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-   ).
 
 
 
  
 
5 August 2019
 
 
HSBC HOLDINGS PLC
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/8246H_1-2019-8-4.pdf
 
 
2019 INTERIM RESULTS – HIGHLIGHTS
 
 
Strong revenue momentum in 1H19 in Retail Banking and Wealth Management (‘RBWM’), as we won new customers and increased lending, and in Commercial Banking (‘CMB’), with growth in all major products and all regions. Global Banking and Markets (‘GB&M’) revenue lower.
 
Continuing growth in Asia, although outlook is less certain. Reported revenue in Asia up 7% compared with 1H18. Reported lending in Asia up $23bn or 5% compared with the end of 2018.
 
Investments of $2.2bn in 1H19, up 17% compared with 1H18, on near- and medium-term initiatives to grow the business and enhance digital capabilities.
 
Improved customer satisfaction in scale markets in RBWM and CMB.
 
 
Group Chief Executive
 
On 5 August 2019, John Flint stepped down as Group Chief Executive and as a Director of HSBC Holdings. Noel Quinn was appointed as interim Group Chief Executive and as a Director of HSBC Holdings.
 
 
Financial performance (vs 1H18)
 
Reported profit after tax up 18.1% to $9.9bn.
 
Reported profit before tax up 15.8% to $12.4bn, including an $828m dilution gain recognised on the completion of the merger of our associate The Saudi British Bank (‘SABB’) with Alawwal bank in Saudi Arabia. It also included a provision of $615m in respect of the mis-selling of payment protection insurance (‘PPI’), and $248m of severance costs arising from cost efficiency measures across our global businesses and functions. Adjusted profit before tax up 6.8% to $12.5bn.
 
Reported revenue up 7.6%. Adjusted revenue up 8.0%, with strong performances in RBWM and CMB. Adjusted revenue down 3% in GB&M, which suffered from lower market activity due to ongoing economic uncertainty, and spread compression.
 
Reported operating expenses down 2.3%. Adjusted operating expenses up 3.5%, with significant work undertaken in 1H19 to reduce 2020 run-rate. Positive adjusted jaws of 4.5%, supported by favourable market impacts in insurance manufacturing, the non-recurrence of a 1H18 adverse swap mark-to-market loss in Corporate Centre and disposal gains in Latin America.
 
Earnings per share of $0.42. Return on average tangible equity (annualised) (‘RoTE’) up 150 basis points (‘bps’) to 11.2%, including c.120bps favourable impact of the SABB dilution gain.
 
Common equity tier 1 (‘CET1’) ratio up 30bps from 31 December 2018 to 14.3%.
 
We intend to initiate a share buy-back of up to $1bn, which we expect to commence shortly
 
 
Progress on 2020 financial targets
 
The outlook has changed. Interest rates in the US dollar bloc are now expected to fall rather than rise, and geopolitical issues could impact a significant number of our major markets. In the near term, the nature and impact of the UK’s departure from the European Union remain highly uncertain. Given the prevailing outlook for interest rates and revenue headwinds in GB&M and RBWM, we do not expect to achieve our 6% RoTE target in the US by 2020.
 
We are managing operating expenses and investment spending in line with the increased risks to revenue.
 
We expect some recovery from first-half market conditions in GB&M in the second half of 2019 and into next year, and continue to target a RoTE above 11% in 2020, but we will not take short-term decisions that could jeopardise the long-term health of the business.
 
 
 
Key financial metrics
 
 
 
 
 
Half-year to
 
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
Footnotes
 
2019
 
2018
 
2018
 
Reported results
 
 
 
 
 
Reported revenue ($m)
 
 
29,372
 
27,287
 
 
26,493
 
Reported profit before tax ($m)
 
 
12,407
 
10,712
 
 
9,178
 
Reported profit after tax ($m)
 
 
9,937
 
8,416
 
 
6,609
 
Profit attributable to the ordinary shareholders of the parent company ($m)
 
 
8,507
 
7,173
 
 
5,435
 
Basic earnings per share ($)
 
 
0.42
 
0.36
 
 
0.27
 
Diluted earnings per share ($)
 
 
0.42
 
0.36
 
 
0.27
 
Return on average ordinary shareholders' equity (annualised) (%)
 
 
10.4
 
8.7
 
 
6.7
 
Return on average tangible equity (annualised) (%)
 
1
 
11.2
 
9.7
 
 
8.6
 
Net interest margin (%)
 
1
 
1.61
 
1.66
 
 
1.66
 
Adjusted results
 
 
 
 
 
Adjusted revenue ($m)
 
 
28,495
 
26,381
 
 
26,333
 
Adjusted profit before tax ($m)
 
 
12,516
 
11,723
 
 
9,593
 
Adjusted jaws (%)
 
 
4.5
 
 
 
Cost efficiency ratio (%)
 
 
56.7
 
59.2
 
 
62.8
 
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances to customers (%)
 
 
0.23
 
0.08
 
 
0.27
 
 
 
 
 
 
 
 
At
 
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
 
2019
 
2018
 
2018
 
Balance sheet
 
 
 
