HSBC : 2019 ANNUAL RESULTS VIDEO WEBCAST PRESENTATION

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HSBC Holdings plc

Overseas Regulatory Announcement

The attached announcement has been released to the other stock exchanges on which HSBC Holdings plc is listed.

The Board of Directors of HSBC Holdings plc as at the date of this announcement comprises: Mark Tucker*, Noel Quinn, Kathleen Casey† , Laura Cha† , Henri de Castries† , Irene Lee† , José Meade† , Heidi Miller† , David Nish† , Ewen Stevenson, Sir Jonathan Symonds† , Jackson Tai† and Pauline van der Meer Mohr† .

* Non-executive Group Chairman

• Independent non-executive Director
  Hong Kong Stock Code: 5

HSBC Holdings plc

Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Incorporated in England with limited liability. Registered in England: number 617987

18 February 2020

HSBC HOLDINGS PLC

2019 ANNUAL RESULTS

VIDEO WEBCAST PRESENTATION

HSBC will be holding an video webcast presentation and live event for investors and analysts at 8.30am GMT today. The speakers will be: Mark Tucker, Group Chairman; Noel Quinn, Group Chief Executive; and Ewen Stevenson, Group Chief Financial Officer.

Full details of how to access the webcast can be found at

http://www.hsbc.com/investors/results-and-announcements

A copy of the presentation to investors and analysts is attached and is also available to view and download at https://www.hsbc.com/investors/results-and-announcements/all-reporting/group

Media enquiries to:
Heidi Ashley	[phone]	[e-mail]
Investor enquiries to:
Richard O'Connor	[phone]	[e-mail]

Note to editors:

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. HSBC serves customers worldwide from offices in 64 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of US$2,715bn at 31 December 2019, HSBC is one of the world's largest banking and financial services organisations.

ends/all

Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Incorporated in England with limited liability. Registered number 617987

HSBC Holdings plc Business Update and Results

Presentation to Investors and Analysts

Agenda

4Q & FY19 results

Business update

Restructuring for growth

Financial implications

Conclusion

4Q19 performance

4Q19 highlights

1 4Q19 reported loss before tax of $3.9bn impacted by a goodwill impairment1 of $7.3bn

2 4Q19 adjusted revenue up 9% to $13.6bn vs. 4Q18 and adjusted PBT up 29% to $4.3bn vs. 4Q18 Hong Kong 4Q19 adjusted PBT up 3% to $2.6bn

1. Cost discipline: 4Q19 adjusted costs of $9.1bn, up 3.2% vs. 4Q18. 2H19 adjusted costs (excl. bank levy) down 2.1% vs. 1H19
2. CET1 ratio further strengthened by 0.4ppts vs. 3Q19 to 14.7% driven by RWA reductions of $22bn

A reconciliation of reported results to adjusted results can be found on slide 46. The remainder of the presentation, unless otherwise stated, is presented on an adjusted basis

3

FY19 performance

Strong performing franchises: FY19 selected highlights

			Revenue up 9% to $23.4bn, PBT up
			15% to $8.0bn
			RoTE2 of 20.5%
RBWM			$16bn growth in mortgage book in
			the UK (up 7%) and Hong Kong (up 9%)
			1.5m increase in active customers,
			up 4% to 39.4m
GPB		PBT up 19% to $0.4bn
	Net New Money of $23bn
			Revenue up 6% to $15.3bn
CMB		RoTE2 of 12.4%
	Loans and advances to customers up
			3% to $346bn
Transaction	Revenue3 up 3% to $16.8bn
#1 globally for GLCM and GTRF
banking
			revenue4

Hong Kong revenue up 7% to $19.4bn, PBT up 5% to $12.1bn

Asia excl. Hong Kong revenue up 8%

Asia to $11.0bn

Asia GB&M revenue up 7% to $7.1bn

RoTE2 of 15.8%

Revenue up 8% to $2.9bn, adjusted

MENA PBT up 3% to $1.6bn

RoTE2 of 12%

Revenue up 3% to $8.4bn

RoTE2 of 9.9%

UK RFB		Mortgage balances up 7% to $134bn;

stock market share of 6.8%5

CMB loans and advances to customers up 2% to $85bn

Mexico PBT up 38% to $0.7bn, RoTE2

Other of 15.3%

Canada RoTE2 of 12.0%

4

FY19 performance

Strong performing franchises: Hong Kong business performance

Financials

Key selected financial data, $m

	4Q19	Ή4	Ή	)<	Ή)<	Ή
Revenue	4,591	233	5%	19,438	1,196	7%
ECL	(118)	(15)	(15)%	(459)	(244)	(113)%
Costs	(1,828)	(127)	(7)%	(6,871)	(345)	(5)%
JV	2	(8)	(80)%	31	(5)	(14)%
Adjusted PBT	2,647	83	3%	12,139	602	5%
Loans and advances to	307	15	5%	307	15	5%
customers, $bn
Customer accounts, $bn	500	12	3%	500	12	3%

Macro

• Weak 2H19 GDP, expected to flow into 1H20
• Cautious on 2020 outlook for Hong Kong given coronavirus (COVID-19) impacts

GDP, %, YoY

2Q19A

3Q19A

4Q19A

1Q20F

2Q20F

3Q20F

4Q20F

Forecast source: HSBC Global Research7

• Resilient performance despite softening macroeconomic environment:
• • FY19 revenue up 7% to $19.4bn
  • FY19 adjusted PBT up 5% to $12.1bn
• Strong balance sheet performance:
• • Loans and advances to customers up 5% to $307bn
  • Customer accounts up 3% to $500bn
  • Number of customers6 up 255k (3%) to 8.4m

Business initiatives

• Continued successful rollout of PayMe, with PayMe for Business launched in 2019:
• • Now has close to 2m customers8, up from 1m in 2018
  • Payments made via PayMe represented 68% of all peer- to-peerpayments9
  • 183k transactions made via PayMe for Business in December 2019
• Continued strong market shares10:
• • 45% for credit cards
  • 54% market share in unit trust gross sales
  • Loans market share of 28%

5

FY19 performance

Underperforming franchises: FY19 summary

Non ring- fenced bank in

Europe and the UK

Revenue down by 3% to $7.8bn

Adjusted PBT down to $0.8bn RoTE2 of 0.6%

Total assets of $842bn and RWAs

of $166bn

Poor RBWM profitability in France; PBT of $50m (loss of $53m in FY18)

Leverage exposures of $755bn

GB&M in the NRFB

PBT down 80% to $176m

CER of 95%

RWAs of $105bn

US

Revenue down 3% to $4.7bn

PBT down 39% to $0.6bn (largely driven by non-recurrence of FY18 ECL releases)

CER of 84%

RoTE2 of 1.5%

Loss-making RBWM business; loss

before tax of $259m vs. loss of $180m in FY18

Leverage exposures11 of $249bn

GB&M in the US

PBT down 24% to $470m

CER of 76%

RWAs of $37bn

6

FY19 performance

FY19 adjusted revenue performance

FY19 revenue

FY19 vs. FY18, $m

$15,840m

RBWM $23,400m $6,746m

$814m

$5,978m

$1,833m

CMB $15,292m

$5,441m

$2,040m

$7,793m

GB&M $14,916m $7,466m

$(343)m

GPB $1,848m

Corporate

Retail Banking

Wealth Management

Other

GLCM

GTRF

Credit and Lending

Other

Global Markets, Securities Services

Global Banking, GLCM, GTRF

Principal Investments, XVA, Other

292

331

26

273

197

(403)

91

203

91

974

$2.0bn

760

9%

$0.8bn

6%

$(0.1)bn

(1)%

5%

Centre

$(47)m

243

Group $55,409m

1,608	1,470	3,078	6%

Excluding certain items included in adjusted revenue For further information please see appendix, page 47

