Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 355

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 355
---
10 |           2 |
| UK                     | n                            |                17 |            0 |                    9 |                8 |           0 |

1 Proportion of our CRE portfolio exposed to specific physical perils in the Downside Physical Risk scenario as at 2050. 2 The size of the bubbles is a visual representation of the portfolios, in terms of EAD, relative to one another. 3 Assumes all properties are impacted by some damage due to extreme wind, but the intensity of impact is very insignificant and highly muted in some regions, represented by (~0%) exposure to this peril. As assessed through our internal climate scenario analysis exercise, impacts on our UK portfolio are largely driven by chronic physical risk, related mainly to coastal and tidal river flooding due to a rise in sea level. The UK analysis explored acute weather events, such as extreme rainfall accompanied with storm winds that may lead to further property damage and business disruption. We assessed the impacts on transition risk for the UK portfolio, mainly focused on the impact of retrofitting costs on property valuations due to meet minimum energy performance certificate (‘EPC’) requirements for properties having low energy efficiency. Sen sitivity analysis has been conducted on EPC upgrade costs that would be higher in a faster transition scenario due to the accelerated pace of upgrades. In the Below 2 Degrees scenario, we assume actions where non-domestic properties are required to achieve an EPC rating of B by 2040. To meet these minimum standards, counterp arties in our portfolio would potentially need to retrofit their properties or risk having stranded assets with a material valuation haircut. The table below demonstrates the impact on our CRE portfolio for specific markets, including the three biggest markets – Hong Kong, the UK and the US. This shows the increase in cumulative ECL over different time horizons, under each scenario, compared with a counterfactual scenario (expressed as a multiple).

| Impact on our commercial real estate portfolio |                 |           |
| Climate Scenarios                              | ECL increase1,2 |           |
| Short-term                                     | Medium-term     | Long-term |
| Below 2 Degrees                                |                 |           |
| Downside Physical Risk                         |                 |           |

| LowerImpact | <1.1x | <1.25x | <1.5x | <1.75x | <2.25x | <2.75x | HigherImpact |

1 Increase in cumulative ECL compared with counterfactual over short, medium and long-term time