3 August 2020

HSBC HOLDINGS PLC
2020 INTERIM RESULTS – HIGHLIGHTS
Noel Quinn, Group Chief Executive, said:“Our first half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightenedlevels of market volatility. Despite this, our Asia franchise showed resilience, and our Global Markets business delivered strong growthcompared with last year’s first half. Having paused parts of our transformation programme in response to the Covid-19 outbreak, we now
intend to accelerate implementation of the plans we announced in February. We are also looking at what additional actions we need totake in light of the new economic environment to make HSBC a stronger and more sustainable business.”“Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint. We will
face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.”

Financial performance (vs 1H19)• Reported profit after tax down 69% to $3.1bn and reported profit before tax down 65% to $4.3bn from higher expectedcredit losses and other credit impairment charges (‘ECL’) and lower revenue. Reported profit in 1H20 also included a $1.2bn
impairment of software intangibles, mainly in Europe.
• In Asia, we reported profit before tax of $7.4bn in 1H20, despite higher ECL, demonstrating the strength and continued
resilience of our operations in the region and underlining the importance of Asia to the Group. Higher ECL charges
materially impacted profitability in our markets across the rest of the world, notably in our operations throughout Europe.
• Reported revenue down 9% to $26.7bn, reflecting the impact of interest rate reductions, as well as adverse market impacts in life
insurance manufacturing and adverse valuation adjustments in Global Banking and Markets (‘GBM’), notably in 1Q20. These factors
more than offset higher revenue in Global Markets.
• Net interest margin (‘NIM’) of 1.43% in 1H20, down 18 basis points (‘bps’) from 1H19. NIM in 2Q20 was 1.33%, down
21bps from 1Q20, primarily reflecting the initial impact of the reduction in interest rates due to the Covid-19 outbreak.
• Reported ECL increased by $5.7bn to $6.9bn due to the impact of the Covid-19 outbreak and the forward economic outlook, anddue to an increase in charges related to specific wholesale customers. ECL (annualised) as a percentage of average gross loans andadvances to customers was 1.33% in 1H20, while allowance for ECL against loans and advances to customers increased from $8.7bn
at 31 December 2019 to $13.2bn at 30 June 2020.
• Reported operating expenses down 4%, despite a $1.2bn impairment of software intangibles. Adjusted operating expenses
fell 5%, despite continued investment, due to lower performance-related pay and reduced discretionary costs.
• In 1H20, lending decreased by $18bn on a reported basis. On a constant currency basis, lending increased by $12bn,
reflecting corporate customers drawing on existing and new credit lines and re-depositing these to increase cash balances in 1Q20,
which was partly offset by paydowns in 2Q20. Deposits grew by $93bn on a reported basis and $133bn on a constantcurrency basis, with growth in all global businesses, including through the depositing of loans from government-backed schemes.
• Common equity tier 1 capital (‘CET1’) ratio of 15.0%, up 30bps from 4Q19, as higher CET1 capital, which included anincrease from the cancellation of the 4Q19 dividend and the current suspension of dividends on ordinary shares, more than offset the
impact of risk-weighted asset (‘RWA’) growth.

Outlook for 2020
• We continue to face a wide range of potential economic outcomes for the second half of 2020 and into 2021, partly
dependent on the extent of any potential impacts from new waves of Covid-19, the path to the development of a possible vaccine andmarket and consumer confidence levels. Heightened geopolitical risk could also impact a number of our markets, including Hong
Kong and the UK.
• Applying a range of weightings to our ECL sensitivity analysis, as disclosed on pages 56 to 62 of the Interim Report
2020, could result in an ECL charge in the range of $8bn to $13bn for 2020. This range, which continues to be subject to ahigh degree of uncertainty due to Covid-19 and geopolitical tensions, is higher than at 1Q20 given the deterioration in consensus
economic forecasts and actual loss experience during 2Q20.
• Lower global interest rates and reduced customer activity have put increasing pressure on revenue, and are expected tocontinue to do so.
• We intend to accelerate our transformation programme and execute additional cost actions to help mitigate pressures onrevenue and create capacity for further investments in technology.
• We expect mid-to-high single-digit RWA percentage growth in 2020, primarily from credit rating migration movements, whichis expected to have an adverse impact on our CET1 ratio. We will continue to aim to reduce RWAs in low-returning areas, and improve
efficiency to allow resources to be further and faster allocated to areas of competitive advantage, higher returns and growth.
• Given the current high degree of uncertainty, we are continuing to monitor closely the implications on our businessplan and medium-term financial targets, while also undertaking a review of our future dividend policy. We intend toprovide an update on our medium-term financial targets and dividend policy at our year-end results for 2020.

Registered Office and Group Head Office: 8 Canada Square, London E14 5HQ, United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered number 617987

Key financial metrics
Half-year to
30 Jun30 Jun31 Dec

2020

2019

2019

Reported revenue ($m)

26,74529,372

26,726

Reported profit before tax ($m)

4,318

12,407940

Reported profit after tax ($m)

3,125

9,937

(1,229)Profit attributable to the ordinary shareholders of the parent company ($m)(2,538)

Footnotes

Reported results

1,977

8,507

Cost efficiency ratio (%)

61.8

58.4

94.3

Basic earnings per share ($)

0.10

0.42

(0.13)

Diluted earnings per share ($)

0.10

0.42

(0.13)

Return on average ordinary shareholders' equity (annualised) (%)

2.4

10.4

(3.0)

1.43

1.61

1.58

Adjusted revenue ($m)

26,477

27,815

26,632Adjusted profit before tax ($m)

5,635

12,273

9,660

Adjusted cost efficiency ratio (%)

56.4

56.6

61.8

1.33

0.22

0.30

3.8

11.2

8.4

30 Jun30 Jun31 Dec

2020

2019

2019

Total assets ($m)

2,922,798

2,751,273

2,715,152

Net loans and advances to customers ($m)

1,018,681

1,021,632

1,036,743

Customer accounts ($m)

1,532,380

1,380,124

1,439,115

2,034,939

1,912,708

1,922,822

66.5

74.0

72.0

187,036

192,676

183,955

Net interest margin (%)

1

Alternative performance measures

Annualised expected credit losses and other credit impairment charges (‘ECL’) as a % of average grossloans and advances to customers (%)
Return on average tangible equity (annualised) (%)

1, 2

At

Balance sheet

Average interest-earning assets ($m)

1Loans and advances to customers as % of customer accounts (%)
Total shareholders’ equity ($m)
Tangible ordinary shareholders’ equity ($m)

147,879

145,441

144,144

Net asset value per ordinary share at period end ($)

3,4

8.17

8.35

8.00

Tangible net asset value per ordinary share at period end ($)

4

7.34

7.19

7.13

Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)

5

15.0

14.3

14.7

Risk-weighted assets ($m)

5854,552

885,971

843,395

Total capital ratio (%)

5

20.7

20.1

20.4

Leverage ratio (%)

5

5.3

5.4

5.3

High-quality liquid assets (liquidity value) ($bn)

654

533

601

Liquidity coverage ratio (%)

148

136

150

Period end basic number of $0.50 ordinary shares outstanding (millions)

20,162

20,221

20,206

Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares(millions)20,19820,286

20,280

Average basic number of $0.50 ordinary shares outstanding (millions)

20,162

20,124

20,191

—

0.20

0.30

Share count

Dividend per ordinary share (in respect of the period) ($)

1

1

For these metrics, half-year to 31 December 2019 is calculated on a full-year basis and not a 2H19 basis.

2

Annualised profit attributable to ordinary shareholders, excluding impairment of goodwill and other intangible assets and changes in present
value of in-force insurance contracts (‘PVIF’) (net of tax), divided by average ordinary shareholders’ equity excluding goodwill, PVIF and otherintangible assets (net of deferred tax).

3

The definition of net asset value per ordinary share is total shareholders’ equity less non-cumulative preference shares and capital securities,
divided by the number of ordinary shares in issue excluding shares the company has purchased and are held in treasury.

4

Excludes impact of $0.10 per share dividend in 1Q19, following a June 2019 change in accounting practice on the recognition of interim
dividends, from the date of declaration to the date of payment.

5

Unless otherwise stated, regulatory capital ratios and requirements are calculated in accordance with the transitional arrangements of the Capital
Requirements Regulation in force in the EU at the time, including the regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’ inarticle 473a. The capital ratios and requirements at 31 December 2019 and 30 June 2020 are reported in accordance with the revised Capital
Requirements Regulation and Directive (‘CRR II’), as implemented, whereas the Capital Requirements Regulation and Directive (‘CRD IV’) applied
at 30 June 2019. Leverage ratios are calculated using the end point definition of capital.

2

HSBC Holdings plc News Release 2020

Highlights
Half-year toFootnotes

30 Jun30 Jun

2020

2019

$m

$m

26,74529,372

Reported
Revenue1

Change in expected credit losses and other credit impairment charges(6,858)(1,140)Operating expenses(16,527)(17,149)

4,318

12,407

26,477

27,815

Profit before tax
Adjusted

2

Revenue1

Change in expected credit losses and other credit impairment charges(6,858)(1,088)Operating expenses(14,942)(15,739)

Profit before tax

5,635

12,273Significant items affecting adjusted performance
Revenue
Customer redress programmes

26—

Disposals, acquisitions and investment in new businesses

(8)

827

299

50

(49)

—

Fair value movements on financial instruments

3

Restructuring and other related costs
Operating expenses
Costs of structural reform

4

Customer redress programmes
Impairment of goodwill and other intangibles
Restructuring and other related costs
Settlements and provisions in connection with legal and regulatory matters

5

—

(91)

(50)

(610)

(1,025)

—

(505)

(287)

(5)

2

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 Adjusted performance is computed by adjusting reported results for the year-on-year effects of foreign currency translation differences andsignificant items which distort year-on-year comparisons.
3 Includes fair value movements on non-qualifying hedges and debt valuation adjustments on derivatives.
4 Comprises costs associated with preparations for the UK’s exit from the European Union.
5 Includes impairment of software intangible assets of $173m.

HSBC Holdings plc News Release 20203

Review by Noel Quinn, Group Chief Executive
The first six months of 2020 have been some of the most challenging in living memory. Due to the Covid-19 pandemic, much of the
global economy slowed significantly and some sectors drew to a near total halt.
This meant two things for HSBC. First, that the financial performance of the bank inevitably suffered in line with the rest of the global
economy. But second, that the real measure of our performance became our success in supporting our customers, colleagues andcommunities during the pandemic, and in laying the groundwork for the recovery to come.

