For the month of April

 

 

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  

 

  

 

30 APRIL 2024

1Q24 EARNINGS RELEASE

 

Noel Quinn, Group Chief Executive, said:

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

 

Financial performance (1Q24 vs. 1Q23)

-     Profit before tax decreased by $0.2bn to $12.7bn. This included a $4.8bn gain following the completion of the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, partly offset by a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale. The reduction in profit before tax also reflected the non-recurrence of a $2.1bn reversal in 1Q23 of an impairment relating to the sale of our retail banking operations in France, which was subsequently reinstated in 4Q23 prior to completion, and a $1.5bn gain recognised in 1Q23 on the acquisition of Silicon Valley Bank UK Limited ('SVB UK').

-     On a constant currency basis, profit before tax decreased by $0.3bn to $12.7bn. Reported profit after tax decreased by $0.2bn to $10.8bn.

-     Revenue increased by $0.6bn or 3% to $20.8bn, including the acquisition and disposal impacts of the strategic transactions described above. Revenue growth also reflected the impact of higher customer activity in our Wealth products in Wealth and Personal Banking ('WPB'), and in Equities and Securities Financing in Global Banking and Markets ('GBM'), which in part mitigated a reduction in Foreign Exchange revenue, compared with a strong 1Q23.

-     Net interest income ('NII') of $8.7bn fell by $0.3bn, primarily reflecting deposit migration. Non-interest income increased by $0.9bn, reflecting a rise in trading income of $1.3bn, mainly in GBM. The associated funding costs reported in NII grew by $1.3bn. In addition, fee income grew by 5%. On a constant currency basis, revenue rose by 3% to $20.8bn.

-     Net interest margin ('NIM') of 1.63% decreased by 6 basis points ('bps') compared with 1Q23. NIM increased by 11bps compared with 4Q23, reflecting the impact of hyperinflation and currency devaluation in Argentina, partly offset by higher funding costs of liabilities.

-     ECL of $0.7bn were $0.3bn higher than in 1Q23. The 1Q24 charge primarily comprised stage 3 charges in both WPB and our wholesale businesses, while the 1Q23 charge reflected a favourable change in economic assumptions and lower stage 3 charges. Annualised ECL as a percentage of gross loans and advances to customers was 30bps in 1Q24, including held for sale balances.

-     Operating expenses of $8.2bn were $0.6bn or 7% higher than in 1Q23. The growth was primarily due to continued investment in technology, the impacts of inflation and a higher performance-related pay accrual which reflected a change in the expected quarterly phasing of the performance-related pay pool relative to 1Q23. While target basis operating expenses rose by 7%, we are reconfirming our cost growth guidance of approximately 5% for 2024 compared with 2023 on this basis. Target basis operating expenses are measured on a constant currency basis, excluding notable items, the impact of retranslating the results of hyperinflationary economies at constant currency, and the direct costs from the sales of our France retail banking operations and our banking business in Canada.

-     Customer lending balances decreased by $5bn compared with 4Q23. On a constant currency basis, lending balances increased by $5bn, including growth in Commercial Banking ('CMB') and GBM, notably in HSBC Bank plc, while mortgage balances increased in WPB in HSBC UK.

-     Customer accounts decreased by $41bn compared with 4Q23. On a constant currency basis, customer accounts fell by $24bn, mainly in our legal entity in Hong Kong, notably reflecting the impact of customer deleveraging and competitive pressures in CMB and GBM, and outflows into wealth products in WPB.

-     Common equity tier 1 ('CET1') capital ratio of 15.2% increased by 0.4 percentage points compared with 4Q23, driven by capital generation, the net beneficial impact of strategic transactions on CET1 and risk-weighted assets ('RWAs'), partly offset by the foreseeable dividend accrual, including the special dividend of $0.21 per share following the completion of the sale of our banking business in Canada, and the share buy-back announced at our 2023 year-end results.

-     The Board has approved a first interim dividend of $0.10 per share. In addition, following the completion of the sale of our banking business in Canada, the Board has approved a special dividend of $0.21 per share, payable in June 2024, alongside the first interim dividend. After completing the $2bn buy-back announced at our full year 2023 results, we now intend to initiate a share buy-back of up to $3bn, which we expect to have a 0.4 percentage point impact on the CET1 capital ratio. We plan for this buy-back to commence shortly after the annual general meeting ('AGM') in May 2024.

 

 

          Outlook

 

-     Our guidance remains unchanged from that set out at our full-year results on 21 February 2024. We continue to target a return on average tangible equity ('RoTE'), excluding the impact of notable items, in the mid-teens for 2024, with banking net interest income ('banking NII') of at least $41bn, dependent on the path of interest rates globally. We are reconfirming our cost growth guidance of approximately 5% for 2024 compared with 2023, on a target basis, and ECL charges as a percentage of average gross loans of around 40bps in 2024.

-     Our guidance reflects our current outlook for the global macroeconomic environment, including customer and financial markets activity. This includes our modelling of a number of market dependent factors, such as market-implied interest rates (as of early April 2024), as well as customer behaviour and activity levels.

-     We intend to manage our CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target of 50% for 2024, excluding material notable items and related impacts.

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

 

 

 

 

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

 

 

Presentation to investors and analysts

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

 

About HSBC

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

 

Business highlights

Our strategy

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

-     Focus - maintain leadership in scale markets, double-down on international connectivity, diversify our revenue and maintain cost discipline and reshape our portfolio;

-     Digitise - deliver seamless customer experience, ensure resilience and security, embrace disruptive technologies and partner with innovators, and automate and simplify at scale;

-     Energise - inspire leaders to drive performance and delivery, unlock our edge to enable success, deliver a unique and exceptional colleague experience and prepare our workforce for the future;

-     Transition - support our customers, embed net zero into the way we operate, partner for systemic change, become net zero in our own operations and supply chain by 2030, and our financed emissions by 2050.

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

These opportunities include further growing our international businesses, diversification of our revenue, including building our wealth business, especially in Asia, continuing to grow in our home markets in Hong Kong and the UK, and also the diversification of our profit generation across the other markets in which we operate. We have continued to demonstrate progress during 1Q24. We generated $6.7bn from transaction banking during 1Q24, which was 1% higher than in 1Q23, driven by revenue growth in Global Payments Solutions ('GPS') in both CMB and GBM, across both NII and fees, which was broadly offset by lower revenue in Global Foreign Exchange in the context of a strong 1Q23. At 31 March 2024, wealth balances were $1.8tn, an increase of 10% compared with the same period last year. Within this we have attracted net new invested assets of $27bn in the first three months of 2024, with $19bn booked in Asia. In addition, our insurance business continued to grow, with insurance manufacturing new business contractual service margin in WPB of $0.8bn, up 87% compared with 1Q23. In Hong Kong and the UK, we grew mortgage lending balances by a combined $9bn since 31 March 2023.

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

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

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

 

ESG update

In January 2024, we published our first net zero transition plan, which is an important milestone in our journey to achieving our net zero ambition - helping our people, customers, investors and other stakeholders to understand our long-term vision, the challenges, uncertainties and dependencies that exist, the progress we are making and what we plan to do in the future. The plan includes details on our approach to sector transitions, and on our implementation plan to embed net zero across key areas of our organisation.

