2 AUGUST 2021

HSBC HOLDINGS PLC
2021 INTERIM RESULTS – HIGHLIGHTS
Noel Quinn, Group Chief Executive, said:“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy. We
were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions. Our lending
pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half. This
performance enables us to pay an interim dividend for the first six months of 2021.
I’m pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of ourstrategy. In particular, we have taken firm steps to define the future of our US and continental Europe businesses, and further enhanced
our global Wealth capabilities.
We are focused on executing the growth and transformation plans we announced in February.”

Financial performance (1H21 vs 1H20)• Reported profit after tax increased by $5.3bn to $8.4bn and reported profit before tax increased by $6.5bn to $10.8bn.
A fall in revenue reflected 2020 interest rate reductions and lower Markets and Securities Services (‘MSS’) revenue relative to a strong
1H20. This was more than offset by releases in our expected credit losses and other credit impairment charges (‘ECL’). Reported profitin 1H20 included an impairment of software intangibles of $1.2bn, mainly in Europe.
• All regions profitable in 1H21, notably HSBC UK Bank plc reported profit before tax of over $2.1bn in the period. Despite
interest rate headwinds, there was continued strength in Asia and a material recovery in profitability in all other regions, reflecting a
net release in ECL as the economic outlook improved.
• Reported revenue down 4% to $25.6bn, primarily reflecting 2020 interest rate reductions and lower MSS revenue in Global
Banking and Markets (‘GBM’). These reductions were partly offset by net favourable movements in market impacts in life insurance
manufacturing and valuation adjustments in GBM.
• In 1H21, lending increased by $21.5bn on a reported basis, reflecting growth in Wealth and Personal Banking (‘WPB’) andCommercial Banking (‘CMB’). Deposits grew by $26.3bn on a reported basis, with increases in all global businesses.
• Net interest margin (‘NIM’) of 1.21% in 1H21, down 22 basis points (‘bps’) from 1H20. NIM in 2Q21 of 1.20% remained
stable compared with 1Q21.
• Reported ECL were a net release of $0.7bn, compared with a $6.9bn charge in 1H20. The net release in 1H21 primarilyreflected an improvement in the economic outlook since 2020. The reduction also reflected low levels of stage 3 charges in 1H21, as
well as the non-recurrence of a large charge in 1H20 related to a corporate exposure in Singapore.
• Reported and adjusted operating expenses increased 3%, primarily due to a higher performance-related pay accrual as
profitability improved, as well as continued investment, partly offset by the impact of our cost-saving initiatives.
• Return on average tangible equity (‘RoTE‘) (annualised) of 9.4%, up 5.6 percentage points compared with 1H20.
• Common equity tier 1 (‘CET1’) ratio of 15.6%, down 0.3 percentage points from 31 December 2020, reflecting an increase
in RWAs from lending growth and a decrease in CET1 capital including the impact of foreseeable dividends.
• The Board has announced an interim dividend for 1H21 of $0.07 per ordinary share, to be paid in cash with no scrip alternative.

Financial performance (2Q21 vs 2Q20)• Reported profit after tax up $3.2bn to $3.9bn and reported profit before tax up $4.0bn to $5.1bn. Reported revenue wasdown 4%, mainly due to lower revenue in MSS, as well as the impact of lower interest rates. This was more than offset by net
releases in reported ECL and lower reported operating expenses.

Outlook for 2021
• The execution of our strategy continues at pace, including the announcement of transactions in relation to our retail operations
in France and mass market retail operations in the US.
• Despite continued revenue headwinds, notably in fixed income markets relative to strong comparative periods, as well
as low interest rates and Covid-19 impacts, there are emerging signs of unsecured personal lending and commercial
lending growth. We expect mid-single-digit lending growth for the full year, which is expected to translate into low-single-digit RWA
growth as we progress with our RWA reduction actions.
• Given current consensus economics and default experience, ECL charges for 2021 are expected to be materially lower
than our medium-term range of 30bps to 40bps of average loans and possibly a net release for the year. Uncertainty
remains as countries emerge from the pandemic at different speeds, government support measures unwind and new virus strains test
the efficacy of vaccination programmes. To reflect this uncertainty, at 30 June 2021 around $2.4bn remained of the stage 1 andstage 2 ECL allowance uplift we made during 2020.
• Our cost reduction programme remains on track. We expect adjusted operating expenses for 2021 to be broadly in line with
2020, excluding the benefit from a reduced bank levy. This remains subject to final decisions on performance-related pay, which will
primarily reflect the performance of the Group.
• The Group maintains a strong capital position and is well placed to fund growth and step up capital returns. Reflecting the current
improved economic outlook and operating environment in many of our markets, we now expect to move to within our target
dividend payout ratio range of 40% to 55% of reported earnings per ordinary share in 2021.

Key financial metrics
Half-year to
30 Jun30 Jun31 Dec

2021

2020

2020

Reported revenue ($m)
Reported profit before tax ($m)

25,551
10,83926,745
4,318

23,684
4,459

Reported profit after tax ($m)
Profit attributable to the ordinary shareholders of the parent company ($m)

8,422
7,276

3,125
1,977

2,974
1,921

Cost efficiency ratio (%)
Basic earnings per share ($)

66.9
0.36

61.8
0.10

75.6
0.10

Diluted earnings per share ($)
Net interest margin (%)1

0.36
1.21

0.10
1.43

0.09
1.32

Alternative performance measures
Adjusted revenue ($m)

25,797

27,597

24,523Adjusted profit before tax ($m)

11,950

5,654

6,680

Adjusted cost efficiency ratio (%)

62.9

56.9

69.1

Annualised expected credit losses and other credit impairment charges (‘ECL’) as a % of average gross loans andadvances to customers (%)

Reported results(0.14)

1.34

0.38

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

8.4

2.4

2.3

Return on average tangible equity (annualised) (%)1,2

9.4

3.8

3.1

30 Jun30 Jun31 Dec

2021

2020

2020

2,976,005
1,059,511
1,669,091
2,188,991
63.5
198,218
157,985
8.69
7.81

2,922,798
1,018,681
1,532,380
2,034,939
66.5
187,036
147,879
8.17
7.34

2,984,164
1,037,987
1,642,780
2,092,900
63.2
196,443
156,423
8.62
7.75

15.6
862,292
21.0
5.3
659
134

15.0
854,552
20.7
5.3
654
148

15.9
857,520
21.5
5.5
678
139

20,223
20,315
20,2110.07

20,162
20,198
20,162—

20,184
20,272
20,1760.15

AtBalance sheet
Total assets ($m)
Net loans and advances to customers ($m)
Customer accounts ($m)
Average interest-earning assets ($m)1
Loans and advances to customers as % of customer accounts (%)
Total shareholders’ equity ($m)
Tangible ordinary shareholders’ equity ($m)
Net asset value per ordinary share at period end ($)3
Tangible net asset value per ordinary share at period end ($)
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)4
Risk-weighted assets ($m)4
Total capital ratio (%)4
Leverage ratio (%)4
High-quality liquid assets (liquidity value) ($bn)
Liquidity coverage ratio (%)
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions)
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)Average basic number of $0.50 ordinary shares outstanding (millions)
Dividend per ordinary share (in respect of the period) ($)

For reconciliations of our reported results to an adjusted basis, including lists of significant items, see page 35 of the Interim report 2021.
Definitions and calculation of other alternative performance measures are included in our ‘Reconciliation of alternative performance measures’ on
page 52 of the Interim report 2021.
1 For these metrics, half-year to 31 December 2020 is calculated on a full-year basis and not a 2H20 basis.
2 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 other intangible assets (netof 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 Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements
Regulation in force at the time. These include the regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’, which are explained
further on page 88 of the Interim Report 2021. Leverage ratios are calculated using the end point definition of capital and the IFRS 9 regulatorytransitional arrangements. Following the end of the transition period after the UK’s withdrawal from the EU, any reference to EU regulations anddirectives (including technical standards) should be read as a reference to the version onshored into UK law under the European Union(Withdrawal) Act 2018, as amended.