Covid-19
In difficult times, HSBC’s job has always been to support our communities, provide stability and help build economic growth. I have been
immensely proud of the way our people have delivered this purpose as the Covid-19 outbreak has unfolded.
Our approach has hinged on three themes – securing a continuous service for all who rely on us; providing a financial bridge for our
personal and business customers beyond the crisis; and ensuring that HSBC retains the strength to help our customers thrive once
restrictions begin to ease.
We maintained a high level of business continuity with 85% of colleagues equipped to work from home, all of our customer contact
centres fully operational, and between 70% and 90% of our branches open for business in the first half. We enhanced our digital
capabilities to serve more customers remotely, with faster access and improved security. We also engaged with our regulators to better
enable customers to access a broad range of banking products and services from their homes, including through remote consultations
and sales.
This underpinned our ability to get our customers the support they need. For our personal lending customers, we granted more than
700,000 payment holidays on loans, credit cards and mortgages, providing more than $27bn in customer relief in the first half of the year.
For our wholesale lending customers, we provided more than $52bn of facilities to more than 172,000 customers globally over the same
period, both through government schemes and our own relief initiatives.
As a global bank, HSBC played a vital role in keeping capital flowing for our clients, arranging more than $1.1tn of loan, debt and equity
financing for our wholesale customers in the first six months of 2020. Global Banking and Markets made a direct contribution to the
Covid-19 relief effort, helping to arrange more than $48bn of financing for our clients through social and Covid-19 relief bonds.
We also took an early decision not to apply for government support packages for employees across the countries in which we operate.
Throughout all of this, the well-being of our people has been our paramount concern. We have taken steps to enable our front-line
colleagues to do their jobs safely and effectively. For all our colleagues, we have maintained a regular flow of communication andlistened closely to their needs, providing the support and flexibility to help them manage their lives during the pandemic.
This has been one of the most demanding periods that I can remember for all of our people across HSBC. Many have had to juggle
personal and professional priorities, while adapting to new and unfamiliar ways of working. I have been humbled by the dedication andcommitment that they have shown in incredibly tough circumstances, and thank them deeply for all they have done – and are doing – forour customers, communities and each other.

Transformation
On 18 February, we announced a substantial transformation programme to ensure that HSBC is fit for the future. We published plans toreshape underperforming businesses, simplify our complex organisation and reduce our costs.
We are moving forward with these plans wherever we can. We have already begun combining our wholesale back office operations, andbrought our retail, wealth and private banking businesses together into a single global business – Wealth and Personal Banking. Our US
business has reduced its branch footprint, and Global Banking and Markets has made good early progress in reducing its risk-weighted
assets. The lessons of the past six months are also being applied more broadly, particularly from parts of the business that have
responded to a fast-moving situation with exceptional pace and agility.
The operational risks posed by the Covid-19 outbreak meant that we had to move more slowly in some areas than others. In March, I
paused the redundancy programme intended to deliver the reduction in headcount we promised in February. It would have been wrong
to proceed with job losses at a time of significant stress for our people and communities, and at a point when we needed to protect ourcapacity to serve our customers. Now, many countries have slowed the spread of the virus and are emerging from lockdown, and wehave adapted to new ways of working. I therefore decided in June to lift the pause on redundancies, proceeding thoughtfully but
purposefully, while taking local considerations into account.
Now that many governments have become better accustomed to managing the ebb and flow of the pandemic, we intend to accelerate
implementation of the plans we announced in February. At the same time, our operating environment has changed significantly since thestart of the year. We will also therefore look at what additional actions we need to take in light of the new economic environment tomake HSBC a stronger and more sustainable business.

Financial performance
A good start to the year in January and February was overshadowed from March onwards by the Covid-19 outbreak and the impact offalling interest rates.
The sharp increase in expected credit losses that followed impacted all markets, but particularly those outside Asia. ECL grew further
from the first to the second quarter as the economic outlook deteriorated, with increases in both stage 1 and 2 allowances. Stage 3 ECL
were up overall but broadly stable during the first half, although the first quarter included a charge in Singapore unrelated to the Covid-19
crisis.
First half reported revenue was 9% lower than last year’s first half, due mainly to the effects of interest rate cuts made at the start of theyear across our deposit franchises. By contrast, our Asia businesses showed good resilience and Global Markets grew revenue on theback of higher client activity.
We took further action on costs in response to the weaker revenue environment, reducing both performance-related pay anddiscretionary spending. Together with our ongoing cost-saving initiatives, this helped reduce reported operating expenses by 4%.
While these cost measures mitigated some of the adverse effects of the radically changed economic environment, reported first half
profit before tax was 65% lower than the same period last year, and adjusted profit before tax fell by 54%.
4

HSBC Holdings plc News Release 2020

Lending decreased by $18bn in the first half. Customers initially drew on new and existing credit lines in the first quarter in response to
the Covid-19 outbreak, but began to pay these down in the second quarter as circumstances changed. Deposits rose by $93bn in the first
half, as customers increased their cash reserves and reduced their spending during lockdown.
We continued to invest in the future of the business while managing costs down, spending $2.8bn on technology in the first six monthsof the year.
Our balance sheet remains robust with a CET1 ratio of 15.0% and strong liquidity and funding.

Facing the future
Our performance in the second half of the year will continue to be influenced by the path and economic impact of the Covid-19 outbreak.
Geopolitical uncertainty could also weigh heavily on our clients, particularly those impacted by heightened US-China and UK-China
tensions, and the future of UK-EU trade relations.
Amid the current uncertainty, we remain focused on the things we can control – helping our customers navigate their own path to acomplex future, and acting with pace and decisiveness to adapt HSBC to an environment in which no business can afford to stand still.
HSBC has always helped our clients manage complexity. There have been many times in the last 155 years when geopolitics has altered
the nature of trade, or disruptive forces have changed entire industries. On each occasion, HSBC has adapted and innovated to help ourcustomers when they need us most, and we will do so again.
We start from a strong position. As the world’s leading trade bank1, we have the knowledge and network to help customers reorder their
supply chains securely and sustainably. As the world’s number one bank for green, social and sustainable bonds2, we have theexperience and expertise to help customers finance their transition to a cleaner, more resilient future. These are important strengths, but
we have to keep investing to maintain them and to provide the agile, responsive and entrepreneurial service that our clients require.
Like our clients, HSBC has to operate in a difficult geopolitical environment. Current tensions between China and the US inevitably create
challenging situations for an organisation with HSBC’s footprint. However, the need for a bank capable of bridging the economies of east
and west is acute, and we are well placed to fulfil this role. We will face any political challenges that arise with a focus on the long-term
needs of our customers and the best interests of our investors.
As we seek to accelerate our transformation in the second half of the year, I am mindful of the impact it will have for some of our people,
particularly those leaving us. As necessary as these changes are, the human impact is a matter of deep personal regret to me. We will
make sure that all those leaving HSBC as part of our transformation will be treated with fairness and consideration, and will receive
support in finding new employment.
Finally, HSBC is a global bank serving customers from many different backgrounds. We therefore need to resemble the communities weserve. In May, we launched a new global ethnicity inclusion programme to better enable careers and career progression for colleagues
from ethnic minorities, and in July, we made a series of commitments to address feedback from Black colleagues in particular. However, I
want us to be judged by our actions, not our words. We will therefore provide more information about the ethnicity of our workforce in
our annual reporting in February, so that our stakeholders can hold us accountable.
1 Euromoney, Trade Finance Survey, January 2020
2 Dealogic, Sustainable Finance Bond league table, 1H20

HSBC Holdings plc News Release 20205

Financial summary
Half-year to
30 Jun30 Jun31 Dec

2020
$m

2019
$m

2019
$m

4,318

12,407

940

1,977

8,507

(2,538)

—

4,206

6,063

Total shareholders’ equity

187,036

192,676

183,955

Total regulatory capital

177,242

176,610

172,150

Customer accounts

1,532,380

1,380,124

1,439,115

Total assets

Footnotes

For the period
Profit before tax
Profit attributable to:– ordinary shareholders of the parent company
Dividends on ordinary shares
At the period end

2,922,798

2,751,273

2,715,152

Risk-weighted assets

854,552

885,971865,318

Per ordinary share

$

$

$

0.10

0.42

(0.13)

Basic earnings
Dividend per ordinary share (declared in the period)

1

—

0.31

0.20

Net asset value

2

8.17

8.35

8.00

1 Dividends recorded in the financial statements are dividends per ordinary share declared in a year and are not dividends in respect of, or for, thatyear.
2 The definition of net asset value per ordinary share is total shareholders equity, less non-cumulative preference shares and capital securities,
divided by the number of ordinary shares in issue, excluding own shares held by the company, including those purchased and held in treasury.

Distribution of results by global business
Adjusted profit before tax
Half-year to

Wealth and Personal Banking
Commercial Banking

30 Jun30 Jun2020

2019

31 Dec
2019

$m

%

$m

%

$m

%

1,695

30.1

4,824

39.3

3,989

41.3

184

3.2

3,911

31.9

3,197

33.1

Global Banking and Markets

2,548

45.2

2,735

22.3

2,396

24.8

Corporate Centre

1,208

21.5

803

6.5

78

0.8

Profit before tax

5,635

100.0

12,273

100.0

9,660

100.0

Distribution of results by geographical region
Reported profit/(loss) before tax
Half-year to
30 Jun30 Jun2020

2019

31 Dec
2019

$m

%

$m

%

$m

%

Europe(3,060)(70.9)

(520)

(4.2)

(4,133)(439.7)

Asia

7,369

170.7

9,780

78.8

8,688

924.3

Middle East and North Africa

(26)

(0.6)

1,736

14.0

591

62.9

North America

23

0.5

746

6.0

21

2.2

Latin America

12

0.3

665

5.4

(265)

(28.2)

Global GBM goodwill impairment
Profit before tax

6

HSBC Holdings plc News Release 2020

—

—

—

—

(3,962)(421.5)

4,318

100.0

12,407

100.0

940

100.0

HSBC adjusted profit before tax and balance sheet data
Half-year to 30 Jun 2020

Footnotes

Net operating income before change in expected credit losses andother credit impairment charges

Wealth andPersonal
Banking

Commercial
BankingGlobalBanking andMarkets

Corporate
Centre

Total

$m

$m

$m

$m

$m

11,251

7,000

8,178

48

26,477– external

9,684

7,431

10,105(743)

26,477– inter-segment

1,567

(431)

(1,927)791—

of which: net interest income/(expense)

8,032

4,883

2,372

(804)

14,483

Change in expected credit losses and other credit impairment charges(2,202)(3,526)(1,118)(12)(6,858)Net operating income

9,049

3,474

7,060

36

19,619Total operating expenses(7,346)(3,290)(4,512)

206(14,942)

Operating profit

1,703

184

2,548

242

4,677

(8)

—

—

966

958

Adjusted profit before tax

1,695

184

2,548

1,208

5,635

%

%

%

%

%

Share of HSBC’s adjusted profit before tax

30.1

3.3

45.2

21.4

100.0

Adjusted cost efficiency ratio

65.3

47.0

55.2

(429.2)

56.4

Adjusted balance sheet data

$m

$m

$m

$m

$m

429,487

344,567

243,355

1,272

1,018,681

1

Share of profit in associates and joint ventures

Loans and advances to customers (net)
Interests in associates and joint ventures
Total external assets
Customer accounts
Adjusted risk-weighted assets

