HSBC : 1Q 2024 Earnings Release

30 APRIL 2024

HSBC HOLDINGS PLC

1Q24 EARNINGS RELEASE

Noel Quinn, Group Chief Executive, said:

"I'm pleased with our start to 2024. We completed the sale of our Canada business and agreed the sale of our Argentina business, both of which allow us to focus on markets with higher value international opportunities. Our good profit performance of $12.7bn in the first quarter has enabled us to continue the trend of rewarding our shareholders. We have announced a total of $8.8bn of distributions, consisting of a first interim dividend for 2024 of $0.10 per share, a special dividend of $0.21 per share from the Canada sale proceeds, and a new share buy-back of up to $3bn. Our 2024 guidance remains unchanged, including a mid-teens return on average tangible equity and continued cost discipline."

Financial performance (1Q24 vs. 1Q23)

• Profit before tax decreased by $0.2bn to $12.7bn. This included a $4.8bn gain following the completion of the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, partly offset by a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale. The reduction in profit before tax also reflected the non- recurrence of a $2.1bn reversal in 1Q23 of an impairment relating to the sale of our retail banking operations in France, which was subsequently reinstated in 4Q23 prior to completion, and a $1.5bn gain recognised in 1Q23 on the acquisition of Silicon Valley Bank UK Limited ('SVB UK').
• On a constant currency basis, profit before tax decreased by $0.3bn to $12.7bn. Reported profit after tax decreased by $0.2bn to $10.8bn.
• Revenue increased by $0.6bn or 3% to $20.8bn, including the acquisition and disposal impacts of the strategic transactions described above. Revenue growth also reflected the impact of higher customer activity in our Wealth products in Wealth and Personal Banking ('WPB'), and in Equities and Securities Financing in Global Banking and Markets ('GBM'), which in part mitigated a reduction in Foreign Exchange revenue, compared with a strong 1Q23.
• Net interest income ('NII') of $8.7bn fell by $0.3bn, primarily reflecting deposit migration. Non-interest income increased by $0.9bn, reflecting a rise in trading income of $1.3bn, mainly in GBM. The associated funding costs reported in NII grew by $1.3bn. In addition, fee income grew by 5%. On a constant currency basis, revenue rose by 3% to $20.8bn.
• Net interest margin ('NIM') of 1.63% decreased by 6 basis points ('bps') compared with 1Q23. NIM increased by 11bps compared with 4Q23, reflecting the impact of hyperinflation and currency devaluation in Argentina, partly offset by higher funding costs of liabilities.
• ECL of $0.7bn were $0.3bn higher than in 1Q23. The 1Q24 charge primarily comprised stage 3 charges in both WPB and our wholesale businesses, while the 1Q23 charge reflected a favourable change in economic assumptions and lower stage 3 charges. Annualised ECL as a percentage of gross loans and advances to customers was 30bps in 1Q24, including held for sale balances.
• Operating expenses of $8.2bn were $0.6bn or 7% higher than in 1Q23. The growth was primarily due to continued investment in technology, the impacts of inflation and a higher performance-relatedpay accrual which reflected a change in the expected quarterly phasing of the performance-relatedpay pool relative to 1Q23. While target basis operating expenses rose by 7%, we are reconfirming our cost growth guidance of approximately 5% for 2024 compared with 2023 on this basis. Target basis operating expenses are measured on a constant currency basis, excluding notable items, the impact of retranslating the results of hyperinflationary economies at constant currency, and the direct costs from the sales of our France retail banking operations and our banking business in Canada.
• Customer lending balances decreased by $5bn compared with 4Q23. On a constant currency basis, lending balances increased by $5bn, including growth in Commercial Banking ('CMB') and GBM, notably in HSBC Bank plc, while mortgage balances increased in WPB in
  HSBC UK.
• Customer accounts decreased by $41bn compared with 4Q23. On a constant currency basis, customer accounts fell by $24bn, mainly in our legal entity in Hong Kong, notably reflecting the impact of customer deleveraging and competitive pressures in CMB and GBM, and outflows into wealth products in WPB.
• Common equity tier 1 ('CET1') capital ratio of 15.2% increased by 0.4 percentage points compared with 4Q23, driven by capital generation, the net beneficial impact of strategic transactions on CET1 and risk-weightedassets ('RWAs'), partly offset by the foreseeable dividend accrual, including the special dividend of $0.21 per share following the completion of the sale of our banking business in Canada, and the share buy-backannounced at our 2023 year-endresults.
• The Board has approved a first interim dividend of $0.10 per share. In addition, following the completion of the sale of our banking business in Canada, the Board has approved a special dividend of $0.21 per share, payable in June 2024, alongside the first interim dividend. After completing the $2bn buy-back announced at our full year 2023 results, we now intend to initiate a share buy-backof up to $3bn, which we expect to have a 0.4 percentage point impact on the CET1 capital ratio. We plan for this buy-back to commence shortly after the annual general meeting ('AGM') in May 2024.

Outlook

• Our guidance remains unchanged from that set out at our full-year results on 21 February 2024. We continue to target a return on average tangible equity ('RoTE'), excluding the impact of notable items, in the mid-teensfor 2024, with banking net interest income ('banking NII') of at least $41bn, dependent on the path of interest rates globally. We are reconfirming our cost growth guidance of approximately 5% for 2024 compared with 2023, on a target basis, and ECL charges as a percentage of average gross loans of around 40bps in 2024.
• Our guidance reflects our current outlook for the global macroeconomic environment, including customer and financial markets activity. This includes our modelling of a number of market dependent factors, such as market-implied interest rates (as of early April 2024), as well as customer behaviour and activity levels.
• We intend to manage our CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target of 50% for 2024, excluding material notable items and related impacts.

