Company: HBCYF
Filing Date: 2025-07-30
Form Type: 6-K
Source: 0001089113-25-000052
Chunk: 94

Company: HSBC HOLDINGS PLC
Filing Date: 2025-07-30
Form: 6-K
Chunk 94
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 long term, earnings beyond the short to medium term are extrapolated into perpetuity using a long-term growth rate to derive a terminal value, which comprises the majority of the VIU. The second component is the capital maintenance charge (‘CMC’), which is management’s forecast of the earnings that need to be withheld in order for BoCom to meet capital requirements over the forecast period, meaning that CMC is deducted when arriving at management’s estimate of future earnings available to ordinary shareholders. The CMC reflects the revised capital requirements arising from revisions of the ratio of risk-weighted assets to total assets assumption. The principal inputs to the CMC calculation include estimates of asset growth, the ratio of risk-weighted assets to total assets and the expected capital requirements. An increase in the CMC as a result of a change to these principal inputs would reduce VIU. Additionally, management considers other qualitative factors, to ensure that the inputs to the VIU calculation remain appropriate. Key assumptions in valu e-in-use calculatio n We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36: – Long-term profit growth rate: 3.00% (31 December 2024: 3.00% ) for periods after 2028, which does not exceed forecast GDP growth in mainland China and is similar to forecasts by external analysts. – Long-term asset growth rate: 3.25% (31 December 2024: 3.25% ) for periods after 2028, which is the rate that assets are expected to grow to achieve long-term profit growth of 3.00% . – Discount rate: 8.08% (31 December 2024: 8.53% ), which is based on a capital asset pricing model (‘CAPM’), using market data. The discount rate used is within the range of 7.1% to 8.9% (31 December 2024: 7.1% to 8.8% ) indicated by the CAPM, and decreased primarily as a consequence of a market-driven reduction in the risk-free rate. – Expected credit losses (‘ECL’) as a percentage of loans and advances to customers: ranges from 0.74% to 0.88% (31 December 2024: 0.74% to 0.93% ) in the short to medium term, reflecting reported credit experience in mainland China. For periods after 2028, the ratio is