3

425

13

136

24,22624,800814,719549,530

1,390,006

168,543

2,922,798

775,870418,263

337,573674

1,532,380

161,744

330,887

277,633

84,288854,552

Half-year to 30 Jun 20192

Net operating income/(expense) before change in expected credit losses andother credit impairment charges

12,861

7,647

7,590

(283)

27,815– external

10,747

8,087

10,258(1,277)

27,815– inter-segment

2,114

(440)

(2,668)994—

of which: net interest income/(expense)

8,525

5,466

2,667

(1,761)

14,897

1

Change in expected credit losses and other credit impairment (charges)/recoveries

(527)

(478)

(97)

14

(1,088)Net operating income/(expense)

12,334

7,169

7,493

(269)

26,727

Total operating expenses(7,551)(3,258)(4,758)(172)(15,739)

Operating profit/(loss)

4,783

3,911

2,735

(441)

10,988

41

—

—

1,244

1,285

Adjusted profit before tax

4,824

3,911

2,735

803

12,273

%

%

%

%

%

Share of HSBC’s adjusted profit before tax

39.3

31.9

22.3

6.5

100.0

Adjusted cost efficiency ratio

58.7

42.6

62.7

(60.8)

56.6

Adjusted balance sheet data

$m

$m

$m

$m

$m

414,611

340,976

246,209

1,184

1,002,980

Share of profit in associates and joint ventures

Loans and advances to customers (net)
Interests in associates and joint ventures
Total external assets
Customer accounts
Adjusted risk-weighted assets

3

451

12

14

23,04623,523729,032

506,223

1,319,642

148,668

2,703,565

714,969

354,806

286,867505

1,357,147

160,993

331,912298,777

77,272868,954

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 A change in reportable segments was made in 2Q20. Comparative data have been re-presented accordingly. For further guidance, refer to Note 5
on page 100 of the Interim Report 2020.
3 Adjusted risk-weighted assets are calculated using reported risk-weighted assets adjusted for the effects of currency translation differences andsignificant items.

HSBC Holdings plc News Release 2020

7

HSBC adjusted profit before tax and balance sheet data (continued)
Half-year to 31 Dec 20193

Footnotes

Net operating income/(expense) before change in expected credit losses andother credit impairment charges

Wealth andPersonal
Banking

Commercial
BankingGlobalBanking andMarkets

Corporate
Centre

Total

$m

$m

$m

$m

$m

12,492

7,379

7,113

(352)

26,632– external

10,320

7,871

9,886

(1,445)

26,632– inter-segment

2,172

(492)

(2,773)

1,093—

of which: net interest income/(expense)

8,769

5,409

2,533

(1,495)

15,216

1

Change in expected credit losses and other credit impairment (charges)/recoveries

(829)

(684)

(61)

20

(1,554)

Net operating income/(expense)

11,663

6,695

7,052

(332)

25,078

Total operating expenses(7,685)(3,498)(4,656)(609)(16,448)

Operating profit/(loss)

3,978

3,197

2,396

(941)

8,630

11

—

—

1,019

1,030

3,989

3,197

2,396

78

9,660

%

%

%

%

%

Share of HSBC’s adjusted profit before tax

41.3

33.1

24.8

0.8

100.0

Adjusted cost efficiency ratio

61.5

47.4

65.5

(173.0)61.8

Adjusted balance sheet data

$m

$m

$m

$m

$m

428,834

336,345

240,411

1,071

1,006,661

Share of profit in associates and joint ventures
Adjusted profit before tax

Loans and advances to customers (net)
Interests in associates and joint ventures
Total external assets
Customer accounts
Adjusted risk-weighted assets

2

445

13

13

23,76024,231

754,369

496,757

1,233,829

153,5392,638,494

735,301

377,691

285,954710

1,399,656

157,777

315,605

267,075

80,807821,264

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 Adjusted risk-weighted assets are calculated using reported risk-weighted assets adjusted for the effects of currency translation differences andsignificant items.
3 A change in reportable segments was made in 2Q20. Comparative data have been presented accordingly.

8

HSBC Holdings plc News Release 2020

Consolidated income statement
Half-year to
30 Jun30 Jun31 Dec

2020

2019

2019

$m

$m

$m

Net interest income

14,50915,24015,222– interest income

23,00027,75026,945– interest expense(8,491)(12,510)(11,723)

Net fee income

5,926

6,124

5,899

– fee income

7,480

7,804

7,635

– fee expense(1,554)(1,680)(1,736)

Net income from financial instruments held for trading or managed on a fair value basis

5,768

5,331

4,900

Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured atfair value through profit or loss

1,282

(1,290)2,196

Change in fair value of designated debt and related derivatives

197

88

2

Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss

80

457

355

Gains less losses from financial investments
Net insurance premium income
Other operating income
Total operating income

466

201

134

5,020

6,323

4,313

471

2,072

885

31,14738,032

32,992

Net insurance claims and benefits paid and movement in liabilities to policyholders(4,402)(8,660)(6,266)

Net operating income before change in expected credit losses and other credit impairment charges

26,74529,372

26,726

Change in expected credit losses and other credit impairment charges(6,858)(1,140)(1,616)

Net operating income

19,88728,232

25,110

Employee compensation and benefits(8,514)(9,255)(8,747)

General and administrative expenses(4,918)(6,372)(7,456)

Depreciation and impairment of property, plant and equipment and right-of-use assets(1,209)(1,010)(1,090)

Amortisation and impairment of intangible assets(1,845)

(512)

(558)

(41)

—

(7,349)(16,527)(17,149)(25,200)

3,360

11,083

(90)

958

1,324

1,030

Profit before tax

4,318

12,407940

Tax expense(1,193)(2,470)(2,169)Profit/(loss) for the period

3,125

9,937

(1,229)(2,538)Goodwill impairment
Total operating expenses
Operating profit/(loss)
Share of profit in associates and joint ventures

Attributable to:– ordinary shareholders of the parent company

1,977

8,507

– preference shareholders of the parent company

45

45

45

– other equity holders

617

664

660

– non-controlling interests

486

721

604

Profit/(loss) for the period

3,125

9,937

(1,229)$$$Basic earnings per ordinary share

0.10

0.42

(0.13)

Diluted earnings per ordinary share

0.10

0.42

(0.13)HSBC Holdings plc News Release 20209

Consolidated statement of comprehensive income
Half-year to
30 Jun30 Jun31 Dec

2020

2019

2019

$m

$m

$m

3,125

9,937

(1,229)Debt instruments at fair value through other comprehensive income

1,747

1,015

137

– fair value gains/(losses)

2,654

2,141

(348)

– fair value (gains)/losses transferred to the income statement on disposal

(454)

(794)

429

– expected credit recoveries/(losses) recognised in the income statement

109

(5)

114

– income taxes

(562)

(327)

(58)

Cash flow hedges

476

239

(33)

– fair value gains

255

241

310
(354)

Profit/(loss) for the period
Other comprehensive income/(expense)
Items that will be reclassified subsequently to profit or loss when specific conditions are met:

– fair value losses/(gains) reclassified to the income statement

364

68

– income taxes and other movements

(143)

(70)

11

Share of other comprehensive income/(expense) of associates and joint ventures

(115)

73

(52)

– share for the period

(115)

85

(64)

—

(12)

12

(4,552)109

935

Remeasurement of defined benefit asset/liability

1,182

(45)

58

– before income taxes

1,703

(50)

33

– income taxes

(521)

5

25

Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in
own credit risk

2,354

(1,445)(557)– before income taxes

2,936(1,816)(823)– income taxes

(582)

371

266

Equity instruments designated at fair value through other comprehensive income

(123)

268

98

– fair value gains/(losses)

(122)

265

99

– income taxes

(1)

3

(1)

Effects of hyperinflation

72

113

104

– fair value (gains)/losses transferred to the income statement on disposal
Exchange differences
Items that will not be reclassified subsequently to profit or loss:

Other comprehensive expense for the period, net of tax

1,041

327

690

Total comprehensive income/(expense)

4,166

10,264(539)(1,903)Attributable to:– ordinary shareholders of the parent company

3,043

8,741

– preference shareholders of the parent company

45

45

45

– other equity holders

617

664

660

– non-controlling interests
Total comprehensive income/(expense)

10

HSBC Holdings plc News Release 2020

461

814

659

4,166

10,264(539)

Consolidated balance sheet
At
30 Jun31 Dec

2020

2019

$m

$m

249,673

154,099

AssetsCash and balances at central banks
Items in the course of collection from other banks

6,289

4,956

Hong Kong Government certificates of indebtedness

39,51938,380

Trading assets

208,964

254,271

Financial assets designated and otherwise mandatorily measured at fair value through profit and loss

41,785

43,627

Derivatives

313,781242,995

Loans and advances to banks

77,01569,203

1,018,681

1,036,743

Reverse repurchase agreements – non-trading

226,345

240,862

Financial investments

494,109443,312Prepayments, accrued income and other assets

197,425

136,680

Loans and advances to customers

Current tax assets

821

755

Interests in associates and joint ventures

24,80024,474

Goodwill and intangible assets

19,438

20,163

Deferred tax assets

4,153

4,632

2,922,798

2,715,152

Hong Kong currency notes in circulation

39,51938,380

Deposits by banks

82,71559,022Customer accounts

1,532,380

1,439,115

112,799

140,344

Total assets
Liabilities and equity
Liabilities

Repurchase agreements – non-trading
Items in the course of transmission to other banks

6,296

4,817

Trading liabilities

79,612

83,170Financial liabilities designated at fair value

156,608

164,466

Derivatives

303,059

239,497

Debt securities in issue

110,114104,555

Accruals, deferred income and other liabilities

173,181

118,156

Current tax liabilities

1,141

2,150

Liabilities under insurance contracts

98,832

97,439Provisions

3,209

3,398

Deferred tax liabilities

4,491

3,375

Subordinated liabilities

23,621

24,6002,727,577

2,522,484

Called up share capital

10,346

10,319

Share premium account14,268

13,959Other equity instruments

20,91420,871

Total liabilities
EquityOther reserves

(301)

2,127

Retained earnings

141,809

136,679

Total shareholders’ equity

187,036

183,955

Non-controlling interests
Total equity
Total liabilities and equity

8,185

8,713

195,221

192,668

2,922,798

2,715,152

HSBC Holdings plc News Release 202011

Consolidated statement of cash flows
Half-year to
30 Jun30 Jun31 Dec

2020

2019

2019

$m

$m

$m

4,318

12,407940

Depreciation, amortisation and impairment

3,095

1,522

8,997

Net gain from investing activities

(405)

(352)

(47)

Share of profits in associates and joint ventures(958)(1,324)(1,030)

Profit before tax
Adjustments for non-cash items:

Gain on disposal of subsidiaries, businesses, associates and joint ventures

—

(828)

(101)

6,875

1,347

1,665

Provisions including pensions

277

1,012

1,411

Share-based payment expense

195

288

190

Other non-cash items included in profit before tax(718)(1,401)(896)

Change in operating assets

11,185(114,049)

9,818

Change in operating liabilities

134,734

136,627(20,544)

Elimination of exchange differences1

3,775(10,266)