Note: we do not reconcile our forward guidance on RoTE excluding notable items, target basis operating expense, dividend payout ratio excluding material notable items and related impacts or banking NII to their reported equivalent measures.

HSBC Holdings plc Earnings Release 1Q24

1

Earnings Release - 1Q24

Contents

1	Group Chief Executive statement	22	Supplementary financial information
1	Financial performance (1Q24 vs. 1Q23)	22	-	Reported and constant currency results
1	Outlook	23	-	Global businesses
2	Business highlights	26	-	Legal entities
3	Financial summary	30	-	Strategic transactions supplementary analysis
3	-	Key financial measures: basis of preparation	31	Alternative performance measures
3	-	Constant currency performance	31	-	Use of alternative performance measures
4	-	Disposal groups and business acquisitions	31	-	Alternative performance measure definitions
6	-	Key financial metrics	35	Risk
7	- Summary consolidated income statement	35	- Managing risk
8	-	Distribution of results by global business and legal entity	36	-	Credit risk
9	-	Income statement commentary	47	-	Capital risk
14	-	Summary consolidated balance sheet	49	-	Regulatory and other developments
14	-	Balance sheet commentary	50	Additional information
16	Global businesses	50	-	Dividends
16	-	Wealth and Personal Banking - constant currency basis	51	-	Investor relations/media relations contacts
17	-	Commercial Banking - constant currency basis	51	-	Cautionary statement regarding forward-looking statements
19	-	Global Banking and Markets - constant currency basis	53	-	Abbreviations

20 - Corporate Centre - constant currency basis

Presentation to investors and analysts

HSBC Holdings plc will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 07.45am BST. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investors.

About HSBC

HSBC Holdings plc, the parent company of HSBC, is headquartered in London. With assets of $3.0tn at 31 March 2024, HSBC is one of the world's largest banking and financial services organisations.

Business highlights

Our strategy

HSBC's purpose is 'Opening up a world of opportunity'. We continue to implement our strategy across four strategic pillars aligned to our purpose, values and ambition. Our strategic pillars remain:

• Focus - maintain leadership in scale markets, double-down on international connectivity, diversify our revenue and maintain cost discipline and reshape our portfolio;
• Digitise - deliver seamless customer experience, ensure resilience and security, embrace disruptive technologies and partner with innovators, and automate and simplify at scale;
• Energise - inspire leaders to drive performance and delivery, unlock our edge to enable success, deliver a unique and exceptional colleague experience and prepare our workforce for the future;
• Transition - support our customers, embed net zero into the way we operate, partner for systemic change, become net zero in our own operations and supply chain by 2030, and our financed emissions by 2050.

The Group continues to target a RoTE in the mid-teens for 2024, excluding notable items. However, we are mindful of the interest rate cycle and subsequent impact on NII and are focused on actions and initiatives to reduce the sensitivity of our earnings to interest rate movements. These include a number of growth opportunities within our strategy that play to our strengths.

These opportunities include further growing our international businesses, diversification of our revenue, including building our wealth business, especially in Asia, continuing to grow in our home markets in Hong Kong and the UK, and also the diversification of our profit generation across the other markets in which we operate. We have continued to demonstrate progress during 1Q24. We generated $6.7bn from transaction banking during 1Q24, which was 1% higher than in 1Q23, driven by revenue growth in Global Payments Solutions ('GPS') in both CMB and GBM, across both NII and fees, which was broadly offset by lower revenue in Global Foreign Exchange in the context of a strong 1Q23. At

31 March 2024, wealth balances were $1.8tn, an increase of 10% compared with the same period last year. Within this we have attracted net new invested assets of $27bn in the first three months of 2024, with $19bn booked in Asia. In addition, our insurance business continued to grow, with insurance manufacturing new business contractual service margin in WPB of $0.8bn, up 87% compared with 1Q23. In Hong Kong and the UK, we grew mortgage lending balances by a combined $9bn since 31 March 2023.

We remain focused on maintaining tight cost discipline and generating cost savings that will help enable us to invest in technology to improve customer experience while also increasing efficiency. We also have an ambition to build a stronger performance culture, improving our colleague experience and preparing our workforce for the future. Finally, we also see significant commercial opportunities in helping to finance the new economy and in supporting the significant investment needs of our customers in the transition to net zero, as well as the importance of helping to mitigate the rising financial and wider societal risks posed by climate change.

We continue to make good progress on our strategic transactions. In 1Q24, we completed the sales of our retail banking operations in France and our banking business in Canada, as we reshape the organisation to focus on our international customer base. In addition, we announced the planned sales of our business in Argentina and our operations in Armenia, and we expect to complete the planned sale of our business in Russia in the second quarter of 2024.

For further details of these transactions, see 'Disposal groups and business acquisitions' on page 4.

• HSBC Holdings plc Earnings Release 1Q24

ESG update

In January 2024, we published our first net zero transition plan, which is an important milestone in our journey to achieving our net zero ambition

• helping our people, customers, investors and other stakeholders to understand our long-term vision, the challenges, uncertainties and dependencies that exist, the progress we are making and what we plan to do in the future. The plan includes details on our approach to sector transitions, and on our implementation plan to embed net zero across key areas of our organisation.

