FORM 6-K
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a - 16 or 15d - 16 of
 
the Securities Exchange Act of 1934
 
 
 
For the month of August
 
HSBC Holdings plc
 
42nd Floor, 8 Canada Square, London E14 5HQ, England
 
 
 
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).
 
Form 20-F   X              Form 40-F ......
 
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
 
Yes.......          No    X
 
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ..............).
 
 
 
 
3 August 2016
HSBC HOLDINGS PLC
2016 INTERIM RESULTS - HIGHLIGHTS
 
Strategy execution
 
 
Announcing a share buy-back of up to $2.5bn in the second half of 2016 ('2H16') following the successful disposal of HSBC Bank Brazil on 1 July 2016.
 
 
Reported and adjusted operating expenses down; tight cost control with run-rate saves of more than $2.0bn since the commencement of our cost-savings programme.
 
 
US successfully achieved a non-objection to its capital plan, which included a dividend payment in 2017, as part of the Comprehensive Capital Analysis and Review ('CCAR').
 
 
Further reduced RWAs in 1H16 by $48bn through management actions bringing the total since 2014 to $172bn.
 
 
Continued to capture value from our international network and gained market share in key Asian markets and businesses.
 
 
Commitment to sustain annual ordinary dividend in respect of the year at current levels for the foreseeable future.
 
Stuart Gulliver, Group Chief Executive, said:
 
"Following the successful sale of our Brazil business and having received the appropriate regulatory clearances, I am pleased to announce that we will execute a share buy-back of up to $2.5bn, which should benefit all shareholders and demonstrates the strength and flexibility of our balance sheet. We performed reasonably well in the first half. I am particularly pleased with our progress in reducing costs and continuing to reduce risk-weighted assets. Our highly diversified, universal banking business model helped to drive growth in a number of areas and we captured market share in many of the product categories that are central to our strategy. While economic conditions remain difficult, we are making progress in all of the areas within our control. In the meantime, our balanced business model, strong liquidity and strict cost management make us highly resilient."
 
Financial performance
 
 
Reported profit before tax ('PBT') in 1H16 of $9,714m, down by $3,914m; adjusted PBT of $10,795m, down $1,755m - a reasonable performance in the face of considerable uncertainty.
 
 
Adjusted revenue of $27,868m, down 4% compared with a strong 1H15; client-facing GB&M and BSM down 7% and Principal RBWM down 6%. Continued momentum in CMB, up 2%.
 
 
Adjusted loan impairment charges of $2,366m reflecting charges in the oil and gas, and metals and mining sectors, and from Brazil; in line with 1Q16.
 
 
Strong capital base with a CRD IV end point CET1 capital ratio of 12.1%, up from 11.9% at 31 December 2015.
 
 
Leverage ratio remained strong at 5.1%.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to 30 Jun
 
 
2016
 
 
2015
 
 
Change
 
 
 
$m
 
 
$m
 
 
%
 
Financial highlights and key ratios1
 
 
 
 
 
 
Reported profit before tax
 
9,714
 
 
13,628
 
 
(28.7
)
Adjusted profit before tax
 
10,795
 
 
12,550
 
 
(14.0
)
Return on average ordinary shareholders' equity (annualised)
 
7.4
%
 
10.6%
 
 
 
Adjusted jaws
 
(0.5
%)
 
(2.9%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At
 
 
30 Jun
 
 
31 Dec
 
 
 
 
 
2016
 
 
2015
 
 
Change
 
 
 
%
 
 
%
 
 
 
Capital and balance sheet
 
 
 
 
 
 
Common equity tier 1 ratio2
 
12.1
 
 
11.9
 
 
 
Leverage ratio
 
5.1
 
 
5.0
 
 
 
 
 
 
 
 
 
 
 
 
$m
 
 
$m
 
 
$m
 
 
 
 
 
 
 
 
Loans and advances to customers
 
887,556
 
 
924,454
 
 
(36,898
)
Customer accounts
 
1,290,958
 
 
1,289,586
 
 
1,372
 
Risk-weighted assets
 
1,082,184
 
 
1,102,995
 
 
(20,811
)
For footnotes, see page 2.
 
 
 
 
 
 
HSBC Holdings plc
 
Registered Office and Group Head Office:
8 Canada Square, London E14 5HQ, United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered number 617987
 
 
 
 
Financial Review
 
 
 
 
 
 
 
 
 
 
 
Half-year to 30 Jun
 
 
2016
 
 
2015
 
 
 
$m
 
 
$m
 
Reported
 
 
 
 
Revenue3
 
29,470
 
 
32,943
 
Loan impairment charges and other credit risk provisions
 
(2,366
)
 
(1,439
)
Operating expenses
 
(18,628
)
 
(19,187
)
Profit before tax
 
9,714
 
 
13,628
 
 
 
 
 
 
Adjusted
 
 
 
 
Revenue3
 
27,868
 
 
29,178
 
Loan impairment charges and other credit risk provisions
 
(2,366
)
 
(1,279
)
Operating expenses
 
(15,945
)
 
(16,605
)
Profit before tax
 
10,795
 
 
12,550
 
 
 
 
 
 
Significant items affecting adjusted performance - (gains)/losses
 
 
 
 
Revenue
 
 
 
 
Debit valuation adjustment on derivative contracts
 
(151
)
 
(165
)
Disposal costs of Brazilian operations
 
32
 
 
-
 
Fair value movements on non-qualifying hedges
 
397
 
 
45
 
Gain on sale of several tranches of real estate secured accounts in the US
 
(68
)
 
(17
)
Gain on disposal of our membership interest in Visa Europe
 
(584
)
 
-
 
Gain on the partial sale of shareholding in Industrial Bank
 
-
 
 
(1,372
)
Own credit spread
 
(1,226
)
 
(650
)
Releases arising from the ongoing review of compliance with the UK Consumer Credit Act
 
(2
)
 
(12
)
 
 
 
 
 
Operating expenses
 
 
 
 
Costs-to-achieve
 
1,018
 
 
-
 
Costs to establish UK ring-fenced bank
 
94
 
 
-
 
Disposal costs of Brazilian operations
 
11
 
 
-
 
Impairment of Global Private Banking - Europe goodwill
 
 
800
 
 
-
 
Regulatory provisions in Global Private Banking
 
4
 
 
147
 
Restructuring and other related costs
 
-
 
 
117
 
Settlements and provisions in connection with legal matters
 
723
 
 
1,144
 
UK customer redress programmes
 
33
 
 
137
 
 
 
 
1
Adjusted performance is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items which distort period-on-period comparisons.
 
 
2
Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc.
 
 
3
Net operating income before loan impairment charges and other credit risk provision, also referred to as revenue.
 
Share buy-back
 
 
Following the successful sale of the Brazil business, the Board has determined to carry out a share buy-back of up to $2.5bn to reduce its outstanding ordinary shares ('buy-back').
 