 

Financial summary

 

Key financial measures: basis of preparation

Return on average tangible equity

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

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

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

Dividend payout ratio target basis

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

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

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

Notes

-     Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2024 and the quarter ended 31 March 2023. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2024 and the corresponding balances at 31 December 2023.

-     The financial information on which this Earnings Release 1Q24 is based is unaudited. It has been prepared in accordance with our material accounting policies as described on pages 341 to 354 of our Annual Report and Accounts 2023.

 

 

Constant currency performance

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

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

Foreign currency translation differences

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

 

 

 

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

-   the income statements for 4Q23 and 1Q23 at the average rate of exchange for 1Q24;

-   the closing prior period balance sheets at the prevailing rates of exchange at 31 March 2024.

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

Notable items

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

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

Global business performance

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

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

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

Management view of revenue on a constant currency basis

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

 

 

Disposal groups and business acquisitions

France retail banking operations

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

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

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

Canada banking business

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

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

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

Argentina business

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

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

 

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

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

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

Other disposals

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

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

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

Acquisitions

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

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

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

Impact of strategic transactions

To aid the understanding of our results, we separately disclose, in selected tables, the impact of strategic transactions classified as material notable items on the results of the Group and our global businesses. Material notable items are a subset of notable items and categorisation is dependent on the financial impact on the Group's income statement. At 1Q24, the disclosure includes the impacts of the disposal of our retail banking operations in France, our banking business in Canada and the planned sale of our business in Argentina. The disclosure also includes the impact of our acquisition of SVB UK and income statement results of IVB. The impacts quoted include the gains or losses on classification to held for sale or acquisition and all other related notable items. Once a transaction has completed, the impact will also include the operating income statement results of each business, which are not classified as notable items, where there are results in one period but not in another, providing the impact of the acquisition or disposal on the results. We have also included strategic transaction supplementary analysis on page 30.

 

 

Key financial metrics

 

	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
Reported results
Profit before tax ($m)	12,650	977	12,886
Profit after tax ($m)	10,837	222	11,026
Cost efficiency ratio (%)	39.3	66.4	37.6
Net interest margin (%)	1.63	1.52	1.69
Basic earnings per share ($)	0.54	(0.01)	0.52
Diluted earnings per share ($)	0.54	(0.01)	0.52
Dividend per ordinary share (in respect of the period) ($)1	0.10	0.31	0.10
Alternative performance measures
Constant currency profit before tax ($m)	12,650	863	12,931
Constant currency cost efficiency ratio (%)	39.3	66.9	37.4
Expected credit losses and other credit impairment charges (annualised) as % of average gross loans and advances to customers (%)	0.31	0.40	0.18
Expected credit losses and other credit impairment charges (annualised) as % of average gross loans and advances to customers, including held for sale (%)	0.30	0.38	0.17
Basic earnings per share excluding material notable items and related impacts ($)	0.34	0.25	0.36
Return on average ordinary shareholders' equity (annualised) (%)	24.0	(0.4)	25.5
Return on average tangible equity (annualised) (%)	26.1	(0.4)	27.4
Return on average tangible equity excluding notable items (annualised) (%)	16.4	12.8	18.4
Target basis operating expenses ($m)	7,939	8,415	7,394

 

 

	At
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
Balance sheet
Total assets ($m)	3,000,517	3,038,677	2,989,696
Net loans and advances to customers ($m)	933,125	938,535	963,394
Customer accounts ($m)	1,570,164	1,611,647	1,604,099
Average interest-earning assets, year to date ($m)	2,140,446	2,164,324	2,152,893
Loans and advances to customers as % of customer accounts (%)	59.4	58.2	60.1
Total shareholders' equity ($m)	191,186	185,329	190,095
Tangible ordinary shareholders' equity ($m)	162,008	155,710	159,458
Net asset value per ordinary share at period end ($)	9.28	8.82	8.65
Tangible net asset value per ordinary share at period end ($)	8.67	8.19	8.08
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)2	15.2	14.8	14.7
Risk-weighted assets ($m)2,3	832,633	854,114	854,434
Total capital ratio (%)2,3	20.7	20.0	19.8
Leverage ratio (%)2,3	5.7	5.6	5.8
High-quality liquid assets (liquidity value) ($m)3,4	645,789	647,505	634,889
Liquidity coverage ratio (%)3,4	136	136	132
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions)	18,687	19,006	19,736
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)	18,838	19,135	19,903
Average basic number of $0.50 ordinary shares outstanding (millions)	18,823	19,130	19,724

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

 

Summary consolidated income statement

 

 

 

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

 

 

Distribution of results by global business and legal entity

 

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

 

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

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

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

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

 

Income statement commentary

 

1Q24 compared with 1Q23 - reported results

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

1Q24 compared with 1Q23 - constant currency basis

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

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

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

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

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

1Q24 compared with 4Q23 - reported results

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

 

 

 

Notable items
	Quarter ended
	31 Mar	31 Dec
	2024	2023
	$m	$m
Revenue
Disposals, acquisitions and related costs	3,732	(2,333)
Fair value movements on financial instruments1	-	(1)
Disposal losses on Markets Treasury repositioning	-	(399)
Currency translation on revenue notable items	-	(23)
Operating expenses
Disposals, acquisitions and related costs	(63)	(124)
Restructuring and other related costs	13	59
Currency translation on operating expenses notable items	-	1
Share of profit in associates and joint ventures
Impairment of interest in associate	-	(3,000)
Currency translation on associate notable items	-	(17)

Reported profit before tax of $12.7bn was $11.7bn higher. The increase reflected higher revenue, which included a $4.8bn gain on the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, and the impact of the non-recurrence of a $2.0bn impairment loss in 4Q23 relating to the sale of our retail banking operations in France, which were partly offset by a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale. Reported share of profit from associates and JVs also increased as 4Q23 included an impairment charge of $3.0bn relating to our investment in BoCom due to a reduction to the accounting value-in-use of the investment. In addition, reported operating expenses and reported ECL decreased.

Reported profit after tax of $10.8bn was $10.6bn higher than in 4Q23.

Reported revenue of $20.8bn was $7.7bn or 59% higher, which included a gain on the disposal of our banking business in Canada and the non-recurrence of an impairment loss in 4Q23 relating to the sale of our retail banking operations in France, partly offset by an impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale, as described above.

The growth also reflected higher NII, mainly due to the impact of hyperinflation in Argentina. There was a good performance in Wealth in WPB, including in our insurance business, Global Private Banking and investment distribution, in part due to a seasonal increase in the first quarter. Revenue increased in GBM, notably in Equities and Global Debt Markets, as market sentiment and client activity improved.

Revenue increased in Markets Treasury mainly due to the non-recurrence of losses on asset disposals of $0.4bn in 4Q23 relating to repositioning and risk management activities in our hold-to-collect-and-sell portfolio in certain key legal entities.

Reported ECL charges of $0.7bn were $0.3bn lower. This included lower stage 3 charges, notably in CMB, reflecting a reduction in charges relating to the commercial real estate sector in mainland China. ECL in WPB included a $0.2bn charge in Mexico, with our credit metrics remaining stable.