2

HSBC Holdings plc News Release 2021

Highlights
Half-year to
30 Jun30 Jun

2021

2020

$m

$m

Reported
Revenue1

25,551

26,745

Change in expected credit losses and other credit impairment charges
Operating expenses

719(17,087)(6,858)(16,527)

Share of profit in associates and joint ventures
Profit before tax

1,656
10,839958
4,318

Adjusted2
Revenue1

25,797

27,597

Change in expected credit losses and other credit impairment charges
Operating expenses

719(16,222)(7,287)(15,705)

Share of profit in associates and joint ventures

1,656

1,049

Profit before tax

11,950

5,654

18
—

26
(8)

Fair value movements on financial instruments3
Restructuring and other related costs4

(194)
(70)

299
(49)

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

(17)
—
(848)
—

(50)
(1,025)(505)(5)

Significant items affecting adjusted performance
Revenue
Customer redress programmes
Disposals, acquisitions and investment in new businesses

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 period-on-period effects of foreign currency translation differences andsignificant items which distort period-on-period comparisons.
3 Includes fair value movements on non-qualifying hedges and debt valuation adjustments on derivatives.
4 Comprises losses associated with the RWA reduction commitments and gains we made at our business update in February 2020.

HSBC Holdings plc News Release 2021

3

Review by Noel Quinn, Group Chief Executive
In February this year, we launched an updated purpose for HSBC. ‘Opening up a world of opportunity’ was the product of wide
consultation with our colleagues and customers around the world. Since then, I have spoken with thousands of my colleagues across
HSBC to discuss how we live that purpose every day.
I have been excited by the energy of those conversations. Our purpose and the values that underpin it – we value difference, we succeed
together, we take responsibility, and we get it done – have resonated strongly, not just as a means of guiding our behaviour, but inarticulating what our people want us to be as a business. Many expressed great pride in our heritage and culture, but also belief in theneed to adapt to meet present and future challenges. Above all though, there was a strong desire to learn from and embed the lessons of
the past 18 months, which is a conviction that my senior management team and I all share.
This spirit was evident in a good first-half performance. The customer-centricity that characterised our response to the Covid-19
pandemic remained to the fore, driven by increased collaboration and the benefits of our continued digital investment. This enabled us
not just to better serve our existing customers, but also to attract new clients, win new mandates and strengthen our lending pipelines.
We also generated strong momentum behind our growth and transformation plans, with good delivery against all four pillars – focus on
our strengths, digitise at scale, energise for growth, and transition to net zero.
Our biggest challenge has remained the Covid-19 pandemic, which continues to threaten our customers, colleagues and communities.
This was especially true in India, where the devastating spread of the Delta variant was a stark reminder of the danger that the virus
continues to pose. India is both a growth market and an important service hub for the Group, and around 39,000 of our people are based
there. While measures were already in place to enable a large majority of these colleagues to work from home, we took urgent steps tohelp them and their dependants to receive a vaccine, and provided financial support to local organisations delivering the relief effort on
the ground. Operationally, we were able to maintain an unbroken service due to the continuity measures in place since March 2020. This
was a testament both to the extraordinary efforts of our people, and the resilience of our systems and processes.
We received a strong endorsement of our recent progress in May, through the upgrade of our MSCI ESG rating from ‘average’ to ‘leader’.
Among other things, MSCI recognised the significant increase in our employee engagement and talent development scores during 2020;
the extensive involvement of our Board in incorporating climate considerations into our business strategy; our strong performance incustomer complaints handling and financial education; and our achievement of the highest possible rating for corporate governance. We
will work hard to maintain this rating in the coming quarters.

Financial performance
Recovering economic growth in many of our main markets had a positive impact on our first-half financial performance. The improved
economic outlook enabled us to begin releasing expected credit losses, which was the main driver of our improved profitability. The
adverse impact of central bank interest rate cuts in 2020 continued to flow through to our interest-rate sensitive business lines, although
our net interest income has now stabilised. A combination of increased fee income and cost-programme savings helped to compensate
for the resulting reduction in revenue, and we strengthened our lending pipelines in our retail and wholesale businesses in the first half ofthe year.
As a consequence, the Group delivered $10.8bn of reported profit before tax, up 151% on the first half of 2020, and $12bn of adjusted
profits, up 111%. We were profitable in every region in the first six months of the year.
Adjusted revenue was 7% lower than the same period last year. This was due mainly to the impact of interest rate cuts during 2020 on
our deposit franchises in all three global businesses. However, our lending pipeline began to translate into business growth in the second
quarter and we further strengthened that pipeline during the half-year.
Our cost reduction programmes continued to mitigate the cost of increased technology investment, although our adjusted operating
expenses rose by 3% due to an increase in performance-related pay. We spent around $3.0bn on technology in the first half of the year,
up 4% on the same period last year.
Our funding, liquidity and capital remain strong. We grew deposits by $27bn on a constant currency basis, with growth in all three global
businesses. Our common equity tier one ratio was 15.6% on 30 June 2021. As a consequence, we are able to pay an interim dividend of$0.07 per ordinary share for the first half of the year.

Focus on our strengths
We made good progress in restructuring our portfolio of businesses in the first half of the year, investing in businesses that we intend togrow and withdrawing from areas in which we lack the scale to compete.
In particular, we took firm steps to resolve the future of our businesses in the US and continental Europe. In the US, we entered into
agreements to sell our mass market retail business in the country, and in continental Europe, we entered into a memorandum of
understanding with My Money Group aimed at selling our retail banking activities in France. Both of these followed a period of extensive
strategic review, and are important milestones in the transformation of the Group. They will help enable both our US and continental
Europe businesses to become more focused, simpler and sustainably profitable, and to better serve the international needs of ourwholesale and wealth management customers.
In Asia, we continued to put in place the building blocks for future growth. We further grew our Pinnacle digital wealth managementbusiness in mainland China, recruiting more than 350 new wealth managers and accelerating our coverage expansion to five cities –Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou. We also improved our ability to serve the wealth needs of customers in Asiaand the Asian diaspora by expanding our digital wealth capabilities in Hong Kong, Malaysia and Singapore, and reorganising our wealthbusinesses in continental Europe and the US to better connect international customers to the global wealth opportunity. The benefits of
our investment in Asia wealth were evident in the first six months of 2021 through strong customer acquisition, increased fee income andsignificant growth in wealth balances.

Digitise at scale
Our technology investment continues to improve the experiences of our customers and colleagues, and to boost efficiency while
reducing our cost base. In the first half of the year, we launched a number of new, scalable digital capabilities for our customers androlled out more of our existing capabilities to new markets.

4

HSBC Holdings plc News Release 2021

For our personal customers, our digital Global Money Account allows our international customers to hold, manage and send funds invarious currencies without paying any fees. Having launched this successfully in the US in 2020, we expanded it successfully into the
UAE and Singapore in the first half of the year, with more to follow during 2021.
For our business customers, we launched HSBC Global Wallet, a new multi-currency digital wallet which allows businesses to hold, send
and receive cash in multiple currencies using a single global account. Launched initially for customers in Singapore, the UK and the US,
we intend to roll out new features and currencies to the platform in the second half of the year.
We also launched HSBC Kinetic for business customers in the UK. Kinetic is designed to be a truly mobile-first banking service, as
opposed to a bank account with mobile features. Built on insights from more than 3,000 small business owners, it allows customers tomanage their finances entirely through their smartphone. More than 10,000 businesses have now signed up, benefiting from online
onboarding in 15 minutes, the ability to apply for lending products with instant lending decisions, and a number of critical insightcapabilities.

Energise for growth
We are seeking to energise HSBC for growth through a strong sense of purpose and simpler ways of working, and by equipping ourcolleagues with the future skills they need. This includes embedding the lessons of the past 18 months to help build a dynamic,
entrepreneurial and inclusive culture.
We are moving to a hybrid working model wherever possible, giving our people the flexibility to work in a way that suits both them andtheir customers. We will need less office space as a result, and we have plans to reduce our global office footprint by more than 3.6
million square feet – or around 20% – by the end of 2021. We are also relocating three of our global business CEOs to Asia on apermanent basis, taking them closer to our customers and to the core of our business.
We continue to simplify the organisation wherever we can. In the first half, we reduced the number of full-time equivalent employees byaround 3,500. We also announced changes to our senior leadership bands to help ensure clarity of scope and accountability, and toempower our leaders to make decisions to accelerate our transformation and drive growth.
I am conscious that our current operating environment remains challenging for many colleagues and their families. While our employee
engagement scores have remained above pre-pandemic levels, we have continued to see a rise in fatigue and anxiety among employees.
To help tackle this, we have provided a variety of well-being resources to support our people, including mindfulness training. This issomething that I continue to monitor closely, particularly as our people adapt to our new hybrid working model.