 
The Group has received regulatory approval from the Prudential Regulation Authority to commence the buy-back and intends that the repurchased shares will be held in treasury.
 
 
The Board intends to announce the commencement of the buy-back in due course. It is expected to be completed by the end of 2016.
 
The sections of this announcement relating to the buy-back contain inside information. This announcement is made by HSBC Holdings plc pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Hong Kong Listing Rules')) under Part XIVA of the Securities and Futures Ordinance (Cap. 571) and Rule 13.09(2)(a) of the Hong Kong Listing Rules.
 
 
HSBC HOLDINGS PLC
 
 
 
 
 
Group Chairman's Statement
 
Statement by Douglas Flint, Group Chairman
 
Amid a turbulent period, nothing cast doubt on the strategic direction and priorities we laid out just over a year ago.
 
The first half of 2016 was characterised by spikes of uncertainty which greatly impacted business and market confidence. This was reflected in lower volumes of customer activity and higher levels of market volatility. Concern over the sustainable level of economic growth in China was the most significant feature of the first quarter and, as this moderated, uncertainty over the upcoming UK referendum on membership of the European Union intensified. Demand for credit for investment slowed as a consequence. Equity market activity was also markedly lower, particularly in Hong Kong, reflecting both economic uncertainty and weaker market pricing, which was exacerbated by net selling from sovereign funds impacted by lower oil prices. The period ended with exceptional volatility as financial markets reacted to the UK referendum decision to leave the EU, a result that had not been anticipated.
 
HSBC came through this period securely as our diversified business model and geographic profile again demonstrated resilience in difficult market conditions.
 
Pre-tax profits of $9.7bn on a reported basis were $3.9bn, 29% lower than in the first half of 2015. On the adjusted basis used to assess management performance, pre-tax profits were $10.8bn, some 14% lower than in the comparable period. Most of the decline in respect of our global business revenues reflected weaker market-facing activity, where lower transaction volumes evidenced customer restraint in uncertain times. Credit-related income remained solid although impairment charges rose against historically low levels. We made progress against our cost challenges, in reducing legacy assets and taking actions to release capital from secondary activities.
 
As a consequence, our common equity tier 1 capital position, which is critical to our capacity to sustain our dividend, strengthened to 12.1% from 11.9% at the beginning of the year. The sale of our Brazilian operations which closed on 1 July is expected to add a further 0.7 of a percentage point in the third quarter. Earnings per share were $0.32 (1H15: $0.48). Our first two dividends in respect of the year, of $0.20 in aggregate, were in line with our plans and the prior year.
 
Reflecting this strengthened capital position, the Board has determined to return to shareholders $2.5bn, approximately half of the capital released through the sale of Brazil, by way of a share buy-back to be executed during the second half of the year.
 
The Board has also determined that in light of the current uncertain economic and geo-political environment, together with our projections for an extended period of low interest rates, it would be appropriate to remove a timetable for reaching our target return on equity in excess of 10%. While the target remains intact and appropriate, the current guidance which points to the end of next year is no longer considered achievable. In addition, the Board is planning in this environment on the basis of sustaining the annual dividend in respect of the year at its current level for the foreseeable future.
 
Strategic direction remains clear
 
Nothing that has happened in this turbulent period casts doubt on the strategic direction and priorities we laid out just over a year ago. Our focus on the Pearl River Delta remains a key priority. We see growing movement in public policy decisions towards needed infrastructure investment on a massive scale, notably through the Belt and Road initiative in China, to underpin increased urbanisation across Asia, the Middle East and Africa, and in support of the transition to a lower carbon economy. Capital markets development in both Europe and Asia remains essential to diversify funding sources, to address demographic ageing and to expand the role of 'green' bond finance. Outward investment from China is growing fast and is expected to accelerate. Internationalisation of the renminbi is also expected to accelerate as a consequence of all of the above. HSBC is well positioned for all of these mega trends, with clear evidence of this contained within the Group Chief Executive's Review.
 
Regulatory policy must be aligned with public policy support for growth
 
At the end of June we, along with the rest of the banking industry, submitted analysis to the Basel Committee on Banking Supervision in response to their request for a quantitative impact assessment around new proposals, inter alia, aimed at reducing the complexity of the regulatory framework and improving comparability. How the regulatory community responds to this consultation, due by the end of this year, is of huge importance to our customers and our shareholders. Any substantial further increase in capital requirements, which is quite possible within the range of outcomes implied by industry-wide impact studies, could have a major impact on the availability and cost of credit, as well as on the return on capital our industry is able to generate. Such constraints would also lean against the increased public policy emphasis on stimulating economic growth at a time of elevated uncertainties.
 
We therefore welcome statements from within the regulatory community and, most recently, in the communiqué from the G20 Finance Ministers and Central Bank Governors meeting in Chengdu, China, that these proposals should not lead to a significant broad-based increase in overall capital requirements. This is consistent with our view that satisfactory levels of capital have been achieved in most banks through the already extensive revisions to the regulatory capital framework. These, together with improvements in risk management and stress testing, have contributed to financial stability, with significantly increased levels of regulatory capital now in place. Near finalisation of the principal resolution regimes have also significantly extended the range of capacity available to absorb losses in the event of failure. A revised calibration that failed to take this progress into account would, in our view, risk undermining that progress.
 
HSBC HOLDINGS PLC
 
     
 
Group Chairman's Statement
 
UK referendum on EU membership
 
As a consequence of the UK referendum decision to leave the European Union, we are entering a new era for the UK and UK business. The work to establish fresh terms of trade with our European and global partners will be complex and time-consuming. Our first priorities have been to offer support to our colleagues working outside their home country who may feel unsettled, as well as proactively reaching out to and working with our customers as they prepare for the new environment.
 
Now is a time for calm consideration of all the issues at hand and careful assessment of how prosperity, growth and a dynamic economy for both the UK and the rest of Europe can be ensured following an orderly transition period. Critical elements include securing the best possible outcome on continuing terms of trade and market access, and ensuring the UK remains attractive for inward investment and has access to all the skills necessary to be fully competitive.
 
HSBC's experience in facilitating and financing trade for over 150 years has shown the value and importance of open trading relationships - for individuals, businesses, communities and nations. We believe that such an open trading relationship must be at the centre of the new relationship between the UK and the EU, and indeed the rest of the world. We aim to do our part in making the transition for our customers to the new arrangements as smooth as possible.
 
Board changes
 
Since we last reported to shareholders we have welcomed David Nish to the Board. David most recently served as Chief Executive Officer of Standard Life plc between 2010 and 2015, having originally joined as its Group Finance Director in 2006. He brings to HSBC considerable relevant experience in financial services, in financial accounting and reporting, as well as a wide-ranging understanding of all aspects of corporate governance. David has also joined the Group Audit Committee.
 