 
 
Total assets ($m)
 
 
2,751,273
 
2,607,314
 
2,558,124
 
Net loans and advances to customers ($m)
 
 
1,021,632
 
973,443
 
981,696
 
Customer accounts ($m)
 
 
1,380,124
 
1,356,307
 
1,362,643
 
Average interest-earning assets ($m)
 
1
 
1,912,708
 
1,839,603
 
 
1,839,346
 
Loans and advances to customers as % of customer accounts (%)
 
 
74.0
 
71.8
 
 
72.0
 
Total shareholders’ equity ($m)
 
 
192,676
 
183,607
 
186,253
 
Tangible ordinary shareholders’ equity ($m)
 
 
145,441
 
139,754
 
140,056
 
Net asset value per ordinary share at period end ($)
 
2,3
 
8.35
 
8.10
 
8.13
 
Tangible net asset value per ordinary share at period end ($)
 
3
 
7.19
 
7.00
 
7.01
 
Capital, leverage and liquidity
 
 
 
 
 
Common equity tier 1 capital ratio (%)
 
 
14.3
 
14.2
 
 
14.0
 
Risk-weighted assets ($m)
 
 
885,971
 
865,467
 
865,318
 
Total capital ratio (%)
 
4
 
20.1
 
20.4
 
20.0
 
Leverage ratio (%)
 
 
5.4
 
5.4
 
5.5
 
High-quality liquid assets (liquidity value) ($bn)
 
 
533
 
540
 
567
 
Liquidity coverage ratio (%)
 
 
136
 
158
 
154
 
Share count
 
 
 
 
 
Period end basic number of $0.50 ordinary shares outstanding (millions)
 
 
20,221
 
19,963
 
19,981
 
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)
 
 
20,286
 
20,045
 
20,059
 
Average basic number of $0.50 ordinary shares outstanding (millions)
 
 
20,124
 
19,998
 
19,786
 
Dividend per ordinary share (declared in the period) ($)
 
 
0.31
 
0.31
 
0.20
 
 
1 For these metrics, half-year to 31 December 2018 is calculated on a full-year basis and not a 2H18 basis.
 
2 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 shares the company has purchased and are held in treasury. 
 
3 Excludes impact of $0.10 per share 1Q19 dividend, following a June 2019 change in accounting practice on the recognition of interim dividends, from the date of declaration to the date of payment.
 
4 Total capital ratio at 30 June 2019 was calculated in accordance with the revisions to the Capital Requirements Regulation (‘CRR II’) on a transitional basis. Prior period ratios were calculated under the Capital Requirements Regulation and Directive (‘CRD IV’) on a transitional basis.
 
 
Highlights
 
 
 
 
 
Half-year to
 
 
 
30 Jun
 
30 Jun
 
 
 
2019
 
2018
 
 
Footnotes
 
$m
 
$m
 
Reported
 
 
 
 
Revenue
 
1
 
29,372
 
27,287
 
Change in expected credit losses and other credit impairment charges
 
 
(1,140)
 
(407)
 
Operating expenses
 
 
(17,149)
 
(17,549)
 
Profit before tax
 
 
12,407
 
10,712
 
Adjusted
 
 
 
 
Revenue
 
1
 
28,495
 
26,381
 
Change in expected credit losses and other credit impairment charges
 
 
 
(1,140)
 
(357)
 
Operating expenses
 
 
(16,163)
 
(15,615)
 
Profit before tax
 
 
12,516
 
11,723
 
Significant items affecting adjusted performance
 
 
 
 
Revenue
 
 
 
 
Customer redress programmes
 
 
 
46
 
Disposals, acquisitions and investment in new businesses
 
 
827
 
(142)
 
Fair value movements on financial instruments
 
 
50
 
(152)
 
Operating expenses
 
 
 
 
Costs of structural reform
 
 
(91)
 
(211)
 
Customer redress programmes
 
 
(610)
 
(100)
 
Disposals, acquisitions and investment in new businesses
 
 
 
(3)
 
Restructuring and other related costs
 
 
(287)
 
(24)
 
Settlements and provisions in connection with legal and regulatory matters
 
 
2
 
(841)
 
 
1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
 
 
Financial summary
 
 
 
 
 
Half-year to
 
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
 
2019
 
2018
 
2018
 
 
Footnotes
 
$m
 
$m
 
$m
 
For the period
 
 
 
 
 
Profit before tax
 
 
12,407
 
10,712
 
9,178
 
 
Profit attributable to:
 
 
 
 
 
– ordinary shareholders of the parent company
 
 
8,507
 
7,173
 
5,435
 
 
Dividends on ordinary shares
 
1
 
4,206
 
6,205
 
3,982
 
 
At the period end
 
 
 
 
 
Total shareholders’ equity
 
 
192,676
 
183,607
 
186,253
 
 
Total regulatory capital
 
 
178,259
 
176,610
 
173,238
 
 
Customer accounts
 
 
1,380,124
 
1,356,307
 
1,362,643
 
 
Total assets
 
 
2,751,273
 
2,607,314
 
2,558,124
 
 
Risk-weighted assets
 
 
885,971
 
865,467
 
865,318
 
 
Per ordinary share
 
 
$
 
$
 
$
 
Basic earnings
 
 
0.42
 
0.36
 
0.27
 
 
Dividend per ordinary share (declared in the period)
 
2
 
0.31
 
0.31
 
0.20
 
 
Net asset value
 
 
8.35
 
8.10
 
8.13
 
 
 
1 At 30 June 2019, HSBC changed its accounting practice on the recognition of interim dividends to recognise them on the date of payment rather than the date of declaration, in line with generally accepted accounting practice. Prior periods have not been restated as all the relevant amounts are clearly disclosed, and the change is not considered material.
 
