Strategic Report [Performance in 2023](index=7&type=section&id=Performance%20in%202023) HSBC achieved a record **$30.3 billion** profit before tax in 2023, driven by strong revenue and higher interest rates, reaching **14.6%** RoTE Key Financial Performance Indicators (2023 vs 2022) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Profit before tax ($ billion) | 30.3 | 17.1 | | Return on average tangible equity (RoTE) | 14.6% | 10.0% | | Operating expenses (Target basis) | $31.6 billion (up 6%) | $32.7 billion (reported) | | Common equity tier 1 (CET1) capital ratio | 14.8% | 14.2% | | Dividend per share ($) | 0.61 | 0.32 | - Revenue increased by **30%** to **$66.1 billion**, primarily due to a **$5.4 billion** rise in Net Interest Income (NII) from the higher interest rate environment and a **$10.0 billion** increase in non-interest income. The latter includes a **$1.6 billion** provisional gain on the acquisition of SVB UK and a **$2.5 billion** favourable year-on-year impact from the sale of the French retail banking operations[79](index=79&type=chunk)[81](index=81&type=chunk) - A **$3.0 billion** impairment charge was recognized in 2023 related to the investment in Bank of Communications Co., Limited ('BoCom'), following a reassessment of its accounting value-in-use[79](index=79&type=chunk)[81](index=81&type=chunk) - The Group announced a new share buy-back of up to **$2.0 billion** and intends to consider a special dividend of **$0.21** per share following the completion of the sale of its Canadian banking business in Q1 2024[86](index=86&type=chunk)[85](index=85&type=chunk) 2024 Outlook | Metric | 2024 Guidance | | :--- | :--- | | Return on average tangible equity (RoTE) | Mid-teens for 2024 | | Banking Net Interest Income (NII) ($ billion) | At least 41 | | Expected Credit Losses (ECL) | Around 40bps of average gross loans | | Target Basis Cost Growth | Approximately 5% | | CET1 Capital Ratio Target | 14% to 14.5% (medium-term) | | Dividend Payout Ratio Target | 50% for 2024 | [Group Chairman's Statement](index=17&type=section&id=Group%20Chairman%27s%20statement) Group Chairman highlighted record **$30.3 billion** profit in 2023, emphasizing shareholder returns, strategic disposals, and growth investments - Reported profit before tax for 2023 was **$30.3 billion**, an increase of **$13.3 billion** from 2022, driven by higher revenue and notable items[111](index=111&type=chunk) - Shareholder returns for 2023 included a total dividend of **$0.61** per share and **$7 billion** in share buy-backs, with a further **$2 billion** buy-back announced. A special dividend of **$0.21** per share is being considered upon completion of the Canada sale[112](index=112&type=chunk)[113](index=113&type=chunk) - Strategic acquisitions in 2023 included Citi's retail wealth business in mainland China and SVB UK, described as an opportunistic deal with excellent strategic sense[118](index=118&type=chunk)[121](index=121&type=chunk) - The first net zero transition plan was published, outlining a realistic and ambitious path to support clients' transition to a low-carbon future[120](index=120&type=chunk) - The economic outlook for 2024 is cautiously optimistic, with China's economy expected to maintain around **5%** growth and significant opportunities in Asia and the Middle East[124](index=124&type=chunk)[125](index=125&type=chunk) [Group Chief Executive's Review](index=19&type=section&id=Group%20Chief%20Executive%27s%20review) Group Chief Executive highlighted 2023's record profit and **14.6%** RoTE, driven by strong growth across all global businesses 2023 Performance Highlights | Metric | 2023 Value | | :--- | :--- | | Profit before tax ($ billion) | 30.3 | | Return on average tangible equity (RoTE) | 14.6% | | Total Shareholder Returns (Dividends & Buy-backs) ($ billion) | 19 (in respect of 2023) | - All three global businesses performed well on a constant currency basis: Commercial Banking profit before tax rose **76%** to **$13.3 billion**, Global Banking and Markets profit was up **26%** to **$5.9 billion**, and Wealth and Personal Banking profit increased by **$6.1 billion** to **$11.5 billion**[143](index=143&type=chunk)[149](index=149&type=chunk) - Future growth will be driven by five key levers: growing international businesses, diversifying revenue (especially in wealth), continued growth in home markets (Hong Kong & UK), investing in technology (including AI and the new 'Zing' platform), and financing the net-zero transition[150](index=150&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk)[157](index=157&type=chunk) - The company attracted **$84 billion** in net new invested assets in its wealth business in 2023 and grew multi-jurisdictional wholesale revenue by **29%** to **$20.4 billion**[147](index=147&type=chunk)[154](index=154&type=chunk) [Our Strategy](index=22&type=section&id=Our%20strategy) HSBC's strategy is built on four pillars: Focus on international growth and wealth, Digitise operations, Energise culture, and Transition to net-zero - **Focus:** Grew wholesale multi-jurisdictional client revenue by **29%** in 2023. Attracted **$84 billion** in net new invested assets. Maintained leadership in Hong Kong and the UK, with UK large corporate banking market penetration over **70%**. Reshaped portfolio with exits from France retail and Greece, and acquisitions like SVB UK[165](index=165&type=chunk)[169](index=169&type=chunk)[177](index=177&type=chunk)[186](index=186&type=chunk) - **Digitise:** Achieved **83%** digitally active Commercial Banking customers. **75%** of WPB international customer accounts were opened digitally. Piloting numerous generative AI use cases and launched 'Zing', an open-market cross-border payments