Transition to net zero
We took a number of important steps towards our net zero ambitions in the first half of the year, and strengthened our position as amarket leader of sustainable finance.
I was particularly pleased that 99.7% of our shareholders backed our special resolution on climate change at our AGM in May. This was astrong endorsement of our climate strategy, which has at its core a commitment to support our customers on their transitions to a lowcarbon future. The resolution commits us to setting out the next steps in our transition, including through short- and medium-term
sector-based targets; to phasing out financing of coal power and thermal coal mining by 2030 in EU and OECD countries, and by 2040
globally; and to reporting annually on our progress. Above all, it signals a unity of purpose between our business and our investors, which
is vital as we confront the shared challenge of the low-carbon transition.
I have always said that partnership lies at the heart of the low-carbon transition. Part of our approach has been to attempt to forge newpartnerships to find new solutions and accelerate progress, whether with our customers, governments or our peers in the banking sector.
In April, we became a founding member of the Net-Zero Banking Alliance (‘NZBA’), which aims to deliver the banking sector’s ambition
to align its climate commitments with the Paris Agreement goals in a collaborative, rigorous and transparent way. Through the NZBA, wealso joined the Glasgow Financial Alliance for Net Zero, which combines the leading initiatives across the financial system to accelerate
the transition to net zero emissions by 2050 at the latest.
In May, we launched a five-year partnership with World Resources Institute and WWF, backed by $100m of philanthropic funding from
HSBC. The Climate Solutions Partnership seeks to unlock barriers to finance for companies and projects that tackle climate change,
bringing emerging climate solutions to commercial viability and scale. By combining our resources, knowledge and insight with ourpartners on the ground, we are aiming to make a real-world impact in a targeted way, with a focus on scaling up climate innovation andnature-based solutions, and helping to transition the energy sector in Asia towards renewables.
We strengthened our position in the ESG bond market in the first half, participating in more issuances than in the whole of 2020. Firsthalf mandates included the world’s first sovereign sustainable sukuk bond; the first sovereign green bonds issued by the UK and Canada;
and a pioneering sustainability-linked bond for an energy company with the cost of financing tied to the reduction of its entire carbon
footprint, including the emissions of products sold.

Our people
None of the achievements of the last six months would have been possible without the commitment and hard work of my colleagues. I
do not underestimate the challenges that many still face as a consequence of the Covid-19 pandemic, which remains a presence in all of
our lives. I am especially grateful to my colleagues in parts of the world where Covid-19 remains prevalent, and who have continued to
go to extraordinary lengths for their customers and colleagues in extremely challenging circumstances.
We have had a good start to the year, but there is much more to do to deliver our ambitions for HSBC. We have a firm platform on which
to build over the remainder of 2021.

HSBC Holdings plc News Release 2021

5

Financial summary
Half-year to
30 Jun30 Jun31 Dec

2021
$m

2020
$m

2020
$m

Profit before tax
Profit attributable to:10,839

4,318

4,459

– ordinary shareholders of the parent company
Dividends on ordinary shares1

7,276
3,059

1,977
—

1,921
—

At the period end
Total shareholders’ equity

198,218

187,036

196,443

Total regulatory capital
Customer accounts

181,122
1,669,091

177,242
1,532,380

184,423
1,642,780

Total assets
Risk-weighted assets

2,976,005
862,2922,922,798
854,552

2,984,164857,520

Per ordinary share
Basic earnings

$

$

$

0.36

0.10

0.10

Dividend per ordinary share (paid in the period)1
Net asset value2

0.15
8.69

—
8.17

—
8.62

For the period

1 Interim dividend of $0.15 per ordinary share in respect of the financial year ending 31 December 2020, paid in April 2021.
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
30 Jun 2021

Wealth and Personal Banking
Commercial Banking
Global Banking and Markets
Corporate Centre
Profit before tax

30 Jun 2020

31 Dec 2020

$m

%

$m

%

$m

%

3,864
3,376
3,307
1,403
11,950

32.3
28.3
27.7
11.7
100.0

1,663
118
2,566
1,307
5,654

29.4
2.1
45.4
23.1
100.0

2,478
1,732
2,312
158
6,680

37.1
25.9
34.6
2.4
100.0

Distribution of results by geographical region
Reported profit/(loss) before tax
Half-year to
30 Jun 2020

30 Jun 2021

EuropeAsia
Middle East and North Africa
North America
Latin America
Profit before tax

6

HSBC Holdings plc News Release 2021

31 Dec 2020

$m

%

$m

%

$m

%

1,968
6,936
723
805
407
10,839

18.2
64.0
6.7
7.4
3.7
100.0

(3,060)
7,369
(26)
23
12
4,318

(70.9)
170.7
(0.6)
0.5
0.3
100.0

(1,145)
5,463
45
145
(49)
4,459

(25.7)
122.5
1.0
3.3
(1.1)
100.0

HSBC adjusted profit before tax and balance sheet data
Half-year to 30 Jun 2021
Wealth andPersonal
Banking

Commercial
BankingGlobalBanking andMarkets

Corporate
Centre

Total

$m

$m

$m

$m

$m

Net operating income/(expense) before change in expected credit losses andother credit impairment charges1

11,401

6,651

7,878

(133)

25,797– external

11,168

6,626

8,631

(628)

25,797– inter-segmentof which: net interest income/(expense)

233
7,067

25
4,366

(753)
2,024

495
(378)

—
13,079Change in expected credit losses and other credit impairment (charges)/recoveries
Net operating income

52
11,453

249
6,900

414
8,292

4
(129)

719
26,516

Total operating expenses
Operating profit(7,600)3,853(3,525)
3,375(4,985)
3,307

(112)
(241)

(16,222)
10,294

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

11
3,864

1
3,376

—
3,307

1,644
1,403

1,656
11,950

%

%

%

%

%

Share of HSBC’s adjusted profit before tax

32.3

28.3

27.7

11.7

100.0

Adjusted cost efficiency ratio
Adjusted balance sheet data

66.7

53.0

63.3

(84.2)

62.9

$m

$m

$m

$m

$m

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

491,320478

350,94515

216,098
128

1,148
28,0881,059,511
28,709Total external assets
Customer accounts
Adjusted risk-weighted assets2

912,479
841,257
184,973624,042
485,689
332,084

1,258,694
341,242
255,158

180,790903
90,077

2,976,005
1,669,091
862,292

Half-year to 30 Jun 2020

Net operating income before change in expected credit losses and other credit
impairment charges1

11,694

7,326

8,574

3

27,597– external– inter-segmentof which: net interest income/(expense)
Change in expected credit losses and other credit impairment charges
Net operating income/(expense)
Total operating expenses
Operating profit/(loss)
Share of profit in associates and joint ventures
Adjusted profit before tax

10,071
1,623
8,331(2,328)9,366(7,695)
1,671
(8)
1,663

7,742
(416)
5,080
(3,751)
3,575(3,457)
118—
118

10,511(1,937)2,435(1,195)
7,379(4,813)
2,566
—
2,566

(727)
730
(804)
(13)
(10)
260
250
1,057
1,307

27,597—
15,042(7,287)
20,310(15,705)
4,605
1,049
5,654

Share of HSBC’s adjusted profit before tax
Adjusted cost efficiency ratio
Adjusted balance sheet data
Loans and advances to customers (net)
Interests in associates and joint ventures
Total external assets
Customer accounts
Adjusted risk-weighted assets2

%

%

%

%

%

29.4
65.8

2.1
47.2

45.4
56.1

23.1
(8,666.7)

100.0
56.9

$m

$m

$m

$m

$m

456,263428
856,599
810,137
168,309

362,09415
579,865
441,427
347,910254,126140
1,472,925
357,082
286,594

1,365
25,659173,932
738
85,332

1,073,848
26,242
3,083,321
1,609,384
888,145

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.