2 The dividends per ordinary share of $0.31 shown in the accounts comprise dividends declared during the first half of 2019. This represents the fourth interim dividend for 2018 and the first interim dividend for 2019.
 
Distribution of results by global business
 
 
 
Adjusted profit/(loss) before tax
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
2018
 
 
$m
 
%
 
$m
 
%
 
$m
 
%
 
Retail Banking and Wealth Management
 
4,441
 
35.5
 
3,588
 
30.6
 
3,445
 
35.9
 
 
Commercial Banking
 
4,025
 
32.1
 
3,975
 
33.9
 
3,545
 
37.0
 
 
Global Banking and Markets
 
2,824
 
22.6
 
3,431
 
29.3
 
2,507
 
26.1
 
 
Global Private Banking
 
196
 
1.6
 
187
 
1.6
 
155
 
1.6
 
 
Corporate Centre
 
1,030
 
8.2
 
542
 
4.6
 
(59
 
(0.6
 
)
 
Profit before tax
 
12,516
 
100.0
 
11,723
 
100.0
 
9,593
 
100.0
 
 
 
 
Distribution of results by geographical region
 
 
 
Reported profit/(loss) before tax
 
 
 
 
 
 
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
2018
 
 
 
$m
 
%
 
$m
 
    %
 
$m
 
         %
 
Europe
 
(520)
 
(4.2)
 
110
 
1.0
 
 
(925)
 
(10.1)
 

 
Asia
 
9,780
 
78.8
 
9,380
 
87.6
 
 
8,410
 
91.7
 
 
Middle East and North Africa
 
1,736
 
14.0
 
836
 
7.8
 
 
721
 
7.9
 
 
North America
 
746
 
6.0
 
42
 
0.4
 
 
757
 
8.2
 
 
Latin America
 
665
 
5.4
 
344
 
3.2
 
 
215
 
2.3
 
 
Profit before tax
 
12,407
 
100.0
 
10,712
 
100.0
 
 
9,178
 
100.0
 
 
 
 
 
HSBC adjusted profit before tax and balance sheet data
 
 
 
Half-year to 30 Jun 2019
 
 
 
RetailBanking and Wealth Management
 
CommercialBanking
 
GlobalBanking and Markets
 
GlobalPrivate Banking
 
Corporate Centre
 
Total
 
 
  Footnotes
 
 
  $m
 
 
  $m
 
 
  $m
 
 
  $m
 
 
  $m
 
 
  $m
 
Net operating income/(expense) before change in expected credit losses and other credit impairment charges
1
 
11,919
 
7,816
 
7,706
 
924
 
130
 
28,495
 
– external
 
 
8,789
 
7,545
 
9,493
 
675
 
1,993
 
28,495
 
– inter-segment
 
 
3,130
 
271
 
(1,787)
 
249
 
(1,863)
 
 
of which: net interest income/(expense)
 
 
8,155
 
5,653
 
2,861
 
441
 
(1,870)
 
15,240
 
Change in expected credit losses and other credit impairment (charges)/recoveries
 
(540)
 
(494)
 
(95)
 
(19)
 
8
 
(1,140)
 
Net operating income
 
 
11,379
 
7,322
 
7,611
 
905
 
138
 
27,355
 
Total operating expenses
 
 
(6,981)
 
(3,297)
 
(4,787)
 
(709)
 
(389)
 
(16,163)
 
Operating profit/(loss)
 
 
4,398
 
4,025
 
2,824
 
196
 
(251)
 
11,192
 
Share of profit in associates and joint ventures
 
 
43
 
 
 
 
1,281
 
1,324
 
Adjusted profit before tax
 
 
4,441
 
4,025
 
2,824
 
196
 
1,030
 
12,516
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC’s adjusted profit before tax
 
 
35.5
 
32.1
 
22.6
 
1.6
 
8.2
 
100.0
 
Adjusted cost efficiency ratio
 
 
58.6
 
42.2
 
62.1
 
76.7
 
299.2
 
56.7
 
Adjusted balance sheet data
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
 
376,126
 
347,387
 
250,790
 
45,806
 
1,523
 
1,021,632
 
Interests in associates and joint ventures
 
 
456
 
 
 