platform[187](index=187&type=chunk)[188](index=188&type=chunk)[190](index=190&type=chunk) - **Energise:** Employee survey showed **73%** of colleagues see the positive impact of the strategy. Reached **34.1%** women in senior leadership roles, on track for the **35%** target by 2025[192](index=192&type=chunk)[193](index=193&type=chunk) - **Transition:** Published first net-zero transition plan in January 2024. Provided and facilitated a cumulative **$294.4 billion** in sustainable finance and investments since January 2020. Reduced own operational greenhouse gas emissions by **57.3%** from a 2019 baseline[196](index=196&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) [ESG Overview](index=25&type=section&id=ESG%20overview) HSBC's ESG strategy focuses on net zero transition, building inclusion, resilience, and responsible actions, with key metrics in remuneration Key ESG Metrics and Targets (2023) | Metric | 2023 Performance | Target/Ambition | | :--- | :--- | :--- | | Sustainable Finance & Investment ($ billion) | 294.4 (cumulative since 2020) | $750 billion to $1 trillion by 2030 | | Operational GHG Emissions Reduction | 57.3% (from 2019 baseline) | Net zero by 2030 | | Women in Senior Leadership | 34.1% | 35% by 2025 | | Black Heritage in UK/US Senior Leadership | 3.0% | 3.4% by 2025 | | Employee Engagement Score | 77% | Maintain 72% | - Published its first net-zero transition plan in January 2024, detailing its sectoral approach and implementation plan[95](index=95&type=chunk) - Set combined on-balance sheet financed and facilitated emissions targets for the oil & gas and power & utilities sectors[95](index=95&type=chunk) - Provided significant support to UK customers facing cost-of-living pressures, including offering mortgage rate switches, term extensions, and financial well-being webinars[215](index=215&type=chunk)[231](index=231&type=chunk) [Remuneration Overview](index=35&type=section&id=Remuneration) HSBC's remuneration strategy reflects strong 2023 performance, with a **$3.774 billion** variable pay pool and new structures for clarity Group Variable Pay Pool | Year | Variable Pay Pool ($ million) | | :--- | :--- | | 2023 | 3,774 | | 2022 | 3,359 | - The Group was certified as a global Living Wage employer for 2024 by the Fair Wage Network, ensuring fixed pay levels provide financial security[277](index=277&type=chunk) - The Group Chief Executive's 2023 annual incentive outcome was **70.24%** of maximum opportunity, which included a **7.5%** downward adjustment related to a PRA Notice[288](index=288&type=chunk)[290](index=290&type=chunk) - A new variable pay structure will be introduced in 2024 for over **150,000** junior and middle management colleagues to provide more clarity on pay levels for on-target performance[283](index=283&type=chunk) [Financial Overview](index=36&type=section&id=Financial%20overview) HSBC's 2023 financial performance showed a **14.6%** RoTE, **$31.6 billion** operating expenses, and a strong **14.8%** CET1 ratio Key Group Financial Targets and Performance | Metric | 2023 Performance | 2024 Target/Outlook | | :--- | :--- | :--- | | Return on average tangible equity (RoTE) | 14.6% | Mid-teens | | Target basis operating expenses ($ billion) | 31.6 (+6% YoY) | Approx. 5% growth | | CET1 ratio | 14.8% | 14.0% to 14.5% range | | Dividend payout ratio | 50% | 50% | - Reported profit before tax was **$30.3 billion**, a **78%** increase from **$17.1 billion** in 2022. This was driven by a **30%** rise in revenue to **$66.1 billion**[307](index=307&type=chunk)[320](index=320&type=chunk) - Net interest margin (NIM) increased to **1.66%** from **1.42%** in 2022, reflecting the higher interest rate environment[307](index=307&type=chunk) - Expected credit losses (ECL) were **$3.4 billion**, a slight reduction from **$3.6 billion** in 2022, and included **$1.0 billion** related to mainland China commercial real estate exposures[322](index=322&type=chunk)[330](index=330&type=chunk) - The Group introduced Banking NII as a new alternative performance measure to better represent banking revenue directly impacted by interest rate changes. For 2024, banking NII is expected to be at least **$41 billion**[305](index=305&type=chunk)[87](index=87&type=chunk) [Risk Overview](index=47&type=section&id=Risk%20overview) HSBC's risk framework addresses geopolitical, macroeconomic, and sectoral risks, maintaining a strong **14.8%** CET1 ratio within appetite - Geopolitical tensions, particularly the Russia-Ukraine and Israel-Hamas wars, are a primary source of risk, with potential to disrupt supply chains and reverse the recent decline in inflation[424](index=424&type=chunk) - The complex relationship between China and other nations, including the US and UK, creates ongoing regulatory, reputational, and market risks from sanctions and trade restrictions[426](index=426&type=chunk) - Mainland China's commercial real estate sector remains distressed, and while authorities are providing support, the risk of a slow recovery is significant[429](index=429&type=chunk) Key Risk Appetite Metrics (2023) | Component | Measure | Risk Appetite | 2023 Performance | | :--- | :--- | :--- | :--- | | Capital | CET1 ratio – end point basis (%) | ≥13.0% | 14.8% | | ECL (WPB) | % of advances | ≤0.50% | 0.21% | | ECL (Wholesale) | % of advances | ≤0.45% | 0.40% | - Top externally driven risks include: Geopolitical and macroeconomic risks, Technology and cybersecurity risk, ESG risks, Financial crime risk, Digitalisation and technological advances, and Evolving regulatory environment[452](index=452&type=chunk)[453](index=453&type=chunk) Financial Review [Financial Summary](index=109&type=section&id=Financial%20summary) HSBC's 2023 financial summary