HSBC Holdings plc News Release 2021

7

HSBC adjusted profit before tax and balance sheet data (continued)
Half-year to 31 Dec 2020
Wealth andPersonal
Banking

Commercial
BankingGlobalBanking andMarkets

Corporate
Centre

Total

$m

$m

$m

$m

$m

Net operating income/(expense) before change in expected credit losses and othercredit impairment charges1

11,019

6,489

7,323

(308)

24,523– external– inter-segment

10,534
485

6,468
21

8,257
(934)

(736)
428

24,523—of which: net interest income/(expense)
Change in expected credit losses and other credit impairment (charges)/recoveries

7,231
(685)

4,545
(1,265)

2,184
(95)

(533)
14

13,427(2,031)

Net operating income/(expense)
Total operating expenses

10,334(7,871)

5,224(3,491)

7,228(4,916)

(294)
(673)

22,492(16,951)

Operating profit/(loss)
Share of profit in associates and joint ventures

2,463
15

1,733
(1)

2,312
—

(967)
1,125

5,541
1,139

Adjusted profit before tax

2,478

1,732

2,312

158

6,680

%

%

%

%

%

37.1
71.4

25.9
53.8

34.6
67.1

2.4
(218.5)

100.0
69.1

Share of HSBC’s adjusted profit before tax
Adjusted cost efficiency ratio
Adjusted balance sheet data
Loans and advances to customers (net)

$m

$m

$m

$m

$m

469,218

342,951

223,395

1,254

1,036,818

Interests in associates and joint ventures
Total external assets

446
882,04214
570,369141
1,342,544

26,261
186,633

26,862
2,981,588

Customer accounts
Adjusted risk-weighted assets2

834,376
172,272

470,686
327,025

335,977
263,959

609
91,582

1,641,648
854,838

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.

8

HSBC Holdings plc News Release 2021

Consolidated income statement
Half-year to
30 Jun30 Jun31 Dec

2021

2020

2020

$m

$m

$m

Net interest income– interest income

13,09817,96014,50923,00013,06918,756– interest expense
Net fee income(4,862)
6,674(8,491)
5,926(5,687)5,948– fee income– fee expense

8,458(1,784)

7,480(1,554)

7,571(1,623)

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

4,184

5,768

3,814

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

2,795

(1,290)

3,371

(67)
548

197
80

34
375

Gains less losses from financial investments
Net insurance premium income

433
5,663

466
5,020

187
5,073

Other operating income
Total operating income

155
33,483471
31,14756
31,927

Net insurance claims and benefits paid and movement in liabilities to policyholders
Net operating income before change in expected credit losses and other credit impairment charges(7,932)25,551(4,402)
26,745(8,243)
23,684

Change in expected credit losses and other credit impairment charges
Net operating income
Employee compensation and benefits
General and administrative expenses
Depreciation and impairment of property, plant and equipment and right-of-use assets
Amortisation and impairment of intangible assets
Goodwill impairment
Total operating expenses
Operating profit
Share of profit in associates and joint ventures
Profit before tax
Tax expense
Profit for the period
Attributable to:– ordinary shareholders of the parent company– preference shareholders of the parent company– other equity holders– non-controlling interests
Profit for the period

719
26,270(9,610)(5,675)(1,160)(642)—(17,087)
9,183
1,656
10,839(2,417)
8,422(6,858)19,887(8,514)(4,918)(1,209)(1,845)(41)(16,527)
3,360
958
4,318
(1,193)
3,125(1,959)21,725(9,562)(6,197)(1,472)(674)—(17,905)
3,820
639
4,459
(1,485)
2,974

7,276
7
666
473
8,422

1,977
45
617
486
3,125

1,921
45
624
384
2,974

Change in fair value of designated debt and related derivatives
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss

Basic earnings per ordinary share
Diluted earnings per ordinary share

$

$

$

0.36
0.36

0.10
0.10

0.10
0.09

HSBC Holdings plc News Release 20219

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

2021

2020

2020

$m

$m

$m

8,422

3,125

2,974

Items that will be reclassified subsequently to profit or loss when specific conditions are met:
Debt instruments at fair value through other comprehensive income(1,368)1,747

3– fair value gains/(losses)– fair value gains transferred to the income statement on disposal(1,392)
(375)

2,654
(454)

293
(214)

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

(26)
425

109
(562)

(61)
(15)

Cash flow hedges– fair value gains/(losses)

(238)
877

476
255

(5)
(412)
405

Profit for the period
Other comprehensive income/(expense)– fair value losses/(gains) reclassified to the income statement(1,195)364– income taxes and other movements

80

(143)

2

Share of other comprehensive income/(expense) of associates and joint ventures– share for the period

104
104

(115)
(115)

42
42

Exchange differences
Items that will not be reclassified subsequently to profit or loss:(449)(4,552)

9,407

Remeasurement of defined benefit asset/(liability)– before income taxes

(747)
(775)

1,182
1,703

(348)
(480)

– income taxes

28

(521)

132

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

155

2,354

(2,187)

(2)
157
(348)
(345)
(3)
166
(2,725)
5,697

2,936
(582)
(123)
(122)
(1)
72
1,041
4,166

(2,746)
559
335
334
1
121
7,368
10,342

4,612
7
666
412
5,697

3,043
45
617
461
4,166

9,103
45
624
570
10,342– before income taxes– income taxes
Equity instruments designated at fair value through other comprehensive income– fair value gains/(losses)– income taxes
Effects of hyperinflation
Other comprehensive income/(expense) for the period, net of tax
Total comprehensive income for the period
Attributable to:– ordinary shareholders of the parent company– preference shareholders of the parent company– other equity holders– non-controlling interests
Total comprehensive income for the period

10

HSBC Holdings plc News Release 2021

Consolidated balance sheet
At
30 Jun31 Dec

2021

2020

$m

$m

AssetsCash and balances at central banks

393,559

304,481

Items in the course of collection from other banks
Hong Kong Government certificates of indebtedness

9,406
41,8804,094
40,420

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

260,250
49,120231,990
45,553

Derivatives
Loans and advances to banks

209,516
86,886

307,726
81,616

1,059,511
201,714

1,037,987
230,628

Financial investments

434,576

490,693

Prepayments, accrued income and other assets

175,155

156,412Current tax assets
Interests in associates and joint ventures

405
28,709954
26,684

Goodwill and intangible assets
Deferred tax assets

20,703
4,615

20,443
4,483

2,976,005

2,984,164

41,880100,448
1,669,091
112,798
15,10089,637
151,686
200,156
84,218164,800
929
110,572
2,814
4,338
20,774
2,769,241

40,42082,0801,642,780
111,901
4,343
75,266
157,439
303,001
95,492
128,624690
107,191
3,678
4,313
21,9512,779,169

10,376
14,60022,414
6,509
144,319
198,218
8,546
206,764
2,976,005

10,347
14,27722,414
8,833
140,572
196,443
8,552
204,995
2,984,164

Loans and advances to customers
Reverse repurchase agreements – non-trading

Total assets
Liabilities and equity
Liabilities
Hong Kong currency notes in circulation
Deposits by banks
Customer accounts
Repurchase agreements – non-trading
Items in the course of transmission to other banks
Trading liabilities
Financial liabilities designated at fair value
Derivatives
Debt securities in issue
Accruals, deferred income and other liabilities
Current tax liabilities
Liabilities under insurance contracts
Provisions
Deferred tax liabilities
Subordinated liabilities
Total liabilities
EquityCalled up share capital
Share premium account
Other equity instruments
Other reserves
Retained earnings
Total shareholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity

HSBC Holdings plc News Release 202111

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

2021

2020

2020

$m

$m

$m

Profit before tax
Adjustments for non-cash items:

10,839

4,318

4,459

Depreciation, amortisation and impairment
Net gain from investing activities

1,802
(485)

3,095
(405)

2,146
(136)

Share of profits in associates and joint ventures
Change in expected credit losses gross of recoveries and other credit impairment charges(1,656)
(484)

(958)
6,875

(639)
2,221

301
254

277
195

887
238

Other non-cash items included in profit before tax
Change in operating assets

205(3,811)(718)
11,185(188)(23,788)

Change in operating liabilities

49,015

134,734

68,164

Elimination of exchange differences1

5,212

3,775

(29,524)

Dividends received from associates
Contributions paid to defined benefit plans

10
(342)