Financial summary

Key financial measures: basis of preparation

Return on average tangible equity

From 1 January 2024, we have revised the adjustments made to RoTE in 2023 from excluding the impact of strategic transactions and the impairment of our investment in Bank of Communications Co., Limited ('BoCom'), to excluding all notable items in 2024. This is intended to improve alignment with the treatment of notable items in our other income statement disclosures. The calculation for RoTE excluding notable items adjusts the 'profit attributable to the ordinary shareholders, excluding goodwill and other intangible assets impairment' for the post-tax impact of notable items. It also adjusts the 'average tangible equity' for the post-tax impact of notable items in each period, which remain as adjusting items for all relevant periods within that calendar year. For a reconciliation from reported RoTE to RoTE excluding notable items, see page 32. On this basis, we continue to target a RoTE in the mid-teens for 2024. We do not reconcile our forward RoTE guidance to the equivalent reported measure.

Target basis operating expenses

Target basis operating expenses is computed by excluding the direct cost impact of our France retail banking operations and Canada banking business disposals from the 2023 baseline. It is measured on a constant currency basis and excludes notable items and the impact of retranslating the prior year results of hyperinflationary economies at constant currency, which we consider to be outside of our control. We consider target basis operating expenses to provide useful information to investors by quantifying and excluding the notable items that management considered when setting and assessing cost-related targets. For a reconciliation from reported operating expenses to target basis operating expenses, see page 33.

In 2024, we will target growth of approximately 5% compared with 2023 on a target basis. This target reflects our current business plan for 2024, and includes an increase in staff compensation, higher technology spend and investment for growth and efficiency, in part mitigated by cost savings from actions taken during 2023. We do not reconcile our forward target basis operating expenses guidance to the reported operating expenses.

Dividend payout ratio target basis

Given our current returns trajectory, we are targeting a dividend payout ratio of 50% for 2024. For the purposes of computing our dividend payout ratio target, we exclude from earnings per share material notable items and related impacts. Material notable items are a subset of notable items for which categorisation is dependent on the nature of each item in conjunction with the financial impact on the Group's income statement. Material notable items comprise the impacts of the sales of our banking business in Canada and our retail banking operations in France, the gain following the acquisition of SVB UK, and the impacts of the planned sale of our business in Argentina. We also exclude HSBC Bank Canada's financial results from the 30 June 2022 net asset reference date until completion, as the gain on sale was recognised through a combination of the consolidation of HSBC Bank Canada's results in the Group's results since this date, and the remaining gain on sale was recognised at completion, inclusive of the recycling of related reserves and fair value gains on related hedges. Following the completion of the sale of our banking business in Canada, the Board has approved a special dividend of $0.21 per share, payable in June 2024, alongside the first interim dividend.

For the planned sale of our business in Argentina, there is a mechanism by which the loss on sale will vary by changes in the net asset value of HSBC Argentina, and in the fair value of consideration including price adjustments and migration costs (see page 4 for details). No additional related impacts have been identified, and the ongoing profits from HSBC Argentina will not be excluded from our dividend payout ratio target basis.

For a reconciliation of basic earnings per share to basic earnings per share excluding material notable items and related impacts, see page 34. We do not reconcile our forward dividend payout ratio, excluding material notable items and related impacts guidance to the reported dividend payout ratio.

Notes

• Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2024 and the quarter ended
  31 March 2023. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2024 and the corresponding balances at 31 December 2023.
• The financial information on which this Earnings Release 1Q24 is based is unaudited. It has been prepared in accordance with our material accounting policies as described on pages 341 to 354 of our Annual Report and Accounts 2023.

Constant currency performance

Constant currency performance is computed by adjusting reported results for the effects of foreign currency translation differences, which distort period-on-period comparisons.

We consider constant currency performance to provide useful information for investors by aligning internal and external reporting, and reflecting how management assesses period-on-period performance.

Foreign currency translation differences

Foreign currency translation differences reflect the movements of the US dollar against most major currencies. We exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a like-for-like basis and to better understand the underlying trends in the business.

HSBC Holdings plc Earnings Release 1Q24

3

Earnings Release - 1Q24

Foreign currency translation differences for 1Q24 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

• the income statements for 4Q23 and 1Q23 at the average rate of exchange for 1Q24;
• the closing prior period balance sheets at the prevailing rates of exchange at 31 March 2024.

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

Notable items

We separately disclose 'notable items', which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. Certain notable items are classified as 'material notable items', which are a subset of notable items. Categorisation as a material notable item is dependent on the nature of each item in conjunction with the financial impact on the Group's income statement. We exclude material notable items when computing our dividend payout ratio target basis.

The tables on pages 23 to 29 detail the effects of notable items on each of our global business segments and legal entities during 1Q24, 4Q23 and 1Q23.

Global business performance

The Group Chief Executive, supported by the rest of the Group Executive Committee ('GEC'), is considered to be the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's reportable segments.

The Group Chief Executive and the rest of the GEC review operating activity on a number of bases, including by global business and legal entities. Our global businesses - Wealth and Personal Banking, Commercial Banking and Global Banking and Markets - along with Corporate Centre - are our reportable segments under IFRS 8 'Operating Segments'. Global business results are assessed by the CODM on the basis of constant currency performance, which removes the effects of currency translation impacts from reported results. Therefore, we present these results on a constant currency basis.