Reported operating expenses of $8.2bn were $0.5bn or 6% lower, including favourable foreign currency translation differences between the periods of $0.1bn. The reduction reflected lower levies, as 4Q23 included the UK bank levy charge of $0.3bn, which included adjustments relating to prior years, and a $0.2bn charge in the US relating to the FDIC special assessment. This compared with a $0.1bn aggregate charge in 1Q24 which related to the Bank of England levy and an incremental FDIC special assessment charge. There was also a reduction in the performance-related pay accrual, although technology spend increased.

The number of employees expressed in full-time equivalent staff ('FTE') at 31 March 2024 was 214,400, a decrease of 6,461 compared with 31 December 2023, primarily reflecting the completion of the sale of our banking business in Canada and our retail banking operations in France. The number of contractors at 31 March 2024 was 4,263, a decrease of 413.

Reported share of profit from associates and joint ventures of $0.8bn was $3.1bn higher, as 4Q23 included an impairment charge of $3.0bn relating to our investment in BoCom due to a reduction in the accounting value-in-use of the investment.

 

1Q24 compared with 4Q23 - constant currency basis

Movement in profit before tax compared with 4Q23 - on a constant currency basis
	Quarter ended
			Variance
			1Q24 vs. 4Q23
	31 Mar	31 Dec			of which strategic transactions1
	2024	2023
	$m	$m	$m	%	$m
Revenue	20,752	12,744	8,008	63	6,004
ECL	(720)	(968)	248	26	-
Operating expenses	(8,151)	(8,530)	379	4	139
Share of profit from associates and JVs less impairment	769	(2,383)	3,152	132	-
Profit before tax	12,650	863	11,787	>200	6,143

Profit before tax of $12.7bn was $11.8bn higher than in 4Q23 on a constant currency basis.

Revenue increased by $8.0bn or 63%, and included a $4.8bn gain on the disposal of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds, and the non-recurrence in 4Q23 of a $2.1bn impairment loss relating to the sale of our retail banking operations in France, partly offset by a $1.1bn impairment recognised in 1Q24 following the classification of our business in Argentina as held for sale. Revenue also reflected growth in NII, including the impact of hyperinflation in Argentina, compounded by the impact of retranslating the results of hyperinflationary economies at constant currency.

Share of profit from associates and JVs increased by $3.2bn, as 4Q23 included an impairment charge of $3.0bn relating to our investment in BoCom due to a reduction in the accounting value-in-use of the investment. Operating expenses decreased by $0.4bn, primarily as 4Q23 included the UK bank levy charge and the impact of the FDIC special assessment in the US. There was also a reduction in the performance-related pay accrual, although technology spend increased. ECL charges were $0.2bn lower, primarily due to a reduction in stage 3 charges in CMB, from lower charges in relation to the commercial real estate sector in mainland China.

 

 

Net interest income

 

	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Interest income	28,265	26,714	22,092
Interest expense	(19,612)	(18,430)	(13,133)
Net interest income	8,653	8,284	8,959
Average interest-earning assets	2,140,446	2,164,324	2,152,893
	%	%	%
Gross interest yield1	5.31	4.90	4.16
Less: gross interest payable1	(4.10)	(3.83)	(2.91)
Net interest spread2	1.21	1.07	1.25
Net interest margin3	1.63	1.52	1.69

 

 

NII in 1Q24 was $8.7bn, up $0.4bn compared with 4Q23, and down $0.3bn compared with 1Q23. The increase of $0.4bn was predominantly due to non-recurrence of the adverse impact in 4Q23 from devaluation of the Argentinian peso and the reclassification related to cash flow hedge in the first nine months of 2023. Excluding the impact of these items, there was a decrease in NII due to higher interest expense across our liabilities. The decrease of $0.3bn compared with 1Q23 was predominantly driven by our main legal entities in Asia and Europe where higher interest expense across our liabilities included the impact of deposit migration, partly offset by HSBC UK where interest income grew by more than interest expense.

NIM in 1Q24 of 1.63% was up 11bps compared with 4Q23, and down 6bps compared with 1Q23. The increase compared with 4Q23 was predominantly due to non-recurrence of the adverse impact from devaluation of the Argentinian peso and the reclassification related to cash flow hedge in the first nine months of 2023. Excluding the impact of these items, there was a decrease in NIM predominantly driven by our main legal entities in Asia and Europe, partly offset by an increase in NIM in HSBC UK. The decrease of 6bps compared with 1Q23 was predominantly driven by the impact of higher funding costs across our liabilities, which included the impact of deposit migration in our main legal entities in Asia and Europe.

Interest income in 1Q24 of $28.3bn increased by $1.6bn compared with 4Q23 and increased by $6.2bn compared with 1Q23. The increase of $1.6bn was predominantly due to the non-recurrence of the one-off items mentioned above in the NII section and a rise in yield on AIEA, offset by a decline in AIEA balances. The increase of $6.2bn compared with 1Q23 was predominantly driven by the impact of higher market interest rates.

 

The change in interest income in 1Q24 compared with 1Q23 included an adverse impact of foreign currency translation differences of $0.2bn. After excluding foreign currency translation differences, interest income increased by $6.4bn.

Interest expense in 1Q24 of $19.6bn increased by $1.2bn compared with 4Q23 and increased by $6.5bn compared with 1Q23. The increase of $1.1bn was due to a rise in yield on average interest-bearing liabilities ('AIBL') along with an increase in AIBL balances. The increase of $6.5bn compared with 1Q23 was mainly due to the impact of higher interest rates on our liabilities which included the impact of deposit migration, notably in Asia and Europe.

The rise in interest expense in 1Q24 compared with 1Q23 included the favourable effects of foreign currency translation differences of $0.1bn. Excluding foreign currency translation differences, interest expense increased by $6.6bn.

 

 

Banking NII is an alternative performance measure, and is defined as Group NII 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 NII in our insurance business.

In our segmental disclosures, the funding costs of trading and fair value net assets are predominantly recorded in GBM 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 costs 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 $11.3bn in 1Q24. The funding costs associated with generating trading and fair value income were $2.7bn, an increase of $1.3bn compared with 1Q23, notably due to higher interest rates. Banking NII also deducts third-party NII related to our insurance business, which was $0.1bn in 1Q24, broadly stable compared with 1Q23.

The internally allocated funding costs incurred in 1Q24 to generate trading and fair value income related to trading, fair value and associated net asset balances predominantly in GBM. At 31 March 2024, these stood at approximately $187bn.