 
23,436
 
23,892
 
Total external assets
 
 
498,045
 
377,142
 
1,120,235
 
50,757
 
705,094
 
2,751,273
 
Customer accounts
 
 
660,588
 
358,735
 
289,950
 
62,235
 
8,616
 
1,380,124
 
Adjusted risk-weighted assets
 
 
128,957
 
327,553
 
284,509
 
16,531
 
127,607
 
885,157
 
 
 
 
 
Half-year to 30 Jun 2018
 
Net operating income/(expense) before change in expected credit losses and other credit impairment charges
1
 
10,668
 
7,140
 
7,916
 
907
 
(250
 
26,381
 
– external
 
 
8,741
 
7,001
 
9,181
 
782
 
676
 
26,381
 
– inter-segment
 
 
1,927
 
139
 
(1,265)
 
125
 
(926)
 
 
of which: net interest income/(expense)
 
 
7,389
 
4,985
 
2,385
 
436
 
(720)
 
14,475
 
Change in expected credit losses and other credit impairment (charges)/recoveries
 
(514)
 
(37)
 
103
 
4
 
87
 
(357)
 
Net operating income/(expense)
 
 
10,154
 
7,103
 
8,019
 
911
 
(163
 
26,024
 
Total operating expenses
 
 
(6,583)
 
(3,128)
 
(4,588)
 
(724)
 
(592)
 
(15,615)
 
Operating profit/(loss)
 
 
3,571
 
3,975
 
3,431
 
187
 
(755)
 
10,409
 
Share of profit in associates and joint ventures
 
 
17
 
 
 
 
1,297
 
1,314
 
Adjusted profit before tax
 
 
3,588
 
3,975
 
3,431
 
187
 
542
 
11,723
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC’s adjusted profit before tax
 
 
30.6
 
33.9
 
29.3
 
1.6
 
4.6
 
100.0
 
Adjusted cost efficiency ratio
 
 
61.7
 
43.8
 
58.0
 
79.8
 
(236.8)
 
59.2
 
Adjusted balance sheet data
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
 
345,029
 
324,717
 
246,900
 
40,809
 
2,012
 
959,467
 
Interests in associates and joint ventures
 
 
393
 
 
 
 
21,744
 
22,137
 
Total external assets
 
 
467,809
 
359,329
 
1,036,945
 
47,311
 
659,756
 
2,571,150
 
Customer accounts
 
 
628,536
 
351,422
 
286,690
 
63,164
 
9,675
 
1,339,487
 
Adjusted risk-weighted assets
 
 
122,679
 
310,278
 
282,439
 
16,881
 
121,666
 
853,943
 
 
 
 
HSBC adjusted profit before tax and balance sheet data (continued)
 
 
 
 
 
Half-year to 31 Dec 2018
 
 
 
RetailBanking and Wealth Management
 
CommercialBanking
 
GlobalBanking and Markets
 
GlobalPrivate Banking
 
Corporate Centre
 
Total
 
 
Footnotes
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Net operating income/(expense) before change in expected credit losses and other credit impairment charges
 
1
10,834
7,420
7,230
854
(5)
26,333
– external
 
 
8,155
 
7,313
 
8,483
 
694
 
1,688
 
26,333
 
– inter-segment
 
 
2,679
 
107
 
(1,253)
 
160
 
(1,693)
 
 
of which: net interest income/(expense)
 
 
8,135
 
5,461
 
2,768
 
440
 
(1,472)
 
15,332
 
Change in expected credit losses and other credit impairment (charges)/recoveries
 
 
(634)
 
(684)
 
(70)
 
3
 
28
 
(1,357)
 
Net operating income
 
 
10,200
 
6,736
 
7,160
 
857
 
23
 
24,976
 
Total operating expenses
 
 
(6,772)
 
(3,191)
 
(4,653)
 
(702)
 
(1,232)
 
(16,550)
 
Operating profit/(loss)
 
 
3,428
 
3,545
 
2,507
 
155
 
(1,209)
 
8,426
 
Share of profit in associates and joint ventures
 
 
17
 
 
 
 
1,150
 
1,167
 
Adjusted profit/(loss) before tax
 
 
3,445
 
3,545
 
2,507
 
155
 
(59)
 
9,593
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC’s adjusted profit before tax
 
 
35.9
 
37.0
 
26.1
 
1.6
 
(0.6)
 
100.0
 
Adjusted cost efficiency ratio
 
 
62.5
 
43.0
 
64.4
 
82.2
 
(24,640.0)
 
62.8
 
Adjusted balance sheet data
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
 
362,262
 
333,854
 
245,261
 
39,265
 
2,459
 
983,101
 
Interests in associates and joint ventures
 
 
399
 
 
 
 
22,043
 
22,442
 
Total external assets
 
 
477,618
 
361,369
 
1,011,691
 
45,140
 
663,540
 
2,559,358
 
Customer accounts
 
 
641,833
 
358,201
 
290,964
 
64,660
 
8,679
 
1,364,337
 
Adjusted risk-weighted assets
 
 
126,929
 
321,717
 
281,338
 
16,811
 
118,826
 
865,621
 
 
1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
 
 
Consolidated income statement
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
2018
 
