in equity (continued)
Other reserves
Called
up
share
capital Other Financial Cash Merger Total
and equity assets flow Foreign and share- Non-
share instru- Retained at FVOCI hedging exchange other holders' controlling Total
premium ments earnings reserve reserve reserve reserves equity interests equity
$m $m $m $m $m $m $m $m $m $m
------------------------------------------------------------- ------- ------- -------- ----------- --------- -------- -------- -------- ------------- ----------
At 1 Jul 2019 24,279 22,367 142,593 (330) 31 (26,041) 29,777 192,676 8,198 200,874
------------------------------------------------------------- ------ ------ ------- ------ ---- --- ------- ------- ------- -------- --- -------
Profit for the period - - (1,833) - - - - (1,833) 604 (1,229)
-------------------------------------------------------------
Other comprehensive
income
(net of tax) - - (462) 222 (33) 908 - 635 55 690
------------------------------------------------------------- ------ ------ ------- ------ --- ---- ------- ------- ------- -------- --- -------
* debt instruments at fair value through other
comprehensive income - - - 145 - - - 145 (8) 137
-------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - 77 - - - 77 21 98
-------------------------------------------------------------
* cash flow hedges - - - - (33) - - (33) - (33)
-------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - (557) - - - - (557) - (557)
-------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - 43 - - - - 43 15 58
-------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - (52) - - - - (52) - (52)
-------------------------------------------------------------
- effects of hyperinflation - - 104 - - - - 104 - 104
-------------------------------------------------------------
- exchange differences - - - - - 908 - 908 27 935
Total comprehensive
income for the period - - (2,295) 222 (33) 908 - (1,198) 659 (539)
------------------------------------------------------------- ------ ------ ------- ------ --- ---- ------- ------- ------- -------- --- -------
Shares issued under
employee remuneration
and share plans 67 - (20) - - - - 47 - 47
-------------------------------------------------------------
Shares issued in lieu
of dividends and amounts
arising thereon - - 1,527 - - - - 1,527 - 1,527
------------------------------------------------------------- ------ ------ ------- ------ --- ---- --- ------- ------- ------- -------- --- -------
Dividends to shareholders - - (6,768) - - - - (6,768) (261) (7,029)
-------------------------------------------------------------
Redemption of securities(1) - (1,496) (12) - - - - (1,508) - (1,508)
-------------------------------------------------------------
Transfers(2) - - 2,475 - - - (2,475) - - -
------------------------------------------------------------- ------ ------ ------- ------ --- ---- --- ------- ------- ------- -------- --- -------
Cost of share-based
payment arrangements - - 223 - - - - 223 - 223
------------------------------------------------------------- ------ ------ ------- ------ --- ---- --- ------- ------- ------- -------- --- -------
Cancellation of shares(3) (68) - (1,000) - - - 68 (1,000) - (1,000)
------------------------------------------------------------- ------ ------ ------- ------ --- ---- --- ------- ------- ------- -------- --- -------
Other movements - - (44) - - - - (44) 117 73
At 31 Dec 2019 24,278 20,871 136,679 (108) (2) (25,133) 27,370 183,955 8,713 192,668
------------------------------------------------------------- ------ ------ ------- ------ ---- ------- ------- ------- -------- --- -------
1 In 2019, HSBC Holdings called and later redeemed $1,500m
5.625% perpetual subordinated capital securities on which there
were $12m of external issuance costs.
2 Permitted transfers from the merger reserve to retained
earnings were made when the investment in HSBC Overseas Holdings
(UK) Limited was previously impaired. In 2019, an additional
impairment of $2,475m was recognised and a permitted transfer of
this amount was made from the merger reserve to retained
earnings.
3 In August 2019, HSBC announced a share buy-back of up to
$1.0bn, which was completed in September 2019.
1 Basis of preparation and significant accounting policies
---------------------------------------------------------
(a) Compliance with International Financial Reporting Standards
Our interim condensed consolidated financial statements have
been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority and IAS 34
'Interim Financial Reporting', as issued by the International
Accounting Standards Board ('IASB') and as endorsed by the EU.
Therefore, they include an explanation of events and transactions
that are significant to an understanding of the changes in HSBC's
financial position and performance since the end of 2019. These
financial statements should be read in conjunction with the Annual
Report and Accounts 2019.
At 30 June 2020, there were no unendorsed standards effective
for the half-year to 30 June 2020 affecting these financial
statements, and there was no difference between IFRSs endorsed by
the EU and IFRSs issued by the IASB in terms of their application
to HSBC.
Standards applied during the half-year to 30 June 2020
There were no new standards or amendments to standards that had
an effect on these interim condensed consolidated financial
statements.
(b) Use of estimates and judgements
Management believes that our critical accounting estimates and
judgements are those that relate to impairment of amortised cost
and FVOCI debt financial assets, goodwill impairment, the valuation
of financial instruments, deferred tax assets, provisions for
liabilities, defined benefit obligations and interests in
associates. There were no changes in the current period to the
critical accounting estimates and judgements applied in 2019, which
are stated on pages 47 and 242 of the Annual Report and Accounts
2019. However, the level of estimation uncertainty and judgement
for the calculation of expected credit losses ('ECL') has increased
since 31 December 2019 as a result of the economic effects of the
Covid-19 outbreak as set out in 'Measurement uncertainty and
sensitivity analysis' on page 56 of the Interim Report 2020. In
addition, as a result of the heightened economic uncertainty
together with the plans announced in the 2020 business update and
historical underperformance of certain businesses, the estimates
and judgements with regard to the expected cash flows of cash
generating units, which are applied to the impairment of
non-financial assets other than goodwill, particularly intangible
assets, have become more sensitive and resulted in significant
impairment charges in the interim reporting period. See Note 11
'Goodwill and intangible assets' of the Interim Report 2020.
(c) Composition of Group
There were no material changes in the composition of the Group
in the half-year to 30 June 2020.
(d) Future accounting developments
IFRS 17 'Insurance Contracts' was issued in May 2017, with
amendments to the standard issued in June 2020. It has not been
endorsed for use in the EU. The standard sets out the requirements
that an entity should apply in accounting for insurance contracts
it issues and reinsurance contracts it holds. Following the
amendments, IFRS 17 is effective from 1 January 2023. The Group is
in the process of implementing IFRS 17. Industry practice and
interpretation of the standard are still developing. Therefore, the
likely impact of its implementation remains uncertain.
