RNS Number : 0816S
HSBC Holdings PLC
06 March 2019
 



Page

Fourth interim dividend for 2018

310

Interim dividends for 2019

310

2018 Annual General Meeting

311

Earnings releases and interim results

311

Shareholder enquiries and communications

311

Stock symbols

312

Investor relations

312

Where more information about HSBC is available

312

Cautionary statement regarding forward-looking statements

314

Certain defined terms

315

Abbreviations

316

A glossary of terms used in this Annual Report and Accounts can be found in 
the Investors section of www.hsbc.com.



Fourth interim dividend for 2018

The Directors have declared a fourth interim dividend for 2018 of $0.21 per ordinary share. Information on the scrip dividend scheme and currencies in which shareholders may elect to have the cash dividend paid will be sent to shareholders on or about 6 March 2019. The timetable for the dividend is:


Footnotes


Announcement


19 February 2019

Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda and American Depositary Shares ('ADS') quoted ex-dividend
in New York


21 February 2019

Record date - London, Hong Kong, New York, Paris, Bermuda

1

22 February 2019

Mailing of Annual Report and Accounts 2018 and/or Strategic Report 2018 and dividend documentation


6 March 2019

Final date for receipt by registrars of forms of election, Investor Centre electronic instructions and revocations of standing instructions for scrip dividends


21 March 2019

Exchange rate determined for payment of dividends in sterling and Hong Kong dollars


25 March 2019

Payment date: dividend warrants, new share certificates or transaction advices and notional tax vouchers mailed and shares credited to stock accounts in CREST


8 April 2019

1     Removals to and from the Overseas Branch register of shareholders in Hong Kong will not be permitted on this date.


Interim dividends for 2019

The Board has adopted a policy of paying quarterly interim dividends on ordinary shares. Under this policy it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. It is envisaged that the first interim dividend in respect of 2019 will be $0.10 per ordinary share.

Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, pounds sterling and Hong Kong dollars, or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.



Other equity instruments

Additional tier 1 capital - contingent convertible securities


HSBC continues to issue contingent convertible securities that are included in its capital base as fully CRD IV-compliant additional tier 1 capital securities on an end point basis. These securities are marketed principally and subsequently allotted to corporate investors and fund managers. The net proceeds of the issuances are used for HSBC's general corporate purposes and to further strengthen its capital base to meet requirements under CRD IV. These securities bear a fixed rate of interest until their initial call dates. After the initial call dates, if they are not redeemed, the securities will bear interest at rates fixed periodically in advance for five-year periods based on credit spreads, fixed at issuance, above prevailing market rates. Interest on the contingent convertible securities will be due and payable only at the sole discretion of HSBC, and HSBC has sole and absolute discretion at all times to cancel for any reason (in whole or part) any interest payment that would otherwise be payable on any payment date. Distributions will not be paid if they are prohibited under UK banking regulations or if the company has insufficient reserves or fails to meet the solvency conditions defined in the securities' terms.

The contingent convertible securities are undated and are repayable at the option of HSBC in whole at the initial call date or on any fifth anniversary after this date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC's dollar and sterling preference shares and therefore rank ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of HSBC at a predetermined price, should HSBC's consolidated end point CET1 ratio fall below 7.0%. Therefore, in accordance with the terms of the securities, if the end point CET1 ratio breaches the 7.0% trigger, the securities will convert into ordinary shares at fixed contractual conversion prices in the issuance currencies of the relevant securities, equivalent to £2.70 at the prevailing rate of exchange on the issuance date, subject to anti-dilution adjustments.

 

Additional tier 1 capital instruments issued during 2018


Nominal

Issue price

Market price

Net price

Issue date


$m

%

%

%


$2,350m 6.250% perpetual subordinated contingent convertible securities

2,350


100.00


93.80


100.00


23 March 2018

$1,800m 6.500% perpetual subordinated contingent convertible securities

1,800


100.00


91.75


100.00


23 March 2018

SGD750m 5.000% perpetual subordinated contingent convertible securities

550


100.00


100.29


100.00


24 September 2018

£1,000m 5.875% perpetual subordinated contingent convertible securities

1,301


100.00


95.89


100.00


28  September 2018


2018 Annual General Meeting

All resolutions considered at the 2018 Annual General Meeting held at 11.00am on 20 April 2018 at the Queen Elizabeth II Conference Centre, London SW1P 3EE were passed on a poll.