highlights **$35.8 billion** NII, **1.66%** NIM, and **$3.04 trillion** total assets, impacted by IFRS 17 adoption - The Group adopted IFRS 17 'Insurance Contracts' on January 1, 2023, and restated 2022 comparative data. The transition reduced 2022 reported revenue by **$1.1 billion** and profit before tax by **$0.5 billion**[1054](index=1054&type=chunk)[1056](index=1056&type=chunk) Consolidated Income Statement Highlights (2023 vs 2022) | Metric ($ million) | 2023 | 2022 (Restated) | | :--- | :--- | :--- | | Net interest income | 35,796 | 30,377 | | Total operating income | 66,058 | 50,620 | | ECL charge | (3,447) | (3,584) | | Profit before tax | 30,348 | 17,058 | | Profit for the year | 24,559 | 16,249 | - Net interest income (NII) increased by **$5.4 billion** (**18%**) to **$35.8 billion** in 2023, reflecting higher average interest rates. Net interest margin (NIM) increased by **24** basis points to **1.66%**[1092](index=1092&type=chunk)[1096](index=1096&type=chunk) - Total assets increased by **$89 billion** to **$3.04 trillion** at year-end 2023. Loans and advances to customers rose by **$15 billion** to **$939 billion**, while customer accounts grew by **$41 billion** to **$1.61 trillion**[1175](index=1175&type=chunk)[1184](index=1184&type=chunk)[1195](index=1195&type=chunk) - Hyperinflationary accounting in Argentina and Türkiye had a significant impact, decreasing the Group's profit before tax by **$1,297 million** in 2023[1073](index=1073&type=chunk) [Global Businesses and Geographical Regions](index=124&type=section&id=Global%20businesses%20and%20geographical%20regions) HSBC's global businesses and geographical regions showed strong financial performance in 2023, driven by growth across all segments Profit Before Tax by Global Business (2023 vs 2022, Constant Currency) | Global Business | 2023 PBT ($ million) | 2022 PBT ($ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Wealth and Personal Banking (WPB) | 11,544 | 5,480 | >100% | | Commercial Banking (CMB) | 13,280 | 7,527 | 76% | | Global Banking and Markets (GBM) | 5,924 | 4,689 | 26% | | Corporate Centre | (400) | (1,155) | 65% (loss reduction) | - **WPB:** Revenue grew **31%** to **$27.3 billion**. Wealth revenue rose **8%** to **$7.5 billion**, supported by **$84 billion** in net new invested assets. Personal Banking revenue was up **28%**, driven by higher net interest income[357](index=357&type=chunk)[362](index=362&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - **CMB:** Revenue increased **40%** to **$22.9 billion**. This was significantly boosted by a **$5.4 billion** (**78%**) rise in Global Payments Solutions revenue and a **$1.6 billion** provisional gain on the acquisition of SVB UK[376](index=376&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - **GBM:** Revenue grew **10%** to **$16.1 billion**. Securities Services revenue was up **19%** and Global Payments Solutions revenue increased **56%**, both benefiting from higher interest rates. Capital Markets and Advisory revenue rose **41%**[393](index=393&type=chunk)[402](index=402&type=chunk)[410](index=410&type=chunk) - **Corporate Centre:** Loss before tax narrowed to **$0.4 billion** from **$1.2 billion**. The improvement was driven by the non-recurrence of restructuring costs and adverse fair value movements from 2022, partly offset by a **$3.0 billion** impairment of the investment in BoCom[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[416](index=416&type=chunk) Risk Review [Our Approach to Risk](index=159&type=section&id=Our%20approach%20to%20risk) HSBC's risk management employs a 'three lines of defence' model, guided by a formal Risk Appetite Statement and robust stress testing - The Group's risk management is based on a 'three lines of defence' model: 1) Risk owners in business lines, 2) Independent Group Risk and Compliance function, and 3) Global Internal Audit for independent assurance[1554](index=1554&type=chunk)[1560](index=1560&type=chunk) - The Risk Appetite Statement (RAS) defines risk levels and guides strategic decisions, financial planning, and capital allocation. Performance against the RAS is reported to the Group Risk Management Meeting[1532](index=1532&type=chunk)[1533](index=1533&type=chunk) - Stress testing is a core tool used to assess resilience to adverse scenarios, inform capital and liquidity planning, and support recovery and resolution plans. The Group conducts internal stress tests and participates in regulatory exercises (e.g., BoE, FRB, HKMA)[1557](index=1557&type=chunk)[1563](index=1563&type=chunk) - Key risk management enhancements in 2023 included strengthening frameworks for model risk (especially AI and climate), concentration risk, third-party risk, and regulatory reporting[1570](index=1570&type=chunk) - The transition from Ibor benchmarks is nearly complete, with only a limited number of 'tough legacy' contracts remaining, primarily syndicated loans, expected to be remediated before September 2024[1567](index=1567&type=chunk)[1568](index=1568&type=chunk) [Top and Emerging Risks](index=163&type=section&id=Top%20and%20emerging%20risks) HSBC identifies top risks including geopolitical instability, cybersecurity threats, evolving ESG landscape, financial crime, and internal operational challenges - **Geopolitical & Macroeconomic Risks:** Elevated risks from the Russia-Ukraine and Israel-Hamas wars, complex US-China relations, and potential for renewed inflation. Mainland China's commercial real estate sector remains a significant concern[1573](index=1573&type=chunk)[1576](index=1576&type=chunk)[1583](index=1583&type=chunk) - **Technology & Cybersecurity Risk:** Continuous threat of sophisticated cyber-attacks, including ransomware and phishing, targeting