RNS Number : 6487F

HSBC Holdings PLC

11 March 2020

�

Financial review

�

47 Financial summary

56 Global businesses and geographical regions

72 Other information

73 Risk

152 Capital

Supporting the transition to a low-carbon economy

We acted as a mandated lead arranger in the refinancing of the �2.5bn Beatrice offshore wind farm off the north-east coast of Scotland, which is jointly owned by UK energy firm SSE, Danish fund manager Copenhagen Infrastructure Partners and Edinburgh-based energy firm Red Rock Power Limited, a subsidiary of Beijing-headquartered SDIC Power.

To encourage low-carbon electricity generation and ensure progress towards carbon neutrality by 2050, the UK government awarded Beatrice a 15-year contract for difference, a mechanism in which public funding underpins power revenues that could otherwise fluctuate with swings in electricity prices.

Beatrice is one of the largest wind farms globally with a capacity of 580MW, which is capable of powering approximately 450,000 homes.

Financial summary
�	Page
Use of non-GAAP financial measures	47
Changes from 1 January 2019 �	47
Critical accounting estimates and judgements	47
Consolidated income statement	48
Income statement commentary	49
Consolidated balance sheet	52

Use of non-GAAP financial measures

Our reported results are prepared in accordance with IFRSs as�detailed in the financial statements starting on page

229

To measure our performance, we also use non-GAAP financial measures, including those derived from our reported results that eliminate factors that distort year-on-year comparisons. The 'adjusted performance' measure used throughout this report is described below, and where others are used they are described. All non-GAAP financial measures are reconciled to the closest reported financial measure.

The global business segmental results are�presented on an adjusted basis in accordance with IFRS 8 'Operating Segments', as detailed in Note 10: Segmental analysis on page 263.

Adjusted performance

Adjusted performance is computed by adjusting reported results for the effects of foreign currency translation differences and significant items, which both distort year-on-year comparisons.

We consider adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believes to be�significant, and providing insight into how management assesses year-on-year performance.

Significant items

'Significant items' refers collectively to the items that management and investors would ordinarily identify and consider separately to improve the understanding of the underlying trends in the business.

The tables on pages 56 to 59 and pages 63 to 68 detail the effects of significant items on each of our global business segments and geographical regions in 2019, 2018 and 2017.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies during 2019.

We exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a like-for-like basis and better understand the�underlying trends in the business.

Foreign currency translation differences

Foreign currency translation differences for 2019 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

� �� the income statements for 2018 and 2017 at the average rates of exchange for 2019; and

� �� the balance sheets at 31 December 2018 and 31 December 2017 at the prevailing rates of exchange on 31 December 2019.

No adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint�ventures or associates. The constant currency data of HSBC's Argentinian subsidiaries have not been adjusted further for the impacts of hyperinflation. When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC's operations have been translated at the appropriate exchange rates�applied in the current period on the basis described above.

�

Changes from 1 January 2019

IFRS 16 'Leases'

On 1 January 2019, HSBC adopted the requirements of IFRS 16 'Leases' retrospectively, with the cumulative effect of initially applying the standard recognised as an adjustment to the opening balance of retained earnings at that date. Comparatives were not restated. The adoption of the standard increased assets by $5bn and increased financial liabilities by the same amount with no effect on net assets or retained earnings.

Interest rate benchmark reform: Amendments to IFRS 9 and IAS 39 'Financial Instruments'

Amendments to IFRS 9 and IAS 39 issued in September 2019 modify specific hedge accounting requirements so that entities apply those hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows of the hedging instrument are based is not altered as a result of interest rate benchmark reform. These amendments apply from 1 January 2020 with early adoption permitted. HSBC has adopted the amendments that apply to IAS 39 from 1 January 2019 and has made the additional disclosures as required by the amendments.

Critical accounting estimates and judgements

The results of HSBC reflect the choice of accounting policies, assumptions and estimates that underlie the preparation of HSBC's consolidated financial statements. The significant accounting policies, including the policies which include critical�accounting estimates and judgements, are described in�Note�

1.2

�on the financial statements. The accounting policies listed below are highlighted as they involve a high degree of uncertainty and have a material impact on the financial statements:

� �� Impairment of amortised cost financial assets and financial assets measured at fair value through other comprehensive income ('FVOCI'): The most significant judgements relate to defining what is considered to be a significant increase in credit risk, determining the lifetime and point of initial recognition of revolving facilities, and making assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions. A high degree of uncertainty is involved in making estimations using assumptions that are highly subjective and very sensitive to the risk factors. See�Note 1.2(i) on�page�246.

� �� Deferred tax assets: The most significant judgements relate to judgements made in respect of expected future profitability. See�Note 1.2(l) on page 250.

� �� Valuation of financial instruments: In determining the fair value of financial instruments a variety of valuation techniques are used, some of which feature significant unobservable inputs and are subject to substantial uncertainty. See Note 1.2(c) on page 244.

� �� Impairment of interests in associates: Impairment testing involves significant judgement in determining the value in use, and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment, based on a number of management assumptions. The most significant judgements relate to the impairment testing of our investment in Bank of Communications Co., Limited ('BoCom'). See Note 1.2(a) on page 242.

� �� Goodwill impairment: A high degree of uncertainty is involved in estimating the future cash flows of the cash-generating units ('CGUs') and the rates used to discount these cash flows. See Note 1.2(a) on page 242.

� �� Provisions: Significant judgement may be required due�to the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that�may arise. See Note 1.2(m) on page 250.

� �� Post-employment benefit plans: The calculation of the defined benefit pension obligation involves the determination of key assumptions including discount rate, inflation rate, pension payments and deferred pensions, pay and mortality. See Note 1.2(k) on page 249.

Given the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of the�items above, it is possible that the outcomes in the next financial year could differ from the expectations on which management's estimates are based, resulting in the recognition and measurement of materially different amounts from those estimated by management in these financial statements.

Consolidated income statement

Summary consolidated income statement
�	�	2019		2018		2017		2016		2015
�	Footnotes	$m		$m		$m		$m		$m
Net interest income	�	30,462	�	30,489	�	28,176	�	29,813	�	32,531	�
Net fee income	�	12,023	�	12,620	�	12,811	�	12,777	�	14,705	�
Net income from financial instruments held for trading or managed on a fair value basis	�	10,231	�	9,531	�	8,426	�	7,521	�	8,717	�
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	�	3,478	�	(1,488	)	2,836	�	1,262	�	565	�
Change in fair value of designated debt and related derivatives	1	90	�	(97	)	155	�	(1,997	)	973	�
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	�	812	�	695	�	N/A		N/A		N/A
Gains less losses from financial investments	�	335	�	218	�	1,150	�	1,385	�	2,068	�
Net insurance premium income	�	10,636	�	10,659	�	9,779	�	9,951	�	10,355	�
Other operating income/(expense)	�	2,957	�	960	�	443	�	(876	)	1,178	�
Total operating income	�	71,024	�	63,587	�	63,776	�	59,836	�	71,092	�
Net insurance claims and benefits paid and movement in liabilities to policyholders	�	(14,926	)	(9,807	)	(12,331	)	(11,870	)	(11,292	)
Net operating income before change in expected credit losses and other credit impairment charges/Loan impairment charges and other credit risk provisions	2	56,098	�	53,780	�	51,445	�	47,966	�	59,800	�
Change in expected credit losses and other credit impairment charges �	�	(2,756	)	(1,767	)	N/A		N/A		N/A
Loan impairment charges and other credit risk provisions	�	N/A		N/A		(1,769	)	(3,400	)	(3,721	)
Net operating income	�	53,342	�	52,013	�	49,676	�	44,566	�	56,079	�
Total operating expenses excluding goodwill impairment	�	(35,000	)	(34,659	)	(34,884	)	(36,568	)	(39,768	)
Goodwill impairment	�	(7,349	)	-	�	-	�	(3,240	)	-	�
Operating profit	�	10,993	�	17,354	�	14,792	�	4,758	�	16,311	�
Share of profit in associates and joint ventures	�	2,354	�	2,536	�	2,375	�	2,354	�	2,556	�
Profit before tax	�	13,347	�	19,890	�	17,167	�	7,112	�	18,867	�
Tax expense	�	(4,639	)	(4,865	)	(5,288	)	(3,666	)	(3,771	)
Profit for the year	�	8,708	�	15,025	�	11,879	�	3,446	�	15,096	�
Attributable to:	�	�		�		�		�		�
-� ordinary shareholders of the parent company	�	5,969	�	12,608	�	9,683	�	1,299	�	12,572	�
-� preference shareholders of the parent company	�	90	�	90	�	90	�	90	�	90	�
-� other equity holders	�	1,324	�	1,029	�	1,025	�	1,090	�	860	�
-� non-controlling interests	�	1,325	�	1,298	�	1,081	�	967	�	1,574	�
Profit for the year	�	8,708	�	15,025	�	11,879	�	3,446	�	15,096	�

Five-year financial information
�	�	2019		2018		2017		2016		2015
�	Footnotes	$		$		$		$		$
Basic earnings per share	�	0.30	�	0.63	�	0.48	�	0.07	�	0.65	�
Diluted earnings per share	�	0.30	�	0.63	�	0.48	�	0.07	�	0.64	�
Dividends per ordinary share	3	0.51	�	0.51	�	0.51	�	0.51	�	0.50	�
�	�	%		%		%		%		%
Dividend payout ratio	4	172.2	�	81.0	�	106.3	�	728.6	�	76.5	�
Post-tax return on average total assets	�	0.3	�	0.6	�	0.5	�	0.1	�	0.6	�
Return on average ordinary shareholders' equity	�	3.6	�	7.7	�	5.9	�	0.8	�	7.2	�
Return on average tangible equity	�	8.4	�	8.6	�	6.8	�	2.6	�	8.1	�
Effective tax rate	�	34.8	�	24.5	�	30.8	�	51.5	�	19.99	�

For footnotes, see page 55.

Unless stated otherwise, all tables in the Annual Report and Accounts 2019 are presented on a reported basis.

For a summary of our financial performance in 2019, see page 27.

For further financial performance data for each global business and geographical region, see pages 56 to 59 and 61 to 69, respectively. The global business segmental results are presented on an adjusted basis in accordance with IFRS 8 'Operating Segments', in Note 10: Segmental analysis on page 263.

Income statement commentary

The following commentary compares Group financial performance for the years ended 2019 with 2018.

Net interest income

�	�	2019		2018		2017
�	Footnotes	$m		$m		$m
Interest income	�	54,695	�	49,609	�	40,995	�
Interest expense	�	(24,233	)	(19,120	)	(12,819	)
Net interest income	�	30,462	�	30,489	�	28,176	�
Average interest-earning assets	�	1,922,822	�	1,839,346	�	1,726,120	�
�	�	%		%		%
Gross interest yield	5	2.84	�	2.70	�	2.37	�
Less: cost of funds	5	(1.48	)	(1.21	)	(0.88	)
Net interest spread	6	1.36	�	1.49	�	1.49	�
Net interest margin	7	1.58	�	1.66	�	1.63	�

For footnotes, see page 55.

Summary of interest income by type of asset
�	�	2019						2018						2017
�	�	Average balance		Interest income		Yield		Average balance		Interest income		Yield		Average balance		Interest income		Yield
�	�	$m		$m		%		$m		$m		%		$m		$m		%
Short-term funds and loans and advances to�banks	�	212,920	�	2,411	�	1.13	�	233,637	�	2,475	�	1.06	�	236,126	�	2,030	�	0.86	�
Loans and advances to customers	�	1,021,554	�	35,578	�	3.48	�	972,963	�	33,285	�	3.42	�	902,214	�	28,751	�	3.19	�
Reverse repurchase agreements - non-trading	�	224,942	�	4,690	�	2.08	�	205,427	�	3,739	�	1.82	�	173,760	�	2,191	�	1.26	�
Financial investments	�	417,939	�	10,705	�	2.56	�	386,230	�	9,166	�	2.37	�	389,807	�	7,440	�	1.91	�
Other interest-earning assets	�	45,467	�	1,311	�	2.88	�	41,089	�	944	�	2.30	�	24,213	�	583	�	2.41	�
Total interest-earning assets	�	1,922,822	�	54,695	�	2.84	�	1,839,346	�	49,609	�	2.70	�	1,726,120	�	40,995	�	2.37	�

Summary of interest expense by type of liability and equity
�	�	2019						2018						2017
�	�	Average balance		Interest expense		Cost		Average balance		Interest expense		Cost		Average balance		Interest expense		Cost
�	Footnotes	$m		$m		%		$m		$m		%		$m		$m		%
Deposits by banks	8	52,515	�	702	�	1.34	�	44,530	�	506	�	1.14	�	47,337	�	451	�	0.95	�
Customer accounts	9	1,149,483	�	11,238	�	0.98	�	1,138,620	�	8,287	�	0.73	�	1,094,920	�	5,405	�	0.49	�
Repurchase agreements - non-trading	�	160,850	�	4,023	�	2.50	�	161,204	�	3,409	�	2.11	�	136,561	�	1,665	�	1.22	�
Debt securities in issue - non-trading	10	211,229	�	6,522	�	3.09	�	183,434	�	5,675	�	3.09	�	169,243	�	4,391	�	2.59	�
Other interest-bearing liabilities	�	59,980	�	1,748	�	2.91	�	53,731	�	1,243	�	2.31	�	7,009	�	907	�	12.94	�
Total interest-bearing liabilities	�	1,634,057	�	24,233	�	1.48	�	1,581,519	�	19,120	�	1.21	�	1,455,070	�	12,819	�	0.88	�

For footnotes, see page 55.