 
$m
 
$m
 
$m
 
Net interest income
 
15,240
 
15,100
 
15,389
 
– interest income
 
27,750
 
23,422
 
26,187
 
– interest expense
 
(12,510)
 
(8,322)
 
(10,798)
 
Net fee income
 
6,124
 
6,767
 
5,853
 
– fee income
 
7,804
 
8,469
 
7,575
 
– fee expense
 
(1,680)
 
(1,702)
 
(1,722)
 
Net income from financial instruments held for trading or managed on a fair value basis
 
5,331
 
4,883
 
4,648
 
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss
 
2,196
 
(222)
 
(1,266)
 
Changes in fair value of long-term debt and related derivatives
 
88
 
(126)
 
29
 
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss
 
457
 
345
 
350
 
Gains less losses from financial investments
 
201
 
124
 
94
 
Dividend income
 
38
 
41
 
34
 
Net insurance premium income
 
6,323
 
5,776
 
4,883
 
Other operating income
 
2,034
 
359
 
526
 
Total operating income
 
38,032
 
33,047
 
30,540
 
Net insurance claims and benefits paid and movement in liabilities to policyholders
 
(8,660)
 
(5,760)
 
(4,047)
 
Net operating income before change in expected credit losses and other credit impairment charges
 
29,372
 
27,287
 
26,493
 
Change in expected credit losses and other credit impairment charges
 
(1,140)
 
(407)
 
(1,360)
 
Net operating income
 
28,232
 
26,880
 
25,133
 
Employee compensation and benefits
 
(9,255)
 
(8,836)
 
(8,537)
 
General and administrative expenses
 
(6,372)
 
(7,767)
 
(7,586)
 
Depreciation and impairment of property, plant and equipment and right-of-use assets1
 
(1,010)
 
(568)
 
(551)
 
Amortisation and impairment of intangible assets and goodwill
 
(512)
 
(378)
 
(436)
 
Total operating expenses
 
(17,149)
 
(17,549)
 
(17,110)
 
Operating profit
 
11,083
 
9,331
 
8,023
 
Share of profit in associates and joint ventures
 
1,324
 
1,381
 
1,155
 
Profit before tax
 
12,407
 
10,712
 
9,178
 
Tax expense
 
(2,470)
 
(2,296)
 
(2,569)
 
Profit for the period
 
9,937
 
8,416
 
6,609
 
Attributable to:
 
 
 
 
– ordinary shareholders of the parent company
 
8,507
 
7,173
 
5,435
 
– preference shareholders of the parent company
 
45
 
45
 
45
 
– other equity holders
 
664
 
530
 
499
 
– non-controlling interests
 
721
 
668
 
630
 
Profit for the period
 
9,937
 
8,416
 
6,609
 
 
$
 
$
 
$
 
Basic earnings per ordinary share
 
0.42
 
0.36
 
0.27
 
Diluted earnings per ordinary share
 
0.42
 
0.36
 
0.27
 
 
1 The impact of the right-of-use assets recognised under IFRS 16 at the beginning of 2019 is not recognised in 2018.
 
 
 
 
Consolidated statement of comprehensive income
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
2018
 
 
$m
 
$m
 
$m
 
Profit for the period
 
9,937
 
8,416
 
6,609
 
Other comprehensive income/(expense)
 
 
 
 
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
 
 
 
 
Debt instruments at fair value through other comprehensive income
 
1,015
 
(265)
 
22
 
– fair value gains/(losses)
 
2,141
 
(658
 
490
 
– fair value (gains)/losses transferred to the income statement on disposal
 
(794)
 
329
 
(424)
 
– expected credit losses recognised in income statement
 
(5)
 
(91)
 
(3)
 
– income taxes
 
(327)
 
155
 
(41)
 
Cash flow hedges
 
239
 
(68)
 
87
 
– fair value gains/(losses)
 
241
 
(276
 
9
 
– fair value losses reclassified to the income statement
68
 
184
 
133
 
– income taxes and other movements
 
(70)
 
24
 
(55)
 
Share of other comprehensive income/(expense) of associates and joint ventures
 
73
 
(57)
 
(7)
 
– share for the period
 
85
 
(57
 
(7
 
– fair value gains transferred to the income statement on disposal
 
(12)
 
 
 
Exchange differences
 
109
 
(4,252)
 
(2,904)
 
Items that will not be reclassified subsequently to profit or loss:
 
 
 
 
Remeasurement of defined benefit asset/liability
 
(45)
 
297
 
(626)
 
– before income taxes
 
(50)
 
421
 
(809)
 
– income taxes
 
5
 
(124)
 
183
 
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk
 
(1,445)
 
1,345
 
1,502
 
– before income taxes
(1,816)
 
1,653
 
1,953
 
– income taxes
371
 
(308)
 
(451)
 
Equity instruments designated at fair value through other comprehensive income
 
268
 
(30)
 
3
 
– fair value gains/(losses)
 
265
 
(26)
 
(45)
 
– income taxes
 
3
 
(4)
 