HSBC or its third-party suppliers. The risk landscape is evolving with ongoing geopolitical events[1593](index=1593&type=chunk) - **ESG Risks:** Financial and non-financial risks from climate change, nature-related issues, and human rights. This includes credit risk from customers' transition failures, reputational risk from not meeting ESG targets, and regulatory compliance risk from evolving global standards[1595](index=1595&type=chunk)[1596](index=1596&type=chunk)[1601](index=1601&type=chunk) - **Financial Crime Risk:** Heightened risk due to geopolitical challenges, complex sanctions, and the increasing sophistication of fraud, including scams using generative AI. The digitization of finance and digital assets present new challenges[1610](index=1610&type=chunk)[1611](index=1611&type=chunk)[1612](index=1612&type=chunk) - **Internally Driven Risks:** Key internal risks include managing large volumes of data accurately and securely, risks from third-party suppliers, model risk from the increasing use of complex AI and climate models, and the execution risk of large-scale strategic change initiatives[1623](index=1623&type=chunk)[1625](index=1625&type=chunk)[1627](index=1627&type=chunk)[1636](index=1636&type=chunk) [Our Material Banking Risks](index=181&type=section&id=Our%20material%20banking%20risks) HSBC manages material banking risks, including credit, treasury, market, and climate risks, through comprehensive frameworks and robust controls - **Credit Risk:** The risk of financial loss from counterparty failure. The ECL charge for 2023 was **$3.4 billion**, driven by stage 3 charges, including **$1.0 billion** related to mainland China's commercial real estate sector[1830](index=1830&type=chunk)[1861](index=1861&type=chunk) - **Treasury Risk:** The risk of insufficient capital and liquidity. The Group maintained a strong capital position with a CET1 ratio of **14.8%** and a liquidity coverage ratio (LCR) of **136%**[2198](index=2198&type=chunk)[2255](index=2255&type=chunk) - **Market Risk:** The risk of adverse impact from changes in market parameters. Trading portfolio VaR (99%, 1-day) was **$182.4 million** at year-end 2023[2338](index=2338&type=chunk)[1812](index=1812&type=chunk) - **Climate Risk:** Financial and non-financial impacts from climate change. Managed through risk metrics, stress testing, and specific policies like the thermal coal phase-out and energy policies[1813](index=1813&type=chunk)[1825](index=1825&type=chunk) - **Resilience, Regulatory, Financial Crime, and Model Risks:** These non-financial risks are managed through robust control frameworks, policies, and governance to ensure operational stability, compliance with evolving regulations, prevention of illicit activities, and sound decision-making based on reliable models[1814](index=1814&type=chunk)[1815](index=1815&type=chunk)[1816](index=1816&type=chunk)[1828](index=1828&type=chunk) Environmental, Social and Governance (ESG) Review [Our Approach to ESG](index=52&type=section&id=Our%20approach%20to%20ESG) HSBC's ESG approach is built on three pillars: net zero transition, building inclusion and resilience, and acting responsibly, guided by materiality - HSBC's ESG strategy is built on three pillars: Transition to net zero, Building inclusion and resilience, and Acting responsibly[458](index=458&type=chunk)[468](index=468&type=chunk) - Published its first net-zero transition plan in January 2024, outlining its progress and future plans to achieve its climate ambitions[461](index=461&type=chunk)[462](index=462&type=chunk) - Set combined on-balance sheet financed and facilitated emissions targets for the high-emitting oil and gas, and power and utilities sectors[461](index=461&type=chunk)[463](index=463&type=chunk) - Material ESG topics are identified through stakeholder engagement and consideration of standards like TCFD, SASB, and the Hong Kong Stock Exchange's ESG Guide[470](index=470&type=chunk)[471](index=471&type=chunk) [Environmental](index=54&type=section&id=Environmental) HSBC's environmental strategy aims for net-zero by 2050, with **$294.4 billion** in sustainable finance and **57.3%** operational GHG emissions reduction Sustainable Finance and Investment Progress ($ billion) | Year | Annual Contribution ($ billion) | Cumulative since 2020 ($ billion) | | :--- | :--- | :--- | | 2023 | 83.7 | 294.4 | | 2022 | 84.2 | 210.7 | | 2021 | 82.4 | 126.5 | | 2020 | 44.1 | 44.1 | - Published its first net-zero transition plan in January 2024, detailing its approach to transitioning industry, catalysing the new economy, and decarbonising trade[497](index=497&type=chunk)[498](index=498&type=chunk) - Set 2030 financed emissions targets for seven sectors: oil and gas, power and utilities, cement, iron/steel/aluminium, aviation, automotive, and thermal coal mining. The oil & gas and power & utilities targets now combine on-balance sheet and facilitated emissions[577](index=577&type=chunk)[578](index=578&type=chunk)[610](index=610&type=chunk) Selected 2030 Financed Emissions Targets vs. 2022 Performance | Sector | Metric | 2022 Performance | 2030 Target | | :--- | :--- | :--- | :--- | | Oil & Gas (Combined) | Mt CO2e | 31.9 | -34% vs 2019 | | Power & Utilities (Combined) | tCO2e/GWh | 396.8 | 138.0 | - Reduced absolute operational GHG emissions (Scope 1, 2, and business travel) by **57.3%** from a 2019 baseline, and sourced **58.4%** of electricity from renewable sources in 2023[692](index=692&type=chunk)[701](index=701&type=chunk) [Social](index=84&type=section&id=Social) HSBC's social strategy focuses on inclusion, achieving **34.1%** women in senior leadership, improving employee engagement, and supporting communities - Achieved **34.1%** representation