Earnings releases and interim results

Earnings releases are expected to be issued on or around 3 May 2019 and 28 October 2019. The interim results for the six months to 30 June 2019 are expected to be issued on 5 August 2019.


Shareholder enquiries and communications

Enquiries

Any enquiries relating to shareholdings on the share register (for example, transfers of shares, changes of name or address, lost share certificates or dividend cheques) should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which enables shareholders to manage their shareholding electronically.

Principal Register:


Hong Kong Overseas Branch Register:


Bermuda Overseas Branch Register:






Computershare Investor Services PLC


Computershare Hong Kong Investor


Investors Relations Team

The Pavilions


Services Limited


HSBC Bank Bermuda Limited

Bridgwater Road


Rooms 1712-1716, 17th Floor


37 Front Street

Bristol BS99 6ZZ


Hopewell Centre


Hamilton HM 11

United Kingdom


183 Queen's Road East


Bermuda

Telephone: +44 (0) 370 702 0137


Hong Kong


Telephone: +1 441 299 6737

Email via website:


Telephone: +852 2862 8555


Email: hbbm.shareholder.services@hsbc.bm

www.investorcentre.co.uk/contactus


Email: hsbc.ecom@computershare.com.hk








Investor Centre:


Investor Centre:


Investor Centre:

www.investorcentre.co.uk


www.investorcentre.com/hk


www.investorcentre.com/bm

Any enquiries relating to ADSs should be sent to the depositary:

The Bank of New York Mellon

Shareowner Services

PO Box 505000

Louisville, KY 40233-5000

USA

Telephone (US): +1 877 283 5786

Telephone (International): +1 201 680 6825

Email: shrrelations@cpushareownerservices.com

Website: www.mybnymdr.com

Any enquiries relating to shares held through Euroclear France, the settlement and central depositary system for NYSE Euronext Paris, should be sent to the paying agent:

CACEIS Corporate Trust

14, rue Rouget de Lisle

92130 Issy-Les-Moulineaux

France

Telephone: +33 1 57 78 34 28

Email: ct-service-ost@caceis.com

Website: www.caceis.com

If you have elected to receive general shareholder communications directly from HSBC Holdings, it is important to remember that your main contact for all matters relating to your investment remains the registered shareholder, or custodian or broker, who administers the investment on your behalf. Therefore any changes or queries relating to your personal details and holding (including any administration of it) must continue to be directed to your existing contact at your investment manager or custodian or broker. HSBC Holdings cannot guarantee dealing with matters directed to it in error.

Shareholders who wish to receive a hard copy should contact HSBC's Registrars. Please visit www.hsbc.com/investors/investor-contacts for further information. You can also download an online version of the report from www.hsbc.com.

Electronic communications

Shareholders may at any time choose to receive corporate communications in printed form or to receive notifications of their availability on HSBC's website. To receive notifications of the availability of a corporate communication on HSBC's website by email, or revoke or amend an instruction to receive such notifications by email, go to www.hsbc.com/ecomms. If you provide an email address to receive electronic communications from HSBC, we will also send notifications of your dividend entitlements by email. If you received a notification of the availability of this document on HSBC's website and would like to receive a printed copy, or if you would like to receive future corporate communications in printed form, please write or send an email (quoting your shareholder reference number) to the appropriate Registrars at the address given above. Printed copies will be provided without charge.


Chinese translation

A Chinese translation of this Annual Report and Accounts 2018 will be available upon request after 6 March 2019 from the Registrars:

Computershare Hong Kong Investor Services Limited


Computershare Investor Services PLC

Rooms 1712-1716, 17th Floor


The Pavilions

Hopewell Centre


Bridgwater Road

183 Queen's Road East


Bristol BS99 6ZZ

Hong Kong


United Kingdom

Please also contact the Registrars if you wish to receive Chinese translations of future documents, or if you have received a Chinese translation of this document and do not wish to receive them in future.

 


Stock symbols

HSBC Holdings ordinary shares trade under the following stock symbols:

London Stock Exchange

HSBA*

Euronext Paris

HSB

Hong Kong Stock Exchange

5

Bermuda Stock Exchange

HSBC.BH

New York Stock Exchange (ADS)

HSBC



*HSBC's Primary market





Investor relations

Enquiries relating to HSBC's strategy or operations may be directed to:

Richard O'Connor, Global Head of Investor Relations

Hugh Pye, Head of Investor Relations, Asia-Pacific

HSBC Holdings plc

The Hongkong and Shanghai Banking

8 Canada Square

Corporation Limited

London E14 5HQ

1 Queen's Road Central

United Kingdom

Hong Kong

Telephone: +44 (0) 20 7991 6590

Telephone: 852 2822 4908

Email: investorrelations@hsbc.com

Email: investorrelations@hsbc.com.hk


Where more information about HSBC is available

This

 Annual Report and Accounts 2018

, and other information on HSBC, may be downloaded from HSBC's website: www.hsbc.com.

