Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 175

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 175
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 December 2023. Shareholders’ equity was increased by profits generated of $24bn and net gains through other comprehensive income (‘OCI’) of $2bn . These increases were broadly offset by the impact of dividends paid of $16bn , and the impact of our $11bn share buy-back activities in 2024. The net gains through OCI of $2bn included a favourable movement of $6bn due to the recycling of foreign exchange and other reserves to the income statement, primarily relating to the completion of disposals in Argentina and Canada, as well as a favourable movement of $1bn from the effects of hyperinflation. These impacts were partly offset by $5bn of exchange differences. Financial investments As part of our interest rate hedging strategy, we hold a portfolio of debt instruments, reported within financial investments, which are classified as hold-to-collect-and-sell. As a result, the change in value of these instruments is recognised through ‘debt instruments at fair value through other comprehensive income’ in equity. At 31 December 2024, we had recognised a pre-tax cumulative unrealised loss reserve through other comprehensive income of $3.8bn related to these hold-to-collect-and-sell positions, excluding investments held in our insurance business. This reflected a $0.1bn pre-tax gain in 2024, inclusive of movements on related fair value hedges. In 2023, we recognised a loss of $1.0bn in the income statement in relation to Treasury repositioning and risk management actions in this portfolio, compared with minimal disposal losses in 2024. Overall, the Group is positively exposed to rising interest rates through NII, although there is an adverse impact on our capital base in the early stages of a rising interest rate environment due to the fair value of hold-to-collect-and-sell instruments. Over time, these adverse movements will unwind as the instruments reach maturity, although not all will necessarily be held to maturity, or as interest rates begin to fall. We also hold a portfolio of financial investments measured at amortised cost, which are classified as hold-to-collect. At 31 December 2024, there was a cumulative unrecognised loss of $2.9bn . This included an unrealised loss of $2.2bn that related to debt instruments held to manage our interest rate exposure, representing a deterioration of $1.2bn during 2024 .

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