Outlook
 
It is evident that we are entering a period of heightened uncertainty where economics risks being overshadowed by political and geo-political events. We are entering this environment strongly capitalised and highly liquid. More importantly, given our history we have considerable experience within the senior management ranks of responding to severe stress events, experience that was deployed most recently in successfully dealing with the market volatility which followed the UK referendum decision on EU membership. Re-positioning our own European business once the future of the UK's current 'passporting' arrangements for financial services is clarified in the upcoming negotiations will add to the very heavy workload already in place to address the regulatory and technological changes that are reshaping our industry. On behalf of the Board let me therefore close my statement by once again recognising the dedicated commitment and effort by all of our 239,000 colleagues to implement these changes and so position HSBC for future success.
 
 
 
 
HSBC HOLDINGS PLC
 
     
 
 
Group Chief Executive's Review
 
Review by Stuart Gulliver, Group Chief Executive
 
Our highly diversified, universal banking business model helped to drive growth and capture market share in a number of areas.
 
Performance
 
We performed reasonably well in the first half in the face of considerable uncertainty. Profits were down against a strong first half of 2015, but our highly diversified, universal banking business model helped to drive growth in a number of areas. We also captured market share in many of the product categories that are central to our strategy.
 
We completed the sale of our Brazil business to Banco Bradesco S.A. in July. This transaction reduces Group risk-weighted assets by around $40bn and would increase the Group's common equity tier 1 ratio from 12.1% at 30 June 2016 to 12.8%.
 
Global Banking and Markets weathered a large reduction in client activity in January and February, but staged a partial recovery in the second quarter. Equities and Foreign Exchange had a difficult half, but Rates performed well on the back of increased client volumes. Global Banking and Markets also achieved some of its strongest rankings for Debt Capital Markets and Mergers and Acquisitions. Improved collaboration with Commercial Banking was cited as a major factor in the naming of HSBC as 'World's Best Investment Bank' and 'World's Best Bank for Corporates' at the Euromoney Awards for Excellence 2016. The citation also highlighted HSBC's diversified and differentiated business model, and described HSBC as 'one of the most joined-up firms in the industry'.
 
Retail Banking and Wealth Management was also affected by reduced client activity. This led to lower revenue in our Wealth businesses, albeit against last year's strong second quarter which was boosted by the Shanghai-Hong Kong Stock Connect. While the revenue environment was challenging, we were able to capture our highest ever share of the Hong Kong mutual fund market by providing the right products to help clients manage the current economic environment. Higher lending balances in Mexico and increased customer deposits in all but one region compensated partly for the reduction in revenue from Wealth Management, with positive implications for future growth.
 
Commercial Banking performed well on the back of targeted loan growth in the UK and Mexico, and higher client balances in Global Liquidity and Cash Management. We maintained our position as the world's number one trade finance bank, with revenue growth and market share gains in Receivables Finance and Supply Chain Finance. We are in an excellent position to capitalise when global trade starts to recover.
 
Global Private Banking attracted $5bn of net new money in the first half, more than half of which came through greater collaboration with our other Global Businesses. This demonstrates the value that the Private Bank brings to our clients from across the Group and the important role it plays within our universal banking business model.
 
Loan impairment charges increased, mainly in the oil and gas, and metals and mining sectors, and in Brazil due to weakness in the Brazilian economy. We remain confident of our credit quality.
 
Strategy
 
We are now more than a year into implementing our strategic actions to improve returns and gain the maximum value from our international network. We have made good progress in the most pressing areas but have further to go in others, due largely to external factors.
 
In the first half of the year we removed an extra $48bn of risk-weighted assets from the business, around half of which came from Global Banking and Markets. This takes us more than 60% of the way towards our target and keeps us on track to deliver the savings we promised by the end of 2017. These savings were in addition to the $40bn reduction from the completion of the sale of our operations in Brazil in July.
 
We continue to make material progress in cutting costs. In the first half of 2016 we reduced our cost base compared with the first half of 2015, in spite of inflation and continued investment in compliance, regulatory programmes and growth. We have achieved this through tight cost control, operational enhancements and better use of digital platforms, improving our service to customers in the process. We are on track to hit the top end of our $4.5-5.0bn cost savings target range.
 
We are on the way to restoring profitability in our businesses in Mexico and the US. These are important businesses for the wider Group.
 
Having commenced the reshaping and de-risking of our Mexico operations in 2012, we have been rebuilding the business since the start of 2015. Since then, we have expanded our share of the cards, personal loans and mortgage markets, and grown our trade finance and international payments operations. As a consequence, adjusted revenues were up by 12% in Retail Banking and Wealth Management and 27% in Commercial Banking. Adjusted profits in our Mexico business were up 37% on the same period last year.
 
In the US, we have invested in Commercial Banking, and Global Banking and Markets to increase revenue from our network. We have also made rapid progress in cutting costs and removing wholesale risk-weighted assets. We have continued to wind down our US CML run-off portfolio quickly and efficiently, disposing of an extra $4.7bn of legacy assets in the first half of 2016. This progress, along with further improvements in our capital planning and management processes, helped the US business to achieve a non-objection to the capital plan it submitted as part of this year's Federal Reserve Comprehensive Capital Analysis and Review ('CCAR'). This plan includes a proposed dividend payment to HSBC Holdings plc in 2017, which would be the first such payment to the Group from our US business since 2007.
 
HSBC HOLDINGS PLC
 
     
 
 
Group Chief Executive's Review
 
Two-thirds of our adjusted profit before tax, or $7.2bn, came from Asia in the first half of 2016, up from 62% in the same period last year. We have continued to develop our Asia businesses, particularly Asset Management and Insurance, and our operations in the ASEAN region and the Pearl River Delta. We increased revenue in all four areas compared with the same period last year and increased assets under management in Asia by 7%. We also maintained our leadership of the market for renminbi business, topping the Asiamoney Offshore RMB Poll for 'Best Overall Provider of Offshore RMB Products and Services' for the fifth year in a row.
 
There are areas where we have more to do. Our pivot to Asia depends on our ability to redeploy the capital that we have made available. While we have clearly demonstrated that we can release capital by reducing risk-weighted assets, the global slow-down has delayed the process of redistributing that capital in Asian growth markets. This will not happen until we judge it to be in the best interests of shareholders.
 
We are continuing to implement Global Standards throughout HSBC.
 
Share buy-back
 
Our strong capital position and stable earnings mean that we are able to retire some of the equity that we no longer require to support the Brazil business. Having received the appropriate regulatory clearances, we will therefore execute a $2.5bn share buy-back in the second half of the year.
 