Net interest income ('NII') of $30.5bn was broadly unchanged compared with 2018. Interest income associated with the increase in average interest-earning assets ('AIEA') of 5% was offset by higher funding costs, reflecting higher average interest rates compared with the previous year.

Excluding the adverse effects of significant items and foreign currency translation differences, NII increased by $1.0bn.

Net interest margin ('NIM') of 1.58% was 8 basis points ('bps') lower than in 2018 as the higher yield on AIEA of 14bps was offset by the rise in funding costs of average interest-bearing liabilities of 27bps.

The decrease in NIM in 2019 included the adverse effects of foreign currency translation differences and significant items. Excluding these, NIM fell by 6bps.

Interest income increased by $5.1bn or 10% compared with 2018, benefiting from growth in AIEA of 5% and higher average interest rates compared with the previous year, with the yield on AIEA increasing by 14bps.

Interest income on loans and advances to customers increased by $2.3bn. This was mainly driven by higher average interest rates compared with the previous year, with yields increasing by 6bps and 5% volume growth in AIEA, notably in term lending in Asia, and growth in mortgages in Asia and Europe.

Interest income on short-term funds and financial investments increased by $1.5bn, reflecting higher average interest rates compared with the previous year.

The increase in interest income included $1.6bn in relation to the adverse effects of significant items and foreign currency translation. Excluding these, interest income increased by $6.7bn.

Interest expense increased by $5.1bn or 27% compared with 2018. This reflects growth in average interest-bearing liabilities of 3% and an increase in funding cost of 27bps, predominantly in customer accounts.

Interest expense on interest-bearing customer accounts was $3.0bn higher, mainly in Asia, reflecting higher average interest rates compared with the previous year together with an increase in customer accounts, primarily towards term deposits.

Interest expense on debt securities in issue was $0.8bn higher. This was mainly as a result of debt issuances by HSBC Holdings to meet regulatory requirements, which contributed $0.5bn towards the increase.

The increase in interest expense included the favourable effects of significant items and foreign currency translation differences of $0.6bn. Excluding these impacts, interest expense was $5.7bn higher.

Net fee income of $12.0bn was $0.6bn lower compared with 2018, including adverse foreign currency translation differences of $0.3bn. The remaining reduction primarily reflected lower net fee income in RBWM and GB&M.

In RBWM, the reduction reflected lower fees from broking and unit trusts in Hong Kong due to lower volumes as investor confidence was weaker compared with a strong 2018. In addition, funds under management fees also reduced, reflecting a change in mix of clients' investments to lower risk and lower margin products.

In GB&M, net fee income was lower, mainly in the UK and the US. This was primarily due to lower corporate finance fees, which reflected reduced client activity. This was partly offset by higher underwriting fees, notably in Asia, France and the US, from higher volumes.

Net income from financial instruments held for trading or managed on a fair value basis increased by $0.7bn and included a favourable fair value movement on non-qualifying hedges of $0.3bn, offset by adverse movements in foreign currency translation differences of $0.5bn.

The increase was mainly in Asia, notably in Hong Kong, reflecting favourable market conditions and increased client activity in our Rates, Credit and Equities businesses, and from gains in Balance Sheet Management ('BSM') on funding swaps due to favourable movements on yield curves. In Latin America, income in BSM increased, primarily from gains on debt securities in Argentina and a favourable impact of hyperinflation, as well as increased client activity in GB&M in Mexico. Income increased in the US from increased client activity on US Treasuries and emerging markets interest rate swaps, partly offset by lower revenue from precious metals trading.

In the UK, income fell as subdued market conditions resulted in lower Global Markets revenue, notably in Rates, Credit and Equities.

Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss was $3.5bn, compared with a net expense of $1.5bn in 2018. This increase primarily reflected more favourable equity market performance in Hong Kong and France, resulting in revaluation gains on the equity and unit trust assets supporting insurance and investment contracts.

This positive movement resulted in a corresponding movement in liabilities to policyholders and the present value of in-force long-term insurance business (see 'Other operating income' below), reflecting the extent to which the policyholders and shareholders respectively participate in the investment performance of the associated assets.

Change in fair value of designated debt and related derivatives were $0.1bn favourable in 2019, compared with adverse movements of $0.1bn in�2018. These movements were driven by changes in interest rates between the periods, notably in US dollars and pounds sterling.

The majority of our financial liabilities designated at fair value are fixed-rate, long-term debt issuances, and are managed in conjunction with interest rate swaps as part of our interest rate management strategy. These liabilities are discussed further on page 53.

Gains less losses from financial investments of $0.3bn increased by $0.1bn compared with 2018, reflecting higher gains from the disposal of debt securities.

Net insurance premium income was broadly unchanged compared with 2018, and included adverse effects of foreign currency translation differences. Excluding these, the increase of $0.2bn reflected higher new business volumes, particularly in Hong Kong, Singapore and UK, partly offset by higher reinsurance ceded in Hong Kong.

Other operating income of $2.9bn in 2019 increased by $2.0bn compared with 2018. This was primarily due to a higher favourable change in the present value of in-force long-term insurance business ('PVIF') in 2019 (up $1.1bn), and a $0.8bn dilution gain in 2019 following the merger of The Saudi British Bank with Alawwal bank in Saudi Arabia.

This increase in PVIF reflected a favourable movement in 'assumption changes and experience variances' of $1.1bn. This was primarily in Hong Kong due to the effect of interest rate changes on the valuation of the liabilities under insurance contracts, which has a corresponding increase in 'net insurance claims and benefits paid and movement in liabilities to policyholders'. For further details, see Note�21 on the financial statements.

In 2019, we recognised a gain in Argentina following the sale of a stake in the payment processing company Prisma Medios de Pago S.A., and a gain in Mexico associated with the launch of a merchant acquiring services joint venture with Global Payments Inc. By contrast, 2018 included a loss of $0.1bn on the early redemption of subordinated debt linked to the US run-off portfolio.

Net insurance claims and benefits paid and movement in liabilities to policyholders were $5.1bn higher, primarily due to higher returns on financial assets supporting contracts where the policyholder is subject to part or all of the investment risk, and the impact of higher new business volumes, particularly in Hong Kong and Singapore. These were partly offset by the impact of higher reinsurance ceded in Hong Kong.

Changes in expected credit losses and other credit impairment charges ('ECL') of $2.8bn were $1.0bn higher compared with 2018. This was mainly driven by higher charges in CMB, RBWM and GB&M. ECL in 2019 included a charge to reflect the economic outlook in Hong Kong, as well as a partial release of allowances related to UK economic uncertainty. See page 95 for more information on the impact of alternative/additional scenarios. The effects of foreign currency translation differences between the periods were minimal.

� �� In CMB, ECL charges of $1.2bn were $0.5bn higher reflecting increases in Europe and Hong Kong, while the previous year benefited from net releases in North America that did not recur. The movements were partly offset by a reduction in ECL charges in MENA.

� �� In RBWM, ECL charges of $1.4bn were $0.3bn higher, driven by increased ECL related to unsecured lending, notably in the US, Mexico, and Hong Kong. In addition, ECL in 2019 included charges in Argentina related to government bond exposures in our insurance business.

� �� In GB&M, net ECL charges of $0.2bn compared with a net release of $31m in 2018. Releases in the previous period more than offset ECL charges and primarily related to a small number of clients within the oil and gas sector in the US.

� �� In Corporate Centre, net ECL charges of $7m compared with a net release of $119m in 2018. The ECL in 2019 included charges related to BSM's exposure to government bonds in Argentina. There were also lower net releases recorded in 2019 related to our legacy portfolios in the UK, compared with 2018.

On a constant currency basis, ECL as a percentage of average gross loans and advances to customers was 0.27%, compared with 0.17% in 2018.

Operating expenses - currency translation and significant items
�	2019		2018
�	$m		$m
Significant items	9,554	�	1,644	�
-� costs of structural reform	158	�	361	�
-� customer redress programmes	1,281	�	146	�
-� disposals, acquisitions and investment in new businesses	-	�	52	�
-� goodwill impairment �	7,349	�	-	�
-� past service costs of guaranteed minimum pension benefits equalisation	-	�	228	�
-� restructuring and other related costs	827	�	66	�
-� settlements and provisions in connection with legal and regulatory matters	(61	)	816	�
-� currency translation on significant items	�		(25	)
Currency translation	�		1,109	�
Year ended 31 Dec	9,554	�	2,753	�

Staff numbers (full-time equivalents)
�	2019		2018		2017
Global businesses	�		�		�
Retail Banking and Wealth Management	134,296	�	133,644	�	129,402	�
Commercial Banking	44,503	�	44,805	�	44,871	�
Global Banking and Markets	48,459	�	48,500	�	45,725	�
Global Private Banking	6,767	�	6,819	�	7,250	�
Corporate Centre	� � � 1,326	�	1,449	�	1,439	�
At 31 Dec	235,351	�	235,217	�	228,687	�

Operating expenses of $42.3bn were $7.7bn or 22% higher than in 2018 and included favourable foreign currency translation differences of $1.1bn, which were more than offset by net adverse movements in significant items of $7.9bn.

Significant items included:

� �� a $7.3bn impairment of goodwill, which included $4.0bn related to our global GB&M business, resulting from an update in long-term assumptions and the planned reshaping of the business, and $2.5bn in our CMB business in Europe, $0.4bn in GPB in North America, and $0.4bn in CMB in Latin America and MENA reflecting lower long-term economic growth rate assumptions. For further details, see Note 21 on the financial statements;

� �� customer redress programme costs of $1.3bn in 2019, $1.2bn of which related to the mis-selling of payment protection insurance ('PPI') mainly driven by a higher than expected increase in the volume of complaints prior to the deadline in August 2019. This compared with $0.1bn in 2018. For further details, see Note 10 on the financial statements; and

� �� restructuring and other related costs of $0.8bn in 2019, which included $753m of severance costs arising from cost efficiency measures across our global businesses and functions. We expect annualised cost savings from these measures to be approximately equal to 2019 severance costs.

These were partly offset by:

� �� the non-recurrence of settlements and provisions in connection with legal and regulatory matters of $0.8bn in 2018;

� �� lower costs of structural reform of $0.2bn, which included costs associated with the UK's withdrawal from the European Union; and

� �� the non-recurrence of a provision in relation to past service costs of guaranteed minimum pension obligations in 2018 of $0.2bn.

Excluding significant items and foreign currency translation differences, operating expenses of $32.8bn were $0.9bn or 2.8% higher than in 2018. The increase primarily reflected investments to grow the business (up $0.4bn), notably in RBWM and CMB, as well as continued investment in digital capabilities across all of our global businesses.

Volume-related growth increased operating expenses by $0.2bn, and the UK bank levy of $988m was $24m higher than in 2018.

The impact of our cost-saving efficiencies broadly offset inflation.

The number of employees expressed in full-time equivalent staff ('FTEs') at 31 December 2019 was 235,351, an increase of 134 from 31 December 2018. This largely reflected an increase in FTEs associated with our investment initiatives, which was broadly offset by reductions following our restructuring programmes. The number of contractors at 31 December 2019 was 7,411, a decrease of 3,443 from 31 December 2018.

The 2020 business update sets a target of reducing adjusted operating expenses to $31bn or lower by 2022. To achieve this reduction, we expect to incur restructuring costs of $6bn during the period to 2022.

Share of profit in associates and joint ventures was $2.4bn, a decrease of $0.2bn or 7% compared with 2018, and included the adverse effects of foreign currency translation differences of $90m.

Excluding the effects of foreign currency translation differences, our share of profit in associates and joint ventures decreased by $92m compared with 2018. This reflected lower income from The Saudi British Bank due to higher ECL charges and other expenses relating to the merger with Alawwal bank, partly offset by higher income from BoCom.

At 31�December 2019, we performed an impairment review of�our�investment in BoCom and concluded that it was not impaired, based on our value-in-use ('VIU') calculation. For more information on the key assumptions in our VIU calculation, including the sensitivity of the VIU to each key assumption, see Note 18 on the financial statements.

Tax expense of $4.6bn was $0.2bn lower than in 2018.

The effective tax rate for 2019 of 34.8% was higher than the 24.5% for 2018 due to the impairment of goodwill in 2019, which is not deductible for tax purposes.

�

This impairment charge increased the 2019 effective tax rate by 12.3%.

Further details are provided in Note 7 on the financial statements.