6,524

Dividends received from associates

120

170

463

Contributions paid to defined benefit plans

(335)

(153)

(380)

Change in expected credit losses gross of recoveries and other credit impairment charges

Tax paid(2,373)(1,347)(920)

Net cash from operating activities

159,785

23,653

6,090

Purchase of financial investments(271,830)(234,762)(211,145)

Proceeds from the sale and maturity of financial investments

225,733

204,600

208,586

Net cash flows from the purchase and sale of property, plant and equipment

(447)

(532)

(811)

Net cash flows from purchase of customer and loan portfolios

244

435

683

Net investment in intangible assets

(957)

(951)

(1,338)Net cash flow on (purchase)/disposal of subsidiaries, businesses, associates and joint ventures
Net cash from investing activities

(409)

(75)

(8)

(47,666)(31,285)(4,033)Cancellation of shares——(1,000)Net sales/(purchases) of own shares for market-making and investment purposes

(48)

27

114

Redemption of preference shares and other equity instruments

(398)

—

—

Subordinated loan capital repaid(1,538)(4,138)(72)

Dividends paid to shareholders of the parent company and non-controlling interests(1,204)(4,271)(5,502)

Net cash from financing activities(3,188)(8,382)(6,460)Net increase/(decrease) in cash and cash equivalents

108,931(16,014)(4,403)

Cash and cash equivalents at the beginning of the period2

293,742

312,911296,723

Exchange differences in respect of cash and cash equivalents
Cash and cash equivalents at the end of the period2(7,455)

(174)

1,422

395,218

296,723

293,742

1 Adjustments to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, asdetails cannot be determined without unreasonable expense.
2 At 31 December 2019, HSBC re-presented cash and cash equivalents to reflect a consistent global approach to these amounts. The net effect ofthese changes decreased cash and cash equivalents by $15.3bn at 30 June 2019.

12

HSBC Holdings plc News Release 2020

Consolidated statement of changes in equity
Other reserves
Called up
sharecapitaland share
premium

Other
equityinstruments

Retainedearnings

Financialassets at
FVOCI
reserveCashflowhedging
reserve

Foreignexchangereserve

Mergerandotherreserves

Total
Nonshareholders’ controlling
equityinterests

Total
equity

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

24,27820,871

136,679

(108)

(2)

(25,133)

27,370183,955

8,713

192,668

Profit for the period

—

—

2,639

—

—

—

—

2,639

486

3,125

Other comprehensive income (net of tax)

—

—

3,506

1,654

465

(4,559)

—

1,066

(25)

1,041

– debt instruments at fair value throughother comprehensive income

—

—

—

1,735

—

—

—

1,735

12

1,747

– equity instruments designated at fair value
through other comprehensive income

—

—

—

(81)

—

—

—

(81)

(42)

(123)

– cash flow hedges

—

—

—

—

465

—

—

465

11

476

– changes in fair value of financial liabilities
designated at fair value upon initialrecognition arising from changes in own
credit risk

—

—

2,354

—

—

—

—

2,354

—

2,354

– remeasurement of defined benefit asset/
liability

—

—

1,195

—

—

—

—

1,195

(13)

1,182

– share of other comprehensive income ofassociates and joint ventures

—

—

(115)

—

—

—

—

(115)

—

(115)

– effects of hyperinflation

—

—

72

—

—

—

—

72

—

72

– exchange differences

—

—

—

—

—

(4,559)—(4,559)7(4,552)

Total comprehensive income for theperiod

—

—

6,145

1,654

465

(4,559)

—

3,705

461

4,166

At 1 Jan 2020

Shares issued under employee remunerationand share plans

336

—

(329)

—

—

—

—

7

—

7

Dividends to shareholders

—

—

(662)

—

—

—

—

(662)

(542)

(1,204)

Cost of share-based payment arrangements

—

—

195

—

—

—

—

195

—

195

Other movements

—

43

(219)

12

—

—

—

(164)

(447)

(611)

At 30 Jun 2020

24,614

20,914

141,809

1,558

463

(29,692)

27,370187,036

8,185

195,221

At 1 Jan 201923,78922,367138,191(1,532)(206)(26,133)

29,777

186,253

7,996

194,249

Profit for the period

—

—

9,216

—

—

—

—

9,216

721

9,937

Other comprehensive income (net of tax)——

(1,297)

1,202

237

92

—

234

93

327

– debt instruments at fair value throughother comprehensive income

—

—

—

1,001

—

—

—

1,001

14

1,015

– equity instruments designated at fair value
through other comprehensive income

—

—

—

201

—

—

—

201

67

268

– cash flow hedges

—

—

—

—

237

—

—

237

2

239

– changes in fair value of financial liabilities
designated at fair value upon initialrecognition arising from changes in own
credit risk——

(1,445)

—

—

—

—

(1,445)—(1,445)– remeasurement of defined benefit asset/
liability

—

—

(38)

—

—

—

—

(38)

(7)

(45)

– share of other comprehensive income ofassociates and joint ventures

—

—

73

—

—

—

—

73

—

73

– effects of hyperinflation

—

—

113

—

—

—

—

113

—

113

– exchange differences

—

—

—

—

—

92

—

92

17

109

Total comprehensive income for the period

—

—

7,919

1,202

237

92

—

9,450

814

10,264

Shares issued under employee remunerationand share plans

(475)

—

—

—

—

15

—

15

490

—

Shares issued in lieu of dividends andamounts arising thereon

—

—

1,160

—

—

—

—

1,160

—

1,160

Dividends to shareholders——(4,915)

—

—

—

—

(4,915)(516)(5,431)

Cost of share-based payment arrangements

—

—

255

—

—

—

—

255

—

255

Other movements

—

—

458

—

—

—

—

458

(96)

362

24,27922,367

142,593(330)

31(26,041)

29,777

192,676

8,198

200,874

At 30 Jun 2019HSBC Holdings plc News Release 202013

Consolidated statement of changes in equity (continued)
Other reserves
Called up
sharecapitaland share
premium

Other
equityinstruments

Retainedearnings

Financialassets at
FVOCI
reserveCashflowhedging
reserve

Foreignexchangereserve

Mergerandotherreserves

Total
shareholders’equityNoncontrollinginterests

Total
equity

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

24,27922,367

142,593(330)

31(26,041)

29,777

192,676

8,198

200,874

Profit for the period——(1,833)

—

—

—

—

(1,833)604(1,229)Other comprehensive income(net of tax)

—

—

(462)

222

(33)

908

—

635

55

690

– debt instruments at fair value through othercomprehensive income

—

—

—

145

—

—

—

145

(8)

137

– equity instruments designated at fair value
through other comprehensive income

—

—

—

77

—

—

—

77

21

98

– cash flow hedges

—

—

—

—

(33)

—

—

(33)

—

(33)

– changes in fair value of financial liabilities
designated at fair value upon initialrecognition arising from changes in own
credit risk

—

—

(557)

—

—

—

—

(557)

—

(557)

– remeasurement of defined benefit asset/
liability

—

—

43

—

—

—

—

43

15

58

– share of other comprehensive income ofassociates and joint ventures

—

—

(52)

—

—

—

—

(52)

—

(52)

– effects of hyperinflation

—

—

104

—

—

—

—

104

—

104

– exchange differences

—

—

—

—

—

908

—

908

27

935

Total comprehensive income for the period——(2,295)

222

(33)

908

—

(1,198)

659

(539)

Shares issued under employee remunerationand share plans

67

—

(20)

—

—

—

—

47

—

47

Shares issued in lieu of dividends andamounts arising thereon

—

—

1,527

—

—

—

—

1,527

—

1,527

Dividends to shareholders——(6,768)

—

—

—

—

(6,768)(261)(7,029)

Redemption of securities1—(1,496)

(12)

—

—

—

—

(1,508)—(1,508)Transfers2

—

—

2,475

—

—

—

(2,475)———

Cost of share-based payment arrangements

—

—

223

—

—

—

—

223

—

223

Cancellation of shares3

(68)

—

(1,000)

—

—

—

68

(1,000)—(1,000)

Other movements

—

—

(44)

—

—

—

—

(44)

117

73

24,27820,871

136,679

(108)

(2)

(25,133)

27,370183,955

8,713

192,668

At 1 Jul 2019

At 31 Dec 2019

1 In 2019, HSBC Holdings called and later redeemed $1,500m 5.625% perpetual subordinated capital securities on which there were $12m ofexternal issuance costs.
2 Permitted transfers from the merger reserve to retained earnings were made when the investment in HSBC Overseas Holdings (UK) Limited waspreviously impaired. In 2019, an additional impairment of $2,475m was recognised and a permitted transfer of this amount was made from themerger reserve to retained earnings.
3 In August 2019, HSBC announced a share buy-back of up to $1.0bn, which was completed in September 2019.

14

HSBC Holdings plc News Release 2020

1

Basis of preparation and significant accounting policies(a)Compliance with International Financial Reporting Standards

Our interim condensed consolidated financial statements have been prepared in accordance with the Disclosure Guidance andTransparency Rules of the Financial Conduct Authority and IAS 34 ‘Interim Financial Reporting’, as issued by the International AccountingStandards Board (‘IASB’) and as endorsed by the EU. Therefore, they include an explanation of events and transactions that are
significant to an understanding of the changes in HSBC’s financial position and performance since the end of 2019. These financial
statements should be read in conjunction with the Annual Report and Accounts 2019.
At 30 June 2020, there were no unendorsed standards effective for the half-year to 30 June 2020 affecting these financial statements,
and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC.

Standards applied during the half-year to 30 June 2020
There were no new standards or amendments to standards that had an effect on these interim condensed consolidated financial
statements.

(b)

Use of estimates and judgements

Management believes that our critical accounting estimates and judgements are those that relate to impairment of amortised cost andFVOCI debt financial assets, goodwill impairment, the valuation of financial instruments, deferred tax assets, provisions for liabilities,
defined benefit obligations and interests in associates. There were no changes in the current period to the critical accounting estimatesand judgements applied in 2019, which are stated on pages 47 and 242 of the Annual Report and Accounts 2019. However, the level of
estimation uncertainty and judgement for the calculation of expected credit losses (‘ECL’) has increased since 31 December 2019 as aresult of the economic effects of the Covid-19 outbreak as set out in ‘Measurement uncertainty and sensitivity analysis’ on page 56 of theInterim Report 2020. In addition, as a result of the heightened economic uncertainty together with the plans announced in the 2020
business update and historical underperformance of certain businesses, the estimates and judgements with regard to the expected cash
flows of cash generating units, which are applied to the impairment of non-financial assets other than goodwill, particularly intangible
assets, have become more sensitive and resulted in significant impairment charges in the interim reporting period. See Note 11 ‘Goodwill
and intangible assets’ of the Interim Report 2020.

(c)Composition of Group

There were no material changes in the composition of the Group in the half-year to 30 June 2020.

