Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 71

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 71
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 affordability as prices and interest rates fell. Stabilisation of the real estate market could be dependent on a further lowering of interest rates to revive demand for property both in the domestic market and from mainland China. Higher interest rates, a stronger US dollar and weak sentiment in mainland China remain the key risks to recovery.

| HSBC Holdings plcAnnual Report on Form 20-F | 37 |

Managing risk continued In mainland China an excess of inventory and low confidence have resulted in the fall in both commercial and residential real estate prices. A recovery remains contingent on reform and broader economy-wide stimulus measures. We continue to closely monitor market conditions and take steps to proactively manage our commercial real estate portfolios. In the fourth quarter of 2024 management adjustments to ECL were applied to reflect sector or portfolio risks that are not fully captured by our models. We continue to assess the impact of Basel 3.1 standards on our capital, including the release of more beneficial PRA near-final rules, developments in the US and the associated implementation challenges. We monitor, and seek to manage, the potential implications of all the above developments on our customers and our business. While the financial performance of our operations varied by geography, our balance sheet and liquidity remained strong. For further details of our Central and other scenarios, see ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on page 178 . Our risk appetite Our risk appetite sets our approach to monitoring and managing our risk exposure. It defines our desired forward-looking risk profile and informs the strategic and financial planning process. It provides a baseline to guide strategic decision making by helping planned business activities to deliver an appropriate balance of return for the risk assumed, while remaining within acceptable risk levels. Risk appetite supports senior management in allocating financial resources optimally to finance sustainable growth and manage risk exposures. At 31 December 2024 our CET1 ratio and ECL charges were within their defined risk appetite thresholds. Our CET1 capital ratio at 31 December 2024 was 14.9 %, up marginally compared with the prior year as capital generation and a reduction in RWAs through strategic transactions were offset by dividends, share buy-backs and organic balance sheet growth. For further details of the key drivers of the overall CET1 ratio, see ‘Own funds’ on page 235 . Wholesale ECL charges during the year continued to reflect stress in the mainland China and Hong Kong commercial real estate sectors however, Wholesale and Retail ECL charges remained within appetite. Stress tests We regularly conduct stress tests to assess the resilience of our balance