Consolidated balance sheet

Five-year summary consolidated balance sheet
�	�	2019		2018		2017		2016		2015
�	Footnotes	$m		$m		$m		$m		$m
Assets	�	�		�		�		�		�
Cash and balances at central banks	�	154,099	�	162,843	�	180,624	�	128,009	�	98,934	�
Trading assets	�	254,271	�	238,130	�	287,995	�	235,125	�	224,837	�
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	�	43,627	�	41,111	�	N/A		N/A		N/A
Financial assets designated at fair value	�	N/A		N/A		29,464	�	24,756	�	23,852	�
Derivatives	�	242,995	�	207,825	�	219,818	�	290,872	�	288,476	�
Loans and advances to banks	�	69,203	�	72,167	�	90,393	�	88,126	�	90,401	�
Loans and advances to customers	11	1,036,743	�	981,696	�	962,964	�	861,504	�	924,454	�
Reverse repurchase agreements - non-trading	�	240,862	�	242,804	�	201,553	�	160,974	�	146,255	�
Financial investments	�	443,312	�	407,433	�	389,076	�	436,797	�	428,955	�
Other assets	�	230,040	�	204,115	�	159,884	�	148,823	�	183,492	�
Total assets at 31 Dec	�	2,715,152	�	2,558,124	�	2,521,771	�	2,374,986	�	2,409,656	�
Liabilities and equity	�	�		�		�		�		�
Liabilities	�	�		�		�		�		�
Deposits by banks	�	59,022	�	56,331	�	69,922	�	59,939	�	54,371	�
Customer accounts	�	1,439,115	�	1,362,643	�	1,364,462	�	1,272,386	�	1,289,586	�
Repurchase agreements - non-trading	�	140,344	�	165,884	�	130,002	�	88,958	�	80,400	�
Trading liabilities	�	83,170	�	84,431	�	184,361	�	153,691	�	141,614	�
Financial liabilities designated at fair value	�	164,466	�	148,505	�	94,429	�	86,832	�	66,408	�
Derivatives	�	239,497	�	205,835	�	216,821	�	279,819	�	281,071	�
Debt securities in issue	�	104,555	�	85,342	�	64,546	�	65,915	�	88,949	�
Liabilities under insurance contracts	�	97,439	�	87,330	�	85,667	�	75,273	�	69,938	�
Other liabilities	�	194,876	�	167,574	�	113,690	�	109,595	�	139,801	�
Total liabilities at 31 Dec	�	2,522,484	�	2,363,875	�	2,323,900	�	2,192,408	�	2,212,138	�
Equity	�	�		�		�		�		�
Total shareholders' equity	�	183,955	�	186,253	�	190,250	�	175,386	�	188,460	�
Non-controlling interests	�	8,713	�	7,996	�	7,621	�	7,192	�	9,058	�
Total equity at 31 Dec	�	192,668	�	194,249	�	197,871	�	182,578	�	197,518	�
Total liabilities and equity at 31 Dec	�	2,715,152	�	2,558,124	�	2,521,771	�	2,374,986	�	2,409,656	�

For footnotes, see page 55.

A more detailed consolidated balance sheet is contained in the financial statements on page 231.

Five-year selected financial information
�	�	2019		2018		2017		2016		2015
�	Footnotes	$m		$m		$m		$m		$m
Called up share capital	�	10,319	�	10,180	�	10,160	�	10,096	�	9,842	�
Capital resources	12	172,150	�	173,238	�	182,383	�	172,358	�	189,833	�
Undated subordinated loan capital	�	1,968	�	1,969	�	1,969	�	1,967	�	2,368	�
Preferred securities and dated subordinated loan capital	13	33,063	�	35,014	�	42,147	�	42,600	�	42,844	�
Risk-weighted assets	�	843,395	�	865,318	�	871,337	�	857,181	�	1,102,995	�
Total shareholders' equity	�	183,955	�	186,253	�	190,250	�	175,386	�	188,460	�
Less: preference shares and other equity instruments	�	(22,276	)	(23,772	)	(23,655	)	(18,515	)	(16,517	)
Total ordinary shareholders' equity	�	161,679	�	162,481	�	166,595	�	156,871	�	171,943	�
Less: goodwill and intangible assets (net of tax)	�	(17,535	)	(22,425	)	(21,680	)	(19,649	)	(24,626	)
Tangible ordinary shareholders' equity	�	144,144	�	140,056	�	144,915	�	137,222	�	147,317	�
Financial statistics	�	�		�		�		�		�
Loans and advances to customers as a percentage of customer accounts	�	72.0%		72.0%		70.6%		67.7%		71.7%
Average total shareholders' equity to average total assets	�	6.97%		7.16%		7.33%		7.37%		7.31%
Net asset value per ordinary share at year-end ($)	14	8.00	�	8.13	�	8.35	�	7.91	�	8.77	�
Tangible net asset value per ordinary share at year-end ($)	�	7.13	�	7.01	�	7.26	�	6.92	�	7.51	�
Tangible net asset value per fully diluted share at year-end ($) �	�	7.11	�	6.98	�	7.22	�	6.88	�	7.46	�
Number of $0.50 ordinary shares in issue (millions)	�	20,639	�	20,361	�	20,321	�	20,192	�	19,685	�
Basic number of $0.50 ordinary shares outstanding (millions)	�	20,206	�	19,981	�	19,960	�	19,838	�	19,604	�
Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	�	20,280	�	20,059	�	20,065	�	19,933	�	19,744	�
Closing foreign exchange translation rates to $:	�	�		�		�		�		�
$1: �	�	0.756	�	0.783	�	0.740	�	0.811	�	0.675	�
$1: �	�	0.890	�	0.873	�	0.834	�	0.949	�	0.919	�

For footnotes, see page 55.

Balance sheet commentary compared with�
31 December 2018

At 31 December 2019, our total assets were $2.7tn, an increase of $157bn or 6% on a reported basis and $126bn or 5% on a constant currency basis.

Our ratio of customer advances to customer accounts of 72.0% was unchanged from 31 December 2018.

Assets

Loans and advances to customers of $1.0tn increased by $55bn or 6% on a reported basis. This included a favourable effect of foreign currency translation differences of $13bn, resulting in growth of $42bn or 4% on a constant currency basis, which was mainly due to continued growth in Asia and Europe, notably in Hong Kong and the UK.

Customer lending in Asia increased by $25bn, with growth in all global businesses. The increase in RBWM (up $13bn) reflected growth in Hong Kong (up $8bn) and Australia (up $3bn), primarily due to increased mortgage lending. In GPB (up $6bn), the increase was mainly in Hong Kong, driven by growth in marketable securities-backed lending transactions, and in Singapore from increased term lending. Lending growth in GB&M (up $4bn) and CMB (up $3bn) reflected higher corporate term lending from our continued strategic focus on loan growth in the region, as well as from an increase in customer demand.

In Europe, customer lending increased by $12bn, notably in HSBC UK (up $11bn). This primarily reflected growth in mortgage balances in RBWM (up $9bn) due to our continued focus on broker-originated mortgages, and in CMB (up $2bn) where term lending increased.

Cash and balances at central banks decreased by $9bn or 5% and included a favourable effect of foreign currency translation differences of $1bn. Excluding this, cash and balances at central banks decreased by $10bn, mainly in the US, reflecting the redeployment of our commercial surplus.

Trading assets increased by $16bn or 7%, which included a favourable effect of foreign currency translation differences of $3bn. Excluding this, trading assets increased by $13bn due to an increase in equity security holdings, notably in Hong Kong, the US and the UK, in part due an increase in client activity compared with 2018. This was partly offset by a decrease in debt securities held in the US.

Derivative assets increased by $35bn or 17% and included a favourable effect of foreign currency translation differences of $5bn. Excluding this, derivative assets increased by $31bn, primarily from mark-to-market gains in the UK. The increase in derivative assets was consistent with the increase in derivative liabilities as the underlying risk is broadly matched.

Financial investments increased by $36bn or 9%, which included a favourable effect of foreign currency translation differences of $3bn. Excluding this, financial investments increased by $33bn, mainly due to an increase in debt securities, notably in the UK, and to a lesser extent in Singapore and the US. This was partly offset by a decrease in investments in government bonds in Hong Kong.

Liabilities

Customer accounts of $1.4tn increased by $76bn or 6% on a reported basis, including the favourable effect of foreign currency translation differences of $17bn. On a constant currency basis, current accounts increased by $59bn or 4%, with growth across all regions, mainly in Asia, Europe and North America.

In Asia, we grew customer accounts by $30bn or 4%, notably in RBWM (up $20bn) and CMB (up $5bn), primarily from an increase in time deposits, reflecting higher customer inflows due to competitive rates. Growth in GB&M (up $5bn) was mainly in Singapore as we continued to target this market for growth.

Customer accounts increased in Europe by $13bn. This was driven by growth in RBWM (up $11bn), mainly due to higher savings balances, notably in the UK, and in CMB (up $10bn), reflecting growth in Global Liquidity and Cash Management ('GLCM'). These increases were partly offset by a decrease in GB&M balances (down $9bn) mainly in the UK in GLCM.

In North America, customer accounts increased by $11bn, notably in RBWM (up $7bn) reflecting growth in savings and deposits from recent promotions. Growth in CMB (up $7bn), was notably in the US from an increase in demand deposits.

Repurchase agreements - non-trading decreased by $26bn or 15%, primarily in the US from a decreased use of repurchase agreements for funding in our Global Markets business.

Financial liabilities designated at fair value were $16bn or 11% higher. This was mainly due to increased issuances of senior debt during the year by HSBC Holdings and increased issuances of structured notes in the UK and France.

Derivative liabilities increased by $34bn or 16%, including a favourable effect of foreign currency translation differences of $5bn. Excluding this, derivative liabilities increased by $29bn, which is consistent with the increase in derivative assets, since the underlying risk is broadly matched.

Debt securities in issue rose by $19bn or 23%, reflecting an increase in certificates of deposits, primarily in Europe, Asia and North America. This was partly offset by a decrease in commercial paper, notably in the UK, and a decrease in medium term notes in North America.

Equity

Total shareholders' equity of $184bn decreased by $2bn or 1%. The reduction was mainly due to dividends paid to shareholders of $12bn and adverse movements of $2bn related to fair value attributable to changes in own credit risk. These reductions were partly offset by profits generated in the period of $7bn, shares issued in lieu of dividends of $3bn and a $1bn decrease in accumulated foreign exchange losses.

Risk-weighted assets

Risk-weighted assets ('RWAs') totalled $843.4bn at 31 December 2019, a $21.9bn decrease. Excluding foreign currency translation differences, RWAs decreased by $26.9bn in 2019.

A $32.2bn decrease in RWAs as a result of methodology and policy changes was mostly due to management initiatives in CMB and GB&M, including risk parameter refinements, a change to our best estimate of expected loss on corporate exposures, and securitisation transactions. A $7.7bn decrease due to model updates included global corporate model changes in CMB and GB&M, and changes to Private Banking credit risk models in Asia and North America. A $9.0bn increase in RWAs due to asset size movements predominantly reflected RWA increases due to lending growth of $26.2bn, which were partly offset by reductions due to active portfolio management of $17.2bn. Changes in asset quality caused a $3.7bn rise in RWAs.

-� other	35,458	�	35,470	�
Asia	697,358	�	664,824	�
-� Hong Kong	499,955	�	484,897	�
-� Singapore	48,569	�	42,323	�
-� mainland China	48,323	�	45,712	�
-� Australia	23,191	�	20,649	�
-� India	14,935	�	14,210	�
-� Malaysia	14,624	�	13,904	�
-� Taiwan	14,668	�	13,602	�
-� Indonesia	4,732	�	3,810	�
-� other	28,361	�	25,717	�
Middle East and North Africa (excluding Saudi Arabia)	38,126	�	35,408	�
-� United Arab Emirates	17,949	�	16,583	�
-� Turkey	3,870	�	4,169	�
-� Egypt	5,186	�	4,493	�
-� other	11,121	�	10,163	�
North America	146,676	�	133,291	�
-� US	90,834	�	82,523	�
-� Canada	48,425	�	43,898	�
-� other	7,417	�	6,870	�
Latin America	28,237	�	25,966	�
-� Mexico	23,051	�	19,936	�
-� other	5,186	�	6,030	�
At 31 Dec	1,439,115	�	1,362,643	�

�

Loans and advances, deposits by currency

�

31 Dec 2019

USD

GBP

HKD

EUR

CNY

Others¹⁵

Total

Loans and advances to banks

19,386

�

3,245

�

6,242

�

4,266

�

5,772

�

30,292

�

69,203

�

Loans and advances to customers

177,696

�

264,029

�

234,945

�

84,919

�

34,338

�

240,816

�

1,036,743

�

Total loans and advances

197,082

�

267,274

�

241,187

�

89,185

�

40,110

�

271,108

�

1,105,946

�

Deposits by banks

23,508

�

7,537

�

1,865

�

11,154

�

4,265

�

10,693

�

59,022

�

Customer accounts

360,462

�

358,764

�

299,049

�

122,988

�

52,216

�

245,636

�

1,439,115

�

Total deposits

383,970

�

366,301

�

300,914

�

134,142

�

56,481

�

256,329

�

1,498,137

�

31 Dec 2018

USD

GBP

HKD

EUR

CNY

Others¹⁵

Total

Loans and advances to banks

23,469

�

4,351

�

3,241

�

3,462

�

7,418

�

30,226

�

72,167

�

Loans and advances to customers

176,907

�

243,541

�

220,458

�

86,583

�

29,973

�

224,234

�

981,696

�

Total loans and advances

200,376

�

247,892

�

223,699

�

90,045

�

37,391

�

254,460

�

1,053,863

�

Deposits by banks

17,802

�

5,777

�

3,748

�

15,923

�

4,065

�

9,016

�

56,331

�

Customer accounts

348,741

�

340,244

�

290,748

�

116,095

�

49,596

�

217,219

�

1,362,643

�

Total deposits

366,543

�

346,021

�

294,496

�

132,018

�

53,661

�

226,235

�

1,418,974

�

Footnotes to financial summary

1�� The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch.

2�� Net operating income before change in expected credit losses and other credit impairment charges/Loan impairment charges and other credit risk provisions, also referred to as revenue.

3�� Dividends recorded in the financial statements are dividends per ordinary share declared in a year and are not dividends in respect of, or for, that year.

4�� Dividends per ordinary share expressed as a percentage of basic earnings per share.

5�� Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA'). Cost of funds is the average annualised interest cost as a percentage on average interest-bearing liabilities.

6�� Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds.

7�� Net interest margin is net interest income expressed as an annualised percentage of AIEA.

8�� Including interest-bearing bank deposits only.

9�� Including interest-bearing customer accounts only.

