Amid the current financial backdrop, HSBC stock has seen extremely strong gains of 80% from levels of $25 in early January 2021 to around $45 now, vs. an increase of about 40% for the S&P 500 over this roughly 3- year period. HSBC is one of a handful of stocks that have increased their value in each of the last 3 years, but that still wasn't enough for it to consistently beat the market. Returns for the stock were 16% in 2021, 3% in 2022, and 30% in 2023. In comparison, returns for the S&P 500 have been 27% ...

The company did quite well with its initial earnings report of the year.Sprawling international banking conglomerate HSBC Holdings (HSBC 3.32%) pleased the market with its first quarterly-earnings report of 2024, although the company's CEO shocked some with a surprise resignation.Both of these developments occurred well before market open Tuesday. Investors reacted to them by trading the company's U.S.-listed American depositary receipts (ADRs) up by more than 3.3% across the day. That contrasted well with ...

HSBC Holdings’ (HSBC) shares rose Tuesday after the London-based bank surprised the market and said its group chief executive (CEO), Noel Quinn, was stepping down after nearly five years at the helm. The bank said Quinn, a 37-year-veteran at the lender, will stay on as it looks for a successor.  First-Quarter Pretax Profit Declined HSBC, which makes most of its profit from Hong Kong and has pivoted more of its business to Asia under Quinn, also announced Tuesday that pretax profit fell to $12.7 billion ...

HSBC on Tuesday announced the surprise departure of Group Chief Executive Officer Noel Quinn after nearly five years at the helm.In a statement released by the bank, Quinn said:"It has been a privilege to lead HSBC. I never imagined when I started 37 years ago that I would have the honour of becoming Group Chief Executive of this great bank. I am proud of what we have achieved, and it has only been possible because of the talent, dedication, and commitment of the people at HSBC. I want to thank them wholehe ...

Financial Performance - Pre-tax profit decreased by $200 million to $12.7 billion, reflecting a $4.8 billion gain from the sale of Canadian banking operations and an $1.1 billion impairment related to Argentine operations[13]. - Revenue increased to $20.8 billion, up $600 million or 3%, driven by increased customer activity in wealth management and global banking[13]. - HSBC reported a profit of $12.7 billion for Q1 2024, enabling the company to continue returning value to shareholders[19]. - The company announced a total distribution of $8.8 billion, including a regular dividend of $0.10 per share and a special dividend of $0.21 per share from the sale of its Canadian business[19]. - The profit attributable to shareholders for the quarter ending March 31, 2024, is $10,584 million, a decrease from $10,745 million in the same period last year[33]. - The basic earnings per share for the quarter is $0.54, compared to $0.52 in the previous year[33]. - The adjusted profit attributable to ordinary shareholders, excluding significant items, is $6,326 million, up from $4,747 million year-over-year[33]. - The company reported a total off-balance sheet nominal amount of $651,879 million, down from $678,024 million, indicating a decrease of about 3.9%[35]. - The company reported a significant gain of $4.8 billion from the sale of its Canadian banking business, which included various foreign exchange hedging gains[168]. Credit Losses and Provisions - Expected credit losses were $700 million, an increase of $300 million compared to Q1 2023, with an annualized rate of 30 basis points of total customer loans[13]. - The expected credit loss (ECL) for retail is projected at $2.9 billion and for wholesale at $2.3 billion, totaling $5.2 billion[23]. - The expected credit loss total as of December 31, 2023, was $3.0 billion for retail and $2.5 billion for wholesale, reflecting the impact of geopolitical risks and macroeconomic conditions[24]. - The expected credit loss provision was $11,483 million, reflecting a decrease of 29 million[37]. - The expected credit loss provisions for customer and interbank loans were $47 million as of March 31, 2024, compared to $303 million as of December 31, 2023, showing a substantial reduction[35]. - The expected credit loss charge for the first three months of 2024 is $0.7 billion, compared to $0.4 billion in Q1 2023[62]. - The expected credit loss provisions rose to $700 million, an increase of $300 million compared to Q1 2023[137]. - The expected credit loss sensitivity analysis indicates a cautious outlook for the upcoming quarters, with various scenarios considered[58]. Operating Expenses - Operating expenses rose to $8.2 billion, an increase of $600 million or 7%, attributed to continued investment in technology and inflation effects[13]. - The total operating expenses for Q1 2024 were $(8,151) million, a decrease of 6% from $(8,645) million in Q4 2023[86]. - Operating expenses for Q1 2024 were $3,700 million, up 7% year-over-year[129]. - Operating expenses totaled $(7,586) million, which is an increase from $(3,084) million in the same quarter last year[176]. Capital and Shareholder Returns - Common equity tier 1 capital ratio improved to 15.2%, up 40 basis points from Q4 2023, influenced by capital generation and strategic transactions[13]. - The company plans to initiate a share buyback of up to $3 billion, expected to impact the common equity tier 1 capital ratio by 40 basis points[13]. - The board declared a regular dividend of $0.10 per ordinary share and a special dividend of $0.21 per ordinary share, to be paid in June 2024[84]. - The target dividend payout ratio for 2024 is set at 50%, calculated based on earnings per share excluding significant items[91]. - The company does not account for significant items when calculating the dividend payout ratio target[91]. Business Segments and Revenue - The wealth management business had a balance of $1.8 trillion, a 10% increase compared to the same period last year, with net new investment assets of $27 billion in the first three months of 2024[16]. - The trading banking segment generated $6.7 billion in revenue, a 1% increase from Q1 2023, driven by growth in commercial banking and global banking and markets[16]. - The wealth management and personal banking segment generated revenue of $7,164 million, compared to $4,253 million in the previous year[79]. - The commercial banking segment reported revenue of $5,532 million, up from $5,095 million year-over-year[79]. - The global banking and markets segment achieved revenue of $4,455 million, an increase from $3,666 million in the previous year[79]. Economic Outlook and Market Conditions - The company anticipates that GDP growth in North America and Europe will slow in 2024 compared to 2023 due to the delayed effects of interest rate hikes and inflation[29]. - The company expects a slowdown in GDP growth in Hong Kong and mainland China for 2024 due to declining property markets and weak global trade growth[30]. - Inflation in major markets is expected to continue to ease, allowing central banks to begin lowering policy interest rates from mid-2024[30]. - The company is focused on maintaining a robust credit risk model to estimate future credit losses, incorporating various economic scenarios[29]. - The geopolitical tensions, including the ongoing Russia-Ukraine conflict and escalating Middle East situations, continue to pose significant uncertainties for HSBC's operations and risk profile[60]. Strategic Initiatives and Sales - HSBC completed the sale of its Canadian business and reached an agreement to sell its Argentine operations, focusing on high-value international opportunities[19]. - The company plans to sell its Argentine business, with related customer accounts of $1 billion classified as "assets held for sale"[150]. - The company completed the sale of its Canadian banking operations to Royal Bank of Canada, resulting in a gain of $4.8 billion, which includes a reversal of $600 million in currency translation reserve losses and $400 million in other reserve losses[71]. - The sale of the French retail banking business to Promontoria MMB SAS generated a profit participation interest of €100 million ($100 million) for HSBC, with an estimated after-tax loss impact of €100 million ($100 million) from retained loans[70].