As required by IFRS 8, reconciliations of the constant currency results to the Group's reported results are presented on page 22. Supplementary reconciliations of constant currency to reported results by global business are presented on pages 23 to 25 for information purposes.

Management view of revenue on a constant currency basis

Our global business segment commentary includes tables that provide breakdowns of revenue on a constant currency basis by major product. These reflect the basis on which revenue performance of the businesses is assessed and managed.

Disposal groups and business acquisitions

France retail banking operations

On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking operations in France to CCF, a subsidiary of Promontoria MMB SAS ('My Money Group'). The sale also included HSBC Continental Europe's 100% ownership interest in HSBC SFH (France) and its 3% ownership interest in Crédit Logement.

Upon completion and in accordance with the terms of the sale, HSBC Continental Europe received a €0.1bn ($0.1bn) profit participation interest in the ultimate holding company of My Money Group. The associated impacts on initial recognition of this stake at fair value were recognised as part of the pre-tax loss on disposal in 2023, upon the reclassification of the disposal group as held for sale. In accordance with the terms of the sale, HSBC Continental Europe retained a portfolio of €7.1bn ($7.8bn) consisting of home and certain other loans, in respect of which it may consider on-sale opportunities at a suitable time, and the CCF brand, which it licensed to the buyer under a long-term licence agreement. Additionally, HSBC Continental Europe's subsidiaries, HSBC Assurances Vie (France) and HSBC Global Asset Management (France), have entered into distribution agreements with the buyer. Ongoing costs associated with the retention of the home and certain other loans, net of income on distribution agreements and the brand licence, are estimated to have an after-tax loss impact of €0.1bn ($0.1bn) in 2024 based on expected funding rates.

The customer lending balances and associated income statement impacts of the portfolio of retained loans, together with the profit participation interest and the licence agreement of the CCF brand, were reclassified from WPB to Corporate Centre, with effect from 1 January 2024.

Canada banking business

On 28 March 2024, HSBC Overseas Holdings (UK) Limited, a direct subsidiary of HSBC Holdings plc, completed the sale of HSBC Bank Canada to the Royal Bank of Canada.

The completion of the transaction resulted in a gain on sale of $4.8bn inclusive of recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn in other reserves losses. The gain on sale also included $0.3bn in fair value gains recognised on the related foreign exchange hedges in the first quarter of 2024. There was no tax on the gain recognised at completion due to the substantial shareholding exemption rule in the UK.

Following the completion of this transaction, the Board has approved a special dividend of $0.21 per share, payable in June 2024 alongside the first interim dividend.

Argentina business

On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to sell its business in Argentina to Grupo Financiero Galicia ('Galicia').

Galicia will acquire all of HSBC Argentina's business covering banking, asset management and insurance, together with $100m of subordinated debt issued by HSBC Argentina and held by HSBC Latin America Holdings (UK) Limited for a base consideration of $550m. The consideration will be adjusted for the results of the business and fair value gains or losses on HSBC Argentina's securities portfolios during the period between 31 December 2023 and closing.

• HSBC Holdings plc Earnings Release 1Q24

HSBC expects to receive the purchase consideration in a combination of cash, loan notes and Galicia's American Depositary Receipts ('ADRs'), with ADRs accounting for around half of the consideration received and representing less than a 10% economic interest in Galicia. The transaction is subject to conditions, including regulatory approval, and is expected to be completed within the next 12 months.

At 31 March 2024, given the advanced stage of agreement on deal terms and that completion was expected within 12 months, our investment in HSBC Argentina met the criteria to be classified as held for sale in accordance with IFRS 5. As a result, we classified total assets of $5.1bn and total liabilities of $3.5bn to held for sale, and recognised a $1.1bn pre-tax loss in the first quarter of 2024. There was no tax deduction on the loss recognised. At closing, cumulative foreign currency translation reserves and other reserves will recycle to the income statement. At 31 March 2024, foreign currency translation reserve losses stood at $4.9bn and other reserve gains at $0.1bn.

Between signing and closing, the loss on sale will vary by changes in the net asset value of the disposed business and associated hyperinflation and foreign currency translation, and the fair value of consideration including price adjustments and migration costs.

Other disposals

On 30 June 2022, following a strategic review of our business in Russia, HSBC Europe BV (a wholly-owned subsidiary of HSBC Bank plc) entered into an agreement for the sale of its wholly-owned subsidiary HSBC Bank (RR) (Limited Liability Company). As at 31 December 2023, following US sanctions designation of the buyer, the sale had become less certain. As a result, the business was no longer classified as held for sale, the previously recognised loss has been reversed, and a broadly offsetting charge relating to recoverability was recognised in the fourth quarter of 2023. During the first quarter of 2024, following the receipt of government and regulatory approvals, the held for sale classification was reinstated. The reinstatement of held for sale did not have a material impact. The transaction is now expected to complete in the second quarter of 2024 and at completion, foreign currency translation reserve losses of approximately $0.1bn will be recognised in the income statement.

On 6 February 2024, following a strategic review of our operations in Armenia, HSBC Europe BV reached an agreement for the sale of HSBC Bank Armenia to Ardshinbank. This resulted in a loss on classification to held for sale of $0.1bn. The transaction is subject to regulatory approvals. As part of this transaction, all staff members of HSBC Armenia will transfer to Ardshinbank at completion, and the transfer will include all customer relationships held by HSBC Armenia at that time. The transaction is expected to complete within 12 months.