7

4Q19 performance

4Q19 adjusted revenue performance

4Q19 revenue

4Q19 vs. 4Q18, $m

$3,989m

RBWM $5,852m $1,655m

$208m

$1,425m

$432m

CMB $3,686m

$1,328m

$501m

$1,765m

GB&M $3,740m $1,858m

$117m

GPB $452m

Corporate

Retail Banking

Wealth Management

Other

GLCM

GTRF

Credit and Lending

Other

Global Markets, Securities Services

Global Banking, GLCM, GTRF

Principal Investments, XVA, Other

(92)

(15)

85

150

4

117

190

45

28

$0.8bn

536

15%

$0.0bn

0%

$0.7bn

23%

466

7%

Centre

$(83)m

(331)

Group $13,647m

Of which BSM down $178m and valuation differences down $140m

587

596	1,183	9%

Excluding certain items included in adjusted revenue For further information please see appendix, page 47

8

4Q19 performance

Net interest income and NIM

Reported	7,709	7,468	7,772	7,568	7,654
quarterly
NII, $m
					+1%				(0)%
						7,714	7,727	7,693
	7,651
					7,380
Adjusted
quarterly
NII, $m
		4Q18	1Q19	2Q19	3Q19	4Q19
					+4%	1,922			+1%	1,947
Quarterly					1,903	1,920
1,875
average
interest
earning
assets
(AIEA),
$bn
		4Q18	1Q19	2Q19	3Q19	4Q19
Reported												0bps
quarterly	1.63%	1.59%	1.62%	1.56%	1.56%
NIM, %

• Adjusted NII of $7.7bn, stable vs. 3Q19 and up 1% vs. 4Q18; FY19 adjusted NII of $30.6bn, up 3% or $1bn vs. FY18
• 4Q19 NIM 1.56% unchanged vs. 3Q19, driven by:
• • 4bps favourable impact from lower provisions in relation to customer redress programmes in the RFB and Argentina hyperinflation
  • Adverse impact of margin pressure and higher funding costs
• Asia (HBAP) NIM of 2.00% was down 5bps vs. 3Q19, driven by lower asset yields
• FY19 NIM of 1.58% was 8bps lower than FY18 as higher yields on AIEA were more than offset by increased funding costs. Excluding FX translation and significant items, NIM fell by 6bps

Quarterly NIM by key legal entity, %

	1Q19	2Q19	3Q19	4Q19	% of 4Q19	% of 4Q19
					Group NII	Group AIEA
The Hongkong and
Shanghai Banking	1.99%	2.05%	2.05%	2.00%	55%	43%
Corporation (HBAP)
HSBC Bank plc	0.34%	0.45%	0.47%	0.46%	7%	22%
(NRFB)
HSBC UK Bank plc	2.21%	2.13%	1.93%	1.95%	20%	16%
(RFB)12
HSBC North
America Holdings,	1.05%	1.01%	0.87%	0.99%	6%	10%
Inc

9

4Q19 performance

Adjusted costs

4Q19 vs. 4Q18, $bn Excl. UK bank levy

											+2.7%			0.1
												0.1
						(0.2)				0.2						8.1
	7.9
		4Q18	Cost	Inflation	Performance	Investments,	4Q19
						saves		costs	volume growth
Adjusted operating expenses trend, $m
	Adjusted costs	8,805		7,949	8,037	7,625		9,084
																	26
									76
							923								988
		Argentina hyperinflation					986		24
										1,228
		UK bank levy	1,184			1,178		1,122
		Investments
		Other Group costs	6,622		6,968	6,835	6,556		6,842

		(5)				(53)
4Q18	1Q19	2Q19	3Q19	4Q19

Adjusted costs

• Adjusted costs excluding UK bank levy up 2.7% to $8.1bn
• 4Q19 investment spend of $1.2bn, up
  4% vs. 4Q18
• FY19 investment spend up 10% to $4.5bn vs. $4.1bn in FY18
• FY19 technology spend up 11% to $4.7bn vs. FY18

Reported costs

• 4Q19 reported costs of $17.1bn include goodwill impairment of $7.3bn and customer redress of $182m, of which $179m relates to the mis-selling of PPI
• 4Q19 restructuring costs of $400m ($827m in FY19)
• Total FTE at FY19 down 2.3k (1%) vs. 1H19 to 235k

10

4Q19 performance

Credit performance

Adjusted ECL charge trend

						0.17								0.27	 4Q19 ECL as a % of gross loans and
													advances to customers was 0.28%
						0.34							0.33	0.28	 4Q19 adjusted ECL of $733m, down
					0.19		0.23		0.21				$144m (16%) vs. 3Q19, of which
0.06	0.08											$401m was in RBWM and $276m was
										in CMB
															 4Q19 UK ECL charge of $67m, down
						843							877	733	$160m vs. 3Q19 primarily due to
						573		549			release of allowance relating to
					484
				199							economic uncertainty of $99m. Total
	148
											allowance for UK economic uncertainty
		1Q18	2Q18	3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	at FY19 was $311m
									ECL, $m
			Quarterly ECL as a % of average gross		FY ECL as a % of average			 4Q19 Hong Kong ECL charge of $118m,
			loans and advances (annualised)		gross loans and advances			down $89m vs. 3Q19 (including an
															additional charge of $56m in relation to
Analysis by stage
										economic outlook). Total allowance for
															Hong Kong economic outlook at FY19
		Reported basis, $bn			Stage 1		Stage 2	Stage 3		Total13	Stage 3 as a
						was $138m
														% of Total
		4Q19												 2H19 ECL charge as a % of gross loans
		Gross loans and advances to customers		951.6		80.2	13.4		1,045.5	1.3%	and advances to customers was 0.31%
		Allowance for ECL			1.3		2.3	5.1		8.7		 FY19 ECL of $2.8bn, up 63%, with ECL
		3Q19
													as a % of gross loans and advances to
		Gross loans and advances to customers		941.1		71.7	13.3		1,026.4	1.3%
					customers of 0.27%
		Allowance for ECL			1.3		2.2	4.9		8.6
							 Stage 3 loan book stable at 1.3% of
		4Q18
															total gross loans and advances to
		Gross loans and advances to customers		908.4		68.6	13.0		990.3	1.3%
					customers
		Allowance for ECL			1.3		2.1	5.0		8.6

11

4Q19 performance

Capital adequacy

Capital progression

	4Q18	1Q19	2Q19	3Q19	4Q19
Common equity tier 1 capital, $bn	121.0	125.8	126.9	123.8	124.0
Risk-weighted assets, $bn	865.3	879.5	886.0	865.2	843.4
CET1 ratio, %	14.0	14.3	14.3	14.3	14.7
Leverage ratio exposure, $bn	2,614.9	2,735.2	2,786.5	2,780.2	2,726.5
Leverage ratio, %	5.5	5.4	5.4	5.4	5.3

• CET1 ratio of 14.7% up 0.4ppts from 14.3% in 3Q19, mainly due to RWA reductions
• RWAs decreased by $22bn vs. 3Q19, driven by GB&M (down $19bn), primarily in the NRFB, from active portfolio management, changes to methodology and policy and model updates

CET1 and RWA movements

									14.7
CET1 ratio, %			(0.2)
14.3	0.2		0.7
(0.4)
					0.1

	3Q19	Profits (adjusted	Dividends	FX translation	Change in RWAs	Other	4Q19
		for goodwill	net of scrip	differences
		impairment)
CET1, $bn	123.8	1.5	(3.4)	3.5		(1.4)	124.0
RWAs, $bn	865.2			16.6	(38.4)		843.4