Reports, statements and information that HSBC Holdings files with the Securities and Exchange Commission are available at www.sec.gov. Investors can also request hard copies of these documents upon payment of a duplicating fee by writing to the SEC at the Office of Investor Education and Advocacy, 100 F Street N.E., Washington, DC 20549-0213 or by emailing PublicInfo@sec.gov. Investors should call the Commission at (1) 202 551 8090 if they require further assistance. Investors may also obtain the reports and other information that HSBC Holdings files at www.nyse.com (telephone number (1) 212 656 3000).

HM Treasury has transposed the requirements set out under CRD IV and issued the Capital Requirements Country-by-Country Reporting Regulations 2013. The legislation requires HSBC Holdings to publish additional information in respect of the year ended 31 December 2018 by 31 December 2019. This information will be available on HSBC's website: www.hsbc.com/tax.


Taxation of shares and dividends

Taxation - UK residents

The following is a summary, under current law and the current published practice of UK HM Revenue and Customer ("HMRC"), of certain UK tax considerations that are likely to be material to the ownership and disposition of HSBC Holdings ordinary shares. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of shares. In particular, the summary deals with shareholders who are resident solely in the UK for UK tax purposes and only with holders who hold the shares as investments and who are the beneficial owners of the shares, and does not address the tax treatment of certain classes of holders such as dealers in securities. Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares in light of their particular circumstances, including the effect of any national, state or local laws.

Taxation of dividends

Currently, no tax is withheld from dividends paid by HSBC Holdings.

UK resident individuals

UK resident individuals are generally entitled to a tax-free annual allowance in respect of dividends received. The amount of the allowance for the tax year beginning 6 April 2018 is £2,000. To the extent that dividend income received by an individual in the relevant tax year does not exceed the allowance, a nil tax rate will apply. Dividend income in excess of this allowance will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

UK resident companies

Shareholders that are within the charge to UK corporation tax should generally be entitled to an exemption from UK corporation tax on any dividends received from HSBC Holdings. However, the exemptions are not comprehensive and are subject to anti-avoidance rules.

If the conditions for exemption are not met or cease to be satisfied, or a shareholder within the charge to UK corporation tax elects for an otherwise exempt dividend to be taxable, the shareholder will be subject to UK corporation tax on dividends received from HSBC Holdings at the rate of corporation tax applicable to that shareholder.

Scrip dividends

Information on the taxation consequences of the HSBC Holdings scrip dividends offered in lieu of the 2017 fourth interim dividend and the first, second and third interim dividends for 2018 was set out in the Secretary's letters to shareholders of 7 March, 31 May, 29 August and 24 October 2018. In no case was the difference between the cash dividend forgone and the market value of the scrip dividend in excess of 15% of the market value. Accordingly, for individual shareholders, the amount of the dividend income chargeable to tax, and the acquisition price of the HSBC Holdings ordinary shares for UK capital gains tax purposes, was the cash dividend forgone.

Taxation of capital gains

The computation of the capital gains tax liability arising on disposals of shares in HSBC Holdings by shareholders subject to UK tax on capital gains can be complex, partly depending on whether, for example, the shares were purchased since April 1991, acquired in 1991 in exchange for shares in The Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to 1991 in exchange for shares in other companies.

For capital gains tax purposes, the acquisition cost for ordinary shares is adjusted to take account of subsequent rights and capitalisation issues. Any capital gain arising on a disposal of shares in HSBC Holdings by a UK company may also be adjusted to take account of indexation allowance if the shares were acquired before 1 January 2018, although the level of indexation allowance that is given in calculating the gain would be frozen at the value that would apply to the disposal of assets acquired on or after 1 January 2018. If in doubt, shareholders are recommended to consult their professional advisers.