On 13 November 2023, the Hongkong and Shanghai Banking Corporation Limited (acting through its Mauritius branch) entered into an agreement with ABSA Bank (Mauritius) Limited, a wholly-owned subsidiary of ABSA Bank Group Limited, to sell its Wealth and Personal Banking business. The sale is expected to complete in the second half of 2024 subject to regulatory approvals.

Acquisitions

In March 2023, HSBC UK Bank plc acquired SVB UK. In June 2023, we changed its legal entity name to HSBC Innovation Bank Limited and launched HSBC Innovation Banking ('IVB') to deliver a globally connected, specialised banking proposition to support innovation businesses and their investors. The acquisition was funded from existing resources and brought the staff, assets and liabilities of SVB UK into the HSBC portfolio. On acquisition, we performed a preliminary assessment of the fair value of the assets and liabilities purchased. We established an opening balance sheet on 13 March 2023 and applied the result of the fair value assessment, which resulted in a reduction in net assets of $0.2bn. We recognised a provisional gain on acquisition of $1.5bn in 1Q23, based on rates of foreign exchange prevailing in 1Q23, representing the difference between the consideration paid of £1 and the net assets acquired. Subsequently, further due diligence was performed post- acquisition and we recognised an additional gain of $0.1bn at 30 September 2023, as required by IFRS 3 'Business Combinations', resulting in a gain on acquisition for the year ended 31 December 2023 of $1.6bn. No further adjustments were made to the gain on acquisition during the first quarter of 2024, which is now final.

In October 2023, HSBC Global Asset Management Singapore Limited entered into an agreement to acquire 100% of the shares of Silkroad Property Partners Pte Ltd ('Silkroad') and for HSBC Global Asset Management Limited to acquire Silkroad's affiliated General Partner entities. Silkroad is a Singapore headquartered Asia-Pacific-focused, real estate investment manager. The acquisition was completed on 31 January 2024.

In October 2023, HSBC Bank (China) Company Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited, entered into an agreement to acquire Citibank China's retail wealth management portfolio in mainland China. The portfolio comprises assets under management and deposits and the associated wealth customers. Upon completion, the acquired business will be integrated into HSBC Bank China's Wealth and Personal Banking operations. The transaction is expected to complete in the first half of 2024.

Impact of strategic transactions

To aid the understanding of our results, we separately disclose, in selected tables, the impact of strategic transactions classified as material notable items on the results of the Group and our global businesses. Material notable items are a subset of notable items and categorisation is dependent on the financial impact on the Group's income statement. At 1Q24, the disclosure includes the impacts of the disposal of our retail banking operations in France, our banking business in Canada and the planned sale of our business in Argentina. The disclosure also includes the impact of our acquisition of SVB UK and income statement results of IVB. The impacts quoted include the gains or losses on classification to held for sale or acquisition and all other related notable items. Once a transaction has completed, the impact will also include the operating income statement results of each business, which are not classified as notable items, where there are results in one period but not in another, providing the impact of the acquisition or disposal on the results. We have also included strategic transaction supplementary analysis on

page 30.

HSBC Holdings plc Earnings Release 1Q24

5

Earnings Release - 1Q24

Key financial metrics

		Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
Reported results
Profit before tax ($m)	12,650	977	12,886
Profit after tax ($m)	10,837	222	11,026
Cost efficiency ratio (%)	39.3	66.4	37.6
Net interest margin (%)	1.63	1.52	1.69
Basic earnings per share ($)	0.54	(0.01)	0.52
Diluted earnings per share ($)	0.54	(0.01)	0.52
Dividend per ordinary share (in respect of the period) ($)1	0.10	0.31	0.10
Alternative performance measures
Constant currency profit before tax ($m)	12,650	863	12,931
Constant currency cost efficiency ratio (%)	39.3	66.9	37.4
Expected credit losses and other credit impairment charges (annualised) as % of average gross loans and advances	0.31	0.40	0.18
to customers (%)
Expected credit losses and other credit impairment charges (annualised) as % of average gross loans and advances	0.30	0.38	0.17
to customers, including held for sale (%)
Basic earnings per share excluding material notable items and related impacts ($)	0.34	0.25	0.36
Return on average ordinary shareholders' equity (annualised) (%)	24.0	(0.4)	25.5
Return on average tangible equity (annualised) (%)	26.1	(0.4)	27.4
Return on average tangible equity excluding notable items (annualised) (%)	16.4	12.8	18.4
Target basis operating expenses ($m)	7,939	8,415	7,394
		At
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
Balance sheet
Total assets ($m)	3,000,517	3,038,677	2,989,696
Net loans and advances to customers ($m)	933,125	938,535	963,394
Customer accounts ($m)	1,570,164	1,611,647	1,604,099
Average interest-earning assets, year to date ($m)	2,140,446	2,164,324	2,152,893
Loans and advances to customers as % of customer accounts (%)	59.4	58.2	60.1
Total shareholders' equity ($m)	191,186	185,329	190,095
Tangible ordinary shareholders' equity ($m)	162,008	155,710	159,458
Net asset value per ordinary share at period end ($)	9.28	8.82	8.65
Tangible net asset value per ordinary share at period end ($)	8.67	8.19	8.08
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)2	15.2	14.8	14.7
Risk-weighted assets ($m)2,3	832,633	854,114	854,434
Total capital ratio (%)2,3	20.7	20.0	19.8
Leverage ratio (%)2,3	5.7	5.6	5.8
High-quality liquid assets (liquidity value) ($m)3,4	645,789	647,505	634,889
Liquidity coverage ratio (%)3,4	136	136	132
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions)	18,687	19,006	19,736
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	18,838	19,135	19,903
Average basic number of $0.50 ordinary shares outstanding (millions)	18,823	19,130	19,724

For reconciliation and analysis of our reported results on a constant currency basis, including lists of notable items, see page 22. Definitions and calculations of other alternative performance measures are included in 'Alternative performance measures' on page 31.