 

	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$bn	$bn	$bn
Net interest income	8.7	8.3	9.0
Banking book funding costs used to generate 'net income from financial instruments held for trading or managed on a fair value basis'	2.7	2.5	1.4
Third-party net interest income from insurance	(0.1)	(0.1)	(0.1)
Banking net interest income	11.3	10.7	10.3

 

 

Summary consolidated balance sheet

 

	At
	31 Mar	31 Dec
	2024	2023
	$m	$m
Assets
Cash and balances at central banks	275,943	285,868
Trading assets	321,540	289,159
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss	113,478	110,643
Derivatives	229,713	229,714
Loans and advances to banks	121,456	112,902
Loans and advances to customers	933,125	938,535
Reverse repurchase agreements - non-trading	250,496	252,217
Financial investments	457,592	442,763
Assets held for sale	5,158	114,134
Other assets	292,016	262,742
Total assets	3,000,517	3,038,677
Liabilities
Deposits by banks	77,982	73,163
Customer accounts	1,570,164	1,611,647
Repurchase agreements - non-trading	226,168	172,100
Trading liabilities	77,263	73,150
Financial liabilities designated at fair value	144,803	141,426
Derivatives	231,218	234,772
Debt securities in issue	101,444	93,917
Insurance contract liabilities	122,496	120,851
Liabilities of disposal groups held for sale	4,588	108,406
Other liabilities	246,014	216,635
Total liabilities	2,802,140	2,846,067
Equity
Total shareholders' equity	191,186	185,329
Non-controlling interests	7,191	7,281
Total equity	198,377	192,610
Total liabilities and equity	3,000,517	3,038,677

 

 

Balance sheet commentary

Balance sheet - 31 March 2024 compared with 31 December 2023

At 31 March 2024, our total assets of $3.0tn were $38bn lower on a reported basis and included unfavourable effects of foreign currency translation differences of $33bn. On a constant currency basis, total assets were broadly stable as the reduction in assets held for sale balances following the completion of the sale of our retail operations in France and the sale of our banking business in Canada were mostly offset by growth in trading assets, a seasonal increase in settlement accounts and higher financial investments balances.

Loans and advances to customers as a percentage of customer accounts were 59.4%, compared with 58.2% at 31 December 2023.

 

Combined view of customer lending and customer deposits
	At
	31 Mar	31 Dec
	2024	2023
	$m	$m
Loans and advances to customers	933,125	938,535
Loans and advances to customers of disposal groups reported in 'Assets held for sale'	1,855	73,285
-  banking business in Canada	-	56,129
-  retail banking operations in France	-	16,902
-  business in Argentina	1,241	-
-  other	613	254
Non-current assets held for sale	189	92
Combined customer lending	935,168	1,011,912
Currency translation	-	(11,891)
Combined customer lending at constant currency	935,168	1,000,021
Customer accounts	1,570,164	1,611,647
Customer accounts reported in 'Liabilities of disposal groups held for sale'	3,659	85,950
-  banking business in Canada	-	63,001
-  retail banking operations in France	-	22,307
-  business in Argentina	2,559	-
-  other	1,100	643
Combined customer deposits	1,573,823	1,697,597
Currency translation	-	(19,525)
Combined customer deposits at constant currency	1,573,823	1,678,073

 

 

Loans and advances to customers of $0.9tn were $5bn lower on a reported basis. This included the adverse effects of foreign currency translation differences of $10bn, excluding which customer lending balances increased by $5bn. The increase primarily reflected growth in CMB, notably in HSBC Bank plc, and in GBM, while mortgage balances also increased in WPB in HSBC UK.

In WPB, customer lending decreased by $7bn. This primarily reflected the $8bn transfer to Corporate Centre of a portfolio of home and certain other loans retained following the sale of our retail banking operations in France. This was partly offset by growth in mortgage lending balances in HSBC UK of $1bn.

In CMB, customer lending increased by $3bn. This was driven by growth in term lending in HSBC Bank plc and in our legal entities in mainland China, Singapore, India, Mexico and Australia, as well as an increase in overdraft balances in HSBC Bank plc. This was partly offset by lower term lending balances in our legal entity in Hong Kong and also in HSBC UK.

In GBM, lending increased by $1bn, primarily reflecting higher overdraft balances, notably in HSBC Bank plc, and term lending growth in India and Singapore.

In Corporate Centre, the increase in customer lending balances of $8bn reflected the transfer of balances from WPB, as mentioned above.

We continue to expect mid-single digit annual percentage customer lending growth over the medium to long term. However, we expect demand to remain subdued in the near term.

Customer accounts of $1.6tn reduced by $41bn on a reported basis. This included the adverse effects of foreign currency translation differences of $17bn, excluding which customer accounts fell by $24bn.

In WPB, customer accounts fell by $7bn, mainly due to decreases in our legal entity in Hong Kong which primarily reflected outflows into Wealth products due to an improvement in market sentiment, as well as a reduction in money market term deposit balances. In addition, we classified to 'assets held for sale' $1bn of customer accounts associated with the planned disposal of our business in Argentina. These reductions were partly offset by increases in term deposit balances in our legal entities in Singapore and mainland China, and in HSBC Bank plc. In HSBC UK, customer accounts were stable, as seasonal tax payments in January were offset by balance growth in February and March.

In CMB, the reduction in customer accounts of $14bn reflected net outflows in our legal entity in Hong Kong as customers deleverage and the impact of competitive pressures, lower balances in HSBC UK due to seasonality and market-wide tightening of liquidity, as well as the impact of repricing actions in our legal entity in the US. In addition, we classified to 'assets held for sale' $1bn of customer accounts associated with the planned disposal of our business in Argentina. 

In GBM, customer accounts decreased by $3bn, primarily reflecting customer deleveraging and the impact of competitive pressures in our legal entity in Hong Kong, competitive pressures in mainland China and the impact of repricing actions in Singapore and the US.

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 March 2024, we had recognised a pre-tax cumulative unrealised loss reserve through other comprehensive income of $4.1bn related to these hold-to-collect-and-sell positions. This reflected a $0.2bn pre-tax loss in 1Q24, inclusive of movements on related fair value hedges. Overall, the Group is positively exposed to rising interest rates through NII, although there is an adverse impact on our capital base in the early stages of a rising interest rate environment due to the fair value of hold-to-collect-and-sell instruments. Over time, these adverse movements will unwind as the instruments reach maturity, although not all will necessarily be held to maturity.

We also hold a portfolio of financial investments measured at amortised cost, which are classified as hold-to-collect. At 31 March 2024, there was a cumulative unrecognised loss of $2.6bn. Within this, $1.8bn related to debt instruments held to manage our interest rate exposure, representing a $0.8bn deterioration during 1Q24.

 

 

Risk-weighted assets - 31 March 2024 compared with 31 December 2023

Risk-weighted assets ('RWAs') reduced by $21.5bn during 1Q24. Excluding a decrease of $8.9bn from foreign currency translation differences, RWAs fell by $12.6bn, reflecting:

-     a $36.2bn decline primarily due to a fall of $32.7bn from the disposal of our banking business in Canada, including the impact of foreign exchange hedges on the sale proceeds, and the sale of our retail banking operations in France.

This was partly offset by:

-     a $14.4bn increase mainly driven by higher value at risk, increased corporate lending, notably in HSBC Bank plc and SAB, and a temporary increase from the Canada business sale proceeds. Additionally there was an increase due to higher securities financing exposures in counterparty credit risk;

-     a $7.3bn increase mainly from unfavourable credit risk rating migrations and portfolio mix changes in CMB in Asia; and

-     a $1.9bn increase due to methodology changes and credit risk parameter refinements notably in HSBC Bank plc and the Middle East.