12

FY19 performance

RWA and RoTE walks

Group RWA walk, FY18 vs. FY19, $bn

3.7 (7.7)

865.3 9.0

(32.2)

843.4

0.3 5.0

FY18	Asset size Asset quality	Model	Methodology	Acquisitions	FX	FY19
		updates	and policy	and disposals	movements

• Total RWA reductions of $22bn, of which GB&M: $23bn vs. FY18
• Renewed focus on customer profitability in CMB and GB&M
• Expect ~$10bn of regulatory RWA inflation and additional ~$10bn of business growth in 1Q20
• Risks to RWAs include:
• • RWA inflation from wholesale exposure credit rating migration in Hong Kong in 2020
  • Basel III reform implementation and mitigation and lack of equivalence recognition between the UK and the EU

Group RoTE14 walk, FY19 vs. FY18, %

	Favourable	0.5
	impact from		(0.6)
	movements
	in 'PVIF'	1.6	(0.7)
	(excluded
	from RoTE)
						(0.1)
					0.3
				(0.9)			(0.4)
				0.6
	8.6										8.4

FY18 Reported	Adj. revenue	Adj. costs	Adj. ECL	Customer	SABB	Other significant	Tax, NCI &	Equity &	FY19 Reported
RoTE				redress	dilution gain	items	AT1/Prefs	other	RoTE

13

FY19 performance

Summary

1. FY19 adjusted revenue up 6% to $55.4bn and adjusted PBT up 5% to $22.2bn
2. FY19 adjusted jaws of 3.1%. FY19 adjusted cost growth of 2.8%, well below FY18 adjusted cost growth of 5.6%

3	Reported PBT of $13.3bn impacted by a 4Q19 goodwill impairment1 of $7.3bn, primarily
in GB&M globally and CMB in Europe, reflecting lower growth rates

4	RoTE14 of 8.4%, supported by a resilient Hong Kong and strong performance in the rest of
Asia, but impacted by poor returns in the US and NRFB in Europe

Well-capitalisedwith CET1 ratio increasing 0.7ppts to 14.7%

5

Underpinned by net FY19 RWA reductions of $22bn, driven by a $23bn reduction in GB&M

6 New cost and RWA reduction plan to address financial underperformance

14

Agenda

4Q & FY19 results

Business update

Restructuring for growth

Financial implications

Conclusion

Restructuring for growth

Actions to deliver our 2022 financial targets

RWAsCosts

Reduce RWAs	Cut costs
in low return franchises (US and
and simplify
the NRFB in Europe and the UK,
the organisation
particularly GB&M)
Reinvest RWAs in high-	Cost programme
savings of c.$4.5bn
performing franchises

Gross RWA reduction of >$100bn

Capital

Sustain the dividend

Suspend buyback in 2020 and 2021

CET1 ratio >14%; manage in

by end-2022

$GMXVWHGFRVWVRIΌEQLQ

RoTE of 10-12% in FY22

14-15% range

16

Restructuring for growth

We continue to build on our differentiated, globally integrated network

Serving wholesale and personal clients in and

into high growth markets

Leading and differentiated propositions for mid-market businesses globally

Leading, full-scale retail bank in Hong Kong, the UK and Mexico and leading international

retail proposition

Strong wealth business with $1.4tn

of balances

#1

#1

#1

#1

Best Global

Transaction Bank15

World's Best Bank

for SMEs16

Largest retail bank

in HK with c.28%

market share17

Best Private Bank in

Asia18 and Best

Private Bank in HK

for 11 consecutive

years19

17

Restructuring for growth: Non Ring-Fenced Bank in Europe and the UK

Europe: Our plan is to reduce RWAs in the Non Ring-Fenced Bank in Europe and the UK by c.35% by end of 2022

Actions

• Focus on client coverage of key international European clients and connecting them to Asia and the Middle East
• Reduce capital deployed in our Rates business, and exit G10 long-term derivative market making in the UK
• Focus European investment banking activities on the UK mid- market as well as capital flows and transactions between Europe and our franchise in high growth markets. London will remain an investment banking hub to support our global client base20
• Reduce Sales and Research coverage in European Cash Equities with a focus on supporting ECM
• Transition Structured Product capabilities from the UK to Asia
• Continue to invest in our transaction banking and financing capabilities
• Intend to reduce operating expenses in the Non Ring-Fenced Bank by c.25%

RWAs

$bn

c.35%

166

Other

Business 61

GB&M 105

2019 202221

Operating expenses

Adjusted, $bn

c.25%

6.8

Other

Business 2.4

GB&M 4.4

2019 2022

Bars in chart are illustrative and not to scale

18

Restructuring for growth: US

US: To generate sufficient returns, we need a new approach

Actions

• Reposition US business as an international client-focussed corporate bank with a targeted retail offering for international and affluent clients
• Focus Commercial Banking and Global Banking on multinational corporate and institutional clients as well as mid- market enterprises with our key capabilities in DCM, transaction banking and financing
• Consolidate select Fixed Income activity in London to maximise global scale and reduce US Global Markets RWAs by c.45% / c.$5bn

RWAs

$bnStable

89

Other

Business 52

GB&M 37

2019 202221

Operating expenses

Adjusted, $bn

 Refocus retail banking on globally mobile clients, invest in		10-15%
digital and unsecured lending, and reduce our branch network
3.9
of 224 by around 30%
 Integrate private and retail banking to seamlessly offer
banking and wealth solutions across our client segments
 Consolidate middle and back office activities and streamline
functions to simplify our organisation and reduce total
operating costs by 10-15%	2019	2022
Bars in chart are illustrative and not to scale		19

Restructuring for growth: GB&M

GB&M: Sharpen focus on serving international clients in and into our high- growth and franchise markets

Actions

 Serve those corporate and institutional clients with global

operations who value our international network, in particular

our strengths in Asia and the Middle East

 Accelerate investments in Asia and the Middle East and shift

more resources over time to those regions; continue to

strengthen our global transaction banking and financing

capabilities

 Strengthen investment banking capabilities in Asia and the

Middle East whilst maintaining a global investment banking hub

in London

 Build leading emerging markets and financing capabilities in

RWAs by region

$bn, %

258 Others 10% North 15%

America

Asia 37%

Europe 38%

2019 202221

Revenue by region

Adjusted, $bn, %

14.9 Others5%

Global Markets; enhance our institutional clients business

 Increase collaboration with other global businesses; create a

North America

15%

single middle and back office to support Commercial Banking

and Global Banking

 Continue to invest in innovative digital systems and solutions

Asia 48%

Europe 32%

2019 2022

Bars in chart are illustrative and not to scale

20

Restructuring for growth: Redeploying RWAs

We will continue to invest in growth opportunities, leveraging our strengths; and plan to reallocate >$100bn RWAs

Aspiration

Leading International	International Wealth	Continue to invest in	HSBC UK (UK RFB) -
Bank for Transaction	and Affluent Bank -	Asia and the Middle	Top 3 UK Financial
Banking and	Top 3 Asia Wealth	East	Institution
Financing	Franchise

Key enablers
Customer centricity	ESG, Sustainable finance	Digital capabilities

Collaboration and connectivity across Geographies and Business lines

21

Restructuring for growth: Costs

7KHUHDUHWKUHHOHYHUVWRDFKLHYHDGMXVWHGFRVWVRIΌEQLQUHSUHVHQWLQJ a cost reduction programme of c.$4.5bn

Portfolio decisions

Automation & digitalisation

Organisation simplification

Ceasing business activities

Investing in technology to re-engineer processes

Organising in a less matrixed and fragmented fashion

Implications

• Remove / reduce costs of exiting businesses
• Reduce processing costs and improve customer experience
• Fewer people, increased accountability and greater agility