120
(335)

641
(160)

(997)
59,863(2,373)
159,785(1,886)22,435Purchase of financial investments
Proceeds from the sale and maturity of financial investments(263,198)
298,596(271,830)
225,733(224,839)
251,257

Net cash flows from the purchase and sale of property, plant and equipment
Net cash flows from purchase of customer and loan portfolios
Net investment in intangible assets
Net cash flow on (purchase)/disposal of subsidiaries, businesses, associates and joint ventures
Net cash from investing activities
Issue of ordinary share capital and other equity instruments
Net sales/(purchases) of own shares for market-making and investment purposes
Redemption of preference shares and other equity instruments
Subordinated loan capital repaid
Dividends paid to shareholders of the parent company and non-controlling interests
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Exchange differences in respect of cash and cash equivalents
Cash and cash equivalents at the end of the period

(375)
1,063
(1,011)(84)
34,9911,996
1(3,450)(852)(4,121)(6,426)88,428468,323(4,818)551,933

(447)
244
(957)
(409)
(47,666)
—
(48)
(398)
(1,538)(1,204)(3,188)108,931
293,742(7,455)395,218

(999)
1,118
(1,107)(194)
25,236
1,497
(133)
—
(2,000)(819)(1,455)
46,216395,218
26,889468,323

Provisions including pensions
Share-based payment expense

Tax paid
Net cash from operating activities

Interest received was $19,761m (1H20: $25,159m; 2H20: $20,419m), interest paid was $6,552m (1H20: $10,573m; 2H20: $7,167m) anddividends received (excluding dividends received from associates, which are presented separately above) were $801m (1H20: $447m;
2H20: $711m).
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.

12

HSBC Holdings plc News Release 2021

Consolidated statement of changes in equity
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

24,624

22,414

140,572

1,816

457

(20,375)

26,935

196,443

8,552

204,995

Profit for the period
Other comprehensive income (net of tax)

—
—

—
—

7,949
(337)

—
(1,629)

—
(234)

—
(464)

—
—

7,949
(2,664)

473
(61)

8,422
(2,725)– debt instruments at fair value throughother comprehensive income

—

—

—

(1,351)———(1,351)(17)(1,368)– equity instruments designated at fair value
through other comprehensive income

—

—

—

(278)

—

—

—

(278)

(70)

(348)

– cash flow hedges

—

—

—

—

(234)

—

—

(234)

(4)

(238)

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

—

—

155

—

—

—

—

155

—

155

– remeasurement of defined benefit asset/
liability

—

—

(762)

—

—

—

—

(762)

15

(747)

– share of other comprehensive income ofassociates and joint ventures

—

—

104

—

—

—

—

104

—

104

– effects of hyperinflation– exchange differences

—
—

—
—

166
—

—
—

—
—

—
(464)

—
—

166
(464)

—
15

166
(449)

Total comprehensive income for theperiod

—

—

7,612

(1,629)

(234)

(464)

—

5,285

412

5,697

At 1 Jan 2021

Shares issued under employee remunerationand share plans

352

—

(335)

—

—

—

—

17

—

17

Capital securities issued1
Dividends to shareholders
Redemption of securities2
Cost of share-based payment arrangements
Other movements
At 30 Jun 2021

—
—
—
—
—
24,9762,000—(2,000)——22,414(4)(3,732)—
254(48)
144,319

—
—
—
—
3
190

—
—
—
—
—
223

—
—
—
—
—
(20,839)—————
26,935

1,996(3,732)(2,000)254(45)
198,218

—
(389)
—
—
(29)
8,546

1,996
(4,121)(2,000)254(74)
206,764

At 1 Jan 2020
Profit for the period
Other comprehensive income (net of tax)
– debt instruments at fair value throughother comprehensive income

24,278——20,871——

136,679
2,639
3,506

(108)
—
1,654

(2)
—
465

(25,133)—(4,559)27,370——183,955
2,639
1,066

8,713
486
(25)

192,668
3,125
1,041

—

—

—

1,735

12

1,747

—

—

—

1,735

– 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– exchange differences
Total comprehensive income for the period

—
—
—

—
—
—

72
—
6,145

—
—
1,654

—
—
465

—
(4,559)(4,559)———72(4,559)
3,705

—
7
461

72
(4,552)
4,166

Shares issued under employee remunerationand share plans

336

—

(329)

—

—

—

—

7

—

7

Dividends to shareholders
Cost of share-based payment arrangements
Other movements
At 30 Jun 2020———
24,614——43
20,914

(662)
195
(219)
141,809

—
—
12
1,558

—
—
—
463

—
—
—
(29,692)———
27,370

(662)
195
(164)
187,036

(542)
—
(447)
8,185

(1,204)
195(611)
195,221HSBC Holdings plc News Release 202113

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

Other
equityinstruments

Retainedearnings

Financialassets at
FVOCI
reserveCashflowhedging
reserve

Foreign
Mergerexchange and otherreserve reserves

Total
shareholders’equityNoncontrollinginterests

Total
equity

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

24,614

20,914

141,809

1,558

463

(29,692)

27,370187,036

8,185

195,221

Profit for the period

—

—

2,590

—

—

—

—

2,590

384

2,974

Other comprehensive income(net of tax)——

(2,388)

259

(6)

9,317

—

7,182

186

7,368

– debt instruments at fair value through othercomprehensive income

—

—

—

11

—

—

—

11

(8)

3

– equity instruments designated at fair value
through other comprehensive income

—

—

—

248

—

—

—

248

87

335

—

—

—

—

(6)

—

—

(6)

1

(5)

At 1 Jul 2020

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

(2,187)

—

—

—

—

(2,187)—(2,187)– remeasurement of defined benefit asset/
liability

—

—

(364)

—

—

—

—

(364)

16

(348)

– share of other comprehensive income ofassociates and joint ventures

—

—

42

—

—

—

—

42

—

42

– effects of hyperinflation– exchange differences
Total comprehensive income for the period

—
—
—

—
—
—

121
—
202

—
—
259

—
—
(6)

—
9,317
9,317

—
—
—

121
9,317
9,772

—
90
570

121
9,407
10,342

Shares issued under employee remunerationand share plans

10

—

(10)

—

—

—

—

—

—

—

Capital securities issued1
Dividends to shareholders
Redemption of securities2
Transfers3
Cost of share-based payment arrangements
Other movements
At 31 Dec 2020

—
—
—
—
—
—
24,624

1,500
—
—
—
—
—
22,414(3)(669)(1,450)435
239
19140,572

—
—
—
—
—
(1)
1,816

—
—
—
—
—
—
457

—
—
—
—
—
—
(20,375)

—
—
—
(435)
—
—
26,935

1,497(669)(1,450)—239
18
196,443

—
(150)
—
—
—
(53)
8,552

1,497
(819)
(1,450)—239(35)
204,9951

During 2021, HSBC Holdings issued $2,000m of Additional Tier1 instruments on which there were $4m of external issue costs. In 2020, HSBC
Holdings issued 1,500m of perpetual subordinated contingent convertible securities.
2 During 2021, HSBC Holdings redeemed $2,000m 6.875% perpetual subordinated contingent convertible securities. In 2020, HSBC Holdings
called and later redeemed 1,450m 6.20% non-cumulative US dollar preference shares.
3 Permitted transfers from the merger reserve to retained earnings were made when the investment in HSBC Overseas Holdings (UK) Limited waspreviously impaired. In 2020, an additional impairment of $435m was recognised and a permitted transfer of this amount was made from themerger reserve to retained earnings.

14

HSBC Holdings plc News Release 2021

1

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

Our interim condensed financial statements have been prepared on the basis of the policies set out in the 2020 annual financial
statements and in accordance with UK adopted IAS 34 ‘Interim Financial Reporting’, IAS 34 ‘Interim Financial Reporting’ as issued by theInternational Accounting Standards Board (‘IASB’), IAS 34 ‘Interim Financial Reporting’ as adopted by the EU and the Disclosure
Guidance and Transparency Rules sourcebook of the UK’s Financial Conduct Authority. Therefore, they include an explanation of eventsand transactions that are significant to an understanding of the changes in HSBC’s financial position and performance since the end of
2020. These financial statements should be read in conjunction with the Annual Report and Accounts 2020, which were prepared inaccordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, and International
Financial Reporting Standards (‘IFRSs’) as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee.
At 30 June 2021, there were no unendorsed standards effective for the half-year to 30 June 2021 affecting these financial statements,
and there was no difference between IFRSs adopted by the UK, IFRSs as adopted by the EU and IFRSs issued by the IASB in terms of
their application to HSBC.
The financial statements for HSBC for the year ended 31 December 2021 will be prepared in accordance with IFRS as adopted by the UK,international financial reporting standards adopted by the EU and IFRSs as issued by the IASB, including interpretations issued by the
IFRS Interpretations Committee.

