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 July
 
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-   ).
 
 
 
 
HSBC HOLDINGS PLC
 
2017 INTERIM RESULTS - HIGHLIGHTS
 
Strategic execution
 
 
Delivered growth from our international network with a 7% increase in revenue from transaction banking products and a 17% rise in revenue synergies between global businesses.
 
 
 
Achieved annualised run-rate savings of $4.7bn since our Investor Update in 2015, while continuing to invest in growth, and regulatory programmes and compliance. Incremental savings in 1H17 were $1.0bn.
 
 
 
Targeted initiatives removed a further $29bn of RWAs in the first half of 2017. Exceeded our RWA reduction target; extracting a total of $296bn of RWAs from the business since the start of 2015.
 
 
 
Obtained regulatory approval to establish HSBC Qianhai Securities; the first securities company in mainland China to be majority-owned by an international bank.
 
 
 
Maintained momentum in Asian Insurance and Asset Management, with annualised new business premiums and assets under management up 14% and 17% respectively.
 
 
 
Successfully achieved a non-objection to our US capital plan, as part of the Comprehensive Capital Analysis and Review ('CCAR').
 
Stuart Gulliver, Group Chief Executive, said:
"We have had an excellent first half of 2017, reflecting the changes we have made since our Investor Update in 2015 and the strength of our competitive position. Our three main global businesses performed well, increasing profit before tax and growing market share in many of the products that are central to our strategy. We remain on track to complete the majority of our strategic actions by the end of the year."
 
Financial performance
 
 
Reported profit before tax of $10.2bn up $0.5bn or 5%, despite adverse movements in significant items including fair value movements on our own debt from changes in our own credit spread in 1H16; adjusted profit before tax of $12.0bn, up $1.3bn or 12% compared with 1H16, reflecting adjusted revenue growth and lower adjusted LICs.
 
 
 
Reported revenue of $26.2bn down $3.3bn was 11% lower primarily due to currency translation differences, the absence of fair value movements on our own debt and revenue from the operations in Brazil that we sold, which were the key elements of the adverse movement in significant items; adjusted revenue of $26.1bn, up $0.8bn or 3%, mainly in RBWM from insurance manufacturing and growth in current accounts, savings and deposits, and in GB&M from FICC, as well as in Equities.
 
 
 
Reported operating expenses of $16.4bn were $2.2bn or 12% lower due to a reduction in significant items including costs from the operations in Brazil that we sold, the write-off of goodwill in our GPB business in Europe in 1H16 and a reduction in settlement and provisions in connection with legal matters; adjusted operating expenses of $14.6bn were $0.4bn or 3% higher, in part due to a credit in the prior year relating to the 2015 UK bank levy, as well as investment in growth programmes, primarily in RBWM where investments were partly funded by one-off disposal proceeds.
 
 
 
Adjusted jaws was positive 0.5%.
 
 
 
Compared with 2Q16, reported profit before tax of $5.3bn up $1.7bn; adjusted profit before tax of $6.0bn up $0.7bn.
 
 
 
Strong capital base with a common equity tier 1 ('CET1') ratio of 14.7% and a leverage ratio of 5.7%.
 
 
 
The Board has determined to return to shareholders up to a further US$2bn by way of a share buy-back which is expected to commence shortly and complete in the second half of 2017. This takes announced buy-backs since the second half of 2016 to $5.5bn.
 
 
 
 
 
 
This news release is issued by
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 performance (continued)
 
Financial highlights and key ratios
 
 
 
 
 
 
Half-year to 30 Jun
 
 
2017
 
2016
 
Change
 
 
Footnotes
$m
 
$m
 
%
 
Reported profit before tax
 
10,243
 
9,714
 
5.4
 
Adjusted profit before tax
1
11,967
 
10,651
 
12.4
 
 
 
%
 
%
 
 
Return on average ordinary shareholders' equity (annualised)
 
8.8
 
7.4
 
 
Adjusted jaws
2
0.5
 
 
 
 
For footnotes, see page 3.
We use adjusted performance to understand the underlying trends in the business. The main differences between reported and adjusted are foreign currency translation and significant items.
 
Capital and balance sheet
 
 
 
 
At
 
30 Jun
 
31 Dec
 
Change
 
 
2017
 
2016
 
 
 
%
 
%
 
 
Common equity tier 1 ratio
14.7
 
13.6
 
 
Leverage ratio
5.7
 
5.4
 
 
 
$m
 
$m
 
$m
 
Loans and advances to customers
919,838
 
861,504
 
58,334
 
Customer accounts
1,311,958
 
1,272,386
 
39,572
 
Risk-weighted assets
876,118
 
857,181
 
18,937
 
 
 
 
 
 
2
HSBC Holdings plc News Release 2017
 
 
 
 
 
Highlights
 
 
 
 
Half-year to 30 Jun
 
 
2017
 
2016
 
 
Footnote
$m
 
$m
 
Reported
 
 
 
Revenue
3
26,166
 
29,470
 
Loan impairment charges and other credit risk provisions
 
(663
)
(2,366
)
Operating expenses
 
(16,443
)
(18,628
)
Profit before tax
 
10,243
 
9,714
 
Adjusted
 
 
 
 
 
Revenue
3
26,053
 
25,235
 
Loan impairment charges and other credit risk provisions
 
(663
)
(1,556
)
Operating expenses
 
(14,606
)
(14,222
)
Profit before tax
 
11,967
 
10,651
 
 
 
 
 
Significant items affecting adjusted performance
 
 
 
Revenue
 
 
 
Debit valuation adjustment on derivative contracts
 
(275
)
151
 
Fair value movements on non-qualifying hedges
 
30
 
(397
)
Gain on disposal of our membership interest in Visa - Europe
 
-
 
584
 
Gain on disposal of our membership interest in Visa - US
 
312
 
-
 
Own credit spread
 
-
 
1,226
 
Portfolio disposals
 
(32
)
68
 
Releases arising from the ongoing review of compliance with the UK Consumer Credit Act
 
-
 
2
 
Trading results from disposed-of operations in Brazil
 
-
 
1,470
 
Other acquisitions, disposals and dilutions
 
78
 
-
 
Loan impairment charges and other credit risk provisions ('LICs')
 
 
 
Trading results from disposed-of operations in Brazil
 
-
 
(748
)
Operating expenses
 
 
 
 
 
Costs associated with portfolio disposals
 
(10
)
-
 
Costs associated with the UK's exit from the EU
 
(4
)
-
 
Costs to achieve
 
(1,670
)
(1,018
)
Costs to establish UK ring-fenced bank
 
(176
)
(94
)
Impairment of Global Private Banking - Europe goodwill
 
-
 
(800
)
Regulatory provisions in Global Private Banking
 
-
 
(4
)
Settlements and provisions in connection with legal matters
 
322
 
(723
)
UK customer redress programmes
 
(299
)
(33
)
Trading results from disposed-of operations in Brazil
 
-
 
(1,059
)
Share of profit in associates and joint ventures
 
 
 
 
 
Trading results from disposed-of operations in Brazil
 
-
 
(1
)
 
 
 
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
Includes UK bank levy.
 