of women in senior leadership roles, on track for the 2025 goal of **35%**. Black heritage representation in UK/US senior leadership reached **3.0%**, against a 2025 goal of **3.4%**[774](index=774&type=chunk)[779](index=779&type=chunk)[781](index=781&type=chunk) - The employee engagement score in the annual Snapshot survey increased by **3** percentage points to **77%**, which is **7** points ahead of the financial services benchmark[817](index=817&type=chunk)[821](index=821&type=chunk) - Launched a global framework to support colleagues experiencing menopause and continued to offer comprehensive mental, physical, and financial well-being programs[806](index=806&type=chunk)[853](index=853&type=chunk)[845](index=845&type=chunk)[855](index=855&type=chunk) - Supported customer inclusion by providing no-cost accounts for vulnerable individuals and making branches 'safe spaces' for domestic abuse victims. The HSBC HK Mobile Banking app's simplified version has attracted over **477,000** unique users[885](index=885&type=chunk)[898](index=898&type=chunk) - Total charitable giving in 2023 was **$107.3 million**, and employees volunteered over **181,800** hours during work time[903](index=903&type=chunk)[901](index=901&type=chunk) [Governance](index=96&type=section&id=Governance) HSBC maintains high governance standards, with Board oversight of ESG, robust financial crime controls, and significant investment in cybersecurity - The Board has overall responsibility for ESG strategy, with oversight from the Group Audit Committee and Group Risk Committee. A new Sustainability Execution Committee was established in 2023 to oversee the operationalization of the sustainability strategy[912](index=912&type=chunk)[918](index=918&type=chunk) - The bank actively manages five salient human rights issues, including the right to decent work and freedom from discrimination, by embedding them into risk management and supplier onboarding processes[921](index=921&type=chunk)[922](index=922&type=chunk) - In 2023, HSBC monitored over **1.35 billion** transactions per month for financial crime, filed over **96,000** suspicious activity reports, and screened **125 million** customer records daily for sanctions exposure[992](index=992&type=chunk) - The Group's total tax contribution in 2023 was **$17.6 billion**, comprising **$6.8 billion** in taxes borne by HSBC and **$10.8 billion** in taxes collected on behalf of governments[1003](index=1003&type=chunk) - Maintains a robust cybersecurity framework with a 'defence in depth' approach. Over **99%** of employees completed mandatory cybersecurity training, and over **94%** of IT developers hold security certifications[1034](index=1034&type=chunk)[1045](index=1045&type=chunk)

[HSBC Holdings plc Share Buy-Back](index=1&type=section&id=HSBC%20Holdings%20plc%20Share%20Buy-Back) [Program Overview](index=1&type=section&id=Program%20Overview) HSBC Holdings plc announced the commencement of a share buy-back program for its ordinary shares, with a maximum consideration of US$2 billion, primarily aimed at reducing the total number of outstanding ordinary shares | Item | Detail | | :--- | :--- | | **Purpose** | To reduce HSBC's outstanding Ordinary Shares | | **Maximum Consideration** | US$2 billion | | **Share Type** | Ordinary shares of US$0.50 each | [Execution Details](index=1&type=section&id=Execution%20Details) HSBC has entered into an irrevocable, non-discretionary agreement with Merrill Lynch International to execute the buy-back, with purchases scheduled from February 23, 2024, to no later than April 26, 2024, across stock exchanges in the UK and Hong Kong - HSBC has engaged **Merrill Lynch International** through an irrevocable, non-discretionary agreement to conduct the share purchases[4](index=4&type=chunk) - The buy-back period runs from **February 23, 2024**, and will end no later than **April 26, 2024**[4](index=4&type=chunk) - Share purchases will be executed on the **London Stock Exchange**, **Cboe Europe** (BXE and CXE order books), **Turquoise**, and **The Stock Exchange of Hong Kong Limited**[5](index=5&type=chunk) [Regulatory Compliance and Shareholder Authority](index=1&type=section&id=Regulatory%20Compliance%20and%20Shareholder%20Authority) The share buy-back program operates under the authority granted by shareholders at the Annual General Meeting on May 5, 2023, adhering to all relevant UK, Hong Kong, and US federal securities laws and regulations, with all repurchased shares to be cancelled - The program is conducted under the general authority granted by shareholders at the annual general meeting on **May 5, 2023**[7](index=7&type=chunk) - All Ordinary Shares purchased under the buy-back will be **cancelled**[8](index=8&type=chunk) - The maximum number of shares that can be repurchased is **1,092,358,231**, based on the 2023 shareholder authority[8](index=8&type=chunk) [Company Profile](index=2&type=section&id=Company%20Profile) HSBC Holdings plc, headquartered in London, is one of the world's largest banking and financial services organizations, reporting total assets of US$3,039 billion as of December 31, 2023, and operating in 62 countries and territories worldwide | Metric | Value | | :--- | :--- | | **Total Assets (as of 31 Dec 2023)** | US$3,039 billion | | **Global Presence** | 62 countries and territories |

FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a - 16 or 15d - 16 of the Securities Exchange Act of 1934 For the month of February HSBC Holdings plc 42nd Floor, 8 Canada Square, London E14 5HQ, England (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F). Form 20-F X Form 40-F 21 February 2024 HSBC HOLDINGS PLC 2023 RESULTS - HIGHLIGHTS Noel Quinn, Group Chief Executive, ...

