HSBC (NYSE: HSBC) lifts RoTE target after $29.9bn profit and $18.9bn returns
Filing Impact
Filing Sentiment
Form Type
20-F
HSBC Holdings plc reports a strong 2025 in its Form 20-F, combining higher underlying profits with heavy one-off charges, large capital returns and updated medium-term targets. Reported profit before tax was
On an underlying basis, performance was robust: constant-currency profit before tax excluding notable items rose to
Strategically, HSBC simplified into four core businesses, advanced a programme targeting
Positive
- Strong underlying profitability and returns: Constant-currency profit before tax excluding notable items rose to $36.6bn, with RoTE excluding notable items improving to 17.2%, signalling robust earnings power beyond one-off charges.
- Significant capital returns to shareholders: 2025 ordinary dividends of $0.75 per share plus $6bn of buy-backs produced total shareholder returns above 57%, while maintaining a 14.9% CET1 ratio.
- Clear, higher medium-term targets: New goals for 17% or better RoTE from 2026–2028 and revenue growth rising to 5% by 2028, excluding notable items, provide a defined profitability and growth framework.
- Strategic reshaping and cost savings: A $1.5bn organisational simplification programme (with $1.2bn already actioned) and exits from non-strategic businesses are intended to free $1.8bn of cost capacity for redeployment into higher-return areas.
- Growth in core franchises and wealth: Bank-wide wealth balances reached $2.1tn, sustainable finance cumulative volumes hit $495.6bn since 2020, and all four main businesses delivered mid-teens or better RoTE excluding notable items.
Negative
- Heavy notable items weigh on reported profit: 2025 profit before tax declined to $29.9bn, reflecting $4.9bn of net adverse notable items, including $2.1bn of dilution and impairment losses related to Bank of Communications and $1.4bn of legal provisions.
- Rising credit costs in key property markets: Expected credit losses increased to $3.9bn, with commercial real estate in Hong Kong incurring $0.7bn of charges and mainland China CRE $0.2bn, highlighting continued asset quality pressure in those sectors.
- Cost inflation and restructuring charges: Operating expenses grew 10% to $36.4bn, driven by $3.0bn of notable items (including $1.0bn of restructuring costs) plus higher technology spend, performance pay and inflation.
- Temporary CET1 dilution from Hang Seng privatisation: Management expects the Hang Seng Bank deal to reduce the CET1 ratio by about 110bps, potentially taking it below the 14–14.5% target range until organic capital generation rebuilds buffers.
Insights
HSBC combines strong underlying profitability, high capital returns and clear 2026–2028 targets, offset by notable charges and China CRE risk.
HSBC generated constant-currency profit before tax excluding notable items of
The bank returned
Risks remain material. Reported profit before tax fell due to
As filed with the Securities and Exchange Commission on February 26, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark one) | |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31 , 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report ____________
For the transition period from N/A to N/A
Commission file number: 001-14930
(Exact name of Registrant as specified in its charter)
N/A | ||
(Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
(Address of principal executive offices)
Tel +44 (0) 20 3268 4840
Email jonathan.bingham@hsbc.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
HSBA | London Stock Exchange | ||
5 | Hong Kong Stock Exchange | ||
HSBC.BH | Bermuda Stock Exchange | ||
* | |||
American Depositary Shares, each representing 5 Ordinary Shares of nominal value US$0.50 each (US4042804066) |
4.041% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280BK42) | |||
4.583% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 (US404280BT50) | |||
3.000% Resettable Senior Unsecured Notes due 2028 (XS1961843171) | |||
3.973% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 (US404280CC17) | |||
3.00% Resettable Senior Unsecured Notes due 2030 (XS2003500142) | |||
4.950% Fixed Rate Senior Unsecured Notes due 2030 (US404280CF48) | |||
2.848% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (US404280CH04) | |||
2.357% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (US404280CK33) | |||
2.013% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280CL16) | |||
1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (US404280CM98) | |||
1.750% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (XS2322315727) | |||
2.804% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 (US404280CT42) | |||
2.206% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 (US404280CV97) | |||
2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (US404280CX53) | |||
2.871% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 (US404280CY37) | |||
4.762% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 (US404280DC08) | |||
4.755% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280DF39) |
5.210% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280DG12) | |||
5.402% Fixed Rate/Floating Rate Senior Unsecured Notes due 2033 (US404280DH94) | |||
7.390% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280DR76) | |||
8.113% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2033 (US404280DS59) | |||
6.161% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 (US404280DU06) | |||
6.254% Fixed Rate/Floating Rate Senior Unsecured Notes due 2034 (US404280DV88) | |||
6.332% Fixed Rate/Floating Rate Senior Unsecured Notes due 2044 (US404280DW61) | |||
6.547% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 (US404280DX45) | |||
5.887% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (US404280DZ92) | |||
Floating Rate Senior Unsecured Notes due 2027 (US404280DY28) | |||
6.800% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (XS2685873908) | |||
7.399% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2034 (US404280EC98) | |||
5.546% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 (US404280ED71) | |||
5.719% Fixed Rate/Floating Rate Senior Unsecured Notes due 2035 (US404280EE54) | |||
5.597% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280EF20) | |||
5.733% Fixed Rate/Floating Rate Senior Unsecured Notes due 2032 (US404280EG03) | |||
5.874% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2035 (US404280EL97) | |||
5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2028 (US404280EM70) | |||
5.286% Fixed Rate/Floating Rate Senior Unsecured Notes due 2030 (US404280EN53) |
Floating Rate Senior Unsecured Notes due 2028 (US404280EK15) | |||
Floating Rate Senior Unsecured Notes due 2030 (US404280EP02) | |||
4.899% Fixed Rate/Floating Rate Senior Unsecured Notes due 2029 (US404280EQ84) | |||
5.130% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (US404280ER67) | |||
5.450% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 (US404280ES41) | |||
Floating Rate Senior Unsecured Notes due 2029 (US404280ET24) | |||
Floating Rate Senior Unsecured Notes due 2031 (US404280EU96) | |||
5.240% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (US404280EW52) | |||
5.790% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 (US404280EX36) | |||
Floating Rate Senior Unsecured Notes due 2031 (US404280EZ83) | |||
5.741% Fixed Rate/Floating Rate Subordinated Unsecured Notes due 2036 (US404280FB07) | |||
4.619% Fixed Rate/Floating Rate Senior Unsecured Notes due 2031 (US404280FE46) | |||
5.133% Fixed Rate/Floating Rate Senior Unsecured Notes due 2036 (US404280FG93) | |||
Floating Rate Senior Unsecured Notes due 2031 (US404280FF11) |
*Not for trading, but only in connection with the registration of American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report:
Ordinary Shares, nominal value US$0.50 each 17,175,239,862
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes ¨
No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes þ No
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). þ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an
emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP | ¨ | þ | Other | ¨ | |
as issued by the International Accounting Standards Board |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the
registrant has elected to follow. ¨ Item 17 ¨ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). ¨ Yes þ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
¨ Yes ¨ No
HSBC Holdings plc Annual Report on Form 20-F |
Opening up a world of opportunity
HSBC is one of the largest banking and financial
services organisations in the world.
Guided by our purpose of opening up a world of
opportunity, our ambition is to become the world’s
most trusted bank globally, putting customers at
the heart of everything we do.
In this year’s report
1Cautionary statement regarding
forward-looking statements
2 Additional cautionary statement
regarding ESG data, metrics and
forward-looking statements
3 Certain defined terms
Strategic report
5 Highlights
7 Who we are
8 Group Chairman’s shareholder letter
10 Group CEO’s shareholder letter
12 Our strategy
15 Financial overview
19 Business segments
28 ESG overview
30 Risk overview
Environmental, social and
governance (‘ESG’) review
33 Environmental
51 Social
57 Governance
Financial review
65 Financial summary
88 Business segments and legal
entities
106 Alternative
performance measures
111Other information
Risk review
119Our approach to risk
121 Top and emerging risks
126Risk factors
138 Our material banking risks
Corporate governance report
220 Biographies of Directors and
senior management
233 Board committees
249 Directors’ remuneration report
Financial statements
286Report of Independent Registered
Public Accounting Firm to the
Board of Directors and Shareholders
of HSBC Holdings plc (PCAOB ID 876 )
288Financial statements
300Notes on the financial statements
Additional information
382Shareholder information
394Abbreviations
This Strategic Report was approved by the
Board on 25 February 2026.
Brendan Nelson
Group Chairman
A reminder
The currency we report in is US dollars.
Our approach to ESG reporting
We embed our ESG reporting and Task Force on
Climate-related Financial Disclosures (‘TCFD’) within
our Annual Report and Accounts. Our TCFD
disclosures are highlighted with the following
TCFD |
symbol:
Use of alternative performance
measures
We supplement our IFRS Accounting Standards
figures with non-IFRS Accounting Standards
measures used by management internally that
constitute alternative performance measures under
European Securities and Markets Authority guidance
and non-GAAP financial measures defined in and
presented in accordance with US Securities and
Exchange Commission rules and regulations.
These measures are highlighted with the following
symbol: ø
ÑFurther explanation may be found on page 65.
Financial targets
For our financial targets, medium-term is defined as
between three to five years, and long term as five to
six years, from 1 January 2026.
ÑSee page 6 for details on our forward guidance
and outlook.
None of the websites referred to in this Form 20-F for
the year ended 31 December 2025 (the ‘Form 20-F’)
(including where a link is provided), and none of the
information contained on such websites, are
incorporated by reference in this report.
HSBC Holdings plc Annual Report on Form 20-F |
1 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Cautionary statement regarding forward-looking statements
This Form 20-F contains certain forward-looking statements with
respect to HSBC’s financial condition; results of operations and
business, including the strategic priorities; financial, investment and
capital targets; and ESG ambitions, targets and commitments
described herein.
Statements that are not historical facts, including statements about
HSBC’s beliefs and expectations, are forward-looking statements.
Words such as ‘may’, ‘will’, ‘should’, ‘expects’, ‘targets’,
‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’,
‘potential’ and ‘reasonably possible’, or the negative thereof, other
variations thereon or similar expressions are intended to identify
forward-looking statements. These statements are based on current
plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking
statements speak only as of the date they are made. HSBC makes
no commitment to revise or update any forward-looking statements
to reflect events or circumstances occurring or existing after the
date of any forward-looking statements. Written and/or oral forward-
looking statements may also be made in the periodic reports to the
US Securities and Exchange Commission, summary financial
statements to shareholders, offering circulars and prospectuses,
press releases and other written materials, and in oral statements
made by HSBC’s directors, officers or employees to third parties,
including financial analysts. Forward-looking statements involve
inherent risks and uncertainties. Readers are cautioned that a
number of factors could cause actual results to differ, in some
instances materially, from those anticipated or implied in any
forward-looking statement. These include, but are not limited to:
–changes in general economic conditions in the markets in which
we operate, such as new, continuing or deepening recessions,
prolonged inflationary pressures and fluctuations in employment
levels and the creditworthiness of customers beyond those
factored into consensus forecasts; the Russia-Ukraine war, further
conflict or military action in the Middle East or elsewhere and their
impact on global economies and the markets where HSBC
operates, which could have a material adverse effect on (among
other things) our financial condition, results of operations,
prospects, liquidity, capital position and credit ratings; deviations
from the market and economic assumptions that form the basis
for our ECL measurements (including, without limitation, as a
result of the Russia-Ukraine war, further conflict or military action
in the Middle East or elsewhere, inflationary pressures,
commodity price changes, and ongoing developments in the
commercial real estate sector in mainland China and Hong Kong);
potential changes in HSBC’s dividend policy; changes and volatility
in foreign exchange rates and interest rates levels, including
fluctuations in HIBOR and the accounting impact resulting from
financial reporting in respect of hyperinflationary economies;
volatility in equity markets and the risk of disruptive correction
stemming from high company valuations; lack of liquidity in
wholesale funding or capital markets, which may affect our ability
to meet our obligations under financing facilities or to fund new
loans, investments and businesses; geopolitical tensions or
diplomatic developments producing social instability or legal
uncertainty, such as the Russia-Ukraine war, conflict in the Middle
East, the US military operation in Venezuela and any potential
military action or conflict elsewhere, and the related imposition of
sanctions, export-control, trade and investment restrictions,
supply chain restrictions and disruptions, sustained increases in
energy prices and key commodity prices, claims of human rights
violations, diplomatic tensions between China and the US, which
may extend to and involve other countries and territories, and
developments in Hong Kong and Taiwan and the surrounding
maritime region, alongside other potential areas of tension, which
may adversely affect HSBC by creating regulatory, reputational
and market risks; the efficacy of government, customer, and
HSBC’s actions in managing and mitigating ESG-related risks, in
particular climate risk, nature-related risks and human rights risks,
and in supporting the global transition to net zero carbon
emissions, each of which can impact HSBC both directly and
indirectly through our customers and which may result in potential
financial and non-financial impacts; illiquidity and downward price
pressure in national real estate markets; adverse changes in
central banks’ policies with respect to the provision of liquidity
support to financial markets; heightened market concerns over
sovereign creditworthiness in over-indebted countries; adverse
changes in the funding status of public or private defined benefit
pensions; the significant depreciation of the US dollar through
2025, with volatility expected to persist; societal shifts in
customer financing and investment needs, including consumer
perception as to the continuing availability of credit; exposure to
counterparty risk, including third parties using us as a conduit for
illegal activities without our knowledge; and price competition in
the market segments we serve;
–changes in government policy and regulation, as well as monetary,
interest rate and other policies of central banks and other
regulatory authorities in the principal markets in which we operate
and the consequences thereof (including, without limitation,
actions taken as a result of changes in government following
national elections in the markets where the Group operates);
continued volatility in trade and tariff policies, changes in tariff
rates, including sector-specific levies imposed by various nations,
including the US, which could further disrupt supply chains and
reduce global trade growth; initiatives to change the size, scope of
activities and interconnectedness of financial institutions in
connection with the implementation of stricter regulation of
financial institutions in key markets worldwide; revised capital and
liquidity benchmarks, which could serve to deleverage bank
balance sheets and lower returns available from the current
business model and portfolio mix; changes to tax laws and tax
rates applicable to HSBC, including the imposition of levies or
taxes designed to change business mix and risk appetite; the
practices, pricing or responsibilities of financial institutions serving
their consumer markets; expropriation, nationalisation,
confiscation of assets and changes in legislation relating to foreign
ownership; the UK’s relationship with the EU, particularly with
respect to the potential divergence of UK and EU law on the
regulation of financial services; changes in government approach
and regulatory treatment in relation to ESG disclosures and
reporting requirements, and the current lack of a single
standardised regulatory approach to ESG across all sectors and
markets; changes in UK macroeconomic and fiscal policy, which
may result in fluctuations in the value of the pound sterling;
general changes in government policy (including, without
limitation, actions taken as a result of changes in government
following national elections in the markets where the Group
operates) that may significantly influence investor decisions; the
costs, effects and outcomes of regulatory reviews, actions or
litigation, including any additional compliance requirements; and
the effects of competition in the markets where we operate
including increased competition from non-bank financial services
companies; and
–factors specific to HSBC, including our success in adequately
identifying the risks we face, such as the incidence of loan losses
or delinquency, and managing those risks (through account
management, hedging and other techniques); our ability to
achieve our financial, investment, capital and ESG ambitions,
targets and commitments (including the positions set forth in our
thermal coal phase-out policy and our energy policy and our
targets to reduce our on-balance sheet financed emissions and,
where applicable, facilitated emissions in our portfolio of selected
high-emitting sectors), which may result in our failure to achieve
any of the expected outcomes of our strategic priorities and may
result in reputational risks; evolving regulatory requirements and
the development of new technologies, including artificial
intelligence, affecting how we manage risk, including model risk;
model limitations or failure, including, without limitation, the
impact that high inflationary pressures and interest rates have had
on the performance and usage of financial models, which may
require us to hold additional capital, incur losses and/or use
compensating controls, such as judgemental post-model
adjustments, to address model limitations; changes to the
judgements, estimates and assumptions we base our financial
statements on; changes in our ability to meet the requirements of
regulatory stress tests; a reduction in the credit ratings assigned
to us or any of our subsidiaries, which could increase the cost or
decrease the availability of our funding and affect our liquidity
HSBC Holdings plc Annual Report on Form 20-F |
2 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
position and net interest margin; changes to the reliability and
security of our data management, data privacy, information and
technology infrastructure, including threats from cyber-attacks,
which may impact our ability to service clients and may result in
financial loss, business disruption and/or loss of customer services
and data; the accuracy and effective use of data, including internal
management information that may not have been independently
verified; changes in insurance customer behaviour and insurance
claim rates; our dependence on loan payments and dividends from
subsidiaries to meet our obligations; changes in our reporting
frameworks and accounting standards, which have had and may
continue to have a material impact on the way we prepare our
financial statements; our ability to successfully execute planned
strategic acquisitions and disposals; our success in adequately
integrating acquired businesses into our business; our ability to
successfully execute and implement the announced strategic
reorganisation of the Group; changes in our ability to manage third-
party, fraud, financial crime and reputational risks inherent in our
operations; employee misconduct, which may result in regulatory
sanctions and/or reputational or financial harm; changes in skill
requirements, ways of working and talent shortages, which may
affect our ability to recruit and retain senior management and an
inclusive and skilled workforce; and changes in our ability to
develop sustainable finance and ESG-related products consistent
with the evolving expectations of our regulators, and our capacity
to measure the environmental and social impacts from our
financing activity (including as a result of data limitations and
changes in methodologies), which may affect our ability to achieve
our ESG ambitions, targets and commitments, including our net
zero ambition, our targets to reduce on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors and the positions set
forth in our thermal coal phase-out policy and our energy policy,
and increase the risk of greenwashing. Effective risk management
depends on, among other things, our ability through stress testing
and other techniques to prepare for events that cannot be
captured by the statistical models it uses; our success in
addressing operational, legal and regulatory, and litigation
challenges; and other risks and uncertainties we identify in ‘Top
and emerging risks’ on pages 121 to 125.
This Annual Report and Accounts 2025 contains a number of
images, graphics, infographics, text boxes and illustrative case
studies and credentials which aim to give a high-level overview of
certain elements of our disclosures and to improve accessibility for
readers. These images, graphics, infographics, text boxes and
illustrative case studies and credentials are designed to be read
within the context of the Form 20-F as a whole.
The information, statements and opinions set out in this Form 20-F
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.
Additional cautionary statement regarding ESG data, metrics and forward-
looking statements
The Form 20-F contains a number of forward-looking statements (as
defined above) with respect to HSBC’s ESG-related ambitions, targets
and commitments, climate-related pathways, processes and plans, and
the methodologies and scenarios we use, or intend to use, to assess
our progress in relation to these (‘ESG-related forward-looking
statements’).
In preparing the ESG-related information contained in the Form 20-F,
HSBC has made a number of key judgements, estimations and
assumptions, and the processes and issues involved are complex. We
have used ESG (including climate) data, models and methodologies that
we consider, as of the date on which they were used, to be appropriate
and suitable to understand and assess climate change risk and its
impact, to analyse financed emissions and operational and supply chain
emissions, to set ESG-related ambitions, targets and commitments and
to evaluate the classification of sustainable finance and investments.
However, these data, models and methodologies are often new, are
rapidly evolving and are not of the same standard as those available in
the context of other financial information, nor are they subject to the
same or equivalent disclosure standards, historical reference points,
benchmarks or globally accepted accounting principles. In particular, it
is not possible to rely on historical data as a strong indicator of future
trajectories in the case of climate change and its evolution. Outputs of
models, processed data and methodologies are also likely to be
affected by underlying data quality, which can be hard to assess and
we expect industry guidance, market practice, and regulations in this
field to continue to change. We also face challenges in relation to our
ability to access data on a timely basis, lack of consistency and
comparability between data that is available and our ability to collect
and process relevant data. Consequently, the ESG-related forward-
looking statements and ESG metrics disclosed in the Annual Report
and Accounts 2025 carry an additional degree of inherent risk and
uncertainty.
Due to the unpredictable evolution of climate change and its future
impact and the uncertainty of future policy and market response to
ESG-related issues and the effectiveness of any such response, HSBC
may have to re-evaluate its progress towards its ESG-related ambitions,
targets and commitments in the future, update the methodologies it
uses or alter its approach to ESG (including climate) analysis and may
be required to amend, update and recalculate its ESG-related
disclosures and assessments in the future, as market practice and data
quality and availability develop.
No assurance can be given by or on behalf of HSBC as to the likelihood
of the achievement or reasonableness of any projections, estimates,
forecasts, ambitions, targets, commitments, prospects or returns
contained herein. Readers are cautioned that a number of factors, both
external and those specific to HSBC, could cause actual achievements,
results, performance or other future events or conditions to differ, in
some cases materially, from those stated, implied and/or reflected in
any ESG-related forward-looking statement or metric due to a variety of
risks, uncertainties and other factors (including without limitation those
referred to below):
–Climate change projection risk: this includes, for example, the
evolution of climate change and its impacts, changes in the scientific
assessment of climate change impacts, transition pathways and
future risk exposure and limitations of climate scenario forecasts;
–ESG projection risk: ESG-related metrics are complex and are still
subject to development. In addition, the scenarios employed in
relation to them, and the models that analyse them, have limitations
that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty, and cannot fully capture all
of the potential effects of climate, policy and technology-driven
outcomes;
–Changes in the ESG regulatory landscape: this involves changes in
government approach and regulatory treatment in relation to ESG
disclosures and reporting requirements, and the current lack of a
single standardised regulatory approach to ESG across all sectors and
markets;
–Variation in reporting standards: ESG reporting standards are still
developing and are not standardised or comparable across all sectors
and markets, and new reporting standards in relation to different ESG
metrics are still emerging;
–Data availability, accuracy, verifiability and data gaps: our disclosures
are limited by the availability of high quality data in some areas and
our own ability to timely collect and process such data as required.
Where data is not available for all sectors or consistently year on year,
there may be an impact to our data quality scores. We may not be
able to fully mitigate financial reporting risks related to our climate
HSBC Holdings plc Annual Report on Form 20-F |
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and ESG disclosures due to the limited quantity and consistency of
available data. The accuracy and reliability of data is also impacted by
the diverse range of internal and external data sources and data
structures needed for climate-related reporting. While we expect our
data quality scores to improve over time, as companies continue to
expand their disclosures to meet growing regulatory and stakeholder
expectations, there may be unexpected fluctuations within sectors
year on year, and/or differences between the data quality scores
between sectors. Any such changes in the availability and quality of
data over time, or our ability to collect and process such data, could
result in revisions to reported data going forward, including on
financed emissions, meaning that such data may not be reconcilable
or comparable year-on year;
–Developing methodologies and scenarios: the methodologies and
scenarios HSBC uses to assess financed emissions and set ESG-
related ambitions, targets and commitments may develop over time
in line with market practice, industry standards, regulation and/or
developments in science, where applicable. Such developments
could result in revisions to reported data, including on financed
emissions or the classification of sustainable finance and
investments, meaning that data outputs may not be reconcilable or
comparable year-on year. Consequently, we might need to reassess
our progress towards ESG-related ambitions, targets and
commitments in the future; and
–Risk management capabilities: global actions, including HSBC’s own
actions, may not be effective in transitioning to net zero and in
managing relevant ESG risks, including in particular climate, nature-
related and human rights risks, each of which can impact HSBC both
directly and indirectly through our customers, and which may result in
potential financial and non-financial impacts to HSBC. In particular:
–we may not be able to achieve our ESG-related ambitions, targets
and commitments (including with respect to the positions set
forth in our thermal coal phase-out policy and our energy policy,
and our targets to reduce our on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors), which may result in
our failure to achieve some or all of the expected outcomes of our
strategic priorities and raise reputational concerns; and
–we may not be able to develop sustainable finance and ESG-
related products consistent with the evolving expectations of our
regulators, and our capacity to measure the environmental and
social impacts from our financing activity may diminish (including
as a result of data and model limitations and changes in
methodologies), which may affect our ability to achieve our ESG-
related ambitions, targets and commitments, including our net
zero ambition, our targets to reduce our on-balance sheet financed
emissions and, where applicable, facilitated emissions in our
portfolio of selected high-emitting sectors and the positions set
forth in our thermal coal phase-out policy and energy policy, and
increase the risk of greenwashing. We may face additional risks if
we knowingly or unknowingly make inaccurate, unclear,
misleading or unsubstantiated claims regarding sustainability to
our stakeholders.
Any forward-looking statements made by or on behalf of HSBC speak
only as of the date they are made. HSBC expressly disclaims any
obligation to revise or update these ESG forward-looking statements,
other than as expressly required by applicable law.
Written and/or oral ESG-related forward-looking statements may also
be made in our periodic reports to the US Securities and Exchange
Commission, summary financial statements to shareholders, proxy
statements, offering circulars and prospectuses, press releases and
other written materials, and in oral statements made by HSBC’s
Directors, officers or employees to third parties, including financial
analysts.
Our data dictionaries and methodologies for preparing the above ESG-
related metrics and third-party limited assurance reports can be found
on: www.hsbc.com/who-we-are/esg-and-responsible-business/esg-
reporting-centre.
Certain defined terms
Unless the context requires otherwise, ‘HSBC Holdings’ means HSBC
Holdings plc and ‘HSBC’, the ‘Group’, ‘we’, ‘us’ and ‘our’ refer to HSBC
Holdings together with its subsidiaries. Within this document the Hong
Kong Special Administrative Region of the People’s Republic of China is
referred to as ‘Hong Kong’.
When used in the terms ‘shareholders’ equity’ and ‘total shareholders’
equity’, ‘shareholders’ means holders of HSBC Holdings ordinary
shares and those preference shares and capital securities issued by
HSBC Holdings classified as equity. The abbreviations ‘$m’, ‘$bn’ and
‘$tn’ represent millions, billions (thousands of millions) and trillions of
US dollars, respectively.
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Performance in 2025
Our key performance indicators measure the progress we have
made against our priorities for the benefit of all our stakeholders,
and also inform remuneration outcomes across the Group.
Financial performance
indicators
ÑRead more on our financial performance in 2025
on pages 5 and 17.
ÑFor an explanation of performance against our
key Group financial targets, see page 15.
ÑTo better align with market practice, from our
2025 full-year results we no longer adjust the
‘average tangible equity‘ for the post-tax impact
of notable items in each period. Comparatives
have been re-presented. This revision improved
RoTE excluding notable items by 16 basis points
(‘bps’) in 2025 (2024: (34)bps).
ÑFor a reconciliation of alternative performance
measures to their reported equivalents, see
page 106.
Return on average tangible equity (‘RoTE’) ø 13.3% (2024: 14.6%) | Profit before tax $29.9bn (2024: $32.3bn) | |
RoTE excluding notable items ø   17.2% (2024: 15.6%) | Constant currency profit before tax excluding notable items ø $36.6bn (2024: $34.2bn) | |
Operating expenses $36.4bn (2024: $33.0bn) | Common equity tier 1 capital ratio 14.9% (2024: 14.9%) | |
Target basis operating expenses ø $33.5bn (2024: $32.5bn) | Dividend per share in respect of 2025 $0.75 (2024 dividend per share: $0.87, inclusive of a special dividend of $0.21 per share) |
Strategic performance
indicators
ÑRead more on our strategy on pages 12 to 14.
ÑRead more on our approach to ESG on page 28.
ÑRead more on our definition of sustainable
finance and investment on page 35.
Organisational simplification $1.2bn Annualised impact of cost saving actions taken during 2025 | Sustainable finance and investment $495.6bn Cumulative total provided and facilitated since 1 January 2020. (2024: $393.6bn) | |
Grow our Wealth business $80bn Net new invested assets generated in 2025, of which $39bn were in Asia. (2024: $64bn generated, of which $47bn were in Asia) |
Link to remuneration
ÑFor details of executive Directors’ pay and
performance in 2025, see the Directors’
Remuneration Report on page 249.
Our remuneration policy supports the
achievement of our strategic objectives by
aligning reward with our long-term
sustainable performance. This includes
review of our performance against financial
and non-financial metrics to determine overall
variable pay for our colleagues and executive
Directors.
Key financial and strategic performance
indicators included in the 2025 annual
incentive and 2023-2025 long-term incentive
scorecards of our executive Directors are
highlighted by the following symbols:
 | Annual incentive |  | Long-term incentive |
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Highlights
We are becoming a simple, more agile, focused bank, built on our core strengths.
Financial performance (vs 2024)
–Reported profit before tax decreased by
$2.4bn to $29.9bn, mainly due to a $4.9bn
year-on-year net adverse impact from
notable items. Profit after tax decreased
by $1.9bn to $23.1bn.
–In 2025, notable items included dilution and
impairment losses of $2.1bn related to our
associate Bank of Communications Co.,
Limited (‘BoCom‘), reserve recycling losses
of $1.5bn following the completion of the
sale of our French retained portfolio of home
and certain other loans, legal provisions of
$1.4bn and restructuring and other related
costs associated with our organisational
simplification of $1.0bn. In 2024, notable
items included net losses relating to our
disposals in Canada and Argentina of $1.4bn.
–Constant currency profit before tax
excluding notable items increased by
$2.4bn to $36.6bn, from a strong
performance in Wealth in our International
Wealth and Premier Banking (‘IWPB’) and
Hong Kong businesses, and from Wholesale
Transaction Banking in our Corporate and
Institutional Banking (‘CIB’) business. This
was partly offset by a rise in expected credit
losses and other credit impairment charges
(‘ECL’) and an increase in operating
expenses due to planned investment and
inflation.
–RoTE in 2025 was 13.3%, compared with
14.6% in 2024. Excluding notable items,
RoTE in 2025 was 17.2%, a rise of 1.6
percentage points compared with 2024.
–Revenue of $68.3bn increased by $2.4bn
or 4% compared with 2024. The increase
was primarily due to fee and other income
growth in Wealth from Investment
Distribution and Insurance, and in Wholesale
Transaction Banking, particularly in Foreign
Exchange in CIB. This was partly offset by
the year-on-year impact of notable items,
mainly relating to business disposals and a
dilution loss related to BoCom. Constant
currency revenue excluding notable items
rose by $3.4bn to $71.0bn.
–Net interest income (‘NII’) of $34.8bn was
$2.1bn higher than 2024 reflecting the
benefit of the reinvestment of our structural
hedge at higher yields, deposit balance
growth and higher NII in Markets Treasury.
In addition, the increase included the non-
recurrence of a $0.2bn loss in 2024 on the
early redemption of legacy securities. This
was partly offset by the adverse year-on-
year impact of $1.6bn from business
disposals in Argentina and Canada, and
margin compression on our deposits. The
growth in NII of $2.1bn also reflected a
benefit from lower funding costs associated
with the trading book of $1.7bn. Banking
net interest income (‘banking NII’), which
excludes these funding costs, increased
by $0.3bn to $44.1bn.
–Net interest margin (‘NIM’) of 1.59% was
3bps higher, reflecting the reinvestment of
our structural hedge at higher yields.
–ECL were $3.9bn, an increase of $0.4bn
compared with 2024, including charges in
both periods related to the commercial real
estate (‘CRE’) sectors in Hong Kong and
mainland China. In 2025, the charge in this
sector in Hong Kong of $0.7bn (2024:
$0.1bn) reflected higher allowances for new
defaulted exposures, the impact of an over-
supply of non-residential properties that has
put continued downward pressure on rental
and capital values, and updates to our
models used for ECL calculations. The 2025
charge in the mainland China CRE sector
was $0.2bn (2024: $0.4bn). ECL were 39
bps of average gross loans, including
loans and advances classified as held for
sale.
–Operating expenses increased by $3.4bn
or 10% to $36.4bn. The increase primarily
reflected notable items in 2025 of $3.0bn,
including legal provisions of $1.4bn,
restructuring and other related costs
associated with our organisational
simplification of $1.0bn, and $0.5bn related
to disposals, wind-downs, acquisitions and
related costs.
–Cost growth also reflected planned spend
and investment in technology, higher
performance-related pay and the impacts of
inflation, partly offset by reductions related
to our business disposals and the benefits of
our organisational simplification.
–Target basis operating expenses rose by
3%, in line with our cost growth target. This
increase primarily reflected higher planned
spend and investment in technology, higher
performance-related pay and the impact of
inflation, partly offset by the benefits of our
organisational simplification.
–Customer lending balances rose by
$57.7bn including favourable foreign
currency translation differences. On a
constant currency basis, lending balances
rose by $17.6bn, mainly in our UK business
reflecting growth in mortgage and
commercial customer lending.
–Customer accounts rose by $131.9bn,
including favourable foreign currency
translation differences. On a constant
currency basis, customer accounts
increased by $67.6bn, with growth in all our
businesses, particularly our Hong Kong
business segment.
–Common equity tier 1 (‘CET1’) capital
ratio remained at 14.9%. This reflected an
increase in risk-weighted assets (‘RWAs‘),
which was offset by an increase in CET1
capital through capital generation net of
distributions. The increase in RWAs was
mainly driven by foreign currency translation
differences and asset size movements.
–The Board has approved a fourth interim
dividend of $0.45 per share, resulting in a
total of $0.75 per share in respect of 2025.
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Outlook
Group financial targets
–We are targeting a RoTE of 17% or better
for 2026, 2027 and 2028, excluding
notable items. Our revised target reflects
momentum in our earnings and the positive
progress we are making in our strategic
execution.
–We are targeting year-on-year growth in
revenue from 2026 to 2028, rising to 5%
growth in 2028 compared with 2027
excluding notable items and on a constant
currency basis.
–We maintain our dividend payout ratio
target basis of 50% in 2026, 2027 and
2028. Our target basis payout ratio is
calculated as a percentage of earnings per
share (‘EPS’) excluding material notable
items and related impacts.
In respect of 2026:
–We expect banking NII of at least $45bn,
based on our current expectations for policy
rates.
–We expect ECL charges as a percentage of
average gross loans to be around 40bps
in 2026 (including held for sale loan
balances). Over the medium term, we retain
our planning range of 30-40bps.
–We retain our commitment to Group-wide
cost discipline. We are targeting growth in
target basis operating expenses of
approximately 1% compared with 2025.
–Our target basis operating expenses
measure excludes notable items and
includes the impact of simplification-related
saves associated with our announced
reorganisation.
–We intend to continue to manage the CET1
capital ratio within our medium-term
target range of 14%–14.5%. Capital may fall
below our target range during January 2026
owing to the privatisation of Hang Seng
Bank, which had a net CET1 capital impact of
110bps in January 2026 (based on our CET1
capital ratio as at 31 December 2025). This
included a day one impact of around 120bps
on CET1, partly offset by a release of around
10bps of incremental hedging-related
structural foreign exchange RWAs.
–We expect to restore our CET1 capital ratio
within our target range through a
combination of organic capital generation and
not initiating any further buy-backs until CET1
capital is back within, or above, this range. A
decision to recommence buy-backs will be
subject to our normal buy-back
considerations and process on a quarterly
basis.
ÑOur targets and expectations reflect our current
outlook for the global macroeconomic
environment and market-dependent factors,
such as market-implied interest rates (as of end
January 2026) and rates of foreign exchange, as
well as customer behaviour and activity levels.
ÑWe do not reconcile our forward guidance on
RoTE excluding notable items, constant currency
revenue excluding notable items, target basis
operating expenses, dividend payout ratio target
basis or banking NII to their equivalent reported
measures.
ÑSee pages 107 to 108 for a further explanation of
RoTE excluding notable items, constant currency
revenue excluding notable items, banking NII,
target basis operating expenses and dividend
payout ratio target basis. For further information
on our CET1 ratio, see page 191.
Reshaping the Group for growth
Privatisation of Hang Seng Bank
–On 26 January 2026, we completed our
privatisation of Hang Seng Bank, following
shareholder and Court approval. Hang Seng
Bank is now a wholly-owned subsidiary
of the HSBC Group and Hang Seng Bank
shares have been withdrawn from the Hong
Kong Stock Exchange. This transaction
demonstrates our confidence in the outlook
for Hong Kong and further strengthens our
market-leading position.
–Through the privatisation of Hang Seng
Bank, we expect to realise $0.5bn in pre-tax
revenue and cost synergies across both our
brands in Hong Kong by the end of 2028,
with associated restructuring costs of
$0.6bn. These costs would be reported as a
material notable item. We intend to redeploy
savings we realise from cost synergies into
areas of competitive advantage and
accretive returns.
–We also have an ambition to generate
further revenue and cost opportunities of
around $0.4bn by the end of 2028 across
both our brands in Hong Kong.
Organisational simplification
–At our 2024 full-year results we announced
measures to simplify the Group, and we
have committed to deliver an annualised
reduction of around $1.5bn in our cost
base, expected by the end of 2026 from
our organisational simplification programme.
–We are on track to have taken actions to
deliver our $1.5bn annualised cost
reduction by the end of June 2026, which is
six months earlier than planned. In 2025,
we identified and actioned annualised
cost savings of approximately $1.2bn,
which resulted in a reduction of around
$0.6bn in operating expenses in the
income statement in 2025. In this period
we incurred $1.0bn in restructuring and
other related costs, primarily related to
severance.
Strategic transactions
–We are also focused on opportunities where
we have a clear competitive advantage and
accretive returns, and we aim to redeploy
approximately $1.8bn of additional costs
saved from non-strategic activities into
these areas over the medium term. The
increase from $1.5bn reflects our intention
to redeploy an additional $0.3bn of costs
saved from the synergies generated from
our privatisation of Hang Seng Bank.
–In 2025, we announced a further 11
transactions, which are set to create
incremental investment capacity for
growth. During the fourth quarter of 2025,
we completed the sales of our French
retained portfolio of home and certain other
loans, our France life insurance business, our
German private banking business and our
Bahrain retail banking business. Completed
or announced transactions are expected to
generate approximately $0.7bn of annualised
cost capacity for reallocation. The associated
businesses contributed around $1.0bn to
revenue in 2025.
–Targeted strategic reviews of our retail
businesses in Australia, Indonesia and
Egypt remain underway on which no
decisions have been made. Our CIB
businesses in these markets are unaffected
by these reviews. In addition, we have
commenced a strategic review of HSBC
Life Singapore.
Progress in growth areas
–In Wealth, we are investing in Wealth
Centres and hiring additional relationship
managers. Wealth balances as at 31
December 2025 across all of our business
segments were $2.1tn, an increase of
16% compared with the same period last
year. Within this we have attracted net
new invested assets of $80bn, with
$39bn booked in Asia. This compared with
net new invested assets in 2024 of $64bn,
with $47bn booked in Asia.
–Transaction banking continues to perform
well as we leverage our network and
capabilities to capture opportunities from
changing trade and capital flows. In 2025,
fee and other income in Wholesale
Transaction Banking performed well,
rising by 4% compared with 2024,
particularly from growth in Global Foreign
Exchange.
ÑFor more details on our strategic progress in
2025, see ‘Our strategy’ on page 12.
ÑFor more details on our businesses held for sale
and disposal groups, see Note 23 on the
financial statements on page 355.
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Who we are
Founded in 1865, HSBC is one of the world’s largest banking and financial services
organisations. We’re here to use our expertise, capabilities, breadth and
perspectives to help open up a world of opportunity for our customers.
Our strategy | Our strategy supports our ambition to be the most trusted bank globally, putting customers at the heart of everything we do. We help meet our customers’ financial needs and support them to achieve their goals with our products and services, while navigating the complexities of the global market through our deep international network, supported with the stability and strength of our balance sheet. | |||||
Our priorities | u | Be simple and agile | u | Drive customer- centricity | u | Deliver focused sustainable growth | |||||
ÑSee page 12 for further details on our strategy. | We aim to make fast, safe decisions – adapting to change by staying relevant, driving simplification and being future ready through technology and digitisation. | We are intensely focused on our customers – helping to deliver excellent outcomes, drive loyalty, and serve our customers for the long term through the depth of what we offer as a franchise. | As a leading international bank, we aim to drive long-term, sustainable growth, focused on areas of competitive strength. |
Our organisational structure | Since 1 January 2025, the HSBC Group has operated through four new businesses to simplify our organisational structure and accelerate delivery against our strategic priorities. | |||||
Revenue by business ($bn)1
HK
$15.9bn
CIB
$27.6bn
UK
$12.9bn
IWPB
$14.5bn
1 Calculation based on revenue of our business
segments excluding Corporate Centre.
Hong Kong | UK | ||||
Our Hong Kong business has a leading market position. It comprises Retail Banking and Wealth and Commercial Banking of HSBC Hong Kong and Hang Seng Bank. | Our UK business has a leading market position. It comprises Retail Banking and Wealth (including first direct and M&S Bank) and UK Commercial Banking, including HSBC Innovation Bank. | ||||
Corporate and Institutional Banking | International Wealth and Premier Banking | ||||
Our CIB business is a market leader in cross-border transaction banking and capital markets. It integrates our Commercial Banking business (outside the UK and Hong Kong) with our Global Banking and Markets business. | Our IWPB business comprises Premier banking outside of Hong Kong and the UK, our Private Bank, Asset Management and Insurance businesses. | ||||
ÑSee pages 19 to 27 for further details on our four businesses and Corporate Centre. | |||||
Our values
At HSBC, our values guide us in all our actions – from strategic decisions to day-to-day interactions with customers and each other. Our values are
rooted in HSBC’s history, heritage and character, and help us deliver on our purpose.
We get it done | We value difference | We take responsibility | We succeed together | |||||||
Moving at pace and making things happen | Seeking out different perspectives | Holding ourselves accountable and taking the long view | Collaborating across boundaries | |||||||
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Group Chairman’s shareholder letter
 |
Brendan Nelson Group Chairman |
We delivered strong performance and material returns for our shareholders in 2025. By leveraging our unique global network and leading capabilities, we helped our customers see past the sustained uncertainty in the international environment and find the opportunities that are driving the global economy forward. |
It is with great pride that I have begun my
tenure as Group Chairman of HSBC. I am truly
privileged to serve such a remarkable
institution, working alongside exceptionally
talented colleagues.
Our 161-year history is firmly rooted in the
objective set by HSBC’s founders – to
establish a bank in Hong Kong and Shanghai
that would facilitate local and international
trade.
By not losing sight of that foundational
objective and by remaining true to our purpose
and values, we have focused on what matters
most – our customers – moving forward
together through these most complex of
times.
Building on that forward momentum, the
Board and I will continue to closely partner
with our highly capable CEO, Georges
Elhedery, and his management team who are
accelerating the execution of our strategy,
with discipline and confidence.
A Modern HSBC: Simple and More Agile
A key catalyst for achieving that acceleration
was the introduction in January 2025 of our
new organisational structure centred on our
four businesses: Hong Kong, the UK,
Corporate and Institutional Banking, and
International Wealth and Premier Banking.
By halving the number of operating
businesses and significantly streamlining the
new Operating Committee of the Group, we
embarked on a journey to become a simple
and more agile organisation; a modern
institution that reflects its cherished legacy,
while embracing technological advances as a
core enabler of future growth,
competitiveness, and, ultimately, customer
aspirations.
Today, HSBC is clear on its core strengths,
investing to further develop our competitive
advantages and deliver sustainable growth,
with an entirely attainable ambition to be the
most trusted bank globally, putting customers
at the heart of everything we do.
Global Context
Global growth in 2025 was stronger than
expected, as the tariff-related headwinds were
offset by the significant momentum generated
by AI capital expenditure and trade growth,
and by the support provided by the ever-
resilient US consumer.
The global geopolitical context was marked by
continued uncertainty. The war in Ukraine,
which has entered its fifth year, and conflicts
in the Middle East and elsewhere, continue to
have significant human consequences.
In parallel, the changing approach to global
trade relations has increased economic
uncertainty. But as the resilience of global
trade growth demonstrates, the inter-
connectedness of the global economy,
underpinned by growing trade flows, is
compelling.
Faced with the re-configuration of the
globalised world, HSBC is optimally positioned
to help our customers capture the meaningful
opportunities that are driving the global
economy forward, across geographies and
throughout our unique global network. Our
strong financial performance and material
returns in 2025 point to that dynamic, along
with our focused approach to implementing
our strategic priorities.
2025 Performance
In 2025, we delivered reported profit before
tax of $29.9bn. Our return on average tangible
equity was 13.3%, or 17.2% excluding the
impact of notable items.
We delivered material returns for our
shareholders. The Board approved a fourth
quarterly dividend of $0.45 per share, bringing
the total dividend announced for 2025 to $0.75
per share. In addition, we announced two
share buy-backs in respect of 2025 worth a
total of $6bn.
Dividends paid in 2025, together with a more
than 49% increase in the share price, delivered
a total shareholder return for the year of more
than 57%.
With our realigned structure providing a
decisive impetus, we achieved broad-based
profit generation through geographic and
business diversification. Our performance
reflects that, as does our ability to invest for
growth, while continuing to optimise cost and
capital allocation. Indeed, we are keeping to
our committed objective of delivering $1.5bn
of organisational simplification savings and
expect to have taken the relevant actions to
achieve it by the end of June 2026, which is
six months earlier than planned.
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Group Chairman’s letter | ||||||||||||
”Today, HSBC is clear
on its core strengths,
investing to further
develop our competitive
advantages and deliver
sustainable growth, with
an entirely attainable
ambition to be the most
trusted bank globally,
putting customers at
the heart of everything
we do.”
Against this backdrop, we believe that the
privatisation of Hang Seng Bank is a milestone
development that brings together two seminal
institutions that have served Hong Kong – a
home market for the Group – for generations.
We are absolutely committed to building on
that valued legacy. While respecting Hang
Seng’s heritage and retaining its brand and
distinct customer proposition, we will continue
to invest and build on the complementary
strengths of our businesses, to the benefit of
our valued customers and the communities
that we serve.
Sustainability
Our ambition remains to become a net zero
bank by 2050. Supporting our customers is
core to our strategy – financing their transition
is both critical to them and aligned to our net
zero ambition.
In November 2025, we published our updated
Net Zero Transition Plan, setting out our
commercially-grounded sustainability strategy,
which reflects the realities of an evolving
global transition. We also set out our updated
interim financed emissions targets, metrics
and associated policies, seeking to remain
science-aligned and compatible with our own
net zero ambition.
We believe that supporting our customers’
transition is one of the most significant roles
we can play in the global transition to net zero.
We aim to provide and facilitate between
$750bn and $1tn of sustainable finance and
investment by 2030. In 2025, we provided and
facilitated $102bn in sustainable finance and
investment, bringing our cumulative total to
$495.6bn since January 2020. This puts us on
track to meet our target by 2030.
Leadership and Board Changes
As I begin my first full year as Group
Chairman, I want to acknowledge and pay
tribute to Sir Mark Tucker’s remarkable
leadership and exemplary commitment to the
Group.
Over a period of eight years, Mark helped
steer HSBC through a number of
unprecedented challenges – a global
pandemic, decades-high inflation and profound
shifts in the trade and geopolitical landscape –
leaving the Group more profitable, resilient,
and strongly positioned for accelerated
growth. I am very grateful to him for the
trusted partnership, friendship, and his support
in ensuring a smooth handover.
We also announced the appointment of Wei
Sun Christianson as an independent non-
executive Director, with effect from 1 January
2026. Wei brings extensive banking and
regulatory experience gained over a 30-year
international career, including as Co-CEO of
Asia Pacific at Morgan Stanley.
Ann Godbehere will be stepping down as a
Director of the Company and retire from the
Board at our 2026 AGM. I want to thank Ann
for her considerable contributions to the HSBC
Board.
In October, we announced the appointment of
Angela McEntee as Group Company Secretary
with effect from 1 January 2026.
In 2025, the Board held meetings in Hong
Kong, India, and London. These were
invaluable opportunities to meet with valued
clients, government representatives,
regulators and colleagues.
We also had productive engagements with our
shareholders on important Group-related
issues at our Annual General Meeting in
London and at the Informal Meeting of our
Hong Kong Shareholders.
Year Ahead
We expect the global economy to expand in
2026. Despite significant policy uncertainty,
global trade is also set to grow, supported by
the expansion of new trade corridors and the
boom in AI hardware demand. Inflation should
continue drifting downward, although with
divergence across markets. Somewhat
uneven growth across industries and
geographies could contribute to periodic
financial volatility.
In China, a stronger policy push should anchor
its growth, and we expect it to broadly
maintain its expansion pace of recent years, as
structural reforms start to gain traction. As part
of its continued economic transformation, the
emphasis will be on strengthening domestic
demand – particularly consumption, but also
investment. Services consumption will benefit
from government policy priorities, as will
technology development. Hong Kong will
continue to benefit as the super-connector
between mainland China and the rest of the
world. Buoyant markets and improvements in
consumption are expected to support its
growth this year.
Elsewhere in Asia, robust consumption and
rising exports generated impressive growth in
a number of markets, in ASEAN in particular.
That combination is expected to continue in
2026. In India, domestic demand will likely be
the main driver of growth, reflecting robust
consumption, as well as ongoing government
infrastructure investment.
Economic diversification continues in the
Middle East, with deep capital reserves being
deployed into significant investments in
infrastructure, technology, and human capital.
The Asia–Middle East trade, investment, and
travel corridor continues to grow.
Europe’s economy will be supported by fiscal
expansion, particularly in Germany, coupled
with lower effective interest rates and steady
consumption growth. We see euro area
growth maintaining its recent pace over the
next year. In the UK, greater fiscal headroom
should give markets and businesses more
confidence. Lower expected inflation and
interest rates should provide a tailwind for
consumption growth.
The US should be a key driver of global
growth, reaping the benefits of sizeable
investments in AI, tax cuts and incentives, as
well as substantial deregulation.
Our Colleagues
I will end where I began, by recognising and
wholeheartedly thanking our HSBC colleagues.
They are the ones who deliver for our
customers, day in and day out, with
excellence, dedication, and respect.
They are the backbone of the Group,
embodying our high-performance culture.
Their commitment to our customers and to
maintaining and further strengthening the
relationships we have built with them is what
set us apart in 2025 and what will help us
thrive going forward, to the benefit of our
shareholders.
Brendan Nelson
Group Chairman
25 February 2026
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Group CEO’s shareholder letter
 | |
Georges Elhedery Group CEO | |
RoTE ø
13.3%
(2024: 14.6%)
RoTE excluding notable items ø
17.2%
(2024: 15.6%)
Profit before tax
$29.9bn
(2024: $32.3bn)
Dear fellow shareholders,
In previous letters I set out a clear agenda to
unlock HSBC’s full potential. 2025 marked a
year of decisive action and swift execution.
We are performing, transforming and investing
for growth as demand for globally-connected
financial services increases, especially in the
world’s fastest-growing regions.
We have aligned our structure with our
strategy and strengthened our four
complementary businesses. We are becoming
a simple, more agile, focused bank built for a
fast-changing world. One that stays true to our
strong foundations and hallmark financial
strength yet moves with the speed our
customers need to navigate the modern
world.
The dynamic market environment shows why
our global network, deep local expertise built
over generations and financial strength set us
apart. It also shows why our customers
continue to turn to us as their reliable and
trusted financial partner.
New targets: 2026-2028
Last February, we set out a three-year target
of a mid-teens return on average tangible
equity (‘RoTE’) in each of the three years from
2025 to 2027, excluding notable items. We
made clear progress against this target in
2025. That is why we are now raising our
ambition and targeting 17% RoTE or better in
each year from 2026 to 2028, excluding
notable items. We are also targeting year-on-
year revenue growth over the same period
rising to 5% in 2028 compared with 2027,
excluding notable items. We maintain our
dividend payout ratio target basis of 50% in
2026, 2027 and 2028. Our target basis payout
ratio is calculated as a percentage of EPS,
excluding material notable items and related
impacts.
Strong performance
On a reported basis, profit before tax of
$29.9bn fell 7% year-on-year due to the impact
of notable items. These included dilution and
impairment losses of $2.1bn related to
BoCom, legal provisions of $1.4bn and $1.0bn
of restructuring and other related costs
associated with our organisational
simplification. On this basis, we delivered a
RoTE of 13.3%.
Excluding notable items, our RoTE was 17.2%
achieving our ‘mid-teens, or better’ target. Our
revenue increased 5% year-on-year to $71bn
and our profit before tax grew 7% to $36.6bn,
excluding notable items on a constant
currency basis. Our common equity tier 1
(‘CET1’) capital ratio was 14.9%, reflecting our
long-standing financial strength.
We maintained tight cost discipline, managing
target basis cost growth to around 3%,
thereby achieving our target. This strong
performance enabled us to announce a total
ordinary dividend per share for 2025 of $0.75,
or $12.9bn, an increase of 14% on the prior
year. In addition, we completed $6bn of share
buy-backs taking total returns to $18.9bn.
Momentum
Our four businesses are built on customer
trust and performed well. Revenue and
deposits grew in each and all four delivered
RoTE of mid-teens, or better, excluding
notable items. We saw growth accelerate in
areas of core strength and we are actively
investing in modern technology to enhance
innovation, productivity and customer
experience.
Turning to business-line performance on a
year-on-year and constant currency basis, our
market-leading Hong Kong business generated
revenue of $15.9bn, or 6% growth. Our
deposit base grew by 7% to more than
$540bn, helping us maintain our number one
position in Hong Kong with market share of
25%. Our UK business delivered revenue of
$12.9bn, an increase of 5%, supported by
robust balance sheet growth with customer
loans increasing by 6% to more than $300bn.
CIB increased revenue by 3% to $27.6bn, and
we generated $13.1bn of fee and other
income, which was 7% higher than the prior
year.
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Group CEO's letter |
“We are becoming
a simple, more agile,
focused bank built for
a fast changing world.”
In 2025, we facilitated around $900bn in trade,
which is comparable to the economic output
of a G20 economy. This represents the
equivalent of around $2.5bn of goods and
services moving through our global network
every single day. This scale, which gives
access to 86% of world trade flows, is why
we were voted in a survey of 13,000
corporates as Euromoney’s ‘World’s Best
Trade Finance Bank’ for the ninth consecutive
year. Across our network we processed
around $500tn of payment transactions in 130
currencies, equivalent to almost $1bn every
minute. That is why 30,000 customers
surveyed by Euromoney voted HSBC the
number one payments bank in products,
services and technology.
In IWPB, revenue was $14.5bn, an increase of
5%. Wealth fee and other income across all
our businesses was $9.4bn, up 24%. At 31
December 2025, bank-wide Wealth balances
were $2.1tn, of which more than $1tn was
booked in Asia, reflecting our position as the
leading wealth manager in Asia and the Middle
East. Given the importance of managing
customer deposits as well as their invested
assets, we are changing our wealth
disclosures. In 2026, we will replace Invested
assets (2025: $1.5tn) with a new calculation of
Wealth balances. The new disclosure adds our
wealth customers’ deposits of $608bn and
removes $580bn of Asset Management third-
party distribution assets. On this new basis,
Wealth balances in 2025 were $1.6tn.
In 2025, we were pleased to update our Net
Zero Transition Plan, which reaffirms our
ambition to become a net zero bank by 2050
and emphasises the importance of supporting
our customers in their transitions.
Discipline
We expect to have taken action to deliver our
$1.5bn organisational simplification saves by
the first half of 2026, six months ahead of
plan. The initiative is designed to make HSBC
simple and more agile with an immaterial
revenue impact. Cost efficiency is one of the
key benefits, clearer accountability and greater
collaboration are others. The saves will be
taken straight to the bottom line.
We have reviewed our portfolio against our
strategic priorities and are moving at pace to
exit non-strategic or low-returning activities.
This initiative is expected to release $1.5bn of
incremental investment capacity, which we
are actively reallocating to areas of competitive
strength where we can generate accretive
returns. In 2025, we announced 11 exits, of
which three have fully completed. These are in
addition to the two transactions we
announced in 2024.
Taken together, the completed and announced
exits will generate $0.7bn in annualised cost
savings and exits in active execution, including
activities under strategic review, are expected
to generate a further $0.6bn.
Following the privatisation of Hang Seng Bank,
reported cost synergies across HSBC and
Hang Seng Bank will release $0.3bn, which
we will direct towards growth opportunities in
Hong Kong. To reflect this, we are increasing
our medium-term cost reallocation
commitment from $1.5bn to $1.8bn.
Investing for growth
Our $13.7bn privatisation of Hang Seng Bank
brings together 255 years of history and
heritage, combining global reach and local
depth. It allows us to scale capabilities across
both banks for all customers. Hong Kong is a
dynamic economy, a top three global financial
centre and a thriving trade gateway. It is a
super-connector between mainland China and
the world. It is also poised to become the
world’s leading cross-border wealth hub by
2029. The privatisation of Hang Seng Bank
reflects our confidence and conviction in Hong
Kong’s future growth.
In our home markets, we are expanding the
number of Wealth Centres and enhancing our
wealth capabilities. In Hong Kong we opened
five new state-of-the-art Wealth Centres. They
provide a space where our Private Banking and
Premier customers can meet our wealth
specialists to plan, invest and manage their
long-term financial future. In the UK, our
flagship Wealth Centre launched in Mayfair,
London, and we opened a second in Leeds, a
major regional wealth hub.
Also in the UK, investment in our Business
Banking coverage model is generating results.
We are growing customer numbers, lowering
attrition rates and seeing greater advocacy.
In IWPB we opened a further 20 new Wealth
Centres focusing on Asia and the Middle East,
excluding those in markets under strategic
review. These are in many of the world’s
fastest-growing wealth economies, such as
mainland China, Singapore and the UAE. We
became the world’s first global asset manager
to establish an onshore platform in the UAE,
offering retail and institutional investors access
to 10 new funds. We refreshed our Premier
proposition for affluent customers in four
markets and it is now live in seven.
In CIB, we are using digital innovation to serve
customers faster. Our tokenised deposits now
offer next-generation real time payments
across our network. They are available in Hong
Kong, Singapore, the UK and Luxembourg.
Other markets will follow in 2026. With
mobile-first consumers changing customer
payment choices, we are changing digital
wallet collection capabilities. Our Digital
Merchant Services solution allows
omnichannel payments, making e-commerce
easier and more efficient for retailers. It is
currently available in Hong Kong, India and
Singapore, with six more markets launching in
2026.
We are also reengineering HSBC while
focusing on resilience and risk management.
We are modernising the bank through AI and
automation to enhance customer experience,
increase productivity and boost efficiency. We
have more than 100 GenAI active use cases
and are increasing AI partnerships to
accelerate adoption of cutting-edge
technologies. More than 31,000 of our
engineers now use an AI-enabled coding
assistant and our HSBC Productivity Suite tool
is available to around 85% of our colleagues to
help summarise, analyse and translate
documents.
High performance culture
A clear strategy sets our direction. A strong
culture is what turns it into results. This is why
we are investing to build a high-performance
culture. First, we refreshed our ambition: ‘To
be the most trusted bank globally, putting
customers at the heart of everything we do’.
Second, we launched six new Leadership
Principles and How We Lead, our new Group-
wide leadership framework. All our senior
leaders, and the broader Managing Director
cohort, have now attended a two-day How We
Lead event and 86% surveyed believe it is
creating a positive cultural change. In 2026, we
will roll it out to our broader people leaders
globally. In the spirit of our Leadership
Principle that ‘great leaders build better
leaders’, more than 150 of our senior leaders
will facilitate a How We Lead event in 2026.
Our people
I would like to thank Sir Mark Tucker for his
exceptional leadership over the last eight years
and congratulate Brendan Nelson on his
appointment as Group Chairman. I look
forward to continue working with Brendan as
we pursue our clear agenda to unlock HSBC’s
full potential.
I would also like to take this opportunity to
thank all my colleagues for their many valuable
contributions to our results. It is a privilege to
work with such talented people. Their
dedication, commitment and passion to deliver
for our customers truly differentiates HSBC
and is key to delivering sustainable long-term
growth for you, our shareholders.
Georges Elhedery
Group CEO
25 February 2026
HSBC Holdings plc Annual Report on Form 20-F |
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Our strategy
In 2025, we continued to implement our strategy that supports our ambition to be the most
trusted bank globally, putting customers at the heart of everything we do.
A growing, high-returning HSBC
Our strategic priorities remain clear: we aim to
drive customer-centricity, deliver focused
sustainable growth, and be simple and more
agile.
We are intensely focused on our customers.
The depth and quality of our customer
relationships and our ability to connect
customers globally help enable us to deliver
best-in-class products and service excellence.
Each of our four businesses is built on trust, as
demonstrated by our $2.1tn Wealth balances
and our $500tn annual payment volumes.
We are driving focused sustainable growth by
targeting areas of competitive strengths. The
privatisation of Hang Seng Bank is an example
of this. The transaction allows us to further
capture the growth opportunities in Hong Kong,
one of our home markets where we are already
the number one bank1. All four of our
businesses are high-returning, delivering mid-
teens or better RoTE individually.
We aim to be a simple and agile organisation
in accordance with the strategy we set out in
2024. We simplified our organisation down to
four connected businesses. We are also
exiting non-strategic businesses at pace,
freeing up investment to grow our core
businesses where we have scale and
competitive advantage.
1Based on deposit market share. Source: Hong
Kong Monetary Authority (‘HKMA’).
Strong performance in 2025
We delivered a strong set of results in 2025.
Our reported revenue was $68.3bn. On a
constant currency basis and excluding notable
items, our revenue was $71.0bn, 5% higher
compared with 2024.
Our reported profit before tax was $29.9bn.
On a constant currency basis and excluding
notable items, we grew our profit before tax
by 7% to $36.6bn.
We continue to grow our deposit base. On a
constant currency basis, customer deposits
increased by $68bn during 2025 and reached
$1.8tn as at 31 December 2025.
In 2025, we achieved a RoTE of 13.3%.
Excluding the impact of notable items, RoTE
was 17.2%, achieving our RoTE target of ‘mid-
teens or better’. We delivered a 15.6% RoTE
excluding notable items in 2024.
Our strong performance in 2025 allowed us to
announce ordinary dividends of $0.75 per
share to our shareholders, compared with
$0.66 in 2024.
CIB
$11.4bn
RoTE excluding notable items ø
17.2%
(2024: 15.6%)
Reported profit before tax by business
segment ($bn)
IWPB
$4.4bn
HK
$9.6bn
UK
$6.7bn
Reshaping and focusing the Group
We continued to make progress in reshaping
the Group. We announced a further 11 exits in
2025. These included our business in Malta,
Sri Lanka retail banking, our UK life insurance
business, our Germany custody and fund
administration businesses, our stake in Grupo
Financiero Galicia, our French retained
portfolio of home and certain other loans, our
Uruguay business, our Bangladesh retail
banking business, equity capital markets
(‘ECM’) and mergers and acquisitions (‘M&A’)
in the US, UK and Europe, and our Bahrain
retail banking unit.
The targeted strategic reviews of our retail
businesses in Australia, Indonesia and Egypt
remain underway, on which no decisions have
been made. We remain committed to our
wholesale banking activities in these markets.
In addition, we commenced a strategic review
of HSBC Life Singapore.
We completed the privatisation of Hang Seng
Bank on 26 January 2026. This transaction will
further simplify the Group and deepen our
presence in one of our home markets where
we are already the market leader.
We are committed to serving Hong Kong with
two iconic brands. We intend to retain Hang
Seng Bank as a separately-licensed bank with
its own governance, brand, distinct customer
proposition and branch network. We aim to
strengthen both the HSBC and Hang Seng
brands by focusing on their competitive
advantages, while allowing customers to
choose where to bank.
Connectivity – our key strength
Connectivity distinguishes HSBC. We have
four deeply-connected businesses that
complement each other. CIB and IWPB are
leading global franchises that serve the Group
by providing a wide range of products and
capabilities. Hong Kong and the UK are our
home markets where we have substantial
retail and wholesale distribution networks.
Our customers choose us because we are a
trusted bank with extensive international
connectivity. We connect customers across
borders in our 56 markets. We are well placed
to help our clients manage increased
complexity as global trade reconfigures, and
their wealth and investment needs globally.
We partner with our clients for the long term as
their business and wealth grow over time. We
are one of the few global universal banking
franchises that offer our clients a full banking
product suite and services for their diverse
financial needs. We serve clients from small
businesses to global institutions, from retail
customers to ultra-high net worth individuals.
As our customers grow, they grow with us.
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Strategy |
Our home markets
Hong Kong
Our Hong Kong business generated revenue
of $15.9bn in 2025, growing by 6% on a
constant currency basis. We have the market-
leading banking franchise in Hong Kong1. Our
deposit base grew by 7% to over $540bn,
maintaining our number one position in market
share1 in Hong Kong at 25.4%2. We also
consistently lead peers in customer
satisfaction, retaining the number one position
in strategic net promoter scores (‘NPS’)3. In
our Commercial Banking (‘CMB’) business, we
focused on strengthening our market position
across multiple products. In trade finance, we
maintained our strong performance with a
market share of 32.6%2. We continued to
solidify and grow our Retail Banking and
Wealth (‘RBW’) business. We welcomed over
1.1 million new-to-bank customers, bringing
the total to over seven million4, and we
opened five new Wealth Centres in 2025.
These achievements reflect our ongoing
commitment to growth, customer satisfaction
and long-term value creation.
UK
Our UK business delivered revenue of $12.9bn
in 2025, an increase of 5% on a constant
currency basis, supported by robust balance
sheet growth, with customer loans increasing
by 6% to over $300bn. We continue to
support key growth sectors in the UK
economy, with our CMB business voted the
‘Best Bank for Corporates’ in the UK by
Euromoney for the second consecutive year.
We see an opportunity to build share in the
small and medium-sized enterprise (‘SME’)
segment and have introduced fee-free banking
for SME clients. In our RBW business, we aim
to support customers to manage and grow
their wealth. Following the relaunch of our
Premier proposition, we rolled out ‘Funds on
Mobile’ to make it easier for customers to buy,
sell and trade funds via the HSBC app, in
addition to opening two new Wealth Centres.
We continued to build on our mortgage
franchise, growing balances by $9bn on a
constant currency basis, taking market share
to 8.1%5.
32.6%
Trade finance market share in Hong Kong2
8.1%
Mortgage market share in the UK5
1HSBC internal analysis based on HSBC Group
deposit balances in Hong Kong as of 30 June
2025, and the financial data presented in the
2Q25 interim financial reports of 12 selected peer
banks.
2Market share refers to HSBC Group balances in
Hong Kong compared with the HKMA Hong
Kong market data as of December 2025.
3 Strategic NPS ranking based on a survey by
third-party vendors, InMoment and MDRi Asia
Limited. Scores pertain to our Retail Banking and
Wealth business only.
4 New-to-bank and total customer numbers
exclude Hang Seng Bank customers.
5 Source: Bank of England. Retail mortgages only.
Our network business
Corporate and Institutional Banking
In CIB, revenue was $27.6bn, an increase of
3% compared with 2024 on a constant
currency basis. HSBC continued to be a
leading global wholesale transaction bank.
Bank-wide, we generated $10.9bn of
wholesale transaction banking fees and other
income in 2025, which was 4% higher
compared with 2024. We also grew our
deposits by $10bn in 2025, bringing the total
to $600bn. We facilitated around $900bn in
trade6, and were ranked number one in 21
markets around the world7. In Global
Payments Solutions (‘GPS’), HSBC was
recognised as the number one Global Cash
Management service provider in products,
service and technology8. In Foreign Exchange,
we were named the ‘World’s Best FX Bank for
Corporates’9. In addition, we were recognised
as ‘Asia’s Best Bank for Securities Services’ by
Euromoney. We continued to invest in
innovative technologies to help build a bank for
the future. We launched a Tokenised Deposit
Service in four markets, enabling continuous
access to real-time settlement for corporate
clients.
International Wealth and Premier
Banking
In IWPB, revenue was $14.5bn, an increase of
5% compared with 2024 on a constant
currency basis. We continued to execute our
bank-wide Wealth strategy in 2025. Our
Premier 3.0 service is now live in seven
markets and we opened 29 new Wealth
Centres across the Group, including seven in
our home markets. Bank-wide Wealth fee and
other income was $9.4bn, up 24% on a
constant currency basis, delivering on our
ambition of ‘double-digit’ growth. At 31
December 2025, wealth balances across all
our businesses were $2.1tn, of which $1.2tn
was booked in Asia, making us a leading
wealth manager in the region. We attracted
bank-wide net new invested assets of $80bn
in 2025, with $39bn booked in Asia. In our
insurance business, our insurance
manufacturing contractual service margin
(‘CSM’) grew by 21% to $14.6bn, which is a
store of potential future revenue for us.
c.$900bn
Trade volumes facilitated6
$2.1tn
Wealth balances
increased by 16% compared with 2024
6HSBC internal management information.
7 Source: Euromoney Trade Finance Survey in
2025.
8Source: Euromoney Cash Management Survey
2025.
9Source: Euromoney Foreign Exchange Awards
2025.
Performance across geographies
We have an established presence in a number
of markets globally. We are particularly
focused on mainland China, India, Singapore
and the UAE. These markets are especially
well connected to international trade, wealth
and investment flows and are key to our
strategy.
In 2025, we reported profit before tax of
$1.1bn in our mainland China business,
including a loss of $2.1bn related to the
dilution and impairment of our associate
BoCom. We continued to support our
customers expanding internationally, where
we serve approximately half of Fortune Global
500 companies. We were recognised as the
‘Best International Bank’ by Euromoney in
2025. We continued to perform strongly in
Wealth, where Wealth invested assets grew
by 37% compared with 2024, driven by strong
wealth distribution and growth in Private
Banking.
In Singapore, we generated profit before tax of
$1.5bn, and we remain the largest foreign
bank10. Singapore is our primary wholesale
offshore booking centre and wealth hub within
the ASEAN region. In 2025, we were
recognised by Euromoney as the ‘Best Bank for
Large Corporates’. Singapore, where we
opened two new Wealth Centres, is our largest
Wealth business outside our home markets and
fast growing. Wealth fee and other income
grew by 27% and our Wealth invested assets
surpassed $100bn for the first time.
10Based on 9M25 profit before tax, using peers’
published results.
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Strategy |
Performance across geographies (continued)
In India, we reported a profit before tax of
$1.9bn and continued to be the largest foreign
bank1. We are the leading bank for multinational
companies, of which around 50% bank with us2.
We launched HSBC Innovation Bank with a
$1bn financing pool and launched new digital
propositions in Payments and Trade. Our ECM
issuance grew more than 60% in 2025. We
expanded to four new cities with wealth and
international potential, remained the top wealth
manager across foreign banks3 and were the
first bank to launch international wealth
solutions in GIFT City4.
In the UAE, we generated $0.8bn in profit
before tax, and are the largest foreign bank5 .
We continued to further strengthen our
leadership in Corporate and Institutional
Banking. We were named ‘Best Investment
Bank’ in the Middle East6, including being top
ranked in debt capital markets in the region for
the fifth consecutive year7. Our UAE wealth
business saw strong growth, with invested
assets up 33% and international new-to-bank
customers up 12%. In 2025, we launched
Premier 3.0, opened a new Wealth Centre, and
introduced 10 new asset management funds.
1 HSBC internal analysis based on 1H25 revenue,
deposits and advances, using peers’ published
results.
2 Source: Ministry of Commerce of India.
3 By Wealth AUM. Source: Indian Mutual Fund
Industry.
4 Gujarat International Finance Tec-City.
5 HSBC internal analysis based on 9M25 revenue,
deposits and advances, using peers’ published
results.
6 Euromoney Awards for Excellence 2025.
7 Source: Bloomberg league table.
Deposit strength core to our strategy
The strength of our franchise is built on the
solid foundation of our $1.8tn deposit base,
which is comprised primarily of current and
savings accounts. We are proud of our
deposit strength, which is a product of the
trust of our customers and an important
source of funding for us, and forms the
foundation of our financial stability.
We have customer loans of $1.0tn, excluding
held for sale assets, representing 55% of
customer deposits. We operate with a
surplus of customer deposits relative to
loans in each of our four franchises and in
our major operating entities, including The
Hongkong and Shanghai Banking Corporation
Limited, HSBC UK and HSBC Bank plc.
$1.8tn
Customer deposit balances
(2024: $1.7tn)
Improving operational excellence through artificial intelligence
In 2025, we accelerated the adoption of
Generative AI (‘GenAI’) across HSBC, moving
from experimentation to scaled delivery.
Today, we have over 100 GenAI solutions in
use and a strong pipeline of use cases in
development. Our adoption of AI is
underpinned by our people, and we continue
to invest in training and tooling to support
staff in their roles. Around the globe, around
85% of our colleagues have access to our
large language model-based productivity
tool, HSBC Productivity Suite, which helps
them to analyse and translate documents,
summarise information and generate insights.
While the progress this year has been
significant, the opportunity ahead is far
greater. Our strategic partnership with Mistral
strengthens our commitment to scale GenAI
capabilities and we will continue to prioritise
areas that matter most to our customers and
colleagues, and drive performance. Through
2026, we intend to expand enterprise-wide
adoption of AI tools and strive to embed AI
deeper into our core processes.
>100
GenAI solutions in use
Our ambitions
Revenue growth rising to 5% YoY
We are focused on growth opportunities
within our strategy that play to our strengths,
while maintaining tight cost discipline and
continuing to invest in growth and efficiency.
We are targeting revenue growth rising to 5%
year-on-year by 2028 on a constant currency
basis excluding notable items. We see growth
opportunities in each of our four businesses. In
Hong Kong, we intend to consolidate market
leadership with the privatisation of Hang Seng
Bank. In the UK, we see the opportunity to
continue building our mortgage franchise and
build share in SME banking. In IWPB, we
intend to particularly focus on building our
successful wealth business, especially in Asia
and the Middle East. In CIB, the opportunities
include further expanding our international
network business and transaction banking.
Having simplified our approach to now include
a revenue growth target, we no longer provide
separate guidance on Wealth fee and other
income growth.
RoTE of 17% or better
Underpinned by the momentum in our earnings
and the positive progress we are making in our
strategic execution, we are targeting a RoTE
excluding notable items of 17% or better for
each of 2026, 2027 and 2028.
Capital generation
Our business model is designed to be highly
capital generative. In 2025, our CET1 capital
ratio was 14.9%, remaining stable compared
with 31 December 2024. During the calendar
year, we paid $5.2bn ordinary dividends with
respect to 2025, and we expect to pay a
further $7.7bn through the fourth interim
dividend with respect to 2025. We aim to
maintain a CET1 capital ratio in the range of
14-14.5% over the medium term8. Capital may
fall below our target range during the first half
of 2026 owing to the privatisation of Hang
Seng Bank. We plan to address this through
organic capital generation and pausing share
buy-backs until CET1 capital is back within or
above this range. A decision to recommence
buy-backs will be subject to our normal buy-
back considerations and process on a quarterly
basis.
Our primary use of capital generation is to pay
an ordinary dividend of 50% of profit
attributable to ordinary shareholders, excluding
material notable items and related impacts (our
dividend payout ratio target basis9). Our
preferred use of capital after paying the
dividend is to support the growth of our four
businesses.
Our targets for 2026-2028
Rising to 5%
Revenue growth YoY by 2028, on a constant
currency basis excluding notable items9
17% or better
RoTE excluding notable items target for 2026,
2027 and 20289
50%
Dividend payout ratio target basis, 2026-20289
8Medium term is defined as 3-5 years from 1
January 2026.
9 We do not reconcile our forward guidance on
revenue on a constant currency basis excluding
notable items, RoTE excluding the impact of
notable items or dividend payout ratio target
basis to their equivalent reported measures.
HSBC Holdings plc Annual Report on Form 20-F |
15 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Financial overview
Performance compared with our 2025 Group financial targets
Return on average tangible equity
excluding notable items ø
17.2%
(2024: 15.6%)
In 2025, RoTE was 13.3%, a decrease of 1.3
percentage points from 2024.
For the purposes of measuring performance
against our Group target, we adjust RoTE to
exclude notable items.
RoTE excluding notable items was 17.2%, an
increase of 1.6 percentage points compared
with 2024 and above our mid-teens target for
2025.
To better align with market practice, from our
2025 full-year results we no longer adjust the
‘average tangible equity‘ for the post-tax
impact of notable items in each period. We
have re-presented comparatives on the
revised basis. This revision improved RoTE
excluding notable items by 16bps in 2025. In
2024, this revision had a 34bps adverse
impact.
ÑSee pages 65 and 107 for further detail on RoTE
excluding notable items.
ÑSee page 65 for further details on notable items.
Target basis operating expenses ø
$33.5bn
(2024: $32.5bn)
In 2025, operating expenses of $36.4bn
increased by $3.4bn or 10%, on a reported
basis.
Target basis operating expenses grew by 3%
compared with 2024 in line with our target of
approximately 3%. This primarily
reflected higher planned spend in technology,
higher performance-related pay and the impact
of inflation.
Our target basis operating expenses exclude
the direct cost impact of the business
disposals in Canada and Argentina, notable
items and the impact of retranslating the prior
year results of hyperinflationary economies at
constant currency.
Our target basis operating expenses included
the impact of simplification-related savings
associated with our reorganisation, which
generated $0.6bn of cost reductions in 2025.
We are on track to have taken actions to
deliver our $1.5bn annualised cost reduction
by the end of June 2026, which is six months
earlier than planned.
ÑSee page 109 for a reconciliation of target basis
operating expenses to reported operating expenses.
Capital and dividend policy
CET1 ratio
14.9%
(2024: 14.9%)
Dividend payout ratio in respect of 2025
50%
on a dividend payout ratio target basis ø
At 31 December 2025, our CET1 capital ratio
was 14.9%, which was higher than our
medium-term target range of 14% to 14.5%.
We intend to continue to manage the CET1
ratio within this range.
The total dividend per share announced in
respect of 2025 was $0.75. On a dividend
payout ratio target basis this resulted in a
payout ratio of 50% of earnings per share. For
the purposes of computing our target basis
dividend payout ratio, we exclude from
earnings per share material notable items and
related impacts.
ÑSee page 110 for a reconciliation of basic
earnings per share excluding material notable
items and related impacts to basic earnings per
share.
Basis of presentation
Constant currency performance
Constant currency performance is computed
by adjusting reported results of comparative
periods for the effects of foreign currency
translation differences, which distort period-
on-period comparisons. Constant currency
performance provides useful information for
investors by aligning internal and external
reporting, reflecting how management
assesses period-on-period performance.
Notable items and material notable items
We separately disclose ‘notable items‘, which
are components of our income statement that
management considers as outside the normal
course of business and generally non-recurring
in nature. Certain notable items are classified
as ‘material notable items’, 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, and are excluded
from our target basis dividend payout ratio
calculation and earnings per share measure.
Material notable items in 2025 or relevant
comparative periods relate to the following:
–Income statement impacts associated with
actions to exit or wind down certain
businesses to redeploy costs from non-
strategic activities (reported under
‘Disposals, wind-downs, acquisitions and
related costs’ in notable items).
–Dilution and impairment losses on our
investment in BoCom.
–A legal provision following developments in
a claim in Luxembourg relating to the
Bernard L. Madoff Investment Securities
LLC fraud.
Impact of strategic transactions
To aid the understanding of our results, we
separately disclose the impact of strategic
transactions classified as material notable
items on the results of the Group and our
business segments. The distorting impact of
the operating income statement results related
to acquisitions and disposals that affect period-
on-period comparisons primarily related to our
disposals in Canada and Argentina.
Management view of revenue on a
constant currency basis
We provide breakdowns of revenue for each
of our business segments on a constant
currency basis by major product. These reflect
the basis on which revenue performance of
the businesses is assessed and managed. In
the management view of revenue, notable
items are presented separately. We group
certain products in a consistent manner across
our business segments. Wholesale transaction
banking comprises our Global Foreign
Exchange, Global Payments Solutions (‘GPS’),
Global Trade Solutions (‘GTS’) and Securities
Services businesses. Wealth comprises our
Investment Distribution, Insurance, Private
Bank and Asset Management businesses.
On page 18, we provide a summarised
management view of revenue for the Group‘s
results to supplement the Group‘s reported
revenue performance using the product
grouping used to manage and assess our
segmental performance.
ÑSee page 92 for further details on the impact of
strategic transactions.
ÑSee page 65 for further details on basis of
preparation and use of alternative performance
measures.
ÑSee pages 88 to 90 and pages 97 to 102 for
details of notable items in our business segments
and legal entities.