• The amount for the quarter ended 31 March 2024 excludes the special dividend of $0.21 per ordinary share arising from the proceeds of the sale of our banking business in Canada to Royal Bank of Canada.

• Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. References to EU regulations and directives (including technical standards) should, as applicable, be read as references to the UK's version of such regulation or directive, as onshored into UK law under the European Union (Withdrawal) Act 2018, and as may be subsequently amended under UK law.

• Regulatory numbers and ratios are as presented at the date of reporting. Small changes may exist between these numbers and ratios and those subsequently submitted in regulatory filings. Where differences are significant, we may restate in subsequent periods.

4 The liquidity coverage ratio is based on the average value of the preceding 12 months.

• HSBC Holdings plc Earnings Release 1Q24

Summary consolidated income statement

			Quarter ended
		31 Mar	31 Dec	31 Mar
		2024	2023	2023
		$m	$m	$m
Net interest income	8,653	8,284	8,959
Net fee income	3,146	2,757	3,004
Net income from financial instruments held for trading or managed on a fair value basis1	5,406	4,097	4,112
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value	1,292	6,149	3,894
through profit or loss
Insurance finance expense	(1,327)	(6,106)	(3,912)
Insurance service result	306	382	284
Gain on acquisition2	-	(2)	1,511
Net gain/(impairment) on sale of business operations3	3,417	(1,980)	2,130
Other operating (expense)/income	(141)	(560)	189
Net operating income before change in expected credit losses and other credit impairment charges4	20,752	13,021	20,171
Change in expected credit losses and other credit impairment charges	(720)	(1,031)	(432)
Net operating income	20,032	11,990	19,739
Total operating expenses excluding impairment of goodwill and other intangible assets	(8,150)	(8,635)	(7,588)
(Impairment)/reversal of impairment of goodwill and other intangible assets	(1)	(10)	2
Operating profit	11,881	3,345	12,153
Share of profit in associates and joint ventures	769	632	733
Impairment of interest in associate	-	(3,000)	-
Profit before tax	12,650	977	12,886
Tax expense	(1,813)	(755)	(1,860)
Profit after tax	10,837	222	11,026
Attributable to:
-	ordinary shareholders of the parent company	10,183	(153)	10,327
-	other equity holders	401	125	418
-	non-controlling interests	253	250	281
Profit after tax	10,837	222	11,026
		$	$	$
Basic earnings per share	0.54	(0.01)	0.52
Diluted earnings per share	0.54	(0.01)	0.52
Dividend per ordinary share (paid in the period)	-	0.10	-
		%	%	%
Return on average ordinary shareholders' equity (annualised)	24.0	(0.4)	25.5
Return on average tangible equity (annualised)	26.1	(0.4)	27.4
Cost efficiency ratio	39.3	66.4	37.6

• Includes a $255m gain (4Q23: $245m loss; 1Q23: $57m loss) on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.

• Gain recognised in respect of the acquisition of SVB UK. In December 2023, a true-up adjustment was made which resulted in a decrease in the gain.
  3 In the first quarter of 2024, a gain of $4.6bn inclusive of the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves recycling losses on the sale of our banking business in Canada, and an impairment loss of $1.1bn relating to the planned sale of our business in Argentina was recognised. In the first quarter of 2023, the $2.1bn reversal of the held for sale classification was recognised which was largely offset by an impairment loss of $2.0bn recognised in the fourth quarter of 2023 relating to the sale of our retail banking operations in France.
  4 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.

HSBC Holdings plc Earnings Release 1Q24

7

Earnings Release - 1Q24

Distribution of results by global business and legal entity

Distribution of results by global business

		Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Constant currency revenue1
Wealth and Personal Banking	7,164	4,253	9,013
Commercial Banking2	5,532	5,095	6,709
Global Banking and Markets2	4,455	3,666	4,402
Corporate Centre3	3,601	(270)	101
Total	20,752	12,744	20,225
Constant currency profit/(loss) before tax
Wealth and Personal Banking	3,181	180	5,324
Commercial Banking2	3,280	2,454	4,883
Global Banking and Markets2	2,025	955	1,990
Corporate Centre3	4,164	(2,726)	734
Total	12,650	863	12,931

• Constant currency net operating income before change in expected credit losses and other credit impairment charges including the effects of foreign currency translation differences, also referred to as constant currency revenue.

2 In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers' respective needs,

a portfolio of our customers within our markets in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.

• With effect from 1 January 2024, following the sale of our retail banking business in France, we have prospectively reclassified the portfolio of retained loans, profit participation interest and licence agreement of the CCF brand from WPB to Corporate Centre.