(e) Going concern
The financial statements are prepared on a going concern basis,
as the Directors are satisfied that the Group and parent company
have the resources to continue in business for the foreseeable
future. In making this assessment, the Directors have considered a
wide range of information relating to present and future
conditions, including future projections of profitability, cash
flows, capital requirements and capital resources. These
considerations include stressed scenarios that reflect the
increasing uncertainty that the global Covid-19 pandemic has had on
HSBC's operations, as well as considering potential impacts from
other top and emerging risks, and the related impact on
profitability, capital and liquidity.
(f) Accounting policies
Except as described above, the accounting policies that we
applied for these interim condensed consolidated financial
statements are consistent with those described on pages 240 to 251
of the Annual Report and Accounts 2019, as are the methods of
computation.
2 Dividends
----------
On 31 March 2020, HSBC announced that, in response to a request
from the Bank of England through the UK's Prudential Regulation
Authority ('PRA'), the Board had cancelled the fourth interim
dividend for 2019 of $0.21 per ordinary share, which was scheduled
to be paid on 14 April 2020. The Board also announced that until
the end of 2020 HSBC will make no quarterly or interim dividend
payments or accruals in respect of ordinary shares.
The Board intend to provide an update on our dividend policy at
our year-end results for 2020, when the economic impact of the
Covid-19 outbreak is better understood. We will also take into
account the views of our shareholders, the interests of our other
stakeholders and other factors, including our financial performance
and capital position.
Dividends paid to shareholders of HSBC Holdings plc
Half-year to
30 Jun 2020 30 Jun 2019 31 Dec 2019
Settled Settled
Per in Per in Per Settled
share Total scrip share Total scrip share Total in scrip
$ $m $m $ $m $m $ $m $m
Dividends paid on ordinary
shares
---------------------------------
In respect of previous year:
--------------------------------- ------ ----- ------- ------ ----- ------- ------ ----- ---------
* fourth interim dividend - - - 0.21 4,206 1,160 - - -
--------------------------------- ------ ----- ------- ------ -----
In respect of current year:
--------------------------------- ------ ----- ------- ------ ----- ------- ------ ----- ---------
* first interim dividend(1) - - - - - - 0.10 2,013 375
---------------------------------
* second interim dividend - - - - - - 0.10 2,021 795
---------------------------------
* third interim dividend - - - - - - 0.10 2,029 357
--------------------------------- ------ ----- ------- ------ ----- ------- ------ ----- -------
Total - - - 0.21 4,206 1,160 0.30 6,063 1,527
--------------------------------- ------ ----- ------- ------ ----- ------- ------ ----- -------
Total dividends on preference
shares classified as equity
(paid quarterly) 31.00 45 31.00 45 31.00 45
Total coupons on capital
securities classified as
equity 617 664 660
Dividends to shareholders 662 4,915 6,768
--------------------------------- ------ ----- ------- ------ ----- ------- ------ ----- ---------
1 At 30 June 2019, HSBC changed its accounting practice on the
recognition of interim dividends to recognise them on the date of
payment rather than the date of declaration, in line with generally
accepted accounting practice.
Dividend on preference shares
A quarterly dividend of $15.50 per 6.20% non-cumulative US
dollar preference share, Series A ('Series A dollar preference
share') (equivalent to a dividend of $0.3875 per Series A American
Depositary Share ('ADS'), each of which represents one-fortieth of
a Series A dollar preference share), and GBP0.01 per Series A
sterling preference share is payable on 15 March, 15 June, 15
September and 15 December 2020 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 15 September 2020 to holders of
record on 31 August 2020.
The Series A dollar preference share quarterly dividend,
announced on 28 April 2020 to be payable on 15 June 2020, was paid
on 16 June 2020 due to an administrative error and may not have
been received by a limited number of ADS holders who were on the
record on 29 May 2020. ADS holders who have not received their
expected dividend should contact HSBC Investor Relations at
investorrelations@hsbc.com to discuss this further.
3 Earnings 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,
excluding own shares held. Diluted earnings per ordinary share is
calculated by dividing the basic earnings, which require no
adjustment for the effects of dilutive potential ordinary shares,
by the weighted average number of ordinary shares outstanding,
excluding own shares held, plus the weighted average number of
ordinary shares that would be issued on conversion of dilutive
potential ordinary shares.
Profit/(loss) attributable to ordinary shareholders of the parent company
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
$m $m $m
----------------------------------------------------------- ------ ------ ---------
Profit attributable to shareholders of the parent company 2,639 9,216 (1,833)
Dividend payable on preference shares classified as
equity (45) (45) (45)
-----
Coupon payable on capital securities classified as equity (617) (664) (660)
----------------------------------------------------------- ----- ----- ------
Profit/(loss) attributable to ordinary shareholders
of the parent company 1,977 8,507 (2,538)
----------------------------------------------------------- ----- ----- ------
Basic and diluted earnings per share
Half-year to
30 Jun 2020 30 Jun 2019 31 Dec 2019
Number Amount Number Amount Number Amount
of per of per of per
Profit shares share Profit shares share Profit/(loss) shares share
Footnotes $m (millions) $ $m (millions) $ $m (millions) $
----------- ---------- ------ ---------- ------ ------ ---------- ------ --------------- ---------- --------
Basic 1 1,977 20,162 0.10 8,507 20,124 0.42 (2,538) 20,191 (0.13)
Effect of
dilutive
potential
ordinary
shares 58 65 -
Diluted 1 1,977 20,220 0.10 8,507 20,189 0.42 (2,538) 20,191 (0.13)
----------- ---------- ------ ---------- ------ ------ ---------- ------ --------- --- ---------- -----
1 Weighted average number of ordinary shares outstanding (basic)
or assuming dilution (diluted).