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial overview |
Key financial metrics
For the year ended 31 Dec | |||
Reported results | 2025 | 2024 | 2023 |
Profit before tax ($m) | 29,907 | 32,309 | 30,348 |
Profit after tax ($m) | 23,131 | 24,999 | 24,559 |
Net operating income before change in expected credit losses and other credit impairment charges (‘revenue’) ($m) | 68,274 | 65,854 | 66,058 |
Cost efficiency ratio (%) | 53.4 | 50.2 | 48.5 |
Net interest margin (%) | 1.59 | 1.56 | 1.66 |
Basic earnings per share ($) | 1.21 | 1.25 | 1.15 |
Diluted earnings per share ($) | 1.20 | 1.24 | 1.14 |
Dividend per ordinary share (in respect of the period) ($)1 | 0.75 | 0.87 | 0.61 |
Dividend payout ratio (%)2 | 50 | 50 | 50 |
Alternative performance measures ø | |||
Constant currency profit before tax ($m) | 29,907 | 32,384 | 29,802 |
Constant currency revenue ($m) | 68,274 | 66,009 | 65,040 |
Constant currency banking net interest income ($m) | 44,084 | 43,550 | 42,515 |
Constant currency cost efficiency ratio (%) | 53.4 | 50.2 | 48.7 |
Constant currency profit before tax excluding notable items ($m) | 36,617 | 34,181 | 32,841 |
Constant currency revenue excluding notable items ($m) | 71,020 | 67,591 | 64,835 |
Constant currency profit before tax excluding notable items and strategic transactions ($m) | 36,617 | 33,768 | N/A |
Constant currency revenue excluding notable items and strategic transactions ($m) | 71,020 | 66,377 | N/A |
Expected credit losses and other credit impairment charges (annualised) as a % of average gross loans and advances to customers, including held for sale (%) | 0.39 | 0.34 | 0.31 |
Basic earnings per share excluding material notable items and related impacts ($) | 1.51 | 1.31 | 1.22 |
Return on average ordinary shareholders’ equity (annualised) (%) | 12.3 | 13.6 | 13.6 |
Return on average tangible equity (annualised) (%) | 13.3 | 14.6 | 14.6 |
Return on average tangible equity excluding notable items (annualised) (%) | 17.2 | 15.6 | 16.0 |
Target basis operating expenses ($m) | 33,464 | 32,478 | N/A |
At 31 Dec | |||
Balance sheet | 2025 | 2024 | 2023 |
Total assets ($m) | 3,233,034 | 3,017,048 | 3,038,677 |
Net loans and advances to customers ($m) | 988,399 | 930,658 | 938,535 |
Constant currency net loans and advances to customers ($m) | 988,399 | 970,778 | 955,706 |
Customer accounts ($m) | 1,786,828 | 1,654,955 | 1,611,647 |
Constant currency customer accounts ($m) | 1,786,828 | 1,719,240 | 1,641,000 |
Average interest-earning assets, year to date ($m) | 2,190,078 | 2,099,285 | 2,161,746 |
Loans and advances to customers as % of customer accounts (%) | 55.3 | 56.2 | 58.2 |
Total shareholders’ equity ($m) | 198,225 | 184,973 | 185,329 |
Tangible ordinary shareholders’ equity ($m) | 165,153 | 154,295 | 155,710 |
Net asset value per ordinary share at period end ($) | 10.36 | 9.26 | 8.82 |
Tangible net asset value per ordinary share at period end ($) | 9.64 | 8.61 | 8.19 |
Capital, leverage and liquidity | |||
Common equity tier 1 capital ratio (%)3,4 | 14.9 | 14.9 | 14.8 |
Risk-weighted assets ($m)3,4 | 888,647 | 838,254 | 854,114 |
Total capital ratio (%)3,4 | 20.5 | 20.6 | 20.0 |
Leverage ratio (%)3,4 | 5.3 | 5.6 | 5.6 |
High-quality liquid assets (liquidity value) ($m)4,5 | 702,123 | 649,210 | 647,505 |
Liquidity coverage ratio (%)4,5 | 137 | 138 | 136 |
Net stable funding ratio (%)4,5 | 143 | 143 | 138 |
Share count | |||
Period end basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | 17,140 | 17,918 | 19,006 |
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares, after deducting own shares held (millions) | 17,276 | 18,062 | 19,135 |
Average basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | 17,427 | 18,357 | 19,478 |
ÑFor reconciliation and analysis of our reported results on a constant currency basis, including lists of notable items, see page 88. Definitions and calculations of
other alternative performance measures are included in ‘Reconciliation of alternative performance measures’ on page 106.
1In 2024, dividend per share includes 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.
2Our dividend payout ratio is adjusted for material notable items and related impacts, including all associated income statement impacts relating to those items.
3Regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. Effective 1
January 2025, the IFRS 9 transitional arrangements came to an end, followed by the end of the CRR II grandfathering provisions on 28 June 2025.
4Regulatory numbers and ratios are as presented at the date of reporting. Small changes may exist between these numbers and ratios and those submitted in
regulatory filings. Where differences are significant, we may restate in subsequent periods.
5The liquidity coverage ratio is based on the average value of the preceding 12 months. The net stable funding ratio is based on the average value of four preceding
quarters.
HSBC Holdings plc Annual Report on Form 20-F |
17 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial overview |
Income statement results
2025 compared with 2024
Movement in reported profit before tax compared with 2024 | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions1 | ||
Reported results | $m | $m | $m | $m | % | $m |
Revenue | 68,274 | 65,854 | 66,058 | 2,420 | 4 | (1,936) |
– of which: net interest income | 34,794 | 32,733 | 35,796 | 2,061 | 6 | (1,628) |
ECL | (3,850) | (3,414) | (3,447) | (436) | (13) | 87 |
Net operating income | 64,424 | 62,440 | 62,611 | 1,984 | 3 | (1,849) |
Total operating expenses | (36,428) | (33,043) | (32,070) | (3,385) | (10) | 606 |
Operating profit | 27,996 | 29,397 | 30,541 | (1,401) | (5) | (1,243) |
Share of profit in associates and joint ventures less impairment | 1,911 | 2,912 | (193) | (1,001) | (34) | |
Profit before tax | 29,907 | 32,309 | 30,348 | (2,402) | (7) | (1,243) |
Tax expense | (6,776) | (7,310) | (5,789) | 534 | 7 | |
Profit after tax | 23,131 | 24,999 | 24,559 | (1,868) | (7) | |
Revenue excluding notable items ø | 71,020 | 67,434 | 65,723 | 3,586 | 5 | |
Profit before tax excluding notable items ø | 36,617 | 34,122 | 33,198 | 2,495 | 7 | |
1For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
Reported profit
Reported profit before tax of $29.9bn was
$2.4bn or 7% lower, mainly due to a $4.9bn
year-on-year net adverse impact from notable
items.
In 2025, notable item impacts included
recognition of dilution and impairment losses
of $2.1bn related to BoCom, reserve recycling
losses of $1.5bn following the completion of
the sale of our French retained portfolio of
home and certain other loans, legal provisions
of $1.4bn and restructuring and other related
costs associated with our organisational
simplification of $1.0bn. In 2024, these
included a gain of $4.8bn on the disposal of
our banking business in Canada and the
impacts of the disposal of our business in
Argentina, comprising a $1.0bn loss on
disposal, and the recycling of foreign currency
reserve losses and other reserves of $5.2bn.
They also included a $0.2bn loss on the early
redemption of legacy securities.
On a constant currency basis, profit before tax
of $29.9bn was $2.5bn lower than in 2024,
while excluding notable items it increased by
$2.4bn or 7%.
Reported revenue
Reported revenue of $68.3bn was $2.4bn or
4% higher, reflecting strong fee and other
income growth. This was partly offset by a net
adverse movement in notable items of
$1.2bn, primarily relating to business
disposals, as well as a dilution loss of $1.1bn
following the completion of BoCom’s capital
issuance in June 2025, which reduced our
interest from 19.03% to 16.00%.
Revenue excluding notable items increased by
$3.6bn, primarily reflecting higher fee and
other income in Wealth and Wholesale
Transaction Banking, as well as from the non-
recurrence of adverse hyperinflationary
impacts in Argentina.
In Wealth, there was a strong performance in
Insurance, due to a higher CSM release,
reflecting strong new business growth and
favourable net investment returns and
experience variances, and growth in our
Private Bank and investment distribution from
higher customer activity. In Wholesale
Transaction Banking, fee and other income
growth reflected a strong performance in
2025, particularly in Global Foreign Exchange
amid elevated market volatility.
Net interest income
NII increased by $2.1bn reflecting the benefit
of the reinvestment of our structural hedge at
higher yields, deposit balance growth and
higher NII in Markets Treasury. In addition, the
increase reflected the non-recurrence of a
$0.2bn loss in 2024 on the early redemption of
legacy securities. This was partly offset by the
adverse impact of $1.6bn from business
disposals in Argentina and Canada, and margin
compression on our deposits from lower
interest rates. The growth in NII also reflected
a benefit from lower funding costs associated
with the trading book of $1.7bn. Banking NII,
which excludes these funding costs, increased
by $0.3bn.
On a constant currency basis, revenue
increased by $2.3bn or 3% and banking NII
rose by $0.5bn.
Notable items – on a reported basis | 2025 | 2024 | 2023 |
$m | $m | $m | |
Revenue | |||
Disposals, wind-downs, acquisitions and related costs1 | (1,642) | (1,343) | 1,298 |
Dilution loss of interest in BoCom associate | (1,104) | — | — |
Fair value movements on financial instruments | — | — | 14 |
Disposal losses on Markets Treasury repositioning | — | — | (977) |
Early redemption of legacy securities | — | (237) | — |
Currency translation on revenue notable items | — | (2) | (130) |
Operating expenses | |||
Disposals, wind-downs, acquisitions and related costs | (502) | (199) | (321) |
Restructuring and other related costs | (1,030) | (34) | 136 |
Legal provisions | (1,432) | — | — |
Currency translation on operating expenses notable items | — | 18 | — |
Share of profit in associates and joint ventures less impairment | |||
Impairment losses of interest in BoCom associate | (1,000) | — | (3,000) |
Currency translation on associate notable items | — | — | (59) |
12024 includes losses of $0.2bn related to the sale of our business in Russia, which are not categorised as a material notable item.
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial overview |
Reported ECL
Reported ECL charges of $3.9bn were $0.4bn
or 13% higher than 2024, including charges in
both periods related to the CRE sectors in
Hong Kong and mainland China. In 2025, the
charge in this sector in Hong Kong of $0.7bn
(2024: $0.1bn) reflected higher allowances for
new defaulted exposures, the impact of an
over-supply of non-residential properties that
has put continued downward pressure on
rental and capital values, and updates to our
models used for ECL calculations. The 2025
charge in the mainland China CRE sector was
$0.2bn (2024: $0.4bn).
ÑFor further details of the calculation of ECL, see
pages 157 to 160.
Reported operating expenses
Reported operating expenses of $36.4bn were
$3.4bn or 10% higher. The increase primarily
reflected notable items in 2025, including legal
provisions of $1.4bn, restructuring and other
related costs in 2025 of $1.0bn and $0.5bn
related to disposals, wind-downs, acquisitions
and related costs.
The remaining growth in reported operating
expenses included higher planned spend and
investment in technology, higher performance-
related pay and the impacts of inflation. These
increases were partly offset by reductions
following the completion of business disposals
in Canada and Argentina, and the benefits
delivered by our restructuring activities.
Target basis operating expenses were
$33.5bn or 3% higher than in 2024 due to
higher planned spend and investment in
technology and the impact of inflation.
Reported share of profit in associates and
joint ventures less impairment of $1.9bn
was $1.0bn or 34% lower, primarily due to an
impairment loss of $1.0bn recognised on
BoCom following our value-in-use assessment
made in 2025.
ÑFor further details on our value-in-use
assessment, see Note 18: Interests in associates
and joint ventures on page 345.
Tax expense
In 2025 tax expense was a charge of $6.8bn,
representing an effective tax rate of 22.7%
(2024: 22.6%). Excluding the non-deductible
impairment and dilution loss in BoCom and
legal provisions on which no tax benefit is
recorded, the effective rate for 2025 was
20.6% (2024: 21.5%, excluding the impact of
the non-taxable gains and losses on the sale of
our banking business in Canada and our
business in Argentina).
ÑFor further details on tax expense, see page 70.
Supplementary management view of revenue ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions1 | ||
$m | $m | $m | $m | % | $m | |
Banking NII2 | 44,084 | 43,975 | 44,095 | 109 | 0 | (1,603) |
Fee and other income | 26,936 | 23,459 | 21,628 | 3,477 | 15 | 128 |
– Wealth | 9,390 | 7,559 | 6,339 | 1,831 | 24 | (164) |
– Wholesale Transaction Banking | 10,860 | 10,433 | 10,654 | 427 | 4 | (171) |
– Other | 6,686 | 5,467 | 4,635 | 1,219 | 22 | 463 |
Revenue excluding notable items | 71,020 | 67,434 | 65,723 | 3,586 | 5 | (1,475) |
Notable items | (2,746) | (1,580) | 335 | (1,166) | (74) | (461) |
Revenue | 68,274 | 65,854 | 66,058 | 2,420 | 4 | (1,936) |
1For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
2For a reconciliation of banking NII to reported NII, see page 69. In the supplementary management view of revenue, banking NII in 2024 excludes notable items
of $0.2bn, which are separately presented in ‘notable items’. There were no notable items in banking NII in 2025 or 2023.
Movement in reported profit before tax compared with 2024 – constant currency basis | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions1 | ||
Results – on a constant currency basis ø | $m | $m | $m | $m | % | $m |
Revenue | 68,274 | 66,009 | 65,040 | 2,265 | 3 | (1,681) |
ECL | (3,850) | (3,392) | (3,250) | (458) | (14) | 72 |
Total operating expenses | (36,428) | (33,146) | (31,691) | (3,282) | (10) | 417 |
Operating profit | 27,996 | 29,471 | 30,099 | (1,475) | (5) | (1,192) |
Share of profit in associates and joint ventures less impairment | 1,911 | 2,913 | (297) | (1,002) | (34) | — |
Profit before tax | 29,907 | 32,384 | 29,802 | (2,477) | (8) | (1,192) |
Revenue excluding notable items | 71,020 | 67,591 | 64,835 | 3,429 | 5 | |
Profit before tax excluding notable items | 36,617 | 34,181 | 32,841 | 2,436 | 7 | |
1 For details, see ‘Strategic transactions supplementary analysis‘ on page 92.
Balance sheet and capital
Balance sheet strength
Total assets of $3.2tn were $216bn higher than
at 31 December 2024 on a reported basis, and
$93bn higher on a constant currency basis. The
increase was driven by growth in financial
investments balances, higher trading assets
and reverse repurchase agreements and higher
other asset balances. This was partly offset by
lower cash and balances at central banks due
to redeployment opportunities and a decrease
in derivative assets. Loans and advances to
customers also increased, and as a percentage
of customer accounts they were 55.3%,
compared with 56.2% at 31 December 2024
(excluding balances classified as held for sale).
Given customer loan growth has been muted in
recent years, we will no longer provide
guidance on medium- to long-term customer
lending growth.
ÑFor detailed balance sheet commentary, see
page 74.
Distributable reserves
The distributable reserves of HSBC Holdings
at 31 December 2025 were $46.2bn, a
$17.9bn increase since 31 December 2024,
primarily driven by $22.1bn in profits and other
reserve movements generated in 2025,
cancellation of $16.6bn standing to the credit
of its share premium and capital redemption
reserves pursuant to the Court approval
obtained by HSBC Holdings on 24 June 2025,
offset by $20.8bn of dividends on ordinary
shares, additional tier 1 coupon and share buy-
back payments.
Capital and liquidity position
Our CET1 ratio at 31 December 2025
remained at 14.9%, unchanged from
31 December 2024. The average high-quality
liquid assets (‘HQLA’) we held was $702.1bn
(31 December 2024: $649.2bn). This excludes
HQLA in legal entities that are not transferable
due to local restrictions.
ÑFor further details, see ‘Capital overview‘ on
page 191.
HSBC Holdings plc Annual Report on Form 20-F |
19 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Business segments
Hong Kong | Our Hong Kong business has a leading market position in our home market of Hong Kong. It comprises Retail Banking and Wealth and Commercial Banking of HSBC Hong Kong and Hang Seng Bank. | |||
Contribution to Group profit
before tax ø
$9.6bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
40% | 7% | |
Growth in Wealth fee and other income compared with 2024, on a constant currency basis. ø | Growth in deposits compared with 2024, on a constant currency basis. ø |
Results – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Revenue | 15,878 | 15,047 | 14,532 | 831 | 6 | — |
ECL | (1,476) | (1,077) | (1,494) | (399) | (37) | — |
Operating expenses | (4,826) | (4,841) | (4,514) | 15 | — | — |
Share of profit/(loss) from associates and joint ventures | — | — | — | — | — | — |
Profit before tax | 9,576 | 9,129 | 8,524 | 447 | 5 | — |
RoTE1 (%) | 35.5 | 37.5 | 34.7 | |||
RoTE excluding notable items1 (%) | 35.5 | 37.5 | 36.4 | |||
Management view of revenue – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Banking NII3 | 12,082 | 11,997 | 12,108 | 85 | 1 | — |
Fee and other income4 | 3,796 | 3,050 | 2,798 | 746 | 24 | — |
– Retail Banking and Wealth | 2,658 | 1,941 | 1,678 | 717 | 37 | — |
– Retail Banking | 326 | 312 | 287 | 14 | 4 | — |
– Wealth | 2,206 | 1,577 | 1,203 | 629 | 40 | — |
– Other5 | 126 | 52 | 188 | 74 | >100 | |
– Commercial Banking | 1,138 | 1,109 | 1,120 | 29 | 3 | — |
– Wholesale Transaction Banking | 730 | 709 | 692 | 21 | 3 | — |
– Credit and Lending | 78 | 83 | 76 | (5) | (6) | — |
– Other5 | 330 | 317 | 352 | 13 | 4 | — |
Revenue excluding notable items | 15,878 | 15,047 | 14,906 | 831 | 6 | — |
Notable items | — | — | (374) | — | n/a | — |
Revenue | 15,878 | 15,047 | 14,532 | 831 | 6 | — |
1 For details of our RoTE calculation by business segment, see page 108. 2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92. 3 For a description of how we derive banking NII, see page 65. In the Hong Kong business, there are no adjustments to NII to derive banking NII. 4 For supplementary analysis of fee and other income, see page 91. 5 Includes revenue from Markets Treasury. It also includes other non-product-specific income and notional tax credits. | ||||||
HSBC Holdings plc Annual Report on Form 20-F |
20 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Disposal losses on Markets Treasury repositioning | — | — | (373) |
Currency translation on revenue notable items | — | — | (1) |
Operating expenses | |||
Restructuring and other related costs | (16) | — | — |
Currency translation on operating expenses notable items | — | — | — |
Financial performance
Profit before tax of $9.6bn increased by $0.4bn
or 5% compared with 2024, on a constant
currency basis.
Revenue of $15.9bn was $0.8bn or 6% higher,
on a constant currency basis.
Banking NII of $12.1bn was broadly stable
compared with 2024, as the benefit of growth
in deposit balances was largely offset by
margin compression on deposits in a lower
interest rate environment, together with lower
lending balances.
Fee and other income of $3.8bn grew by
$0.7bn or 24%, primarily reflecting an increase
of $0.6bn or 40% in Wealth from a strong
performance in investment distribution due to
higher customer activity.
ECL of $1.5bn increased by $0.4bn compared
with 2024, on a constant currency basis,
including charges in both periods related to the
Hong Kong CRE sector. In 2025, the increased
charge in this sector reflected higher
allowances for new defaulted exposures, the
impact of an over-supply of non-residential
properties that has put continued downward
pressure on rental and capital values, and
updates to our models used for ECL
calculations.
Operating expenses of $4.8bn were stable, on
a constant currency basis. This reflected lower
operations costs, which were broadly offset by
increases from planned higher spend on
technology, including the development of our
Wealth proposition, and the impact of inflation.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
HSBC Holdings plc Annual Report on Form 20-F |
21 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
UK | Our UK business has a leading market position in our home market of the UK. It comprises UK Retail Banking and Wealth (including first direct and M&S Bank) and UK Commercial Banking, including HSBC Innovation Bank. | |||
Contribution to Group profit
before tax ø
$6.7bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
6% | 7% | |
Growth in loans and advances to customers compared with 2024, on a constant currency basis. ø | Growth in banking NII compared with 2024, on a constant currency basis.3 ø |
Results – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Revenue | 12,938 | 12,342 | 13,439 | 596 | 5 | — |
ECL | (696) | (415) | (545) | (281) | (68) | — |
Operating expenses | (5,537) | (5,104) | (4,829) | (433) | (8) | (7) |
Share of profit/(loss) from associates and joint ventures | — | — | — | — | — | — |
Profit before tax | 6,705 | 6,823 | 8,065 | (118) | (2) | (7) |
RoTE1 (%) | 22.6 | 25.0 | 33.3 | |||
RoTE excluding notable items1 (%) | 22.9 | 25.0 | 25.1 | |||
Management view of revenue – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Banking NII3 | 11,096 | 10,355 | 9,903 | 741 | 7 | — |
Fee and other income4 | 1,842 | 1,987 | 2,036 | (145) | (7) | — |
– Retail Banking and Wealth | 617 | 744 | 749 | (127) | (17) | — |
– Retail Banking | 255 | 273 | 260 | (18) | (7) | — |
– Wealth | 339 | 391 | 419 | (52) | (13) | — |
– Other5 | 23 | 80 | 70 | (57) | (71) | |
– Commercial Banking | 1,225 | 1,243 | 1,287 | (18) | (1) | — |
– Wholesale Transaction Banking | 891 | 912 | 926 | (21) | (2) | — |
– Credit and Lending | 238 | 216 | 178 | 22 | 10 | — |
– Other5 | 96 | 115 | 183 | (19) | (17) | — |
Revenue excluding notable items | 12,938 | 12,342 | 11,939 | 596 | 5 | — |
Notable items | — | — | 1,500 | — | n/a | — |
Revenue | 12,938 | 12,342 | 13,439 | 596 | 5 | — |
1 For details of our RoTE calculation by business segment, see page 108. 2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92. 3 For a description of how we derive banking NII, see page 65. In the UK business, there are no adjustments to NII to derive banking NII. 4 For supplementary analysis of fee and other income, see page 91. 5 Includes revenue from Markets Treasury. It also includes other non-product-specific income, gains/(losses) on property disposals and notional tax credits. | ||||||
HSBC Holdings plc Annual Report on Form 20-F |
22 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Disposals, wind-downs, acquisitions and related costs | — | — | 1,591 |
Disposal losses on Markets Treasury repositioning | — | — | (142) |
Currency translation on revenue notable items | — | — | 51 |
Operating expenses | |||
Disposals, wind-downs, acquisitions and related costs | 1 | 6 | (45) |
Restructuring and other related costs | (70) | 7 | 17 |
Currency translation on operating expenses notable items | — | — | (3) |
Financial performance
Profit before tax of $6.7bn was $0.1bn or 2%
lower than 2024, on a constant currency basis.
Revenue of $12.9bn was $0.6bn or 5% higher
on a constant currency basis.
Banking NII of $11.1bn increased by $0.7bn or
7%, despite reductions in interest rates. This
increase was driven by the continued benefit
of our structural hedge, as well as higher
lending balances across mortgages and
corporate lending and from growth in deposit
balances, in line with the increase in the
overall market size. These increases were
partly offset by the impact of lower interest
rates.
Fee and other income of $1.8bn fell by 7%.
–In Retail Banking and Wealth, fee and other
income was lower reflecting an increased
cost of customer rewards following the
relaunch of HSBC Premier.
–In Commercial Banking, lower business
banking fees due to proposition changes
were partly offset by higher corporate
lending fees.
ECL of $0.7bn increased by $0.3bn compared
with 2024, on a constant currency basis. The
increase reflected a more normalised level of
ECL in 2025, as well as the non-recurrence of
releases against retail exposures in 2024.
Operating expenses of $5.5bn increased by
$0.4bn or 8%, on a constant currency basis,
including restructuring and other related costs
associated with our organisational
simplification of $0.1bn. The increase primarily
reflected planned higher investment spend in
technology, including on operational resilience.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
HSBC Holdings plc Annual Report on Form 20-F |
23 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Corporate and Institutional Banking | Our CIB business is a market leader in cross-border transaction banking and capital markets. | |||
Contribution to Group profit
before tax ø
$11.4bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
7% | 16.2% | |
Growth in fees and other income compared with 2024, on a constant currency basis. ø | RoTE excluding notable items up 2.0 percentage points compared with 2024. ø |
Results – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Revenue | 27,637 | 26,772 | 24,723 | 865 | 3 | (638) |
ECL | (696) | (878) | (524) | 182 | 21 | 36 |
Operating expenses | (15,556) | (14,612) | (13,755) | (944) | (6) | 96 |
Share of profit/(loss) from associates and joint ventures | 1 | 1 | (1) | — | — | — |
Profit before tax | 11,386 | 11,283 | 10,443 | 103 | 1 | (506) |
RoTE1 (%) | 14.9 | 14.2 | 14.3 | |||
RoTE excluding notable items1 (%) | 16.2 | 14.2 | 14.8 | |||
Management view of revenue – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Banking NII3 | 14,532 | 14,519 | 13,399 | 13 | 0 | (758) |
Fee and other income4 | 13,114 | 12,267 | 11,701 | 847 | 7 | 129 |
– Wholesale Transaction Banking | 9,239 | 8,847 | 8,920 | 392 | 4 | (137) |
– Investment Banking | 962 | 946 | 851 | 16 | 2 | (26) |
– Debt and Equity Markets | 2,283 | 2,252 | 1,628 | 31 | 1 | 33 |
– Wholesale Credit and Lending | 567 | 626 | 668 | (59) | (9) | (52) |
– Other5 | 63 | (404) | (366) | 467 | >100 | 311 |
Revenue excluding notable items | 27,646 | 26,786 | 25,100 | 860 | 3 | (629) |
Notable items | (9) | (14) | (377) | 5 | 36 | (9) |
Revenue | 27,637 | 26,772 | 24,723 | 865 | 3 | (638) |
1 For details of our RoTE calculation by business segment, see page 108. 2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92. 3 For a description of how we derive banking NII, see page 65. In CIB, there are no adjustments to NII to derive banking NII. The internal funding costs of trading and fair value net assets are recorded in ’fee and other income’. On consolidation, this funding is eliminated in Corporate Centre. In 2025, this funding cost was $9.7bn (2024: $11.5bn). 4 For supplementary analysis of fee and other income, see page 91. 5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes notional tax credits. | ||||||
HSBC Holdings plc Annual Report on Form 20-F |
24 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Disposals, wind-downs, acquisitions and related costs | (9) | (14) | — |
Disposal losses on Markets Treasury repositioning | — | — | (371) |
Currency translation on revenue notable items | — | — | (6) |
Operating expenses | |||
Disposals, wind-downs, acquisitions and related costs | (290) | (10) | (7) |
Restructuring and other related costs | (348) | (2) | 45 |
Legal provisions | (322) | — | — |
Currency translation on operating expenses notable items | — | 3 | 2 |
Financial performance
Profit before tax of $11.4bn was $0.1bn or
1% higher than in 2024, on a constant
currency basis.
Revenue of $27.6bn was $0.9bn or 3%
higher, on a constant currency basis, including
the adverse impact of $0.6bn from strategic
transactions.
Banking NII of $14.5bn was broadly stable in
comparison with 2024 including an adverse
impact of $0.8bn from strategic transactions.
Banking NII benefited from an increase in
allocated revenue from Markets Treasury
along with a strong growth of 8% in GTS,
mainly in Asia. This was offset by a reduction
in GPS due to the impact of lower interest
rates, offsetting a 5% growth in average
balances.
Fee and other income of $13.1bn increased
by $0.8bn or 7%.
–In Wholesale Transaction Banking, fee and
other income increased by $0.4bn or 4%,
mainly due to strong trading performance in
Global Foreign Exchange from elevated
market volatility and Securities Services,
reflecting improved market conditions and
new clients.
–In Debt and Equity Markets, fee and other
income increased by 1% from elevated
market volatility and strong client demand
from both wealth and corporate clients
within Equity Derivatives.
–In Other, fee and other income increased by
$0.5bn, largely due to the non-recurrence of
adverse hyperinflationary impacts in
Argentina.
ECL of $0.7bn decreased by $0.2bn compared
with 2024 on a constant currency basis. The
decrease reflected lower charges in Asia, due
to a reduction in ECL within the CRE sector in
mainland China.
Operating expenses of $15.6bn were $0.9bn
or 6% higher than in 2024 on a constant
currency basis, including a $0.1bn favourable
impact from strategic transactions. The
increase reflected the impact of notable items
of $1.0bn, including restructuring and other
related costs associated with our
organisational simplification of $0.3bn, legal
provisions of $0.3bn, and costs associated
with the wind-down of M&A and ECM
activities in the UK, Europe and the US. Cost
growth also reflected planned higher spend
and investment in technology, and inflationary
impacts.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
HSBC Holdings plc Annual Report on Form 20-F |
25 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
International Wealth and Premier Banking | Our IWPB business comprises Premier banking outside of Hong Kong and the UK, our Private Bank, Asset Management and Insurance businesses. | |||
Contribution to Group
profit before tax ø
$4.4bn
Calculation is based on profit before tax of our
business segments excluding Corporate Centre.
Divisional highlights
22% | 35% | |
Growth in wealth fees and other income compared with 2024, on a constant currency basis. ø | Growth in Insurance manufacturing new business CSM compared with 2024, up $0.9bn. |
Results – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Revenue | 14,520 | 13,817 | 12,385 | 703 | 5 | (590) |
ECL | (892) | (993) | (686) | 101 | 10 | 36 |
Operating expenses | (9,285) | (8,900) | (8,549) | (385) | (4) | 253 |
Share of profit/(loss) from associates and joint ventures | 24 | 45 | 62 | (21) | (47) | — |
Profit before tax | 4,367 | 3,969 | 3,212 | 398 | 10 | (301) |
RoTE1 (%) | 17.8 | 15.7 | 13.1 | |||
RoTE excluding notable items1 (%) | 19.0 | 15.5 | 13.6 | |||
Management view of revenue – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Banking NII3 | 7,000 | 7,640 | 7,288 | (640) | (8) | (552) |
Fee and other income4 | 7,593 | 6,151 | 5,391 | 1,442 | 23 | 61 |
– Retail Banking | 665 | 765 | 745 | (100) | (13) | (41) |
– Wealth | 6,845 | 5,618 | 4,661 | 1,227 | 22 | (143) |
– Other5 | 83 | (232) | (15) | 315 | >100 | 245 |
Revenue excluding notable items | 14,593 | 13,791 | 12,679 | 802 | 6 | (491) |
Notable items | (73) | 26 | (294) | (99) | >(100) | (99) |
Revenue | 14,520 | 13,817 | 12,385 | 703 | 5 | (590) |
1 For details of our RoTE calculation by business segment, see page 108. 2 Impact of strategic transactions classified as material notable items. For further details, see ‘Strategic transactions supplementary analysis‘ on page 92. 3 For a description of how we derive banking NII, see page 65. Banking NII in IWPB is computed by deducting third-party NII in our insurance business from total IWPB NII, which was $0.4bn in 2025 (2024: $0.4bn). Total Insurance NII is presented in ‘fee and other income‘ in Wealth. 4 For supplementary analysis of fee and other income, see page 91. 5 Includes allocated revenue from Markets Treasury and hyperinflationary impacts. It also includes other non-product-specific income. | ||||||
HSBC Holdings plc Annual Report on Form 20-F |
26 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Disposals, wind-downs, acquisitions and related costs | (73) | 28 | 4 |
Disposal losses on Markets Treasury repositioning | — | — | (91) |
Currency translation on revenue notable items | — | (2) | (207) |
Operating expenses | |||
Disposals, wind-downs, acquisitions and related costs | (83) | (3) | (53) |
Restructuring and other related costs | (161) | (14) | 11 |
Currency translation on operating expenses notable items | — | — | — |
Financial performance
Profit before tax of $4.4bn was $0.4bn higher
than in 2024, on a constant currency basis.
Revenue of $14.5bn was $0.7bn or 5% higher
on a constant currency basis. This included an
adverse impact of $0.6bn from strategic
transactions.
Banking NII of $7.0bn decreased by $0.6bn or
8%, primarily driven by the impact of strategic
transactions of $0.6bn, and the effects of
lower interest rates on deposits. This
reduction was partly offset by growth in
deposits and lending balances, mainly in Asia.
Fee and other income of $7.6bn was up by
$1.4bn or 23%, driven by Wealth due to
broad-based growth across all products and in
multiple markets, including Hong Kong,
mainland China, Singapore, Taiwan and
Mexico.
In Wealth, fee and other income of $6.8bn
was up $1.2bn or 22%, including an adverse
impact of $0.1bn from strategic transactions.
–Insurance increased by $0.6bn or 35%,
reflecting a higher CSM release given
continued year-on-year growth in our CSM
balance and favourable net investment
return and experience variances. The
insurance manufacturing CSM balance at 31
December 2025 was $14.6bn, up $2.5bn or
21% compared with 31 December 2024.
The increase primarily reflected new
business CSM growth of $3.4bn or 35% and
favourable market movements, partly offset
by CSM release.
–Private Bank increased by $0.2bn or 16%,
as increased customer activity supported by
business initiatives led to strong
performances in brokerage and trading, and
from higher annuity fees, driven by growth
in invested asset balances.
–Investment Distribution increased by $0.2bn
or 24% driven by higher sales of mutual
funds and structured products, mainly in
Asia.
In Other, fees and other income increased by
$0.3bn largely due to the non-recurrence of
adverse hyperinflationary impacts in Argentina.
The net loss in notable items of $0.1bn in
2025 was primarily related to net losses on
the disposals of our French and UK life
insurance businesses, partly offset by gains on
the sales of our private banking business in
Germany and our retail operations in Bahrain.
ECL of $0.9bn were broadly stable on a
constant currency basis.
Operating expenses of $9.3bn were $0.4bn or
4% higher than in 2024 on a constant currency
basis, including a $0.3bn favourable impact
from strategic transactions. The growth
primarily reflected continued investments in
Wealth, planned higher spend and investment
in technology, and the impact of inflation.
There was also a $0.1bn increase in
restructuring and other related costs
associated with our organisational
simplification.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
HSBC Holdings plc Annual Report on Form 20-F |
27 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments |
Corporate Centre
The results of Corporate Centre primarily comprise the financial impact of certain acquisitions and disposals
and the share of profit from our interests in our associates and joint ventures and related impairments. It also
includes Central Treasury, stewardship costs and consolidation adjustments.
Financial performance
Loss before tax of $2.1bn compared with a
profit before tax of $1.2bn in 2024, on a
constant currency basis, primarily due to the
impact from notable items. In 2025, these
included reserve recycling losses of $1.5bn
following the completion of the sale of our
French retained portfolio of home and certain
other loans, legal provisions of $1.1bn, a
$1.1bn loss from the dilution of our
shareholding and a $1.0bn impairment to the
carrying value of the Group’s interest in our
associate BoCom. In 2024, notable items
included a net loss of $1.4bn related to
business disposals in Canada and Argentina,
as well as a $0.2bn loss related to the early
redemption of legacy securities.
ÑFor further details of the dilution of our
shareholding in BoCom and our impairment
review process see Note 18: Interests in
associates and joint ventures on page 345.
Revenue was $0.7bn lower on a constant
currency basis. This primarily reflected the
impact of notable items, comprising the non-
recurrence of notable items in 2024 as
mentioned above, as well as the reserve
recycling losses recognised following the sale
of our French retained portfolio of home and
certain other loans and the dilution loss related
to BoCom, both in 2025.
Banking NII increased by $0.1bn on a constant
currency basis, primarily on the retained French
portfolio of home and certain other loans,
reflecting the effects of lower interest rates as
well as disposal of the portfolio. Banking NII in
2025 removes from NII the internal cost to fund
trading and fair value net assets, predominantly
in CIB, of $9.7bn (2024: $11.5bn).
Fee and other income of $0.6bn was $0.2bn
higher, primarily due to fair value movements
on financial instruments in Central Treasury
and structural foreign exchange hedges, and
the non-recurrence of an impairment in 2024
related to the sale of our operations in Armenia.
Operating expenses of $1.2bn increased by
$1.5bn on a constant currency basis, primarily
reflecting a legal provision of $1.1bn and a rise
in restructuring and other related costs
associated with our organisational simplification
of $0.4bn.
Share of profit from associates and joint
ventures less impairment of $1.9bn decreased
by $1.0bn on a constant currency basis,
primarily due to an impairment loss of $1.0bn
referred to above.
ÑFor business segment financial performance
commentary for the year ended 31 December
2024 compared with 31 December 2023, see
pages 104 to 105.
Results – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Revenue | (2,699) | (1,969) | (39) | (730) | (37) | (453) |
ECL | (90) | (29) | (1) | (61) | >(100) | — |
Operating expenses | (1,224) | 311 | (44) | (1,535) | >(100) | 75 |
Share of profit in associates and joint ventures less impairment | 1,886 | 2,867 | (358) | (981) | (34) | — |
Profit/(loss) before tax | (2,127) | 1,180 | (442) | (3,307) | >(100) | (378) |
RoTE1 (%) | (5.6) | 0.7 | (1.0) | |||
RoTE excluding notable items1 (%) | 6.1 | 4.3 | 6.0 | |||
Management view of revenue – on a constant currency basis ø | ||||||
2025 | 2024 | 2023 | 2025 vs 2024 | of which strategic transactions2 | ||
$m | $m | $m | $m | % | $m | |
Banking NII3 | (626) | (726) | (183) | 100 | 14 | 105 |
Fee and other income | 591 | 351 | 394 | 240 | 68 | (199) |
Revenue excluding notable items | (35) | (375) | 211 | 340 | 91 | (94) |
Notable items | (2,664) | (1,594) | (250) | (1,070) | (67) | (359) |
Revenue4 | (2,699) | (1,969) | (39) | (730) | (37) | (453) |
1 For details of our RoTE calculation by business segment, see page 108.
2 Impact of strategic transactions classified as material notable items. For details, see ‘Impact of strategic transactions‘ on page 91.
3 For a description of how we derive banking NII, see page 65. Corporate Centre banking NII includes funding charges on property and technology assets, and the
banking NII of the French retained portfolio of home and other loans prior to disposal. Banking NII in 2024 excludes notable items of $0.2bn, which are separately
presented in ‘notable items’. There were no notable items in banking NII in 2025 or 2023.
4 Revenue from Markets Treasury, HSBC Holdings net interest expense and hyperinflation are allocated out to the business segments, to align them better with their
revenue and expense. The total Markets Treasury revenue component of this allocation for 2025 was $2.3bn (2024: $1.5bn; 2023: $0.4bn).
Notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Disposals, wind-downs, acquisitions and related costs | (1,560) | (1,357) | (297) |
Dilution loss of interest in BoCom associate | (1,104) | — | — |
Fair value movements on financial instruments | — | — | 14 |
Early redemption of legacy securities | — | (237) | |
Currency translation on revenue notable items | — | — | 33 |
Operating expenses | |||
Disposals, wind-downs, acquisitions and related costs | (130) | (192) | (216) |
Restructuring and other related costs | (435) | (25) | 63 |
Legal provisions | (1,110) | — | — |
Currency translation on operating expenses notable items | — | 15 | — |
Impairment of interest in associate | (1,000) | — | (3,000) |
Currency translation on associate notable items | — | — | (59) |
HSBC Holdings plc Annual Report on Form 20-F |
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ESG overview
Our approach to ESG is focused on creating long-term value for our customers
and wider stakeholders.
Our approach
Our approach to ESG focuses on three main
areas: the transition to net zero, building
inclusion and resilience, and acting
responsibly.
Transition to net zero
Our ambition is to become a net zero bank by
2050. Supporting our customers is core to our
strategy and financing their transition is both
critical to them and aligned to our net zero
ambition. We want to be our customers’ most
trusted international financial partner through
the transition, creating long-term value for
them and our shareholders.
Our updated Net Zero Transition Plan
Our updated Net Zero Transition Plan,
published in November 2025, sets out our
commercially-grounded approach to helping
our customers succeed as the world moves
towards net zero amid changing economic and
geopolitical conditions. It intensifies our efforts
to be customer-focused, commercial and agile.
Our refreshed strategy supports the transition of
our CIB customers, and Commercial Banking
customers in the UK and Hong Kong, by
directing our financing and capabilities to areas
where we believe we can have the greatest
impact on the real economy. Our aim is to
support our customers’ transition by providing
and facilitating between $750bn and $1tn of
sustainable finance and investment by 2030.
Targets and policies
In our Net Zero Transition Plan, we also set out
our updated interim financed emissions
targets, metrics and associated policies,
seeking to remain science-aligned and
compatible with our own net zero ambition.
Our ability to meet our ambitions, targets and
commitments largely depends on the pace of
our customers’ transition journeys in the real
economy.
In light of the latest credible industry-specific
net zero pathways and decarbonisation rates,
we have updated our interim sector-specific
financed emissions targets from fixed targets
to target ranges.
We have also published a new Sustainability
Risk Policies Framework, which details how
we identify, evaluate and manage risks related
to the delivery of our sustainability approach,
and which sets out our sector-specific
sustainability risk approach. It also includes our
Thermal Coal Phase-Out Policy.
ÑFor more details, see HSBC Net Zero Transition
Plan at https://www.hsbc.com/who-we-are/our-
climate-strategy/our-net-zero-transition-plan
Building inclusion and resilience
We seek to foster inclusion and build
resilience to help create long-term value for all
our stakeholders. For colleagues, we focus on
creating an inclusive environment and offer
resources that support well-being. In 2025, we
achieved an Inclusion Index score of 78%
against an ambition of 75%, as measured by
our employee engagement survey, Snapshot.
We work to improve accessibility through
products that support customers experiencing
challenges, such as disabilities, impairments,
or significant life events, while also fostering
financial education and well-being.
Acting responsibly
Our conduct approach guides us to do the
right thing and focus on the impact we have
on our customers and the financial markets in
which we operate.
Progress on our ESG metrics
We have established ambitions and targets that guide how we do business, including how we operate and how we serve our customers. We set out
below some of the key ESG metrics we use to measure progress against our ambitions. To help us achieve our ESG ambitions, a number of measures
are included in the incentive scorecards of the Group CEO, Group CFO and Group Operating Committee members that underpin some of the ESG
metrics in the table below. For a summary of how our non-financial metrics link to executive remuneration, see pages 253 - 256 of the Director’s
remuneration report.
Environment | Social | Governance | ||||||
Transition to net zero | Building inclusion and resilience | Acting responsibly | ||||||
Sustainable finance and investment | Net zero in our own operations1 | Gender representation | Black heritage | Training | ||||
$495.6bn | 84.9% | 34.7% | 3.0% | 99% | ||||
Cumulative total provided and facilitated since 1 January 2020 (2024: $393.6bn) | Reduction in absolute operational greenhouse gas emissions from 2019 baseline (2024: 66.1%) | Senior leadership roles held by women (2024: 34.6%) | Senior leadership roles held by Black heritage colleagues in the UK and US combined (2024: 3.0%) | Employees who completed conduct training in 2025 (2024: 99%) | ||||
ÑRead more on page 35. | ÑRead more on page 47. | ÑRead more on page 51. | ÑRead more on page 51. | ÑRead more on page 61. | ||||
Financed emissions | ||||||||
7 sectors | ||||||||
Number of sectors where we have set interim financed emissions targets | ||||||||
ÑRead more on page 39. | ||||||||
1This absolute greenhouse gas emission figure covers scope 1, scope 2 and scope 3 (business travel) emissions only.
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ESG overview |
Task Force on Climate-related Financial Disclosures (‘TCFD’)
TCFD |
We have considered our ‘comply or explain’
obligation under both the UK Financial Conduct
Authority’s Listing Rules 6.6.6R(8) (‘UKLR’)
and Sections 414CA and 414CB of the UK
Companies Act 2006 (‘CA 2006’), collectively
referred to as the ‘TCFD requirements’ and
Hong Kong Listing Rules (‘HKLR’) Appendix C2
ESG Reporting Code Part D climate-related
disclosures (‘HKLR Part D’).
We perform an assessment to ascertain the
appropriate level of detail to be included in the
climate-related financial disclosures set out in
our Annual Report and Accounts 2025, as part
of considering what to measure and publicly
report.
Our assessment takes into account factors
such as the level of our exposure to climate-
related risks and opportunities, the scope and
objectives of our climate-related strategy,
transitional challenges, and the nature, size
and complexity of our business. See ‘How we
decide what to measure’ on page 385 for
further information.
Many of the climate-related requirements are
duplicated across both UKLR and HKLR Part
D, and as a result we have streamlined our
reporting approach where possible.
We confirm that we have made disclosures
consistent with the TCFD Recommendations
and Recommended Disclosures, including its
annexes and supplemental guidance, save for
one item: we do not plan to set short-term
targets for financed emissions, sustainable
finance or our own operations as our overall
climate strategy is focused on our ambition to
become a net zero bank by 2050. We have set
interim financed emissions 2030 targets and a
sustainable finance and investment ambition
by 2030. Further information can be found on
pages 35 and 41.
We disclose detailed explanatory statements
for TCFD requirements and HKLR Part D.
These statements include additional items that
we either do not currently disclose or partly
disclose within this report.
We further set out reasons for this, including
associated data and system limitations. Where
relevant, we also outline ongoing efforts to
enhance our reporting in these areas.
ÑFor a full summary of our TCFD disclosures,
including cross-references to detailed disclosure
locations, see page 386.
ÑOur detailed HKLR Index, including HKLR Part D,
can be found in our ESG Data Pack at
www.hsbc.com/esg.
ÑDetailed explanatory statements for TCFD
requirements and HKLR Part D can be found
from pages 386 to 388.
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Risk overview
Managing risk
We maintain a proactive approach to managing
our exposure to economic, financial and
geopolitical risks, supported by continuous
monitoring and review. Developments in these
areas have historically affected, and may in the
future materially affect, HSBC’s customers,
operations and financial risk profile.
Geopolitical and macroeconomic risk
In 2025, the global economy showed resilience
to unpredictable US trade policies, heightened
geopolitical tensions and increased fiscal
concerns in our major markets. Global GDP
growth exceeded expectations, driven by export
growth related to the front-loading of trade
purchases to avoid US tariffs and a weaker US
dollar, as well as government spending.
Household consumption was more subdued
due to weak confidence, higher unemployment
and inflation concerns. In the US, GDP growth
outperformed initial forecasts, helped by the
surge of investment in the technology sector. In
mainland China and Hong Kong, exports to
markets in Asia and Latin America offset some
of the impact of US tariffs, while supportive
fiscal and monetary policies continued to
underpin growth.
Trade and tariff policies are expected to remain a
source of uncertainty for businesses and
consumers. Changes to tariff rates, including the
application of sector-specific levies, may deter
capital investment and consumer spending,
disrupt supply chains and reduce global trade
growth. Although the reconfiguration of supply
chains may offer new opportunities for
investment and growth, such developments
could also adversely affect the Group and our
customers who operate in some of the most
affected markets.
Financial markets have witnessed significant
valuation gains, including in the artificial
intelligence (‘AI’) and technology sectors. The
investment in these sectors may deliver gains
to productivity, but current high valuations also
raise the risk of a material fall in the markets if
the expected gains to productivity fail to
materialise. A disruptive market correction
could undermine economic growth, which
may in turn have an adverse effect on HSBC’s
risk profile and earnings by increasing the
financial vulnerability of customers and
decreasing the value of collateral and other
claims.
We also remain subject to interest rate risk,
which can affect net interest income, the fair
value of our assets and liabilities, and overall
financial performance.
Major central banks have adjusted their policy
approach in response to changing inflation and
employment risks. The US Federal Reserve
resumed its cycle of interest rate cuts in
September 2025, after it assessed tariff-related
inflation risks as transitory but labour market
risks as having increased. The target range for
the Federal Funds rate is now 3.5%–3.75%. In
the UK, the Bank of England judged that inflation
pressures had moderated sufficiently to cut
interest rates in December 2025.
Although financial markets have priced in further
interest rate cuts, there is uncertainty around
their future trajectory. Policy rates could be
raised if inflation were to accelerate significantly
beyond central bank target ranges. Higher
interest rates may reduce loan demand across
key consumer and business segments, which
could lead to a deterioration in credit quality and
weigh on real estate and other asset prices. By
contrast, lower interest rates could pressure net
interest margins and adversely affect
profitability.
Our risk profile may be influenced by fiscal
policies, public deficits and levels of
indebtedness. In many of our major markets,
government debt levels are rising due to higher
social welfare costs and increased expenditure
on defence and climate transition. A fragmented
political landscape in many markets has
diminished the political will for fiscal tightening.
Higher long-term interest rates across major
economies could adversely impact the fiscal
capacity and debt sustainability of highly-
indebted sovereigns. The rise in funding costs in
our major markets could reduce the potential for
GDP growth by raising the cost of borrowing
while also creating refinancing risks for our
customers and counterparties.
Exchange rate volatility may also affect our risk
exposure through mark-to-market changes in
trading positions and the translation effects of
currency movements.
The geopolitical environment remains complex,
and tensions could impact the Group’s
operations and risk profile. We continue to
monitor the Russia-Ukraine war, developments
in relation to conflict in the Middle East, and the
wider implications as a result of the US military
action in Venezuela, as well as any indication of
other potential military action or conflicts
elsewhere. These conflicts remain key sources
of uncertainty, and may impact HSBC and our
customers, including through increased market
volatility and supply chain disruptions.
Heightened strategic competition between the
US and China, including cross-border
investment restrictions, is also affecting the
configuration of global supply chains, which may
in turn affect the Group’s operations.
Sanctions and restrictions on trade and
investment are continually evolving in response
to geopolitical events and may adversely affect
the Group, its customers and the markets in
which the Group operates. These factors may
result in increased legal, regulatory, reputational
and market risks, and a more complex operating
environment.
Signs of a recovery have begun to emerge in
the residential segment of Hong Kong’s
commercial real estate market in the second
half of 2025. However, the office segment is still
facing pressure and market liquidity remains
tight, particularly for mid-sized and sub-
investment grade corporates. In mainland China,
the property market remains weak with
government stimulus yet to trigger a material
improvement in buyer sentiment.
At the end of 2025, management adjustments
to ECL were applied to reflect sector or portfolio
risks that are not fully captured by our models.
We continue to monitor, and seek to manage,
the potential implications of all the above
developments on our customers and our
business.
Our key risk appetite metrics
At 31 December 2025, our CET1 ratio and ECL
charges were within our defined risk appetite
thresholds. At 31 December 2025, our CET1
ratio was 14.9%, unchanged from 31
December 2024. Wholesale and Retail ECL
charges were within appetite at 0.4% and
0.34% of loans and advances, respectively.
Our operations
We remain committed to investing in the
reliability and resilience of our technology
systems and critical services, including our ability
to withstand and respond to cyber-attacks. We
assess our third parties to help ensure they
deliver the standard of services we require to
provide resilient services to our customers. We
do so to help protect our customers and
counterparties, and to help ensure that we
minimise any disruption to our services. In our
approach to defending against these threats, we
invest in business and technical controls to help
us detect, prevent, respond to, recover and learn
from issues in a timely manner within our risk
appetite.
HSBC is committed to using AI responsibly. We
are working to balance the opportunity AI
presents to accelerate delivery of our strategy
with the need for appropriate controls to help
mitigate the associated risks. To help meet the
Group’s needs and regulatory expectations for
AI, whether developed internally or facilitated
through third parties, we continue to enhance
our Group-wide AI oversight, governance,
lifecycle management and risk framework.
HSBC’s Principles for the Ethical Use of Data
and AI are available at www.hsbc.com/ai.
We continue to focus on improving the quality
and timeliness of the data used to support
informed management decisions, and we are
advancing our strategic and regulatory change
initiatives to help deliver the right outcomes for
our customers, people, investors and
communities.
ÑFor further details of our Central and other
economic scenarios, see page 149.
ÑFor further details on our CET1 ratio, see pages 5
and 192.
ÑFor further details of our risk management
framework and risk appetite, see page 119.
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Risk overview |
Top and emerging risks
Our top and emerging risks report identifies
forward-looking risks so that they can be
considered in determining whether any
incremental action is needed to either prevent
them from materialising or to limit their effect.
Top risks are those that have the potential to
have a material adverse impact on the financial
results, reputation or business model of the
Group. We actively manage and take actions
to mitigate our top risks. Emerging risks are
those that, while they could have a material
impact on our risk profile were they to occur,
are not considered immediate and are not
under active management. Our suite of top
and emerging risks is subject to regular review
by senior governance forums. We continue to
monitor closely the identified risks and agree
management actions to remediate and/or
reduce them to acceptable levels, as required.
ÑFor further detail on our top and emerging risks,
see page 121.
Risk | Trend | Description |
Externally driven | ||
Geopolitical and macroeconomic risks | ~ | Our operations and portfolios are subject to risks arising from political instability, civil unrest and military conflict, which may lead to disruption of our operations, physical risk to our staff and/or physical damage to our assets. We are also subject to macroeconomic risks, which may drive changes to our income growth and asset quality. Heightened geopolitical and macroeconomic risk globally, including uncertainty in international trade policy, is subject to close monitoring and review. |
Technology and cybersecurity risk | ~ | There is an increased risk of service disruption or loss of data resulting from technology failures or malicious activities from internal or external threats. We continue to monitor changes to the technology and threat landscape, including those arising from ongoing geopolitical and macroeconomic events alongside third-party incidents and the impact this may have on risk management. We operate a continuous improvement programme to help support the resilience and stability of our technology operations and counter a fast-evolving and heightened cyber threat environment. |
Environmental, social and governance (‘ESG’) risks | ~ | We are subject to ESG risks, including in relation to climate change, nature and human rights. These risks have increased due to diverging national and political agendas, a more complex and prescriptive regulatory environment across the jurisdictions we operate in, as well as increasing frequency of severe weather events across the globe. Financial institutions’ actions and investment decisions in respect of ESG matters continue to be subject to heightened scrutiny by stakeholders. Failure to meet these evolving expectations may have financial and non-financial impacts, including reputational, legal and regulatory compliance risks. |
Financial crime risk | ~ | We are exposed to financial crime risk from our customers, staff and third parties engaging in criminal activity. The financial crime risk environment is heightened due to increasingly complex geopolitical challenges, the macroeconomic outlook, the complex and dynamic nature of sanctions and export control compliance, evolving financial crime regulations, rapid technological developments, an increasing number of national data privacy requirements and the increasing sophistication of fraud. As a result, we will continue to face the possibility of regulatory enforcement and reputational risk. |
Digitalisation and technological advances risk | ~ | Developments in technology and changes in regulations continue to enable new entrants to the banking industry as well as new products and services offered by competitors. This challenges us to continue to innovate with new digital capabilities and evolve our products, to attract, retain and best serve our customers. Along with opportunities, new technology, including GenAI, can introduce risks and disruption. We seek to manage technology developments with appropriate controls and oversight. |
Evolving regulatory environment risk | ~ | The regulatory and compliance risks are set against continued geopolitical risk and regulatory focus on operational resilience, resolvability, prudential requirements, financial reporting and data, ESG, conduct, as well as sound risk and financial crime risk management practices. The approach to regulation is increasingly fragmented, including in relation to AI and digital assets, and a trend towards deregulation has emerged in some jurisdictions, concurrently with regulatory actions to support business growth. |
Internally driven | ||
Data risk | } | We use data to serve our customers and run our operations, often in real-time within digital experiences and processes. If our data is not accurate and timely, our ability to serve customers, operate with resilience or meet regulatory requirements could be impacted. We seek to ensure that non-public data is kept confidential, and that we comply with the growing number of regulations that govern data privacy and cross-border movement of data. |
Risks arising from the receipt of services from third parties | ~ | We procure goods and services from a range of third parties. In the current macroeconomic and geopolitical climate, the risk of service disruption in supply chains is elevated, driven by an industry-wide increase in supply chain cyber threats. We continue to strengthen our controls, oversight and risk management policies and processes to select and manage third parties, including our third parties’ own supply chains, particularly for key activities that could affect our operational resilience. |
Model risk | } | Model risk arises whenever business decision making includes reliance on models. We use models in both financial and non- financial contexts, as well as in a range of business applications. Evolving regulatory requirements and enhanced expectations continue to drive changes to the way model risk is managed across the banking industry, with a particular focus on capital and credit loss models. New technologies, including AI, are driving a need for enhanced model risk controls. |
Strategic execution risk | ~ | Successful execution of our strategy enables us to help address the swiftly changing needs of our customers and stakeholders. We are committed to enhancing the effectiveness of strategic execution risk controls and monitoring. This will help us minimise disruptions during a period of heightened execution risk, driven by the complexity and scale of ongoing strategic, regulatory and technological change. |
Risks associated with workforce capability, capacity and environmental factors with potential impact on growth | ~ | Our businesses, functions and geographies are exposed to risks associated with employee retention and talent availability, the evolving skills requirements of our workforce, and compliance with employment laws and regulations. Voluntary attrition across the Group remains stable, but failure to manage these risks may impact the delivery of our strategic objectives or lead to regulatory sanctions or legal claims, and the risks are heightened during the implementation of organisational change. |
~ Risk heightened during 2025 } Risk remained at the same level as 2024
HSBC Holdings plc Annual Report on Form 20-F |
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Environmental,
social and
governance review
Our ESG review sets out our approach to our
environment, customers, employees and
governance. It explains how we aim to achieve
our purpose, deliver our strategy in a way that is
sustainable, and build strong relationships with all
of our stakeholders.
How we present our TCFD disclosures
Our overall approach to TCFD can be found on page 29 and
additional information is included on pages 385 to 388. Further
details have been embedded in this section and the Risk review
section on pages 203 to 212. Our TCFD disclosures are
highlighted with the following symbol:
TCFD |
Environmental | |
33 | Our approach to the transition |
34 | Understanding our ESG reporting |
35 | Supporting our customers |
38 | Partnering for an enabling environment |
39 | Embedding net zero into the way we operate |
Social | |
51 | Our commitment to inclusion |
53 | Building a healthy workplace |
55 | Developing skills, careers and opportunities |
56 | Building customer inclusion and resilience |
56 | Engaging with our communities |
Governance | |
57 | Setting high standards of governance |
58 | Human rights |
59 | Customer experience |
61 | Integrity, conduct and fairness |
63 | Safeguarding data |
2
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Environmental
TCFD |
Transition to net zero
We aim to support the transition to net zero and a sustainable future
in partnership with our customers and other stakeholders
Our approach to the transition
Our Priorities | Be simple and agile | Drive customer-centricity | Deliver focused sustainable growth | |||||||||||||
Our Values | We value difference | We succeed together | We take responsibility | We get it done | ||||||||||||
Our Net Zero Ambition | Ambition to become a net zero bank by 2050 supported by our Sustainability Strategy | |||||||||||||||
Our Three Net Zero Pillars | Supporting our customers | Embedding net zero into the way we operate | Partnering for an enabling environment | |||||||||||||
We are seeking to align our capital and capabilities with our customers’ transition goals, by tailoring our products and services to the specific needs of different customers around the world. | We are working to incorporate net zero considerations into our broader decision-making activities, our climate risk management framework, our metrics, and in our own operations and supply chains. | Our ability to finance our customers’ transition is influenced by external market and policy conditions, therefore we seek to partner with stakeholders and advocate for progress across the financial system. | ||||||||||||||
Our ambition is to become a net zero bank by
2050. Supporting our customers is core to our
strategy and financing our customers'
transition is both critical to them and aligned to
our net zero ambition.
Our updated Net Zero Transition Plan
When we published our first Net Zero
Transition Plan, we committed to evolving our
approach to keep pace with the dynamic world
in which we and our customers operate. Since
early 2024, the global landscape has shifted
markedly, making the pace of transition more
uneven. Against this broader landscape, we
updated our Net Zero Transition Plan in
November 2025, intensifying our efforts to be
customer focused, commercial and agile. It
sets out the actions we are continuing to take
to achieve our net zero ambition and to align
our financing with the Paris Agreement goals
of holding the increase in global average
temperature to well below 2°C above pre-
industrial levels, and pursuing efforts to limit
the temperature increase to 1.5°C.
Our Net Zero Transition Plan remains
structured around our three core
implementation pillars: supporting our
customers, embedding net zero into the way
we operate, and partnering for an enabling
environment.
Supporting our customers
As a global financial institution, we exist to
serve our customers. We believe supporting
our customers’ transition is one of the most
significant roles we can play in the global
transition to net zero. This will help to deliver
long-term value for customers and
shareholders. We have refined our approach
to continue to be responsive to the diverse
realities faced by our different customers
across the world, from individuals through to
multinational corporates and institutions.
Embedding net zero into the way we
operate
Our net zero ambition is an important part of our
corporate strategy. Our global businesses are
developing strategic plans that integrate climate
and sustainability considerations into their
operations. This approach reflects the diverse
transition maturities and local regulatory
expectations across our global footprint.
Our focus on the transition to net zero is well
established within our governance, culture,
and key performance indicators. A number of
measures supporting our progress towards
our net zero ambition are included in executive
performance scorecards and management
reporting, helping align accountability across
the organisation.
Partnering for an enabling environment
Recognising that our customers’ transition, and
our ability to finance it, relies in part on external
market and policy conditions, we also seek to
support enabling environments that can help
accelerate the flow of capital towards business
innovation and transformation.
Our approach seeks to build support across a
range of stakeholder groups and reflect the
varying pace and shape of the transition across
sectors and geographies, as well as the size
and scope of our presence in local markets.
Progress on our Net Zero Transition Plan
We continue to take actions across our
organisation to support the implementation of
our Net Zero Transition Plan. We continue to
focus on developing and maintaining the
capabilities of our people as the sustainability
landscape evolves. This report provides key
updates on our progress in 2025 and includes
our annual TCFD reporting.
ÑFor further details on our climate risk exposures,
see page 203.
ÑFor further details on building our net zero
capabilities and upskilling, and assumptions,
uncertainties and dependencies, see pages 9,
48, 49, and 57 of the HSBC Net Zero Transition
Plan.
ÑFor the HSBC Net Zero Transition Plan refer to
https://www.hsbc.com/who-we-are/our-climate-
strategy/our-net-zero-transition-plan
Key changes to our 2025 disclosures In 2025, there was an impact on certain climate disclosures, including: –Financed emissions: We have updated our interim 2030 financed emissions targets for all of our in-scope carbon-intensive sectors, apart from thermal coal mining. We have re- baselined and restated prior year metrics | to account for the latest methodology and scope changes, including the addition of short-term lending. For further details, see page 39. –Thermal coal financing drawn balance exposure: In 2025 we amended product scope in line with changes made for financed emissions as discussed above | and have developed a more detailed framework for our approach to exclusions. This resulted in a re-baseline of our 2020 thermal coal financing drawn balance exposure. For further details, see page 50. |
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Understanding our ESG reporting
Engaging with our stakeholders and our
material ESG topics
We know that engaging with our stakeholders
is core to being a responsible business. To
determine material topics that our
stakeholders are interested in, we conduct a
number of activities throughout the year. The
TCFD requirements, HKLR Appendix C2 ESG
Reporting Code Parts C and D and other
applicable rules and regulations are considered
as part of the identification of material issues
and disclosures. Additional information can be
found in the 'How we decide what to
measure' section on page 385. Material ESG
topics are listed on page 32 and related
disclosures are covered in this ESG review.
Continuing to evolve our climate
disclosures
We engage with standard setters to support
the development of transparent and
consistent climate-related industry standards
in areas such as implementation of new
International Sustainability Standards across
jurisdictions, sustainable finance taxonomy
and emissions accounting. We have aligned
our definitions of risk and opportunities with
our strategic planning cycle. For climate
reporting, we define short-term as time
periods up to 2 years, medium-term is
between 3-5 years, and long-term is between
6-15 years.
We have reviewed our interim financed
emissions targets, metrics and associated
policies, seeking to remain science-aligned
and compatible with our own net zero
ambition, while remaining realistic and credible
given global developments.
We expect to periodically review and, if
required, update our targets. We seek to
monitor the latest developments in climate
science and associated scenarios to help
inform our approach to target setting and our
portfolio alignment to support the transition of
the real economy to net zero. In 2026, we will
continue to review and enhance our approach
to disclosures.
Internal and external data challenges
The effective measurement, governance and
reporting of progress against our climate
ambitions is reliant on the availability of high-
quality, accessible, comparable and reliable
internal and external data. We are also reliant
on our own ability to collect and process such
relevant data as required in a timely manner.
Reported client emission data may have up to
a two-year lag, making alignment to financial
reporting dates challenging and leading to
further reliance on proxies.
Newer data sources and topics may be
difficult to assure using traditional verification
techniques. This, coupled with diverse
external data sources and complex structures,
further complicates data consolidation. Our
internal data on customer groups that was
used to source financial exposure and
emissions data is based on credit and
relationship management factors and is not
always aligned with the need to analyse
emissions across sector value chains. This can
result in inconsistencies in our financed
emissions calculations.
We continue to strengthen our ESG data and
analytics capability, working to deliver trusted
data assets, dashboards, AI, and advanced
analytics solutions that help support initiatives
like financed emissions, climate scenario
analysis, stress testing, sustainable finance
and portfolio optimisation.
Given our dependency on collecting emissions
data from our clients and the manual nature of
the process, enhanced verification and
assurance procedures are performed on a
sample basis over this data, including by the
first and second lines of defence. Our climate
models undergo independent review by an
internal model review group, and we obtain
limited assurance on our financed emissions
and sustainable finance disclosures from
external parties, including our external
auditors.
Lack of consistency across sustainable
finance taxonomies
Sustainable finance metrics, taxonomies and
practices currently lack global consistency. As
standards develop and regulatory guidance
evolves across jurisdictions, our targets,
methodologies and disclosures may also need
to adapt. Recognising these challenges, we
annually refresh and disclose our Sustainable
Finance and Investment Data Dictionary to
accompany reporting against our sustainable
finance and investment ambition. For further
details, see page 35.
Our re-baseline and restatement policy defines
the circumstances for a restatement of
previously reported data. We continue to
engage with standard setters in different
regions to support the development of
transparent and consistent taxonomies to
encourage science-based decarbonisation,
particularly in high transition risk sectors.
Impact on our reporting and financial
statements
We have assessed the impact of climate risk
on our balance sheet and have concluded that
no incremental adjustments were needed to
capture climate impacts in our financial
statements for the year ended 31 December
2025. The effects of climate change are a
source of uncertainty. We capture known and
observable potential impacts of climate-related
risks in our asset valuations and balance sheet
calculations. These are considered in relevant
areas of our balance sheet, including expected
credit losses, classification and measurement
of financial instruments, goodwill and other
intangible assets; and in making the long-term
viability and going concern assessment. As
part of assessing the impact on our financial
statements we conducted scenario analysis to
understand the impact of climate risk on our
business (see pages 49 and 206), and we also
used available information to perform a
climate ECL sensitivity analysis for both our
retail and wholesale portfolios (see page 212).
ÑFor further details of how management
considered the impact of climate-related risks on
its financial position and performance, see
‘Critical estimates and judgements’ on page 301.
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Environment |
Supporting our customers
Sustainable finance and investment
TCFD |
We aim to help our customers’ transition to net
zero and a sustainable future by providing and
facilitating between $750bn and $1tn of
sustainable finance and investment by 2030.
Our sustainable finance and investment
ambition aims to help promote green,
sustainable and socially-focused business and
sustainable investment products and solutions.
Since 1 January 2020, we have provided and
facilitated a cumulative $437.9bn of sustainable
finance and $57.7bn of ESG and sustainable
investing, as defined in our Sustainable Finance
and Investment Data Dictionary 2025. This
included 39% where the use of proceeds was
dedicated to green financing, 11% to social
financing, and 14% to other sustainable
financing. It also included 24% of sustainability-
linked financing and 12% of net new
investment flows managed and distributed on
behalf of investors.
In 2025, our underwriting activity for green,
social, sustainability, and sustainability-linked
bonds declined, primarily due to challenging
market conditions, particularly in the latter half
of the year. The global social bond market
contracted during 2025, with HSBC’s volume
reducing by approximately $4bn compared
with the previous year. Despite these
headwinds, on-balance sheet sustainable
lending transactions increased by 12% versus
2024, supported by strong growth of 15% in
ESG and sustainable investing flows.
In 2025, as part of our continued monitoring
and controls processes, we identified $0.3bn of
transactions that no longer fulfil our eligibility
criteria. These were declassified and removed
from the 2025 total, taking the total amount
declassified since 1 January 2020 to $1.6bn.
Continued progress towards achieving our
sustainable finance and investment ambition is
dependent on market demand for the products
and services set out in our Sustainable Finance
and Investment Data Dictionary 2025.
Sustainable finance and investment
$495.6bn†
Cumulative total provided and facilitated since
1 January 2020 (2024: $393.6bn)
Sustainable finance and investment summary1 | 2025 ($bn) | 2024 ($bn) | 2023 ($bn) | Cumulative progress since 2020 ($bn) |
Balance sheet-related transactions provided2 | 52.8 | 47.4 | 42.7 | 221.5 |
Capital markets/advisory (facilitated) | 32.6 | 37.3 | 33.3 | 216.4 |
ESG and sustainable investing (net new flows) | 16.6 | 14.5 | 7.7 | 57.7 |
Total contribution† | 102.0 | 99.2 | 83.7 | 495.6 |
Sustainable finance and investment classification by theme1 | ||||
Green use of proceeds5 | 41.7 | 42.2 | 37.1 | 196.0 |
Social use of proceeds | 6.9 | 9.6 | 8.4 | 52.6 |
Other sustainable use of proceeds3 | 14.2 | 13.9 | 10.7 | 71.4 |
Sustainability-linked4 | 22.6 | 19.0 | 19.8 | 117.9 |
ESG and sustainable investing | 16.6 | 14.5 | 7.7 | 57.7 |
Total contribution† | 102.0 | 99.2 | 83.7 | 495.6 |
† The $495.6bn cumulative progress since 1 January 2020 is subject to independent third-party limited assurance in accordance with International Standard on
Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’. Our Sustainable Finance and
Investment Data Dictionary 2025 and independent third-party limited assurance report is available at: www.hsbc.com/who-we-are/esg-and-responsible-business/
esg-reporting-centre.
1 The 2025 data in this table has been prepared in accordance with our Sustainable Finance and Investment Data Dictionary 2025, which includes green, social and
sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions provided (including drawn and
undrawn amounts), the proportional share of facilitated capital markets/advisory activities and ESG and sustainable investing net new flows of both HSBC Asset
Management sustainable investment funds and third-party solutions distributed through Private Bank and Retail Banking.
2 In 2024 only nine months of retail green/energy efficient mortgages were included for the first time within Other Qualified Green Lending. In 2025 reporting, 12
months of transactions were included, reported a quarter in arrear (1 October 2024 to 30 September 2025) due to the time lag in sourcing supporting third-party
data. For future years’ reporting we will continue to report green/energy efficient mortgages a quarter in arrear.
3Sustainable use of proceeds can be used for green, social or a combination of green and social purposes, assessed by HSBC against internal standards and
relevant industry guidelines.
4 Sustainability-linked products, where the coupon or interest rate is dependent on whether the borrower achieves certain pre-defined sustainability performance
target(s), are assessed by HSBC against internal standards and relevant industry guidelines and can be used for general purposes, which may be sustainable or
non-sustainable.
5 Included within the total cumulative contribution towards our ambition are transactions to customers within the six high transition risk sectors (i.e. automotive,
chemicals, construction and building materials, metal and mining, oil and gas, and power and utilities) as described on page 204, of which approximately $71bn is
defined as green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2025.
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Environment |
We believe supporting our customers’
transition is one of the most significant roles
we can play in the global transition to net zero.
Our Corporate and Institutional Banking (‘CIB’)
business, which incorporates HSBC
Infrastructure Finance, gives our customers
seamless access to global capital, markets
expertise and financing through a single
platform.
We have refreshed our strategy to support the
transitions of our CIB customers globally and
our Commercial Banking customers in the UK
and Hong Kong, and deliver on our growth
ambition. Our lending to corporate and
institutional customers makes up the majority
of our balance sheet and financed emissions,
so the role we play with these customers is
critical to achieving our net zero ambition.
We intend to become:
–The leading bank for fast-growing
transition ecosystems. Our customer
base spans ecosystems like clean power,
electrification of transport, and data centres
and AI. These ecosystems represent a
significant volume of the transition capex
needed by 2030 as they are key
decarbonisation and transformation vectors
for the economy. Expanding clean
electrification will be an important step to
minimise AI’s operational footprint while
maximising the technology’s potential1.
–The strategic transition partner for all
our customers. We aim to support all our
customers across segments and sectors to
meet their sustainability goals, leveraging
our debt financing and trade finance
capabilities across over 50 markets1.
–Bank of choice to catalyse emerging
climate tech. With our HSBC Innovation
Banking platform and substantial balance
sheet, we can bridge the gap between early-
stage development and large-scale
deployment of climate-critical technologies.
–We are also well-positioned to connect
these start-ups with our corporate and
institutional customers that are looking to
invest in climate tech ventures, and adopt
their solutions to accelerate their transition
journey1.
–
Understanding customer transition
priorities
We take a holistic approach to understanding
and supporting the transition journeys of our
customers and potential customers. We
regularly engage with our corporate customers
to help tailor our solutions to the diverse
realities they face around the globe, and the
different stages of their transition journey.
Supporting personal customers
We offer financing and investing options to
our individual banking customers in the key
areas where they may be able to influence
their carbon footprint.
1 For further details see HSBC Net Zero Transition
Plan at https://www.hsbc.com/who-we-are/our-
climate-strategy/our-net-zero-transition-plan
pages 26-28.
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Environment |
ESG and sustainable investing
Our ambition is to be one of the leading global
asset and wealth managers and sustainability
is an important enabler to achieving this
ambition.
We offer a suite of ESG and sustainable
investing solutions to institutional and
individual investors who want to mitigate risk
or seek value creation through considering
climate, nature or other sustainability factors in
their investment horizon. Covering both
traditional and alternative investment areas,
our solutions aim to advance ESG and
sustainable goals. We take different
approaches to achieve this, such as investing
in issuers or securities that may either seek
stronger ESG performance, align to themes
such as climate or the net zero transition, or
seek to deliver environmental or social
outcomes.
As at 31 December 2025, HSBC Asset
Management managed $213bn in ESG and
sustainable investing solutions, marking an
increase of $33.3bn or 18.5% from 2024.
These assets include those that are distributed
by our Private Bank and Retail Banking, and
those that Asset Management manages on
behalf of HSBC Insurance. This increase
underscores our continued focus on providing
a range of solutions tailored to meet the
diverse investment objectives of our clients.
For our individual investors, our ESG and
sustainable investing solutions span multiple
asset classes, including mutual funds, ETFs,
equities, fixed income, alternatives, as well as
discretionary mandates. In 2025, we
expanded our investment offering with the
launch of four additional mutual funds and
ETFs. We regularly publish insights to help our
clients better understand the ESG implications
of their investments.
In our Insurance business, as an asset owner,
we seek to adopt a responsible investment
approach. We give customers access to
sustainability options through investment-
linked insurance products where we offer a
range of investment choices, including those
relating to ESG and sustainable investing.
Some may target specific net zero transition
and climate themes.
ÑFor further details of our Asset Management
policies, see page 50.
Our sustainable finance and investment data dictionary
We define sustainable finance and investment
as any form of financial service that integrates
ESG criteria into business or investment
decisions. This includes financing, investing
and related activities that support the
achievement of the UN Sustainable
Development Goals, including but not limited
to the aims of the Paris Agreement on climate
change.
Our Sustainable Finance and Investment Data
Dictionary sets out our approach for classifying
financing and investment as sustainable for
the purpose of tracking and disclosing our
performance against our sustainable finance
and investment ambition.
We update our data dictionary annually,
including reviewing our product definitions,
adding new qualifying products and removing
products that no longer qualify, making
enhancements to our internal standards, and
developing our reporting and governance.
We engage in industry initiatives to develop
our understanding and approach to ‘transition
finance’. We do not currently include transition
finance as a product label or stand-alone
category in our data dictionary and reporting,
and we will continue to monitor and consider
industry guidance for future updates to our
data dictionary.
We have established internal business
governance forums and processes to assess
and monitor the risks associated with
sustainable finance products, ranging from
product design, origination and approval, as
well as tracking and monitoring product
performance.
We recognise that there are products and
assets included in HSBC’s ESG and
sustainable investing approach which may be
counted towards our sustainable finance and
investment ambition that do not necessarily
qualify as ‘sustainable investments’ as defined
by Sustainable Finance Disclosure Regulation
(SFDR) and/or other relevant regulations, and
may not qualify as ‘sustainable’ products for
the purposes of the UK Sustainability
Disclosure Requirements (SDR) and European
Securities and Markets Authority (ESMA) fund
naming guidance and/or any other regulatory
standards.
ÑFor our 2025 ESG Data Pack and Sustainable
Finance and Investment Data Dictionary, see
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
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Environment |
Partnering for an enabling environment
Our ability to support our customers’ transition
is heavily influenced by external market and
policy conditions. We seek to partner for an
enabling environment that can help to
accelerate the flow of capital towards scaling
transition solutions and innovation.
We aim to use our global reach and convening
ability to engage and collaborate with a range
of partners – including industry peers,
customers, governments, academia, civil
society and entrepreneurs – on solutions that
can help support the transition.
Through our philanthropy, we also partner with
a range of NGOs to help develop thought
leadership, spur innovation, build capacity,
mobilise capital and test and scale climate
solutions.
Highlights from our sustainability-
aligned partnerships
In 2025, we donated approximately $12.6m in
grant funding to help establish a portfolio of
partnerships aligned to the strategic focus
areas set out in our Net Zero Transition Plan.
We also supported initiatives focused on
driving progress on cross-cutting issues, such
as nature and the just transition.
Our just transition approach The speed and scale of the transition to net zero will be influenced by how it impacts communities, and how communities view and support the transition. Our approach to net zero considers how we can support a just transition, including how best to engage with and inform our customers on the topic, as well as helping to ensure the transition to net zero can positively impact local communities. Examples of our engagement include: –In 2025, we supported the Just Transition Finance Lab at the London School of Economics, which produced thought | – –leadership on topics including ‘promoting a transition with inclusion in India’ and ‘mobilising bonds for a just transition’. –HSBC Asset Management, in line with relevant stewardship activities, encourages companies to identify and address the impacts of their climate strategy on stakeholders, including workers, suppliers and the communities in which they operate. This may involve setting specific metrics or objectives concerning, but not limited to, employee training and development, green job creation, safeguarding workers’ rights and support for affected communities. |
Our approach to nature | ||||
Nature and its ecosystem services are foundational to economic growth, resilience and long-term value creation. Nature-related opportunities and risks – which can stem from the impacts and dependencies the global economy and financial system have on nature, as well as the complex interactions and compounding effects of climate change – are areas that require further consideration. We have been developing our approach to nature, aligning it with our net zero approach: supporting our customers through financing and investing in nature-related solutions; starting to embed nature into the way we operate, initially through understanding our exposure to nature and managing nature- related risk in our European business; and | partnering for a supportive enabling environment, for example, through our nature-focused philanthropic partnerships. In 2025, we established a Group Nature Programme, including senior governance, to oversee the development of our approach to nature. We continued to advance our approach to nature-related risk, initially focused on key parts of our European business, by starting to incorporate nature into wholesale credit risk management processes and completing a pilot nature scenario analysis stress test. We continue to enhance our capabilities, methodologies and tools, in line with evolving regulatory and reporting expectations. | HSBC Asset Management highlights good practices relating to nature in its Stewardship Plan, emphasising natural capital strategy, risk and reporting, governance and engagement. We encourage priority investee companies (as defined in our Stewardship Plan), where nature-related issues are relevant, to work towards these practices. In 2025, Climate Asset Management, a joint venture between HSBC Asset Management and climate investment and advisory firm Pollination, was ranked as Fund Manager of the year in both Global and European Categories at the Agri Investor Awards. ÑFor further details see HSBC Asset Management Stewardship Plan at https:// www.assetmanagement.hsbc.co.uk/en/ institutional-investor/about-us/responsible- investing/policies | ||
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Environment |
Embedding net zero into the way we operate
Financed emissions
TCFD |
Financed emissions is one of the key metrics
we use to measure progress on the transition
of our portfolio. As part of our ambition to
become a net zero bank by 2050, we have set
financed emissions targets for 2030.