Financial Performance - HSBC Holdings reported a record profit of $30.3 billion for 2023, an increase of $13.3 billion compared to the previous year, driven by revenue growth and strategic transactions[4]. - Total revenue increased by $15.4 billion to $66.1 billion, representing a 30% growth, with net interest income rising by $5.4 billion due to higher interest rates[4]. - The reported pre-tax profit for 2023 is $30,348 million, a significant increase from $17,058 million in 2022, representing an increase of 78.3%[15]. - The profit attributable to ordinary shareholders was $22,432 million, up from $14,346 million in 2022, marking a growth of 56.5%[32]. - The company reported a net profit of $24,559 million for 2023, compared to $16,249 million in 2022, which is a 51% increase[54]. - The total comprehensive income for 2023 was $29,542 million, a significant recovery from a loss of $993 million in 2022[54]. - The basic earnings per share (EPS) rose to $1.15 in 2023, compared to $0.72 in 2022, reflecting a growth of 59.7%[15]. - The average return on common equity improved to 13.6% in 2023, compared to 9.0% in 2022, indicating stronger profitability relative to equity[15]. Capital and Dividends - The Common Equity Tier 1 capital ratio improved to 14.8%, an increase of 60 basis points, despite dividend payments and share buybacks[4]. - The board approved a fourth interim dividend of $0.31 per share, totaling $0.61 per share for 2023, and announced a share buyback program of up to $2 billion[4]. - The dividend payout ratio for 2023 is 50%, up from 44% in 2022, reflecting a commitment to returning value to shareholders[15]. - Total dividends paid to shareholders increased to $11,593 million in 2023 from $6,544 million in 2022, representing a growth of 77.5%[85]. - The total dividend per share for 2023 was $0.53, significantly higher than $0.27 in 2022, marking a 96.3% increase[85]. Customer and Loan Growth - Customer loans increased by $15 billion, while customer accounts rose by $41 billion, mainly driven by growth in wealth management and personal banking in Asia[4]. - Customer loans (net) amounted to $938,535 million, slightly up from $923,561 million in 2022, indicating stable loan growth[15]. - The total customer accounts reached $1,611,647 million, up from $1,570,303 million in 2022, an increase of 2.6%[32]. - The company anticipates mid-single-digit percentage growth in customer loans year-over-year in the medium to long term, despite cautious outlook for the first half of 2024[10]. Operating Efficiency - Operating expenses decreased by $600 million to $32.1 billion, a 2% reduction, primarily due to the end of a cost-saving program[4]. - The cost-to-income ratio improved to 48.5% in 2023, down from 64.6% in 2022, showcasing better operational efficiency[15]. - The total operating expenses for 2023 were $32,070 million, a slight decrease from $32,701 million in 2022[52]. Credit Losses and Provisions - Expected credit losses decreased by $1 billion to $3.4 billion, representing 33 basis points of average loans, influenced by economic uncertainties and inflation pressures[4]. - Expected credit loss provisions are projected to average about 40 basis points of total loans for 2024, with a return to normal levels of 30 to 40 basis points in the medium to long term[10]. - Expected credit losses and other credit impairment charges totaled $3,447 million, compared to $3,630 million in the previous year, reflecting a decrease of about 5.0%[50]. Strategic Initiatives and Acquisitions - HSBC completed the acquisition of Silicon Valley Bank UK, contributing an estimated $1.6 billion to pre-tax profit[4]. - The company plans to continue expanding its market presence and investing in new technologies to enhance customer service and operational efficiency[4]. - Following the sale of its French retail banking business, the company is focusing on investing in business development, including the acquisition of Citigroup's retail wealth management business in mainland China[62]. Market Outlook and Economic Conditions - The company anticipates challenges in the market environment, particularly due to conflicts in Europe and the Middle East, which may lead to economic volatility[66]. - The economic outlook for 2024 remains cautiously optimistic, with expectations of a slowdown in growth during the first half, followed by a recovery[76]. - HSBC's financial performance improved in 2023, with enhanced shareholder returns reflecting the collective efforts of all employees[76]. Legal and Regulatory Matters - HSBC is involved in multiple ongoing legal cases related to alleged anti-competitive behavior in foreign exchange and precious metals markets, with potential damages in Canada amounting to CAD 1 billion plus CAD 250 million in punitive damages[97]. - Ongoing investigations by global tax authorities may lead to substantial financial impacts for HSBC, although specific outcomes are currently unpredictable[98]. - HSBC is facing a collective lawsuit in Canada regarding price manipulation of silver and gold, with claims totaling CAD 1 billion[97]. Risk Management and Governance - The Group Risk Management Committee oversees internal controls and risk management systems, excluding financial reporting controls[141]. - HSBC has complied with the corporate governance codes in both the UK and Hong Kong throughout 2023[141]. - The establishment of the Technology Committee will lead to the formal dissolution of the Technology Governance Working Group on March 1, 2024[141].

Investment Rating - The report assigns an "OUTPERFORM" rating with a target price of 53.12, while the current price is 49.4 [3]. Core Insights - The report indicates that revenue and profit missed expectations primarily due to a decline in net interest margin (NIM), which decreased by 18 basis points to 1.52%, below the Bloomberg consensus forecast of 1.69% [12][36]. - Total revenue decreased by 10.6% year-over-year, which is lower than the Bloomberg consensus forecast of a 7.0% decline [18][36]. - Pre-tax profit saw a significant drop of 80.6% year-over-year, also falling short of the expected 5.9% decline [18][36]. - Net profit attributable to common shareholders decreased by 103.3% year-over-year, compared to the expected decline of 26.8% [18][36]. Revenue Breakdown - Wealth and Personal Banking revenue fell by 39.1% year-over-year, underperforming against the Bloomberg consensus forecast of a 33.1% decline [37]. - Commercial Banking revenue increased by 11.9% year-over-year, but this was below the expected growth of 14.4% [37]. - Global Banking and Markets revenue grew by 7.7% year-over-year, exceeding the Bloomberg consensus forecast of 5.1% [37][41]. Financial Metrics - Net interest income decreased by 7.8% year-over-year, contrasting with the Bloomberg consensus forecast of a 1.4% increase [12][36]. - Non-interest income fell by 15.1% year-over-year, which was better than the expected decline of 20.4% [12][36]. - The cost-to-income ratio increased by 6.4 percentage points to 66.4%, worse than the expected 60.3% [36]. - The Common Equity Tier 1 (CET1) ratio rose by 0.6 percentage points to 14.8%, surpassing the expected 14.6% [19][36]. Loan and Deposit Growth - Total loans to customers increased by 1.6% year-over-year, exceeding the Bloomberg consensus forecast of 0.8% [12]. - Total deposits grew by 2.6% year-over-year, also outperforming the expected decline of 0.4% [12]. Conclusion - The report highlights significant challenges faced by the company, particularly in terms of net interest income and overall profitability, while also noting areas of growth in loans and deposits [36][41].