(d)

Future accounting developments

IFRS 17 ‘Insurance Contracts’ was issued in May 2017, with amendments to the standard issued in June 2020. It has not been endorsed
for use in the EU. The standard sets out the requirements that an entity should apply in accounting for insurance contracts it issues andreinsurance contracts it holds. Following the amendments, IFRS 17 is effective from 1 January 2023. The Group is in the process of
implementing IFRS 17. Industry practice and interpretation of the standard are still developing. Therefore, the likely impact of its
implementation remains uncertain.

(e)Going concern

The financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company havethe resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range
of information relating to present and future conditions, including future projections of profitability, cash flows, capital requirements andcapital resources. These considerations include stressed scenarios that reflect the increasing uncertainty that the global Covid-19
pandemic has had on HSBC’s operations, as well as considering potential impacts from other top and emerging risks, and the related
impact on profitability, capital and liquidity.

(f)Accounting policies

Except as described above, the accounting policies that we applied for these interim condensed consolidated financial statements are
consistent with those described on pages 240 to 251 of the Annual Report and Accounts 2019, as are the methods of computation.

2

Dividends

On 31 March 2020, HSBC announced that, in response to a request from the Bank of England through the UK’s Prudential Regulation
Authority (‘PRA’), the Board had cancelled the fourth interim dividend for 2019 of $0.21 per ordinary share, which was scheduled to be
paid on 14 April 2020. The Board also announced that until the end of 2020 HSBC will make no quarterly or interim dividend payments or
accruals in respect of ordinary shares.
The Board intend to provide an update on our dividend policy at our year-end results for 2020, when the economic impact of the Covid-19
outbreak is better understood. We will also take into account the views of our shareholders, the interests of our other stakeholders andother factors, including our financial performance and capital position.

HSBC Holdings plc News Release 202015

Dividends paid to shareholders of HSBC Holdings plc
Half-year to
30 Jun 2020
Per
share

30 Jun 2019

Total

Settledin scrip

Per share

$

$m

$m

—

—

– first interim dividend1—– second interim dividend—– third interim dividend
Total

31 Dec 2019

Total

Settled inscrip

Per share

Total

Settled in
scrip

$

$m

$m

$

$m

$m

—

0.21

4,206

1,160

—

—

—

—

—

—

—

—

0.10

2,013

375

—

—

—

—

—

0.10

2,021

795

—

—

—

—

—

—

0.10

2,029

357

—

—

—

0.21

4,206

1,160

0.30

6,063

1,527

Dividends paid on ordinary shares
In respect of previous year:– fourth interim dividend
In respect of current year:

Total dividends on preference shares classified as equity (paidquarterly)

31.00

45

31.00

45

31.00

45

Total coupons on capital securities classified as equity

617

664

660

Dividends to shareholders

662

4,915

6,768

1 At 30 June 2019, HSBC changed its accounting practice on the recognition of interim dividends to recognise them on the date of payment rather
than the date of declaration, in line with generally accepted accounting practice.

Dividend on preference shares
A quarterly dividend of $15.50 per 6.20% non-cumulative US dollar preference share, Series A (‘Series A dollar preference share’)(equivalent to a dividend of $0.3875 per Series A American Depositary Share (‘ADS’), each of which represents one-fortieth of a Series A
dollar preference share), and £0.01 per Series A sterling preference share is payable on 15 March, 15 June, 15 September and 15
December 2020 for the quarter then ended at the sole and absolute discretion of the Board of HSBC Holdings plc. Accordingly, the Boardof HSBC Holdings plc has approved a quarterly dividend to be payable on 15 September 2020 to holders of record on 31 August 2020.
The Series A dollar preference share quarterly dividend, announced on 28 April 2020 to be payable on 15 June 2020, was paid on 16 June
2020 due to an administrative error and may not have been received by a limited number of ADS holders who were on the record on 29
May 2020. ADS holders who have not received their expected dividend should contact HSBC Investor Relations atinvestorrelations@hsbc.com to discuss this further.

3

Earnings per share

Basic earnings per ordinary share is calculated by dividing the profit attributable to ordinary shareholders of the parent company by theweighted average number of ordinary shares outstanding, excluding own shares held. Diluted earnings per ordinary share is calculatedby dividing the basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average
number of ordinary shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be
issued on conversion of dilutive potential ordinary shares.
Profit/(loss) attributable to ordinary shareholders of the parent company
Half-year to
30 Jun30 Jun31 Dec

2020
$m

2019
$m

2019
$m

Profit attributable to shareholders of the parent company

2,639

9,216

(1,833)

Dividend payable on preference shares classified as equity

(45)

(45)

(45)

Coupon payable on capital securities classified as equity

(617)

(664)

(660)

Profit/(loss) attributable to ordinary shareholders of the parent company

1,977

8,507

(2,538)

Basic and diluted earnings per shareHalf-year to
30 Jun 2020

Footnotes

Basic

ProfitNumberof shares

Amountper share

ProfitNumberof shares

Profit/(loss)

Numberof shares

Amountper share$m(millions)$$m(millions)$$m(millions)

$

1,977

20,162

0.10

8,507

20,1240.42(2,538)20,191(0.13)

1

1,977

20,220

0.10

8,507

20,1890.42(2,538)20,19158

65

1 Weighted average number of ordinary shares outstanding (basic) or assuming dilution (diluted).

16

31 Dec 2019
Amountper share

1

Effect of dilutive potential ordinary shares
Diluted30 Jun 2019HSBC Holdings plc News Release 2020—
(0.13)

4

Adjusted balance sheet reconciliationAt
30 Jun 2020

Loans and advances to customers (net)
Interests in associates and joint ventures

31 Dec 2019

Reported
and adjusted

Adjusted

Currencytranslation

$m

$m

$m

$m

1,018,681

1,006,661

30,082

1,036,743

Reported

24,80024,231

243

24,474

Total external assets

2,922,798

2,638,494

76,6582,715,152

Customer accounts

1,532,380

1,399,656

39,4591,439,115

5Reconciliation of reported and adjusted items
Half-year toFootnotes

Revenue

30 Jun30 Jun31 Dec

2020
$m

2019
$m

2019
$m

26,74529,372

26,726

(681)

(281)

1

Reported
Currency translation
Significant items

(268)

(876)

187

– customer redress programmes

(26)

—

163

8

(827)

59

(299)

(50)

(34)

49

—

—

– disposals, acquisitions and investment in new businesses– fair value movements on financial instruments

2– restructuring and other related costs– currency translation on significant items
Adjusted

1(1)

26,477

27,815

26,632(6,858)(1,140)(1,616)

ECL
Reported
Currency translation
Adjusted

52

62(6,858)(1,088)(1,554)(16,527)(17,149)(25,200)

Operating expenses
Reported
Currency translation
Significant items– costs of structural reform

1,585
3

453

228

957

8,524

—

91

67

50

610

671

1,025

—

7,349

505

287

540

– settlements and provisions in connection with legal and regulatory matters

5

(2)

(59)

– currency translation on significant items

—

(29)

(44)

(14,942)(15,739)(16,448)

958

1,324

1,030

– customer redress programmes– impairment of goodwill and other intangibles– restructuring and other related costs

Adjusted4

Share of profit in associates and joint ventures
Reported
Currency translation
Adjusted

(39)

—

958

1,285

1,030

4,318

12,407

940

Profit before tax
Reported
Currency translation

(215)

9

1,317

81

8,711

– revenue

(268)

(876)

187

– operating expenses

1,585

957

8,524

Adjusted

5,635

12,273

9,660

Significant items

1
2
3
4

Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
Includes fair value movements on non-qualifying hedges and debt valuation adjustments on derivatives.
Comprises costs associated with preparations for the UK’s exit from the European Union.
Includes impairment of software intangible assets of $173m.

HSBC Holdings plc News Release 202017

6Contingent liabilities, contractual commitments and guarantees
At
30 Jun31 Dec

2020

2019

$m

$m

– financial guarantees

18,32820,214– performance and other guarantees

73,07875,933– other contingent liabilities

1,094

1,576

At the end of the period

92,50097,723

Footnotes

Guarantees and contingent liabilities:

Commitments:

1– documentary credits and short-term trade-related transactions

6,201

6,316

– forward asset purchases and forward deposits placed

91,84956,326– standby facilities, credit lines and other commitments to lend

740,023734,966

At the end of the period

838,073797,608

1 Includes $648,156m of commitments at 30 June 2020 (31 December 2019: $600,029m), to which the impairment requirements in IFRS 9 areapplied where HSBC has become party to an irrevocable commitment.

The preceding table discloses the nominal principal amounts of off-balance sheet liabilities and commitments for the Group, which
represent the maximum amounts at risk should the contracts be fully drawn upon and the clients default. As a significant portion ofguarantees and commitments are expected to expire without being drawn upon, the total of the nominal principal amounts is notindicative of future liquidity requirements. The expected credit loss provision relating to guarantees and commitments under IFRS 9 isdisclosed in Note 12 of the Interim Report 2020.
The majority of the guarantees have a term of less than one year, while guarantees with terms of more than one year are subject to
HSBC’s annual credit review process.
Contingent liabilities arising from legal proceedings, regulatory and other matters against Group companies are disclosed in Note 7 below
and Note 14 of the Interim Report 2020.

7

Legal proceedings and regulatory matters

HSBC is party to legal proceedings and regulatory matters in a number of jurisdictions arising out of its normal business operations.
Apart from the matters described below, HSBC considers that none of these matters are material. The recognition of provisions isdetermined in accordance with the accounting policies set out in Note 1 of the Annual Report and Accounts 2019. While the outcomes oflegal proceedings and regulatory matters are inherently uncertain, management believes that, based on the information available to it,
appropriate provisions have been made in respect of these matters as at 30 June 2020 (see Note 12 of the Interim Report 2020). Wherean individual provision is material, the fact that a provision has been made is stated and quantified, except to the extent that doing sowould be seriously prejudicial. Any provision recognised does not constitute an admission of wrongdoing or legal liability. It is notpracticable to provide an aggregate estimate of potential liability for our legal proceedings and regulatory matters as a class of contingent
liabilities.