Our analysis of financed emissions comprises
‘on-balance sheet financed emissions’ and
‘facilitated emissions’, which we distinguish
where necessary in our reporting.
Financed emissions link the financing we
provide for our customers to their activities in
the real economy and provide an indication of
the associated GHG emissions. They form
part of our scope 3 emissions, which include
emissions associated with the use of a
company’s products and services.
Our on-balance sheet financed emissions
include emissions related to on-balance sheet
lending, such as project finance and direct
lending. Our facilitated emissions include
emissions related to financing we help clients
to raise through capital markets activities. Our
analysis covers financing from CIB, and
Commercial Banking in the UK and Hong
Kong.
Our combined on-balance sheet financed and
facilitated emissions targets are for two
emissions-intensive sectors: oil and gas; and
power and utilities. Our on-balance sheet
financed emissions targets cover the following
sectors: cement; iron and steel; aviation;
automotive; and thermal coal mining.
We have set absolute emissions reduction
targets for the oil and gas, and thermal coal
mining sectors. For the power and utilities;
cement; iron and steel; aviation; and
automotive sectors, we have set emissions
intensity targets that allow us to deploy capital
towards decarbonisation solutions.
As part of our financial reporting, we present the
progress for these sectors against our financed
emissions baselines and targets.
Our approach to financed emissions
In our approach to assessing our financed
emissions, our key methodological decisions
are shaped in line with industry practices and
standards. We recognise that these practices
and standards are still developing. We will also
continue to review our reporting approach as
regulatory standards evolve, such as the
impact of the International Sustainability
Standards Board (ISSB) Standards.
Coverage of our analysis
Our analysis focuses on the most carbon-
emissive sectors and the parts of the value
chain where we believe most of the
emissions are produced, to help reduce
double counting of emissions. Double
counting may occur when GHG emissions are
counted more than once in the financed
emissions calculation. For instance, to
minimise the overlap of emissions captured,
we only include midstream activities of the
automotive sector, as upstream may be
included in other sectors that we finance, such
as iron and steel. This is different to the scope
of sectors within the wholesale corporate
lending portfolio that we use to manage
climate risk. These sectors are set out on page
204.
By estimating emissions and setting targets for
customers that directly account for, or indirectly
influence, the majority of emissions in each of
the most carbon-emissive sectors, we can
focus our engagement and resources where we
believe the potential for change is highest. For
each sector, our reported emissions now
typically include all the major GHGs, including
carbon dioxide, methane and nitrous oxide,
among others. These are reported as tonnes of
CO2 equivalent (‘tCO2e’).
To calculate annual on-balance sheet financed
emissions, we have taken into consideration
guidance from the Partnership for Carbon
Accounting Financials (‘PCAF’) standard. We
use drawn balances as at 31 December in the
year of analysis related to wholesale credit and
lending, including business loans and project
finance, as the value of finance provided to
customers.
For facilitated emissions we considered all
capital market transactions in scope for the year
of analysis. These included debt and equity
capital markets, and syndicated loans.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
Our financed emissions target refresh and associated changes | ||||
As stated in our 2025 Net Zero Transition Plan, we have undertaken a detailed review of each of our interim 2030 financed emissions targets this year to seek to ensure our approach continues to reflect the evolving external context, including developments in policy, technology, climate science, customer actions, available data and methodologies. We have updated our targets for all our in- scope carbon-intensive sectors, apart from thermal coal mining. Our thermal coal mining target remains unchanged, in alignment with our thermal coal phase-out policy and thermal coal financing drawn balance exposure reporting. | The key change is the adoption of a target range for our interim 2030 financed emissions targets, informed by IEA’s 2024 Net Zero Emissions (‘NZE’) Scenario and Announced Pledges Scenario (‘APS’). For our emissions intensity-based targets, we have moved the baseline year from 2019 to 2023 to reflect improvements in available data and methodology. Targets for these sectors are point-in-time targets and independent from the baseline. We continue to use 2019 as the baseline year for our oil and gas combined financed and facilitated emissions target, and 2020 for our thermal coal mining financed emissions target, as our absolute emissions reduction targets are set based on a percentage reduction from the baseline year. | Lending products that are short term in nature are now included in our financed emissions reporting. We have included short-term lending with the aim to cover in-scope lending activity and align with industry guidance. In addition, we have descoped aluminium from the previously reported iron, steel and aluminium sector and changed the reporting unit for aviation from revenue passenger kilometre (‘rpk’) to revenue tonne kilometre (‘rtk’). See page 45 for details on the scope and methodology changes driving our re-baselines and restatements. ÑFor further details see our Financed Emissions and Thermal Coal Exposures Methodology at www.hsbc.com/who-we-are/esg-and- responsible-business/esg-reporting-centre | ||
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Environment |
The chart below shows the scope of our
financed emissions analysis of seven sectors,
including upstream, midstream and
downstream activities within each sector. The
allocation of companies to different parts of
the value chain is highly dependent on expert
judgement and data available on company
revenue streams. As data quality improves,
this will be further refined.
Financed emissions analysis
Sector | Scope of emissions | Value chain in scope | Coverage of GHGs | |||
Oil and gas | 1, 2 and 3 | Upstream (e.g. extraction) | Midstream (e.g. transport) | Downstream (e.g. fuel use) | Integrated/ diversified | All GHGs |
Power and utilities | 1 and 2 | Upstream (e.g. generation) | Midstream (e.g. transmission and distribution) | Downstream (e.g. retail) | Diversified utilities - Power generation | All GHGs |
Cement | 1 and 2 | Upstream (e.g. raw materials, extraction) | Midstream (e.g. clinker and cement manufacturing) | Downstream (e.g. construction) | All GHGs | |
Iron and steel | 1 and 2 | Upstream (e.g. raw materials, extraction) | Midstream (e.g. ore to steel) | Downstream (e.g. construction) | All GHGs | |
Aviation | 1 for airlines, 3 for aircraft lessors | Upstream (e.g. parts manufacturers) | Midstream (e.g. aircraft manufacturing) | Downstream (e.g. airlines and air lessors) | All GHGs | |
Automotive | 1, 2 and 3 | Upstream (e.g. suppliers) | Midstream (e.g. motor vehicle manufacture) | Downstream (e.g. retail) | All GHGs | |
Thermal coal mining | 1, 2 and 3 | Upstream (e.g. extraction) | Midstream (e.g. processing) | Downstream (e.g. retail) | All GHGs | |
Key: | ||||||
Included in analysis
Setting our targets
Our initial approach to target setting used a
single reference scenario – the 2021
International Energy Agency (‘IEA’) Net Zero
Emissions by 2050 Scenario (‘NZE 2021’). We
have now introduced a target range for all our
in-scope carbon-intensive sectors (except for
thermal coal mining) informed by the IEA’s
2024 NZE and APS Scenarios.
Our approach is aligned with the goals of the
Paris Agreement to hold the global
temperature increase to well below 2°C above
pre-industrial levels and pursuing efforts to
limit the temperature increase to 1.5°C above
pre-industrial levels. Adopting a target range
helps us to better navigate the inherent
uncertainty in the pace of transition in the real
economy.
Facilitated emissions included in our combined
metrics are weighted at 33%, in accordance
with the PCAF standard. To further reduce the
inherent volatility in facilitated emissions, we
apply a moving average up to three years
building up from the baseline year (e.g.
average of 2022, 2023 and 2024 for the 2024
oil and gas progress numbers) to track
progress towards our combined target. This
means that transactions facilitated in 2028 and
2029 will still have an impact on the 2030
progress number and will need to be taken
into consideration as we manage progress
towards our target.
We perform feasibility analysis of our financed
emissions targets, considering multiple
climate-related scenarios.
We do not plan to rely on purchasing credits
to achieve any interim 2030 financed
emissions targets we set.
An evolving approach
We continue to engage with regulators,
standard setters, investors and industry bodies
to help shape our approach to target setting and
managing portfolio alignment to support the
transition to net zero in the global economy.
For the agricultural, corporate and retail real
estate sectors, we continue to expect to
measure and report our financed emissions in
future disclosures and we are working on
improving the quality and granularity of internal
data and sourcing suitable external data for
reliable measurement.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
Data and methodology limitations | |||
Our financed emissions estimates and methodological choices are shaped by data availability for our sectors. We are members of the PCAF, which defines and develops GHG accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for Financed Emissions and for Facilitated Emissions provide detailed methodological guidance. | |||
–We have found that data quality scores vary across the different sectors and years of our analysis. While we expect our data quality scores to improve over time, as companies continue to expand their disclosures to meet growing regulatory and stakeholder expectations, there may be fluctuations within sectors year-on-year, and/or differences in the data quality scores due to changes in data availability. | –Most of our clients do not yet report the full scope of GHG emissions included in our analysis, in particular scope 3 at a subsidiary level. In the absence of client-reported emissions, we estimated emissions using proxies based on company production and revenue figures. We applied industry averages in our analysis where company- specific data was unavailable, using third- party datasets. As data improves for client- reported emissions, our reliance on estimates will continue to reduce. | –Reported client emissions data may have up to a two-year lag, which may result in alignment challenges to financial reporting dates and lead to further reliance on proxies. –Mapping external datasets to our internal client entities can be challenging due to complex company ownership structures. –The methodology and data used to assess financed emissions and set targets continue to evolve and we expect industry guidance, market practice, and regulations to continue to change. | |
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Environment |
Data and methodology limitations continued | |||
–We remain conscious that the financed emissions calculation is sensitive to volatility in drawn amounts or market value fluctuations, and we plan to be transparent around drivers for change to portfolio financed emissions where possible. –We calculate sector-level emissions intensity metrics using a portfolio-weighted approach. –Due to data limitations, we are unable to obtain production data for all clients and so we calculate an emissions intensity figure using the 75th percentile of available data points to meet this data gap, which we consider as a conservative approach. –Classification of our clients into sectors is performed at a counterparty group level with inputs from SMEs, and will continue to evolve with improvements to data and our sector classification approach. Our internal data on customer groups used to source financial exposure and emissions data is based on credit and relationship management attributes and may not always be aligned to the data required to analyse emissions across sector value chains. | –As the sub-sector, and therefore the value chain classification of a client, is based on expert judgement, and as clients continue to transition, classification changes can result in sectoral movement year-on-year. –Emissions are calculated at a counterparty group level, rather than at subsidiary level, mainly due to the availability of emissions data, and this may lead to over- or under- estimation of emissions compared with calculation at the subsidiary level. –Companies with multiple activities, such as conglomerates with near to equal business activity split across multiple sectors, are excluded from our reporting as these can have different activities and cannot be allocated to one sector target. –For scope 2 emissions, companies may often choose between reporting location or market-based emissions. For our analysis, where available, market-based emissions data is prioritised for sourcing compared with location-based emissions. | –We use structured entities to securitise customer loans and advances we originate and to diversify sources of funding for asset origination and capital efficiency. These are currently excluded and we will continue to review our reporting approach as industry guidance and methodology evolves. –Where we have sponsored or invested in our clients’ securitisation vehicles, these have been included in our analysis where possible, recognising current data limitations, applying the PCAF business loans approach. –The operating environment for climate analysis and portfolio alignment is maturing. We continue to work to improve our data management processes. ÑFor further details see our Financed Emissions and Thermal Coal Exposures Methodology at www.hsbc.com/who-we-are/esg-and- responsible-business/esg-reporting-centre | |
Targets and progress
We have set out in the table below our
combined on-balance sheet financed and
facilitated emissions targets for the oil and
gas, and power and utilities sectors. We also
set out our updated targets for the on-balance
sheet financed emissions for cement, iron and
steel, aviation and automotive, and our
existing thermal coal mining target.
For our combined on-balance sheet financed
and facilitated emissions targets in 2024, the
moving average for facilitated emissions with
a 33% weighting for the oil and gas sector
totals 5.0 Mt CO2e and for the power and
utilities sector, it totals 279 tCO2e/GWh.
These values are then combined with the on-
balance sheet numbers for the relevant year to
track progress to target. We set out the annual
figures before the application of the three-year
average built up from the baseline in the
facilitated emissions table on page 46.
This year we have a three-year moving
average for oil and gas in 2023 and 2024, and
a two-year moving average for power and
utilities in 2024. Averages will be built up to
three years over time.
We disclose emissions in 2023 and 2024 and
progress achieved in 2024 versus baseline for
each sector.
The table incorporates re-baselines and
restatements, where relevant, and in this
section we set out the approach we take to
target setting.
When assessing the changes from 2019 to
2024, it is important to emphasise how
changes to exposure and market fluctuations
impact yearly updates as we make progress
towards our interim targets. Movement from
one year to the next may not reflect future
trends for the financed emissions of our
portfolio.
See specific sector sections for further
information on key movements.
Sector1 | Baseline | 2023 | 2024 | 2024 % change vs. baseline | 2030 target | Unit2 | Target type | Target scenario |
Combined on-balance sheet financed and facilitated emissions at 33%, with up to 3 years moving average | ||||||||
Oil and gas | 46.2 in 2019 | 28.9 | 28.5 | (38)% | (14-30)% | Mt CO2e | Absolute | IEA APS and NZE 2024 |
Power and utilities | 295 in 2023 | 295 | 242 | (18)% | 195-270 | tCO2e/GWh | Intensity | IEA NZE and APS 2024 |
On-balance sheet financed emissions | ||||||||
Cement | 0.59 in 2023 | 0.59 | 0.61 | 3% | 0.47-0.56 | tCO2e/t cement | Intensity | IEA NZE and APS 2024 |
Iron and steel | 1.73 in 2023 | 1.73 | 1.81 | 5% | 1.29-1.52 | tCO2e/t steel | Intensity | IEA NZE and APS 2024 |
Aviation | 747 in 2023 | 747 | 737 | (1)% | 709-776 | tCO2e/million rtk3 | Intensity | IEA NZE and APS 2024 |
Automotive | 152.8 in 2023 | 152.8 | 146.8 | (4)% | 65.5-95.3 | tCO2e/million vkm | Intensity | IEA NZE and APS 2024 |
Thermal coal mining4 | 3.4 in 2020 | 1.03 | 0.22 | (94)% | (70)%4 | Mt CO2e | Absolute | IEA NZE 2021 |
1 Our absolute and intensity emissions metrics and targets are measured based on the drawn exposures of the counterparties in scope for each sector. Emissions
intensity is a weighted average according to the portfolio weight of each investment, as a proportion of the total portfolio value.
2 For the oil and gas sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent (‘Mt CO2e’); for the power and utilities sector, intensity
is measured in tonnes of carbon dioxide equivalent per gigawatt hour (‘tCO2e/GWh’); for the cement sector, intensity is measured in tonnes of carbon dioxide
equivalent per tonne of cement (‘tCO2e/t cement’); for the iron and steel sector, intensity is measured in tonnes of carbon dioxide equivalent per tonne of steel
(‘tCO2e/t steel’); for the aviation sector, intensity is measured in tonnes of carbon dioxide equivalent per million revenue tonne kilometres (‘tCO2e/million rtk’); for
the automotive sector, intensity is measured in tonnes of carbon dioxide equivalent per million vehicle kilometres (‘tCO2e/million vkm’); and for the thermal coal
mining sector, absolute emissions are measured in million tonnes of carbon dioxide equivalent (‘Mt CO2e’).
3 We have changed our reporting unit for aviation from revenue passenger kilometre (‘rpk’) to revenue tonne kilometre (‘rtk’) to better align to counterparties in scope
which often include all airline activities (passengers, belly cargo, dedicated cargo). Additionally, this metric enables direct comparison to climate scenarios that are based
on traffic demand forecasts and aligns to industry practice.
4 The thermal coal mining scope differs from the other target sectors. We include solely emissions from thermal coal production and coal power generation, rather than
the total emissions of a counterparty within a sector, to reflect the thermal coal mining absolute financed emissions reduction target.
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Environment |
We plan to report financed emissions and
progress against our targets annually, and to
be transparent in our disclosures about the
methodologies applied and any challenges or
dependencies. However, financed emissions
figures may not be reconcilable or comparable
year-on-year in future, and baselines and
targets may require updates or revisions as
data, methodologies and reference scenarios
develop.
Consistent with the PCAF guidance on
financed emissions accounting, we only
consider the outstanding drawn financing
amount, given this has a direct link to real
economy emissions.
A number of clients have material undrawn
balances that, if drawn, could significantly
increase the financed emissions related to
those clients. We expect to assess how to
manage these exposures on a forward-looking
basis as we progress towards our 2030
targets. In addition, for the sectors with
intensity-based targets, the emissions
intensity is sensitive to material clients, and
changes to drawn balances year-on-year can
therefore influence the trend.
We continue to engage with and support our
clients in their decarbonisation journey by
providing financing and advisory services.
The charts below display our progress to date
in relation to the updated 2030 target,
including historical progress metrics based on
our previous methodology.
ÑFor further details see our Financed Emissions
and Thermal Coal Exposures Methodology at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre
Oil and gas
For the oil and gas sector, our analysis
included scope 1, 2 and 3 emissions, including
carbon dioxide and methane, for upstream and
integrated companies. Our baseline and
progress figures reflect combined on-balance
sheet financed and facilitated emissions.
We have set a target to reduce absolute
combined on-balance sheet financed and
facilitated emissions for our oil and gas
portfolio by 14-30% by 2030 relative to our
2019 baseline. The percentage reduction
range is equivalent to the percentage decrease
that the IEA indicates in its APS and NZE 2024
scenarios for global sector emissions to 2030,
from a 2019 baseline.
We show in the chart our progress to date
against our 2030 target. For 2024, the oil and
gas sector represents 48% of the financed
emission footprint of our target sectors. In
2024, absolute combined on-balance sheet
financed and facilitated emissions in our
portfolio decreased by 38% to 28.5 million
tonnes of carbon dioxide equivalent (‘Mt
CO2e’) relative to the 2019 baseline and
decreased by 1% from 2023 to 2024.
The reduction was due to strategic portfolio
management actions, complemented by
temporary factors, such as low loan drawdown
levels. These factors offset increases in 2024
for both short-term lending and capital markets
transaction volumes, where capital markets
activity remains subdued compared with the
baseline year. Facilitated emissions are
incorporated on a three-year rolling average
basis, and lower volumes from 2022 and 2023
continue to be included in the 2024 reported
number.
We are currently reporting below the 2030
target range. Achieving the target range is
sensitive to market activities, such as clients
increasing capital markets transactions, and
volatility in short-term lending or external
factors leading clients to draw down on
existing facilities, all of which could lead to
increased financed emissions in our portfolio.
We continue to engage and support our clients
in their transition journey while managing
towards our risk appetite.
Oil and gas Mt CO2e | 2024 progress from baseline |
(38)% |
(14-30)%
Power and utilities
For the power and utilities sector, our analysis
included scope 1 and 2 emissions for
upstream power generation, and diversified
utilities power generation companies. Our
baseline and progress figures reflect combined
on-balance sheet financed and facilitated
emissions.
We target a combined on-balance sheet
financed and facilitated emissions intensity of
195-270 tonnes of carbon dioxide equivalent
per gigawatt hour (‘tCO2e/GWh’) by 2030. This
reduction range is equivalent to the global
sector average emissions intensity for 2030
that the IEA indicates in its NZE and APS 2024
scenarios.
We have chosen an intensity-based target to
enable increased financing of clients engaging
in low-emissions solutions and transition
initiatives, such as renewable and clean energy
deployment, grid modernisation, energy
storage and efficiency improvements. With
electricity demand expected to more than
double by 2050 due to population growth,
electrification of industry, transport and
buildings, and demand from air conditioners
and data centres, a shift to low carbon-
intensive power generation will be critical.
We show in the chart our progress to date
against our 2030 target. For 2024, the power
and utilities sector represents 14% of the
financed emission footprint of our target
sectors. In 2024, the combined on-balance
sheet financed and facilitated emissions
intensity in our portfolio decreased by 18% to
242 tCO2e/GWh relative to the 2023 baseline
and is currently within the 2030 target range.
This reduction was primarily driven by
increased financing to lower emission-
intensive clients and a greater shift towards
financing renewable energy projects and pure-
play companies.
Power and utilities tCO2e/GWh | 2024 progress from baseline |
(18)% |
195-270
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Environment |
Cement
For the cement sector, our analysis included
scope 1 and 2 emissions for midstream
companies with clinker and cement
manufacturing facilities.
We target an on-balance sheet financed
emissions intensity of 0.47-0.56 tonnes of
carbon dioxide equivalent per tonne of cement
(‘tCO2e/t cement’) by 2030, using 2023 as our
baseline. This reduction is equivalent to the
global sector average emissions intensity for
2030 that the IEA indicates in its NZE and APS
2024 scenarios.
In the short term, the global cement industry
has demonstrated emissions reductions
through energy efficiency, alternative fuels,
kiln optimisation, lowering the clinker-to-
cement ratio and incorporating supplementary
cementitious materials. Achieving further
emissions reductions and enabling near-zero
emissions cement production in the medium
to long term will require significant investment
in emerging technologies, including alternative
cementitious materials, renewable industrial
heat, and large-scale carbon capture and
storage.
Globally, over 50 million tonnes per annum of
near-zero emissions cement and concrete
production capacity has been announced or is
under development.
We show in the chart our progress to date
against our 2030 target. For 2024, the cement
sector represents 11% of the financed
emission footprint of our target sectors.
The 2024 emissions intensity of our portfolio,
at 0.61 tCO2e/t cement, was 3% higher than
the 2023 baseline. The increase in 2024 was
mainly driven by sector mix. Our portfolio in
this sector is heavily concentrated and
emissions intensity trends are highly sensitive
to material client exposures and changes to
drawn balances year-on-year.
Cement tCO2e/t cement | 2024 progress from baseline |
3% |
0.47-0.56
Iron and steel
For the iron and steel sector, our analysis
included scope 1 and 2 for midstream iron and
steel production. We have now descoped
aluminium as our exposure to this sector is
very limited and the combination of two
metals with different emissions intensity
ranges and decarbonisation trajectories
created volatility in reporting.
We have currently not set a separate
aluminium target due to our low exposure to
the sector, both in terms of client numbers
and financed emissions. We will continue to
monitor our aluminium exposure and in the
event that it becomes a more material part of
our portfolio in future, we may consider
creating a separate target.
We target an on-balance sheet financed
emissions intensity of 1.29-1.52 tonnes of
carbon dioxide equivalent per tonne of steel
(‘tCO2e/t steel’) by 2030, using 2023 as our
baseline. This reduction is equivalent to the
global sector average emissions intensity for
2030 that the IEA indicates in its NZE and APS
2024 scenarios.
To achieve near-term emissions reductions,
we note that steel producers are focusing on
enhanced energy efficiency, increased scrap
utilisation, procuring green electricity and
testing alternatives to coke. A smaller group of
clients are looking at more transformative
investments, such as closing old coal-reliant
capacity and replacing it with direct reduction
and electric arc furnaces, and investing in
upstream enablers, like high quality iron ore,
and green iron supply chains.
Further innovation and investments this
decade will be crucial to scale and
commercialise low-emissions iron and steel
production processes, which will be an
important factor in achieving our 2030 target.
We show in the chart our progress to date
against our 2030 target. For 2024, the iron and
steel sector represents 8% of the financed
emissions footprint of our target sectors.
The emissions intensity of our portfolio in 2024
rose by 5% to 1.81 tCO2e/t steel against our
2023 baseline, driven by a shift in our sector
mix across our low to high emissions-intensive
clients. The emissions intensity trends in this
sector are highly sensitive to volatility in client
exposures and changes to drawn balances
year-on-year.
Iron and steel tCO2e/t steel1 | 2024 progress from baseline |
5% |
1.29-1.52
1Previously reported progress figures include
aluminium.
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Environment |
Aviation
For the aviation sector, our analysis included
passenger airlines’ scope 1 and aircraft
lessors‘ scope 3 emissions, focusing on
downstream. We have changed our reporting
unit for aviation from revenue passenger
kilometre (‘rpk’) to revenue tonne kilometre
(‘rtk’) to better align counterparties in scope,
which often include all airline activities
(passengers, belly cargo, dedicated cargo).
Additionally, this metric enables a direct
comparison with climate scenarios that are
based on traffic demand forecasts, and aligns
to industry practice.
We target an on-balance sheet financed
emissions intensity of 709-776 tonnes of
carbon dioxide equivalent per million revenue
tonne kilometres (‘tCO2e/million rtk’) by 2030,
using 2023 as our baseline. This reduction is
equivalent to the global sector average
emissions intensity for 2030 that the IEA
indicates in its NZE and APS 2024 scenarios.
We believe the sector needs significant policy
support, investments in alternative fuels, such
as sustainable aviation fuel (‘SAF’), and new
efficient aircraft to reduce emissions.
The adoption of SAF is in its infancy, currently
accounting for an estimated 0.1% of all
aviation fuels consumed.
SAF use needs to increase to over 10% by
2030 to be in line with the IEA NZE 2024
scenario. This requires a significant ramp-up of
investment in production capacity and
supportive policies, such as fuel taxes and low
carbon fuel standards, as existing and planned
SAF projects are expected to meet just 2–4%
of jet fuel demand by 2030.
We show in the chart our progress to date
against our 2030 target. Historical progress
metrics are based on our previous
methodology, with tCO2e/rpk converted to
tCO2e/rtk using a multiplier of 10. For 2024,
the aviation sector represents 7% of the
financed emission footprint of our target
sectors.
In 2024, the emissions intensity of our
portfolio fell by 1% to 737 tCO2e/million rtk
relative to the 2023 baseline and is currently
within the 2030 target range. This decline was
primarily driven by higher exposure to airlines
that are transitioning to lower emissions.
Improved availability of client reported data has
also improved the quality of our reported
numbers. This sector is heavily concentrated,
and emissions-intensity trends are highly
sensitive to material client exposures and
changes to drawn balances year-on-year.
Aviation tCO2e/million rtk1 | 2024 progress from baseline |
(1)% |
709-776
1Previously reported progress figures in tCO2e/
million rpk are converted to tCO2e/million rtk
using a multiplier of 10.
Automotive
For the automotive sector, our analysis
included scope 1 and 2 for midstream
manufacturing of vehicles, and scope 3 for
tank-to-wheel exhaust pipe emissions for light-
duty vehicles. We excluded heavy-duty
vehicles from our analysis as the target
pathway derived from the IEA excludes them
as they have a different decarbonisation
pathway relative to light-duty vehicles. This
approach is also consistent with industry
practice. We will consider including heavy-duty
vehicles at a later stage of our analysis, as data
and methodologies develop.
We target an on-balance sheet financed
emissions intensity of 65.5-95.3 tonnes of
carbon dioxide equivalent per million vehicle
kilometres (‘tCO2e/million vkm’) by 2030 using
2023 as our baseline. This reduction is
equivalent to the global sector average
emissions intensity for 2030 that the IEA
indicates in its NZE and APS 2024 scenarios.
The IEA NZE 2024 scenario implies that by
2030, electric vehicle (‘EV’) share of sales
would be 30%, based on HSBC analysis.
During 2025, BloombergNEF estimates that
EV sales were 24%.
Achieving our 2030 financed emissions target
will be challenging unless there is a strong
acceleration in the share of EV sales in certain
markets. This will require large-scale
investments in new EVs and battery
manufacturing plants, alongside widespread
charging infrastructure and government
policies to support EVs.
We show in the chart our progress to date
against our 2030 target. For 2024, the
automotive sector represents 12% of the
financed emissions footprint of our target
sectors.
The 2024 emissions intensity of our portfolio
dropped by 4% to 146.8 tCO2e/million vkm
against our 2023 baseline of 152.8 tCO2e/
million vkm. The decline against our baseline
was driven by a sector mix towards lower
emissions-intensity clients.
Automotive tCO2e/million vkm | 2024 progress from baseline |
(4)% |
65.5-95.3
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Environment |
Thermal coal mining
For the thermal coal mining sector, our
analysis focused on scope 1, 2 and 3
emissions in upstream companies, including
those involved in extraction. When calculating
our financed emissions from thermal coal
mining, we focused on thermal coal extraction
and processing companies, and diversified
mining companies. The majority of our
reported financed emissions relate to scope 3
emissions associated with coal mining,
representing financing provided to large
conglomerates that own diversified business
interests including coal.
We have set a target to reduce our absolute
on-balance sheet financed emissions by 70%
by 2030, relative to the re-baselined 2020
figure of 3.4 million tonnes of carbon dioxide
equivalent (‘Mt CO2e’). We used 2020 as a
baseline to align with the baseline used for our
drawn balance exposure targets in our thermal
coal phase-out policy. Our target is consistent
with a global 1.5°C-aligned pathway, as
defined by the IEA NZE 2021 scenario.
We show in the chart our progress to date
against our 2030 target. For 2024, thermal coal
mining represents 0.5% of the financed
emissions footprint of our target sectors.
In 2024, absolute on-balance sheet financed
emissions decreased by 94% to 0.22 Mt CO2e
relative to the 2020 baseline and decreased by
79% from 2023 to 2024. The overall reduction
from the 2020 baseline figure for 2023 and
2024 was due to reduced project financing and
specific coal purpose loans, combined with
strategic decisions and low client drawdown
levels.
We are currently reporting below the 2030
target. Looking ahead, this number remains
sensitive to risk factors, such as increased
client drawdowns of existing facilities and
volatility in short-term lending products that
could result in an increase from the current
reported number. We continue to engage with
and support our clients in their transition
journey while managing these dynamics within
our risk appetite to remain on track to meet
the 2030 target.
Thermal coal mining Mt CO2e | 2024 progress from baseline |
(94)% |
Our approach to re-baselines and restatements
Our re-baseline and restatement policy
defines the circumstances for a restatement
of previously reported data and targets,
including a re-baseline.
Changes to methodology, errors, and scope
or boundary changes are our key drivers of
change.
Climate-related data and processes are
continually evolving. Therefore, we do not
consider data and process enhancements to
be a key driver of change. This may change
over time as data and processes mature.
When key drivers, in aggregate, breach our
defined significance thresholds, a
restatement of previously reported data and
targets, including where necessary a re-
baseline, is required.
We expect our policy to evolve with further
industry guidance.
Financed emissions re-baselines and restatements
In 2025, we have re-baselined and restated
previously reported metrics to account for the
latest methodology and scope changes.
Lending products that are short term in
nature are now included in our financed
emissions reporting. This represents a scope
change and was a key driver of change for all
sectors except thermal coal mining.
We have refined our scope to include project
finance for the relevant part of the value chain
for each sector. This is a key driver of change
for oil and gas.
Divestments as at the latest reporting year
have been removed from all years of
reporting. This scope change mainly impacts
the oil and gas sector. We have also
descoped aluminium from the previously
reported iron, steel and aluminium sector.
Methodology changes include consideration
of use of proceeds financing and financing for
pure-play green clients, driving change in the
power and utilities sector. We also changed
the reporting unit for aviation from revenue
passenger kilometre (‘rpk’) to revenue tonne
kilometre (‘rtk’). We have aligned thermal coal
mining financed emissions to the refined
thermal coal financing exposure basis of
preparation.
Additionally, enhancements to our internal and
external data have been reflected in our
restated metrics. This includes improvements
in our data sourcing of customer groups and
sector classifications, and other sector-specific
data enhancements aimed at reducing our
reliance on proxy emission calculations.
The aggregated change across all of these
items breaches the significance threshold for
absolute financed emissions or emissions
intensity for all sectors. We have set out in
the table below our re-baselined and restated
target metrics.
ÑFor further details of our re-baselined and
restated metrics, see our ESG Data Pack at
www.hsbc.com/esg
Restated target metrics | Previously Reported | Restated Metrics1 | Percentage Change | |||||||
Sector | Unit | 2019 | 2020 | 2023 | 2019 | 2020 | 2023 | 2019 | 2020 | 2023 |
Combined on-balance sheet financed and facilitated emissions at 33% weighting, with up to 3 years moving average | ||||||||||
Oil and gas | Mt CO2e | 42.6 | — | 23.2 | 46.2 | — | 28.9 | 8% | — | 25% |
Power and utilities | tCO2e/GWh | — | — | 349.0 | — | — | 295 | — | — | (15)% |
On-balance sheet financed emissions | ||||||||||
Cement | tCO2e/t cement | — | — | 0.59 | — | — | 0.59 | — | — | 0% |
Iron and steel2 | tCO2e/t steel | — | — | 2.1 | — | — | 1.73 | — | — | (18)% |
Aviation3 | tCO2e/million rtk | — | — | 796 | — | — | 747 | — | — | (6)% |
Automotive | tCO2e/million vkm | — | — | 152.4 | — | — | 152.8 | — | — | 0.3% |
Thermal coal mining | Mt CO2e | — | 4.7 | — | — | 3.4 | — | — | (28)% | — |
1 All of the restated metrics set out below represent new baseline figures, apart from oil and gas 2023 which is a restated prior year comparative. Rounding in the
restated metrics has been adjusted to align with the updated target metrics where relevant.
2 Previously reported metrics for iron and steel include aluminium, which has now been descoped.
3 Previously reported progress numbers for aviation in tCO2e/million rpk are converted to tCO2e/million rtk using a multiplier of 10.
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Environment |
On-balance sheet financed emissions
The table below summarises the results of our assessment of on-balance sheet financed emissions using 2023 and 2024 data.
On-balance sheet financed emissions – wholesale credit lending and project finance1 | ||||||
Sector | Year | Scope 1-2 (Mt CO2e)† | Scope 3 (Mt CO2e)† | Emissions intensity | PCAF Data quality score2,† | |
Scope 1 and 2 | Scope 3 | |||||
Oil and gas | 2023 | 2.6 | 19.7 | N/A | 2.2 | 2.7 |
2024 | 3.0 | 20.4 | N/A | 2.3 | 2.8 | |
Power and utilities | 2023 | 7.1 | N/A | 288 | 2.9 | N/A |
2024 | 6.6 | N/A | 232 | 3.0 | N/A | |
Cement | 2023 | 7.2 | N/A | 0.59 | 2.3 | N/A |
2024 | 5.1 | N/A | 0.61 | 2.2 | N/A | |
Iron and steel | 2023 | 3.2 | N/A | 1.73 | 2.9 | N/A |
2024 | 3.7 | N/A | 1.81 | 2.9 | N/A | |
Aviation | 2023 | 2.9 | 0.51 | 747 | 2.2 | 2.5 |
2024 | 2.8 | 0.60 | 737 | 2.2 | 2.7 | |
Automotive | 2023 | 0.16 | 9.3 | 152.8 | 2.2 | 3.2 |
2024 | 0.11 | 5.9 | 146.8 | 2.3 | 3.2 | |
Thermal coal mining | 2023 | 0.06 | 0.97 | N/A | 3.2 | 3.2 |
2024 | 0.01 | 0.21 | N/A | 3.0 | 3.0 | |
Facilitated emissions
The table below summarises the results of our assessment of facilitated emissions for the oil and gas, and the power and utilities sectors.
As per the PCAF Standard for Facilitated Emissions, the facilitated emissions figures are weighted at 33%. We also disclose values at 100%
weighting. For all 100%-weighted facilitated values, please refer to the ESG Data Pack at www.hsbc.com/esg.
Facilitated emissions – ECM, DCM and syndicated loans3 (33% weighting) | ||||||
Sector | Year | Scope 1-2 (Mt CO2e)† | Scope 3 (Mt CO2e)† | Emissions intensity | PCAF Data quality score2,† | |
Scope 1 and 2 | Scope 3 | |||||
Oil and gas | 2023 | 0.32 | 3.1 | N/A | 2.1 | 2.5 |
2024 | 0.50 | 6.7 | N/A | 2.2 | 2.4 | |
Power and utilities | 2023 | 1.2 | N/A | 320 | 2.4 | N/A |
2024 | 1.7 | N/A | 247 | 2.5 | N/A | |
1 For all sectors in scope of financed emissions targets, the total lending exposures included were approximately 3.3% of total loans and advances to customers at 31
December 2023 and approximately 3.5% at 31 December 2024. The total loans and advances have not been adjusted for assets held for sale. The methodology for
quantifying our lending exposure to financed emissions sectors will evolve over time as data and processes continue to improve.
2 PCAF scores where 1 is high and 5 is low. This is a weighted average score based on financing for on-balance sheet financed emissions or facilitated volumes.
3 The total capital markets activity analysed applying a 100% weighting in 2024 was $17.1.bn, representing 4.3% of in-scope capital markets activity at 31 December
2024.
† Data is subject to independent third-party limited assurance in accordance with ISAE 3000 / ISAE 3410. For further details, see our Financed Emissions and Thermal
Coal Exposures Methodology and the independent third-party limited assurance report, which are available at www.hsbc.com/who-we-are/esg-and-responsible-
business/esg-reporting-centre.
Reducing emissions in assets under management
HSBC Asset Management continues to work
towards its interim target1 of reducing scope 1
and 2 financed emissions intensity by 58%
between 2019 and 2030 for the in scope
assets under management (‘AUM‘), consisting
of listed equities and corporate fixed income
managed within our major investment hubs.
As of 31 December 2019, in scope assets
amounted to $193.9bn, equating to 38% of
global AUM. This financed emissions target
remains subject to developments in transition
pathways and consultation with stakeholders,
including investors, fund boards, industry
bodies and regulators.
As at 31 December 2024, the scope 1 and 2
financed emissions intensity of HSBC Asset
Management’s in scope assets stood at 60.7
tCO2e/M$ invested, representing a 51%
reduction compared with the 2019 baseline.
The PCAF2 Data Quality score for the 31
December 2024 financed emissions intensity
was 2.3.
Reported metrics3
2019 | 2023 | 2024 | Unit | |
Scope 1 and 2 financed emissions intensity | 124.0 | 69.8 | 60.7 | tCO2e/M$ invested |
AUM in scope | 193.9 | 223.0 | 250.2 | Billions $ |
PCAF Data Quality Score4 | 2.6 | 2.6 | 2.3 |
1This target remains subject to consultation with stakeholders including investors and fund boards on whose behalf we manage the assets. The 58% reduction
target is based on assumptions for financial markets and other data, including the IEA’s 2021 Net Zero Emissions by 2050 scenario and its underlying activity
growth assumptions. Carbon emissions intensity is measured as tonnes of carbon dioxide equivalent per million USD invested (tCO2e/M$ invested), where
emissions are scaled by enterprise values including cash.
2 PCAF defines and develops greenhouse gas accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standard for Financed
Emissions provides detailed methodological guidance to measure and disclose financed emissions. PCAF Standards are available at: https://
carbonaccountingfinancials.com/standard. HSBC Asset Management reports financed emissions based on Part A – Financed emissions 2nd edition (2022).
3The 2024 metrics were subject to independent third-party limited assurance in accordance with the International Standard on Assurance Engagements 3000
(Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’, and with respect to the GHG emissions, in accordance with
the International Standard on Assurance Engagements 3410 ‘Assurance Engagements on Greenhouse Gas Statements’, issued by the International Auditing and
Assurance Standards Board. For the independent third party’s limited assurance report, see http://www.assetmanagement.hsbc.com/about-us/net-zero. The
methodology used is available at: http://www.assetmanagement.hsbc.co.uk/-/media/files/attachments/common/creating-a-new-climate-for-change/financed-
emissions-disclosures-reporting-criteria.pdf.
4From 2024, PCAF Data Quality Score is weighted by market value. In prior years, PCAF Data Quality Score was weighted by financed emissions.
HSBC Holdings plc Annual Report on Form 20-F |
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Environment |
Net zero in our own operations
TCFD |
In line with our ambition to become a net zero
bank, we aim to achieve net zero emissions in
our own operations and supply chain by 2050.
Reduce, replace and remove
We continue to address the emissions from
our own operations and supply chain by
focusing on reducing our consumption and
replacing consumption with low carbon
alternatives.
Based on our current pathway to net zero, in
the interim we expect to achieve a reduction of
around 40% in emissions across our
operations, business travel and supply chain by
2030, compared with our 2019 baseline year.
We will only use high-integrity carbon credits to
remove any residual emissions from our own
operations that cannot otherwise be reasonably
reduced. We continue to monitor external
guidance, including from the Science Based
Targets initiative, to seek to ensure our
approach remains credible.
Our energy consumption
In 2025 we achieved a 34.5% reduction in our
energy consumption compared with 2019. This
was driven by our strategic divestments and
adoption of energy conservation programmes,
supported by more detailed and automated
metering and monitoring of our consumption.
In 2025, we increased our purchase of
electricity from renewable sources to 94.2%, a
key milestone towards our ambition to
purchase 100% renewable electricity across
our own operations by 2030.
We continue to search for opportunities to
procure renewable electricity in each of our
markets. We follow RE100 principles to focus
on creating additional renewable capacity
through power purchase agreements (PPAs),
where possible. Where regulation or our
energy profile does not allow for PPAs, we
pursue the procurement of renewable
electricity through our utility partners, as is the
case in France and regions of India. We are
also investigating bespoke solutions such as
on-site generation, direct investment into
renewable assets and private wire
agreements. If none of these options are
available to us, we source remaining renewable
electricity through energy attribute certificates.
Business travel
Connecting with clients and colleagues
remains an important part of how we do
business. We have introduced internal carbon
budgets and enhanced our internal reporting to
allow businesses and markets to monitor their
travel emissions in greater detail. Through
guidance on more sustainable ways to travel,
we encourage ownership and conscious
decision making.
Recognising the importance of sustainable
aviation fuel (‘SAF’) to the decarbonisation of
the aviation sector and following our 2024
strategic investment made in SAF through a
partnership with EcoCeres and Cathay Pacific,
we continue to explore new opportunities to
invest in SAF. We do not currently account for
the emissions reduction of SAF purchases in
our emissions reporting.
Engaging with our supply chain
Our supply chain is the largest source of our
operational emissions and where we face the
most significant decarbonisation challenge,
reflecting the pace of the transition across the
real economy.
Our suppliers are at various stages in their
sustainability journey, and we aim to support
their transition while navigating external factors
and challenges. Given many of our suppliers are
also our customers, our customer engagement
model is also beneficial to reducing our supply
chain emissions. We consider sustainability and
supply chain decarbonisation in our sourcing and
supplier management process, where possible,
to support the reduction of our supply chain
emissions, being mindful of the business
importance of certain goods and services and
the varying regional approaches to the transition.
We support our sourcing teams to further
integrate sustainability into sourcing strategy
and decisions, including new supplier selection,
renewals and ongoing supplier management.
We continue to deepen collaboration with
suppliers and have increased our focus on
those without public disclosures or emissions
reduction plans, for example, by providing
them with additional guidance. We have
enhanced the questions we ask suppliers at
onboarding, to get a better view of their
transition journey, and are now including
suppliers’ carbon footprint as a consideration in
our selection process.
Through ongoing engagement and targeted
collaboration events, we are partnering with
some of our suppliers that are more advanced
in their sustainability journey, to jointly develop
innovative ideas on decarbonisation and nature-
related topics. We aim to support smaller
suppliers in their transitions by providing
educational materials.
Nature in our operations and supply chain
Alongside our net zero operations ambition, we
aim to be a responsible consumer of natural
resources across our operations and supply
chain. In our supply chain, we have begun
developing sustainable sourcing roadmaps
across key categories, following a materiality
assessment of biodiversity and nature risks.
Wherever possible, we aim to protect the
environment and mitigate our impact on natural
resources through our procurement choices,
design and construction, and our operations
(e.g. reduction in waste generation and paper
consumption).
Our presence in environmentally sensitive areas | ||
Our global portfolio of buildings support customers and communities in some areas of water stress, and/or protected areas of biodiversity. About 53% of our global offices, branches and data centres are in urban or city centre locations with large, concentrated populations. These areas have been identified as being subject to water stress, accounting for almost half of our annual water consumption, with about 0.9% in protected areas of biodiversity. Although our industry is a low user of potable water, we continue to implement measures to reduce water consumption across our portfolio, including the installation of water efficient taps and flow restrictors. |
 | ||
Environmental management of our portfolio | ||
Our buildings policy recognises that regulatory and environmental requirements differ across regions. Supported by our real estate services procedures for environmental and sustainability management, our buildings policy seeks to ensure that HSBC properties minimise their overall direct environmental impact. Our green leasing programme supports close collaboration with our landlords to drive better energy efficiency and we aim to achieve Leadership in Energy and Environmental Design (LEED) or equivalent certification for our construction projects in key premises. We seek to identify new opportunities to further reduce emissions and one of our emerging priorities is decarbonising our heating through electrification and heat networks by overcoming technical and engineering challenges. Detailed design considerations documented in our global engineering standards aim to reduce or avoid depletion of critical resources, such as energy, water, land and raw materials. Our suppliers are requested to comply with our Supplier Code of Conduct, including having in place environmental policies appropriate to the size and nature of their operations to reduce environmental impacts. |
HSBC Holdings plc Annual Report on Form 20-F |
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Environment |
Operational and supply chain greenhouse gas emissions in tonnes CO2e | ||||||
2025 | 2024 | 2019 baseline | ||||
Scope 11† | ~ | 16,698 | 15,025 | 22,066 | ||
Scope 2 (market-based)1† | Ä | 19,919 | 83,760 | 392,270 | ||
Scope 3 | Ä | 1,040,300 | 1,127,909 | 1,356,631 | ||
Category 1: Purchased goods and services2† | Ä | 807,293 | 866,873 | 1,033,972 | ||
Category 2: Capital goods2† | ~ | 165,988 | 127,158 | 50,651 | ||
Category 6: Business travel1† | Ä | 67,019 | 133,878 | 272,008 | ||
Total | Ä | 1,076,917 | 1,226,693 | 1,770,967 | ||
Included scope 1 and 2 of UK | ~ | 6,357 | 5,887 | 10,432 | ||
† Data in 2025 is subject to an independent third-party limited assurance in accordance with ISAE 3000 / ISAE 3410. For further details, see third-party limited assurance report at www.hsbc.com/ who-we-are/esg-and-responsible-business/esg-reporting-centre. In respect of data in 2019 and 2024, see our relevant Annual Report and Accounts. 1 Our reporting period aligns with our financial year January – December. Due to a three-month time lag in data availability, we use the data from Q4 of the previous year, as an estimate for the current year’s Q4 data 2. Supply chain emissions are calculated using a combination of supplier emissions data and industry average emissions factors. A data quality score is applied to this calculation where 1 is high and 4 is low, based on the quality of emissions data. This is a weighted average score based on HSBC supplier spend. Data quality scores can be found in the ESG Data Pack. ÑOur scope 2 location-based emissions in 2025 were 259,129† tonnes CO2e. For a detailed breakdown, information about contractual instruments, and relevant environmental key facts, see our ESG Data Pack at www.hsbc.com/esg. | ||||||
2025 emissions performance
We continue to make progress towards our
2050 net zero ambition. In 2025 we achieved a
reduction in absolute operational greenhouse
gas emissions (scope 1, 2 and business travel)
of 84.9% from our 2019 baseline. Overall,
including supply chain emissions, we achieved
a 39.2% reduction against 2019 and 12.2%
compared with 2024.
Scope 1 and 2 emissions
We have already reduced our scope 1 and 2
emissions considerably and are on track to
achieve a reduction of at least 90% by 2030.
In 2025, we reduced these emissions (i.e.
energy and road fleet) to 36,617 tonnes CO2e,
representing a 91.2% reduction from our 2019
baseline, and a 62.9% reduction from 2024,
driven by a reduction in energy consumption
and significant investment in renewable
electricity, in conjunction with an overall
reduction of the emission factors. For scope 1,
we saw an increase due to an adjustment of
our uplift rate to include estimated emissions
from refrigerant leaks in our cooling systems.
Refrigerant leaks occur when cooling gases
escape from equipment, contributing to
greenhouse gas emissions. Currently 94.2% of
our electricity comes from renewable sources
and we are on track for 100% renewable
electricity by 2030.
In addition to the reduction in energy
consumption driven by our strategic
divestments, we are increasingly adopting
innovative metering technologies and
collaborating with strategic partners to seek to
target the more challenging elements, such as
our remaining data centres.
Specifically in the UK, the increase in energy
and scope 1 and 2 emissions is driven by an
increase in electricity consumption in data
centres and an increase in primary fuels in our
offices and branches.
In addition to our focus on energy
consumption, we continue to transition our
vehicles to electric, ordering fully electric or
hybrid options, wherever possible.
Emissions from travel
We reduced our emissions from scope 3
business travel by 75.4% compared with 2019
and 49.9% compared with 2024. The decrease
was driven by improved oversight,
strengthened internal reporting and an overall
reduction in the emissions factors provided by
the UK Department for Energy Security and
Net Zero.
Emissions from our supply chain
In 2025, we reduced our overall supply chain
emissions (scope 3: category 1 and 2) by
10.3% against the 2019 baseline, and 2.1%
compared with 2024. This was primarily due to
the reduced emissions intensity (i.e. ratio of
emissions vs revenue) of suppliers providing
professional services and marketing, and who
reported emissions to us. However, this has
been partly counteracted by an increase in
spend on servers and data centres, and an
increase in the emissions intensity of suppliers
providing real estate services, which also
caused the increase in emissions from capital
goods.
Greenhouse gas emissions in tonnes CO2e per FTE | Energy consumption in kWh in 000s | |||||||||||
2025 | 2024 | 2019 | 2025 | 2024 | 2019 | |||||||
Scope 1, 2 and 3 (Category 6) | Ä | 0.5 | 1.1 | 2.9 | Total | Ä | 687,521 | 728,890 | 1,049,072 | |||
Scope 1, 2 and 3 (Category 1, 2 and 6) | Ä | 5.1 | 5.7 | 7.8 | UK only | ~ | 211,033 | 206,028 | 281,271 | |||
We continue to expand and improve our
reporting as more suppliers make emissions
data available.
Emissions calculations approach
Our emissions report adheres to the GHG
Protocol, which incorporates the scope 2
market-based emissions methodology. We
report GHG emissions associated with the
energy used in our premises and employees’
business travel and our supply chain in tonnes
of CO2 equivalent.
Based on our operational control boundary, in
2025 we collected data on energy use and
business travel for our operations in 34
countries and territories out of the 56 markets
we operate in, which accounted for
approximately 98.2% of our full-time equivalent
staff (‘FTEs’). To estimate the emissions of our
operations in entities where we have
operational control and a small presence, we
scale up the emissions to 100%.
We have reviewed and updated the emission
uplift rate for scope 1 to reflect the actual data
and the uncertainty regarding the volume of
the estimated fugitive emissions. Following
improvements in our reporting process, we
have removed the uplift for scopes 2 and 3
(category 6: business travel). This approach is
consistent with both the Intergovernmental
Panel on Climate Change’s Good Practice
Guidance and Uncertainty Management in
National Greenhouse Gas Inventories and our
internal analysis.
Our calculation methodology for supply chain
emissions follows the spend-based method
under the GHG Protocol; a combination of
supplier emissions data and industry averages.
We source actual data via CDP, or direct
engagement with suppliers through a third
party. In the absence of this we use
estimations data provided by a third party and
industry average carbon intensities from CDP
to estimate supply chain emissions.
As more of our suppliers report their
emissions, we should be able to include more
accurate data and fewer industry averages in
the calculation. We have applied a data quality
score to the sources of data we used to
determine supplier emissions.
In 2025 we conducted a materiality
assessment on scope 3 categories, and we
have identified categories 1 (purchased goods
and services), 2 (capital goods), and 6 (business
travel) as material.
ÑFor further details of our methodologies,
assumptions, and sources of conversion factors
used for the reporting of emissions, see the GHG
Reporting Guidance 2025 at www.hsbc.com/
esg.
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Environment |
Managing climate risk
TCFD |
Climate risk relates to the financial and non-
financial impacts that may arise as a result of
climate change and the move to a net zero
economy. We manage climate risk across all
our businesses and incorporate climate
considerations within our traditional risk types,
in line with our Group-wide risk management
framework.
Our material exposure to climate risk relates to
wholesale and retail client financing activity
within our banking portfolio. We are also
exposed to climate risk in relation to asset
ownership by our insurance business and
employee pension plans. Our clients are
exposed to climate-related investment risk in
our Asset Management business.
ÑFor further details of our approach to climate
risk, see ‘ESG risk’ on page 122 and ‘Climate
risk’ on page 203.
Banking
Our banking business is well positioned to
support our customers managing their own
climate risk through financing. For our most
material wholesale customers, we use our
transition engagement questionnaire to
understand clients’ climate strategies and
risks. We have set out a suite of policies to
guide our management of climate risk. We
continue to develop our climate risk appetite
and metrics to help manage climate exposures
in our wholesale and retail portfolios. We use
climate scenario analysis to gain insights into
the long-term effects of transition and physical
risks across our wholesale and retail portfolios
(for further details, see page 206).
Asset management
HSBC Asset Management recognises that
climate-related risks may impact the
operational and financial performance of
investee companies. The impact of these risks
will vary depending on characteristics such as
asset class, sector, business model and
geography. We continue to integrate climate
analysis into our actively managed product
offerings and seek to assess climate-related
risks that may impact investment
performance, where relevant.
As part of our stewardship activities, we
engage on climate change issues with
investee companies on a priority list, as
defined in our Stewardship Plan. HSBC Asset
Management acts independently in its
investment and voting decisions.
Employee pensions
The Trustee of the HSBC Bank (UK) Pension
Scheme (‘the Scheme’), our largest plan with
$38bn of assets under management, aims to
achieve net zero greenhouse gas emissions
across its defined benefit and defined
contribution assets by 2050. The amount
within the scheme includes defined benefit
assets of $25bn and defined contribution
assets amounting to $13bn. To help achieve
this, it is targeting an interim emissions
reduction of 50% by 2030 from 2019 levels for
its equity and corporate bond mandates. This
commitment was made in the context of
wider efforts to manage the impact of climate
change on the Scheme’s investments and the
consequent impact on the financial interests of
members.
The Scheme reports the carbon footprint for
its equity and corporate bond mandates in its
annual TCFD Report, and will seek to widen
the coverage of its assessment and reporting
over time. In line with the Trustee’s
commitment to good stewardship, the Trustee
engages its asset managers to seek to ensure
that financially material ESG risks are explicitly
considered in the investment process.
Insurance
We are improving our ability to perform
exploratory solvency assessment of our
biggest insurance businesses under climate
stress scenarios.
ÑFor further details of HSBC Asset Management’s
Stewardship Plan, see:
www.assetmanagement.hsbc.co.uk/en/
institutional-investor/about-us/responsible-
investing/-/media/files/attachments/uk/policies/
stewardship-plan-uk.pdf.
ÑFor further details of the HSBC Bank (UK)
Pension Scheme’s annual TCFD statements and
UK Stewardship Code submission, see https://
futurefocus.staff.hsbc.co.uk/active-dc/
information-centre/search-documents.
Sustainability risk policies
TCFD |
Our sustainability risk policies form part of our
broader risk management framework and are
important mechanisms for managing risks,
including delivering our net zero ambition.
These policies focus on mitigating reputational,
credit, legal and other risks related to our
customers’ environmental and social impacts.
Our policies
HSBC has sector-specific sustainability risk
policies covering the energy sector, thermal
coal, agricultural commodities, forestry, and
mining and metals. These are summarised in
our Sustainability Risk Policies Framework
which also contains HSBC’s Thermal Coal
Phase-Out Policy. We also implement a cross-
sector policy for project-related financing,
informed by international standards.
The Framework provides an overview of how
HSBC identifies, evaluates and manages risks
related to the delivery of our sustainability
approach.
Implementation of the sector-specific policies
is achieved through internal policies and
procedures, supported by technical experts
and specialists and our relationship managers.
We take a risk-based approach when
identifying transactions and clients to which
our sustainability risk policies apply and, where
relevant, when reporting on relevant
exposures, adopting approaches proportionate
to risk and materiality. This helps to focus our
efforts on areas that we consider to be most
critical, taking into account experience from
policy implementation over time.
We continue to review policy implementation
as we apply our policies in practice, engage
customers on their transition plans and
consider how we can support them. We
conduct periodic policy reviews, incorporating
feedback and where appropriate, updating
based on factors including risk materiality,
implementation experience, evolving scientific
guidance, regulatory requirements and
evolving industry practices.
For customers in scope of sector-specific
policies, we will look to take actions as
outlined in our policies, such as enhanced due
diligence. Such instances may require
additional review and approval by our
sustainability risk specialists and risk
committees.
Governance and implementation
Our Group Risk and Compliance function has
specialists who review and support
implementation of our sustainability risk
policies. Our relationship managers are
primarily responsible for assessing relevant
considerations under our risk management
framework, including whether our clients may
be in scope of applicable sustainability risk
policies. Where considered appropriate, policy
matters are escalated to relevant governance
committees.
Oversight of the development and
implementation of policies is the responsibility
of relevant governance committees
comprising senior members of the Group Risk
and Compliance function and global
businesses.
ÑFor further details of how we manage
sustainability risk and our Sustainability
Risk Policies Framework, see
https://www.hsbc.com/sustainability-risk.
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Environment |
Nature-related policies
Our sustainability risk policies impose
restrictions on certain financing activities that
may have material negative impacts on nature.
Our forestry and agricultural commodities
policies focus specifically on the upstream
impacts of key agricultural commodities
including palm oil, timber, soy and cattle. We
also require palm oil customers to obtain
certification under the Roundtable on
Sustainable Palm Oil.
Our energy policy
Our energy policy applies to the broader
energy system, including upstream oil and gas,
fossil fuel power generation, hydrogen,
renewables and hydropower, nuclear, biomass
and energy from waste sectors.
The policy seeks to achieve two objectives: to
help drive global greenhouse gas emissions
reductions, both to achieve a net zero HSBC
portfolio and to support our customers in the
transition to a net zero global energy future;
and to identify and manage risks arising from
the provision of financing or advisory services
to customers with energy assets.
The energy policy was first published in
December 2022, and is reviewed periodically,
with the most recent update in November
2025.
Our thermal coal phase-out policy
Our thermal coal phase-out policy seeks to
achieve two objectives: to phase out the
financing of thermal coal-fired power and
thermal coal mining by 2030 in markets in the
European Union (‘EU’) and Organisation for
Economic Cooperation and Development
(‘OECD’), and by 2040 in other markets
(Phase-Out Commitment); and to identify and
manage risks arising from the provision of
financing or advisory services to customers
with thermal coal assets.
The policy was first published in December
2021 and is reviewed annually, with the most
recent update in November 2025.
ÑFor further details of our energy policy and our
thermal coal phase-out policy see our
Sustainability Risk Policies Framework, at
https://www.hsbc.com/sustainability-risk
ÑFor further details of our oil and gas, and power
and utilities financed emissions targets, see page
42.
Thermal coal financing exposures
We aim to reduce thermal coal financing
drawn balance exposure from a 2020 baseline
by at least 25% by 2025, and aim to reduce it
by 50% by 2030.
Our basis of preparation for reporting on
thermal coal financing drawn balance
exposures is aligned with our thermal coal
phase-out policy and applies a risk-based
approach to reporting on relevant exposures.
This includes the use of globally recognised
third-party data sources to screen clients and
applies materiality considerations to product
type, customer type and exposure type, which
informs inclusion and exclusion requirements.
Specifically, for customer types, exclusions are
applied for certain customer types such as
sovereigns and individuals. For exposure
types, a threshold of $15m for drawn balances
is applied for thermal coal financing exposures
reporting.
We recognise that we provide financing to
groups of connected companies where the
wider group has thermal coal exposures, and
this introduces additional complexities when
estimating thermal coal exposure. In such
cases, we consider relevant factors, including
the nature and the extent of the connection to
thermal coal activity, any relevant structural
considerations in relation to the wider group
and any restrictions on use of financing
proceeds to fund thermal coal activities.
We continue to refine our basis of preparation
and have made further enhancements in 2025
to develop a more detailed framework for our
approach to exclusions from reporting.
In line with changes to financed emissions
product scope, short-term lending products are
now included in scope for thermal coal drawn
balance exposures.
Thermal coal financing drawn balance
exposure is sensitive to volatility from both
short-term lending products and additional
drawdowns under committed facilities.
Applying our refined basis of preparation
resulted in a net 10% increase in the thermal
coal financing drawn balance exposure
baseline (as of 31 December 2020) to $1.1bn†
from $1.0bn. This year we present figures for
2023 and 2024, therefore we are not restating
2021 and 2022 figures.
Our thermal coal financing drawn balance
exposures for 2023 and 2024 were $0.6bn†
and $0.5bn† respectively. We intend to
present our 2025 figures in our Annual Report
and Accounts 2026. The reductions from the
revised baseline were primarily driven by
natural amortisation and portfolio level
financing decisions.
Thermal coal financing drawn balance exposure | |
$bn | |
† Data is subject to independent third-party limited
assurance, in accordance with ISAE 3000/ISAE
3410. For further details, see our Financed
Emissions and Thermal Coal Exposures
Methodology and independent third-party limited
assurance report, which are available at
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre.
ÑFor further details of our approach to financed
emissions, see page 39.
ÑFor further details of our financed emissions and
thermal coal exposures methodology, see
www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre.
Asset Management’s Energy and Thermal Coal Policies
HSBC Asset Management’s Energy and
Thermal Coal policies have been developed in
support of HSBC Group’s net zero ambition.
Under the Energy Policy, HSBC Asset
Management aims to engage with and assess
transition plans of listed issuers responsible for
around 70% of relevant emissions covering
listed equity and corporate fixed income
issuers managed in its major investment
hubs. Engagement and assessment are
undertaken for the oil and gas, and power and
utilities issuers in this group.
The Thermal Coal Policy is developed in
support of the transition from thermal coal-
fired power and thermal coal mining (collectively
‘thermal coal’) within the 2030/40 timelines set
out in the HSBC Thermal Coal Phase-Out Policy.
ÑThe current policies including their application can
be found here: https://
www.assetmanagement.hsbc.co.uk/en/
institutional-investor/about-us/responsible-
investing/policies.
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Social
Building inclusion and resilience
We play an active role in opening up a world of opportunity for our customers,
colleagues and communities by connecting across our international networks
to help build a more inclusive and resilient society.
Our commitment to inclusion
Our approach
For 160 years, our core strategy has been
connecting people and businesses across
geographies and cultures.
By embracing diversity and fostering inclusive
thinking, we better meet our customers’
needs and deliver improved outcomes.
We are committed to continuing to build an
inclusive organisation by focusing on four key
areas as detailed below.
The focus of our Global Inclusion strategy | ||||||||||||||
Building an inclusive culture We recognise the importance of fostering an inclusive culture, benefiting both our colleagues and customers. Embracing differences enhances diversity of thought and experiences, leading to better outcomes. Our Global Inclusion strategy embraces our unique international footprint, while seeking to ensure it remains locally relevant and compliant with local laws. | Fair and inclusive recruiting Having a diverse and inclusive workforce that better reflects the communities we serve remains one of our key strategic pillars. By ensuring a fair and transparent recruitment process, we aim to attract and retain talent from all backgrounds. | Fair progression of talent We understand the importance of having motivated and engaged teams. By offering growth opportunities, such as training and development programmes, and internal mobility opportunities, we aim to foster a strong sense of belonging and equip our people with the skills needed for the future. | Supporting an inclusive society We are dedicated to fostering a culture where everyone feels they belong, guided by shared values and a commitment to inclusion. By listening to the voices of both colleagues and customers from all backgrounds, we seek to create a more inclusive and accessible banking experience, impacting communities positively. | |||||||||||
Our progress
Prior analysis of our workforce identified that
both women and Black heritage colleagues
were underrepresented across senior leadership
roles. We introduced a set of public aspirational
ambitions, which aimed to increase
representation of these two groups by 2025 and
improve our Inclusion Index score as measured
in our employee engagement survey, Snapshot.
By the end of 20251, we achieved:
–a 34.7% representation of women in senior
leadership roles against an ambition of 35%1;
–a 3.0% representation of Black heritage
colleagues in senior leadership roles (UK/US
combined) against an ambition of 3.4%1 ; and
–an Inclusion Index score of 78% against an
ambition of 75%.
We have made annual progress in increasing
the representation of women in senior
leadership roles, strengthened by our hiring,
promotion and retention strategies. Over this
period, representation of women in senior
leadership roles has increased by three
percentage points. We narrowly missed our
gender representation ambition of 35%,
primarily due to a reduction in the number of
promotions and new hires in 2025. This has
also impacted our progress against our
ambition to achieve 3.4% of Black heritage
colleagues in senior leadership roles in the UK/
US combined since 2021, which has remained
steady since 20231..
Previously in 2020, we set an initial ambition to
double the number of Black heritage
colleagues in senior leadership roles globally
by the end of 2025. Over the past five years,
changes in our global organisation, such as the
divestiture of the US Wealth and Personal
Banking business, and increased investment
across Asia, have made achieving this
ambition more challenging. By the end of
2025, we increased the number of Black
heritage colleagues in senior leadership roles
by 48%1.
While our publicly stated aspirational ambitions
concluded at the end of 2025, we remain
committed to building an inclusive culture for
all colleagues, measured using our Inclusion
Index. We continue to work towards better
reflecting the communities we serve, in order
to deliver better outcomes for our customers.
Data and transparency
Colleagues’ self-identification data enables us
to refine and evolve our Global Inclusion
strategy by ensuring we make informed
decisions and set priorities that will have the
greatest impact. It also helps us to identify and
address any inequalities or barriers.
We invite colleagues to voluntarily share their
demographic data with us including ethnicity,
sexual orientation and disability. In 2025,
69.1% of colleagues shared their ethnic
background. We collect data in markets and
territories where we are legally permitted to
do so.
We continue to disclose the shape of our
workforce publicly, as well as participating in
the government-led FTSE Women Leaders
Review and Parker Review benchmarks in the
UK, which track the gender and ethnicity
representation of our Operating Committee
and senior leadership population.
ÑFor further details of our representation data, pay
gap data, and actions, see www.hsbc.com/who-
we-are/our-people/inclusion-at-hsbc and the ESG
Data Pack at www.hsbc.com/esg
1These numerical ambitions do not form part of
any US-based senior leader performance or
other objectives, or in other jurisdictions where
application of such objectives would be contrary
to local law.
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Fostering an inclusive culture
Embedding inclusion
Our recruitment practices are designed to be
fair and transparent providing equal
opportunities for all colleagues to progress
their careers. We promote inclusive leadership
and recognise that diverse perspectives drive
innovation and stronger business outcomes.
In 2025, we partnered with KPMG to support
personal development opportunities for UK-
based Black heritage colleagues in our IWPB
and Global Functions teams. Fifteen individuals
were matched with sponsors aligned to their
career aspirations, who aim to broaden
participants’ network and advocate for their
talent and career progression. In 2025 we
continued Solaris, our UK development
programme for female Black heritage
colleagues, with 19 individuals completing the
course in 2025.
Removing barriers for colleagues with a
disability
In 2025, we led the way in benchmarking
disability confidence across Asia, aligning with
United Nations Guidelines for People with
Disabilities. HSBC is recognised for disability
inclusion as featured by the International
Labour Organisation (ILO) Global Business
Disability Network.
In 2025, our Digital Accessibility programme
garnered 15 awards, including recognition
from the Hong Kong Digital Accessibility
Recognition Scheme for the accessibility of
our digital channels. We were also honoured at
the Pay 360 Awards in the UK celebrating
outstanding achievements in the payments
industry.
We retained our Business Disability Forum
‘Smart Gold’ status in the UK in 2025. The
Disability Smart Framework helps businesses
enhance their performance for disabled
customers, service users, colleagues and
stakeholders.
We have developed a Disability Toolkit to
support colleagues with a disability and their
line managers, outlining the well-being
resources available and how each can help
colleagues manage their condition.
In the US, we have been recognised as a ‘Best
Place to Work for Disability Inclusion’ in the
Disability:IN, 2025 Disability Index.
We are enhancing our workplace adjustments
programme to better support colleagues with
their needs. In 2025, it was extended to
include colleagues in UAE, Egypt, Algeria,
Kuwait and Oman.
Supporting colleagues from a lower
socio-economic background
Research indicates that individuals from low
socio-economic backgrounds encounter
additional barriers when entering the financial
services industry, and are less likely to
advance to senior leadership.
To support early career colleagues from these
backgrounds, we launched a grant initiative in
2025, offering new joiners £1,000 to support
pre-joining expenses.
In 2025, we improved our position in the UK
Social Mobility Index to 18th, up from 37th in
2024 and 67th in 2023.
We have also partnered with Community
Business, which is a non-governmental
organisation that advances research on social
mobility across Asia, focusing on Hong Kong,
mainland China, India, Singapore, Japan,
Korea, the Philippines and Malaysia.
Inclusion for all
In 2025, the Hong Kong-based Equal
Opportunities Commission introduced the
Racial Diversity & Inclusion Employers Award
Scheme to honour organisations committed to
racial equality, diversity and inclusion in the
workplace, and we received three gold
awards.
We were also named the Best Bank for
Diversity and Inclusion in Hong Kong at the
Euromoney Awards 2025 for the second year
running. We climbed to 2nd in the 2025 Hong
Kong Community Business LGBTQ+ Index,
marking us as the top financial institution and
improving from 6th in 2023.
In the US, we partnered with organisations
Handshake and HelloHive to broaden our
reach to undergraduate students from all
backgrounds. Community engagement
opportunities to support career readiness have
in turn resulted in increased candidate
applications to the HSBC US Early Careers
programme.
Gender representation (%)
Holdings Board | |
Group Operating Committee ('Group OpCo') | |
Combined Group OpCo and direct reports1 | |
Subsidiary directors2 | |
Senior leadership3 | |
Middle management3 | |
Junior management3 | |
All employees4 | |
1 Combined Group OpCo and direct reports
includes Group OpCo members and their direct
reports (excluding administrative staff) as of 31
December 2025.
2 Directors (or equivalent) of subsidiary companies
that are included in the Group’s consolidated
financial statements, excluding corporate
directors.
3 In our leadership structure, we classify senior
leadership as those at global career band 3 and
above; middle management as those at global
career band 4; and junior management as those
at global career bands 5 and 6.
4 As at 31 December 2025, the Group’s headcount
consisted of 103,086 Males and 108,393
Females. Employees with undisclosed gender
have been included in the ‘Male’ category. Due
to local restrictions, Saudi Arabia headcount has
been excluded from gender reporting.
ÑFor further details of our employee profile data,
see the ESG Data Pack at www.hsbc.com/esg
Representation and pay gaps Our reports on gender, ethnicity and disability pay gaps show the difference in average pay between these groups of people and the wider workforce, regardless of their role or seniority. We have reported our UK gender representation and pay gap data since 2017, in line with reporting regulations. These UK disclosures are available in our ESG Data Pack. We have voluntarily extended this to include the US, mainland China, Hong Kong, India, Mexico, Singapore, Malaysia and the UAE, alongside ethnicity data for the UK and US, which are available on our website. | In 2025, our mean aggregate UK-wide gender pay gap was 39.4% (2024: 40.6%), and the ethnicity pay gap was 9.8% (2024: 7.7%). These gaps are primarily driven by workforce composition, with more men in senior, higher- paid roles and more women in junior, lower-paid roles. While we are confident in our approach to pay equity, average pay gaps will persist until there is proportional representation of women and ethnic minority colleagues at all levels. | We are committed to paying colleagues fairly regardless of their gender or ethnicity and have processes to review that remuneration is free from bias. We review our pay practices regularly to ensure that our commitments to equal pay are upheld. ÑFor further details of our representation data, pay gap data, and actions see www.hsbc.com/who- we-are/our-people/inclusion-at-hsbc and the ESG Data Pack at www.hsbc.com/esg |
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Building a healthy workplace
Listening to our colleagues
We value difference at HSBC, and we do this
by seeking out different perspectives and
listening. Our colleagues succeed together by
being connected across the organisation, and
they take responsibility by speaking up. These
activities are core to our values and we
capture regular feedback from our colleagues
to help improve HSBC and the employee
experience.
How we listen
At the heart of our employee dialogue strategy
is listening to our people and responding to
their feedback, fostering open, two-way
communication between colleagues and the
organisation.
To support organisational change in 2025, we
enhanced our feedback process. In addition to
our annual Snapshot survey, we introduced a
monthly Pulse survey for quick leadership
insights. This complements our event-based
lifecycle surveys, capturing colleague
sentiment as they apply, join, transition and
leave HSBC.
We streamlined our 2025 Snapshot survey by
reducing the number of questions by 40%,
and aligning our reporting with overall strategic
priorities. A response rate of 87% was
achieved, with over 186,000 colleagues
sharing their insights.
Survey insights are shared with the Group
Operating Committee, the Board, and over
11,000 people leaders who receive 10 or more
team responses. We facilitate effective
feedback discussions by providing interactive
dashboards, action planning tools and
discussion guides.
Despite organisational change, our Snapshot
results remain robust, with only slight declines
in some areas. Our Employee Engagement
index, which reflects how our people feel
about HSBC, decreased by two percentage
points to 78%. This is four percentage points
above the global financial services benchmark.
Our Inclusion Index, an indicator of our
commitment to fostering an inclusive culture
at HSBC, remained at 78%. Our Well-being
Index increased by one percentage point,
positioning us five percentage points ahead of
our peers in the financial services sector.
While we were eight percentage points above
the financial services benchmark for our
Sustainable Growth Index, confidence in our
future direction decreased by three percentage
points to 76%. This decline was mainly due to
lower scores among groups more impacted by
ongoing organisational changes. We continue
to prioritise clear communication with our
colleagues about what these changes mean
for them.
Our new How We Lead Index, designed to
gauge the embedding of our new Group-wide
leadership framework, achieved 77%. This
surpassed the financial services benchmark by
five percentage points.
We launched four new values-aligned indices,
each scoring between 79% and 81%. Each
overall index score surpassed the financial
services benchmark.
Going forward we will continue to encourage
high levels of engagement and feedback.
ÑFor further details of our Snapshot data, see the
ESG Data Pack at www.hsbc.com/esg.
Employee relations
We engage, consult, and where appropriate,
negotiate with employee representative
bodies. Our policy is to maintain well-
developed communications and consultation
programmes with all employee representative
bodies.
We are committed to complying with the
applicable employment laws and regulations in
all the jurisdictions in which we operate.
HSBC’s employment practices and relations
policy provides the framework and controls
through which we seek to uphold that
commitment.
Employee conduct and harassment
We expect our employees to treat each other
with dignity and respect, and we do not
tolerate or condone discrimination,
harassment, bullying or retaliation in any form
as outlined in our Global Anti-Bullying and
Harassment Code. This is supported by our
Global Code of Conduct.
We encourage our colleagues to speak up
about poor behaviour. We measure confidence
of colleagues to speak up via our Snapshot
response, which stood at 81% in 2025.
We recognise the need for ongoing focus on
our speak-up culture to ensure we create the
right environment. We are committed to
raising awareness and providing education on
poor behaviours and strengthening our
response to these issues across the
organisation. Our colleagues receive training
on bullying, harassment, discrimination and
retaliation at least every other year through our
global mandatory training and as part of other
learning resources.
We monitor cases raised via our speak-up
channels, and data is reported to senior
leadership to ensure visibility. In 2025, we
received a total of 793 cases raised in relation
to bullying and harassment. Where the
concerns were substantiated following an
investigation, appropriate actions were taken,
including dismissal where warranted. In 2025,
30% of cases raised were either partly or fully
substantiated, and 38 colleagues were
dismissed in relation to bullying, harassment,
discrimination or retaliation.
We continue to act where we find that any
colleague has breached our values and high
standards of conduct.
How we listen
Snapshot survey response
87%
A response rate of 87% was achieved, with
over 186,000 colleagues sharing their insights.
Employee Engagement Index
78%
Our Employee Engagement Index decreased
by two percentage points to 78%. This is four
percentage points above the global financial
services benchmark.
How We Lead Index
77%
Our new How We Lead Index achieved 77%.
This surpasses the financial services
benchmark by five percentage points.
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Being a great place to work
Reward and recognition
Our aim is to create an environment that
energises colleagues to perform at their best.
This is critical for attracting, retaining and
motivating our colleagues, supported by our
core reward principles: rewarding colleagues
responsibly, recognising colleagues’ success
and supporting our colleagues to grow.
Rewarding colleagues responsibly
Pay is a key element of our overall proposition.
We aim to enhance transparency and clarity,
helping our colleagues to better understand
how we make our pay decisions. We remain
committed to providing a competitive total
compensation package that balances an
appropriate mix of fixed and variable pay.
HSBC achieved accreditation on 31 December
2024 from the Fair Wage Network, which
provides an independent source of wage
levels, as a global living wage employer for
two years. Following our accreditation, we
have collaborated with the Fair Wage Network
to ensure we continue to meet or surpass
local living wage benchmarks. A living wage
should be sufficient to cover an adequate
standard of living, given the cost of goods and
services in each country and territory where
we operate.
We also seek to implement contractual
clauses that encourage our suppliers to pay at
least a living wage in the UK, including our
most material consultancy and workforce
contracts.
Recognising colleagues’ success
We have performance routines to foster a
high-performance culture, and in 2025 these
routines encouraged colleagues to set
challenging goals aligned with our strategic
priorities. Regular feedback exchanges helped
colleagues understand their progress and
areas for improvement. Ongoing performance
check-ins result in a clear and focused year-
end performance assessment that wraps up
these discussions.
In 2025, our Snapshot results showed that
86% of colleagues clearly understood what is
expected of them, aligned to the 2024 result
of 87%. Also, 81% of colleagues received
performance-improving feedback, consistent
with the results from 2024.
Our variable pay plans recognise the
performance and behaviours of our colleagues.
We operate Target Variable Pay for over
127,000 colleagues across 48 markets,
promoting clarity and transparency in pay
decisions. This helps colleagues understand
how they contribute to the organisation’s
performance.
Our ‘At Our Best’ recognition platform
empowers our colleagues to recognise each
other for role model behaviours aligned with
our values. In 2025, we celebrated each other
1.4 million times. We also launched short-
term recognition campaigns engaging over
30,000 colleagues, encouraging nominations
for outstanding ‘How We Succeed’
behaviours.
Share plans also empower colleagues to
engage in HSBC’s success. In 2025, we
invited around 199,000 colleagues to join our
share plans, and 95% of colleagues globally
have eligibility. Currently, around 63,000
colleagues participate in one of the plans.
Supporting our colleagues to grow
We recognise the importance of personal and
professional growth for our colleagues, and
seek to support their mental, physical and
financial well-being.
We have refined our Well-being index in the
Snapshot survey to focus on where we can
make the most positive impact and updated
our questions to focus on happiness at work,
stress levels, job satisfaction, and sense of
purpose, aligning our methodology to the
Organisation for Economic Co-operation and
Development (‘OECD’) measures of well-
being.
In 2025 our Well-being index increased to
66%, with improvements of one percentage
point across happiness at work, stress levels
and job satisfaction.
Mental health
We were ranked 1st globally for the fourth
consecutive year in the CCLA Corporate
Mental Health Benchmark Global 100+. We
are the only organisation to achieve Tier 1
status since the benchmark’s inception. In
2025, we scored 83%, significantly higher
than the financial services industry average of
34%.
In 2025, we hosted two global masterclass
series, one focused on mental health and
performance, and the other on sleep and well-
being. These events brought together senior
leaders and industry experts to share
evidence-based strategies for enhancing well-
being and performance, while addressing
workplace myths and stigma.
In 2025, we updated the well-being content in
our global mandatory training and launched a
new voluntary mental health module. The new
module has been completed over 1,300 times
since launch in November, with 27% of those
completions being done by people leaders.
Our network of over 250 mindfulness
champions delivered sessions to over 27,000
colleagues, up 43% on 2024, and enrolment to
the meditation app, Headspace, increased by
8%.
Physical health
We provided private medical insurance to 99%
of our permanent employees, and offered
telemedicine services in most countries and
territories. In some markets, we also have on-
site medical centres. In 2025, 80% of
colleagues can access free health
assessments. We also expanded medical
outpatient reimbursement to over 35,000
colleagues in India. In Singapore and the UK,
we introduced fertility medical support,
increasing the number of countries offering
this benefit to 10.
In 2025, we continued to offer the Personify
Health app to colleagues, helping boost their
physical activity. Over 33,000 colleagues have
downloaded the app, an increase of 57% on
2024. Additionally, over 11,400 colleagues
participated in the HSBC Global Activity
Challenge in September, an increase of over
149% in participation from 2024. We set a
new Guinness World Record for the most
participants in a 10,000 step challenge in 24
hours.