 
 
3
Net operating income before loan impairment charges and other credit risk provision, also referred to as revenue.
 
 
HSBC Holdings plc News Release 2017
3
 
 
 
Statement by Douglas Flint, Group Chairman
 
The Group delivered strong results across its major businesses, providing further evidence of a successful repositioning. Its diversified business model, international network and capital strength provide a solid foundation for further growth.
 
As the Group approaches a periodic transition in leadership, it is extremely pleasing to report that, in the first half of 2017, it delivered a strong set of results across its major businesses. As well as being financially robust, these results added further evidence of the successful repositioning of the Group since 2011. This has created a solid foundation, with attractive optionality, for the future.
 
The benefits of diversification, combined with the Group's capital and funding strength, once again were apparent. Notwithstanding uncertainties arising from increasing geopolitical tensions and ambiguous predictions around the shape of transition to, and final form of, the UK's future relationship with its major trading partners in the EU, customer activity across all business segments was resilient. Markets-based revenues benefited from market share advances, commercial banking customer activity was robust, wealth management and insurance revenues were notably stronger in Hong Kong, and credit experience globally remained remarkably sound. As central bank interest rates edged higher, led by the US, we began to benefit from improved margins on our core deposit bases, providing a welcome enhancement to the Group's revenue mix, given the likely trajectory of interest rates over the medium term.
 
These factors drove reported profit before tax for the Group in the first six months of 2017 to $10.2bn, 5% higher than what was achieved in the first half of 2016. Earnings per share amounted to $0.35 (1H16: $0.32).
 
On the adjusted basis used to assess management performance, pre-tax profits were $12.0bn, 12% higher than in the comparable period. It was particularly pleasing to note improvements within both revenue and cost performance that derive from management actions taken in recent years to reshape the Group around its core strengths. Stuart Gulliver will address these in more detail in his review.
The Group's capital position remains strong, with the common equity tier 1 ratio standing at 14.7% at 30 June (31 December: 13.6%). During the period we completed the further share buy-back of $1bn that the Board approved in February and, also as previously announced, we maintained the first two dividends in respect of the year at $0.20 in aggregate, in line with the prior year. In light of the strong capital position, the Board approved a further buy-back of up to $2.0bn of ordinary shares, planned to commence shortly after publication of these interim results.
 
HSBC is now better positioned for the future
 
Management continued to make good progress against the strategic targets laid out in June 2015. The first half of the year included a number of important events that will contribute to the strengthening of HSBC's position in our two home markets and in core product areas.
One of the most significant opportunities for HSBC going forward is participation in China's domestic capital markets as these open up. Meaningful progress in this regard was made in the first half of this year, which saw the granting of further access to undertake domestic corporate bond underwriting and the establishment of Bond Connect, which enables offshore investors to trade onshore Chinese interbank bonds through Hong Kong. In equity markets, Chinese stocks traded higher in part on MSCI's decision in June to include them in its global benchmark equity index for the first time.
 
Given these developments, we were delighted to receive approvals at the end of June enabling The Hongkong and Shanghai Banking Corporation to establish the first joint venture securities company majority-owned by a foreign bank. This will enable HSBC to offer a broad spectrum of securities and investment banking services nationally, and is an important step in building out our global banking and markets capabilities to serve the Chinese capital markets.
 
The second area to highlight is the value of our network and how we are investing to enhance that value. HSBC's position as the leading bank in trade finance reflects its unique global network and heritage. Technology is offering important opportunities to automate and digitise paper-heavy supply chain processes, and organise supply chain financing on a single platform. For example, HSBC, working with its strategic business commerce partner, Tradeshift, is now offering an integrated solution to enable our clients to manage their global supply chains and working capital requirements from a simple online platform. This will improve transparency and reduce costs.
 
In terms of structural change, the creation of the UK ring-fenced bank to meet the central recommendation of the Independent Commission on Banking in 2011 has been one of the largest projects ever undertaken by the Group. At its peak, the project team numbered more than 2,000 and costs to date amount to approximately half a billion dollars. In early July, the Prudential Regulation Authority approved a restricted licence for the new bank, representing an important milestone in meeting our legal obligations. We are targeting 1 July 2018 as the deadline to operationalise the UK ring-fenced bank, ahead of the statutory implementation date of 1 January 2019. Transition towards this deadline will be a key execution priority.
 
Finally, the Board was delighted that the successful transformation of the Group over the last six and a half years was recognised through HSBC being awarded the accolade of the 'World's Best Bank' earlier this month by Euromoney magazine. This award reflects the extraordinary efforts of the management team and all of our colleagues in reshaping the Group to meet the expectations of all our stakeholders. As ever, we owe them our sincere gratitude.
 
As I head towards retirement from HSBC later this year, I have taken the opportunity to set out the three public policy issues that are top of mind in terms of allowing the financial system to serve the global economy better.
 
 
 
 
 
4
HSBC Holdings plc News Release 2017
 
Regulatory fragmentation must be avoided
 
The new administration in the US is leading the rest of the world in applying a retrospective lens to the aggregate of regulatory changes implemented and proposed in the aftermath of the global financial crisis. This fresh look, focusing on simplification and supporting economic growth, is to be welcomed. Earlier concerns that it could lead to fragmentation of the international regulatory concordat have substantially dissipated following supportive comments from senior US officials regarding continuing active participation in the international regulatory bodies.
 
However, there remain concerns, particularly in Europe, that outstanding work streams may be addressed over different time frames globally. This, too, would lead to a fragmented framework with the risk of skewing financial market activity to where the capital support required is lightest. Such an outcome has to be avoided to prevent capital misallocation, and is particularly pertinent for traded markets activity. The best outcome remains early finalisation of what has already been agreed globally in principle, and a further agreement that remaining regulatory changes will be implemented in lockstep across the major jurisdictions.
 
Europe must not allow its financial capacity and capabilities to be diminished
 
Negotiations concerning the future shape of financial service provision as the UK prepares to leave the EU will undoubtedly be complex and time-consuming. The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will continue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU.
 
On a highly positive note, we are encouraged that there has been no suggestion of weakening regulatory or supervisory standards anywhere in Europe in order to improve competitive positioning; this is equally essential to preserve the credibility and capacity of European financial markets.
 
Increased cooperation on tackling financial crime is essential
 
Tackling financial crime remains both a priority and a key challenge. We have made significant progress in detecting and preventing bad actors accessing the financial system but recognise this is a never-ending effort. Additionally, as digitalisation of commercial activity increases, the risks of confidence-threatening disruption and economic loss, not least from cyber attacks, are amplified. Technology, and in particular data analytics and machine learning applied to big data, will soon provide much greater capabilities to help us meet our objectives. What is also clear is that greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.
 
The good news is that there is increasing evidence of such discussions taking place. We should aspire to a unique digital identity for all participants in the financial system; a mandatory register of beneficial ownership of corporate and other non-personal structures in every country; and finally, enabling law and regulation to allow sanctioned sharing of customer information within institutions cross-border, between peer institutions, and between the industry and law enforcement services in pursuance of tackling financial crime. With enhanced public/private cooperation to combat financial crime, we could deploy the industry's considerable investment in this area much more effectively to the benefit of the societies we serve.
 