The investment-banking sector across the Pacific Ocean isn't exactly thriving.There's apparently trouble on the Eastern front for global banking conglomerate HSBC (HSBC -2.27%), and investors are clearly concerned. On news of layoffs in two major Asian markets, they traded out of the company's stock, to the point where the bank's U.S.-listed shares lost more than 2% of their value.Pink slips coming?HSBC is in the process of laying off a clutch of workers in its investment-banking operations in two of the co ...

KEY TAKEAWAYSHSBC is selling its Argentina business to Grupo Financiero Galicia for $550 million.The sale will result in a $1 billion loss for HSBC in the first quarter of 2024.The deal follows several others as HSBC focuses on higher-growth markets like Asia.  HSBC Holdings (HSBC) will sell its banking operations in Argentina to Grupo Financiero Galicia for $550 million, with the divestment resulting a $1 billion first-quarter loss, the bank said Tuesday. Grupo Financiero Galicia will acquire all of HSBC's ...

Financial Performance - HSBC reported a financial performance with a net profit of $16 billion for 2023, an increase of 30% compared to the previous year[10]. - The bank's return on equity (ROE) improved to 12.5%, up from 9.5% in 2022[10]. - Total revenue reached $40 billion, reflecting a growth of 15% year-over-year[10]. - The group achieved a revenue of 840 billion in 2023, with 470 billion coming from Asia, representing a 34.1% increase in high-tier customer members compared to 2022[23]. - The group reported a return on equity of 14.6%, up from 10.0% in 2022[24]. - The company’s return on equity for 2023 was 14.6%, with a reported return of 15.6% after strategic adjustments[65]. - The overall financial performance in 2023 improved, reflecting the effectiveness of the company's strategies and asset management[64]. - The company reported a benchmark revenue of 303 billion, an increase of 133 billion compared to 2022[84]. - Net income increased by 54 billion, leading to a benchmark revenue of 154 billion, representing a growth rate of 30%[86]. Customer Engagement and Satisfaction - The bank's customer deposits increased by 8% to $1.5 trillion, indicating strong customer confidence[10]. - Customer satisfaction improved significantly, with the company doubling its ranking in the industry[27]. - The total customer base using HSBC services reached 2,944 billion, an increase from 2,107 billion in 2022[23]. - The company processed approximately $500 billion in cross-border payments in 2023, indicating strong market positioning[70]. - The wealth management and personal banking business added over 100,000 new clients in 2023[78]. - 83% of customers utilized digital services, marking a 5 percentage point increase since 2022[97]. - 75% of international clients in wealth management and personal banking opened accounts digitally, reflecting a 30 percentage point increase since 2022[97]. Strategic Initiatives and Expansion - HSBC plans to expand its operations in Asia, targeting a 20% increase in market share by 2025[10]. - The company plans to expand its banking operations in France, with expectations to launch in early 2024[14]. - The company is focusing on expanding its wealth management strategy, particularly in mainland China and the UK banking sector[43]. - The company plans to maintain a strong presence in the Southeast Asian market, leveraging favorable economic conditions[1]. - The company is actively exploring artificial intelligence applications to adapt to significant changes in the financial landscape[62]. - The company is focused on expanding its digital banking services, with 54% of wealth management and personal banking clients actively using mobile services, a 6 percentage point increase since 2022[97]. Sustainability and ESG Commitment - HSBC is focusing on sustainable finance, with a target to provide $100 billion in green financing by 2030[10]. - The company achieved a net zero carbon emissions goal with a sustainable financing amount of $2.583 billion and $361 million related to social activities as of December 31, 2023[27]. - The company aims to achieve a 35% reduction in emissions by 2025 as part of its net zero carbon emissions plan[27]. - The company aims to achieve net zero carbon emissions in its operations and supply chain by 2030, and for its financing projects by 