22

Restructuring for growth: Simplification

As a result, we will create a simpler, more efficient and empowered organisation

• Consolidate number of businesses from 4 to 3 - GPB and RBWM to form Wealth and Personal Banking (WPB)
• Implement unified wholesale middle and back office across CMB and Global Banking; maintain separate client coverage teams to ensure focus on unique client needs
• Reduce geographic reports from 7 to 4 at Group Executive level22
• Reorganise the Global Functions and Head office to match the size and structure
• Executive scorecards increasingly aligned to Group outcomes, not just individual business units or functions

Implications

Leaner and less fragmented organisation

Clearer accountability

More customer-centric organisation

More agile decision-making

23

Restructuring for growth: Shape of the Group

Planned shape of the Group post restructuring

Shifts in the Group's RWA allocation

RWAs, $bn

By Global Business

Stable

By region

Stable

RBWM

GPB

CMB

NRFB in

16%WPB Europe and

the UK

2%

US

37%

Other23

19%

10%

16%

GB&M

Corporate

Centre

31%

14%

UK

RFB

<25%

Asia

13%

c.50%

42%

2019

202221

2019

202221

Bars in chart are illustrative and not to scale

24

Restructuring for growth

To conclude, we plan to…

Restructure to address Europe and the US

Reposition GB&M to leverage its strengths in Transaction Banking and Asia

Reallocate freed-upcapital into higher growth and higher return

businesses and markets

Simplify our organisation and reduce costs

25

Agenda

4Q & FY19 results

Business update

Restructuring for growth

Financial implications

Conclusion

Financial implications

Actions to deliver our 2022 financial targets

RWAsCosts

Reduce RWAs	Cut costs
in low return franchises (US and
and simplify
the NRFB in Europe and the UK,
the organisation
particularly GB&M)
Reinvest RWAs in high-	Cost programme
savings of c.$4.5bn
performing franchises

Gross RWA reduction of >$100bn

Capital

Sustain the dividend

Suspend buyback in 2020 and 2021

CET1 ratio >14%; manage in

by end-2022

$GMXVWHGFRVWVRIΌEQLQ

RoTE of 10-12% in FY22

14-15% range

27

Financial implications

RWAs - We aim to make a gross RWA reduction of at least $100bn by 2022

RWAs, $bn

>$100bn	c.850
843
Total management actions: >$100bn

2019	NRFB in Europe	US	GB&M (ex.	Other mgt	Business	Other (including the 2022
	and the UK		NRFB & US)	actions	growth	net day 1 impact from
						Basel III reform)

• Gross RWA reductions of >$100bn planned, with c.35% completed by FY20, and c.70% completed by FY21
• RWAs saved will be redeployed to more profitable businesses, predominantly in RBWM and in Asia

• Limited Basel III reform impact expected in 2022 post mitigating actions, however output floors expected to increase RWAs towards the end of the 2022-27 transition period

Bars in chart are illustrative and not to scale

28

Financial implications

RWAs - planned gross RWA reduction

Gross RWA saves (2020-22), $bn

				>$100bn
Asset disposals	Deleveraging	Securitisation	Other	Gross RWA
	activities	and other risk	efficiencies24	saves
		mitigation

• Deleveraging activities across all global businesses, clients and products, primarily in Europe and the US
• Deleveraging includes some client exits for those who have purely domestic activities and/or low returns on RWAs
• GB&M RWA reduction has associated disposal losses25 of c.$1.2bn
• GB&M net RWA reductions result in a net loss of annual revenue of c$2.5bn by end 2022, partially offset by organic growth
• Leverage exposures reduced by c.$200bn:
• • Reduction of c.$250bn on a gross basis, mainly in Global Markets in Europe and US
  • Increase of c.$50bn in Asia as we grow and invest in the business

Bars in chart are illustrative and not to scale

29

Financial implications

RWAs - increasing revenue on a stable RWA base

Adjusted revenue, $bn

Net benefit of $1-1.5bn
55.4	As full benefit of
	reinvestment flows
c.$0.5bn	through
c.$1.1bn
Of which	Of which
GB&M	GB&M

	2019	Non-repeat	Interest	Gross RWA	RWA	Organic growth	2022	2023
		of certain	rates	reductions	growth	(incl. non-RWA		onwards
		items26				intensive business)
RWAs	$843bn			>$100bn	>$100bn	c.$850bn

Reported

revenue / 6.5%

Average

RWAs

• Areas of reductions generate low revenue / RWAs, and have very high cost efficiency ratios
• RWAs will be deployed into higher return franchises (e.g. RBWM, Asia), which generate higher revenue / RWAs, and have lower cost efficiency ratios

• Revenue expected to be down modestly in 2020, impacted by lower interest rates and the non-repeat of certain items. Expect low single-digit revenue growth in 2021 and 2022
• Reduction and redeployment of RWAs, and associated revenue impacts, expected to be spread evenly across 2020 - 2022; further revenue benefits expected in 2023 and beyond

Bars in chart are illustrative and not to scale

30

Financial implications

Capital - impact of restructuring programme

Illustrative CET1 ratio evolution, %

c.15%

14.7%

>$100bn >$100bn

RWAs RWAs

2019	CTA and asset Revenue loss27	Gross RWA
	disposals25	saves

• Plan assumes share buybacks suspended in 2020-21 as we go through the period of restructuring. Plan is to recommence in 2022, and broadly neutralise the scrip in the period 2022-24
• Plan assumes substantial capital generation in 2022-24, as restructuring charges fall away and RWA redeployment is fully embedded
• Expect the CET1 ratio to be towards the top end of a 14-15% range at end-2022. CET1 target maintained at >14%

Business	Other RWA	Profit after	2022
growth	growth	dividends

• Higher levels of CET1 capital expected during the plan, due to:
• • Basel III reform implementation and other regulatory changes (including Brexit)
  • Local RWAs higher than PRA RWAs (e.g. standardised vs. modelled approaches)
  • Higher local capital requirements in some subsidiaries
  • High level of restructuring during plan period
  • Excess capital in the US created through restructure - regulatory approval required to release

Bars in chart are illustrative and not to scale

31

Financial implications

&RVWV͙ ZHSODQWRUHGXFH*URXSDGMXVWHGFRVWVWRΌEQLQ

Adjusted costs, $bn

			c.34		c.(10)%
32.8		c.$0.7bn
									Ό
				c.$4.5bn
2019*	Inflation	Bank levy	2019 cost	2020-22 cost	Other BAU	Software	Business	Other	2022
			initiatives	programme	saves28	amortisation	growth &
							investment

• The cost programme intends to deliver savings of c.$4.5bn between 2020-2022
• 7KHΌEQFRVWWDUJHWZLOOEHDGMXVWHGIRUFXUUHQFDQG any disposals
• From 2021 the UK bank levy will apply to the UK balance sheet only. The bank levy is forecast to reduce from $1.0bn to c.$0.3bn

• We plan to continue to increase investment spending and technology costs (FY19 investment spend of $4.1bn; technology spend of $4.7bn)
• We aim to significantly reduce the $2.5bn retained costs of HSBC Holdings plc29 through simplification of the matrix structure, and ensuring only costs relating directly to HSBC Holdings plc and the stewardship of the Group are retained in HSBC Holdings plc

Bars in chart are illustrative and not to scale	32
* At 31 January the USD was weaker than it was on average during 2019. Assuming no change to FX rates that represents a c.$500m cost increase and a revenue increase of a similar amount versus FY19