Stamp duty and stamp duty reserve tax

Transfers of shares by a written instrument of transfer generally will be subject to UK stamp duty at the rate of 0.5% of the consideration paid for the transfer (rounded up to the next £5), and such stamp duty is generally payable by the transferee. An agreement to transfer shares, or any interest therein, normally will give rise to a charge to stamp duty reserve tax at the rate of 0.5% of the consideration. However, provided an instrument of transfer of the shares is executed pursuant to the agreement and duly stamped before the date on which the stamp duty reserve tax becomes payable, under the current published practice of HMRC it will not be necessary to pay the stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty reserve tax is generally payable by the transferee.

Paperless transfers of shares within CREST, the UK's paperless share transfer system, are liable to stamp duty reserve tax at the rate of 0.5% of the consideration. In CREST transactions, the tax is calculated and payment made automatically. Deposits of shares into CREST generally will not be subject to stamp duty reserve tax, unless the transfer into CREST is itself for consideration. Following the case HSBC pursued before the European Court of Justice (Case C-569/07 HSBC Holdings plc and Vidacos Nominees Ltd v The Commissioners for HM Revenue & Customs) and a subsequent case in relation to depositary receipts, HMRC accepts that the charge to stamp duty reserve tax at 1.5% on the issue of shares (and transfers integral to capital raising) to a depositary receipt issuer or a clearance service is incompatible with European Union law, and will not be imposed.

At Autumn Budget 2017, the UK government announced that it will continue its policy of not charging a 1.5% stamp duty and stamp duty reserve tax on issues of shares to overseas clearance services and depositary receipt issuers following the UK's departure from the European Union, although no further confirmations or assurances have been given since then.

Taxation - US residents

The following is a summary, under current law, of the principal UK tax and US federal income tax considerations that are likely to be material to the ownership and disposition of shares or American Depositary Shares ('ADSs') by a holder that is a US holder, as defined below, and who is not resident in the UK for UK tax purposes.

The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of shares or ADSs. In particular, the summary deals only with US holders that hold shares or ADSs as capital assets, and does not address the tax treatment of holders that are subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, persons that hold shares or ADSs as part of an integrated investment (including a 'straddle' or 'hedge') comprised of a share or ADS and one or more other positions, and persons that own, directly or indirectly, 10% or more (by vote or value) of the stock of HSBC Holdings. This discussion is based on laws, treaties, judicial decisions and regulatory interpretations in effect on the date hereof, all of which are subject to change.

For the purposes of this discussion, a 'US holder' is a beneficial holder that is a citizen or resident of the United States, a US domestic corporation or otherwise is subject to US federal income taxes on a net income basis in respect thereof.

Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares or ADSs in light of their particular circumstances, including the effect of any national, state or local laws.

Any US federal tax advice included in this Annual Report and Accounts 2018 is for informational purposes only; it was not intended or written to be used, and cannot be used, for the purpose of avoiding US federal tax penalties.

Taxation of dividends

Currently, no tax is withheld from dividends paid by HSBC Holdings. For US tax purposes, a US holder must include cash dividends paid on the shares or ADSs in ordinary income on the date that such holder or the ADS depositary receives them, translating dividends paid in UK pounds sterling into US dollars using the exchange rate in effect on the date of receipt. A US holder that elects to receive shares in lieu of a cash dividend must include in ordinary income the fair market value of such shares on the dividend payment date, and the tax basis of those shares will equal such fair market value.

Subject to certain exceptions for positions that are held for less than 61 days, and subject to a foreign corporation being considered a 'qualified foreign corporation' (which includes not being classified for US federal income tax purposes as a passive foreign investment company), certain dividends ('qualified dividends') received by an individual US holder generally will be subject to US taxation at preferential rates. Based on the company's audited financial statements and relevant market and shareholder data, HSBC Holdings was not and does not anticipate being classified as a passive foreign investment company. Accordingly, dividends paid on the shares or ADSs generally should be treated as qualified dividends.

Taxation of capital gains

Gains realised by a US holder on the sale or other disposition of shares or ADSs normally will not be subject to UK taxation unless at the time of the sale or other disposition the holder carries on a trade, profession or vocation in the UK through a branch or agency or permanent establishment and the shares or ADSs are or have been used, held or acquired for the purposes of such trade, profession, vocation, branch or agency or permanent establishment. Such gains will be included in income for US tax purposes, and will be long-term capital gains if the shares or ADSs were held for more than one year. A long-term capital gain realised by an individual US holder generally will be subject to US tax at preferential rates.