48
 
Effects of hyperinflation
 
113
 
 
283
 
Other comprehensive expense for the period, net of tax
 
327
 
(3,030)
 
(1,640)
 
Total comprehensive income for the period
 
10,264
 
5,386
 
4,969
 
Attributable to:
 
 
 
 
– ordinary shareholders of the parent company
 
8,741
 
4,229
 
3,854
 
– preference shareholders of the parent company
 
45
 
45
 
45
 
– other equity holders
 
664
 
530
 
499
 
– non-controlling interests
 
814
 
582
 
571
 
Total comprehensive income for the period
 
10,264
 
5,386
 
4,969
 
 
 
 
 
Consolidated balance sheet
 
 
At
 
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
 
$m
 
$m
 
Assets
 
 
 
Cash and balances at central banks
 
171,090
 
162,843
 
Items in the course of collection from other banks
 
8,673
 
5,787
 
Hong Kong Government certificates of indebtedness
 
36,492
 
35,859
 
Trading assets
 
271,424
 
238,130
 
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss
 
41,043
 
41,111
 
Derivatives
 
233,621
 
207,825
 
Loans and advances to banks
 
82,397
 
72,167
 
Loans and advances to customers
 
1,021,632
 
981,696
 
Reverse repurchase agreements – non-trading
 
233,079
 
242,804
 
Financial investments
 
428,101
 
407,433
 
Prepayments, accrued income and other assets
 
168,880
 
110,571
 
Current tax assets
 
804
 
684
 
Interests in associates and joint ventures
 
23,892
 
22,407
 
Goodwill and intangible assets
 
25,733
 
24,357
 
Deferred tax assets
 
4,412
 
4,450
 
Total assets
 
2,751,273
 
2,558,124
 
Liabilities and equity
 
 
 
Liabilities
 
 
 
Hong Kong currency notes in circulation
 
36,492
 
35,859
 
Deposits by banks
 
71,051
 
56,331
 
Customer accounts
 
1,380,124
 
1,362,643
 
Repurchase agreements – non-trading
 
184,497
 
165,884
 
Items in the course of transmission to other banks
 
9,178
 
5,641
 
Trading liabilities
 
94,149
 
84,431
 
Financial liabilities designated at fair value
 
165,104
 
148,505
 
Derivatives
 
229,903
 
205,835
 
Debt securities in issue
 
103,663
 
85,342
 
Accruals, deferred income and other liabilities
 
152,052
 
97,380
 
Current tax liabilities
 
1,653
 
718
 
Liabilities under insurance contracts
 
93,794
 
87,330
 
Provisions
 
3,025
 
2,920
 
Deferred tax liabilities
 
2,820
 
2,619
 
Subordinated liabilities
 
22,894
 
22,437
 
Total liabilities
 
2,550,399
 
2,363,875
 
Equity
 
 
 
Called up share capital
 
10,281
 
10,180
 
Share premium account
 
13,998
 
13,609
 
Other equity instruments
 
22,367
 
22,367
 
Other reserves
 
3,437
 
1,906
 
Retained earnings
 
142,593
 
138,191
 
Total shareholders’ equity
 
192,676
 
186,253
 
Non-controlling interests
 
8,198
 
7,996
 
Total equity
 
200,874
 
194,249
 
Total liabilities and equity
 
2,751,273
 
2,558,124
 
 
 
 
 
 
 
Consolidated statement of cash flows
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2019
 
2018
 
2018
 
 
$m
 
$m
 
$m
 
Profit before tax
 
12,407
 
10,712
 
9,178
 
Adjustments for non-cash items:
 
 
 
 
Depreciation and amortisation1
 
1,522
 
946
 
987
 
Net (gain)/loss from investing activities
 
(352)
 
85
 
(211)
 
Share of profit in associates and joint ventures
 
(1,324)
 
(1,381)
 
(1,155)
 
Gain on disposal of subsidiaries, businesses, associates and joint ventures
 
(828)
 
 
 
Change in expected credit losses gross of recoveries and other credit impairment charges
 
1,347
 
680
 
1,600
 
Provisions including pensions
 
1,012
 
1,244
 
700
 
Share-based payment expense
 
288
 
274
 
176
 
Other non-cash items included in profit before tax
 
(1,401)
 
(899)
 
(404)
 
Change in operating assets
(98,152)
 
(68,860)
 
14,657
 
Change in operating liabilities
136,627
 
71,964
 
(20,708)
 
Elimination of exchange differences2
 
(9,281)
 
(5,967)
 
11,168
 
Dividends received from associates
170
 
126
 
784
 
Contributions paid to defined benefit plans
(153)
 
(103)
 
(229)
 
Tax paid
 
(1,347)
 
(1,116)
 
(2,301)
 
Net cash from operating activities
 
40,535
 
7,705
 
14,242
 
Purchase of financial investments
 
(234,762)
 
(207,747)
 
(192,824)
 
Proceeds from the sale and maturity of financial investments
 
204,600
 
210,880
 
175,176
 
Net cash flows from the purchase and sale of property, plant and equipment
 
(532)
 