Financial health
We introduced a four-part financial well-being
series providing ‘Money Skills That Make Life
Easier’, which gained an overall satisfaction
score of 97%. According to our Performance
and Reward survey, 37% of colleagues
expressed a desire for more financial well-
being support. In response, we trialled an
independent financial well-being platform for
colleagues in Mexico, UAE, the UK and India
to enhance financial literacy. Over 1,600
colleagues are participating in the trial, which
concludes in March 2026.
Flexible working
We support hybrid working, with 85% of our
colleagues embracing this approach.
We value flexibility but also emphasise the
importance of in-person interactions to foster
collaboration, build trust, and demonstrate care
and empathy. Strong relationships among
colleagues lead to better outcomes for our
customers.
In 2025, we reset our expectations that
Managing Directors are present in the office a
minimum of four days a week, emphasising
the importance of relationships, as we evolve
our culture.
We enhanced our family leave policies to
promote flexibility and work-life balance. Over
99% of colleagues now have access to at
least 18 weeks of fully-paid parental leave for
primary caregivers, along with five paid
compassionate leave days. Additionally,
around 72% of colleagues can also use up to
five paid days as carer leave days, when
regular arrangements unexpectedly fall
through.
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Developing skills, careers and opportunities
Learning and skills development
Employee development energises our
colleagues for growth and helps equip them
with the skills they need today while also
preparing them to meet future challenges.
Establishing our leadership framework
To support our refreshed strategy and
ambition, a cross-section of business leaders
developed and launched a set of leadership
principles and a new Group-wide leadership
framework called How We Lead. This is
characterised by simple, practical and universal
tools and consistent leadership language for all
people leaders across HSBC.
Supporting future skills
We have evolved our platforms to offer skills,
opportunities and development pathways,
supporting our colleagues to grow, perform
and adapt in a changing environment. In 2025,
we:
–increased the number of active users and
participation in learning programmes. To
bridge skill gaps we offered access to
learning content, fostering knowledge-
sharing, collaboration and structured learning
pathways; and
–increased efforts in our digital badging to
recognise skill-building achievements, with
46 new badges launched and more than
42,000 credentials issued in areas across
data, digital, banking and finance, and
wealth.
Maintaining our risk management
culture
We continue to improve our risk management
learning programmes to seek to ensure that
they maintain relevance and reinforce our risk
management culture.
In 2025, we introduced a multi-year Financial
Crime learning programme aimed at enhancing
our ability to manage financial crime risks. This
programme seeks to equip our colleagues in
high-risk roles with essential skills and
knowledge to effectively mitigate these risks.
Learning is delivered through role-specific
scenarios that assess capability by applying
knowledge and addressing skill gaps with
tailored content.
We have evolved our global mandatory
training, a key component of our risk and
compliance framework. Moving away from
traditional compliance methods, we have
adopted thematic structures in risk
management, financial crime, and conduct,
focusing on skills and behaviours. This
approach emphasises practical application and
tailors content to individual capabilities. By
2026, the training will develop into a dynamic,
personalised experience, emphasising
foundational knowledge for new joiners and
ongoing improvement for colleagues.
Fostering AI adoption
Our AI Academy continues to drive innovation
and improvement, equipping colleagues with
the skills to use AI technologies effectively
and ethically. Since its launch in 2024, the
Academy has evolved to focus on specialised
technical pathways tailored to employee roles
and their level of AI involvement. It provides
comprehensive training on AI literacy,
responsible AI, and AI ethics, with
participants earning badges to recognise their
achievements. In 2025, we piloted the AI
Ambassador mentorship programme to
empower a future-ready workforce. This
initiative accelerates skills development and
expands professional networks through
dynamic peer-to-peer mentorship and
meaningful connections.
Engagement with the AI Academy remained
strong throughout 2025, with 26,000
colleagues completing over 122,000 hours of
learning.
Hong Kong has progressed AI capability-
building with its ‘Skills Galaxy’ and ‘Skills
Master’ initiatives. These programmes focus
on AI, data and leadership. The Skills Galaxy
carnival attracted over 1,400 colleagues,
offering interactive booths, workshops and
information sessions. The Skills Master
initiative was launched as a self-paced online
learning journey, engaging over 3,300
colleagues in themed semesters to promote
continuous learning in AI and data.
Advancing wealth management
expertise
In 2025 we introduced the Wealth Academy to
cultivate top-tier wealth managers. The
Academy offers a wealth knowledge hub with
198 topics across five core skills, offering 26
hours of learning content in four languages.
Our colleagues can earn digital badges at three
competency levels through passing online
assessments. By September 2025, over 1,000
team members interacted with the Hub, and
720 qualified for competency badges.
We have teamed up with the London
Business School for a nine-month programme
for our 70 top-performing wealth managers.
This programme combines academic rigour
with practical wealth management strategies,
virtual learning and customer-focused
challenges. Wealth managers will earn a
certificate from the London Business School
upon completion.
Supporting in-person development
In June, we opened our fourth HSBC
University campus in Nansha, Guangzhou with
an event that brought together senior leaders
from across the Group. Our flagship residential
learning campus is dedicated to uniting our
colleagues globally in a space designed for
learning and engagement. It features 170
guest rooms, a large auditorium, a multi-
purpose hall, modern flexible classrooms and
well-being areas. To date, over 4,500 senior
leaders globally have attended leadership
events held at the China campus.
 | ||
Energising our colleagues for growth | ||
This year, we made significant upskilling efforts to fast track our digital, sustainability and growth ambitions: –Since its inception in 2024, our Digital Acceleration Programme has delivered over 25,000 hours of targeted training for key roles, including product owners and scrum masters. This strategic investment in professional development empowers our teams to build superior products and deliver services more efficiently, driving better outcomes for our customers. –We launched a programme to strengthen our Sustainable Supply Chain Finance CIB capabilities. This initiative increased ESG-related activity including client calls, deal pipeline and mandates awarded. –Expanding on our ‘Doing Business In’ series, we focused on new growth markets, such as India. In collaboration with the Indian School of Business, we conducted a four-day on-campus programme that provided bankers with a comprehensive understanding of the Indian economy, business environment, regulatory framework and clients’ banking priorities. | ||
Training at HSBC
5.6 million
Training hours by our colleagues in 2025.
(2024: 6.2 million)
26.8 hours
Training hours per FTE in 2025.
(2024: 29.6 hours)
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Building customer inclusion and resilience
Our approach to customer inclusion and resilience
We support our customers, colleagues and
communities through offering solutions that
aim to remove barriers to accessing financial
services. This section highlights some of the
solutions that we offer.
Access to HSBC products and services
In the UK and Hong Kong, we offer no-cost
accounts for customers who do not qualify for
standard accounts or who might need additional
support due to social or financial vulnerability.
This aims to enable them access to essential
banking services. In the UK, through our
partnership with Shelter, we extend this service
to include customers with no fixed address, so
that people experiencing homelessness may be
able to access HSBC services.
The reduction in no-cost accounts between 2024 and 2025 is in part due to bulk closure of inactive accounts in the UK. |
Making banking accessible
The table shows the number of no-cost
accounts held by customers in the UK and
Hong Kong
2025 |
2024 |
2023 |
Supporting financial knowledge and
education
We continue to invest in financial education
content and tools across different channels to
help customers, colleagues and communities
be confident users of financial services.
Supporting customer financial well-being
We seek to support the financial well-being of
our customers and employees so that they
can make the most of their money both day-
to-day and in the long term. We offer a
combination of personalised services and
digital tools, including a financial fitness test,
future planner, webinars and financial health
checks.
Creating an inclusive banking
experience
We seek to ensure that our banking products
and services are designed to be accessible for
customers experiencing either temporary or
permanent challenges, such as disability,
impairment or a major life event. We regularly
assess our web and mobile banking platforms
against Web Content Accessibility Guidelines
(‘WCAG’) 2.2 AA standards. Our digital
accessibility programme has received industry
awards including accolades from the Hong
Kong Digital Accessibility Recognition Scheme,
and recognition at the UK Pay 360 Awards. To
foster inclusive digital environments, we are
providing public training resources through our
Accessibility Hub and Train 1000 programme,
which offer resources for digital professionals,
including developers, designers and content
authors. Over 100,000 individuals engaged
with these resources in 2025.
Engaging with our communities
Helping people and communities
We seek to support the communities in which
we operate, and work with charity partners to
initiate a range of programmes that help
people and communities respond to
opportunities and challenges.
We continued our partnership with the British
Council in Brazil, Mexico, India, Indonesia and
Vietnam, and with The King’s Trust Group in
Australia, India and Malaysia to empower
young, marginalised people through training
and skills development on topics including
employability and climate, and to help equip
them for the new economy.
In the UK, Egypt and Mexico, we supported
financial and social empowerment: over
286,000 young people in the UK were
provided with financial skills in partnership
with Young Enterprise; 1,150 widows in Egypt
were supported to improve their self-reliance
through micro-banking with Global Fund For
Widows; and 800 incarcerated women in
Mexico with our charity partner La Cana were
supported in gaining employability and
emotional skills.
In China and India, HSBC initiatives aimed to
support financial literacy and entrepreneurship:
46,003 children and 26,291 families in China
benefited from financial education, while over
15,000 entrepreneurs in India, primarily
women, saw on average a 20% income
increase and improved access to credit,
markets and social security.
HSBC grants in the US trained 639 individuals
from low-income communities about clean
energy, benefiting 6,484 people.
In Hong Kong, Food Angel launched a new
production line to scale up cook-chill meal
operations, supporting 27,000 marginalised
elderly people with HSBC’s support.
Philanthropy can also play an important role in
addressing the barriers to action, helping to
build capacity, and testing and scaling the
innovation required to achieve a resilient and
sustainable net zero future.
ÑFor more information about our environment-
related philanthropy, refer to ‘Partnering for an
enabling environment’ on page 38.
Community engagement and
volunteering
We offer paid volunteering days, and
encourage our people to offer their time, skills
and knowledge to causes within their
communities. In 2025, our colleagues gave
over 248,639 hours to community activities
during work hours and 272,088 hours during
their own time.
Charitable contributions in 2025 (%)
Social, including Future Skills: 36%
Environment, including the Climate
Solutions Partnership: 38%
Local Priorities: 7%
Disaster relief and other giving: 19%
Cash charitable contributions
$103.7m
Total value of our contribution to
communities
$137.8m
HSBC Holdings plc Annual Report on Form 20-F |
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Governance
Acting responsibly
Setting high standards of governance
TCFD |
How ESG is governed
The Board takes overall responsibility for ESG
strategy, overseeing executive management in
developing the approach, execution and
associated reporting. Progress against our ESG
ambitions is reviewed through Board discussion
and review of key topics, such as updates on
the sustainability strategy and reviewing the
ESG strategy dashboard. The Board is regularly
provided with specific updates on ESG matters,
including the Net Zero Transition Plan,
philanthropy strategy, human rights and
workforce engagement. Board members
receive ESG-related training as part of their
induction and ongoing development, and seek
out further opportunities to build their skills and
experience in this area. For further details of
Board members’ ESG skills and experience,
see page 220. For further details of their
induction and training in 2025, see page 231.
In March 2025, we streamlined our ESG
governance with the demise of the ESG
Committee, which was part of the Group
Operating Committee, with the business of the
meeting being embedded across the formal
Operating Committee level governance
meetings or managed via individual
accountability. We expect that our approach to
ESG governance is likely to continue to develop,
in line with our evolving approach to ESG
matters and stakeholder expectations.
The diagram on the right provides an illustration
of our ESG governance process, including how
the Board’s strategy on climate is cascaded and
implemented throughout the organisation. It
identifies examples of forums that manage both
climate-related opportunities and risks, as well
as considering the associated trade-offs. Details
are also provided on their responsibilities and
the responsible chair. The structure of the
process remains consistent with a defined
escalation pathway for issues and emerging
challenges, with issues either resolved in a
given forum or raised to the appropriate level of
governance with appropriate scope and
authority.
Given the wide-ranging remit of ESG matters,
the governance activities are managed through
a combination of specialist governance
infrastructure and regular meetings and
committees, where appropriate. These include
the Group Risk Committee and Group Audit
Committee, which provide oversight for the
scope and content of ESG disclosures.
For some areas, such as climate where our
approach is more advanced, dedicated
governance activities exist to support the wide
range of activities.
The Group Chief Risk and Compliance Officer
and the chief risk officers of our PRA-regulated
businesses are the senior managers
responsible for climate financial risks under the
UK Senior Managers Regime. Climate risks are
considered in the Group Risk Management
Meeting and the Group Risk Committee, with
scheduled updates provided, as well as detailed
reviews of material matters, such as climate-
related stress-testing exercises.
How HSBC’s climate strategy is cascaded | ||||||||||||||||||||
Opportunities | Risks | |||||||||||||||||||
Board level governance | ||||||||||||||||||||
Group Board | Group Audit Committee | Group Risk Committee | ||||||||||||||||||
Takes overall responsibility for climate strategy, overseeing executive management in developing the approach and execution. | Monitors and assesses the integrity of the Group’s financial disclosures, including those relating to ESG. | Oversees and advises the Board on risk-related matters including those related to ESG risks (incorporating climate risk). | ||||||||||||||||||
Chair: Brendan Nelson | Chair: Brendan Nelson | Chair: James Forese | ||||||||||||||||||
Specialist Board governance | ||||||||||||||||||||
Sustainability Working Group Meets on an ad hoc basis to provide guidance on the Group-wide medium and longer-term sustainability strategy, including our progress towards our net zero ambition, taking into account key factors such as risk appetite, commerciality, capability and data. Chair: Geraldine Buckingham | ||||||||||||||||||||
Management level governance | ||||||||||||||||||||
Group Operating Committee Receives regular ESG updates and shapes and influences our strategy. Chair: Group Chief Executive Officer | Group Risk Management Meeting Oversees the enterprise-wide management of all risks, including updates relating to the Group’s climate risk profile and risk appetite, top and emerging climate risks. Chair: Group Chief Risk and Compliance Officer | |||||||||||||||||||
Regional, global business and group infrastructure | ||||||||||||||||||||
Examples of ESG-related management governance The following governance bodies support management in its delivery of ESG activities. | ||||||||||||||||||||
Group Reputational Risk Committee Provides recommendations and advice on significant reputational risk matters with impact across the Group. Chair: Group Chief Risk and Compliance Officer | Sustainability Leadership Meeting Monitors execution of the Group’s sustainability strategy and requirements. Chair: Group Chief Sustainability Officer | |||||||||||||||||||
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Governance |
Human rights
Our respect for human rights
As set out in our Human Rights Statement, we
recognise the role of business in respecting
human rights. Our approach is guided by the
UN Guiding Principles on Business and Human
Rights (‘UNGPs’) and the OECD Guidelines for
Multinational Enterprises on Responsible
Business Conduct.
Our salient human rights issues
Our salient human rights issues | ||||||
Illustration of HSBC Group’s inherent human rights risks mapped to our business activities. | ||||||
Inherent human rights risks | Employer | Buyer | Provider of products and services | Investor | ||
Personal customers | Business customers | |||||
Right to decent work | Freedom from forced labour | u | u | u | ||
Just and favourable conditions of work | u | u | u | u | ||
Right to health and safety at work | u | u | u | u | ||
Right to equality and freedom from discrimination | u | u | u | u | u | |
Right to privacy | u | u | u | |||
Cultural and land rights | u | u | u | |||
Right to dignity and justice | u | u | u | u | u | |
We continue to develop our understanding of
our salient human rights issues. These are the
human rights at risk of the most severe
negative impact through our business activities
and relationships.
An extensive review of our salient human
rights issues conducted in 2022 identified five
human rights risks inherent to HSBC’s
business globally, and five types of activity
through which such risks might arise. These
are represented in the adjacent table. We
reviewed those earlier findings in 2025,
drawing on consultations with stakeholders
including employees, customers, investors,
public authorities and civil society groups
representing potentially affected people. This
review validated our existing assessment, and
no substantive changes have been made to the
table as a result. Respondents highlighted
several developing issues, including the
potential social impacts of AI on communities.
In 2025, we continued to focus on our
approach to human rights risk management
relating to the goods and services we buy
from third parties and in respect of our
business customers.
Managing risks to human rights
We continued the process of adapting our risk
management procedures, reflecting what we
learned from the recent work on salient
human rights issues and continued to embed
the guidance documents issued in 2024 for
those who manage our relationships with
suppliers and with business customers.
Our Global Procurement function continued to
implement its human rights due diligence
operating procedure. This procedure sets out
how HSBC aims to identify suppliers where
the risk of human rights impact is considered
to be higher, and the process to be followed to
review and mitigate the associated risks. We
continued the human rights audits of suppliers
and closed out findings from the 2024 audits.
We use independent negative news data to
help identify controversies related to our
corporate customers, including on human
rights, which may lead to further review and
escalation.
ÑFor further details of the actions taken to respect
the right to decent work, see our 2024 Annual
Statement under the UK Modern Slavery Act at
www.hsbc.com/modern-slavery-act.
ÑSee ’Our approach to inclusion’ on page 51 for
details relating to freedom from discrimination.
Sustainability risk policies
Some of our business customers operate in
sectors in which the risk of adverse human
rights impact is considered greater. Our
sustainability risk policies consider human
rights issues such as forced labour, harmful or
exploitative child labour, workers’ rights, health
and safety of communities and land rights.
Through our membership of international
certification schemes, such as the Forestry
Stewardship Council, the Roundtable on
Sustainable Palm Oil and the Equator
Principles, we support standards aimed at
respecting human rights.
ÑFor further details on our sustainability risk policies
see page 49.
Financial crime controls
Our financial crime risk framework also seeks
to mitigate the risk of being associated with
adverse human rights impacts, by helping to
identify and assess the financial crime risk
associated with our customers, employees
and third parties.
ÑFor further details of how we fight financial crime
see www.hsbc.com/fighting-financial-crime.
Other principles
HSBC’s Principles for the Ethical Use of Data
and Artificial Intelligence include how we seek
to respect the right to privacy while making
use of these technologies.
ÑFor further details see www.hsbc.com/ai-principles.
Supporting change
We continued to participate in industry forums,
including the Thun Group of Banks, which is an
informal group that seeks to promote
understanding of the UNGPs within the sector,
and the UN Global Compact Human Rights
Working Group.
HSBC has been a member of the Mekong
Club since 2016. We are a participant in their
financial services working group, and we use
their informative typological toolkits,
infographics and other multimedia resources
covering current and emerging issues. Our
compliance teams regularly collaborate and
engage with the Mekong Club in designing
Group-wide knowledge sharing and training
sessions.
Investments
HSBC Asset Management acknowledges the
important role that business plays in
respecting human rights.
HSBC Asset Management engages with
companies prioritised for purposeful
engagement under its stewardship plan on
core relevant themes, including human rights.
Engagements may be on a one-on-one basis,
or collaboratively with other investors. Further
details can be found in its stewardship plan.
The Global Voting Guidelines provide an
overview of its approach to exercising its
shareholder rights in respect of ESG issues,
including human rights.
Supporting those impacted and those
potentially at risk
We continued to expand our Survivor Bank
programme, which has now supported over
4,100 (a more than 15% increase since last
year) survivors of modern slavery and human
trafficking in the UK.
Our personal customers (IWPB) team
continues to deliver training to raise
awareness of modern slavery, which seeks to
enable employees to spot signs of abuse and
escalate their concerns through established
channels. In addition, our customer-facing
employees globally are given training as part of
their induction which aims to help them
identify and support vulnerable customers.
ÑFor further details of our work to support
vulnerable communities, see page 56.
Effectiveness
We increased the proportion of our suppliers
who had either confirmed adherence to
HSBC’s code of conduct or their own
alternative, which was accepted by our Global
Procurement function, to 97.3%. We also
continued to train employees in relevant roles
on one or more aspects of a range of human
rights related topics, having now reached over
11,300 employees over the past 24 months.
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Governance |
Customer experience
We remain committed to improving customers’ experiences. In 2025, we gathered feedback from over one million customers across our four
business segments to help us understand our strengths and the areas we need to focus on.
Customer satisfaction
Listening to drive improvement
We continue to listen, learn and act on
customer feedback. We use the net promoter
score (‘NPS’) system to share feedback with
our front-line teams, allowing them to respond
directly to customers. We also run dedicated
global forums to provide oversight of our retail
and business customers’ experiences and
promote continuous improvement.
How we fared
In Hong Kong, we were ranked in first place
for both RBW and CMB. Notably, we reached
a record high NPS in RBW.
We also reached our highest NPS to date in
the UK among RBW customers and improved
our rank.
In CMB, we ranked second for mid-market
enterprises, and improved our SME Business
Banking ranking to fifth.
In IWPB, among the mass affluent we
improved our NPS or rank in seven of 10 key
markets. We ranked in the top 3 of the eight
competitively benchmarked markets. We rose
to first place in Singapore and China and
maintained second place in Malaysia.
India and Mexico both experienced a decline in
NPS during the period. Although NPS is
influenced by various factors, the increase in
customer complaints contributed to a shift in
overall customer sentiment. For further details
on IWPB customer complaints, please refer to
page 60.
In our private bank, our global NPS increased
to 54 points, compared with 48 points in 2024.
In CIB, among Corporates we were ranked
among the top 3 in seven of 10 key markets.
We led in three markets and held a stronger
position in Asia and the Middle East than in
Europe and the Americas.
How we listen
To improve how we serve our customers, we must be open to feedback and acknowledge when things go wrong. We continue to adapt at pace to
provide support for customers facing new challenges, new ways of working and those that require enhanced care needs. We aim to be open and
consistent in how we track, record and manage complaints, although as we serve a wide range of customers – from personal banking and wealth
customers to large corporates, institutions and governments – we tailor our approach in each of our global businesses.
How we handle complaints | ||||
Our principles | Our actions | |||
Making it easy for customers to complain | Customers can complain through the channel that best suits them. We provide a point of contact along with clear information on next steps and timescales. | |||
Acknowledging complaints | All colleagues welcome complaints as opportunities and exercise empathy to acknowledge our customers’ issues. Complaints are escalated if they cannot be resolved at first point of contact. | |||
Keeping the customer up to date | We set clear expectations and keep customers informed throughout the complaint resolution process through their preferred channel. | |||
Ensuring fair resolution | We thoroughly investigate all complaints to address concerns and ensure the right outcome for our customers. | |||
Providing available rights | We provide customers with information on their rights and the appeal process if they are not satisfied with the outcome of the complaint. | |||
Undertaking root cause analysis | Complaint causes are analysed on a regular basis to identify and address any systemic issues and to inform process improvements. | |||
Hong Kong
As of 31 December 2025, Hong Kong CMB
received 7,324 customer complaints, down
3.5% from the year before. The primary
drivers of these complaints were related to
servicing, policy, and digital issues. Policy-
related complaints focused on Client Selection
and Exit Management (‘CSEM’) cases and
CSEM appeals, while digital complaints
involved business internet banking log-on
problems, webpage design and online
transactions issues.
In 2025, despite a growing customer base, the
Hong Kong RBW average complaints per
1,000 customers per month decreased from
0.71 to 0.68.
Acting on feedback
The bi-monthly CMB complaint review forum
brings together key decision makers,
customer relationship owners and product and
process owners to identify the latest complaint
trends and concern areas. It oversees root
cause analysis and implements improvement
actions with the aim of reducing complaints
and enhancing customer service. Awareness
sessions are provided to client-facing staff to
reinforce the CMB complaint handling
procedure and customer feedback tool
functionalities, to help equip staff with relevant
skills and knowledge to manage complaints
effectively.
The improvement for Hong Kong RBW was
achieved through enhanced banking
capabilities and a focus on customer
experience. The positive trend stemmed from
fostering a customer-centric culture,
emphasising service resolutions, and
proactively addressing feedback through root
cause analysis and insights from complaint
management information and NPS.
Strengthened cross-departmental collaboration
and advanced technological methods in
complaint management further enhanced our
efficiency and responsiveness.
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Governance |
UK
For UK CMB, complaints reduced by 13.8% in
2025 compared with 2024, with the most
common complaint categories continuing to
relate to telephony, servicing and transactions.
A refined customer contact strategy has been
embedded to drive improved outcomes and
customer experience.
In 2025, average complaints per 1,000
customers per month for UK RBW were 0.84.
Overall, complaints fell by 18% in 2025 vs
2024.
During 2025, our two key priorities continued
to be complaints prevention and improving the
quality of resolution of the complaints we
received. We made good progress in both
areas, driven by targeted intervention in
priority areas and ongoing regular oversight.
Acting on feedback
A focus on root cause analysis identified
more than 240 opportunities to reduce
dissatisfaction in key customer journeys in
CMB.
In RBW, we focused on the top 35 complaint
themes – such as telephony customer
experience, transaction disputes and
international payment processing – and
allocating them to individual executives as
accountable ‘owners’ to remedy the root
cause.
Corporate and Institutional Banking
Within CIB, excluding Hong Kong CMB and UK
CMB, we achieved a 3.7% reduction in
complaints. Complaint volumes decreased in
2025, with 7,373 complaints received
compared with 7,655 in 2024, indicating an
overall downward trend.
In Markets and Securities Services (MSS)
complaints increased slightly by 4.6% to 320.
The majority of the complaints were
operational in nature and resolved in a timely
manner. Of the overall MSS complaints in
2025, 46% came from Asia-Pacific and 44%
came from Europe, our two largest markets.
Acting on feedback
These complaints were mainly related to
servicing and transactions across all regions,
with a notable concentration in Latin America,
the Middle East and North Africa, Asia-Pacific
and Europe.
To mitigate potential risks, comprehensive
mandated conduct and complaints training has
been provided to all CIB employees. This
training aims to strengthen a culture of
accountability, transparency and learning
aligned to our conduct principles.
In 2025, focus continued to be on increasing
the quality of the documentation of customer
feedback received within MSS. Continuous
training for front-line staff on recurring themes
that are identified when managing complaints
ensured that we continued to learn from
feedback, allowing us to further embed
changes into our processes, leading to a better
customer experience. Although complaint
volumes increased slightly, we identified
better quality of complaint documentation,
allowing us to address the issues more
effectively.
International Wealth and Premier Banking
In 2025, IWPB received approximately
717,000 complaints from customers in eight
priority markets. Average complaints per 1,000
customers (CPK) per month increased from
4.2 in 2024 to 4.7 in 2025. Our top three
markets – Mexico, Australia and India –
accounted for 88% of IWPB complaints
globally. The rise in complaints was primarily
driven by disputes in Mexico, largely
stemming from customer concerns about
unauthorised or fraudulent transactions.
Additionally, the introduction of credit card
annual fees, and more frequent risk reviews
contributed to higher complaint volumes in
Australia and India. We are closely monitoring
these trends and have initiated targeted
actions in each market to address the
underlying causes.
We continue our commitment to drive
accuracy over how we log and respond to
customer feedback.
In our Private Bank, we received 593
complaints, a decrease of 54 compared with
2024, helped by the sale of our private bank in
Germany. Banking products and service issues
accounted for the largest volume of
complaints overall, a high proportion of which
were attributable to issues with payment
processing and credit cards. Overall, our
Private Bank resolved 578 complaints in 2025.
Acting on feedback
In 2025, we further strengthened our
customer capabilities – the tools, skills, and
processes that empower our teams to better
understand, actively listen and improve the
customer experience globally.
We upgraded our listening platforms which
support our colleagues in meeting minimum
service standards and in prioritising customer
experience in their daily routines. A key
milestone was the launch of a new platform
designed to gather and analyse customer
feedback, generating actionable insights for
continuous improvement. These upgrades
help us to improve customer experience and
systematically track and measure our
progress.
ÑFor further details of complaints volumes by
business lines, see our ESG Data Pack at
www.hsbc.com/esg.
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Governance |
Integrity, conduct and fairness
Safeguarding the financial system
We have continued our efforts to combat
financial crime and reduce its impact on our
organisation, customers and the communities
that we serve. Financial crime includes fraud,
bribery and corruption, tax evasion and the
facilitation of tax evasion, sanctions and
export control violations and evasion, money
laundering, terrorist financing and proliferation
financing.
We manage financial crime risk because it is
the right thing to do to protect our customers,
shareholders, staff, the communities in which
we operate, as well as the integrity of the
financial system on which we all rely. Our
financial crime risk management framework
is applicable across all global businesses and
functions, and in all countries and territories
in which we operate. The financial crime risk
framework is overseen by the Board,
supported by our financial crime policy, and is
designed to enable adherence to applicable
laws and regulations globally.
Annual global mandatory training is provided
to all colleagues, with additional targeted
training tailored to certain individuals. We
carry out regular risk assessments to identify
where we need to respond to evolving
financial crime threats, as well as to monitor
and test our financial crime risk management
programme.
Our anti-bribery and corruption policy
We are required to comply with all applicable
anti-bribery and corruption laws in every
market and jurisdiction in which we operate.
We seek to focus not only on the letter, but
also on the spirit of relevant laws and
regulations to demonstrate our commitment
to ethical behaviours and conduct, as part of
our environmental, social and corporate
governance.
Our global financial crime policy requires that
all activity must be: conducted without intent
to bribe or corrupt; reasonable and
transparent; considered to be neither lavish
nor disproportionate to the professional
relationship; appropriately documented with
business rationale; and authorised at an
appropriate level of seniority. Our global
financial crime policy requires that we identify
and mitigate the risk of our employees,
customers and third parties committing
bribery or corruption. Among other controls,
we use risk assessments, due diligence and
ongoing monitoring following a risk-based
approach, to identify and help mitigate the
risk that our customers are involved in, or use
HSBC’s products or services, to commit
bribery or corruption.
There were no concluded legal cases
regarding bribery or corruption brought
against HSBC or its employees in 2025.
 | ||
The scale of our work | ||
Each month in 2025 we monitored approximately 980 million transactions for signs of financial crime. We performed daily screening of approximately 109 million customer records for sanctions exposure. In 2025, we filed nearly 137,000 suspicious activity reports to law enforcement and regulatory authorities where we identified potential financial crime. | ||
99%
Total percentage of permanent and non-
permanent employees who received financial
crime training, including on anti-bribery and
corruption in 2025.
Whistleblowing
We want colleagues and stakeholders to
have confidence in speaking up when they
observe unlawful or unethical behaviour. We
offer a range of speak-up channels to listen to
the concerns of individuals and have a zero-
tolerance policy for acts of retaliation.
Listening through whistleblowing
channels
Our global whistleblowing channel, HSBC
Confidential, is one of our speak-up channels,
which allows colleagues past and present and
other stakeholders to raise concerns
confidentially and, if preferred, anonymously
(subject to local laws). In most of our
markets, HSBC Confidential concerns are
raised through an independent third party,
offering 24/7 hotlines and a web portal in
multiple languages. We also provide and
monitor an external email address for
concerns about accounting, internal financial
controls or auditing matters
(accountingdisclosures@hsbc.com).
Concerns are investigated proportionately and
independently, with action taken where
appropriate. This can include disciplinary
action, such as dismissal and adjustments to
variable pay and performance ratings, or
operational actions including changes to
policies and procedures.
We continue to actively promote our full range
of speak-up channels to colleagues to help
ensure their concerns are handled through the
most effective route. In 2025, 1,100 concerns
were investigated through HSBC Confidential
(2024: 925) with 34% found to have some
level of substantiation (2024: 35%) and a
further 19% identifying other issues (2024:
22%).
The Group Audit Committee has oversight of
the Group’s whistleblowing arrangements, and
the Chair of the Group Audit Committee acts
as HSBC’s Whistleblowers’ Champion with
responsibility for ensuring and overseeing the
integrity, independence and effectiveness of
the Group’s policies and procedures.
Regulatory Compliance sets the
whistleblowing policy and procedures and
provides the Group Audit Committee with
periodic updates on their effectiveness.
Specialist teams and investigation functions
own whistleblowing controls, with monitoring
in place to determine control effectiveness.
ÑFor further details of the role of the Group Audit
Committee in relation to whistleblowing, see
page 238.
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Governance |
A responsible approach to tax
We seek to pay our fair share of tax in all
jurisdictions in which we operate, applying
both the letter and spirit of the law, and to
minimise the risk of customers using our
products and services to evade or
inappropriately avoid tax. Our approach to tax
and governance processes is designed to
achieve these goals.
We maintain open and transparent
relationships with tax authorities. We
cooperate to resolve differing interpretations
or disputes in a timely manner.
Through adoption of the Group’s risk
management framework, we seek to ensure
that we do not adopt inappropriately tax-
motivated transactions or products, and that
tax planning is scrutinised and supported by
genuine commercial activity. HSBC has no
appetite for using aggressive tax structures.
With respect to our customers’ taxes, we
have made considerable investments to
support external tax transparency initiatives to
reduce the risk of banking services being used
to facilitate customer tax evasion and
implemented processes that aim to ensure
that inappropriately tax-motivated products and
services are not provided to our customers.
Our tax contributions
During 2025, we paid $7.7bn (2024: $9.2bn) in
respect of our own tax liabilities and collected
taxes of $10.0bn (2024: $10.1bn) on behalf of
governments around the world. Tax paid was
lower than in the previous year primarily due to
the 2025 corporate income tax assessments
for the Group’s entities in Hong Kong being
received and paid in January 2026, whereas
the 2024 assessments were received and
settled during 2024.
Taxes paid – by type of tax
Tax on profits $4,296m (2024: $6,080m)
Withholding taxes $685m (2024: $667m)
Employer taxes $1,102m (2024: $1,003m)
Bank levy $273m (2024: $135m)
Irrecoverable VAT $1,160m (2024: $1,098m)
Other duties and levies $221m1 (2024: $229m)
1Other duties and levies includes property taxes of
$83m (2024: $76m).
Our approach to customer and market conduct
Our Conduct Approach guides us to do the
right thing and to focus on the impact we have
for our customers and the financial markets in
which we operate. It is embedded throughout
our product and services lifecycle, with a focus
on five clear outcomes:
–We understand our customers’ needs.
–We provide products and services that offer
a fair exchange of value.
–We service customers’ ongoing needs and
put it right if we make a mistake.
–We act with integrity in the financial markets
we operate in.
–We operate resiliently and securely to avoid
harm to customers and markets.
Our principles, policies and procedures set
standards to help ensure that we consider and
meet customer needs and protect market
integrity. They help ensure our products and
services remain fit-for-purpose, offer fair value
exchange and mitigate the risk of customer or
market detriment.
We train all our colleagues on the importance
of customer and market conduct, helping to
ensure our conduct outcomes are part of
everything we do.
Our approach with suppliers
We maintain global policies and procedures for
the onboarding and use of third-party
suppliers. We expect suppliers to meet our
third-party risk compliance requirements and
assess them to identify any financial stability
concerns.
Sustainable procurement
Supporting and engaging with our supply chain
is vital to progressing our sustainable
procurement goals. In 2025:
–We continued gathering carbon emission
data from our suppliers through CDP
(formerly the Carbon Disclosure Project) and
an additional data collection source
introduced in 2024 to simplify and expand
our supplier outreach for scope 3 data
collection.
–We continued to deepen our collaboration
with suppliers and have increased our focus
on those without public disclosures or
emissions reduction plans, and supported
them by providing additional guidance where
appropriate.
–Through ongoing engagement and targeted
collaboration events, we are partnering with
–some of our suppliers who are more
advanced in their sustainability journey to
jointly develop innovative ideas on
decarbonisation and nature-related topics.
–We also supported our sourcing teams to
further integrate sustainability into sourcing
strategy and decision making, including new
supplier selection, renewals and ongoing
supplier management.
–As part of our nature approach, we have
begun developing sustainable sourcing
roadmaps across key sectors, such as
support services, technology services and
corporate real estate, following a materiality
assessment of biodiversity and nature risks.
The roadmaps will help us address high-risk
areas and include considerations for nature
and biodiversity within our procurement
activities.
–We continue to implement our human rights
due diligence process to help identify
supplier risks.
–We maintained an inclusive approach to
supplier engagement, supporting fair access
to procurement opportunities for all
suppliers.
Supplier Code of Conduct
Our Supplier Code of Conduct (‘the Code’)
sets out the minimum standards we expect of
our suppliers in respect of the environment,
inclusion and human rights. In 2025, we
refreshed the Code to include principles on
responsible use of AI. We continue to
formalise adherence to the Code by seeking to
add clauses to our supplier contracts which
support the right to audit and act if a breach is
discovered. At the end of 2025, 97.3% of
approximately 9,830 contracted suppliers had
either confirmed adherence to the Code, or
provided their own alternative that was
accepted by our Global Procurement function.
Our Supplier Code of Conduct is available at:
www.hsbc.com/who-we-are/esg-and-
responsible-business/working-with-suppliers
ÑFor further details of the number of suppliers in
each geographical region, see the ESG Data
Pack at www.hsbc.com/esg
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Governance |
Safeguarding data
Data privacy
We are committed to protecting and managing
the data we process, in accordance with the
laws and regulations of the markets in which
we operate. Our strategy rests on having the
right talent, technology, and processes to
manage privacy risks effectively. Our Group-
wide data risk policy provides a consistent
approach to data and privacy risk
management, applicable across all global
businesses and infrastructure. This policy is
reviewed annually with the aim of ensuring
that we remain responsive to regulatory
changes. Our HSBC Privacy Principles can be
found at: www.hsbc.com/ who-we-are/esg-
and-responsible-business/ managing-risk/
operational-risk.
We regularly provide employees with training
and awareness sessions on data privacy and
security, offering both mandatory and
supplementary sessions as required. In
addition, we mark International Data Privacy
Day each year, with events that discuss
developments in the data privacy landscape
and reinforce privacy awareness across HSBC.
We provide transparency to our customers,
employees and other stakeholders regarding
processing of personal data and their rights.
Where relevant, we work with third parties to
help ensure adequate protections are
provided, in line with our data risk policy and
regulatory requirements. We offer a broad
range of channels for customers, employees
and other stakeholders to raise privacy
concerns and questions.
Data privacy is regularly monitored at multiple
governance forums, including at Board level,
providing senior executive oversight on privacy
risk and global programmes. Our Global Internal
Audit function independently assures whether
our data privacy risk management approach is
effectively designed and operational. In addition,
we have established data privacy governance
structures and continue to embed accountability
across all businesses and functions.
We continue to review and implement
industry best practices for data privacy and
security, working closely with our data
protection officers, industry bodies, and
research institutions. Regular reviews and
privacy risk assessments are conducted to
strengthen our data privacy controls.
Procedures are in place to address data privacy
considerations, including notifying regulators,
customers and data subjects as required by
law in the event of a data privacy breach.
Intellectual property rights practices
Our Group intellectual property risk policy,
supported by comprehensive controls and
guidance, is designed to manage risks
associated with intellectual property. This
policy seeks to ensure that our commercially
and strategically valuable intellectual property
is properly identified and safeguarded. This
includes applying to register trademarks and
patents and enforcing our rights against third
parties making unauthorised use of our
intellectual property. Additionally, our
intellectual property framework helps prevent
infringement of third-party rights, thereby
supporting the consistent and effective
management of intellectual property risk in
alignment with our risk appetite.
Cybersecurity
The threat of a significant cyber incident
remains a concern for the Group and the
broader financial sector. As cyber threats
continue to evolve, failure to protect our
operations may result in disruption to our
business services and negative impacts on our
customers, such as a financial loss, loss of
sensitive data or damage to our reputation,
among other risks.
Identify, protect, detect, respond and
recover
We invest in business and technical controls to
help prevent, detect and mitigate cyber threats.
Our controls follow a ’defence in depth’
approach, leveraging multiple security layers,
and recognising the complexity of our
environment. Our ability to detect and respond
to attacks through our round-the-clock security
operations is intended to help reduce the impact
of attacks. We routinely test our data backup
and disaster recovery processes with the aim of
limiting the impact on customers and restoring
services in the event of a cyber-attack.
Our cyber intelligence and threat analysis team
proactively collects and analyses internal and
external cyber information to evaluate threat
levels, including from ongoing geopolitical
events, potential outcomes, and what control
adjustments are needed to best defend
against them. We collaborate with the broader
cyber intelligence community, the financial
services industry and global government
agencies.
In 2025, we continued to enhance our
cybersecurity capabilities to help reduce the
likelihood and impact of unauthorised access,
security vulnerabilities being exploited, data
leakage, third-party security exposure and
advanced malware. We focused on
preparedness for emerging technology risks,
such as AI and quantum computing.
We work with third parties, suppliers and
financial infrastructure bodies to help reduce
the threat of cyber-attacks impacting our
business services. We have a third-party
security risk management process in place to
continually assess, identify and manage
cybersecurity risks with suppliers and other
third-party relationships. This includes
assessments of the third parties against our
own cybersecurity standards and
requirements.
Policy and governance
We have a suite of cybersecurity policies,
procedures and controls to help with the
effective oversight and management of the
organisation. This includes but is not limited to
defined information security responsibilities for
employees, contractors and third parties, as
well as standard procedures for cyber incident
identification, investigation, mitigation and
reporting. We operate a three lines of defence
model, aligned to the enterprise risk
management framework, to help the oversight
and challenge of our cybersecurity capabilities.
The assessment and management of our
cybersecurity risk is led and coordinated by our
Global Chief Information Security Officer
(‘CISO’), who has extensive experience in
financial services, security and resilience as
well as strategy, governance, risk
management and regulatory compliance. The
Global CISO is supported by business and
regional level CISOs. In the event of incidents,
both the Global and relevant supporting CISOs
are informed and are engaged in line with our
cybersecurity incident response protocols. Key
risk indicators, significant cyber incidents and
other matters related to cybersecurity are
presented on a regular basis to various risk and
control committees, including Board
committees, the Group Risk Management
Meeting and global businesses.
Our cybersecurity capabilities are periodically
assessed against standards issued by the
National Institute of Standards and Technology
and by independent third parties, and we
proactively collaborate with regulators to
participate in regular testing activities. In
addition, HSBC engages external, independent
third parties to support our penetration and
threat-led penetration testing.
Cyber training and awareness
Our people play an important role in protecting
against cybersecurity threats and we aim to
provide tools, and encourage behaviours, to
keep our organisation and customer data safe.
This includes cybersecurity training and
awareness for all our people and targeted
training for staff that are identified as having
elevated cyber risk exposure. We host an
annual Cyber Awareness Month, covering
topics such as online safety at home, social
media safety, safe hybrid working and cyber
incidents and response. We also provide a
wide range of education and guidance to our
customers about how to spot and prevent
online fraud.
ÑSee ‘Top and emerging risks’ on pages 121 and
122 for more information relevant to data privacy
and cybersecurity.
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Financial
review
The financial review gives detailed reporting of our
financial performance in 2025 at Group level, our
business segments and legal entities.
65 | Financial summary |
88 | Business segments and legal entities |
106 | Alternative performance measures |
111 | Other information |
3
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Financial summary
Basis of presentation
Constant currency performance
Constant currency performance is computed by adjusting reported
results for the effects of foreign currency translation differences, which
reflect the movements of the US dollar against most major currencies
during 2025. Excluding these differences allows 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. Foreign
currency translation differences for 2025 are computed by retranslating
into US dollars for non-US dollar branches, subsidiaries, joint ventures
and associates:
–the income statement for the year ended 31 December 2024 at the
average rate of exchange for the year ended 31 December 2025;
and
–the balance sheets at 31 December 2024 at the prevailing rates of
exchange on 31 December 2025.
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 our operations 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 has been translated at the appropriate
exchange rates applied in the current period on the basis described
above.
Notable items and material 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, and are excluded
from our target basis dividend payout ratio calculation and earnings per
share measure. Material notable items in 2025 or relevant comparative
periods relate to the operating expenses associated with actions to exit
or wind down non-strategic businesses. They also include a dilution
loss and the recognition of an impairment of our investment in BoCom,
and a legal provision relating to developments in a claim in Luxembourg
relating to the Bernard L. Madoff Investment Securities LLC fraud.
ÑThe tables on pages 88 to 90 and pages 97 to 102 detail the effects of notable
items on each of our business segments, legal entities and selected countries/
territories in 2025 and 2024.
Impact of strategic transactions
In addition to the items categorised as material notable items, the
impacts of strategic transactions include the distorting impact observed
between the periods of the operating income statement results related
to acquisitions, disposals and wind-downs that affect period-on-period
comparisons. Once a transaction has completed or a wind-down has
commenced, the impact will include the operating income statement
results of each business, which are not classified as notable items, in
any comparative period if there are no results in the current period as a
result of a transaction, or a reduction in revenue or costs has arisen
from the wind-down of a business. We consider the monthly impact of
distorting income statement results when calculating the impact of
strategic transactions. In the case of wind-downs, or transactions that
complete in phased tranches, there may be timing differences between
the recognition of operating cost impacts and operating revenue
impacts. These would arise in the event there is a timing lag between
the impact of cost actions and the resultant impact on operating
revenue.
Impact of hyperinflationary accounting
The sale of our business in Argentina, previously treated as a
hyperinflationary economy for accounting purposes, was completed in
2024. We continue to treat Türkiye as a hyperinflationary economy for
accounting purposes. The impact of applying International Accounting
Standard (‘IAS’) 29 ‘Financial Reporting in Hyperinflationary Economies’
and the hyperinflation provisions of IAS 21 ’The Effects of Changes in
Foreign Exchange Rates’ in the current period for our operations in
Türkiye was a decrease in the Group’s profit before tax of $150m (2024:
$157m), comprising a decrease in revenue, including a loss on net
monetary position of $145m (2024: $146m) and an increase in ECL and
operating expenses of $4m (2024: increase of $11m). The consumer
price index at 31 December 2025 for Türkiye was 3,513.87, with an
increase in the period of 829.32 (2024: 825.55 increase).
Use of alternative performance
measures
Our reported results are prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IFRS Accounting Standards’), as detailed in the
financial statements starting on page 288.
To measure our performance, we supplement our IFRS Accounting
Standards figures with non-IFRS Accounting Standards measures,
which constitute alternative performance measures under European
Securities and Markets Authority guidance and non-GAAP financial
measures defined in and presented in accordance with US Securities
and Exchange Commission rules and regulations. These measures
include those derived from our reported results that eliminate factors
distorting year-on-year comparisons. The ‘constant currency
performance’ measure used throughout this report is described above.
Definitions and calculations of other alternative performance measures
are included in our ‘Alternative performance measures’ on page 106.
Additionally, the insurance-specific non-GAAP measure ‘Insurance
equity plus CSM net of tax‘ is provided on page 93, along with its
definition and reconciliation to the GAAP measure. All alternative
performance measures are reconciled to the closest reported
performance measure.
Return on average tangible equity
excluding notable items
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. To
better align with market practice, from 2025 we no longer adjust the
‘average tangible equity‘ for the post-tax impact of notable items in each
period. Comparatives have been re-presented.
ÑSee page 106 for the definition of return on average tangible equity excluding
notable items and page 107 for the reconciliation to the GAAP measure.
Banking net interest income
Banking net interest income (‘banking NII’) adjusts our NII primarily for
the impact of funding trading and fair value activities reported in interest
expense. It represents the Group’s banking revenue that is directly
impacted by changes in interest rates. We use this measure to
determine the deployment of our surplus funding, and to help optimise
our structural hedging and risk management actions. For more
information on banking NII, see page 69.
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Financial summary |
Constant currency revenue and profit
before tax excluding notable items and the
impact of strategic transactions
To aid the understanding of our results, we separately report ‘constant
currency revenue excluding notable items‘ and ‘constant currency profit
before tax excluding notable items‘, which exclude the impact of notable
items and the impact of foreign exchange translation. We also separately
disclose ‘constant currency revenue excluding notable items and the
impact of strategic transactions‘ and ‘constant currency profit before tax
excluding notable items and the impact of strategic transactions‘, which
also exclude the impact of strategic transactions classified as material
notable items as described above. We consider these measures to provide
useful information to investors as they remove items that distort period-on-
period comparisons.
The impact of strategic transactions also includes the distorting impact
between the periods of the operating income statement results related
to acquisitions and disposals and that affect period-on-period
comparisons. These impacts are not included in our notable or material
notable items. The impact of strategic transactions is computed by
including the operating income statement results of each business in any
period for which there are no results in the comparative period.
ÑSee page 107 for the reconciliation to the GAAP measure.
Target basis operating expenses
Target basis operating expenses is computed by excluding the direct cost
impact of the disposals of our banking business in Canada and our
business in Argentina from the 2024 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.
ÑSee page 109 for further details and the reconciliation to the GAAP measure.
Basic earnings per share excluding
material notable items and related impacts
We established a dividend payout ratio target basis of 50% for 2025.
For the purposes of computing our dividend payout ratio target basis,
we exclude from earnings per share material notable items and related
impacts. Material notable items for the ‘basic earnings per share
excluding material notable items and related impacts‘ measure in 2025
and comparative periods are described above.
Related impacts include those items that do not qualify for designation
as notable items but whose adjustment is considered by management
to be appropriate for the purposes of determining the basis for our
dividend payout ratio target basis calculation, for which we exclude
from earnings per share material notable items and related impacts.
ÑSee page 92 for the supplementary analysis of the impact of strategic
transactions.
ÑSee page 106 for the definition of basic earnings per share excluding material
notable items and related impacts and page 110 for the reconciliation to the
GAAP measure.
Critical estimates and judgements
The results of HSBC reflect the choice of accounting policies,
assumptions and estimates that underlie the preparation of HSBC’s
consolidated financial statements. The material accounting policies,
including the policies which include critical estimates and judgements,
are described in Note 1.2 on the financial statements. The accounting
policies listed below are highlighted as they involve a high degree of
uncertainty and have a material impact on the financial statements:
–Impairment of amortised cost financial assets and financial assets
measured at fair value through other comprehensive income
(‘FVOCI’): The most significant judgements relate to defining what is
considered to be a significant increase in credit risk, determining the
lifetime and point of initial recognition of revolving facilities,
selecting and calibrating the probability of default (‘PD’), the loss
given default (‘LGD’) and the exposure at default (‘EAD’) models, as
well as selecting model inputs and economic forecasts, making
assumptions and estimates to incorporate relevant information
about late-breaking and past events, current conditions and
forecasts of economic conditions, and selecting applicable recovery
strategies for certain wholesale credit-impaired loans. A high degree
of uncertainty is involved in making estimations using assumptions
that are highly subjective and very sensitive to the risk factors.
See Note 1.2(j) on page 306.
–Deferred tax assets: The most significant judgements relate to
those made in respect of recoverability, which are based on
expected future profitability. See Note 1.2(m) on page 310.
–Valuation of financial instruments: In determining the fair value of
financial instruments a variety of valuation techniques are used,
some of which feature significant unobservable inputs and are
subject to substantial uncertainty. See Note 1.2(d) on page 304.
–Impairment of investment in subsidiaries: Impairment testing,
including testing for reversal of impairment, involves significant
judgement in determining the value in use, and in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of
management assumptions. See Note 1.2(a) on page 301.
–Impairment of interests in associates: Impairment testing, including
testing for reversal of impairment, involves significant judgement in
determining the value in use, and in particular estimating the
present values of cash flows expected to arise from continuing to
hold the investment, based on a number of management
assumptions. The most significant judgements relate to the
impairment testing of our investment in Bank of Communications
Co., Limited (‘BoCom’). See Note 1.2(a) on page 301.
–Impairment of goodwill and non-financial assets: A high degree of
uncertainty is involved in estimating the future cash flows of the
cash-generating units (‘CGUs’) and the rates used to discount these
cash flows. See Note 1.2(b) on page 302.
–Provisions: Significant judgement may be required due to the high
degree of uncertainty associated with determining whether a
present obligation exists, and estimating the probability and amount
of any outflows that may arise. See Note 1.2(n) on page 311.
–Post-employment benefit plans: The calculation of the defined
benefit pension obligation involves the determination of key
assumptions including discount rate, inflation rate, pension
payments and deferred pensions, pay and mortality. See Note 1.2(l)
on page 310.
Given the inherent uncertainties and the high level of subjectivity
involved in the recognition or measurement of the items above, it is
possible that the outcomes in the next financial year could differ from
the expectations on which management’s estimates are based,
resulting in the recognition and measurement of materially different
amounts from those estimated by management in these financial
statements.
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Financial summary |
Consolidated income statement
Summary consolidated income statement | |||||
2025 | 2024 | 20231 | 2022 | 2021 | |
$m | $m | $m | $m | $m | |
Net interest income | 34,794 | 32,733 | 35,796 | 30,377 | 26,489 |
Net fee income | 13,343 | 12,301 | 11,845 | 11,770 | 13,097 |
Net income from financial instruments held for trading or managed on a fair value basis2 | 19,682 | 21,116 | 16,661 | 10,278 | 7,744 |
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 11,175 | 5,901 | 7,887 | (13,831) | 4,053 |
Net insurance premium income | — | — | — | — | 10,870 |
Insurance finance (expense)/income | (11,197) | (5,978) | (7,809) | 13,799 | — |
Insurance service result | 1,825 | 1,310 | 1,078 | 809 | — |
Gain on acquisition3 | — | — | 1,591 | — | — |
Losses recognised on sale of business operations4 | (47) | (1,752) | (61) | (2,678) | — |
Other operating income/(expense)5,6 | (1,301) | 223 | (930) | 96 | 1,687 |
Total operating income | 68,274 | 65,854 | 66,058 | 50,620 | 63,940 |
Net insurance claims and benefits paid and movement in liabilities to policyholders | — | — | — | — | (14,388) |
Net operating income before change in expected credit losses and other credit impairment charges7 | 68,274 | 65,854 | 66,058 | 50,620 | 49,552 |
Change in expected credit losses and other credit impairment charges | (3,850) | (3,414) | (3,447) | (3,584) | 928 |
Net operating income | 64,424 | 62,440 | 62,611 | 47,036 | 50,480 |
Total operating expenses excluding impairment of goodwill and other intangible assets | (36,023) | (32,966) | (32,355) | (32,554) | (33,887) |
(Impairment)/reversal of impairment of goodwill and other intangible assets | (405) | (77) | 285 | (147) | (733) |
Operating profit | 27,996 | 29,397 | 30,541 | 14,335 | 15,860 |
Share of profit in associates and joint ventures | 2,911 | 2,912 | 2,807 | 2,723 | 3,046 |
Impairment of interest in associate6 | (1,000) | — | (3,000) | — | — |
Profit before tax | 29,907 | 32,309 | 30,348 | 17,058 | 18,906 |
Tax expense | (6,776) | (7,310) | (5,789) | (809) | (4,213) |
Profit for the year | 23,131 | 24,999 | 24,559 | 16,249 | 14,693 |
Attributable to: | |||||
– ordinary shareholders of the parent company | 21,102 | 22,917 | 22,432 | 14,346 | 12,607 |
– preference shareholders of the parent company | — | — | — | — | 7 |
– other equity holders | 1,183 | 1,062 | 1,101 | 1,213 | 1,303 |
– non-controlling interests | 846 | 1,020 | 1,026 | 690 | 776 |
Profit for the year | 23,131 | 24,999 | 24,559 | 16,249 | 14,693 |
Five-year financial information | |||||
2025 | 2024 | 20231 | 2022 | 2021 | |
$ | $ | $ | $ | $ | |
Basic earnings per share | 1.21 | 1.25 | 1.15 | 0.72 | 0.62 |
Diluted earnings per share | 1.20 | 1.24 | 1.14 | 0.72 | 0.62 |
Dividends per ordinary share (paid in the period)8 | 0.66 | 0.82 | 0.53 | 0.27 | 0.22 |
% | % | % | % | % | |
Dividend payout ratio9 | 50 | 50 | 50 | 44 | 40 |
Post-tax return on average total assets | 0.7 | 0.8 | 0.8 | 0.5 | 0.5 |
Return on average ordinary shareholders’ equity | 12.3 | 13.6 | 13.6 | 9.0 | 7.1 |
Return on average tangible equity | 13.3 | 14.6 | 14.6 | 10.0 | 8.3 |
Effective tax rate | 22.7 | 22.6 | 19.1 | 4.7 | 22.3 |
1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended
31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 is prepared on an IFRS 4 basis.
2 In 2025, the amounts include a $0.1bn (2024: $0.1bn gain) mark-to-market gain on interest rate hedging of the portfolio of retained loans post sale of our retail
banking operations in France and a $0.1bn fair value loss on Grupo Financiero Galicia‘s (‘Galicia‘) American Depositary Receipts (‘ADRs‘) received as purchase
consideration from the sale of our business in Argentina. In 2024, the amounts include a $0.3bn gain (2023: $0.3bn loss) on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
3 Gain recognised in respect of the acquisition of SVB UK.
4 In 2024, the amount includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves
arising on sale of our business in Argentina. This was partly offset by a gain of $4.6bn, inclusive of the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves losses but excluding the $0.3bn gain on the foreign exchange hedging (see footnote 2 above) on the sale of our banking
business in Canada. The amount in 2023 primarily reflected losses due to restrictions impacting the recoverability of assets in Russia, partly offset by a gain on
sale of our retail banking operations in France. The amount in 2022 included losses from classifying businesses as held for sale as part of a broader restructuring
of our European business.
5Includes a loss on net monetary positions of $0.2bn (2024: $1.2bn; 2023: $1.7bn) as a result of applying IAS 29 ‘Financial Reporting in Hyperinflationary
Economies’.
6 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans
following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the
dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment loss following an impairment test on the carrying value of the Group’s
investment in BoCom in ‘Impairment of interest in associate’. See Note 18 on pages 345 to 348.
7Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.
8Includes dividend paid during the period, which consisted of a fourth interim dividend of $0.36 per ordinary share in respect of the financial year ended
31 December 2024 paid in April 2025 and the first, second and third interim dividends of $0.30 per ordinary share in respect of the financial year ending
31 December 2025. In 2024, a special dividend of $0.21 per ordinary share from the Canada sale proceeds was paid in June.
9In 2025, 2024 and 2023, our dividend payout ratio was adjusted for material notable items and related impacts. In 2022, our dividend payout ratio was adjusted
for the loss on classification to held for sale of our retail banking business in France, items relating to the sale of our banking business in Canada, and the
recognition of certain deferred tax assets. No items were adjusted for in 2021.
HSBC Holdings plc Annual Report on Form 20-F |
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Financial summary |
Income statement commentary
The following commentary compares Group financial performance for the year ended 2025 with 2024, unless otherwise stated.
Net interest income
Year ended | Quarter ended | |||||
31 Dec 2025 | 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2025 | 30 Sep 2025 | 31 Dec 2024 | |
$m | $m | $m | $m | $m | $m | |
Interest income | 97,872 | 108,631 | 100,868 | 24,503 | 24,361 | 26,004 |
Interest expense | (63,078) | (75,898) | (65,072) | (15,307) | (15,584) | (17,819) |
Net interest income | 34,794 | 32,733 | 35,796 | 9,196 | 8,777 | 8,185 |
Average interest-earning assets | 2,190,078 | 2,099,285 | 2,161,746 | 2,221,054 | 2,218,472 | 2,113,276 |
% | % | % | % | % | % | |
Gross interest yield1 | 4.47 | 5.17 | 4.67 | 4.38 | 4.36 | 4.90 |
Less: gross interest payable1 | (3.11) | (3.95) | (3.47) | (2.93) | (3.01) | (3.60) |
Net interest spread2 | 1.36 | 1.22 | 1.20 | 1.45 | 1.35 | 1.30 |
Net interest margin3 | 1.59 | 1.56 | 1.66 | 1.64 | 1.57 | 1.54 |
1Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’), net of amortised premiums and loan fees. Gross
interest payable is the average annualised interest cost as a percentage of average interest-bearing liabilities.
2Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average
annualised interest rate payable on average interest-bearing funds.
3Net interest margin is net interest income expressed as an annualised percentage of AIEA.
Summary of interest income by type of asset | |||||||||
2025 | 2024 | 2023 | |||||||
Average balance | Interest income | Yield | Average balance | Interest income | Yield | Average balance | Interest income | Yield | |
$m | $m | % | $m | $m | % | $m | $m | % | |
Short-term funds and loans and advances to banks | 325,790 | 11,460 | 3.52 | 349,517 | 14,727 | 4.21 | 403,674 | 14,770 | 3.66 |
Loans and advances to customers | 971,804 | 46,036 | 4.74 | 949,825 | 49,879 | 5.25 | 957,717 | 47,673 | 4.98 |
Reverse repurchase agreements – non-trading1 | 273,941 | 16,616 | 6.07 | 238,694 | 17,721 | 7.42 | 240,263 | 14,391 | 5.99 |
Financial investments | 539,107 | 20,830 | 3.86 | 470,182 | 20,587 | 4.38 | 407,363 | 16,858 | 4.14 |
Other interest-earning assets | 79,436 | 2,930 | 3.69 | 91,067 | 5,717 | 6.28 | 152,729 | 7,176 | 4.70 |
Total interest-earning assets | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 | 2,161,746 | 100,868 | 4.67 |
Summary of interest expense by type of liability | |||||||||
2025 | 2024 | 2023 | |||||||
Average balance | Interest expense | Cost | Average balance | Interest expense | Cost | Average balance | Interest expense | Cost | |
$m | $m | % | $m | $m | % | $m | $m | % | |
Deposits by banks2 | 76,081 | 2,613 | 3.43 | 66,405 | 2,930 | 4.41 | 60,392 | 2,401 | 3.98 |
Customer accounts3 | 1,487,032 | 33,289 | 2.24 | 1,385,840 | 40,173 | 2.90 | 1,334,803 | 34,162 | 2.56 |
Repurchase agreements – non-trading1 | 188,748 | 13,629 | 7.22 | 187,337 | 15,617 | 8.34 | 146,605 | 10,858 | 7.41 |
Debt securities in issue – non-trading | 198,317 | 10,847 | 5.47 | 196,440 | 12,806 | 6.52 | 184,867 | 11,223 | 6.07 |
Other interest-bearing liabilities | 77,793 | 2,700 | 3.47 | 84,773 | 4,372 | 5.16 | 146,216 | 6,428 | 4.40 |
Total interest-bearing liabilities | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 | 1,872,883 | 65,072 | 3.47 |
1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
2Including interest-bearing bank deposits only.
3Including interest-bearing customer accounts only.
Net interest income (‘NII’) for 2025 was $34.8bn, an increase of
$2.1bn or 6% compared with 2024. The increase reflected the benefit
of the reinvestment of our structural hedge at higher yields, deposit
balance growth and higher NII in Markets Treasury. In addition, the
increase included the non-recurrence of a $0.2bn loss in 2024 on the
early redemption of legacy securities. This was partly offset by the
adverse impact of $1.6bn from business disposals in Argentina and
Canada, and margin compression on our deposits from lower interest
rates. The growth in NII also reflected a benefit from lower funding
costs associated with the trading book of $1.7bn.
Excluding the unfavourable impact of foreign currency translation
differences of $0.2bn, net interest income increased by $2.3bn or 7%.
NII for 4Q25 was $9.2bn, up 5% compared with 3Q25, and up 12%
compared with 4Q24. The increase in NII compared with 3Q25 was
predominantly driven by the increase in short-term interest rates in
Hong Kong and deposit balance growth.
Net interest margin (‘NIM’) for 2025 of 1.59% was 3bps higher
compared with 2024, reflecting the reinvestment of our structural
hedge at higher yields and lower funding costs associated with the
trading book The increase in NIM included the adverse impact of
foreign currency translation differences. Excluding this, NIM increased
by 6bps.
4Q25 NIM was 1.64%, up 7bps compared with 3Q25, and up 10bps
compared with 4Q24. The increase against the previous quarter was
primarily driven by higher short-term interest rates in Hong Kong.
Interest income for 2025 of $97.9bn decreased by $10.8bn compared
with 2024, primarily due to lower market interest rates.
Interest income of $25bn in 4Q25 was $0.1bn higher compared with
3Q25, due to the increase of short-term interest rates in Hong Kong,
partly offset by lower interest rates in currencies including pounds
sterling and US dollar. Interest income in 4Q25 was down $1.5bn
compared with 4Q24.
The change in interest income in 2025 compared with 2024 included a
favourable impact of foreign currency translation differences of $0.2bn.
After excluding foreign currency translation differences, interest income
decreased by $11.0bn.
Interest expense for 2025 of $63.1bn decreased by $12.8bn compared
with 2024, primarily due to lower market interest rates. The fall in
interest expense included the adverse effects of foreign currency
translation differences of $0.5bn. Excluding this, interest expense
decreased by $13.3bn. Interest expense of $15.3bn in 4Q25 was
$0.3bn lower than 3Q25, and $2.5bn lower compared with 4Q24. The
decrease against the previous quarter was due lower market interest
rates, particularly in US dollars and pounds sterling.
HSBC Holdings plc Annual Report on Form 20-F |
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Financial summary |
Banking net interest income | |||||
Year ended | Quarter ended | ||||
31 Dec 2025 | 31 Dec 2024 | 31 Dec 2025 | 30 Sep 2025 | 31 Dec 2024 | |
$m | $m | $m | $m | $m | |
Net interest income | 34,794 | 32,733 | 9,196 | 8,777 | 8,185 |
Banking book funding costs used to generate ‘net income from financial instruments held for trading or managed on a fair value basis’ | 9,686 | 11,434 | 2,592 | 2,384 | 2,874 |
Third-party net interest income from insurance | (396) | (429) | (66) | (112) | (109) |
Banking net interest income | 44,084 | 43,738 | 11,722 | 11,049 | 10,950 |
Currency translation | (188) | (34) | 136 | ||
Banking net interest income – on a constant currency basis | 44,084 | 43,550 | 11,722 | 11,015 | 11,086 |
Banking net interest income – on a reported basis | 44,084 | 43,738 | 11,722 | 11,049 | 10,950 |
– of which: | |||||
The Hongkong and Shanghai Banking Corporation Limited | 21,676 | 21,691 | 5,710 | 5,351 | 5,464 |
HSBC UK Bank plc | 11,523 | 10,368 | 3,046 | 2,969 | 2,663 |
HSBC Bank plc | 5,257 | 4,630 | 1,477 | 1,351 | 1,182 |
Banking net interest income adjusts our NII, primarily for the impact
of funding trading and fair value activities reported in interest expense.
It represents the Group’s banking revenue that is directly impacted by
changes in interest rates. It is defined as Group net interest income
after deducting:
–the internal cost to fund trading and fair value net assets for which
associated revenue is reported in ‘Net income from financial
instruments held for trading or managed on a fair value basis’, also
referred to as ‘trading and fair value income’. These funding costs
reflect proxy overnight or term interest rates as applied by internal
funds transfer pricing;
–the funding costs of foreign exchange swaps in Markets Treasury,
where an offsetting income or loss is recorded in trading and fair
value income. These instruments are used to manage foreign
currency deployment and funding in our entities; and
–third-party net interest income in our insurance business.
In our segmental disclosures, the funding costs of trading and fair value
net assets are predominantly recorded in CIB in ‘net income from
financial instruments held for trading or managed on a fair value basis’.
On consolidation, this funding is eliminated in Corporate Centre,
resulting in an increase in the funding cost reported in NII with an
equivalent offsetting increase in ‘net income from financial instruments
held for trading or managed on a fair value basis’ in this segment. In the
consolidated Group results, the cost to fund these trading and fair value
net assets is reported in NII.
Banking NII was $44.1bn in 2025, an increase of $0.3bn or 1%
compared with 2024. The growth reflected the benefits of the
reinvestment of our structural hedge at higher yields, deposit balance
growth and higher NII in Markets Treasury. In addition, the increase
included the non-recurrence of a loss of $0.2bn in 2024 on the early
redemption of legacy securities. This was partly offset by the adverse
impact of $1.6bn from the disposals of our business in Argentina and
our banking business in Canada, and the impact of margin compression
on our deposits from lower interest rates.
Banking NII also deducts third-party NII related to our Insurance
business, which was $0.4bn, broadly stable compared with 2024. The
funding costs associated with generating trading and fair value income
were $9.7bn, a decrease of $1.7bn compared with 2024, reflecting the
reduction in interest rates that more than offset a rise in trading book
balances.
The internally allocated funding to generate trading and fair value
income was approximately $225bn at 31 December 2025, a rise of
approximately $25bn since 31 December 2024, and $11bn lower
compared with 30 September 2025. This relates to trading, fair value
and associated net asset balances predominantly in CIB.
Net fee income of $13.3bn was $1.0bn or 8% higher than in 2024, and
included an adverse impact of $0.3bn due to the disposal of our
banking business in Canada and business in Argentina. On a constant
currency basis, net fee income was $1.0bn higher. This primarily
reflected increased broking fee income in our Hong Kong business and
higher fee income from unit trusts and funds under management in
IWPB, primarily in Hong Kong and mainland China.
Net income from financial instruments held for trading or
managed on a fair value basis of $19.7bn was $1.4bn lower
compared with 2024. This primarily reflected a decrease in the trading
book funding costs of $1.7bn associated with generating this income,
due to lower interest rates which more than offset the impact of a rise
in trading book balances, resulting in a corresponding increase in NII.
Inclusive of the reduction in funding costs, net trading income in CIB
was higher, notably as elevated market volatility and higher trading
volumes benefited Global Foreign Exchange and Debt and Equity
Markets.
The reduction of trading income in Corporate Centre also included an
adverse movement of $0.1bn in 2025 on American Depositary Receipts
received as purchase consideration from the sale of our business in
Argentina, which we disposed of in 2025. It also included the non-
recurrence of favourable fair value movements of $0.3bn in 2024 on
the foreign exchange hedging of the proceeds of the sale of our
banking business in Canada until the completion of the sale.
Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit
or loss of $11.2bn increased by $5.3bn compared with 2024 reflecting
strong equity markets and the favourable impact of the downward
movement in interest rates on our fixed income investments in our
IWPB business in Hong Kong, partly offset by rising interest rates in
mainland China.
This favourable movement resulted in a corresponding movement in
insurance finance expense, which has an offsetting impact for the
related liabilities to policyholders.
Insurance finance expense of $11.2bn was $5.2bn higher than in
2024, reflecting the impact of investment returns on underlying assets
on the value of liabilities to policyholders, which moves inversely with
‘net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit or
loss’.
Insurance service result of $1.8bn increased by $0.5bn compared
with 2024, reflecting higher contractual service margin (‘CSM’) release
as a result of strong new business growth, and favourable experience
variances from positive investment management fee, maintenance
expense and claims experience.
Losses recognised on the sale of business operations fell by $1.7bn
in 2025. In 2025, the net loss included a loss on the sale of our France life
insurance business, including the recycling of related reserves, and a loss
related to the sale of our UK life insurance entity. These were partly
offset by gains on the disposals of our private banking business in
Germany and our retail operations in Bahrain. In 2024, losses arose from
the completion of the disposal of our business in Argentina, comprising
the recycling of $5.2bn of foreign currency translation reserve losses and
other reserves to the income statement and a $1.0bn loss on disposal.
These were partly offset by a gain of $4.6bn in 2024 on the sale of our
banking business in Canada, inclusive of recycling of foreign currency
translation reserve and other reserve losses to the income statement.
Other operating income/(expense) was $1.5bn lower than in 2024.
The 2025 period included reserve recycling losses of $1.5bn following
the completion of the sale of our French retained portfolio of home and
certain other loans, and a dilution loss of $1.1bn on BoCom following the
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
completion of its capital issuance. This was partly offset by a lower loss
on net monetary positions in hyperinflationary economies following the
disposal of our business in Argentina.
Change in expected credit losses and other credit impairment
charges (‘ECL’) of $3.9bn was $0.4bn higher than in 2024, including
charges in both periods related to the CRE sectors in Hong Kong and
mainland China. In 2025, the charge in this sector in Hong Kong of
$0.7bn (2024: $0.1bn) reflected higher allowances for new defaulted
exposures, the impact of an over-supply of non-residential properties
that has put continued downward pressure on rental and capital values,
and updates to our models used for ECL calculations. The 2025 charge
in the mainland China CRE sector was $0.2bn (2024: $0.4bn).
ÑFor further details on 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 148 to 157.
Operating expenses | |||
Year ended | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Gross employee compensation and benefits | 21,512 | 20,153 | 19,623 |
Capitalised wages and salaries | (1,959) | (1,688) | (1,403) |
Property and equipment | 5,066 | 4,786 | 4,285 |
Amortisation and impairment of intangibles | 2,945 | 2,235 | 1,827 |
UK bank levy | 290 | 249 | 339 |
Legal proceedings and regulatory matters | 1,542 | 145 | 188 |
Other operating expenses1 | 7,032 | 7,163 | 7,211 |
Reported operating expenses | 36,428 | 33,043 | 32,070 |
Currency translation | — | 103 | (379) |
Constant currency operating expenses | 36,428 | 33,146 | 31,691 |
1Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel.
Staff numbers (full-time equivalents)1 | |||
2025 | 2024 | 2023 | |
Business segments | |||
Hong Kong | 29,633 | 34,578 | 34,886 |
UK | 29,922 | 30,783 | 30,638 |
Corporate and Institutional Banking | 78,981 | 71,935 | 72,713 |
International Wealth and Premier Banking | 69,854 | 73,668 | 82,287 |
Corporate Centre | 330 | 340 | 337 |
At 31 Dec | 208,720 | 211,304 | 220,861 |
– of which (by country/territory): | |||
India | 47,423 | 44,262 | 42,287 |
UK | 32,294 | 33,970 | 34,125 |
Hong Kong | 25,639 | 26,599 | 26,472 |
1Represents the number of full-time equivalent staff (‘FTE’) with contracts of service with the Group who are being paid at the reporting date. Comprises FTE in
front-line roles and those providing dedicated support services managed by the business segments (‘direct FTE’) (at 31 December 2025: Hong Kong: 20,290; UK:
20,969; CIB: 45,970; IWPB: 53,136) and an allocation of Corporate Centre FTE in proportion to business usage of shared support services and global
infrastructure. During 2025, certain Operations FTE were transferred from Corporate Centre to the business segments for which they provide dedicated support
services (if these FTE had been transferred at 31 December 2024, the direct FTE of the segments would have been as follows: Hong Kong: 20,471; UK: 20,794;
CIB: 46,914; IWPB: 55,482).
Reported operating expenses of $36.4bn were $3.4bn or 10% higher
than in 2024. The increase primarily reflected notable items in 2025,
including legal provisions of $1.4bn, restructuring and other related
costs in 2025 of $1.0bn related to our organisational simplification,
mainly severance costs, and $0.5bn related to strategic transactions.
In addition, growth in reported operating expenses included higher
planned spend and investment in technology, and the impacts of
inflation. These increases were partly offset by reductions following the
completion of business disposals in Canada and Argentina, and benefits
delivered by our organisational simplification of $0.6bn.
Target basis operating expenses were $33.5bn or 3% higher than in
2024 due to higher planned spend and investment in technology,
higher performance-related pay and the impact of inflation.
ÑFor a reconciliation of target basis operating expenses to reported operating
expenses see page 109.
The number of employees expressed in full-time equivalent (‘FTE’) staff
at 31 December 2025 was 208,720, a reduction of 2,584 compared
with 31 December 2024. The number of contractors at 31 December
2025 was 3,974, a reduction of 252 from 31 December 2024.
Share of profit in associates and joint ventures of $2.9bn was stable
compared with 2024.
Impairment of interest in associate of $1.0bn related to BoCom.
ÑFor further details of our impairment review process, see Note 18: Interests
in associates and joint ventures on page 345.
Tax expense
Tax expense in 2025 was a charge of $6.8bn, representing an effective
tax rate of 22.7% (2024: 22.6%). The effective tax rate for 2025 was
increased by the non-deductible impairment and dilution loss in BoCom
and legal provisions on which no tax benefit is recorded. Excluding these
items, the effective rate for 2025 was 20.6% (2024: 21.5%, excluding
the impact of the non-taxable gains and losses on the sale of our
banking business in Canada and our business in Argentina). The
decrease in the effective tax rate excluding these items was primarily
the result of a reduction in the unfavourable impact of hyperinflation
following the sale of our business in Argentina in 2024.
Tax expense | ||
2025 | 2024 | |
$m | $m | |
Tax (charge)/credit | ||
Reported | (6,776) | (7,310) |
Currency translation | — | (39) |
Constant currency tax (charge)/credit | (6,776) | (7,349) |
Notable items | ||
2025 | 2024 | |
$m | $m | |
Tax | ||
Tax (charge)/credit on notable items | 440 | 108 |
Return on average tangible equity
In 2025, RoTE was 13.3%, compared with 14.6% in 2024. RoTE excluding
notable items was 17.2% in 2025, compared with 15.6% in 2024.
HSBC Holdings plc Annual Report on Form 20-F |
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Financial summary |
Income statement commentary: 2024 compared with 2023
The following commentary compares Group financial performance for
the year ended 2024 with 2023.
Net interest income (‘NII’) for 2024 was $32.7bn, a decrease of
$3.1bn or 9% compared with 2023. The decrease included a $2.7bn
reduction mainly due to the redeployment of our commercial surplus to
net trading and fair value assets, for which the associated revenue is
reported in ‘net income on financial instruments held for trading or
managed on a fair value basis‘. The fall also reflected a $1.0bn loss due
to the disposal of our business in Canada and a $0.2bn loss in 2024
related to the early redemption of legacy securities. NII in HSBC UK
grew by $0.6bn, including the benefit of our structural hedge and
balance sheet growth, partly offset by mortgage pricing pressures.
There was also higher NII in Markets Treasury due to reinvestments in
our portfolio at higher yields. Excluding the unfavourable impact of
foreign currency translation differences, net interest income decreased
by $1.4bn or 4%. NII for the fourth quarter of 2024 was $8.2bn, up 7%
compared with the previous quarter, and down 1% compared with the
fourth quarter of 2023. The increase compared with 3Q24 was
predominantly driven by the non-recurrence of the adverse impact in
3Q24 from the early redemption of legacy securities. The decline in NII
compared with 4Q23 was predominantly driven by the impact of lower
AIEA.
Net interest margin (‘NIM’) for 2024 of 1.56% was 10bps lower
compared with 2023, reflecting redeployment of our commercial
surplus to net trading and fair value assets, and higher interest expense
due to higher market rates and an adverse impact of $0.2bn from the
early redemption of legacy securities. The decrease in NIM in 2024
included the unfavourable impact of foreign currency translation
differences. Excluding this, NIM decreased by 6bps. NIM for the fourth
quarter of 2024 was 1.54%, up 8bps compared with the previous
quarter, and up 2bps compared with the fourth quarter of 2023. The
increase against the previous quarter was primarily due to the non-
recurrence of the adverse impact from the early redemption of legacy
securities. The year-on-year increase was predominantly driven by
HSBC UK.
Interest income for 2024 of $108.6bn increased by $7.8bn compared
with 2023, primarily due to an increase in market interest rates.
Interest income of $26bn in the fourth quarter of 2024 was down
$1.3bn compared with the previous quarter, and down $0.7bn
compared with the fourth quarter of 2023. Both the declines were
primarily due to lower market interest rates.
The change in interest income in 2024 compared with 2023 included an
adverse impact of foreign currency translation differences of $2.7bn.
After excluding foreign currency translation differences, interest income
increased by $10.5bn.
Interest expense for 2024 of $75.9bn increased by $10.8bn compared
with 2023, primarily due to an increase in market interest rates, growth
in customer accounts with higher proportion for term deposits and the
impact of the early redemption of legacy securities.
The rise in interest expense included the favourable effects of foreign
currency translation differences of $1.1bn. Excluding this, interest
expense increased by $11.9bn.
Interest expense of $17.8bn in the fourth quarter of 2024 was $1.8bn
and $0.6bn lower compared with the third quarter of 2024 and the
fourth quarter of 2023 respectively. The decrease against the previous
quarter was due to the non-recurrence of an adverse impact from the
early redemption of legacy securities. The year-on-year decline was
primarily due to lower market interest rates.
Banking NII was $43.7bn in 2024. The funding costs associated with
generating trading and fair value income were $11.4bn, an increase of
$2.7bn compared with 2023, primarily reflecting redeployment of our
commercial surplus to net trading and fair value assets. Banking NII
also deducts third-party NII related to our insurance business, which
was $0.4bn, stable compared with 2023. The movement in banking NII
also included a reduction from the disposal of our business in Canada of
$1.0bn, a $0.2bn loss in 2024 related to the early redemption of legacy
securities and from higher interest expense on deposits in part due to
balance growth. Banking NII in HSBC UK grew by $0.7bn, including the
benefit of our structural hedge and balance sheet growth, partly offset
by mortgage pricing pressures. There was higher NII in Markets
Treasury due to reinvestments in our portfolio at higher yields.