Inheritance tax

Shares or ADSs held by an individual whose domicile is determined to be the US for the purposes of the United States-United Kingdom Double Taxation Convention relating to estate and gift taxes (the 'Estate Tax Treaty') and who is not for such purposes a national of the UK will not, provided any US federal estate or gift tax chargeable has been paid, be subject to UK inheritance tax on the individual's death or on a lifetime transfer of shares or ADSs except in certain cases where the shares or ADSs (i) are comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the US and was not a national of the UK), (ii) are part of the business property of a UK permanent establishment of an enterprise, or (iii) pertain to a UK fixed base of an individual used for the performance of independent personal services. In such cases, the Estate Tax Treaty generally provides a credit against US federal tax liability for the amount of any tax paid in the UK in a case where the shares or ADSs are subject to both UK inheritance tax and to US federal estate or gift tax.

Stamp duty and stamp duty reserve tax - ADSs

If shares are transferred to a clearance service or American Depositary Receipt ('ADR') issuer (which will include a transfer of shares to the Depositary) under the current published HMRC practice, UK stamp duty and/or stamp duty reserve tax will be payable. The stamp duty or stamp duty reserve tax is generally payable on the consideration for the transfer and is payable at the aggregate rate of 1.5%.

The amount of stamp duty reserve tax payable on such a transfer will be reduced by any stamp duty paid in connection with the same transfer.

No stamp duty will be payable on the transfer of, or agreement to transfer, an ADS, provided that the ADR and any separate instrument of transfer or written agreement to transfer remain at all times outside the UK, and provided further that any such transfer or written agreement to transfer is not executed in the UK. No stamp duty reserve tax will be payable on a transfer of, or agreement to transfer, an ADS effected by the transfer of an ADR.

US backup withholding tax and information reporting

Distributions made on shares or ADSs and proceeds from the sale of shares or ADSs that are paid within the US, or through certain financial intermediaries to US holders, are subject to information reporting and may be subject to a US 'backup' withholding tax. General exceptions to this rule happen when the US holder: establishes that it is a corporation (other than an S corporation) or other exempt holder; or provides a correct taxpayer identification number, certifies that no loss of exemption from backup withholding has occurred and otherwise complies with the applicable requirements of the backup withholding rules. Holders that are not US taxpayers generally are not subject to information reporting or backup withholding tax, but may be required to comply with applicable certification procedures to establish that they are not US taxpayers in order to avoid the application of such information reporting requirements or backup withholding tax to payments received within the US or through certain financial intermediaries.


Cautionary statement regarding

forward-looking statements

The

Annual Report and Accounts 2018

 contains certain forward-looking statements with respect to HSBC's financial condition, results of operations and business, including the strategic priorities and 2020 financial, investment and capital targets described herein.

Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'targets', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.

Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.

Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement. These include, but are not limited to:

•      Changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates, including the accounting impact resulting from financial reporting in respect of hyperinflationary economies; volatility in equity markets; lack of liquidity in wholesale funding markets; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks' policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; and consumer perception as to the continuing availability of credit and price competition in the market segments we serve; and deviations from the market and economic assumptions that form the basis for our ECL measurements;

•      Changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the practices, pricing or responsibilities of financial institutions serving their consumer markets; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms.

•      Factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques). Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models it uses; and our success in addressing operational, legal and regulatory, and litigation challenges; and other risks and uncertainties we identify in 'top and emerging risks' on pages 69 to 73.



 

Certain defined terms

Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together with its subsidiaries. Within this document the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares and capital securities issued by HSBC Holdings classified as equity. The abbreviations '$m', '$bn' and '$tn' represent millions, billions (thousands of millions) and trillions of US dollars, respectively.

 



Abbreviations


 

Currencies


£

British pound sterling

CA$

Canadian dollar

Euro

HK$

Hong Kong dollar

MXN

Mexican peso

RMB

Chinese renminbi

SGD

Singapore dollar

$

United States dollar

A


ABS¹

Asset-backed security

ADR

American Depositary Receipt

ADS

American Depositary Share

AFS

Available for sale

AGM

Annual General Meeting

AIEA

Average interest-earning assets

ALCM

Asset, Liability and Capital Management

ALCO

Asset and Liability Management Committee

AML

Anti-money laundering

AML DPA

Five-year deferred prosecution agreement with the US Department of Justice, entered into in December 2012