(520)
 
(676)
 
Net cash flows from purchase/(disposal) of customer and loan portfolios
 
435
 
(542)
 
338
 
Net investment in intangible assets
 
(951)
 
(751)
 
(1,097)
 
Net cash flow on disposal of subsidiaries, businesses, associates and joint ventures
 
(75)
 
(19)
 
23
 
Net cash from investing activities
 
(31,285)
 
1,301
 
(19,060)
 
Issue of ordinary share capital and other equity instruments
 
 
4,150
 
1,851
 
Cancellation of shares
 
 
(986)
 
(1,012)
 
Net sales of own shares for market-making and investment purposes
 
27
 
43
 
90
 
Redemption of preference shares and other equity instruments
 
 
(6,078)
 
 
Subordinated loan capital repaid
 
(4,138)
 
(4,020)
 
(57)
 
Dividends paid to shareholders of the parent company and non-controlling interests
(4,271)
 
(4,965)
 
(5,797)
 
Net cash from financing activities
 
(8,382)
 
(11,856)
 
(4,925)
 
Net increase/(decrease) in cash and cash equivalents
 
868
 
(2,850)
 
(9,743)
 
Cash and cash equivalents at the beginning of the period3
 
311,153
 
333,912
 
324,901
 
Exchange differences in respect of cash and cash equivalents
 
(46)
 
(6,161)
 
(4,005)
 
Cash and cash equivalents at the end of the period3
 
311,975
 
324,901
 
311,153
 
 
1 The impact of the right-of-use assets recognised under IFRS 16 at the beginning of 2019 is not recognised in 2018.
 
2 The 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.
 
3 At 30 June 2019, HSBC changed its accounting practice to include settlement accounts with bank counterparties of one month or less on a net basis. Comparatives have been re-presented and also include other cash equivalents not included in 2018 cash and cash equivalents. The net effect of these changes increased cash and cash equivalents by $10.8bn (30 Jun 2018: $15.2bn and 31 Dec 2018: $10.1bn).
 
 
 
 
Consolidated statement of changes in equity
 
 
 
 
 
Other reserves
 
 
 
 
 
Called up sharecapital and share premium
 
Otherequity instru-ments
 
Retainedearnings
 
Financial assets at FVOCI reserve
 
Cashflow hedging reserve
 
Foreignexchange reserve
 
Merger and otherreserves
 
Total share-holders’ equity
 
Non-controlling interests
 
Total equity
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
At 1 Jan 2019
 
23,789
 
22,367
 
138,191
 
(1,532)
 
(206)
 
(26,133)
 
29,777
 
186,253
 
7,996
 
194,249
 
Profit for the period
 
 
 
9,216
 
 
 
 
 
9,216
 
721
 
9,937
 
Other comprehensive income (net of tax)
 
 
 
(1,297)
 
1,202
 
237
 
92
 
 
234
 
93
 
327
 
– debt instruments at fair value through other comprehensive income
 
 
 
 
1,001
 
 
 
 
1,001
 
14
 
1,015
 
– equity instruments designated at fair value through other comprehensive income
 
 
 
 
201
 
 
 
 
201
 
67
 
268
 
– cash flow hedges
 
 
 
 
 
237
 
 
 
237
 
2
 
239
 
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk
 
 
 
(1,445)
 
 
 
 
 
(1,445)
 
 
(1,445)
 
– remeasurement of defined benefit asset/liability
 
 
 
(38)
 
 
 
 
 
(38)
 
(7)
 
(45)
 
– share of other comprehensive income of associates and joint ventures
 
 
 
73
 
 
 
 
 
73
 
 
73
 
– effects of hyperinflation
 
 
 
113
 
 
 
 
 
113
 
 
113
 
– exchange differences
 
 
 
 
 
 
92
 
 
92
 
17
 
109
 
Total comprehensive income for the period
 
 
 
7,919
 
1,202
 
237
 
92
 
 
9,450
 
814
 
10,264
 
Shares issued under employee remuneration and share plans
 
490
 
 
(475)
 
 
 
 
 
15
 
 
15
 
Shares issued in lieu of dividends and amounts arising thereon
 
 
 
1,160
 
 
 
 
 
1,160
 
 
1,160
 
Dividends to shareholders6
 
 
 
(4,915)
 
 
 
 
 
(4,915)
 
(516)
 
(5,431)
 
Cost of share-based payment arrangements
 
 
 
255
 
 
 
 
 
255
 
 
255
 
Other movements
 
 
 
458
 
 
 
 
 
458
 
(96
 
362
 
At 30 Jun 2019
 
24,279
 
22,367
 
142,593
 
(330)
 
31
 
(26,041)
 
29,777
 
192,676
 
8,198
 
200,874
 
 
At 1 Jan 2018
 
20,337
 
22,250
 
139,414
 
(1,371)
 
(222)
 
(19,072)
 
27,308
 
188,644
 
7,580
 
196,224
 
Profit for the period
 
 
 
7,748
 
 
 
 
 
7,748
 
668
 
8,416
 
Other comprehensive income (net of tax)
 