Standards applied during the half-year to 30 June 2021
There were no new standards or amendments to standards that had an effect on these interim condensed 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, the valuation of financial instruments, deferred tax assets, provisions for liabilities, defined benefit
obligations, interests in associates, impairment of non-financial assets and post-employment benefits. There were no changes in thecurrent period to the critical accounting estimates and judgements applied in 2020, which are stated on pages 77 and 289 of the Annual
Report and Accounts 2020.

(c)Composition of the Group

There were no material changes in the composition of the Group in the half-year to 30 June 2021. For further details of future businessdisposals, see Note 8 ‘Business disposals’.

(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 adopted
for use in the UK or in the EU. The standard sets out the requirements that an entity should apply in accounting for insurance contracts it
issues and reinsurance contracts it holds. Following the amendments, IFRS 17 is effective from 1 January 2023. The Group is in theprocess of implementing IFRS 17. Industry practice and interpretation of the standard are still developing. Therefore, the likely impact of
its implementation remains uncertain. However, compared with the Group’s current accounting policy for insurance, there will be no
PVIF asset recognised; rather the estimated future profit will be included in the measurement of the insurance contract liability as thecontractual service margin and gradually recognised in revenue as services are provided over the duration of the insurance contract.

(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 continuing 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

The accounting policies that we applied for these interim condensed consolidated financial statements are consistent with thosedescribed on pages 288 to 299 of the Annual Report and Accounts 2020, as are the methods of computation.

HSBC Holdings plc News Release 2021

15

2

Dividends

On 2 August 2021, the Directors approved an interim dividend for the 2021 half-year of $0.07 per ordinary share in respect of thefinancial year ending 31 December 2021. This distribution amounts to approximately $1,430m and will be payable on 30 September
2021. No liability is recognised in the financial statements in respect of these dividends.
Dividends paid to shareholders of HSBC Holdings plc
Half-year to
30 Jun 2021
Per share

Dividends paid on ordinary shares
In respect of previous year:– fourth interim dividend
In respect of current year:– first interim dividend– second interim dividend– third interim dividend
Total
Total dividends on preference shares classified as equity (paidquarterly)1
Total coupons on capital securities classified as equity
Dividends to shareholders

30 Jun 2020

Settled in
Total
scrip

31 Dec 2020

Per share

Total

Settled inscrip

Per share

Total

Settled in
scrip

$

$m

$m

$

$m

$m

$

$m

$m

0.15

3,059

—

—

—

—

—

—

—

—
—
—
0.15

—
—
—
3,059

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

4.99

7
666
3,732

31.00

45
617
662

31.00

45
624
669

1 HSBC Holdings called $1,450m 6.20% non-cumulative US dollar preference shares on 10 December 2020. The security was redeemed andcancelled on 13 January 2021.

Interim dividend for the 2021 half-year
On 2 August 2021, the Directors approved an interim dividend for the 2021 half-year of $0.07 per ordinary share in respect of thefinancial year ending 31 December 2021. The dividend will be payable on 30 September 2021 to holders on the Principal Register in theUK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on 20 August 2021.
The dividend will be payable in US dollars, or in pounds sterling or Hong Kong dollars at the forward exchange rates quoted by HSBCBank plc in London at or about 11.00am on 20 September 2021, or a combination of these currencies. Particulars of these arrangements
will be sent to shareholders on or about 27 August 2021 and changes to currency elections must be received by 16 September 2021. The
ordinary shares in London, Hong Kong and Bermuda, and American Depositary Shares (‘ADSs’) in New York will be quoted ex-dividendon 19 August 2021. As announced on 23 February 2021, the Group has decided to discontinue the scrip dividend option.
The dividend will be payable on ADSs, each of which represents five ordinary shares, on 30 September 2021 to holders of record on
20 August 2021. The dividend of $0.35 per ADS will be payable by the depositary in US dollars. Alternatively, the cash dividend may beinvested in additional ADSs by participants in the dividend reinvestment plan operated by the depositary. Elections must be received by
10 September 2021.
Any person who has acquired ordinary shares registered on the Principal Register in the UK, the Hong Kong Overseas Branch Register orthe Bermuda Overseas Branch Register but who has not lodged the share transfer with the Principal Registrar in the UK, Hong Kong
Overseas Branch Registrar or Bermuda Overseas Branch registrar should do so before 4.00pm local time on 20 August 2021 in order toreceive the dividend.
Ordinary shares may not be removed from or transferred to the Principal Register in the UK, the Hong Kong Overseas Branch Register orthe Bermuda Overseas Branch Register on 20 August 2021. Any person wishing to remove ordinary shares to or from each register must
do so before 4.00pm local time on 19 August 2021.
Transfer of ADSs must be lodged with the depositary by 11.00am on 20 August 2021 in order to receive the dividend. ADS holders who
receive a cash dividend will be charged a fee, which will be deducted by the depositary, of $0.005 per ADS per cash dividend.

Dividend on preference share
A quarterly dividend of £0.01 per Series A sterling preference share is payable on 15 March, 15 June, 15 September and 15 December
2021 for the quarter then ended at the sole and absolute discretion of the Board of HSBC Holdings plc. Accordingly, the Board of HSBC
Holdings plc has approved a quarterly dividend to be payable on 15 September 2021 to holders of record on 31 August 2021.

16

HSBC Holdings plc News Release 2021

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 attributable to ordinary shareholders of the parent company
Half-year to
30 Jun2021

30 Jun31 Dec

$m

2020
$m

2020
$m

Profit attributable to shareholders of the parent company

7,949

2,639

2,590

Dividend payable on preference shares classified as equity
Coupon payable on capital securities classified as equity

(7)
(666)

(45)
(617)

(45)
(624)

Profit attributable to ordinary shareholders of the parent company

7,276

1,977

1,921

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

30 Jun 2021

Basic1
Effect of dilutive potential ordinary shares
Diluted1

Profit$m(millions)$$m(millions)$$m(millions)

$

7,276

20,211
97
20,308

0.36

1,977

0.10

1,921

1,977

0.10

1,921

20,17663
20,2390.10

0.36

20,162
58
20,2207,276

Amountper share

31 Dec 2020

Numberof shares

ProfitNumber Amount perof shares
share

ProfitNumber Amount perof shares
share

0.09

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

4

Adjusted balance sheet reconciliation
At

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

30 Jun 2021
Reported and adjusted

Adjusted

31 Dec 2020
Currency translation

$m

$m

$m

$m

1,059,511
28,7092,976,005
1,669,091

1,036,818
26,862
2,981,588
1,641,648

1,169
(178)
2,576
1,132

1,037,987
26,684
2,984,164
1,642,780

Reported

HSBC Holdings plc News Release 2021

17

5Reconciliation of reported and adjusted items

Revenue1
Reported

30 JunHalf-year to
30 Jun31 Dec

2021
$m

2020
$m

2020
$m

25,551

26,74523,684Currency translation
Significant items

246

1,117
(265)

630
209

– customer redress programmes– disposals, acquisitions and investment in new businesses

(18)
—

(26)
8

47
2

– fair value movements on financial instruments2– restructuring and other related costs3

194
70

(299)
49

35
121

25,797

3
27,597

4
24,523719(6,858)(1,959)719(429)(7,287)(72)(2,031)(17,087)(16,527)(17,905)

865
17
—
—
848
—
—
(16,222)

(887)
1,709
50
1,025
—
505
5
124
(15,705)

(471)
1,425
(104)
65
17
1,403
7
37
(16,951)

958
91
—
—
1,049

639
38
462
462
1,139

4,318
(108)
1,444
(265)
1,709
—
5,654

4,459
125
2,096
209
1,425
462
6,680

– currency translation on significant items
Adjusted
ECL
Reported
Currency translation
Adjusted
Operating expenses
Reported
Currency translation
Significant items– customer redress programmes– impairment of goodwill and other intangibles– past service costs of guaranteed minimum pension benefits equalisation– restructuring and other related costs– settlements and provisions in connection with legal and regulatory matters– currency translation on significant items
Adjusted
Share of profit in associates and joint ventures
Reported
Currency translation
Significant items– impairment of goodwill4
Adjusted
Profit before tax
Reported
Currency translation
Significant items– revenue– operating expenses– share of profit in associates and joint ventures4
Adjusted

1
2
3
4

1,656
—
—
1,656
10,839
1,111
246
865
—
11,950Net 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 losses associated with the RWA reduction commitments and gains relating to the business update in February 2020.
During the six months to 31 December 2020, The Saudi British Bank ('SABB'), an associate of HSBC, impaired the goodwill that arose following
the merger with Alawwal bank in 2019. HSBC's post-tax share of the goodwill impairment was $462m.