Looking forward
 
Following the outcome of the referendum on the UK's membership of the European Union, there has been a period of volatility and uncertainty which is likely to continue for some time. We are actively monitoring our portfolio to quickly identify any areas of stress, however it is still too early to tell which parts may be impacted and to what extent.
 
While the economic environment remains difficult, the action we have taken has already put us in a far better position for when normal conditions return. HSBC is stronger, leaner and better connected than it was last June. There is much still to do, but we are making progress in all of the areas within our control. In the meantime, our balanced and diversified business model, strong liquidity and strict cost management make us highly resilient.
 
 
 
HSBC HOLDINGS PLC
 
     
 
 
Financial Review
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
 
30 Jun
 
 
31 Dec
 
 
 
2016
 
 
2015
 
 
2015
 
 
 
$m
 
 
$m
 
 
$m
 
For the period
 
 
 
 
 
 
Profit before tax
 
9,714
 
 
13,628
 
 
5,239
 
Profit attributable to shareholders of the parent company
 
6,912
 
 
9,618
 
 
3,904
 
Dividends declared on ordinary shares
 
6,118
 
 
5,796
 
 
3,914
 
 
 
 
 
 
 
 
At the period end
 
 
 
 
 
 
Total shareholders' equity
 
191,257
 
 
192,427
 
 
188,460
 
Total regulatory capital
 
186,793
 
 
195,110
 
 
189,833
 
Customer accounts
 
1,290,958
 
 
1,335,800
 
 
1,289,586
 
Total assets
 
2,608,149
 
 
2,571,713
 
 
2,409,656
 
Risk-weighted assets
 
1,082,184
 
 
1,193,154
 
 
1,102,995
 
 
 
 
 
 
 
 
 
 
$
 
 
$
 
 
$
 
Per ordinary share
 
 
 
 
 
 
Basic earnings
 
0.32
 
 
0.48
 
 
0.17
 
Dividends1
 
0.31
 
 
0.30
 
 
0.20
 
Net asset value
 
8.75
 
 
9.11
 
 
8.73
 
Share information
 
 
 
 
 
 
$0.50 ordinary shares in issue
 
19,813
m
 
19,516
m
 
19,685
m
 
 
 
1
The dividends per ordinary share of $0.31 shown in the accounts comprise dividends declared during the first half of 2016. This represents the fourth interim dividend for 2015 and the first interim dividend for 2016.
Distribution of results by geographical region
Profit/(loss) before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun 2016
 
30 Jun 2015
 
31 Dec 2015
 
 
$m
 
 
%
 
 
$m
 
 
%
 
$m
 
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe
 
1,579
 
 
16.3
 
 
2,205
 
 
16.2
 
(1,562
)
 
(29.8
)
Asia
 
7,155
 
 
73.7
 
 
9,400
 
 
69.0
 
6,363
 
 
121.5
 
Middle East and North Africa
 
985
 
 
10.1
 
 
901
 
 
6.6
 
636
 
 
12.1
 
North America
 
50
 
 
0.5
 
 
690
 
 
5.1
 
(76
)
 
(1.5
)
Latin America
 
(55
)
 
(0.6
)
 
432
 
 
3.1
 
(122
)
 
(2.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
9,714
 
 
100.0
 
 
13,628
 
 
100.0
 
5,239
 
 
100.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax expense
 
(2,291
)
 
 
 
(2,907
)
 
 
 
(864
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit for the period
 
7,423
 
 
 
 
10,721
 
 
 
 
4,375
 
 
 
Profit attributable to shareholders of the parent company
 
6,912
 
 
 
 
9,618
 
 
 
 
3,904
 
 
 
Profit attributable to non-controlling interests
 
511
 
 
 
 
1,103
 
 
 
 
471
 
 
 
 
Distribution of results by global business
Profit/(loss) before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Half-year to
 
 
 
 
30 Jun 2016
 
30 Jun 2015
 
31 Dec 2015
 
 
$m
 
 
%
 
 
$m
 
 
%
 
$m
 
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
2,382
 
 
24.5
 
 
3,362
 
 
24.7
 
1,605
 
 
30.6
 
Commercial Banking
 
4,304
 
 
44.3
 
 
4,523
 
 
33.2
 
3,450
 
 
65.9
 
Global Banking and Markets
 
4,006
 
 
41.2
 
 
4,754
 
 
34.9
 
3,156
 
 
60.2
 
Global Private Banking
 
(557
)
 
(5.7
)
 
180
 
 
1.3
 
164
 
 
3.1
 
Other1
 
(421
)
 
(4.3
)
 
809
 
 
5.9
 
(3,136
)
 
(59.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,714
 
 
100.0
 
 
13,628
 
 
100.0
 
5,239
 
 
100.0
 
 
 
 
1
The main items reported under 'Other' are the results of HSBC's holding company and financing operations, which include: net interest earned on free capital held centrally; operating costs incurred by the head office operations in providing stewardship and central management services to HSBC; costs incurred by the Group Service Centres and Shared Service Organisations and their associated recoveries;the UK bank levy; unallocated investment activities; centrally held investment companies; gains arising from the dilution of interests in associates and joint ventures and gains from certain property transactions. 'Other' also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M).
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Income Statement
 
Consolidated income statement
for the half-year to 30 June 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
 
30 Jun
 
 
31 Dec
 
 
 
2016
 
 
2015
 
 
2015
 
 
 
$m
 
 
$m
 
 
$m
 
 
 
 
 
 
 
 
Interest income
 
23,011
 
 
24,019
 
 
23,170
 
Interest expense
 
(7,251
)
 
(7,575
)
 
(7,083
)
 
 
 
 
 
 
 
Net interest income
 
15,760
 
 
16,444
 
 
16,087
 
 
 
 
 
 
 
 
Fee income
 
8,202
 
 
9,372
 
 
8,644
 
Fee expense
 
(1,616
)
 
(1,647
)
 
(1,664
)
 
 
 
 
 
 
 
Net fee income
 
6,586
 
 
7,725
 
 
6,980
 
 
 
 
 
 
 
 
Trading income excluding net interest income
 
4,594
 
 
3,520
 
 
3,428
 
Net interest income on trading activities
 
730
 
 
1,053
 
 
722
 
 
 
 
 
 
 
 
Net trading income
 
5,324
 
 
4,573
 
 
4,150
 
 
 
 
 
 
 
 
Changes in fair value of long-term debt issued and related derivatives
 
270
 
 
1,324
 
 
(461
)
Net income/(expense) from other financial instruments designated at fair value
 
291
 
 
1,342
 
 
(673
)
 
 
 
 
 
 
 
Net income/(expense) from financial instruments designated at fair value
 
561
 
 
2,666
 
 
(1,134
)
Gains less losses from financial investments
 
965
 
 
1,874
 
 
194
 
Dividend income
 
64
 
 
68
 
 
55
 
Net insurance premium income
 
5,356
 
 
5,607
 
 
4,748
 
Other operating income
 
644
 
 
836
 
 
219
 
 
 
