Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 354

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 354
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eline flood risk is the flood risk for a 1-in-100 year event, based on current peril data. 3 2024 relates to the year in which the assessment was conducted. The baseline data is based on the mortgage portfolio as at 31 December 2023 and 2022, for the UK and Hong Kong respectively. 4 In 2022, 94% of properties in Hong Kong (where HSBC provides mortgages) are apartments located on the second floor or above. For properties located in areas exposed to flooding, direct damages would be mitigated against, with only common ground floor areas potentially impacted. Through our climate scenario analysis, we recognise acute impacts are more severe than long-term chronic impacts. We observed this when assessing the outputs under the Severe Climate Stress scenario, which focuses on prescribed physical risk events rather than recognising the probabilistic nature of these perils, which are considered very unlikely by 2030. Overall, our retail mortgage portfolio remains resilient to climate risk and impact severity is muted at portfolio levels as our book has diversified property locations with insurance coverage being a key loan covenant. How climate change is impacting our commercial real estate portfolios In our climate scenario analysis exercise, we assess our commercial real estate (‘CRE’) customers’ vulnerability to various perils, including flooding and cyclonic wind exposures. Our CRE portfolio is globally diversified with larger concentrations in Hong Kong, the UK, France and the US. In our 2024 exercise we carried out a detailed assessment of our UK portfolio. In addition, we performed a bespoke assessment of our Hong Kong portfolio via the HKMA climate scenario analysis exercise. Geographical location is a key determinant in our exposure to potential physical risk events, which can lead to higher ECLs due to the cost of repairing damage as well as the longer-term impacts on property valuations. These can lead to higher defaults and consequential losses in areas where physical risk events are gradually increasing in frequency and severity.

| HSBC Holdings plcAnnual Report on Form 20-F | 257 |

The table below shows the proportion of our CRE portfolio exposed to specific physical perils in our key markets.

| Exposure to peril (%)1 |                              |                   |              |                      |                  |             |
| Market                 | Exposureat default(EAD)22023 | Coastalinundation | Cyclonewind3 | Surfacewaterflooding | Riverineflooding | ForestFires |
| HongKong               | n                            |                 1 |          100 |                   12 |