Strategy 4Q22 results Summary Appendix Our strategy 3Q23 results Appendix >100% 16% 9M22 9M23 $0.8bn $1.1bn +40% c.$3.6bn in assets and deposits 3Q23 results Appendix | --- | --- | --- | |-------------------|-------|---------| | $bn | 3Q23 | Δ (%) | | Customer loans | 936 | (0)% | | Customer deposits | 1,563 | (0)% | | Reported RWAs | 840 | (2)% | | CET1 ratio7, % | 14.9 | 0.2ppts | | TNAV per share, $ | $7.96 | $0.12 | Banking NII of $11.5bn Customer deposits stable vs. 2Q23 3Q23 results Appendix +40% WPB ...

Financial Performance - HSBC reported a pre-tax profit of $29.4 billion for the first nine months of 2023, an increase of $17.8 billion or over 100% compared to the same period in 2022[11]. - Total revenue for the first nine months of 2023 reached $53.0 billion, reflecting a 51% increase from $35.2 billion in the same period of 2022[11]. - The bank's pre-tax profit for Q3 2023 was $7.7 billion, an increase of over 100% from $3.2 billion in Q3 2022[5]. - The total pre-tax profit for the nine months ended September 30, 2023, was $29,371 million, significantly up from $11,528 million in the same period of 2022[62]. - For the first nine months of 2023, HSBC reported a pre-tax profit of $29.4 billion, an increase of $17.4 billion compared to the same period in 2022[68]. - The adjusted profit before tax for the first nine months was $29.4 billion, up $17.4 billion, driven by increased net interest income and the reversal of a $2.3 billion impairment related to the planned sale of the French retail banking business[92]. Revenue Growth - Net interest income for the first nine months of 2023 was $27.5 billion, up $6.1 billion or 29% year-over-year, driven by rising average market interest rates[12]. - Total revenue for the first nine months of 2023 was $22.9 billion, an increase of $8.9 billion, representing a growth rate of 64% driven by expanded net interest income and increased loans[42]. - Wealth management revenue reached $5.815 billion for the first nine months of 2023, compared to $5.172 billion in the same period of 2022, reflecting a growth of 12.4%[19]. - Global payment solutions revenue increased to $9,166 million, up over 100% compared to $4,320 million in the same period last year[44]. - The acquisition of UK Silicon Valley Bank contributed a one-time gain of $1,593 million, significantly impacting overall revenue[44]. Operating Expenses - Operating expenses for the first nine months of 2023 were $23.4 billion, a slight decrease from $23.4 billion in the same period of 2022[11]. - Operating expenses for the first nine months of 2023 were $23.425 billion, a decrease of 2% from $23.920 billion in the same period of 2022[28]. - Adjusted operating expenses were $8 billion, reflecting a 2% increase, mainly due to rising technology costs and performance-linked compensation, although restructuring costs decreased[92]. Credit Losses - Expected credit losses increased to $2.4 billion for the first nine months of 2023, compared to $2.2 billion in the same period of 2022[11]. - Expected credit losses were $2.416 billion for the first nine months of 2023, compared to $2.155 billion in the same period of 2022, reflecting an increase of $261 million or 12%[28]. - The expected credit loss provision for Q3 2023 remained largely unchanged, with specific provisions related to the commercial property sector in mainland China[25]. Asset Management - Total assets as of September 30, 2023, amounted to $3 trillion, a decrease of $21 billion from June 30, 2023, with a negative impact of $59 billion from currency translation[16]. - Customer loans decreased to $900 billion, down $24 billion, with a negative currency translation impact of $19 billion; excluding this, customer loans decreased by $5 billion[16]. - Customer accounts totaled $1.6 trillion, a decrease of $33 billion, with a negative currency translation impact of $31 billion; excluding this, customer accounts decreased by $2 billion[16]. Shareholder Returns - HSBC announced a total of $7 billion in share buybacks and declared quarterly dividends totaling $0.3 per share in 2023[2]. - The company aims for a dividend payout ratio target of 50% for 2023 and 2024, excluding significant items[48]. - The board declared a third interim dividend of $0.10 per share and plans to repurchase up to $3 billion of shares[100]. Strategic Initiatives - The company plans to sell its retail mortgage portfolio in New Zealand, which will result in $800 million being reclassified as held for sale[16]. - The company plans to acquire Citibank's retail wealth management business in mainland China, which includes approximately $3.6 billion in managed assets and deposits[68]. - The company is focused on transitioning to net-zero carbon emissions and is implementing related policies and processes[69]. Market Conditions - The company anticipates a cautious short-term outlook on loan growth, with a projected annual increase of approximately 5% in the medium to long term[16]. - The company expects net interest income to exceed $35 billion for 2023, with a cost of funds for generating trading and fair value income exceeding $7 billion[63]. - Anticipated credit loss provisions are expected to average around 40 basis points of total loans for 2023, reflecting ongoing monitoring of risks in the commercial property sector in mainland China[64].