Outlook
 
In spite of geopolitical tensions and uncertainties, the major economic regions seem more synchronised in their growth trajectories than ever. Business investment is rising in the US and could expand further if promised tax reform can be delivered. Confidence is notably improving within the eurozone, with the prospect of structural reform in France, following the recent election outcomes, seen positively for future growth prospects. China's economic data also is evidencing resilience after a slower period, and against this backdrop China's financial regulators have taken the opportunity to tackle risks evident in both the traditional and so-called shadow banking systems. With careful coordination and calibration, these moves are positive for the economy. The UK is, however, showing some signs of slower growth as the inflationary impacts of a weaker currency, Bank of England caution over consumer indebtedness and uncertainties over the EU exit negotiations constrain consumer and business confidence and spending.
 
The risks to economic growth remain concentrated around geopolitical events and political mis-steps. Additionally, the formidable challenge within Europe of negotiating both the terms of the UK's exit from the EU and the basis of the future relationship will dominate political agendas for some time, crowding out time for other policy considerations.
 
We enter this period with confidence, given our geographical and business line diversification, and strong balance sheet. On top of this, HSBC is served by an exceptional management team and 233,000 dedicated and talented colleagues.
 
For the past six and a half years, it has been my great privilege to lead HSBC's employees as Group Chairman. As I prepare to pass on the baton, I could not be more proud of what we have achieved together and I thank them on behalf of the Board, for the last time, for all their support.
 
 
 
HSBC Holdings plc News Release 2017
5
 
 
 
 
Review by Stuart Gulliver, Group Chief Executive
 
We have a diversified, universal banking business model and an integrated global network that work for our clients and deliver industry-leading returns for our investors.
 
We have made an excellent start to 2017, reflecting the changes we have made since our Investor Update in 2015 and the strength of our competitive position. Our three main global businesses performed well, generating significant increases in both reported and adjusted profit before tax, and gaining market share in many of the products that are central to our strategy. Revenue grew faster than costs on an adjusted basis compared with last year's first half, and we passed a number of major milestones on the way to completing our strategic actions.
 
Our international network continues to distinguish us from our peers and we strengthened it further in the first half of the year. We received regulatory approval in June to establish HSBC Qianhai Securities Limited, which will be the first joint-venture securities company in mainland China to be majority-owned by a foreign bank. This is a landmark achievement that will increase access to China's markets for our domestic and international clients. The new business is expected to launch in December 2017, pending the granting of the necessary securities licences.
 
HSBC was named 'World's Best Bank' at the Euromoney Awards for Excellence 2017 in July. This is a fantastic endorsement of all that we have achieved in transforming HSBC since 2011, and recognises the effectiveness of our business model, the value of our network and the superior ability that these things give us to help clients achieve their international ambitions. I am grateful to all 233,000 colleagues around the world for their considerable efforts in making this possible.
 
Business performance
 
Global Banking and Markets had a strong first half with large adjusted revenue increases in the majority of businesses compared with the same period last year. Our Equities and Fixed Income businesses performed well, growing revenue and capturing market share in spite of difficult conditions at the start of the second quarter. Debt Capital Markets also gained market share in Asia, MENA and Latin America.
Retail Banking and Wealth Management adjusted revenue grew significantly, with increases across multiple business lines. In Retail Banking, our robust balance sheet and trademark capital strength continued to attract deposits, particularly in Hong Kong, with associated revenue growth supported by interest rate rises.  We also increased lending in our target markets, especially Hong Kong, the UK and Mexico.  Wealth management benefited from improving customer investment appetite, strong product sales across all categories, and the impact of market movements on our life insurance manufacturing businesses.
 
Commercial Banking adjusted revenue increased on the back of strong growth in Global Liquidity and Cash Management. This more than compensated for marginal falls in revenue in Credit and Lending, and Global Trade and Receivables Finance. While Global Trade and Receivables Finance revenue was down compared with last year's first half, it remained stable from the end of 2016 as we grew the balance sheet in Asia. We continued to capture trade finance market share in key hubs, including Hong Kong and Singapore.
Adjusted operating expenses rose slightly compared with the same period last year, as we invested more in business growth. Performance-related compensation also rose in line with increases in profit before tax. We remain on track to hit our revised cost-saving target by the end of 2017.
 
Adjusted loan impairment charges were lower than in the first half of 2016, mainly due to improved credit conditions in the oil and gas industry in North America.
 
Delivering value for our shareholders
 
Our common equity tier 1 ratio was 14.7% at 30 June, up from 12.1% at the same point in 2016. In the past 12 months we have paid more in dividends than any other European or American bank and returned $3.5bn to shareholders through share buy-backs. We have done this while strengthening one of the most resilient capital ratios in the industry.
 
Where we have excess capital, we are open to returning it to shareholders. To that end, and having received the appropriate regulatory clearances, we will execute a further share buy-back of up to $2bn in the second half of 2017. This will bring the total value of shares repurchased since August 2016 to $5.5bn.
 
Strategic actions
 
The strategic actions that we announced at our Investor Day in June 2015 have been instrumental in making HSBC a better and more profitable bank. They continue to improve our ability to increase returns and gain maximum value from our international network, and we remain on track to complete the majority of actions by the end of the year.
 
Targeted initiatives removed a further $29bn of RWAs from the business in the first half of 2017. Our RWA reduction programmes have extracted a total of $296bn of RWAs from the business since the start of 2015, comfortably exceeding our target. We will continue to identify and remove low-return RWAs to the end of 2017 and beyond.
 
We remain on track to achieve around $6bn of annualised cost savings by the end of the year, in line with the revised expectations that we set at our annual results. We removed a further $0.9bn of costs in the first six months, taking the total achieved since 2015 to $4.7bn.
HSBC Mexico maintained its momentum from 2016. Higher lending balances, strong deposit growth and improved collaboration between businesses helped to generate significantly higher profits than in last year's first half. It also continued to capture market share in targeted areas, particularly consumer lending.
 
Our US business remains a valuable source of business for other parts of our global network, and is therefore integral to HSBC. It is off track, but continues to make important progress. The run-off of our legacy US consumer and mortgage lending portfolio has been faster than we originally projected, and is almost complete. The US business received a non-objection to its capital plan from the US Federal Reserve Board as part of the Comprehensive Capital Analysis and Review in June.
 
 
6
HSBC Holdings plc News Release 2017
 
We have been granted a restricted banking licence from the Financial Conduct Authority and the Prudential Regulation Authority for our UK ring-fenced bank. This is a significant achievement and an important milestone in the creation of HSBC UK. We have made good progress in establishing the IT infrastructure for HSBC UK, and have moved around 170,000 customer sterling accounts to new HSBC UK sort codes. We expect to move all remaining sterling accounts that require new HSBC UK sort codes by the end of September 2017. We are very well advanced in filling the roles that will move from London to Birmingham, and remain on track to have a fully functioning team in place for the opening of our new UK headquarters in the first quarter of 2018.
 
Our international network continues to drive revenue growth for the business. Revenue from transaction banking products, which rely on the strength of the network, grew relative to last year's first half, particularly in Global Liquidity and Cash Management, and Foreign Exchange. 49% of Group adjusted client revenue is now linked to our international network, up from 45% at the same point in 2016.
 