Bernard L. Madoff Investment Securities LLC
Bernard L. Madoff (‘Madoff’) was arrested in December 2008 and later pleaded guilty to running a Ponzi scheme. His firm, Bernard L.
Madoff Investment Securities LLC (‘Madoff Securities’), is being liquidated in the US by a trustee (the ‘Trustee’).
Various non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside theUS whose assets were invested with Madoff Securities. Based on information provided by Madoff Securities as at 30 November 2008,
the purported aggregate value of these funds was $8.4bn, including fictitious profits reported by Madoff.
Based on information available to HSBC, the funds’ actual transfers to Madoff Securities minus their actual withdrawals from Madoff
Securities during the time HSBC serviced the funds are estimated to have totalled approximately $4bn. Various HSBC companies havebeen named as defendants in lawsuits arising out of Madoff Securities’ fraud.
US litigation: The Trustee has brought lawsuits against various HSBC companies and others in the US Bankruptcy Court for theSouthern District of New York (the ‘US Bankruptcy Court’), seeking recovery of transfers from Madoff Securities to HSBC in an amount
not yet pleaded or determined. HSBC and other parties to the actions have moved to dismiss the Trustee’s claims. The US Bankruptcy
Court granted HSBC’s motion to dismiss with respect to certain of the Trustee’s claims in November 2016. In February 2019, the US
Court of Appeals for the Second Circuit (the ‘Second Circuit Court of Appeals’) reversed that dismissal. Following the US Supreme
Court’s denial of certiorari in June 2020, the cases were remanded to the US Bankruptcy Court, where they are now pending.
Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield Lambda Limited (together, ‘Fairfield’) (in liquidation since July 2009) havebrought a lawsuit in the US against fund shareholders, including HSBC companies that acted as nominees for clients, seeking restitutionof redemption payments. In December 2018, the US Bankruptcy Court issued an opinion, which ruled in favour of the defendants’ motion
to dismiss in respect of certain claims by the liquidators for Fairfield and granted a motion by the liquidators to file amended complaints.
As a result of that opinion, all claims against one of the HSBC companies were dismissed, and certain claims against the remaining
HSBC defendants were also dismissed. In May 2019, the liquidators appealed certain issues from the US Bankruptcy Court to the US
District Court for the Southern District of New York (the ’New York District Court’) and, in January 2020, the liquidators filed amended
complaints on the claims remaining in the US Bankruptcy Court. In March 2020, HSBC and other parties to the action moved to dismiss
the amended complaints in the US Bankruptcy Court.
UK litigation: The Trustee has filed a claim against various HSBC companies in the High Court of England and Wales, seeking recoveryof transfers from Madoff Securities to HSBC in an amount not yet pleaded or determined. The deadline for service of the claim has been
extended to September 2020 for UK-based defendants and November 2020 for all other defendants.
18

HSBC Holdings plc News Release 2020

Cayman Islands litigation: In February 2013, Primeo Fund (‘Primeo’) (in liquidation since April 2009) brought an action against HSBC
Securities Services Luxembourg (‘HSSL’) and Bank of Bermuda (Cayman) Limited (now known as HSBC Cayman Limited), alleging
breach of contract and breach of fiduciary duty and claiming damages and equitable compensation. The trial concluded in February 2017
and, in August 2017, the court dismissed all claims against the defendants. In September 2017, Primeo appealed to the Court of Appealof the Cayman Islands and, in June 2019, the Court of Appeal of the Cayman Islands dismissed Primeo’s appeal. In August 2019, Primeo
filed a notice of appeal to the UK Privy Council, which has listed the hearing for April 2021.
Luxembourg litigation: In April 2009, Herald Fund SPC (‘Herald’) (in liquidation since July 2013) brought an action against HSSL before
the Luxembourg District Court, seeking restitution of cash and securities that Herald purportedly lost because of Madoff Securities’ fraud,or money damages. The Luxembourg District Court dismissed Herald’s securities restitution claim, but reserved Herald’s cash restitution
claim and its claim for money damages. Herald has appealed this judgment to the Luxembourg Court of Appeal, where the matter ispending. In late 2018, Herald brought additional claims against HSSL and HSBC Bank plc before the Luxembourg District Court, seeking
further restitution and damages.
In October 2009, Alpha Prime Fund Limited (‘Alpha Prime’) brought an action against HSSL before the Luxembourg District Court,
seeking the restitution of securities, or the cash equivalent, or money damages. In December 2018, Alpha Prime brought additional
claims before the Luxembourg District Court seeking damages against various HSBC companies. These matters are currently pending
before the Luxembourg District Court.
In December 2014, Senator Fund SPC (‘Senator’) brought an action against HSSL before the Luxembourg District Court, seeking
restitution of securities, or the cash equivalent, or money damages. In April 2015, Senator commenced a separate action against the
Luxembourg branch of HSBC Bank plc asserting identical claims before the Luxembourg District Court. In December 2018, Senator
brought additional claims against HSSL and HSBC Bank plc Luxembourg branch before the Luxembourg District Court, seeking
restitution of Senator’s securities or money damages. These matters are currently pending before the Luxembourg District Court.
Ireland litigation: In November 2013, Defender Limited brought an action against HSBC Institutional Trust Services (Ireland) Limited(‘HTIE’) and others, based on allegations of breach of contract and claiming damages and indemnification for fund losses. The trial
commenced in October 2018. In December 2018, the Irish High Court issued a judgment in HTIE’s favour on a preliminary issue, holdingthat Defender Limited had no effective claim against HTIE. This judgment concluded the trial without further issues in dispute being
heard. In February 2019, Defender Limited appealed the decision. In July 2020, the Irish Supreme Court ruled in part in favour of
Defender Limited and returned the case to the High Court for further proceedings.
There are many factors that may affect the range of possible outcomes, and any resulting financial impact, of the various Madoff-related
proceedings described above, including but not limited to the multiple jurisdictions in which the proceedings have been brought. Basedupon the information currently available, management’s estimate of the possible aggregate damages that might arise as a result of all
claims in the various Madoff-related proceedings is up to or exceeding $500m, excluding costs and interest. Due to uncertainties andlimitations of this estimate, any possible damages that might ultimately arise could differ significantly from this amount.

Anti-money laundering and sanctions-related matters
In December 2012, among other agreements, HSBC Holdings agreed to an undertaking with the UK Financial Services Authority, which
was replaced by a Direction issued by the UK Financial Conduct Authority (‘FCA’) in 2013, and again in July 2020, and consented to acease-and-desist order with the US Federal Reserve Board (‘FRB’), both of which contained certain forward-looking anti-money
laundering (‘AML’) and sanctions-related obligations. HSBC also agreed to retain an independent compliance monitor (who is, for FCA
purposes, a ‘Skilled Person’ under section 166 of the Financial Services and Markets Act and, for FRB purposes, an ‘Independent
Consultant’) to produce periodic assessments of the Group’s AML and sanctions compliance programme (the ‘Skilled Person/
Independent Consultant’). In December 2012, HSBC Holdings also entered into an agreement with the Office of Foreign Assets Control(‘OFAC’) regarding historical transactions involving parties subject to OFAC sanctions. HSBC’s engagement with the Skilled Person
appointed pursuant to the 2013 Direction was terminated in February 2020 and a new Skilled Person with a narrower mandate has been
appointed to assess the remaining areas that require further work in order for HSBC to transition fully to business-as-usual financial crime
risk management. The Independent Consultant will continue to carry out an annual OFAC compliance review at the FRB’s discretion. The
role of the Skilled Person/Independent Consultant is discussed on page 145 of the Annual Report and Accounts 2019.
Through the Skilled Person/Independent Consultant’s prior reviews, as well as internal reviews conducted by HSBC, certain potential
AML and sanctions compliance issues have been identified that HSBC is reviewing further with the FRB, FCA and/or OFAC. The Financial
Crimes Enforcement Network of the US Treasury Department, as well as the Civil Division of the US Attorney’s Office for the Southern
District of New York, are investigating the collection and transmittal of third-party originator information in certain payments instructed
over HSBC’s proprietary payment systems. The FCA is also conducting an investigation into HSBC Bank plc’s and HSBC UK Bank plc’s
compliance with UK money laundering regulations and financial crime systems and controls requirements. HSBC is cooperating with allof these investigations.
In May 2014, a shareholder derivative action was filed by a shareholder of HSBC Holdings purportedly on behalf of HSBC Holdings,
HSBC Bank USA N.A. (‘HSBC Bank USA’), HSBC North America Holdings Inc. and HSBC USA Inc. (the ‘Nominal Corporate Defendants’)in New York state court against certain current and former directors and officers of the Nominal Corporate Defendants (the ‘Individual
Defendants’). The complaint alleges that the Individual Defendants breached their fiduciary duties to the Nominal Corporate Defendants
and caused a waste of corporate assets by allegedly permitting and/or causing the conduct underlying the five-year deferred prosecutionagreement with the US Department of Justice (‘DoJ’), entered into in December 2012. In November 2015, the New York state court
granted the Nominal Corporate Defendants’ motion to dismiss, but the appellate court reversed the decision in November 2018 andreinstated the action. In June 2020, the parties reached an agreement to resolve this derivative action. In July 2020, the court granted
preliminary approval of the settlement, under which HSBC will receive a payment from directors and officers liability insurance carriers
and will continue for a period of time certain corporate governance practices. The final settlement approval hearing has been scheduled
for October 2020.
Since November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others onbehalf of plaintiffs who are, or are related to, victims of terrorist attacks in the Middle East or of cartel violence in Mexico. In each case, it
is alleged that the defendants aided and abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism
Act. Currently, 10 actions remain pending in federal courts in New York or the District of Columbia. In March, September and October
2019, the courts granted HSBC’s motions to dismiss in three of these cases. The plaintiffs have appealed the decisions in two of thesecases and are seeking certification to appeal in the third case. HSBC has filed motions to dismiss in three further cases, two of whichwere granted in June 2020, while the third remains pending. The four remaining actions are at a very early stage.
HSBC Holdings plc News Release 202019

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including thetiming or any possible impact on HSBC, which could be significant.

London interbank offered rates, European interbank offered rates and other benchmark interest rate
investigations and litigation
Euro interest rate derivatives: In December 2016, the European Commission (the ‘EC’) issued a decision finding that HSBC, among
other banks, engaged in anti-competitive practices in connection with the pricing of euro interest rate derivatives in early 2007. The EC
imposed a fine on HSBC based on a one-month infringement. HSBC appealed the decision and, in September 2019, the General Court of
the European Union (the ‘General Court’) issued a decision largely upholding the EC’s findings on liability but annulling the fine. HSBC
and the EC have both appealed the General Court’s decision to the European Court of Justice.
US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named as defendants in a number of private lawsuits filed
in the US with respect to the setting of US dollar Libor. The complaints assert claims under various US laws, including US antitrust andracketeering laws, the US Commodity Exchange Act (‘US CEA’) and state law. The lawsuits include individual and putative class actions,most of which have been transferred and/or consolidated for pre-trial purposes before the New York District Court.
In 2017 and 2018, HSBC reached agreements with plaintiffs to resolve putative class actions brought on behalf of the following fivegroups of plaintiffs: persons who purchased US dollar Libor-indexed bonds; persons who purchased US dollar Libor-indexed exchangetraded instruments; US-based lending institutions that made or purchased US dollar Libor-indexed loans (the ‘Lender class’); persons
who purchased US dollar Libor-indexed interest rate swaps and other instruments directly from the defendant banks and their affiliates(the ‘OTC class’); and persons who purchased US dollar Libor-indexed interest rate swaps and other instruments from certain financial
institutions that are not the defendant banks or their affiliates. During 2018, the New York District Court granted final approval of thesettlements with the OTC and Lender classes. The remaining settlements are subject to final court approval. Additionally, a number ofother US dollar Libor-related actions remain pending against HSBC in the New York District Court and the Second Circuit Court ofAppeals.
Intercontinental Exchange (‘ICE’) Libor: Between January and March 2019, HSBC and other panel banks were named as defendants
in three putative class actions filed in the New York District Court on behalf of persons and entities who purchased instruments paying
interest indexed to US dollar ICE Libor from a panel bank. The complaints allege, among other things, misconduct related to the
suppression of this benchmark rate in violation of US antitrust and state law. In July 2019, the three putative class actions wereconsolidated, and the plaintiffs filed a consolidated amended complaint. In March 2020, the court granted the defendants’ joint motion todismiss in its entirety. The plaintiffs have appealed.
Singapore interbank offered rate (‘Sibor’), Singapore swap offer rate (‘SOR’) and Australia bank bill swap rate (‘BBSW’):
In July and August 2016, HSBC and other panel banks were named as defendants in two putative class actions filed in the New York
District Court on behalf of persons who transacted in products related to the Sibor, SOR and BBSW benchmark rates. The complaints
allege, among other things, misconduct related to these benchmark rates in violation of US antitrust, commodities and racketeering laws,
and state law.
In the Sibor/SOR litigation, following a decision on the defendants’ motion to dismiss in October 2018, the claims against a number of
HSBC entities were dismissed, and The Hongkong and Shanghai Banking Corporation Limited (‘HBAP’) remained as the only HSBC
defendant in this action. In October 2018, HBAP filed a motion for reconsideration of the decision based on the issue of personal
jurisdiction. This motion was denied in April 2019. Also in October 2018, the plaintiffs filed a third amended complaint naming only theSibor panel members, including HBAP, as defendants. The court dismissed the third amended complaint in its entirety in July 2019against all defendants. In August 2019, the plaintiffs filed an appeal to the Second Circuit Court of Appeals, which remains pending.
In the BBSW litigation, in November 2018, the court dismissed all foreign defendants, including all the HSBC entities, on personal
jurisdiction grounds. In April 2019, the plaintiffs filed an amended complaint, which the defendants moved to dismiss. In February 2020,
the court again dismissed the plaintiffs’ amended complaint against all the HSBC entities.
There are many factors that may affect the range of outcomes, and the resulting financial impact, of these matters, which could besignificant.