4 Adjusted balance sheet reconciliation
--------------------------------------
At
30 Jun
2020 31 Dec 2019
-------------
Reported Currency
and adjusted Adjusted translation Reported
$m $m $m $m
------------- --------- ------------ -----------
Loans and advances to customers (net) 1,018,681 1,006,661 30,082 1,036,743
-------------------------------------------- ------------- --------- ------------ ---------
Interests in associates and joint ventures 24,800 24,231 243 24,474
Total external assets 2,922,798 2,638,494 76,658 2,715,152
------------- ---------
Customer accounts 1,532,380 1,399,656 39,459 1,439,115
-------------------------------------------- ------------- --------- ------------ ---------
5 Reconciliation of reported and adjusted items
----------------------------------------------
Half-year to
30 Jun 30 Jun 31 Dec
2020 2019 2019
Footnotes $m $m $m
Revenue 1
---------- --------
Reported 26,745 29,372 26,726
-------
Currency translation (681) (281)
-------
Significant items (268) (876) 187
------------------------------------------------------------ ---------- ------- -------
* customer redress programmes (26) - 163
------------------------------------------------------------
* disposals, acquisitions and investment in new
businesses 8 (827) 59
------------------------------------------------------------
* fair value movements on financial instruments 2 (299) (50) (34)
------------------------------------------------------------ ----------
* restructuring and other related costs 49 - -
------------------------------------------------------------ ----------
- currency translation on significant items 1 (1)
------------------------------------------------------------ ---------- ------- -------
Adjusted 26,477 27,815 26,632
------------------------------------------------------------ ---------- ------- ------- -------
ECL
------------------------------------------------------------ ---------- -------- -------- ----------
Reported (6,858) (1,140) (1,616)
-------
Currency translation 52 62
------------------------------------------------------------ ---------- -------- ------- -------
Adjusted (6,858) (1,088) (1,554)
------------------------------------------------------------ ---------- ------- ------- -------
Operating expenses
------------------------------------------------------------ ---------- -------- -------- ----------
Reported (16,527) (17,149) (25,200)
------------------------------------------------------------ -------
Currency translation 453 228
------------------------------------------------------------ ---------- -------- ------- -------
Significant items 1,585 957 8,524
------------------------------------------------------------ ---------- ------- ------- -------
* costs of structural reform 3 - 91 67
------------------------------------------------------------ ----------
* customer redress programmes 50 610 671
------------------------------------------------------------ ----------
* impairment of goodwill and other intangibles 1,025 - 7,349
------------------------------------------------------------ ----------
* restructuring and other related costs 4 505 287 540
------------------------------------------------------------ ----------
* settlements and provisions in connection with legal
and regulatory matters 5 (2) (59)
------------------------------------------------------------ ----------
- currency translation on significant items - (29) (44)
------------------------------------------------------------ ---------- ------- ------- -------
Adjusted (14,942) (15,739) (16,448)
------------------------------------------------------------ ---------- ------- ------- -------
Share of profit in associates and joint ventures
------------------------------------------------------------ ---------- -------- -------- ----------
Reported 958 1,324 1,030
-------
Currency translation (39) -
------------------------------------------------------------ ---------- -------- ------- -------
Adjusted 958 1,285 1,030
------------------------------------------------------------ ---------- ------- ------- -------
Profit before tax
------------------------------------------------------------ ---------- -------- -------- ----------
Reported 4,318 12,407 940
------------------------------------------------------------ ---------- -------
Currency translation (215) 9
------------------------------------------------------------ ---------- --------
Significant items 1,317 81 8,711
------------------------------------------------------------ ---------- ------- ------- -------
- revenue (268) (876) 187
------------------------------------------------------------ ----------
- operating expenses 1,585 957 8,524
------------------------------------------------------------ ---------- ------- ------- -------
Adjusted 5,635 12,273 9,660
------------------------------------------------------------ ---------- ------- ------- -------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Includes fair value movements on non-qualifying hedges and
debt valuation adjustments on derivatives.
3 Comprises costs associated with preparations for the UK's exit from the European Union.
4 Includes impairment of software intangible assets of $173m.
6 Contingent liabilities, contractual commitments and guarantees
---------------------------------------------------------------
At
30 Jun 31 Dec
2020 2019
Footnotes $m $m
------------------------------------------------------------ ---------- ------- ---------
Guarantees and contingent liabilities:
------------------------------------------------------------ ----------
* financial guarantees 18,328 20,214
------------------------------------------------------------ ----------
- performance and other guarantees 73,078 75,933
------------------------------------------------------------ ---------- ------- -------
* other contingent liabilities 1,094 1,576
------------------------------------------------------------ ----------
At the end of the period 92,500 97,723
------------------------------------------------------------ ---------- ------- -------
Commitments: 1
------------------------------------------------------------ ----------
* documentary credits and short-term trade-related
transactions 6,201 6,316
------------------------------------------------------------ ----------
* forward asset purchases and forward deposits placed 91,849 56,326
------------------------------------------------------------ ----------
* standby facilities, credit lines and other
commitments to lend 740,023 734,966
------------------------------------------------------------ ---------- ------- -------
At the end of the period 838,073 797,608
------------------------------------------------------------ ---------- ------- -------
1 Includes $648,156m of commitments at 30 June 2020 (31 December
2019: $600,029m), 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 12 of the Interim Report 2020.
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 disclosed
in Note 7 below and Note 14 of the Interim Report 2020.
7 Legal proceedings and regulatory matters
-----------------------------------------
HSBC is party to legal proceedings and regulatory matters in a
number of jurisdictions arising out of its normal business
operations. Apart from the matters described below, HSBC considers
that none of these matters are material. The recognition of
provisions is determined in accordance with the accounting policies
set out in Note 1 of the Annual Report and Accounts 2019. 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 30 June 2020 (see Note 12 of the Interim
Report 2020). 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
Bernard L. Madoff ('Madoff') was arrested in December 2008 and
later pleaded guilty to running a Ponzi scheme. His firm, Bernard
L. Madoff Investment Securities LLC ('Madoff Securities'), is being
liquidated in the US by a trustee (the 'Trustee').
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 Madoff Securities. Based on
information provided by Madoff Securities as at 30 November 2008,
the purported aggregate value of these funds was $8.4bn, including
fictitious profits reported by Madoff.
Based on information available to HSBC, the funds' actual
transfers to Madoff Securities minus their actual withdrawals from
Madoff Securities during the time HSBC serviced the funds are
estimated to have totalled approximately $4bn. Various HSBC
companies have been named as defendants in lawsuits arising out of
Madoff Securities' fraud.
US litigation: The Trustee has brought lawsuits against various
HSBC companies and others in the US Bankruptcy Court for the
Southern District of New York (the 'US Bankruptcy Court'), seeking
recovery of transfers from Madoff Securities to HSBC in an amount
not yet pleaded or determined. HSBC and other parties to the
actions have moved to dismiss the Trustee's claims. The US
Bankruptcy Court granted HSBC's motion to dismiss with respect to
certain of the Trustee's claims in November 2016. In February 2019,
the US Court of Appeals for the Second Circuit (the 'Second Circuit
Court of Appeals') reversed that dismissal. Following the US
Supreme Court's denial of certiorari in June 2020, the cases were
remanded to the US Bankruptcy Court, where they are now
pending.
Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield
Lambda Limited (together, 'Fairfield') (in liquidation since July
2009) have brought a lawsuit in the US against fund shareholders,
including HSBC companies that acted as nominees for clients,
seeking restitution of redemption payments. In December 2018, the
US Bankruptcy Court issued an opinion, which ruled in favour of the
defendants' motion to dismiss in respect of certain claims by the
liquidators for Fairfield and granted a motion by the liquidators
to file amended complaints. As a result of that opinion, all claims
against one of the HSBC companies were dismissed, and certain
claims against the remaining HSBC defendants were also dismissed.
In May 2019, the liquidators appealed certain issues from the US
Bankruptcy Court to the US District Court for the Southern District
of New York (the 'New York District Court') and, in January 2020,
the liquidators filed amended complaints on the claims remaining in
the US Bankruptcy Court. In March 2020, HSBC and other parties to
the action moved to dismiss the amended complaints in the US
Bankruptcy Court.
UK litigation: The Trustee has filed a claim against various
HSBC companies in the High Court of England and Wales, seeking
recovery of transfers from Madoff Securities to HSBC in an amount
not yet pleaded or determined. The deadline for service of the
claim has been extended to September 2020 for UK-based defendants
and November 2020 for all other defendants.
Cayman Islands litigation: In February 2013, Primeo Fund
('Primeo') (in liquidation since April 2009) brought an action
against HSBC Securities Services Luxembourg ('HSSL') and Bank of
Bermuda (Cayman) Limited (now known as HSBC Cayman Limited),
alleging breach of contract and breach of fiduciary duty and
claiming damages and equitable compensation. The trial concluded in
February 2017 and, in August 2017, the court dismissed all claims
against the defendants. In September 2017, Primeo appealed to the
Court of Appeal of the Cayman Islands and, in June 2019, the Court
of Appeal of the Cayman Islands dismissed Primeo's appeal. In
August 2019, Primeo filed a notice of appeal to the UK Privy
Council, which has listed the hearing for April 2021.
Luxembourg litigation: In April 2009, Herald Fund SPC ('Herald')
(in liquidation since July 2013) brought an action against HSSL
before the Luxembourg District Court, seeking restitution of cash
and securities that Herald purportedly lost because of Madoff
Securities' fraud, or money damages. The Luxembourg District Court
dismissed Herald's securities restitution claim, but reserved
Herald's cash restitution claim and its claim for money damages.
Herald has appealed this judgment to the Luxembourg Court of
Appeal, where the matter is pending. In late 2018, Herald brought
additional claims against HSSL and HSBC Bank plc before the
Luxembourg District Court, seeking further restitution and
damages.
In October 2009, Alpha Prime Fund Limited ('Alpha Prime')
brought an action against HSSL before the Luxembourg District
Court, seeking the restitution of securities, or the cash
equivalent, or money damages. In December 2018, Alpha Prime brought
additional claims before the Luxembourg District Court seeking
damages against various HSBC companies. These matters are currently
pending before the Luxembourg District Court.
In December 2014, Senator Fund SPC ('Senator') brought an action
against HSSL before the Luxembourg District Court, seeking
restitution of securities, or the cash equivalent, or money
damages. In April 2015, Senator commenced a separate action against
the Luxembourg branch of HSBC Bank plc asserting identical claims
before the Luxembourg District Court. In December 2018, Senator
brought additional claims against HSSL and HSBC Bank plc Luxembourg
branch before the Luxembourg District Court, seeking restitution of
Senator's securities or money damages. These matters are currently
pending before the Luxembourg District Court.
Ireland litigation: In November 2013, Defender Limited brought
an action against HSBC Institutional Trust Services (Ireland)
Limited ('HTIE') and others, based on allegations of breach of
contract and claiming damages and indemnification for fund losses.
The trial commenced in October 2018. In December 2018, the Irish
High Court issued a judgment in HTIE's favour on a preliminary
issue, holding that Defender Limited had no effective claim against
HTIE. This judgment concluded the trial without further issues in
dispute being heard. In February 2019, Defender Limited appealed
the decision. In July 2020, the Irish Supreme Court ruled in part
in favour of Defender Limited and returned the case to the High
Court for further proceedings.
There are many factors that may affect the range of possible
outcomes, and any resulting financial impact, of the various
Madoff-related proceedings described above, including but not
limited to the multiple jurisdictions in which the proceedings have
been brought. Based upon the information currently available,
management's estimate of the possible aggregate damages that might
arise as a result of all claims in the various Madoff-related
proceedings is up to or exceeding $500m, excluding costs and
interest. Due to uncertainties and limitations of this estimate,
any possible damages that might ultimately arise could differ
significantly from this amount.
Anti-money laundering and sanctions-related matters
In December 2012, among other agreements, HSBC Holdings agreed
to an undertaking with the UK Financial Services Authority, which
was replaced by a Direction issued by the UK Financial Conduct
Authority ('FCA') in 2013, and again in July 2020, and consented to
a cease-and-desist order with the US Federal Reserve Board ('FRB'),
both of which contained certain forward-looking anti-money
laundering ('AML') and sanctions-related obligations. HSBC also
agreed to retain an independent compliance monitor (who is, for FCA
purposes, a 'Skilled Person' under section 166 of the Financial
Services and Markets Act and, for FRB purposes, an 'Independent
Consultant') to produce periodic assessments of the Group's AML and
sanctions compliance programme (the 'Skilled Person/Independent
Consultant'). In December 2012, HSBC Holdings also entered into an
agreement with the Office of Foreign Assets Control ('OFAC')
regarding historical transactions involving parties subject to OFAC
sanctions. HSBC's engagement with the Skilled Person appointed
pursuant to the 2013 Direction was terminated in February 2020 and
a new Skilled Person with a narrower mandate has been appointed to
assess the remaining areas that require further work in order for
HSBC to transition fully to business-as-usual financial crime risk
management. The Independent Consultant will continue to carry out
an annual OFAC compliance review at the FRB's discretion. The role
of the Skilled Person/Independent Consultant is discussed on page
145 of the Annual Report and Accounts 2019.
Through the Skilled Person/Independent Consultant's prior
reviews, as well as internal reviews conducted by HSBC, certain
potential AML and sanctions compliance issues have been identified
that HSBC is reviewing further with the FRB, FCA and/or OFAC. The
Financial Crimes Enforcement Network of the US Treasury Department,
as well as the Civil Division of the US Attorney's Office for the
Southern District of New York, are investigating the collection and
transmittal of third-party originator information in certain
payments instructed over HSBC's proprietary payment systems. The
FCA is also conducting an investigation into HSBC Bank plc's and
HSBC UK Bank plc's compliance with UK money laundering regulations
and financial crime systems and controls requirements. HSBC is
cooperating with all of these investigations.