We continue to shift the Group's business mix towards Asia, building on our improved financial performance and strong customer acquisition in the region since June 2015. We won new mandates related to the China-led Belt and Road initiative in the first half of the year and helped connect more Chinese companies to international opportunities. We also continued to expand our product range in the Pearl River Delta, offering personal loans to existing customers and launching retail business banking in the region. We now have around a quarter of a million credit cards in circulation in mainland China following the launch of our exclusively HSBC-branded credit card in December 2016. HSBC was named 'Asia's Best Bank' at the Euromoney Awards for Excellence 2017.
 
We remain the world's leading international bank for renminbi business, and achieved a number one ranking among foreign banks for onshore bonds in the first half of the year. HSBC was appointed one of the first market makers for the new Bond Connect in mainland China's Interbank Bond Market, and we underwrote the first new bond issue under the scheme in July. We ranked number one for the sixth consecutive year in the Asiamoney Offshore RMB Poll 2017.
 
Over the past five years, our Global Standards programme has transformed our ability to manage financial crime risk, making the Group and its customers safer and helping us to protect the integrity of the financial system. We have more work to do this year to complete the programme before integrating it fully into 'business as usual' risk management practices. Combating financial crime will continue to be a high priority, and we will always look for ways to strengthen our capabilities.
 
Douglas Flint
 
Douglas Flint steps down as Group Chairman in October and retires from HSBC after 22 years' distinguished service. I am grateful to Douglas for his support since the end of 2010 as we have implemented our long-term strategy for HSBC. During that time, he has not only helped HSBC to negotiate an ever-evolving regulatory environment, but also played a leading role in helping the banking industry recast the regulatory framework in response to the global financial crisis. Douglas has a fantastic reputation around the world for his knowledge, experience and technical expertise. I am sure that he will continue to contribute all of those things for the benefit of business and wider society. He leaves with the best wishes of everyone at HSBC.
 
Looking forward
 
Our business is in good shape. We have a diversified, universal banking business model and an integrated global network that work for our clients and deliver industry-leading returns for our investors. It is run efficiently, with strict risk-weighted asset and cost discipline, and responsibly, with a robust balance sheet and a formidable capital base. We remain focused on growing the business, improving our competitive position and rewarding our shareholders.
 
 
 
HSBC Holdings plc News Release 2017
7
 
 
 
 
Financial summary
 
 
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
 
2017
 
2016
 
2016
 
 
Footnote
$m
 
$m
 
$m
 
For the period
 
 
 
 
 
 
Profit/(loss) before tax
 
10,243
 
9,714
 
(2,602
)
Profit attributable to:
 
 
 
 
- ordinary shareholders of the parent company
 
6,999
 
6,356
 
(5,057
)
Dividends declared on ordinary shares
 
6,174
 
6,118
 
3,981
 
At the period end
 
 
 
 
 
 
Total shareholders' equity
 
188,396
 
191,257
 
175,386
 
Total regulatory capital
 
183,892
 
186,793
 
172,358
 
Customer accounts
 
1,311,958
 
1,290,958
 
1,272,386
 
Total assets
 
2,492,443
 
2,608,149
 
2,374,986
 
Risk-weighted assets
 
876,118
 
1,082,184
 
857,181
 
Per ordinary share
 
$
 
$
 
$
 
Basic earnings
 
0.35
 
0.32
 
(0.25
)
Dividends
1
0.31
 
0.31
 
0.20
 
Net asset value
 
8.30
 
8.75
 
7.91
 
Share information
 
 
 
 
 
 
Number of $0.50 ordinary shares in issue (millions)
 
20,376
 
19,813
 
20,192
 
 
 
 
1
The dividends per ordinary share of $0.31 shown in the accounts comprise dividends declared during the first half of 2017. This represents the fourth interim dividend for 2016 and the first interim dividend for 2017.
 
 
 
 
Distribution of results by global business
 
 
Adjusted profit/(loss) before tax
 
 
 
 
 
 
 
Half-year to
 
30 Jun 2017
30 Jun 2016
31 Dec 2016
 
$m
 
%
$m
 
%
$m
 
%
 
Retail Banking and Wealth Management
3,355
 
28.0
2,539
 
23.8
2,669
 
33.2
 
Commercial Banking
3,443
 
28.8
2,945
 
27.6
2,892
 
36.0
 
Global Banking and Markets
3,403
 
28.4
2,558
 
24.0
2,882
 
35.9
 
Global Private Banking
143
 
1.2
182
 
1.7
97
 
1.2
 
Corporate Centre
1,623
 
13.6
2,427
 
22.9
(506
)
(6.3
)
Profit before tax
11,967
 
100.0
10,651
 
100.0
8,034
 
100.0
 
 
 
 
 
Distribution of results by geographical region
 
 
Reported profit/(loss) before tax
 
 
 
 
 
 
 
Half-year to
 
30 Jun 2017
30 Jun 2016
31 Dec 2016
 
$m
 
%
$m
 
%
 
$m
 
%
 
Europe
572
 
5.6
1,585
 
16.3
 
(8,359
)
321.3
 
Asia
7,630
 
74.5
7,155
 
73.7
 
6,624
 
(254.6
)
Middle East and North Africa
804
 
7.8
979
 
10.1
 
524
 
(20.1
)
North America
953
 
9.3
50
 
0.5
 
135
 
(5.2
)
Latin America
284
 
2.8
(55
)
(0.6
)
(1,526
)
58.6
 
Profit before tax
10,243
 
100.0
9,714
 
100.0
 
(2,602
)
100.0
 
 
 
 
 
 
 
8
HSBC Holdings plc News Release 2017
 
 
 
HSBC adjusted profit before tax and balance sheet data
 
 
Half-year to 30 Jun 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
 
Net interest income
 
6,745
 
4,288
 
2,252
 
394
 
98
 
13,777
 
Net fee income/(expense)
 
2,516
 
1,774
 
1,875
 
355
 
(29
)
6,491
 
Net trading income
1
297
 
270
 
3,385
 
95
 
127
 
4,174
 
Other income
2
485
 
75
 
311
 
2
 
738
 
1,611
 
Net operating income before loan impairment charges and other credit risk provisions
3
10,043
 
6,407
 
7,823
 
846
 
934
 
26,053
 
- external
 
8,596
 
6,468
 
8,371
 
711
 
1,907
 
26,053
 
- inter-segment
 
1,447
 
(61
)
(548
)
135
 
(973
)
-
 
Loan impairment (charges)/recoveries and othercredit risk provisions
 
(556
)
(118
)
(41
)
(1
)
53
 
(663
)
Net operating income
 
9,487
 
6,289
 
7,782
 
845
 
987
 
25,390
 
Total operating expenses
 
(6,121
)
(2,846
)
(4,379
)
(702
)
(558
)
(14,606
)
Operating profit
 
3,366
 
3,443
 
3,403
 
143
 
429
 
10,784
 
Share of profit/(loss) in associates and joint ventures
 
(11
)
-
 
-
 
-
 
1,194
 
1,183
 
Adjusted profit before tax
 
3,355
 
3,443
 
3,403
 
143
 
1,623
 
11,967
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC's adjusted profit before tax
 
28.0
 
28.8
 
28.4
 
1.2
 
13.6
 
100.0
 
Adjusted cost efficiency ratio
 
60.9
 
44.4
 
56.0
 
83.0
 
59.7
 
56.1
 
Adjusted balance sheet data
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
324,464
 