Foreign exchange-related investigations and litigation
Various regulators and competition authorities around the world, including in the EU, Brazil and South Africa, are conducting
investigations and reviews into trading by HSBC and others on the foreign exchange markets. HSBC is cooperating with theseinvestigations and reviews.
In January 2018, HSBC Holdings entered into a three-year deferred prosecution agreement with the Criminal Division of the DoJ (the ‘FXDPA’), regarding fraudulent conduct in connection with two particular transactions in 2010 and 2011. This concluded the DoJ’s
investigation into HSBC’s historical foreign exchange activities. Under the terms of the FX DPA, HSBC has a number of ongoingobligations, including implementing enhancements to its internal controls and procedures in its Global Markets business, which will be
the subject of annual reports to the DoJ. In addition, HSBC agreed to pay a financial penalty and restitution.
In December 2016, Brazil’s Administrative Council of Economic Defense initiated an investigation into the onshore foreign exchange
market and identified a number of banks, including HSBC, as subjects of its investigation.
In June 2020, the Competition Commission of South Africa, having initially referred a complaint for proceedings before the South African
Competition Tribunal in February 2017, filed a revised complaint against 28 financial institutions, including HSBC Bank plc and HSBCBank USA, for alleged anti-competitive behaviour in the South African foreign exchange market.
In October 2018, HSBC Holdings and HSBC Bank plc received an information request from the EC concerning potential coordination inforeign exchange options trading. In May 2020, HSBC was informed that the EC had discontinued its investigation and does not intend to
take further action.
In late 2013 and early 2014, various HSBC companies and other banks were named as defendants in various putative class actions
consolidated in the New York District Court. The consolidated complaint alleged, among other things, that the defendants conspired tomanipulate the WM/Reuters foreign exchange benchmark rates. In September 2015, HSBC reached an agreement with the plaintiffs
to resolve the consolidated action, and the court granted final approval of the settlement in August 2018.

20

HSBC Holdings plc News Release 2020

A putative class action complaint making similar allegations on behalf of retail customers of foreign exchange products was filed in the
US District Court for the Northern District of California in 2015, and was subsequently transferred to the New York District Court where it
remains pending. In 2017, putative class action complaints making similar allegations on behalf of purported indirect purchasers of
foreign exchange products were filed in New York and were subsequently consolidated in the New York District Court. In April 2020,
HSBC reached an agreement with the plaintiffs to resolve the indirect purchaser action. The settlement remains subject to final court
approval.
In September 2018, various HSBC companies and other banks were named as defendants in two motions for certification of class actions
filed in Israel alleging foreign exchange-related misconduct. In July 2019, the Tel Aviv Court allowed the plaintiffs to consolidate theirclaims and, in September 2019, the plaintiffs filed a motion for certification of the consolidated class action.
In November and December 2018, complaints alleging foreign exchange-related misconduct were filed in the New York District Court andthe High Court of England and Wales against HSBC and other defendants by certain plaintiffs that opted out of the US class action
settlement. In May 2020, the court granted in part and denied in part the defendants’ motion to dismiss the US opt-out actions. These
matters remain at an early stage. It is possible that additional civil actions will be initiated against HSBC in relation to its historical foreignexchange activities.
There are many factors that may affect the range of outcomes, and the resulting financial impact, of these matters, which could besignificant.

Precious metals fix-related litigation
Gold: Beginning in March 2014, numerous putative class actions were filed in the New York District Court and the US District Courts forthe District of New Jersey and the Northern District of California, naming HSBC and other members of The London Gold Market Fixing
Limited as defendants. The complaints allege that, from January 2004 to June 2013, the defendants conspired to manipulate the price ofgold and gold derivatives for their collective benefit in violation of US antitrust laws, the US CEA and New York state law. The actions
were consolidated in the New York District Court. The defendants’ motion to dismiss the consolidated action was granted in part anddenied in part in October 2016. In June 2017, the court granted the plaintiffs leave to file a third amended complaint, naming a new
defendant. The court has denied the pre-existing defendants’ request for leave to file a joint motion to dismiss, and discovery is
proceeding.
Beginning in December 2015, numerous putative class actions under Canadian law were filed in the Ontario and Quebec Superior Courtsof Justice against various HSBC companies and other financial institutions. The plaintiffs allege that, among other things, from January
2004 to March 2014, the defendants conspired to manipulate the price of gold and gold derivatives in violation of the CanadianCompetition Act and common law. These actions are at an early stage.
Silver: Beginning in July 2014, numerous putative class actions were filed in federal district courts in New York, naming HSBC and othermembers of The London Silver Market Fixing Limited as defendants. The complaints allege that, from January 2007 to December 2013,
the defendants conspired to manipulate the price of silver and silver derivatives for their collective benefit in violation of US antitrust
laws, the US CEA and New York state law. The actions were consolidated in the New York District Court. The defendants’ motion todismiss the consolidated action was granted in part and denied in part in October 2016. In June 2017, the court granted the plaintiffs
leave to file a third amended complaint, which names several new defendants. The court has denied the pre-existing defendants’ request
for leave to file a joint motion to dismiss, and discovery is proceeding.
In April 2016, two putative class actions under Canadian law were filed in the Ontario and Quebec Superior Courts of Justice against
various HSBC companies and other financial institutions. The plaintiffs in both actions allege that, from January 1999 to August 2014, thedefendants conspired to manipulate the price of silver and silver derivatives in violation of the Canadian Competition Act and common
law. The Ontario action is at an early stage. The Quebec action has been temporarily stayed.
Platinum and palladium: Between late 2014 and early 2015, numerous putative class actions were filed in the New York District Court,
naming HSBC and other members of The London Platinum and Palladium Fixing Company Limited as defendants. The complaints allege
that, from January 2008 to November 2014, the defendants conspired to manipulate the price of platinum group metals (‘PGM’) andPGM-based financial products for their collective benefit in violation of US antitrust laws and the US CEA. In March 2017, the defendants’
motion to dismiss the second amended consolidated complaint was granted in part and denied in part. In June 2017, the plaintiffs filed athird amended complaint. In March 2020, the court granted the defendants' motion to dismiss the third amended complaint but granted
the plaintiffs leave to re-plead certain claims. The plaintiffs have filed an appeal.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including thetiming or any possible impact on HSBC, which could be significant.

Film finance litigation
In July and November 2015, two actions were brought by individuals against HSBC Private Bank (UK) Limited (‘PBGB’) in the High Courtof England and Wales seeking damages on various alleged grounds, including breach of duty to the claimants, in connection with their
participation in certain Ingenious film finance schemes. These actions are ongoing.
In December 2018, a separate action was brought against PBGB in the High Court of England and Wales by multiple claimants seeking
damages for alleged unlawful means conspiracy and dishonest assistance in connection with lending provided by PBGB to third parties inrespect of certain Ingenious film finance schemes in which the claimants participated. In June 2019, a similar claim was issued against
PBGB in the High Court of England and Wales by additional claimants. These actions are ongoing.
In June 2020, two separate claims were issued against HSBC UK Bank plc (as successor to PBGB’s business) by two separate groups ofinvestors in Eclipse film finance schemes in connection with PBGB’s role in facilitating the design, promotion and operation of such
schemes. Only one of these claims has been served to date. These matters are at an early stage.
In February 2020, a claim was issued against HSBC UK Bank plc (as successor to PBGB’s business) by two individuals in relation to theZeus film finance schemes. Separately, in June 2020, HSBC UK Bank plc received an application for disclosure of documents by a law
firm acting on behalf of a number of investors in the Zeus schemes. These matters are at an early stage.
It is possible that additional actions or investigations will be initiated against HSBC UK Bank plc as a result of PBGB’s historicalinvolvement in the provision of certain film finance-related services.
Based on the facts currently known, it is not practicable to predict the resolution of these matters, including the timing or any possible
impact on HSBC, which could be significant.
HSBC Holdings plc News Release 202021

Other regulatory investigations, reviews and litigation
HSBC Holdings and/or certain of its affiliates are subject to a number of other investigations and reviews by various regulators andcompetition and law enforcement authorities, as well as litigation, in connection with various matters relating to the firm’s businesses
and operations, including:• investigations by tax administration, regulatory and law enforcement authorities in Argentina, India and elsewhere in connection withallegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation;• an investigation by the US Commodity Futures Trading Commission regarding interest rate swap transactions related to bondissuances;• an investigation by the Swiss Competition Commission in connection with the setting of Euribor and Japanese yen Libor;• an investigation by the FCA in connection with collections and recoveries operations in the UK;• an information request from the UK Competition and Markets Authority concerning the financial services sector;• putative class actions brought in the New York District Court relating to the Mexican government bond market, the US governmentsponsored enterprise bond market, and the market for US dollar-denominated supranational sovereign and agency bonds;• two group actions pending in the US courts and a claim issued in the High Court of England and Wales in connection with HSBC Bank
plc’s role as a correspondent bank to Stanford International Bank Ltd from 2003 to 2009; and• litigation brought against various HSBC companies in the US courts relating to residential mortgage-backed securities, based primarilyon (a) claims brought against HSBC Bank USA in connection with its role as trustee on behalf of various securitisation trusts; and (b)claims against several HSBC companies seeking that the defendants repurchase various mortgage loans.
There are many factors that may affect the range of outcomes, and the resulting financial impact, of these matters, which could besignificant.

