2026-02-25 14:02Financial 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]