Financial implications

Costs - phasing and nature of restructuring charges

Cost of restructuring, $bn

Losses on asset disposals*

Other	10%
Technology	20%
Software write-offs	15%
CRE write-offs	15%
Severance	40%
	2020-22

c.$1.2bn

Costs to achieve P&L charge of c.$6bn

Costs to		>50%
achieve:	40%
c.$6bn
			<10%
	2020	2021	2022

Cost programme savings, $bn

c.4.5 c.4.5

Cumulative cost programme saves of c.$4.5bn

Middle and

35% Organisation simplification

60%

c.4.5

back office

		20%	Technology
		enablement
GB&M	25%	45%	Business
Other Global		reductions
15%
Businesses
	2020-22	2020-22

c.3.0

c.1.0

2020

2021

2022

Bars in chart are illustrative and not to scale	33
* Losses on asset disposals expected to broadly be split 40% in 2020, 40% in 2021 and 20% in 2022. Losses on asset disposals expected to be reported as a revenue significant item

Financial implications

Path to achieve a RoTE of 10-12% by 2022, while sustaining the dividend and maintaining a CET1 ratio >14%

RoTE walk by Global Business and geographic drivers

10-12%

8.4%

2019	NRFB in Europe	US	GB&M (ex.	Other Businesses	Bank levy &	2022
	and the UK		NRFB & US)	& geographies	Significant
					items

RoTE walk by line item

10-12%

8.4%

2019Adj. revenue Adj. costsECLBank levy & Equity & other2022 Significant

items

Bars in chart are illustrative and not to scale

34

Agenda

4Q & FY19 results

Business update

Restructuring for growth

Financial implications

Conclusion

Conclusion

To conclude

1. We delivered strong revenue growth in our targeted areas with improving cost discipline in 2019
2. Our immediate aims are to increase returns, create the capacity to invest in the future, and build a platform for sustainable growth
3. We will restructure in the US and Europe, reposition GB&M and plan to reallocate capital to higher growth and higher return markets. We will also simplify our organisation structure
4. To achieve a 2022 target RoTE of 10-12%, we plan to execute a gross RWA reduction and redeployment of >$100bn, and a cost reduction programme of c.$4.5bn

36

Appendix

Appendix

Improving Group returns by addressing underperforming franchises

RoTE (excluding significant items and UK bank levy) by major legal entity2, (2019 Tangible Equity as size)

RoTE (%) 22

20

18

16

14

Group 2022 12 target 10-12%

10

8

6

4

2

0

-2

-4

-6

	Asia	Mexico
Canada
UK RFB30		MENA

US

NRFB in Europe

and the UK

-4-3-2-1 0

1

2

3

4

5

6

7

8

9 10 11 12 13 14

Adjusted revenue growth - 2019 vs. 2018 (%)

38

Appendix

Assumptions and basis of preparation

• Assumed no changes from 2019 in IFRS accounting rules; RoTE target of 10-12% in FY22 excludes the potential impact of IFRS17
• Assumed no changes from 2019 in Common law
• Losses on asset disposals expected to be reported as a revenue significant item
• Costs to achieve expected to be reported as a cost significant item
• Bank levy forecast based upon levy rates effective 31 December 2019. From 2021, the Bank Levy will be chargeable only on the UK balance sheet equity and liabilities of banks and building societies. The bank levy is forecast to reduce from $1.0bn to c.$0.3bn
• Planned cost reductions in the Non Ring-fenced Bank in Europe and the UK, and the US are on a nominal basis
• There is no assumed impairment of the Group's investment in Bank of Communications Co., Limited
• Group effective reported tax rate of 24% is assumed in 2020. Assumed Group adjusted effective tax rate of 19-20% in 2020-2022. Note the tax rates are highly sensitive to the overall profitability of the UK group entities
• Assumed that where targeted reduction on RWAs require regulatory approvals (e.g. model changes), these will be received
• Absolute targets presented in this document will be restated for prevailing foreign exchange rates in subsequent updates to the market
• Plan assumes a steady recovery in Hong Kong from 2H20
• Plan does not include the potential impact of the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020
• Basel III Reform assumed implementation date is on 1 January 2022, including the capital requirements of the new FRTB, CVA and Operational Risk rules. Other regulatory changes assumes UK and EU maintain broad equivalence

Macro31

World GDP growth

US Fed. funds rate (year-end)

Bank of England base rate (year-end)

1 month HIBOR (year-end)

2019e	2020e	2021e	2022e
2.59%	2.68%	2.77%	2.84%
1.50%-1.75%	1.25%-1.50%	1.25%-1.50%	1.25%-1.50%
0.75%	0.50%	0.50%	0.50%
1.55%	1.30%	1.25%	1.28%

39

Appendix

The macro-economic and geopolitical remains uncertain, but we still see significant opportunities for growth

World Nominal GDP Growth, 2019-203032

World Trade Growth, 2019-203032

+5.4%			CAGR
		Asia	7.1%
		Middle East	5.7%
		Africa	7.8%
		Latin America	4.4%
		North America	4.4%
		Europe	3.6%

2019 2030E

• Asia's contribution to incremental GDP growth from 2019 to 2030 is 50%
• Within Asia, China is expected to grow at 8% annually (5.2% on real basis)

+5.4%			CAGR
		Asia	6.7%
		Middle East	4.6%
		Africa	7.3%
		Latin America	4.9%
		North America	4.1%
		Europe	4.5%

2019 2030E

• 60% of Asia's trade flow is currently intra-regional33
• Asia continues to be among the fastest growing for trade

40

Appendix

Collaboration: Drive more growth through cross-selling across businesses

Total revenue synergies, $bn

Revenue synergies by global business

+8%

17.2 31%

29% 16.0

1		RBWM
	clients

	FY19 revenue
GB&M products for retail and business
banking solutions	$1.7bn
Payroll products to CMB and GB clients

2		GPB
	clients

Referrals from other global businesses Global Markets products to private clients

Insurance and Asset Management products from RBWM

$0.7bn

12.1 22%

21% 11.7

8%	4.3	5.1	9%
		201834	2019

3		CMB
	clients
4		GB&M
	clients
5		In-business
	synergies

GLCM from GB&M
Global Markets and Global Banking from	$8.7bn
GB&M
Investment and Insurance from RBWM

GTRF solutions from CMB

$1.1bn

Asset Management products from RBWM

Securities Services / custody

Asset Management (manufacturing) $5.1bn Life insurance (manufacturing)

		Cross-business		In-business
% of Group total		synergies35		synergies36

Total revenue synergies

$17.2bn

41

Appendix

Simplifying the wholesale businesses (GB&M and CMB) to deliver greater revenue synergies and cost efficiencies

Overview of our wholesale banking business today

• Two separate wholesale banking businesses - GB&M and CMB - each delivering c.$15bn of revenue per annum
• Both units owns their own product and operations capabilities
• We successfully cross-sell from one business to the other through collaboration - for example, selling DCM products to CMB customers

Ambition: one wholesale support model

• Create central product teams mandated to serve both businesses and owned by both businesses
• Merge operational support infrastructure serving Global Banking and CMB to deliver operating synergies
• Keep separate frontline teams serving CMB clients and GB clients to maintain focus on growth and customer needs
• End result to have focused relationship management teams capable of drawing on common product and operations support

42

Appendix

We have four main levers to simplify our RBWM and GPB business to capture value

 Consolidate RBWM and GPB into one new global business	Strong Wealth business with $1.4tn of
called Wealth and Personal Banking (WPB) under a	balances37 and is one of the world's largest
single accountable executive to serve all 39m clients along	investment management and wealth businesses
the pyramid

• Private Banking relationship teams will remain as a distinct unit within WPB to account for the sophisticated needs of client segments
• Lower cost-to-serve expected over time due to integration capabilities, platforms and resources for all client segments
• Improved digital and transactional banking experience for Private Banking clients
• Greater access to Wealth Management capabilities for Retail Banking customers
• Cross-sellingopportunities by combining the wealth product teams to better serve the needs of our clients across the full spectrum of our WPB client pyramid