305,018
 
243,989
 
38,601
 
7,766
 
919,838
 
Interests in associates and joint ventures
 
381
 
-
 
-
 
-
 
20,690
 
21,071
 
Total external assets
 
440,978
 
332,806
 
1,025,209
 
44,921
 
648,529
 
2,492,443
 
Customer accounts
 
619,858
 
341,596
 
267,274
 
68,226
 
15,004
 
1,311,958
 
Adjusted risk-weighted assets
 
116,612
 
289,145
 
306,086
 
16,407
 
142,551
 
870,801
 
 
 
 
 
Half-year to 30 Jun 2016
Net interest income
 
6,328
 
4,187
 
2,351
 
402
 
803
 
14,071
 
Net fee income/(expense)
 
2,288
 
1,783
 
1,702
 
376
 
(21
)
6,128
 
Net trading income
1
183
 
239
 
3,102
 
96
 
1,440
 
5,060
 
Other income/(expense)
2
156
 
106
 
58
 
20
 
(364
)
(24
)
Net operating income before loan impairment charges and other credit risk provisions
3
8,955
 
6,315
 
7,213
 
894
 
1,858
 
25,235
 
- external
 
7,726
 
6,312
 
8,543
 
773
 
1,881
 
25,235
 
- inter-segment
 
1,229
 
3
 
(1,330
)
121
 
(23
)
-
 
Loan impairment (charges)/recoveries and othercredit risk provisions
 
(531
)
(524
)
(428
)
10
 
(83
)
(1,556
)
Net operating income
 
8,424
 
5,791
 
6,785
 
904
 
1,775
 
23,679
 
Total operating expenses
 
(5,898
)
(2,846
)
(4,227
)
(722
)
(529
)
(14,222
)
Operating profit
 
2,526
 
2,945
 
2,558
 
182
 
1,246
 
9,457
 
Share of profit in associates and joint ventures
 
13
 
-
 
-
 
-
 
1,181
 
1,194
 
Adjusted profit before tax
 
2,539
 
2,945
 
2,558
 
182
 
2,427
 
10,651
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC's adjusted profit before tax
 
23.8
 
27.6
 
24.0
 
1.7
 
22.9
 
100.0
 
Adjusted cost efficiency ratio
 
65.9
 
45.1
 
58.6
 
80.8
 
28.5
 
56.4
 
Adjusted balance sheet data
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
310,027
 
281,277
 
225,145
 
39,852
 
19,371
 
875,672
 
Interests in associates and joint ventures
 
394
 
-
 
-
 
-
 
18,974
 
19,368
 
Total external assets
 
422,080
 
303,652
 
1,041,857
 
48,361
 
711,242
 
2,527,192
 
Customer accounts
 
579,348
 
330,794
 
264,187
 
77,984
 
20,513
 
1,272,826
 
Adjusted risk-weighted assets
 
113,314
 
278,496
 
319,759
 
16,948
 
291,691
 
1,020,208
 
For footnotes, see page 10.
 
 
HSBC Holdings plc News Release 2017
9
 
 
 
HSBC adjusted profit before tax and balance sheet data (continued)
 
 
Half-year to 31 Dec 2016
 
 
Retail Banking and Wealth Management
 
Commercial Banking
 
Global Banking and Markets
 
Global Private Banking
 
Corporate Centre
 
Total
 
 
Footnotes
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Net interest income
 
6,451
 
4,209
 
2,404
 
396
 
364
 
13,824
 
Net fee income/(expense)
 
2,419
 
1,730
 
1,651
 
367
 
(42
)
6,125
 
Net trading income
1
242
 
202
 
3,030
 
85
 
938
 
4,497
 
Other income/(expense)
2
285
 
14
 
237
 
(10
)
(1,510
)
(984
)
Net operating income/(expense) before loan impairment charges and other credit risk provisions
3
9,397
 
6,155
 
7,322
 
838
 
(250
)
23,462
 
- external
 
8,144
 
6,185
 
8,685
 
704
 
(256
)
23,462
 
- inter-segment
 
1,253
 
(30
)
(1,363
)
134
 
6
 
-
 
Loan impairment (charges)/recoveries and other credit risk provisions
 
(594
)
(432
)
(35
)
(10
)
57
 
(1,014
)
Net operating income/(expense)
 
8,803
 
5,723
 
7,287
 
828
 
(193
)
22,448
 
Total operating expenses
 
(6,142
)
(2,831
)
(4,405
)
(731
)
(1,401
)
(15,510
)
Operating profit/(loss)
 
2,661
 
2,892
 
2,882
 
97
 
(1,594
)
6,938
 
Share of profit in associates and joint ventures
 
8
 
-
 
-
 
-
 
1,088
 
1,096
 
Adjusted profit/(loss) before tax
 
2,669
 
2,892
 
2,882
 
97
 
(506
)
8,034
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
Share of HSBC's adjusted profit before tax
 
33.2
 
36.0
 
35.9
 
1.2
 
(6.3
)
100.0
 
Adjusted cost efficiency ratio
 
65.4
 
46.0
 
60.2
 
87.2
 
(560.4
)
66.1
 
Adjusted balance sheet data
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
Loans and advances to customers (net)
 
316,712
 
289,767
 
232,847
 
36,022
 
12,366
 
887,714
 
Interests in associates and joint ventures
 
394
 
-
 
-
 
-
 
19,860
 
20,254
 
Total external assets
 
427,032
 
314,763
 
957,960
 
42,065
 
698,593
 
2,440,413
 
Customer accounts
 
603,123
 
350,457
 
265,193
 
70,741
 
14,683
 
1,304,197
 
Adjusted risk-weighted assets
 
113,926
 
282,195
 
304,795
 
15,465
 
151,614
 
867,995
 
 
 
 
 
 
 
1
Net trading income includes the revenues of internally funding trading assets, while the related costs are reported in net interest income. In our global business results, the total cost of funding trading assets is included within Corporate Centre net trading income as an interest expense. In the statutory presentation, internal interest income and expense are eliminated.
 
 
 
 
 
 
 
2
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.
 
 
 
3
Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.
 
 
 
 
 
 
 
 
10
HSBC Holdings plc News Release 2017
 
 
 
 
Consolidated income statement
 
 
 
Half-year to
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2017
 
2016
 
2016
 
 
$m
 
$m
 
$m
 
Net interest income
13,777
 
15,760
 
14,053
 
- interest income
19,727
 
23,011
 
19,403
 
- interest expense
(5,950
)
(7,251
)
(5,350
)
Net fee income
6,491
 
6,586
 
6,191
 
- fee income
7,906
 
8,202
 
7,467
 
- fee expense
(1,415
)
(1,616
)
(1,276
)
Net trading income
3,928
 
5,324
 
4,128
 
- trading income excluding net interest income
3,177
 
4,594
 
3,472
 
- net interest income on trading activities
751
 
730
 
656
 
Net income/(expense) from financial instruments designated at fair value
2,007
 
561
 
(3,227
)
- changes in fair value of long-term debt and related derivatives
480
 
270
 
(4,245
)
- net income from other financial instruments designated at fair value
1,527
 