In May 2014, a shareholder derivative action was filed by a
shareholder of HSBC Holdings purportedly on behalf of HSBC
Holdings, HSBC Bank USA N.A. ('HSBC Bank USA'), HSBC North America
Holdings Inc. and HSBC USA Inc. (the 'Nominal Corporate
Defendants') in New York state court against certain current and
former directors and officers of the Nominal Corporate Defendants
(the 'Individual Defendants'). The complaint alleges that the
Individual Defendants breached their fiduciary duties to the
Nominal Corporate Defendants and caused a waste of corporate assets
by allegedly permitting and/or causing the conduct underlying the
five-year deferred prosecution agreement with the US Department of
Justice ('DoJ'), entered into in December 2012. In November 2015,
the New York state court granted the Nominal Corporate Defendants'
motion to dismiss, but the appellate court reversed the decision in
November 2018 and reinstated the action. In June 2020, the parties
reached an agreement to resolve this derivative action. In July
2020, the court granted preliminary approval of the settlement,
under which HSBC will receive a payment from directors and officers
liability insurance carriers and will continue for a period of time
certain corporate governance practices. The final settlement
approval hearing has been scheduled for October 2020.
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, victims of
terrorist attacks in the Middle East or of cartel violence in
Mexico. 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. Currently, 10 actions
remain pending in federal courts in New York or the District of
Columbia. In March, September and October 2019, the courts granted
HSBC's motions to dismiss in three of these cases. The plaintiffs
have appealed the decisions in two of these cases and are seeking
certification to appeal in the third case. HSBC has filed motions
to dismiss in three further cases, two of which were granted in
June 2020, while the third remains pending. The four remaining
actions are at a very 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.
London interbank offered rates, European interbank offered rates
and other benchmark interest rate investigations and litigation
Euro interest rate derivatives: In December 2016, the European
Commission (the '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 in early 2007.
The EC imposed a fine on HSBC based on a one-month infringement.
HSBC appealed the decision and, in September 2019, the General
Court of the European Union (the 'General Court') issued a decision
largely upholding the EC's findings on liability but annulling the
fine. HSBC and the EC have both appealed the General Court's
decision to the European Court of Justice.
US dollar Libor: Beginning in 2011, HSBC and other panel banks
have been named as defendants in a number of private lawsuits filed
in the US with respect to the setting of US dollar Libor. The
complaints assert claims under various US laws, including US
antitrust and racketeering laws, the US Commodity Exchange Act ('US
CEA') and state law. The lawsuits include individual and putative
class actions, most of which have been transferred and/or
consolidated for pre-trial purposes before the New York District
Court.
In 2017 and 2018, HSBC reached agreements with plaintiffs to
resolve putative class actions brought on behalf of the following
five groups of plaintiffs: persons who purchased US dollar
Libor-indexed bonds; persons who purchased US dollar Libor-indexed
exchange-traded instruments; US-based lending institutions that
made or purchased US dollar Libor-indexed loans (the 'Lender
class'); persons who purchased US dollar Libor-indexed interest
rate swaps and other instruments directly from the defendant banks
and their affiliates (the 'OTC class'); and persons who purchased
US dollar Libor-indexed interest rate swaps and other instruments
from certain financial institutions that are not the defendant
banks or their affiliates. During 2018, the New York District Court
granted final approval of the settlements with the OTC and Lender
classes. The remaining settlements are subject to final court
approval. Additionally, a number of other US dollar Libor-related
actions remain pending against HSBC in the New York District Court
and the Second Circuit Court of Appeals.
Intercontinental Exchange ('ICE') Libor: Between January and
March 2019, HSBC and other panel banks were named as defendants in
three putative class actions filed in the New York District Court
on behalf of persons and entities who purchased instruments paying
interest indexed to US dollar ICE Libor from a panel bank. The
complaints allege, among other things, misconduct related to the
suppression of this benchmark rate in violation of US antitrust and
state law. In July 2019, the three putative class actions were
consolidated, and the plaintiffs filed a consolidated amended
complaint. In March 2020, the court granted the defendants' joint
motion to dismiss in its entirety. The plaintiffs have
appealed.
Singapore interbank offered rate ('Sibor'), Singapore swap offer
rate ('SOR') and Australia bank bill swap rate ('BBSW'):
In July and August 2016, HSBC and other panel banks were named
as defendants in two putative class actions filed in the New York
District Court on behalf of persons who transacted in products
related to the Sibor, SOR and BBSW benchmark rates. The complaints
allege, among other things, misconduct related to these benchmark
rates in violation of US antitrust, commodities and racketeering
laws, and state law.
In the Sibor/SOR litigation, following a decision on the
defendants' motion to dismiss in October 2018, the claims against a
number of HSBC entities were dismissed, and The Hongkong and
Shanghai Banking Corporation Limited ('HBAP') remained as the only
HSBC defendant in this action. In October 2018, HBAP filed a motion
for reconsideration of the decision based on the issue of personal
jurisdiction. This motion was denied in April 2019. Also in October
2018, the plaintiffs filed a third amended complaint naming only
the Sibor panel members, including HBAP, as defendants. The court
dismissed the third amended complaint in its entirety in July 2019
against all defendants. In August 2019, the plaintiffs filed an
appeal to the Second Circuit Court of Appeals, which remains
pending.
In the BBSW litigation, in November 2018, the court dismissed
all foreign defendants, including all the HSBC entities, on
personal jurisdiction grounds. In April 2019, the plaintiffs filed
an amended complaint, which the defendants moved to dismiss. In
February 2020, the court again dismissed the plaintiffs' amended
complaint against all the HSBC entities.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
Foreign exchange-related investigations and litigation
Various regulators and competition authorities around the world,
including in the EU, Brazil and South Africa, are conducting
investigations and reviews into trading by HSBC and others on the
foreign exchange markets. HSBC is cooperating with these
investigations and reviews.
In January 2018, HSBC Holdings entered into a three-year
deferred prosecution agreement with the Criminal Division of the
DoJ (the 'FX DPA'), regarding fraudulent conduct in connection with
two particular transactions in 2010 and 2011. This concluded the
DoJ's investigation into HSBC's historical foreign exchange
activities. Under the terms of the FX DPA, HSBC has a number of
ongoing obligations, including implementing enhancements to its
internal controls and procedures in its Global Markets business,
which will be the subject of annual reports to the DoJ. In
addition, HSBC agreed to pay a financial penalty and
restitution.
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.