The internally allocated funding to generate trading and fair value
income was approximately $200bn at 31 December 2024, a rise of
approximately $37bn since 31 December 2023, although it decreased
by approximately $9bn during 4Q24. This relates to trading, fair value
and associated net asset balances predominantly in CIB. The increase
reflected management decisions on the deployment of our commercial
surplus.
Net fee income of $12.3bn was $0.5bn or 4% higher than in 2023, and
included an adverse impact from foreign currency translation
differences of $0.2bn, as well as a reduction of $0.4bn due to the
impact of the disposal of our banking business in Canada.
The increase in net fee income was mainly in Wealth products in our
Hong Kong business and in IWPB in Hong Kong, reflecting stronger
equity markets and improved customer sentiment. It also included an
increase in cards income, mainly in Mexico and Asia in IWPB, as
customer spending increased, and in our Hong Kong business.
In CIB, net fee income was down by $0.1 bn. This included lower fees
from credit facilities, notably due to the disposal of our banking
operations in Canada. In addition, there was higher fee expense relating
to custody. This was partly offset by higher broking and underwriting
income in our main entity in Europe, although the associated fee
expense also increased.
Net income from financial instruments held for trading or
managed on a fair value basis of $21.1bn was $4.5bn higher
compared with 2023. This included favourable fair value movements of
$0.6bn on the foreign exchange hedging of the proceeds of the sale of
our banking business in Canada until completion of the sale. The
increase also reflected higher client activity and elevated volatility in
Debt and Equity Markets in CIB. A component of funding costs
incurred to generate this income are reported in NII, and these
increased by $2.7bn, compared with 2023.
In IWPB, income rose by $0.2bn due to a favourable movement related
to derivatives in our insurance business and from higher customer
trading activity in Wealth, including in our main legal entity in Asia.
Net expense from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit
or loss of $5.9bn fell by $2.0bn compared with 2023. This decrease
reflected adverse fair value movements on debt securities, due to
movements in interest rates, including in our portfolios in Hong Kong
and France, partly offset by improved equity returns.
This unfavourable movement resulted in a corresponding movement in
insurance finance expense, which has an offsetting impact for the
related liabilities to policyholders.
Insurance finance expense of $6.0bn was $1.8bn lower than in 2023,
reflecting the impact of investment returns on underlying assets on the
value of liabilities to policyholders, which moves inversely with ‘net
income from assets and liabilities of insurance businesses, including
related derivatives, measured at fair value through profit or loss’.
Insurance service result of $1.3bn increased by $0.2bn compared
with 2023, primarily due to an increase in the release of the contractual
service margin (‘CSM’).
Gain on acquisition fell by $1.6bn, reflecting the non-recurrence of a
gain recognised in respect of the acquisition of SVB UK in 1Q23.
Losses recognised on sale of business operations were $1.8bn in
2024. This compared with a gain of $61m in 2023. In 2024, there were
losses from completion of the disposal of our business in Argentina,
comprising the recycling of $5.2bn of foreign currency translation
reserve losses and other reserves to the income statement and a
$1.0bn loss on disposal. This was partly offset by a gain of $4.6bn on
the sale of our banking business in Canada, inclusive of recycling of
foreign currency translation reserve and other reserve losses to the
income statement.
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Financial summary |
Other operating income of $0.2bn was $1.3bn higher than in 2023.
The increase primarily related to the non-recurrence of losses in 2023
of $1.0bn relating to Treasury repositioning and risk management.
The increase also included the non-recurrence of a loss of $0.3bn in
2023 relating to corrections to historical valuation estimates in our life
insurance business, and losses related to the disposal of our New
Zealand retail mortgage loan portfolio and the merger of HSBC Bank
Oman in 2023 with Sohar International.
Changes in expected credit losses and other credit impairment
charges (‘ECL’) were a charge of $3.4bn, stable compared with 2023.
ECL in 2024 included charges of $0.4bn in respect of commercial real
estate in mainland China and of $0.1bn in the Hong Kong real estate
sector. This compared with charges of $1.0bn and $0.1bn respectively
in these sectors in 2023. In addition, ECL in CIB in 2024 included a
charge related to a single exposure in the UK, partly offset by a release
of stage 3 allowances in HSBC Bank plc related to a single exposure.
Charges in our UK business were $0.1bn lower compared with 2023.
In WPB, ECL charges were $1.1bn. up $0.2bn compared with 2023.
These primarily related to our legal entity in Mexico, reflecting growth
in our unsecured lending portfolio and unemployment trends.
ÑFor further details on 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 153 to 157.
Operating expenses of $33.0bn were $1.0bn or 3% higher than in
2023, including a favourable impact of $0.6bn from foreign currency
translation differences. The increase reflected higher spend and
investment in technology and inflationary impacts, while performance-
related pay remained stable. Operating expenses were adversely
impacted by the non-recurrence of a $0.2bn reversal of historical asset
impairments in 2023.
These increases were partly offset by the favourable impacts from the
completion of business disposals in Canada and France, and a lower UK
bank levy of $0.1bn, as 2023 included adjustments relating to prior
years. Operating expenses in 2024 benefited from the non-recurrence
of a $0.2bn charge in 2023 incurred in the US relating to the FDIC
special assessment.
Target basis operating expense growth was 5% compared with 2023,
in line with our cost growth target. This primarily reflected higher
investment spend, including in technology and from inflationary
pressures, while our performance-related pay accrual was broadly in
line with 2023. Our target basis operating expenses are measured on a
constant currency basis, excluding notable items, the impact of
retranslating the prior year results of hyperinflationary economies at
constant currency, and the direct costs from the sales of our French
retail banking operations and our banking business in Canada.
The number of employees expressed in full-time equivalent staff (‘FTE’)
at 31 December 2024 was 211,304, a decrease of 9,557 compared
with 31 December 2023, primarily reflecting the completion of the
sales of our banking business in Canada, our retail banking operations in
France and our business in Argentina. The number of contractors at 31
December 2024 was 4,226, a decrease of 450.
Share of profit in associates and joint ventures of $2.9bn was
$3.1bn higher than in 2023, including an increase in the share of profit
from SAB.
Impairment of interest in associate In relation to our investment in
BoCom, at 31 December 2024 we concluded that there was no
indication of further significant impairment (or indication that an
impairment may no longer exist or may have decreased significantly)
since 31 December 2023.
At 31 December 2023, the Group performed an impairment test on the
carrying value of our investment in BoCom which resulted in an
impairment of $3.0bn.
ÑFor further details, see Note 18: Interests in associates and joint ventures
on page 345.
Tax expense The effective tax rate for 2024 of 22.6% was higher than
the 19.1% in 2023. The effective tax rate for 2024 was increased by 4.8
percentage points by the non-deductible loss on disposal of our
business in Argentina and by 0.7 percentage points by the tax charge
arising under the Global Minimum Tax rules, and reduced by 3.6
percentage points by the non-taxable gain on disposal of our banking
business in Canada. The effective tax rate for 2023 was increased by
2.3 percentage points by the non-deductible impairment of investments
in associates, and reduced by 1.6 percentage points by the release of
provisions for uncertain tax positions and by 1.5 percentage points by
the non-taxable accounting gain arising on the acquisition of SVB UK.
ÑFurther details are provided in Note 7 on the financial statements of the
HSBC Holdings plc Form 20-F for the year ended 31 December 2024.
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Financial summary |
Consolidated balance sheet
Five-year summary consolidated balance sheet | |||||
2025 | 2024 | 2023 | 20221 | 2021 | |
$m | $m | $m | $m | $m | |
Assets | |||||
Cash and balances at central banks | 242,859 | 267,674 | 285,868 | 327,002 | 403,018 |
Trading assets | 366,153 | 314,842 | 289,159 | 218,093 | 248,842 |
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 133,063 | 115,769 | 110,643 | 100,101 | 49,804 |
Derivatives | 237,740 | 268,637 | 229,714 | 284,159 | 196,882 |
Loans and advances to banks | 108,462 | 102,039 | 112,902 | 104,475 | 83,136 |
Loans and advances to customers | 988,399 | 930,658 | 938,535 | 923,561 | 1,045,814 |
Reverse repurchase agreements – non-trading | 298,392 | 252,549 | 252,217 | 253,754 | 241,648 |
Financial investments | 567,211 | 493,166 | 442,763 | 364,726 | 446,274 |
Assets held for sale | 11,115 | 27,234 | 114,134 | 115,919 | 3,411 |
Other assets | 279,640 | 244,480 | 262,742 | 257,496 | 239,110 |
Total assets at 31 Dec | 3,233,034 | 3,017,048 | 3,038,677 | 2,949,286 | 2,957,939 |
Liabilities | |||||
Deposits by banks | 97,952 | 73,997 | 73,163 | 66,722 | 101,152 |
Customer accounts | 1,786,828 | 1,654,955 | 1,611,647 | 1,570,303 | 1,710,574 |
Repurchase agreements – non-trading | 204,974 | 180,880 | 172,100 | 127,747 | 126,670 |
Trading liabilities | 72,122 | 65,982 | 73,150 | 72,353 | 84,904 |
Financial liabilities designated at fair value | 158,456 | 138,727 | 141,426 | 127,321 | 145,502 |
Derivatives | 237,854 | 264,448 | 234,772 | 285,762 | 191,064 |
Debt securities in issue | 99,675 | 105,785 | 93,917 | 78,149 | 78,557 |
Insurance contract liabilities | 122,955 | 107,629 | 120,851 | 108,816 | 112,745 |
Liabilities of disposal groups held for sale | 23,382 | 29,011 | 108,406 | 114,597 | 9,005 |
Other liabilities | 223,170 | 203,361 | 216,635 | 212,319 | 190,989 |
Total liabilities at 31 Dec | 3,027,368 | 2,824,775 | 2,846,067 | 2,764,089 | 2,751,162 |
Equity | |||||
Total shareholders’ equity | 198,225 | 184,973 | 185,329 | 177,833 | 198,250 |
Non-controlling interests | 7,441 | 7,300 | 7,281 | 7,364 | 8,527 |
Total equity at 31 Dec | 205,666 | 192,273 | 192,610 | 185,197 | 206,777 |
Total liabilities and equity at 31 Dec | 3,233,034 | 3,017,048 | 3,038,677 | 2,949,286 | 2,957,939 |
1From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended
31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.
ÑA more detailed consolidated balance sheet is contained in the financial statements on page 290.
Five-year selected financial information | |||||
2025 | 2024 | 2023 | 20221 | 2021 | |
$m | $m | $m | $m | $m | |
Called up share capital | 8,588 | 8,973 | 9,631 | 10,147 | 10,316 |
Capital resources2 | 182,371 | 172,386 | 171,204 | 162,423 | 177,786 |
Undated subordinated loan capital | — | 17 | 18 | 1,967 | 1,968 |
Preferred securities and dated subordinated loan capital3 | 37,581 | 35,258 | 36,413 | 29,921 | 28,568 |
Risk-weighted assets | 888,647 | 838,254 | 854,114 | 839,720 | 838,263 |
Total shareholders’ equity | 198,225 | 184,973 | 185,329 | 177,833 | 198,250 |
Less: preference shares and other equity instruments | (20,716) | (19,070) | (17,719) | (19,746) | (22,414) |
Total ordinary shareholders’ equity | 177,509 | 165,903 | 167,610 | 158,087 | 175,836 |
Less: goodwill and intangible assets (net of deferred tax) | (12,356) | (11,608) | (11,900) | (11,160) | (17,643) |
Tangible ordinary shareholders’ equity | 165,153 | 154,295 | 155,710 | 146,927 | 158,193 |
Financial statistics | |||||
Loans and advances to customers as a percentage of customer accounts (%) | 55.3 | 56.2 | 58.2 | 58.8 | 61.1 |
Average total shareholders’ equity to average total assets (%) | 5.99 | 6.12 | 6.01 | 5.97 | 6.62 |
Net asset value per ordinary share at year-end ($)4 | 10.36 | 9.26 | 8.82 | 8.01 | 8.76 |
Tangible net asset value per ordinary share at year-end ($)4 | 9.64 | 8.61 | 8.19 | 7.44 | 7.88 |
Tangible net asset value per fully diluted share at year-end ($) | 9.56 | 8.54 | 8.14 | 7.39 | 7.84 |
Number of $0.50 ordinary shares in issue (millions) | 17,175 | 17,947 | 19,263 | 20,294 | 20,632 |
Basic number of $0.50 ordinary shares outstanding, after deducting own shares held (millions) | 17,140 | 17,918 | 19,006 | 19,739 | 20,073 |
Basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares, after deducting own shares held (millions) | 17,276 | 18,062 | 19,135 | 19,876 | 20,189 |
Closing foreign exchange translation rates to $: | |||||
$1: £ | 0.746 | 0.797 | 0.784 | 0.830 | 0.739 |
$1: € | 0.853 | 0.964 | 0.903 | 0.937 | 0.880 |
1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended
31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021 has been prepared on an IFRS 4 basis.
2Capital resources are regulatory total capital, the calculation of which is set out on page 192.
3 Including perpetual preferred securities, details of which can be found in Note 29: Subordinated liabilities on page 359.
4 For the definition, see page 106.
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Financial summary |
Combined view of customer lending and customer deposits1 | ||
2025 | 2024 | |
$m | $m | |
Loans and advances to customers | 988,399 | 930,658 |
Loans and advances to customers of disposal groups reported in ‘Assets held for sale’ | 2,190 | 965 |
– private banking business in Germany | — | 309 |
– Germany custody business | 323 | — |
– business in South Africa | 431 | 656 |
– retail banking business in Sri Lanka | 101 | — |
– business in Uruguay | 1,314 | — |
– other | 21 | — |
Non-current assets held for sale | 1,303 | 12 |
Combined customer lending | 991,892 | 931,635 |
Currency translation | — | 40,108 |
Combined customer lending at constant currency | 991,892 | 971,743 |
Customer accounts | 1,786,828 | 1,654,955 |
Customer accounts reported in ‘Liabilities of disposal groups held for sale’ | 16,173 | 5,399 |
– private banking business in Germany | — | 2,085 |
– Germany custody business | 12,316 | — |
– business in South Africa | 2,056 | 3,294 |
– retail banking business in Sri Lanka | 430 | — |
– business in Uruguay | 1,369 | — |
– other | 2 | 20 |
Combined customer deposits | 1,803,001 | 1,660,354 |
Currency translation | — | 64,285 |
Combined customer deposits at constant currency | 1,803,001 | 1,724,639 |
1On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to sell its business in Argentina to Galicia. The sale was completed on 6 December
2024, so is not included in the table above.
Balance sheet commentary compared with 31 December 2024
At 31 December 2025, total assets of $3.2tn were $216bn or 7%
higher on a reported basis and increased by $93bn or 3% on a constant
currency basis.
Reported loans and advances to customers as a percentage of
customer accounts was 55.3% compared with 56.2% at 31 December
2024 (excluding balances classified as held for sale). The movement in
this ratio reflected a higher growth in customer accounts than in
lending.
Assets
Cash and balances at central banks decreased by $25bn or 9%,
which included a $22bn favourable impact of foreign currency
translation differences. The reduction was primarily due to lower
allocated balances from Markets Treasury within HSBC Bank plc,
leading to decreases across CIB and IWPB. Cash also declined in our
UK business, driven by increased customer lending and redeployment
into other asset classes.
Trading assets rose by $51bn or 16%, which included a favourable
impact of foreign currency translation differences of $13bn. The growth
was mainly in our CIB business reflecting increased client demand and
an increase in valuations.
Derivative assets decreased by $31bn or 12%, which included a
favourable impact of foreign currency translation differences of $17bn.
The reduction was primarily in our CIB business and reflected fair value
movements on foreign exchange contracts, driven by foreign exchange
rate volatility, and reductions in the fair value of interest rate contracts
resulting from curve movements. The decrease in derivative assets
was consistent with the decrease in derivative liabilities, as the
underlying risk is broadly matched.
Loans and advances to customers of $988bn were $58bn or 6%
higher on a reported basis. This included a favourable impact of foreign
currency translation differences of $40bn.
On a constant currency basis, loans and advances to customers
increased by $18bn, reflecting the following movements:
–In our UK business, customer lending rose by $18bn, primarily
driven by continued growth in mortgage balances as well as
increased commercial lending.
–In CIB, customer lending increased by $7bn. This was driven by
term lending growth in our main legal entities in Asia, including,
Australia, India and Hong Kong, and from an increase in the Middle
East, partly offset by the reclassification of our business in Uruguay
to held for sale.
–In IWPB, customer lending increased by $6bn, primarily driven by
wealth lending growth in the Private Bank, notably in our main legal
entity in Hong Kong.
–In our Hong Kong business, customer lending decreased by $6bn,
primarily in wholesale lending, reflecting low demand driven by
macroeconomic conditions.
–In Corporate Centre, customer lending decreased by $8bn following
the reclassification and subsequent sale of a portfolio of home and
certain other loans retained in France following the disposal of our
French retail operations.
Reverse repurchase agreements – non-trading rose by $46bn or
18%, primarily reflecting client demand.
Financial investments increased by $74bn or 15% The increase was
across both debt instruments held at fair value through other
comprehensive income and instruments held at amortised cost, as we
redeployed our commercial surplus to benefit from higher yield curves
and enhanced our structural hedge.
Assets held for sale decreased by $16bn or 59%, primarily due to the
reductions in IWPB following the completion of the sales of our French
life insurance business and our German private banking business, partly
offset by reclassification of assets from our UK life insurance business.
There were also increases in CIB and IWPB following the
announcement of the planned sale of our Uruguay business.
Other assets grew by $35bn or 14% reflecting higher settlement
accounts balances, notably in CIB, from higher client-driven trading
activity with a corresponding increase in settlement liabilities. In
addition, the growth reflected higher valuations on bullion.
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Financial summary |
Liabilities
Deposits by banks increased by $24bn or 32%, reflecting an increase
in client inflows, notably in our CIB business.
Customer accounts of $1.8tn increased by $132bn or 8% on a
reported basis. This included a favourable impact of foreign currency
translation differences of $64bn, mainly in our UK entities.
On a constant currency basis, customer accounts increased by $68bn,
reflecting the following movements:
–In our Hong Kong business, customer accounts increased by $37bn,
primarily in retail deposits, reflecting broader market growth.
–In our UK business, customer accounts increased by $11bn
primarily due to market growth in retail and corporate savings.
–In CIB, customer accounts increased by $10bn mainly driven by
strong deposit momentum in Asia, including in mainland China and
India, partly offset by the reclassification of our Germany custody
business to held for sale.
–In IWPB, customer accounts rose by $9bn, notably in the Private
Bank in Hong Kong, Singapore and the UK, reflecting strong wealth
deposit inflows amidst market volatility.
Repurchase agreements – non-trading increased by $24bn or 13%,
with increases in our CIB and UK businesses.
Financial liabilities designated at fair value increased by $20bn or
14%, notably in Corporate Centre, reflecting an increase in debt
securities in issue of $10bn in 2025, and in our CIB business from
increased medium-term note issuances by our Debt and Equity
Markets business.
Liabilities of disposal groups held for sale decreased by $6bn or
19%, primarily due to reductions in IWPB following the completion of
the sales of our French life insurance business and our German private
banking business, partly offset by reclassification of liabilities from our
UK life insurance business. There were also additions in CIB and IWPB
following the announcement of the planned sale of our Uruguay
business.
Other liabilities increased by $20bn or 10%. This included a rise of
$7bn in settlement accounts in our main legal entity in the US from an
increase in trading activity.
Equity
Total shareholders’ equity, including non-controlling interests, of
$206bn increased by $13bn or 7% compared with 31 December 2024.
Profits generated of $22bn and net gains through other comprehensive
income (‘OCI’) of $10bn were partly offset by the impact of dividends
paid of $13bn, and the impact of our $8bn share buy-back activities in
2025, which included the $2bn buy-back announced with our 2024
annual results in February 2025.
The net gains through OCI of $10bn included $7bn of exchange
differences and a $2bn increase in the cash flow hedging reserve.
Financial investments
As part of our interest rate hedging strategy, we hold a portfolio of debt
instruments, reported within financial investments, which are classified
as hold-to-collect-and-sell. As a result, the change in value of these
instruments is recognised through ‘debt instruments at fair value
through other comprehensive income’ in equity. At 31 December 2025,
we had recognised a pre-tax cumulative unrealised loss reserve
through other comprehensive income of $1.1bn related to these hold-
to-collect-and-sell positions, excluding investments held in our
insurance business. This compared with an unrealised loss of $3.8bn at
31 December 2024, and reflected a $2.7bn pre-tax gain in 2025,
inclusive of movements on related fair value hedges.
We also hold a portfolio of financial investments measured at amortised
cost, which are classified as hold-to-collect and are primarily held to
manage our interest rate exposure. At 31 December 2025, the debt
instruments within this portfolio had a cumulative unrecognised loss of
$0.4 bn, representing a $2.5bn improvement during 2025.
Customer accounts by country/territory | ||
2025 | 2024 | |
$m | $m | |
Hong Kong | 619,029 | 575,141 |
UK | 568,712 | 524,251 |
US | 99,458 | 99,278 |
Singapore | 81,740 | 76,737 |
Mainland China | 69,473 | 63,169 |
France | 50,880 | 40,384 |
Australia | 34,171 | 31,951 |
Germany1 | 15,588 | 23,564 |
Mexico | 29,493 | 27,525 |
UAE | 30,861 | 28,008 |
India | 28,725 | 27,199 |
Taiwan | 18,771 | 17,067 |
Malaysia | 20,252 | 17,038 |
Egypt | 5,610 | 4,137 |
Indonesia | 5,777 | 5,558 |
Türkiye | 3,624 | 3,489 |
Other1 | 104,664 | 90,459 |
At 31 Dec | 1,786,828 | 1,654,955 |
1At 31 December 2025, customer accounts of $16.2bn met the criteria to be classified as held for sale and are reported within ‘Liabilities of disposal groups held
for sale’ on the balance sheet, of which $12.3bn, $2.1bn, $1.4bn and $0.4bn belongs to the planned sale of our German custody business, South Africa business,
HSBC Bank (Uruguay) S.A., and Sri Lanka retail banking business, respectively. Refer to Note 23 on page 355 for further details.
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Financial summary |
Loans and advances, deposits by currency | |||||||
At 31 Dec 2025 | |||||||
$m | USD | GBP | HKD | EUR | CNY | Others1 | Total |
Loans and advances to banks | 38,546 | 17,085 | 3,716 | 4,810 | 9,146 | 35,159 | 108,462 |
Loans and advances to customers | 171,177 | 323,026 | 201,691 | 71,148 | 54,015 | 167,342 | 988,399 |
Total loans and advances | 209,723 | 340,111 | 205,407 | 75,958 | 63,161 | 202,501 | 1,096,861 |
Deposits by banks | 43,915 | 14,910 | 4,427 | 11,995 | 5,308 | 17,397 | 97,952 |
Customer accounts | 529,437 | 465,673 | 320,778 | 134,689 | 72,626 | 263,625 | 1,786,828 |
Total deposits | 573,352 | 480,583 | 325,205 | 146,684 | 77,934 | 281,022 | 1,884,780 |
At 31 Dec 2024 | |||||||
Loans and advances to banks | 33,727 | 15,267 | 5,340 | 4,137 | 8,129 | 35,439 | 102,039 |
Loans and advances to customers | 171,530 | 286,797 | 203,586 | 68,437 | 51,966 | 148,342 | 930,658 |
Total loans and advances | 205,257 | 302,064 | 208,926 | 72,574 | 60,095 | 183,781 | 1,032,697 |
Deposits by banks | 31,415 | 18,771 | 3,973 | 8,788 | 4,114 | 6,936 | 73,997 |
Customer accounts | 476,210 | 426,747 | 316,997 | 124,452 | 67,405 | 243,144 | 1,654,955 |
Total deposits | 507,625 | 445,518 | 320,970 | 133,240 | 71,519 | 250,080 | 1,728,952 |
1‘Others’ includes items with no currency information available of $0.5bn for loans and advances to banks (2024: $0.9bn), and $1.3bn for loans and advances to
customers (2024: $0.9bn), Nil for deposits by banks (2024: Nil) and $0.2bn for customer accounts (2024: $6m).
Risk-weighted assets
Risk-weighted assets (‘RWAs‘) increased by $50.3bn during the year,
including an increase of $27.4bn from foreign currency translation
differences. The remaining increase was largely driven by $39.9bn of
asset size movements; which included an $11.6bn rise in operational
risk, driven by higher average income. Further increases were due to
corporate lending growth, largely in our UK and CIB business segments
and in SAB within Corporate Centre.
These increases were partly offset by an $11.6bn decrease in RWAs
due to credit risk parameter refinements, including methodology
changes to our undrawn exposures within our UK and CIB businesses;
and a UK transaction where some credit risk was transferred to a third
party, and a $4.5bn decrease from strategic disposals.
RWAs by currency | |||||||
At 31 Dec 2025 | |||||||
$m | USD | GBP | HKD | EUR | CNY | Others | Total |
RWAs1 | 210,900 | 189,045 | 133,894 | 75,334 | 55,811 | 223,663 | 888,647 |
At 31 Dec 2024 | |||||||
RWAs1 | 205,645 | 165,684 | 136,001 | 67,440 | 56,561 | 206,923 | 838,254 |
1 RWAs include credit risk, counterparty credit risk, market risk and operational risk RWAs.
HSBC Holdings plc Annual Report on Form 20-F |
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Financial summary |
Average balance sheet
Average balance sheet and net interest income
Average balances and related interest are shown for the domestic
operations of our principal commercial banks by legal entity. ‘Other
trading entities’ comprise the operations of our principal commercial
banking and consumer finance entities outside their domestic markets
and all other banking operations, including investment banking balances
and transactions.
Average balances are based on daily averages for the principal areas of
our banking activities with monthly or less frequent averages used
elsewhere.
Balances and transactions with fellow subsidiaries are reported gross in
the principal commercial banking and consumer finance entities, and
the elimination entries are included within ‘Holding companies, shared
service centres and intra-group eliminations’.
Net interest margin numbers are calculated by dividing net interest
income as reported in the income statement by the average interest-
earning assets from which interest income is reported within the ‘Net
interest income’ line of the income statement. Total interest-earning
assets include credit-impaired loans where the carrying amount has
been adjusted as a result of impairment allowances. In accordance with
IFRSs, we recognise interest income on credit-impaired assets after the
carrying amount has been adjusted as a result of impairment. Fee
income that forms an integral part of the effective interest rate of a
financial instrument is recognised as an adjustment to the effective
interest rate and recorded in ‘Interest income’.
Assets | ||||||
2025 | 2024 | |||||
Average balance | Interest income | Yield | Average balance | Interest income | Yield | |
$m | $m | % | $m | $m | % | |
Summary | ||||||
Interest-earning assets measured at amortised cost (itemised below) | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 |
Trading assets and financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 262,719 | 8,169 | 3.11 | 244,686 | 7,943 | 3.25 |
Expected credit losses provision | (10,151) | N/A | N/A | (10,633) | N/A | N/A |
Non-interest-earning assets | 755,734 | N/A | N/A | 729,136 | N/A | N/A |
Total assets and interest income | 3,198,380 | 106,041 | 3.32 | 3,062,474 | 116,574 | 3.81 |
Average yield on all interest-earning assets | 4.32 | 4.97 | ||||
Short-term funds and loans and advances to banks | ||||||
HSBC Bank plc | 146,469 | 4,321 | 2.95 | 151,675 | 5,993 | 3.95 |
HSBC UK Bank plc | 65,457 | 2,493 | 3.81 | 76,705 | 3,255 | 4.24 |
The Hongkong and Shanghai Banking Corporation Limited | 82,451 | 2,561 | 3.11 | 86,976 | 3,250 | 3.74 |
HSBC Bank Middle East Limited | 7,398 | 464 | 6.27 | 6,960 | 418 | 6.01 |
HSBC North America Holdings Inc. | 28,832 | 1,136 | 3.94 | 29,434 | 1,275 | 4.33 |
HSBC Bank Canada | — | — | — | 13 | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 2,759 | 208 | 7.54 | 3,037 | 298 | 9.81 |
Other trading entities | 5,761 | 957 | 16.61 | 5,992 | 812 | 13.55 |
Holding companies, shared service centres and intra-group eliminations | (13,337) | (680) | 5.10 | (11,275) | (574) | 5.09 |
At 31 Dec | 325,790 | 11,460 | 3.52 | 349,517 | 14,727 | 4.21 |
Loans and advances to customers | ||||||
HSBC Bank plc | 107,315 | 4,850 | 4.52 | 110,123 | 5,740 | 5.21 |
HSBC UK Bank plc | 295,491 | 14,060 | 4.76 | 275,614 | 13,176 | 4.78 |
The Hongkong and Shanghai Banking Corporation Limited | 459,820 | 18,940 | 4.12 | 455,258 | 21,804 | 4.79 |
HSBC Bank Middle East Limited | 21,910 | 1,220 | 5.57 | 20,558 | 1,313 | 6.39 |
HSBC North America Holdings Inc. | 56,893 | 3,136 | 5.51 | 56,149 | 3,403 | 6.06 |
HSBC Bank Canada | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 25,872 | 3,299 | 12.75 | 26,704 | 3,631 | 13.60 |
Other trading entities | 4,901 | 662 | 13.51 | 5,642 | 918 | 16.27 |
Holding companies, shared service centres and intra-group eliminations | (398) | (131) | 32.91 | (223) | (106) | 47.53 |
At 31 Dec | 971,804 | 46,036 | 4.74 | 949,825 | 49,879 | 5.25 |
Reverse repurchase agreements – banks1 | ||||||
HSBC Bank plc | 41,903 | 2,695 | 6.43 | 38,819 | 3,293 | 8.48 |
HSBC UK Bank plc | 5,424 | 220 | 4.06 | 2,401 | 109 | 4.54 |
The Hongkong and Shanghai Banking Corporation Limited | 56,488 | 2,058 | 3.64 | 57,293 | 2,384 | 4.16 |
HSBC Bank Middle East Limited | 5,723 | 267 | 4.67 | 4,195 | 243 | 5.79 |
HSBC North America Holdings Inc. | 13,708 | 745 | 5.43 | 12,262 | 840 | 6.85 |
HSBC Bank Canada | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 2,217 | 188 | 8.48 | 2,599 | 281 | 10.81 |
Other trading entities | 1,641 | 155 | 9.45 | 2,182 | 363 | 16.64 |
Holding companies, shared service centres and intra-group eliminations | (8,702) | (576) | 6.62 | (15,962) | (833) | 5.22 |
At 31 Dec | 118,402 | 5,752 | 4.86 | 103,789 | 6,680 | 6.44 |
HSBC Holdings plc Annual Report on Form 20-F |
78 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Assets (continued) | ||||||
2025 | 2024 | |||||
Average balance | Interest income | Yield | Average balance | Interest income | Yield | |
$m | $m | % | $m | $m | % | |
Reverse repurchase agreements – customers1 | ||||||
HSBC Bank plc | 53,110 | 4,083 | 7.69 | 46,092 | 4,178 | 9.06 |
HSBC UK Bank plc | 12,062 | 629 | 5.21 | 7,832 | 478 | 6.10 |
The Hongkong and Shanghai Banking Corporation Limited | 51,842 | 1,491 | 2.88 | 41,295 | 1,368 | 3.31 |
HSBC Bank Middle East Limited | 3,155 | 146 | 4.63 | 2,644 | 135 | 5.11 |
HSBC North America Holdings Inc. | 44,485 | 4,495 | 10.10 | 42,410 | 4,851 | 11.44 |
HSBC Bank Canada | — | — | — | 2 | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 274 | 21 | 7.66 | 280 | 32 | 11.43 |
Other trading entities | — | — | — | — | — | — |
Holding companies, shared service centres and intra-group eliminations | (9,389) | (1) | 0.01 | (5,650) | (1) | 0.02 |
At 31 Dec | 155,539 | 10,864 | 6.98 | 134,905 | 11,041 | 8.18 |
Financial investments | ||||||
HSBC Bank plc | 79,377 | 3,025 | 3.81 | 70,702 | 3,013 | 4.26 |
HSBC UK Bank plc | 54,417 | 2,157 | 3.96 | 41,036 | 1,845 | 4.50 |
The Hongkong and Shanghai Banking Corporation Limited | 313,880 | 10,934 | 3.48 | 274,924 | 11,023 | 4.01 |
HSBC Bank Middle East Limited | 13,379 | 591 | 4.42 | 11,690 | 565 | 4.83 |
HSBC North America Holdings Inc. | 48,984 | 2,085 | 4.26 | 44,044 | 1,945 | 4.42 |
HSBC Bank Canada | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 6,839 | 577 | 8.44 | 5,150 | 481 | 9.34 |
Other trading entities | 4,226 | 759 | 17.96 | 3,375 | 802 | 23.76 |
Holding companies, shared service centres and intra-group eliminations | 18,005 | 702 | 3.90 | 19,261 | 913 | 4.74 |
At 31 Dec | 539,107 | 20,830 | 3.86 | 470,182 | 20,587 | 4.38 |
Other interest-earning assets | ||||||
HSBC Bank plc | 66,389 | 2,206 | 3.32 | 59,244 | 2,587 | 4.37 |
HSBC UK Bank plc | 336 | 30 | 8.93 | 252 | 35 | 13.89 |
The Hongkong and Shanghai Banking Corporation Limited | 14,897 | 599 | 4.02 | 10,747 | 653 | 6.08 |
HSBC Bank Middle East Limited | 289 | 13 | 4.50 | (178) | 1 | (0.56) |
HSBC North America Holdings Inc. | 5,710 | 229 | 4.01 | 3,726 | 195 | 5.23 |
HSBC Bank Canada | — | — | — | 19,475 | 984 | 5.05 |
Grupo Financiero HSBC, S.A. de C.V. | 279 | 9 | 3.23 | 315 | 15 | 4.76 |
Other trading entities | 749 | 171 | 22.83 | 3,551 | 1,922 | 54.13 |
Holding companies, shared service centres and intra-group eliminations | (9,213) | (327) | 3.55 | (6,065) | (675) | 11.13 |
At 31 Dec | 79,436 | 2,930 | 3.69 | 91,067 | 5,717 | 6.28 |
Total interest-earning assets | ||||||
HSBC Bank plc | 494,563 | 21,180 | 4.28 | 476,655 | 24,804 | 5.20 |
HSBC UK Bank plc | 433,187 | 19,589 | 4.52 | 403,840 | 18,898 | 4.68 |
The Hongkong and Shanghai Banking Corporation Limited | 979,378 | 36,583 | 3.74 | 926,493 | 40,482 | 4.37 |
HSBC Bank Middle East Limited | 51,854 | 2,701 | 5.21 | 45,869 | 2,675 | 5.83 |
HSBC North America Holdings Inc. | 198,612 | 11,826 | 5.95 | 188,025 | 12,509 | 6.65 |
HSBC Bank Canada | — | — | — | 19,490 | 984 | 5.05 |
Grupo Financiero HSBC, S.A. de C.V. | 38,240 | 4,302 | 11.25 | 38,085 | 4,738 | 12.44 |
Other trading entities | 17,278 | 2,704 | 15.65 | 20,742 | 4,817 | 23.22 |
Holding companies, shared service centres and intra-group eliminations | (23,034) | (1,013) | 4.40 | (19,914) | (1,276) | 6.41 |
At 31 Dec | 2,190,078 | 97,872 | 4.47 | 2,099,285 | 108,631 | 5.17 |
1The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
HSBC Holdings plc Annual Report on Form 20-F |
79 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Equity and liabilities | ||||||
2025 | 2024 | |||||
Average balance | Interest expense | Cost | Average balance | Interest expense | Cost | |
$m | $m | % | $m | $m | % | |
Summary | ||||||
Interest-bearing liabilities measured at amortised cost (itemised below) | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 |
Trading liabilities and financial liabilities designated at fair value (excluding own debt issued) | 153,896 | 5,114 | 3.32 | 143,636 | 5,271 | 3.67 |
Non-interest bearing current accounts | 214,507 | N/A | N/A | 220,291 | N/A | N/A |
Total equity and other non-interest bearing liabilities | 802,006 | N/A | N/A | 777,753 | N/A | N/A |
Total equity and liabilities | 3,198,380 | 68,192 | 2.13 | 3,062,475 | 81,169 | 2.65 |
Average cost on all interest-bearing liabilities | 3.13 | 3.93 | ||||
Deposits by banks1 | ||||||
HSBC Bank plc | 39,910 | 1,236 | 3.10 | 33,041 | 1,376 | 4.16 |
HSBC UK Bank plc | 12,550 | 602 | 4.80 | 13,265 | 743 | 5.60 |
The Hongkong and Shanghai Banking Corporation Limited | 25,823 | 532 | 2.06 | 24,561 | 611 | 2.49 |
HSBC Bank Middle East Limited | 7,693 | 355 | 4.61 | 5,870 | 303 | 5.16 |
HSBC North America Holdings Inc. | 12,509 | 345 | 2.76 | 9,012 | 329 | 3.65 |
HSBC Bank Canada | — | — | — | 27 | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 563 | 53 | 9.41 | 648 | 74 | 11.42 |
Other trading entities | 1,468 | 161 | 10.97 | 890 | 46 | 5.17 |
Holding companies, shared service centres and intra-group eliminations | (24,435) | (671) | 2.75 | (20,909) | (552) | 2.64 |
At 31 Dec | 76,081 | 2,613 | 3.43 | 66,405 | 2,930 | 4.41 |
Debt Securities in issue – non trading | ||||||
HSBC Bank plc | 47,563 | 1,909 | 4.01 | 47,684 | 2,536 | 5.32 |
HSBC UK Bank plc | 24,781 | 1,334 | 5.38 | 22,042 | 1,357 | 6.16 |
The Hongkong and Shanghai Banking Corporation Limited | 42,396 | 2,305 | 5.44 | 45,303 | 2,772 | 6.12 |
HSBC Bank Middle East Limited | 2,132 | 89 | 4.17 | 1,668 | 67 | 4.02 |
HSBC North America Holdings Inc. | 25,048 | 1,408 | 5.62 | 26,551 | 1,694 | 6.38 |
HSBC Bank Canada | — | — | — | 181 | 12 | 6.63 |
Grupo Financiero HSBC, S.A. de C.V. | 3,712 | 334 | 9.00 | 3,429 | 353 | 10.29 |
Other trading entities | 1,386 | 150 | 10.82 | 1,608 | 142 | 8.83 |
Holding companies, shared service centres and intra-group eliminations | 51,299 | 3,318 | 6.47 | 47,974 | 3,873 | 8.07 |
At 31 Dec | 198,317 | 10,847 | 5.47 | 196,440 | 12,806 | 6.52 |
Customer accounts2 | ||||||
HSBC Bank plc | 275,748 | 8,778 | 3.18 | 258,026 | 10,753 | 4.17 |
HSBC UK Bank plc | 304,835 | 5,863 | 1.92 | 279,227 | 6,156 | 2.20 |
The Hongkong and Shanghai Banking Corporation Limited | 793,610 | 14,024 | 1.77 | 738,028 | 17,654 | 2.39 |
HSBC Bank Middle East Limited | 18,669 | 520 | 2.78 | 14,725 | 520 | 3.53 |
HSBC North America Holdings Inc. | 80,866 | 2,627 | 3.25 | 78,919 | 3,030 | 3.84 |
HSBC Bank Canada | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 21,679 | 1,135 | 5.24 | 22,573 | 1,555 | 6.89 |
Other trading entities | 5,805 | 828 | 14.26 | 7,123 | 1,012 | 14.21 |
Holding companies, shared service centres and intra-group eliminations | (14,180) | (486) | 3.43 | (12,781) | (507) | 3.97 |
At 31 Dec | 1,487,032 | 33,289 | 2.24 | 1,385,840 | 40,173 | 2.90 |
Repurchase agreements – with banks3 | ||||||
HSBC Bank plc | 15,015 | 1,615 | 10.76 | 17,981 | 2,212 | 12.30 |
HSBC UK Bank plc | 1,856 | 123 | 6.63 | 317 | 23 | 7.26 |
The Hongkong and Shanghai Banking Corporation Limited | 66,984 | 2,293 | 3.42 | 60,491 | 2,640 | 4.36 |
HSBC Bank Middle East Limited | 4,516 | 198 | 4.38 | 3,276 | 178 | 5.43 |
HSBC North America Holdings Inc. | 11,369 | 604 | 5.31 | 10,110 | 655 | 6.48 |
HSBC Bank Canada | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 1,684 | 156 | 9.26 | 181 | 25 | 13.81 |
Other trading entities | 363 | 7 | 1.93 | 304 | 43 | 14.14 |
Holding companies, shared service centres and intra-group eliminations | (15,877) | (614) | 3.87 | (18,373) | (881) | 4.80 |
At 31 Dec | 85,910 | 4,382 | 5.10 | 74,287 | 4,895 | 6.59 |
Repurchase agreements – with customers3 | ||||||
HSBC Bank plc | 40,513 | 3,721 | 9.18 | 44,267 | 4,090 | 9.24 |
HSBC UK Bank plc | 2,597 | 251 | 9.66 | 3,147 | 273 | 8.67 |
The Hongkong and Shanghai Banking Corporation Limited | 14,778 | 549 | 3.71 | 22,262 | 1,108 | 4.98 |
HSBC Bank Middle East Limited | 11 | 0.4 | 3.64 | 19 | 1 | 5.26 |
HSBC North America Holdings Inc. | 42,483 | 4,360 | 10.26 | 42,071 | 4,821 | 11.46 |
HSBC Bank Canada | — | — | — | 230 | 13 | 5.65 |
Grupo Financiero HSBC, S.A. de C.V. | 4,521 | 365 | 8.07 | 3,850 | 415 | 10.78 |
Other trading entities | — | — | — | 10 | 1 | 10.00 |
Holding companies, shared service centres and intra-group eliminations | (2,065) | 0.6 | (0.03) | (2,806) | — | — |
At 31 Dec | 102,838 | 9,247 | 8.99 | 113,050 | 10,722 | 9.48 |
HSBC Holdings plc Annual Report on Form 20-F |
80 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Equity and liabilities (continued) | ||||||
2025 | 2024 | |||||
Average balance | Interest expense | Cost | Average balance | Interest expense | Cost | |
$m | $m | % | $m | $m | % | |
Other interest-bearing liabilities | ||||||
HSBC Bank plc | 66,070 | 2,236 | 3.38 | 54,689 | 2,582 | 4.72 |
HSBC UK Bank plc | 309 | 11 | 3.56 | 426 | 16 | 3.76 |
The Hongkong and Shanghai Banking Corporation Limited | 12,607 | 410 | 3.25 | 14,052 | 619 | 4.41 |
HSBC Bank Middle East Limited | 823 | 18 | 2.19 | 274 | 14 | 5.11 |
HSBC North America Holdings Inc. | 9,180 | 350 | 3.81 | 7,582 | 367 | 4.84 |
HSBC Bank Canada | — | — | — | 16,483 | 659 | 4.00 |
Grupo Financiero HSBC, S.A. de C.V. | 157 | 31 | 19.75 | 183 | 24 | 13.11 |
Other trading entities | 757 | 138 | 18.23 | 2,882 | 798 | 27.69 |
Holding companies, shared service centres and intra-group eliminations | (12,110) | (494) | 4.08 | (11,798) | (707) | 5.99 |
At 31 Dec | 77,793 | 2,700 | 3.47 | 84,773 | 4,372 | 5.16 |
Total interest-bearing liabilities | ||||||
HSBC Bank plc | 484,819 | 19,495 | 4.02 | 455,688 | 23,549 | 5.17 |
HSBC UK Bank plc | 346,928 | 8,184 | 2.36 | 318,424 | 8,568 | 2.69 |
The Hongkong and Shanghai Banking Corporation Limited | 956,198 | 20,113 | 2.10 | 904,697 | 25,404 | 2.81 |
HSBC Bank Middle East Limited | 33,844 | 1,179 | 3.48 | 25,832 | 1,083 | 4.19 |
HSBC North America Holdings Inc. | 181,455 | 9,694 | 5.34 | 174,245 | 10,896 | 6.25 |
HSBC Bank Canada | — | — | — | 16,921 | 684 | 4.04 |
Grupo Financiero HSBC, S.A. de C.V. | 32,316 | 2,074 | 6.42 | 30,864 | 2,446 | 7.93 |
Other trading entities | 9,779 | 1,284 | 13.13 | 12,817 | 2,042 | 15.93 |
Holding companies, shared service centres and intra-group eliminations | (17,368) | 1,055 | (6.07) | (18,693) | 1,226 | (6.56) |
At 31 Dec | 2,027,971 | 63,078 | 3.11 | 1,920,795 | 75,898 | 3.95 |
1This includes interest-bearing bank deposits only. See page 12 for an analysis of all bank deposits.
2This includes interest-bearing customer accounts only. See page 13 for an analysis of all customer accounts.
3The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported for repurchase agreements and thus higher cost.
Net interest margin1 | |||
2025 | 2024 | 2023 | |
% | % | % | |
HSBC Bank plc | 0.34 | 0.26 | 0.55 |
HSBC UK Bank plc | 2.63 | 2.56 | 2.43 |
The Hongkong and Shanghai Banking Corporation Limited | 1.68 | 1.63 | 1.81 |
HSBC Bank Middle East Limited | 2.94 | 3.47 | 3.62 |
HSBC North America Holdings Inc. | 1.07 | 0.86 | 0.98 |
HSBC Bank Canada | — | 1.54 | 1.54 |
Grupo Financiero HSBC, S.A. de C.V. | 5.83 | 6.02 | 6.17 |
Other trading entities | 8.23 | 13.37 | 7.71 |
At 31 Dec | 1.59 | 1.56 | 1.66 |
1Net interest margin is calculated as net interest income divided by average interest-earning assets.
Distribution of average total assets | |||
2025 | 2024 | 2023 | |
% | % | % | |
HSBC Bank plc | 30.5 | 30.6 | 30.0 |
HSBC UK Bank plc | 14.1 | 13.7 | 14.0 |
The Hongkong and Shanghai Banking Corporation Limited | 45.9 | 45.4 | 44.0 |
HSBC Bank Middle East Limited | 2.0 | 1.9 | 2.0 |
HSBC North America Holdings Inc. | 8.4 | 8.4 | 8.0 |
HSBC Bank Canada | — | 0.7 | 3.0 |
Grupo Financiero HSBC, S.A. de C.V. | 1.5 | 1.6 | 2.0 |
Other trading entities | 1.0 | 1.1 | 2.0 |
Holding companies, shared service centres and intra-group eliminations | (3.4) | (3.4) | (5.0) |
At 31 Dec | 100.0 | 100.0 | 100.0 |
HSBC Holdings plc Annual Report on Form 20-F |
81 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Analysis of changes in net interest income and net interest expense
The following tables allocate changes in interest income and interest expense between volume and rate for 2025 compared with 2024, and for
2024 compared with 2023. We isolate rate variances and allocate any change arising from both volume and rate/volume to volume.
Interest income | |||||||
Increase/(decrease) in 2025 compared with 2024 | Increase/(decrease) in 2024 compared with 2023 | ||||||
2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
$m | $m | $m | $m | $m | $m | $m | |
Short-term funds and loans and advances to banks | |||||||
HSBC Bank plc | 4,321 | (155) | (1,517) | 5,993 | (887) | 679 | 6,201 |
HSBC UK Bank plc | 2,493 | (432) | (330) | 3,255 | (1,017) | 786 | 3,486 |
The Hongkong and Shanghai Banking Corporation Limited | 2,561 | (141) | (548) | 3,250 | (48) | 220 | 3,078 |
HSBC Bank Middle East Limited | 464 | 28 | 18 | 418 | 40 | 24 | 354 |
HSBC North America Holdings Inc. | 1,136 | (24) | (115) | 1,275 | (155) | 294 | 1,136 |
HSBC Bank Canada | — | — | — | — | — | (2) | 2 |
Grupo Financiero HSBC, S.A. de C.V. | 208 | (21) | (69) | 298 | 42 | (11) | 267 |
Other trading entities | 957 | (38) | 183 | 812 | (916) | 921 | 807 |
Holding companies, shared service centres and intra-group eliminations | (680) | (105) | (1) | (574) | 138 | (151) | (561) |
At 31 Dec | 11,460 | (855) | (2,412) | 14,727 | (2,263) | 2,220 | 14,770 |
Loans and advances to customers | |||||||
HSBC Bank plc | 4,850 | (130) | (760) | 5,740 | 28 | 723 | 4,989 |
HSBC UK Bank plc | 14,060 | 939 | (55) | 13,176 | 676 | 1,281 | 11,219 |
The Hongkong and Shanghai Banking Corporation Limited | 18,940 | 186 | (3,050) | 21,804 | (578) | 561 | 21,821 |
HSBC Bank Middle East Limited | 1,220 | 76 | (169) | 1,313 | 50 | 34 | 1,229 |
HSBC North America Holdings Inc. | 3,136 | 42 | (309) | 3,403 | 125 | 103 | 3,175 |
HSBC Bank Canada | — | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 3,299 | (105) | (227) | 3,631 | 252 | (27) | 3,406 |
Other trading entities | 662 | (100) | (156) | 918 | (2,512) | 1,092 | 2,338 |
Holding companies, shared service centres and intra-group eliminations | (131) | (58) | 33 | (106) | 74 | 324 | (504) |
At 31 Dec | 46,036 | 1,001 | (4,844) | 49,879 | (380) | 2,586 | 47,673 |
Reverse repurchase agreements – with banks | |||||||
HSBC Bank plc | 2,695 | 198 | (796) | 3,293 | (1,205) | 1,321 | 3,177 |
HSBC UK Bank plc | 220 | 123 | (12) | 109 | 32 | 8 | 69 |
The Hongkong and Shanghai Banking Corporation Limited | 2,058 | (28) | (298) | 2,384 | (334) | 281 | 2,437 |
HSBC Bank Middle East Limited | 267 | 71 | (47) | 243 | 63 | 9 | 171 |
HSBC North America Holdings Inc. | 745 | 79 | (174) | 840 | 233 | (38) | 645 |
HSBC Bank Canada | — | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 188 | (32) | (61) | 281 | 20 | 7 | 254 |
Other trading entities | 155 | (51) | (157) | 363 | (274) | 33 | 604 |
Holding companies, shared service centres and intra-group eliminations | (576) | 480 | (223) | (833) | 481 | (443) | (871) |
At 31 Dec | 5,752 | 712 | (1,640) | 6,680 | (609) | 803 | 6,486 |
Reverse repurchase agreements – with customers | |||||||
HSBC Bank plc | 4,083 | 536 | (631) | 4,178 | 877 | 594 | 2,707 |
HSBC UK Bank plc | 629 | 221 | (70) | 478 | 122 | 29 | 327 |
The Hongkong and Shanghai Banking Corporation Limited | 1,491 | 301 | (178) | 1,368 | (254) | 652 | 970 |
HSBC Bank Middle East Limited | 146 | 24 | (13) | 135 | 11 | 11 | 113 |
HSBC North America Holdings Inc. | 4,495 | 212 | (568) | 4,851 | 865 | 230 | 3,756 |
HSBC Bank Canada | — | — | — | — | — | (2) | 2 |
Grupo Financiero HSBC, S.A. de C.V. | 21 | — | (11) | 32 | 1 | — | 31 |
Other trading entities | — | — | — | — | — | — | — |
Holding companies, shared service centres and intra-group eliminations | (1) | (1) | 1 | (1) | (1) | 1 | (1) |
At 31 Dec | 10,864 | 1,442 | (1,619) | 11,041 | 645 | 2,491 | 7,905 |
HSBC Holdings plc Annual Report on Form 20-F |
82 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Interest income (continued) | |||||||
Increase/(decrease) in 2025 compared with 2024 | Increase/(decrease) in 2024 compared with 2023 | ||||||
2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
$m | $m | $m | $m | $m | $m | $m | |
Financial investments | |||||||
HSBC Bank plc | 3,025 | 330 | (318) | 3,013 | 835 | 312 | 1,866 |
HSBC UK Bank plc | 2,157 | 534 | (222) | 1,845 | 630 | 324 | 891 |
The Hongkong and Shanghai Banking Corporation Limited | 10,934 | 1,368 | (1,457) | 11,023 | 1,345 | 1,014 | 8,664 |
HSBC Bank Middle East Limited | 591 | 74 | (48) | 565 | 49 | 65 | 451 |
HSBC North America Holdings Inc. | 2,085 | 210 | (70) | 1,945 | 179 | 132 | 1,634 |
HSBC Bank Canada | — | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 577 | 142 | (46) | 481 | 103 | 87 | 291 |
Other trading entities | 759 | 153 | (196) | 802 | (1,834) | 728 | 1,908 |
Holding companies, shared service centres and intra-group eliminations | 702 | (49) | (162) | 913 | (126) | (114) | 1,153 |
At 31 Dec | 20,830 | 2,688 | (2,445) | 20,587 | 2,751 | 978 | 16,858 |
Interest expense | |||||||
Increase/(decrease) in 2025 compared with 2024 | Increase/(decrease) in 2024 compared with 2023 | ||||||
2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
$m | $m | $m | $m | $m | $m | $m | |
Deposits by banks | |||||||
HSBC Bank plc | 1,236 | 210 | (350) | 1,376 | 160 | 79 | 1,137 |
HSBC UK Bank plc | 602 | (35) | (106) | 743 | 20 | 107 | 616 |
The Hongkong and Shanghai Banking Corporation Limited | 532 | 27 | (106) | 611 | 52 | 52 | 507 |
HSBC Bank Middle East Limited | 355 | 84 | (32) | 303 | 83 | 20 | 200 |
HSBC North America Holdings Inc. | 345 | 96 | (80) | 329 | 32 | (18) | 315 |
HSBC Bank Canada | — | — | — | — | — | (6) | 6 |
Grupo Financiero HSBC, S.A. de C.V. | 53 | (8) | (13) | 74 | 12 | (39) | 101 |
Other trading entities | 161 | 63 | 52 | 46 | (122) | 137 | 31 |
Holding companies, shared service centres and intra-group eliminations | (671) | (96) | (23) | (552) | (7) | (33) | (512) |
At 31 Dec | 2,613 | 334 | (651) | 2,930 | 269 | 260 | 2,401 |
Customer accounts | |||||||
HSBC Bank plc | 8,778 | 579 | (2,554) | 10,753 | 1,134 | 1,108 | 8,511 |
HSBC UK Bank plc | 5,863 | 489 | (782) | 6,156 | 225 | 1,399 | 4,532 |
The Hongkong and Shanghai Banking Corporation Limited | 14,024 | 946 | (4,576) | 17,654 | 882 | 2,249 | 14,523 |
HSBC Bank Middle East Limited | 520 | 110 | (110) | 520 | 61 | 77 | 382 |
HSBC North America Holdings Inc. | 2,627 | 63 | (466) | 3,030 | 51 | 248 | 2,731 |
HSBC Bank Canada | — | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 1,135 | (48) | (372) | 1,555 | (2) | 68 | 1,489 |
Other trading entities | 828 | (188) | 4 | 1,012 | (3,094) | 1,710 | 2,396 |
Holding companies, shared service centres and intra-group eliminations | (486) | (48) | 69 | (507) | (115) | 10 | (402) |
At 31 Dec | 33,289 | 2,263 | (9,147) | 40,173 | 1,473 | 4,538 | 34,162 |
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Interest expense (continued) | |||||||
Increase/(decrease) in 2025 compared with 2024 | Increase/(decrease) in 2024 compared with 2023 | ||||||
2025 | Volume | Rate | 2024 | Volume | Rate | 2023 | |
$m | $m | $m | $m | $m | $m | $m | |
Repurchase agreements – with banks | |||||||
HSBC Bank plc | 1,615 | (320) | (277) | 2,212 | (511) | 808 | 1,915 |
HSBC UK Bank plc | 123 | 102 | (2) | 23 | (25) | 14 | 34 |
The Hongkong and Shanghai Banking Corporation Limited | 2,293 | 222 | (569) | 2,640 | 758 | 514 | 1,368 |
HSBC Bank Middle East Limited | 198 | 54 | (34) | 178 | 70 | 9 | 99 |
HSBC North America Holdings Inc. | 604 | 67 | (118) | 655 | 296 | (85) | 444 |
HSBC Bank Canada | — | — | — | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 156 | 139 | (8) | 25 | (16) | 5 | 36 |
Other trading entities | 7 | 1 | (37) | 43 | (61) | (10) | 114 |
Holding companies, shared service centres and intra-group eliminations | (614) | 96 | 171 | (881) | 309 | (181) | (1,009) |
At 31 Dec | 4,382 | 594 | (1,107) | 4,895 | 1,621 | 273 | 3,001 |
Repurchase agreements – with customers | |||||||
HSBC Bank plc | 3,721 | (342) | (27) | 4,090 | 929 | 647 | 2,514 |
HSBC UK Bank plc | 251 | (53) | 31 | 273 | (382) | 227 | 428 |
The Hongkong and Shanghai Banking Corporation Limited | 549 | (276) | (283) | 1,108 | (12) | 126 | 994 |
HSBC Bank Middle East Limited | 0.4 | (0.6) | — | 1 | 1 | — | — |
HSBC North America Holdings Inc. | 4,360 | 44 | (505) | 4,821 | 1,249 | 34 | 3,538 |
HSBC Bank Canada | — | (13) | — | 13 | (15) | 3 | 25 |
Grupo Financiero HSBC, S.A. de C.V. | 365 | 54 | (104) | 415 | 45 | (12) | 382 |
Other trading entities | — | (1) | — | 1 | — | — | 1 |
Holding companies, shared service centres and intra-group eliminations | 0.6 | (0.2) | 0.8 | — | — | 25 | (25) |
At 31 Dec | 9,247 | (921) | (554) | 10,722 | 1,537 | 1,328 | 7,857 |
Debt securities in issue – non trading | |||||||
HSBC Bank plc | 1,909 | (2) | (625) | 2,536 | 512 | 137 | 1,887 |
HSBC UK Bank plc | 1,334 | 149 | (172) | 1,357 | 230 | 368 | 759 |
The Hongkong and Shanghai Banking Corporation Limited | 2,305 | (159) | (308) | 2,772 | (210) | 166 | 2,816 |
HSBC Bank Middle East Limited | 89 | 19 | 3 | 67 | (12) | 6 | 73 |
HSBC North America Holdings Inc. | 1,408 | (84) | (202) | 1,694 | 167 | 22 | 1,505 |
HSBC Bank Canada | — | (12) | — | 12 | (37) | (2) | 51 |
Grupo Financiero HSBC, S.A. de C.V. | 334 | 25 | (44) | 353 | 178 | 83 | 92 |
Other trading entities | 150 | (24) | 32 | 142 | (3) | (10) | 155 |
Holding companies, shared service centres and intra-group eliminations | 3,318 | 213 | (768) | 3,873 | (147) | 135 | 3,885 |
At 31 Dec | 10,847 | 104 | (2,063) | 12,806 | 751 | 832 | 11,223 |
HSBC Holdings plc Annual Report on Form 20-F |
84 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Loan maturity and interest sensitivity analysis
The analysis of loan maturity and interest sensitivity is presented for
loans where repayment is expected to occur on a contractual
repayment basis (presented within Loans and advances to banks and
Loans and advances to customers on our balance sheet). Loans that
have been re-classified to Assets held for sale are excluded as recovery
is expected from sale proceeds within the next 12 months rather than
individual contractual repayment terms. The analysis of loan maturity
and interest sensitivity by loan type on a contractual repayment basis
was as follows.
Total | Total | |
2025 | 2024 | |
$m | $m | |
Maturity of 1 year or less | ||
Loans and advances to banks | 101,823 | 97,156 |
Loans and advances to customers | 361,354 | 341,022 |
463,177 | 438,178 | |
Maturity after 1 year but within 5 years | ||
Loans and advances to banks | 5,968 | 4,513 |
Loans and advances to customers | 285,116 | 268,427 |
291,084 | 272,940 | |
Interest rate sensitivity of loans and advances to banks | ||
Fixed interest rate | 1,937 | 1,217 |
Variable interest rate | 4,031 | 3,296 |
5,968 | 4,513 | |
Interest rate sensitivity of loans and advances to customers | ||
Fixed interest rate | 66,999 | 60,088 |
Variable interest rate | 218,117 | 208,339 |
285,116 | 268,427 | |
Maturity after 5 years but within 15 years | ||
Loans and advances to banks | 678 | 383 |
Loans and advances to customers | 177,571 | 164,603 |
178,249 | 164,986 | |
Interest rate sensitivity of loans and advances to banks | ||
Fixed interest rate | 678 | 333 |
Variable interest rate | — | 50 |
678 | 383 | |
Interest rate sensitivity of loans and advances to customers | ||
Fixed interest rate | 77,525 | 69,464 |
Variable interest rate | 100,045 | 95,139 |
177,570 | 164,603 | |
Maturity after 15 years | ||
Loans and advances to banks | — | — |
Loans and advances to customers | 175,050 | 166,321 |
175,050 | 166,321 | |
Interest rate sensitivity of loans and advances to banks | ||
Fixed interest rate | — | — |
Variable interest rate | — | — |
— | — | |
Interest rate sensitivity of loans and advances to customers | ||
Fixed interest rate | 83,388 | 76,945 |
Variable interest rate | 91,662 | 89,376 |
175,050 | 166,321 |
HSBC Holdings plc Annual Report on Form 20-F |
85 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Deposits
The following tables summarise the average amount of bank deposits,
customer deposits and certificates of deposit (‘CDs’) and other money
market instruments (that are included within ‘Debt securities in issue’
in the balance sheet), together with the average interest rates paid
thereon for each of the past two years.
The analysis of average deposits by legal entity is based on the legal
entity in which the deposits are recorded and excludes balances with
HSBC companies.
Deposits by banks | ||||
2025 | 2024 | |||
Average balance | Average rate | Average balance | Average rate | |
$m | % | $m | % | |
HSBC UK Bank plc | 12,498 | — | 13,243 | |
– demand and other – non-interest bearing | 13 | — | 31 | — |
– demand – interest bearing | 30 | 4.5 | 11 | 2.7 |
– time | 12,455 | 4.8 | 13,201 | 5.5 |
– other | — | — | — | — |
HSBC Bank plc | 40,789 | — | 33,104 | |
– demand and other – non-interest bearing | 8,031 | — | 6,159 | — |
– demand – interest bearing | 23,186 | 3.4 | 18,384 | 4.9 |
– time | 8,145 | 3.5 | 8,197 | 3.9 |
– other | 1,427 | — | 364 | — |
The Hongkong and Shanghai Banking Corporation Limited | 22,932 | — | 21,785 | |
– demand and other – non-interest bearing | 3,480 | — | 3,412 | — |
– demand – interest bearing | 15,211 | 2.1 | 13,326 | 2.3 |
– time | 4,236 | 3.8 | 5,035 | 5.0 |
– other | 5 | — | 12 | — |
HSBC Bank Middle East Limited | 3,333 | — | 2,566 | |
– demand and other – non-interest bearing | 113 | — | 101 | — |
– demand – interest bearing | 744 | 0.9 | 721 | 0.6 |
– time | 2,401 | 5.2 | 1,665 | 5.9 |
– other | 75 | — | 79 | — |
HSBC North America Holdings Inc. | 7,837 | — | 5,449 | |
– demand and other – non-interest bearing | 706 | — | 942 | — |
– demand – interest bearing | 6,471 | 3.7 | 4,271 | 4.8 |
– time | 660 | 4.1 | 236 | 5.5 |
– other | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V | 575 | — | 662 | |
– demand and other – non-interest bearing | 13 | — | 14 | — |
– demand – interest bearing | 45 | 8.4 | 34 | 11.8 |
– time | 517 | 9.0 | 614 | 10.7 |
– other | — | — | — | — |
Other trading entities | 489 | — | 271 | |
– demand and other – non-interest bearing | 16 | — | 16 | — |
– demand – interest bearing | 2 | 1.5 | 13 | 7.7 |
– time | 471 | 4.1 | 242 | 10.7 |
– other | — | — | — | — |
Total | 88,453 | 3.0 | 77,080 | 3.8 |
– demand and other – non-interest bearing | 12,372 | — | 10,675 | — |
– demand – interest bearing | 45,689 | 3.0 | 36,760 | 3.9 |
– time | 28,885 | 4.4 | 29,190 | 5.1 |
– other | 1,507 | — | 455 | — |
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Customer accounts | ||||
2025 | 2024 | |||
Average balance | Average rate | Average balance | Average rate | |
$m | % | $m | % | |
HSBC UK Bank plc | 356,138 | — | 336,151 | |
– demand and other – non-interest bearing | 56,526 | — | 58,672 | — |
– demand – interest bearing | 255,665 | 1.6 | 224,061 | 1.9 |
– savings | 30,936 | 3.4 | 39,915 | 3.0 |
– time | 13,011 | 3.4 | 13,473 | 4.3 |
– other | — | 0.5 | 30 | 3.3 |
HSBC Bank plc | 311,416 | — | 297,942 | |
– demand and other – non-interest bearing | 43,164 | — | 49,569 | — |
– demand – interest bearing | 174,895 | 3.3 | 164,360 | 4.2 |
– savings | 58,187 | 2.7 | 49,037 | 3.3 |
– time | 35,061 | 4.0 | 34,976 | 5.1 |
– other | 109 | 3.1 | — | — |
The Hongkong and Shanghai Banking Corporation Limited | 866,221 | — | 805,694 | |
– demand and other – non-interest bearing | 73,600 | — | 68,539 | — |
– demand – interest bearing | 465,021 | 0.7 | 416,431 | 1.0 |
– savings | 318,953 | 3.3 | 311,870 | 4.1 |
– time | 8,643 | 3.6 | 8,704 | 4.9 |
– other | 4 | 3.3 | 150 | — |
HSBC Bank Middle East Limited | 35,832 | — | 33,470 | |
– demand and other – non-interest bearing | 17,184 | — | 18,761 | — |
– demand – interest bearing | 10,102 | 2.0 | 6,372 | 2.4 |
– savings | 7,451 | 3.7 | 7,186 | 4.2 |
– time | 1,095 | 4.6 | 1,151 | 5.6 |
– other | — | — | — | — |
HSBC North America Holdings Inc. | 97,508 | — | 95,893 | |
– demand and other – non-interest bearing | 17,066 | — | 17,409 | — |
– demand – interest bearing | 37,156 | 3.2 | 34,270 | 3.7 |
– savings | 43,286 | 3.3 | 44,214 | 4.0 |
– time | — | — | — | — |
– other | — | — | — | — |
Grupo Financiero HSBC, S.A. de C.V. | 28,009 | 4.1 | 29,311 | 5.3 |
– demand and other – non-interest bearing | 6,330 | — | 6,738 | — |
– demand – interest bearing | 13,432 | 4.2 | 13,881 | 5.6 |
– savings | — | — | — | — |
– time | 8,247 | 6.9 | 8,692 | 8.9 |
– other | — | — | — | — |
Other trading entities | 10,442 | 8.0 | 11,504 | 12.8 |
– demand and other – non-interest bearing | 4,664 | — | 4,438 | — |
– demand – interest bearing | 1,374 | 1.2 | 2,252 | 8.0 |
– savings | 4,183 | 19.2 | 4,060 | 30.9 |
– time | 221 | 7.1 | 754 | 5.6 |
– other | — | — | — | — |
Total | 1,705,566 | 2.0 | 1,609,965 | 2.6 |
– demand and other – non-interest bearing | 218,534 | — | 224,126 | — |
– demand – interest bearing | 957,645 | 1.6 | 861,627 | 2.1 |
– savings | 462,996 | 3.4 | 456,282 | 4.3 |
– time | 66,278 | 4.2 | 67,750 | 5.4 |
– other | 113 | 3.7 | 180 | 2.2 |
HSBC Holdings plc Annual Report on Form 20-F |
87 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Financial summary |
Net charge-offs to average loans
The following table provides the net charge-offs to average loans for
loans and advances to banks and customers.
Net charge-offs to average loans | ||
2025 | 2024 | |
% | % | |
Loans and advances to banks | — | — |
Loans and advances to customers | 0.33 | 0.44 |
Allowances for credit losses to total loans are presented in Summary of
credit risk (excluding debt instruments measured at FVOCI) by stage
distribution and ECL coverage by industry sector at page 145.
Estimate of uninsured deposits and
uninsured time deposits
HSBC provides deposit services to customers across the many
countries in which we operate and are therefore subject to differing
national and state deposit insurance regimes. Uninsured deposits are
presented on an estimated basis using the same methodologies and
assumptions inherent in our liquidity reporting requirements to our
primary regulator, the Prudential Regulation Authority.
The insured status of a deposit is determined on the basis of individual
insurance limits enacted within local regulations.
At 31 December 2025, the amount of uninsured deposits was $1.4tn
(31 December 2024: $1.3tn).
Uninsured time deposits are uninsured deposits which are subject to
contractual maturity requirements prior to withdrawal. Amounts are
presented on a residual contractual maturity basis and exclude
overnight deposits where contractual requirements are imminently
satisfied.
Maturity analysis of uninsured time deposits | |||||
At 31 Dec 2025 | |||||
3 months or less | After 3 months but within 6 months | After 6 months but within 12 months | After 12 months | Total | |
$m | $m | $m | $m | $m | |
Uninsured time deposits | 294,755 | 15,139 | 8,416 | 6,340 | 324,650 |
At 31 Dec 2024 | |||||
Uninsured time deposits | 262,268 | 20,540 | 9,433 | 4,783 | 297,024 |
HSBC Holdings plc Annual Report on Form 20-F |
88 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information |
Business segments and legal entities
Basis of preparation
Business segments
Our business segments – Hong Kong, UK, Corporate and Institutional
Banking, and International Wealth and Premier Banking – along with
Corporate Centre, are our reportable segments under IFRS 8 ‘Operating
Segments’. Reconciliations of the total constant currency business
segment results to the Group’s reported results are presented on
page 330.
The Group Operating Committee is considered the Chief Operating
Decision Maker (‘CODM’) for the purposes of identifying the Group’s
reportable segments. Business segment results are assessed by the
CODM on the basis of constant currency performance. We separately
disclose ‘notable items’, as described on page 65.
Our operations are closely integrated and, accordingly, the presentation
of data includes internal allocations of certain items of income and
expense. These allocations include the costs of certain support services
and global infrastructures to the extent that they can be meaningfully
attributed to business segments. While such allocations have been
made on a systematic and consistent basis, they involve a certain
degree of subjectivity. Costs that are not allocated to business
segments are included in Corporate Centre.
Where relevant, income and expense amounts presented include the
results of inter-segment funding along with inter-company and inter-
business line transactions. All such transactions are undertaken on
arm’s length terms. The intra-Group elimination items for business
segments are presented in Corporate Centre.
Effective 1 January 2026, we have transitioned certain clients, primarily
from Hong Kong and the UK to the Corporate and Institutional Banking
segment to better serve their specific needs. Such transition did not
involve a change in our reportable segments.
Legal entities
The results of main legal entities are presented on a reported and
constant currency basis, including HSBC UK Bank plc, HSBC Bank plc,
The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank
Middle East Limited, HSBC North America Holdings Inc., and Grupo
Financiero HSBC, S.A. de C.V.
HSBC Holdings incurs the liability of the UK bank levy, with the cost
being recharged to its UK operating subsidiaries. The current year
expense will be reflected in the fourth quarter as it is assessed on our
balance sheet position as at 31 December.
The results of legal entities are presented on a reported basis on
page 95 and a constant currency basis on page 97.
Supplementary analysis of constant currency results and notable items by business
segment
Constant currency results | ||||||
2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Revenue | 15,878 | 12,938 | 27,637 | 14,520 | (2,699) | 68,274 |
ECL | (1,476) | (696) | (696) | (892) | (90) | (3,850) |
Operating expenses | (4,826) | (5,537) | (15,556) | (9,285) | (1,224) | (36,428) |
Share of profit in associates and joint ventures | — | — | 1 | 24 | 1,886 | 1,911 |
Profit/(loss) before tax | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
Loans and advances to customers (net) | 229,491 | 303,698 | 305,022 | 150,047 | 141 | 988,399 |
Customer accounts | 543,381 | 364,323 | 597,719 | 281,058 | 347 | 1,786,828 |
Notable items | ||||||
2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Notable items | ||||||
Revenue | ||||||
Disposals, wind-downs, acquisitions and related costs1 | — | — | (9) | (73) | (1,560) | (1,642) |
Dilution loss of interest in BoCom associate2 | — | — | — | — | (1,104) | (1,104) |
Operating expenses | ||||||
Disposals, wind-downs, acquisitions and related costs | — | 1 | (290) | (83) | (130) | (502) |
Restructuring and other related costs3 | (16) | (70) | (348) | (161) | (435) | (1,030) |
Legal provisions4 | — | — | (322) | — | (1,110) | (1,432) |
Impairment loss of interest in BoCom associate2 | — | — | — | — | (1,000) | (1,000) |
1Amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of
its sale to a consortium comprising Rothesay Life plc and CCF.
2 Amounts include a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn
impairment loss following an impairment test on the carrying value of the Group’s investment in BoCom in ‘Impairment loss of interest in BoCom associate’. See
Note 18 on pages 345 to 348.
3Amounts include a $1.0bn organisational simplification provision recognised in 2025.
4 Amounts include a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff
Investment Securities LLC fraud and a $0.3bn provision in connection with certain historical trading activities in HSBC Bank plc.
HSBC Holdings plc Annual Report on Form 20-F |
89 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Reconciliation of reported results to constant currency results – business segments (continued) | ||||||
2024 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Revenue | ||||||
– Reported | 15,034 | 11,954 | 26,819 | 13,976 | (1,929) | 65,854 |
– Currency translation | 13 | 388 | (47) | (159) | (40) | 155 |
– Constant currency | 15,047 | 12,342 | 26,772 | 13,817 | (1,969) | 66,009 |
ECL | ||||||
– Reported | (1,076) | (402) | (869) | (1,038) | (29) | (3,414) |
– Currency translation | (1) | (13) | (9) | 45 | — | 22 |
– Constant currency | (1,077) | (415) | (878) | (993) | (29) | (3,392) |
Operating expenses | ||||||
– Reported | (4,837) | (4,947) | (14,544) | (9,013) | 298 | (33,043) |
– Currency translation | (4) | (157) | (68) | 113 | 13 | (103) |
– Constant currency | (4,841) | (5,104) | (14,612) | (8,900) | 311 | (33,146) |
Share of profit/(loss) in associates and joint ventures | ||||||
– Reported | — | — | 1 | 47 | 2,864 | 2,912 |
– Currency translation | — | — | — | (2) | 3 | 1 |
– Constant currency | — | — | 1 | 45 | 2,867 | 2,913 |
Profit/(loss) before tax | ||||||
– Reported | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
– Currency translation | 8 | 218 | (124) | (3) | (24) | 75 |
– Constant currency | 9,129 | 6,823 | 11,283 | 3,969 | 1,180 | 32,384 |
Loans and advances to customers (net) | ||||||
– Reported | 235,208 | 267,293 | 284,701 | 136,325 | 7,131 | 930,658 |
– Currency translation | (155) | 18,485 | 13,176 | 7,702 | 912 | 40,120 |
– Constant currency | 235,053 | 285,778 | 297,877 | 144,027 | 8,043 | 970,778 |
Customer accounts | ||||||
– Reported | 507,389 | 330,012 | 557,796 | 259,443 | 315 | 1,654,955 |
– Currency translation | (832) | 22,821 | 30,130 | 12,145 | 21 | 64,285 |
– Constant currency | 506,557 | 352,833 | 587,926 | 271,588 | 336 | 1,719,240 |
Notable items (continued) | ||||||
2024 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Notable items | ||||||
Revenue | ||||||
Disposals, wind-downs, acquisitions and related costs1 | — | — | (14) | 28 | (1,357) | (1,343) |
Early redemption of legacy securities | — | — | — | — | (237) | (237) |
Operating expenses | ||||||
Disposals, wind-downs, acquisitions and related costs | — | 6 | (10) | (3) | (192) | (199) |
Restructuring and other related costs2 | — | 7 | (2) | (14) | (25) | (34) |
1Amounts include a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of
our business in Argentina, partly offset by 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 losses.
2Amounts include organisational simplification provisions recognised in 2024 and reversals of restructuring provisions recognised during 2022.
HSBC Holdings plc Annual Report on Form 20-F |
90 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Reconciliation of reported results to constant currency results – business segments (continued) | ||||||
2023 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Revenue | ||||||
– Reported | 14,476 | 12,690 | 25,762 | 13,329 | (199) | 66,058 |
– Currency translation | 56 | 749 | (1,039) | (944) | 160 | (1,018) |
– Constant currency | 14,532 | 13,439 | 24,723 | 12,385 | (39) | 65,040 |
ECL | ||||||
– Reported | (1,488) | (516) | (601) | (841) | (1) | (3,447) |
– Currency translation | (6) | (29) | 77 | 155 | — | 197 |
– Constant currency | (1,494) | (545) | (524) | (686) | (1) | (3,250) |
Operating expenses | ||||||
– Reported | (4,499) | (4,551) | (14,005) | (9,072) | 57 | (32,070) |
– Currency translation | (15) | (278) | 250 | 523 | (101) | 379 |
– Constant currency | (4,514) | (4,829) | (13,755) | (8,549) | (44) | (31,691) |
Share of profit/(loss) in associates and joint ventures | ||||||
– Reported | — | — | (1) | 65 | (257) | (193) |
– Currency translation | — | — | — | (3) | (101) | (104) |
– Constant currency | — | — | (1) | 62 | (358) | (297) |
Profit/(loss) before tax | ||||||
– Reported | 8,489 | 7,623 | 11,155 | 3,481 | (400) | 30,348 |
– Currency translation | 35 | 442 | (712) | (269) | (42) | (546) |
– Constant currency | 8,524 | 8,065 | 10,443 | 3,212 | (442) | 29,802 |
Loans and advances to customers (net) | ||||||
– Reported | 239,218 | 264,544 | 288,351 | 146,155 | 267 | 938,535 |
– Currency translation | 955 | 13,681 | 1,876 | 650 | 9 | 17,171 |
– Constant currency | 240,173 | 278,225 | 290,227 | 146,805 | 276 | 955,706 |
Customer accounts | ||||||
– Reported | 485,039 | 330,480 | 539,139 | 256,393 | 596 | 1,611,647 |
– Currency translation | 1,834 | 17,090 | 9,136 | 1,271 | 22 | 29,353 |
– Constant currency | 486,873 | 347,570 | 548,275 | 257,664 | 618 | 1,641,000 |
Notable items (continued) | ||||||
2023 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Notable items | ||||||
Revenue | ||||||
Disposals, wind-downs, acquisitions and related costs1,2,3 | — | 1,591 | — | 4 | (297) | 1,298 |
Fair value movements on financial instruments4 | — | — | — | — | 14 | 14 |
Disposal losses on Markets Treasury repositioning | (373) | (142) | (371) | (91) | — | (977) |
Operating expenses | ||||||
Disposals, wind-downs, acquisitions and related costs | — | (45) | (7) | (53) | (216) | (321) |
Restructuring and other related costs5 | — | 17 | 45 | 11 | 63 | 136 |
Impairment loss of interest in BoCom associate6 | — | — | — | — | (3,000) | (3,000) |
1Amounts include impact of the sale of our retail banking operations in France.
2Amounts include the gain of $1.6bn recognised in respect of the acquisition of SVB UK.
3Amounts include fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.
4Amounts relate to fair value movements on non-qualifying hedges in HSBC Holdings.
5Amounts relate to reversals of restructuring provisions recognised during 2022.
6Amounts relate to an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Fee and other income supplementary analysis
The following table presents an analysis of the components of fee and other income by business segment.