10� 'Financial liabilities designated at fair value - own debt issued' and 'Debt securities' lines have been merged into one new line: 'Debt securities in issue - non-trading'. Interest expense on financial liabilities designated at fair value is reported as 'Net income/ (expense) from financial instruments held for trading or managed on a fair value basis' in the consolidated income statement, other than interest on own debt, which is reported in 'Interest expense'.

11 Net of impairment allowances.

12 Capital resources are regulatory capital, the calculation of which is set out on page�152.

13 Including perpetual preferred securities, details of which can be found in Note 28 on the financial statements.

14 The definition of net asset value per ordinary share is total shareholders' equity, less non-cumulative preference shares and capital securities, divided by the number of ordinary shares in issue, excluding own shares held by the company, including those purchased and held in treasury.

15 'Others' includes items with no currency information available ($9,334m for loans to banks, $62,037m for loans to customers, $15m for deposits by banks and $33m for customer accounts).

Global businesses and geographical regions
�	Page
Reconciliation of reported and adjusted items - global businesses �	56
Supplementary global business disclosures �	60
Analysis of reported results by geographical regions	62
Reconciliation of reported and adjusted items - geographical regions	64
Analysis by country	70

Summary

The Group Chief Executive and the rest of the Group Management Board ('GMB') review operating activity on a number of bases, including by global business and geographical region. Global businesses are our reportable segments under IFRS 8 'Operating

Segments' and are presented in Note 10: Segmental analysis on page 263.

Geographical information is classified by the location of the principal operations of the subsidiary or, for The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank plc, HSBC UK Bank plc, HSBC Bank Middle East Limited and HSBC Bank USA, by the location of the branch responsible for reporting the results or providing funding.

The expense of the UK bank levy is included in the Europe geographical region as HSBC regards the levy as a cost of being headquartered in the UK. For the purposes of the presentation by global business, the cost of the levy is included in the Corporate Centre.

The results of geographical regions are presented on a reported basis.

Reconciliation of reported and adjusted items - global businesses

Supplementary unaudited analysis of significant items by global business is presented below.

�	�	2019
�	�	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	�	23,192	�	15,285	�	14,840	�	1,848	�	933	�	56,098	�
Significant items	�	208	�	7	�	76	�	-	�	(980	)	(689	)
-� customer redress programmes	�	156	�	7	�	-	�	-	�	-	�	163	�
-� disposals, acquisitions and investment in new businesses	�	52	�	-	�	-	�	-	�	(820	)	(768	)
-� fair value movements on financial instruments �	2	-	�	-	�	76	�	-	�	(160	)	(84	)
Adjusted	�	23,400	�	15,292	�	14,916	�	1,848	�	(47	)	55,409	�
ECL	�	�		�		�		�		�		�
Reported	�	(1,390	)	(1,184	)	(153	)	(22	)	(7	)	(2,756	)
Adjusted	�	(1,390	)	(1,184	)	(153	)	(22	)	(7	)	(2,756	)
Operating expenses	�	�		�		�		�		�		�
Reported	�	(15,429	)	(9,829	)	(13,640	)	(1,817	)	(1,634	)	(42,349	)
Significant items	�	1,412	�	3,028	�	4,223	�	393	�	498	�	9,554	�
-� costs of structural reform	3	-	�	4	�	42	�	-	�	112	�	158	�
-� customer redress programmes	�	1,264	�	17	�	-	�	-	�	-	�	1,281	�
-� goodwill impairment	�	-	�	2,956	�	3,962	�	431	�	-	�	7,349	�
-� restructuring and other related costs	�	148	�	51	�	217	�	32	�	379	�	827	�
-� settlements and provisions in connection with legal and regulatory matters	�	-	�	-	�	2	�	(70	)	7	�	(61	)
Adjusted	�	(14,017	)	(6,801	)	(9,417	)	(1,424	)	(1,136	)	(32,795	)
Share of profit in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	55	�	-	�	-	�	-	�	2,299	�	2,354	�
Adjusted	�	55	�	-	�	-	�	-	�	2,299	�	2,354	�
Profit before tax	�	�		�		�		�		�		�
Reported	�	6,428	�	4,272	�	1,047	�	9	�	1,591	�	13,347	�
Significant items	�	1,620	�	3,035	�	4,299	�	393	�	(482	)	8,865	�
-� revenue	�	208	�	7	�	76	�	-	�	(980	)	(689	)
-� operating expenses	�	1,412	�	3,028	�	4,223	�	393	�	498	�	9,554	�
Adjusted	�	8,048	�	7,307	�	5,346	�	402	�	1,109	�	22,212	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	395,393	�	346,060	�	246,266	�	47,593	�	1,431	�	1,036,743	�
Adjusted	�	395,393	�	346,060	�	246,266	�	47,593	�	1,431	�	1,036,743	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	689,283	�	386,522	�	292,284	�	62,943	�	8,083	�	1,439,115	�
Adjusted	�	689,283	�	386,522	�	292,284	�	62,943	�	8,083	�	1,439,115	�

�

For footnotes, see page 71.

�

Reconciliation of reported and adjusted items (continued)
�	�	2018
�	�	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	�	21,928	�	14,938	�	15,634	�	1,790	�	(510	)	53,780	�
Currency translation	�	(562	)	(423	)	(489	)	(28	)	(115	)	(1,617	)
Significant items	�	8	�	(50	)	(120	)	(5	)	335	�	168	�
-� customer redress programmes	�	-	�	(53	)	-	�	-	�	-	�	(53	)
-� disposals, acquisitions and investment in new businesses	�	7	�	-	�	-	�	(5	)	111	�	113	�
-� fair value movements on financial instruments �	2	-	�	-	�	(122	)	-	�	222	�	100	�
-� currency translation on significant items	�	1	�	3	�	2	�	-	�	2	�	8	�
Adjusted	�	21,374	�	14,465	�	15,025	�	1,757	�	(290	)	52,331	�
ECL	�	�		�		�		�		�		�
Reported	�	(1,177	)	(739	)	26	�	8	�	115	�	(1,767	)
Currency translation	�	43	�	27	�	5	�	(1	)	4	�	78	�
Adjusted	�	(1,134	)	(712	)	31	�	7	�	119	�	(1,689	)
Operating expenses	�	�		�		�		�		�		�
Reported	�	(13,902	)	(6,480	)	(9,348	)	(1,550	)	(3,379	)	(34,659	)
Currency translation	�	467	�	203	�	287	�	28	�	124	�	1,109	�
Significant items	�	180	�	2	�	(109	)	97	�	1,474	�	1,644	�
-� costs of structural reform	3	2	�	8	�	41	�	-	�	310	�	361	�
-� customer redress programmes	�	173	�	(5	)	(22	)	-	�	-	�	146	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	52	�	-	�	52	�
-� past service costs of guaranteed minimum pension benefits equalisation	�	-	�	-	�	-	�	-	�	228	�	228	�
-� restructuring and other related costs	�	-	�	-	�	-	�	7	�	59	�	66	�
-� settlements and provisions in connection with legal and regulatory matters	�	16	�	-	�	(131	)	42	�	889	�	816	�
-� currency translation on significant items	�	(11	)	(1	)	3	�	(4	)	(12	)	(25	)
Adjusted	�	(13,255	)	(6,275	)	(9,170	)	(1,425	)	(1,781	)	(31,906	)
Share of profit in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	33	�	-	�	-	�	-	�	2,503	�	2,536	�
Currency translation	�	-	�	-	�	-	�	-	�	(90	)	(90	)
Adjusted	�	33	�	-	�	-	�	-	�	2,413	�	2,446	�
Profit/(loss) before tax	�	�		�		�		�		�		�
Reported	�	6,882	�	7,719	�	6,312	�	248	�	(1,271	)	19,890	�
Currency translation	�	(52	)	(193	)	(197	)	(1	)	(77	)	(520	)
Significant items	�	188	�	(48	)	(229	)	92	�	1,809	�	1,812	�
-� revenue	�	8	�	(50	)	(120	)	(5	)	335	�	168	�
-� operating expenses	�	180	�	2	�	(109	)	97	�	1,474	�	1,644	�
Adjusted	�	7,018	�	7,478	�	5,886	�	339	�	461	�	21,182	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	361,872	�	333,162	�	244,978	�	39,217	�	2,467	�	981,696	�
Currency translation	�	6,045	�	3,937	�	2,147	�	385	�	66	�	12,580	�
Adjusted	�	367,917	�	337,099	�	247,125	�	39,602	�	2,533	�	994,276	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	640,924	�	357,596	�	290,914	�	64,658	�	8,551	�	1,362,643	�
Currency translation	�	8,248	�	4,678	�	3,670	�	395	�	104	�	17,095	�
Adjusted	�	649,172	�	362,274	�	294,584	�	65,053	�	8,655	�	1,379,738	�

For footnotes, see page 71.

Reconciliation of reported and adjusted items (continued)
�	�	2017
�	�	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	�	20,519	�	13,120	�	14,617	�	1,723	�	1,466	�	51,445	�
Currency translation	�	(578	)	(336	)	(264	)	(5	)	(161	)	(1,344	)
Significant items	�	(233	)	99	�	470	�	(20	)	(244	)	72	�
-� customer redress programmes	�	3	�	103	�	2	�	-	�	-	�	108	�
-� disposals, acquisitions and investment in new businesses	�	(235	)	-	�	99	�	(20	)	(118	)	(274	)
-� fair value movements on financial instruments �	2	-	�	-	�	373	�	-	�	(128	)	245	�
-� currency translation on significant items	�	(1	)	(4	)	(4	)	-	�	2	�	(7	)
Adjusted	�	19,708	�	12,883	�	14,823	�	1,698	�	1,061	�	50,173	�
LICs	�	�		�		�		�		�		�
Reported	�	(980	)	(496	)	(459	)	(16	)	182	�	(1,769	)
Currency translation	�	39	�	28	�	20	�	(1	)	(3	)	83	�
Adjusted	�	(941	)	(468	)	(439	)	(17	)	179	�	(1,686	)
Operating expenses	�	�		�		�		�		�		�
Reported	�	(13,734	)	(6,001	)	(8,723	)	(1,586	)	(4,840	)	(34,884	)
Currency translation	�	471	�	178	�	133	�	9	�	124	�	915	�
Significant items	�	877	�	53	�	(119	)	193	�	2,706	�	3,710	�
-� costs of structural reform	3	6	�	3	�	8	�	-	�	403	�	420	�
-� costs to achieve	�	270	�	44	�	240	�	3	�	2,445	�	3,002	�
-� customer redress programmes	�	637	�	16	�	2	�	-	�	-	�	655	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	31	�	22	�	53	�
-� gain on partial settlement of pension obligation	�	(26	)	(9	)	(9	)	(3	)	(141	)	(188	)
-� settlements and provisions in connection with legal and regulatory matters	�	-	�	-	�	(376	)	164	�	14	�	(198	)
-� currency translation on significant items	�	(10	)	(1	)	16	�	(2	)	(37	)	(34	)
Adjusted	�	(12,386	)	(5,770	)	(8,709	)	(1,384	)	(2,010	)	(30,259	)
Share of profit in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	18	�	-	�	-	�	-	�	2,357	�	2,375	�
Currency translation	�	(6	)	-	�	-	�	-	�	(41	)	(47	)
Adjusted	�	12	�	-	�	-	�	-	�	2,316	�	2,328	�
Profit/(loss) before tax	�	�		�		�		�		�		�
Reported	�	5,823	�	6,623	�	5,435	�	121	�	(835	)	17,167	�
Currency translation	�	(74	)	(130	)	(111	)	3	�	(81	)	(393	)
Significant items	�	644	�	152	�	351	�	173	�	2,462	�	3,782	�
-� revenue	�	(233	)	99	�	470	�	(20	)	(244	)	72	�
-� operating expenses	�	877	�	53	�	(119	)	193	�	2,706	�	3,710	�
Adjusted	�	6,393	�	6,645	�	5,675	�	297	�	1,546	�	20,556	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	346,148	�	316,533	�	252,474	�	40,326	�	7,483	�	962,964	�
Currency translation	�	(8,380	)	(7,663	)	(5,584	)	(313	)	(101	)	(22,041	)
Adjusted	�	337,768	�	308,870	�	246,890	�	40,013	�	7,382	�	940,923	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	639,592	�	362,908	�	283,943	�	66,512	�	11,507	�	1,364,462	�
Currency translation	�	(10,150	)	(6,420	)	(7,309	)	(1,021	)	(490	)	(25,390	)
Adjusted	�	629,442	�	356,488	�	276,634	�	65,491	�	11,017	�	1,339,072	�

For footnotes, see page 71.

Reconciliation of reported and adjusted risk-weighted assets

�

At 31 Dec 2019

�

Retail

Banking and

Wealth
Management

Commercial
Banking

Global
Banking and
Markets

Global Private
Banking

Corporate Centre

Total

�

Footnotes

$bn

Risk-weighted assets

�

Reported

�

134.0

�

316.7

�

258.2

�

14.0

�

120.5

�

843.4

�

Adjusted

134.0

�

316.7

�

258.2

�

14.0

�

120.5

�

843.4

�

At 31 Dec 2018

Risk-weighted assets

�

Reported

�

126.9

�

321.2

�

281.0

�

16.8

�

119.4

�

865.3

�

Currency translation

�

0.7

�

3.4

�

1.1

�

0.1

�

0.4

�

5.7

�

Disposals

�

(0.8

)

(0.8

)

-� operations in Brazil

�

(0.8

)

(0.8

)

Adjusted

127.6

�

324.6

�

282.1

�

16.9

�

119.0

�

870.2

�

�	�	At 31 Dec 2017
Risk-weighted assets	�	�		�		�		�		�		�
Reported	�	121.5	�	301.0	�	299.3	�	16.0	�	133.5	�	871.3	�
Currency translation	�	(2.5	)	(8.0	)	(4.6	)	(0.1	)	(1.4	)	(16.6	)
Disposals	�	-	�	-	�	-	�	-	�	(2.6	)	(2.6	)
-� operations in Brazil	�	-	�	-	�	-	�	-	�	(2.6	)	(2.6	)
Adjusted	4	119.0	�	293.0	�	294.7	�	15.9	�	129.5	�	852.1	�

For footnotes, see page 71.