18

HSBC Holdings plc News Release 2021

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

2021

2020

$m

$m

Guarantees and contingent liabilities:– financial guarantees

27,274

18,384– performance and other guarantees– other contingent liabilities

80,641
838

78,114
1,219

At the end of the period
Commitments:1

108,753

97,717– documentary credits and short-term trade-related transactions– forward asset purchases and forward deposits placed

9,201
72,916

7,178
66,506– standby facilities, credit lines and other commitments to lend
At the end of the period

764,768
846,885

771,086
844,770

1 Includes $661,373m of commitments at 30 June 2021 (31 December 2020: $659,783m), to which the impairment requirements in IFRS 9 areapplied where HSBC has become party to an irrevocable commitment.

Contingent liabilities arising from legal proceedings and regulatory and other matters against Group companies are excluded from thisnote but are disclosed in Note 7 below and Notes 11 and 13 of the Interim Report 2021.

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. Apartfrom the matters described below, HSBC considers that none of these matters are material. The recognition of provisions is determinedin accordance with the accounting policies set out in Note 1 of the Annual Report and Accounts 2020. While the outcomes of legal
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 2021 (see Note 11). Where an individual provision ismaterial, the fact that a provision has been made is stated and quantified, except to the extent that doing so would be seriously
prejudicial. Any provision recognised does not constitute an admission of wrongdoing or legal liability. It is not practicable to provide anaggregate 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, and certain claims against the remaining HSBC defendants,
were dismissed. In May 2019, the liquidators appealed certain issues from the US Bankruptcy Court to the US District Court for theSouthern District of New York (the ’New York District Court’) and these appeals remain pending.
In January 2020, the liquidators filed amended complaints on the claims remaining in the US Bankruptcy Court. In December 2020, the
US Bankruptcy Court granted in part and denied in part motions filed by the defendants, including HSBC, to dismiss the amended
complaints. In March 2021, the liquidators and defendants appealed the US Bankruptcy Court’s decision, and these appeals are currently
pending. Meanwhile, proceedings before the US Bankruptcy Court with respect to the remaining claims that were not dismissed areongoing.
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 2021 for UK-based defendants and November 2021 for all other defendants.
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

HSBC Holdings plc News Release 2021

19

filed a notice of appeal to the UK Privy Council. The first of two possible hearings before the UK Privy Council took place during April
2021, where judgment is pending.
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. In April 2021, the parties reached an agreement toresolve the dispute and, in May 2021, the action against HTIE was discontinued.
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, HSBC Holdings entered into a number of agreements, including an undertaking with the UK Financial Services
Authority (replaced with a Direction issued by the UK Financial Conduct Authority (‘FCA’) in 2013 and again in 2020) as well as a ceaseand-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 was, 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. In 2020, HSBC’s engagement with theindependent compliance monitor, acting in his roles as both Skilled Person and Independent Consultant, concluded. The role of FCA
Skilled Person was assigned to a new individual in the second quarter of 2020. Separately, in early 2021, a new FRB Independent
Consultant was appointed pursuant to the cease-and-desist order. The roles of each of the FCA Skilled Person and the FRB Independent
Consultant are discussed on page 188 of the Annual Report and Accounts 2020.
The FCA is 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 continues to cooperate with the FCA’s investigation, which is at or nearing
completion.
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. 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, nine actions
remain pending in federal courts in New York or the District of Columbia. The courts have granted HSBC’s motions to dismiss in five of
these cases. Appeals remain pending in two cases, and the remaining three dismissals are also subject to appeal. The four remaining
actions are at a very early stage.
There are many factors that may affect the range of outcomes, and the resulting financial impact, of these matters, which could besignificant.

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 (‘EC’) issued a decision finding that HSBC, among otherbanks, 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 both appealed the General Court’s decision to the European Court of Justice (the ‘Court of Justice’). In June 2021, the EC
adopted a new fining decision for an amount which was 5% less than the previously annulled fine, and subsequently withdrew its appeal
to the Court of Justice. HSBC’s appeal remains pending.
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. HSBC has reachedclass settlements with five groups of plaintiffs, and the court has approved these settlements. HSBC has also resolved several of theindividual actions, although a number of other US dollar Libor-related actions remain pending against HSBC in the New York District
Court and the Second Circuit Court of Appeals.
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
20

HSBC Holdings plc News Release 2021

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. This matter is on appeal.
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, in March 2021, following an appeal by the plaintiffs, the Second Circuit Court of Appeals reversed thedismissal of the plaintiffs’ third amended complaint and remanded the case to the New York District Court where it remains pending
against the defendants, including The Hongkong and Shanghai Banking Corporation Limited.
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
Since at least 2014, the EC has been conducting an investigation into trading activities by a number of banks, including HSBC, in theforeign exchange spot market. HSBC is cooperating with this investigation.
In January 2018, following the conclusion of the US Department of Justice’s (‘DoJ’) investigation into HSBC’s historical foreign exchange
activities, HSBC Holdings entered into a three-year deferred prosecution agreement with the Criminal Division of the DoJ (the ‘FX DPA’),regarding fraudulent conduct in connection with two particular transactions in 2010 and 2011. In January 2021, the FX DPA expired and,in July 2021, the DoJ filed a motion to dismiss the charges deferred by the FX DPA, which remains pending.
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 August 2020, HSBC Bank plc and
HSBC Bank USA filed an application to dismiss the revised complaint, which remains pending.
Beginning in 2013, various HSBC companies and other banks have been named as defendants in a number of putative class actions filedin, or transferred to, the New York District Court arising from allegations that the defendants conspired to manipulate foreign exchange
rates. HSBC has reached class settlements with two groups of plaintiffs, including direct and indirect purchasers of foreign exchange
products, and the court has granted final approval of these settlements. A putative class action by a group of retail customers of foreignexchange products remains pending.
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 August 2020, HSBCBank plc filed a motion to dismiss and, in January 2021, HSBC Holdings filed a motion seeking to challenge the service of the motion forcertification on defendants outside Israel. These motions remain pending.
In November and December 2018, complaints alleging foreign exchange-related misconduct were filed in the New York District Court
and the High Court of England and Wales against HSBC and other defendants by certain plaintiffs that opted out of the direct purchaser
class action settlement in the US. These matters remain pending. Additionally, in May 2021, two civil actions were filed in Brazil alleging
foreign exchange-related misconduct by various banks, including HSBC, for the period from 2007 to 2013. HSBC has not yet been servedwith these actions. It is possible that additional civil actions will be initiated against HSBC in relation to its historical foreign exchange
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, which were consolidated in the New York District Court, allege that, from January 2004 to June
2013, the defendants conspired to manipulate the price of gold and gold derivatives for their collective benefit in violation of US antitrust
laws, the US CEA and New York state law. In October 2020, HSBC reached a settlement in principle with the plaintiffs to resolve theconsolidated action. The settlement remains subject to court approval.
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 ongoing.
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, 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. These actions are ongoing.
HSBC Holdings plc News Release 2021

21

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 2020, the court
granted the defendants' motion to dismiss the plaintiffs’ 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) in the High Court ofEngland and Wales by two separate groups of investors in Eclipse film finance schemes in connection with PBGB’s role in thedevelopment of such schemes. These actions are ongoing.
In April 2021, HSBC UK Bank plc (as successor to PBGB’s business) was served with a claim issued in the High Court of England andWales in connection with PBGB’s role in the development of the Zeus film finance schemes. This action is 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.