2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$bn | $bn | $bn | $bn | $bn | $bn | |
Net fee income | 2,776 | 1,804 | 4,489 | 4,263 | 11 | 13,343 |
Net income from financial instruments held for trading or managed on a fair value basis | 622 | (25) | 7,660 | 678 | 10,747 | 19,682 |
Insurance revenue1 | 89 | — | — | 1,756 | (42) | 1,803 |
Gain less impairment relating to sale of business operations | — | — | (15) | (31) | (1) | (47) |
Other operating (expense)/income | 309 | 63 | 971 | 458 | (3,102) | (1,301) |
Total | 3,796 | 1,842 | 13,105 | 7,124 | 7,613 | 33,480 |
Banking book funding costs used to generate ‘net income from financial instruments held for trading or managed on a fair value basis’ | — | — | — | — | (9,686) | (9,686) |
Third-party net interest income from insurance | — | — | — | 396 | — | 396 |
Notable items | — | — | 9 | 73 | 2,664 | 2,746 |
Fee and other income | 3,796 | 1,842 | 13,114 | 7,593 | 591 | 26,936 |
Supplementary management view of fee and other income - on a constant currency basis | ||||||
Wholesale Transaction Banking | 730 | 891 | 9,239 | — | — | 10,860 |
–Global Foreign Exchange | 183 | 166 | 5,345 | — | — | 5,694 |
–Global Payments Solutions | 343 | 534 | 1,417 | — | — | 2,294 |
–Global Trade Solutions | 204 | 191 | 1,067 | — | — | 1,462 |
–Securities Services | — | — | 1,410 | — | — | 1,410 |
Wealth | 2,206 | 339 | — | 6,845 | — | 9,390 |
–Investment Distribution | 2,124 | 335 | — | 1,165 | — | 3,624 |
–Insurance1 | 82 | 4 | — | 2,513 | — | 2,599 |
–Asset Management | — | — | — | 1,500 | — | 1,500 |
–Private Bank | — | — | — | 1,667 | — | 1,667 |
Investment Banking, Debt and Equity Markets | — | — | 3,245 | — | — | 3,245 |
Retail Banking | 326 | 255 | — | 665 | — | 1,246 |
Wholesale Credit and Lending | 78 | 238 | 567 | — | — | 883 |
Other | 456 | 119 | 63 | 83 | 591 | 1,312 |
2024 | ||||||
Net fee income | 2,305 | 1,821 | 4,345 | 3,857 | (27) | 12,301 |
Net income from financial instruments held for trading or managed on a fair value basis | 390 | 13 | 7,304 | 517 | 12,892 | 21,116 |
Insurance revenue1 | 27 | — | — | 1,209 | (3) | 1,233 |
Gain less impairment relating to sale of business operations | — | — | (26) | (3) | (1,723) | (1,752) |
Other operating (expense)/income | 325 | 91 | 422 | 85 | (700) | 223 |
Total | 3,047 | 1,925 | 12,045 | 5,665 | 10,439 | 33,121 |
Banking book funding costs used to generate ‘net income from financial instruments held for trading or managed on a fair value basis’ | — | — | — | — | (11,434) | (11,434) |
Third-party net interest income from insurance | — | — | — | 429 | — | 429 |
Notable items | — | — | 14 | (28) | 1,357 | 1,343 |
Currency translation | 3 | 62 | 208 | 85 | (11) | 347 |
Fee and other income | 3,050 | 1,987 | 12,267 | 6,151 | 351 | 23,806 |
Supplementary management view of fee and other income - on a constant currency basis | ||||||
Wholesale Transaction Banking | 709 | 912 | 8,847 | — | — | 10,468 |
–Global Foreign Exchange | 180 | 165 | 5,096 | — | — | 5,441 |
–Global Payments Solutions | 326 | 552 | 1,383 | — | — | 2,261 |
–Global Trade Solutions | 203 | 195 | 1,059 | — | — | 1,457 |
–Securities Services | — | — | 1,309 | — | — | 1,309 |
Wealth | 1,577 | 391 | — | 5,618 | — | 7,586 |
–Investment Distribution | 1,535 | 384 | — | 938 | — | 2,857 |
–Insurance1 | 42 | 7 | — | 1,864 | — | 1,913 |
–Asset Management | — | — | — | 1,373 | — | 1,373 |
–Private Bank | — | — | — | 1,443 | — | 1,443 |
Investment Banking, Debt and Equity Markets | — | — | 3,198 | — | — | 3,198 |
Retail Banking | 312 | 273 | — | 765 | — | 1,350 |
Wholesale Credit and Lending | 83 | 216 | 626 | — | — | 925 |
Other | 369 | 195 | (404) | (232) | 351 | 279 |
1Includes Group ‘net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’,
‘insurance finance expense’ and ‘insurance service result’.
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
Strategic transactions supplementary analysis
The following table presents the selected impacts of strategic transactions on the Group and our business segments for transactions that are
classified as material notable items. See page 65 for further information on material notable items and the impact of strategic transactions.
Constant currency results | ||||||||
of which | ||||||||
2025 | 2024 | Variance 2025 vs. 2024 | Hong Kong | UK | CIB | IWPB | Corporate Centre | |
$m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | (1,642) | 39 | (1,681) | — | — | (638) | (590) | (453) |
– distorting impact of operating results | — | 1,214 | (1,214) | — | — | (629) | (491) | (94) |
– notable items | (1,642) | (1,175) | (467) | — | — | (9) | (99) | (359) |
ECL | — | (72) | 72 | — | — | 36 | 36 | — |
Operating expenses | (502) | (919) | 417 | — | (7) | 96 | 253 | 75 |
– distorting impact of operating results | — | (729) | 729 | — | — | 381 | 336 | 12 |
– notable items | (502) | (190) | (312) | — | (7) | (285) | (83) | 63 |
Share of profit in associates and joint ventures | — | — | — | — | — | — | — | — |
Profit before tax | (2,144) | (952) | (1,192) | — | (7) | (506) | (301) | (378) |
– distorting impact of operating results | — | 413 | (413) | — | — | (212) | (119) | (82) |
– notable items | (2,144) | (1,365) | (779) | — | (7) | (294) | (182) | (296) |
Profit before tax1 | ||||||||
– business in Argentina | (107) | (5,990) | 5,883 | — | — | (160) | (14) | 6,057 |
– banking business in Canada | (3) | 4,980 | (4,983) | — | — | (143) | (67) | (4,773) |
– wind-down of M&A and ECM in the UK, Europe and US | (114) | (98) | (16) | — | — | (16) | — | — |
– France life insurance business | (231) | (6) | (225) | — | — | — | (214) | (11) |
– retained French portfolio of home and certain other loans | (1,468) | 91 | (1,559) | — | — | — | — | (1,559) |
– Germany private banking business | 142 | 13 | 129 | — | — | — | 134 | (5) |
– other strategic transactions | (363) | 58 | (421) | — | (7) | (187) | (140) | (87) |
1Represents the impact on profit before tax due to strategic transactions, inclusive of the notable items impacts and the distorting impact of operating results.
This does not represent the profit before tax of each disposed business. In the case of wind-downs, there may be timing differences between the recognition of
operating cost impacts and operating revenue impacts. These would arise in the event there is a timing lag between the impact of cost actions and the resultant
impact on operating revenue.
Reconciliation of reported and constant currency risk-weighted assets
At 31 Dec 2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total RWAs | |
$bn | $bn | $bn | $bn | $bn | $bn | |
Risk-weighted assets | ||||||
Reported | 139.6 | 152.9 | 408.7 | 89.9 | 97.5 | 888.6 |
Constant currency | 139.6 | 152.9 | 408.7 | 89.9 | 97.5 | 888.6 |
At 31 Dec 2024 | ||||||
Risk-weighted assets | ||||||
Reported | 143.7 | 133.5 | 388.0 | 85.7 | 87.4 | 838.3 |
Currency translation | 0.1 | 9.3 | 12.7 | 4.0 | 1.1 | 27.2 |
Constant currency | 143.8 | 142.8 | 400.7 | 89.7 | 88.5 | 865.5 |
At 31 Dec 2023 | ||||||
Risk-weighted assets | ||||||
Reported | 145.2 | 124.9 | 398.2 | 97.6 | 88.2 | 854.1 |
Currency translation | 0.7 | 6.5 | (3.9) | (1.9) | (0.5) | 0.9 |
Constant currency | 145.9 | 131.4 | 394.3 | 95.7 | 87.7 | 855.0 |
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
Supplementary tables for Wealth
Insurance business performance
The following table provides an analysis of the results of our insurance business for the year. It comprises income earned by IWPB insurance
manufacturing operations, income earned by wealth distribution channels within our IWPB, Hong Kong and UK business segments, and
consolidation adjustments.
Total insurance profit and loss (constant currency) | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Net fee income | 287 | 223 | 194 |
Insurance service result | 1,825 | 1,317 | 1,078 |
– release of contractual service margin | 1,593 | 1,339 | 1,125 |
– risk adjustment release | 65 | 66 | 36 |
– experience variance and other | 254 | 35 | 26 |
– loss from onerous contracts | (87) | (123) | (109) |
Investment income | 11,387 | 6,115 | 8,027 |
– net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 11,175 | 5,865 | 7,743 |
– other investment income | 212 | 250 | 284 |
Insurance finance expense | (11,197) | (5,949) | (7,781) |
Other income | 297 | 207 | (54) |
Revenue1 | 2,599 | 1,913 | 1,464 |
ECL | (1) | — | 4 |
Net operating income | 2,598 | 1,913 | 1,468 |
Operating expenses | (789) | (724) | (690) |
Operating profit | 1,809 | 1,189 | 778 |
Share of profit in associates and JVs | 15 | 32 | 49 |
Profit before tax | 1,824 | 1,221 | 827 |
1‘Revenue’ of $2.6bn (2024: $1.9bn; 2023: $1.5bn) includes $2.5bn earned within IWPB (2024: $1.8bn; 2023: $1.4bn) and $0.1bn earned within Hong Kong (2024:
$0.1bn; 2023: $0.1bn). This comprises revenue from insurance manufacturing operations of $2.3bn (2024: $1.7bn; 2023: $1.3bn), and revenue from wealth
distribution channels and consolidation impacts of $0.3bn (2024: $0.2bn; 2023: $0.2bn).
Total insurance revenue of $2.6bn was $0.7bn higher than in 2024
reflecting the following:
–Insurance service result of $1.8bn increased by $0.5bn compared
with 2024 reflecting higher CSM release as a result of strong new
business growth, and favourable experience variances from positive
investment management fee, maintenance expense and claims
experience.
–Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit or
loss of $11.2bn increased by $5.3bn compared with 2024 reflecting
strong equity markets and the favourable impact of downward
movements in interest rates on our fixed income investments in
Hong Kong, partly offset by rising rates in mainland China.
–This was offset by Insurance finance expense of $11.2bn, which
moves inversely with investment income. The margin between
investment income and insurance finance expense benefited from
increases in interest rates in mainland China.
–Other income increased by $0.1bn compared with 2024 from gains
on reinsurance contracts in Hong Kong.
Insurance key performance metrics | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Annualised new business premiums of insurance manufacturing operations | 6,505 | 4,912 | 3,797 |
Insurance manufacturing new business contractual service margin | 3,405 | 2,515 | 1,686 |
Consolidated Group new business contractual service margin | 3,799 | 2,729 | 1,812 |
Net dividends of insurance manufacturing operations | 962 | 1,522 | 813 |
Insurance equity plus CSM net of tax ø | 18,800 | 17,025 | 16,583 |
Annualised new business premiums (‘ANP’) is used to assess new
insurance premiums generated by the business. It is calculated as
100% of annualised first year regular premiums and 10% of single
premiums, before reinsurance ceded. ANP increased by 32%
compared with 2024, primarily from strong new business sales in Hong
Kong.
Consolidated Group new business contractual service margin
represents insurance manufacturing new business CSM and the
consolidation impact of inclusion of our bank distribution channel.
Consolidated Group new business contractual service margin increased
by $1.1bn compared with 2024, reflecting strong sales in Hong Kong
and increased sales of higher margin products, contributing to the
overall Group CSM at 31 December 2025 of $15.7bn (2024: $12.8bn;
2023: $11.4bn).
Net dividends of insurance manufacturing operations represents
dividends paid to immediate parent companies net of CET1 qualifying
injections to fund business growth. Net dividends of insurance
manufacturing operations in 2025 included dividends paid to immediate
parent companies of $1.2bn (2024: $1.6bn; 2023: $1.0bn) net of CET1
qualifying injections to fund business growth of $0.2bn (2024: $0.1bn;
2023: $0.2bn). Net dividends decreased by $0.6bn due to the non-
recurrence of a 2024 release of surplus regulatory capital in Hong Kong.
Insurance equity plus CSM net of tax is a non-GAAP alternative
performance measure that provides information about our insurance
manufacturing operations’ net asset value plus the future earnings from
in-force business. At 31 December 2025, insurance equity plus CSM
net of tax was calculated as follows:
Insurance equity plus CSM net of tax | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Insurance manufacturing operations equity | 6,715 | 7,015 | 7,731 |
Insurance manufacturing CSM | 14,598 | 12,063 | 10,786 |
CSM deferred tax recognised | (2,513) | (2,053) | (1,934) |
Insurance equity plus CSM net of tax ø | 18,800 | 17,025 | 16,583 |
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
Wealth balances
The following table shows our wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets
either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our
customers. From 1 January 2026, we have updated the definition of our wealth balances to exclude Asset Management third-party distribution.
This will enhance comparability with industry peers.
Reported wealth balances1 | ||
2025 | 2024 | |
$bn | $bn | |
Private Bank invested assets2 | 465 | 395 |
Retail invested assets | 490 | 409 |
Asset Management third-party distribution3 | 580 | 489 |
Reported invested assets1 | 1,535 | 1,293 |
– of which: The Hongkong and Shanghai Banking Corporation Limited | 773 | 645 |
Wealth deposits (Premier and Private Bank)4 | 608 | 555 |
– of which: The Hongkong and Shanghai Banking Corporation Limited | 407 | 372 |
Total reported wealth balances | 2,143 | 1,848 |
– of which: The Hongkong and Shanghai Banking Corporation Limited | 1,180 | 1,017 |
Total reported wealth balances excluding Asset Management third-party distribution | 1,563 | 1,359 |
– of which: The Hongkong and Shanghai Banking Corporation Limited | 1,055 | 907 |
1Invested assets are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as
investment manager.
2Private Bank client balances, which comprise invested assets and customer deposits, were $566bn (31 December 2024: $484bn).
3Total assets under management manufactured by Asset Management, which includes third-party distribution and other components that are reported in the
Private Bank and Retail invested assets in the table above, were $866bn (31 December 2024: $731bn). This includes balances related to The Hongkong and
Shanghai Banking Corporation Limited, of which $260bn (31 December 2024: $223bn).
4Premier and Private Bank deposits, which include Prestige deposits in Hang Seng Bank, form part of the total IWPB, Hong Kong and UK businesses’ customer
accounts balance on page 88.
Invested assets
‘Net new invested assets’ represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Private
Bank invested assets. It excludes all customer deposits.
Invested assets | 2025 | 2024 |
$bn | $bn | |
Opening balance | 1,293 | 1,191 |
Net new invested assets | 80 | 64 |
– of which: The Hongkong and Shanghai Banking Corporation Limited | 39 | 47 |
Net market movements | 125 | 97 |
Foreign exchange and others | 37 | (59) |
Closing balance | 1,535 | 1,293 |
Net new money
Net new money ('NNM') represents our net customer inflows from
Private Bank and Retail invested assets and wealth deposits. It
excludes foreign exchange movements and market and other
movements not relating to client inflows/outflows which are reported
within ‘foreign exchange and others’ and ‘net market movements’,
respectively. This metric excludes net customer inflows from Asset
Management third-party distribution. From 1 January 2026
management will disclose NNM as the key wealth metric, offering
greater comparability to industry peers. From 1 January 2026, we no
longer intend to disclose invested assets as a key metric.
Net new money | 2025 | 2024 |
$bn | $bn | |
Opening balance (total reported wealth balances excluding Asset Management third-party distribution) | 1,359 | 1,282 |
Net new money3 | 86 | 80 |
– of which: Net new invested assets excluding Asset Management third-party distribution | 46 | 51 |
– of which: Change in deposits | 40 | 29 |
Net market movements excluding Asset Management third-party distribution | 91 | 60 |
Foreign exchange and others excluding Asset Management third-party distribution, including wealth deposits1 | 27 | (63) |
Closing balance2 | 1,563 | 1,359 |
Net new money – The Hongkong and Shanghai and Banking Corporation Limited | 72 | 71 |
– of which: net new invested assets excluding Asset Management third-party distribution | 41 | 43 |
– of which: change in deposits on a constant currency basis | 31 | 28 |
1Includes foreign exchange on wealth deposits.
2Closing balance includes invested assets of $1,535bn (2024: $1,293bn), excluding Asset Management third-party distribution invested assets of $580bn (2024:
$489bn) and includes wealth deposit balances of $608bn (2024: $555bn).
3 Clients’ assets are translated at the average quarterly rates of foreign exchange applicable to the respective quarters, with the effects of currency translation
reported separately.
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
CIB: Securities Services and Issuer Services
Assets held in custody
Custody is the safekeeping and servicing of securities and other
financial assets on behalf of clients. Assets held in custody are not
reported on the Group’s balance sheet, except where it is deemed that
we are acting as principal rather than agent in our role as investment
manager. At 31 December 2025, we held $12.9tn of assets as
custodian, an increase of 21% compared with 31 December 2024. The
balance comprised $11.9tn of assets in Securities Services, which
were recorded at market value, and $1.0tn of assets in Issuer Services,
recorded at book value.
Assets under administration
Our assets under administration business includes the provision of
bond and loan administration services, transfer agency services and the
valuation of portfolios of securities and other financial assets on behalf
of clients and complements the custody business. At 31 December
2025, the value of assets held under administration by the Group
amounted to $6.0tn, which was 16% higher than at 31 December
2024. The balance comprised $3.6tn of assets in Securities Services,
which were recorded at market value, and $2.4tn of assets in Issuer
Services, recorded at book value.
Analysis of reported results by legal entities
HSBC reported profit/(loss) before tax and balance sheet data | ||||||||||
2025 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Net interest income | 11,406 | 1,684 | 16,471 | 1,524 | 2,130 | — | 2,229 | 1,422 | (2,072) | 34,794 |
Net fee income | 1,696 | 1,618 | 6,483 | 555 | 1,513 | — | 635 | 996 | (153) | 13,343 |
Net income from financial instruments held for trading or managed on a fair value basis | 568 | 6,490 | 10,910 | 339 | 548 | — | 440 | 112 | 275 | 19,682 |
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss | — | 1,364 | 9,741 | — | — | — | 49 | 15 | 6 | 11,175 |
Insurance finance income/(expense) | — | (1,462) | (9,695) | — | — | — | (43) | — | 3 | (11,197) |
Insurance service result | — | 218 | 1,538 | — | — | — | 69 | — | — | 1,825 |
Other income/(expense)1 | 132 | (874) | (194) | 192 | 539 | — | 94 | 150 | (1,387) | (1,348) |
Net operating income before change in expected credit losses and other credit impairment charges | 13,802 | 9,038 | 35,254 | 2,610 | 4,730 | — | 3,473 | 2,695 | (3,328) | 68,274 |
Change in expected credit losses and other credit impairment charges | (710) | (203) | (1,635) | (186) | (201) | — | (786) | (25) | (104) | (3,850) |
Net operating income | 13,092 | 8,835 | 33,619 | 2,424 | 4,529 | — | 2,687 | 2,670 | (3,432) | 64,424 |
Total operating expenses excluding impairment of goodwill and other intangible assets | (5,663) | (8,818) | (15,132) | (1,332) | (3,326) | — | (2,045) | (1,544) | 1,837 | (36,023) |
Impairment of goodwill and other intangible assets | (21) | (323) | (49) | (2) | (5) | — | (3) | — | (2) | (405) |
Operating profit/(loss) | 7,408 | (306) | 18,438 | 1,090 | 1,198 | — | 639 | 1,126 | (1,597) | 27,996 |
Share of profit in associates and joint ventures less impairment2 | 1 | 82 | 1,150 | — | — | — | 10 | 672 | (4) | 1,911 |
Profit/(loss) before tax | 7,409 | (224) | 19,588 | 1,090 | 1,198 | — | 649 | 1,798 | (1,601) | 29,907 |
% | % | % | % | % | % | % | % | % | % | |
Share of HSBC’s profit before tax | 24.8 | (0.7) | 65.5 | 3.6 | 4.0 | — | 2.2 | 6.0 | (5.4) | 100.0 |
Cost efficiency ratio | 41.2 | 101.1 | 43.1 | 51.1 | 70.4 | — | 59.0 | 57.3 | 55.1 | 53.4 |
Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
Loans and advances to customers (net) | 310,116 | 106,409 | 467,842 | 22,618 | 52,178 | — | 25,252 | 3,971 | 13 | 988,399 |
Total assets | 475,752 | 950,562 | 1,492,150 | 64,295 | 261,401 | — | 50,197 | 32,339 | (93,662) | 3,233,034 |
Customer accounts | 376,903 | 321,451 | 911,725 | 37,010 | 99,458 | — | 29,493 | 10,781 | 7 | 1,786,828 |
Risk-weighted assets3,4 | 157,963 | 146,010 | 411,824 | 27,180 | 73,961 | — | 32,509 | 57,014 | 2,106 | 888,647 |
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
HSBC reported profit/(loss) before tax and balance sheet data (continued) | ||||||||||
2024 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Net interest income | 10,331 | 1,254 | 15,077 | 1,590 | 1,613 | 300 | 2,292 | 2,774 | (2,498) | 32,733 |
Net fee income | 1,672 | 1,629 | 5,449 | 508 | 1,372 | 129 | 630 | 1,076 | (164) | 12,301 |
Net income from financial instruments held for trading or managed on a fair value basis | 580 | 6,042 | 11,781 | 331 | 914 | 33 | 504 | 411 | 520 | 21,116 |
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss | — | 1,100 | 4,608 | — | — | — | 22 | 183 | (12) | 5,901 |
Insurance finance income/(expense) | — | (1,261) | (4,562) | — | — | — | (26) | (150) | 21 | (5,978) |
Insurance service result | — | 217 | 1,042 | — | — | — | 76 | (7) | (18) | 1,310 |
Other income/(expense) | 169 | 576 | 658 | 75 | 365 | — | 75 | (984) | (2,463) | (1,529) |
Net operating income before change in expected credit losses and other credit impairment charges | 12,752 | 9,557 | 34,053 | 2,504 | 4,264 | 462 | 3,573 | 3,303 | (4,614) | 65,854 |
Change in expected credit losses and other credit impairment charges | (405) | (211) | (1,532) | (198) | (81) | (40) | (864) | (93) | 10 | (3,414) |
Net operating income | 12,347 | 9,346 | 32,521 | 2,306 | 4,183 | 422 | 2,709 | 3,210 | (4,604) | 62,440 |
Total operating expenses excluding impairment of goodwill and other intangible assets | (5,124) | (6,718) | (14,296) | (1,191) | (3,349) | (236) | (1,992) | (1,959) | 1,899 | (32,966) |
Impairment of goodwill and other intangible assets | (11) | (5) | (33) | (1) | (2) | — | (2) | (22) | (1) | (77) |
Operating profit/(loss) | 7,212 | 2,623 | 18,192 | 1,114 | 832 | 186 | 715 | 1,229 | (2,706) | 29,397 |
Share of profit in associates and joint ventures less impairment | 1 | 22 | 2,278 | — | — | — | 15 | 600 | (4) | 2,912 |
Profit/(loss) before tax | 7,213 | 2,645 | 20,470 | 1,114 | 832 | 186 | 730 | 1,829 | (2,710) | 32,309 |
% | % | % | % | % | % | % | % | % | % | |
Share of HSBC’s profit before tax | 22.2 | 8.2 | 63.4 | 3.4 | 2.6 | 0.6 | 2.3 | 5.7 | (8.4) | 100.0 |
Cost efficiency ratio | 40.3 | 70.3 | 42.1 | 47.6 | 78.6 | 51.1 | 55.8 | 60.0 | 41.1 | 50.2 |
Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
Loans and advances to customers (net) | 272,973 | 103,464 | 449,940 | 20,440 | 55,786 | — | 23,439 | 4,617 | (1) | 930,658 |
Total assets | 426,165 | 914,506 | 1,400,456 | 57,215 | 253,251 | — | 46,007 | 26,623 | (107,175) | 3,017,048 |
Customer accounts | 340,233 | 297,785 | 845,284 | 34,808 | 99,278 | — | 27,525 | 9,999 | 43 | 1,654,955 |
Risk-weighted assets3,4 | 138,332 | 137,609 | 402,847 | 26,624 | 74,416 | — | 29,671 | 50,731 | (648) | 838,254 |
2023 | ||||||||||
Net interest income | 9,684 | 2,674 | 16,705 | 1,551 | 1,712 | 1,275 | 2,148 | 3,765 | (3,718) | 35,796 |
Net fee income | 1,597 | 1,527 | 4,859 | 475 | 1,237 | 559 | 581 | 1,225 | (215) | 11,845 |
Net income from financial instruments held for trading or managed on a fair value basis | 516 | 4,220 | 9,507 | 397 | 729 | 110 | 437 | 1,054 | (309) | 16,661 |
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss | — | 1,438 | 6,258 | — | — | — | 39 | 323 | (171) | 7,887 |
Insurance finance income/(expense) | — | (1,460) | (6,237) | — | — | — | (44) | (166) | 98 | (7,809) |
Insurance service result | — | 154 | 838 | — | — | — | 87 | 9 | (10) | 1,078 |
Other income/(expense) | 1,608 | 736 | (31) | 2 | 185 | 22 | 65 | (1,481) | (506) | 600 |
Net operating income before change in expected credit losses and other credit impairment charges | 13,405 | 9,289 | 31,899 | 2,425 | 3,863 | 1,966 | 3,313 | 4,729 | (4,831) | 66,058 |
Change in expected credit losses and other credit impairment (charges)/recoveries | (523) | (212) | (1,641) | (90) | (94) | (46) | (696) | (279) | 134 | (3,447) |
Net operating income | 12,882 | 9,077 | 30,258 | 2,335 | 3,769 | 1,920 | 2,617 | 4,450 | (4,697) | 62,611 |
Total operating expenses excluding impairment of goodwill and other intangible assets | (4,602) | (6,483) | (13,379) | (1,095) | (3,473) | (1,049) | (1,823) | (2,631) | 2,180 | (32,355) |
Impairment of goodwill and other intangible assets | (10) | 97 | (16) | (1) | 222 | — | (3) | (4) | — | 285 |
Operating profit/(loss) | 8,270 | 2,691 | 16,863 | 1,239 | 518 | 871 | 791 | 1,815 | (2,517) | 30,541 |
HSBC Holdings plc Annual Report on Form 20-F |
97 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
HSBC reported profit/(loss) before tax and balance sheet data (continued) | ||||||||||
2023 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Share of profit in associates and joint ventures less impairment2 | — | (52) | (696) | — | — | — | 14 | 544 | (3) | (193) |
Profit/(loss) before tax | 8,270 | 2,639 | 16,167 | 1,239 | 518 | 871 | 805 | 2,359 | (2,520) | 30,348 |
% | % | % | % | % | % | % | % | % | % | |
Share of HSBC’s profit before tax | 27.2 | 8.7 | 53.3 | 4.1 | 1.7 | 2.9 | 2.6 | 7.8 | (8.3) | 100.0 |
Cost efficiency ratio | 34.4 | 68.7 | 42.0 | 45.2 | 84.2 | 53.4 | 55.1 | 55.7 | 45.1 | 48.5 |
Balance sheet data | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m |
Loans and advances to customers (net) | 270,208 | 95,750 | 455,315 | 20,072 | 54,829 | — | 26,410 | 15,951 | — | 938,535 |
Total assets | 423,029 | 896,682 | 1,333,911 | 50,612 | 252,339 | 90,731 | 47,309 | 59,051 | (114,987) | 3,038,677 |
Customer accounts | 339,611 | 274,733 | 801,430 | 31,341 | 99,607 | — | 29,423 | 35,326 | 176 | 1,611,647 |
Risk-weighted assets3,4 | 129,211 | 131,468 | 396,677 | 24,294 | 72,248 | 31,890 | 32,639 | 59,574 | 6,704 | 854,114 |
1 In 2025, the amounts include recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans
following the completion of its sale to a consortium comprising Rothesay Life plc and CCF and a loss of $1.1bn inclusive of reserves recycling as a result of the
dilution of our shareholding in BoCom.
2Includes impairment losses of $1.0bn (2025) and $3.0bn (2023) recognised in respect of the Group’s investment in BoCom. See Note 18 on pages 345 to 348.
3Risk-weighted assets are non-additive across the legal entities due to market risk diversification effects within the Group.
4Balances are on a third-party Group consolidated basis.
Summary information – legal entities and selected countries/territories
Legal entity reported and constant currency results | ||||||||||
2025 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corpo- ration Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities1 | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | 13,802 | 9,038 | 35,254 | 2,610 | 4,730 | — | 3,473 | 2,695 | (3,328) | 68,274 |
ECL | (710) | (203) | (1,635) | (186) | (201) | — | (786) | (25) | (104) | (3,850) |
Operating expenses | (5,684) | (9,141) | (15,181) | (1,334) | (3,331) | — | (2,048) | (1,544) | 1,835 | (36,428) |
Share of profit in associates and joint ventures less impairment | 1 | 82 | 1,150 | — | — | — | 10 | 672 | (4) | 1,911 |
Profit/(loss) before tax | 7,409 | (224) | 19,588 | 1,090 | 1,198 | — | 649 | 1,798 | (1,601) | 29,907 |
Loans and advances to customers (net) | 310,116 | 106,409 | 467,842 | 22,618 | 52,178 | — | 25,252 | 3,971 | 13 | 988,399 |
Customer accounts | 376,903 | 321,451 | 911,725 | 37,010 | 99,458 | — | 29,493 | 10,781 | 7 | 1,786,828 |
1Includes the results of entities located in 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. These entities had an aggregated impact on the Group’s reported profit before tax of $1.5bn.
HSBC Holdings plc Annual Report on Form 20-F |
98 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Legal entity results: notable items | ||||||||||
2025 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corpo- ration Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | ||||||||||
Disposals, wind-downs, acquisitions and related costs1 | — | (1,546) | — | 71 | — | — | — | — | (167) | (1,642) |
Dilution loss of interest in BoCom2 | — | — | (1,138) | — | — | — | — | — | 34 | (1,104) |
Operating expenses | ||||||||||
Disposals, wind-downs, acquisitions and related costs | (1) | (388) | (46) | (16) | (18) | — | — | (2) | (31) | (502) |
Restructuring and other related costs3 | (161) | (350) | (300) | (27) | (66) | — | (65) | (31) | (30) | (1,030) |
Legal provisions4 | — | (1,197) | — | — | — | — | — | — | (235) | (1,432) |
Impairment loss of interest in BoCom associate2 | — | — | (1,000) | — | — | — | — | — | — | (1,000) |
1Includes recycling of cumulative fair value losses of $1.5bn relating to the French retained portfolio of home and certain other loans following the completion of its sale
to a consortium comprising Rothesay Life plc and CCF.
2 Includes a loss of $1.1bn inclusive of reserves recycling as a result of the dilution of our shareholding in BoCom. We have also recognised a $1.0bn impairment
loss following an impairment test on the carrying value of the Group’s investment in BoCom in ‘Impairment loss of interest in BoCom associate’. See Note 18 on
pages 345 to 348.
3Amounts include organisational simplification provision recognised in 2025.
4 Includes a $1.1bn provision in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard L. Madoff
Investment Securities LLC fraud in HSBC Bank plc and Holding companies and a $0.3bn provision in connection with certain historical trading activities in HSBC
Bank plc.
Selected countries/territories results | |||||
2025 | |||||
UK1 | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | 22,346 | 23,935 | 3,314 | 4,644 | 3,473 |
ECL | (839) | (1,478) | (68) | (200) | (785) |
Operating expenses | (16,064) | (9,429) | (3,236) | (3,332) | (2,048) |
Share of profit/(loss) in associates and joint ventures less impairment | 81 | (2) | 1,077 | — | 10 |
Profit before tax | 5,524 | 13,026 | 1,087 | 1,112 | 650 |
Loans and advances to customers (net) | 357,246 | 273,396 | 45,585 | 52,178 | 25,252 |
Customer accounts | 568,712 | 619,029 | 69,473 | 99,458 | 29,493 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the separately
incorporated group of service companies (‘ServCo Group’).
Selected countries/territories results: notable items | |||||
2025 | |||||
UK | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | |||||
Disposals, wind-downs, acquisitions and related costs | (211) | — | — | — | — |
Restructuring and other related costs | 188 | 18 | 12 | 6 | — |
Dilution loss of interest in BoCom associate | — | — | (1,104) | — | — |
Operating expenses | |||||
Disposals, wind-downs, acquisitions and related costs | (41) | (16) | (5) | (18) | — |
Restructuring and other related costs | (481) | (179) | (60) | (72) | (65) |
Legal provisions1 | (566) | — | — | — | — |
Impairment loss of interest in BoCom associate | — | — | (1,000) | — | — |
1 Includes $0.2bn in relation to internal reinsurance arrangements relating to the Bernard L. Madoff Investment Securities LLC fraud provision and a $0.3bn
provision in connection with certain historical trading activities in HSBC Bank plc.
HSBC Holdings plc Annual Report on Form 20-F |
99 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Legal entity reported and constant currency results (continued) | ||||||||||
2024 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities1 | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | ||||||||||
– Reported | 12,752 | 9,557 | 34,053 | 2,504 | 4,264 | 462 | 3,573 | 3,303 | (4,614) | 65,854 |
– Currency translation | 405 | 296 | 13 | 1 | — | (27) | (163) | (380) | 10 | 155 |
– Constant currency | 13,157 | 9,853 | 34,066 | 2,505 | 4,264 | 435 | 3,410 | 2,923 | (4,604) | 66,009 |
ECL | ||||||||||
– Reported | (405) | (211) | (1,532) | (198) | (81) | (40) | (864) | (93) | 10 | (3,414) |
– Currency translation | (14) | (6) | (1) | — | 1 | 2 | 24 | 15 | 1 | 22 |
– Constant currency | (419) | (217) | (1,533) | (198) | (80) | (38) | (840) | (78) | 11 | (3,392) |
Operating expenses | ||||||||||
– Reported | (5,135) | (6,723) | (14,329) | (1,192) | (3,351) | (236) | (1,994) | (1,981) | 1,898 | (33,043) |
– Currency translation | (162) | (258) | (14) | — | — | 14 | 84 | 240 | (7) | (103) |
– Constant currency | (5,297) | (6,981) | (14,343) | (1,192) | (3,351) | (222) | (1,910) | (1,741) | 1,891 | (33,146) |
Share of profit/(loss) in associates and joint ventures | ||||||||||
– Reported | 1 | 22 | 2,278 | — | — | — | 15 | 600 | (4) | 2,912 |
– Currency translation | — | 1 | — | — | — | — | (1) | 1 | — | 1 |
– Constant currency | 1 | 23 | 2,278 | — | — | — | 14 | 601 | (4) | 2,913 |
Profit before tax | ||||||||||
– Reported | 7,213 | 2,645 | 20,470 | 1,114 | 832 | 186 | 730 | 1,829 | (2,710) | 32,309 |
– Currency translation | 229 | 33 | (2) | 1 | 1 | (11) | (56) | (124) | 4 | 75 |
– Constant currency | 7,442 | 2,678 | 20,468 | 1,115 | 833 | 175 | 674 | 1,705 | (2,706) | 32,384 |
Loans and advances to customers (net) | ||||||||||
– Reported | 272,973 | 103,464 | 449,940 | 20,440 | 55,786 | — | 23,439 | 4,617 | (1) | 930,658 |
– Currency translation | 18,878 | 10,852 | 6,722 | 9 | — | — | 3,607 | 51 | 1 | 40,120 |
– Constant currency | 291,851 | 114,316 | 456,662 | 20,449 | 55,786 | — | 27,046 | 4,668 | — | 970,778 |
Customer accounts | ||||||||||
– Reported | 340,233 | 297,785 | 845,284 | 34,808 | 99,278 | — | 27,525 | 9,999 | 43 | 1,654,955 |
– Currency translation | 23,529 | 26,782 | 9,773 | 28 | — | — | 4,236 | (62) | (1) | 64,285 |
– Constant currency | 363,762 | 324,567 | 855,057 | 34,836 | 99,278 | — | 31,761 | 9,937 | 42 | 1,719,240 |
1Other trading entities includes the results of entities located in 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. These entities had an aggregated impact on the Group’s reported profit before tax of $1.4bn, and constant
currency profit before tax of $1.4bn.
Legal entity results: notable items (continued) | ||||||||||
2024 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | ||||||||||
Disposals, acquisitions and related costs1 | — | (148) | — | — | — | — | — | (23) | (1,172) | (1,343) |
Early redemption of legacy securities | — | — | — | — | — | — | — | — | (237) | (237) |
Operating expenses | ||||||||||
Disposals, acquisitions and related costs | 8 | (9) | — | — | (29) | (36) | — | (61) | (72) | (199) |
Restructuring and other related costs2 | 3 | 15 | (5) | (2) | (4) | — | — | (9) | (32) | (34) |
1Includes a $1.0bn loss on disposal and a $5.2bn loss on the recycling in foreign currency translation reserve losses and other reserves arising on sale of our
business in Argentina. This was partly offset by 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 sales proceeds, the recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn of other reserves losses.
2Amounts relate to organisational simplification provision recognised in 2024 and reversals of restructuring provisions recognised during 2022.
HSBC Holdings plc Annual Report on Form 20-F |
100 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Selected countries/territories results (continued) | |||||
2024 | |||||
UK1 | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | |||||
– Reported | 21,017 | 22,038 | 4,078 | 4,216 | 3,573 |
– Currency translation | 704 | 18 | 3 | — | (163) |
– Constant currency | 21,721 | 22,056 | 4,081 | 4,216 | 3,410 |
ECL | |||||
– Reported | (526) | (1,273) | (121) | (81) | (864) |
– Currency translation | (13) | (1) | — | — | 24 |
– Constant currency | (539) | (1,274) | (121) | (81) | (840) |
Operating expenses | |||||
– Reported | (13,725) | (8,886) | (2,971) | (3,350) | (1,994) |
– Currency translation | (420) | (6) | (6) | — | 84 |
– Constant currency | (14,145) | (8,892) | (2,977) | (3,350) | (1,910) |
Share of profit/(loss) in associates and joint ventures | |||||
– Reported | 24 | 8 | 2,241 | — | 15 |
– Currency translation | — | 1 | 2 | — | (1) |
– Constant currency | 24 | 9 | 2,243 | — | 14 |
Profit before tax | |||||
– Reported | 6,790 | 11,887 | 3,227 | 785 | 730 |
– Currency translation | 271 | 12 | (1) | — | (56) |
– Constant currency | 7,061 | 11,899 | 3,226 | 785 | 674 |
Loans and advances to customers (net) | |||||
– Reported | 313,925 | 272,152 | 44,551 | 55,786 | 23,439 |
– Currency translation | 21,709 | (629) | 1,956 | — | 3,607 |
– Constant currency | 335,634 | 271,523 | 46,507 | 55,786 | 27,046 |
Customer accounts | |||||
– Reported | 524,251 | 575,141 | 63,169 | 99,278 | 27,525 |
– Currency translation | 36,254 | (1,330) | 2,773 | — | 4,236 |
– Constant currency | 560,505 | 573,811 | 65,942 | 99,278 | 31,761 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo
Group.
Selected countries/territories results: notable items (continued) | |||||
2024 | |||||
UK | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | |||||
Disposals, acquisitions and related costs1 | 285 | — | — | — | — |
Early redemption of legacy securities | (237) | — | — | — | — |
Operating expenses | |||||
Disposals, acquisitions and related costs | (50) | (2) | (7) | (28) | — |
Restructuring and other related costs | (42) | (4) | — | (4) | — |
1Includes fair value movements on the foreign exchange hedging of the sale of our banking business in Canada, which is booked in HSBC Overseas Holdings (UK)
Limited.
HSBC Holdings plc Annual Report on Form 20-F |
101 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Business segments and legal entities | ||||||||||||
Legal entity reported and constant currency results (continued) | ||||||||||
2023 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities1 | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | ||||||||||
– Reported | 13,405 | 9,289 | 31,899 | 2,425 | 3,863 | 1,966 | 3,313 | 4,729 | (4,831) | 66,058 |
– Currency translation | 775 | 287 | (86) | 2 | — | (67) | (250) | (1,800) | 121 | (1,018) |
– Constant currency | 14,180 | 9,576 | 31,813 | 2,427 | 3,863 | 1,899 | 3,063 | 2,929 | (4,710) | 65,040 |
ECL | ||||||||||
– Reported | (523) | (212) | (1,641) | (90) | (94) | (46) | (696) | (279) | 134 | (3,447) |
– Currency translation | (30) | (15) | (2) | (1) | — | 1 | 48 | 193 | 3 | 197 |
– Constant currency | (553) | (227) | (1,643) | (91) | (94) | (45) | (648) | (86) | 137 | (3,250) |
Operating expenses | ||||||||||
– Reported | (4,612) | (6,386) | (13,395) | (1,096) | (3,251) | (1,049) | (1,826) | (2,635) | 2,180 | (32,070) |
– Currency translation | (283) | (330) | 16 | — | — | 36 | 139 | 910 | (109) | 379 |
– Constant currency | (4,895) | (6,716) | (13,379) | (1,096) | (3,251) | (1,013) | (1,687) | (1,725) | 2,071 | (31,691) |
Share of profit/(loss) in associates and joint ventures | ||||||||||
– Reported | — | (52) | (696) | — | — | — | 14 | 544 | (3) | (193) |
– Currency translation | — | — | (102) | — | — | — | (1) | — | (1) | (104) |
– Constant currency | — | (52) | (798) | — | — | — | 13 | 544 | (4) | (297) |
Profit before tax | ||||||||||
– Reported | 8,270 | 2,639 | 16,167 | 1,239 | 518 | 871 | 805 | 2,359 | (2,520) | 30,348 |
– Currency translation | 462 | (58) | (174) | 1 | — | (30) | (64) | (697) | 14 | (546) |
– Constant currency | 8,732 | 2,581 | 15,993 | 1,240 | 518 | 841 | 741 | 1,662 | (2,506) | 29,802 |
Loans and advances to customers (net) | ||||||||||
– Reported | 270,208 | 95,750 | 455,315 | 20,072 | 54,829 | — | 26,410 | 15,951 | — | 938,535 |
– Currency translation | 13,974 | 5,357 | 186 | 7 | — | — | (1,595) | (758) | — | 17,171 |
– Constant currency | 284,182 | 101,107 | 455,501 | 20,079 | 54,829 | — | 24,815 | 15,193 | — | 955,706 |
Customer accounts | ||||||||||
– Reported | 339,611 | 274,733 | 801,430 | 31,341 | 99,607 | — | 29,423 | 35,326 | 176 | 1,611,647 |
– Currency translation | 17,563 | 14,913 | 1,855 | 17 | — | — | (1,777) | (3,218) | — | 29,353 |
– Constant currency | 357,174 | 289,646 | 803,285 | 31,358 | 99,607 | — | 27,646 | 32,108 | 176 | 1,641,000 |
1Other trading entities includes the results of entities located in Oman, 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. These entities had an aggregated impact on the Group’s reported profit before tax of $1.3bn and
constant currency profit before tax of $1.1bn.
Legal entity results: notable items (continued) | ||||||||||
2023 | ||||||||||
HSBC UK Bank plc | HSBC Bank plc | The Hongkong and Shanghai Banking Corporation Limited | HSBC Bank Middle East Limited | HSBC North America Holdings Inc. | HSBC Bank Canada | Grupo Financiero HSBC, S.A. de C.V. | Other trading entities | Holding companies, shared service centres and intra-Group eliminations | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Revenue | ||||||||||
Disposals, acquisitions and related costs1,2,3 | 1,591 | (14) | — | — | — | — | — | — | (279) | 1,298 |
Fair value movements on financial instruments4 | — | — | — | — | — | — | — | — | 14 | 14 |
Restructuring and other related costs | — | 361 | — | — | — | — | — | — | (361) | — |
Disposal losses on Markets Treasury repositioning | (145) | (94) | (473) | (20) | (246) | — | — | — | 1 | (977) |
Operating expenses | ||||||||||
Disposals, acquisitions and related costs | (45) | (111) | — | — | (11) | (115) | — | — | (39) | (321) |
Restructuring and other related costs5 | 20 | 30 | 10 | 2 | 10 | — | 6 | 2 | 56 | 136 |
Impairment loss of interest in BoCom associate6 | — | — | (3,000) | — | — | — | — | — | — | (3,000) |
1 Includes the impact of the sale of our retail banking operations in France.
2 Includes the gain of $1.6bn recognised in respect of the acquisition of SVB UK.
3 Includes fair value movements on the foreign exchange hedging of the proceeds from the sale of our banking business in Canada.
4 Fair value movements on non-qualifying hedges in HSBC Holdings.
5 Balances relate to reversals of restructuring provisions recognised during 2022.
6 Includes an impairment loss of $3.0bn recognised in respect of the Group’s investment in BoCom.
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Business segments and legal entities | ||||||||||||
Selected countries/territories results (continued) | |||||
2023 | |||||
UK1 | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | |||||
– Reported | 19,092 | 20,611 | 3,923 | 3,796 | 3,313 |
– Currency translation | 1,310 | 86 | (59) | — | (250) |
– Constant currency | 20,402 | 20,697 | 3,864 | 3,796 | 3,063 |
ECL | |||||
– Reported | (594) | (1,529) | (93) | (94) | (696) |
– Currency translation | (35) | (5) | (2) | — | 48 |
– Constant currency | (629) | (1,534) | (95) | (94) | (648) |
Operating expenses | |||||
– Reported | (12,485) | (8,244) | (2,713) | (3,251) | (1,826) |
– Currency translation | (726) | (33) | 37 | — | 139 |
– Constant currency | (13,211) | (8,277) | (2,676) | (3,251) | (1,687) |
Share of profit/(loss) in associates and joint ventures | |||||
– Reported | (53) | 30 | (746) | — | 14 |
– Currency translation | 1 | 1 | (102) | — | (1) |
– Constant currency | (52) | 31 | (848) | — | 13 |
Profit before tax | |||||
– Reported | 5,960 | 10,868 | 371 | 451 | 805 |
– Currency translation | 550 | 49 | (126) | — | (64) |
– Constant currency | 6,510 | 10,917 | 245 | 451 | 741 |
Loans and advances to customers (net) | |||||
– Reported | 309,262 | 279,551 | 44,275 | 54,829 | 26,410 |
– Currency translation | 15,994 | 1,013 | 685 | — | (1,595) |
– Constant currency | 325,256 | 280,564 | 44,960 | 54,829 | 24,815 |
Customer accounts | |||||
– Reported | 508,181 | 543,504 | 56,006 | 99,607 | 29,423 |
– Currency translation | 26,280 | 1,969 | 868 | — | (1,777) |
– Constant currency | 534,461 | 545,473 | 56,874 | 99,607 | 27,646 |
1UK includes HSBC UK Bank plc (ring-fenced bank), HSBC Bank plc (non-ring-fenced bank), the ultimate holding company, HSBC Holdings plc, and the ServCo
Group.
Selected countries/territories results: notable items (continued) | |||||
2023 | |||||
UK | Hong Kong | Mainland China | US | Mexico | |
$m | $m | $m | $m | $m | |
Revenue | |||||
Disposals, acquisitions and related costs1 | 1,272 | — | — | — | — |
Fair value movements on financial instruments | 14 | — | — | — | — |
Disposal losses on Markets Treasury repositioning | (239) | (473) | — | (246) | — |
Operating expenses | |||||
Disposals, acquisitions and related costs | (71) | (1) | (5) | (11) | — |
Restructuring and other related costs | 75 | 9 | 4 | 10 | 6 |
Impairment loss of interest in BoCom associate | — | — | (3,000) | — | — |
1Includes the impairment gain relating to the sale of our retail banking operations in France.
Analysis by country/territory
Profit/(loss) before tax by country/territory within business segments | ||||||
2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
UK1 | (346) | 6,687 | (487) | 75 | (405) | 5,524 |
– of which: HSBC UK Bank plc (ring-fenced bank) | — | 7,044 | 161 | 135 | 68 | 7,408 |
– of which: HSBC Bank plc (non-ring-fenced bank) | — | — | 758 | 375 | (145) | 988 |
– of which: Holdings and other | (346) | (357) | (1,406) | (435) | (328) | (2,872) |
France | — | — | 116 | (71) | (1,566) | (1,521) |
Germany | — | — | 46 | 147 | (57) | 136 |
Hong Kong | 9,891 | — | 1,770 | 1,948 | (583) | 13,026 |
Australia | — | — | 519 | 159 | (14) | 664 |
India | — | 12 | 1,500 | 88 | 266 | 1,866 |
Indonesia | — | — | 172 | 3 | (1) | 174 |
Mainland China2 | 5 | — | 888 | 98 | 96 | 1,087 |
Malaysia | 1 | — | 367 | 168 | (6) | 530 |
Singapore | 2 | — | 967 | 598 | (29) | 1,538 |
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
Profit/(loss) before tax by country/territory within business segments (continued) | ||||||
2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Taiwan | — | — | 277 | 144 | (10) | 411 |
Egypt | — | 1 | 453 | 100 | (5) | 549 |
UAE | — | — | 547 | 283 | (51) | 779 |
Saudi Arabia3 | — | — | 97 | — | 665 | 762 |
US | — | — | 1,165 | 152 | (205) | 1,112 |
Canada | — | — | — | — | 6 | 6 |
Mexico | — | — | 497 | 195 | (42) | 650 |
Other | 23 | 5 | 2,492 | 280 | (186) | 2,614 |
Year ended 31 Dec 2025 | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
2024 | ||||||
$m | $m | $m | $m | $m | $m | |
UK1 | (288) | 6,605 | (457) | 85 | 845 | 6,790 |
– of which: HSBC UK Bank plc (ring-fenced bank) | — | 6,889 | 146 | 106 | 72 | 7,213 |
– of which: HSBC Bank plc (non-ring-fenced bank) | — | — | 754 | 534 | (359) | 929 |
– of which: Holdings and other | (288) | (284) | (1,357) | (555) | 1,132 | (1,352) |
France | — | — | 322 | 61 | (153) | 230 |
Germany | — | — | 182 | 27 | 5 | 214 |
Hong Kong | 9,377 | — | 1,373 | 1,619 | (482) | 11,887 |
Australia | — | — | 477 | 141 | (9) | 609 |
India | — | — | 1,323 | 96 | 269 | 1,688 |
Indonesia | — | — | 219 | 7 | (5) | 221 |
Mainland China2 | 9 | — | 891 | (154) | 2,481 | 3,227 |
Malaysia | — | — | 374 | 143 | (3) | 514 |
Singapore | 1 | — | 823 | 572 | (21) | 1,375 |
Taiwan | — | — | 293 | 113 | (8) | 398 |
Egypt | — | — | 501 | 122 | (16) | 607 |
UAE | — | — | 583 | 371 | (83) | 871 |
Saudi Arabia3 | — | — | 112 | — | 596 | 708 |
US | — | — | 909 | 74 | (198) | 785 |
Canada4 | — | — | 153 | 70 | 4,503 | 4,726 |
Mexico | — | — | 542 | 185 | 3 | 730 |
Other5 | 22 | — | 2,787 | 440 | (6,520) | (3,271) |
Year ended 31 Dec 2024 | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
2023 | ||||||
$m | $m | $m | $m | $m | $m | |
UK1 | (346) | 7,623 | (1,011) | (106) | (200) | 5,960 |
– of which: HSBC UK Bank plc (ring-fenced bank) | — | 7,922 | 144 | 114 | 90 | 8,270 |
– of which: HSBC Bank plc (non-ring fenced bank) | — | — | 416 | 396 | 177 | 989 |
– of which: Holdings and other | (346) | (299) | (1,571) | (616) | (467) | (3,299) |
France | — | — | 364 | (36) | 10 | 338 |
Germany | — | — | 273 | 43 | 4 | 320 |
Hong Kong | 8,760 | — | 1,150 | 1,262 | (304) | 10,868 |
Australia | — | — | 403 | 178 | (15) | 566 |
India | — | — | 1,171 | 57 | 289 | 1,517 |
Indonesia | — | — | 191 | 24 | (7) | 208 |
Mainland China2 | 31 | — | 976 | (96) | (540) | 371 |
Malaysia | — | — | 377 | 111 | (21) | 467 |
Singapore | — | — | 879 | 234 | (31) | 1,082 |
Taiwan | — | — | 270 | 99 | (7) | 362 |
Egypt | — | — | 401 | 141 | (11) | 531 |
UAE | — | — | 589 | 387 | (83) | 893 |
Saudi Arabia3 | — | — | 118 | — | 539 | 657 |
US | — | — | 624 | 225 | (398) | 451 |
Canada | — | — | 681 | 293 | (96) | 878 |
Mexico | — | — | 520 | 316 | (31) | 805 |
Other | 44 | — | 3,179 | 349 | 502 | 4,074 |
Year ended 31 Dec 2023 | 8,489 | 7,623 | 11,155 | 3,481 | (400) | 30,348 |
1 UK includes results from the ultimate holding company, HSBC Holdings plc, and the ServCo Group.
2Includes our share of the profits of our associate, BoCom. Amounts in 2025 include a $1.1bn loss on dilution of our shareholding in BoCom and a $1.0bn
impairment loss on Group’s investment in BoCom. See Note 18 on pages 345 to 348. Amounts in 2023 include an impairment loss of $3.0bn recognised in
respect of the Group’s investment in BoCom.
3Includes the results of HSBC Saudi Arabia and our share of the profits of our associate, Saudi Awwal Bank.
4Corporate Centre in 2024 includes a gain on the sale of our banking business in Canada excluding the fair value movements on the foreign exchange hedging of
the sale which is booked in HSBC Overseas Holdings (UK) Limited.
5Corporate Centre in 2024 includes a loss of $6.2bn relating to the sale of our business in Argentina and inter-company debt eliminations of $0.3bn.
HSBC Holdings plc Annual Report on Form 20-F |
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Business segments and legal entities | ||||||||||||
The following commentary compares business segment financial
performance on a constant currency basis for the year ended 31
December 2024 with 31 December 2023, represented based on our
reportable segments under IFRS 8 'Operating Segments' effective
from 1 January 2025.
ÑFor business segment performance commentary for the year ended 31
December 2025 compared with 31 December 2024, see pages 19 to 27.
Hong Kong Business
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $9.1bn was $0.6bn or 7% higher than in 2023 on a
constant currency basis.
Revenue of $15.0bn was $0.5bn or 4% higher on a constant currency
basis.
Banking NII of $12.0bn fell $0.1bn or 1%. This was due to the impact
of lower margins in 2024 relative to 2023 but partly offset by deposit
balance growth.
Fee and other income of $3.1bn was up $0.3bn or 9%.
–In Wealth, investment distribution revenue grew by $0.4bn or 31%
driven by higher sales of mutual funds, structured products and
bonds due to our focus on investment in Wealth and improved
market sentiment.
–In Other, revenue decreased by $0.1bn due to lower revenue
allocated from Markets Treasury.
Notable items in 2023 include $0.4bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL were $1.1bn, a decrease of $0.4bn compared with 2023 on a
constant currency basis, reflecting a reduction in ECL in the commercial
real estate sector in 2024.
Operating expenses of $4.8bn were $0.3bn higher on a constant
currency basis, reflecting continued investments in Wealth, higher
spend and investment in technology, higher performance-related pay
and inflationary impacts. These were partly offset by continued cost
discipline.
UK Business
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $6.8bn was $1.2bn or (15)% lower than in 2023 on
a constant currency basis.
Revenue of $12.3bn was $1.1bn or (8)% lower on a constant currency
basis.
Banking NII of $10.4bn increased by $0.5bn or 4.6% despite two base
rate cut in 2024. The increase reflected balance sheet growth, the full
year impact of our acquisition of SVB UK, and benefit from our
structural hedges. These increases were partly offset by mortgage
pricing pressures, as well as a change in deposit mix towards interest-
bearing deposit accounts.
Fee and other income of $2.0bn was broadly stable.
Notable items in 2023 include the non-recurrence of a $1.7bn gain
recognised on the acquisition of SVB UK which was partly offset by the
non-recurrence of $0.1bn disposal losses relating to Markets Treasury
repositioning and risk management.
ECL were $0.4bn, a decrease of $0.1bn compared with 2023 on a
constant currency basis, reflecting lower stage 3 charges combined
with improved forward economic outlook in 2024.
Operating expenses of $5.1bn were $0.3bn higher on a constant
currency basis. This includes the Bank of England levy introduced in
2024. The increase also reflects incremental costs in IVB following the
acquisition of SVB, higher spend and investment in technology, higher
performance-related pay and inflationary impacts. These were partly
offset by continued cost discipline.
Corporate and Institutional Banking
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $11.3bn was $0.8bn or 8% higher than in 2023 on a
constant currency basis.
Revenue of $26.8bn was $2.0bn or 8% higher on a constant currency
basis.
Banking NII of $14.5bn was up $1.1bn or 8%. This was largely driven
by the hyperinflationary impacts in Argentina along with higher
allocated revenue from Markets Treasury.
Fee and other income of $12.3bn was up $0.6bn or 5%.
–In Debt and Equity Markets, fee and other income rose by $0.6bn or
38.3%. In Equities, fee and other income increased amid improved
market sentiment, which drove higher client demand for wealth
products, as well as higher levels of volatility in 2H24. In Debt
Markets the growth reflected client demand for financing products
and increased volumes, primarily from emerging markets credit,
–In Investment Banking, fee and other income increased by $0.1bn
or 11%, due to higher advisory and financing activity, supported by
the recovery in global capital markets.
–In Wholesale Transaction Banking, fee and other income fell by
$0.1bn or 1% driven by a decrease in Foreign Exchange as client
activity remained resilient given the market environment, and the
impact of the disposal of our banking business in Canada. This was
partly offset by an increase fee and other income in GPS reflecting
business initiatives, repricing and transaction volume growth, and in
GTS reflecting growth from guarantees.
Notable items in 2023 included $0.4bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL charges of $0.9bn were $0.4bn higher on a constant currency
basis. ECLs in 2024 reflected higher CRE charges in Asia, and in the
Middle East reflecting higher oil and gas and construction sector
charges.
Operating expenses of $14.6bn were $0.9bn or 6% higher on a
constant currency basis. The increase reflected hyperinflationary
impacts in Argentina, incremental costs following the acquisition of
SVB UK, higher spend and investment in technology, and inflationary
impacts. These increases were in part mitigated by continued cost
discipline and lower costs following the disposal of our banking
business in Canada.
International Wealth and Premier
Banking
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $4.0bn was $0.8bn or 24% higher than in 2023 on a
constant currency basis.
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Business segments and legal entities | ||||||||||||
Revenue of $13.8bn was $$1.4bn or 12% higher on a constant
currency basis.
Banking NII of $7.6bn was $0.4bn higher or 5%. This was driven by
increase in revenue allocated from Markets Treasury and continued
balance sheet growth, partly offset by narrower margins and our
business disposals in Canada and France.
Fee and other income of $6.2bn was up $0.8bn or 14% driven by
strong growth across all products in Wealth.
In Wealth, fee and other income of $5.6bn was up $1.0bn or 21%.
–Insurance increased by $0.5bn, reflecting a higher contractual
service margin (‘CSM’) release, largely due to continued growth in
the CSM balance, as well as due to the impact of corrections to
historical valuation estimates recognised in 2023.
–Private Bank increased by $0.3bn, primarily driven by a strong
performance in brokerage and trading in our entities in Asia.
–Asset Management increased by $0.1bn, driven by an increase in
assets under management due to inflows and positive market
movements partly offset by the impact of our business disposal in
Canada and France.
Notable items in 2023 included $0.2bn impact of the sale of our retail
banking operations in France, and $0.1bn from the non-recurrence of
disposal losses relating to Markets Treasury repositioning and risk
management.
ECL were $1.0bn, an increase of $0.3bn compared with 2023 on a
constant currency basis, primarily reflecting higher charges in our legal
entity in Mexico, mainly in our unsecured portfolio, due to portfolio
growth and unemployment trends.
Operating expenses of $8.9bn were $0.4bn higher on a constant
currency basis, reflecting continued investments in Wealth in Asia,
higher spend and investment in technology, higher performance-related
pay and from the impact of higher inflation. These were partly offset by
continued cost discipline and the impact of the business disposals in
France and Canada.
Corporate Centre
2024 compared with 2023
Financial performance (on a constant
currency basis)
Profit before tax of $1.2bn was $1.6bn higher than in 2023 on a
constant currency basis.
Revenue of $2.0bn was $1.9bn lower on a constant currency basis,
primarily due to the impact of notable items.
In 2024, these included a loss on disposal of $1.0bn, as well as foreign
currency and other reserve losses of $5.2bn, following the disposal of
our business in Argentina. They also included a loss of $0.1bn related to
the recycling of reserves following the completion of the sale of our
business in Russia, and a $0.2bn loss on the early redemption of legacy
securities. These were partly offset by a $4.8bn gain on the sale of our
banking business in Canada, inclusive of fair value gains on related
hedging and recycling of related reserves.
In 2023, notable items included fair value losses of $0.3bn relating to
the hedging of the proceeds of the sale of our business in Canada.
Banking NII in 2024 removes from NII the internal costs to funding
trading and fair value net assets, predominately in CIB, of $11.4bn
(2023: $8.7bn). Banking NII was a net expense of $0.7bn. This was
$0.5bn higher than in 2023. The movement in Banking NII reflected the
impact of the transfer of the retained French retail lending portfolio
from IWPB.
Fee and other income of $0.4bn was broadly stable.
Operating expenses decreased by $0.4bn on a constant currency basis.
This included a lower impact from levies, including in relation to the
FDIC special assessment and the UK bank levy.
Share of profit from associates and joint ventures of $2.9bn increased
by $3.2bn on a constant currency basis, primarily reflecting the non-
recurrence of an impairment charge of $3.0bn in 2023 relating to our
investment in BoCom and an increase in share of profit from SAB.
HSBC Holdings plc Annual Report on Form 20-F |
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Alternative performance measures
The following tables provide the calculation, definition and reconciliation of alternative performance measures to the closest reported performance
measure. For further details and an explanation of their basis of preparation, including constant currency, notable items and material notable items,
and the impact of strategic transactions and hyperinflationary accounting, see page 65.
Alternative performance measure | Definition | ||||
Reported revenue excluding notable items | Reported revenue after excluding notable items reported under revenue | ||||
Reported profit before tax excluding notable items | Reported profit before tax after excluding notable items reported under revenue less notable items reported under operating expenses | ||||
Constant currency revenue excluding notable items | Reported revenue excluding notable items and the impact of foreign exchange translation | ||||
Constant currency profit before tax excluding notable items | Reported profit before tax excluding notable items and the impact of foreign exchange translation | ||||
Constant currency revenue excluding notable items and strategic transactions | Reported revenue excluding notable items, strategic transactions and the impact of foreign exchange translation | ||||
Constant currency profit before tax excluding notable items and strategic transactions | Reported profit before tax excluding notable items, strategic transactions and the impact of foreign exchange translation | ||||
Return on average ordinary shareholders’ equity (‘RoE’) | Profit attributable to the ordinary shareholders | ||||
Average ordinary shareholders’ equity | |||||
Return on average tangible equity (‘RoTE‘) | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other intangible assets | ||||
Average ordinary shareholders’ equity adjusted for goodwill and intangibles | |||||
Return on average tangible equity (‘RoTE‘) excluding notable items | Profit attributable to the ordinary shareholders, excluding impairment of goodwill and other intangible assets and notable items | ||||
Average ordinary shareholders’ equity adjusted for goodwill and intangibles | |||||
Net asset value per ordinary share | Total ordinary shareholders’ equity1 | ||||
Basic number of ordinary shares in issue after deducting own shares held | |||||
Tangible net asset value per ordinary share | Tangible ordinary shareholders’ equity2 | ||||
Basic number of ordinary shares in issue after deducting own shares held | |||||
Post-tax return on average total assets | Profit after tax | ||||
Average total assets | |||||
Average total shareholders’ equity on average total assets | Average total shareholders’ equity | ||||
Average total assets | |||||
Banking net interest income | Banking net interest income adjusts our reported NII, primarily for the impact of funding trading and fair value activities reported in interest expense and to exclude third-party insurance NII3 | ||||
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances to customers | Annualised constant currency ECL | ||||
Constant currency average gross loans and advances to customers | |||||
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances to customers, including held for sale | Annualised constant currency ECL | ||||
Constant currency average gross loans and advances to customers, including held for sale | |||||
Target basis operating expenses | Reported operating expenses excluding notable items, foreign exchange translation and other excluded items | ||||
Basic earnings per share excluding material notable items and related impacts | Profit attributable to ordinary shareholders excluding material notable items and related impacts | ||||
Weighted average number of ordinary shares outstanding after deducting own shares held | |||||
Multi-jurisdictional client revenue | Total client revenue we generate from clients that hold a relationship with us that generates revenue in more than one market | ||||
1Total ordinary shareholders’ equity is total shareholders‘ equity less non-cumulative preference shares and capital securities.
2Tangible ordinary shareholders’ equity is total ordinary shareholders’ equity excluding goodwill and other intangible assets (net of deferred tax).
3For details on the calculation of banking NII, see page 69.
HSBC Holdings plc Annual Report on Form 20-F |
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Alternative performance measures | ||||||||||||
Constant currency revenue and profit before tax excluding notable items and strategic transactions | |||
Year ended | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Revenue | |||
Reported | 68,274 | 65,854 | 66,058 |
Notable items | 2,746 | 1,580 | (335) |
Reported revenue excluding notable items | 71,020 | 67,434 | 65,723 |
Currency translation1 | 157 | (888) | |
Constant currency revenue excluding notable items | 71,020 | 67,591 | 64,835 |
Constant currency impact of strategic transactions (distorting impact of operating results between periods)2 | — | (1,214) | N/A |
Constant currency revenue excluding notable items and strategic transactions | 71,020 | 66,377 | N/A |
Profit before tax | |||
Reported | 29,907 | 32,309 | 30,348 |
Notable items | 6,710 | 1,813 | 2,850 |
Reported profit before tax excluding notable items | 36,617 | 34,122 | 33,198 |
Currency translation1 | — | 59 | (357) |
Constant currency profit before tax excluding notable items | 36,617 | 34,181 | 32,841 |
Constant currency impact of strategic transactions (distorting impact of operating results between periods)2 | — | (413) | N/A |
Constant currency profit before tax excluding notable items and strategic transactions | 36,617 | 33,768 | N/A |
1Currency translation on the reported balance excluding currency translation on notable items.
2For more details of strategic transactions, please refer to page 92.
Return on average ordinary shareholders’ equity, return on average tangible equity and return on average tangible equity excluding notable items | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Profit after tax | |||
Profit attributable to the ordinary shareholders of the parent company | 21,102 | 22,917 | 22,432 |
Impairment of goodwill and other intangible assets (net of tax) | 144 | 118 | 43 |
Profit attributable to the ordinary shareholders, excluding goodwill and other intangible assets impairment | 21,246 | 23,035 | 22,475 |
Impact of notable items1 | 6,126 | 1,588 | 2,173 |
Profit attributable to the ordinary shareholders, excluding goodwill, other intangible assets impairment and notable items | 27,372 | 24,623 | 24,648 |
Equity | |||
Average total shareholders’ equity | 191,598 | 187,507 | 184,029 |
Effect of average preference shares and other equity instruments | (19,987) | (18,480) | (18,794) |
Average ordinary shareholders’ equity | 171,611 | 169,027 | 165,235 |
Effect of goodwill and other intangibles (net of deferred tax) | (12,040) | (11,626) | (11,480) |
Average tangible equity | 159,571 | 157,401 | 153,755 |
% | % | % | |
Ratio | |||
Return on average ordinary shareholders’ equity | 12.3 | 13.6 | 13.6 |
Return on average tangible equity | 13.3 | 14.6 | 14.6 |
Return on average tangible equity excluding notable items | 17.2 | 15.6 | 16.0 |
1For details of notable items please refer to Supplementary financial information on page 88.
To better align our return on average tangible equity (‘RoTE’) excluding notable items measure with market practice, from our 2025 full-year results
we no longer adjust the ‘average tangible equity‘ for the post-tax impact of notable items in each period. Comparatives have been re-presented.
HSBC Holdings plc Annual Report on Form 20-F |
108 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Alternative performance measures | ||||||||||||
The following table details the adjustments made to reported results by business segment:
Return on average tangible equity by business segment | ||||||
Year ended 31 Dec 2025 | ||||||
Hong Kong | UK | CIB | IWPB | Corporate Centre | Total | |
$m | $m | $m | $m | $m | $m | |
Profit before tax | 9,576 | 6,705 | 11,386 | 4,367 | (2,127) | 29,907 |
Tax expense | (1,604) | (1,953) | (2,414) | (987) | 182 | (6,776) |
Profit after tax | 7,972 | 4,752 | 8,972 | 3,380 | (1,945) | 23,131 |
Less attributable to: preference shareholders, other equity holders, non-controlling interests | (898) | (221) | (504) | (193) | (213) | (2,029) |
Profit attributable to ordinary shareholders of the parent company | 7,074 | 4,531 | 8,468 | 3,187 | (2,158) | 21,102 |
Other adjustments | 339 | 210 | (168) | 64 | (301) | 144 |
Profit attributable to ordinary shareholders | 7,413 | 4,741 | 8,300 | 3,251 | (2,459) | 21,246 |
Impact of notable items | 9 | 45 | 717 | 226 | 5,129 | 6,126 |
Profit attributable to ordinary shareholders, excluding notable items | 7,422 | 4,786 | 9,017 | 3,477 | 2,670 | 27,372 |
Average tangible shareholders’ equity | 20,889 | 20,936 | 55,828 | 18,313 | 43,605 | 159,571 |
RoTE (%) (annualised) | 35.5 | 22.6 | 14.9 | 17.8 | (5.6) | 13.3 |
RoTE (%), excluding notable items (annualised) | 35.5 | 22.9 | 16.2 | 19.0 | 6.1 | 17.2 |
Year ended 31 Dec 2024 | ||||||
Profit before tax | 9,121 | 6,605 | 11,407 | 3,972 | 1,204 | 32,309 |
Tax expense | (1,219) | (1,844) | (2,734) | (781) | (732) | (7,310) |
Profit after tax | 7,902 | 4,761 | 8,673 | 3,191 | 472 | 24,999 |
Less attributable to: preference shareholders, other equity holders, non-controlling interests | (944) | (225) | (487) | (158) | (268) | (2,082) |
Profit attributable to ordinary shareholders of the parent company | 6,958 | 4,536 | 8,186 | 3,033 | 204 | 22,917 |
Other adjustments | 239 | 222 | (427) | (46) | 130 | 118 |
Profit attributable to ordinary shareholders | 7,197 | 4,758 | 7,759 | 2,987 | 334 | 23,035 |
Impact of notable items | — | (9) | 18 | (34) | 1,613 | 1,588 |
Profit attributable to ordinary shareholders, excluding notable items | 7,197 | 4,749 | 7,778 | 2,953 | 1,946 | 24,623 |
Average tangible shareholders’ equity | 19,199 | 19,010 | 54,819 | 19,019 | 45,354 | 157,401 |
RoTE (%) (annualised) | 37.5 | 25.0 | 14.2 | 15.7 | 0.7 | 14.6 |
RoTE (%), excluding notable items (annualised) | 37.5 | 25.0 | 14.2 | 15.5 | 4.3 | 15.6 |
Net asset value and tangible net asset value per ordinary share | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Total shareholders’ equity | 198,225 | 184,973 | 185,329 |
Preference shares and other equity instruments | (20,716) | (19,070) | (17,719) |
Total ordinary shareholders’ equity | 177,509 | 165,903 | 167,610 |
Goodwill and intangible assets (net of deferred tax) | (12,356) | (11,608) | (11,900) |
Tangible ordinary shareholders’ equity | 165,153 | 154,295 | 155,710 |
Basic number of $0.50 ordinary shares outstanding, after deducting own shares held | 17,140 | 17,918 | 19,006 |
Value per share | $ | $ | $ |
Net asset value per ordinary share | 10.36 | 9.26 | 8.82 |
Tangible net asset value per ordinary share | 9.64 | 8.61 | 8.19 |
Post-tax return and average total shareholders’ equity on average total assets | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Profit after tax | 23,131 | 24,999 | 24,559 |
Average total shareholders’ equity | 191,598 | 187,507 | 184,029 |
Average total assets | 3,198,379 | 3,062,474 | 3,059,887 |
Ratio | % | % | % |
Post-tax return on average total assets | 0.7 | 0.8 | 0.8 |
Average total shareholders’ equity to average total assets | 5.99 | 6.12 | 6.01 |
HSBC Holdings plc Annual Report on Form 20-F |
109 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Alternative performance measures | ||||||||||||
Expected credit losses and other credit impairment charges as % of average gross loans and advances to customers and expected credit losses and other credit impairment charges as % of average gross loans and advances to customers, including held for sale | |||
2025 | 2024 | 2023 | |
$m | $m | $m | |
Expected credit losses and other credit impairment charges (‘ECL’) | (3,850) | (3,414) | (3,447) |
Currency translation | — | 22 | 197 |
Constant currency | (3,850) | (3,392) | (3,250) |
Average gross loans and advances to customers | 975,905 | 952,484 | 955,585 |
Currency translation | 12,891 | 23,848 | 30,056 |
Constant currency | 988,796 | 976,332 | 985,641 |
Average gross loans and advances to customers, including held for sale | 977,814 | 968,785 | 1,020,992 |
Currency translation | 12,959 | 23,308 | 29,489 |
Constant currency | 990,773 | 992,093 | 1,050,481 |
Ratio | % | % | % |
Expected credit losses and other credit impairment charges (annualised) as a % of average gross loans and advances to customers (%) | 0.39 | 0.35 | 0.33 |
Expected credit losses and other credit impairment charges (annualised) as a % of average gross loans and advances to customers, including held for sale (%) | 0.39 | 0.34 | 0.31 |
Target basis operating expenses
Target basis operating expenses | ||
2025 | 2024 | |
$m | $m | |
Reported operating expenses | 36,428 | 33,043 |
Notable items | (2,964) | (233) |
– disposals, wind-downs, acquisitions and related costs | (502) | (199) |
– restructuring and other related costs | (1,030) | (34) |
– legal provisions1,2 | (1,432) | — |
Currency translation3 | — | 121 |
Excluding the constant currency impact of the sale of our business in Argentina and banking business in Canada4 | — | (509) |
Excluding the impact of retranslating prior year costs of hyperinflationary economies at a constant currency foreign exchange rate | — | 56 |
Target basis operating expenses | 33,464 | 32,478 |
1During 2025, a $0.3bn provision was recognised in connection with certain historical trading activities in HSBC Bank plc.
2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard
L. Madoff Investment Securities LLC fraud.
3Currency translation on reported operating expenses, excluding currency translation on notable items.
4This represents the business as usual costs which are not classified as notable items relating to our business in Argentina and banking business in Canada, on a
constant currency basis. This does not include the disposal costs which relate to these transactions.
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Alternative performance measures | ||||||||||||
Basic earnings per share excluding material notable items and related impacts
Basic earnings per share excluding material notable items and related impacts | ||
2025 | 2024 | |
$m | $m | |
Profit attributable to shareholders of company | 22,285 | 23,979 |
Coupon payable on capital securities classified as equity | (1,183) | (1,062) |
Profit attributable to ordinary shareholders of company | 21,102 | 22,917 |
Dilution and impairment losses of interest in associate | 1,956 | — |
Legal provisions2 | 1,110 | — |
Impact of disposals, wind-downs, acquisitions and related costs | 2,077 | 1,137 |
– of which: impact of the sale of our banking business in Canada1 | 1 | (4,963) |
– of which: impact of the sale of our business in Argentina | 98 | 6,161 |
– of which: other strategic transactions3 | 1,978 | (61) |
Profit attributable to ordinary shareholders of company excluding material notable items and related impacts | 26,245 | 24,054 |
Number of shares | ||
Weighted average basic number of ordinary shares (millions) after deducting own shares held | 17,427 | 18,357 |
Basic earnings per share ($) | 1.21 | 1.25 |
Basic earnings per share excluding material notable items and related impacts ($) | 1.51 | 1.31 |
Dividend per ordinary share (in respect of the period) ($)4 | 0.75 | 0.87 |
Dividend payout ratio (%) (dividend per ordinary share divided by basic earnings per share excluding material notable items and related impacts) | 50% | 50% |
1Represents gain on sale of our banking business in Canada recognised on completion, inclusive of the earnings recognised by the banking business from 30 June
2022, the recycling of losses in foreign currency translation reserves and other reserves, and gain on the foreign exchange hedging of the sale proceeds.
2During 2025, a $1.1bn provision was recognised in connection with a claim brought by Herald Fund SPC in the Luxembourg District Court, relating to the Bernard
L. Madoff Investment Securities LLC fraud.
3For the year ended 31 December 2025, this includes a loss of $1.5bn from the recycling of other reserves associated with the sale of retained home loan
portfolio, after the sale of our retail banking operations in France. Additionally, it also includes the loss of $0.3bn recognised from the sale of our French and UK
life insurance businesses.
4In 2024, dividend per share includes 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.
Multi-jurisdictional client revenue
Multi-jurisdictional client revenue is a financial metric we use to assess
our ability to drive value from our international network.
In our wholesale businesses, we identify a client as multi-jurisdictional if
they hold a relationship with us that generates revenue in any market
outside of where the primary relationship is managed. A client is
defined as a master group (HSBC’s own client groupings) that includes
both the parent and, where relevant, any subsidiaries.
Multi-jurisdictional client revenue is a component of wholesale client
revenue and represents the total client revenue we generate from
multi-jurisdictional clients. Wholesale client revenue is derived by
excluding from wholesale revenue the revenue we generate from Fixed
Income, Equities, Commodities, and non-cash foreign exchange, as
well as other non-client revenue.
Wholesale multi-jurisdictional client revenue | ||
2025 | 2024 | |
$bn | $bn | |
Wholesale revenue | 40.3 | 39.1 |
Allocated revenue and other1 | (2.2) | (1.3) |
Fixed Income, Equities, Commodities, and non-Cash FX | (6.4) | (5.6) |
Wholesale client revenue | 31.7 | 32.3 |
– clients banked in multiple jurisdictions (‘multi-jurisdictional’) | 20.0 | 20.0 |
– domestic only clients2 | 11.7 | 12.3 |
1Including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital
held in the business segment.
2The fall in wholesale client revenue from domestic only clients primarily reflected the sale of our businesses in Canada and Argentina in 2024, as well as the
impact of lower interest rates.
HSBC Holdings plc Annual Report on Form 20-F |
111 |
Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Other information
111 | Disclosure controls |
111 | Management’s assessment of internal controls over financial reporting |
111 | Regulation and supervision |
116 | Disclosures pursuant to Section 13(r) of the Securities Exchange Act |
Disclosure controls
The Group CEO and Group CFO, with the assistance of other members
of management, carried out an evaluation of the effectiveness of the
design and operation of HSBC Holdings’ disclosure controls
and procedures as at 31 December 2025. Based upon that evaluation,
the Group CEO and Group CFO concluded that the disclosure controls
and procedures at 31 December 2025 were effective to provide
reasonable assurance that information required to be disclosed in the
reports that the company files and submits under the US Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarised and reported as and when required. There are inherent
limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only
provide reasonable assurance of achieving their control objectives.
Management’s assessment of internal
controls over financial reporting
Management is responsible for establishing and maintaining an
adequate internal control structure and procedures for financial
reporting, and has completed an assessment of the effectiveness of
the Group’s internal controls over financial reporting for the year ended
31 December 2025. In making the assessment, management used the
framework for internal control evaluation contained in the Financial
Reporting Council’s Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting (September 2014), as
well as the criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission (‘COSO’) in ‘Internal
Control-Integrated Framework (2013)’.
There have been no changes in HSBC Holdings’ internal control over
financial reporting during the year ended 31 December 2025 that have
materially affected, or are reasonably likely to materially affect, HSBC
Holdings’ internal control over financial reporting.
Based on the assessment performed, management concluded that for
the year ended 31 December 2025, the Group’s internal controls over
financial reporting were effective.
PricewaterhouseCoopers LLP, which has audited the consolidated
financial statements of the Group for the year ended 31 December
2025, has also audited the effectiveness of the Group’s internal control
over financial reporting as stated in their report on page 286.