ASEAN

Association of Southeast Asian Nations

AT1

Additional tier 1

B


Basel Committee

Basel Committee on Banking Supervision

Basel II¹

2006 Basel Capital Accord

Basel III¹

Basel Committee's reforms to strengthen global capital and liquidity rules

BIS

Bank for International Settlements

 

BoCom

Bank of Communications Co., Limited, one of China's largest banks

BoE

Bank of England

Bps¹

Basis points. One basis point is equal to one-hundredth of a percentage point

BSA

Bank Secrecy Act (US)

BSM

Balance Sheet Management

BVI

British Virgin Islands

C


C&L

Credit and Lending

CAPM

Capital asset pricing model

CCAR

Federal Reserve Comprehensive Capital Analysis and Review

CDOs

Collateralised debt obligations

CDS¹

Credit default swap

CEA

Commodity Exchange Act (US)

CET1¹

Common equity tier 1

CGUs

Cash-generating units

CMB

Commercial Banking, a global business

CMC

Capital maintenance charge

CML¹

Consumer and Mortgage Lending (US)

CODM

Chief Operating Decision Maker

COSO

2013 Committee of the Sponsors of the Treadway Commission (US)

CP¹

Commercial paper

CRD¹

Capital Requirements Directive

CRD IV

Capital Requirements Regulation and Directive

CRR¹

Customer risk rating

CSA

Credit support annex

CVA¹

Credit valuation adjustment

D


DDOS

Distributed denial of service

Deferred Shares

Awards of deferred shares define the number of HSBC Holdings ordinary shares to which the employee will become entitled, generally between one and seven years from the date of the award, and normally subject to the individual remaining in employment

Dodd-Frank

Dodd-Frank Wall Street Reform and Consumer Protection Act (US)

DoJ

US Department of Justice

DPD

Days past due

DPF

Discretionary participation feature of insurance and investment contracts

DVA¹

Debit valuation adjustment

E


EAD¹

Exposure at default

EBA

European Banking Authority

EC

European Commission

ECB

European Central Bank

EEA

European Economic Area

ECL

Expected credit losses. In the income statement, ECL is recorded as a change in expected credit losses and other credit impairment charges. In the balance sheet, ECL is recorded as an allowance for financial instruments to which only the impairment requirements in IFRS 9 are applied.

 

EL¹

Expected loss

ESG

Environmental, Social and Governance

EU

European Union

Euribor

Euro interbank offered rate

EVE

Economic value of equity

F


FCA

Financial Conduct Authority (UK)

FFVA

Funding fair value adjustment estimation methodology on derivative contracts

FPA

Fixed pay allowance

FRB

Federal Reserve Board (US)

FRC

Financial Reporting Council

FSB

Financial Stability Board

FSCS

Financial Services Compensation Scheme

FSVC

Financial System Vulnerabilities Committee

FTE

Full-time equivalent staff

FTSE

Financial Times - Stock Exchange index

FuM

Funds under management

FVOCI¹

Fair value through other comprehensive income

FVPL¹

Fair value through profit or loss

FX DPA

Three-year deferred prosecution agreement with the US Department of Justice, entered into in January 2018

 

G


GAAP

Generally accepted accounting principles

GAC

Group Audit Committee

GB&M

Global Banking and Markets, a global business

GDP

Gross domestic product

GDPR

General Data Protection Regulation

GLCM

Global Liquidity and Cash Management

Global Markets

HSBC's capital markets services in Global Banking and Markets

GMB

Group Management Board

GMP

Guaranteed minimum pension

GPB

Global Private Banking, a global business

GPSP

Group Performance Share Plan

GRC

Group Risk Committee

Group

HSBC Holdings together with its subsidiary undertakings

GSM

The Group's Global Standards Manual

GTRF

Global Trade and Receivables Finance

H


Hang Seng Bank

Hang Seng Bank Limited, one of Hong Kong's largest banks

HKEx

The Stock Exchange of Hong Kong Limited

HKMA

Hong Kong Monetary Authority

HMRC

HM Revenue and Customs

HNAH

HSBC North America Holdings Inc.

Holdings ALCO

HSBC Holdings Asset and Liability Management Committee

Hong Kong

Hong Kong Special Administrative Region of the People's Republic of China

HOST

HSBC Operations Services and Technology

HQLA

High-quality liquid assets

HSBC

HSBC Holdings together with its subsidiary undertakings

HSBC Bank

HSBC Bank plc

HSBC Bank
Middle East

HSBC Bank Middle East Limited

HSBC Bank USA

HSBC Bank USA, N.A., HSBC's retail bank

in the US

HSBC Canada

The sub-group, HSBC Bank Canada, HSBC Trust Company Canada, HSBC Mortgage Corporation Canada and HSBC Securities Canada, consolidated for liquidity purposes

HSBC Colombia

HSBC Bank (Colombia) S.A.