 
 
 
 
 
Total operating income
 
35,260
 
 
39,793
 
 
31,299
 
 
 
 
 
 
 
 
Net insurance claims and benefits paid and movement in liabilities to policyholders
 
(5,790
)
 
(6,850
)
 
(4,442
)
 
 
 
 
 
 
 
Net operating income before loan impairment charges andother credit risk provisions
 
29,470
 
 
32,943
 
 
26,857
 
 
 
 
 
 
 
 
Loan impairment charges and other credit risk provisions
 
(2,366
)
 
(1,439
)
 
(2,282
)
 
 
 
 
 
 
 
Net operating income
 
27,104
 
 
31,504
 
 
24,575
 
 
 
 
 
 
 
 
Employee compensation and benefits
 
(9,354
)
 
(10,041
)
 
(9,859
)
General and administrative expenses
 
(7,467
)
 
(8,129
)
 
(9,533
)
Depreciation and impairment of property, plant and equipment
 
(605
)
 
(604
)
 
(665
)
Amortisation and impairment of intangible assets and goodwill
 
(1,202
)
 
(413
)
 
(524
)
 
 
 
 
 
 
 
Total operating expenses
 
(18,628
)
 
(19,187
)
 
(20,581
)
 
 
 
 
 
 
 
Operating profit
 
8,476
 
 
12,317
 
 
3,994
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
1,238
 
 
1,311
 
 
1,245
 
 
 
 
 
 
 
 
Profit before tax
 
9,714
 
 
13,628
 
 
5,239
 
 
 
 
 
 
 
 
Tax expense
 
(2,291
)
 
(2,907
)
 
(864
)
 
 
 
 
 
 
 
Profit for the period
 
7,423
 
 
10,721
 
 
4,375
 
 
 
 
 
 
 
 
Profit attributable to shareholders of the parent company
 
6,912
 
 
9,618
 
 
3,904
 
Profit attributable to non-controlling interests
 
511
 
 
1,103
 
 
471
 
 
 
 
 
 
 
 
 
 
$
 
 
$
 
 
$
 
 
 
 
 
 
 
 
Basic earnings per ordinary share
 
0.32
 
 
0.48
 
 
0.17
 
Diluted earnings per ordinary share
 
0.32
 
 
0.48
 
 
0.17
 
 
 
 
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Statement of Comprehensive Income
 
Consolidated statement of comprehensive income
for the half-year to 30 June 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
 
30 Jun
 
 
31 Dec
 
 
 
2016
 
 
2015
 
 
2015
 
 
 
$m
 
 
$m
 
 
$m
 
 
 
 
 
 
 
 
Profit for the period
 
7,423
 
 
10,721
 
 
4,375
 
 
 
 
 
 
 
 
Other comprehensive income/(expense)
 
 
 
 
 
 
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
 
 
 
 
 
 
Available-for-sale investments
 
1,010
 
 
(2,445
)
 
(627
)
- fair value gains/(losses)
 
2,826
 
 
(355
)
 
(876
)
- fair value gains reclassified to the income statement
 
(1,228
)
 
(2,317
)
 
(120
)
- amounts reclassified to the income statement in respect of impairment losses
 
24
 
 
2
 
 
125
 
- income taxes
 
(612
)
 
225
 
 
244
 
 
 
 
 
 
 
 
Cash flow hedges
 
340
 
 
(150
)
 
126
 
- fair value (losses)/gains
 
(1,796
)
 
341
 
 
363
 
- fair value losses/(gains) reclassified to the income statement
 
2,242
 
 
(538
)
 
(167
)
- income taxes
 
(106
)
 
47
 
 
(70
)
 
 
 
 
 
 
 
Share of other comprehensive (expense)/income of associates and joint ventures
 
(1
)
 
2
 
 
(11
)
- share for the period
 
(1
)
 
2
 
 
(11
)
- reclassified to income statement on disposal
 
-
 
 
-
 
 
-
 
 
 
 
 
 
 
 
Exchange differences
 
(2,713
)
 
(3,267
)
 
(7,678
)
- other exchange differences
 
(2,619
)
 
(3,395
)
 
(7,717
)
- income tax attributable to exchange differences
 
(94
)
 
128
 
 
39
 
 
 
 
 
 
 
 
Items that will not be reclassified subsequently to profit or loss:
 
 
 
 
 
 
Remeasurement of defined benefit asset/liability
 
416
 
 
(1,680
)
 
1,781
 
- before income taxes
 
533
 
 
(2,085
)
 
2,215
 
- income taxes
 
(117
)
 
405
 
 
(434
)
 
 
 
 
 
 
 
Other comprehensive expense for the period, net of tax
 
(948
)
 
(7,540
)
 
(6,409
)
 
 
 
 
 
 
 
Total comprehensive income/(expense) for the period
 
6,475
 
 
3,181
 
 
(2,034
)
 
 
 
 
 
 
 
Attributable to:
 
 
 
 
 
 
- shareholders of the parent company
 
6,010
 
 
2,856
 
 
(2,396
)
- non-controlling interests
 
465
 
 
325
 
 
362
 
 
 
 
 
 
 
 
Total comprehensive income/(expense) for the period
 
6,475
 
 
3,181
 
 
(2,034
)
 
 
 
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Balance Sheet
 
Consolidated balance sheet
at 30 June 2016
 
 
 
 
 
 
 
 
 
 
At 30 Jun 2016
 
 
At 31 Dec 2015
 
 
 
$m
 
 
$m
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and balances at central banks
 
128,272
 
 
98,934
 
Items in the course of collection from other banks
 
6,584
 
 
5,768
 
Hong Kong Government certificates of indebtedness
 
29,011
 
 
28,410
 
Trading assets
 
280,295
 
 
224,837
 
Financial assets designated at fair value
 
23,901
 
 
23,852
 
Derivatives
 
369,942
 
 
288,476
 
Loans and advances to banks
 
92,199
 
 
90,401
 
Loans and advances to customers
 
887,556
 
 
924,454
 
Reverse repurchase agreements - non-trading
 
187,826
 
 
146,255
 
Financial investments
 
441,399
 
 
428,955
 
Assets held for sale
 
50,305
 
 
43,900
 
Prepayments, accrued income and other assets
 
60,569
 
 
54,398
 
Current tax assets
 
714
 
 
1,221
 
Interests in associates and joint ventures
 
19,606
 
 
19,139
 
Goodwill and intangible assets
 
24,053
 
 
24,605
 
Deferred tax assets
 
5,917
 
 
6,051
 
 
 
 
 
 
Total assets
 
2,608,149
 
 
2,409,656
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
Hong Kong currency notes in circulation
 