Supplementary global business disclosures

RBWM: Insurance manufacturing adjusted results

The following table shows the results of our insurance manufacturing operations by income statement line item. It shows

�

the results of insurance manufacturing operations for RBWM and for all global business segments in aggregate, and separately the insurance distribution income earned by HSBC bank channels.

Adjusted results of insurance manufacturing operations and insurance distribution income earned by HSBC bank channels⁵
�	�	2019				2018				2017
�	�	RBWM		All global businesses		RBWM		All global businesses		RBWM		All global businesses
�	Footnotes	$m		$m		$m		$m		$m		$m
Net interest income	�	2,131	�	2,306	�	2,026	�	2,196	�	1,977	�	2,174	�
Net fee income	�	(690	)	(739	)	(569	)	(558	)	(489	)	(496	)
- fee income	�	104	�	129	�	181	�	274	�	232	�	330	�
- fee expense	�	(794	)	(868	)	(750	)	(832	)	(721	)	(826	)
Net income from financial instruments held for trading or managed on a fair value basis	�	(44	)	(29	)	(521	)	167	�	(51	)	1	�
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss	�	3,568	�	3,554	�	(897	)	(1,559	)	2,830	�	2,771	�
Gains less losses from financial investments	�	5	�	5	�	58	�	57	�	23	�	31	�
Net insurance premium income	�	10,054	�	10,718	�	10,054	�	10,541	�	9,312	�	9,938	�
Other operating income	�	1,765	�	1,787	�	709	�	767	�	62	�	96	�
of which: PVIF	�	1,696	�	1,749	�	637	�	679	�	12	�	22	�
Total operating income	�	16,789	�	17,602	�	10,860	�	11,611	�	13,664	�	14,515	�
Net insurance claims and benefits paid and movement in liabilities to policyholders	�	(14,192	)	(14,891	)	(9,079	)	(9,596	)	(11,732	)	(12,323	)
Net operating income before change in expected credit losses and other credit impairment charges	1	2,597	�	2,711	�	1,781	�	2,015	�	1,932	�	2,192	�
ECL	�	(104	)	(115	)	(2	)	(1	)	-	�	-	�
Net operating income	�	2,493	�	2,596	�	1,779	�	2,014	�	1,932	�	2,192	�
Total operating expenses	�	(520	)	(505	)	(455	)	(478	)	(388	)	(422	)
Operating profit	�	1,973	�	2,091	�	1,324	�	1,536	�	1,544	�	1,770	�
Share of profit in associates and joint ventures	�	44	�	44	�	31	�	32	�	10	�	10	�
Profit before tax of insurance manufacturing operations	6	2,017	�	2,135	�	1,355	�	1,568	�	1,554	�	1,780	�
Annualised new business premiums of insurance manufacturing operations	�	3,296	�	3,382	�	3,153	�	3,231	�	2,647	�	2,706	�
Insurance distribution income earned by HSBC bank channels	�	913	�	1,039	�	923	�	1,039	�	889	�	1,012	�

For footnotes, see page 71.

Insurance manufacturing

The following commentary, unless otherwise specified, relates to the 'All global businesses' results.

HSBC recognises the present value of long-term in-force insurance contracts and investment contracts with discretionary participation features ('PVIF') as an asset on the balance sheet. The overall balance sheet equity, including PVIF, is therefore a measure of the embedded value in the insurance manufacturing entities, and the movement in this embedded value in the period drives the overall income statement result.

Adjusted profit before tax of $2.1bn increased by $0.6bn or 36%. This was mainly due to favourable market impacts of $0.1bn in 2019, primarily driven by strong equity market performance in Hong Kong, compared with adverse market impacts of $(0.3)bn in 2018. It also reflected a $0.1bn increase in the value of new business written.

Net operating income before change in expected credit losses and other credit impairment charges was $0.7bn or 35% higher than 2018. This reflected the following:

� �� 'Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss' of $3.6bn compared with a net expense of $1.6bn in 2018, due to favourable equity market performance in Hong Kong and France in 2019 compared with 2018, resulting in revaluation gains on equity and unit trust assets supporting insurance and investment contracts. This positive movement resulted in a corresponding movement in liabilities to policyholders and PVIF (see 'Other operating income' below), reflecting the extent to which the policyholders and shareholders respectively participate in the investment performance of the associated assets portfolio.

� �� 'Net insurance premium income' of $10.7bn was $0.2bn higher. This was driven by higher new business volumes across all entities, and particularly in Hong Kong, Singapore and UK, partly offset by higher reinsurance ceded in Hong Kong.

� �� 'Other operating income' of $1.8bn increased by $1.0bn. This increase in PVIF reflected a favourable movement in 'assumption changes and experience variances' of $1.1bn, primarily in Hong Kong due to the effect of interest rate changes on the valuation of the liabilities under insurance contracts. In addition, the value of new business written increased by $0.1bn to $1.2bn. For further details, see Note�21 on the financial statements.

� �� 'Net insurance claims and benefits paid and movement in liabilities to policyholders' of $14.9bn were $5.3bn higher than 2018. This increase was primarily due to higher returns on financial assets supporting contracts where the policyholder is subject to part or all of the investment risk and the impact of higher new business volumes, particularly in Hong Kong and Singapore. This was partly offset by the impact of higher reinsurance ceded in Hong Kong.

Adjusted ECL of $0.1bn in 2019 primarily related to government bond exposures in Argentina.

Adjusted operating expenses of $0.5bn increased by $27m or 6% compared with 2018, reflecting investment in core insurance functions and capabilities, including preparation for the implementation of IFRS 17 'Insurance Contracts'.

Annualised new business premiums ('ANP') is used to assess new insurance premium generation by the business. It is calculated as 100% of annualised first year regular premiums and 10% of single premiums, before reinsurance ceded. Growth in ANP during the period reflected new business growth in most entities, with the main contribution coming from Hong Kong, mainland China and the UK.

Insurance distribution income from HSBC channels included $665m (2018: $651m) on HSBC manufactured products, for which a corresponding fee expense is recognised within insurance manufacturing, and $375m (2018: $389m) on products manufactured by third-party providers. The RBWM component of this distribution income was $589m (2018: $581m) from HSBC manufactured products and $325m (2018: $343m) from third-party products.

�

Asset Management: Funds under management

The following table shows the funds under management of our Asset Management business.

Asset Management - reported funds under management⁷
�	2019		2018		2017
�	$bn		$bn		$bn
Opening balance	444	�	462	�	410	�
Net new money	30	�	8	�	8	�
Value change	30	�	(14	)	24	�
Exchange and other	2	�	(12	)	20	�
Closing balance	506	�	444	�	462	�
�	�		�		�
�	�		�		�
Asset Management - reported funds under management by geography
�	2019		2018		2017
�	$bn		$bn		$bn
Europe	287	�	235	�	249	�
Asia	161	�	164	�	168	�
MENA	6	�	2	�	1	�
North America	44	�	36	�	37	�
Latin America	8	�	7	�	7	�
Closing balance	506	�	444	�	462	�

For footnotes, see page 71.

Funds under management represents assets managed, either actively or passively, on behalf of our customers. At 31 December 2019, Asset Management funds under management amounted to $506bn, an increase of $62bn or 14%. The increase reflected positive market performance and foreign exchange, together with strong net new money, primarily from money market solutions and discretionary products, notably in the UK.

GB&M: Securities Services

Assets held in custody⁷

Custody is the safekeeping and servicing of securities and other financial assets on behalf of clients. At 31 December 2019, we held $8.5tn of assets as custodian, 16% higher than at 31 December 2018. This increase was driven by the onboarding of assets for new clients globally, and the incremental net asset inflows for existing clients together with favourable market movements mainly in Asia.

Assets under administration

Our assets under administration business, which includes the provision of bond and loan administration services, transfer agency services and the valuation of portfolios of securities and other financial assets on behalf of clients, complements the custody business. At 31 December 2019, the value of assets held

under administration by the Group amounted to $4.0tn, which was 20% higher than at 31 December 2018. This increase was mainly driven by the onboarding of significant new client assets in Europe, together with incremental net assets inflows for existing clients in both Europe and Asia.

GPB client assets

The following table shows the client assets of our GPB business.

GPB - reported client assets
�	2019		2018		2017
�	$bn		$bn		$bn
At 1 Jan	309	�	330	�	298	�
Net new money	23	�	10	�	-	�
Value change	23	�	(17	)	21	�
Disposals	-	�	-	�	-	�
Exchange and other	6	�	(14	)	11	�
At 31 Dec	361	�	309	�	330	�

�

GPB - reported client assets by geography
�	�	2019		2018		2017
�	Footnotes	$bn		$bn		$bn
Europe	�	171	�	149	�	161	�
Asia	�	151	�	124	�	130	�
North America	�	39	�	36	�	39	�
Latin America	�	-	�	-	�	-	�
Middle East	8	-	�	-	�	-	�
At 31 Dec	�	361	�	309	�	330	�

For footnotes, see page 71.

Analysis of reported results by geographical regions

�

HSBC reported profit/(loss) before tax and balance sheet data
�	�	2019
�	�	Europe		Asia		MENA		North America		Latin America		Intra-HSBC/ Global impairment		Total
�	Footnotes	$m		$m		$m		$m		$m		$m		$m
Net interest income	�	5,601	�	16,607	�	1,781	�	3,241	�	2,061	�	1,171	�	30,462	�
Net fee income	�	3,668	�	5,325	�	685	�	1,804	�	540	�	1	�	12,023	�
Net income from financial instruments held for trading or managed on a fair value basis	�	3,785	�	4,735	�	327	�	873	�	883	�	(372	)	10,231	�
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	�	1,656	�	1,803	�	-	�	-	�	14	�	5	�	3,478	�
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	�	1,516	�	28	�	1	�	31	�	41	�	(805	)	812	�
Other income/(expense)	9	1,830	�	1,921	�	916	�	638	�	(23	)	(6,190	)	(908	)
Net operating income before change in expected credit losses and other credit impairment charges	1	18,056	�	30,419	�	3,710	�	6,587	�	3,516	�	(6,190	)	56,098	�
Change in expected credit losses and other credit impairment charges	�	(938	)	(724	)	(117	)	(237	)	(740	)	-	�	(2,756	)
Net operating income	�	17,118	�	29,695	�	3,593	�	6,350	�	2,776	�	(6,190	)	53,342	�
Total operating expenses excluding goodwill impairment	�	(19,237	)	(13,297	)	(1,452	)	(5,152	)	(2,052	)	6,190	�	(35,000	)
Goodwill impairment	�	(2,522	)	-	�	(97	)	(431	)	(337	)	(3,962	)	(7,349	)
Operating profit/(loss)	�	(4,641	)	16,398	�	2,044	�	767	�	387	�	(3,962	)	10,993	�
Share of profit/(loss) in associates and joint ventures	�	(12	)	2,070	�	283	�	-	�	13	�	-	�	2,354	�
Profit/(loss) before tax	�	(4,653	)	18,468	�	2,327	�	767	�	400	�	(3,962	)	13,347	�
�	�	%		%		%		%		%		�		%
Share of HSBC's profit before tax	�	(34.9	)	138.4	�	17.4	�	5.7	�	3.0	�	�		100.0	�
Cost efficiency ratio	�	120.5	�	43.7	�	41.8	�	84.8	�	67.9	�	�		75.5	�
Balance sheet data	�	$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)	�	393,850	�	477,727	�	28,556	�	113,474	�	23,136	�	-	�	1,036,743	�
Total assets	�	1,248,205	�	1,102,805	�	65,369	�	377,095	�	52,879	�	(131,201	)	2,715,152	�
Customer accounts	�	528,718	�	697,358	�	38,126	�	146,676	�	28,237	�	-	�	1,439,115	�
Risk-weighted assets	10	280,983	�	366,375	�	57,492	�	121,953	�	38,460	�	-	�	843,395	�
HSBC reported profit/(loss) before tax and balance sheet data (continued)						�		�		�		�		�
�	�	2018
�	�	Europe		Asia		MENA		North America		Latin America		Intra-HSBC items		Total
�	Footnotes	$m		$m		$m		$m		$m		$m		$m
Net interest income	�	6,841	�	16,108	�	1,763	�	3,521	�	2,020	�	236	�	30,489	�
Net fee income	�	3,996	�	5,676	�	607	�	1,854	�	498	�	(11	)	12,620	�
Net income from financial instruments held for trading or managed on a fair value basis	�	3,942	�	4,134	�	285	�	728	�	736	�	(294	)	9,531	�
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	�	(789	)	(717	)	-	�	-	�	18	�	-	�	(1,488	)
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	�	601	�	(26	)	(1	)	36	�	27	�	58	�	695	�
Other income/(expense)	9	3,113	�	3,609	�	33	�	586	�	(237	)	(5,171	)	1,933	�
Net operating income before change in expected credit losses and other credit impairment charges/recoveries �	1	17,704	�	28,784	�	2,687	�	6,725	�	3,062	�	(5,182	)	53,780	�
Change in expected credit losses and other credit impairment (charges)/recoveries	�	(609	)	(602	)	(209	)	223	�	(570	)	-	�	(1,767	)
Net operating income	�	17,095	�	28,182	�	2,478	�	6,948	�	2,492	�	(5,182	)	52,013	�
Total operating expenses	�	(17,934	)	(12,466	)	(1,357	)	(6,149	)	(1,935	)	5,182	�	(34,659	)
Operating profit/(loss)	�	(839	)	15,716	�	1,121	�	799	�	557	�	-	�	17,354	�
Share of profit in associates and joint ventures	�	24	�	2,074	�	436	�	-	�	2	�	-	�	2,536	�
Profit/(loss) before tax	�	(815	)	17,790	�	1,557	�	799	�	559	�	-	�	19,890	�
�	�	%		%		%		%		%		�		%
Share of HSBC's profit before tax	�	(4.1	)	89.5	�	7.8	�	4.0	�	2.8	�	�		100.0	�
Cost efficiency ratio	�	101.3	�	43.3	�	50.5	�	91.4	�	63.2	�	�		64.4	�
Balance sheet data	�	$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)	�	373,073	�	450,545	�	28,824	�	108,146	�	21,108	�	-	�	981,696	�
Total assets	�	1,150,235	�	1,047,636	�	57,455	�	390,410	�	51,923	�	(139,535	)	2,558,124	�
Customer accounts	�	503,154	�	664,824	�	35,408	�	133,291	�	25,966	�	-	�	1,362,643	�
Risk-weighted assets	10	298,056	�	363,894	�	56,689	�	131,582	�	38,341	�	-	�	865,318	�
�	�	�		�		�		�		�		�		�
�	�	2017
Net interest income	�	6,970	�	14,153	�	1,752	�	3,441	�	2,098	�	(238	)	28,176	�
Net fee income	�	4,161	�	5,631	�	619	�	1,880	�	520	�	-	�	12,811	�
Net income from financial instruments held for trading or managed on a fair value basis	11,12	4,066	�	2,929	�	180	�	527	�	486	�	238	�	8,426	�
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss	�	769	�	2,003	�	-	�	-	�	64	�	-	�	2,836	�
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss	�	N/A		N/A		N/A		N/A		N/A		N/A		N/A
Other income	9,12	1,454	�	1,090	�	109	�	865	�	57	�	(4,379	)	(804	)
Net operating income before loan impairment charges/recoveries and other credit risk provisions	1	17,420	�	25,806	�	2,660	�	6,713	�	3,225	�	(4,379	)	51,445	�
Loan impairment (charges)/recoveries and other credit risk�provisions	�	(658	)	(570	)	(207	)	189	�	(523	)	-	�	(1,769	)
Net operating income	�	16,762	�	25,236	�	2,453	�	6,902	�	2,702	�	(4,379	)	49,676	�
Total operating expenses	�	(18,665	)	(11,790	)	(1,394	)	(5,305	)	(2,109	)	4,379	�	(34,884	)
Operating profit/(loss)	�	(1,903	)	13,446	�	1,059	�	1,597	�	593	�	-	�	14,792	�
Share of profit/(loss) in associates and joint ventures	�	39	�	1,883	�	442	�	4	�	7	�	-	�	2,375	�
Profit/(loss) before tax	�	(1,864	)	15,329	�	1,501	�	1,601	�	600	�	-	�	17,167	�
�	�	%		%		%		%		%		�		%
Share of HSBC's profit before tax	�	(10.8	)	89.3	�	8.7	�	9.3	�	3.5	�	�		100.0	�
Cost efficiency ratio	�	107.1	�	45.7	�	52.4	�	79.0	�	65.4	�	�		67.8	�
Balance sheet data	�	$m		$m		$m		$m		$m		$m		$m
Loans and advances to customers (net)	�	381,547	�	425,971	�	28,050	�	107,607	�	19,789	�	-	�	962,964	�
Total assets	�	1,169,515	�	1,008,498	�	57,469	�	391,292	�	48,413	�	(153,416	)	2,521,771	�
Customer accounts	�	505,182	�	657,395	�	34,658	�	143,432	�	23,795	�	-	�	1,364,462	�
Risk-weighted assets	10	311,612	�	357,808	�	59,196	�	131,276	�	36,372	�	-	�	871,337	�

�

For footnotes, see page 71.

Reconciliation of reported and adjusted items - geographical regions

�

Reconciliation of reported and adjusted items
�	�	2019
�	�	Europe		Asia		MENA		North America		Latin America		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	11	18,056	�	30,419	�	3,710	�	6,587	�	3,516	�	56,098	�
Significant items	�	26	�	35	�	(828	)	68	�	10	�	(689	)
-� customer redress programmes	�	163	�	-	�	-	�	-	�	-	�	163	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	(828	)	59	�	1	�	(768	)
-� fair value movements on financial instruments �	2	(137	)	35	�	-	�	9	�	9	�	(84	)
Adjusted	11	18,082	�	30,454	�	2,882	�	6,655	�	3,526	�	55,409	�
ECL	�	�		�		�		�		�		�
Reported	�	(938	)	(724	)	(117	)	(237	)	(740	)	(2,756	)
Adjusted	�	(938	)	(724	)	(117	)	(237	)	(740	)	(2,756	)
Operating expenses	�	�		�		�		�		�		�
Reported	11, 14	(21,759	)	(13,297	)	(1,549	)	(5,583	)	(2,389	)	(42,349	)
Significant items	14	4,435	�	126	�	112	�	544	�	375	�	9,554	�
-� costs of structural reform	3	154	�	4	�	-	�	-	�	-	�	158	�
-� customer redress programmes	�	1,281	�	-	�	-	�	-	�	-	�	1,281	�
-� goodwill impairment	14	2,522	�	-	�	97	�	431	�	337	�	7,349	�
-� restructuring and other related costs	�	538	�	123	�	15	�	113	�	38	�	827	�
-� settlements and provisions in connection with legal and regulatory matters	�	(60	)	(1	)	-	�	-	�	-	�	(61	)
Adjusted �	14	(17,324	)	(13,171	)	(1,437	)	(5,039	)	(2,014	)	(32,795	)
Share of profit/(loss) in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	(12	)	2,070	�	283	�	-	�	13	�	2,354	�
Adjusted	�	(12	)	2,070	�	283	�	-	�	13	�	2,354	�
Profit/(loss) before tax	�	�		�		�		�		�		�
Reported	14	(4,653	)	18,468	�	2,327	�	767	�	400	�	13,347	�
Significant items	14	4,461	�	161	�	(716	)	612	�	385	�	8,865	�
-� revenue	�	26	�	35	�	(828	)	68	�	10	�	(689	)
-� operating expenses	14	4,435	�	126	�	112	�	544	�	375	�	9,554	�
Adjusted	�	(192	)	18,629	�	1,611	�	1,379	�	785	�	22,212	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	393,850	�	477,727	�	28,556	�	113,474	�	23,136	�	1,036,743	�
Adjusted	�	393,850	�	477,727	�	28,556	�	113,474	�	23,136	�	1,036,743	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	528,718	�	697,358	�	38,126	�	146,676	�	28,237	�	1,439,115	�
Adjusted	�	528,718	�	697,358	�	38,126	�	146,676	�	28,237	�	1,439,115	�

For footnotes, see page 71.�

Reconciliation of reported and adjusted items (continued)
�	�	2019
�	�	UK		Hong Kong		Mainland China		US		Mexico
�	Footnotes	$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�
Reported	�	13,538	�	19,412	�	3,101	�	4,638	�	2,555	�
Significant items	�	23	�	26	�	1	�	66	�	8	�
-� customer redress programmes	�	162	�	-	�	-	�	-	�	-	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	59	�	-	�
-� fair value movements on financial instruments	2	(139	)	26	�	1	�	7	�	8	�
Adjusted	�	13,561	�	19,438	�	3,102	�	4,704	�	2,563	�
ECL	�	�		�		�		�		�
Reported	�	(714	)	(459	)	(129	)	(170	)	(491	)
Adjusted	�	(714	)	(459	)	(129	)	(170	)	(491	)
Operating expenses	�	�		�		�		�		�
Reported	�	(16,157	)	(6,935	)	(2,111	)	(4,033	)	(1,390	)
Significant items	�	1,795	�	64	�	6	�	93	�	20	�
-� costs of structural reform	3	101	�	4	�	-	�	-	�	-	�
-� customer redress programmes	�	1,281	�	-	�	-	�	-	�	-	�
-� restructuring and other related costs	�	405	�	61	�	6	�	93	�	20	�
-� settlements and provisions in connection with legal and regulatory matters	�	8	�	(1	)	-	�	-	�	-	�
Adjusted	�	(14,362	)	(6,871	)	(2,105	)	(3,940	)	(1,370	)
Share of profit/(loss) in associates and joint ventures	�	�		�		�		�		�
Reported	�	(12	)	31	�	2,016	�	-	�	13	�
Adjusted	�	(12	)	31	�	2,016	�	-	�	13	�
Profit/(loss) before tax	�	�		�		�		�		�
Reported	�	(3,345	)	12,049	�	2,877	�	435	�	687	�
Significant items	�	1,818	�	90	�	7	�	159	�	28	�
-� revenue	�	23	�	26	�	1	�	66	�	8	�
-� operating expenses	�	1,795	�	64	�	6	�	93	�	20	�
Adjusted	�	(1,527	)	12,139	�	2,884	�	594	�	715	�
Loans and advances to customers (net)	�	�		�		�		�		�
Reported	�	303,041	�	306,964	�	42,380	�	63,588	�	20,426	�
Adjusted	�	303,041	�	306,964	�	42,380	�	63,588	�	20,426	�
Customer accounts	�	�		�		�		�		�
Reported	�	419,642	�	499,955	�	48,323	�	90,834	�	23,051	�
Adjusted	�	419,642	�	499,955	�	48,323	�	90,834	�	23,051	�

For footnotes, see page 71.

�

Reconciliation of reported and adjusted items (continued)	�	�		�		�		�		�		�
�	�	2018
�	�	Europe		Asia		MENA		North America		Latin America		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	11	17,704	�	28,784	�	2,687	�	6,725	�	3,062	�	53,780	�
Currency translation	11	(914	)	(316	)	(18	)	(40	)	(389	)	(1,617	)
Significant items	�	103	�	(36	)	(1	)	97	�	5	�	168	�
-� customer redress programmes	�	(53	)	-	�	-	�	-	�	-	�	(53	)
-� disposals, acquisitions and investment in new businesses	�	(5	)	-	�	-	�	103	�	15	�	113	�
-� fair value movements on financial instruments	2	156	�	(38	)	(1	)	(8	)	(9	)	100	�
-� currency translation on significant items	�	5	�	2	�	-	�	2	�	(1	)	8	�
Adjusted	11	16,893	�	28,432	�	2,668	�	6,782	�	2,678	�	52,331	�
Change in expected credit losses and other credit impairment charges	�	�		�		�		�		�		�
Reported	�	(609	)	(602	)	(209	)	223	�	(570	)	(1,767	)
Currency translation	�	12	�	5	�	9	�	(1	)	53	�	78	�
Adjusted	�	(597	)	(597	)	(200	)	222	�	(517	)	(1,689	)
Operating expenses	�	�		�		�		�		�		�
Reported	11	(17,934	)	(12,466	)	(1,357	)	(6,149	)	(1,935	)	(34,659	)
Currency translation	11	664	�	175	�	23	�	23	�	284	�	1,109	�
Significant items	�	652	�	16	�	-	�	976	�	-	�	1,644	�
-� costs of structural reform	3	352	�	9	�	-	�	-	�	-	�	361	�
-� customer redress programmes	�	146	�	-	�	-	�	-	�	-	�	146	�
-� disposals, acquisitions and investment in new businesses	�	52	�	-	�	-	�	-	�	-	�	52	�
-� past service costs of guaranteed minimum pension benefits equalisation �	�	228	�	-	�	-	�	-	�	-	�	228	�
-� restructuring and other related costs	�	46	�	7	�	-	�	13	�	-	�	66	�
-� settlements and provisions in connection with legal and regulatory matters	�	(147	)	�		-	�	963	�	-	�	816	�
-� currency translation on significant items	�	(25	)	-	�	-	�	-	�	-	�	(25	)
Adjusted	11	(16,618	)	(12,275	)	(1,334	)	(5,150	)	(1,651	)	(31,906	)
Share of profit in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	24	�	2,074	�	436	�	-	�	2	�	2,536	�
Currency translation	�	-	�	(89	)	-	�	-	�	(1	)	(90	)
Adjusted	�	24	�	1,985	�	436	�	-	�	1	�	2,446	�
Profit/(loss) before tax	�	�		�		�		�		�		�
Reported	�	(815	)	17,790	�	1,557	�	799	�	559	�	19,890	�
Currency translation	�	(238	)	(225	)	14	�	(18	)	(53	)	(520	)
Significant items	�	755	�	(20	)	(1	)	1,073	�	5	�	1,812	�
-� revenue	�	103	�	(36	)	(1	)	97	�	5	�	168	�
-� operating expenses	�	652	�	16	�	-	�	976	�	-	�	1,644	�
Adjusted	�	(298	)	17,545	�	1,570	�	1,854	�	511	�	21,182	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	373,073	�	450,545	�	28,824	�	108,146	�	21,108	�	981,696	�
Currency translation	�	8,887	�	1,875	�	(84	)	2,067	�	(165	)	12,580	�
Adjusted	�	381,960	�	452,420	�	28,740	�	110,213	�	20,943	�	994,276	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	503,154	�	664,824	�	35,408	�	133,291	�	25,966	�	1,362,643	�
Currency translation	�	12,796	�	3,016	�	58	�	2,163	�	(938	)	17,095	�
Adjusted	�	515,950	�	667,840	�	35,466	�	135,454	�	25,028	�	1,379,738	�

For footnotes, see page 71.