Regulation and supervision
The ordinary shares of HSBC Holdings are listed in London, Hong Kong,
New York and Bermuda. As a result of the listing in London, HSBC
Holdings is subject to the UK Listing Rules of the FCA. As a result of
the listing in Hong Kong, HSBC Holdings is subject to The Rules
Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited (‘HKEX’). In the US, where the listing is through an
American Depositary Receipt Programme, shares are traded in the
form of American Depositary Shares (‘ADS’), which are registered with
the US Securities and Exchange Commission (‘SEC’). As a
consequence of its US listing, HSBC Holdings is also subject to the
reporting and other requirements of: the US Securities Act of 1933, as
amended; the Securities Exchange Act of 1934, as amended; and the
New York Stock Exchange’s (‘NYSE’) Listed Company Manual, in each
case as applied to foreign private issuers. In Bermuda, HSBC Holdings
is subject to the listing rules of the Bermuda Stock Exchange applicable
to companies with secondary listings.
A statement of our compliance with the provisions of the UK Corporate
Governance Code issued by the Financial Reporting Council and with
the Hong Kong Corporate Governance Code set out in Appendix 14 to
the Rules Governing the Listing of Securities on HKEX can be found in
the ‘Corporate Governance Report: Statement of Compliance’ on page
284.
Our operations throughout the world are regulated and supervised
globally by a large number of different regulatory authorities, central
banks and other bodies in those jurisdictions in which we have offices,
branches or subsidiaries. These authorities impose a variety of
requirements and controls designed to provide financial stability,
transparency in financial markets and a contribution to economic
growth. The requirements to which our operations must adhere include
those relating to capital and liquidity, disclosure standards and
restrictions on certain types of products or transaction structures,
recovery and resolution, governance standards, conduct of business
and financial crime.
The UK's Prudential Regulation Authority (‘PRA’) is the HSBC Group’s
consolidated lead regulator. HSBC Holdings is approved by, and directly
responsible to the PRA for ensuring the HSBC Group meets
consolidated prudential requirements. The Group‘s other lead UK
regulator, the FCA, supervises 11 of HSBC’s entities in the UK,
including six where the PRA is responsible for those entities‘ prudential
supervision. The FCA maintains global oversight of the Group’s
management of financial crime risk in the exercise of its wider powers
under the Financial Services and Markets Act 2000, and through the
exercise of direct supervisory powers over HSBC Holdings. In addition,
and as required under relevant local laws, each operating bank, finance
company and insurance operation within HSBC is regulated by relevant
local regulatory authorities.
UK regulation and supervision
The UK‘s financial services regulatory structure is chiefly comprised of
three regulatory bodies: the Bank of England ('BoE'); the PRA; and the
FCA.
The BoE is responsible for macro-prudential supervision, focusing on
systemic risks that may affect the UK’s financial stability. This is largely
affected through the Financial Policy Committee, a statutory body.
The BoE conducts micro-prudential regulation and supervision of
financial services firms through the PRA (also a statutory body), and in
addition to its wider role as the UK’s central bank, the BoE is the UK
resolution authority responsible for taking action to manage the failure
of certain types of financial institutions in the UK, if necessary. The
latter involves a set of responsibilities and powers that apply outside of
an actual bank failure and relate to general resolution planning, including
an assessment of any barriers to the resolution of banks, the exercise
of powers to require the removal of impediments to resolvability and
the setting of minimum requirements for own funds and eligible
liabilities (‘MREL‘), through the Banking Act and the Bank Recovery and
Resolution (Amendment) Regulations 2025.
These include own funds and liabilities that can be written down or
converted into equity capital to absorb losses or recapitalise a bank in
the event of its failure. These requirements are based on the resolution
strategy for the Group, as agreed by the BoE in consultation with our
local regulators.
The PRA and the FCA are micro-prudential supervisors. The Group’s
banking subsidiaries in the UK, such as HSBC Bank plc and HSBC UK,
are ‘dual-regulated’ firms, subject to prudential regulation by the PRA
and to conduct regulation by the FCA. Other (generally smaller, non-
bank) UK-based subsidiaries are ‘solo regulated’ by the FCA (i.e. the
FCA is responsible for both prudential and conduct regulation of those
subsidiaries). HSBC Group is subject to consolidated supervision by the
PRA.
HSBC Holdings plc Annual Report on Form 20-F |
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Strategic report | ESG review | Financial review | Risk review | Corporate Governance Report | Financial statements | Additional information | ||||||
Other information | ||||||||||||
UK banking and financial services institutions are subject to numerous
laws and regulations, plus related regulatory rules, guidance and
expectations. The primary UK statute in this context is the Financial
Services and Markets Act 2000, as amended and supplemented by
subsequent legislation and statutory instruments, in addition to EU
financial services legislation that has been assimilated into UK law
pursuant to the European Union (Withdrawal) Act 2018, as amended
(‘EUWA’). In 2023, the Financial Services and Markets Act 2023
(‘FSMA 2023’) was passed creating a new set of regulatory
frameworks, providing powers to HM Treasury and the UK’s financial
services regulators to revoke and replace EU ’assimilated’ law and to
establish new objectives, and accountability frameworks.
The PRA and FCA are together responsible for authorising and
supervising all our operating businesses in the UK that require
authorisation under the Financial Services and Markets Act 2000.
These include deposit-taking, retail banking, consumer credit, life and
general insurance, pensions, investments, mortgages, custody and
share-dealing businesses, and treasury and capital markets activity.
The FCA is also responsible for promoting effective competition in the
interests of consumers, and an independent subsidiary of the FCA, the
Payment Systems Regulator, is the economic regulator of payment
systems in the UK. Additionally, the Competition and Markets Authority
(CMA) is responsible for promoting competitive markets in the UK. It
can investigate aspects of the financial services sector where HSBC
operates, and take action against firms where it sees fit. The CMA and
FCA have established a Memorandum of Understanding for regulatory
coordination between the authorities.
The PRA and FCA set the minimum standards for authorising banks
and financial institutions engaged in regulated activities. In the UK, both
regulators may object—on prudential grounds—to any individual or
entity seeking to acquire, or holding, 10% or more of the voting rights
or shares in a regulated institution or its parent. The PRA supervises
HSBC on a consolidated basis, receiving capital adequacy information
and establishing group-wide requirements. It also conducts stress tests
across HSBC’s UK entities and the broader Group. Meanwhile, each
banking subsidiary within the Group is overseen by its respective local
regulator, which sets and monitors its capital adequacy standards.
The Group complies with capital requirements under the UK Capital
Requirements Legislative Package, which includes on-shored EU
Regulation No. 575/2013 (as amended), the PRA Rulebook, and UK law
implementing the Capital Requirements Directive.
The UK introduced the initial set of Basel 3.1 reforms in January 2022,
targeting risk-weighted assets (‘RWAs’) for counterparty risk, equity
investments in funds and market risk, and the leverage ratio. The PRA
subsequently released two near-final rule packages for the second
tranche: the first in December 2023, covering market risk, credit
valuation adjustment, and operational risk; and the second in
September 2024, addressing credit risk, the output floor and
requirements for reporting and disclosures. Additionally, the PRA also
published the first of two proposals to modify the Pillar 2A capital
framework and capital communications.
The PRA initially planned to implement the second tranche of Basel 3.1
on 1 January 2026, with a four-year phase-in for the output floor. In
January 2025, this was deferred to 1 January 2027 to align with US
timelines, and the output floor phase-in was reduced to three years.
Following the UK Government’s announcement of its 10-year Financial
Services Growth and Competitiveness Strategy in July 2025, the 1
January 2027 implementation date was confirmed for credit risk,
operational risk, credit valuation adjustment, and non-modelled market
risk. A further one-year extension was proposed for the internal model
approach to market risk, moving its implementation to 1 January 2028.
The Group is also subject to liquidity requirements, namely the Liquidity
Coverage Ratio (‘LCR’) and the Net Stable Funding Ratio (‘NSFR’) as set
out in the Liquidity Coverage Ratio (CRR) and Liquidity (CRR) Parts of
the PRA Rulebook respectively.
The PRA and FCA monitor authorised institutions through ongoing
supervision and the review of routine and ad hoc reports relating to
financial, prudential, conduct of business and financial crime matters.
They may also obtain independent reports from a Skilled Person on the
adequacy of procedures and systems covering internal controls and
governing records and accounting. The PRA meets the Group’s senior
executives regularly to discuss our adherence to its prudential
requirements. In addition, both the PRA and FCA regularly discuss with
relevant management fundamental matters relating to our business in
the UK and internationally, including areas such as strategic and
operating plans, risk control, loan portfolio composition, organisational
changes, succession planning and recovery and resolution
arrangements.
Hong Kong regulation and supervision
The Banking Ordinance provides the legal framework for banking
supervision in Hong Kong. Section 7(1) of the Ordinance provides that
the principal function of the Hong Kong Monetary Authority (‘HKMA’) is
to ‘promote the general stability and effective working of the banking
system’. The HKMA seeks to establish a regulatory framework in line
with international standards, in particular those issued by the Basel
Committee on Banking Supervision (‘Basel‘) and the Financial Stability
Board (‘FSB’). The objective is to maintain a prudential supervisory
system that underpins the general stability and effective working of the
banking system, while at the same time providing sufficient flexibility
for authorised institutions to take commercial decisions. Under the
Banking Ordinance, the HKMA is the licensing authority responsible for
the authorisation, suspension, and revocation of authorised institutions.
To provide checks and balances, the HKMA is required under the
Ordinance to consult with the Financial Secretary on important
authorisation decisions, such as suspension and involuntary revocation.
The Hongkong and Shanghai Banking Corporation Limited and its
overseas branches and subsidiaries are licensed under the Banking
Ordinance and hence subject to the supervision, regulation, and
examination of the HKMA.
The HKMA follows international practices as recommended by Basel to
supervise authorised institutions. Under the Banking Ordinance, the
HKMA imposes capital requirements on authorised institutions through
the Banking (Capital) Rules, liquidity requirements through the Banking
(Liquidity) Rules and large exposure limits through the Banking
(Exposure Limits) Rules. These rules take into account the latest
standards set by Basel. In December 2023, the HKMA published final
rules for the implementation of the Basel 3.1 standards, which became
effective on 1 January 2025.
The Banking Ordinance empowers the HKMA to collect prudential data
from authorised institutions on a routine or ad hoc basis and to require
any holding company or subsidiary or sister company of an authorised
institution to submit such information as may be required for the
exercise of the HKMA’s functions under the Ordinance. The HKMA has
the power to serve a notice of objection on persons if they are no
longer deemed to be fit and proper to be controllers of the authorised
institution, if they may otherwise threaten the interests of depositors or
potential depositors, or if they have contravened any conditions
specified by the HKMA. The HKMA may revoke authorisation in the
event of an institution’s non-compliance with the provisions of the
Banking Ordinance. These provisions require, among other things, the
furnishing of accurate reports.
To enhance the exchange of supervisory information and cooperation,
the HKMA has entered into Memoranda of Understanding (’MoU’) or
other formal arrangements with a number of banking supervisory
authorities within and outside Hong Kong, including Singapore. The
marketing of, dealing in, and provision of advice and asset management
services in relation to securities and futures in Hong Kong are subject
to the provisions of the Securities and Futures Ordinance of Hong
Kong. Entities engaging in activities regulated by the Ordinance
(including HSBC) are required to be licensed or registered with the
Securities and Futures Commission (‘SFC’). The HKMA is the front-line
regulator for banks involved in the securities and futures business.
The HKMA and the SFC work very closely to ensure that there is an
open market with a level playing field for all intermediaries in the
securities industry of Hong Kong.
Among other functions, the Securities and Futures Ordinance vests the
SFC with powers to set and enforce market regulations, including
investigating breaches of rules and market misconduct and taking
appropriate enforcement action.
HSBC Holdings plc Annual Report on Form 20-F |
113 |
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The SFC is responsible for licensing and supervising intermediaries
conducting SFC-regulated activities, such as investment advisers, fund
managers, brokers, trustees and custodians. Additionally, the SFC sets
standards for the authorisation and regulation of investment products,
and it reviews and authorises offering documents of retail investment
products to be marketed to the public.
To promote proper conduct and increase awareness of individual
responsibility and accountability, the SFC introduced and implemented
the Manager-In-Charge (‘MIC’) regime in Hong Kong. The MIC regime
applies to senior individuals of licensed corporations responsible for
managing core functions within financial services businesses
supervised by the SFC. The regime required SFC-licensed corporations
to review their organisational structure and the roles of senior
management and their responsible officers in light of the SFC’s
classification of core functions within licensed corporations and its
guidelines on identifying MIC of core functions. The regime also
imposes reporting requirements on SFC-licensed corporations.
Similar to the SFC, the HKMA launched its Management Accountability
Initiative, which is aimed at increasing the accountability of the senior
management of Hong Kong registered institutions (‘RIs’) i.e. Hong
Kong banks registered to carry on one or more regulated activities
under the SFO. The Management Accountability Initiative clarified the
HKMA’s expectations on the responsibility and accountability of RIs’
senior management, and enhanced its information-gathering on RIs’
regulated activities, while requiring RIs to better identify lines of
responsibility and accountability for their regulated activities.
To support capacity building and talent development, the HKMA has
been working with the banking industry and relevant professional
bodies to implement an industry-wide enhanced competency
framework for banking practitioners. Currently, the enhanced
competency framework for banking practitioners covers ten
professional work streams: anti-money laundering and counter-
financing of terrorism; cybersecurity; treasury management; retail
wealth management; credit risk management; operational risk
management; fintech; private wealth management; green and
sustainable finance; and compliance.
Relevant to the Group‘s insurance business in Hong Kong, the HKMA
and the Hong Kong Insurance Authority (‘IA’) have signed an ‘MoU’ to
enhance the cooperation, exchange of information and mutual
assistance between the two authorities. This MoU sets out the
framework between the HKMA and the IA for strengthening co-
operation in respect of regulation and supervision of entities or financial
groups in which the two authorities have a common regulatory interest.
Pursuant to the statutory regulatory regime for insurance intermediaries
under the Insurance Ordinance, the IA has delegated its inspection and
investigation powers to the HKMA in relation to the insurance-related
businesses of authorised institutions in Hong Kong, which aims to
minimise possible regulatory overlap.
Under the statutory regime for the regulation of Mandatory Provident
Fund (‘MPF’) intermediaries, the Mandatory Provident Fund Schemes
Authority is the lead regulator in respect of regulation of MPF
intermediaries whereas the HKMA, the IA and the SFC are the front-
line regulators of the MPF intermediaries.
The Financial Institutions (Resolution) Ordinance (‘FIRO‘) established
the legal basis for a cross-sector resolution regime in Hong Kong under
which the HKMA is the resolution authority for banking sector entities,
including all authorised institutions. The HKMA is also designated as
the lead resolution authority for the cross-sectoral groups in Hong Kong
that include banking sector entities within the scope of the FIRO. The
HKMA’s function as a resolution authority is undertaken by the
Resolution Office within the HKMA. The Resolution Office is
operationally independent and has a direct reporting line to the chief
executive of the HKMA.
For resolution to be both feasible and credible, the HKMA requires
authorised institutions to be organised and managed at all times in a
way that facilitates the effective use of its resolution powers in the
event of their failure or likely failure. Institutions must comply with
HKMA resolution standards, which support resolution planning and
address barriers to resolvability. Key requirements include regular
submission of core data to the Resolution Office, maintaining adequate
loss-absorbing capacity, ensuring liquidity and funding during resolution,
operational continuity, contractual recognition of suspension of
termination rights, and continuity of access to financial market
infrastructure services.
US regulation and supervision
The Group is subject to federal and state supervision and regulation in
the US. Banking laws and regulations of the Federal Reserve Board (the
‘FRB’), the Office of the Comptroller of the Currency (the ‘OCC’) and
the Federal Deposit Insurance Corporation (the ‘FDIC’) (collectively, the
‘US banking regulators’) govern various aspects of our US business.
HSBC Bank USA, N.A. (‘HSBC Bank USA’) is subject to direct
supervision and regulation by the Consumer Financial Protection
Bureau (‘CFPB’), which has the authority to examine and take
enforcement action related to compliance with US federal consumer
financial laws and regulations. HSBC Bank USA’s derivative activities
are subject to supervision and regulation by the Securities and
Exchange Commission (‘SEC’) and Commodity Futures Trading
Commission (‘CFTC’). The Group’s US securities broker/dealer and
investment banking operations are also subject to ongoing supervision
and regulation by SEC, the Financial Industry Regulatory Authority and
other government agencies and self-regulatory organisations under US
federal and state securities laws. Similarly, the Group’s US commodity
futures, commodity options and swaps-related and client clearing
operations are subject to ongoing supervision and regulation by the
CFTC, the National Futures Association and other self-regulatory
organisations under US federal commodities laws. Furthermore, since
we have substantial operations outside the US that conduct many of
their day-to-day transactions with the US, HSBC entities’ operations
outside the US are also subject to the extraterritorial effects of US
regulation in many respects.
HSBC Holdings and its US operations are subject to supervision,
regulation and examination by the FRB because HSBC Holdings is a
‘bank holding company’ (‘BHC‘) under the US Bank Holding Company
Act of 1956, as a result of its control of HSBC Bank USA and HSBC
Trust Company (Delaware), N.A., Wilmington, Delaware (‘HTCD’).
HSBC North America Holdings (‘HNAH‘) and HSBC USA Inc., are each
a ‘bank holding company’ and HNAH is also an intermediate holding
company (‘IHC’) regulated by the FRB. HSBC Holdings, HNAH and
HSBC USA Inc. have elected to be financial holding companies
pursuant to the provisions of the Gramm-Leach-Bliley Act and,
accordingly, may affiliate with securities firms and insurance
companies, and engage in other activities that are financial in nature or
incidental or complementary to activities that are financial in nature.
Under regulations implemented by the FRB, if any financial holding
company, or any depository institution controlled by a financial holding
company, ceases to meet certain capital or management standards, the
FRB may impose corrective capital and/or managerial requirements on
the financial holding company and place limitations on its ability to
conduct the broader financial activities permissible for financial holding
companies. In addition, the FRB may require divestiture of the holding
company’s depository institutions, or its affiliates engaged in broader
financial activities in reliance on the Gramm-Leach-Bliley Act if the
deficiencies persist.
The regulations also provide that if any depository institution controlled
by a financial holding company fails to maintain a satisfactory rating
under the Community Reinvestment Act of 1977, the FRB must
prohibit the financial holding company and its subsidiaries from
engaging in any additional activities other than those permissible for
bank holding companies that are not financial holding companies.
The two US banks, HSBC Bank USA and HTCD, are subject to
regulation and examination primarily by the OCC. HSBC Bank USA and
HTCD are subject to additional regulation and supervision by the FDIC,
the CFPB and the FRB. Banking laws and regulations restrict many
aspects of their operations and administration, including the
establishment and maintenance of branch offices, capital and reserve
requirements, deposits and borrowings, investment and lending
activities, payment of dividends and numerous other matters.
In 2019, the FRB and other US banking regulators introduced the
Tailoring Rules, which refine the application of enhanced prudential
standards for large US banking organisations and the US operations of
certain foreign banks. Under these rules, institutions with $50 billion or
more in total US assets are categorised into five groups (Categories I–
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IV and ‘Other Firms’) according to factors such as asset size, cross-
jurisdictional activity, short-term wholesale funding reliance, non-bank
asset size, and off-balance sheet exposures.
As of 1 January 2026, HNAH remains classified as a Category IV firm,
subject to the specific enhanced prudential standards for this category.
HSBC Bank USA is also required to comply with the regulatory capital
and liquidity requirements applicable to Category IV firms.
HNAH, HSBC USA Inc. (‘HUSI’) and HSBC Bank USA (‘HBUS’) are
required to maintain minimum capital ratios (exclusive of any capital
buffers), including a minimum Tier 1 leverage ratio of 4%, and a
minimum total risk-based capital ratio of at least 8%. HNAH, HUSI and
HBUS each calculate their risk-based capital requirements as Non-
Advanced Approaches banks in accordance with the Basel III rules as
adopted by US banking regulators. Over and above the minimum risk-
based requirements, HNAH is subject to a Stress Capital Buffer (‘SCB’),
which is floored at 2.5% and is recalibrated every other year unless
HNAH opts to be subject to supervisory stress testing by the FRB
during an ‘off year’. HUSI and HBUS continue to be subject to the static
2.5% capital conservation buffer (‘CCB‘). Compliance with the SCB/
CCB does not represent minimum requirements, but rather a
necessary condition to allow capital distributions and discretionary
bonus payments.
In 2023, US banking regulators proposed changes to the regulatory
capital rules applicable to US banks, BHCs and IHCs, including HNAH,
HSBC USA Inc. and HSBC Bank USA. The 2023 proposal has not yet
been finalised, and as of December 2025, a re-proposal of the rule
changes, rather than a finalised version of the 2023 proposal, is
expected to be issued, likely sometime in early 2026.
Under FRB regulations, HNAH is subject to supervisory stress testing
requirements (on an every other year basis, with the next FRB
supervisory stress test expected to take place in 2026) that are
designed to evaluate whether a BHC has sufficient capital on a total
consolidated basis to absorb losses and support operations under
severely adverse economic conditions. As part of the Comprehensive
Capital Analysis and Review (‘CCAR‘), the FRB uses pro-forma capital
positions and ratios under such stress scenarios to determine the size
of the SCB for each CCAR participating firm.
As part of CCAR, HNAH is required to submit an annual capital plan to
the FRB on or before 5 April of each year. Category IV firms may opt
into CCAR supervisory stress testing in an ‘off year’ in order to
recalibrate their SCB, based on their most recent supervisory stress
test. The SCB equals (i) a firm‘s projected decline in common equity tier
1 under the supervisory severely adverse stress testing scenario plus
(ii) one year of planned common stock dividends. HNAH’s SCB
requirement effective from 1 October 2025 is 5.1%, unchanged from
2024.
HNAH already utilises an internal capital assessment approach that is
analogous to the SCB and continues to review the composition of its
capital structures and capital buffers in light of these developments.
Under the Tailoring Rules, certain US banking organisations are subject
to heightened liquidity and risk management requirements, including
the US LCR and NSFR. Category IV firms whose weighted short term
wholesale funding equals or exceeds $50bn, including HNAH, are
subject to a less stringent US LCR and NSFR modified regulatory
requirement. As a result, under the modified US LCR requirement, a
LCR of 100% or higher reflects an unencumbered HQLA balance that is
equal to or exceeds 70% of the firm’s liquidity needs (net cash
outflows) for a 30-calendar day liquidity stress scenario.
Under the modified US NSFR requirement as applied to HNAH, a NSFR
of 100% or more reflects an available stable funding balance from
liabilities and capital over the next 12 months that is equal to or
exceeds 70% of the firm’s required stable funding amount for assets
and off-balance sheet exposures. As a Category IV firm, HNAH is also
subject to tailored liquidity risk management and liquidity buffer
requirements, as well as liquidity stress testing on a quarterly basis.
Section 165(d) of the Dodd-Frank Act requires designated financial
institutions, including foreign bank holding companies such as HSBC
Holdings plc (HSBC Group), to periodically submit a resolution plan to
the FDIC and Federal Reserve. This plan outlines the strategy for the
rapid and orderly resolution of their U.S. operations under the U.S.
Bankruptcy Code in the event of material financial distress or failure.
Following the transition of HSBC Group’s US Operations from Category
III to Category IV, HSBC Holdings now qualifies for triennial reduced
filings. The last reduced resolution plan was submitted in July 2025,
with the next submission due 1 July, 2028. In July 2024, the FDIC
finalised a rule requiring insured depository institutions (IDIs) with total
assets of $100 billion or more to submit resolution plans (the ‘IDI plan’).
The rule revises existing requirements concerning the content and
timing of full resolution submissions and interim supplements, in the
off years and enhancing the FDIC’s preparedness for potential distress
or failure of large IDIs. It also strengthens the assessment of
submission credibility, broadens expectations for engagement and
capabilities testing, and clarifies the FDIC’s approach to review,
feedback, and enforcement of compliance. HSBC Bank USA continues
to be required to submit an IDI Plan every three years and would
become subject to increased content requirements and an emphasis
on capabilities testing and engagement with the FDIC. In April 2025,
the FDIC waived several of the substantive requirements associated
with all IDI Plan submissions due in July 2025, and, in December 2025,
extended that waiver for certain IDI Plan submissions due in 2026,
including HSBC Bank USA's full IDI Plan. In December 2025, the FDIC
indicated that it intends to consider further changes to its resolution
plan requirements in 2026. As a result, the future of these
requirements is uncertain. HSBC Bank USA submitted an interim
supplement on 1 July 2025, while its next full IDI Plan submission is
due by 1 July 2026.
In Q4 2024, the Office of the Comptroller of the Currency (OCC) issued
guidelines establishing recovery planning standards for certain financial
institutions, effective 1 January 2025. These requirements apply to
insured national banks, Federal savings associations, and Federal
branches with average total consolidated assets of $100 billion or more.
HSBC Bank USA became subject to these standards, with compliance
deadlines set for 1 January 2026 (overall recovery plan) and 1 January
2027 (scenario testing). HSBC Bank USA submitted its recovery plan in
December 2025, in line with the Guideline. In October 2025, the OCC
proposed rescinding the recovery planning guidelines; however, as no
final rule has been issued, the requirement for the 1 January 2027
submission remains uncertain.
The FRB has separately established a framework for recovery plans,
although HSBC is not currently required to submit a recovery plan to US
regulators unless specifically requested to do so. The FRB limits credit
exposures to single counterparties for large BHCs and IHCs. HNAH is
not directly subject to these single counterparty credit limits.
Independent of HNAH‘s classification as a Category IV firm, HNAH,
together with its subsidiaries, could become subject to limits on its
exposures to unaffiliated counterparties if its parent, HSBC, cannot
certify its compliance with a large exposure regime in the UK that is
consistent with the Basel large exposure framework.
Pursuant to Title VII of the Dodd-Frank (‘Title VII’), the SEC and CFTC
have adopted extensive requirements to regulate over-the-counter
(‘OTC’) derivatives, including, among other requirements, registration
for swap dealers, major swap participants, security-based swap (‘SBS’)
dealer and major SBS participants, mandatory clearing and trade
execution of certain OTC derivatives, position limits for certain physical
positions and economically equivalent swaps, real-time public and
regulatory trade reporting, business conduct, enhanced documentation,
supervision, recordkeeping, and financial reporting requirements.
HSBC Bank USA and HSBC Bank plc are registered as swap dealers
with the CFTC and registered as SBS dealers with the SEC. Because it
is a non-US dealer, HSBC Bank plc is only subject to certain of the
CFTC’s requirements in respect of swap transactions with US persons
and certain persons guaranteed by or affiliated with US persons, and
only subject to certain of the SEC’s requirements in respect of SBS
transactions with US persons or which are arranged, negotiated, or
executed by US personnel. HSBC Bank plc is also permitted to satisfy
certain CFTC requirements and SEC requirements through ‘substituted
compliance’ pursuant to relevant determinations and related relief
issued by the SEC and the CFTC.
Pursuant to Title VII, the US prudential regulators adopted margin
requirements for non-cleared swaps and SBS for prudentially regulated
swap dealers and SBS dealers, such as HSBC Bank USA and HSBC
Bank plc. Subject to certain exceptions, the margin rules require HSBC
Bank USA and HSBC Bank plc to collect and post initial and variation
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margin for non-cleared swaps and SBS entered into with other swap
dealers and certain financial end-users. The prudential regulators’
margin requirements, the parallel margin rules adopted by the CFTC
and the SEC and certain non-US regulators, as well as other regulations
of OTC derivatives under Title VII, have increased the costs associated
with trading OTC derivatives and may adversely affect our business in
such products.
Dodd-Frank also expanded the extra-territorial jurisdiction of US courts
over actions brought by the SEC or the US with respect to violations of
the anti-fraud provisions in the Securities Act, the Securities Exchange
Act of 1934 and the Investment Advisers Act of 1940.
In addition, regulations could affect the nature of the activities that our
FDIC-insured depository institution subsidiaries may conduct, and may
impose restrictions and limitations on the conduct of such activities.
The implementation of the remaining Dodd-Frank provisions could
result in additional costs, or limit or restrict the way we conduct our
business in the US.
EU Regulation and supervision
HSBC Continental Europe (‘HBCE’), headquartered in France, is the
parent company of all HSBC European subsidiaries. In accordance with
provisions of the Capital Requirements Directive (‘CRD’), HBCE is an
Intermediate Parent Undertaking (‘IPU’) for HSBC's European
subgroup, centralising all coordination and requests to the unique Joint
Supervisory Team (‘JST‘) and the unique Internal Resolution Team
(‘IRT‘), made up respectively of the European Central Bank (‘ECB‘) and
the national supervisory authorities on the one hand, and the Single
Resolution Board (‘SRB‘) and the national resolution authorities on the
other. In particular, HBCE will have to submit consolidated reports
directly onto the portal of the French resolution authority (ACPR), as the
host authority of HBCE.
At the end of 2025, HBCE operated ten branches in the following
jurisdictions: Belgium, Czech Republic, Germany, Ireland, Italy,
Luxembourg, Netherlands, Poland, Spain and Sweden with two
principal subsidiaries, HSBC Bank Malta plc (‘HBMT’) and HSBC Private
Bank (Luxembourg) SA (‘PBLU’) following further transformation in
2022 and 2023 to support HBCE’s role as the Group’s EU IPU.
The revised Capital Requirements Regulation (‘CRR3’) implementing
EU’s Basel 3.1 package entered into force on 1 January 2025; however,
the market risk framework was delayed. In June 2025, the European
Commission (‘EC’) announced a further one-year delay to market risk
implementation to 1 January 2027. The one-year delay aims to ensure
that implementation in Europe is aligned to other major jurisdictions.
Furthermore, the European Banking Authority (‘EBA’) continues to
publish technical standards in line with its mandate to develop 140
technical standards.
In June 2024, the EU adopted amendments to the Capital
Requirements Directive (‘CRD6’) which EU member states are in the
process of transposing. While CRR3 and most CRD6 provisions apply
solely to HSBC’s European subsidiaries, CRD6 Article 21c introduces
restrictions on cross-border services offered by non-EU banking entities
to EU clients, with certain exemptions. Such cross-border restrictions
will generally come into effect in January 2027, although precise
effective dates will vary across EU member states.
Global and regional prudential and other
regulatory developments
The Group operates under the oversight of numerous regulatory
authorities and agencies. Regulatory changes are introduced both at the
national level and by global organisations such as Basel, FSB and the
G20. These global standards are subsequently adopted by individual
countries.
We are subject to regulatory stress testing across multiple jurisdictions,
with increasing frequency and more detailed data requirements from
supervisors. These include programmes from the BoE, FRB (see ‘US
regulation and supervision’), OCC, EBA, ECB, HKMA, and other
authorities. For further information, refer to ‘Stress testing’ on page
120. Details on prudential changes are available in the ‘Regulatory
developments’ section on page 7 of the Pillar 3 Disclosures as at 31
December 2025.
Recovery and resolution
The HSBC Group is subject to recovery and resolution requirements in
many of the jurisdictions in which it operates. In Europe, the Bank
Recovery and Resolution Directive (BRRD) establishes a framework for
the recovery and resolution of EU credit institutions and investment
firms. This framework applies to HSBC’s operating banks in the
European region. In Hong Kong, the Banking Ordinance and Financial
Institutions (Resolution) Ordinance sets out requirements for recovery
and resolution planning. In general, each respective part of the HSBC
Group is responsible for ensuring that it meets local recovery and
resolution requirements where they exist, which are mainly applicable
only to those regulated entities in a particular jurisdiction. The PRA and
BoE, however, are the lead regulators from a recovery and resolution
perspective respectively for the consolidated HSBC Group.
HSBC maintains recovery plans designed to outline credible
management actions that the HSBC Group could implement in the
event of severe stress in order to restore its business to a stable and
sustainable condition. The HSBC Group submits a Group recovery plan
to the PRA, the latest plan being submitted to the PRA in June 2024. In
addition, certain HSBC entities also submit local recovery plans to host
regulators, where local recovery planning requirements are in place.
HSBC’s recovery plans are frequently re-appraised to reflect HSBC’s
Group structure as well as meet regulatory and internal feedback,
including through regular stress testing and ‘fire drill’ simulations.
In general terms, resolution refers to the exercise of statutory powers
where a financial institution and/or its parent or other group company is
deemed by its regulators to be failing, or likely to fail and it is not
reasonably likely that any action taken would result in the institution
recovering.
In view of the HSBC Group’s corporate structure, which comprises a
group of locally regulated operating banks, the preferred resolution
strategy for the HSBC Group, as confirmed by its regulators, is a
multiple point of entry (‘MPE’) bail-in strategy. This provides flexibility
for HSBC to be resolved either (i) through a bail-in at the HSBC
Holdings level, which enables the recapitalisation of operating bank
subsidiaries in the HSBC Group (as required) while restructuring actions
are undertaken, with the HSBC Group remaining together; or (ii) at a
local subsidiary level pursuant to the application of statutory resolution
powers by local resolution authorities.
In the event of a resolution of the HSBC Group, it is anticipated that the
MREL eligible debt issued externally by HSBC Holdings plc would be
written down or converted to equity by the BoE using its statutory
powers. This would enable subsidiaries of the HSBC Group to be
recapitalised, as needed, to support the resolution objectives and
maintain the provision of critical functions locally. Recapitalisation of
operating bank subsidiaries could be achieved through the write-down,
or conversion to equity, of internally issued MREL, Total Loss
Absorbing Capacity (‘TLAC‘) or Loss Absorbing Capacity (‘LAC‘). It is
anticipated that this approach to recapitalising the HSBC Group’s
operating bank subsidiaries would allow the Group to stay together in
order to ensure an effective stabilisation of the whole Group whilst also
facilitating an orderly restructuring process post resolution. Any
resolution of HSBC as a group would be coordinated by the BoE.
Given the geographical footprint of the HSBC Group, resolution
authorities have determined that HSBC has three resolution groups that
together account for over 92% ($817bn) of the Group’s consolidated
RWAs ($889bn): The Asia resolution group ('ARG'), the European
resolution group ('ERG') and the US resolution group ('USRG'). As a
result, HSBC is overseen by various regulators and resolution
authorities including its lead global regulators and resolution authority,
the BoE and the PRA and a number of host regulators and resolution
authorities. Examples include the European SRB, the HKMA, FRB,
FDIC and OCC. These host resolution authorities have statutory
resolution group powers which could be applied to subsidiaries of the
HSBC Group in their jurisdictions. The application of these local
statutory resolution powers may result in one or more individual
resolution authorities leading to a local resolution of the subsidiaries
within their jurisdiction.
This may or may not result in such subsidiaries ceasing to be part of the
HSBC Group, depending on the drivers of failure and the resolution
powers exercised by the relevant resolution authority.
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HSBC considers that a bail-in at the HSBC Holdings plc level that
enables subsidiaries in the HSBC Group to be recapitalised, (as
required), and the subsequent implementation of restructuring actions
while the HSBC Group remains together, is the strategy most likely to
deliver the optimal resolution outcome for all of HSBC’s stakeholders.
In July 2019, the BoE and PRA published final policies on the
Resolvability Assessment Framework (‘RAF‘), which places the onus
on firms to demonstrate their own resolvability and is designed to
increase transparency and accountability for resolution planning. In
order to be considered resolvable, HSBC must meet three outcomes:
(i) have adequate resources in resolution; (ii) be able to continue
business through resolution and restructuring; and (iii) be able to co-
ordinate its resolution and communicate effectively with stakeholders.
The RAF requires HSBC to prepare a report on the HSBC Group’s
assessment of its resolvability, which must be submitted to the BoE on
a periodic basis as requested by the BoE. HSBC Group submitted its
second report to the BoE in October 2023. In August 2024, HSBC
made its second public disclosure on its resolvability, which
summarised the key findings from the second RAF Self-assessment. In
line with the previous BoE RAF cycle, alongside HSBC's disclosure, the
BoE also disclosed its own assessment of UK banks’ resolvability,
including HSBC, against expectations set out in the RAF.
Regular engagement with the BoE and PRA is maintained on Recovery
and Resolution Planning topics. HSBC continues to engage with the
BoE, PRA and its global regulators in other jurisdictions to help ensure
that it meets current and future recovery and resolution requirements.
Financial crime regulation
HSBC is committed to preventing our products and services from being
exploited for criminal activity. We do this because it is the right thing to
do to protect our customers, shareholders, staff, the communities in
which we operate and the integrity of the financial system on which we
all rely. We recognise that financial institutions are inherently exposed
to financial crime risk, which cannot be mitigated in its entirety. We
employ a risk-based approach to managing our exposure by focusing
our resources in a manner that is proportionate to the level of financial
crime risk inherent in our business strategy and operating model. We
remain committed to conducting our activities in accordance with all
applicable financial crime laws and regulations in the markets in which
we operate, the expectations of our regulators, measures associated
with corporate criminal liability, and our own risk appetite.
HSBC has an established financial crime risk management programme
that is applicable across all global businesses and functions, and all
countries and territories in which we operate. This enables the bank
and its staff to detect, analyse, investigate, report and mitigate the risk
of HSBC facilitating or being used to facilitate financial crime, including
bribery and corruption, fraud, money laundering, terrorist financing and
proliferation financing, tax evasion, sanctions and export control
violations and evasion.
HSBC could be subject to heightened commercial, operational,
regulatory, reputational and market risks resulting from sanctions, trade
restrictions and other regulatory changes related to foreign policy or
national security concerns, as well as shifts in the geopolitical
landscape. These risks may increase or evolve due to changing
geopolitical dynamics, economic uncertainties, strategic competition in
technology, and political instability and conflicts. HSBC has developed a
comprehensive compliance framework to seek to manage sanctions
and other financial crime risks. It is designed to identify and respond to
changes in financial crime laws and regulations affecting the Group, to
identify and address exposure that may arise from the activities of the
Group, while fostering a strong compliance culture. This is supported
through an extensive training programme aimed at equipping HSBC
employees with the knowledge and skills necessary to maintain high
standards of compliance.
Technical and digital innovation in how we engage with customers and
the services we provide to them continue at pace. Considering the
dynamic and changing environment, including the increasing use of
alternative (including digitised) payment methods and technologies,
HSBC continues to shape its risk appetite and enhance its control
framework to detect, deter and disrupt financial crime more effectively,
increasing its use of intelligence-led technologies and artificial
intelligence to monitor customers for unusual or suspicious activity.
HSBC also maintains clear whistleblowing policies and processes, to
enable individuals to report concerns confidentially.
Disclosures pursuant to Section 13(r)
of the Securities Exchange Act
Section 13(r) of the Securities Exchange Act requires each issuer
registered with the SEC to disclose in its annual or quarterly reports
whether it or any of its affiliates have knowingly engaged in specified
activities or transactions with persons or entities targeted by U.S.
sanctions programmes relating to Iran, terrorism, or the proliferation of
weapons of mass destruction, even if those activities are not prohibited
by U.S. law, are conducted outside the U.S. by non-U.S. affiliates in
compliance with local laws and regulations, and are not material to the
business of the issuer or any of its affiliates.
To comply with this requirement, HSBC Holdings plc (together with its
affiliates, “HSBC”) has requested relevant information from its affiliates
globally. The following activities conducted by HSBC are disclosed in
response to Section 13(r) and are not material to the business of HSBC:
Legacy contractual obligations related to
guarantees
Between 1996 and 2007, we provided guarantees to a number of our
non-Iranian customers in Europe and the Middle East for various
business activities in Iran. In a number of cases, we issued counter
indemnities involving Iranian banks as the Iranian beneficiaries of the
guarantees required that they be backed directly by Iranian banks. The
Iranian banks to which we provided counter indemnities included Bank
Tejarat, Bank Melli, and the Bank of Industry and Mine.
There was no measurable gross revenue in 2025 under those
guarantees and counter indemnities. We do not allocate direct costs to
fees and commissions and, therefore, have not disclosed a separate
net profit measure. We are seeking to cancel all relevant guarantees
and counter indemnities, and do not currently intend to provide any
new guarantees or counter indemnities involving Iran. No guarantees
were cancelled in 2025, and approximately 14 remain outstanding.
Other relationships with Iranian banks
Activity related to U.S.-sanctioned Iranian banks not covered elsewhere
in this disclosure includes the following:
We act as the trustee and administrator for a pension scheme involving
employees of a U.S.-sanctioned Iranian bank in Asia. Under the rules of
this scheme, we accept contributions from the Iranian bank each
month and allocate the funds into the pension accounts of the Iranian
bank’s employees. We run and operate this pension scheme in
accordance with applicable laws and regulations. Estimated gross
revenue, which includes fees and/or commissions, generated by this
pension scheme during 2025, was approximately $2,224.
For the Iranian bank-related activity discussed above, we do not allocate
direct costs to fees and commissions and, therefore, have not
disclosed a separate net profit measure.
We currently intend to continue to wind down the above activities, to
the extent legally permissible, and not enter into any new such activity.
Activity related to U.S. Executive Order
13224
We have a corporate customer in Asia that was designated under
Executive Order 13224 in 2025. Immediately following the designation,
and prior to the accounts being restricted, we processed two low-value
local currency domestic payments for the customer.
We had an individual customer in Europe that was designated under
Executive Order 13224 in 2021. The relationship was exited in 2025
and, as part of the exit process, we wrote off a de minimis local
currency balance owed by the customer.
We had an individual customer in Latin America that was designated
under Executive Order 13224 in 2025. Shortly following the designation
and before the account was restricted, we processed three small local
currency domestic payments for our customer.
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Other information | ||||||||||||
We had an individual customer in the Middle East that was designated
under Executive Order 13224 in 2021. The customer’s accounts were
restricted at the time of designation and the relationship was exited
during 2025. As part of the exit process, we returned the customer’s
funds to the customer.
During 2025, as part of the settlement of the estate of a deceased
customer in the Middle East, we processed a local currency domestic
payment from the deceased customer’s account to an individual
designated under Executive Order 13224 who acted as representative
for the deceased customer’s heirs.
We have individual and corporate customers in the Middle East that,
during 2025, made local currency cheque payments for the rental of
property to a corporate entity designated under Executive Order 13224.
We processed these cheques on behalf of our customers.
During 2025, pursuant to general licences issued by the U.S.
Department of the Treasury’s Office of Foreign Assets Control, we
processed a small number of low-value U.S. dollar payments to the
account of a non-designated non-governmental organisation held at a
financial institution designated under Executive Order 13224 and one
U.S. dollar payment from an entity designated pursuant to Executive
Order 13224 to a non-designated corporate customer of HSBC.
For these activities, there was no measurable gross revenue or net
profit to HSBC during 2025.
Activity related to U.S. Executive Order
13382
We had a corporate customer in Asia that was designated under
Executive Order 13382 in 2025. Immediately following the designation,
and prior to the accounts being restricted, we processed two payments
for the customer. The relationship was exited in 2025 and, as part of
the exit process, we returned the customer’s funds to the customer.
For this activity, there was no measurable gross revenue or net profit to
HSBC during 2025.
Other activity
We have a non-Iranian insurance company customer in the Middle East
that, during 2025, made local currency domestic payments for the
reimbursement of medical treatment to a hospital located outside Iran
that is owned by the Government of Iran. We processed these
payments from our customer to the hospital.
We have three customers in the Middle East that, during 2025, made
local currency domestic payments for medical treatment to a hospital
located outside Iran that is owned by the Government of Iran. We
processed these payments from our customers to the hospital.
We have three corporate customers in the Middle East that, during
2025, received local currency cheques from a hospital located outside
Iran that is owned by the Government of Iran. We processed the
cheques from the hospital to our customers.
We have individual and corporate customers in the Middle East that,
during 2025, received local currency cheques from an insurance
company located outside Iran that is owned by the Government of Iran.
We processed these cheques from the insurance company to our
customers.
We have individual and corporate customers in Europe that, during
2025, made local currency domestic payments to, or received such
payments from, an Iranian embassy. Generally, these customers
appear to receive consular or other services provided by the embassy
or provide goods and services that support the conduct of the official
business of the embassy. We processed these payments between our
customers and the Iranian embassy.
We have an individual customer in Europe that is employed by a bank
located outside Iran that is owned by the Government of Iran. During
2025, we processed local currency salary payments received via a bank
that is not owned by the Government of Iran to our customer. We are
in the process of exiting the customer.
During 2025, we processed two low value local currency payments to a
pension fund in Europe from an account held at a non-designated
financial institution by an insurance company located outside Iran that is
owned by the Government of Iran.
For these activities, there was no measurable gross revenue or net
profit to HSBC during 2025.
Frozen accounts and transactions
We maintain several accounts that are frozen as a result of relevant
sanctions programmes, and safekeeping boxes and other similar
custodial relationships, for which no activity, except as licensed,
authorised, or otherwise related to the maintenance of such accounts
as consistent with applicable law, took place during 2025. There was no
measurable gross revenue or net profit to HSBC during 2025 relating to
these frozen accounts.
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Risk
review
Our risk review outlines our approach to risk
management, how we identify and monitor top
and emerging risks, and the actions we take to
mitigate them. In addition, it explains our
material banking risks, including how we
manage capital.
119 | Our approach to risk |
121 | Top and emerging risks |
126 | Risk factors |
138 | Our material banking risks |
140 | Credit risk |
189 | Treasury risk |
200 | Market risk |
203 | Climate risk |
213 | Resilience risk |
213 | Regulatory compliance risk |
214 | Financial crime risk |
214 | Model risk |
215 | Insurance manufacturing operations risk |
4
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Our approach to risk
We recognise that the primary role of risk management is to help
protect our customers, business, colleagues, shareholders and the
communities that we serve, while ensuring we are able to support our
strategy and provide sustainable growth.
In addition, we recognise the importance of a strong culture, which
refers to our shared attitudes, beliefs, values and standards that shape
behaviours including those related to risk awareness, risk taking and
risk management. All our people are responsible for the management
of risk, with ultimate supervisory oversight residing with the Board.
The implementation of our business strategy remains a key focus. As
we deliver change initiatives, we seek to actively manage the execution
risks. We also perform periodic risk assessments, including against
strategies, to help ensure retention of key personnel for our continued
safe operation.
Our risk management framework
We aim to use a comprehensive risk management approach across the
organisation and across all risk types, underpinned by our culture and
values. This is outlined in our Risk Management Framework (‘RMF’),
including the key principles and practices that we employ in managing
material risks, both financial and non-financial.
The RMF sets out in a consistent way how we identify, assess and
manage the risks that matter the most with respect to our ability to
operate, grow, and meet external commitments. It translates our
strategy, values and commitments into practical actions and risk-based
decisions.
Our Group Risk and Compliance function is responsible for the Group’s
RMF. Independent from the business segments, including our sales
and trading functions, it provides challenge, oversight and appropriate
balance of risk and reward in decision-making. Its responsibility includes
establishing global policy, monitoring risk profiles, and identifying and
managing forward-looking risk.
Our people are responsible for managing both financial and non-
financial risk, including regulatory compliance and financial crime risks.
They are required to manage the risks of the business and operational
activities for which they are responsible. We maintain adequate
oversight of our risks through our various specialist risk stewards and
the collective accountability held by our chief risk officers (‘CROs’) and
chief risk and compliance officers (‘CRCOs’). We seek to maintain a
sound control environment and regularly test and monitor our
controls, which aim to prevent risks from materialising, detect when
they do, and recover and learn from issues in a timely manner within
our risk appetite.
Our risk appetite
Our risk appetite defines the level and types of risk that we are willing
to take to achieve our strategic objectives.
The Board approves the Group’s risk appetite and reviews it regularly to
help ensure it remains fit for purpose.
Our enterprise-wide risk appetite is expressed holistically through
various risk management mechanisms and activities, in both
quantitative and qualitative terms and is formally articulated through our
Risk Appetite Statement (‘RAS’).
The Group’s risk appetite is established considering:
–alignment with our strategy, purpose, values, external risk
environment, reputational and customer needs;
–compliance with applicable laws, regulations and regulatory
priorities;
–forward-looking insights into future risk exposure;
–sufficiency of available capital, liquidity and balance sheet leverage
to absorb the risks;
–capacity and capabilities of people to manage the risk landscape;
–functionality, capacity and resilience of available systems to manage
the risk landscape;
–effectiveness of the applicable control environment to mitigate risk;
and
–internally and externally disclosed commitments.
Performance against the Group’s RAS is reported to the Group Risk
Management Meeting to support targeted insight and discussion of
breaches of risk appetite and any associated mitigating actions. This
reporting helps risks to be promptly identified and mitigated and
informs risk-adjusted remuneration to drive a strong risk culture.
Each principal subsidiary and material operating entity is covered by a
RAS, and their alignment with the Group’s RAS is monitored.
Our risk governance
The Board has ultimate supervisory responsibility for the effective
management of risk.
The Group Chief Risk and Compliance Officer (‘GCRCO’), supported by
members of the Group Risk Management Meeting, holds executive
accountability for the ongoing monitoring, assessment and
management of the risk environment and the effectiveness of the risk
management framework.
The GCRCO is also responsible for the oversight of reputational risk,
with the support of the Group Reputational Risk Committee. Further
details can be found under the ‘Reputational risk’ section of
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-
risk.
Day-to-day responsibility for risk management is delegated to senior
managers with individual accountability for decision making.
We use a defined executive risk governance structure to help enable
appropriate oversight and accountability of risk, which facilitates
reporting and escalation to the Group Risk Management Meeting. This
structure is summarised in the following table.
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Our approach to risk |
Governance structure for the management of risk and compliance | ||
Authority | Membership | Responsibilities include: |
Group Risk Management Meeting | GCRCO Group Chief Legal Officer Group CEO Group CFO All other Group Operating Committee members | –Supporting the GCRCO in exercising Board-delegated risk management authority –Overseeing the implementation of risk appetite and the risk management framework –Forward-looking assessment of the risk environment, analysing possible risk impacts and taking appropriate action –Monitoring all categories of risk and determining appropriate mitigating action –Promoting a supportive Group culture in relation to risk management and conduct |
Group Risk and Compliance Leadership Meeting | GCRCO CRCOs of HSBC’s business segments Regional CRCOs and CROs Heads of Global Risk and Compliance sub-functions | –Supporting the GCRCO in providing strategic direction for the Group Risk and Compliance function, setting priorities and providing oversight –Overseeing a consistent approach to accountability for, and mitigation of, risk and compliance across the Group |
Global business/regional risk management meetings | Global business/regional CRCOs and CROs Global business/regional CEOs Global business/regional CFOs Global business/regional heads of global functions | –Supporting the GCRCO in exercising Board-delegated risk management authority –Forward-looking assessment of the risk environment –Implementation of risk appetite and the risk management framework –Monitoring all categories of risk and overseeing appropriate mitigating actions –Embedding a supportive culture in relation to risk management and controls |
ÑThe Board committees with responsibility for oversight of risk-related matters are set out on page 228.
ÑTreasury risks, excluding pension and insurance risks, are the responsibility of the Group Finance Management Meeting and the Group Risk Committee. Global
Treasury actively manages these risks, supported by the Holdings Asset and Liability Management Committee (‘ALCO’) and local ALCOs, overseen by Treasury
Risk Management and Risk Management Meetings. Further details on treasury risk management are set out on page 189.
Our responsibilities
All our people are responsible for identifying and managing risk within
the scope of their roles. Roles are defined using the three lines of
defence model, which takes into account our business and functional
structures as described below.
Three lines of defence
To create a robust control environment to manage risks, we use an
activity-based three lines of defence model. This model delineates
management accountabilities and responsibilities for risk management
and the control environment.
The model underpins our approach to risk management by clarifying
responsibility and encouraging collaboration, as well as enabling
effective coordination of risk and control activities. The three lines of
defence are summarised below:
–The first line of defence owns the risks and is responsible
for identifying, recording, reporting and managing these risks in line
with risk appetite, including that the right controls and assessments
are in place to mitigate them.
–The second line of defence challenges the first line of defence on
effective risk management, and provides advice, guidance and
assurance of the first line of defence to help ensure it is managing
risk effectively.
–The third line of defence is our Global Internal Audit function,
which provides independent assurance as to whether our risk
management approach and processes are designed and operating
effectively.
Stress testing
Our stress testing programme assesses potential financial risks to our
business model, and forms part of our risk management and capital and
liquidity planning. As well as undertaking regulatory-driven stress tests,
we conduct our own internally defined stress tests to understand the
nature of our potential vulnerabilities, quantify their impact, and develop
plausible mitigating actions. The outcome of a stress test provides
management with key insights into the impact of severely adverse
events on the Group and provides an indication to regulators of the
Group’s resilience to shocks and any consequences for financial
stability.
Our internal capital assessment uses a range of stress scenarios that
explore systemic risks, as well as other potential events that are
idiosyncratic to HSBC.
During 2025, we completed a Group-wide internal stress test of the
Group’s strategy and corporate plan. The stress scenario assessed the
impact of the ongoing trade policy uncertainty, including tariffs and
geopolitical conflicts which remain key risks for the global economy.
In addition to the Group-wide stress testing scenarios, each principal
subsidiary conducts regular macroeconomic and event-driven scenario
analysis specific to its region. They also participate, as required, in the
regulatory stress testing programmes of the jurisdictions in which they
operate, including stress tests required by the Bank of England (‘BoE’)
in the UK, the Federal Reserve Board (‘FRB’) in the US, and the Hong
Kong Monetary Authority (‘HKMA’) in Hong Kong.
We also conduct reverse stress tests each year at the Group level and,
where required, at a subsidiary entity level to understand potential
extreme conditions that would make our business model non-viable.
Reverse stress testing identifies potential stresses and vulnerabilities
we might face, and helps inform early warning triggers, management
actions and contingency plans designed to mitigate risks.
ÑFor further details of our stress testing and recovery and resolution planning,
see ‘Stress testing and recovery and resolution planning’ on page 190.
Key developments in 2025
In 2025, we continued to manage risks related to macroeconomic and
geopolitical uncertainties and develop risk management capabilities
through the continued enhancement of our risk management
framework. We work to maintain and build stronger relationships with
regulators and other external stakeholders to support our business and
customer objectives. We retained our focus on risk transformation and
financial crime and continued to assess the Group’s operational
resilience capability while prioritising the most significant enterprise
risks. More specifically, we sought to enhance our risk management in
the following areas:
–We have been advancing our programme aimed at strengthening
our global regulatory reporting processes and making them more
sustainable, including enhancing data, consistency and controls.
While this programme continues, there may be further impacts on
some of our regulatory ratios as we implement recommended
changes and continue to enhance our controls across the process.
–We strengthened our control environment through the continued
embedding of our Group Chief Control Oversight Office which
established a centralised approach to controls oversight across the
first line of defence business and process owners, including a
consistent approach to control standards, aggregated reporting and
testing.
–We enhanced our technology and cybersecurity controls to help
improve the resilience and security of our technology services in
response to the heightened external threat environment.
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Our approach to risk |
–We responded to new innovations in the financial system, including
growing adoption of digital assets and currencies, as well as the
evolving use of AI through reviewing and enhancing controls across
risk areas to help us and our customers safely benefit from
innovation.
–We continue to enhance our processes, framework and controls to
improve the oversight of our third parties. We have strengthened
our due diligence and monitoring capabilities, with respect to the
financial stability of our third parties to better manage our supply
chain and we continue to assess and seek to manage our
operational resilience.
–We have further enhanced the way we identify and manage HSBC
Group climate-related risks, which have also been embedded
across the wider organisation. This has been achieved through risk
policy and guideline updates, including updates to our HSBC Group
climate risk approach document, and further development of our
risk metrics and assessments to help monitor and manage
exposures across our organisation. We have also reviewed a
number of climate models and have sought to enhance our internal
climate scenario analysis capabilities.
–We deployed advanced technology and analytics capabilities into
new markets to improve our ability to identify suspicious activities
and prevent financial crime. We will continue to evaluate
technological solutions to improve our capabilities in the detection
and prevention of financial crime.
–We continued to promote our whistleblowing service, HSBC
Confidential, ensuring it is embedded in our speak-up culture.
Continual enhancement is being undertaken to help ensure optimal
effectiveness of the service, while maintaining adherence to
regulation and legislation.
–We have refreshed our conduct approach to ensure it remains clear,
accessible and aligned with how we work today, while maintaining
the same strong standards and enhancing our capability to drive
positive outcomes for our customers and protect the integrity of
financial markets.
Top and emerging risks
We use a top and emerging risks process to provide a forward-looking
view of issues with the potential to threaten our operations or the
execution of our strategy over the medium to long term.
We proactively assess the internal and external risk environment, and
review the themes identified across our regions and business
segments, for any risks that may require global escalation. We update
our top and emerging risks as necessary.
Our current top and emerging risks are as follows.
Externally driven
Geopolitical and macroeconomic risks
Key economic and financial risks are monitored closely. The Group
remains exposed to these risks through its operations, investments and
business activity.
The global economy proved resilient to trade policy changes and
geopolitical shocks through 2025 and growth was stronger than
expected. Economic activity was supported by a decline in policy
interest rates and deficit spending across major economies. At the
same time, oil prices remained broadly stable despite heightened
geopolitical tensions over Venezuela and the Middle East. Asset prices
also rose on account of strong corporate earnings and investor
enthusiasm for technology stocks and investment in AI.
A key source of ongoing uncertainty is the volatility of US trade and
tariff policies. Changes to tariff rates, including sector-specific levies,
may deter capital investment and consumer spending, disrupt supply
chains and reduce global trade growth. Policy uncertainty and trade
disruption may also deter businesses from hiring. During 2025,
unemployment rose across many of our major markets, and there
remains a risk of further increases if layoffs begin to increase more
significantly, employment growth continues to be constrained by
uncertainty, or if investment in AI starts to yield productivity gains that
reduce demand for labour.
A broader escalation of tariffs and a trade war remain a risk. Strategic
competition between countries is reshaping trading relationships and
increasing the focus on long-term economic and supply chain security,
which could adversely affect the Group and our customers.
Tariffs are a particular challenge to China and other export-led
economies. While China has responded by diversifying trade to other
markets, it faces cyclical and structural challenges in the short to
medium term, including reviving the property sector. In contrast, the
effect of tariffs on the UK has been smaller, given the less significant
role of trade with the US. The UK benefited from securing an early
trade agreement with the US on relatively preferential terms, however
it now faces the possibility that the deal is replaced by alternative US
tariffs on different terms.
The disruption of key supply routes caused by geopolitical conflicts has
continued to impact global supply chains. The Russia-Ukraine war and
further conflict or military action, in the Middle East, Venezuela or
elsewhere, could impact economic activity regionally or globally which,
if continued for a prolonged period, could have a material adverse effect
on the Group’s business, financial condition, results of operations,
prospects, liquidity, capital position and credit ratings. The financial
impact on the Group of geopolitical risks in Asia is heightened due to
the region’s relatively high contribution to the Group’s profitability.
The monetary policy outlook remains uncertain across major
economies. During 2025, major central banks cut policy interest rates,
but several, including the US Federal Reserve, have had to balance
inflation – that has persisted above target – against weaker
employment growth. The Group’s financial performance could be
affected by changes to interest rate expectations. Policy interest rates
could be reduced further if inflation continues to moderate. However,
that trajectory could be disrupted if wage growth, tariffs or key
commodity prices keep inflation higher for longer.
The US dollar depreciated in 2025 driven by changing interest rates and
tariff policy uncertainty. The decline marked the end of a long period of
sustained appreciation against major currencies. Although the US dollar
remains the primary trade invoicing and reserve asset currency,
elevated volatility is expected to persist, reflecting concern over fiscal
sustainability and an increasingly complex fiscal and monetary policy
environment.
Equity markets rose strongly during 2025, led by significant gains for
the technology sector and AI company valuations in particular. While
high asset prices may create a tailwind from positive wealth effects,
current high valuations also raise the risk of a material fall in the
markets if the expected gains to productivity fail to materialise. In
addition, the Group remains exposed to the market risk and any
potential impact on economic growth of an abrupt revaluation of asset
prices.
Fiscal policy and high levels of government debt are monitored closely.
Debt levels in many of our major markets have continued to rise due to
higher social welfare costs and increased expenditures on defence and
climate transition. Rising government debt and high interest payments
could adversely impact the fiscal capacity and debt sustainability of
highly-indebted sovereign issuers. Emerging markets with substantial
debt and weak fiscal positions may also face increased repayment
costs, heightened refinancing risks, a greater likelihood of sovereign
rating downgrades, and a higher tax burden. This could prove negative
for short and long-term growth prospects. Uncertainty about future
taxation could undermine confidence, business investment and
consumer spending, which would be negative for the Group’s retail and
corporate operations in various markets.
Demographic shifts, including population ageing and migration patterns,
may alter savings and investment behaviours and result in reduced
demand for bank borrowing.
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Top and emerging risks | ||||||||||||
We continue to closely monitor market conditions in the Hong Kong
and mainland China commercial real estate (‘CRE’) markets. In Hong
Kong, market sentiment and the economic outlook continue to show
signs of improvement, supported by interest rate cuts, the positive
wealth effect from a buoyant equities market and improving economic
conditions. Nevertheless, recovery is likely to take time, with liquidity
and valuation pressures expected to continue in the near term,
particularly for mid-sized and sub-investment grade corporates. In
mainland China, market fundamentals remain weak and refinancing
risks continue.
ÑFor further details of market conditions, see page 177.
Sanctions and restrictions on trade and investment are continually
evolving in response to geopolitical events, and may adversely affect
the Group, its customers and the markets in which the Group operates.
These factors may result in increased legal, regulatory, reputational and
market risks, and a more complex operating environment. HSBC
actively monitors and responds to financial sanctions and restrictions on
trade and investment.
Global tensions over trade and technology are resulting in divergent
regulatory standards and compliance regimes, presenting long-term
strategic challenges for multinational businesses such as HSBC. As the
geopolitical landscape evolves, compliance by multinational
corporations with their legal or regulatory obligations or other initiatives
in one jurisdiction may be seen as supporting the law or policy
objectives of that jurisdiction over another, creating additional legal,
regulatory, reputational and political risks for the Group. We maintain
dialogue with our regulators in various jurisdictions on the impact of
legal and regulatory obligations on our business and customers.
While it is the Group‘s policy to comply with all applicable laws and
regulations of all jurisdictions in which it operates, geopolitical tensions
and potential ambiguities in the Group’s compliance obligations
continue to present challenges and risks for the Group, and could have
a material adverse impact on the Group’s strategy, business,
customers, operations, financial results and reputation.
Expanding data privacy, national security and cybersecurity laws in a
number of markets could pose potential challenges to intra-group data
sharing. These developments may affect our ability to manage financial
crime risks across markets due to limitations on cross-border transfers
of personal information.
Provisioning against credit loss is conducted under the IFRS 9 ‘Financial
Instruments’ (’IFRS 9’) calculations of ECL, which use forward-looking
scenarios that incorporate the economic and financial risks detailed
above. There remains uncertainty regarding the adequacy of our
models in capturing credit losses under emerging risks which are not
captured by the historical loss experience of our models, or to
effectively distinguish risks for specific sectors and portfolios.
The above risks could also have an impact on our customers, and we
continue to closely monitor the potential impacts and offer support to
our customers in line with regulatory, government and wider
stakeholder expectations.
ÑFor further details of our Central and other scenarios, see ‘Measurement
uncertainty and sensitivity analysis of ECL estimates’ on page 148.
Mitigating actions
–We closely monitor geopolitical and economic developments in key
markets and sectors. We may undertake scenario analysis, including
stress testing portfolios of particular concern to identify sensitivity to
loss under a range of scenarios. This helps us to take actions to
manage our portfolios where necessary, including through
enhanced monitoring, amending our risk appetite and/or reducing
limits and exposures.
–We regularly review key portfolios, including our commercial real
estate portfolio, to help ensure that individual customer or portfolio
risks are understood and that our ability to manage the level of
facilities offered through any downturn is appropriate.
–We apply management judgemental adjustments where modelled
ECL does not fully reflect the identified risks and related uncertainty,
or to capture significant late-breaking events.
–We continue to seek to manage the impact of sanctions and
restrictions on trade and investment through the use of reasonably
designed policies, procedures and controls, which are subject to
ongoing testing and enhancements.
–We have taken steps, where necessary, to enhance physical
security in geographical areas deemed to be at high risk from
terrorism and military conflicts.
We operate in an extensive and complex technology landscape. We
need to remain resilient to support customers, our colleagues and
financial markets globally. Risks arise where, for example, technology –
including rapidly advancing AI – is not understood, maintained or
developed appropriately. We also continue to operate in an increasingly
complex cyber threat environment globally. These threats include
potential unauthorised access to systems, whether ours or those of our
third-party suppliers, including access to and potential exfiltration of
customer data. These threats require ongoing investment in business
–We continue to upgrade many of our technology systems and are
transforming how software solutions are developed, delivered,
maintained and tested as part of our investment in the Group’s
operational resilience to seek to meet the expectations of our
customers and regulators, and to help prevent disruptions to our
services and recover when they occur.
–Our cyber intelligence and threat analysis team continually evaluate
threat levels for the most prevalent cyber-attack types and their
potential outcomes (see page 63), and we continue to seek to
strengthen our controls to help reduce the likelihood and impact of
attacks including advanced malware, data leakage, exposure
through third parties and security vulnerabilities.
–We continue to seek to enhance our cybersecurity capabilities,
including infrastructure and network security, cloud security, identity
and access management, metrics and data analytics, and third-party
security assurance, and to invest in mitigating the potential threats
of emerging technologies.
–We regularly report and review cyber risk and control effectiveness
at executive level across business segments, functions and regions,
as well as at non-executive Board level to help enable appropriate
visibility and governance of the risk and its mitigating actions.
–We participate globally in industry bodies and working groups,
working together to seek to protect against, detect, respond to and
recover from cyber-attacks on financial organisations globally.
–We respond to attempts to compromise our cybersecurity in
accordance with our cybersecurity framework. To date, none of
these attacks have had a material impact on our business or
operations.
Environmental, social and governance
(‘ESG’) risks
We are subject to financial and non-financial risks associated with ESG-
related matters, such as climate change, nature-related and human
rights issues. These matters can impact us both directly and indirectly
through our business activities and relationships. For details of how we
govern ESG, see page 57.
We may face credit and trading losses, liquidity impacts and/or impacts
to our real estate portfolios if climate-related regulatory, legislative or
technological developments impact customers’ business models or if
extreme weather events disrupt or interrupt customers’ operations,
resulting in financial difficulty for customers and/or stranded assets, and
impacting their ability to repay their debts or secure insurance. Our
customers may find that their business models fail to align to a net zero
economy or face disruption to their operations or deterioration to their
assets as a result of extreme weather. Operational risk may also
increase if extreme weather events impact critical operations and
premises.
We may face regulatory compliance, legal, conduct and reputational
risks resulting from the increasing pace, breadth and depth of climate-
related regulatory expectations, including on the management of
climate risk, and variations in external ESG-related reporting standards
and taxonomies, requiring implementation in short timeframes across
multiple jurisdictions. Such risks may also arise from how we decide to
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support our customers in high-emitting sectors in their transition to net
zero, the preferences of different stakeholders in relation to our
approach to the transition to net zero, and if we make insufficient
progress in achieving our ESG-related ambitions, targets and
commitments.
We may face additional risks if we knowingly or unknowingly make
inaccurate, unclear, misleading, or unsubstantiated claims regarding
sustainability to our stakeholders.
Requirements, policy objectives, expectations, views or market and
public perceptions and preferences in connection with the transition to
a net zero economy and ESG-related matters may vary by jurisdiction
and stakeholder, particularly in light of the differing perspectives and
responses to climate change of stakeholders in different markets, such
as the UK, the US, the EU, and others. We may be subject to
potentially conflicting approaches to ESG matters in certain
jurisdictions, which may impact our ability to conduct certain business
within those jurisdictions or result in additional regulatory compliance,
reputational, political or litigation risks.
For example, our reputation and client relationships may be damaged
as a result of our decision to participate, or not to participate, in certain
projects perceived to be associated with causing or exacerbating
climate change, as well as any decisions we make to continue to
conduct or change our activities in response to considerations relating
to climate change, including the transition to net zero. These risks may
also arise from divergence in the implementation of ESG, climate policy
and financial regulation in the many regions in which we operate,
including initiatives to apply and enforce policy and regulation with
extraterritorial effect.
Our strategy and business model, including our products, services, and
risk management processes, will need to continue to evolve to align
with evolving regulatory requirements, stakeholder expectations and to
manage ESG-related risks. This may involve adapting the way we
measure and manage both financial and non-financial risks associated
with ESG matters. Achieving our strategy with respect to ESG matters,
including any related ambitions, targets and commitments we may set,
depends on a number of factors beyond the Group’s control, such as
technological advancements and supportive public policies in our
operating markets. If these external factors do not materialise or are
delayed, we may not meet our ESG-related ambitions, targets and
commitments.
We may encounter financial reporting risks concerning our climate and
ESG disclosures due to model limitations and the limited quality and
consistency of available data. As methodologies, data, scenarios, and
industry standards evolve with market practices, regulations, or
scientific advancements, our ability to collect and process required data
may be challenged, exposing us to financial reporting risk in relation to
our climate and ESG disclosures. This could result in the Group having
to re-evaluate its progress towards its ESG-related ambitions, targets
and commitments in the future, resulting in reputational, regulatory
compliance and legal risks.
We recognise the importance of nature-related risks, as well as the
complex interactions and compounding effects of climate and nature-
related risk drivers. Nature-related risks may emerge when
dependencies on natural capital – such as plants, soils and minerals and
ecosystem services – such as water availability and air quality – are
affected by key drivers of nature loss, or when there is a lack of
alignment between an organisation’s impact on the natural
environment and actions to protect, restore or reduce negative impacts
on nature. Such risks can affect both HSBC and our customers through
various channels, including macroeconomic, market, credit,
reputational, regulatory compliance and legal risks.
Businesses are expected to be transparent about their efforts to
identify and respond to the risk of adverse human rights impacts arising
from their business activities and relationships. Failure to manage this
risk may negatively impact people and communities, which in turn may
result in reputational, regulatory compliance and legal risks for HSBC.
Mitigating actions
–We continue to develop our climate risk management capabilities
across four key pillars: governance and risk appetite, risk
management, stress testing and scenario analysis, and disclosures.
–We continue to enhance our approach to managing and mitigating
the risk of greenwashing.
–Our sustainability risk policies form part of our broader risk
management framework and are important mechanisms for
managing risks. Our sustainability risk policies focus on mitigating
reputational, credit, legal and other risks related to our customers’
environmental and social impacts. For further details of our
sustainability risk policies, see page 49.
–Sustainability execution risk has been defined as a new risk type to
help identify and manage the risks around the delivery and
execution of our sustainability strategy. For further details, see page
204.
–We continue to develop our understanding of nature-related risks in
line with European and other emerging regulatory expectations.
–In 2025, we continued to focus on our approach to human rights risk
management relating to the goods and services we buy from third
parties and in respect of our business customers. For further details
of our approach to human rights risk management, see page 58.
–The scope of our financial reporting risk framework includes
oversight of the accuracy and completeness of climate and ESG-
related disclosures. Our risk appetite statement references our
climate and ESG-related disclosures. Our internal controls
incorporate requirements for addressing the risk of misstatement in
climate and ESG-related disclosures. We developed a framework to
support the implementation of controls for climate and ESG-related
disclosures, which includes areas such as process and data
governance, and risk assessment.
–We continue to engage with our customers, investors and
regulators on the management of climate and ESG risks. We also
engage with initiatives, including the Climate Financial Risk Forum,
to help with informing developing practice for climate risk
management.
ÑFor further details of our approach to climate risk management, see ‘Climate
risk’ on page 203.
ÑOur ESG review can be found on page 32.
Financial crime risk
Financial institutions remain under considerable regulatory scrutiny
regarding their ability to detect and prevent financial crime. In 2025,
these risks continued to be exacerbated by rising geopolitical tensions
and ongoing macroeconomic factors. These challenges require not only
the management of conflicting laws and approaches to legal and
regulatory regimes, but also the implementation of more complex and
less predictable sanctions and restrictions on trade and investment.
Amid growing cost of living pressures, we continue to face increasing
regulatory expectations with respect to managing internal and external
fraud and protecting customers. The accessibility and increasing
sophistication of Generative AI (‘GenAI’) can create additional financial
crime risks. While there is potential for the technology to support
financial crime detection, there is also a risk that criminals use GenAI to
perpetrate fraud, particularly scams.
The digitisation of financial services continues to have an impact on the
payments ecosystem, with an increasing number of new market
entrants and payment mechanisms, not all of which are subject to the
same level of regulatory scrutiny or regulations as banks.
Developments in digital assets and currencies have continued at pace,
with an increasing regulatory and enforcement focus on the financial
crimes linked to these types of assets.
We also continue to face increasing challenges presented by national
data privacy requirements, which may affect our ability to manage
financial crime risks across markets.
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Mitigating actions
–We continue to seek to manage sanctions and restrictions on trade
and investment through the use of reasonably designed policies,
procedures and controls, which are subject to ongoing testing and
enhancements.
–We continue to develop our fraud controls and invest in capabilities
to fight financial crime through the application of advanced analytics
and AI, while monitoring technological developments and engaging
with third parties.
–We continue to assess the impact of a rapidly changing payments
ecosystem, as well as risks associated with direct and indirect
exposure to digital assets and currencies, in an effort to maintain
appropriate financial crime controls.
–We engage with regulators, policymakers and relevant international
bodies, to improve the effectiveness of managing financial crime
risk through changes to international standards, guidance and
legislation, including seeking to address data privacy challenges.
Digitalisation and technological
advances risk
Developments in technology and changes to regulations are enabling
new entrants to the industry, particularly with respect to payments.
This challenges us to continue innovating, enhancing efficiency, and
adapting our products to attract and retain customers, which may
require increased investment to meet evolving customer needs. We
aim to ensure that new digital capabilities do not weaken our resilience
or wider risk management capabilities.
New technologies such as GenAI, large language models, blockchain,
and quantum computing not only offer business opportunities but also
pose potential risks for HSBC. As with the use of all technologies, we
aim to maximise their potential while seeking to ensure a robust control
environment is in place to help manage the inherent risks.
Mitigating actions
–We continue to monitor this emerging risk and advances in
technology, as well as changes in customer behaviours, to
understand how these may impact our business.
–We assess new technologies to help develop appropriate controls
and maintain resilience.
–We closely monitor and assess financial crime risk and the impact
on payment transparency and wider payment infrastructure.
–We conduct risk assessments and have governance in place (for
example on AI and digital assets and currencies) to help enable
Group-wide cross-risk focus on areas of emerging technology.
–We seek to be transparent as to how we are engaging with new
technology innovation, for example publishing HSBC’s Principles for
the Ethical Use of Data and AI.
–We continue to make improvements to our related policies and to
our control framework to enhance the end-to-end management of
risks from new technology innovations.
Evolving regulatory environment risk
We operate across a range of highly regulated markets, designed to
protect customers, ensure the stability of the financial system and
prevent financial crime. Regulatory approvals and permissions are
required to operate in these markets. The approach to regulation is
increasingly fragmented, including in relation to AI and digital assets,
and a trend towards deregulation has emerged in some jurisdictions,
concurrently with regulatory actions to support business growth.
Mitigating actions
–We proactively manage relationships with regulators globally
covering a range of topics which include but are not limited to:
prudential requirements; operational resilience; resolvability; financial
reporting and data; ESG; conduct; sound risk and financial crime risk
management practices. We also engage with financial services
regulators to inform them of changes to the business and to
address their concerns, including meetings with them to discuss
strategic contingency plans, including those arising from geopolitical
issues.
–We monitor and track regulatory developments to understand the
evolving regulatory landscape and implement necessary changes
required by legislation and regulations.
–We engage with governments and regulators directly, and by
responding to formal consultations, to help shape legislation and
regulations to support our customers and strategic objectives.
Internally driven
Data risk
We use multiple systems and an increasing volume of data to support
our customers. Risk arises if data is incorrect, unavailable, misused or
unprotected. Like other banks and financial institutions, we must
comply with external regulatory obligations and laws governing data,
such as the Basel Committee on Banking Supervision’s 239
(‘BCBS239’) principles and the UK/EU General Data Protection
Regulation.
Mitigating actions
–We actively monitor the quality, availability and security of data that
supports our customers and internal processes, seeking to address
any identified issues.
–We continue to make regular improvements to our data policies and
control framework, including trusted sources, data flows and data
quality, to enhance comprehensive management of data risk.
–We seek to protect customer data through our data privacy
processes and controls, which set practices, design principles and
guidelines to help ensure compliance with data privacy laws and
regulations.
–We have established a comprehensive Risk Data Aggregation and
Risk Reporting framework, seeking to ensure compliance with
BCBS239 principles.
–We continue to modernise our data and analytics infrastructure
through investments in cloud technology, data visualisation,
machine learning and AI.
–We provide regular mandatory training globally to educate our
employees on data risk management, seeking to ensure they know
how to process and protect data effectively.
Risks arising from the receipt of services
from third parties
We use third parties to provide a range of goods and services. It is
critical that we seek to have appropriate risk management policies,
processes and practices over the selection, governance and oversight
of third parties and their supply chain, particularly for key activities that
could affect our operational resilience. Any deficiency in the
management of risks associated with our third parties could affect our
ability to support our customers and meet regulatory expectations.
Mitigating actions
We continue to:
–monitor the effectiveness of the controls operated by our third-party
providers and request third-party control reports, where required;
–develop the management of our intra-group arrangements using
equivalent control requirements as we apply to external third-party
arrangements;
–strengthen our due diligence and monitoring capabilities in respect
of the financial stability of our third parties;
–strengthen third-party risk oversight across all non-financial risks and
to enhance our processes and framework;
–enhance reporting capabilities to help improve the visibility of risk
and enable more robust management of our material third parties by
our business segments, functions and regions; and
–implement changes required by new regulations.
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Model risk
Model risk remains a key area of focus given the regulatory scrutiny in
this area, with local regulatory exams taking place in many jurisdictions
and uplifted requirements from the PRA’s supervisory statement 1/23
(‘SS1/23’) being implemented.
We continued to prioritise the redevelopment of internal ratings-based
(‘IRB’) and internal model methods (‘IMM’) models, in relation to
counterparty credit, as part of the IRB repair and Basel 3.1 and
Fundamental Review of the Trading Book programmes. We have a key
focus on enhancing the quality of data used as model inputs and
ensuring that models adhere to both the letter and spirit of the
regulation. Some models have been approved, and a number are
pending approval decisions from the UK’s Prudential Regulation
Authority (‘PRA’) and other key regulators. We are a year into a major
project to redevelop our Wholesale IRB models which are expected to
be submitted for regulatory approval over the next two years. Should
the agreed timelines not be met, there is a potential risk of
requirements to hold additional capital or fines being applied by
regulators.
Focus remains on AI and machine learning models given the rapid pace
of technological advances, including the development of GenAI and
agentic AI (autonomous systems powered by AI agents). AI is driving
significant changes in modelling techniques, and regulators across the
globe are beginning to publish regulations and guidance.
Mitigating actions
–We are investing in the redevelopment of our IRB models used in
our wholesale businesses to enhance our modelling capability and
help ensure we meet regulatory expectations for the adoption of
Basel 3.1 requirements.
–We further enhanced our Model Risk Management (‘MRM’)
framework to meet the requirements of the PRA’s SS1/23 with a
programme of work in progress to implement these changes across
our model landscape.
–We completed the identification of tools that meet the definition of
Deterministic Quantitative Methods (‘DQMs’), which are complex
and material calculators, and although not technically models, they
present similar risks. We have now commenced a programme for
uplifting the controls for these DQMs.
–We made changes to our Model Risk Governance committees at
the Group, business and functional levels as part of our
organisational simplification, to help ensure they continue to provide
effective and efficient oversight of model risk.
–Model Risk Management works closely with businesses to support
the development of IRB/IMM/IMA/IFRS 9/stress testing models by
providing independent validation, review and challenge to help meet
risk management, pricing, capital management, and credit risk
measurement needs.
–Additional assurance work is performed by the model risk
governance teams, which act as second lines of defence. The
teams test whether controls implemented by model users comply
with model risk policy and if model risk procedures are adequate.
