Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 347

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 347
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. Please seethe result of our climate scenario analysis on page255.Physical riskFor the UK mortgage book, flood data is sourced from a third-party data provider, and considers the UK only, covering present day risk from tidal,river and surface water/flash flooding baselined to 2021. A flood risk rating score of 0-100 is provided with 100 being highest risk. Flood riskscores are based on the average annual loss generated using flood hazard frequency, flood depths and based on the probability of floodingevents occurring. For the UK mortgage book, flood data is available for 93.7% of the mortgage book of which0.9% is at a very high risk offlooding, with2.7% of the book at a high risk of flooding. Geographically, by lending balances, our highest risk exposures are the Greater Londonand South-East regions. During 2024 we changed our flood risk classification of very high risk to align to the provider’s flood score bands. Thepostcode data used in the regional flood table has also been refined to incorporate a more granular approach. This has helped to aid the regionalallocation and as a result the 2023 data has been restated to reflect this. |            |     |           |                                              |                 |           |                   |           |

| 252 | HSBC Holdings plcAnnual Report on Form 20-F |

Risk review

| Risk type                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Our approach                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |     |                                |
| Retail creditrisk(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Transition riskWe monitor the energy performance certificate (‘EPC’) ratings of individual properties from A (highest efficiency) through to G (least efficient) asEPCs are commonly used as an indicator of transition risk in the UK mortgage book. All UK rental properties must have a minimum EPC rating ofE. It is broadly expected that the rental market will need to transition all rented properties to an EPC rating of C by 2030. We track EPC ratingsfor both owner occupied (‘OO’) and buy to let (‘BTL’), which are 96.6% of the portfolio and 3.4% of the portfolio by lending value, respectively.The EPC profile is broadly improving (to higher bands) but is evolving slowly, and the pace is dependent on regulation. Where we do not hold acurrent EPC, we have included expired EPCs for 2024