-    

 

 

Global businesses

 

 

Wealth and Personal Banking - constant currency basis

 

Results - on a constant currency basis
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions1
	2024	2023	2023	Total
	$m	$m	$m	$m	%	$m
Revenue1	7,164	4,253	9,013	(1,849)	(21)	(2,076)
ECL	(301)	(289)	(243)	(58)	(24)	-
Operating expenses	(3,695)	(3,803)	(3,463)	(232)	(7)	145
Share of profit/(loss) from associates and JVs	13	19	17	(4)	(24)	-
Profit before tax	3,181	180	5,324	(2,143)	(40)	(1,931)

 

Management view of revenue
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions
	2024	2023	2023
	$m	$m	$m	$m	%	$m
Wealth	2,192	1,691	1,956	236	12	(11)
-  investment distribution	720	567	636	84	13	(11)
-  Global Private Banking	672	539	578	94	16	-
net interest income	297	281	298	(1)	-	-
non-interest income	375	258	280	95	34	-
-  life insurance	466	255	437	29	7	-
-  asset management	334	330	305	29	10	-
Personal Banking	4,868	4,971	4,986	(118)	(2)	(44)
-  net interest income	4,549	4,613	4,678	(129)	(3)	(28)
-  non-interest income	319	358	308	11	4	(15)
Other1	104	(2,409)	2,071	(1,967)	(95)	(2,021)
-  of which: impairment (loss)/reversal relating to the planned sale of our retail banking operations in France	53	(2,050)	2,044	(1,991)	(97)	(1,991)
Net operating income2	7,164	4,253	9,013	(1,849)	(21)	(2,076)
RoTE (annualised)3 (%)	29.4	28.5	50.2

 

Notable items
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	53	(2,030)	2,021
Disposal losses on Markets Treasury repositioning	-	(138)	-
Currency translation on revenue notable items	-	(20)	23
Operating expenses
Disposals, acquisitions and related costs	(1)	(27)	(21)
Restructuring and other related costs	2	4	-
Currency translation on operating expenses notable items	-	-	-

 

 

Profit before tax of $3.2bn was $2.1bn lower than in 1Q23 on a constant currency basis. The reduction was driven by the non-recurrence of a $2.0bn reversal in 1Q23 of an impairment relating to the planned sale of our retail banking operations in France, although it was subsequently reinstated in 4Q23 and the sale completed on 1 January 2024. NII was stable compared with 1Q23, while fee income increased by 10%. Operating expenses grew by $0.2bn and there was an increase in ECL of $0.1bn.

Revenue of $7.2bn was $1.8bn or 21% lower on a constant currency basis. This included the non-recurrence of a $2.0bn reversal in 1Q23 mentioned above, included within 'Other'. Wealth performed strongly, up $0.2bn, mainly due to a rise of $0.1bn in Global Private Banking non-net interest income and $0.1bn in investment distribution, as well as growth in asset management and life insurance. This was partly offset by a reduction in Personal Banking NII of $0.1bn, primarily from margin compression, although there was balance sheet growth across a number of our entities.

In Wealth, revenue of $2.2bn was up $0.2bn or 12%.

-     Global Private Banking revenue was $0.1bn or 16% higher due to strong performance in brokerage and trading in Asia.

-     Investment distribution revenue grew by $0.1bn or 13% driven by mutual funds, structured products and bonds.

-     Asset management revenue was $29m or 10% higher, driven by strong flows in 2023 and positive market movements, resulting in an 11% growth in assets under management.

-     Life insurance revenue rose by $29m or 7%. The increase was mainly driven by an increase in contractual service margin ('CSM') earnings, largely due to growth in the CSM balance, reflecting increased sales during 2023 and into 1Q24. New business CSM of $0.8bn was 87% higher than in 1Q23, mainly in Hong Kong.

In Personal Banking, revenue of $4.9bn was down $0.1bn or 2%.

-     NII was $0.1bn or 3% lower due to narrower margins and the disposal of our retail banking operations in France. Compared with 1Q23, lending balances fell due to the sale of our retail banking operations in France, partly offset by growth in HSBC UK and our main legal entities in Asia, Mexico and the US. Unsecured lending balances increased by $1bn, notably in the UK, Mexico, Hong Kong, Taiwan and India, partly offset by a reduction due to the sale of our retail banking operations in France and the divestment of our business in Oman. Deposit balances fell by $32bn, mainly due to the impact of the retail banking operations sale in France. Declines in HSBC UK and our main entity in Hong Kong were partly offset by growth in our main legal entities in mainland China, Singapore, Australia, Taiwan and the Channel Islands.

Other revenue decreased by $2.0bn, mainly due to the non-recurrence of a $2.0bn reversal in 1Q23 mentioned above. The reduction in revenue also included a $0.1bn adverse impact of hyperinflation.

ECL were $0.3bn, an increase of $0.1bn compared with 1Q23 on a constant currency basis. ECL in 1Q24 included a $0.2bn charge in Mexico, which was $49m higher than in 1Q23, reflecting growth in lending during 2023. Our credit metrics remained stable, despite continuing inflationary pressures.

Operating expenses of $3.7bn were 7% higher on a constant currency basis, reflecting continued investments, notably in wealth in Asia, higher technology spend, a higher performance-related pay accrual relative to 1Q23, and the impact of inflation. These were partly offset by ongoing cost discipline.

 

 

Commercial Banking - constant currency basis

 

Results - on a constant currency basis
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions1
	2024	2023	2023	Total
	$m	$m	$m	$m	%	$m
Revenue	5,532	5,095	6,709	(1,177)	(18)	(1,405)
ECL	(380)	(665)	(149)	(231)	>(100)	22
Operating expenses	(1,872)	(1,976)	(1,677)	(195)	(12)	(68)
Share of profit/(loss) from associates and JVs	-	-	-	-	-	-
Profit before tax	3,280	2,454	4,883	(1,603)	(33)	(1,451)

 

 

 

Management view of revenue
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions
	2024	2023	2023
	$m	$m	$m	$m	%	$m
Global Trade and Receivables Finance	497	477	499	(2)	-	1
Credit and Lending	1,382	1,248	1,352	30	2	75
Global Payments Solutions	3,077	3,171	2,885	192	7	44
GBM products, Insurance and Investments, and Other1	576	199	1,973	(1,397)	(71)	(1,525)
-  of which: share of revenue from Markets and Securities Services and Banking products	328	321	338	(10)	(3)	7
-  of which: gain on the acquisition of Silicon Valley Bank UK Limited	-	(2)	1,577	(1,577)	(100)	(1,577)
Net operating income2	5,532	5,095	6,709	(1,177)	(18)	(1,405)
-  of which: transaction banking3	3,808	3,899	3,628	180	5
RoTE (annualised)4 (%)	21.8	23.4	36.1

 

Notable items
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue
Disposals, acquisitions and related costs	-	(2)	1,511
Disposal losses on Markets Treasury repositioning	-	(126)	-
Currency translation on revenue notable items	-	-	66
Operating expenses
Disposals, acquisitions and related costs	(1)	(25)	-
Restructuring and other related costs	1	2	-
Currency translation on operating expenses notable items	-	-	-

 

Profit before tax of $3.3bn was $1.6bn lower than in 1Q23 on a constant currency basis. This was largely due to the non-recurrence of a $1.6bn gain recognised in 1Q23 on the acquisition of SVB UK, partly offset by incremental IVB revenue following the acquisition and integration of SVB UK.

Revenue of $5.5bn was $1.2bn or 18% lower on a constant currency basis.