Diversity and Inclusion - As of the end of the first half of 2023, the proportion of women in senior leadership positions at HSBC has increased to 33.6%, with a target of reaching 35% by the end of 2025[1]. - The company is committed to fostering an inclusive work environment to attract and retain diverse talent[1]. Climate and Sustainability Initiatives - HSBC has invested $30 million in climate technology risk capital strategies to support innovations in key areas such as electric vehicle routing and technology[1]. - The company aims to achieve net-zero carbon emissions for its own operations and supply chain by 2030, and for its financed projects by 2050[1]. - HSBC is expanding the number of industries covered by its 2030 financing emissions targets, including shipping, agriculture, commercial real estate, and residential properties[1]. - HSBC's revised energy policy, released in December 2022, now encompasses a broader range of energy sectors, including upstream oil and gas, hydrogen, and renewable energy[1]. - HSBC has launched a sustainable development academy in 2022 to enhance employee skills in support of the net-zero carbon emissions goal[1]. - The group is committed to managing climate risks across all businesses and integrating climate factors into existing risk categories, with detailed disclosures available in the 2022 Annual Report[11]. Financial Performance - Net interest income for the first half of 2023 was $18.3 billion, an increase of $4.9 billion or 36% compared to the same period in 2022[25]. - The total pre-tax profit for the first half of 2023 was $21.657 billion, significantly higher than $8.780 billion in the same period of 2022[21]. - The bank's business net interest income for the first half of 2023 was $21.9 billion, up from $13.6 billion in the same period of 2022, reflecting a growth of 61%[23]. - The effective tax rate for the first half of 2023 was 16.6%, with a decrease of 1.9 percentage points attributed to non-taxable gains from the acquisition of the UK Silicon Valley Bank[33]. - The profit attributable to ordinary shareholders for the six months ended June 30, 2023, was $16,966 million, compared to $7,966 million for the same period in 2022, representing a 113% increase[97]. Risk Management - The company is committed to addressing environmental, social, and governance (ESG) risks, which have increased due to global regulatory developments and stakeholder expectations[15]. - The company continues to monitor evolving regulatory environments, especially following recent bank failures that may lead to changes in overall regulatory scrutiny[15]. - The company is actively managing model risk as regulatory requirements evolve, particularly concerning capital models and the use of artificial intelligence[15]. - The group is closely monitoring credit quality changes and potential risks of defaults in various sectors[117]. - The company continues to enhance risk management frameworks, particularly in third-party risk policies and climate risk assessments[113]. Economic Outlook - The economic outlook remains uncertain, particularly in the UK, which may adversely affect profitability and growth prospects in that market[117]. - The risk of economic recession persists, with mixed signals from the commercial property market in mainland China[117]. - The anticipated credit losses and other credit impairment provisions were impacted by global inflation and rising interest rates in the first half of 2023[117]. - The unemployment rate in the UK is expected to rise to 4.2% in 2023, with a gradual increase from 2022 levels, while China and Hong Kong are anticipated to see a decrease in unemployment rates as the economy recovers[149]. - The overall economic outlook reflects a significant risk of recession, with potential increases in unemployment and declines in asset prices[163]. Customer Engagement and Technology - The company is focused on enhancing digital technology to innovate and improve customer service, while also managing associated risks[15]. - The company is actively simplifying banking procedures and providing tools to help customers manage their finances effectively[1]. - HSBC plans to continue expanding its market presence and investing in new technologies to enhance customer experience[79]. Credit Losses and Provisions - Expected credit losses and other credit impairment charges amounted to $1.3 billion in the first half of 2023, including $1.1 billion in stage three provisions, with $300 million related to the commercial property sector in mainland China[29]. - The expected credit loss provision as of June 30, 2023, is $12.8 billion, an increase of $0.2 billion from December 31, 2022, including $1 billion from adverse foreign exchange movements[123]. - The expected credit loss for retail loans increased by $100 million compared to December 31, 2022, while wholesale loans saw a decrease of $400 million[192]. Strategic Transactions - The acquisition gain recognized from the purchase of the UK Silicon Valley Bank was $1.5 billion, contributing positively to the financial results[28]. - The company recognized a temporary gain of $1,500 million related to the acquisition of Silicon Valley Bank in the UK[81]. Workforce and Employee Engagement - A 2022 reward survey indicated a 9 percentage point increase in employees who believe their compensation is fair[1]. - Employee turnover rates have eased, but inflation remains high in certain regions, impacting talent retention and recruitment efforts[15]. - The number of employees as of June 30, 2023, was 221,764, an increase of 2,565 from December 31, 2022, indicating growth in workforce[33].

HSBC Holdings PLC (NYSE:HSBC) Q2 2023 Earnings Conference Call August 1, 2023 2:30 AM ET Company Participants Richard O'Connor - Global Head, IR Noel Quinn - Group CEO Georges Elhedery - Group CFO Conference Call Participants Manus Costello - Autonomous Aman Rakkar - Barclays Bank Raul Sinha - JPMorgan Chase & Co. Nicholas Lord - Morgan Stanley Perlie Mong - KBW Guy Stebbings - BNP Paribas Exane Tom Rayner - Numis Securities Katherine Lei - JPMorgan Chase & Co. Joseph Dickerson - Jefferies Andrew Coombs - C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of August 2023 Commission File Number: 001-14930 HSBC Holdings plc 8 Canada Square, London E14 5HQ, England (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F). Form 20-F X Form 40-F ...... This Report on Form 6-K with respect to our interi ...