Reconciliation of reported and adjusted items (continued)
�	�	2018
�	�	UK		Hong Kong		Mainland China		US		Mexico
�	Footnotes	$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�
Reported	�	13,597	�	18,231	�	2,888	�	4,741	�	2,294	�
Currency translation	�	(713	)	6	�	(125	)	-	�	(1	)
Significant items	�	114	�	5	�	(1	)	97	�	(8	)
-� customer redress programmes	�	(53	)	-	�	-	�	-	�	-	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	103	�	-	�
-� fair value movements on financial instruments	2	162	�	5	�	(1	)	(6	)	(7	)
-� currency translation on significant items	�	5	�	-	�	-	�	-	�	(1	)
Adjusted	�	12,998	�	18,242	�	2,762	�	4,838	�	2,285	�
Change in expected credit losses and other credit impairment charges	�	�		�		�		�		�
Reported	�	(516	)	(214	)	(143	)	199	�	(463	)
Currency translation	�	9	�	(1	)	4	�	-	�	-	�
Adjusted	�	(507	)	(215	)	(139	)	199	�	(463	)
Operating expenses	�	�		�		�		�		�
Reported	�	(14,502	)	(6,539	)	(1,920	)	(4,987	)	(1,303	)
Currency translation	�	494	�	(2	)	81	�	-	�	-	�
Significant items	�	511	�	15	�	-	�	920	�	-	�
-� costs of structural reform	3	294	�	9	�	-	�	-	�	-	�
-� customer redress programmes	�	146	�	-	�	-	�	-	�	-	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	-	�	-	�
-� past service costs of guaranteed minimum pension benefits equalisation �	�	228	�	-	�	-	�	-	�	-	�
-� restructuring and other related costs	�	39	�	7	�	-	�	11	�	-	�
-� settlements and provisions in connection with legal and regulatory matters	�	(176	)	-	�	-	�	908	�	-	�
-� currency translation on significant items	�	(20	)	(1	)	-	�	1	�	-	�
Adjusted	�	(13,497	)	(6,526	)	(1,839	)	(4,067	)	(1,303	)
Share of profit in associates and joint ventures	�	�		�		�		�		�
Reported	�	25	�	36	�	2,033	�	-	�	-	�
Currency translation	�	(1	)	-	�	(90	)	-	�	-	�
Adjusted	�	24	�	36	�	1,943	�	-	�	-	�
Profit/(loss) before tax	�	�		�		�		�		�
Reported	�	(1,396	)	11,514	�	2,858	�	(47	)	528	�
Currency translation	�	(211	)	3	�	(130	)	-	�	(1	)
Significant items	�	625	�	20	�	(1	)	1,017	�	(8	)
-� revenue	�	114	�	5	�	(1	)	97	�	(8	)
-� operating expenses	�	511	�	15	�	-	�	920	�	-	�
Adjusted	�	(982	)	11,537	�	2,727	�	970	�	519	�
Loans and advances to customers (net)	�	�		�		�		�		�
Reported	�	287,144	�	290,547	�	38,979	�	64,011	�	17,895	�
Currency translation	�	10,190	�	1,609	�	(477	)	-	�	763	�
Adjusted	�	297,334	�	292,156	�	38,502	�	64,011	�	18,658	�
Customer accounts	�	�		�		�		�		�
Reported	�	399,487	�	484,897	�	45,712	�	82,523	�	19,936	�
Currency translation	�	14,173	�	2,686	�	(559	)	-	�	856	�
Adjusted	�	413,660	�	487,583	�	45,153	�	82,523	�	20,792	�

For footnotes, see page 71.

Reconciliation of reported and adjusted items (continued)
�	�	2017
�	�	Europe		Asia		MENA		North America		Latin America		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�		�
Reported	11	17,420	�	25,806	�	2,660	�	6,713	�	3,225	�	51,445	�
Currency translation	11	(165	)	(418	)	(93	)	(36	)	(661	)	(1,344	)
Significant items	�	61	�	118	�	1	�	(94	)	(14	)	72	�
-� customer redress programmes	�	108	�	-	�	-	�	-	�	-	�	108	�
-� disposals, acquisitions and investment in new businesses	�	(98	)	(27	)	-	�	(130	)	(19	)	(274	)
-� fair value movements on financial investments	2	54	�	148	�	1	�	37	�	5	�	245	�
-� currency translation on significant items	�	(3	)	(3	)	-	�	(1	)	-	�	(7	)
Adjusted	11	17,316	�	25,506	�	2,568	�	6,583	�	2,550	�	50,173	�
LICs	�	�		�		�		�		�		�
Reported	�	(658	)	(570	)	(207	)	189	�	(523	)	(1,769	)
Currency translation	�	26	�	9	�	5	�	-	�	43	�	83	�
Adjusted	�	(632	)	(561	)	(202	)	189	�	(480	)	(1,686	)
Operating expenses	�	-	�	-	�	-	�	-	�	-	�	-	�
Reported	11	(18,665	)	(11,790	)	(1,394	)	(5,305	)	(2,109	)	(34,884	)
Currency translation	11	135	�	229	�	87	�	21	�	472	�	915	�
Significant items	�	2,810	�	622	�	25	�	199	�	54	�	3,710	�
-� costs of structural reform	3	420	�	-	�	-	�	-	�	-	�	420	�
-� costs to achieve	�	1,908	�	623	�	34	�	371	�	66	�	3,002	�
-� customer redress programmes	�	655	�	-	�	-	�	-	�	-	�	655	�
-� disposals, acquisitions and investment in new businesses	�	36	�	-	�	-	�	17	�	-	�	53	�
-� gain on partial settlement of pension obligations	�	-	�	-	�	-	�	(188	)	-	�	(188	)
-� settlements and provisions in connection with legal and regulatory matters	�	(215	)	17	�	-	�	-	�	-	�	(198	)
-� currency translation on significant items	�	6	�	(18	)	(9	)	(1	)	(12	)	(34	)
Adjusted	11	(15,720	)	(10,939	)	(1,282	)	(5,085	)	(1,583	)	(30,259	)
Share of profit in associates and joint ventures	�	�		�		�		�		�		�
Reported	�	39	�	1,883	�	442	�	4	�	7	�	2,375	�
Currency translation	�	(2	)	(40	)	-	�	-	�	(5	)	(47	)
Adjusted	�	37	�	1,843	�	442	�	4	�	2	�	2,328	�
Profit/(loss) before tax	�	�		�		�		�		�		�
Reported	�	(1,864	)	15,329	�	1,501	�	1,601	�	600	�	17,167	�
Currency translation	�	(6	)	(220	)	(1	)	(15	)	(151	)	(393	)
Significant items	�	2,871	�	740	�	26	�	105	�	40	�	3,782	�
-� revenue	�	61	�	118	�	1	�	(94	)	(14	)	72	�
-� operating expenses	�	2,810	�	622	�	25	�	199	�	54	�	3,710	�
Adjusted	�	1,001	�	15,849	�	1,526	�	1,691	�	489	�	20,556	�
Loans and advances to customers (net)	�	�		�		�		�		�		�
Reported	�	381,547	�	425,971	�	28,050	�	107,607	�	19,789	�	962,964	�
Currency translation	�	(11,204	)	(6,374	)	(1,328	)	(1,373	)	(1,762	)	(22,041	)
Adjusted	�	370,343	�	419,597	�	26,722	�	106,234	�	18,027	�	940,923	�
Customer accounts	�	�		�		�		�		�		�
Reported	�	505,182	�	657,395	�	34,658	�	143,432	�	23,795	�	1,364,462	�
Currency translation	�	(14,581	)	(5,882	)	(963	)	(1,555	)	(2,409	)	(25,390	)
Adjusted	�	490,601	�	651,513	�	33,695	�	141,877	�	21,386	�	1,339,072	�

For footnotes, see page 71.

�

Reconciliation of reported and adjusted items (continued) �
�	�	2017
�	�	UK		Hong Kong		Mainland China		US		Mexico
�	Footnotes	$m		$m		$m		$m		$m
Revenue	1	�		�		�		�		�
Reported	�	12,922	�	16,117	�	2,379	�	4,876	�	2,160	�
Currency translation	�	(129	)	(87	)	(52	)	-	�	(47	)
Significant items	�	50	�	(52	)	100	�	(99	)	5	�
-� customer redress programmes	�	108	�	-	�	-	�	-	�	-	�
-� disposals, acquisitions and investment in new businesses	�	(78	)	(126	)	99	�	(130	)	-	�
-� fair value movements on financial instruments	2	24	�	75	�	2	�	31	�	5	�
-� currency translation on significant items	�	(4	)	(1	)	(1	)	-	�	-	�
Adjusted	�	12,843	�	15,978	�	2,427	�	4,777	�	2,118	�
LICs	�	�		�		�		�		�
Reported	�	(492	)	(396	)	(67	)	108	�	(473	)
Currency translation	�	21	�	4	�	1	�	-	�	11	�
Adjusted	�	(471	)	(392	)	(66	)	108	�	(462	)
Operating expenses	�	�		�		�		�		�
Reported	�	(15,086	)	(6,131	)	(1,687	)	(4,267	)	(1,297	)
Currency translation	�	100	�	31	�	39	�	-	�	25	�
Significant items	�	2,476	�	306	�	68	�	119	�	46	�
-� costs of structural reform	3	410	�	-	�	-	�	-	�	-	�
-� costs to achieve	�	1,766	�	291	�	69	�	290	�	46	�
-� customer redress programmes	�	655	�	-	�	-	�	-	�	-	�
-� disposals, acquisitions and investment in new businesses	�	-	�	-	�	-	�	17	�	-	�
-� gain on partial settlement of pension obligations	�	-	�	-	�	-	�	(188	)	-	�
- �settlements and provisions in connection with legal and regulatory matters	�	(362	)	17	�	-	�	-	�	-	�
- �currency translation on significant items	�	7	�	(2	)	(1	)	-	�	-	�
Adjusted	�	(12,510	)	(5,794	)	(1,580	)	(4,148	)	(1,226	)
Share of profit in associates and joint ventures	�	�		�		�		�		�
Reported	�	38	�	8	�	1,863	�	-	�	-	�
Currency translation	�	(1	)	-	�	(40	)	-	�	-	�
Adjusted	�	37	�	8	�	1,823	�	-	�	-	�
Profit/(loss) before tax	�	�		�		�		�		�
Reported	�	(2,618	)	9,598	�	2,488	�	717	�	390	�
Currency translation	�	(9	)	(52	)	(52	)	-	�	(11	)
Significant items	�	2,526	�	254	�	168	�	20	�	51	�
-� revenue	�	50	�	(52	)	100	�	(99	)	5	�
-� operating expenses	�	2,476	�	306	�	68	�	119	�	46	�
Adjusted	�	(101	)	9,800	�	2,604	�	737	�	430	�
Loans and advances to customers (net)	�	�		�		�		�		�
Reported	�	295,538	�	268,966	�	40,686	�	65,168	�	15,172	�
Currency translation	�	(6,336	)	904	�	(2,666	)	1	�	679	�
Adjusted	�	289,202	�	269,870	�	38,020	�	65,169	�	15,851	�
Customer accounts	�	�		�		�		�		�
Reported	�	401,733	�	477,104	�	45,991	�	89,887	�	17,809	�
Currency translation	�	(8,593	)	1,605	�	(3,013	)	-	�	798	�
Adjusted	�	393,140	�	478,709	�	42,978	�	89,887	�	18,607	�

For footnotes, see page 71.

Analysis by country

�

Profit/(loss) before tax by country/territory within global businesses
�	�	Retail Banking and Wealth Management		Commercial Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		� Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Europe	�	(760	)	(889	)	(474	)	72	�	(2,602	)	(4,653	)
-� UK	12	(815	)	1,365	�	(650	)	(44	)	(3,201	)	(3,345	)
-� of which: HSBC UK Bank plc (RFB) �	�	(399	)	1,497	�	70	�	16	�	123	�	1,307	�
-� HSBC Bank plc (NRFB)	�	202	�	271	�	(223	)	39	�	(419	)	(130	)
-� Holdings and other	�	(618	)	(403	)	(497	)	(99	)	(2,905	)	(4,522	)
-� France	�	45	�	119	�	(66	)	9	�	(71	)	36	�
-� Germany	�	6	�	37	�	74	�	7	�	37	�	161	�
-� Switzerland	�	(1	)	7	�	(3	)	90	�	(2	)	91	�
-� other	13	5	�	(2,417	)	171	�	10	�	635	�	(1,596	)
Asia	�	6,935	�	4,266	�	3,793	�	381	�	3,093	�	18,468	�
-� Hong Kong	�	6,550	�	3,107	�	1,663	�	366	�	363	�	12,049	�
-� Australia	�	121	�	108	�	168	�	(1	)	48	�	444	�
-� India	�	48	�	181	�	466	�	-	�	311	�	1,006	�
-� Indonesia	�	12	�	49	�	123	�	-	�	32	�	216	�
-� mainland China	�	(74	)	296	�	498	�	(5	)	2,162	�	2,877	�
-� Malaysia	�	85	�	66	�	184	�	-	�	7	�	342	�
-� Singapore	�	114	�	80	�	219	�	22	�	43	�	478	�
-� Taiwan	�	41	�	23	�	91	�	-	�	6	�	161	�
-� other	�	38	�	356	�	381	�	(1	)	121	�	895	�
Middle East and North Africa	�	190	�	174	�	722	�	1	�	1,240	�	2,327	�
-� Egypt	�	44	�	65	�	222	�	-	�	79	�	410	�
-� UAE	�	127	�	91	�	241	�	1	�	(35	)	425	�
-� Saudi Arabia	�	(3	)	-	�	13	�	-	�	1,145	�	1,155	�
-� other	13	22	�	18	�	246	�	-	�	51	�	337	�
North America	�	(219	)	807	�	608	�	(445	)	16	�	767	�
-� US	�	(323	)	365	�	452	�	(14	)	(45	)	435	�
-� Canada	�	44	�	406	�	120	�	-	�	48	�	618	�
-� other	13	60	�	36	�	36	�	(431	)	13	�	(286	)
Latin America	�	282	�	(86	)	360	�	-	�	(156	)	400	�
-� Mexico	�	279	�	166	�	217	�	-	�	25	�	687	�
-� other	13	3	�	(252	)	143	�	-	�	(181	)	(287	)
GB&M goodwill impairment	13	-	�	-	�	(3,962	)	-	�	-	�	(3,962	)
Year ended 31 Dec 2019 �	�	6,428	�	4,272	�	1,047	�	9	�	1,591	�	13,347	�

For footnotes, see page 71.