PB Ultra High Net Worth

$30m+*

Private

Bank	PB High Net Worth
$5m+
	Top tier inc. Jade
	$1m+
RBWM Wealth
Distribution Balances,	Premier
Premier and Jade	$100k+

Personal Banking wealth products

Asset Management funds distributed to third parties

* Indicates investable assets required to meet eligibility criteria for each tier

43

Appendix

Simplifying the organisation and setting up capacity to execute the plan

GCEO

GCFOGCRO

Three Global Businesses		Four Geographies

Wealth and	Commercial	Global		HSBC UK		Rest of the
Personal	Banking &	Asia Pacific	US
Banking	(RFB)	World38
Banking	Markets

Other Global Functions			Transformation office

A new role responsible to drive execution

44

Appendix

Key financial metrics

Key financial metrics	FY19	FY18	Ή)<
Return on average tangible equity14	8.4%	8.6%	(0.2)ppt
Return on average ordinary shareholders' equity	3.6%	7.7%	(4.1)ppt
Jaws (adjusted)39	3.1%	(1.2)%	4.3ppt
Dividends per ordinary share in respect of the period	$0.51	$0.51	-
Earnings per share40	$0.30	$0.63	$(0.33)
Common equity tier 1 ratio41	14.7%	14.0%	0.7ppt
Leverage ratio42	5.3%	5.5%	(0.2)ppt
Advances to deposits ratio	72.0%	72.0%	-
Net asset value per ordinary share (NAV)	$8.00	$8.13	$(0.13)
Tangible net asset value per ordinary share (TNAV)	$7.13	$7.01	$0.12

Reported results, $m

	4Q19	Ή 4	Ή	FY19	Ή)<	Ή
Revenue	13,371	676	5%	56,098	2,318	4%
ECL	(733)	120	14%	(2,756)	(989)	(56)%
Costs	(17,053)	(7,909)	(86)%	(42,349)	(7,690)	(22)%
Associates	518	(40)	(7)%	2,354	(182)	(7)%
PBT	(3,897)	(7,153)	(>100)%	13,347	(6,543)	(33)%
PAOS*	(5,509)	(7,046)	(>100)%	5,969	(6,639)	(53)%

* Profit attributable to ordinary shareholders of the parent company

Adjusted results, $m

	4Q19	Ή4	Ή	FY19	Ή)<	Ή
Revenue	13,647	1,183	9%	55,409	3,078	6%
ECL	(733)	110	13%	(2,756)	(1,067)	(63)%
Costs	(9,084)	(279)	(3)%	(32,795)	(889)	(3)%
Associates	518	(33)	(6)%	2,354	(92)	(4)%
PBT	4,348	981	29%	22,212	1,030	5%

45

Appendix

Significant items

$m	4Q19	3Q19	4Q18	FY19	FY18
Reported PBT	(3,897)	4,837	3,256	13,347	19,890
Revenue
Currency translation	-	110	(102)	-	(1,617)
Customer redress programmes	45	118	(7)	163	(53)
Disposals, acquisitions and investment in new businesses	55	4	(29)	(768)	113
Fair value movements on financial instruments	176	(210)	(95)	(84)	100
Currency translation on significant items	-	4	2	-	8
	276	26	(231)	(689)	(1,449)
ECL
Currency translation	-	5	10	-	78
Operating expenses
Currency translation	-	(99)	79	-	1,109
Cost of structural reform	32	35	61	158	361
Customer redress programmes	183	488	(16)	1,281	146
Goodwill impairment	7,349	-	-	7,349	-
Disposals, acquisitions and investment in new businesses	-	-	(2)	-	52
Restructuring and other related costs	400	140	15	827	66
Settlements and provisions in connection with legal and regulatory matters	5	(64)	(24)	(61)	816
Past service costs of guaranteed minimum pension benefits equalisation	-	-	228	-	228
Currency translation on significant items	-	23	(2)	-	(25)
	7,969	523	339	9,554	2,753
Share of profit in associates and joint ventures
Currency translation	-	(2)	(7)	-	(90)
Total currency translation and significant items	8,245	552	111	8,865	1,292
Adjusted PBT	4,348	5,389	3,367	22,212	21,182

• Goodwill impairment of $7.3bn, of which $4.0bn related to global GB&M, in CMB $2.5bn related to Europe, $0.3bn to Latin America and $0.1bn to MENA, and in GPB $0.4bn related to NAM
• Customer redress programmes include PPI provisions of $1.2bn in FY19. 4Q19 PPI provisions totalled $179m
• FY19 restructuring and other related costs of $827m includes $753m of severance costs (4Q19: $348m) arising from cost efficiency measures

46

Appendix

Certain revenue items and Argentina hyperinflation

Certain items included in adjusted revenue	4Q19	3Q19	2Q19	1Q19	4Q18	FY19	FY18
highlighted in management commentary43, $m
Insurance manufacturing market impacts in RBWM	201	(210)	(33)	182	(185)	129	(325)
Credit and funding valuation adjustments in GB&M	191	(166)	(34)	47	(177)	44	(181)
Legacy Credit in Corporate Centre	13	(41)	(13)	(71)	(12)	(111)	(91)
Valuation differences on long-term debt and	(73)	76	93	50	67	147	(313)
associated swaps in Corporate Centre
Argentina hyperinflation44	30	(132)	15	(56)	73	(143)	(231)
RBWM disposal gains in Latin America	-	-	-	133	-	133	-
CMB disposal gains in Latin America	-	-	-	24	-	24	-
GB&M provision release in Equities	-	-	-	106	-	106	-
Total	362	(473)	28	415	(234)	329	(1,141)

Argentina hyperinflation44 impact included in
adjusted results (Latin America Corporate	4Q19	3Q19	2Q19	1Q19	4Q18	FY19	FY18
Centre), $m
Net interest income	33	(61)	24	(8)	55	(12)	(54)
Other income	(3)	(71)	(9)	(48)	18	(133)	(177)
Total revenue	30	(132)	15	(56)	73	(143)	(231)
ECL	(10)	12	(3)	1	(12)	(0)	8
Costs	(26)	53	(24)	5	(76)	8	63
PBT	(6)	(67)	(12)	(50)	(15)	(135)	(160)

47

Appendix

Sustainable Finance & ESG Highlights

		Target	2019 Progress
Environment
	Sustainable finance	Provide & facilitate	$52.4bn
	and investment	$100bn	cumulative progress
		by the end of 202545	since 2017
	Reduce operational	2.0 tonnes used per	2.26 tonnes
	CO2 emissions	full time equivalent by	per full time
		the end of 2020	equivalent46 (on track)
	Climate-related	Continued	We published our 3rd
	disclosures	implementation of the	TCFD, which can be
	Financial Stability Board
		found on pages 24
		Task Force on Climate	and 25 in the HSBC
		related Disclosures	Holdings plc Annual
		(TCFD)	Report and Accounts
			2019
Social
	Customer	Customer	6 RBWM markets
	satisfaction	satisfaction	and 4 CMB markets
		improvements in 8	sustained top three
		major markets47	rank and/or
			improvement in
			customer satisfaction47
	Employee advocacy	69% of employees	66% employees
		recommending HSBC	would recommend
		as a great place to	HSBC as a great place
		work by the end of	to work48 (2018: 66%)
		201948
	Employee gender	30% women in senior	29.4% women in
	diversity	leadership roles by the	senior leadership
		end of 203049	roles49
Governance
	Achieve sustained	98% of staff to	98.2% of staff
	delivery of global	complete annual	have completed
	conduct outcomes	conduct training	conduct training in
	and effective		2019
	financial crime risk
	management

