a7708f
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the
month of July
HSBC Holdings plc
42nd
Floor, 8 Canada Square, London E14 5HQ, England
(Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form
20-F X Form 40-F
12 July 2023
STATEMENT ON THE BANK OF ENGLAND
2022 ANNUAL CYCLICAL SCENARIO STRESS TEST RESULTS
HSBC Holdings plc ('HSBC' or together with its subsidiaries, 'the
Group' or 'HSBC Group') and HSBC UK Bank plc (together with its
subsidiaries, 'HSBC UK') note the publication today of the Bank of
England's 2022 Annual Cyclical Scenario Stress Test ('ACS')
results.
The severe stress scenario used for the 2022 ACS is not a forecast.
It is designed to test the resilience of the UK banking system to
deep simultaneous recessions in the UK and global economies, large
falls in asset prices and higher global interest rates, and a
separate stress of misconduct costs.
HSBC Group
Under this stress scenario, the Bank of England's results indicate that the
Group's common equity tier 1 ('CET1') capital ratio on an IFRS
9 transitional basisb would
fall to a low point of 10.7%, above the Group's CET1 hurdle rate of
7.0%. On an IFRS 9 non-transitional basis, the Group's CET1 capital
ratio is projected to reach a low point of 9.9%, which is above its
IFRS 9 non-transitional CET1 hurdle rate of
6.2%.
HSBC UK
Under this stress scenario, the Bank of England's results indicate
that HSBC UK's CET1 capital ratio on an IFRS 9 transitional
basisb would
fall to a low point of 10.1%, above its CET1 hurdle rate of 6.2%.
On an IFRS 9 non-transitional basis, HSBC UK's CET1 capital ratio
is projected to reach a low point of 8.9%, which is above its IFRS
9 non-transitional CET1 hurdle rate of
6.4%.
Both the Group and HSBC UK's results incorporate strategic
management actions, which have been accepted by the Bank of England
for the purposes of this exercise. In practice, under such adverse
economic circumstances, the Group would consider a variety of
management actions depending on the prevailing circumstances at the
time.
The Group's intention, as evidenced by its past actions, is to
maintain a conservative and prudent approach to capital management.
Today's results demonstrate the Group and HSBC UK's continued
capital strength under this severe downside scenario.
The Bank of England's 2022 ACS results are available to view in
full at: www.bankofengland.co.uk/stress-testing
HSBC Group results
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Actual(30 June 2022)
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Minimum stressed ratio (before strategic management
actions)
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Minimum stress ratio (after the impact of strategic management
actions)
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Hurdle rate
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Actual (1Q23)
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IFRS9 Transitional
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Common equity tier 1 ratio(a)(b)
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13.6%
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9.0%(g)
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10.7%
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7.0%
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14.7%
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Tier 1 capital ratio(c)
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16.1%
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11.3%(g)
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13.2%(g)
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17.0%
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Total capital ratio(d)
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18.6%
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13.6%(g)
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15.8%(g)
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19.8%
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Memo: risk
weighted assets (US$ bn)
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852
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958(g)
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846(g)
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854
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Memo: CET1
(US$ bn)
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116
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86(g)
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90(g)
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126
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Tier 1 leverage ratio(a)(e)
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5.5%
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4.3%(h)
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5.0%
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3.6%
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5.8%
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Memo: leverage
exposure (US$ bn)
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2,484
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2,496(h)
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2,259 (h)
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2,486
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IFRS9 non-transitional
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Common equity tier 1 ratio(f)
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13.6%
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8.3%
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9.9%
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6.2%
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14.7%
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Tier 1 leverage ratio(e)(f)
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5.5%
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4.1%
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4.7%
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3.3%
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5.8%
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Source: HSBC accounts and STDF data submissions, Bank of England
analysis and calculations
HSBC UK results
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Actual(30 June 2022)
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Minimum stressed ratio (before strategic management
actions)
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Minimum stress ratio (after the impact of strategic management
actions)
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Hurdle rate
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Actual (1Q23)
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IFRS9 Transitional
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Common equity tier 1 ratio(a)(b)
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13.7%
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9.9%(g)
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10.1%
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6.2%
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14.3%
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Tier 1 capital ratio(c)
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16.2%
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11.7%(g)
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11.9%(g)
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16.6%
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Total capital ratio(d)
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19.6%
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14.7%(g)
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14.9%(g)
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19.6%
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Memo: risk
weighted assets (£ bn)
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90
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124(g)
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122(g)
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100
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Memo: CET1
(£ bn)
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12
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12(g)
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12(g)
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14
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Tier 1 leverage ratio(a)(e)
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5.8%
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5.3%(h)
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5.4%
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3.3%
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6.3%
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Memo: leverage
exposure (£ bn)
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253
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253(h)
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249(h)
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262
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IFRS9 non-transitional
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Common equity tier 1 ratio(f)
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13.7%
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8.7%
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8.9%
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6.4%
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14.3%
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Tier 1 leverage ratio(e)(f)
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5.8%
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4.8%
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4.9%
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3.3%
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6.3%
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Source: HSBC UK accounts and STDF data submissions, Bank of England
analysis and calculations
Notes
a)
The low points for the common equity Tier 1 (CET1) ratio and
leverage ratio shown in the table do not necessarily occur in the
same year of the stress scenario and correspond to the year where
the minimum stressed ratio is calculated after strategic management
actions. There is no conversion of banks' AT1 instruments in the
stress.