�

Profit/(loss) before tax by country/territory within global businesses (continued)								�		�		�
�	�	Retail Banking and Wealth Management		Commercial �Banking		Global Banking and Markets		Global Private Banking		Corporate Centre		Total
�	Footnotes	$m		$m		$m		$m		$m		$m
Europe	�	440	�	2,289	�	690	�	(122	)	(4,112	)	(815	)
-� UK	12	476	�	1,901	�	409	�	23	�	(4,205	)	(1,396	)
-� of which: HSBC UK Bank plc (RFB) �	�	539	�	934	�	4	�	38	�	(133	)	1,382	�
-� HSBC Bank plc (NRFB)	�	548	�	1,394	�	795	�	60	�	(719	)	2,078	�
-� Holdings and other	�	(611	)	(427	)	(390	)	(75	)	(3,353	)	(4,856	)
-� France	�	(56	)	170	�	8	�	16	�	(101	)	37	�
-� Germany	�	14	�	85	�	99	�	8	�	(5	)	201	�
-� Switzerland	�	(1	)	5	�	(1	)	(100	)	20	�	(77	)
-� other	�	7	�	128	�	175	�	(69	)	179	�	420	�
Asia	�	6,190	�	4,176	�	3,773	�	353	�	3,298	�	17,790	�
-� Hong Kong	�	5,951	�	3,114	�	1,670	�	333	�	446	�	11,514	�
-� Australia	�	115	�	120	�	185	�	(1	)	44	�	463	�
-� India	�	20	�	143	�	387	�	-	�	275	�	825	�
-� Indonesia	�	(1	)	13	�	91	�	-	�	1	�	104	�
-� mainland China	�	(200	)	262	�	566	�	(4	)	2,234	�	2,858	�
-� Malaysia	�	130	�	82	�	132	�	-	�	30	�	374	�
-� Singapore	�	75	�	98	�	230	�	25	�	63	�	491	�
-� Taiwan	�	55	�	23	�	117	�	-	�	30	�	225	�
-� other	�	45	�	321	�	395	�	-	�	175	�	936	�
Middle East and North Africa	�	182	�	108	�	733	�	7	�	527	�	1,557	�
-� Egypt	�	34	�	54	�	202	�	-	�	43	�	333	�
-� UAE	�	112	�	58	�	296	�	7	�	-	�	473	�
-� Saudi Arabia	�	-	�	-	�	-	�	-	�	436	�	436	�
-� other	�	36	�	(4	)	235	�	-	�	48	�	315	�
North America	�	(96	)	968	�	738	�	11	�	(822	)	799	�
-� US	�	(205	)	473	�	624	�	23	�	(962	)	(47	)
-� Canada	�	55	�	455	�	139	�	-	�	116	�	765	�
-� other	�	54	�	40	�	(25	)	(12	)	24	�	81	�
Latin America	�	166	�	178	�	378	�	(1	)	(162	)	559	�
-� Mexico	�	194	�	114	�	197	�	-	�	23	�	528	�
-� other	�	(28	)	64	�	181	�	(1	)	(185	)	31	�
Year ended 31 Dec 2018	Year ended 31 Dec	6,882	�	7,719	�	6,312	�	248	�	(1,271	)	19,890	�

�

Europe	�	(159	)	1,899	�	777	�	(231	)	(4,150	)	(1,864	)
-� UK	12	(177	)	1,539	�	192	�	(23	)	(4,149	)	(2,618	)
-� of which: HSBC UK Bank plc (RFB) �	�	NA		NA		NA		NA		NA		NA
-� HSBC Bank plc (NRFB)	�	413	�	1,911	�	889	�	63	�	(1,224	)	2,052	�
-� Holdings and other	�	(590	)	(372	)	(697	)	(86	)	(2,925	)	(4,670	)
-� France	�	(12	)	204	�	228	�	5	�	(156	)	269	�
-� Germany	�	21	�	61	�	141	�	9	�	39	�	271	�
-� Switzerland	�	(2	)	7	�	1	�	(192	)	2	�	(184	)
-� other	�	11	�	88	�	215	�	(30	)	114	�	398	�
Asia	�	5,372	�	3,394	�	3,135	�	285	�	3,143	�	15,329	�
-� Hong Kong	�	5,039	�	2,460	�	1,357	�	257	�	485	�	9,598	�
-� Australia	�	122	�	101	�	108	�	(1	)	35	�	365	�
-� India	�	21	�	159	�	362	�	-	�	374	�	916	�
-� Indonesia	�	(24	)	76	�	98	�	-	�	30	�	180	�
-� mainland China	�	(44	)	161	�	387	�	(4	)	1,988	�	2,488	�
-� Malaysia	�	85	�	50	�	162	�	-	�	28	�	325	�
-� Singapore	�	69	�	94	�	202	�	34	�	64	�	463	�
-� Taiwan	�	43	�	10	�	107	�	(1	)	40	�	199	�
-� other	�	61	�	283	�	352	�	-	�	99	�	795	�
Middle East and North Africa	�	144	�	199	�	593	�	-	�	565	�	1,501	�
-� Egypt	�	26	�	69	�	164	�	-	�	46	�	305	�
-� UAE	�	110	�	53	�	268	�	-	�	48	�	479	�
-� Saudi Arabia	�	-	�	-	�	-	�	-	�	441	�	441	�
-� other	�	8	�	77	�	161	�	-	�	30	�	276	�
North America	�	305	�	932	�	671	�	67	�	(374	)	1,601	�
-� US	�	166	�	435	�	494	�	66	�	(444	)	717	�
-� Canada	�	61	�	453	�	132	�	-	�	43	�	689	�
-� other	�	78	�	44	�	45	�	1	�	27	�	195	�
Latin America	�	161	�	199	�	259	�	-	�	(19	)	600	�
-� Mexico	�	139	�	105	�	158	�	-	�	(12	)	390	�
-� other	�	22	�	94	�	101	�	-	�	(7	)	210	�
Year ended 31 Dec 2017	�	5,823	�	6,623	�	5,435	�	121	�	(835	)	17,167	�

For footnotes, see page 71.

Footnotes to global businesses and

geographical regions

1�� Net operating income before change in expected credit losses and other credit impairment charges/Loan impairment charges and other credit risk provisions, also referred to as revenue.

2�� Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.

3�� Comprises costs associated with preparations for the UK's exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong.

4�� Adjusted risk-weighted assets are calculated using reported risk-weighted assets adjusted for the effects of currency translation differences and significant items.

5�� The results presented for insurance manufacturing operations are shown before elimination of intercompany transactions with HSBC non-insurance operations.

6�� The effect on the Insurance manufacturing operations of applying hyperinflation accounting in Argentina resulted in a reduction in adjusted revenue in 2019 of $3m (2018: $29m) and a reduction in PBT in 2019 of $3m (2018: $27m). These effects are recorded in 'all global businesses' within Corporate Centre.

7�� Funds under management and assets held in custody are not reported on the Group's balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.��

8�� Client assets related to our Middle East clients are booked across various other regions, primarily in Europe.

9�� 'Other income' in this context comprises where applicable net income/expense from other financial instruments designated at fair value, gains less losses from financial investments, dividend income, net insurance premium income and other operating income less net insurance claims and benefits paid and movement in liabilities to policyholders.

10� Risk-weighted assets are non-additive across geographical regions due to market risk diversification effects within the Group.

11 Amounts are non-additive across geographical regions due to intercompany transactions within the Group.

12 UK includes results from the ultimate holding company, HSBC Holdings plc, and the separately incorporated group of service companies ('ServCo Group').

13� Includes the impact of goodwill impairment. As per Group accounting policy, HSBC's cash-generating units are based on geographical regions subdivided by global business, except for Global Banking and Markets, for which goodwill is monitored on a global basis.

14� Amounts are non-additive across geographical regions due to goodwill impairment recognised on the Global Banking and Markets cash-generating unit, which is monitored on a global basis.

Other information
�	Page
Taxes paid by region and country/territory	73
Carbon dioxide emissions	73

Taxes paid by region and country/territory

The following table reflects a geographical view of HSBC's operations.

Taxes paid by HSBC relate to HSBC's own tax liabilities including tax on profits earned, employer taxes, the bank levy and other�
duties/levies such as stamp duty. Numbers are reported on a cash flow basis.

Taxes paid by country/territory
�	�	2019		2018		2017
�	�	$m		$m		$m
Europe	�	3,077	�	3,398	�	3,340	�
-� UK	�	2,468	�	2,693	�	2,654	�
-� of which: HSBC Holdings	�	889	�	832	�	1,078	�
-� France	�	476	�	536	�	530	�
-� Germany	�	116	�	111	�	140	�
-� Switzerland	�	(7	)	13	�	(67	)
-� other	�	24	�	45	�	83	�
Asia	�	1,487	�	2,742	�	2,277	�
-� Hong Kong	�	248	�	1,398	�	1,043	�
-� Australia	�	180	�	140	�	142	�
-� mainland China	�	76	�	235	�	227	�
-� India	�	398	�	384	�	297	�
-� Indonesia	�	50	�	44	�	84	�
-� Malaysia	�	119	�	94	�	81	�
-� Singapore	�	104	�	88	�	64	�
-� Taiwan	�	68	�	53	�	42	�
-� other	�	244	�	306	�	297	�
Middle East and North Africa	�	313	�	234	�	419	�
-� Saudi Arabia	�	-	�	-	�	170	�
-� UAE	�	66	�	67	�	101	�
-� Egypt	�	136	�	104	�	58	�
-� Turkey	�	42	�	-	�	-	�
-� other	�	69	�	63	�	90	�
North America	�	314	�	399	�	317	�
-� US	�	152	�	162	�	134	�
-� Canada	�	162	�	240	�	182	�
-� other	�	-	�	(3	)	1	�
Latin America	�	400	�	281	�	443	�
-� Mexico	�	179	�	90	�	129	�
-� Argentina	�	188	�	163	�	278	�
-� other	�	33	�	191	�	314	�
-� of which: Brazil	�	21	�	28	�	36	�
Year ended 31 Dec	�	5,591	�	7,054	�	6,796	�

The tax we paid during 2019 was lower than in 2018 due to differences in the timing of payments, particularly in Hong Kong.

Further details on our approach to tax are provided on page 25.

�

Carbon dioxide emissions

We report our carbon emissions following the Greenhouse Gas Protocol, which incorporates the scope 2 market-based emission methodology. We report carbon dioxide emissions resulting from energy use in our buildings and employees' business travel.

In 2019, we collected data on energy use and business travel for our operations in 28 countries and territories, which accounted for approximately 94% of our FTEs. To estimate the emissions of our operations in countries and territories where we have operational control and a small presence, we scale up the emissions data from 94% to 100%.

We then apply emission uplift rates to reflect uncertainty concerning the quality and coverage of emission measurement and estimation. The rates are 4% for electricity, 10% for other energy and 6% for business travel. This is consistent both with the Intergovernmental Panel on Climate Change's Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories and our internal analysis of data coverage and quality.

Further details on our methodology can be found in our 'CO2 Emissions Reporting Guidance 2019' on our website at www.hsbc.com/our-approach/esg-information/esg-reporting-and-policies as relevant environmental key facts.

�

Carbon dioxide emissions in tonnes
�	2019		2018
Total	530,000	�	559,000	�
From energy¹	414,000	�	437,000	�
Included energy UK	10,400	�	9,700	�
From travel¹	116,000	�	122,000	�

1�� Our carbon dioxide reporting year runs from October to September. PwC provided limited assurance over our carbon dioxide emissions in accordance with International Standard on Assurance Engagement 3000 (Revised) 'Assurance Engagements other than Audits and Reviews of Historical Financial Information'. This can be found on our website at www.hsbc.com/our-approach/esg-information/esg-reporting-and-policies.

Carbon dioxide emissions in tonnes per FTE
�	2019		2018
Total	2.26	�	2.39	�
From energy	1.76	�	1.87	�
From travel	0.5	�	0.52	�

The reduction in our carbon emissions continues to be driven�by�energy efficiency initiatives, as well as our procurement of electricity from renewable sources under power purchase agreements.

Energy consumption in GWh
�	2019		2018
Total Group	1,050	�	1,092	�
UK only	281	�	279	�

As energy takes 78% of our carbon emissions, we continue to focus on energy reduction and efficiency projects. During 2019, we implemented over 810 energy conservation measures that amount to an estimated energy avoidance in excess of 22M kWh.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

�

END

�

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