Company: HBCYF
Filing Date: 2025-04-29
Form Type: 6-K
Source: 0001654954-25-004763
Chunk: 51

Company: HSBC HOLDINGS PLC
Filing Date: 2025-04-29
Form: 6-K
Chunk 51
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 takes into consideration the relationship of the consensus scenario to both internal and external assessments of risk.

For the first quarter of 2025, scenario weights were adjusted to the downside to reflect greater risk and uncertainty around the Central scenario projection. Management assessed that a change to global scenario weightings was appropriate given the increase in market measures of volatility and policy uncertainty in response to the implementation of US tariff policies from early February onwards and announced retaliatory actions from US trading partners. The re-weighting of scenarios was global in scope, reflecting the particular downside risk to the US economy and its importance to the global economic and financial system.As a consequence, the consensus Upside and Central scenarios for all key markets were assigned a combined weighting of 70%, down from 85% at 31 December 2024. The remaining 30% was assigned to the two Downside scenarios, with the consensus Downside 1 scenario being awarded a weight of 25% and 5% assigned to the Downside 2 scenario.

The swift implementation and subsequent pause in tariffs for many countries on 9 April 2025 affirmed the high level of uncertainty attached to the economic outlook. The uncertain policy direction has contributed to increased financial market volatility, as well as declines in both business and consumer confidence, supporting the decision for re-weighting scenarios to reflect more significant downside risks.

Management judgemental adjustments

In the context of IFRS 9, management judgemental adjustments are typically short-term increases or decreases to the modelled allowance for ECL at either a customer, segment or portfolio level where management believes allowances do not sufficiently reflect the credit risk/expected credit losses at the reporting date. These can relate to risks or uncertainties that are not reflected in the models and/or to any late-breaking events with significant uncertainty, subject to management review and challenge. The drivers of management judgemental adjustments continue to evolve with the economic environment and as new risks emerge. Further details can be found in the section 'Management judgemental adjustments' on page 155 of the Annual Report and Accounts 2024.

Management judgemental adjustments are reviewed under the governance process for IFRS 9, as detailed in the section 'Credit risk management' on page 139 of the Annual Report and Accounts 2024.

At 31 March 2025, management judgmental adjustments were an increase to allowance for ECL of $0.3bn (31 December 2024: $0.1bn increase). Management judgemental adjustments increased $0.2bn from 31 December 2024.