Highlights

2019 Awards

	Euromoney Awards	 World's Best Bank for Sustainable
	for Excellence	Finance
		 Asia's Best Bank for Sustainable Finance
		 The Middle East's Best Bank for
		Sustainable Finance
	Extel Survey	 No. 1 in a range of categories including
		ESG, Socially Responsible Investment &
		Sustainability
	Environmental	 Lead manager of the year, Green Bonds:
	Finance Awards	Local authority/municipality
		 Lead manager of the year, Social Bonds:
		Corporate
		 Lead manager of the year, Sustainability
		Bonds: Corporate
	Communicate	 Best CSR or ESG Report: Gold awards
	Magazine Awards
Achievements
	Carbon Disclosure	 Leadership score of A- (higher than the
	Project	financial services sector average of C)
	World Resources	 9 out of 10 (high green). Referenced in
	Institute	FRC guidance on good examples of
		climate reporting
	Dealogic league	 2nd in green, social & sustainability bond
	table	2019 league table. On an excluding self-
		mandated* basis HSBC ranked 1st50
	HSBC's ESG rating	 Medium ESG risk rating. Outperformed
	from Sustainalytics	compared to a basket of peers
	Achieve 100% of our	 29.4% Signed renewable electricity
	electricity from	from power purchase agreements as at
	renewable sources by	Dec 2019 (2018: 24%, 2017: 27%)
2030

Sustainability modules  >5,300 modules completed in 2019

through HSBC(>7,500 since program was launched in

University2018)

48

Appendix

Glossary

AIEA	Average interest earning assets
AUM	Assets under management
BAU	Business as usual
Bps	Basis points. One basis point is equal to one-hundredth of a percentage
point
BSM	Balance Sheet Management
CET1	Common Equity Tier 1
	In December 2016, certain functions were combined to create a
	Corporate Centre. These include Balance Sheet Management, legacy
Corporate Centre	businesses and interests in associates and joint ventures. The Corporate
	Centre also includes the results of our financing operations, central
	support costs with associated recoveries and the UK bank levy
CMB	Commercial Banking, a global business
CRD IV	Capital Requirements Directive IV
CRR	Customer risk rating
	Expected credit losses. In the income statement, ECL is recorded as a
	change in expected credit losses and other credit impairment charges.
ECL	In the balance sheet, ECL is recorded as an allowance for financial
	instruments to which only the impairment requirements in IFRS 9 are
	applied.
ESG	Environmental, social and governance
FICC	Fixed Income, Currencies and Commodities
GB&M	Global Banking and Markets, a global business
GLCM	Global Liquidity and Cash Management
GPB	Global Private Banking, a global business
GTRF	Global Trade and Receivables Finance
IAS	International Accounting Standards
IBOR	Interbank Offered Rate
IFRS	International Financial Reporting Standard
	The difference between the rate of growth of revenue and the rate of
Jaws	growth of costs. Positive jaws is where the revenue growth rate
	exceeds the cost growth rate. Calculated on an adjusted basis

	A portfolio of assets including securities investment conduits, asset-
Legacy credit	backed securities, trading portfolios, credit correlation portfolios and
	derivative transactions entered into directly with monoline insurers
LTV	Loan to value
MENA	Middle East and North Africa
NAV	Net Asset Value
NBFI	Non-Bank Financial Institutions
NCI	Non-controlling interests
NII	Net interest income
NIM	Net interest margin
NRFB	Non ring-fenced bank in Europe and the UK
PAOS	Profit attributable to ordinary shareholders
PBT	Profit before tax
POCI	Purchased or originated credit-impaired
Ppt	Percentage points
PRD	Pearl River Delta
PVIF	Present value of in-force insurance contracts
RBWM	Retail Banking and Wealth Management, a global business
HBUK (RFB)	Ring-fenced bank, established July 2018 as part of ring fenced bank
legislation
RoE	Return on average ordinary shareholders' equity
RoTE	Return on average tangible equity
RWA	Risk-weighted asset
TNAV	Tangible net asset value
XVAs	Credit and Funding Valuation Adjustments

49

Appendix

Footnotes

1. The goodwill impairment of $7.3bn arose from an update to long-term growth assumptions reflecting the more challenging revenue outlook impacting a number of our businesses, and specifically to GB&M arising from the reshaping of the business
2. RoTE excludes significant items and the UK bank levy. RBWM RoTE includes an adverse impact reflecting lower discount rates on Insurance liabilities, but excludes a broadly offsetting favourable movement in PVIF. Asia = The Hongkong and Shanghai Banking Corporation limited; MENA = HSBC Bank Middle East; Canada = HSBC Canada; Mexico = HSBC Mexico; Non ring-fenced bank (NRFB) in Europe and the UK = HSBC Bank plc; US = HSBC North America Holdings Inc.; UK Ring-fenced bank (RFB) = HSBC UK Bank plc (excludes conduct charges relating to the mis-selling of payment protection insurance of $1.2bn)
3. GTRF, GLCM, FX and HSS revenue across all business lines globally
4. As at FY18, HSBC estimates from HSBC Global Research report 'EU Investment Banks: Weighed down by macro factors', 14 August 2019 and internal data
5. Mortgage market share as at 31 December 2019, mortgage market sourced from Bank of England (BoE)
6. Including Hang Seng
7. HSBC Global Research report on Greater China Economics 'The hit to GDP from the coronavirus', published 12 February 2020
8. As at January 2020. FY19 customer numbers of 1.9m as per HSBC Holdings plc Annual Report and Accounts 2019
9. In value terms during 3Q19
10. Credit cards market share: HKMA data as at 30 September 2019 (including Hang Seng); Mutual funds market share: Hong Kong Investment Funds Association (HKIFA) as at 30
    September 2019 (including Hang Seng); Loans market share: total loans for use in Hong Kong as of 30 November 2019 (including Hang Seng)
11. Under local rules
12. Due to customer redress programmes, HBUK 4Q19 NIM has been adversely impacted by 5bps (3Q19 NIM impacted by 19bps), FY19 NIM of 2.05% has been adversely impacted by 6bps
13. Total includes POCI balances and related allowances
14. Due to falling interest rates in the year to date, the regulator-prescribed 'Valuation Interest Rate' parameters used to discount the insurance liabilities in Hong Kong and Singapore were reduced. This led to an increase in the liabilities under insurance contracts of $1.2bn, and a corresponding increase in the Present Value of In-Force business ('PVIF') of $1.1bn. Because the increase in PVIF is excluded from both the numerator and denominator of the Group's RoTE calculation, the reduction in the discount rates lowered FY19 RoTE by 0.6ppts
15. The Banker Transaction Banking Awards, 2019
16. Euromoney Awards for Excellence, 2019
17. Total loans for use in HK market share of 27.9% as of November 2019 (including Hang Seng)
18. WealthBriefingAsia Awards, 2019
19. FinanceAsia Country Awards for Achievement, 2009-2019
20. With client coverage and decision-making in Paris for EU 27 clients
21. 2022 RWAs are pre-Basel III reform
22. Seven geographic reports include Asia, UK, Canada, US, LATAM, Europe and MENA; four geographic reports include Asia, UK, US and Rest of the World
23. Including MENA, LATAM and Canada
24. Includes model updates, data improvements
25. Losses on asset disposals will negatively impact reported revenue
26. Positive revenue items: insurance manufacturing market impacts, credit and funding valuation adjustments, valuation differences on long term debt and associated swaps, disposal gains and a provision release in Equities
27. Revenue loss related to Gross RWA saves
28. Includes saves to partly offset inflation. These are the BAU saves built into to business and functions plans to offset inflation, such as: vacancy and attrition management, supply chain and location optimisation, management of third party spend
29. FY19 data. Defined as HSBC Holdings plc costs, excluding recharges (which net off against 'Other income' in HSBC Holdings plc's company income statement) and the UK bank levy
30. UK RFB negatively impacted by a pension surplus. In the event that the current IAS 19 Pension fund surplus was zero, additional CET1 capital would be required to be held and Adjusted RoTE would be 11.3%
31. World GDP source: HSBC internal 3Q19 Forward Economic Guidance; US Fed. Funds rate, Bank of England base and 1 month HIBOR source: HSBC internal guidance, Bloomberg market consensus
32. Global Insights Jan20; World trade based on imports plus exports; North America includes US and Canada.
33. International Merchandise Trade data from UNCTAD