HSBC Finance

HSBC Finance Corporation, the US consumer finance company (formerly Household International, Inc.)

HSBC France

HSBC's French banking subsidiary, formerly CCF S.A.

HSBC Holdings

HSBC Holdings plc, the parent company of HSBC

HSBC Private Bank (Suisse)

HSBC Private Bank (Suisse) SA, HSBC's private bank in Switzerland

HSBC UK

HSBC UK Bank plc

HSBC USA

The sub-group, HSBC USA Inc (the holding company of HSBC Bank USA) and HSBC Bank USA, consolidated for liquidity purposes

HSI

HSBC Securities (USA) Inc.

HSSL

HSBC Securities Services (Luxembourg)

HTIE

HSBC International Trust Services (Ireland) Limited

HTM

Held to maturity

I


IAS

International Accounting Standards

IASB

International Accounting Standards Board

Ibor

Interbank offered rate

ICAAP

Internal capital adequacy assessment process

IFRSs

International Financial Reporting Standards

ILAAP

Individual liquidity adequacy assessment process

IRB¹

Internal ratings-based

IRRBB

Interest rate risk in the banking book

ISDA

International Swaps and Derivatives Association

J


Jaws

Adjusted jaws measures the difference between the rates of change in adjusted revenue and adjusted operating expenses.

K


KMP

Key Management Personnel

L


LCR

Liquidity coverage ratio

LFRF

Liquidity and funding risk management framework

LGBT+

Lesbian, gay, bisexual and transgender. The plus sign denotes other non-mainstream groups on the spectrums of sexual orientation and gender identity

LGD¹

Loss given default

Libor

London interbank offered rate

LICs

Loan impairment charges and other credit risk provisions

LMA

Loan Markets Association

LTI

Long-term incentive

LTV¹

Loan-to-value ratio

M


Mainland China

People's Republic of China excluding Hong Kong

Malachite

Malachite Funding Limited, a term-funding vehicle

Mazarin

Mazarin Funding Limited, an asset-backed CP conduit

MBS

US mortgage-backed security

MENA

Middle East and North Africa

MOCs

Model Oversight Committees

Monoline

Monoline insurance company

MRT¹

Material Risk Taker

N


NII

Net interest income

NSFR

Net stable funding ratio

NYSE

New York Stock Exchange

O


OCC

Office of the Comptroller of the Currency (US)

OCI

Other comprehensive income

OECD

Organisation of Economic Co-operation and Development

OFAC

Office of Foreign Assets Control

 

ORMF

Operational risk management framework

OTC¹

Over-the-counter

P


PD¹

Probability of default

Performance shares¹

Awards of HSBC Holdings ordinary shares under employee share plans that are subject to corporate performance conditions

Ping An

Ping An Insurance (Group) Company of China, Ltd, the second-largest life insurer in the PRC

POCI

Purchased or originated credit-impaired financial assets

PBT

Profit before tax

PIT

Point-in-time

PPI

Payment protection insurance

PRA

Prudential Regulation Authority (UK)

PRC

People's Republic of China

Principal plan

HSBC Bank (UK) Pension Scheme

PVIF

Present value of in-force long-term insurance business and long-term investment contracts with DPF

PwC

The member firms of the PwC network, including PricewaterhouseCoopers LLP

 

R


RAS

Risk appetite statement

RBWM

Retail Banking and Wealth Management, a global business

Repo¹

Sale and repurchase transaction

Reverse repo

Security purchased under commitments to sell

RFB

Ring-fenced bank

RFR

Risk-free rate

RMM

Risk Management Meeting of the Group Management Board

RNIV

Risk not in VaR

RoE

Return on equity

RoRWA

Return on average risk-weighted assets

RoTE

Return on tangible equity

RWA¹

Risk-weighted asset

S


SAPS

Self-administered pension scheme

 

SDG

United Nation's Sustainable Development Goals

SE¹

Structured entity

SEC

Securities and Exchange Commission (US)

ServCo group

Separately incorporated group of service companies planned in response to UK ring-fencing proposals