-     In GPS, revenue increased by $0.2bn, with growth in all main legal entities, including incremental IVB revenue. This was driven by an increase in margins reflecting interest rate rises and repricing actions. Average balances were marginally lower reflecting global tightening of liquidity, notably in our legal entities in the UK and Asia. There was also a 4% increase in fee income as business initiatives drove growth in transaction banking including higher volumes and international payments, notably in our main legal entities in the US and Asia.

-     In Global Trade and Receivables Finance, revenue was stable reflecting improved margins which were offset by the impacts from the softer trade cycle in Asia.

-     In Credit and Lending, revenue increased by $30m or 2%, primarily due to incremental IVB revenue. This was partly offset by margin compression and lower balances, notably in 2023, reflecting softer demand from customers, notably in our legal entity in Asia.

-     In GBM products, Insurance and Investments, and Other, revenue decreased by $1.4bn, largely due to the non-recurrence of a $1.6bn gain recognised in 1Q23 on the acquisition of SVB UK and adverse impacts of hyperinflationary accounting of $0.2bn. These adverse impacts were partly offset by higher revenues from Markets Treasury and interest income on own capital.

ECL charges of $0.4bn were $0.2bn higher than in 1Q23 on a constant currency basis given benign credit conditions in 1Q23, including a net release of stage 1 and stage 2 allowances reflecting a favourable shift in economic assumptions, notably in our main legal entity in Asia.

Operating expenses of $1.9bn were $0.2bn or 12% higher than in 1Q23, on a constant currency basis. The increase reflected incremental costs in IVB of $0.1bn following the acquisition and integration of SVB UK, a higher performance-related pay accrual relative to 1Q23, ongoing investment in technology and inflationary impacts. These increases were in part mitigated by the impact of continued strategic cost-saving initiatives.

 

 

Global Banking and Markets - constant currency basis

 

Results - on a constant currency basis
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions1
	2024	2023	2023	Total
	$m	$m	$m	$m	%	$m
Revenue	4,455	3,666	4,402	53	1	-
ECL	(33)	(16)	(31)	(2)	(6)	-
Operating expenses	(2,397)	(2,695)	(2,381)	(16)	(1)	-
Share of profit/(loss) from associates and JVs	-	-	-	-	-	-
Profit before tax	2,025	955	1,990	35	2	-

 

Management view of revenue
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions7
	2024	2023	2023
	$m	$m	$m	$m	%	$m
Markets and Securities Services	2,454	2,062	2,518	(64)	(3)	-
-  Securities Services	564	565	558	6	1	-
-  Global Debt Markets	324	77	354	(30)	(8)	-
-  Global Foreign Exchange	971	963	1,201	(230)	(19)	-
-  Equities	257	149	144	113	78	-
-  Securities Financing	367	304	261	106	41	-
-  Credit and funding valuation adjustments	(29)	4	-	(29)	n/a	-
Banking	2,191	2,110	2,127	64	3	-
-  Global Trade and Receivables Finance	176	163	177	(1)	(1)	-
-  Global Payments Solutions	1,162	1,157	1,073	89	8	-
-  Credit and Lending	453	479	499	(46)	(9)	-
-  Investment Banking1	279	223	310	(31)	(10)	-
-  Other2	121	88	68	53	78	-
GBM Other	(190)	(506)	(243)	53	22	-
-  Principal Investments	(5)	(18)	(5)	-	-	-
-  Other3	(185)	(488)	(238)	53	22	-
Net operating income4	4,455	3,666	4,402	53	1	-
-  of which: transaction banking5	2,873	2,848	3,009	(136)	(5)
RoTE (annualised) (%)6	15.1	11.4	15.5

 

Notable items
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue
Disposal losses on Markets Treasury repositioning	-	(135)	-
Currency translation on revenue notable items	-	-	-
Operating expenses
Disposals, acquisitions and related costs	-	-	3
Restructuring and other related costs	2	17	-
Currency translation on operating expenses notable items	-	1	-

 

 

 

Profit before tax of $2.0bn was $35m or 2% higher than in 1Q23 on a constant currency basis. Revenue increased marginally by 1% while operating expenses and ECL remained broadly stable compared with prior year.

In Markets and Securities Services ('MSS'), revenue was $0.1bn or 3% lower.

-     Global Debt Markets revenue fell by $30m or 8%. Lower secondary client activity reflected market outlook uncertainty, partly offset by increased primary market activity at the beginning of the quarter.

-     Global Foreign Exchange revenue fell by $0.2bn or 19% compared with a strong 1Q23, as the uncertain outlook affected client flows and risk management activity.

-     Equities revenue increased by $0.1bn or 78% reflecting strong client activity as market sentiment improved. In contrast, 1Q23 had considerably weaker performance as increasing interest rates reduced clients' risk appetite.

-     Securities Financing revenue increased by $0.1bn or 41%, driven by new clients on-boarding resulting in increased flows, including in prime finance.

In Banking, revenue increased by $0.1bn or 3%.

-     GPS revenue increased by $0.1bn or 8%, driven by margin growth from rising global interest rates and business pricing actions.

-     Investment Banking revenue, which includes Issuer Services, decreased by $31m or 10%, notably as the prior year included a small number of large transactions.

-     Credit and Lending revenue decreased by $46m or 9% as the business continued to experience weaker client demand.

GBM Other revenue increased by $53m or 22% compared with prior year.

ECL of $33m in 1Q24 were broadly stable compared with 1Q23 on a constant currency basis.

Operating expenses of $2.4bn increased marginally by $16m or 1% on a constant currency basis due to the impact of inflation and a higher performance-related pay accrual relative to 1Q23, which were in part mitigated by business actions.

 

 

Corporate Centre - constant currency basis

 

Results - on a constant currency basis
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions1
	2024	2023	2023	Total
	$m	$m	$m	$m	%	$m
Revenue	3,601	(270)	101	3,500	>100	3,652
ECL	(6)	2	(5)	(1)	(20)	-
Operating expenses	(187)	(56)	(47)	(140)	>(100)	(18)
Share of profit/(loss) from associates and JVs less impairment	756	(2,402)	685	71	10	-
Profit before tax	4,164	(2,726)	734	3,430	>100	3,634

 

 

Management view of revenue
	Quarter ended
				Variance
				1Q24 vs. 1Q23
	31 Mar	31 Dec	31 Mar			of which strategic transactions
	2024	2023	2023
	$m	$m	$m	$m	%	$m
Central Treasury1	9	1	101	(92)	-	-
Legacy portfolios	10	6	(2)	12	>100	-
Other2,3	3,582	(277)	2	3,580	>100	3,652
-  of which: gain on the sale of our banking business in Canada and associated hedges4	4,789	(245)	(57)	4,846	>100	4,846
-  of which: impairment loss relating to the planned sale of our business in Argentina	(1,137)	-	-	(1,137)	>100	(1,137)
Net operating income5	3,601	(270)	101	3,500	>100	3,652
RoTE (annualised) (%)6	36.6	(1.0)	11.1

1     Central Treasury comprises valuation differences on issued long-term debt and associated swaps and fair value movements on financial instruments.