b)
The CET1 capital ratio is defined as CET1 capital expressed as a
percentage of the total risk exposure amount (risk-weighted assets
or RWAs), where CET1 capital and RWAs are determined in accordance
with the CRR.
c)
The Tier 1 capital ratio is defined as Tier 1 capital expressed as
a percentage of RWAs, where Tier 1 capital is defined as the sum of
CET1 capital and additional Tier 1 capital determined in accordance
with the CRR.
d)
The Total capital ratio is defined as total capital expressed as a
percentage of RWAs, where total capital is defined as the sum of
Tier 1 capital and Tier 2 capital determined in accordance with the
CRR.
e)
The Tier 1 leverage ratio is Tier 1 capital expressed as a
percentage of the leverage exposure measure, as defined in Article
429(2) of the Leverage Ratio (CRR) part of the PRA Rulebook. If a
firm does not have sufficient CET1 capital to meet 75% of the
leverage ratio minimum requirement and 100% of its leverage ratio
buffers (as required by PRA rules), additional Tier 1 capital has
been capped at 25% of the leverage ratio minimum requirement for
the purpose of calculating the Tier 1 leverage ratio.
f)
The low point year for the non-transitional IFRS 9 may differ to
the low point year on a transitional IFRS 9 basis.
g)
Corresponds to the same year as the minimum CET1 ratio over the
stress scenario after strategic management actions.
h)
Corresponds to the same year as the minimum leverage ratio over the
stress scenario after strategic management actions.
Investor enquiries to:
Richard
O'Connor (London)
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+44 (0)
20 7991 6590
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richard.j.oconnor@hsbc.com
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Yafei
Tian (Hong Kong)
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+852
2899 8909
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yafei.tian@hsbc.com.hk
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Media enquiries to:
Press
Office
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+44 (0)
20 7991 8096
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pressoffice@hsbc.com
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Notes to editors:
1. HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is
headquartered in London. The Group serves customers worldwide from
offices in 62 countries and territories. With total assets of
US$2,990bn at 31 March 2023, the HSBC Group is one of the world's
largest banking and financial services organisations.
2. HSBC UK
HSBC UK serves over 14.75 million customers across the UK,
supported by 24,000 colleagues. HSBC UK offers a complete range of
retail banking and wealth management to personal and private
banking customers, as well as commercial banking for small to
medium businesses and large corporates. HSBC UK is a wholly owned
subsidiary of HSBC Holdings plc.
Forward-looking statements
This announcement contains certain forward-looking statements with
respect to the financial condition, results of operations, capital
position, strategy and business of HSBC and its consolidated
subsidiaries (together, the 'Group') which can be identified by the
use of forward-looking terminology such as "may", "will", "should",
"expect", "anticipate", "project", "plan", "estimate", "seek",
"intend", "target", "believe", "potential" and "reasonably
possible" or the negatives thereof or other variations thereon or
comparable terminology (together, "forward-looking statements"),
including any financial, investment and capital targets described
herein. Any such forward-looking statements are not a reliable
indicator of future performance, as they may involve significant
stated or implied assumptions and subjective judgements which may
or may not prove to be correct. There can be no assurance that any
of the matters set out in forward-looking statements are
attainable, will actually occur or will be realised or are complete
or accurate. The assumptions and judgments may prove to be
incorrect and involve known and unknown risks, uncertainties,
contingencies and other important factors, many of which are
outside the control of the Group.
Actual achievements, results, performance or other future events or
conditions may differ materially from those stated, implied and/or
reflected in any forward-looking statements due to a variety of
risks, uncertainties and other factors (including without
limitation those which are referable to general market or economic
conditions, regulatory changes, increased volatility in the
financial services and banking sector, geopolitical tensions such
as the Russia-Ukraine war, the impact of the Covid-19 pandemic or
as a result of data limitations and changes in applicable
methodologies in relation to ESG related matters). Any such
forward-looking statements are based on the beliefs, expectations
and opinions of the Group at the date the statements are made, and
the Group does not assume, and hereby disclaims, any obligation or
duty to update, revise or supplement them if circumstances or
management's beliefs, expectations or opinions should change. For
these reasons, recipients should not place reliance on, and are
cautioned about relying on, any forward-looking statements. No
representations or warranties, expressed or implied, are given by
or on behalf of the Group as to the achievement or reasonableness
of any projections, estimates, forecasts, targets, commitments,
ambitions, prospects or returns contained herein.
Additional detailed information concerning important factors that
could cause actual results to differ materially from this
announcement is available in our Annual Report and Accounts for the
fiscal year ended 31 December 2022 filed with the Securities and
Exchange Commission (the "SEC") on Form 20-F on 22 February 2023
(the "2022 Form 20-F") and our 1Q 2023 Earnings Release furnished
with the SEC on Form 6-K on 2 May 2023 (the "1Q 2023 Earnings
Release").
ends/all
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HSBC
Holdings plc
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By:
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Name:
Aileen Taylor
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Title:
Group Company Secretary and Chief Governance Officer
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Date:
12 July 2023
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