Distribution of results by legal entity

		Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Reported profit/(loss) before tax
HSBC UK Bank plc	1,811	1,701	3,131
HSBC Bank plc	697	(1,766)	2,714
The Hongkong and Shanghai Banking Corporation Limited	5,457	1,167	5,849
HSBC Bank Middle East Limited	283	216	377
HSBC North America Holdings Inc.	253	(368)	307
HSBC Bank Canada	186	176	239
Grupo Financiero HSBC, S.A. de C.V.	186	147	215
Other trading entities1	390	619	493
- of which: other Middle East entities (including Oman, Türkiye, Egypt and Saudi Arabia)	214	206	139
- of which: Saudi Awwal Bank	145	147	110
Holding companies, shared service centres and intra-Group eliminations	3,387	(915)	(439)
Total	12,650	977	12,886
Constant currency profit/(loss) before tax
HSBC UK Bank plc	1,811	1,739	3,266
HSBC Bank plc	697	(1,786)	2,756
The Hongkong and Shanghai Banking Corporation Limited	5,457	1,155	5,776
HSBC Bank Middle East Limited	283	216	377
HSBC North America Holdings Inc.	253	(368)	307
HSBC Bank Canada	186	178	239
Grupo Financiero HSBC, S.A. de C.V.	186	152	236
Other trading entities1	390	488	411
- of which: other Middle East entities (including Oman, Türkiye, Egypt and Saudi Arabia)	214	184	130
- of which: Saudi Awwal Bank	145	148	110
Holding companies, shared service centres and intra-Group eliminations2	3,387	(911)	(437)
Total	12,650	863	12,931

• Other trading entities includes the results of entities located in Oman (pre merger with Sohar International Bank SAOG in August 2023), Türkiye, Egypt and Saudi Arabia (including our share of the results of Saudi Awwal Bank) which do not consolidate into HSBC Bank Middle East Limited. Supplementary analysis is provided on page 29 for a fuller picture of the Middle East, North Africa and Türkiye ('MENAT') regional performance.

• Includes a $4.8bn gain on disposal of our banking business in Canada, inclusive of a $0.3bn gain on the foreign exchange hedging of the sale proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves recycling losses. This is partly offset by a $1.1bn impairment recognised in relation to the planned sale of our business in Argentina.

Tables showing constant currency profit before tax by global business and legal entity are presented to support the commentary on constant currency performance on pages 10 and 12.

The tables on pages 23 to 29 reconcile reported to constant currency results for each of our global business segments and legal entities.

• HSBC Holdings plc Earnings Release 1Q24

Income statement commentary

1Q24 compared with 1Q23 - reported results

Movement in reported profit compared with 1Q23

			Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Mar			of which strategic
	2024	2023			transactions1
	$m	$m	$m	%	$m
Revenue	20,752	20,171	581	3	260
ECL	(720)	(432)	(288)	(67)	20
Operating expenses	(8,151)	(7,586)	(565)	(7)	57
Share of profit/(loss) from associates and JVs	769	733	36	5	-
Profit before tax	12,650	12,886	(236)	(2)	337
Tax expense	(1,813)	(1,860)	47	3
Profit after tax	10,837	11,026	(189)	(2)

1 For details, see 'Impact of strategic transactions' on page 5.

Notable items

	Quarter ended
	31 Mar	31 Mar
	2024	2023
	$m	$m
Revenue
Disposals, acquisitions and related costs	3,732	3,562
Fair value movements on financial instruments1	-	15
Currency translation on revenue notable items	-	92
Operating expenses
Disposals, acquisitions and related costs	(63)	(61)
Restructuring and other related costs	13	-
Currency translation on operating expenses notable items	-	(1)

1 Fair value movements on non-qualifying hedges in HSBC Holdings.

Reported profit

Reported profit before tax of $12.7bn was $0.2bn lower. The decrease included a $4.8bn gain on the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, partly offset by a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale. The reduction in profit before tax also reflected the non-recurrence of a $2.1bn reversal in 1Q23 of an impairment relating to the sale of our retail banking operations in France, which was subsequently reinstated in 4Q23 prior to completion, and a $1.5bn gain recognised in 1Q23 on the acquisition of SVB UK. Reported ECL charges were $0.3bn higher than in 1Q23, with the charge in 1Q24 primarily comprising stage 3 charges. Reported operating expenses rose by 7% due to higher technology costs, the impacts of inflation and an increased performance-related pay accrual relative to 1Q23.

Reported profit after tax of $10.8bn was $0.2bn lower than in 1Q23.

Reported revenue

Reported revenue of $20.8bn was $0.6bn or 3% higher. The increase included a $4.8bn gain on the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, which was broadly offset by the period-on-period impacts of a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale, the non-recurrence of a $2.1bn reversal in 1Q23 of an impairment relating to the sale of our retail banking operations in France, and a $1.5bn gain recognised in 1Q23 on the acquisition of SVB UK, as described above.

The remaining increase in revenue reflected higher wealth revenue in WPB, notably from a strong performance in Global Private Banking, as well as revenue growth in Equities and Securities Financing in GBM, as market sentiment improved. These factors were partly offset by a reduction in revenue in Global Foreign Exchange in GBM, which compared with a strong 1Q23.

NII also fell compared with 1Q23, reflecting the impact of customers migrating their deposits to higher interest-bearing term and savings accounts. This was in part mitigated by higher NII in Markets Treasury due to the impact of the repositioning actions in relation to our hedging portfolio carried out in 2023. Markets Treasury revenue is allocated to our global businesses.