–Models using AI or GenAI techniques are reviewed by the relevant
risk teams and monitored by the business to help ensure that
identified risks have adequate oversight and review. A framework
has been developed to manage the range of risks that are generated
by these advanced techniques and to recognise the multidisciplinary
nature of these risks.
–We have enhanced our inventory control to apply heightened
scrutiny of agentic AI use cases before deployment.
Strategic execution risk
Effective management of strategic execution risk is essential to
delivering our strategy, fulfilling shareholder expectations, and
sustaining stakeholder confidence. To achieve the Group’s strategic
commitments, it is essential to engage in effective financial resource
planning that helps ensure safe and sustainable delivery of strategic
outcomes. Strategic execution risk remains elevated due to the
complexity and scale of ongoing strategic, regulatory and technological
change. It is critical to uphold and enhance strategic execution risk
controls and monitoring.
Mitigating actions
–We have refreshed our Strategic Risk Policy to strengthen control
requirements.
–We have clarified strategic execution risk management
requirements and oversight accountabilities.
–The Group Finance Management Meeting oversees the prioritisation
and funding, strategic alignment, and management of strategic
execution risk for transformative initiatives. Additionally, the HSBC
Holdings Board provides enhanced oversight over the simplification
programme, directly supervising its mobilisation and delivery.
–We have updated our strategic execution risk metrics and reporting
to help support improved monitoring and oversight of performance.
Risks associated with workforce
capability, capacity and environmental
factors with potential impact on growth
Our business segments and functions in all of our markets are exposed
to risks associated with workforce capacity challenges, including
challenges to retain, develop and attract high-performing employees in
key labour markets, the evolving skills requirements of our workforce
and compliance with employment laws and regulations. Failure to
manage these risks may have an impact on the delivery of our strategic
objectives. It could also result in poor customer outcomes or a breach
of employment laws and regulations, which may lead to regulatory
sanctions or legal claims.
Mitigating actions
–We seek to promote an inclusive workforce and provide health and
wellbeing support. We continue to build our speak-up culture
through active campaigns.
–We monitor hiring activities and levels of employee attrition, with
each business and function putting in place plans to help ensure
they have effective workforce forecasting to meet business
demands.
–We monitor people risks that could arise due to the implementation
of organisational restructuring, seeking to ensure that we manage
redundancies sensitively and support impacted employees. We
encourage our people leaders to focus on talent retention at all
levels, with an empathetic mindset and approach, while ensuring
the whole proposition of working at HSBC is well understood.
–Our Future Skills curriculum aims to provide skills that enable
employees and HSBC to be successful in the future.
–We develop succession plans for key management roles, with
oversight from the Group Operating Committee.
–We have introduced ‘How We Lead’, a new Group-wide leadership
framework designed to shape the way we operate. This initiative
brings with it a new set of Leadership Principles, and we expect it to
drive meaningful changes in our ways of working across the
organisation.
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Risk factors
We have identified a suite of risk factors that cover a broad range of
risks to which our businesses are exposed. These risks have the
potential to have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position, strategy,
reputation and/or customers.
They may not necessarily be deemed as top or emerging risks;
however, they inform the ongoing assessment of our top and emerging
risks that may result in our risk appetite being revised. The risk factors
are set out below.
Macroeconomic and geopolitical risk
Economic and market conditions and
geopolitical developments may
adversely affect our financial condition
and results
Our earnings are affected by global and local economic, financial and
geopolitical changes. Uncertain economic conditions and volatile
markets can create a challenging operating environment for our
business operations.
HSBC has experience of financial and operational loss sustained as a
consequence of the economic cycle, financial crises and wars. Our
earnings, operations and operating model have been and could in future
be affected by the following factors:
–The economic cycle: Deteriorating business, consumer or investor
confidence and lower levels of investment and productivity growth,
may lead to economic recession and lower customer and client
activity. Rapid changes to the economic environment can also
create challenging operating conditions for financial institutions such
as HSBC and may affect our earnings and profits. The volatility of
US trade and tariff policies remains a key source of uncertainty.
Changes to tariff rates, including sector-specific levies, may deter
capital investment and consumer spending, disrupt supply chains
and reduce global trade growth. A broader escalation of tariffs, and a
potential trade war remain a risk. Policy uncertainty may also deter
businesses from hiring. During 2025, unemployment rose across
many of our major markets, and there remains a risk of further
increases if layoffs begin to increase more significantly, employment
growth continues to be constrained by uncertainty, or if investment
in artificial intelligence (’AI’) starts to yield productivity gains that
reduce demand for labour. Slowing growth in China over the second
half of 2025 also suggests that additional economic policy support
may be needed to stimulate domestic growth. Weak growth, higher
unemployment and rising costs could affect the earnings and
activity of our customers, which could, in turn, reduce demand for
our products and services.
–Inflation and monetary policy: The future path for interest rates
remains uncertain and changes to interest rate expectations could
affect net interest income, the fair value of our assets and liabilities
and overall financial performance. The combined pressure of tariffs,
persistent inflation and restrictive interest rates could have material
impacts on our customers as these factors could erode real
purchasing power, increase debt service costs and weigh on real
estate and other asset prices. High interest rates may affect the
credit rating of our customers and their ability to repay debt. This
could negatively impact the Group’s risk-weighted assets (’RWAs’)
and capital position, resulting in increases in expected credit losses
and other impairment charges (’ECL’) and potential liquidity stresses
due to, amongst other factors, increased customer drawdowns.
There could be further adverse impacts on the Group’s income if
high rates were to result in lower lending volumes and weaker
wealth and insurance revenue. Alternatively, lowering interest rates,
while stimulating demand for new lending, could reduce revenue
from net interest margins and profitability. Major central banks,
including the US Federal Reserve, the European Central Bank and
the Bank of England (‘BoE‘), eased monetary policy during 2025 as
higher inflation risks were seen to diminish as unemployment rose.
However, that trajectory could be disrupted if wage growth, tariffs
or key commodity prices keep inflation higher for longer.
–Financial stability: Changing economic conditions and shifting policy
create a more uncertain and volatile environment for asset markets.
Financial markets have seen significant gains over 2025, including in
the AI and the technology sectors, supported by the decline in short-
term interest rates. The investment in these sectors may lead to
future gains to productivity, while high equity market valuations may
create a tailwind from positive wealth effects. However, current
high valuations also raise the risk of a material fall in the markets, if
the expected gains to productivity fail to materialise. This could
adversely affect economic growth, which may, in turn, have an
adverse impact on HSBC’s risk profile and earnings by increasing
the financial vulnerability of customers and decreasing the value of
collateral and other claims. The depreciation of the US dollar through
2025 driven by changing interest rates and tariff policy uncertainty,
is also an area of focus due to the associated hedging and
revaluation risks. Elevated volatility is expected to persist,
reflecting concern over fiscal sustainability and an increasingly
complex fiscal and monetary policy environment. Exchange rate
volatility may affect our risk exposure through mark-to-market
changes in trading positions and the translation effects of currency
movements.
–Fiscal policy and high levels of government debt: Debt levels in
many of our major markets have continued to rise due to higher
social welfare costs and increased expenditures on defence and
climate transition. Rising government debt and high interest
payments could adversely affect the fiscal capacity and debt
sustainability of highly indebted sovereign issuers. Emerging
markets with substantial debt and weak fiscal positions may also
face increased repayment costs, heightened refinancing risks and
greater likelihood of sovereign rating downgrades. A fragmented
political landscape in many markets has diminished the political will
for fiscal tightening. These factors could drive higher refinancing
costs and could lead to tax increases that prove negative for growth.
Uncertainty about future taxation could undermine confidence,
business investment and consumer spending, which would be
negative for the Group’s retail and corporate operations in various
markets. Additionally, where HSBC has exposure to such
sovereigns or related parties, it could incur losses. At the same
time, sovereign rating downgrades and/or a disorderly increase in
long-term government funding costs, could increase the cost of
funding for HSBC and/or limit access to market funding, resulting in
an adverse impact on interest margins and liquidity.
–Longer term trends: Strategic competition between countries is
reshaping trading relationships and increasing the focus on long-
term economic and supply chain security, which could adversely
affect the Group and our customers. Diversification in trade
invoicing currencies, payment systems and reserve holdings is also
increasing as a consequence of these trends, raising liquidity and
volatility risks, as well as increasing operational complexity.
Evolving demographics, including population ageing and changing
migration patterns, may also result in changes to long-term savings
and investment behaviours, including reduced demand for bank
borrowing.
–Geopolitical risks: Geopolitical risks remain high. The disruption of
key supply routes caused by geopolitical conflicts has continued to
impact global supply chains. The Russia-Ukraine war and further
conflict or military action, in the Middle East, Venezuela or
elsewhere, could impact economic activity regionally or globally
which, if continued for a prolonged period, could have a material
adverse effect on the Group’s business, financial condition, results
of operations, prospects, liquidity, capital position and credit ratings.
(For further details see ’We are subject to political, social and other
risks in the countries in which we operate’).
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Adverse changes to the current economic, financial and geopolitical
situation including in relation to any of the factors listed above, could
result in:
–Idiosyncratic losses: Impairment estimates attempt to capture the
effects of economic, financial and geopolitical risks in the aggregate,
but credit losses on specific exposures, with idiosyncratic features
that make them particularly susceptible to the risks described
above, may not be fully captured in our impairment estimates;
–Sector-wide impairment: Changing economic conditions, policies
and funding costs may give rise to a deterioration in specific
industries and sectors that may reduce the creditworthiness of our
customers. For example, in mainland China, excess supply
conditions continued to weigh on the property market, despite
various central government policies introduced to support the
property market and wider economy. In contrast, the Hong Kong
real estate market showed some signs of recovery in the second
half of 2025, particularly in the residential segment, supported by
lower interest rates. Nevertheless, valuation pressures and liquidity
constraints are expected to continue in the near term, particularly for
mid-sized and sub-investment grade corporates. In addition, certain
products, sectors and countries may be targeted by material
increases in trade tariffs, potentially driving a slowdown in export
demand;
–Reduced credit demand: The demand for borrowing from
creditworthy customers may diminish during periods of recession or
where economic activity slows or remains subdued;
–A tightening of financial market conditions: Our ability to borrow
from other financial institutions or to engage in funding transactions
may be adversely affected by market disruption; and
–Goodwill and intangibles: A changing economic and geopolitical
outlook may change the recoverable value of assets and necessitate
a write down in the value of intangible balance sheet items such as
goodwill.
Provisioning against credit loss is conducted under the IFRS 9 ‘Financial
Instruments’ (IFRS 9) calculations of ECL, which use forward looking
scenarios that incorporate the economic and financial risks detailed
above. In the fourth quarter of 2025, HSBC’s Central scenario, which
has the highest probability weighting, assumes that GDP growth in
many of our major markets will remain stable, or slow down in 2026,
relative to 2025. Slower growth is assumed to result from the higher
global tariffs and weaker labour market conditions across major
economies. The scenario also assumes that central banks will cut
policy interest rates further over 2026, as inflation is expected to
converge towards official target rates.
However, forecasts remain uncertain, and changing economic
conditions and the materialisation of key risks could reduce the
accuracy of our Central scenario. There remains uncertainty regarding
the adequacy of our models in capturing credit losses under emerging
risks which are not captured by the historical loss experience of our
models, or to effectively distinguish risks for specific sectors and
portfolios. Our financial model outputs (including retail and wholesale
credit models such as IFRS loss models) continue to be monitored and
management judgemental adjustments are used where modelled ECL
does not fully reflect the identified risks and related uncertainty, or to
capture significant late-breaking events. Nevertheless, our model
outputs may fail to accurately capture the effects of complex economic,
financial and geopolitical risks. See also ’We could incur losses or be
required to hold additional capital as a result of model limitations or
failure‘.
The occurrence of any of these events or circumstances could have a
material adverse effect on our business, financial condition, results of
operations, prospects and customers.
We are subject to political, social and
other risks in the countries in which we
operate
We operate through an international network of subsidiaries and
affiliates across countries and territories around the world. Our global
operations are subject to potentially unfavourable political, social,
environmental and economic developments in such jurisdictions, which
may include:
–coups, armed conflict or acts of terrorism;
–political and/or social instability;
–geopolitical tensions;
–epidemics and pandemics (such as the Covid-19 pandemic);
–climate change, acts of God and natural disasters (such as floods
and hurricanes); and
–infrastructure issues, such as transportation and power failures.
Each of the above could impact RWAs, and the financial losses caused
by any of these risk events or developments could impair asset values
and the creditworthiness of customers.
These risk events or developments may also give rise to disruption to
the Group’s services and some may result in physical damage to our
operations and/or risks to the safety of our personnel and customers.
Geopolitical tensions could have significant ramifications for the Group
and its customers. In particular:
–Throughout 2025, the US government announced far-reaching tariffs
against a broad spectrum of countries, including the UK, China, the
EU, Canada, India, and Mexico. Although subsequent bilateral and
multilateral negotiations have moderated certain tariff rates,
particularly in sectors deemed critical to domestic supply chains,
there is a possibility that these deals are replaced by alternative US
tariffs on different terms, and the overall trade policy environment
remains fluid and unpredictable;
–While globalisation appears to remain deeply embedded in the
international system, it is increasingly challenged by protectionism,
including trade tariffs. The broad geographic footprint and coverage
of HSBC may make us and our customers susceptible to
protectionist measures taken by national governments and
authorities, including imposition of trade tariffs, restrictions on
market access and investment, restrictions on the ability to transact
on a cross-border basis, expropriation, restrictions on international
ownership, interest rate caps, limits on dividend flows and increases
in taxation. There may be uncertainty as to the conflicting nature of
such measures, their duration, the potential for escalation, and their
potential impact on global economies;
–Following the US military operation in Venezuela, further action
elsewhere remains possible. Such developments, including the
actual or threatened use of force, could have regional or global
economic and political implications, leading to further trade
disruption. (For further details, see ’Economic and market conditions
and geopolitical developments may adversely affect our financial
conditions and results’);
–Sanctions and restrictions on trade and investment are continually
evolving in response to geopolitical events and may adversely affect
the Group, its customers and the markets in which the Group
operates. These factors may result in increased legal, regulatory,
reputational and market risks, and a more complex operating
environment;
–The Russia-Ukraine war along with related financial sanctions, trade
restrictions and Russian countermeasures, has had global economic
and political implications. The US, the UK, and the EU, as well as
other countries, have continued to impose sanctions against Russia.
The US retains broad discretion to impose sanctions on non-US
financial institutions that knowingly or unknowingly engage in
transactions or provide services to sanctioned parties or otherwise
involve Russia’s military-industrial base. The imposition of such
sanctions against any non-US HSBC entity could result in significant
adverse commercial, operational, and reputational consequences for
HSBC;
–Strategic competition between the US and China, including in the
form of escalation and de-escalation over tariffs, sanctions, export
controls, the trade of rare earth minerals and semiconductors, and
cross-border investment restrictions, have increased risk and
uncertainty. Diplomatic tensions between China and the US and
related actions, which may extend to and involve other countries,
and developments in Hong Kong and Taiwan and the surrounding
maritime region, may further adversely affect the Group.
Developments in alternative payment systems, such as projects to
explore how tokenised commercial and central bank money could be
used for cross-border payments, continue with implications for the
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future architecture of global finance. Development of new payments
infrastructure and use of alternative currencies may present operational
and other challenges, if, for example, certain governments mandate the
use of payment channels that do not integrate with our payment
architecture and financial crime controls.
Global tensions over trade and technology are resulting in divergent
regulatory standards and compliance regimes, presenting long-term
strategic challenges for multinational businesses such as HSBC. As the
geopolitical landscape evolves, compliance by multinational
corporations with their legal or regulatory obligations or other initiatives
in one jurisdiction may be seen as supporting the law or policy
objectives of that jurisdiction over another, creating additional legal,
regulatory, reputational and political risks for the Group. The financial
impact on the Group of geopolitical risks in Asia is heightened due to
the region’s relatively high contribution to the Group’s profitability,
particularly in Hong Kong.
While it is the Group’s policy to comply with all applicable laws and
regulations of all jurisdictions in which it operates, geopolitical tensions,
and potential ambiguities in the Group’s compliance obligations,
continue to present challenges and risks for the Group and could have a
material adverse impact on the Group‘s strategy, business, customers,
operations, financial results and reputation.
We are subject to financial and non-
financial risks associated with
Environmental, Social and Governance
(‘ESG‘) related matters, such as climate
change, nature-related and human rights
issues
ESG-related matters such as climate change, society’s impact on
nature and human rights issues bring risks to our business, our
customers and wider society. If we fail to meet evolving regulatory
expectations or requirements relating to these matters, this could have
regulatory compliance and reputational impacts.
Climate change could have both financial and non-financial impacts on
HSBC either directly or indirectly through our business activities and
relationships. Our climate risk approach identifies physical risk and
transition risk as primary drivers of climate risk. We continue to identify
the risk of greenwashing as a thematic risk issue related to climate risk,
which may arise if we knowingly or unknowingly make inaccurate,
unclear, misleading or unsubstantiated claims regarding sustainability to
our stakeholders.
Physical risk may arise from the increased frequency and severity of
extreme weather events, such as hurricanes and floods or chronic
gradual shifts in weather patterns or rises in sea level.
Transition risk may arise from the process of moving to a net zero
economy including changes in government policy and legislation,
technology, market demand and reputational implications triggered by a
change in stakeholder expectations in relation to our action or inaction.
We currently expect the following to be the most likely ways in which
climate risk may materialise for the Group:
–credit risk may increase if climate-related regulatory, legislative or
technological changes impact customers' business models or if
extreme weather events disrupt or interrupt operations, resulting in
financial difficulty for customers and/or stranded assets, or
impacting their ability to repay their debts. Clients may find that their
business models fail to align to a net zero economy or face
disruption to their operations or deterioration to their assets as a
result of extreme weather;
–trading losses if climate change results in changes to
macroeconomic and financial variables which negatively impact our
trading book exposures;
–liquidity impacts in the form of deposit outflows due to changes in
customer behaviours driven by impacts to profitability and wealth, or
from reputational concerns relating to the progress we make
towards our ESG-related ambitions, targets and commitments;
–our real estate portfolios may be impacted due to changes to the
climate, an increase in the frequency and severity of extreme
weather events and chronic gradual shifts in weather patterns,
which could impact both property values and the ability of borrowers
to afford their mortgage payments. This may lead to the reduced
availability or increased cost of insurance, including insurance that
protects property pledged as collateral for HSBC mortgages;
–operational risk may increase if extreme weather events impact
critical operations and premises;
–regulatory compliance risk may result from the increasing pace,
breadth and depth of climate-related regulatory expectations,
including on the management of climate risk, and variations in
climate-related external reporting standards and taxonomies,
requiring implementation in short timeframes across multiple
jurisdictions;
–conduct risk may arise in association with the increasing demand for
’green‘ or ’sustainable‘ products where there are differing and
developing standards or taxonomies;
–reputational risks may arise from how we decide to support our
customers in high-emitting sectors in their transition to net zero, the
preferences of different stakeholders in relation to our approach to
the transition to net zero, and if we make insufficient progress in
achieving our ESG-related ambitions, targets and commitments; and
–model risk may arise from the uncertain and evolving impacts of
climate change, as well as data and methodology limitations, which
present challenges to creating reliable and accurate model outputs.
We may face heightened reputational, regulatory compliance, and legal
risks as we advance towards our ESG-related ambitions, targets and
commitments. Stakeholders are likely to scrutinise our actions,
including the formulation of our ESG and sustainability risk policies, our
disclosures, and our financing and investment decisions in relation to
these ambitions, targets and commitments. Additional risks may arise if
we fail to:
–make sufficient progress towards our ESG-related ambitions,
targets and commitments;
–set adequate plans and execute, or adapt those plans as necessary,
in response to changes in the external environment;
–manage the risks associated both with meeting and not meeting our
ESG-related ambitions, targets and commitments; and
–meet evolving regulatory expectations and requirements on the
management of ESG risks.
We may also face risks related to climate and ESG-related litigation and
regulatory enforcement. This could occur directly if stakeholders
believe we are not effectively managing these risks, or indirectly if our
customers are involved in litigation, which might lead to a revaluation of
their assets.
Requirements, policy objectives, expectations, views or market and
public perceptions and preferences in connection with the transition to
a net zero economy and ESG-related matters may vary by jurisdiction
and stakeholder, particularly in light of the differing perspectives and
responses to climate change of stakeholders in different markets, such
as the UK, the US, the EU and others. We may be subject to potentially
conflicting approaches to ESG matters in certain jurisdictions, which
may impact our ability to conduct certain business within those
jurisdictions or result in additional regulatory compliance, reputational,
political or litigation risks.
For example, our reputation and client relationships may be damaged
as a result of our decision to participate, or not to participate, in certain
projects perceived to be associated with causing or exacerbating
climate change, as well as any decisions we make to continue to
conduct or change our activities in response to considerations relating
to climate change, including the transition to net zero. These risks may
also arise from divergence in the implementation of ESG, climate policy
and financial regulation in the many regions in which we operate,
including initiatives to apply and enforce policy and regulation with
extraterritorial effect.
We recognise the importance of nature-related risks, as well as the
complex interactions and compounding effects of climate and nature-
related risk drivers. Nature related-risks may emerge when
dependencies on natural capital - such as plants, soils and minerals -
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and ecosystem services - such as water availability and air quality - are
affected by key drivers of nature loss, or when there is a lack of
alignment between an organisation’s impact on the natural
environment and actions to protect, restore or reduce negative impacts
on nature. Such risks can affect both HSBC and our customers through
various channels, including macroeconomic, market, credit,
reputational, regulatory compliance, and legal risks.
Businesses are expected to be transparent about their efforts to
identify and respond to the risk of adverse human rights impacts arising
from their business activities and relationships. Failure to manage this
risk may negatively impact people and communities, which in turn may
result in reputational, regulatory compliance and legal risks for HSBC.
Our strategy and business model, including our products, services, and
risk management processes, will need to continue to evolve to align
with evolving regulatory requirements, stakeholder expectations and to
manage ESG-related risks. This may involve adapting the way we
measure and manage both financial and non-financial risks associated
with ESG matters. Achieving our strategy with respect to ESG matters,
including any related ambitions, targets and commitments we may set,
depends on a number of factors beyond the Group’s control, such as
technological advancements and supportive public policies in our
operating markets. If these external factors do not materialise or are
delayed, we may not meet our ESG-related ambitions, targets and
commitments.
We may encounter financial reporting risks concerning our climate and
ESG disclosures due to the limited quality and consistency of available
data. Such uncertainty poses a risk of relying on incomplete or
inaccurate data and models, potentially leading to sub-optimal decision-
making. As methodologies, data, scenarios, and industry standards
evolve with market practices, regulations, or scientific advancements,
our ability to collect and process required data may be challenged,
exposing us to financial reporting risk in relation to our climate and ESG
disclosures. Such developments could also necessitate revisions to our
internal measurement frameworks and reported data, including on
financed emissions, making year-on-year comparisons difficult. This
could result in the Group having to re-evaluate its progress towards its
ESG-related ambitions, targets and commitments in the future,
resulting in reputational, regulatory compliance and legal risks.
If any of the above risks materialise, this could have financial and non-
financial impacts for HSBC which could, in turn, have a material adverse
effect on our business, financial condition, results of operations,
reputation, prospects and strategy.
The UK’s trading relationship with the
EU, following the UK’s withdrawal from
the EU, may adversely affect our
operating model and financial results
The uncertain outcome of potential developments relating to the
financial services trading relationship between the UK and EU, including
the rules under which financial services may be provided on a cross-
border basis into the EU and its member states, remains a source of
risk for the Group.
The EU Capital Requirements Directive (’CRDVI’), which EU member
states are in the process of transposing into national law, introduces a
new requirement (‘the EU branch requirement’) under which non-EU
banks and significant investment firms would have to establish a
branch in each EU member state in which they carry out ‘core banking
activities’, defined as deposit taking, lending and guarantees, and
commitments. The EU branch requirement, which will be subject to
certain exclusions and exemptions will generally come into effect on 11
January 2027, although precise effective dates vary across EU member
states. Grandfathering of cross border core banking contracts entered
into before 11 July 2026 is provided for under CRDVI, although the
availability of such grandfathering may vary subject to transposition by
EU member states.
The Financial Services and Markets Act (‘FSMA’) 2023 became law in
June 2023 and provides for a number of changes to the regulatory
architecture in the UK. It contains provisions that would allow for
specified ‘onshored’ EU legislation, also known as ‘retained EU law’ or
‘REUL’ (and known as ‘assimilated law’ after 1 January 2024), to be
revoked and replaced by legislation or rules made by HM Treasury or
the regulators. FSMA 2023 allows for the eventual repeal of assimilated
law related to financial services and enables the government and
regulators to replace it in line with the FSMA model. Each piece of
assimilated law related to financial services is now within a ‘transitional
period’, lasting until its repeal is individually commenced by HM
Treasury in a phased and sequenced manner. Furthermore, as of 1
January 2024, certain legal effects previously associated with REUL
(now referred to as assimilated law) no longer apply, including the
supremacy of REUL over other types of conflicting domestic UK law,
general principles of EU law (which informed REUL’s interpretation and
application) and directly effective EU rights.
Uncertainty remains as to the extent to which EU and UK laws will
diverge in the future, as a result of the future repeal of assimilated law
under FSMA 2023 or further development of the EU‘s own regulatory
regime. In particular, the UK is in the process of revoking the remainder
of the assimilated version of the Capital Requirements Regulation and
replacing it with rules published and maintained by the Prudential
Regulation Authority (’PRA’), which will also reflect the UK’s
implementation of the Basel Committee on Banking Supervision‘s
(’BCBS’) final reforms to the prudential framework (’Basel 3.1’).
Any changes to the current EU and UK banking and financial services
rules, including as a result of the EU branch requirement, the UK’s
revocation and replacement of EU-derived laws, the UK and EU
implementation of Basel 3.1 reforms and any further divergences
between the two legal regimes, could require modifications to our UK
and EU operating models, with resulting impacts to our customers and
employees. The precise impacts on our customers will depend on the
nature of any developments and their individual circumstances and
could include disruption to the provision of products and services, and
this could in turn increase operational complexity and/or costs for the
Group.
More generally, over the medium to long term, the UK’s withdrawal
from the EU and the operation of the Trade and Cooperation
Agreement agreed between the EU and the UK (and any complexities
that may result therefrom), may lead to increased market volatility and
economic risk, particularly in the UK, which could adversely impact our
profitability and prospects for growth in this market.
In addition, the UK’s future trading relationship with the EU and the rest
of the world will likely take a number of years to fully stabilise. This may
result in a prolonged period of uncertainty, unstable economic
conditions and market volatility. This could include reduced international
trade flows and loss of export market shares, as well as currency
fluctuations. If any of the above risks materialise, this could have a
material adverse effect on our business, financial condition, results of
operations, reputation, prospects and strategy.
We operate in markets that are highly
competitive
We compete with other financial institutions in a highly competitive
industry that continues to undergo significant change as a result of
financial regulatory reform, as well as increased public scrutiny and a
continued challenging macroeconomic environment.
We target internationally mobile customers who need sophisticated
global financial solutions. We generally compete on the basis of the
quality of our customer service, the variety of products and services
that we can offer our customers, the ability of our products and
services to satisfy our customers’ needs, the extensive distribution
channels available for our customers, our innovation, and our
reputation. Continued and/or increased competition in any one or all of
these areas may negatively affect our market share and/or require
increased capital investment in our businesses in order to remain
competitive.
In the highly competitive markets in which we operate, our ability to
reposition or reprice our products and services from time to time may
be limited, and could be influenced significantly by the actions of our
customers or competitors. Any changes in the types of products and
services that we offer our customers, and/or the pricing for those
products and services, could result in a loss of customers and market
share.
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Developments in technology and changes to regulations are enabling
new entrants to the industry. This challenges HSBC to continue
innovating and taking advantage of new digital capabilities so that we
improve how we serve our customers, drive efficiency and adapt our
products to attract and retain customers. As a result, we may need to
increase our investment in our business to adapt or develop products
and services to respond to evolving customer needs and regulatory
requirements. New digital capabilities have the potential to weaken our
resilience or wider risk management capabilities. If HSBC fails to
develop and adapt its products and services to take advantage of new
digital capabilities this could have an adverse impact on our business.
The digitisation of financial services continues to have an impact on the
payment services ecosystem, including new market entrants and
payment mechanisms, not all of which are subject to the same level of
regulatory scrutiny or regulations as financial institutions. This presents
ongoing challenges in terms of maintaining required levels of payment
transparency, notably where financial institutions serve as
intermediaries. Developments around digital assets and currencies
have continued at pace, with an increasing regulatory and enforcement
focus.
Any of these factors could have a material adverse effect on our
business, financial condition, results of operations, prospects and
reputation.
Changes in foreign currency exchange
rates may affect our results
We prepare our accounts in US dollars because the US dollar and
currencies linked to it form the major currency bloc in which we
transact and fund our business. However, a substantial portion of our
assets, liabilities, assets under management, revenues and expenses
are denominated in other currencies. Changes in foreign exchange
rates, including those that may result from a currency becoming de-
pegged from the US dollar, may have an effect on our accounting
standards, reported income, cash flows and shareholders’ equity.
Unfavourable changes in foreign exchange rates could have a material
adverse effect on our business, financial condition, results of
operations, capital position and prospects.
Market fluctuations may reduce our
income or the value of our portfolios
Our businesses are inherently subject to risks in financial markets and
in the wider economy, including changes in, and increased volatility of,
interest rates, inflation rates, credit spreads, foreign exchange rates,
commodity, equity, bond and property prices, and the risk that our
customers act in a manner inconsistent with our business, pricing and
hedging assumptions.
Market pricing can be volatile and ongoing market movements could
significantly affect us in a number of key areas. For example, banking
and trading activities are subject to interest rate risk, foreign exchange
risk, inflation risk and credit spread risk. Changes in interest rate levels,
interbank spreads over official rates and yield curves affect the interest
rate spread realised between lending and borrowing costs. The
potential for future volatility and margin changes remains. See
‘Economic and market conditions and geopolitical developments may
adversely affect our financial condition and results‘ above regarding the
impact of these on the interest rate environment. Competitive
pressures on fixed rates or product terms in existing loans and
deposits sometimes restrict our ability to change interest rates applying
to customers in response to changes in official and wholesale market
rates. Our pension scheme assets include equity and debt securities,
the cash flows of which change as equity prices and interest rates vary.
Our insurance businesses are exposed to the risk that market
fluctuations may cause mismatches to occur between product liabilities
and the investment assets that back them. Market risks can affect our
insurance products in a number of ways depending upon the product
and the associated contract. For example, mismatches between assets
and liability yields and maturities give rise to interest rate risk. Some of
these risks are borne directly by the customer and some are borne by
the insurance businesses, with their excess capital invested in the
markets. Some insurance contracts involve guarantees and options that
increase in value in adverse investment markets. There is a risk that the
insurance businesses could bear some of the cost of such guarantees
and options. The performance of the investment markets could thus
have a direct effect upon the value embedded in the insurance and
investment contracts and our operating results, financial condition and
prospects.
It is difficult to predict with any degree of accuracy changes in market
conditions, and such changes could have a material adverse effect on
our business, financial condition, results of operations, capital position
and prospects.
Liquidity, or ready access to funds, is
essential to our businesses
Our ability to borrow on a secured or unsecured basis, and the cost of
doing so, can be affected by increases in interest rates or credit
spreads, the availability of credit, regulatory requirements relating to
liquidity or the market perceptions of risk relating to the Group or the
banking sector, including our perceived or actual creditworthiness.
Current accounts and savings deposits payable on demand or at short
notice form a significant part of our funding, and we place considerable
importance on maintaining their stability. For deposits, stability depends
upon preserving investor confidence in our capital strength and liquidity,
and on comparable and transparent pricing.
We also access wholesale markets in order to provide funding for
entities that do not accept deposits, to align asset and liability
maturities and currencies, and to maintain a presence in local markets.
In 2025, we issued the equivalent of $28.1bn of senior debt securities
in the public capital markets in a range of currencies and maturities
from a number of Group entities, including $25.7bn of senior securities
issued by HSBC Holdings.
An inability to obtain financing in the unsecured long-term or short-term
debt capital markets, or to access the secured lending markets, could
have a material adverse effect on our liquidity.
Unfavourable macroeconomic developments, market disruptions or
regulatory developments may increase our funding costs or challenge
our ability to raise funds to support or expand our businesses.
If we are unable to raise funds through deposits and/or in the capital
markets, our liquidity position could be adversely affected, and we
might be unable to meet deposit withdrawals on demand or at their
contractual maturity, to repay borrowings as they mature, to meet our
obligations under committed financing facilities and insurance contracts
or to fund new loans, investments and businesses.
We may need to liquidate unencumbered assets to meet our liabilities.
In a time of reduced liquidity, we may be unable to sell some of our
assets, or we may need to sell assets at reduced prices, which in either
case could materially adversely affect our business, financial condition,
results of operations, capital position and prospects.
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Macro-prudential, regulatory and
legal risks to our business model
We are subject to numerous new and
existing legislative and regulatory
requirements, and to the risk of failure to
comply with applicable regulations
Our businesses are subject to ongoing regulation, policies, voluntary
codes of practice and interpretations in the various markets in which
we operate. A number of regulatory changes affecting our business
have effects beyond the country in which they are enacted. Increased
fragmentation in regulatory requirements may limit our ability to
implement globally consistent standards in response to regulatory
change.
The areas where regulatory changes and increased supervisory
expectations could have a material adverse effect on our business,
financial condition, results of operations, prospects, capital position,
reputation and strategy include, but are not limited to, those listed
below, grouped around prudential and non-prudential themes.
Prudential and related issues
In recent years, regulators and governments have focused on
reforming both the prudential regulation of the financial services
industry and the ways in which the business of financial services is
conducted. The measures taken include enhanced capital, liquidity and
funding requirements, the separation or prohibition of certain activities
by banks, changes in the operation of capital markets activities, the
introduction of tax levies and transaction taxes and changes in
compensation practices. Specific examples of such measures and
initiatives include:
–the implementation of Basel 3.1, which includes changes to the
RWA approaches to credit risk, market risk, operational risk,
counterparty risk and credit valuation adjustments, and the
application of an RWA output floor. The majority of the rules in the
new framework will take effect from 1 January 2027, while the
Internal Model Approach for market risk rules has been delayed until
1 January 2028;
–the UK government‘s Financial Services Growth and
Competitiveness Strategy, which was published in July 2025 and
which re-iterated proposals to reform the UK capital framework for
banks, including reforms to the UK’s bank ring fencing regime.
Finally, the BoE’s Financial Policy Committee (‘FPC’) was asked to
undertake a review of capital levels for banks in the UK. While the
FPC published the initial findings of its review in December 2025,
there remain a number of areas subject to further review, including
the capital buffers, the leverage ratio and the application of the RWA
output floor to the ring-fenced bank;
–enhanced supervisory expectations regarding regulatory reporting,
including increased focus on data integrity, governance, and
controls. To seek to address these expectations, we have been
advancing a programme aimed at strengthening our global
regulatory reporting processes and making them more sustainable,
including enhancing data, consistency and controls and, while this
programme continues, there may be further impacts on some of our
regulatory ratios, such as the common equity tier 1 (‘CET1’) ratio,
the liquidity coverage ratio (‘LCR’), and the net stable funding ratio
(‘NSFR’);
–the financial effects of climate risk and other ESG-related changes
being incorporated within the global prudential framework, including
physical risks from climate change and the transition risks resulting
from a shift to a low carbon economy;
–heightened supervisory concern regarding the growth of private
markets and their interconnection with banks, as demonstrated by
the BoE’s launch of a system-wide exploratory scenario in 2026 and
the PRA’s ‘Dear Chief Risk Officer’ letter on private equity related
financing activities from the PRA in 2024; and
–BCBS’s review of the cryptoassets RWA standard, following delays
in implementation reported by various jurisdictions, which attribute
the postponements to technological advancements in the
cryptoassets sector that have made parts of the Basel standards
outdated.
Non-prudential and related issues
With regard to the non-financial risk agenda, there is a focus on
business practices (including customers and markets), operational and
cyber resilience, AI, digital and technology changes, ESG, payments
and financial crime, including:
–continued focus by regulators, international bodies and policymakers
on banks’ business practices. This includes ensuring fair outcomes
for customers, fostering effective competition and maintaining the
orderly and transparent functioning of global financial markets. We
also continue to focus on employee culture and behaviour,
whistleblowing, and inclusion;
–the EU’s CRDVI Article 21c amendment requiring non-EU entities to
provide core banking services to EU clients through an EU branch or
subsidiary;
–the high regulatory expectations and requirements relating to
various aspects of operational and cyber resilience, and third-party
risks, including an ongoing focus on the response of institutions to
operational disruptions, including those arising out of the application
of the EU’s Digital Operational Resilience Act (‘DORA’), which came
into effect in January 2025;
–regulatory expectations and requirements around the use of AI,
including in connection with, the implementation of the EU’s AI Act
and the US’s AI Action Plan;
–the supervisory and regulatory focus on technology adoption and
digital delivery, underpinned by consumer protection, including in
respect of the use of digital assets and currencies and wider
financial technology risks. For example, the UK FCA and PRA
launched consultations in 2025 relating to stablecoin issuance,
custody of cryptoassets, associated requirements and the regulation
of systemic stablecoins. In the US, the Stablecoin (GENIUS) Act
was signed into law in July 2025. In Hong Kong, the HKMA
Stablecoin Ordinance came into effect in August 2025;
–the ongoing transition of a small number of legacy contracts tied to
benchmark rates that have been demised, which continues to
expose HSBC to regulatory compliance, legal and conduct risks. In
particular, if HSBC does not successfully transition its remaining
legacy contracts to the appropriate replacement benchmarks, this
could lead to reliance on fallback provisions which do not
contemplate the permanent cessation of the relevant demised
benchmark rate or on recently implemented legislative solutions the
operation and enforceability of which may, in certain circumstances,
remain uncertain, and this could result in unfavourable outcomes for
clients and investors;
–compliance with existing and future ESG-related risk management
and disclosure requirements applicable to banks and businesses
more generally, particularly those relating to climate change,
transition plans, greenwashing and supply chain due diligence (such
as requirements under the UK’s Sustainability Disclosure
Requirements, proposed amendments to the EU’s Sustainable
Finance Disclosure Regulation (‘SFDR’) and proposed changes to
the Corporate Sustainability Reporting Directive (‘CSRD’) and the
Corporate Sustainability Due Diligence Directive (‘CSDDD’) in the
EU). The US Agencies (the Federal Reserve Board, the Federal
Deposit Insurance Corporation, the Office of the Comptroller of the
Currency) have rescinded the interagency Principles for Climate-
Related Financial Risk Management for Large Financial Institutions
published in 2023, although various individual US states have issued
their own requirements, such as California's climate disclosure
rules;
–continuing supervisory and regulatory change globally on payment
services and related infrastructure, including future changes in the
EU as a result of the EU’s Third Payment Services Directive (‘PSD3’)
and an accompanying Payment Services Regulation, which are
expected to come into force in 2026; and
–the ongoing expectations with respect to managing emerging
financial crime risks and their impact on customers, managing
conflicting laws and approaches to legal and regulatory regimes, and
implementing complex sanctions and restrictions on trade and
investment.
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We are subject to the risk of current and
future legal, regulatory or administrative
actions and investigations, the outcomes
of which are inherently difficult to
predict
We face significant risks in our business relating to legal, regulatory or
administrative actions and investigations. The amounts of damages
claimed in litigation, regulatory proceedings, investigations,
administrative actions and other adversarial proceedings against
financial institutions remain elevated for many reasons. These reasons
include a substantial increase in the number of regulatory changes
taking place globally, increasing focus from regulators, investors and
other stakeholders on ESG disclosures, including in relation to the
measurement and reporting of such matters as both local and
international standards in this area continue to significantly evolve and
develop, increased media attention, higher expectations from
regulators and the public, and the globalisation of class actions,
including in relation to competition matters and data breach litigation. In
addition, criminal prosecutions of, and civil proceedings involving,
financial institutions for, among other things, alleged conduct breaches,
breaches of anti-money laundering, anti-bribery and anti-corruption and
sanctions regulations, antitrust violations, market manipulation, aiding
and abetting tax evasion, and providing unlicensed cross-border banking
services, have become more commonplace and may increase in
frequency due to increased media attention and higher expectations
from regulators and the public.
Any such legal, regulatory or administrative action or investigation
against HSBC Holdings or one or more of our subsidiaries could result
in, among other things, substantial fines, civil penalties, criminal
penalties, cease and desist orders, forfeitures, the suspension or
revocation of key licences, requirements to exit certain businesses,
other disciplinary actions and/or withdrawal of funding from depositors
and other stakeholders. Any threatened or actual litigation, regulatory
proceeding, administrative action, investigation, or other adversarial
proceedings against HSBC Holdings or one or more of our subsidiaries
could have a material adverse effect on our business, financial
condition, results of operations, prospects and reputation. Additionally,
the Group’s financial statements reflect provisioning for legal
proceedings, regulatory and customer remediation matters. Provisions
for legal proceedings, regulatory and customer remediation matters,
typically require a higher degree of judgement than other types of
provisions, and the actual costs resulting from such proceedings and
matters may exceed existing provisioning.
Additionally, as described in Note 35 to the Financial Statements, we
continue to be subject to a number of material legal proceedings,
regulatory actions and investigations, the outcomes of which are
inherently difficult to predict, particularly those cases in which the
matters are brought on behalf of various classes of claimants, seek
damages of unspecified or indeterminate amounts or involve novel
legal claims. Moreover, we may face additional legal proceedings,
investigations, or regulatory actions in the future, including in other
jurisdictions and/or with respect to matters similar to, or broader than,
the existing legal proceedings, investigations or regulatory actions. An
unfavourable result in one or more of these proceedings could have a
material adverse effect on our business, financial condition, results of
operations, prospects and reputation.
We may fail to meet the requirements of
regulatory stress tests
We are subject to supervisory stress tests in many jurisdictions, which
are described on page 190. These exercises are designed to assess the
resilience of banks to potential adverse economic developments or
operational failure to inform mitigation actions and ensure that they
have robust, forward looking capital planning processes that account for
the risks associated with their business profile. Assessment by
supervisors is both on a quantitative and qualitative basis, the latter
focusing on our data provision, stress testing capability and internal
management processes and controls.
Failure to meet quantitative or qualitative requirements of regulatory
stress tests, or the failure by supervisors to approve our stress test
results and capital plans, could result in the Group being required to
enhance its capital position, and this could, in turn, have a material
adverse effect on our business, financial returns, capital position,
operational capabilities and reputation.
HSBC and its UK subsidiaries may
become subject to stabilisation
provisions under the UK Banking Act
2009, in certain significant stress
situations
Under the Special Resolution Regime set out in the UK Banking Act
2009 (the ‘SRR’), HM Treasury, the BoE, the PRA and the FCA
(together, the ‘Authorities’) are granted substantial powers to
implement the following stabilisation options: (i) transfer of all or part of
the business of a relevant entity or the shares of the relevant entity to a
private sector purchaser; (ii) transfer of all or part of the business of the
relevant entity to a ‘bridge bank’ wholly owned by the BoE temporarily,
to allow for preparation for an onward sale to a private sector purchaser
or an initial public offering; (iii) transfer of part of the assets, rights or
liabilities of the relevant entity to one or more asset management
vehicles for management of the transferor’s assets, rights or liabilities;
(iv) the write-down, conversion, transfer, modification, or suspension of
the relevant entity’s equity, capital instruments and liabilities (the so-
called ‘bail-in power’); and (v) temporary public ownership of the
relevant entity.
The SRR also provides for modified insolvency and administration
procedures for relevant entities, and confers ancillary powers on the
Authorities, including the power to modify or override certain
contractual arrangements in certain circumstances. The UK Banking Act
2009 gives power to HM Treasury to make further amendments to the
law for the purpose of enabling it to use the SRR powers effectively,
potentially with retrospective effect.
These stabilisation options and powers may also be applied to a UK
bank or investment firm or to certain of their affiliates (which, in respect
of HSBC, could include HSBC Holdings) where certain conditions are
met.
In view of the HSBC Group’s corporate structure, which comprises a
group of locally regulated operating banks, the preferred resolution
strategy for the HSBC Group, as confirmed by its lead home and host
regulators through the annual Crisis Management Group, is Multiple
Point of Entry bail-in strategy. This approach provides flexibility for
HSBC to be resolved either (i) through a bail-in at the HSBC Holdings
level (using the above-mentioned bail-in power), which enables the
recapitalisation of operating bank subsidiaries in the HSBC Group (as
required) while restructuring actions are undertaken, with the HSBC
Group remaining together; or (ii) at a local subsidiary level pursuant to
the application of statutory resolution powers by local resolution
authorities. Further details on HSBC’s resolution strategy can be found
in the section entitled ‘Recovery and resolution’ on page 20.
In addition to the stabilisation options, the relevant Authority may, in
certain circumstances, require the permanent write-down or conversion
into equity of any outstanding tier 1 capital instruments and tier 2
capital instruments prior to the exercise of any stabilisation option
(including the bail-in power), which may lead to the cancellation,
transfer or dilution of HSBC Holdings’ ordinary share capital.
In general, the UK Banking Act 2009 requires the Authorities to have
regard to specified objectives in exercising the powers provided for by
the Act. One of the objectives (which is required to be balanced as
appropriate with the other specified objectives) refers to the protection
and enhancement of the stability of the financial system of the UK. The
UK Banking Act 2009 includes, in certain circumstances, and with
respect to the exercise of certain powers provided for by the Act,
provisions related to compensation in respect of transfer instruments
and orders made under it. This includes a ‘no creditor worse off’
safeguard, which requires that no shareholder or creditor must be left
worse off from the use of resolution powers than they would have
been had the entity entered insolvency rather than resolution.
However, if we are at or approaching the point where we may be
deemed by our regulators to be failing, or likely to fail, so as to require
regulatory intervention, any exercise of the above mentioned powers
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by the Authorities may result in holders of our ordinary shares, or other
instruments that may fall within the scope of the ‘bail in’ or other write-
down and conversion powers granted under the UK Banking Act 2009,
being materially adversely affected, including by the cancellation of
shares, the write-down or conversion into shares of other instruments,
the transfer of shares to a third party appointed by the BoE, the loss of
rights associated with shares or other instruments (including rights to
dividends or interest payments), the dilution of their percentage
ownership of our share capital, and any corresponding material adverse
effect on the market price of our ordinary shares and other instruments.
We are subject to tax-related risks in the
countries in which we operate
We are subject to the substance and interpretation of tax laws in all
countries in which we operate and are subject to routine review and
audit by tax authorities in relation thereto. Our interpretation or
application of these tax laws may differ from those of the relevant tax
authorities and we provide for potential tax liabilities that may arise on
the basis of the amounts expected to be paid to the tax authorities. The
amounts ultimately paid may differ materially from the amounts
provided depending on the ultimate resolution of such matters.
In addition, potential changes to tax legislation, the approach taken by
tax authorities in audits, and tax rates in the countries and territories in
which we operate, in particular, those arising as a consequence of the
OECD‘s Base Erosion and Profit Shifting project, could increase our
effective tax rate in the future and have a material adverse effect on our
business, financial condition, results of operations, prospects and
capital position.
Risks related to our operations
Our operations are highly dependent on
our information technology systems
We operate in an extensive and complex technology landscape, which
must remain resilient to support customers, the Group and markets
globally. Risks can arise where technology is not understood,
maintained, or developed appropriately.
The reliability and security of the HSBC Group’s information technology
infrastructure is crucial to the HSBC Group’s provision of financial
services to our customers and protecting the HSBC brand.
The effective functioning of our payment systems, financial control, risk
management, credit analysis and reporting, accounting, customer
service and other information technology systems, as well as the
communication networks between our branches and main data
processing centres, are important to our operations.
Critical system failure, prolonged service unavailability or a material
breach of data security, particularly of customer data, could
compromise HSBC Group’s ability to serve its customers. Rapid
advances in AI may further facilitate cyber-attacks or data compromise.
Such scenarios could breach regulations and could cause long-term
damage to HSBC Group’s business and brand that could have a
material adverse effect on our financial condition, results of operations,
prospects and reputation.
We remain susceptible to a wide range
of cyber risks
The threat of cyber-attacks remains a concern for HSBC, as it does
across the global financial sector. As cyber-attacks continue to evolve,
failure to protect our operations may result in disruption for customers,
manipulation of data or financial loss. This could adversely impact our
customers and the Group.
Adversaries attempt to achieve their objectives by compromising HSBC
or our third-party suppliers. They use techniques that include malware
(such as ransomware), exploitation of both known and unpublished
(zero-day) software vulnerabilities, phishing emails, distributed denial of
service attacks, as well as physical compromise of premises, or
coercion of staff. Our customers may also be subject to these attack
techniques. The Group, like other financial institutions, has experienced
numerous common cyber-attacks, including for example, distributed
denial of service and phishing attacks. Some of our third-party service
providers have also experienced cyber-attacks. To date, we have not
been materially affected by cybersecurity threats. However, we expect
cyber-attacks to continue, and our business strategy, results of
operations and financial condition could be materially affected by
cybersecurity risks and any future material incidents.
Cybersecurity risks will continue to increase due to several factors,
including the growing delivery of services over the internet; increased
dependence on internet-based products, applications and data storage;
and the expanding use of AI, which could enable sophisticated cyber-
attacks. Additionally, the adoption of hybrid working models by HSBC’s
employees, contractors, and third-party service providers and their sub-
contractors contributes to this trend.
Failure to adhere to HSBC’s cybersecurity policies, procedures or
controls, employee or third-party wrongdoing, human error, or
governance or technological error could compromise HSBC’s ability to
defend against cyber-attacks. Should any of these cybersecurity risks
materialise, they could have a material adverse effect on our
customers, business, financial condition, results of operations,
prospects and reputation.
We could incur losses or be required to
hold additional capital as a result of
model limitations or failure
HSBC uses models for a range of purposes in managing its business,
including regulatory capital calculations, stress testing, credit approvals,
calculation of ECLs on an IFRS 9 basis, financial crime and fraud risk
management and financial reporting.
HSBC could face adverse consequences as a result of decisions that
may lead to actions by management based on models that are poorly
developed, implemented or used, or as a result of the modelled
outcome being misunderstood, or the use of modelled information for
purposes which it was not designed for, or by inherent limitations
arising from the uncertainty inherent in predicting or estimating future
outcomes. Regulatory scrutiny and supervisory concerns over banks’
use of models are considerable, particularly the internal models and
assumptions used by banks in the calculation of regulatory capital. If
regulatory approval for key capital models is not achieved in a timely
manner or if those models are subject to negative feedback from
regulators HSBC could face fines or be required to hold additional
capital. Evolving regulatory requirements have resulted in changes to
HSBC’s approach to model risk management, which poses execution
challenges. The adoption of more sophisticated modelling approaches
including AI and technology related developments by both HSBC and
the financial services industry could also lead to increased model risk.
HSBC’s commitment to changes to business activities due to climate
and sustainability challenges will also have an impact on model risk
going forward. Models will play an important role in risk management
and financial reporting of climate-related risks. Uncertainty around the
long-dated impacts of climate change and lack of robust and high-
quality climate related data present challenges to creating reliable and
accurate model outputs for these models.
Model risk remains a key area of focus given the regulatory scrutiny in
this area with local regulatory examinations taking place in many
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jurisdictions and revised principles on model risk published by the PRA
which came into force in 2024.
Risks arising from the use of models could have a material adverse
effect on our business, financial condition, results of operations,
prospects, capital position and reputation. See also ‘Economic and
market conditions and geopolitical developments may adversely affect
our financial condition and results’.
Our operations use third-party suppliers
and service providers
HSBC relies on third parties to provide goods and services. The use of
third-party providers by financial institutions is of particular focus to
global regulators. This includes how outsourcing decisions are made,
how key relationships are managed, our understanding of third-party
dependencies, and the potential impacts of third parties on our
operational resilience.
The inadequate management of third-party risk could impact our ability
to meet strategic, regulatory and customer expectations.
This may lead to a range of impacts, including regulatory censure,
penalties or damage both to shareholder value and to our reputation.
This could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position and
reputation.
Risks related to our governance and
internal controls
Our data management and data privacy
controls must be sufficiently robust to
support the increasing data volumes and
evolving regulations
As the HSBC Group becomes more data-driven and our business
processes move to digital channels, the volume of data that we rely on
has increased. As a result, management of data (including data storage
and deletion, data quality, data privacy and data architecture) from
creation to destruction must be robust and designed to identify quality
and availability issues. Inadequate data management could result in
negative impacts to customer service, business processes, or require
manual intervention to reduce the risk of errors in reporting to senior
management, executives or regulators.
Expanding data privacy, national security and cybersecurity laws in a
number of markets could pose potential challenges to intra-group data
sharing. These developments could increase financial institutions’
compliance obligations in respect of cross-border transfers of personal
information, which may affect our ability to manage financial crime risks
across markets.
In addition, failure to comply with data privacy laws and other legislation
in the jurisdictions in which we operate may result in regulatory
sanctions. Any of these failures could have a material adverse effect on
our business, financial condition, results of operations, prospects, and
reputation.
Third parties may use us as a conduit for
illegal activities without our knowledge
We are required to comply with applicable financial crime laws and
regulations, and have adopted various policies, procedures and controls
aimed at preventing the exploitation of HSBC‘s products and services
for criminal activity. Financial crime includes fraud, bribery and
corruption, tax evasion and the facilitation of tax evasion, sanctions and
export control violations and evasion, money laundering, terrorist
financing and proliferation financing (see ‘Regulation and supervision -
Financial crime regulation’). There are instances, as permitted by
regulation, where we may rely upon third parties to undertake certain
financial crime risk management activities on our behalf. Any controls
implemented and maintained by HSBC to manage the risk created by
such reliance may not prevent third parties from using us (and our
relevant counterparties) as a conduit for financial crime, without our
knowledge (and that of those counterparties).
Becoming a party to, associated with, or accused of being associated
with, financial crime could damage our reputation and could make us
subject to fines, sanctions and / or legal or regulatory enforcement. Any
one of these outcomes could have a material adverse effect on our
strategy, business, customers, financial condition, results of operations,
prospects and reputation.
We are subject to the risk of financial
crime
We are exposed to financial crime risk from our customers, staff and
third parties engaging in criminal activity (see also ‘Third parties may
use us as a conduit for illegal activities without our knowledge’) and, as
such, we continue facing increasing regulatory expectations. In 2025,
financial crime risk continued to be exacerbated by increasingly
complex geopolitical challenges, the macroeconomic outlook, the
complex and dynamic nature of sanctions and export control
compliance, evolving financial crime regulations, rapid technological
developments, an increasing number of national data privacy
requirements and the increasing sophistication of fraud and other
criminal activities. Our ability to manage financial crime risk is
dependent on the use and effectiveness of our financial crime risk
assessments, systems and controls. Weak or ineffective financial crime
processes and controls may risk HSBC inadvertently facilitating financial
crime, which may result in regulatory investigation, sanction, litigation,
fines and reputational damage.
In addition, HSBC Bank USA, as the primary US dollar correspondent
bank for the Group, is subject to heightened financial crime risk arising
from business conducted on behalf of its non-US HSBC affiliates.
HSBC Bank USA has implemented policies, procedures and controls
reasonably designed to comply with financial crime legal and regulatory
requirements and mitigate financial crime risk from its affiliates.
Nevertheless, in the event that these controls are ineffective, this could
lead to a breach of these requirements resulting in a potential
enforcement action by the US Department of the Treasury or other US
agencies that may include substantial fines or penalties. Any such
action against HSBC Bank USA could have a material adverse effect on
our strategy, business, customers, financial condition, results of
operations, prospects and reputation.
We may suffer losses due to employee
misconduct
Our businesses are exposed to risk from potential non-compliance with
Group policies, including the HSBC Values, and associated behaviours
and employee misconduct such as fraud, negligence or non-financial
misconduct. These issues could lead to regulatory penalties and
damage to our reputation or finances. In recent years, several global
financial institutions have incurred significant losses due to rogue
employee actions. While we strive to prevent and detect such
misconduct, our measures may not always be effective, or a regulator
could find HSBC‘s efforts to deter such activities inadequate.
The risk of misconduct may be heightened if our prevent-and-detect
measures are less effective, particularly in remote and home working
environments.
If any of these risks materialise, this could have a material adverse
effect on our business, financial condition, results of operations,
prospects and reputation.
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The delivery of our strategic actions is
subject to execution risk and we may not
achieve all of the expected benefits of
our strategic initiatives
Management of strategic execution risk is required for us to be able to
deliver our strategy, meet shareholder expectations and maintain
stakeholder confidence.
Executing our strategy and meeting our targets necessitates effective
prioritisation, planning, and management. This process may be
influenced by operational capacity, the efficacy of key controls, and
structural challenges arising from any mergers or acquisitions.
Additionally, there is a possibility of unforeseen changes in the market
or regulatory environment in which we operate, while complex
technological changes are underway. The global economic outlook
remains uncertain, particularly concerning legislative changes and
geopolitical tensions. The scale, complexity, and concurrent demands
of such transformation initiatives can result in heightened execution
risk.
Our strategic actions seek to align with investor expectations, yet they
carry increased execution risk due to the emphasis on cost
management and funding capacity. Consequently, there is a risk that
our cost and investment measures may not fully realise the anticipated
benefits of our strategic initiatives.
The development and implementation of our strategy requires difficult
and complex judgements, including forecasts of economic conditions in
various parts of the world. We may fail to correctly identify the relevant
factors in making decisions as to capital deployment and cost
reduction. We may also encounter unpredictable changes in the
external environment that are disadvantageous to our strategy.
There is a risk that the Group’s reorganisation announced in 2024 may
not achieve some or all of its goals and may fail to deliver or achieve
the expected benefits of the Group’s strategic initiatives.
If any of these risks materialise, this could have a material adverse
effect on our customers, business, financial condition, prospects,
operational resilience and reputation.
Our risk management measures may not
be successful
The management of risk is a fundamental component of all our
activities, as outlined in our Risk Management Framework (‘RMF’). Risk
represents our exposure to uncertainty and the potential variability in
outcomes. Specifically, risk encompasses the negative impact on
profitability or financial condition due to various sources of uncertainty,
including retail and wholesale credit risk, treasury risk, traded risk,
financial reporting and tax risk, resilience risk, strategic risk, legal risk,
regulatory compliance risk, financial crime risk, people risk and model
risk.
We employ a comprehensive and diversified set of risk monitoring and
mitigation techniques, supported by the Three Lines of Defence model,
which defines clear accountabilities across risk ownership, oversight,
and independent assurance. However, these methods and the
judgements involved cannot foresee every adverse event or the
specifics and timing of every outcome. Inadequate risk management
could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position, strategy and
reputation.
Risks related to our business
Our business has inherent reputational
risk
Reputational risk is the risk of failing to meet stakeholder expectations
as a result of any event, behaviour, action or inaction, either by HSBC,
our employees or those with whom we are associated. Any material
lapse in standards of integrity, compliance, customer service or
operating efficiency may represent a potential reputational risk.
Stakeholder expectations constantly evolve, and so reputational risk is
dynamic and varies between geographical regions, groups and
individuals. In addition, our business faces increasing scrutiny in respect
of ESG-related matters. If we fail to act responsibly, or to achieve our
announced targets, commitments, goals or ambitions, in a number of
areas, such as inclusion, climate, sustainability, workplace conduct,
human rights, and support for local communities, our reputation and the
value of our brand may be negatively affected.
Social media and other broadcasting channels that facilitate
communication with large audiences in short time frames and with
minimal costs, may significantly enhance and accelerate the distribution
and effect of damaging information and allegations. Reputational risk
could also arise from negative public opinion about the actual, or
perceived, manner in which we conduct our business activities, or our
financial performance, as well as actual or perceived practices in
banking and the financial services industry generally. Negative public
opinion may adversely affect our ability to retain and attract customers,
in particular, corporate and retail depositors, and to retain and motivate
staff, and could have a material adverse effect on our business,
financial condition, results of operations, prospects and reputation.
Non-Financial risks are inherent in our
business
We are exposed to many types of non-financial risks that are inherent in
our operations. Non-financial risk can be defined as the risk to HSBC of
not achieving its strategy or objectives because of inadequate or failed
internal processes, people and systems, or external events. It includes:
breakdowns in processes or procedures, breaches of regulations or
law, financial crime, financial reporting and tax errors, external events
and systems failure or non-availability. These risks are also present
when we rely on outside suppliers or vendors to provide services to us
and our customers.
These non-financial risks may result in financial losses to the Group and
our customers, an adverse customer experience, reputational damage
and potential litigation, regulatory proceedings, administrative action or
other adversarial proceedings in any jurisdiction in which we operate,
depending on the circumstances of the event.
These could have a material adverse effect on our business, financial
condition, results of operations, prospects, operational resilience,
strategy and reputation.
We rely on recruiting, retaining and
developing appropriate senior
management and skilled personnel
Our ongoing success and the successful execution of our strategy are
partly reliant on retaining key management team members and our
broader workforce, as well as ensuring the availability of skilled
management and personnel across our global businesses and
functions. The complexity of our talent supply challenge is heightened
by the shortage of talent and capabilities in our major markets,
especially where specialist skills require global mobility. This challenge
is further compounded by ongoing organisational changes, rapidly
evolving skill requirements, regulatory developments, and heightened
expectations for employing local nationals and fostering inclusion in
certain jurisdictions.
HSBC’s ability to continue to attract, train, motivate and retain highly
qualified professionals may also depend on factors beyond our control,
including economic, market and regulatory conditions.
When acquiring or disposing of a Group operation, it is essential to
comply with employment requirements, support affected employees
and integrate new employees into HSBC‘s values, culture and working
practices.
Should global businesses or functions fail to adequately staff their
operations, lose key senior executives without timely and satisfactory
replacements, or fail to implement necessary organisational changes to
support the Group’s strategy, this could have a material adverse effect
on our business performance, reputation, operational resilience and
overall control environment.
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We have significant exposure to
counterparty risk
We are exposed to counterparties that are involved in virtually all major
industries, and we routinely execute transactions with counterparties in
financial services, including brokers and dealers, central clearing
counterparties, commercial banks, investment banks, mutual and
hedge funds, and other institutional clients.
Many of these transactions expose us to credit risk in the event of
default by our counterparty or client.
Our ability to engage in routine transactions to fund our operations and
manage our risks could be materially adversely affected by the actions
and commercial soundness of other financial services institutions.
Financial institutions are necessarily interdependent because of trading,
clearing, counterparty or other relationships. As a consequence, a
default by, or decline in market confidence in, individual institutions, or
anxiety about the financial services industry generally, can lead to
further individual and/or systemic difficulties, defaults and losses.
Mandatory central clearing of OTC derivatives poses risks to the Group.
As a clearing member, we are required to underwrite losses incurred at
a central counterparty by the default of other clearing members and
their clients. An increased move towards central clearing brings with it
a further element of interconnectedness between clearing members
and clients that we believe may increase rather than reduce our
exposure to systemic risk. At the same time, our ability to manage
such risk ourselves will be reduced because control has been largely
outsourced to central counterparties, and it is unclear at present how,
at a time of stress, regulators and resolution authorities will intervene.
Where bilateral counterparty risk has been mitigated by taking
collateral, our credit risk may remain high if the collateral we hold
cannot be realised or has to be liquidated at prices that are insufficient
to recover the full amount of our loan or derivative exposure.
There is a risk that collateral cannot be realised, including situations
where this arises by change of law or the imposition of sanctions, that
may influence our ability to foreclose on collateral or otherwise enforce
contractual rights.
The Group also has credit exposure arising from mitigants, such as
credit default swaps, and other credit derivatives, each of which is
carried at fair value. The risk of default by counterparties to credit
default swaps and other credit derivatives used as mitigants affects the
fair value of these instruments depending on the valuation and the
perceived credit risk of the underlying instrument against which
protection has been purchased. Any such adjustments or fair value
changes could have a material adverse effect on our business, financial
condition, results of operations, prospects, capital position and
reputation.
Any reduction in the credit rating
assigned to HSBC Holdings, any
subsidiaries of HSBC Holdings or any of
their respective debt securities could
increase the cost or decrease the
availability of our funding and materially
adversely affect our liquidity position
and/or net interest margin
Credit ratings affect the cost and other terms upon which we are able
to obtain market funding. Rating agencies regularly evaluate HSBC
Holdings and certain of its subsidiaries, as well as their respective debt
securities. Their ratings are based on a number of factors, including
their assessment of the relative financial strength of the Group or of the
relevant subsidiary, as well as conditions affecting the financial services
industry generally. There can be no assurance that the rating agencies
will maintain HSBC Holdings’ or the relevant subsidiary’s current
ratings, or outlook based on bank rating methodologies applied by
ratings agencies.
Any reductions in these current ratings or the outlook could increase
the cost of our funding, limit access to capital markets and require
additional collateral to be placed and, consequently, materially adversely
affect our interest margins and our liquidity position.
Risks concerning borrower credit quality
are inherent in our businesses
Risks arising from changes in credit quality and the recoverability of
loans and amounts due from borrowers and counterparties (for
example, reinsurers and counterparties in derivative transactions) are
inherent in a wide range of our businesses. Adverse changes in the
credit quality of our borrowers and counterparties or reduced
recoverability of our assets arising from a general deterioration in
economic conditions or systemic risks in the financial systems, could
require an increase in our ECLs (see ’Economic and market conditions
and geopolitical developments may adversely affect our financial
condition and results’).
We estimate and recognise ECLs in our credit exposure. This process,
which is critical to our results and financial condition, requires difficult,
subjective and complex judgements, including forecasts of how the
macroeconomic and geopolitical conditions might impair the ability of
our borrowers to repay their loans and the ability of other
counterparties to meet their obligations. This assessment considers
multiple alternative forward-looking economic conditions (including GDP
estimates) and incorporates this into the ECL estimates to meet the
measurement objective of IFRS 9. As is the case with any such
assessments, we may fail to estimate accurately the effect of factors
that we identify or fail to identify relevant factors. Further, the
information we use to assess the creditworthiness of our
counterparties may be inaccurate or incorrect. Any failure by us to
accurately estimate the ability of our counterparties to meet their
obligations could have a material adverse effect on our business,
financial condition, results of operations and prospects.
Our insurance businesses are subject to
risks relating to insurance claim rates
and changes in insurance customer
behaviour
We provide various insurance products for customers, including several
types of life insurance products. The cost to support insurance claims
and benefits can be influenced by many factors, including mortality and
morbidity rates, lapse and surrender rates and the performance of
assets to support the liabilities. Adverse developments in any of these
factors could materially adversely affect our business, financial
condition, results of operations, capital position, prospects and
reputation.
HSBC Holdings is a holding company
and, as a result, is dependent on loan/
instrument payments and dividends
from its subsidiaries to meet its
obligations, including obligations with
respect to its debt securities, and to
provide profits for payment of future
dividends to shareholders
HSBC Holdings is a non-operating holding company and, as such, its
principal source of income is from operating subsidiaries that hold the
principal assets of the Group. As a separate legal entity, HSBC Holdings
relies on remittance of its subsidiaries’ loan/instrument interest
payments and dividends in order to be able to pay obligations to debt
holders as they fall due, and to pay dividends to its shareholders. The
ability of HSBC Holdings’ subsidiaries and affiliates to pay interest and
dividends to HSBC Holdings is subject to such subsidiaries’ and
affiliates’ financial performance and could also be restricted by
applicable laws, regulations, exchange controls and other requirements.
HSBC Holdings plc Annual Report on Form 20-F |
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Risk factors | ||||||||||||
We may be required to make substantial
contributions to our pension plans
We operate a number of pension plans throughout the world for our
personnel, including defined benefit pension plans. Pension scheme
obligations fluctuate with changes in long-term interest rates, inflation,
salary levels and the longevity of scheme members. They can also be
affected by operational and legal risks. The level of contributions we
make to our pension plans has a direct effect on our cash flow. To the
extent plan assets are insufficient to cover existing liabilities, higher
levels of contributions may be required. As a result, deficits in those
pension plans could have a material adverse effect on our business,
financial condition, results of operations, prospects and reputation.
Risk related to our financial
statements and accounts
Our financial statements are based in
part on judgements, estimates and
assumptions that are subject to
uncertainty
The preparation of financial information requires management to make
judgements and use estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making estimates, particularly those
involving the use of complex models, actual results reported in future
periods could differ from the expectations on which management’s
estimates are based. Judgements, estimates, assumptions and models
are continually evaluated, and are based on historical experience and
other factors, including expectations of future events that are believed
to be reasonable under the prevailing circumstances. The impacts of
revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected.
Accounting policies deemed critical to our results and financial position
are those that involve a high degree of uncertainty and have a material
impact on the financial statements. In 2025, these included impairment
of amortised cost financial assets and financial assets measured at
FVOCI, impairment of goodwill and non-financial assets, valuation of
financial instruments, deferred tax assets, provisions, impairment of
interests in associates, post-employment benefit plans, and impairment
of investments in subsidiaries, which are discussed in detail in ‘Critical
estimates and judgements’ on page 66.
The measurement of ECLs requires the selection and calibration of
complex models and the use of estimates and assumptions to
incorporate relevant information about past events, current conditions
and forecasts of economic conditions. Additionally, significant
judgement is involved in determining what is considered to be
significant increases in credit risk and what the point of initial
recognition is for revolving facilities.
The assessment of whether goodwill and non-financial assets are
impaired, and the measurement of any impairment, involve the
application of judgement in determining key assumptions, including
discount rates, estimated cash flows for the periods for which detailed
cash flows are available and projecting the long-term pattern of
sustainable cash flows thereafter. The recognition and measurement of
deferred tax assets involve significant judgement regarding the
probability and sufficiency of future taxable profits, taking into account
the future reversal of existing taxable temporary differences and tax
planning strategies, including corporate reorganisations.
The recognition and measurement of provisions involve significant
judgements due to the high degree of uncertainty in determining
whether a present obligation exists, and in estimating the probability
and amount of any outflows that may arise. The valuation of financial
instruments measured at fair value can be subjective, in particular
where models are used that include unobservable inputs.
The assessment of interests in associates for impairment involves
significant judgements in determining the value in use, in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of management
assumptions.
The Group’s impairment test on the carrying amount at 30 June 2025
resulted in an impairment of $1.0bn, as the recoverable amount as
determined by a value-in-use calculation was lower than the carrying
amount. No further impairment (or reversal) was required for the period
from 1 July 2025 to 31 December 2025. Impairment reviews are
complex and require significant judgments, such as the
appropriateness of projected future cash flows, discount rate, and
regulatory capital assumptions. There can be no assurance that no
additional impairment will be required in future financial periods. See
Note 18 to the Financial Statements for further details.
The calculation of the defined benefit pension obligation involves the
determination of key assumptions, including discount rate, inflation
rate, pay, pension payments and deferred pension, and mortality.
The assessment of interests in subsidiaries for impairment involves
significant judgements in determining the value in use, in particular
estimating the present values of cash flows expected to arise from
continuing to hold the investment, based on a number of management
assumptions.
Given the uncertainty and subjectivity associated with the above critical
accounting judgements and estimates, future outcomes may differ
materially from those assumed using information available at the
reporting date.
These judgements and estimates could have a material adverse effect
on the future financial position of the Group, results of operations,
capital position, prospects and reputation. For further details, see
‘Critical estimates and judgements’ on page 66.
Changes in accounting standards may
have a material impact on how we
report our financial results and financial
condition
We prepare our consolidated financial statements in conformity with
UK-adopted international accounting standards and with the
requirements of the UK Companies Act 2006, and have also applied
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. Our
consolidated financial statements are also prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB‘) (‘IFRS Accounting
Standards’), including interpretations issued by the IFRS Interpretations
Committee.
From time to time, the IASB or the IFRS Interpretations Committee
may issue new accounting standards or interpretations that could
materially impact how we calculate, report and disclose our financial
results and financial condition, and which may affect our capital ratios,
including the CET1 ratio. We could also be required to apply new or
revised standards retrospectively, resulting in our restating prior period
financial statements in material amounts. This could have a material
adverse effect on our business, financial condition, results of operations
and capital position.
HSBC Holdings plc Annual Report on Form 20-F |
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Our material banking risks
The material risk types associated with our banking and insurance manufacturing operations are described in the following tables:
Description of risks – banking operations | ||
Risks | Arising from | Measurement, monitoring and management of risk |
Credit risk u See page 140 | ||
Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. | Credit risk arises principally from direct lending, trade finance and leasing business, but also from other products such as guarantees and derivatives. | Credit risk is: –measured as the amount that could be lost if a customer or counterparty fails to make repayments; –monitored using various internal risk management measures and within limits approved by individuals within a framework of delegated authorities; and –managed through a risk control framework, which seeks to outline clear and consistent policies, principles and guidance for risk managers; and by setting limits and appetite across geographical markets, portfolios or sectors. |
Treasury risk u See page 189 | ||
Treasury risk is the risk of having insufficient capital, liquidity or funding resources to meet financial obligations and satisfy regulatory requirements, including the risk of an adverse impact on earnings or capital due to structural and transactional foreign exchange exposures and changes in market interest rates, together with pension and insurance risk. | Treasury risk arises from changes to the respective resources and risk profiles driven by customer behaviour, management decisions or the external environment. | Treasury risk is: –measured through risk appetite and more granular limits, set to provide an early warning of increasing risk, minimum ratios of relevant regulatory metrics, and metrics to monitor the key risk drivers impacting treasury resources; –monitored and projected against appetites and by using operating plans based on strategic objectives together with stress and scenario testing; and –managed through control of resources in conjunction with risk profiles, strategic objectives and cash flows. |
Market risk u See page 200 | ||
Market risk is the risk of an adverse financial impact on trading activities arising from changes in market parameters such as interest rates, foreign exchange rates, asset prices, volatilities, correlations and credit spreads. | Market risk arises from both trading portfolios and non-trading portfolios. Market risk for trading portfolios is discussed in the Market risk section on page 201. Market risk for non-trading portfolios is discussed in the Treasury risk section on page 198. Market risk exposures arising from our insurance operations are discussed on page 217. | Market risk is: –measured using sensitivities, value at risk (‘VaR’) and stress testing, giving a detailed picture of potential gains and losses for a range of market movements and scenarios, as well as tail risks over specified time horizons; –monitored using VaR, stress testing and other measures; and –managed using risk limits approved by the Group Risk Management Meeting and the risk management meetings in various business segments. |
Climate risk u See page 203 | ||
Climate risk relates to the financial and non-financial impacts that may arise as a result of climate change and the move to a net zero economy. | Climate risk can materialise through: –physical risk, which arises from the increased frequency and severity of extreme weather events, such as hurricanes and floods, or chronic gradual shifts in weather patterns or rises in the sea level; –transition risk, which arises from the process of moving to a net zero economy, including changes in government policy and legislation, technology, market demand, and reputational implications triggered by a change in stakeholder expectations, action or inaction; and –the risk of greenwashing, which arises from the act of knowingly or unknowingly making inaccurate, unclear, misleading or unsubstantiated claims regarding sustainability to stakeholders. | Climate risk is: –measured using risk metrics and stress testing; –monitored against risk appetite statements; –managed through adherence to risk appetite thresholds, through specific policies, and through enhancements to processes and development of tools; and –this includes the development of product controls to manage the risk of greenwashing and the development of portfolio steering capabilities to manage our net zero ambitions. |
Sustainability execution risk u See page 206 | ||
Sustainability execution risk is the risk of not meeting our sustainability ambitions, targets and commitments as set out in firm-level external reporting, sustainability risk policies and associated internal policies, and other ESG commitments. | Sustainability execution risk can arise from: –financing or engaging in business activities with clients and/or transactions that are not aligned or that are inconsistent with our sustainability risk appetite and policies; –incorrectly including products or transactions as counting towards our sustainable finance ambition; –engaging in activities that do not support our ambition to become a net zero bank by 2050. | Sustainability execution risk is: –measured through progress against sustainability ambitions, targets and commitments using risk metrics; –monitored against targets to reduce emissions and risk appetite which includes sectoral decarbonisation pathways; and –managed through a risk control framework, appropriate policies and continual monitoring. |
HSBC Holdings plc Annual Report on Form 20-F |
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Our material banking risks | ||||||||||||
Description of risks – banking operations (continued) | ||
Risks | Arising from | Measurement, monitoring and management of risk |
Resilience risk u See page 213 | ||
Resilience risk is the risk of sustained and significant business disruption causing the inability to provide critical services to our customers, affiliates, and counterparties. | Resilience risk arises from failures or inadequacies in processes, people, systems or external events. | Resilience risk is: –measured using a range of metrics and against our agreed risk appetite; –monitored through oversight of enterprise processes, risks, controls and strategic change programmes; and –managed by continual monitoring and thematic reviews. |
Regulatory compliance risk u See page 213 | ||
Regulatory compliance risk is the risk associated with breaching our duty to clients and other counterparties, inappropriate market conduct (including unauthorised trading) and breaching related financial services regulatory standards. | Regulatory compliance risk arises from the failure to observe relevant laws, codes, rules and regulations, potentially resulting in adverse market or conduct outcomes, fines, penalties and reputational harm. | Regulatory compliance risk is: –assessed and measured with reference to risk appetite, identified metrics, incident assessments, regulatory feedback and the judgement of our regulatory compliance teams; –monitored against the first line of defence risk and control assessments and testing, alongside the outcome of the second line of defence monitoring and control assurance activities, as well as internal and external audits and regulatory inspections; and –managed by establishing and communicating appropriate policies and procedures, training employees accordingly, and monitoring activities to help ensure compliance. |
Financial crime risk u See page 214 | ||
Financial crime risk is the risk that ⚠️ Filing Content TruncatedThis filing was too large to display in its entirety (original size: 42.61 MB). The content has been truncated to fit within database limits. To view the complete filing, please visit the original source: View Complete Filing on SEC Website
Filing: 20-F - HSBC HOLDINGS PLC (HSBC,HBCYF) | ||
FAQ
How did HSBC (HSBC) perform financially in 2025?
HSBC reported profit before tax of $29.9bn in 2025, down from $32.3bn mainly due to notable items. Excluding these, constant-currency profit before tax rose to $36.6bn and revenue to $71.0bn, with return on tangible equity excluding notable items improving to 17.2%.
What dividends and buy-backs did HSBC (HSBC) deliver for 2025?
For 2025, HSBC declared total ordinary dividends of $0.75 per share, up from $0.66 the prior year. It also completed $6bn of share buy-backs, bringing combined cash dividends and repurchases to $18.9bn and supporting total shareholder returns above 57%.
What are HSBC’s (HSBC) financial targets for 2026–2028?
HSBC targets a return on average tangible equity of 17% or better in each of 2026, 2027 and 2028, excluding notable items. It also aims for year-on-year revenue growth over that period, rising to 5% growth in 2028 versus 2027 on a constant-currency, excluding-notable-items basis.
How is HSBC (HSBC) managing costs and organisational simplification?
HSBC is executing an organisational simplification programme targeting $1.5bn of annualised cost reductions by end-2026, with $1.2bn already actioned in 2025. These actions reduced 2025 operating expenses by about $0.6bn and are expected to release $1.8bn of cost capacity for reinvestment.
What does the Hang Seng Bank privatisation mean for HSBC (HSBC)?
Completed in January 2026, the $13.7bn privatisation makes Hang Seng Bank a wholly owned HSBC subsidiary. HSBC expects around $0.5bn in pre-tax revenue and cost synergies across its Hong Kong brands by 2028, with about $0.6bn of associated restructuring costs reported as notable items.
How strong is HSBC’s (HSBC) capital and funding position?
HSBC ended 2025 with a CET1 capital ratio of 14.9% and customer deposits of about $1.8tn versus $1.0tn of loans, indicating surplus deposit funding. Management plans to manage CET1 within a 14–14.5% range over the medium term, after absorbing the Hang Seng Bank transaction impact.
What progress has HSBC (HSBC) made on wealth and sustainable finance?
By end-2025, HSBC’s bank-wide wealth balances reached $2.1tn, up 16%, with net new invested assets of $80bn. It provided and facilitated $102bn of sustainable finance in 2025, taking the cumulative total since January 2020 to $495.6bn toward its $750bn–$1tn 2030 goal.
Hsbc Holdings Plc