In June 2020, the Competition Commission of South Africa, having
initially referred a complaint for proceedings before the South
African Competition Tribunal in February 2017, filed a revised
complaint against 28 financial institutions, including HSBC Bank
plc and HSBC Bank USA, for alleged anti-competitive behaviour in
the South African foreign exchange market.
In October 2018, HSBC Holdings and HSBC Bank plc received an
information request from the EC concerning potential coordination
in foreign exchange options trading. In May 2020, HSBC was informed
that the EC had discontinued its investigation and does not intend
to take further action.
In late 2013 and early 2014, various HSBC companies and other
banks were named as defendants in various putative class actions
consolidated in the New York District Court. The consolidated
complaint alleged, among other things, that the defendants
conspired to manipulate the WM/Reuters foreign exchange benchmark
rates. In September 2015, HSBC reached an agreement with the
plaintiffs to resolve the consolidated action, and the court
granted final approval of the settlement in August 2018.
A putative class action complaint making similar allegations on
behalf of retail customers of foreign exchange products was filed
in the US District Court for the Northern District of California in
2015, and was subsequently transferred to the New York District
Court where it remains pending. In 2017, putative class action
complaints making similar allegations on behalf of purported
indirect purchasers of foreign exchange products were filed in New
York and were subsequently consolidated in the New York District
Court. In April 2020, HSBC reached an agreement with the plaintiffs
to resolve the indirect purchaser action. The settlement remains
subject to final court approval.
In September 2018, various HSBC companies and other banks were
named as defendants in two motions for certification of class
actions filed in Israel alleging foreign exchange-related
misconduct. In July 2019, the Tel Aviv Court allowed the plaintiffs
to consolidate their claims and, in September 2019, the plaintiffs
filed a motion for certification of the consolidated class
action.
In November and December 2018, complaints alleging foreign
exchange-related misconduct were filed in the New York District
Court and the High Court of England and Wales against HSBC and
other defendants by certain plaintiffs that opted out of the US
class action settlement. In May 2020, the court granted in part and
denied in part the defendants' motion to dismiss the US opt-out
actions. These matters remain at an early stage. It is possible
that additional civil actions will be initiated against HSBC in
relation to its historical foreign exchange activities.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
Precious metals fix-related litigation
Gold: Beginning in March 2014, numerous putative class actions
were filed in the New York District Court and the US District
Courts for the District of New Jersey and the Northern District of
California, naming HSBC and other members of The London Gold Market
Fixing Limited as defendants. The complaints allege that, from
January 2004 to June 2013, the defendants conspired to manipulate
the price of gold and gold derivatives for their collective benefit
in violation of US antitrust laws, the US CEA and New York state
law. The actions were consolidated in the New York District Court.
The defendants' motion to dismiss the consolidated action was
granted in part and denied in part in October 2016. In June 2017,
the court granted the plaintiffs leave to file a third amended
complaint, naming a new defendant. The court has denied the
pre-existing defendants' request for leave to file a joint motion
to dismiss, and discovery is proceeding.
Beginning in December 2015, numerous putative class actions
under Canadian law were filed in the Ontario and Quebec Superior
Courts of Justice against various HSBC companies and other
financial institutions. The plaintiffs allege that, among other
things, from January 2004 to March 2014, the defendants conspired
to manipulate the price of gold and gold derivatives in violation
of the Canadian Competition Act and common law. These actions are
at an early stage.
Silver: Beginning in July 2014, numerous putative class actions
were filed in federal district courts in New York, naming HSBC and
other members of The London Silver Market Fixing Limited as
defendants. The complaints allege 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.
The actions were consolidated in the New York District Court. The
defendants' motion to dismiss the consolidated action was granted
in part and denied in part in October 2016. In June 2017, the court
granted the plaintiffs leave to file a third amended complaint,
which names several new defendants. The court has denied the
pre-existing defendants' request for leave to file a joint motion
to dismiss, and discovery is proceeding.
In April 2016, two putative class actions under Canadian law
were filed in the Ontario and Quebec Superior Courts of Justice
against various HSBC companies and other financial institutions.
The plaintiffs in both actions allege that, from January 1999 to
August 2014, the defendants conspired to manipulate the price of
silver and silver derivatives in violation of the Canadian
Competition Act and common law. The Ontario action is at an early
stage. The Quebec action has been temporarily stayed.
Platinum and palladium: Between late 2014 and early 2015,
numerous putative class actions were filed in the New York District
Court, naming HSBC and other members of The London Platinum and
Palladium Fixing Company Limited as defendants. The complaints
allege that, from January 2008 to November 2014, the defendants
conspired to manipulate the price of platinum group metals ('PGM')
and PGM-based financial products for their collective benefit in
violation of US antitrust laws and the US CEA. In March 2017, the
defendants' motion to dismiss the second amended consolidated
complaint was granted in part and denied in part. In June 2017, the
plaintiffs filed a third amended complaint. In March 2020, the
court granted the defendants' motion to dismiss the third amended
complaint but granted the plaintiffs leave to re-plead certain
claims. The plaintiffs have filed an appeal.
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.
Film finance litigation
In July and November 2015, two actions were brought by
individuals against HSBC Private Bank (UK) Limited ('PBGB') in the
High Court of England and Wales seeking damages on various alleged
grounds, including breach of duty to the claimants, in connection
with their participation in certain Ingenious film finance schemes.
These actions are ongoing.
In December 2018, a separate action was brought against PBGB in
the High Court of England and Wales by multiple claimants seeking
damages for alleged unlawful means conspiracy and dishonest
assistance in connection with lending provided by PBGB to third
parties in respect of certain Ingenious film finance schemes in
which the claimants participated. In June 2019, a similar claim was
issued against PBGB in the High Court of England and Wales by
additional claimants. These actions are ongoing.
In June 2020, two separate claims were issued against HSBC UK
Bank plc (as successor to PBGB's business) by two separate groups
of investors in Eclipse film finance schemes in connection with
PBGB's role in facilitating the design, promotion and operation of
such schemes. Only one of these claims has been served to date.
These matters are at an early stage.
In February 2020, a claim was issued against HSBC UK Bank plc
(as successor to PBGB's business) by two individuals in relation to
the Zeus film finance schemes. Separately, in June 2020, HSBC UK
Bank plc received an application for disclosure of documents by a
law firm acting on behalf of a number of investors in the Zeus
schemes. These matters are at an early stage.
It is possible that additional actions or investigations will be
initiated against HSBC UK Bank plc as a result of PBGB's historical
involvement in the provision of certain film finance-related
services.