Reported ECL

Reported ECL of $0.7bn were $0.3bn higher than in 1Q23. In 1Q24, ECL primarily comprised stage 3 charges in both WPB and our wholesale businesses. ECL in WPB included a $0.2bn charge in Mexico, which was $0.1bn higher than in 1Q23, reflecting growth in lending during 2023. The ECL charge in 1Q23 reflected a favourable change in economic assumptions and lower stage 3 charges.

For further details of the calculation of ECL, including the measurement uncertainties and significant judgements applied to such calculations, the impact of the economic scenarios and management judgemental adjustments, see pages 38 to 44.

Reported operating expenses

Reported operating expenses of $8.2bn were $0.6bn or 7% higher. This mainly reflected continued investment in technology, the impacts of inflation, as well as a higher performance-related pay accrual, which reflects a change in the expected quarterly phasing of the performance- related pay pool relative to 1Q23. In addition, 1Q24 included a rise of $0.1bn due to the additional costs of IVB, a $0.1bn increase relating to the

HSBC Holdings plc Earnings Release 1Q24

9

Earnings Release - 1Q24

Bank of England levy and the incremental cost of the Federal Deposit Insurance Corporation ('FDIC') special assessment in the US to reflect the FDIC's revised estimated losses. These increases were partly offset by the effects of our continued cost discipline.

Reported share of profit from associates and JVs

Reported share of profit from associates and joint ventures of $0.8bn was $36m or 5% higher. This included a higher share of profit from Saudi Awwal Bank ('SAB'), formerly The Saudi British Bank.

Tax expense

Tax in 1Q24 was a charge of $1.8bn, representing an effective tax rate of 14.3%, which was 0.1 percentage points lower than the effective tax rate of 14.4% for 1Q23. The effective tax rate for 1Q24 was reduced by the non-taxable gain on the sale of our banking business in Canada and increased by the non-deductible loss recorded on the planned sale of the Group's business in Argentina. The effective rate for 1Q24 was below the Pillar 2 Global Minimum Tax ('GMT') rate of 15% because the gain on the sale of our banking business in Canada is excluded when calculating the Group's GMT liability. The effective rate for 1Q23 was reduced by the release of provisions for uncertain tax positions and by the non-taxable provisional gain on the acquisition of SVB UK. Excluding these items, the effective tax rates were 19.5% for 1Q24 and 20.9% for 1Q23.

First interim dividend for 2024 and special dividend

On 30 April 2024, the Board announced a first interim dividend for 2024 of $0.10 per ordinary share. In addition, following the completion of the sale of our banking business in Canada, the Board has approved a special dividend of $0.21 per ordinary share, payable in June 2024, alongside the first interim dividend. For further details, see page 50.

1Q24 compared with 1Q23 - constant currency basis

Movement in profit before tax compared with 1Q23 - on a constant currency basis

		Quarter ended
					Variance
					1Q24 vs. 1Q23
	31 Mar
	31 Mar			of which strategic
	2024	2023				transactions1
	$m	$m	$m	%	$m
Revenue	20,752	20,225		527	3	171
ECL	(720)	(428)		(292)	(68)	22
Operating expenses	(8,151)	(7,568)		(583)	(8)	59
Share of profit from associates and JVs	769	702		67	10	-
Profit before tax	12,650	12,931		(281)	(2)	252

1 For details, see 'Impact of strategic transactions' on page 5.

Profit before tax of $12.7bn was $0.3bn lower than in 1Q23, on a constant currency basis, as growth in revenue was more than offset by higher operating expenses and a rise in ECL charges.

Revenue increased by $0.5bn or 3%, and included a $4.8bn gain on the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds. This gain was broadly offset by the period-on period impacts of a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale, the non-recurrence of a $2.1bn reversal in 1Q23 of an impairment relating to the sale of our retail banking operations in France, and a $1.6bn gain recognised on the acquisition of SVB UK. The remaining increase reflected revenue growth in Wealth in WPB and in Equities and Securities Financing in GBM, partly offset by lower revenue in Global Foreign Exchange and a reduction in NII.

ECL charges of $0.7bn were $0.3bn higher, with the 1Q24 charge primarily related to stage 3 charges in both WPB, notably in Mexico, and in our wholesale businesses.

Operating expenses increased by $0.6bn or 8%, mainly driven by continued investment in technology, the impacts of inflation and a higher performance-related pay accrual, as well as a $0.1bn increase from the Bank of England levy and an incremental cost associated with the FDIC special assessment in the US. It also included a rise of $0.1bn due to the additional costs of IVB. The impact of retranslating the prior year results of our operations in hyperinflationary economies at 1Q24 average rates of foreign exchange resulted in cost growth of $0.1bn.

1Q24 compared with 4Q23 - reported results

Movement in reported profit compared with 4Q23

		Quarter ended
					Variance
					1Q24 vs. 4Q23
	31 Mar	31 Dec			of which strategic
	2024	2023				transactions1
	$m	$m	$m	%	$m
Revenue	20,752	13,021		7,731	59	5,983
ECL	(720)	(1,031)		311	30	-
Operating expenses	(8,151)	(8,645)		494	6	136
Share of profit from associates and JVs less impairment	769	(2,368)		3,137	>100	-
Profit before tax	12,650	977		11,673	>100	6,119
Tax expense	(1,813)	(755)		(1,058)	>(100)
Profit after tax	10,837	222		10,615	>100

1 For details, see 'Impact of strategic transactions' on page 5.

10 HSBC Holdings plc Earnings Release 1Q24