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, among otherthings, bond issuances;• an investigation by the FCA in connection with collections and recoveries operations in the UK;• an investigation by the UK Competition and Markets Authority concerning the financial services sector;• a putative class action brought in the New York District Court relating to the Mexican government bond market;• 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

Business disposals

In the first half of 2021, we accelerated the pace of execution on our strategic ambition to be the preferred international financial partner
for our clients with the announcements of the potential sale of our retail banking businesses in France, as well as the exit of domestic
mass market retail banking in the US.

Potential sale of the retail banking business in France
On 18 June 2021, HSBC Continental Europe signed a memorandum of understanding with Promontoria MMB SAS (‘My Money Group’),its subsidiary Banque des Caraïbes SA and My Money Bank, regarding the potential sale of HSBC Continental Europe’s retail banking
business in France.
The potential sale includes: HSBC Continental Europe’s French retail banking business; the Crédit Commercial de France (‘CCF’) brand;and, subject to the satisfaction of relevant conditions, HSBC Continental Europe’s 100% ownership interest in HSBC SFH (France) and its
3% ownership interest in Crédit Logement. The sale would generate an estimated loss before tax including related transaction costs for
the Group of $2.3bn, together with an additional $0.7bn impairment of goodwill.
There would be no immediate tax benefit recognised in respect of the sale loss nor impairment. The vast majority of the estimated loss
for the write-down of the disposal group to fair value less costs to sell will be recognised when it is classified as held for sale inaccordance with IFRS 5, which is currently anticipated to be in 2022. Subsequently, the disposal group classified as held for sale will be
remeasured at the lower of carrying amount and fair value less costs to sell at each reporting period. Any remaining gain or loss notpreviously recognised shall be recognised at the date of derecognition, which is currently anticipated to be in the first half of 2023.
At 30 June 2021, the value of the total assets of the business to be sold was $28.2bn, including $25.6bn of loans and advances tocustomers, and the value of customer accounts were $23.5bn.
22

HSBC Holdings plc News Release 2021

US retail banking businessOn 26 May 2021, we announced that we will exit our US mass market retail banking business, including our Personal and Advancepropositions, as well as retail business banking, and will rebrand approximately 20 to 25 of our retail branches into international wealthcentres to serve our Premier and Jade customers. In conjunction with the execution of this strategy, HSBC Bank USA, N.A. has enteredinto definitive sale agreements with Citizens Bank and Cathay Bank to sell approximately 90 of our retail branches along with
substantially all residential mortgage, unsecured and retail business banking loans and all deposits in our branch network not associatedwith our Premier, Jade and Private Banking customers. Certain assets under management associated with our mass market retailbanking business will also be transferred. The remaining branches not sold or rebranded will be closed.
The sales are expected to close by the first quarter of 2022, subject to regulatory approval, and are not expected to impact resultsmaterially. At 30 June 2021, loans and advances to customers of $2.6bn and customer accounts of $9.9bn related to these transactions
met the criteria to be classified as held for sale.

9

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.
An interim dividend for the 2021 half-year in respect of the financial year ending 31 December 2021 was approved by the Directors on
2 August 2021, as described in Note 2.

10

Capital structure

Capital ratios
At

Transitional basis
Common equity tier 1 ratio
Tier 1 ratio
Total capital ratio
End point basis
Common equity tier 1 ratio
Tier 1 ratio
Total capital ratio

30 Jun31 Dec

2021

2020

%

%

15.6
18.4
21.0

15.9
18.7
21.5

15.6
18.2
19.8

15.9
18.5
20.2

Total regulatory capital and risk-weighted assets
At

Transitional basis
Common equity tier 1 capital
Additional tier 1 capital
Tier 2 capital
Total regulatory capital
Risk-weighted assets
End point basis
Common equity tier 1 capital
Additional tier 1 capital
Tier 2 capital
Total regulatory capital
Risk-weighted assets

30 Jun31 Dec

2021

2020

$m

$m

134,606
23,72922,787
181,122862,292

136,050
24,12324,250184,423
857,520

134,606
22,423
13,662
170,691
862,292

136,050
22,411
14,743
173,204
857,520HSBC Holdings plc News Release 2021

23

Leverage ratio1
At

Ref*
20

Tier 1 capital

21

Total leverage ratio exposure

22
EU-23

Leverage ratio
Choice of transitional arrangements for the definition of the capital measure
UK leverage ratio exposure – quarterly average2
UK leverage ratio – quarterly average2
UK leverage ratio – quarter end2

30 Jun31 Dec

2021

2020

$bn

$bn

157.0

158.5

2,968.5

2,897.1%%

5.3
Fully phased-in

5.5
Fully phased-in

2,535.1

2,555.5

%

%

6.3
6.2

6.1
6.2

* The references identify the lines prescribed in the EBA template.
1 The CRR II regulatory transitional arrangements for IFRS 9 are applied in both leverage ratio calculations.
2 UK leverage ratio denotes the Group’s leverage ratio calculated under the PRA’s UK leverage framework. This measure excludes from thecalculation of exposure qualifying central bank balances and loans under the UK Bounce Back Loan Scheme.

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.

11

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 2020 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 condensed financial statements which are contained in
the Interim Report 2021. The Interim Report 2021 was approved by the Board of Directors on 2 August 2021. The unaudited interim
condensed 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 2021.

12

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 2021.

13

Earnings release and final results

An earnings release for the three-month period ending 30 September 2021 is expected to be issued on 25 October 2021. The results forthe year to 31 December 2021 are expected to be announced on 22 February 2022.

24

HSBC Holdings plc News Release 2021

14

Corporate governance

We are subject to corporate governance requirements in both the UK and Hong Kong. Throughout the six months ended 30 June 2021,
we complied with the applicable provisions of the UK Corporate Governance Code and also the requirements of the Hong Kong
Corporate Governance Code. The UK Corporate Governance Code is available at www.frc.org.uk and the Hong Kong Corporate
Governance Code is available at www.hkex.com.hk.
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.
Following specific enquiries all Directors have confirmed that they have complied with their obligations in respect of transacting in Groupsecurities throughout the period.
There have been no material changes to the information disclosed in the Annual Report and Accounts 2020 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 31 of the Interim Report 2021.
The Board of Directors of HSBC Holdings plc as at the date of this announcement comprises:
Mark Tucker*, James Anthony Forese†, Steven Guggenheimer†, Irene Lee†, José Antonio Meade Kuribreña†, 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

15Interim Report 2021

The Interim Report 2021 will be made available to shareholders on or about 27 August 2021. Copies of the Interim Report 2021 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 2021 and thisNews Release may also be downloaded from the HSBC website, www.hsbc.com.
A Chinese translation of the Interim Report 2021 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 2021 will be available on The Stock Exchange of Hong Kong Limited’s website www.hkex.com.hk.

16

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 and ESG targets/commitments describedherein.
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 2020 for the fiscal year ended 31 December 2020 filed with the Securities and Exchange
Commission (the ‘SEC’) on Form 20-F on 24 February 2021, our 1Q 2021 Earnings Release furnished to the SEC on Form 6-K on 27 April
2021, and our Interim Report 2021 for the six months ended 30 June 2021 which we expect to furnish to the SEC on Form 6-K on oraround 2 August 2021.

HSBC Holdings plc News Release 2021

25

17

Use of alternative performance measures

This news release contains non-IFRS measures used by management internally that constitute alternative performance measures underEuropean Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with SEC
rules and regulations (‘alternative performance measures’). The primary alternative performance measures we use are presented on an‘adjusted performance’ basis which is computed by adjusting reported results for the period-on-period effects of foreign currencytranslation differences and significant items which distort period-on-period comparisons. Significant items are those items which
management and investors would ordinarily identify and consider separately when assessing performance in order to better understandthe underlying trends in the business. Reconciliations between alternative performance measures and the most directly comparable
measures under IFRS are provided in our 2020 Form 20-F,which is available at www.hsbc.com.

18

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.

19

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 – Jessica Lee
Tel: +852 2822 1268

20

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

26

HSBC Holdings plc News Release 2021

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