Based on the facts currently known, it is not practicable to
predict the resolution of these matters, 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 subject to a
number of other investigations and reviews by various regulators
and competition and law enforcement authorities, as well as
litigation, in connection with various matters relating to the
firm's businesses and operations, including:
-- investigations by tax administration, regulatory and law
enforcement authorities in Argentina, India and elsewhere in
connection with allegations of tax evasion or tax fraud, money
laundering and unlawful cross-border banking solicitation;
-- an investigation by the US Commodity Futures Trading
Commission regarding interest rate swap transactions related to
bond issuances;
-- an investigation by the Swiss Competition Commission in
connection with the setting of Euribor and Japanese yen Libor;
-- an investigation by the FCA in connection with collections
and recoveries operations in the UK;
-- an information request from the UK Competition and Markets
Authority concerning the financial services sector;
-- putative class actions brought in the New York District Court
relating to the Mexican government bond market, the US
government-sponsored enterprise bond market, and the market for US
dollar-denominated supranational sovereign and agency bonds;
-- two group actions pending in the US courts and a claim issued
in the High Court of England and Wales in connection with HSBC Bank
plc's role as a correspondent bank to Stanford International Bank
Ltd from 2003 to 2009; and
-- litigation brought against various HSBC companies in the US
courts relating to residential mortgage-backed securities, based
primarily on (a) claims brought against HSBC Bank USA in connection
with its role as trustee on behalf of various securitisation
trusts; and (b) claims against several HSBC companies seeking that
the defendants repurchase various mortgage loans.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
8 Events after the balance sheet date
------------------------------------
In its assessment of events after the balance sheet date, HSBC
has considered and concluded that no material events have occurred
resulting in adjustments to the financial statements.
9 Capital structure
------------------
Capital ratios
------ --------
At
30 Jun 31 Dec
2020 2019
% %
---------------------------- ------ --------
Transitional basis
----------------------------
Common equity tier 1 ratio 15.0 14.7
Tier 1 ratio 17.8 17.6
Total capital ratio 20.7 20.4
---------------------------- ------ ------
End point basis
----------------------------
Common equity tier 1 ratio 15.0 601.4
Tier 1 ratio 17.5 400.5
Total capital ratio 19.2 150.2
---------------------------- ------ ------
Total regulatory capital and risk-weighted assets
------- ---------
At
30 Jun 31 Dec
2020 2019
$m $m
Transitional basis
---------------------------------------------------
Common equity tier 1 capital 128,446 123,966
-------
Additional tier 1 capital 24,031 24,393
-------
Tier 2 capital 24,765 23,791
Total regulatory capital 177,242 172,150
Risk-weighted assets 854,552 843,395
End point basis
---------------------------------------------------
Common equity tier 1 capital 128,446 121,022
Additional tier 1 capital 20,914 22,525
Tier 2 capital 15,021 24,511
Total regulatory capital 164,381 168,058
Risk-weighted assets 854,552 865,318
--------------------------------------------------- ------- -------
Leverage ratio
At
30 Jun 31 Dec
2020 2019
Ref* $bn $bn
20 Tier 1 capital 149.4 144.8
---------------
21 Total leverage ratio exposure 2,801.4 2,726.5
--------------- ---------------
% %
----------------- -----------------
22 Leverage ratio 5.3 5.3
Choice of transitional arrangements for the definition
EU-23 of the capital measure Fully phased-in Fully phased-in
-----------------
UK leverage ratio exposure - quarterly average(1) 2,565.8 2,535.4
---------------
% %
-----------------
UK leverage ratio - quarterly average 5.7 5.8
---------------
UK leverage ratio - quarter end 5.9 5.7
------ ------------------------------------------------------- --------------- ---------------
* The references identify the lines prescribed in the European
Banking Authority ('EBA') template.
1 UK leverage ratio here and below denotes the Group's leverage
ratio calculated under the PRA's UK leverage framework.
Unless otherwise stated, all figures are calculated using the
EU's regulatory transitional arrangements for IFRS 9 'Financial
Instruments' in article 473a of the Capital Requirements
Regulation.
10 Statutory accounts
--- -------------------
The information in this media release does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The statutory accounts for the year ended 31
December 2019 have been delivered to the Registrar of Companies in
England and Wales in accordance with section 447 of the Companies
Act 2006. The Group's auditors, PricewaterhouseCoopers LLP ('PwC'),
has reported on those accounts. Its report was unqualified, did not
include a reference to any matters to which PwC drew attention by
way of emphasis without qualifying their report and did not contain
a statement under section 498(2) or (3) of the Companies Act
2006.
The information in this media release does not constitute the
unaudited interim consolidated financial statements which are
contained in the Interim Report 2020. The Interim Report 2020 was
approved by the Board of Directors on 3 August 2020. The unaudited
interim consolidated financial statements have been reviewed by the
Group's auditor, PwC, in accordance with the guidance contained in
the International Standard on Review Engagements (UK and Ireland)
2410: Review of Interim Financial Information Performed by the
Independent Auditor of the Entity issued by the Auditing Practices
Board. The full report of its review, which was unmodified, is
included in the Interim Report 2020.
11 Dealings in HSBC Holdings plc listed securities
--- ------------------------------------------------
HSBC has policies and procedures that, except where permitted by
statute and regulation, prohibit it undertaking specified
transactions in respect of its securities listed on The Stock
Exchange of Hong Kong Limited ('HKEx'). Except for dealings as
intermediaries or as trustees by subsidiaries of HSBC Holdings,
neither HSBC Holdings nor any of its subsidiaries has purchased,
sold or redeemed any of its securities listed on HKEx during the
half-year ended 30 June 2020.
12 Earnings release and final results
--- -----------------------------------
An earnings release for the three-month period ending 30
September 2020 is expected to be issued on 27 October 2020. The
results for the year to 31 December 2020 are expected to be
announced on 23 February 2021.
13 Corporate governance
--- ---------------------
We are subject to corporate governance requirements in both the
UK and Hong Kong. Throughout the six months ended 30 June 2020, we
complied with the applicable provisions of the UK Corporate
Governance Code and also the requirements of the Hong Kong
Corporate Governance Code, save to the extent referred to in the
next paragraph. The UK Corporate Governance Code is available at
www.frc.org.uk and the Hong Kong Corporate Governance Code is
available at www.hkex.com.hk
Following the UK Government's introduction of social distancing
measures and prohibition on non-essential travel and public
gatherings, it was not possible for shareholders to attend this
year's Annual General Meeting ('AGM') in person. The Board was
fully informed of all relevant AGM and shareholder matters but only
a limited number of directors and essential personnel attended the
AGM to ensure the meeting was quorate and to enable the business of
the meeting to be conducted. Shareholders were advised to vote by
submitting a proxy in advance of the AGM and that they should only
appoint the Chairman of the AGM to act as their proxy. To ensure
that shareholders did not lose the opportunity to raise questions,
shareholders were encouraged to submit questions for the Board via
email in advance of the AGM. Responses to the most frequent
questions across key themes were published on the HSBC website
after due consideration by the Board. None of the questions
submitted covered a topic that required consideration by the
auditor. Given these measures, not all of the persons set out in
paragraphs A.6.7 and E.1.2 of the Hong Kong Corporate Governance
Code were able to attend the AGM.