29,011
 
 
28,410
 
Deposits by banks
 
69,900
 
 
54,371
 
Customer accounts
 
1,290,958
 
 
1,289,586
 
Repurchase agreements - non-trading
 
98,342
 
 
80,400
 
Items in the course of transmission to other banks
 
7,461
 
 
5,638
 
Trading liabilities
 
188,698
 
 
141,614
 
Financial liabilities designated at fair value
 
78,882
 
 
66,408
 
Derivatives
 
368,414
 
 
281,071
 
Debt securities in issue
 
87,673
 
 
88,949
 
Liabilities of disposal groups held for sale
 
43,705
 
 
36,840
 
Accruals, deferred income and other liabilities
 
42,057
 
 
38,116
 
Current tax liabilities
 
1,569
 
 
783
 
Liabilities under insurance contracts
 
73,416
 
 
69,938
 
Provisions
 
5,797
 
 
5,552
 
Deferred tax liabilities
 
2,300
 
 
1,760
 
Subordinated liabilities
 
21,669
 
 
22,702
 
 
 
 
 
 
Total liabilities
 
2,409,852
 
 
2,212,138
 
 
 
 
 
 
Equity
 
 
 
 
Called up share capital
 
9,906
 
 
9,842
 
Share premium account
 
12,772
 
 
12,421
 
Other equity instruments
 
17,110
 
 
15,112
 
Other reserves
 
5,759
 
 
7,109
 
Retained earnings
 
145,710
 
 
143,976
 
 
 
 
 
 
Total shareholders' equity
 
191,257
 
 
188,460
 
Non-controlling interests
 
7,040
 
 
9,058
 
 
 
 
 
 
Total equity
 
198,297
 
 
197,518
 
 
 
 
 
 
Total liabilities and equity
 
2,608,149
 
 
2,409,656
 
 
 
 
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Statement of Cash Flows
 
Consolidated statement of cash flows
for the half-year to 30 June 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
 
30 Jun
 
 
31 Dec
 
 
 
2016
 
 
2015
 
 
2015
 
 
 
$m
 
 
$m
 
 
$m
 
 
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
 
 
Profit before tax
 
9,714
 
 
13,628
 
 
5,239
 
 
 
 
 
 
 
 
Adjustments for:
 
 
 
 
 
 
- net gain from investing activities
 
(1,034
)
 
(1,926
)
 
(9
)
- share of profit in associates and joint ventures
 
(1,238
)
 
(1,311
)
 
(1,245
)
- other non-cash items included in profit before tax
 
5,817
 
 
4,522
 
 
6,243
 
- change in operating assets
 
7,268
 
 
12,077
 
 
53,751
 
- change in operating liabilities
 
59,093
 
 
(15,544
)
 
(91,218
)
- elimination of exchange differences1
 
(3,193
)
 
3,951
 
 
14,357
 
- dividends received from associates
 
619
 
 
770
 
 
109
 
- contributions paid to defined benefit plans
 
(340
)
 
(226
)
 
(438
)
- tax paid
 
(1,668
)
 
(1,351
)
 
(2,501
)
 
 
 
 
 
 
 
Net cash generated from/(used in) operating activities
 
75,038
 
 
14,590
 
 
(15,712
)
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
Purchase of financial investments
 
(233,153
)
 
(211,669
)
 
(226,707
)
Proceeds from the sale and maturity of financial investments
 
216,340
 
 
208,637
 
 
190,999
 
Purchase of property, plant and equipment
 
(429
)
 
(620
)
 
(732
)
Proceeds from the sale of property, plant and equipment
 
40
 
 
56
 
 
47
 
Net cash inflow from disposal of customer and loan portfolios
 
4,186
 
 
321
 
 
1,702
 
Net purchase of intangible assets
 
(395
)
 
(400
)
 
(554
)
Net cash inflow from disposal of subsidiaries, businesses, associates and joint ventures
 
16
 
 
6
 
 
2
 
 
 
 
 
 
 
 
Net cash used in investing activities
 
(13,395
)
 
(3,669
)
 
(35,243
)
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
Issue of ordinary share capital
 
8
 
 
9
 
 
138
 
Net (purchases)/sales of own shares for market-making and investment purposes
 
(78
)
 
139
 
 
192
 
Issue of other equity instruments
 
1,998
 
 
2,459
 
 
1,120
 
Redemption of preference shares and other equity instruments
 
(1,825
)
 
(462
)
 
-
 
Subordinated loan capital issued
 
1,129
 
 
1,680
 
 
1,500
 
Subordinated loan capital repaid
 
(546
)
 
(778
)
 
(1,379
)
Dividends paid to ordinary shareholders of the parent company
 
(3,729
)
 
(1,834
)
 
(4,714
)
Dividends paid to non-controlling interests
 
(702
)
 
(386
)
 
(311
)
Dividends paid to holders of other equity instruments
 
(556
)
 
(428
)
 
(522
)
 
 
 
 
 
 
 
Net cash generated (used in)/from financing activities
 
(4,301
)
 
399
 
 
(3,976
)
 
 
 
 
 
 
 
Net increase/(decrease) in cash and cash equivalents
 
57,342
 
 
11,320
 
 
(54,931
)
 
 
 
 
 
 
 
Cash and cash equivalents at the beginning of the period
 
243,863
 
 
301,301
 
 
308,792
 
Exchange differences in respect of cash and cash equivalents
 
(1,452
)
 
(3,829
)
 
(9,998
)
 
 
 
 
 
 
 
Cash and cash equivalents at the end of the period
 
299,753
 
 
308,792
 
 
243,863
 
For footnote, see page 13.
 
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Statement of Changes in Equity
 
Consolidated statement of changes in equity
for the half-year to 30 June 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other reserves
 
 
 
 
 
 
 
 
Called
 up share
 capital
 
 
Share
premium
 
 
Other
 equity
 instru-
ments2
 
 
Retained
earnings
 
 
Available-
for-sale
fair
 value
reserve3
 
 
Cash
flow
hedging
reserve3
 
 
Foreign
exchange
reserve3
 
 
Merger
reserve
 
 
Total
share-
holders'
 equity
 
 
Non-
controlling
interests4
 
 
Total
 equity
 
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
At 1 Jan 2016
 
9,842
 
 
12,421
 
 
15,112
 
 
143,976
 
 
(189
)
 
34
 
 
(20,044
)
 
27,308
 
 
188,460
 
 
9,058
 
 
197,518
 
Profit for the period
 
-
 
 
-
 
 
-
 
 
6,912
 
 
-
 
 
-
 
 
-
 
 
-
 
 
6,912
 
 
511
 
 
7,423
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (net of tax)
 
-
 
 
-
 
 
-
 
 
451
 
 
1,024
 
 
341
 
 
(2,718
)
 