3     Revenue from Markets Treasury, HSBC Holdings net interest expense and hyperinflation are allocated out to the global businesses, to align them better with their revenue and expense. The total Markets Treasury revenue component of this allocation for 1Q24 was $484m (1Q23: $214m; 4Q23: $(142)m).

 

Notable items
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1	3,679	(301)	30
Fair value movements on financial instruments2	-	(1)	15
Currency translation on revenue notable items	-	(3)	3
Operating expenses
Disposals, acquisitions and related costs	(61)	(72)	(43)
Restructuring and other related costs	8	36	-
Currency translation on operating expenses notable items	-	-	(1)
Share of profit in associates and joint ventures less impairment
Impairment of interest in associate	-	(3,000)	-
Currency translation on associate notable items	-	(17)	-

Profit before tax of $4.2bn was $3.4bn higher than in 1Q23 on a constant currency basis. This increase included a $4.8bn gain in 1Q24 following the sale of our banking business in Canada, inclusive of fair value gains on the hedging of the sale proceeds and recycling of related reserves. This was partly offset by a $1.1bn impairment recognised following the classification of our business in Argentina as held for sale.

Revenue of $3.6bn was $3.5bn higher on a constant currency basis, which included a $4.8bn gain on the sale of our banking business in Canada, as mentioned above. These factors were partly offset by a $1.1bn impairment recognised following the classification of our business in Argentina as held for sale, adverse fair value movements on financial instruments in Central Treasury and structural hedges, and the non-recurrence of a 1Q23 favourable impact following the reversal of an impairment related to the sale of our France retail banking operations. In addition, 1Q24 included an impairment of $0.1bn following the classification of our operations in Armenia to held for sale.

Operating expenses increased by $0.1bn on a constant currency basis, including a charge in the US related to the incremental cost of the FDIC special assessment, as well as an increase associated with disposals, acquisitions and related costs.

Share of profit from associates and joint ventures of $0.8bn increased by $0.1bn or 10% which included an increase in share of profit from SAB.

 

 

Supplementary financial information

 

 

 

Reported and constant currency results

 

Reported and constant currency results1
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue2
Reported	20,752	13,021	20,171
Currency translation		(277)	54
Constant currency	20,752	12,744	20,225
Change in expected credit losses and other credit impairment charges
Reported	(720)	(1,031)	(432)
Currency translation		63	4
Constant currency	(720)	(968)	(428)
Operating expenses
Reported	(8,151)	(8,645)	(7,586)
Currency translation		115	18
Constant currency	(8,151)	(8,530)	(7,568)
Share of profit in associates and joint ventures
Reported	769	(2,368)	733
Currency translation		(15)	(31)
Constant currency	769	(2,383)	702
Profit before tax
Reported	12,650	977	12,886
Currency translation		(114)	45
Constant currency	12,650	863	12,931
Profit after tax
Reported	10,837	222	11,026
Currency translation		(51)	48
Constant currency	10,837	171	11,074
Loans and advances to customers (net)
Reported	933,125	938,535	963,394
Currency translation		(10,055)	(85)
Constant currency	933,125	928,480	963,309
Customer accounts
Reported	1,570,164	1,611,647	1,604,099
Currency translation		(17,361)	(1,379)
Constant currency	1,570,164	1,594,286	1,602,720

 

 

Notable items
	Quarter ended
	31 Mar	31 Dec	31 Mar
	2024	2023	2023
	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1,2,3	3,732	(2,333)	3,562
Fair value movements on financial instruments4	-	(1)	15
Disposal losses on Markets Treasury repositioning	-	(399)	-
Operating expenses
Disposals, acquisitions and related costs	(63)	(124)	(61)
Restructuring and other related costs5	13	59	-
Impairment of interest in associate6	-	(3,000)	-
Tax
Tax (charge)/credit on notable items	8	581	(492)
Uncertain tax positions	-	-	427

 

 

Global businesses

 

Supplementary analysis of constant currency results and notable items by global business

 

Constant currency results
	Quarter ended 31 Mar 2024
	Wealth andPersonalBanking	Commercial Banking	Global Banking and Markets	Corporate Centre1	Total
	$m	$m	$m	$m	$m
Revenue2	7,164	5,532	4,455	3,601	20,752
ECL	(301)	(380)	(33)	(6)	(720)
Operating expenses	(3,695)	(1,872)	(2,397)	(187)	(8,151)
Share of profit in associates and joint ventures	13	-	-	756	769
Profit before tax	3,181	3,280	2,025	4,164	12,650
Loans and advances to customers (net)	443,516	308,596	173,186	7,827	933,125
Customer accounts	790,715	456,286	322,773	390	1,570,164

 

Notable items
	Quarter ended 31 Mar 2024
	Wealth and Personal Banking	Commercial Banking	GlobalBanking and Markets	Corporate Centre	Total
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1	53	-	-	3,679	3,732
Operating expenses
Disposals, acquisitions and related costs	(1)	(1)	-	(61)	(63)
Restructuring and other related costs2	2	1	2	8	13

 

 

Constant currency results (continued)
	Quarter ended 31 Mar 2023
	Wealth and Personal Banking	Commercial Banking1	Global Banking and Markets1	CorporateCentre	Total
	$m	$m	$m	$m	$m
Revenue2
Reported	8,983	6,675	4,440	73	20,171
Currency translation	30	34	(38)	28	54
Constant currency	9,013	6,709	4,402	101	20,225
ECL
Reported	(246)	(151)	(32)	(3)	(432)
Currency translation	3	2	1	(2)	4
Constant currency	(243)	(149)	(31)	(5)	(428)
Operating expenses
Reported	(3,483)	(1,712)	(2,368)	(23)	(7,586)
Currency translation	20	35	(13)	(24)	18
Constant currency	(3,463)	(1,677)	(2,381)	(47)	(7,568)
Share of profit in associates and joint ventures
Reported	17	-	-	716	733
Currency translation	-	-	-	(31)	(31)
Constant currency	17	-	-	685	702
Profit before tax
Reported	5,271	4,812	2,040	763	12,886
Currency translation	53	71	(50)	(29)	45
Constant currency	5,324	4,883	1,990	734	12,931
Loans and advances to customers (net)
Reported	455,266	323,268	184,492	368	963,394
Currency translation	2,417	(1,149)	(1,350)	(3)	(85)
Constant currency	457,683	322,119	183,142	365	963,309
Customer accounts
Reported	809,830	471,187	322,443	639	1,604,099
Currency translation	1,232	(590)	(2,025)	4	(1,379)
Constant currency	811,062	470,597	320,418	643	1,602,720

 

Notable items (continued)
	Quarter ended 31 Mar 2023
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	CorporateCentre	Total
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1,2	2,021	1,511	-	30	3,562
Fair value movements on financial instruments3	-	-	-	15	15
Operating expenses
Disposals, acquisitions and related costs	(21)	-	3	(43)	(61)

 