Under the Hong Kong Code, the Group Audit Committee should be
responsible for the oversight of all risk management and internal
control systems, unless expressly addressed by a separate risk
committee. Our Group Risk Committee is responsible for oversight of
internal control, other than internal financial controls, and risk
management systems.
The Board has codified obligations for transactions in Group
securities in accordance with the requirements of the Market Abuse
Regulation and the rules governing the listing of securities on the
HKEx, save that the HKEx has granted waivers from strict compliance
with the rules that take into account accepted practices in the UK,
particularly in respect of employee share plans.
Following specific enquiries and except as disclosed on page 121
of the Interim Report 2020, all Directors have confirmed that they
have complied with their obligations in respect of transacting in
Group securities throughout the period.
There have been no material changes to the information disclosed
in the Annual Report and Accounts 2019 in respect of the
remuneration of employees, remuneration policies, bonus and share
option plans and training schemes. Details of the number of
employees are provided on page 29 of the Interim Report 2020.
The Board of Directors of HSBC Holdings plc as at the date of
this announcement comprises:
Mark Tucker*, Laura Cha , Henri de Castries , James Anthony
Forese , Steven Guggenheimer , Irene Lee , José Antonio Meade
Kuribreña , Heidi Miller , Eileen K Murray , David Nish , Noel
Quinn, Ewen Stevenson, Jackson Tai and Pauline van der Meer Mohr
.
* Non-executive Group Chairman
Independent non-executive Director
14 Interim Report 2020
--- --------------------
The Interim Report 2020 will be made available to shareholders
on or about 26 August 2020. Copies of the Interim Report 2020 and
this Media Release may be obtained from Global Communications, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; from
Communications (Asia), The Hongkong and Shanghai Banking
Corporation Limited, 1 Queen's Road Central, Hong Kong; or from US
Communications, HSBC Bank USA, N.A., 1 West 39th Street, 9th Floor,
New York, NY 10018, USA. The Interim Report 2020 and this News
Release may also be downloaded from the HSBC website,
www.hsbc.com.
A Chinese translation of the Interim Report 2020 is available
upon request from Computershare Hong Kong Investor Services
Limited, Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's
Road East, Hong Kong.
The Interim Report 2020 will be available on The Stock Exchange
of Hong Kong Limited's website www.hkex.com.hk.
15 Cautionary statement regarding forward-looking statements
--- ----------------------------------------------------------
This news release may contain projections, estimates, forecasts,
targets, opinions, prospects, results, returns and forward-looking
statements with respect to the financial condition, results of
operations, capital position, strategy and business of the Group
which can be identified by the use of forward-looking terminology
such as 'may', 'will', 'should', 'expect', 'anticipate', 'project',
'estimate', 'seek', 'intend', 'target' or 'believe' or the
negatives thereof or other variations thereon or comparable
terminology (together, "forward-looking statements"), including the
strategic priorities and any financial, investment and capital
targets described herein.
Any such forward-looking statements are not a reliable indicator
of future performance, as they may involve significant stated or
implied assumptions and subjective judgements which may or may not
prove to be correct. There can be no assurance that any of the
matters set out in forward-looking statements are attainable, will
actually occur or will be realised or are complete or accurate. The
assumptions and judgments may prove to be incorrect and involve
known and unknown risks, uncertainties, contingencies and other
important factors, many of which are outside the control of the
Group. Actual achievements, results, performance or other future
events or conditions may differ materially from those stated,
implied and/or reflected in any forward-looking statements due to a
variety of risks, uncertainties and other factors (including
without limitation those which are referable to general market
conditions, regulatory changes or Covid-19).
Any such forward-looking statements are based on the beliefs,
expectations and opinions of the Group at the date the statements
are made, and the Group does not assume, and hereby disclaims, any
obligation or duty to update, revise or supplement them if
circumstances or management's beliefs, expectations or opinions
should change. For these reasons, recipients should not place
reliance on, and are cautioned about relying on, any
forward-looking statements. No representations or warranties,
expressed or implied, are given by or on behalf of the Group as to
the achievement or reasonableness of any projections, estimates,
forecasts, targets, prospects or returns contained herein.
Additional detailed information concerning important factors
that could cause actual results to differ materially from this news
release is available in our Annual Report and Accounts 2019 for the
fiscal year ended 31 December 2019 filed with the Securities and
Exchange Commission (the 'SEC') on Form 20-F on 19 February 2020,
our 1Q 2020 Earnings Release furnished to the SEC on Form 6-K on 28
April 2020, and our Interim Report 2020 for the six months ended 30
June 2020 which we expect to furnish to the SEC on Form 6-K on or
around 3 August 2020.
16 Certain defined terms
--- ----------------------
Unless the context requires otherwise, 'HSBC Holdings' means
HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our'
refer to HSBC Holdings together with its subsidiaries. Within this
document the Hong Kong Special Administrative Region of the
People's Republic of China is referred to as 'Hong Kong'. When used
in the terms 'shareholders' equity' and 'total shareholders'
equity', 'shareholders' means holders of HSBC Holdings ordinary
shares and those preference shares and capital securities issued by
HSBC Holdings classified as equity. The abbreviations '$m'and '$bn'
represent millions and billions (thousands of millions) of US
dollars, respectively.
17 For further information contact:
--- ---------------------------------
Investor Relations Media Relations
UK - Richard O'Connor UK - Heidi Ashley
Tel: +44 (0) 20 7991 6590 Tel: +44 (0) 20 7992 2045
Hong Kong - Mark Phin Hong Kong - Patrick Humphris
Tel: +852 2822 4908 Tel: +852 2822 2052
Click on, or paste the following link into your web browser, to
view the Data Pack for 2Q 2020.
http://www.rns-pdf.londonstockexchange.com/rns/8496U_1-2020-8-2.pdf
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UUVKRRKUWRAR
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August 03, 2020 02:00 ET (06:00 GMT)
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