-
 
 
(902
)
 
(46
)
 
(948
)
- available-for-sale investments
 
-
 
 
-
 
 
-
 
 
-
 
 
1,024
 
 
-
 
 
-
 
 
-
 
 
1,024
 
 
(14
)
 
1,010
 
- cash flow hedges
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
341
 
 
-
 
 
-
 
 
341
 
 
(1
)
 
340
 
- remeasurement of defined benefit asset/liability
 
-
 
 
-
 
 
-
 
 
452
 
 
-
 
 
-
 
 
-
 
 
-
 
 
452
 
 
(36
)
 
416
 
- share of other comprehensive income of associates & joint ventures
 
-
 
 
-
 
 
-
 
 
(1
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(1
)
 
-
 
 
(1
)
- exchange differences
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(2,718
)
 
-
 
 
(2,718
)
 
5
 
 
(2,713
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income for the period
 
-
 
 
-
 
 
-
 
 
7,363
 
 
1,024
 
 
341
 
 
(2,718
)
 
-
 
 
6,010
 
 
465
 
 
6,475
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued under employee remuneration and share plans
 
32
 
 
383
 
 
-
 
 
(407
)
 
-
 
 
-
 
 
-
 
 
-
 
 
8
 
 
-
 
 
8
 
Shares issued in lieu of dividends and amounts arising thereon
 
32
 
 
(32
)
 
-
 
 
1,111
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,111
 
 
-
 
 
1,111
 
Dividends to shareholders
 
-
 
 
-
 
 
-
 
 
(6,674
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(6,674
)
 
(702
)
 
(7,376
)
Capital securities issued
 
-
 
 
-
 
 
1,998
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,998
 
 
-
 
 
1,998
 
Cost of share-based payment arrangements
 
-
 
 
-
 
 
-
 
 
305
 
 
-
 
 
-
 
 
-
 
 
-
 
 
305
 
 
-
 
 
305
 
Other movements
 
-
 
 
-
 
 
-
 
 
36
 
 
3
 
 
-
 
 
-
 
 
-
 
 
39
 
 
(1,781
)
 
(1,742
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 30 Jun 2016
 
9,906
 
 
12,772
 
 
17,110
 
 
145,710
 
 
838
 
 
375
 
 
(22,762
)
 
27,308
 
 
191,257
 
 
7,040
 
 
198,297
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 1 Jan 2015
 
9,609
 
 
11,918
 
 
11,532
 
 
137,144
 
 
2,143
 
 
58
 
 
(9,265
)
 
27,308
 
 
190,447
 
 
9,531
 
 
199,978
 
Profit for the period
 
-
 
 
-
 
 
-
 
 
9,618
 
 
-
 
 
-
 
 
-
 
 
-
 
 
9,618
 
 
1,103
 
 
10,721
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (net of tax)
 
-
 
 
-
 
 
-
 
 
(1,693
)
 
(1,735
)
 
(151
)
 
(3,183
)
 
-
 
 
(6,762
)
 
(778
)
 
(7,540
)
- available-for-sale investments
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,735
)
 
-
 
 
-
 
 
-
 
 
(1,735
)
 
(710
)
 
(2,445
)
- cash flow hedges
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(151
)
 
-
 
 
-
 
 
(151
)
 
1
 
 
(150
)
- remeasurement of defined benefit asset/liability
 
-
 
 
-
 
 
-
 
 
(1,695
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,695
)
 
15
 
 
(1,680
)
- share of other comprehensive income of associates & joint ventures
 
-
 
 
-
 
 
-
 
 
2
 
 
-
 
 
-
 
 
-
 
 
-
 
 
2
 
 
-
 
 
2
 
- exchange differences
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,183
)
 
-
 
 
(3,183
)
 
(84
)
 
(3,267
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income for the period
 
-
 
 
-
 
 
-
 
 
7,925
 
 
(1,735
)
 
(151
)
 
(3,183
)
 
-
 
 
2,856
 
 
325
 
 
3,181
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued under employee remuneration and share plans
 
31
 
 
490
 
 
-
 
 
(512
)
 
-
 
 
-
 
 
-
 
 
-
 
 
9
 
 
-
 
 
9
 
Shares issued in lieu of dividends and amounts arising thereon
 
118
 
 
(118
)
 
-
 
 
2,242
 
 
-
 
 
-
 
 
-
 
 
-
 
 
2,242
 
 
-
 
 
2,242
 
Dividends to shareholders
 
-
 
 
-
 
 
-
 
 
(6,224
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(6,224
)
 
(432
)
 
(6,656
)
Capital securities issued
 
-
 
 
-
 
 
2,459
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
2,459
 
 
-
 
 
2,459
 
Cost of share-based payment arrangements
 
-
 
 
-
 
 
-
 
 
444
 
 
-
 
 
-
 
 
-
 
 
-
 
 
444
 
 
-
 
 
444
 
Other movements
 
-
 
 
-
 
 
-
 
 
189
 
 
5
 
 
-
 
 
-
 
 
-
 
 
194
 
 
(469
)
 
(275
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 30 Jun 2015
 
9,758
 
 
12,290
 
 
13,991
 
 
141,208
 
 
413
 
 
(93
)
 
(12,448
)
 
27,308
 
 
192,427
 
 
8,955
 
 
201,382
 
 
HSBC HOLDINGS PLC
 
     
 
 
Consolidated Statement of Changes in Equity (continued)
 
 
Consolidated statement of changes in equity for the half-year to 30 June 2016 (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other reserves
 
 
 
 
 
 
 
 
Called
 up
 Share
 capital
 
 
Share
premium
 
 
Other
 equity
 instru-
ments
 
 
Retained
earnings
 
 
Available-
 for-sale
 fair
 value
reserve3
 
 
Cash
 flow
hedging
reserve3
 
 
Foreign
 exchange
 reserve3
 
 
Merger
reserve
 
 
Total
share-
holders'
 equity
 
 
Non-
controlling
interests
 
 
Total
 equity
 
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
 
$m
 
At 1 Jul 2015
 
9,758
 
 
12,290
 
 
13,991
 
 
141,208
 
 
413
 
 
(93
)
 
(12,448
)
 
27,308
 
 
192,427
 
 
8,955
 
 
201,382
 
Profit for the period
 
-
 
 
-
 
 
-
 
 
3,904
 
 
-
 
 
-
 
 
-
 
 
-
 
 
3,904
 
 
471
 
 
4,375
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (net of tax)
 
-
 
 
-
 
 
-
 
 
1,766
 
 
(597
)
 
127
 
 
(7,596
)
 
-
 
 
(6,300
)
 
(109
)
 
(6,409
)
- available-for-sale investments
 
-
 
 
-
 
 
-
 
 
-
 
 
(597
)
 