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Appendix

Footnotes

1. Prior period revenue synergies presented on constant currency basis where available and the rest are on reported basis.
2. Cross-businesssynergies are presented as gross revenue and do not reflect any revenue sharing arrangement between Global Businesses
3. In-businesssynergies include separately managed operations that are reported within a global business line
4. Wealth balances includes RBWM Premier and Jade deposits (inc. HASE Prestige), RBWM Wealth distribution and Insurance balances, GPB client assets and Asset Management assets distributed through third parties and managed for institutional clients. Figure excludes Personal Banking customer deposits but includes wealth assets distributed to personal banking clients
5. Rest of the World includes: Europe (ex-HBUK); the Middle East, North Africa and Turkey; Latin America; and Canada
6. FY18 Jaws (adjusted) is as reported at FY18
7. 20,158 million weighted average basic ordinary shares outstanding during the period
8. Unless otherwise stated, risk-weighted assets and capital amounts at 31 December 2019 are calculated in accordance with the Capital Requirements Regulation and Directive, as implemented ('CRR II'), and specifically using its transitional arrangements for capital instruments and for IFRS 9 Financial instruments
9. Leverage ratio at 31 December 2019 is calculated using the CRR II end-point basis for additional tier 1 capital
10. Where a quarterly trend is presented on the Income Statement, all comparatives are re-translated at average 4Q19 exchange rates
11. From 1st July 2018, Argentina was deemed a hyperinflationary economy for accounting purposes
12. The sustainable finance commitment and progress figure includes green, social and sustainability activities. For a full break down see pages 20 and 21 of the Annual Report and Accounts 2019
13. 2018 CO2 emissions per FTE: 2.39 tonnes. See reporting guidelines on hsbc.com for further details on carbon emissions reporting. As we define new baseline for the next phase of our operational sustainability strategy, an updated reporting methodology for air travel - including cabin seating class - will be incorporated as our new baseline
14. Our customer satisfaction performance is based on improving from our 2017 baseline. Our scale markets are Hong Kong, the UK, Mexico, the Pearl River Delta, Singapore, Malaysia, the UAE and Saudi Arabia
15. Our target was to improve employee advocacy by three points each year through to 2020. Our employee advocacy score in 2018 was 66%. Performance is based on our employee Snapshot results.
16. Senior leadership is classified as 0 to 3 in our global career band structure
17. Self mandated bonds are bonds issued by the financial institution who recorded the bond in their own results.

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Appendix

Disclaimer

Important notice

The information, statements and opinions set out in this presentation and accompanying discussion ("this Presentation") are for informational and reference purposes only and do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other financial instruments or any advice or recommendation in respect of such securities or other financial instruments.

This Presentation, which does not purport to be comprehensive nor render any form of legal, tax, investment, accounting, financial or other advice, has been provided by HSBC Holdings plc (together with its consolidated subsidiaries, the "Group") and has not been independently verified by any person. You should consult your own advisers as to legal, tax investment, accounting, financial or other related matters concerning any investment in any securities. No responsibility, liability or obligation (whether in tort, contract or otherwise) is accepted by the Group or any member of the Group or any of their affiliates or any of its or their officers, employees, agents or advisers (each an "Identified Person") as to or in relation to this Presentation (including the accuracy, completeness or sufficiency thereof) or any other written or oral information made available or any errors contained therein or omissions therefrom, and any such liability is expressly disclaimed.

No representations or warranties, express or implied, are given by any Identified Person as to, and no reliance should be placed on, the accuracy or completeness of any information contained in this Presentation, any other written or oral information provided in connection therewith or any data which such information generates. No Identified Person undertakes, or is under any obligation, to provide the recipient with access to any additional information, to update, revise or supplement this Presentation or any additional information or to remedy any inaccuracies in or omissions from this Presentation. Past performance is not necessarily indicative of future results. Differences between past performance and actual results may be material and adverse.

Forward-looking statements

This Presentation may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and forward-looking statements with respect to the financial condition, results of operations, capital position, strategy and business of the Group which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "seek", "intend", "target" or "believe" or the negatives thereof or other variations thereon or comparable terminology (together, "forward-looking statements"), including the strategic priorities and any financial, investment and capital targets described herein. Any such forward-looking statements are not a reliable indicator of future performance, as they may involve significant stated or implied assumptions and subjective judgements which may or may not prove to be correct. There can be no assurance that any of the matters set out in forward-looking statements are attainable, will actually occur or will be realised or are complete or accurate. Certain of the assumptions and judgements upon which forward-looking statements regarding strategic priorities and targets are based are discussed under "Targeted Outcomes: Basis of Preparation", available separately from this Presentation at www.hsbc.com. The assumptions and judgments may prove to be incorrect and involve known and unknown risks, uncertainties, contingencies and other important factors, many of which are outside the control of the Group. Actual achievements, results, performance or other future events or conditions may differ materially from those stated, implied and/or reflected in any forward-looking statements due to a variety of risks, uncertainties and other factors (including without limitation those which are referable to general market conditions or regulatory changes). Any such forward-looking statements are based on the beliefs, expectations and opinions of the Group at the date the statements are made, and the Group does not assume, and hereby disclaims, any obligation or duty to update, revise or supplement them if circumstances or management's beliefs, expectations or opinions should change. For these reasons, recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. No representations or warranties, expressed or implied, are given by or on behalf of the Group as to the achievement or reasonableness of any projections, estimates, forecasts, targets, prospects or returns contained herein.

Additional detailed information concerning important factors that could cause actual results to differ materially from this Presentation is available in our Annual Report and Accounts for the fiscal year ended 31 December 2018 filed with the Securities and Exchange Commission (the "SEC") on Form 20-F on 20 February 2019 (the "2018 Form 20-F") and in our Interim Report for the six months ended 30 June 2019 furnished to the SEC on Form 6-K on 5 August 2019 (the "2019 Interim Report"), as well as in our Annual Report and Accounts for the fiscal year ended 31 December 2019 which we expect to file with the SEC on Form 20-F on 19 February 2020.

Non-GAAP financial information

This Presentation contains non-GAAP financial information. The primary non-GAAP financial measures we use are presented on an 'adjusted performance' basis which is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items which distort period-on-period comparisons. Significant items are those items which management and investors would ordinarily identify and consider separately when assessing performance in order to better understand the underlying trends in the business.

Reconciliations between non-GAAP financial measurements and the most directly comparable measures under GAAP are provided in our 2018 Form 20-F, our 1Q 2019 Earnings Release furnished to the SEC on Form 6-K on 3 May 2019, the 2019 Interim Report, our 3Q 2019 Earnings Release furnished to the SEC on Form 6-K on 28 October 2019, and the corresponding Reconciliations of Non- GAAP Financial Measures document, each of which are available at www.hsbc.com.

Information in this Presentation was prepared as at 18 February 2020.

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