291
 
1,018
 
Gains less losses from financial investments
691
 
965
 
420
 
Dividend income
49
 
64
 
31
 
Net insurance premium income
4,811
 
5,356
 
4,595
 
Other operating income/(expense)
526
 
644
 
(1,615
)
Total operating income
32,280
 
35,260
 
24,576
 
Net insurance claims and benefits paid and movement in liabilities to policyholders
(6,114
)
(5,790
)
(6,080
)
Net operating income before loan impairment charges and other credit risk provisions
26,166
 
29,470
 
18,496
 
Loan impairment charges and other credit risk provisions
(663
)
(2,366
)
(1,034
)
Net operating income
25,503
 
27,104
 
17,462
 
Employee compensation and benefits
(8,680
)
(9,354
)
(8,735
)
General and administrative expenses
(6,900
)
(7,467
)
(9,006
)
Depreciation and impairment of property, plant and equipment
(567
)
(605
)
(624
)
Amortisation and impairment of intangible assets and goodwill
(296
)
(1,202
)
(2,815
)
Total operating expenses
(16,443
)
(18,628
)
(21,180
)
Operating profit/(loss)
9,060
 
8,476
 
(3,718
)
Share of profit in associates and joint ventures
1,183
 
1,238
 
1,116
 
Profit/(loss) before tax
10,243
 
9,714
 
(2,602
)
Tax expense
(2,195
)
(2,291
)
(1,375
)
Profit/(loss) for the period
8,048
 
7,423
 
(3,977
)
Attributable to:
 
 
 
- ordinary shareholders of the parent company
6,999
 
6,356
 
(5,057
)
- preference shareholders of the parent company
45
 
45
 
45
 
- other equity holders
466
 
511
 
579
 
- non-controlling interests
538
 
511
 
456
 
Profit/(loss) for the period
8,048
 
7,423
 
(3,977
)
 
$
 
$
 
$
 
Basic earnings per ordinary share
0.35
 
0.32
 
(0.25
)
Diluted earnings per ordinary share
0.35
 
0.32
 
(0.25
)
 
 
HSBC Holdings plc News Release 2017
11
 
 
 
 
 
Consolidated statement of comprehensive income
 
 
 
Half-year to
 
30 Jun
 
30 Jun
 
31 Dec
 
 
2017
 
2016
 
2016
 
 
$m
 
$m
 
$m
 
Profit for the period
8,048
 
7,423
 
(3,977
)
Other comprehensive income/(expense)
 
 
 
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
 
 
 
Available-for-sale investments
484
 
1,010
 
(1,309
)
- fair value gains/(losses)
1,447
 
2,826
 
(2,351
)
- fair value gains reclassified to the income statement
(848
)
(1,228
)
333
 
- amounts reclassified to the income statement in respect of impairment losses
20
 
24
 
47
 
- income taxes
(135
)
(612
)
662
 
Cash flow hedges
24
 
340
 
(408
)
- fair value (losses)/gains
(881
)
(1,796
)
1,499
 
- fair value losses/(gains) reclassified to the income statement
894
 
2,242
 
(2,047
)
- income taxes
11
 
(106
)
140
 
Share of other comprehensive income/(expense) of associates and joint ventures
(6
)
(1
)
55
 
- share for the period
(6
)
(1
)
55
 
- reclassified to income statement on disposal
-
 
-
 
-
 
Exchange differences
5,269
 
(2,713
)
(5,379
)
- foreign exchange gains reclassified to the income statement on disposal of a foreign operation
-
 
-
 
1,894
 
- other exchange differences
5,270
 
(2,619
)
(7,172
)
- income tax attributable to exchange differences
(1
)
(94
)
(101
)
Items that will not be reclassified subsequently to profit or loss:
 
 
 
Remeasurement of defined benefit asset/liability
1,708
 
416
 
(409
)
- before income taxes1
2,253
 
533
 
(617
)
- income taxes
(545
)
(117
)
208
 
Changes in fair value of financial liabilities designated at fair value due to movement in own credit risk
(1,156
)
-
 
-
 
- before income taxes
(1,398
)
-
 
-
 
- income taxes
242
 
-
 
-
 
Other comprehensive expense for the period, net of tax
6,323
 
(948
)
(7,450
)
Total comprehensive income/(expense) for the period
14,371
 
6,475
 
(11,427
)
Attributable to:
 
 
 
- ordinary shareholders of the parent company
13,241
 
5,454
 
(12,422
)
- preference shareholders of the parent company
45
 
45
 
45
 
- other equity holders
466
 
511
 
579
 
- non-controlling interests
619
 
465
 
371
 
Total comprehensive income/(expense) for the period
14,371
 
6,475
 
(11,427
)
For footnote, see page 16.
 
 
 
 
12
HSBC Holdings plc News Release 2017
 
 
 
 
 
Consolidated balance sheet
 
 
 
At
 
30 Jun
 
31 Dec
 
 
2017
 
2016
 
 
$m
 
$m
 
Assets
 
 
Cash and balances at central banks
163,353
 
128,009
 
Items in the course of collection from other banks
7,129
 
5,003
 
Hong Kong Government certificates of indebtedness
31,943
 
31,228
 
Trading assets
320,037
 
235,125
 
Financial assets designated at fair value
27,937
 
24,756
 
Derivatives
229,719
 
290,872
 
Loans and advances to banks
86,633
 
88,126
 
Loans and advances to customers
919,838
 
861,504
 
Reverse repurchase agreements - non-trading
196,834
 
160,974
 
Financial investments
385,378
 
436,797
 
Assets held for sale
2,301
 
4,389
 
Prepayments, accrued income and other assets
70,592
 
59,520
 
Current tax assets
1,054
 
1,145
 
Interests in associates and joint ventures
21,071
 
20,029
 
Goodwill and intangible assets
22,653
 
21,346
 
Deferred tax assets
5,971
 
6,163
 
Total assets
2,492,443
 
2,374,986
 
Liabilities and equity
 
 
Liabilities
 
 
Hong Kong currency notes in circulation
31,943
 
31,228
 
Deposits by banks
64,230
 
59,939
 
Customer accounts
1,311,958
 
1,272,386
 
Repurchase agreements - non-trading
145,306
 
88,958
 
Items in the course of transmission to other banks
7,799
 
5,977
 
Trading liabilities2, 3
202,401
 
153,691
 
Financial liabilities designated at fair value
93,163
 
86,832
 
Derivatives
223,413
 
279,819
 
Debt securities in issue
63,289
 
65,915
 
Liabilities of disposal groups held for sale
620
 
2,790
 
Accruals, deferred income and other liabilities
42,724
 
41,501
 
Current tax liabilities
1,186
 
719
 
Liabilities under insurance contracts
81,147
 
75,273
 
Provisions
4,379
 
4,773
 
Deferred tax liabilities
1,886
 
1,623
 
Subordinated liabilities
21,213
 
20,984
 
Total liabilities
2,296,657
 
2,192,408
 
Equity
 
 
Called up share capital
10,188
 
10,096
 
Share premium account
12,069
 
12,619
 
Other equity instruments
20,830
 
17,110
 
Other reserves
4,472
 
(1,234
)
Retained earnings
140,837
 
136,795
 
Total shareholders' equity
188,396
 
175,386
 
Non-controlling interests
7,390
 
7,192
 
Total equity
195,786
 
182,578
 
Total liabilities and equity
2,492,443
 
2,374,986
 
For footnotes, see page 16.
 
