Financial Performance - Group revenue for 2025 was $71 billion, representing a 5% year-on-year growth, with profit before tax at $36.6 billion, a 7% increase, marking a record high for the company [2][3] - The return on tangible equity (ROTE) was 17.2%, achieving the mid-teens target [2] Business Line Performance - Fee and other income from wholesale transaction banking grew by 4% year-over-year within the Corporate Investment Banking (CIB) business, while wealth fee and other income in the International Wealth and Personal Banking (IWPB) segment rose by 22% [3] - The loan book grew by 2%, with increases in the UK, CIB, and IWPB, partially offset by customer repayments and muted demand in Hong Kong [6] Market Performance - Deposits grew by 5%, equivalent to an increase of $78 billion, with particularly strong growth in Hong Kong [5][6] - The cost of risk for the year was around 39 basis points, aligned with guidance, with expectations for a similar level in 2026 [6] Strategic Direction and Industry Competition - The company completed the privatization of Hang Seng Bank ahead of schedule, enhancing its position in Hong Kong, a key financial center [4] - The company announced 11 business exits in 2025 to simplify operations and improve capital efficiency [5] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the balance sheet and capital generation, with a target for revenue growth of around 5% by 2028 [11] - The company is investing in digital asset capabilities and artificial intelligence to drive future growth and operational efficiency [11][12] Other Important Information - The Common Equity Tier 1 (CET1) ratio was 14.9%, expected to remain within the operating range of 14% to 14.5% [7][8] - The company plans to issue approximately $20 billion of holdco senior debt, $1 billion of Tier 2, and $4 billion of AT1 in 2026 [14] Q&A Session Summary Question: Update on issuance plans regarding currency - The company plans to issue a significant portion of its debt in US dollars, with flexibility to consider other currencies based on market conditions [17][18] Question: Insights on the FPC review and its implications - Management welcomed the FPC review, highlighting potential positive changes in leverage ratios and buffer usability [22][23][25] Question: Timeline for tokenized deposits offering - The company has onboarded clients in Hong Kong and is expanding to other jurisdictions, with ongoing development in this area [26][27] Question: Concerns regarding Stage 3 loans and their future trajectory - Stage 3 loans have increased slightly, but management remains optimistic about the overall market conditions and expects to manage risks effectively [75]

Financial Performance - Group revenue for 2025 was $71 billion, representing a 5% year-on-year growth, with profit before tax at $36.6 billion, a 7% increase, marking a record high for the company [2] - The return on tangible equity (ROTE) was 17.2%, achieving the mid-teens target [2] - Ordinary dividends declared for the year were $0.75 per share, an increase of 14% from the previous year [3] Business Line Performance - Fee and other income from wholesale transaction banking grew by 4% year-over-year within the Corporate Investment Banking (CIB) business [3] - Wealth fee and other income in the International Wealth and Personal Banking (IWPB) segment rose by 22%, with growth across all subsegments [3] Market Performance - Deposits grew by 5% during the year, equivalent to an increase of $78 billion, with particularly strong growth in Hong Kong [5] - The loan book grew by 2%, with increases in the U.K., CIB, and IWPB, partially offset by customer repayments and muted demand in Hong Kong [6] Company Strategy and Industry Competition - The company completed the privatization of Hang Seng Bank ahead of schedule, enhancing its position in the Hong Kong market [4] - The company announced 11 business exits in 2025 to simplify operations and improve capital efficiency [5] - The company is focused on digital asset capabilities and artificial intelligence to drive future growth and operational efficiency [11][12] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the strength of the balance sheet, with a CET1 ratio of 14.9% and expectations to remain capital generative [7] - The company anticipates revenue growth rising towards 5% by 2028 and targets a return on tangible equity of 17% or better each year until 2028 [11] - Management highlighted ongoing improvements in asset quality and a stable outlook for the loan book, with expectations for a cost of risk around 40 basis points [6][72] Other Important Information - The company realized approximately $1.2 billion of annualized simplification savings in 2025, ahead of the original timeline [5] - The total High-Quality Liquid Assets (HQLA) on hand is $0.9 trillion, covering around half of the total customer deposit base [9] Q&A Session Summary Question: Update on issuance plans and currency - The company plans to issue approximately $20 billion of holdco senior, $1 billion of Tier 2, and $4 billion of AT1 in 2026, primarily in U.S. dollars [14][18] Question: Insights on the FPC review and tokenized deposits - Management welcomed the FPC review as a positive step and highlighted the potential for changes in leverage ratios and buffer usability [22][25] - The company is actively developing its tokenized deposit offering, with initial launches in Hong Kong and plans to expand to other jurisdictions [26][27] Question: Stage 3 loans and commercial real estate - Stage 3 loans have increased to 2.5%, with management indicating a conservative outlook and ongoing monitoring of commercial real estate [72][73] Question: Legacy position and Tier 2 issuance - The company has made significant progress in reducing its legacy stack and continues to monitor opportunities for further reduction [54][55] - There are no set plans for Tier 2 issuance currency at the moment, with options being evaluated based on market conditions [75]

Financial Performance - Group revenue for 2025 was $71 billion, representing a 5% year-on-year growth, with profit before tax at $36.6 billion, a 7% increase, marking a record high for the company [2][3] - The return on tangible equity (ROTE) was 17.2%, achieving the mid-teens target [2] Business Line Performance - Fee and other income from wholesale transaction banking grew 4% year-over-year within the Corporate Investment Banking (CIB) business, while wealth fee and other income rose 22% in the International Wealth and Personal Banking (IWPB) segment [3] Market Performance - Deposits grew by 5%, equivalent to a $78 billion increase, with notable strength in Hong Kong [5][6] - The loan book grew by 2%, with increases in the UK, CIB, and IWPB, partially offset by customer repayments and muted demand in Hong Kong [6] Company Strategy and Industry Competition - The company completed the privatization of Hang Seng Bank ahead of schedule, enhancing its position in Hong Kong, a key financial center [4] - The company announced 11 business exits in 2025 to simplify operations and improve capital efficiency [5] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the ongoing improvement of asset quality and the potential for revenue and cost synergies from the Hang Seng transaction [4][5] - The company expects revenue growth to rise towards 5% by 2028 and targets a return on tangible equity of 17% or better each year [11] Other Important Information - The Common Equity Tier 1 (CET1) ratio was 14.9%, with expectations to manage it within the operating range of 14% to 14.5% [7][8] - The company plans to issue approximately $20 billion of holdco senior debt, $1 billion of Tier 2, and $4 billion of AT1 in 2026 [13] Q&A Session Summary Question: Update on currency issuance plans - The company plans to issue most of its debt in US dollars, with some issuance in other currencies depending on market conditions [17][18] Question: Insights on the FPC review and its implications - Management highlighted the importance of the FPC review and its potential to improve the capital framework, particularly regarding leverage ratios and buffer usability [20][22][25] Question: Timeline for tokenized deposits offering - The company has onboarded clients in Hong Kong for tokenized deposits and aims to expand this offering to other jurisdictions, including the UK and Singapore [27][28] Question: CET1 recovery timeline post-Hang Seng privatization - The CET1 ratio is expected to recover back into the target operating range quickly, with the company remaining capital generative [42][43] Question: Details on MREL requirement increase - The increase in MREL requirements was driven by leverage constraints in certain entities, with a significant buffer still maintained [52][53]