-
 
 
-
 
 
-
 
 
(597
)
 
(30
)
 
(627
)
- cash flow hedges
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
127
 
 
-
 
 
-
 
 
127
 
 
(1
)
 
126
 
- remeasurement of defined benefit asset/liability
 
-
 
 
-
 
 
-
 
 
1,777
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,777
 
 
4
 
 
1,781
 
- share of other comprehensive income of associates & joint ventures
 
-
 
 
-
 
 
-
 
 
(11
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(11
)
 
-
 
 
(11
)
- exchange differences
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(7,596
)
 
-
 
 
(7,596
)
 
(82
)
 
(7,678
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income for the period
 
-
 
 
-
 
 
-
 
 
5,670
 
 
(597
)
 
127
 
 
(7,596
)
 
-
 
 
(2,396
)
 
362
 
 
(2,034
)
Shares issued under employee remuneration and share plans
 
14
 
 
201
 
 
-
 
 
(77
)
 
-
 
 
-
 
 
-
 
 
-
 
 
138
 
 
-
 
 
138
 
Shares issued in lieu of dividends and amounts arising thereon
 
70
 
 
(70
)
 
-
 
 
920
 
 
-
 
 
-
 
 
-
 
 
-
 
 
920
 
 
-
 
 
920
 
Dividends to shareholders
 
-
 
 
-
 
 
-
 
 
(4,436
)
 
-
 
 
-
 
 
-
 
 
-
 
 
(4,436
)
 
(265
)
 
(4,701
)
Capital securities issued
 
-
 
 
-
 
 
1,121
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,121
 
 
-
 
 
1,121
 
Cost of share-based payment arrangements
 
-
 
 
-
 
 
-
 
 
313
 
 
-
 
 
-
 
 
-
 
 
-
 
 
313
 
 
-
 
 
313
 
Other movements
 
-
 
 
-
 
 
-
 
 
378
 
 
(5
)
 
-
 
 
-
 
 
-
 
 
373
 
 
6
 
 
379
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 31 Dec 2015
 
9,842
 
 
12,421
 
 
15,112
 
 
143,976
 
 
(189
)
 
34
 
 
(20,044
)
 
27,308
 
 
188,460
 
 
9,058
 
 
197,518
 
 
Footnotes to financial statements
 
 
1
Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without unreasonable expense.
 
 
2
During June 2016, HSBC Holdings issued $2,000m of perpetual subordinated contingent convertible capital securities, after issuance costs of $6m and tax benefits of $4m, which are classified as equity under IFRSs.
 
 
3
At 30 June 2016, our operations in Brazil were classified as held for sale (see Note 11 of the Interim Report 2016). The cumulative amounts of other reserves attributable to these operations were as follows: available-for-sale fair value reserve debit of $33m (30 June 2015: $65m debit; 31 December 2015: $176m debit), nil cash flow hedging reserve (30 June 2015: $29m debit; 31 December 2015: $34m credit) and foreign exchange reserve debit of $1.9bn (30 June 2015: $1.7bn debit; 31 December 2015: $2.6bn debit).
 
 
4
During the period HSBC USA Inc. and HSBC Finance Corporation redeemed all outstanding preferred securities at 31 December 2015 ($1,825m). Refer to Note 34 on pages 436 and 437 of the Annual Report and Accounts 2015 for further details of all preferred securities outstanding at 31 December 2015.
 
 
 
 
 
1
Basis of preparation and significant accounting policies
(a)    Compliance with International Financial Reporting Standards
 
The interim condensed consolidated financial statements of HSBC have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Conduct Authority and IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU. These financial statements should be read in conjunction with the Annual Report and Accounts 2015.
 
At 30 June 2016, there were no unendorsed standards effective for the half-year to 30 June 2016 affecting these financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC.
 
Standards applied during the half-year to 30 June 2016
 
There were no new standards applied during the half-year to 30 June 2016. During the period, HSBC applied a number of interpretations and amendments to standards which had an insignificant effect on these financial statements.
 
(b)    Use of estimates and judgements
 
Management believes that HSBC's critical accounting estimates and judgements are those which relate to impairment of loans and advances, goodwill impairment, the valuation of financial instruments, deferred tax assets, provisions for liabilities and interests in associates. There was no change in the current period to the critical accounting estimates and judgements applied in 2015, which are stated on pages 64 and 353 of the Annual Report and Accounts 2015.
 
(c)    Composition of Group
 
There were no material changes in the composition of the HSBC Group in the half-year to 30 June 2016.
 
(d)    Future accounting developments
 
Information on future accounting developments and their potential effect on the financial statements of HSBC are provided on pages 347 to 352 of the Annual Report and Accounts 2015. The IFRS 9 'Financial Instruments' Programme's focus continues to be on developing the impairment models and processes which are needed for the parallel run during 2017 in accordance with the project plan and finalising implementation of the more complex requirements. Until sufficient models have been developed and tested, we will not have a reliable understanding of the potential impact on the financial statements and any consequential effects on regulatory capital requirements.
 
(e)    Going concern
 
The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources.
 
(f)    Accounting policies
 
The accounting policies applied by HSBC for these interim condensed consolidated financial statements are consistent with those described on pages 347 to 469 of the Annual Report and Accounts 2015, as are the methods of computation.
 
 
 
2
Deferred tax
Net deferred tax assets amounted to $3.6bn at 30 June 2016 (30 June 2015: $4.5bn; 31 December 2015: $4.3bn) and mainly relate to timing differences in the US.
 
 
 
3
Dividends
On 3 August 2016, the Directors declared a second interim dividend of $0.10 per ordinary share, in respect of the financial year ending 31 December 2016, a distribution of approximately $1,992m which will be payable on 28 September 2016. No liability is recognised in the financial statements in respect of this dividend.
 
HSBC HOLDINGS PLC
 
     
 
 
Additional information (continued)
 
Dividends paid to shareholders of HSBC Holdings plc
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun 2016
 
30 Jun 2015
 
31 Dec 2015
 
 
Per
share
 
 
Total
 
 
Settled
in scrip
 
 
Per
share
 
 
Total
 
 
Settled
in scrip
 
 
Per
share
 
 
Total
 
 
Settled
in scrip
 
 
 
$
 
 
$m
 
 
$m
 
 
$
 
 
$m
 
 
$m
 
 
$
 
 
$m
 
 
$m
 
Dividends paid on ordinary shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In respect of previous year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- fourth interim dividend
 
0.21
 
 
4,137
 
 
408
 
 
0.20
 
 
3,845
 
 
2,011
 
 
-
 
 
-
 
 
-
 
In respect of current year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- first interim dividend
 
0.10
 
 
1,981
 
 
703
 
 
0.10
 
 
1,951
 
 
231
 
 
-
 
 
-