 
 
 
HSBC Holdings plc News Release 2017
13
 
 
 
 
Consolidated statement of cash flows
 
 
 
 
Half-year to
 
 
30 Jun
 
30 Jun
 
31 Dec
 
 
 
2017
 
2016
 
2016
 
 
 
$m
 
$m
 
$m
 
Profit before tax
 
10,243
 
9,714
 
(2,602
)
Adjustments for non-cash items:
 
 
 
 
Depreciation, amortisation and impairment
 
863
 
1,772
 
3,440
 
Net gain from investing activities
 
(764
)
(1,034
)
(181
)
Share of profit in associates and joint ventures
 
(1,183
)
(1,238
)
(1,116
)
Loss on disposal of associates, joint ventures, subsidiaries and businesses
 
(79
)
-
 
1,743
 
Loan impairment losses gross of recoveries and other credit risk provisions
 
1,018
 
2,672
 
1,418
 
Provisions including pensions
 
186
 
982
 
1,500
 
Share-based payment expense
 
267
 
305
 
229
 
Other non-cash items included in profit before tax
 
(157
)
86
 
(293
)
Change in operating assets
 
(115,324
)
7,268
 
29,031
 
Change in operating liabilities
 
109,828
 
59,093
 
(55,893
)
Elimination of exchange differences4
 
(16,208
)
(3,193
)
18,557
 
Dividends received from associates
 
589
 
619
 
70
 
Contributions paid to defined benefit plans
 
(351
)
(340
)
(386
)
Tax paid
 
(810
)
(1,668
)
(1,596
)
Net cash from operating activities
 
(11,882
)
75,038
 
(6,079
)
Purchase of financial investments
 
(175,346
)
(233,153
)
(223,931
)
Proceeds from the sale and maturity of financial investments
 
233,711
 
216,340
 
213,745
 
Net cash flows from the purchase and sale of property, plant and equipment
 
(314
)
(389
)
(762
)
Net cash inflow from disposal of customer and loan portfolios
 
5,044
 
4,186
 
5,008
 
Net purchase of intangible assets
 
(514
)
(395
)
(511
)
Net cash inflow on disposal of subsidiaries, businesses, associates and joint ventures
 
141
 
16
 
4,786
 
Net cash from investing activities
 
62,722
 
(13,395
)
(1,665
)
Issue of ordinary share capital and other equity instruments
 
3,727
 
2,006
 
18
 
Cancellation of shares
 
(1,000
)
-
 
-
 
Net (purchases)/sales of own shares for market-making and investment purposes
 
(49
)
(78
)
601
 
Purchase of treasury shares
 
-
 
-
 
(2,510
)
Redemption of preference shares and other equity instruments
 
-
 
(1,825
)
-
 
Subordinated loan capital issued
 
-
 
1,129
 
1,493
 
Subordinated loan capital repaid
 
(520
)
(546
)
(49
)
Dividends paid to shareholders of the parent company and non-controlling interests
 
(3,266
)
(4,987
)
(4,170
)
Net cash from financing activities
 
(1,108
)
(4,301
)
(4,617
)
Net increase/(decrease) in cash and cash equivalents
 
49,732
 
57,342
 
(12,361
)
Cash and cash equivalents at the beginning of the period
 
274,550
 
243,863
 
299,753
 
Exchange differences in respect of cash and cash equivalents
 
11,546
 
(1,452
)
(12,842
)
Cash and cash equivalents at the end of the period
 
335,828
 
299,753
 
274,550
 
For footnote, see page 16.
 
 
14
HSBC Holdings plc News Release 2017
 
 
 
 
Consolidated statement of changes in equity
 
 
 
 
 
 
Other reserves
 
 
 
 
 
Called up share capital and share premium5
 
Other equity instru-ments6
 
Retained earnings7
 
Available-for-salefair value reserve
 
Cash flow hedging reserve
 
Foreign exchange reserve
 
Merger reserve
 
Total share-holders' equity
 
Non-controlling interests
 
Total equity
 
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
 
At 1 Jan 2017
22,715
 
17,110
 
136,795
 
(477
)
(27
)
(28,038
)
27,308
 
175,386
 
7,192
 
182,578
 
 
Profit for the period
-
 
-
 
7,510
 
-
 
-
 
-
 
-
 
7,510
 
538
 
8,048
 
 
Other comprehensive income(net of tax)
-
 
-
 
536
 
468
 
16
 
5,222
 
-
 
6,242
 
81
 
6,323
 
 
- available-for-sale investments
-
 
-
 
-
 
468
 
-
 
-
 
-
 
468
 
16
 
484
 
 
- cash flow hedges
-
 
-
 
-
 
-
 
16
 
-
 
-
 
16
 
8
 
24
 
 
- changes in fair value of financial liabilities designated at fair value arising from changes in own credit risk
-
 
-
 
(1,156
)
-
 
-
 
-
 
-
 
(1,156
)
-
 
(1,156
)
 
- remeasurement of defined benefit asset/liability
-
 
-
 
1,698
 
-
 
-
 
-
 
-
 
1,698
 
10
 
1,708
 
 
- share of other comprehensive income of associates and joint ventures
-
 
-
 
(6
)
-
 
-
 
-
 
-
 
(6
)
-
 
(6
)
 
- exchange differences
-
 
-
 
-
 
-
 
-
 
5,222
 
-
 
5,222
 
47
 
5,269
 
 
Total comprehensive income for the period
-
 
-
 
8,046
 
468
 
16
 
5,222
 
-
 
13,752
 
619
 
14,371
 
 
Shares issued under employee remuneration and share plans
542
 
-
 
(535
)
-
 
-
 
-
 
-
 
7
 
-
 
7
 
 
Shares issued in lieu of dividends and amounts arising thereon
-
 
-
 
2,771
 
-
 
-
 
-
 
-
 
2,771
 
-
 
2,771
 
 
Capital securities issued
-
 
3,720
 
-
 
-
 
-
 
-
 
-
 
3,720
 
-
 
3,720
 
 
Dividends to shareholders
-
 
-
 
(6,795
)
-
 
-
 
-
 
-
 
(6,795
)
(420
)
(7,215
)
 
Cost of share-based payment arrangements
-
 
-
 
267
 
-
 
-
 
-
 
-
 
267
 
-
 
267
 
 
Cancellation of shares
(1,000
)
-
 
-
 
-
 
-
 
-
 
-
 
(1,000
)
-
 
(1,000
)
 
Other movements
-
 
-
 
288
 
-
 
-
 
-
 
-
 
288
 
(1
)
287
 
 
At 30 Jun 2017
22,257
 
20,830
 
140,837
 
(9
)
(11
)
(22,816
)
27,308
 
188,396
 
7,390
 
195,786
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 1 Jan 2016
22,263
 
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 and joint ventures
-
 
-
 
(1
)
-
 
-
 
-
 
-
 
(1
)
-
 
(1
)
 
- exchange differences
-
 
-
 
-
 
-
 
-
 
(2,718
)
-
 
(2,718
)
5
 
(2,713
)
 