8

Events after the balance sheet date

In its assessment of events after the balance sheet date, HSBC has considered and concluded that no material events have occurred
resulting in adjustments to the financial statements.

9

Capital structure

Capital ratios
At
30 Jun31 Dec

2020

2019

%

%

Common equity tier 1 ratio

15.0

14.7

Tier 1 ratio

17.8

17.6

Total capital ratio

20.7

20.4

Common equity tier 1 ratio

15.0

601.4

Tier 1 ratio

17.5

400.5

Total capital ratio

19.2

150.2

Transitional basis

End point basis

Total regulatory capital and risk-weighted assets
At
30 Jun31 Dec

2020

2019

$m

$m

Common equity tier 1 capital

128,446

123,966

Additional tier 1 capital

24,031

24,393Tier 2 capital

24,76523,791

Total regulatory capital

177,242

172,150

Risk-weighted assets

854,552

843,395

Common equity tier 1 capital

128,446

121,022

Additional tier 1 capital

20,914

22,525Tier 2 capital

15,021

24,511

Total regulatory capital

164,381

168,058

Risk-weighted assets

854,552

865,318

Transitional basis

End point basis

22

HSBC Holdings plc News Release 2020

Leverage ratioAt
30 Jun31 Dec

2020

2019

$bn

$bn

149.4

144.8

2,801.4

2,726.5

Ref*
20

Tier 1 capital

21

Total leverage ratio exposure

22

Leverage ratio

EU-23

Choice of transitional arrangements for the definition of the capital measure
UK leverage ratio exposure – quarterly average1

%

%

5.3

5.3

Fully phased-in

Fully phased-in

2,565.8

2,535.4%%

UK leverage ratio – quarterly average

5.7

5.8

UK leverage ratio – quarter end

5.9

5.7

* The references identify the lines prescribed in the European Banking Authority (‘EBA’) template.
1 UK leverage ratio here and below denotes the Group’s leverage ratio calculated under the PRA’s UK leverage framework.

Unless otherwise stated, all figures are calculated using the EU's regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’in article 473a of the Capital Requirements Regulation.

10

Statutory accounts

The information in this media release does not constitute statutory accounts within the meaning of section 434 of the Companies Act
2006. The statutory accounts for the year ended 31 December 2019 have been delivered to the Registrar of Companies in England andWales in accordance with section 447 of the Companies Act 2006. The Group’s auditors, PricewaterhouseCoopers LLP (‘PwC’), hasreported on those accounts. Its report was unqualified, did not include a reference to any matters to which PwC drew attention by way ofemphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The information in this media release does not constitute the unaudited interim consolidated financial statements which are contained in
the Interim Report 2020. The Interim Report 2020 was approved by the Board of Directors on 3 August 2020. The unaudited interim
consolidated financial statements have been reviewed by the Group’s auditor, PwC, in accordance with the guidance contained in theInternational Standard on Review Engagements (UK and Ireland) 2410: Review of Interim Financial Information Performed by the
Independent Auditor of the Entity issued by the Auditing Practices Board. The full report of its review, which was unmodified, is includedin the Interim Report 2020.

11

Dealings in HSBC Holdings plc listed securities

HSBC has policies and procedures that, except where permitted by statute and regulation, prohibit it undertaking specified transactions
in respect of its securities listed on The Stock Exchange of Hong Kong Limited (‘HKEx’). Except for dealings as intermediaries or astrustees by subsidiaries of HSBC Holdings, neither HSBC Holdings nor any of its subsidiaries has purchased, sold or redeemed any of its
securities listed on HKEx during the half-year ended 30 June 2020.

12

Earnings release and final results

An earnings release for the three-month period ending 30 September 2020 is expected to be issued on 27 October 2020. The results forthe year to 31 December 2020 are expected to be announced on 23 February 2021.

13

Corporate governance

We are subject to corporate governance requirements in both the UK and Hong Kong. Throughout the six months ended 30 June 2020,
we complied with the applicable provisions of the UK Corporate Governance Code and also the requirements of the Hong Kong
Corporate Governance Code, save to the extent referred to in the next paragraph. The UK Corporate Governance Code is available atwww.frc.org.uk and the Hong Kong Corporate Governance Code is available at www.hkex.com.hk
Following the UK Government’s introduction of social distancing measures and prohibition on non-essential travel and public gatherings,
it was not possible for shareholders to attend this year’s Annual General Meeting (‘AGM’) in person. The Board was fully informed of all
relevant AGM and shareholder matters but only a limited number of directors and essential personnel attended the AGM to ensure themeeting was quorate and to enable the business of the meeting to be conducted. Shareholders were advised to vote by submitting a
proxy in advance of the AGM and that they should only appoint the Chairman of the AGM to act as their proxy. To ensure thatshareholders did not lose the opportunity to raise questions, shareholders were encouraged to submit questions for the Board via email inadvance of the AGM. Responses to the most frequent questions across key themes were published on the HSBC website after due
consideration by the Board. None of the questions submitted covered a topic that required consideration by the auditor. Given thesemeasures, not all of the persons set out in paragraphs A.6.7 and E.1.2 of the Hong Kong Corporate Governance Code were able to attend
the AGM.
Under the Hong Kong Code, the Group Audit Committee should be responsible for the oversight of all risk management and internal
control systems, unless expressly addressed by a separate risk committee. Our Group Risk Committee is responsible for oversight ofinternal control, other than internal financial controls, and risk management systems.
The Board has codified obligations for transactions in Group securities in accordance with the requirements of the Market Abuse
Regulation and the rules governing the listing of securities on the HKEx, save that the HKEx has granted waivers from strict compliancewith the rules that take into account accepted practices in the UK, particularly in respect of employee share plans.
HSBC Holdings plc News Release 202023

Following specific enquiries and except as disclosed on page 121 of the Interim Report 2020, all Directors have confirmed that they havecomplied with their obligations in respect of transacting in Group securities throughout the period.
There have been no material changes to the information disclosed in the Annual Report and Accounts 2019 in respect of the remunerationof employees, remuneration policies, bonus and share option plans and training schemes. Details of the number of employees areprovided on page 29 of the Interim Report 2020.
The Board of Directors of HSBC Holdings plc as at the date of this announcement comprises:
Mark Tucker*, Laura Cha†, Henri de Castries†, James Anthony Forese†, Steven Guggenheimer†, Irene Lee†, José Antonio Meade
Kuribreña†, Heidi Miller†, Eileen K Murray†, David Nish†, Noel Quinn, Ewen Stevenson, Jackson Tai† and Pauline van der Meer Mohr†.
* Non-executive Group Chairman†

Independent non-executive Director

14Interim Report 2020

The Interim Report 2020 will be made available to shareholders on or about 26 August 2020. Copies of the Interim Report 2020 and thisMedia Release may be obtained from Global Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom;from Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, 1 Queen’s Road Central, Hong Kong; or from
US Communications, HSBC Bank USA, N.A., 1 West 39th Street, 9th Floor, New York, NY 10018, USA. The Interim Report 2020 and thisNews Release may also be downloaded from the HSBC website, www.hsbc.com.
A Chinese translation of the Interim Report 2020 is available upon request from Computershare Hong Kong Investor Services Limited,
Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
The Interim Report 2020 will be available on The Stock Exchange of Hong Kong Limited’s website www.hkex.com.hk.

15

Cautionary statement regarding forward-looking statements

This news release may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and forward-looking
statements with respect to the financial condition, results of operations, capital position, strategy and business of the Group which canbe identified by the use of forward-looking terminology such as ‘may’, ‘will’, ‘should’, ‘expect’, ‘anticipate’, ‘project’, ‘estimate’, ‘seek’,‘intend’, ‘target’ or ‘believe’ or the negatives thereof or other variations thereon or comparable terminology (together, “forward-looking
statements”), including the strategic priorities and any financial, investment and capital targets described herein.
Any such forward-looking statements are not a reliable indicator of future performance, as they may involve significant stated or implied
assumptions and subjective judgements which may or may not prove to be correct. There can be no assurance that any of the mattersset out in forward-looking statements are attainable, will actually occur or will be realised or are complete or accurate. The assumptions
and judgments may prove to be incorrect and involve known and unknown risks, uncertainties, contingencies and other importantfactors, many of which are outside the control of the Group. Actual achievements, results, performance or other future events orconditions may differ materially from those stated, implied and/or reflected in any forward-looking statements due to a variety of risks,
uncertainties and other factors (including without limitation those which are referable to general market conditions, regulatory changes
or Covid-19).
Any such forward-looking statements are based on the beliefs, expectations and opinions of the Group at the date the statements are
made, and the Group does not assume, and hereby disclaims, any obligation or duty to update, revise or supplement them if
circumstances or management’s beliefs, expectations or opinions should change. For these reasons, recipients should not place relianceon, and are cautioned about relying on, any forward-looking statements. No representations or warranties, expressed or implied, aregiven by or on behalf of the Group as to the achievement or reasonableness of any projections, estimates, forecasts, targets, prospects orreturns contained herein.
Additional detailed information concerning important factors that could cause actual results to differ materially from this news release isavailable in our Annual Report and Accounts 2019 for the fiscal year ended 31 December 2019 filed with the Securities and Exchange
Commission (the ‘SEC’) on Form 20-F on 19 February 2020, our 1Q 2020 Earnings Release furnished to the SEC on Form 6-K on 28 April
2020, and our Interim Report 2020 for the six months ended 30 June 2020 which we expect to furnish to the SEC on Form 6-K on oraround 3 August 2020.

16

Certain defined terms

Unless the context requires otherwise, ‘HSBC Holdings’ means HSBC Holdings plc and ‘HSBC’, the ‘Group’, ‘we’, ‘us’ and ‘our’ refer to
HSBC Holdings together with its subsidiaries. Within this document the Hong Kong Special Administrative Region of the People’s
Republic of China is referred to as ‘Hong Kong’. When used in the terms ‘shareholders’ equity’ and ‘total shareholders’ equity’,‘shareholders’ means holders of HSBC Holdings ordinary shares and those preference shares and capital securities issued by HSBC
Holdings classified as equity. The abbreviations ‘$m’and ‘$bn’ represent millions and billions (thousands of millions) of US dollars,
respectively.

17

For further information contact:

Investor Relations

Media Relations

UK – Richard O’Connor
Tel: +44 (0) 20 7991 6590

UK – Heidi Ashley
Tel: +44 (0) 20 7992 2045

Hong Kong – Mark Phin
Tel: +852 2822 4908

Hong Kong – Patrick Humphris
Tel: +852 2822 2052

24

HSBC Holdings plc News Release 2020

HSBC Holdings plc
8 Canada Square
London E14 5HQ
United Kingdom
Telephone: 44 020 7991 8888
www.hsbc.com
Incorporated in England with limited liability
Registered number 617987