2050[51]. - The company is committed to addressing human rights risks and ensuring all employees have access to digital tools[27]. - The company is committed to providing inclusive banking services and has implemented measures to support clients in understanding their financial options[104]. - The company has established a comprehensive ESG reporting framework to detail actions taken towards its sustainability goals[103]. Operational Efficiency - HSBC's cost-to-income ratio improved to 52%, down from 55% in the previous year, demonstrating operational efficiency[10]. - The company is focusing on enhancing operational efficiency and increasing employee compensation as part of its 2024 business plan[14]. - The cost target for 2024 is set, excluding significant items and reflecting a baseline of 30 to 40 basis points[13]. - The baseline cost of funds decreased by 2% year-on-year, contributing to improved performance metrics[70]. - The company is actively identifying new strategies to enhance capital management and operational efficiency[1]. Shareholder Returns - The bank has set a dividend payout ratio of 50% for 2024, aiming to return more capital to shareholders[10]. - The total dividend for 2023 is expected to reach $0.61 per share, the highest level since 2008, with a payout ratio of 14.8%[70]. - The company has initiated a share buyback program, targeting up to 20% of its capital[13]. - The company returned a total of 190 billion to shareholders through dividends and share buybacks in 2023[84]. Employee Engagement and Development - The company has a workforce of 221,000 employees worldwide[32]. - Employee engagement improved, with a rise of 11 percentage points in 2023 compared to 2020, exceeding the financial services industry benchmark[89]. - 91% of employees reported being able to balance their work commitments, with 62% choosing flexible work arrangements[175]. - The company aims to enhance employee engagement and performance, with 81% of employees expressing confidence in the company, a 4 percentage point increase since 2022[98]. - The company has set a target to achieve 35% representation of senior management roles by 2025, with 34.1% currently held by women[98]. Governance and Compliance - The board of directors has undergone significant changes, enhancing governance and oversight capabilities[1]. - The board has established a governance committee to ensure effective oversight of its governance practices[191]. - The board continues to engage with key stakeholders and has made decisions in line with the requirements of the Companies Act 2006[166]. - The board has prioritized understanding the impact of regulatory changes on the group's strategy and operations[170].

Investment Rating - The investment rating for the company is "Add" [2] Core Views - The company aims for an average tangible equity return of approximately 15% in 2024, with a projected net interest income of at least $41 billion for the banking business in 2024. The target payout ratio for 2024 is maintained at 50%, and the company has announced a share buyback of up to $2 billion [2][3] Financial Performance Summary - For the fiscal year 2023, the total operating income reached $66.1 billion, representing a year-on-year growth of 30.5%. The attributable net profit for ordinary shareholders was $22.4 billion, with a year-on-year increase of 56.4% [2][3] - The net interest margin improved to 1.66%, an increase of 24 basis points year-on-year. The company’s pre-tax profit rose by $13.8 billion to $30.3 billion, while the post-tax profit increased by $8.3 billion to $24.6 billion [3] - The average tangible equity return increased from 10.0% in 2022 to 14.6% in 2023. The liquidity coverage ratio stood at 136%, total capital ratio at 20.0%, and leverage ratio at 5.6% [3] 2024 Outlook - The company maintains a cautious outlook for loan growth in the first half of 2024 but expects a mid-single-digit percentage increase in customer loans year-on-year in the medium to long term. The anticipated credit loss provisions are expected to average around 40 basis points of total loans [3][2] - The company targets a cost increase of approximately 5% for 2024, excluding the impact of the sale of the French retail banking business and the planned sale of the Canadian banking business [3]

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)