Constant currency results (continued)
	Quarter ended 31 Dec 2023
	Wealth andPersonalBanking	Commercial Banking1	Global Banking and Markets1	CorporateCentre	Total
	$m	$m	$m	$m	$m
Revenue2
Reported	4,356	5,227	3,727	(289)	13,021
Currency translation	(103)	(132)	(61)	19	(277)
Constant currency	4,253	5,095	3,666	(270)	12,744
ECL
Reported	(320)	(690)	(24)	3	(1,031)
Currency translation	31	25	8	(1)	63
Constant currency	(289)	(665)	(16)	2	(968)
Operating expenses
Reported	(3,880)	(2,044)	(2,683)	(38)	(8,645)
Currency translation	77	68	(12)	(18)	115
Constant currency	(3,803)	(1,976)	(2,695)	(56)	(8,530)
Share of profit in associates and joint ventures
Reported	19	-	-	(2,387)	(2,368)
Currency translation	-	-	-	(15)	(15)
Constant currency	19	-	-	(2,402)	(2,383)
Profit/(loss) before tax
Reported	175	2,493	1,020	(2,711)	977
Currency translation	5	(39)	(65)	(15)	(114)
Constant currency	180	2,454	955	(2,726)	863
Loans and advances to customers (net)
Reported	454,878	309,422	173,966	269	938,535
Currency translation	(4,724)	(3,351)	(1,976)	(4)	(10,055)
Constant currency	450,154	306,071	171,990	265	928,480
Customer accounts
Reported	804,863	475,666	330,522	596	1,611,647
Currency translation	(7,233)	(4,931)	(5,191)	(6)	(17,361)
Constant currency	797,630	470,735	325,331	590	1,594,286

 

Notable items (continued)
	Quarter ended 31 Dec 2023
	Wealth and PersonalBanking	Commercial Banking	GlobalBanking and Markets	CorporateCentre	Total
	$m	$m	$m	$m	$m
Revenue
Disposals, acquisitions and related costs1,2	(2,030)	(2)	-	(301)	(2,333)
Fair value movements on financial instruments3	-	-	-	(1)	(1)
Disposal losses on Markets Treasury repositioning	(138)	(126)	(135)	-	(399)
Operating expenses
Disposals, acquisitions and related costs	(27)	(25)	-	(72)	(124)
Restructuring and other related costs4	4	2	17	36	59
Impairment of interest in associate5	-	-	-	(3,000)	(3,000)

 

 

Reconciliation of reported risk-weighted assets to constant currency risk-weighted assets

The following table reconciles reported and constant currency RWAs.

 

Reconciliation of reported risk-weighted assets to constant currency risk-weighted assets
	At 31 Mar 2024
	Wealth and Personal Banking	Commercial Banking	Global Banking and Markets	CorporateCentre	Total
	$bn	$bn	$bn	$bn	$bn
Risk-weighted assets
Reported	182.2	337.8	222.7	89.9	832.6
Constant currency	182.2	337.8	222.7	89.9	832.6
	At 31 Dec 2023
Risk-weighted assets
Reported	192.9	354.5	218.5	88.2	854.1
Currency translation	(2.5)	(4.7)	(2.9)	(0.6)	(10.7)
Constant currency	190.4	349.8	215.6	87.6	843.4
	At 31 Mar 2023
Risk-weighted assets
Reported	181.4	353.1	225.2	94.7	854.4
Currency translation	(1.9)	(4.5)	(2.7)	(1.1)	(10.2)
Constant currency	179.5	348.6	222.5	93.6	844.2

 

Legal entities

Supplementary analysis of constant currency results and notable items by legal entity

 

 

Legal entity results1
	Quarter ended 31 Mar 2024
	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	GrupoFinancieroHSBC, S.A.de C.V.	Other trading entities2	Holding companies, shared service centres and intra-Group eliminations	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
Revenue3	3,091	2,307	8,469	620	1,086	462	888	790	3,039	20,752
ECL	(52)	(66)	(271)	(55)	7	(40)	(176)	(68)	1	(720)
Operating expenses	(1,228)	(1,554)	(3,352)	(282)	(840)	(236)	(530)	(477)	348	(8,151)
Share of profit/(loss) in associates and joint ventures	-	10	611	-	-	-	4	145	(1)	769
Profit before tax	1,811	697	5,457	283	253	186	186	390	3,387	12,650
Loans and advances to customers (net)	268,477	107,995	449,043	20,732	54,941	-	27,581	4,356	-	933,125
Customer accounts	333,416	290,613	776,288	33,397	95,407	-	31,244	9,726	73	1,570,164

2     Other 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 Group reported profit before tax of $359m. Supplementary analysis is provided on page 29 to give a fuller picture of the MENAT regional performance.

 

 

 

Notable items
	Quarter ended 31 Mar 2024
	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	GrupoFinancieroHSBC, 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	-	(16)	-	-	-	-	-	-	3,748	3,732
Operating expenses
Disposals, acquisitions and related costs	-	(5)	-	-	(7)	(36)	-	-	(15)	(63)
Restructuring and other related costs2	3	9	-	-	-	-	-	-	1	13

 

 

 

 

Legal entity results (continued)
	Quarter ended 31 Mar 2023
	HSBC UK Bank plc	HSBC Bank plc	The Hongkong andShanghaiBankingCorporationLimited	HSBC Bank Middle East Limited	HSBC North America Holdings Inc.	HSBC Bank Canada	GrupoFinancieroHSBC, 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
Revenue2
Reported	4,275	4,432	8,334	624	1,083	500	748	932	(757)	20,171
Currency translation	184	85	(75)	-	-	1	73	(234)	20	54
Constant currency	4,459	4,517	8,259	624	1,083	501	821	698	(737)	20,225
ECL
Reported	(161)	(18)	(67)	7	(29)	(1)	(128)	(35)	-	(432)
Currency translation	(7)	(2)	3	-	-	-	(13)	21	2	4
Constant currency	(168)	(20)	(64)	7	(29)	(1)	(141)	(14)	2	(428)
Operating expenses
Reported	(983)	(1,657)	(3,084)	(254)	(747)	(260)	(407)	(512)	318	(7,586)
Currency translation	(42)	(41)	31	-	-	(1)	(40)	130	(19)	18
Constant currency	(1,025)	(1,698)	(3,053)	(254)	(747)	(261)	(447)	(382)	299	(7,568)
Share of profit/(loss) in associates and joint ventures
Reported	-	(43)	666	-	-	-	2	108	-	733
Currency translation	-	-	(32)	-	-	-	1	1	(1)	(31)
Constant currency	-	(43)	634	-	-	-	3	109	(1)	702
Profit before tax
Reported	3,131	2,714	5,849	377	307	239	215	493	(439)	12,886
Currency translation	135	42	(73)	-	-	-	21	(82)	2	45
Constant currency	3,266	2,756	5,776	377	307	239	236	411	(437)	12,931
Loans and advances to customers (net)
Reported	258,758	117,858	468,924	18,829	54,374	-	22,728	21,923	-	963,394
Currency translation	5,511	320	(5,392)	16	-	-	1,943	(2,482)	(1)	(85)
Constant currency	264,269	118,178	463,532	18,845	54,374	-	24,671	19,441	(1)	963,309
Customer accounts
Reported	343,803	281,557	778,853	30,994	101,537	-	27,153	40,041	161	1,604,099
Currency translation	7,322	2,480	(6,633)	28	-	-	2,321	(6,897)	-	(1,379)
Constant currency	351,125	284,037	772,220	31,022	101,537	-	29,474	33,144	161	1,602,720