Total comprehensive income forthe period
-
 
-
 
7,363
 
1,024
 
341
 
(2,718
)
-
 
6,010
 
465
 
6,475
 
 
Shares issued under employee remuneration and share plans
415
 
-
 
(407
)
-
 
-
 
-
 
-
 
8
 
-
 
8
 
 
Shares issued in lieu of dividends and amounts arising thereon
-
 
-
 
1,111
 
-
 
-
 
-
 
-
 
1,111
 
-
 
1,111
 
 
Capital securities issued
-
 
1,998
 
-
 
-
 
-
 
-
 
-
 
1,998
 
-
 
1,998
 
 
Dividends to shareholders
-
 
-
 
(6,674
)
-
 
-
 
-
 
-
 
(6,674
)
(702
)
(7,376
)
 
Cost of share-based payment arrangements
-
 
-
 
305
 
-
 
-
 
-
 
-
 
305
 
-
 
305
 
 
Other movements
-
 
-
 
36
 
3
 
-
 
-
 
-
 
39
 
(1,781
)
(1,742
)
 
At 30 Jun 2016
22,678
 
17,110
 
145,710
 
838
 
375
 
(22,762
)
27,308
 
191,257
 
7,040
 
198,297
 
 
For footnotes, see page 16.
 
 
 
HSBC Holdings plc News Release 2017
15
 
 
 
 
 
 
 
 Consolidated statement of changes in equity (continued)
 
 
 
Called upshare capital and share premium
 
 
 
Other reserves
 
 
 
 
 
 
Other
equity instru-ments
 
Retained earnings
 
Available- for-sale
fair value reserve
 
Cash flow hedging reserve
 
Foreign exchange reserve
 
Merger reserve
 
Total share-holders'equity
 
Non-controlling interests
 
Total equity
 
 
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
$m
 
 
 
At 1 Jul 2016
22,678
 
17,110
 
145,710
 
838
 
375
 
(22,762
)
27,308
 
191,257
 
7,040
 
198,297
 
 
 
Profit for the period
-
 
-
 
(4,433
)
-
 
-
 
-
 
-
 
(4,433
)
456
 
(3,977
)
 
 
Other comprehensive income(net of tax)
-
 
-
 
(392
)
(1,295
)
(402
)
(5,276
)
-
 
(7,365
)
(85
)
(7,450
)
 
 
- available-for-sale investments
-
 
-
 
-
 
(1,295
)
-
 
-
 
-
 
(1,295
)
(14
)
(1,309
)
 
 
- cash flow hedges
-
 
-
 
-
 
-
 
(402
)
-
 
-
 
(402
)
(6
)
(408
)
 
 
- remeasurement of defined benefit asset/liability
-
 
-
 
(447
)
-
 
-
 
-
 
-
 
(447
)
38
 
(409
)
 
 
- share of other comprehensive income of associates and joint ventures
-
 
-
 
55
 
-
 
-
 
-
 
-
 
55
 
-
 
55
 
 
 
- foreign exchange reclassified to income statement on disposal of a foreign operation
-
 
-
 
-
 
-
 
-
 
1,894
 
-
 
1,894
 
-
 
1,894
 
 
 
- exchange differences
-
 
-
 
-
 
-
 
-
 
(7,170
)
-
 
(7,170
)
(103
)
(7,273
)
 
 
Total comprehensive income for the period
-
 
-
 
(4,825
)
(1,295
)
(402
)
(5,276
)
-
 
(11,798
)
371
 
(11,427
)
 
 
Shares issued under employee remuneration and share plans
37
 
-
 
(18
)
-
 
-
 
-
 
-
 
19
 
-
 
19
 
 
 
Shares issued in lieu of dividends and amounts arising thereon
-
 
-
 
1,929
 
-
 
-
 
-
 
-
 
1,929
 
-
 
1,929
 
 
 
Net increase in treasury shares
-
 
-
 
(2,510
)
-
 
-
 
-
 
-
 
(2,510
)
-
 
(2,510
)
 
 
Dividends to shareholders
-
 
-
 
(4,605
)
-
 
-
 
-
 
-
 
(4,605
)
(217
)
(4,822
)
 
 
Cost of share-based payment arrangements
-
 
-
 
229
 
-
 
-
 
-
 
-
 
229
 
-
 
229
 
 
 
Other movements
-
 
-
 
885
 
(20
)
-
 
-
 
-
 
865
 
(2
)
863
 
 
 
At 31 Dec 2016
22,715
 
17,110
 
136,795
 
(477
)
(27
)
(28,038
)
27,308
 
175,386
 
7,192
 
182,578
 
 
 
 
 
 
Footnotes to financial statements
 
 
 
 
 
1
An actuarial gain of $2,024m has arisen as a result of the remeasurement of the defined benefit pension obligation of the HSBC Bank (UK) Pension Scheme. An increase in the discount rate of 0.15%, a 0.1% reduction in the inflation assumption and modifications to mortality assumptions led to a gain of $1,799m. Other net gains totalled $225m.
 
 
 
2
Includes structured deposits placed at HSBC Bank USA and HSBC Trust Company (Delaware) National Association. These are insured by the Federal Deposit Insurance Corporation, a US Government agency, up to $250,000 per depositor.
 
 
 
3
At 30 June 2017, the cumulative amount of change in fair value attributable to changes in own credit risk was a loss of $344m (31 December 2016: gain of $2m).
 
 
 
4
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.
 
 
 
5
In February 2017, HSBC announced a share buy-back of up to $1.0bn. Subsequently, HSBC completed a $1.0bn share buy-back in April 2017.
 
 
 
6
During 2017, HSBC Holdings issued $3,000m and SGD1,000m of perpetual subordinated contingent convertible capital securities, on which there were $10m of external issuance costs, $27m of intra-group issuance costs and $7m of tax benefits, which are classified as equity under IFRSs.
 
 
 
7
At 1 January 2017, the cumulative changes in fair value attributable to changes in own credit risk of financial liabilities designated at fair value was a loss of $1,672m.
 
 
 
 
 
16
HSBC Holdings plc News Release 2017
 
 
 
 
 
 
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 Guidance 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 2016.
At 30 June 2017, there were no unendorsed standards effective for the half-year to 30 June 2017 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 2017
HSBC has adopted the requirements of IFRS 9 'Financial Instruments' relating to the presentation of gains and losses on financial liabilities designated at fair value from 1 January 2017. As a result, the effects of changes in those liabilities' credit risk is presented in other comprehensive income with the remaining effect presented in profit or loss. As permitted by the transitional requirements of IFRS 9, comparatives have not been restated. Adoption increased profit after tax by $1,156m and basic and diluted earnings per share by $0.06 with the opposite effect on other comprehensive income and no effect on net assets.
(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 2016, which are stated on pages 30, 31 and 196 of the Annual Report and Accounts 2016.
(c)    Composition of Group
There were no material changes in the composition of the Group in the half-year to 30 June 2017.
(d)    Future accounting developments
Information on future accounting developments and their potential effect on the financial statements of HSBC are provided on pages 194 and 195 of the Annual Report and Accounts 2016. The joint Global Risk and Global Finance IFRS 9 Implementation Programme was set up to address IFRS 9 classification and measurement for financial assets, including impairment. Its focus is on the preparation for the impairment parallel run that will commence during the second half of 2017 in accordance with the project plan. Until this work is suffic