Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 235

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 235
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 many cases left growth and employment dependent on continued deficit spending. Against the backdrop of higher global interest rates, a high level of public debt issuance and a strong US dollar, borrowing costs for certain countries could increase further. This could adversely impact the fiscal capacity and debt sustainability of highly-indebted sovereign issuers. Emerging markets with higher levels of US dollar-denominated debt and weaker public finances could be further impacted by higher US interest rates and the US dollar's strength which could result in higher repayment costs and refinancing risks and the associated possibility of sovereign rating downgrades. Where HSBC has exposure to such sovereigns or related parties, it could incur losses. At the same time, external sovereign ratings downgrades and/or a disorderly increase in long- term government funding costs, could increase the cost of funding for HSBC and/or limit access to market funding, resulting in an adverse impact on interest margins and liquidity. – Geopolitical risks: Geopolitical risks remain high. The disruption of key supply routes, particularly through the Red Sea continues to impact global supply cost. Escalation, resurgence or other changes in the Russia-Ukraine war and the conflict in the Middle East could impact economic activity regionally, or globally for a prolonged period which, in turn, could have a material adverse effect on the Group’s business, financial condition, results of operations, prospects, liquidity, capital position and credit ratings. (For further details see 'We are subject to political, social and other risks in the countries in which we operate') Adverse changes to the current economic, financial and geopolitical situation including in relation to any of the factors listed above, could result in: – Idiosyncratic losses: Our impairment estimates attempt to capture the effects of economic, financial and geopolitical risks in the aggregate, but credit losses on specific exposures, with idiosyncratic features that make them particularly susceptible to the risks described above, may not be fully captured in our impairment estimates. – Sector-wide impairment: Changing economic conditions, policies and funding costs may give rise to a deterioration in specific industries and sectors. For example, excess supply conditions, coupled with a changes to government policies have given rise to a broad decline in mainland China real estate conditions, which has affected the financial performance of corporates operating in this market. Similarly, the Hong Kong real estate market is suffering a downturn due to high interest rates, a strong US dollar and a decline in purchases from mainland Chinese buyers. In addition, certain sectors in various countries may be targeted by material increases in trade tariffs