SFR

Stable funding ratio

Sibor

Singapore interbank offered rate

SIC

Securities investment conduit

SID

Senior Independent Director

SME

Small- and medium-sized enterprise

Solitaire

Solitaire Funding Limited, a special purpose entity managed by HSBC

SPE¹

Special purpose entity

SPPI

Solely payments of principal and interest

SRI

Socially responsible investment

T


T1

Tier 1

T2

Tier 2

TCFD¹

Task Force on Climate-related Financial Disclosures

TLAC¹

Total loss-absorbing capacity

TSR¹

Total shareholder return

U


UAE

United Arab Emirates

UK

United Kingdom

UN

United Nations

UN PRI

United Nations Principles of Responsible Investment

US

United States of America

US run-off portfolio

Includes our CML, vehicle finance and Taxpayer Financial Services businesses and insurance, commercial, corporate and treasury activities in HSBC Finance on an IFRSs management basis

V


VaR¹

Value at risk

VIU

Value in use

 

1     A full definition is included in the glossary to the Annual Report and Accounts 2018 which is available at www.hsbc.com/investors.


HSBC Holdings plc


Incorporated in England on 1 January 1959 with

limited liability under the UK Companies Act

Registered in England: number 617987

 

Registered Office and Group Head Office


8 Canada Square

London E14 5HQ

United Kingdom

Telephone: 44 020 7991 8888

Facsimile: 44 020 7992 4880

Web: www.hsbc.com

 

Registrars


Principal Register

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

United Kingdom

Telephone: 44 0370 702 0137

Email: via website

Web: www.investorcentre.co.uk/contactus


Hong Kong Overseas Branch Register

Computershare Hong Kong Investor Services

Limited

Rooms 1712-1716, 17th floor

Hopewell Centre

183 Queen's Road East

Hong Kong

Telephone: 852 2862 8555

Email: hsbc.ecom@computershare.com.hk

Web: www.investorcentre.com/hk


Bermuda Overseas Branch Register

Investor Relations Team

HSBC Bank Bermuda Limited

37 Front Street

Hamilton HM11

Bermuda

Telephone: 1 441 299 6737

Email: hbbm.shareholder.services@hsbc.bm

Web: www.investorcentre.com/bm

 

ADR Depositary

The Bank of New York Mellon

Shareowner Services

PO Box 505000

Louisville, KY 40233-5000

USA

Telephone (US): 1 877 283 5786

Telephone (International): 1 201 680 6825

Email: shrrelations@cpushareownerservices.com

Web: www.mybnymdr.com

 

Paying Agent (France)

CACEIS Corporate Trust

14, rue Rouget de Lisle

92130 Issy-Les-Moulineaux

France

Telephone: 33 1 57 78 34 28

Email: ct-service-ost@caceis.com

Web: www.caceis.com

 

Corporate Brokers


Goldman Sachs International

Peterborough Court

133 Fleet Street

London EC4A 2BB

United Kingdom


Credit Suisse Securities (Europe) Limited

1 Cabot Square

London E14 4QT

United Kingdom


HSBC Bank plc

8 Canada Square

London E14 5HQ

United Kingdom


© Copyright HSBC Holdings plc 2019

All rights reserved

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Holdings plc.

Published by Global Finance, HSBC Holdings plc, London

Designed by Superunion (formerly Addison Group), London (Strategic Report) and by Global Finance with Superunion (rest of Annual Report and Accounts)

 

Photography

Highlights (pages 2 to 3): Lavender field in Provence, France. Taken by Andrea A Attard, who works in our corporate treasury solutions team in Malta

Our strategy (pages 10 to 13): Boat navigating off the coast of Thailand. Taken by Joanna S Ellis, who supports with retail customer due diligence and is based in India

Global businesses (pages 18 to 21): Hong Kong skyline at night. Taken by John Oldham, who works in the legal team in the UK

How we do business (pages 22 to 23): Fish off Raja Ampat, Indonesia, one of the world's most diverse marine regions. Taken by Faith Li, who works in asset management in China

How we do business (pages 28 to 29): Thrunton Woods, Northumberland. Taken by Ciara Jennings, who works in the UK's digital technology team

Risk overview (pages 30 to 31): Raindrops on a peacock feather. Taken by Noman Anwar, who works in communications in Bangladesh

Inside back cover: Crowds below an escalator in Incheon Airport, South Korea. Taken by Michael Hu, who works in China's finance team

Group Chairman and Group Chief Executive portraits: Taken by Charles Best

 

 


 


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