 
 
1,589
 
(273)
 
(66)
 
(4,194)
 
 
(2,944)
 
(86)
 
(3,030)
 
– debt instruments at fair value through other comprehensive income
 
 
 
 
(264)
 
 
 
 
(264)
 
(1)
 
(265)
 
– equity instruments designated at fair value through other comprehensive income
 
 
 
 
(9)
 
 
 
 
(9)
 
(21)
 
(30)
 
– cash flow hedges
 
 
 
 
 
(66)
 
 
 
(66)
 
(2)
 
(68)
 
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk
 
 
 
1,346
 
 
 
 
 
1,346
 
(1)
 
1,345
 
– remeasurement of defined benefit asset/liability
 
 
 
300
 
 
 
 
 
300
 
(3)
 
297
 
– share of other comprehensive income of associates and joint ventures
 
 
 
(57)
 
 
 
 
 
(57)
 
 
(57)
 
– exchange differences
 
 
 
 
 
 
(4,194)
 
 
(4,194)
 
(58)
 
(4,252)
 
Total comprehensive income for the period
 
 
 
9,337
 
(273)
 
(66)
 
(4,194)
 
 
4,804
 
582
 
5,386
 
Shares issued under employee remuneration and share plans
 
582
 
 
(570)
 
 
 
 
 
12
 
 
12
 
Shares issued in lieu of dividends and amounts arising thereon
 
 
 
606
 
 
 
 
 
606
 
 
606
 
Capital securities issued1
 
 
4,150
 
 
 
 
 
 
4,150
 
 
4,150
 
Dividends to shareholders
 
 
 
(6,904)
 
 
 
 
 
(6,904)
 
(461)
 
(7,365)
 
Redemption of securities2
 
 
(5,827)
 
(237)
 
 
 
 
 
(6,064)
 
 
(6,064)
 
Cost of share-based payment arrangements
 
 
 
274
 
 
 
 
 
274
 
 
274
 
Cancellation of shares3
 
(986)
 
 
(1,014)
 
 
 
 
 
(2,000)
 
 
(2,000)
 
Other movements
 
 
 
2
 
83
 
 
 
 
85
 
(14)
 
71
 
At 30 Jun 2018
 
19,933
 
20,573
 
140,908
 
(1,561)
 
(288)
 
(23,266)
 
27,308
 
183,607
 
7,687
 
191,294
 
 
 
 
 
 
Consolidated statement of changes in equity (continued)
 
 
 
 
 
Other reserves
 
 
 
 
 
Called upshare capital and share premium
 
Otherequity instru- ments
 
Retainedearnings
 
Financial assets at FVOCI reserve
 
Cashflow hedging reserve
 
Foreign exchange reserve
 
Merger and other reserves
 
Totalshare- holders’ equity
 
Non-controlling interests
 
Totalequity
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
At 1 Jul 2018
 
19,933
 
20,573
 
140,908
 
(1,561)
 
(288)
 
(23,266)
 
27,308
 
183,607
 
7,687
 
191,294
 
Profit for the period
 
 
 
5,979
 
 
 
 
 
5,979
 
630
 
6,609
 
Other comprehensive income(net of tax)
 
 
 
1,176
 
28
 
82
 
(2,867)
 
 
(1,581)
 
(59)
 
(1,640)
 
– debt instruments at fair value through other comprehensive income
 
 
 
 
19
 
 
 
 
19
 
3
 
22
 
– equity instruments designated at fair value through other comprehensive income
 
 
 
 
9
 
 
 
 
9
 
(6
 
3
 
– cash flow hedges
 
 
 
 
 
82
 
 
 
82
 
5
 
87
 
– changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk
 
 
 
1,501
 
 
 
 
 
1,501
 
1
 
1,502
 
– remeasurement of defined benefit asset/liability
 
 
 
(601)
 
 
 
 
 
(601)
 
(25)
 
(626
 
– share of other comprehensive income of associates and joint ventures
 
 
 
(7)
 
 
 
 
 
(7)
 
 
(7)
 
– effects of hyperinflation
 
 
 
283
 
 
 
 
 
283
 
 
283
 
– exchange differences
 
 
 
 
 
 
(2,867)
 
 
(2,867)
 
(37
 
(2,904)
 
Total comprehensive income for the period
 
 
 
7,155
 
28
 
82
 
(2,867)
 
 
4,398
 
571
 
4,969
 
Shares issued under employee remuneration and share plans
 
139
 
 
(40)
 
 
 
 
 
99
 
 
99
 
Shares issued in lieu of dividends and amounts arising thereon
 
 
 
888
 
 
 
 
 
888
 
 
888
 
Capital securities issued1
 
 
1,818
 
 
 
 
 
 
1,818
 
 
1,818
 
Dividends to shareholders
 
 
 
(4,643)
 
 
 
 
 
(4,643)
 
(249)
 
(4,892)
 
Redemption of securities2
 
 
(24)
 
 
 
 
 
 
(24)
 
 
(24)
 
Transfers4
 
 
 
(2,200)